<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the fiscal year ended DECEMBER 31, 2001

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from ___________________ to __________________

                             COMMISSION FILE NUMBER

                                    0-25821

                          STATIA TERMINALS GROUP N.V.
                             (PENDING LIQUIDATION)
             (Exact name of registrant as specified in its charter)

     Netherlands Antilles                                       52-2003016
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                             Identification No.)

                              c/o Covenant Managers
                            Werfstraat 6, Willemstad
                          Curacao, Netherlands Antilles
                               (011) 599-31-82300
   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

Securities Registered Pursuant to Section 12(b) of the Act:          None


       Title of Class                   Name of Exchange On Which Registered
------------------------------          ------------------------------------
Securities Registered Pursuant                  Class A Common Shares
 to Section 12(G) of the Act:

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         Aggregate market value of Registrant's Voting Stock held by
non-affiliates: Not Applicable. As explained herein, registrant has been
dissolved pursuant to Netherlands Antilles law and is in the process of being
liquidated.

         As of April 16, 2002 6,013,253 class A common shares of the registrant
were outstanding.


<PAGE>

                           Statia Terminals Group N.V.

                           Annual Report On Form 10-K

                                Table of Contents
<TABLE>
<CAPTION>

<S>        <C>                                                                                                    <C>
PART I.    .........................................................................................................1

Item 1.    Business.................................................................................................1

Item 2.    Properties..............................................................................................15

Item 3.    Legal Proceedings.......................................................................................17

Item 4.    Submission of Matters To a Vote of Security Holders.....................................................18


PART II.   ........................................................................................................19

Item 5.    Market for Registrant's Common Equity and Related Security Matters......................................19

Item 6.    Selected Financial Data.................................................................................24

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations...................26

Item 7a.   Quantitative and Qualitative Disclosures About Market Risk..............................................47

Item 8.    Financial Statements and Supplementary Data.............................................................48

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....................48


PART III.  ........................................................................................................49

Item 10.   Directors and Executive Officers of the Registrant......................................................49

Item 11.   Executive Compensation..................................................................................54

Item 12.   Security Ownership of Certain Beneficial Owners and Management..........................................61

Item 13.   Certain Relationships and Related Transactions..........................................................62


PART IV.   ........................................................................................................64

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.........................................64

</Table>

                                     Page i
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         THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DISCUSSIONS CONTAINING SUCH
FORWARD-LOOKING STATEMENTS MAY BE FOUND IN PART I AND PART II HEREOF, AS WELL AS
WITHIN THIS REPORT GENERALLY. IN ADDITION, WHEN USED IN THIS REPORT, THE WORDS
"MAY," "WILL," "BELIEVE," "ANTICIPATE," "EXPECT," "ESTIMATE," "PROJECT," AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, INCLUDING THOSE
DISCUSSED BELOW, AND SPEAK ONLY AS OF THE DATE HEREOF. ACTUAL RESULTS IN THE
FUTURE COULD DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE PRESENTATION OF CLAIMS NOT CURRENTLY KNOWN TO US,
ACTIONS TAKEN BY OUR LIQUIDATOR OR BY THE NETHERLANDS ANTILLES AUTHORITIES IN
CONNECTION WITH OUR LIQUIDATION, AND OTHER MATTERS INCLUDED IN THIS REPORT. WE
DO NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS
TO THESE FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT ANY FUTURE
EVENTS OR CIRCUMSTANCES.

         FREQUENTLY IN THIS REPORT, WE REFER TO OURSELVES, STATIA TERMINALS
GROUP N.V. ("GROUP") AND OUR FORMER SUBSIDIARIES, AS "WE," "US," THE "COMPANY,"
OR "GROUP." ON FEBRUARY 28, 2002, WE SOLD SUBSTANTIALLY ALL OF OUR ASSETS,
CONSISTING OF STATIA TERMINALS INTERNATIONAL N.V. ("INTERNATIONAL") AND ITS
SUBSIDIARIES, STATIA TECHNOLOGY, INC. ("TECHNOLOGY"), AND STATIA MARINE, INC.
("MARINE"), TO AN ENTITY ("KANEB") AFFILIATED WITH KANEB PIPE LINE PARTNERS,
L.P. (NYSE: KPP) WHOSE GENERAL PARTNER IS KANEB SERVICES LLC (NYSE: KSL), AND WE
REFER TO THE SALE EVENT ON FEBRUARY 28, 2002, AS THE "CLOSING." ON OR BEFORE
FEBRUARY 28, 2002, REFERENCES TO "WE," "US," OR "GROUP" GENERALLY INCLUDE OUR
FORMER SUBSIDIARIES, WHILE AFTER FEBRUARY 28, 2002, THE REFERENCES ARE ONLY TO
GROUP. ADDITIONALLY, WE REFER TO THE SUBSIDIARIES SOLD BY GROUP ON FEBRUARY 28,
2002, COLLECTIVELY AND INDIVIDUALLY AS "OUR FORMER SUBSIDIARIES." THE
INFORMATION PROVIDED WITH RESPECT TO OUR FORMER SUBSIDIARIES IS ONLY PROVIDED
THROUGH FEBRUARY 28, 2002. WE HAVE ONLY PROVIDED CERTAIN PUBLICLY AVAILABLE
INFORMATION WITH RESPECT TO OUR FORMER SUBSIDIARIES RELATING TO ANY PERIOD
SUBSEQUENT TO FEBRUARY 28, 2002, AND WE DISCLAIM ANY RESPONSIBILITY FOR OUR
FORMER SUBSIDIARIES SUBSEQUENT TO THAT DATE.

                                     PART I.

                                ITEM 1. BUSINESS

                  SALE OF SUBSIDIARIES AND LIQUIDATION OF GROUP

         On February 22, 2002, our shareholders voted to sell substantially all
of our assets, consisting of the outstanding capital stock of our former
subsidiaries, to Kaneb, and to dissolve and liquidate Group. Substantially all
of the proceeds from the sale transaction were distributed to our shareholders
beginning on February 28, 2002. Holders of our class A common shares and class B
subordinated shares received distributions of $18.4998 per share and $16.8844
per share, respectively. Our class C shareholder received a distribution of
approximately $7.0 million, and we estimate that our class C shareholder will
receive a further distribution of approximately $3.0 million following our
liquidation, assuming no adjustments to the purchase price received from Kaneb
are required and no unanticipated claims are presented to Group or additional
costs are incurred by Group.

         At the close of trading on February 28, 2002, we terminated the listing
of our class A common shares on the Nasdaq National Market and our transfer
agent closed its stock transfer books and ceased recording transfers of our
class A common shares as of that date. Our dissolution under Netherlands
Antilles law occurred on March 2, 2002, and we are currently in the process of
liquidating Group. This process is described in detail under ITEM 5. "MARKET FOR
REGISTRANT'S COMMON EQUITY




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<PAGE>

AND RELATED SECURITY MATTERS" and is anticipated to be completed before December
31, 2002. After satisfaction of our creditors, any cash remaining at the end of
the liquidation period will be paid to the holder of our class C shares. No
further distributions will be made to holders of our class A common shares and
class B subordinated shares.

                            INTRODUCTION AND HISTORY

         Prior to the sale of our former subsidiaries, we believe we were one of
the five largest independent marine terminaling companies in the world as
measured in terms of storage capacity. At the end of 2001, our tank capacity was
18.8 million barrels. We believe we were the largest independent marine terminal
operator handling crude oil imported into the Eastern United States. The two
terminals of our former subsidiaries were strategically located at points of
minimal deviation from major shipping routes. Our former subsidiaries provided
terminaling services for crude oil and refined petroleum products to many of the
world's largest producers of crude oil, integrated oil companies, oil traders,
refiners, petrochemical companies and ship owners. Customers of our former
subsidiaries included a subsidiary of Saudi Aramco and Tosco Corporation. Our
former subsidiaries' customers transshiped their products through our former
subsidiaries' facilities to the Americas and Europe. Our former subsidiaries
owned and operated one storage and transshipment facility located on the island
of St. Eustatius, Netherlands Antilles, and one located at Point Tupper, Nova
Scotia, Canada. In connection with their terminaling business, our former
subsidiaries provided related value-added services, including crude oil and
petroleum product blending and processing, berthing of vessels at their marine
facilities, and emergency and spill response services. In addition to their
terminaling services, our former subsidiaries sold bunkers, which is the fuel
marine vessels consume, and bulk petroleum products to various commercial
interests.

