<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                        
 
                                   FORM 10-Q

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the quarterly period ended December 31, 1998

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

 

     Commission File Number 001-11763

 
 
                              TRANSMONTAIGNE INC.
                                        

     Delaware                                            06-1052062         
(State or other jurisdiction of                          (I.R.S. Employer   
incorporation or organization)                           Identification No.) 

                  2750 REPUBLIC PLAZA, 370 SEVENTEENTH STREET
                            DENVER, COLORADO 80202
         (Address, including zip code, of principal executive offices)
                                (303) 626-8200
                    (Telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.

                                Yes [X]  No [_]

As of January 31, 1999 there were 30,471,024 shares of the registrant's Common
Stock outstanding.

<PAGE>
 
                              TRANSMONTAIGNE INC.

                                     INDEX



                        PART I.   FINANCIAL INFORMATION
<TABLE> 
<CAPTION> 
                                                                                                     PAGE NO.
<S>                                                                                                  <C> 
ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS
 
          Consolidated Balance Sheets
          December 31, 1998 and June 30, 1998......................................................       4
 
          Consolidated Statements of Operations
          Three Months Ended December 31, 1998 and
          Three Months Ended January 31, 1998......................................................       5
 
          Consolidated Statements of Operations
          Six Months Ended December 31, 1998 and
          Six Months Ended January 31, 1998........................................................       6
 
          Consolidated Statements of Stockholders' Equity
          Year Ended April 30, 1998,
          Two Months Ended June 30, 1998 and
          Six Months Ended December 31, 1998.......................................................       7
 
          Consolidated Statements of Cash Flows
          Six Months Ended December 31, 1998 and
          Six Months Ended January 31, 1998........................................................       8
 
          Notes to Consolidated Financial Statements...............................................      10
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................................      23
</TABLE> 

                          PART II.  OTHER INFORMATION

<TABLE> 
<CAPTION> 
<S>                                                                                                     <C> 
ITEM 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....................................      52
 
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K........................................................      52
 
           SIGNATURES..............................................................................      54
 </TABLE> 

                                       2
<PAGE>
 
PART I.  FINANCIAL INFORMATION
------------------------------

ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS


The consolidated financial statements of TransMontaigne Inc. are included herein
beginning on the following page.

                                       3
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION> 
DECEMBER 31, 1998 AND JUNE 30, 1998 (UNAUDITED)

---------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                            December 31,1998               June 30, 1998
------                                                                        ---------------------         ---------------------
<S>                                                                           <C>                           <C>  
Current assets:
     Cash and cash equivalents                                                $          29,500,233                    27,215,374
     Trade accounts receivable                                                          151,058,972                    36,391,584
     Inventories                                                                        318,653,064                    63,559,637
     Deferred tax assets, net                                                                     -                       573,000
     Prepaid expenses and other                                                           5,152,515                     2,705,905
                                                                              ---------------------         ---------------------
                                                                                        504,364,784                   130,445,500
                                                                              ---------------------         ---------------------
 
Property, plant and equipment:
     Land                                                                                12,376,364                     2,801,964
     Plant and equipment                                                                383,011,572                   191,600,521
     Accumulated depreciation                                                           (28,467,863)                  (21,912,875)
                                                                              ---------------------         ---------------------
                                                                                        366,920,073                   172,489,610
                                                                              ---------------------         ---------------------
 
Investments and other assets:
     Investments                                                                         46,139,837                    10,180,720
     Deferred debt issuance costs, net                                                    9,973,261                     1,607,855
     Other assets                                                                         3,695,690                     3,491,813
                                                                              ---------------------         ---------------------
                                                                                         59,808,788                    15,280,388
                                                                              ---------------------         ---------------------
 
                                                                              $         931,093,645                   318,215,498
                                                                              =====================         =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
 
Current liabilities:
     Current portion of long-term debt                                        $           2,000,000                             -
     Trade accounts payable                                                             147,594,518                    28,640,766
     Inventory due under exchange agreements                                              4,034,022                     2,730,787
     Excise taxes payable                                                                36,491,018                     7,846,657
     Other accrued liabilities                                                            6,259,452                     4,760,063
                                                                              ---------------------         ---------------------
                                                                                        196,379,010                    43,978,273
                                                                              ---------------------         ---------------------
 
Long-term debt                                                                          526,851,600                   128,971,400
 
Deferred tax liabilities, net                                                               236,943                             -
 
Stockholders' equity:
     Preferred stock, par value $.01 per share,
        authorized 2,000,000 shares, none issued                                                  -                             -
     Common stock, par value $.01 per share, authorized 80,000,000
        shares, issued and outstanding 30,470,424 shares at
        December 31, 1998 and 25,953,324 shares at June 30, 1998                            304,705                       259,534
     Capital in excess of par value                                                     197,334,056                   136,780,000
     Unearned compensation                                                                 (589,442)                     (618,348)
     Retained earnings                                                                   10,576,773                     8,844,639
                                                                              ---------------------         ---------------------
                                                                                        207,626,092                   145,265,825
                                                                              ---------------------         ---------------------
 
                                                                              $         931,093,645                   318,215,498
                                                                              =====================         =====================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 1998 AND THREE MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------

                                                                             December 31, 1998              January 31, 1998
                                                                          ---------------------         ---------------------
<S>                                                                       <C>                           <C>
Revenues:
   Product sales, pipeline tariffs, terminal
       and storage fees, marketing fees and
       natural gas gathering and processing fees                          $         741,300,100                   470,731,798
 
Costs and expenses:
   Product costs and direct
       operating expenses                                                           721,770,859                   460,141,569
   General and administrative                                                         8,135,002                     3,736,259
   Depreciation and amortization                                                      4,128,018                     2,229,583
                                                                          ---------------------         ---------------------
                                                                                    734,033,879                   466,107,411
                                                                          ---------------------         ---------------------
 
            Operating income                                                          7,266,221                     4,624,387
 
Other income (expenses):
   Dividend income                                                                     339,361                             -
   Interest income                                                                      381,729                       484,154
   Interest expense                                                                  (7,175,000)                   (2,166,204)
   Other financing costs                                                             (1,281,981)                     (124,316)
                                                                          ---------------------         ---------------------
                                                                                     (7,735,891)                   (1,806,366)
                                                                          ---------------------         ---------------------
 
            Earnings (loss) before income taxes                                        (469,670)                    2,818,021
 
Income tax benefit (expense)                                                            178,201                    (1,100,000)
                                                                          ---------------------         --------------------- 
            Net earnings (loss)                                           $            (291,469)                    1,718,021
                                                                          =====================         =====================
 
 
Weighted average common
     shares outstanding:
            Basic                                                                    28,975,791                    25,918,870
                                                                          =====================         =====================
            Diluted                                                                  28,975,791                    26,685,256
                                                                          =====================         =====================
 
Earnings (loss) per common share
            Basic                                                         $               (0.01)                         0.07
                                                                          =====================         =====================
            Diluted                                                       $               (0.01)                         0.06
                                                                          =====================         =====================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

Consolidated Statements of Operations

SIX MONTHS ENDED DECEMBER 31, 1998 AND SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------

                                                                             December 31, 1998              January 31, 1998
                                                                          ---------------------         ---------------------
<S>                                                                       <C>                           <C>   
Revenues:
   Product sales, pipeline tariffs, terminal
          and storage fees, marketing fees and
          natural gas gathering and processing fees                       $       1,204,421,083                 1,015,831,854
 
Costs and expenses:
   Product costs and direct
          operating expenses                                                      1,171,760,907                   995,292,593
   General and administrative                                                        12,903,106                     6,876,917
   Depreciation and amortization                                                      6,920,537                     4,042,731
                                                                          ---------------------         ---------------------
                                                                                  1,191,584,550                 1,006,212,241
                                                                          ---------------------         ---------------------
 
            Operating income                                                         12,836,533                     9,619,613
 
Other income (expenses):
   Dividend income                                                                      339,361                             -
   Interest income                                                                      759,038                     1,064,828
   Interest expense                                                                  (9,650,264)                   (3,734,981)
   Other financing costs                                                             (1,490,534)                     (263,967)
                                                                          ---------------------         ---------------------
                                                                                    (10,042,399)                   (2,934,120)
                                                                          ---------------------         ---------------------
 
            Earnings before income taxes                                              2,794,134                     6,685,493
 
   Income tax expense                                                                 1,062,000                     2,570,000
                                                                          ---------------------         --------------------- 

            Net earnings                                                  $           1,732,134                     4,115,493
                                                                          =====================         =====================
 
 
Weighted average common
   shares outstanding:
            Basic                                                                    27,469,391                    25,899,929
                                                                          =====================         =====================
            Diluted                                                                  28,201,262                    26,696,089
                                                                          =====================         =====================
 
Earnings per common share
            Basic                                                         $                0.06                          0.16
                                                                          =====================         =====================
            Diluted                                                       $                0.06                          0.15
                                                                          =====================         =====================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEAR ENDED APRIL 30, 1998, TWO MONTHS ENDED JUNE 30, 1998 AND
SIX MONTHS ENDED DECEMBER 31, 1998 (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                       Capital in
                                         Common        excess of          Unearned        Retained
                                         stock         par value        Compensation      earnings           Total
                                      -----------     ------------    ----------------   ----------      -------------     
<S>                                   <C>             <C>             <C>               <C>              <C>  
BALANCE AT APRIL 30, 1997             $ 257,947       134,843,884                 -       3,869,910       138,971,741
 
Common stock issued for
   options exercised                        922           406,404                 -               -           407,326
Tax benefit arising from
   options exercised                          -           583,000                 -               -           583,000
Costs related to issuance of
   common stock                               -           (53,863)                -               -           (53,863)
Unearned compensation
   related to restricted
   stock awards                             560           938,440          (939,000)              -                 -
Amortization of unearned
   compensation                               -                 -           258,469               -           258,469
Net earnings                                  -                 -                 -       7,637,630         7,637,630
                                      -----------     ------------    ----------------   -----------     -------------
 
BALANCE AT APRIL 30, 1998               259,429       136,717,865          (680,531)     11,507,540       147,804,303
 
Common stock issued for
   options exercised                         88            36,652                 -               -            36,740
Common stock issued for
   services rendered                         17            25,483                 -               -            25,500
Amortization of unearned
   compensation                               -                 -            62,183               -            62,183
Net (loss)                                    -                 -                 -      (2,662,901)       (2,662,901)
                                      -----------     ------------    ----------------   -----------     -------------
 
BALANCE AT JUNE 30, 1998                259,534       136,780,000          (618,348)      8,844,639       145,265,825
 
Common stock issued for
   options exercised                         68            32,131                 -               -            32,199
Common stock issued for
   services rendered                         65            93,373                 -               -            93,438
Unearned compensation related
   to restricted stock awards               120           161,880          (162,000)              -                 -
Amortization of unearned
   compensation                               -                 -           190,906               -           190,906
Common stock issued in
   acquisition of
   Louis Dreyfus Energy
   Corp.  (LDEC)                         45,000        60,390,000                 -               -        60,435,000
Common stock repurchased
   and retired                              (82)         (123,328)                -               -          (123,410)
Net earnings                                  -                 -                 -       1,732,134         1,732,134
                                      -----------     ------------    ---------------   ------------     -------------      
 
BALANCE AT DECEMBER 31, 1998          $ 304,705       197,334,056          (589,442)     10,576,773       207,626,092
                                      ===========     ============    ===============   ============     ============= 
</TABLE>

See accompanying notes to consolidated financial statements.