         Operations of our former subsidiaries began in 1982 as Statia Terminals
N.V., with an oil products terminal located on the island of St. Eustatius,
Netherlands Antilles. In 1984, CBI Industries, Inc., an industrial gases and
contracting services company, acquired a controlling interest in Statia
Terminals N.V. Our former subsidiaries purchased Statia Terminals Southwest,
Inc. with its facility at Brownsville, Texas, in 1986. In 1990, CBI Industries
became the sole owner of Statia Terminals N.V. and Statia Terminals Southwest.
In 1992 and 1993, our former subsidiaries acquired an interest in, and
ultimately all of, the predecessor of Statia Terminals Canada, Incorporated, the
managing partner of Statia Terminals Canada Partnership, which owns the facility
located at Point Tupper, Nova Scotia, Canada. Praxair, Inc. acquired CBI
Industries in 1996. In November 1996, Castle Harlan Partners II, L.P., members
of our former subsidiaries' management and others acquired from Praxair all of
the outstanding capital stock of Statia Terminals N.V., the predecessor to
Statia Terminals Canada, Incorporated, Statia Terminals, Inc., their
subsidiaries and certain of their affiliates. Castle Harlan Partners II, L.P. is
a private equity investment fund managed by Castle Harlan, Inc., a private
merchant bank. Group and certain of its former subsidiaries were organized for
purposes of facilitating the acquisition. In connection with the November 1996
acquisition, two of our former subsidiaries issued to the public $135 million of
11 3/4% First Mortgage Notes (the "Notes") which mature on November 27, 2003. On
April 5, 2002, Kaneb redeemed the Notes. See ITEM 7. "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" for further
information. An unaffiliated third party purchaser bought Statia Terminals
Southwest in July 1998.

         On April 28, 1999, we completed our initial public equity offering of
7.6 million class A common shares. The offering price was $20 per share raising
gross proceeds of $152 million. The gross proceeds of the offering were used
primarily to redeem all of our outstanding Series A, B, C, D, and E preferred
stock and pay accrued dividends, underwriters' discounts, fees, and other costs
directly associated with




                                       2
<PAGE>

the offering. In addition, proceeds from the offering were used during May 1999,
along with existing cash, to repurchase in the open market a principal amount of
$34 million of the Notes, leaving $101 million outstanding at that time. In
connection with the repurchase of the Notes, we incurred a $4.7 million loss on
the early extinguishment of debt.

         The day-to-day operations of our former subsidiaries were managed at
the respective terminal locations. Our former subsidiaries' management team and
employee base possessed a diverse range of experience and skills in the
terminaling industry. This experience permitted our former subsidiaries to
better understand the objectives of their customers and to forge alliances with
those customers at the terminals to meet those objectives. Thus, we believed
that our former subsidiaries' operations extended beyond the traditional
approach to terminaling. Our former subsidiaries were premier providers of the
core services offered by other terminal operators. In addition, unlike many
competitors, our former subsidiaries refrained from competing with their
customers and provided ancillary, value-added services tailored to support the
particular needs of their customers.

                                    INDUSTRY

         TERMINALING

         We believe the petroleum terminaling industry consists of two market
segments. One segment is characterized by the ownership and management of
terminals inland along major crude oil or petroleum product pipelines. This
segment is primarily engaged in the distribution of crude oil to inland
refineries or petroleum products via pipeline, rail or truck. The second segment
of the industry is marine terminaling. This segment is primarily engaged in bulk
storage and transshipment of crude oil and petroleum products of domestic and
overseas producers, integrated oil companies, traders, refiners and
distributors. Our former subsidiaries were primarily engaged in marine
terminaling. "Transshipment" is the process whereby customers transfer their
products either from a vessel to storage tanks for subsequent transfer to other
vessels for delivery to other destinations, or from one ship to another ship
across the dock.

         A substantial portion of crude oil and petroleum products storage
terminals are captive, in other words, they are owned by producers, refiners,
utilities, and pipeline operators and used almost exclusively for their own
products and operations. The independent terminaling operator segment of the
marine terminaling industry, which is described in this Report, excludes these
captive terminals. Captive terminal storage is only occasionally made available
to the general market and lacks some of the competitive advantages of
independent operations, the most important of which is confidentiality.

         Companies generally use marine terminals for various reasons including
to:

         o        take advantage of economies of scale by transporting crude oil
                  or petroleum products in bulk to a terminal as near to the
                  ultimate destination as economically possible;
         o        blend crude oil or petroleum products to meet market
                  specifications;
         o        process products to add value for a specific downstream
                  market;
         o        temporarily store crude oil or petroleum products; and
         o        access bunker fuels and lube oils for consumption by marine
                  vessels.



                                       3
<PAGE>
         BULK CARGO MOVEMENT

         Due to significant economies of scale, petroleum companies ship crude
oil from locations such as the Middle East, North Sea and West Africa in
very-large or ultra-large crude carriers to a transshipment point such as one of
our former subsidiaries' terminals. These very-large and ultra-large crude
carriers, however, are too large to deliver their cargo directly to many ports,
including virtually all U.S. ports. Therefore, most petroleum companies are
forced to either partially or completely "lighter" their cargo, which is the
process by which liquid cargo is transferred to smaller vessels, usually while
at sea, or transship their cargo through a terminal to smaller vessels that can
enter U.S., Canadian, and Caribbean ports. Both of our former subsidiaries'
facilities could handle substantially all of the world's largest fully-laden
very-large and ultra-large crude carriers.

         We believe that terminaling offers several advantages over lightering.
Terminaling generally provides more flexibility in the scheduling of deliveries
and allows the customers of our former subsidiaries to deliver their products to
multiple locations. Terminaling is also generally safer and more environmentally
sound than lightering which is conducted at sea and may be impacted by vessel
movement, adverse weather, and sea conditions. Lightering in U.S. territorial
waters also creates a risk of liability for owners and shippers of oil. Under
the U.S. Oil Pollution Act of 1990 and other state and federal legislation,
significant liability is imposed for spills in U.S. territorial waters. In
Canada, similar liability exists under the Canadian Shipping Act. Terminaling
also provides customers with the ability to access value-added terminal
services.

         Lightering generally takes significantly longer than discharging at a
terminal. For example, a fully-laden ultra-large crude carrier may require four
or more days to fully discharge by lightering, but only 24 to 36 hours to fully
discharge at a terminal. In addition, terminals allow oil producers to store oil
and benefit from value-added services. The advantages of terminaling may be
offset in market conditions where the direct costs of terminaling are higher
than those of lightering. The direct cost differential of lightering versus
terminaling changes as charter rates change for ships of various sizes. Under
current market conditions, lightering in most instances costs less than
terminaling, primarily by allowing very-large and ultra-large crude carriers to
cover the longest portion of the total journey.

         BLENDING

         Increasingly stringent environmental regulations create additional
demand for facilities that can blend a variety of components into finished
products that meet such regulations as well as meet customer specific
requirements. Precise blending requires specialized equipment, expertise, and
availability of a full range of blendstocks. The evolving reformulated gasoline
market in the U.S., resulting primarily from emission-reduction regulations,
including the U.S. CLEAN AIR ACT, as amended, tightening specifications for
distillates and the increasing need for blended residual fuel are expected to
enhance the growth of the product blending segment of the terminaling industry.
Our former subsidiaries regularly blended components to make finished gasolines
and various grades of residual fuel. Crude oils were blended for various
refiners.

         STRATEGIC STORAGE

         Some crude oil producers, integrated oil companies, refiners, and
others have a continuing need to store crude oil and petroleum products to
supply a specific downstream demand, such as to supply feedstock to a refinery
or utility. The need for strategic storage is generally not as sensitive to
changes in market conditions as is seasonal and opportunity storage and usually
results in the realization of longer



                                       4
<PAGE>

term contracts by our former subsidiaries. Our former subsidiaries had several
customers who used our former subsidiaries' facilities for strategic purposes.
At St. Eustatius, an oil producer leased 5.0 million barrels of storage from our
former subsidiaries and used these tanks to supply its customers. In Canada, a
large independent U.S. refiner leased and utilized 3.6 million barrels of
storage from one of our former subsidiaries for gathering crude oil from various
locations to feed two of its refineries on the U.S. East coast. A second
customer, consisting of a consortium of major oil companies, sent natural gas
liquids via pipeline to certain processing facilities on land leased from our
former subsidiaries. After processing, certain products were stored with our
former subsidiaries under a long-term contract.