                                       7
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED DECEMBER 31, 1998 AND SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 December 31, 1998     January 31, 1998
                                                                 -----------------     ----------------
<S>                                                              <C>                   <C> 
Cash flows from operating activities:
  Net earnings                                                     $   1,732,134            4,115,493    
  Adjustments to reconcile net earnings to net                                                           
   cash provided by operating activities:                                                                
    Depreciation and amortization                                      6,920,537            4,042,731    
    Deferred tax expense                                                 809,943            2,176,000    
    Loss on disposition of assets                                         14,320                3,060    
    Amortization of unearned compensation                                190,906              152,543    
    Amortization of deferred debt issuance costs                       1,057,922              195,783    
    Changes in operating assets and liabilities,                                                         
     net of noncash items and acquisitions:                                                              
      Trade accounts receivable                                       10,351,173           15,165,240    
      Inventories                                                    (84,135,307)         (10,138,855)   
      Prepaid expenses and other                                      (2,433,768)            (999,279)   
      Trade accounts payable                                          33,152,054          (10,838,846)   
      Inventory due under exchange  agreements                         1,303,235           (2,622,971)    
      Excise taxes payable and other
       accrued liabilities                                             5,773,464              304,127       
                                                                   -------------        -------------
        Net cash provided (used) by operating activities             (25,263,387)           1,555,026       
                                                                   -------------        ------------- 
Cash flows from investing activities:                                                                       
 Purchases of property, plant and equipment                          (40,223,996)         (47,765,104)      
  Acquisition of LDEC                                               (293,056,539)                   -       
  Investment in West Shore Pipe Line Company                         (29,285,117)                   -       
 Proceeds from sale of assets                                                  -               22,845       
  Cash received in connection with acquisition                                 -              906,267       
  Costs related to acquisition                                                 -             (130,755)      
  Decrease (increase) in other assets, net                              (251,763)            (820,753)      
                                                                   -------------        -------------
        Net cash (used) by investing activities                     (362,817,415)         (47,787,500)      
                                                                   -------------        -------------
Cash flows from financing activities:                                                                       
  Borrowings of long-term debt, net                                  399,880,200           45,527,757       
  Deferred debt issuance costs                                        (9,423,328)             (13,024)      
  Common stock repurchased and retired                                  (123,410)                   -       
  Common stock issued for options exercised                               32,199              300,376       
  Costs related to issuance of common stock                                    -              (26,500)      
                                                                   -------------        -------------
         Net cash provided by financing activities                   390,365,661           45,788,609       
                                                                   -------------        -------------
        Increase (decrease) in cash and cash equivalents               2,284,859             (443,865)      
                                                                                                            
Cash and cash equivalents at beginning of period                      27,215,374           41,265,879       
                                                                   -------------        ------------- 
                                                                                                            
Cash and cash equivalents at end of period                         $  29,500,233           40,822,014       
                                                                   =============        =============
</TABLE>
 
See accompanying notes to consolidated financial statements.

                                       8
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

SIX MONTHS ENDED DECEMBER 31, 1998 AND SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 December 31, 1998     January 31, 1998
                                                                 -----------------     ----------------
<S>                                                              <C>                   <C> 
Supplemental disclosures of cash flow information:
 
Acquisition of LDEC
 
Fair value of assets acquired                                      $  456,989,523                  -      
Fair value of liabilities assumed                                    (103,497,984)                 -      
                                                                   --------------        -------------          
                                                                      353,491,539                  -      
                                                                                                            
Fair value of common stock issued                                     (60,435,000)                 -      
                                                                   --------------        -------------          
                                                                                                            
Cash paid in acquisition                                           $  293,056,539                  -      
                                                                   ==============        =============          
 
Cash received in connection with acquisition
  included in assets acquired                                      $            -                  -
                                                                   ==============        =============
</TABLE>
 
See accompanying notes to consolidated financial statements.

                                       9
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1998
--------------------------------------------------------------------------------

(1) BASIS OF PRESENTATION

    The consolidated financial statements included in this Form 10-Q have been
    prepared by TransMontaigne Inc. ("TransMontaigne") without audit pursuant to
    the rules and regulations of the Securities and Exchange Commission.
    Accordingly, these statements reflect adjustments (consisting only of normal
    recurring entries) which are, in the opinion of TransMontaigne management,
    necessary for a fair statement of the financial results for the interim
    periods.  Certain information and notes normally included in financial
    statements prepared in accordance with generally accepted accounting
    principles have been condensed or omitted pursuant to such rules and
    regulations, although TransMontaigne believes that the disclosures are
    adequate to make the information presented not misleading.  These
    consolidated financial statements should be read in conjunction with the
    financial statements and related notes, together with management's
    discussion and analysis of financial condition and results of operations,
    included in TransMontaigne's Annual Report on Form 10-K for the year ended
    April 30, 1998.

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires TransMontaigne management to make
    estimates and assumptions that affect the reported amounts of assets and
    liabilities at the date of the financial statements and the reported amounts
    of revenues and expenses during the reporting period. Changes in these
    estimates and assumptions will occur as a result of the passage of time and
    the occurrence of future events, and actual results will differ from the
    estimates.

    "TransMontaigne" is used as a collective reference to TransMontaigne Inc.
    and its subsidiaries and affiliates.  The businesses of TransMontaigne are
    conducted by the subsidiaries and affiliates whose operations are managed by
    their respective officers.

                                       10
<PAGE>
 
    In August 1998, the Board of Directors of TransMontaigne voted to change
    TransMontaigne's fiscal year end from April 30 to June 30, to be effective
    June 30, 1998.  This new fiscal year end will allow TransMontaigne to
    conform to the predominant calendar quarterly reporting periods used in its
    industry.

(2) ACQUISITIONS

    On October 30, 1998, TransMontaigne, through a wholly-owned subsidiary,
    TransMontaigne Product Services Inc. ("TPSI"), acquired all of the common
    stock of Louis Dreyfus Energy Corp. ("LDEC") for approximately $161,000,000,
    including $100,565,000 cash and 4.5 million shares of TransMontaigne common
    stock valued at $60,435,000, plus working capital of $192,492,000. The LDEC
    acquisition included 24 refined petroleum products terminal and storage
    facilities, of which 7 are wholly owned and 17 are owned jointly with BP Oil
    Company, together with its supply, distribution and marketing business.
    These facilities are located in 9 states in the Southern and Eastern regions
    of the United States; have approximately 4.2 million barrels of
    TransMontaigne owned storage capacity; and are supplied primarily by the
    Colonial and Plantation pipeline systems. LDEC's supply, distribution and
    marketing business includes over 350 services supply/exchange points
    nationwide and handles annually in excess of 85 million barrels of refined
    petroleum products. The purchase price was established in arms-length
    negotiation between the managements of TransMontaigne and LDEC. The cash
    component of the purchase price and the net working capital acquired were
    funded by an advance from TransMontaigne's $500,000,000 credit facility. The
    transaction was accounted for as a purchase. As of December 31, 1998 the
    consolidated financial statements include preliminary allocations of the
    aggregate purchase price to the assets acquired and liabilities assumed
    based on their estimated fair values as determined by TransMontaigne.
    Adjustments to the preliminary purchase price allocations may be necessary
    based upon the completion of an independent appraisal of the assets
    acquired. Subsequent to closing the acquisition, the LDEC name was changed
    to TransMontaigne Product Services East Inc.

    On September 18, 1998, TransMontaigne, through a wholly-owned subsidiary,
    TransMontaigne Pipeline Inc. ("TPI"), acquired for $29,219,000 cash the
    15.38% common stock interest in 

                                       11
<PAGE>
 
    West Shore Pipe Line Company ("West Shore") owned by Atlantic Richfield
    Company. Effective December 31, 1998 TransMontaigne acquired for $5,488,000
    cash an additional 4.11% common stock interest in West Shore owned by
    Equilon Pipeline Company, LLC and for $1,186,000 cash an additional .89%
    common stock interest in West Shore owned by Texaco Transportation and
    Trading Inc., both of which transactions closed on January 7, 1999. West
    Shore owns a 600-mile common carrier petroleum products pipeline system
    which operates between the Chicago refining corridor locations of East
    Chicago, Indiana; Blue Island, Joliet and Lemont, Illinois; north through
    metropolitan Chicago; along the western edge of Lake Michigan to Milwaukee
    and Green Bay, Wisconsin; and west to Rockford and Peru, Illinois, and
    Madison, Wisconsin. The pipeline serves approximately 55 locations,
    including 4 refineries, the Chicago-O'Hare and Milwaukee airports, and 49
    refined petroleum products terminals in the Chicago, Illinois area and the
    upper Mid-West region of the United States. With a 20.38% common stock
    interest, TransMontaigne is the largest owner of West Shore, whose ownership
    as of December 31, 1998 also includes Citgo, Marathon, Equilon, Texaco,
    Amoco, Midwest (Union Oil), Mobil and Exxon.

    On July 29, 1998, TransMontaigne, through a wholly-owned subsidiary,
    TransMontaigne Terminaling Inc. ("TTI"), acquired all of the common stock of
    Statia Terminals Southwest, Inc. ("Southwest Terminal") for $6,500,000 cash.
    The acquisition included terminaling, storage and loading facilities for
    petroleum products, chemicals and other bulk liquids at the Port of
    Brownsville, Texas with over 1.6 million barrels of tank storage, 12 truck
    rack loading bays, connections to barge and tanker loading facilities and
    the exclusive use of 5 railroad spur lines with a total of 32 railroad car
    loading spots. Southwest Terminal was merged into TTI effective September
    30, 1998. The cost of this acquisition has been allocated to the terminal
    facilities and other related assets acquired and liabilities assumed based
    on their estimated fair market value as determined by TransMontaigne. The
    transaction was accounted for as a purchase.

    On November 25, 1997, TransMontaigne, through a wholly-owned subsidiary,
    TTI, acquired for $32,000,000 ($31,458,000 cash plus assumption of
    outstanding bank debt of approximately $542,000) the common stock of 17
    corporations, known as the "ITAPCO Terminal Corporations", and certain
    related property and property interests. The acquisition included 17

                                       12
<PAGE>
 
    storage and distribution terminals located in 8 states having total tankage
    capacity in excess of 3.3 million barrels, handling primarily refined
    petroleum products, chemicals and other bulk liquids together with the
    related operations of the terminals and certain other assets. The ITAPCO
    Corporations were merged into TTI effective December 1, 1997.  The cost of
    the ITAPCO Terminal Corporations has been allocated to the terminal
    facilities acquired and to the other related assets acquired and liabilities
    assumed based on their estimated fair market value as determined by
    TransMontaigne.  The transaction was accounted for as a purchase.

    On December 18, 1996, TransMontaigne, through a wholly-owned subsidiary,
    Bear Paw Energy Inc. ("BPEI"), acquired the Grasslands natural gas
    gathering, processing, treating and fractionation system (the "Grasslands
    Facilities") for approximately $71,000,000 cash. The Grasslands Facilities
    are strategically located between TransMontaigne's Marmarth facility in
    southwestern North Dakota, its Baker facility in eastern Montana and its
    Lignite facility in northern North Dakota. TransMontaigne has natural gas
    gathering facilities covering the eastern corridor of Montana and the
    western quarter of North Dakota, from the Canadian border to the South
    Dakota border, which enables TransMontaigne to provide a complete service
    package to North Dakota and Montana producers as well as to end-users of
    natural gas liquids ("NGL") and natural gas.

                                       13
<PAGE>
 
    The following summarized unaudited pro forma results of operations assumes
    that the acquisition of the ITAPCO Terminal Corporations and of LDEC
    occurred as of August 1, 1997 and combines the historical results of
    operations of TransMontaigne for the three months and six months ended
    December 31, 1998 and January 31, 1998 with the pro forma historical results
    of operations of the ITAPCO Terminal Corporations and of LDEC for the three
    months and six months ended December 31, 1998 and January 31, 1998. The
    unaudited pro forma results of operations are not necessarily indicative of
    the results of operations which would actually have occurred if the ITAPCO
    Terminal Corporations and LDEC had been acquired as of August 1, 1997, or
    which will be attained in the future.

<TABLE>
<CAPTION>
                                             Three Months Ended                                      Six Months Ended
                                ------------------------------------------------   -----------------------------------------------
                                    December 31, 1998            January 31,           December 31, 1998           January 31,    
                                           1998                      1998                    1998                     1998        
                                -----------------------    ---------------------   ----------------------   ----------------------
                                       (Pro forma)               (Pro forma)              (Pro forma)              (Pro forma)    
                                -----------------------    ---------------------   ----------------------   ----------------------
<S>                          <C>                           <C>                     <C>                      <C>   
Revenues                     $              987,659,000            1,058,494,000            2,054,553,000            2,054,496,000
                                =======================    =====================   ======================   ======================
                                                                                                                                  
Net earnings (loss)          $                 (383,000)                 195,000                3,697,000                6,740,000
                                =======================    =====================   ======================   ======================
                                                                                                                                  
Earnings (loss) per common                                                                                                        
 share:                                                                                                                           
          Basic              $                    (0.01)                    0.01                     0.12                     0.22
                                =======================    =====================   ======================   ======================
          Diluted            $                    (0.01)                    0.01                     0.12                     0.22
                                =======================    =====================   ======================   ======================
</TABLE>

                                       14
<PAGE>
 
(3) INVENTORY RISK MANAGEMENT

    TransMontaigne manages inventory to maximize its value and minimize risk by
    utilizing risk and portfolio management disciplines including certain
    hedging transactions, forward purchases and sales, swaps and other financial
    instruments to manage market exposure.

    TransMontaigne's refined petroleum products inventory consists primarily of
    gasoline and distillates, the majority of which is held for sale or trade in
    the ordinary course of business.  A portion of this inventory represents
    line fill and tank bottoms; is required to be held for operating balances in
    the conduct of TransMontaigne's daily supply, distribution and marketing
    activities; and is maintained both in tanks and pipelines owned by
    TransMontaigne and pipelines owned by third parties. NGL and residue natural
    gas inventories are not significant.

    TransMontaigne regularly engages in the trading of futures contracts in the
    cash markets and on the New York Mercantile Exchange ("NYMEX").  The change
    in market value of NYMEX-traded futures contracts requires daily cash
    settlements in margin accounts with brokers.  NYMEX future contracts are
    guaranteed by the NYMEX and have nominal credit risk.  TransMontaigne is
    exposed to credit risk in the event the counterparties to other third party
    agreements are not able to perform their contractual obligations.

    Following the acquisition of LDEC on October 30, 1998, TransMontaigne has
    continued the separate inventory accounting methods, procedures and
    policies, and the related management of the risks associated with
    fluctuations in the price of refined petroleum products and purchase and
    sales commitments, which had been previously utilized by TPSI (renamed TPSI
    - Midwest) and by LDEC (renamed TPSI - East).

    TPSI - Midwest selectively enters into futures contracts which are
    designated as hedges of the products purchased or sold. Hedging gains and
    losses are recognized and recorded in operations when the related inventory
    is sold. TPSI - Midwest inventory is recorded at the lower of last-in, 
    first-out ("LIFO") cost or market. At December 31, 1998, the market value of
    the TPSI - Midwest inventory was approximately $20,800,000 less than its
    LIFO carrying cost.

                                      15
<PAGE>
 
    TPSI - Midwest policy is to defer at interim reporting dates recognition of
    lower-of-cost or market adjustment to inventory due to price declines,
    unless the price declines are not expected to be restored by its June 30
    fiscal year end. TransMontaigne has reviewed its inventory position at
    December 31, 1998 and, considering the current and prospective impact of the
    price declines in refined petroleum products due to market conditions,
    believes that a portion of the price declines may not be temporary and
    restored by June 30, 1999. As a result, a non-cash lower-of-cost or market
    inventory write-down adjustment of $8,600,000 was recognized and charged to
    product costs as of December 31, 1998. Inventory risk management strategies
    undertaken by TransMontaigne subsequent to December 31, 1998 are anticipated
    to cause the balance of the excess inventory carrying cost of $12,200,000 to
    be restored by June 30, 1999. The status of the excess inventory carrying
    cost will be monitored by TransMontaigne and further adjustment, if
    required, will be recognized at March 31, 1999.

    TPSI - East inventory price risk is managed on an aggregate portfolio basis.
    The net of physical inventory, forward sales commitments and forward
    purchase commitments are generally hedged with NYMEX traded futures
    contracts.  TPSI - East values the aggregate portfolio using the mark to
    market inventory accounting method with all changes in market values
    recognized and recorded in operations.

    TPSI - Midwest, in connection with its supply, distribution and marketing
    activities, had outstanding NYMEX and cash futures contracts to sell
    5,130,000 barrels of product and outstanding NYMEX and cash futures
    contracts to purchase 5,130,000 barrels of product at December 31, 1998; and
    outstanding NYMEX and cash futures contracts to sell 3,950,000 barrels of
    product and outstanding NYMEX and cash futures contracts to purchase
    3,950,000 barrels of product at January 31, 1998.  Net unrealized gains of
    $2,066,000 at December 31, 1998 and $1,523,000 at January 31, 1998,
    respectively, relating to these outstanding NYMEX and cash futures contracts
    have been recognized in operations.

    TPSI - East, in connection with its supply, distribution and marketing
    activities, had outstanding NYMEX futures contracts to sell 33,147,000
    barrels of product and outstanding NYMEX futures contracts to purchase
    30,480,000 barrels of product at December 31, 1998. Net

                                       16
<PAGE>
 
    unrealized gains of $2,103,000 relating to these outstanding futures
    contracts for the two months ended December 31, 1998 have been recognized in
    operations.

    TPSI - East also had outstanding cash contracts to sell 16,478,000 barrels
    of product and outstanding cash contracts to purchase 11,680,000 barrels at
    December 31, 1998. The decrease in market values of product from October 30,
    1998 to December 31, 1998 resulted in an increase in unrealized gains on
    these cash contracts of $19,640,000 during the two month period, which
    unrealized gains have been offset by a reduction in the market value of
    physical inventory held in the portfolio since October 30, 1998. The
    discounted present value of these contracts was $68,385,000 on December 31,
    1998 and is included in inventory on the Balance Sheet. TransMontaigne
    believes that the counterparty risk of nonperformance with respect to these
    contracts is minimal.

    Contractual commitments are subject to risks including market value
    fluctuations as well as counterparty credit and liquidity risk.
    TransMontaigne has established procedures to continually monitor these
    contracts in order to minimize credit risk, including the establishment and
    review of credit limits, margin requirements, master netting arrangements,
    letters of credit and other guarantees.

(4) INCOME TAXES
 
    TransMontaigne utilizes the asset and liability method of accounting for
    income taxes, as prescribed by Statement of Financial Accounting Standards
    No. 109.  Under this method, deferred tax assets and liabilities are
    recognized for the future tax consequences attributable to differences
    between the financial statement carrying amounts of existing assets and
    liabilities and their respective tax bases.  Deferred tax assets and
    liabilities are measured using enacted tax rates expected to apply in the
    years in which these temporary differences are expected to be recovered or
    settled.  Changes in tax rates are recognized in income in the period that
    includes the enactment date.

                                      17
<PAGE>
 
(5) BANK CREDIT FACILITY

    On October 30, 1998, TransMontaigne closed a $500,000,000 credit facility
    with BankBoston, N.A. The credit facility includes a 5 year $350,000,000
    revolving credit facility due December 31, 2003 and a 22 month $150,000,000
    term loan due June 30, 2000. Borrowings under this credit facility bear
    interest at an annual rate equal to the lender's Alternate Base Rate plus a
    margin subject to a Eurodollar Rate pricing option. The credit facility
    includes a $20,000,000 same day revolving swing line of credit under which
    advances may be drawn at an interest rate comparable to the Eurodollar Rate.
    The credit facility contains a negative pledge covenant and financial tests
    similar to the previous credit facility. The proceeds from the credit
    facility were used to fund the LDEC acquisition as well as to refinance
    existing bank debt and provide funds for future acquisitions and other
    general corporate purposes. The average interest rate at December 31, 1998
    was 7.36%.

    At December 31, 1998, TransMontaigne had advances of $449,875,000
    outstanding under the bank credit facility.  In addition, $1,300,000 of the
    facility was used to support a standby letter of credit to a bank to assist
    Lion Oil Company, a corporation in which TransMontaigne owns a net 18.04%
    interest, in obtaining financing.

(6) MASTER SHELF AGREEMENT

    In April 1997, TransMontaigne entered into a Master Shelf Agreement with an
    institutional lender which provides that the lender will agree to quote,
    from time to time, an interest rate at which the lender would be willing to
    purchase, on an uncommitted basis, up to $100,000,000 of TransMontaigne
    senior promissory notes which will mature in no more than 12 years, with an
    average life not in excess of 10 years.

    TransMontaigne sold to the lender, under the Master Shelf Agreement,
    $50,000,000 of 7.85% Senior Notes due April 17, 2003 in April 1997 and
    $25,000,000 of 7.22% Senior Notes due October 17, 2004 in December 1997, all
    of which were outstanding at December 31, 1998.

                                       18
<PAGE>
 
(7) SENIOR SUBORDINATED DEBENTURES

    In March 1991, TransMontaigne issued $4,000,000 of 12.75% senior
    subordinated debentures which are guaranteed by certain subsidiaries; are
    due December 15, 2000; are subject to a required redemption of $2,000,000 on
    December 15, 1999 and December 15, 2000, respectively; and may be prepaid
    prior to maturity at a premium.  In connection with the issuance of these
    debentures, TransMontaigne issued warrants to purchase 248,686 shares of
    common stock at $3.60 per share, through December 15, 2000.

(8) RESTRICTED STOCK

    TransMontaigne has a restricted stock plan that provides for awards of
    common stock to certain key employees, subject to forfeiture if employment
    terminates prior to the vesting dates.  The market value of shares awarded
    under the plan is recorded in stockholders' equity as unearned compensation.
    During the fiscal year ended April 30, 1998, the TransMontaigne Board of
    Directors approved the issuance of 56,000 shares to certain key employees.
    As of December  31, 1998, 5,600 shares had vested.  During the six months
    ended December 31, 1998, the TransMontaigne Board of Directors approved the
    issuance of an additional 12,000 shares to certain key employees.  Unearned
    compensation is amortized over the four year vesting period of the awards.
    Amortization of unearned compensation of $190,906 is included in general and
    administrative expense for the six months ended December 31, 1998.

(9) REPURCHASED STOCK
 
    In December 1998, TransMontaigne repurchased 8,200 shares of common stock
    previously issued for consulting services rendered in connection with the
    acquisition of certain terminaling facilities for $123,410.

                                       19
<PAGE>
 
(10) OPERATING BUSINESS SEGMENTS

     TransMontaigne's logistical petroleum services operating business segment
     relates to pipelining, terminaling and storing, marketing and supply and
     distribution of refined petroleum products, and the equity investment in
     West Shore. TransMontaigne's natural gas services operating business
     segment relates to gathering, processing, treating and marketing of NGL and
     residue gas. Corporate services relates to all of TransMontaigne's
     activities and assets which are not specifically identified with logistical
     petroleum and natural gas services, including cash and cash equivalents,
     the investment in Lion Oil Company and other assets.

     The refined petroleum products, chemicals and other bulk liquids operations
     related to the acquisitions of LDEC in October 1998, Southwest Terminal in
     July 1998 and the ITAPCO Terminal Corporations in November 1997 are
     included in the logistical petroleum services operating business segment.

                                       20
<PAGE>
 
     Information regarding TransMontaigne's operating business segments for the
     six months ended December 31, 1998 and for the six months ended January 31,
     1998 is summarized below:
<TABLE> 
<CAPTION> 
                                                             December 31, 1998            January 31, 1998
                                                           ---------------------       ---------------------- 
<S>                                                        <C>                       <C>                   
Revenues
 Logistical petroleum services                             $       1,177,197,286                  982,755,836
 Natural gas services                                                 27,223,797                   33,076,018
                                                           ---------------------       ----------------------  
                                                           $       1,204,421,083                1,015,831,854
                                                           =====================       ======================
Operating income (loss)
 Logistical petroleum services                             $          13,888,151                    6,648,049
 Natural gas services                                                  1,348,382                    3,571,564
 Corporate services                                                   (2,400,000)                    (600,000)
                                                           ---------------------       ----------------------
                                                           $          12,836,533                    9,619,613
                                                           =====================       ======================
Identifiable assets at the end of the period (net
 of accumulated depreciation)
 Logistical petroleum services                             $         782,251,058                  166,208,117
 Natural gas services                                                 93,205,380                   90,653,127
 Corporate services                                                   55,637,207                   66,725,739
                                                           ---------------------       ---------------------- 
                                                           $         931,093,645                  323,586,983
                                                           =====================       ======================
Depreciation and amortization
 Logistical petroleum services                             $           3,487,899                    1,216,698
 Natural gas services                                                  2,929,983                    2,561,849
 Corporate services                                                      502,655                      264,184
                                                           ---------------------       ---------------------- 
                                                           $           6,920,537                    4,042,731
                                                           =====================       ====================== 
Capital expenditures
 Logistical petroleum services                             $         232,298,339     (1)           39,376,423
 Natural gas services                                                  2,526,023                    7,330,030
 Corporate services                                                    2,292,634                    1,058,651
                                                           ---------------------       ---------------------- 
                                                           $         237,116,996                   47,765,104
                                                           =====================       ======================  
</TABLE> 
 
(1)  Includes $161,000,000 for the LDEC acquisition and $35,893,000 for the
acquisition of common stock in West Shore.

                                       21
<PAGE>
 
(11)  EARNINGS PER SHARE

      Earnings per share ("EPS") has been calculated based on the weighted
      average number of common shares outstanding for the period in accordance
      with the Statement of Financial Accounting Standards No. 128. The
      following tables reconcile the computation of basic EPS and diluted EPS
      for the three months and six months ended December 31, 1998 and three
      months and six months ended January 31, 1998.