         SEASONAL AND OPPORTUNITY STORAGE

         Refiners, traders, and others use storage facilities to take advantage
of seasonal movements and anomalies in the crude oil and petroleum products
markets. When the forward prices for crude oil and petroleum products fall below
spot prices for any length of time, this market condition is called
"backwardation." When forward prices exceed spot prices for any length of time
the market is said to be in "contango." When crude oil and petroleum product
markets are in contango by an amount exceeding storage costs, the time value of
money, the cost of a second vessel plus the cost of loading and unloading at a
terminal, the demand for storage capacity at terminals usually increases. When
crude oil and petroleum products markets are in backwardation for any length of
time, the opportunity users of terminal storage facilities are less likely to
store product, thereby reducing storage utilization levels. Historically,
heating oil has been in contango during the summer months and gasoline has been
in contango during the winter months. As a result, demand for heating oil
storage is typically strongest during the summer, fall and winter months and
demand for gasoline storage is typically strongest in the winter, spring and
summer months. However, in recent years, the heating oil and gasoline markets
have not followed this historical pattern, and we can give no assurance that the
crude oil and petroleum products markets will follow these patterns in the
future.

         Beginning in late 1997 and continuing until the spring of 1999, all
segments of the crude oil and petroleum products markets were generally in
contango. In March 1999, members of the Organization of Petroleum Exporting
Countries ("OPEC"), in conjunction with certain non-OPEC members, entered into
an agreement to reduce worldwide crude oil production with the intent of
supporting market prices for crude oil and petroleum products. In accordance
with the one year accord, which became effective April 1, 1999, the signatories
significantly reduced their production of crude oil which resulted in a
significant increase in spot prices and a reduction of crude oil and petroleum
products inventories. Shortly after the accord was reached in March 1999 and
continuing through 2000, generally all segments of the crude oil and petroleum
products markets were in backwardation. We believe that market conditions
related to the accord had an adverse effect on our business primarily during the
second half of 1999 and the first half of 2000.

         Several times during 2000 and 2001, after the termination of the
initial one year accord, the signatories adjusted their production levels in an
attempt to maintain the price of crude oil within a target range. These actions
caused uncertain conditions in the crude oil and petroleum products markets
primarily during the second half of 2000 and continuing through 2001.
Additionally, all segments of the crude oil and petroleum products markets were
generally in contango during 2001, due, in part, to the recession in the U.S.
and the effects of the September 11, 2001 terrorist acts. These factors created
trading opportunities at certain times for several of our customers who in turn
leased storage from our former subsidiaries on a short-term basis. Effective
January 1, 2002, the signatories were joined by certain other oil producers in a
production cut, the purpose of which was to increase the price of crude oil.



                                       5
<PAGE>

         BUNKER SALES

         "Bunkering" is the sale and delivery of fuels to marine vessels to be
used for their own engines. The customer base and suppliers of bunker fuel are
located worldwide. Sales of bunker fuel, which includes diesel oil, gas oil, and
intermediate fuel oil, are driven primarily by the proximity of the supply
location to major shipping routes and ports of call; the amount of cargo carried
by marine vessels; and the price, quantity, and quality of bunker fuel.

         Bunker fuel is sold under international standards of quality that are
recognized by both fuel suppliers and ship operators. Raw materials for bunker
fuels are purchased in bulk lots of various grades and then blended to meet
customer specifications. Each supplier is responsible for quality control and
other merchantability aspects of the fuel they sell.

         Traditionally, the bunker fuel business was concentrated in those ports
with high ship traffic and near primary sources of refined marine fuels. In
recent years, the number of refiner/suppliers in many ports has diminished and
stricter environmental laws have been enacted, primarily in the U.S., Canada and
Europe. As a result, the sale of bunker fuel has increased at locations outside
the U.S., Canada and Europe.

         Our former subsidiaries' bunker fuel revenues and related direct costs
are variable and linked to global oil prices. Product costs of our former
subsidiaries were also impacted by market supply conditions, types of products
sold and volumes delivered. The increase in global oil prices during the period
from the spring of 1999 generally through the summer of 2001 caused our former
subsidiaries' bunker fuel revenues and related direct costs to increase
significantly, as compared to earlier years, beginning in the spring of 1999 and
generally continuing through the summer of 2001. Global oil prices generally
decreased beginning in the summer of 2001 and continuing through December 31,
2001. As a result both our bunker fuel revenues and related direct costs
decreased during this period.

         PROCESSING

         Atmospheric distillation is a process that applies heat to separate the
hydrocarbons in crude oil into certain petroleum products. Most simple
distillation units, including that of one of our former subsidiaries, produce at
least three product streams: naphtha, distillate (heating oil) and residual
fuel. The profitability of atmospheric distillation is dependent on feedstock,
operating and other costs compared to the value of the resulting products. From
time to time, our former subsidiaries processed petroleum products with their
atmospheric distillation unit.

                              SERVICES AND PRODUCTS

         TERMINALING AND PORT SERVICES

         Our former subsidiaries provided storage services which were designed
to meet their customers' specifications and a full range of terminaling-related
services, including product blending, heating, mixing, separation, and removal
of water and other impurities. Our former subsidiaries' facilities could handle
a variety of petroleum materials, including light, medium and heavy crude oils,
residual fuel oil, gasoline, gasoline blending components, diesel, marine gas
oil, marine diesel oil, aviation fuel, bunker fuel, and natural gas liquids.
Residual fuel oil is comprised of the residue from the distillation of crude oil
after the light oils, gasoline, naphtha, kerosene, and distillate oils are
extracted. Our former subsidiaries also handled petroleum diluents, lubricating
oils, and various other petroleum products.




                                       6
<PAGE>

         Our former subsidiaries owned seven berthing locations where vessels
may load and discharge crude oil or petroleum products at the St. Eustatius
facility and two berthing locations at the Point Tupper facility. With these
berthing locations and their uniquely designed mooring facilities and piping
configurations, our former subsidiaries could handle oil tankers of various
sizes, from relatively small to some of the largest in the world and provided
services such as simultaneous discharging and loading of vessels and "across the
dock" transfers. Our former subsidiaries chartered tugboats and owned other
marine equipment to assist with docking operations and provided port services.

         Our former subsidiaries specialized in "in-tank" or "in-line" blending
with computer-assisted blending technology that assures product integrity and
homogeneity. Our former subsidiaries' facilities could blend and mix a full
range of petroleum products including gasoline, residual fuel oils, bunker fuel,
and crude oil. We believe the blending capabilities of our former subsidiaries
attracted certain customers who leased capacity primarily for blending purposes
and who contributed to the bunker fuel and bulk product sales of our former
subsidiaries. Our former subsidiaries worked closely with residual fuel oil
market participants to assist them with their blending operations.

         Our former subsidiaries owned storage spheres for butane at both of
their facilities that enhanced their gasoline blending capabilities. Our former
subsidiaries also owned an atmospheric distillation unit for refining at St.
Eustatius. Our former subsidiaries used the storage spheres and the distillation
unit to improve product quality and add value to their customers' products.

         Notwithstanding periods of unusually adverse market conditions, the
average percentage of available capacity leased at the St. Eustatius facility
for each of the years ended 1999, 2000, and 2001 was 90%, 88%, and 95%,
respectively. The average percentage of available capacity leased at the Point
Tupper facility over each of the last three years ended 1999, 2000, and 2001 was
79%, 68%, and 85%, respectively. We believe that cost advantages associated with
the location of our former subsidiaries' facilities, shipping economies of
scale, product blending capabilities, and the availability of a full range of
ancillary services at the facilities drove the demand for storage services at
these facilities.

         PRODUCT SALES

         As part of their petroleum product marketing, our former subsidiaries
supplied bunker fuels in the Caribbean and periodically in Nova Scotia, Canada.
At and around St. Eustatius, the bunkering business evolved from offering fuels
to ships at the terminal berths to a delivery system utilizing specially
modified barges, which provided fuels to vessels at anchor. Our former
subsidiaries concentrated their marketing efforts on finding additional
customers, particularly those with regular routes through the Caribbean, and on
customers requiring larger volumes of fuel per vessel call. As part of these
efforts, during 1999 our former subsidiaries began chartering a barge capable of
delivering larger volumes of fuel in a single load. This barge complemented four
barges owned by our former subsidiaries. As a result of these efforts, the
average volume of bunker fuel delivered per vessel and the total volume
delivered increased during 1998 and 1999. During 2000, both the average bunker
fuel delivered per vessel and the total volume delivered decreased over the
record amounts of 1999, but remained above the levels of 1998. During 2001, the
total volume delivered increased from 1999 levels, but the average bunker fuel
delivered per vessel decreased. At Point Tupper, our former subsidiaries were
able to deliver bunker fuels via pipeline at the terminal berths and by truck in
the surrounding Strait of Canso area. From time to time, our former subsidiaries
secured supplies of bunker fuels at Point Tupper and have therefore increased
bunkering operations at this facility.