<TABLE>
<CAPTION>
                            For the three months ended December 31, 1998        For the three months ended January 31, 1998
                          ------------------------------------------------    ----------------------------------------------
                             EARNINGS          
                              (LOSS)              SHARES           PER         EARNINGS          SHARES             PER 
                            (NUMERATOR)        (DENOMINATOR)      SHARE       (NUMERATOR)     (DENOMINATOR)        SHARE
                          ---------------     --------------   -----------    --------------  --------------    ------------
<S>                       <C>                 <C>              <C>            <C>             <C>               <C>
Basic EPS - Net
 earnings
 (loss) available to       
 common stockholders      $  (291,469)         28,975,791      $  (0.01)     $   1,718,021     25,918,870       $  0.07
                                                               =========                                        ======= 
 
Effect of Dilutive
  Securities:
     Stock options                  -                   -                                -        576,664
     Stock warrants                 -                   -                                -        189,722
                          ------------         ----------                    -------------     ----------               
Diluted EPS - Net
 earnings (loss) 
 available to
 common stockholders     
 and assumed conversions  $  (291,469)         28,975,791      $  (0.01)     $   1,718,021     26,685,256       $  0.06
                          ============         ==========      =========     =============     ==========       ======= 
</TABLE>
                                                                                
<TABLE>
<CAPTION>
                             For the six months ended December 31, 1998         For the six months ended January 31, 1998
                          ------------------------------------------------    ----------------------------------------------
                             EARNINGS          
                              (LOSS)              SHARES           PER         EARNINGS          SHARES             PER 
                            (NUMERATOR)        (DENOMINATOR)      SHARE       (NUMERATOR)     (DENOMINATOR)        SHARE
                          ---------------     --------------   -----------    --------------  --------------    ------------
<S>                       <C>                 <C>              <C>            <C>             <C>               <C>
Basic EPS - Net
 earnings available to            
 common stockholders      $  1,732,134        27,469,391        $   0.06        $  4,115,493       25,899.929        $   0.16 
                                                                ========                                             ========  
 
Effect of Dilutive
  Securities:
     Stock options                   -           548,026                                   -          602,265
     Stock warrants                  -           183,845                                   -          193,895
                          ------------        ----------                        ------------       ----------                  
   
Basic EPS - Net earnings
   available to common               
   stockholders and 
   assumed conversions    $  1,732,134        28,201,262        $   0.06        $  4,115,493       26,696,089        $   0.15
                          ============        ==========        ========        ============       ==========        ========  
</TABLE>
                                                                                
    Note:  Options to purchase 498,500 and 165,000 shares of common stock at
           $17.25 and $15.00 per share, respectively, were outstanding at
           December 31, 1998, but were not included in the computation of
           diluted EPS because the options' exercise price was greater than the
           average market price of the common shares during the three months and
           six months ended December 31, 1998 and the effect was anti-dilutive.

                                       22
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

     TransMontaigne provides a broad range of integrated transportation,
terminaling, supply, distribution, gathering, processing and marketing services
to producers, refiners, distributors, marketers and industrial end-users of
petroleum products, chemicals, other bulk liquids, natural gas and crude oil in
the downstream sector of the petroleum and chemical industries. TransMontaigne
is a holding company which conducts its operations through subsidiaries
primarily in the Mid-Continent and Rocky Mountain regions of the United States.
TransMontaigne does not explore for, or produce, crude oil or natural gas; does
not own crude oil or natural gas reserves; and does not own chemicals or other
bulk liquids inventory.

     TransMontaigne owns and operates refined petroleum products, chemicals,
other bulk liquids, crude oil and natural gas assets. TransMontaigne's refined
petroleum products, chemicals, other bulk liquids and crude oil assets consist
primarily of 3 pipeline systems with approximately 790 miles of pipeline and 59
terminal, storage and delivery facilities located in 19 states with a combined
tank storage capacity of approximately 15,000,000 barrels. TransMontaigne's
natural gas gathering and processing assets consist of 5 gathering and
processing systems in 3 states with combined throughput capacity of
approximately 94 million cubic feet per day and over 2,800 miles of pipelines.
TransMontaigne also extensively utilizes refined petroleum products common
carrier pipelines and terminals owned by third parties in order to increase
product volumes shipped, marketed and sold to and exchanged with customers in
other locations. Management believes that the use of all these facilities should
allow TransMontaigne to significantly expand its geographic service area and the
integrated logistical services it provides.

     The principal predecessor of TransMontaigne was formed in 1977. In April
1995, present management and certain institutional stockholders of
TransMontaigne acquired control of the predecessor through a merger in which the
name was changed to TransMontaigne Oil Company.

                                       23
<PAGE>
 
In June 1996, TransMontaigne and a publicly held corporation merged, with the
stockholders of TransMontaigne receiving approximately 93% of the stock of the
merged corporation. In August 1998, upon receiving shareholder approval, the
name TransMontaigne Oil Company was changed to TransMontaigne Inc.

     Since TransMontaigne's present management assumed control in April 1995,
TransMontaigne has raised approximately $117,000,000 in equity capital
($30,000,000 private placement in May 1995; $25,000,000 private placement in
March 1996; and $62,000,000 public offering in February 1997); established an
initial $130,000,000 working capital and acquisition revolving bank credit
facility in December 1996 which in April 1998 was increased to a $175,000,000
bank credit facility due December 31, 2002; and issued $50,000,000 of 7.85%
Senior Notes due April 17, 2003 in April 1997 and $25,000,000 of 7.22% Senior
Notes due October 17, 2004 in December 1997 to an institutional lender under a
$100,000,000 Master Shelf Agreement.

     On October 30, 1998, TransMontaigne closed a $500,000,000 credit facility
with BankBoston, N.A. The credit facility includes a 5 year $350,000,000
revolving credit facility due December 31, 2003 and a 22 month $150,000,000 term
loan due June 30, 2000. Borrowings under this credit facility bear interest at
an annual rate equal to the lender's Alternate Base Rate plus a margin subject
to a Eurodollar Rate pricing option. The credit facility includes a $20,000,000
same day revolving swing line of credit under which advances may be drawn at an
interest rate comparable to the Eurodollar Rate. The credit facility contains a
negative pledge covenant and financial compliance tests similar to the previous
credit facility. Credit facility proceeds were used to fund the LDEC acquisition
as well as to refinance existing bank debt and provide funds for future
acquisitions and other general corporate purposes.

ACQUISITIONS

     In December 1996, TransMontaigne acquired the Grasslands Facilities natural
gas gathering, processing, treating and fractionation system for approximately
$71,000,000 in cash and through December 31, 1998 has additionally invested
approximately $25,000,000 in improvements and expansion of the Grasslands
Facilities and other assets in its natural gas services business segment. 

                                       24
<PAGE>
 
The Grasslands Facilities are strategically located between TransMontaigne's
Marmarth facility in southwestern North Dakota, its Baker facility in eastern
Montana and its Lignite facility in northern North Dakota. TransMontaigne has
natural gas gathering facilities covering the eastern corridor of Montana and
the western quarter of North Dakota, from the Canadian border to the South
Dakota border, which enables TransMontaigne to provide a complete service
package to North Dakota and Montana producers as well as to end-users of NGL and
natural gas. The Grasslands Facilities contributed approximately 87% and 92% of
the total net operating margins of TransMontaigne's natural gas gathering and
processing operations during the six months ended December 31, 1998 and January
31, 1998, respectively.

     In November 1997, TransMontaigne acquired the common stock of the 17 ITAPCO
Terminal Corporations and certain related property and property interests. The
acquisition included 17 bulk liquid storage and distribution terminals located
in 8 states having total tankage capacity in excess of 3.3 million barrels,
handling primarily refined petroleum products, chemicals and other bulk liquids
together with the related operations of the terminals; and certain other assets.
The ITAPCO Terminal Corporations purchase price was $32,000,000 and was funded
by an advance of $22,000,000 from the TransMontaigne bank credit facility with
the balance from TransMontaigne cash reserves. Through December 31, 1998,
TransMontaigne has additionally invested approximately $3,900,000 in
improvements and expansion of the ITAPCO Terminal Corporations facilities. The
ITAPCO Terminal Corporations contributed approximately 45% and 43% of the total
net operating margins of the TransMontaigne terminal operations during the three
months and six months ended December 31, 1998, respectively.

     In July 1998, TransMontaigne acquired the Southwest Terminal for $6,500,000
cash. The acquisition included terminaling, storage and loading facilities for
petroleum products, chemicals and other bulk liquids at the Port of Brownsville,
Texas with over 1.65 million barrels of tank storage, 12 truck rack loading
bays, connections to barge and tanker loading facilities and the exclusive use
of 5 railroad spur lines with a total of 32 railroad car loading spots.

     In September 1998, TransMontaigne acquired for $29,219,000 cash the 15.38%
common stock interest in West Shore owned by Atlantic Richfield Company.
Effective December 31, 1998 

                                       25
<PAGE>
 
TransMontaigne acquired for $5,488,000 cash an additional 4.11% common stock
interest in West Shore owned by Equilon Pipeline Company, LLC and for $1,186,000
cash an additional .89% common stock interest in West Shore owned by Texaco
Transportation and Trading Inc., both of which transactions closed on January 7,
1999. West Shore owns a 600-mile common carrier petroleum products pipeline
system which operates between the Chicago refining corridor locations of East
Chicago, Indiana; Blue Island, Joliet and Lemont, Illinois; north through
metropolitan Chicago; along the western edge of Lake Michigan to Milwaukee and
Green Bay, Wisconsin; and west to Rockford and Peru, Illinois, and Madison,
Wisconsin. The pipeline serves approximately 55 locations, including 4
refineries, the Chicago-O'Hare and Milwaukee airports, and 49 refined petroleum
products terminals in the Chicago, Illinois area and the upper Mid-West region
of the United States. With a 20.38% common stock interest, TransMontaigne is the
largest owner of West Shore, whose ownership as of December 31, 1998 also
includes Citgo, Marathon, Equilon, Texaco, Amoco, Midwest (Union Oil), Mobil and
Exxon.

     In October 1998, TransMontaigne acquired all of the common stock of LDEC
for approximately $161,000,000, including $100,565,000 cash and 4.5 million
shares of TransMontaigne common stock valued at $60,435,000, plus working
capital of $192,492,000. The LDEC acquisition included 24 refined petroleum
products terminal and storage facilities, of which 7 are wholly owned and 17 are
owned jointly with BP Oil Company, together with its supply, distribution and
marketing business. These facilities are located in 9 states in the Southern and
Eastern regions of the United States; have approximately 4.2 million barrels of
TransMontaigne owned storage capacity; and are supplied primarily by the
Colonial and Plantation pipeline systems. LDEC's supply, distribution and
marketing business includes over 350 service supply/exchange points nationwide
and handles annually in excess of 85 million barrels of refined petroleum
products. Subsequent to closing, the name LDEC was changed to TransMontaigne
Product Services East Inc. LDEC is a major shipper on the Colonial pipeline
which connects the Houston ship channel and associated major refining complexes
to the New York Harbor which is the New York Mercantile Exchange ("NYMEX")
petroleum products delivery point. The cash component of the purchase price and
the net working capital acquired were funded by an advance from TransMontaigne's
$500,000,000 credit facility with BankBoston, N.A.

                                       26
<PAGE>
 
     TransMontaigne intends to continue to make strategic additions to and
expansions of its existing facilities in order to achieve greater regional
geographical presence, extend customer service opportunities, improve operating
efficiencies, increase cash flow, generate incremental net earnings and enhance
its competitive market position.

INVENTORY RISK MANAGEMENT

     TransMontaigne manages inventory to maximize its value and minimize risk by
utilizing risk and portfolio management disciplines including certain hedging
transactions, forward purchases and sales, swaps and other financial instruments
to manage market exposure.

     TransMontaigne's refined petroleum products inventory consists primarily of
gasoline and distillates, the majority of which is held for sale or trade in the
ordinary course of business. A portion of this inventory represents line fill
and tank bottoms; is required to be held for operating balances in the conduct
of TransMontaigne's daily supply, distribution and marketing activities; and is
maintained both in tanks and pipelines owned by TransMontaigne and pipelines
owned by third parties. Natural gas liquids and residue natural gas inventories
are not significant.

     TransMontaigne regularly engages in the trading of futures contracts in the
cash markets and on the NYMEX. The change in market value of NYMEX-traded
futures contracts requires daily cash settlements in margin accounts with
brokers. NYMEX future contracts are guaranteed by the NYMEX and have nominal
credit risk. TransMontaigne is exposed to credit risk in the event the
counterparties to other third party agreements are not able to perform their
contractual obligations.

     Following the acquisition of LDEC on October 30, 1998, TransMontaigne has
continued the separate inventory accounting methods, procedures and policies,
and the related management of the risks associated with fluctuations in the
price of refined petroleum products and purchase and sales commitments, which
had been previously utilized by TPSI (renamed TPSI - Midwest) and by LDEC
(renamed TPSI - East).