                                       7
<PAGE>

         Our former subsidiaries purchased small quantities of petroleum
products primarily to maintain an inventory of certain blendstocks and bunker
fuel. The blendstocks allowed our former subsidiaries to assist their customers
with meeting the customers' quality requirements. From time to time our former
subsidiaries purchased and sold products to accommodate customers who wished to
source or dispose of small quantities of product, and to assist customers' sales
activities. Primarily during 2000, our former subsidiaries sold to a customer
that utilized the product to supply its distribution network in the northeastern
Caribbean. Other relatively small product sales were made to Caribbean
wholesalers.

         EMERGENCY RESPONSE SERVICES

         Netherlands Antilles and Canadian environmental laws and regulations
require ship owners, vessel charterers, refiners, and terminals to have access
to spill response capabilities. At St. Eustatius, our former subsidiaries owned
and operated the M/V STATIA RESPONDER, a 194 foot multi-function emergency
response and maintenance vessel with spill response, firefighting, and
underwater diving support capabilities. The STATIA ALERT, a barge capable of
recovering 200 gallons of oil/water mixture per minute, and two response boats
that could deploy booms to contain a spill within a certain area and release
absorbent materials, supported the emergency and spill response capabilities at
St. Eustatius. The St. Eustatius facility also had three tugs on time charter
and owned two mooring launches, all of which were available for safe berthing of
vessels calling at the terminal and for emergency and spill response.

         In Canada, our former subsidiaries owned and operated two fully
equipped spill response vessels on Cape Breton Island, one located at Point
Tupper and the other located in Sydney, Nova Scotia. In the event of an oil
spill, these vessels could deploy containment and clean-up equipment, including
skimmers to retrieve product from the surface of the water, booms to contain
spills, and absorbents to absorb spilled product. Our former subsidiaries
chartered tugs, mooring launches, and other vessels to assist with the movement
of vessels through the Strait of Canso and the safe berthing of vessels at Point
Tupper and to provide other services to vessels.

         We believe that the presence of fully equipped emergency and spill
response vessels in port was important in attracting customers to the
facilities. Our former subsidiaries' customers benefited by ready access to this
equipment, and each vessel that called at the facilities was charged a fee for
this capability.

         DEVELOPMENT OPPORTUNITIES

         In 1998, our former subsidiaries entered into a 25-year agreement to
lease approximately 65 acres of their land at Point Tupper and a 12-year product
storage agreement for over 500,000 barrels of their storage tank capacity with
Sable Offshore Energy, Inc., a Canadian corporation, which, as of February 28,
2002, was extracting natural gas liquids from the Sable Island region of Nova
Scotia. Sable subsequently built a natural gas liquids fractionation plant,
storage, and rail handling facilities on the land. The fractionation plant had
the ability to process an average of 20,000 barrels per day of natural gas
liquids, which were delivered via pipeline to the fractionation plant from
Sable's Goldboro Gas Processing Plant in Guysborough County, Nova Scotia. The
fractionation plant produced propane, butane and condensate. Condensate was
stored at our former subsidiaries' facility and, when sold by Sable, was loaded
by our former subsidiaries onto marine vessels. On February 1, 2002, the project
owners announced that a major oil company will be operator of the



                                       8
<PAGE>

project and will assume certain covenants, duties, and obligations of Sable
under the land lease and product storage agreements.

         A salt deposit has been identified on a parcel of land very near the
Point Tupper facility. Frequently, salt storage caverns which are used around
the world for storing hydrocarbon products can be developed from such deposits.
Propane and butane, such as that produced by the Sable fractionation plant, are
gases at atmospheric temperatures and pressure and become liquids when stored
under pressure underground or at very low temperatures. As of February 28, 2002,
our former subsidiaries had investigated this salt deposit, which is known as
the Port Richmond salt deposit, for approximately four years and had a license
from governmental authorities to perform work to further analyze the usefulness
of the property and the deposit for the storage of natural gas or other
hydrocarbons. As of February 28, 2002, our former subsidiaries had not
established sufficient information to determine whether or not this project
would ever produce income. Through December 31, 2001, our former subsidiaries
had expended management time on this project and capitalized approximately $1.0
million of third-party costs.

                                     PRICING

         TERMINALING SERVICES

         Storage and throughput pricing in the marine terminaling industry is
subject to a number of factors, including variations in petroleum product
production and consumption, economic conditions, political developments,
expected weather conditions, seasonality of demand for certain products and the
geographic sector of the world being serviced. At the customer level, terminal
selection focuses primarily on:

         o        location;
         o        quality of service; and
         o        range of services offered.

         Although price is always an issue, price differentials among competing
terminals are frequently less important to the customer because terminaling
costs represent only a small portion of the customer's total distribution costs.

         In developing pricing strategy, our former subsidiaries considered
petroleum market conditions and oil price trends. They also took into
consideration the quality and range of their services compared to those of
competing terminals, prices prevailing at the time in the terminaling market in
which they operated, cost savings from shipping to their terminal locations,
their incremental costs to provide the services required by the customer, and
the cost of other options available to the customer. In situations requiring
special accommodations for the customer (e.g. unique tank modification or
construction of new tanks or other facilities), our former subsidiaries
sometimes priced on a rate-of-return basis.

         Our former subsidiaries entered into storage and throughput contracts
with customers. At December 31, 2001, approximately 71% of our former
subsidiaries' tank capacity was leased pursuant to long-term contracts and
during 2001, 61% of their storage and throughput revenues, excluding related




                                       9
<PAGE>

ancillary services, were attributable to long-term storage and throughput
agreements of one year or more. Our former subsidiaries' long-term storage and
throughput agreements were individually negotiated with each customer. The
typical agreement specified tank storage volume, the commodities to be stored, a
minimum monthly charge, an excess throughput charge for throughput volume in
excess of the volume specified in the storage contract, and a price escalator.
In addition, our former subsidiaries charged for certain additional services
such as the transfer, blending, mixing, heating, decanting, and other processing
of stored commodities. Under these storage and throughput agreements, the
minimum monthly charge was due and payable without regard to the volume of
storage capacity, if any, actually utilized. For the minimum monthly charge, the
user had been generally allowed to deliver, store for one month and remove the
specified tank storage volume of commodities. As an incentive for the user to
throughput additional barrels through their leased tanks, the excess throughput
charge was typically a lower rate per barrel than the rate per barrel utilized
in establishing the minimum monthly charge. Year-to-year escalation of charges
was typical in long-term contracts.

         Charges for marine services at St. Eustatius and Point Tupper,
including dock usage fees and stand-by emergency response fees at St. Eustatius,
were primarily determined by market conditions existing at facilities and ports
with which these facilities competed. Our former subsidiaries determined their
pricing based on the underlying direct and indirect costs of providing these
services, which included tug, pilot, and line handling costs, among others.
After addition of a profit margin, these rates were compared to the market, and
further adjustments were made. Stand-by emergency response fees at Point Tupper
were submitted for approval every three years to a Canadian government
authority. The government's review process included public comment. The charges
of our former subsidiaries for marine services and stand-by emergency response
fees did not increase significantly during the last three years. If our former
subsidiaries responded to an oil spill or other emergency involving a marine
vessel, the vessel operator was generally charged additional amounts based on an
established fee schedule.

         BUNKER SALES

         The pricing of bunker fuels is subject to a number of factors,
including general economic conditions and the geographic sector of the world
being serviced. Substantially all bunker sales were negotiated on an individual
vessel basis as each vessel has a specific requirement for fuel. Because many
vessels have sufficient fuel capacity to allow them to travel long distances
between refueling stops, worldwide market conditions and the specific ports
along the vessel's intended route dictate individual sale prices. Factors such
as cost of supply, type and quality of fuel, quantity, method and location of
delivery, and other factors determined our former subsidiaries' pricing.

                                   COMPETITION

         The main competition to crude oil storage at our former subsidiaries'
facilities was from lightering. Under current market conditions, lightering in
most instances costs less than terminaling. The price differential between
lightering and terminaling is primarily driven by the charter rates for vessels
of various sizes. A very-large or ultra-large crude carrier was generally at a
berth at our former subsidiaries' terminals for a shorter period of time than
was required for the lightering of that vessel. A very-large crude carrier can
be lightered in approximately four days if lightering vessels are available for
continuous back-to-back operations and the weather is good. If not, a longer
period is required. Depending on charter rates, the longer charter period
associated with lightering is generally offset by various costs associated with
terminaling including storage costs, dock charges, and spill response fees.
However, terminaling reduces the risk of environmental damage associated with
lightering.




                                       10
<PAGE>

         The independent terminaling industry is fragmented and includes both
large, well-financed companies that own many terminal locations and smaller
companies that may own a single terminal location. Our former subsidiaries were
members of the Independent Liquid Terminals Association ("ILTA") which, among
other functions, publishes a directory of terminal locations of its members
throughout the world. Customers with specific geographic and other logistical
requirements may use the ILTA directory to identify the terminals in the region
available for specific needs and to select the preferred providers on the basis
of service, specific terminal capabilities, and environmental compliance.

         In addition to the terminals owned by independent terminal operators,
many state-owned oil producers and major energy and chemical companies also own
extensive terminal facilities, and these terminals often have the same
capabilities as terminals owned by independent operators. While the purpose of
such terminals is to serve the operations of their owners, and they do not
customarily offer terminaling services to third parties, these terminals
occasionally are made available to the market when they have unused capacity on
a short-term and irregular basis. Such terminals lack certain competitive
advantages of independent operators, the most important of which is
confidentiality.

         In many instances, major energy and chemical companies that own storage
and terminaling facilities are also significant customers of independent
terminal operators. Such companies typically have strong demand for terminals
owned by independent operators when independent terminals have more
cost-effective equipment and locations near key transportation links such as
deep-water ports. Major energy and chemical companies also need independent
terminal storage when their captive storage facilities are inadequate, either
because of size constraints, the nature of the stored material or specialized
handling requirements.

         Terminal owners and operators compete based on the location and
versatility of their terminals, service and price. A favorably located terminal
will have access to cost-effective transportation both to and from the terminal.
Possible transportation modes include waterways, railroads, roadways, and
pipelines.

         Terminal versatility is a function of the operator's ability to offer
safe handling for a diverse group of products with potentially complicated
handling requirements. The primary service function provided by the terminal is
the safe storage and return of all of the customer's product while maintaining
product integrity. Terminals may also provide additional services, such as
heating, blending, water removal, and processing with assurance of proper
environmental handling procedures or vapor control to reduce evaporation.

         In the bunkering business, our former subsidiaries competed with ports
offering bunker fuels to which, or from which, each vessel travels or are along
the route of travel of the vessel. Our former subsidiaries also competed with
bunker delivery locations around the world. In the Western Hemisphere, there
were significant alternative bunker locations, including ports on the U.S. East
coast and Gulf coast and in Panama, Puerto Rico, the Bahamas, Aruba, Curacao,
and Halifax. In addition, our former subsidiaries competed with Rotterdam and
various other North Sea locations.



                                       11
<PAGE>

                                    CUSTOMERS

         Our former subsidiaries' customers included many of the world's largest
producers of crude oil, integrated oil companies, oil traders, refiners,
petrochemical companies, and ship owners and operators.

         As of February 28, 2002, our former subsidiaries maintained significant
long-term contracts at St. Eustatius, including a storage and throughput
agreement with Bolanter Corporation N.V., a subsidiary of Saudi Aramco, which
had an initial five-year term that ended on January 30, 2000, and was renewed
and amended during 2001 to extend the agreement, among other changes, until
January 30, 2005. The terminal enabled Bolanter to transport various grades of
crude oil closer to market at competitive transportation rates. This contract
committed all of the St. Eustatius facility's crude oil storage capacity to
Bolanter, which represented approximately 44% of the terminal's total capacity
and 4.0% of our 2001 revenues, including revenues derived from affiliates of
Bolanter as an indirect result of this contract. An additional 9.4% of our 2001
revenues were derived from parties unaffiliated with Bolanter but generated by
the movement of Bolanter's crude oil, or crude oil sold by Bolanter, through the
St. Eustatius terminal. In addition, revenues from an affiliate of Bolanter,
which received bunker fuels at the St. Eustatius facility, accounted for 1.0% of
our total 2001 revenues.

         As of February 28, 2002, our former subsidiaries maintained significant
long-term contracts at Point Tupper, including an agreement with a large
independent refiner, Tosco Corporation, which had an initial five-year term that
ended July 31, 1999, and was amended and extended through July 31, 2004. At the
end of the current term, the contract may be renewed for another five-year term
at the customer's discretion. This contract committed approximately 48% of the
tank capacity at Point Tupper. This contract and certain short-term storage
contracts entered into with Tosco during 2001, including revenues derived from
an affiliate of Tosco as an indirect result of these contracts, represented
approximately 5.8% of our 2001 revenues. An additional 2.7% of our 2001 revenues
were derived from parties unaffiliated with Tosco, but generated by the movement
of Tosco's products through the Point Tupper terminal.

         In addition, another terminaling customer represented 5.3% of our 2001
revenues. Our former subsidiaries also supplied bunker fuel to two customers,
which represented 5.4% and 5.6% of our 2001 revenues, respectively. No other
customer accounted for more than 5% of our total 2001 revenues.

                                    SUPPLIERS

         At St. Eustatius, our former subsidiaries were purchasing a majority of
the fuel oil necessary to support their bunker sales requirements pursuant to a
contract with a major state-owned oil company. This contract became effective in
1993, and was renewed annually thereafter through June 30, 2002. We believed
that suitable alternate sources of supply were available from which our former
subsidiaries could procure fuel oil should the contract be interrupted or not
renewed.

         Our former subsidiaries purchased the remainder of the bunker fuel and
bulk product sold by the product sales segment from various other suppliers.
Inventories of these products were held for short periods, generally not
exceeding 90 days. During the period this inventory was held, our former
subsidiaries were subject to market risk from changes in the global oil markets
which may have caused the value of this inventory to increase or decrease from
the amounts paid. Such changes were reflected in the gross margins of this
segment.




                                       12
<PAGE>

                    ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS

         Our former subsidiaries were subject to comprehensive and periodically
changing environmental, health and safety laws and regulations within the
jurisdictions of their operations, including those governing oil spills,
emissions of air pollutants, discharges of wastewater and storm waters, and the
disposal of non-hazardous and hazardous waste. The nature of our former
subsidiaries' business was such that spills of crude oil or refined products
could, although infrequently, occur at the terminals. As of February 28, 2002,
we believed our former subsidiaries were in substantial compliance with
applicable laws and regulations governing environmental, health and safety
matters. Our former subsidiaries had taken measures to mitigate their exposure
to environmental risks including acquiring automated and monitoring equipment,
training employees, maintaining their own emergency and spill response equipment
at each terminal, and maintaining liability insurance for certain accidental
spills. Additional information regarding environmental, health and safety
matters is presented under ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Environmental, Health and Safety
Matters."

         ST. EUSTATIUS

         The St. Eustatius terminal was built and, from its construction through
February 28, 2002, operated substantially in accordance with U.S. or European
environmental, health, and safety requirements. Prior to enactment in 1993 of
the St. Eustatius Nuisance Ordinance, the St. Eustatius terminal was not subject
to significant Netherlands Antilles environmental, health, and safety
regulations, and environmental, health, and safety audits were required by law.
As of February 28, 2002, no environmental or health and safety permits were
required for the St. Eustatius terminal except under the St. Eustatius Nuisance
Ordinance. A license under the St. Eustatius Nuisance Ordinance was issued to
our former subsidiaries in February 1997 subject to compliance with certain
requirements. The requirements established by the license set forth
environmental standards for operation of the facility, including monitoring of
air emissions, limits on and monitoring of wastewater discharges, establishment
of a wastewater treatment system, standards for above-ground storage tanks and
tank pits, reporting and clean-up of any soil or water pollution, and certain
site security measures. As of February 28, 2002, our former subsidiaries had
generally complied with the license requirements, and did not expect further
compliance to have a material adverse effect on their business and financial
condition, or results of operations.

         At St. Eustatius, terminal management, with the advice of certain
consultants, supervised the on and off-site disposal and storage of hazardous
waste materials. Over the past three years ended December 31, 2001, there were
no significant spills. All spills at the St. Eustatius terminal were reported to
the appropriate environmental authorities and had not, as of February 28, 2002,
resulted in any citations by such authorities for violations of law. As of
February 28, 2002, our former subsidiaries had remediated all such spills to the
satisfaction of the applicable authorities.

         POINT TUPPER

         The Point Tupper terminal was subject to a variety of environmental,
health, and safety regulations administered by the Canadian federal government
and the Nova Scotia Department of Environment ("NSDOE"). While air emission
monitoring was not required by the NSDOE, surface water and groundwater
monitoring were required and were performed on a routine basis in accordance
with the requirements of Industrial Approval permit #92-IAE 013 which was issued
by NSDOE, in March 1999



                                       13
<PAGE>

and expires March 8, 2008. As of February 28, 2002, our former subsidiaries
believed they had all requisite environmental permits. The Point Tupper
facility, pursuant to the Canadian Shipping Act, was designated as an Oil
Handling Facility. The facility was, as of February 28, 2002, compliant with
regulations respecting the procedures, equipment and resources, including an
arrangement with a certified response organization, to mitigate any incidents
with respect to oil pollution which may occur out of the loading or unloading of
crude oil and petroleum products to or from a ship at the facility. Over the
past three years ended December 31, 2001, there were no significant spills. As
of February 28, 2002, all spills at the Point Tupper terminal had been reported
and remediated and had not resulted in any citations by authorities.