                                       27
<PAGE>
 
     TPSI - Midwest selectively enters into futures contracts which are
designated as hedges of the products purchased or sold. Hedging gains and losses
are recognized and recorded in operations when the related inventory is sold.
TPSI - Midwest inventory is recorded at the lower of last-in, first-out ("LIFO")
cost or market. At December 31, 1998, the market value of the TPSI -Midwest
inventory was approximately $20,800,000 less than its LIFO carrying cost. TPSI -
Midwest policy is to defer at interim reporting dates recognition of lower-of-
cost or market adjustment to inventory due to price declines, unless the price
declines are not expected to be restored by its June 30 fiscal year end.
TransMontaigne has reviewed its inventory position at December 31, 1998 and,
considering the current and prospective impact of the price declines in refined
petroleum products due to market conditions, believes that a portion of the
price declines may not be temporary and restored by June 30, 1999. As a result,
a non-cash lower-of-cost or market inventory write-down adjustment of $8,600,000
was recognized and charged to product costs as of December 31, 1998. Inventory
risk management strategies undertaken by TransMontaigne subsequent to December
31, 1998 are anticipated to cause the balance of the excess inventory carrying
cost of $12,200,000 to be recovered by June 30, 1999. The status of the excess
inventory carrying cost will be monitored by TransMontaigne and further
adjustment, if required, will be recognized at March 31, 1999.

     TPSI - East inventory price risk is managed on an aggregate portfolio
basis. The net of physical inventory, forward sales commitments and forward
purchase commitments are generally hedged with NYMEX traded futures contracts.
TPSI - East values the aggregate portfolio using the mark to market inventory
accounting method with all changes in market values recognized and recorded in
operations.

     TPSI - Midwest, in connection with its supply, distribution and marketing
activities, had outstanding NYMEX and cash futures contracts to sell 5,130,000
barrels of product and outstanding NYMEX and cash futures contracts to purchase
5,130,000 barrels of product at December 31, 1998; and outstanding NYMEX and
cash futures contracts to sell 3,950,000 barrels of product and outstanding
NYMEX and cash futures contracts to purchase 3,950,000 barrels of product at
January 31, 1998. Net unrealized gains of $2,066,000 at December 31, 1998 and
$1,523,000 at January 31, 1998, respectively, relating to these outstanding
NYMEX and cash futures contracts have been recognized in operations.

                                      28
<PAGE>
 
     TPSI - East, in connection with its supply, distribution and marketing
activities, had outstanding NYMEX futures contracts to sell 33,147,000 barrels
of product and outstanding NYMEX futures contracts to purchase 30,480,000
barrels of product at December 31, 1998. Net unrealized gains of $2,103,000
relating to these outstanding futures contracts for the two months ended
December 31, 1998 have been recognized in operations.

     TPSI - East also had outstanding cash contracts to sell 16,478,000 barrels
of product and outstanding cash contracts to purchase 11,680,000 barrels at
December 31, 1998. The decrease in market values of product from October 30,
1998 to December 31, 1998 resulted in an increase in the discounted present
value of the unrealized gains on these cash contracts of $19,640,000 during the
two month period, which have been offset by a reduction in the market
value of physical inventory held in the portfolio since October 30, 1998. The
aggregate discounted present value of the unrealized gains on these contracts
was $68,385,000 on December 31, 1998 and is included in inventory on the Balance
Sheet. TransMontaigne believes that the counterparty risk of nonperformance with
respect to these contracts is minimal.

     Contractual commitments are subject to risks including market value
fluctuations as well as counterparty credit and liquidity risk. TransMontaigne
has established procedures to continually monitor these contracts in order to
minimize credit risk, including the establishment and review of credit limits,
margin requirements, master netting arrangements, letters of credit and other
guarantees.

                                       29
<PAGE>
 
INFORMATION REGARDING FORWARD LOOKING STATEMENTS

     This Form 10-Q includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.  Although TransMontaigne believes that its expectations
are based on reasonable assumptions, it can give no assurance that its goals
will be achieved.  Important factors which could cause actual results to differ
materially from those in the forward looking statements include:

     .    that TransMontaigne will continue to expand its business

     .    that TransMontaigne will generate net operating margins from high
          sales volumes

     .    that TransMontaigne will generate net operating margins affected by
          price volatility of products purchased and sold

     .    that TransMontaigne will enter into transactions with counterparties
          having the ability to meet their financial commitments to
          TransMontaigne

     .    that TransMontaigne will selectively and effectively hedge certain
          inventory positions

     .    that TransMontaigne will be required to recognize lower-of-cost or
          market write-downs of its inventories

     .    that TransMontaigne will incur unanticipated costs in complying with
          current and future environmental regulations

     .    that TransMontaigne will capitalize on the trend by other companies in
          the oil and gas industry to divest assets and outsource certain
          services

     .    that TransMontaigne will replace the supply of dedicated natural gas
          reserves gathered and processed by its facilities

     .    that TransMontaigne will generate working capital internally, or have
          the ability to access debt and equity resources, to meet its future
          capital requirements

     .    that TransMontaigne will achieve year 2000 compliance without
          incurring material costs adversely impacting its operating results.

                                       30
<PAGE>
 
RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Three Months         Three Months         Six Months           Six Months
                                                     Ended                Ended                Ended               Ended
                                               December 31, 1998     January 31, 1998    December 31, 1998    January 31, 1998
                                             --------------------  -------------------  -------------------  -----------------
<S>                                          <C>                   <C>                  <C>                  <C>  
PIPELINE OPERATIONS
   Volume (1)                                              5,648                4,365               12,364               9,093
   Revenues (2)                               $            3,381                3,194                7,865               6,374
   Net Operating Margin (2)                   $            1,781                1,724                4,607               3,425
   Margin per Gallon                          $           0.0075               0.0094               0.0089              0.0090
 
TERMINAL AND STORAGE OPERATIONS
   Volume (1)                               
      Refined petroleum products                       1,108,000              421,000            1,717,000             728,000
      Chemicals and other bulk liquids                     2,000               10,000                6,000              10,000
   Revenues (2)                             
      Refined petroleum products              $            6,818                3,110               10,947               5,344
      Chemicals and other bulk liquids        $            2,169                1,026                4,432               1,026
   Net Operating Margin (2)                   $            5,728                2,655                9,716               4,100
   Margin per Gallon                          $           0.0052               0.0062               0.0056              0.0056
                                              
PRODUCTS SUPPLY, DISTRIBUTION                 
AND MARKETING OPERATIONS                      
   Volume (1)                                          1,541,000              808,000            2,587,000           1,717,000
   Revenues (2)                               $          715,006              446,822            1,153,953             970,012
   Net Operating Margin (2)                   $            8,388                2,403               11,444               4,849
   Margin per Gallon                          $           0.0054               0.0030                .0044              0.0028
                                              
NATURAL GAS SERVICES OPERATIONS               
   Inlet Volume (3)                                        5,308                5,337               10,700              10,860
   NGL Production (3)                                     27,384               25,085               53,878              50,141
   Residue Production (3)                              4,272,379            5,054,379            8,653,566           9,304,701
   Revenues (2)                               $           13,926               16,580               27,224              33,076
   Net Operating Margin (2)                   $            3,632                3,808                6,893               8,165
                                              
TOTAL OPERATIONS                              
   Revenues (2)                               $          741,300              470,732            1,204,421           1,015,832
   Net Operating Margin (2)                   $           19,529               10,590               32,660              20,539
   Net Earnings (Loss) (2)                    $             (291)               1,718                1,732               4,115
</TABLE>

(1)  Pipeline volumes are expressed in thousands of barrels (42 gallons per
     barrel).  Terminal and storage and products supply and distribution volumes
     are expressed in thousands of gallons.
(2)  Revenues, net operating margins, and net earnings are expressed in
     thousands of dollars.  Net operating margin represents (a)  revenues less
     direct operating expenses for pipeline and terminal and storage operations;
     (b) revenues less cost of refined petroleum products purchased for products
     supply and distribution operations, and (c) revenues less cost of natural
     gas gathered, processed and sold and direct operating expenses for natural
     gas services operations.
(3)  Natural gas inlet volumes are expressed in million cubic feet; NGL
     production is expressed in thousands of gallons; and residue natural gas
     production is expressed in million British Thermal Units.

                                       31
<PAGE>
 
     Prior to the acquisition of the ITAPCO Terminal Corporations facilities in
November 1997 and the Grasslands Facilities in December 1996, TransMontaigne's
revenues were derived from the logistical petroleum services operating business
segment consisting primarily of transporting refined petroleum products (and to
a lesser extent crude oil) in pipelines; the storage and terminaling of refined
petroleum products; and the supply, distribution and marketing of refined
petroleum products. The storage and terminaling of chemicals and other bulk
liquids became a component of the logistical petroleum operating business
segment following the ITAPCO Terminal Corporations acquisition. Natural gas
services became a separate operating business segment with the acquisition of
the Grasslands Facilities.

     Pipeline revenues are based on the volume of refined petroleum products or
crude oil transported and the distance from the origin point to the delivery
point. TransMontaigne's interstate pipeline systems transport refined petroleum
products and their tariffs are regulated by the Federal Energy Regulatory
Commission (the "FERC"). TransMontaigne's intrastate pipeline transports crude
oil and its tariffs are not regulated by the FERC, but are regulated by the
Texas Railroad Commission.

     Terminal revenues are based on the volume of refined petroleum products
handled at TransMontaigne terminal loading racks, generally at a standard per
gallon rate. Terminal fees are not regulated. Storage fees are generally based
on a per barrel rate or tankage capacity committed and will vary with the
duration of the arrangement, the product stored and special handling
requirements, particularly when certain types of chemicals and other bulk
liquids are involved. Storage fees are not regulated.

     Direct operating expenses of pipeline and terminal and storage operations
include wages and employee benefits, utilities, communications, maintenance and
repairs, property taxes, rent, insurance, vehicle expenses, environmental
compliance costs, materials and supplies.

     Products supply, distribution and marketing logistical services revenues
and fees are generated from (a) significant volumes of bulk sales and exchanges
of refined petroleum products to major and large independent energy companies;
(b) wholesale distribution of refined petroleum products to 

                                       32
<PAGE>
 
jobbers and retailers; (c) regional and national industrial end-user and
commercial wholesale storage and forward sales marketing contracts of refined
petroleum products; and (d) tailored short and long-term fuel margin and risk
management logistical services arrangements to wholesale, retail and industrial
end-users. Bulk purchase and sale transactions in quantities of 25,000 barrels
to 50,000 barrels or more are common and are generally made at small margins.
Wholesale distribution of refined petroleum products is conducted from 59
proprietary and 150 non-proprietary truck loading terminal, storage and delivery
locations. Refined petroleum products storage and forward sales transactions
enable TransMontaigne to purchase refined petroleum products inventory, utilize
proprietary and leased tankage as well as line space controlled by
TransMontaigne in major common carrier pipelines to store the inventory and,
depending upon market conditions, to lock-in margins through sales in the
futures cash market or NYMEX contracts. Margin and risk management logistical
services provide both TransMontaigne's large and small volume customers an
assured, ratable and cost effective short or long-term delivered source of
refined petroleum product supply through proprietary pipelines and terminals as
well as non-proprietary pipeline, terminal, truck, rail and barge distribution
channels.

     Direct operating expenses of products supply, distribution and marketing
operations are primarily the cost of products sold and also include
transportation, storage, terminaling, wages and employee benefits and sales
commission expenses.

     Natural gas gathering and processing revenues are based on the inlet volume
of natural gas purchased from producers under both percentage of proceeds and
fee based arrangements. Natural gas is gathered and processed into NGL products,
principally propane, butane and natural gasoline. These products are transported
by truck or pipeline to storage facilities from which they are further
transported and marketed by TransMontaigne to wholesalers and end-users. Residue
natural gas is delivered to and marketed through connections with third-party
interstate natural gas pipelines.

     Direct operating expenses of natural gas gathering and processing
operations include wages and employee benefits, utilities, maintenance and
repairs, property taxes, rent, insurance, vehicle expenses, environmental
compliance costs, material and supplies.

                                       33
<PAGE>
 
THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO

THREE MONTHS ENDED JANUARY 31, 1998

     In August 1998, TransMontaigne elected to change its fiscal year end to
June 30.  The management discussion which follows compares the three months
ended December 31, 1998 to the three months ended January 31, 1998.
TransMontaigne did not recast historical financial information to present the
three months ended December 31, 1997 since the financial reporting systems in
place at that time included certain procedures which were completed only on a
quarterly basis.  Accordingly, it is impractical to recast this financial
information.