         Past use of the facility by others, including its past operation by
others as an oil refinery, resulted in certain on-site areas of known and
potential contamination, as described under ITEM 7. "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Environmental, Health
and Safety Matters."

                                    EMPLOYEES

         After the closing of the sale of our former subsidiaries on February
28, 2002, we have no employees. As of February 28, 2002, before the close and
excluding contract labor, our former subsidiaries employed 224 people. Forty
employees were located in the United States, 105 on St. Eustatius, and 79 at
Point Tupper. A majority of the employees at both the St. Eustatius and Point
Tupper facilities were unionized. We believed that our former subsidiaries'
relationships with their employees were good as of February 28, 2002. At that
time, our former subsidiaries had never experienced a material labor related
business disruption.

         ST. EUSTATIUS

         The Windward Islands Federation of Labor ("WIFOL") represented the
majority of the hourly workers at St. Eustatius. Our former subsidiaries entered
into an agreement with WIFOL on June 1, 1993, which extended to May 31, 1996.
The agreement provided for automatic one year extensions if neither party
requested an amendment. Our former subsidiaries had not requested or received
any requests for an amendment prior to closing. Management of our former
subsidiaries believed they were no longer bound by the agreement, but as of
February 28, 2002, they continued to provide pay and benefits to the hourly
workers as if the agreement was still in effect.

         POINT TUPPER

         The Communications, Energy and Paperworkers Union represented a
majority of Point Tupper's hourly work force. During 1999, our former
subsidiaries signed a new agreement with the union which was to expire on
September 30, 2003. As of February 28, 2002, our former subsidiaries had
experienced no operational work stoppages in the preceding five years.

                             GEOGRAPHIC INFORMATION

         Certain information with respect to our operations by geographic
location is provided in Note 14 of the notes to consolidated financial
statements contained in ITEM 14. "EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K" and generally throughout PART I and ITEM 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
included elsewhere in this Report.




                                       14
<PAGE>

                               ITEM 2. PROPERTIES

                       ST. EUSTATIUS, NETHERLANDS ANTILLES

         As of February 28, 2002, our former subsidiaries owned an 11.3 million
barrel petroleum terminaling facility located on the Netherlands Antilles island
of St. Eustatius which is located at a point of minimum deviation from major
shipping routes. St. Eustatius is approximately 1,900 miles from Houston, 1,500
miles from Philadelphia, 550 miles from Amuay Bay, Venezuela, and 1,100 miles
from the Panama Canal. This facility was capable of handling a wide range of
petroleum products, including crude oil and refined products. A three-berth
jetty, a two-berth monopile with platform and buoy systems, a floating hose
station, and an offshore single point mooring buoy with loading and unloading
capabilities served the terminal's customers' vessels.

         This facility had 24 tanks with a total capacity of 4.7 million barrels
dedicated to fuel oil storage, 18 tanks with a total capacity of 1.6 million
barrels dedicated to petroleum products storage, and eight tanks totaling 5.0
million barrels dedicated to multigrade crude oil storage. The facility also had
a 15,000 barrel butane sphere. The fuel oil and petroleum product facilities had
"in-tank" and "in-line" blending capabilities and were constructed in various
phases from 1980 to 1992. Construction of the crude storage facility was
completed in early 1995 by a subsidiary of Chicago Bridge & Iron Company. The
storage tanks complied with construction standards that met or exceeded American
Petroleum Institute, National Fire Prevention Association and other material
industry standards. Crude oil movements at the terminal were fully automated. In
addition to the storage and blending services at St. Eustatius, this facility
had the flexibility to utilize certain storage capacity for both feedstock and
refined products to support its atmospheric distillation unit, which was capable
of processing up to 15,000 barrels per day of feedstock, ranging from
condensates to heavy crude oil.

         The St. Eustatius facility could accommodate the world's largest
vessels for loading and discharging crude oil. The single point mooring system
could handle a single fully-laden vessel of up to 520,000 deadweight tons, which
is a marine vessel's cargo carrying capacity, with a draft of up to 120 feet.
The single point mooring system could discharge or load at rates in excess of
100,000 barrels of crude oil per hour. There were six pumps connected to the
single point mooring system, each of which could pump up to 18,000 barrels per
hour from the single point mooring system to the storage tanks. The jetty at St.
Eustatius could accommodate three vessels simultaneously. The south berth of the
jetty could handle vessels of up to 150,000 deadweight tons with a draft of up
to 55 feet. The north berth of the jetty could handle vessels of up to 80,000
deadweight tons with a draft of up to 55 feet. There was also a barge loading
station on the jetty. At the south and north berths of the jetty, 25,000 barrels
per hour of fuel oil could be discharged or loaded. To accommodate the needs of
gasoline and diesel oil customers, in July 1998, our former subsidiaries
completed installation of a monopile with platform that could handle vessels of
up to 40,000 deadweight tons with a draft of up to 46 feet. The monopile with
platform could handle two vessels simultaneously and could discharge or load
12,000 barrels per hour of refined products. In addition, this facility had a
floating hose station that was used to load bunker fuels onto barges for
delivery to customers. Management of our former subsidiaries believed that the
speed at which their facility at St. Eustatius could discharge or load vessels
with crude oil and petroleum products gave our former subsidiaries a competitive
advantage due to reductions in the time ships spend in port.

         As of February 28, 2002, our former subsidiaries owned and operated all
of the berthing facilities at the St. Eustatius terminal for which they charged
vessels a dock charge. Vessel owners or charterers



                                       15
<PAGE>

may have incurred separate charges for berthing facilities use and associated
services such as pilotage, tug assistance, line handling, launch service,
emergency and spill response and ship services.

         Recognizing the strategic advantage of its location in the Caribbean
near major shipping lanes, our former subsidiaries delivered bunker fuel to
vessels at the St. Eustatius facility. The bunkering business of our former
subsidiaries evolved from offering fuels to ships at the berth to a delivery
system utilizing specially modified barges that provided fuel to vessels at
anchorage. The location of the terminal on the leeward side of the island, which
provided natural protection for ships, generally favorable year-round weather
conditions, and deep navigable water at an anchorage relatively close to shore,
attracted ships to this facility for their bunker fuel requirements. As of
February 28, 2002, our former subsidiaries owned four barges and chartered one
barge, which supported the bunker fuel sales operation.

                        POINT TUPPER, NOVA SCOTIA, CANADA

         As of closing on February 28, 2002, our former subsidiaries owned a
terminaling facility located at Point Tupper in the Strait of Canso, near Port
Hawkesbury, Nova Scotia, Canada, which is located at a point of minimal
deviation from major shipping routes. Point Tupper is approximately 700 miles
from New York City, 850 miles from Philadelphia and 2,500 miles from Mongstad,
Norway. This facility operated the deepest independent ice-free marine terminal
on the North American Atlantic coast, with access to the U.S. East Coast,
Canada, and the Midwestern U.S. via the St. Lawrence Seaway and the Great Lakes
system. The Point Tupper facility could accommodate substantially all of the
world's largest fully-laden very-large and ultra-large crude carriers for
loading and discharging.

         Our former subsidiaries renovated the facilities at Point Tupper and
converted a former oil refinery site into an independent storage terminal. This
work, performed primarily by a subsidiary of Chicago Bridge & Iron Company,
began in 1992 and was completed in 1994. The tanks were renovated to comply with
construction standards that met or exceeded American Petroleum Institute,
National Fire Prevention Association and other material industry standards.

         Management of our former subsidiaries believed that the dock at Point
Tupper was one of the premier dock facilities in North America. The outer berth
of the Point Tupper facility's dock, Berth One, could handle fully-laden vessels
of up to 400,000 deadweight tons with a draft of up to 84 feet. At Berth One,
approximately 75,000 barrels per hour of crude oil, approximately 17,000 barrels
per hour of diesel or gasoline, or 50,000 barrels per hour of fuel oil could be
discharged or loaded. Berth Two could accommodate certain vessels of up to
99,000 deadweight tons with drafts of up to 40 feet. At Berth Two, approximately
25,000 barrels per hour of crude oil, approximately 12,000 barrels per hour of
diesel or gasoline, or approximately 12,000 barrels per hour of fuel oil could
be discharged or loaded. Liquid movement at the terminal was fully automated.
The Point Tupper facility could accommodate two vessels simultaneously. Our
former subsidiaries charged separately for the use of the dock facility as well
as associated services, including pilotage, tug assistance, line handling,
launch service, emergency and spill response and ship services.