     The net operating margin from pipeline operations for the three months
ended December 31, 1998 was $1,781,000 compared to $1,724,000 for the three
months ended January 31, 1998, an increase of 3%, or $57,000.  The margin per
gallon for the three months ended December 31, 1998 of $.0075 decreased 20%, or
$.0019.  Pipeline volumes increased 29% and revenues increased 6%, which were
partially offset by increased operating costs due to incremental power costs
attributable to additional thruput volumes and increased maintenance and right
of way clearing costs.

     The net operating margin from terminal and storage operations for the three
months ended December 31, 1998 was $5,728,000 compared to $2,655,000 for the
three months ended January 31, 1998, an increase of 116%, or $3,073,000.  The
margin per gallon for the three months ended December 31, 1998 of $.0052
decreased 16%, or $.0010.  The increase in net operating margin resulted from a
significant increase in refined petroleum products volumes and revenues due to
the addition of the LDEC terminals acquired in October 1998, notwithstanding a
decrease in the small volumes of chemicals and other bulk liquids handled at a
terminal temporarily taken out of service.  These revenue increases were
partially offset by a 120% increase in terminal operating costs primarily
attributable to the LDEC terminals, the ITAPCO Terminal Corporations terminals
and expanded East Chicago and Mt. Vernon terminal operations.

     The net operating margin from products supply, distribution and marketing
operations for the three months ended December 31, 1998 was $8,388,000 compared
to $2,403,000 for the three months ended January 31, 1998, an increase of 249%,
or $5,985,000. Revenues were $715,006,000 

                                       34
<PAGE>
 
for the three months ended December 31, 1998 compared to $446,822,000 for the
three months ended January 31, 1998, an increase of 60%, or $268,184,000. These
increases were due to the addition of the LDEC operations which contributed
$15,401,000 net operating margin in November and December 1998 and a $0.019
margin per gallon. Net operating margin for the three months ended December 31,
1998 was impacted by an $8,600,000 charge to product costs for a non-cash lower-
of-cost or market inventory write-down adjustment which caused a $0.0056
decrease in margin per gallon.

     Overall, the increased products supply, distribution and marketing volume
contributed directly to the increases in pipeline, terminal and storage volumes.
By providing seamless integrated logistical services to customers through the
effective utilization of its proprietary pipeline, terminal and storage
facilities, and the facilities owned and operated by third parties, as well as
its significantly expanded product supply, distribution and marketing
capabilities, TransMontaigne's aggregate net operating margin from the
logistical petroleum services operating business segment was $15,897,000 for the
three months ended December 31, 1998 compared to $6,782,000 for the three months
ended January 31, 1998, an increase of $134%, or $9,115,000.

     The net operating margin from natural gas services operations for the three
months ended December 31, 1998 was $3,632,000 compared to $3,808,000 for the
three months ended January 31, 1998, a decrease of 5%, or $176,000.  Revenues
for the three months ended December 31, 1998 were $13,926,000 compared to
$16,580,000 for the three months ended January 31, 1998 a decrease of 16%, or
$2,654,000.  The net operating margin and revenues were attributable primarily
to the business activities of the Grasslands Facilities.  Net operating margin
and revenues during the three months ended December 31, 1998 were negatively
impacted by continued low NGL prices, primarily in propane, which was in near
record oversupply, and the adverse effect of weak crude oil prices,
notwithstanding an approximate 9% increase in NGL production.

     General and administrative expenses for the three months ended December 31,
1998 were $8,135,000 compared to $3,736,000 for the three months ended January
31, 1998, an increase of 118%, or $4,399,000.  The increase was due primarily to
additional personnel costs, related employee benefits, increased office lease
rentals, increased communication expenses and $1,500,000 

                                       35
<PAGE>
 
of expenses related to the relocation of TransMontaigne employees to the 
Atlanta-based LDEC operations. These increases were directly attributable to the
continued expansion of TransMontaigne's integrated logistical petroleum services
and to the acquisition and operations of LDEC and the ITAPCO Terminal
Corporations.

     Other income for the three months ended December 31, 1998 included a
dividend from West Shore of $339,000 and interest income of $382,000 compared to
$484,000 for the three months ended January 31, 1998, a decrease of 21%, or
$102,000.  The decrease in interest income was due primarily to the decrease in
interest bearing cash balances held for future investments.

     Interest expense represents interest on the TransMontaigne credit facility
borrowings and senior promissory notes which were used primarily to finance the
acquisitions of LDEC, West Shore, Southwest Terminal, the ITAPCO Terminal
Corporations in November, 1997 and Grasslands Facilities in December, 1996,
other continuing capital expenditures and working capital to carry inventory and
accounts receivable.  Also included is interest on the TransMontaigne senior
subordinated debentures.  Other financing costs include commitment fees,
amendment fees and amortization of debt acquisition costs paid in connection
with the credit facility.  Interest expense and other financing costs during the
three months ended December 31, 1998 amounted to $8,457,000 compared to
$2,291,000 during the three months ended January 31, 1998, an increase of 269%,
or $6,166,000.  The increased interest expense of $5,009,000 was due to an
increase in average outstanding debt primarily to fund acquisitions.  Other
financing costs increased $1,158,000 largely due to increased amortization of
costs incurred in securing the new $500,000,000 credit facility with BankBoston,
N.A. and additional costs associated with amending the Master Shelf Agreement.

     Loss before income taxes for the three months ended December 31, 1998 was
$470,000, compared to earnings before income taxes of $2,818,000 for the three
months ended January 31, 1998, a decrease of 117%, or $3,288,000.  The decrease
in earnings before income taxes resulted from increased net operating margin
contributions from products supply, distribution and marketing operations
primarily from the LDEC acquisition offset by the $8,600,000 non-cash lower-of-
cost or market inventory write-down adjustment; terminal and storage operations
primarily from the LDEC acquisition and ITAPCO Terminal Corporations
acquisition; and pipeline operations.  Additional 

                                       36
<PAGE>
 
factors were increased general and administrative expenses; additional
depreciation attributable to the acquisitions of LDEC and the ITAPCO Terminal
Corporations and the expansion of natural gas services assets; and interest
expense primarily attributable to the financing of the LDEC, West Shore,
Southwest Terminal and ITAPCO Terminal Corporations acquisitions.
 
     Income tax benefit for the three months ended December 31, 1998 was
$178,000 and income tax expense of $1,100,000 for the three months ended January
31, 1998 were based upon an effective combined federal and state income tax rate
of 38%.

     Net loss for the three months ended December 31, 1998, after providing for
income tax benefit, was $291,000 compared to net earnings of $1,718,000 for the
three months ended January 31, 1998, a decrease of 117%, or $2,009,000. Loss per
share for the three months ended December 31, 1998 was $.01 basic and $.01
diluted based on 28,975,791 weighted average basic shares outstanding and
weighted average diluted shares outstanding compared to earnings per share of
$.07 basic and $.06 diluted for the three months ended January 31, 1998.

                                       37
<PAGE>
 
SIX MONTHS ENDED DECEMBER 31, 1998 COMPARED TO

SIX MONTHS ENDED JANUARY 31, 1998

     In August  1998, TransMontaigne elected to change its fiscal year end to
June 30.  The management discussion that follows compares the six months ended
December 31, 1998 to the six months ended January 31, 1998.  TransMontaigne did
not recast historical financial information to present the six months ended
December 31, 1997 because the financial reporting systems in place at that time
included certain procedures which were completed only on a quarterly basis.
Accordingly, it is impractical to recast this financial information.

     The net operating margin from pipeline operations for the six months ended
December 31, 1998 was $4,607,000 compared to $3,425,000 for the six months ended
January 31, 1998, an increase of 35%, or $1,182,000.  The margin per gallon for
the six months ended December 31, 1998 of $.0089 decreased 1%, or $.0001.
Pipeline volumes increased 36% and revenues increased 23%, which were partially
offset by increased operating costs due to incremental power costs attributable
to additional thruput volumes and increased maintenance and right of way
clearing costs.

     The net operating margin from terminal and storage operations for the six
months ended December 31, 1998 was $9,716,000 compared to $4,100,000 for the six
months ended January 31, 1998, an increase of 137%, or $5,616,000.  The margin
per gallon for the six months ended December 31, 1998 of $.0056 remained
constant.  The increase in net operating margin resulted from a significant
increase in refined petroleum products volumes handled and revenues due to the
addition of the LDEC terminals acquired in October 1998, notwithstanding a
decrease in the small volumes of chemicals and other bulk liquids handled at a
terminal temporarily taken out of service.  These revenue increases were
partially offset by a 150% increase in terminal operating costs primarily
attributable to the LDEC terminals, the ITAPCO Terminal Corporations terminals
and expanded East Chicago and Mt. Vernon terminal operations.

     The net operating margin from products supply, distribution and marketing
operations for the six months ended December 31, 1998 was $11,444,000 compared
to $4,849,000 for the six months ended January 31, 1998, an increase of 136%, or
$6,595,000. Revenues were $1,153,953,000 for 

                                       38
<PAGE>
 
the six months ended December 31, 1998 compared to $970,012,000 for the six
months ended January 31, 1998, an increase of 19%, or $183,941,000. These
increases were due to the addition of the LDEC operations which contributed
$15,401,000 net operating margin in November and December 1998 and a $0.019
margin per gallon. Net operating margin for the six months ended December 31,
1998 was impacted by an $8,600,000 charge to product costs for a non-cash lower-
of-cost or market inventory write-down adjustment which caused a $0.0033
decrease in margin per gallon.

     Overall, the increased products supply, distribution and marketing volume
contributed directly to the increases in pipeline, terminal and storage volumes.
By providing seamless integrated logistical services to customers through the
effective utilization of its proprietary pipeline, terminal and storage
facilities, and the facilities owned and operated by third parties, as well as
its significantly expanded product supply, distribution and marketing
capabilities, TransMontaigne's aggregate net operating margin from the
logistical petroleum services operating business segment was $25,767,000 for the
six months ended December 31, 1998 compared to $12,374,000 for the six months
ended January 31, 1998, an increase of 108%, or $13,393,000.

     At June 30, 1998, TransMontaigne had recorded an allowance of $3.6 million
to reduce the LIFO carrying value of its inventories to market. Under the LIFO
method of accounting for inventories, this allowance was recorded as a reduction
of product costs in the six months ended December 31, 1998.

     The net operating margin from natural gas services operations for the six
months ended December 31, 1998 was $6,893,000 compared to $8,165,000 for the six
months ended January 31, 1998, a decrease of 16%, or $1,272,000. Revenues for
the six months ended December 31, 1998 were $27,224,000 compared to $33,076,000
for the six months ended January 31, 1998, a decrease of 18%, or $5,852,000. The
net operating margin and revenues were attributable primarily to the business
activities of the Grasslands Facilities. Net operating margin and revenues
during the six months ended December 31, 1998 were negatively impacted by
continued low NGL prices, primarily in propane, which was in near record
oversupply, and the adverse effect of weak crude oil prices, notwithstanding
an approximate 7% increase in NGL production.

                                      39
<PAGE>
 
     General and administrative expenses for the six months ended December 31,
1998 were $12,903,000 compared to $6,877,000 for the six months ended January
31, 1998, an increase of 88%, or $6,026,000.  The increase was due primarily to
additional personnel costs, related employee benefits, increased office lease
rentals, increased communication expenses and $1,500,000 of expenses related to
the relocation of TransMontaigne employees to the Atlanta-based LDEC operations.
These increases were directly attributable to the continued expansion of
TransMontaigne's integrated logistical petroleum services and to the acquisition
and operations of LDEC and the ITAPCO Terminal Corporations.

     Other income for the six months ended December 31, 1998 included a dividend
from West Shore of $339,000 and interest income of $759,000 compared to
$1,065,000 for the six months ended January 31, 1998, a decrease of 29%, or
$306,000. The decrease in interest income was due primarily to the decrease in
interest bearing cash balances held for future investments.

     Interest expense represents interest on the TransMontaigne credit facility
borrowings and senior promissory notes which were used primarily to finance the
acquisitions of LDEC, West Shore, Southwest Terminal, the ITAPCO Terminal
Corporations in November, 1997 and Grasslands Facilities in December, 1996,
other continuing capital expenditures and working capital to carry inventory and
accounts receivable. Also included is interest on the TransMontaigne senior
subordinated debentures. Other financing costs include commitment fees,
amendment fees and amortization of debt acquisition costs paid in connection
with the credit facility. Interest expense and other financing costs during the
six months ended December 31, 1998 amounted to $11,141,000 compared to
$3,999,000 during the six months ended January 31, 1998, an increase of 179%, or
$7,142,000. The increased interest expense of $5,915,000 was due to an increase
in average outstanding debt primarily to fund acquisitions. Other financing
costs increased $1,227,000 largely due to amortization of costs incurred in
securing the new credit facility with BankBoston, N.A. in October 1998 and
additional costs associated with amending the Master Shelf Agreement.

     Earnings before income taxes for the six months ended December 31, 1998 was
$2,794,000, compared to $6,685,000 for the six months ended January 31, 1998, a
decrease of 58%, or 

                                       40
<PAGE>
 
$3,891,000. The decrease in earnings before income taxes resulted from the
increased net operating margin contributions from products supply, distribution
and marketing operations primarily from the LDEC acquisition offset by the
$8,600,000 non-cash lower-of-cost or market inventory write-down adjustment;
terminal and storage operations primarily from the LDEC acquisition and ITAPCO
Terminal Corporations acquisition; and pipeline operations. Additional factors
were increased general and administrative expenses; additional depreciation
attributable to the acquisitions of LDEC and the ITAPCO Terminal Corporations
and the expansion of natural gas services assets; and interest expense,
primarily attributable to the financing of the LDEC, West Shore, Southwest and
ITAPCO Terminal Corporations acquisitions.
 
     Income tax expense for the six months ended December 31, 1998 of $1,062,000
and $2,570,000 for the six months ended January 31, 1998 is based upon an
effective combined federal and state income tax rate of 38%.

     Net earnings for the six months ended December 31, 1998, after providing
for the income tax expense, was $1,732,000 compared to $4,115,000 for the six
months ended January 31, 1998, a decrease of 58%, or $2,383,000. Earnings per
share for the six months ended December 31, 1998 was $.06 basic and $.06 diluted
based on 27,469,391 weighted average basic shares outstanding and 28,201,262
weighted average diluted shares outstanding. This compares to earnings per share
of $.16 basic and $.15 diluted for the six months ended January 31, 1998.

                                       41
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

     The following summary reflects TransMontaigne's comparative net cash flows
for the six months ended December 31, 1998 and the six months ended January 31,
1998.

<TABLE>
<CAPTION>
                                                                     Six Months Ended           Six Months Ended     
                                                                     December 31, 1998          January 31, 1998    
                                                                  ----------------------    -----------------------  
     <S>                                                          <C>                         <C>                    
     Net cash provided (used) by operating activities             $      (25,263,000)                 1,555,000      
     Net cash (used) by investing activities                      $     (362,817,000)               (47,788,000)     
     Net cash provided by financing activities                    $      390,366,000                 45,789,000       
</TABLE>

     TransMontaigne's net cash used by operating activities of $25,263,000 for
the six months ended December 31, 1998 was attributable primarily to decreased
earnings before income taxes of $3,891,000, additional depreciation of
$2,878,000 and increases in trade accounts payable and receivables and decreased
by additional inventory of $84,135,000 attributable to the LDEC operations.
TransMontaigne's current ratio (current assets divided by current liabilities)
was 2.6 to 1.0 at December 31, 1998 compared to 3.0 to 1.0 at January 31, 1998.

     Net cash used by investing activities was $362,817,000 during the six
months ended December 31, 1998 as TransMontaigne continued its growth through
construction and improvements to existing operating facilities and the
acquisitions of LDEC ($293,057,000 cash), Southwest Terminal ($6,500,000 cash)
and initial 15.38% common stock interest in West Shore ($29,219,000 cash).
Capital expenditures included enhancements to the East Chicago facility and to
several of the acquired ITAPCO terminals; construction costs related to new
terminal projects; improvements to the NORCO Pipeline facilities; expansion of
natural gas services assets; and additions to TransMontaigne's corporate
facilities, communications and data processing infrastructure. Net cash used by
investing activities was $47,788,000 during the six months ended January 31,
1998 which included approximately $32,000,000 for the ITAPCO Terminal
Corporations acquisition, $3,174,000 of improvements to the Grasslands
Facilities and other natural gas assets; and enhancements to the pipeline and
terminal facilities.

                                       42
<PAGE>
 
     Net cash provided by financing activities for the six months ended December
31, 1998 of $390,366,000 primarily represented borrowings under TransMontaigne's
credit facility used to fund the LDEC and West Shore common stock acquisitions,
as well as to finance other capital expenditures. Net cash provided by financing
activities for the six months ended January 31, 1998 of $45,789,000 represented
borrowings under TransMontaigne's credit facility primarily used to finance
operations and capital expenditures. At December 31, 1998, TransMontaigne had
$604,000,000 of borrowing capacity with availability of $73,825,000 under its
credit agreements.

     EBITDA represents earnings before income taxes plus interest expense and
other financing costs and depreciation and amortization. EBITDA is used by
management as part of its overall assessment of TransMontaigne's performance by
analyzing and comparing EBITDA between reporting periods. Management believes
that, in addition to cash flow from operations as well as operating income and
net earnings (determined in accordance with generally accepted accounting
principles) as indicators of operating performance, EBITDA is used by the
financial community to measure operating effectiveness and as a method to
evaluate the market value of companies like TransMontaigne. EBITDA is also used
to evaluate TransMontaigne's ability to incur and service debt and to fund
capital expenditures, although it is not considered in isolation or a substitute
for the other measurements of performance and liquidity.

     EBITDA was $12,115,000 and $20,855,000 for the three months and six months
ended December 31, 1998, respectively.  EBITDA for the three months and six
months ended December 31, 1998 reflects the $8,600,000 charge to product costs
for a non-cash lower-of-cost or market inventory write-down adjustment as of
December 31, 1998.

      Working capital required to support TransMontaigne's business operations, 
principally to carry accounts receivable and inventory, is provided by advances 
from its credit facility.  Interest expense related to working capital advances 
is not included in the determination of EBITDA.  For the three months and six 
months ended December 31, 1998, the interest expense attributable to working 
capital advances was approximately $3,300,000 and $4,200,000, respectively.
 
                                      43
<PAGE>
 
     Achieving continued EBITDA growth through strategic acquisitions, further
internal expansion of existing facilities and value-added, products supply,
distribution and marketing operations is a primary objective of TransMontaigne
management.

     Capital expenditures anticipated in the year ending June 30, 1999 are
estimated to be  $258,000,000 for pipeline, terminal, storage and natural gas
gathering and processing facilities, and assets to support these facilities,
including $161,000,000 in cash and common stock for LDEC; $29,219,000 cash for
the 15.38% common stock interest in West Shore and $6,674,000 cash for the
additional 5% common stock interest in West Shore; $6,500,000 cash for the
Southwest Terminal; and $5,200,000 for the Renssalaer, New York terminal.  In
addition, other major capital expenditures through June 30, 1999 include
$8,000,000 for enhancements to the ITAPCO Corporations Terminals; $7,000,000 for
the North Peoria, Illinois terminal; and $6,500,000 for additional tankage at
the East Chicago storage complex.  Future capital expenditures will depend on
numerous factors, including the availability, economics and cost of appropriate
acquisitions which TransMontaigne identifies and evaluates; the economics, cost
and required regulatory approvals with respect to the expansion and enhancement
of existing systems and facilities; the demand for the services TransMontaigne
provides; local, state and federal governmental regulations; environmental
compliance requirements; fuel conservation efforts; and the availability of debt
financing and equity capital on acceptable terms.

     In February 1997, TransMontaigne closed a public offering of 4,357,000
shares of its common stock of which 4,035,000 shares were issued and sold by
TransMontaigne and 322,000 shares were sold by certain selling stockholders.
The net proceeds to TransMontaigne, based on the public offering price of $14.25
per share, were $53,506,000 after deducting underwriting discounts and
commissions and offering costs, of which $45,000,000 was used to repay a portion
of the long-term debt incurred under its bank credit facility and the balance
was added to working capital. In March 1997 the underwriters' overallotment
option to purchase an additional 557,543 shares and the Merrill Lynch Growth
Fund antidilution right to purchase an additional 98,390 shares were both
exercised and TransMontaigne received additional net proceeds of $8,809,000
which was added to working capital.  The total net proceeds from the offering
was $62,315,000.

                                       44
<PAGE>
 
     On October 30, 1998, TransMontaigne closed a $500,000,000 credit facility
with BankBoston, N.A.  The credit facility includes a 5 year $350,000,000
revolving credit facility due December 31, 2003 and a 22 month $150,000,000 term
loan due June 30, 2000.  Borrowings under this credit facility bear interest at
an annual rate equal to the lender's Alternate Base Rate plus a margin subject
to a Eurodollar Rate pricing option.  The credit facility includes a $20,000,000
same day revolving swing line of credit under which advances may be drawn at an
interest rate comparable to the Eurodollar Rate.  The proceeds from the credit
facility were used to fund the LDEC acquisition as well as to refinance existing
bank debt and provide funds for future acquisitions and other general corporate
purposes.

     At December 31, 1998, TransMontaigne had advances of $449,875,000
outstanding under the bank credit facility utilizing the Eurodollar Rate loan
pricing option and $1,300,000 of the facility was used to support a standby
letter of credit to a bank to assist Lion Oil Company in obtaining financing.
The average interest rate at December 31, 1998 was 7.36%.

     In April 1997, TransMontaigne entered into a Master Shelf Agreement with an
institutional lender which provides that the lender will agree to quote, from
time to time, an interest rate at which the lender would be willing to purchase,
on an uncommitted basis, up to $100,000,000 of TransMontaigne senior promissory
notes which will mature in no more than 12 years, with an average life not in
excess of 10 years.

     At December 31, 1998, TransMontaigne had outstanding under the Master Shelf
Agreement, $50,000,000 of 7.85% Senior Notes due April 17, 2003 and $25,000,000
of 7.22% Senior Notes due October 17, 2004.  The Master Shelf Agreement was
amended as of October 30, 1998 in connection with the closing of the
$500,000,000 credit facility.  Costs relating to the amendment were $1,125,000
of which $375,000 is included in other financing costs for the three months and
six months ended December 31, 1998.

     The bank credit facility agreement and the Master Shelf Agreement contain a
negative pledge covenant by TransMontaigne and its subsidiaries and are secured
by the stock of the subsidiaries.  The agreements also include financial
compliance tests relating to fixed charges coverage, leverage 

                                       45
<PAGE>
 
ratio, consolidated tangible net worth, distributions and inventory positions.
As of December 31, 1998, TransMontaigne was in compliance with all such tests.

     At December 31, 1998, TransMontaigne had working capital of $307,986,000;
availability under its bank credit facility of $48,825,000; and additional
borrowing capacity of $25,000,000 under the Master Shelf Agreement.

     TransMontaigne believes that its current working capital position; future
cash provided by operating activities; proceeds from the private placement or
public offering of debt and common stock; available borrowing capacity under the
bank credit facility agreement and the Master Shelf Agreement; additional
borrowing allowed under those agreements; and its relationship with
institutional lenders and equity investors should enable TransMontaigne to meet
its future capital requirements.

YEAR 2000 MATTERS

     Historically, certain computer software, as well as certain hardware
containing embedded technology, such as microcontrollers and microprocessors,
were designed to utilize a two-digit rather than a four-digit date field and
consequently may cause computers, computer controlled systems and equipment with
embedded software, microcontrollers and microprocessors to malfunction or
incorrectly process data in the Year 2000. This could result in significant
system failures. TransMontaigne relies on its computer-based management
information systems, as well as embedded technology, such as microcontrollers
and microprocessors, to operate instruments and equipment in conducting its
normal business activities. Certain of these computer-based programs and 
embedded technology, such as microcontrollers and microprocessors, may not have 
been designed to function properly with respect to the application of dating 
systems relating to the Year 2000.

      In response, TransMontaigne has developed a "Year 2000" Plan.  
TransMontaigne's Board of Directors has been briefed about Year 2000 concerns 
generally and the possible affect on TransMontaigne.  The Year 2000 Plan has 
been presented to the Board and periodic progress updates regarding its 
implementation have been provided.  The purpose of the Year 2000 Plan is to 
define and 

                                      46
<PAGE>
 
provide a continuing process for assessment, remediation planning and plan
implementation to achieve a level of readiness that will effectively deal with
the Year 2000 concerns in a timely manner. While achieving Year 2000 readiness
does not mean correcting every Year 2000 limitation, critical systems and
electronic assets, as well as relationships with key third-party customers,
suppliers and local, state and federal government agencies have been, and
continue to be, evaluated and are expected to be suitable for continued use into
and beyond the Year 2000, and that contingency plans are in place.