         The berths at the dock of the Point Tupper facility connected to a 7.5
million barrel tank farm. The terminal had the capability of receiving and
loading crude oil, petroleum products and certain petrochemicals. This facility
had 16 tanks with a combined capacity of 5.0 million barrels which, as of
February 28, 2002, were dedicated to multigrade crude oil storage, three tanks
with a combined capacity of 0.5 million barrels dedicated to fuel oil storage
and 17 tanks with a combined capacity of 2.0 million barrels dedicated to
petroleum products, including gasoline, gasoline blend components, diesel, and
distillates. During 1997, approximately two-thirds of the storage tanks
dedicated to petroleum products




                                       16
<PAGE>

were converted to crude oil storage. The facility also had a 55,000-barrel
butane storage sphere that was one of the largest of its kind in North America.

         In order to comply with safe handling procedures and Canadian
environmental laws, as of February 28, 2002, our former subsidiaries owned and
operated two fully equipped spill response vessels on Cape Breton Island, one
located at Point Tupper and the other located in Sydney, Nova Scotia. In
addition to these vessels, as of February 28, 2002, our former subsidiaries had
the capability to respond to spills on land or water with a combined spill
response capability of over 2,500 metric tons at this terminal location. As of
February 28, 2002, an additional 7,500 metric ton spill response capability was
immediately available at Point Tupper by agreement with another response
organization. Our former subsidiaries' customers benefited by ready access to
the equipment. In 1995, one of our former subsidiaries was granted Canadian
Coast Guard certification as a response organization with spill response
capabilities. Consequently, vessels calling in the Strait of Canso were required
to pay our former subsidiaries a subscription fee for access to the services
provided by the spill response organization, even if they did not dock at the
Point Tupper terminal.

         There were two truck racks at the Point Tupper facility. The north
truck rack had the capability to load up to 550 barrels per hour of fuel oil and
the south truck rack had the capability to load up to 550 barrels per hour of
fuel oil or diesel.

          As of February 28, 2002, our former subsidiaries were continuing to
negotiate a land exchange agreement with the Province of Nova Scotia conveying
certain land our former subsidiaries owned at the Point Tupper terminal site to
the Province of Nova Scotia in exchange for the conveyance by the Province of
Nova Scotia of certain unused rights-of-way on the remaining property at Point
Tupper. Our former subsidiaries owned approximately 3,000 acres of land at this
location. However, our former subsidiaries were effectively prohibited by law
from using the approximately 1,296 acres comprising Landrie Lake and adjacent
watershed land. The land anticipated to be transferred to the Province is
principally the Landrie Lake and adjacent watershed lands.

                            ITEM 3. LEGAL PROCEEDINGS

         As of closing on February 28, 2002, our former subsidiaries were
involved in various claims and litigation related to the ordinary conduct of
their business. Based upon our analysis of legal matters and our discussions
with legal counsel, we believe that these matters will not materially impact our
business and financial condition, or results of operations.



                                       17
<PAGE>
           ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of our security holders during the
quarter ended December 31, 2001.

         A special general meeting of the shareholders of Group was held on
February 22, 2002. At the meeting, our shareholders voted:

Item 1.  To adopt amendments to our articles of incorporation pursuant to
         which, in the event that we sell all or substantially all of our
         assets, we will distribute (i) in the following order of priority,
         $18.00 per share to our class A common shareholders, $16.40 per share
         to our class B subordinated shareholder and an initial distribution of
         the remaining cash to our class C shareholder, and (ii) after payment
         of our liabilities and following our liquidation, any remaining cash to
         our class C shareholder. If the amount to be received by our class C
         shareholder pursuant to the sale, as determined on the date of closing
         of the sale, would exceed 5% of the total amount to be distributed to
         our shareholders following the closing of the sale, the excess shall be
         distributed 66% to our class A common shareholders and 34% to our class
         B subordinated shareholder.

Item 2.  To (i) approve the sale of substantially all of our assets,
         consisting of all of the outstanding capital stock of our three
         subsidiaries, International, Technology and Marine to Kaneb, followed
         by a distribution to our shareholders of substantially all of the
         proceeds of the sale in accordance with our articles of incorporation,
         as amended, (ii) adopt our dissolution and liquidation to occur on the
         day following the distribution referred to in (i) and distribute our
         remaining assets to our shareholders in accordance with our articles of
         incorporation, as amended, and (iii) appoint our board of directors as
         our liquidator and custodian of our corporate documents following our
         liquidation.

         Although our articles of incorporation did not require a separate vote
of the class A common shareholders, in the interest of fairness to our class A
common shareholders, our board of directors determined, solely with respect to
the proposal to amend our articles of incorporation (Item 1), to require the
affirmative vote of more than 66 2/3% of all votes cast by our class A common
shareholders voting separately as a class at the special general meeting held on
February 22, 2002, provided at least one-half of our outstanding class A common
shareholders were present or represented at the meeting. There were 3,729,404
class A common shares present or represented at the meeting which equals 62.02%
of the outstanding class A common shares. The results of the separate class vote
were as follows:

                                   For               Against            Abstain
                                ---------            -------            -------
                  Item 1.       3,428,017            281,410             19,977

         Following are the results of the voting for Items 1 and 2 given in
aggregate number of class A common shares and class B subordinated shares:

                                   For               Against            Abstain
                                ---------            -------            -------
                  Item 1.       7,228,017            281,410             19,977
                  Item 2.       7,233,662            270,197             25,545





                                       18
<PAGE>

                                    PART II.

                  ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
                                       AND
                            RELATED SECURITY MATTERS

                        MARKET FOR CLASS A COMMON SHARES

         Our class A common shares were traded on the Nasdaq National Market
under the symbol STNV from the date of completion of our initial public offering
on April 28, 1999, through February 28, 2002, the date we delisted our class A
common shares in connection with the closing of the sale of our former
subsidiaries and the commencement of our dissolution and liquidation. The
following table sets forth the range of high and low bid information for our
class A common shares as reported by the Nasdaq National Market for the
indicated quarters during the period from January 1, 2000, through December 31,
2001.

             Quarter Ended                        High            Low
             -------------                        ----            ---

             March 31, 2000                    $   7.875      $   4.750
             June 30, 2000                         7.250          5.375
             September 30, 2000                    8.125          6.125
             December 31, 2000                     9.000          5.938
             March 31, 2001                       10.063          6.875
             June 30, 2001                        14.500          8.750
             September 30, 2001                   14.900          9.900
             December 31, 2001                    18.120         11.750

         As of February 28, 2002, there were 88 holders of record of our class A
common shares. This figure excludes those holders maintaining ownership in
street name and our account, which holds our treasury shares.




                                       19

<PAGE>
                                  DISTRIBUTIONS

         The following table sets forth certain information with respect to
distributions paid on our class A common shares during the period from April 28,
1999, through February 14, 2002 (the date we paid our last quarterly
distribution).

<TABLE>
<CAPTION>

                                                                                                 Additional  Aggregate
       Quarter            Declaration           Record              Payment        Distribution  Arrearage   Arrearage
        Ended                Date                Date                Date           Per Share    Per Share   Per Share*
       -------            -----------           ------              -------        ------------  ---------   ---------
<S>                     <C>               <C>                 <C>                     <C>          <C>         <C>
June 30, 1999          July 29, 1999      August 4, 1999      August 13, 1999         $0.3165      $   --      $   --
September 30, 1999     October 15, 1999   October 29, 1999    November 12, 1999        0.45            --          --
December 31, 1999      January 19, 2000   January 31, 2000    February 14, 2000        0.15          0.30        0.30
March 31, 2000         N/A                N/A                 N/A                        --          0.45        0.75
June 30, 2000          July 19, 2000      July 31, 2000       August 14, 2000          0.15          0.30        1.05
September 30, 2000     October 24, 2000   October 31, 2000    November 14, 2000        0.15          0.30        1.35
December 31, 2000      January 24, 2001   January 31, 2001    February 14, 2001        0.20          0.25        1.60
March 31, 2001         April 18, 2001     April 30, 2001      May 15, 2001             0.45            --        1.60
June 30, 2001          July 24, 2001      July 31, 2001       August 14, 2001          0.45            --        1.60
September 30, 2001     October 17, 2001   October 31, 2001    November 14, 2001        0.45            --        1.60
December 31, 2001      January 18, 2002   January 31, 2002    February 14, 2002        0.45            --        1.60
</TABLE>

N/A - Not applicable. No distribution was declared for the quarter.

* - Payment of the aggregate arrearage per share is one of the requirements that
must be met for the subordination period, as defined in our articles of
incorporation, to end.