     Implementation of TransMontaigne's Year 2000 Plan is directly supervised by
a Senior Vice President, assisted by a Year 2000 Plan Director. The Plan
Director coordinates the implementation of the Year 2000 Plan among
TransMontaigne's individual business units. The Plan Director has established an
internal group to identify and assess potential areas of risk and to make any
required modifications to computer systems and equipment used in
TransMontaigne's business activities involving refined product and crude oil
pipeline, terminaling and storage, natural gas gathering and processing; and
products supply, distribution and marketing.  The Year 2000 Plan is comprised of
several phases, including assessment, remediation planning and implementation.
These three phases are more fully described as follows:

     A.   Assessment - This phase involves the identification and inventory of
TransMontaigne's business assets and processes and determination of Year 2000
compliancy status of these business assets and those third-party suppliers,
customers  and state and federal governmental agencies believed to be material
to TransMontaigne's business, results of operations, or financial condition
("Key Parties"). The Assessment phase of the Year 2000 Plan includes assessment
of Year 2000 compliancy of the following:

          1.   Computer systems and software ("Information Technology")

          2.   Control software, microprocessors and micro-controllers embedded
               in equipment ("Embedded Systems")

          3.   Key Parties

     B.   Remediation Planning - This phase involves the development of
remediation plans which, when implemented, will enable business assets and
business relationships critical to 


                                      47
<PAGE>
 
TransMontaigne's business operations to be Year 2000 ready. This phase also
contemplates implementation planning and prioritization of implementation of
remediation plans.

     C.   Implementation - This phase involves the implementation of remediation
plans, including post-remediation testing and contingency planning.

After the Assessment phase has been completed and evaluated, the Remediation
Planning and Implementation phases will be implemented to ensure that the
material facilities and business activities will continue to operate safely and
reliably, and without interruption after 1999.

     TransMontaigne has also undertaken to monitor the compliance efforts of Key
Parties with whom it does business, including those with whom TransMontaigne
maintains banking and stock transfer relationships, and whose computer-based
systems and/or embedded technology equipment interface with those of
TransMontaigne, in order to ensure that operations will not be adversely
affected by the Year 2000 compliance problems of third-parties. TransMontaigne
has contacted 580 Key Parties by letter requesting detailed information to be
completed and returned to the Plan Director. Through December 31, 1998,
responses had been received from 52% of those contacted. Telephonic follow-up
with non-respondents commenced in early December 1998 with each Key Party being
contacted in order of importance.

     TransMontaigne assesses the state of readiness of Key Parties responding to
the request for information, which procedure will continue as additional
responses are received. Each Key Party is given a risk rating based on the
information and readiness plan submitted.  There is no assurance that
TransMontaigne will not be adversely affected if Key Parties, including local,
state and federal governmental agencies, do not convert their systems in a
timely manner and in a manner which is compatible with TransMontaigne's
Information Technology and Embedded Systems. However, TransMontaigne believes
that the ongoing communication with and assessment of the compliance efforts and
status of the Key Parties will minimize these risks.

     TransMontaigne believes that it can provide the resources necessary to
ensure Year 2000 compliance and expects to complete the Year 2000 Plan within a
time frame which will enable its

                                       48
<PAGE>
 
Information Technology and Embedded Systems to function without significant
disruption in the Year 2000. The Assessment phase of its Year 2000 Plan was
being finalized at December 31, 1998. It is anticipated that the Remediation
Planning phase will be completed by March 31, 1999 and the Implementation phase
by June 30, 1999.

     At December 31, 1998, TransMontaigne had incurred third party costs of
approximately $140,000 related to Year 2000 compliance matters and estimates
that the total cumulative future third party, software and equipment costs
related to Year 2000 Assessment, Remediation Planning and Implementation phases,
based upon information developed to date, will be approximately $2,500,000,
which will be expensed as incurred.  These costs have been and will continue to
be funded through operating cash flows and are not considered material to the
operations of TransMontaigne. The cost of the remediation activities and the
completion dates are based on TransMontaigne's best estimates and may be revised
as additional information becomes available. The costs incurred to date and
those estimated to be incurred in the future do not include internal costs.
TransMontaigne does not presently separately record internal costs incurred with
respect to implementation of the Year 2000 Plan. Such costs are principally the
related payroll costs for the information systems and field operations
personnel, including senior management, involved in carrying out the Year 2000
Plan, as well as related travel and other out-of-pocket expenses.

     Although TransMontaigne anticipates that minimal business disruption will
occur as a result of Year 2000 issues, in the event TransMontaigne's Information
Technology and Embedded Systems, or those owned and operated by third parties,
should fail to function properly, possible consequences include but are not
limited to, loss of communications links with pipeline control centers, terminal
automation systems and field offices; loss of electric power; and inability to
automatically process commercial transactions, or engage in similar normal
automated or computerized business activities.

     TransMontaigne is in the process of identifying the most reasonably likely
worst case Year 2000 scenarios and is not yet able to determine whether the
consequences of such scenarios could have a material impact on the business,
results of operations or financial condition of TransMontaigne. The process of
defining the most reasonably likely worst case scenarios is part of the
contingency planning effort which is currently underway.  The contingency
planning process and

                                      49
<PAGE>
 
the process of developing most reasonably likely worst case scenarios will be
ongoing processes, requiring continuing development, modification and refinement
as additional information is obtained regarding the status of TransMontaigne's
Information Technology and Embedded Systems during the Implementation phase of
the Year 2000 Plan, as well as the status, and the impact on TransMontaigne, of
the Year 2000 readiness of others.

     TransMontaigne is in the process of developing Year 2000 contingency plans
which are intended to enable TransMontaigne to deliver an acceptable level of
service despite Year 2000 failures. These plans include performing certain
processes manually, changing suppliers and reducing or suspending certain
noncritical aspects of TransMontaigne's operations. The contingency planning
effort will focus on potential internal risks, as well as potential risks
associated with Key Parties. TransMontaigne believes that its Assessment,
Remediation Planning and Implementation phases will be effective to achieve Year
2000 readiness in a timely manner. TransMontaigne anticipates that contingency
plans, if determined to be necessary, will be in place by September 30, 1999.
TransMontaigne does not anticipate that the Year 2000 issues will have a
material adverse effect on the operations or financial performance of
TransMontaigne. However, there can be no assurance that the Year 2000 will not
adversely affect TransMontaigne and its business.

     The preceding "Year 2000 Matters" discussion contains various forward-
looking statements that represent TransMontaigne's beliefs or expectations
regarding future events. When used in the "Year 2000 Matters" discussion, the
words "believes," "intends," "expects," "estimates," "plans," "goals," and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements include, without limitation, expectations as to when
the Assessment, Remediation Planning and Implementation phases of the Year 2000
Plan, as well as Year 2000 contingency planning will be completed; the estimated
cost of achieving Year 2000 readiness; and the belief that TransMontaigne's
Information Technology and Embedded Systems will be Year 2000 ready in a timely
and appropriate manner. All forward-looking statements involve a number of risks
and uncertainties which could cause the actual results to differ materially from
the projected results. Factors which may cause those differences include
availability of information technology resources; continued availability of
materials, services and data from TransMontaigne's suppliers; the ability to
identify and remediate all date-sensitive lines of computer code and to replace
embedded

                                       50
<PAGE>
 
microprocessors and micro-controllers in affected systems and equipment; the
failure of others to timely achieve appropriate Year 2000 readiness; and the
actions or inaction of governmental agencies and others with respect to Year
2000 problems.

NEW ACCOUNTING STANDARDS

     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), was issued June
1997 by the Financial Accounting Standards Board.  SFAS 131 established new
standards which change the way public companies report information about
segments.  This statement is based on the management approach to segment
reporting and requires companies to report selected quarterly segment
information and entity-wide disclosures about products and services, major
customers and geographic areas in which the entity holds assets and reports
revenues.  SFAS 131 is effective for financial statements for fiscal years
beginning after December 31, 1997.  TransMontaigne does not expect the adoption
of SFAS 131 to have a material effect on the presentation of its financial
statements.

     Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), was issued in June
1998 by the Financial Accounting Standards Board.  SFAS 133 establishes new
accounting and reporting standards for derivative instruments and for hedging
activities.  This statement requires an entity to establish at the inception of
a hedge, the method it will use for assessing the effectiveness of the hedging
derivative and the measurement approach for determining the ineffective aspect
of the hedge.  Those methods must be consistent with the entity's approach to
managing risk.  SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.  TransMontaigne is in the process of assessing
the impact, if any, that SFAS 133 will have on its consolidated financial
statements.

                                       51
<PAGE>
 
PART II.  OTHER INFORMATION
---------------------------

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Through a consent solicitation closing on December 17, 1998, the stockholders of
record on October 30, 1998 of TransMontaigne approved the proposal to amend
Section 5.1 of Article V of TransMontaigne's Restated Certificate of
Incorporation to increase the number of authorized shares of TransMontaigne
common stock, par value $.01 per share, from 40,000,000 to 80,000,000 shares.

A total of 24,608,951 votes were cast in favor of the proposal to amend Section
5.1 of Article V of the Restated Certificate of Incorporation to increase the
number of authorized shares of TransMontaigne common stock, par value $.01 per
share, from 40,000,000 to 80,000,000, while 185,655 votes were cast against the
proposal and 4,558 votes abstained.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

 
(a)  Exhibits

     3.1A           Restated Certificate of Incorporation and Certificate of
                    Merger. Incorporated by reference to TransMontaigne Oil
                    Company Form 10-K (Securities and Exchange Commission File
                    No. 001-11763) for the year ended April 30, 1996.

     3.1B           Certificate of Amendment of Restated Certificate of
                    Incorporation of TransMontaigne Oil Company dated August 26,
                    1998. Incorporated by reference to TransMontaigne Inc. Form
                    10-Q (Securities and Exchange Commission File No. 001-11763)
                    for the quarter ended September 30, 1998.

     3.1C           Certificate of Amendment of Restated Certificate of
                    Incorporation of TransMontaigne Inc. dated December 18,
                    1998. FILED HEREWITH.

     10.1           Amendment No. 1 to Stock Purchase Agreement dated as of
                    October 30, 1998, between Louis Dreyfus Corporation and
                    TransMontaigne Inc. Incorporated by reference to
                    TransMontaigne Inc. Current Report on Form 8-K (Securities
                    and Exchange Commission File No. 001-11763) filed on
                    November 13, 1998.

                                      52
<PAGE>
 
     10.2           Amendment No. 1 dated as of June 30, 1998 to the Amended and
                    Restated Credit Agreement between TransMontaigne Oil Company
                    and BankBoston, N.A., as Agent, dated March 31, 1998. FILED
                    HEREWITH.

     10.3           Second Amended and Restated Credit Agreement between
                    TransMontaigne Inc. and BankBoston, N.A., as Agent, dated as
                    of October 30, 1998. FILED HEREWITH.

     10.4           Amendment No. 1 dated as of December 14, 1998 to the Second
                    Amended and Restated Credit Agreement between TransMontaigne
                    Inc. and BankBoston, N.A., as Agent, dated as of October 30,
                    1998. FILED HEREWITH.

     10.5           Letter Amendment No. 2, dated as of June 30, 1998, to Master
                    Shelf Agreement dated as of April 17, 1997, among
                    TransMontaigne Oil Company, The Prudential Insurance Company
                    of America and U.S. Private Placement Fund. FILED HEREWITH.

     10.6           Letter Amendment No. 3, dated as of October 30, 1998, to
                    Master Shelf Agreement dated as of April 17, 1997, among
                    TransMontaigne Oil Company, The Prudential Insurance Company
                    of America and U.S. Private Placement Fund. FILED HEREWITH.

     27             Financial Data Schedule.  FILED HEREWITH.

     99.1           Press Release dated November 2, 1998. Incorporated by
                    reference to TransMontaigne Inc. Current Report on Form 8-K
                    (Securities and Exchange Commission File No. 001-11763)
                    filed on November 13, 1998.

     99.2           Press Release dated November 12, 1998. FILED HEREWITH.


(b)  The following report on Form 8-K was filed during the quarter ended
     December 31, 1998:

     A Form 8-K dated October 30, 1998 was filed on November 13, 1998 reporting
     Item 2 (the acquisition of all of the issued and outstanding capital stock
     of Louis Dreyfus Energy Corp. from its parent company, Louis Dreyfus
     Corporation) and Item 7 (deferring filing of the historical and pro forma
     financial statements for the Louis Dreyfus Energy Corp. acquisition). 

                                       53
<PAGE>
 
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:  February 19, 1999               TRANSMONTAIGNE INC.
                                        (Registrant)



                                        /s/ CORTLANDT S. DIETLER
                                        ------------------------
                                        Cortlandt S. Dietler
                                        Chairman and Chief Executive Officer



                                        /s/ RODNEY S. PLESS
                                        --------------------
                                        Rodney S. Pless
                                        Vice President, Controller and Chief 
                                        Accounting Officer 


                                       54