         The $18.4998 distribution per class A common share that was paid on or
around February 28, 2002, eliminated all arrearages in target quarterly
distributions, and we are not obligated to pay or accrue any further arrearages
in target quarterly distributions in the future.

                  NETHERLANDS ANTILLES TAX AND RELATED MATTERS

         Under the laws of the Netherlands Antilles as currently in effect, a
holder of class A common shares who is not a resident or deemed a resident of,
and during the taxable year has not engaged in trade or business through a
permanent establishment in, or permanent representative or agent in, the
Netherlands Antilles will not be subject to Netherlands Antilles income tax on
distributions made with respect to the class A common shares or on gains
realized during that year on sale or disposal of such shares. The Netherlands
Antilles do not impose a withholding tax on distributions made by Group. There
are no gift or inheritance taxes levied by the Netherlands Antilles when at the
time of such gift, or at the time of death, the relevant holder of class A
common shares was not domiciled or deemed domiciled in the Netherlands Antilles.
A person is not deemed a resident or deemed domiciled in the Netherlands
Antilles merely on the basis of being a holder of class A common shares. No
reciprocal tax treaty presently exists between the Netherlands Antilles and the
United States.

         Netherlands Antilles law imposes no limitations on the right of
non-resident or foreign owners to hold or vote our class A common shares, though
we currently do not anticipate calling any shareholder meetings prior to our
liquidation.



                                       20
<PAGE>
                      SALE OF SUBSIDIARIES AND LIQUIDATION

         On February 22, 2002, our shareholders voted (i) to sell our
subsidiaries consisting of International and its subsidiaries, Technology and
Marine, (representing our operations and substantially all of our assets prior
to the sale) to Kaneb, (ii) to dissolve and liquidate Group, and (iii) to
appoint Group's board of directors as its liquidator and custodian of its
corporate documents. The sale transaction was completed on February 28, 2002.
The purchase price paid by Kaneb at closing was approximately $311.5 million,
including cash on hand, minus approximately $106.7 million of our former
subsidiaries' debt. The purchase price is subject to adjustment based on the
amount of cash and cash equivalents held by our former subsidiaries on the date
of closing.

         Substantially all of the proceeds from the sale transaction (less
approximately $3.0 million that will be held by Group until its liquidation is
complete, and estimated fees and expenses related to the sale transaction
totaling approximately $6.3 million) were distributed to our shareholders
beginning on February 28, 2002. Holders of our class A common shares and class B
subordinated shares received distributions of $18.4998 per share and $16.8844
per share, respectively. Our class C shareholder received a distribution of
approximately $7.0 million, and we estimate our class C shareholder will receive
a further distribution of approximately $3.0 million following our liquidation,
assuming no adjustments to the purchase price received from Kaneb are required
and costs remain as estimated. The $18.4998 distribution per class A common
share eliminated all arrearages in target quarterly distributions, and we are
not obligated to pay or accrue any further arrearages in target quarterly
distributions. Additionally, the $16.8844 distribution per class B subordinated
share eliminated all deferred distributions payable in respect of these shares
which aggregated $2.9 million.

         At the close of trading on February 28, 2002, we terminated the listing
of our class A common shares on the Nasdaq National Market and our transfer
agent closed its stock transfer books and ceased recording transfers of our
class A common shares as of that date. Our dissolution under Netherlands
Antilles law, occurred on March 2, 2002, and we are currently in the process of
liquidation. Under Netherlands Antilles law, we are no longer authorized to
undertake actions other than those necessary to wind up our affairs. The steps
taken to wind up our affairs, as described below, will be completed when no more
assets are available for distribution, all required filings have been made, and
the report of the liquidator has become binding and final.

          Shareholders of record on February 28, 2002, will remain shareholders
until the liquidation is complete, which we anticipate will occur before
December 31, 2002. After satisfaction of our creditors, any cash remaining at
the end of the liquidation period will be paid to the holder of our class C
shares. No further distributions will be made to holders of our class A common
shares and class B subordinated shares.

         ACTIONS BY THE LIQUIDATOR

         Our shareholders have appointed our board of directors to act as our
liquidator. The liquidator has the responsibility to (a) settle and wind-up our
business and our remaining operations, (b) convert to cash as many of our
remaining non-cash assets as possible, (c) pay or make provision for the
satisfaction of all of our expenses and liabilities, (d) create reserves for
contingencies, (e) prosecute, defend and settle lawsuits, if any, (f) draw up a
plan of distribution (PLAN VAN UITKERING) for the distribution of our assets to
our shareholders, file the plan of distribution with the Trade Registry at
Curacao, Netherlands Antilles, and register our dissolution and the resolution
to dissolve us with the Trade Registry at Curacao, Netherlands Antilles, (g)
distribute our remaining assets, if any, to our class C shareholder, and (h) do
any




                                       21
<PAGE>

other act necessary to wind up and liquidate our business and affairs, including
filing and publishing information regarding the liquidation as required under
Netherlands Antilles law. Under Netherlands Antilles law a liquidator has the
same powers, obligations, and liabilities as a director.

         From the date of dissolution the words "pending liquidation" (IN
LIQUIDATIE) will follow our name on all official documents.

         PLAN OF DISTRIBUTION

         After adoption of the proposal to dissolve us, the liquidator drew up a
plan of distribution which provided the basis for the distributions paid by us
beginning on February 28, 2002. The plan of distribution was made public by a
filing with the Netherlands Antilles Trade Registry on March 26, 2002. The
filing of the plan with the Trade Registry was published in the Official Gazette
of the Netherlands Antilles on April 5, 2002. The plan is also available at the
offices of Covenant Managers N.V., our local representative in Curacao,
Netherlands Antilles. Our creditors have a two-month period following April 5,
2002, to review the plan of distribution and object to its contents. If our
creditors do not object to the plan of distribution within the stated timeframe,
our remaining assets, if any, shall be distributed in accordance with the plan.
The liquidator shall have the authority to sell all of our assets and distribute
the proceeds from such sale according to the plan of distribution, without
further shareholder action or approval.

         DISTRIBUTION TO SHAREHOLDERS

         We have established what we deem are appropriate reserves aggregating
approximately $3.0 million for the payment, satisfaction and discharge of all
known, unascertained or contingent debts and liabilities, including costs and
expenses incurred and anticipated to be incurred in connection with the sale of
any remaining assets and claims from tax authorities. In connection with this,
we anticipate expenses for professional fees, filings, and other expenses of
liquidation of approximately $0.1 million. These expenses will reduce the amount
of assets available for ultimate distribution to the holder of our class C
shares. After payment of these expenses and satisfaction of any liabilities, any
cash remaining at the end of the liquidation period will be paid to the holder
of our class C shares.

         LIQUIDATION ACCOUNTS

         Distributions to our shareholders which have not been claimed within
six months of the date on which they first became payable will be placed in a
depository account under the supervision of the Netherlands Antilles court.
Within seven months of the date on which the last distribution payment became
payable, the liquidator will draw up final liquidation accounts (REKENING EN
VERANTWOORDING). Subsequently, the liquidator will announce in the official
Gazette of the Netherlands Antilles that the liquidation accounts have been
drawn up and such accounts will be filed with the Trade Registry at Curacao,
Netherlands Antilles, for inspection by interested parties. The liquidation
accounts will become final if no objections are filed within three months from
the public announcement that the liquidation accounts are available for
inspection.




                                       22
<PAGE>

         CONTINGENT LIABILITY OF SHAREHOLDERS AFTER DISSOLUTION

         If, following liquidation, a creditor or other party entitled to the
surplus comes forward, or the existence of an asset is ascertained, the court in
the Netherlands Antilles can reopen the liquidation at the request of an
interested party. The court's ability to reopen the liquidation is not subject
to any time limit. In case of such reopening of the liquidation, the liquidator
is entitled to recover from shareholders who received a liquidating
distribution, on a PRO RATA basis, the amount necessary to satisfy the claim of
the creditor or other party, up to the amount of the liquidating distribution
received by each shareholder.

         CUSTODIAN OF COMPANY'S RECORDS

         After completion of our liquidation, the custodian appointed by the
special general meeting will retain all our accounting records and documents for
a period of ten years. The custodian is required to inform the Trade Registry in
Curacao, Netherlands Antilles, of its appointment. Our previous shareholders or
their successors may request the court to provide them with access to our
records if they can provide a valid reason for such request.





                                       23
<PAGE>
                         ITEM 6. SELECTED FINANCIAL DATA

         You should read the following selected financial data in conjunction
with ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS," our consolidated financial statements and notes thereto
and other financial information included elsewhere in this Report.

<TABLE>
<CAPTION>

                                                                         (Dollars in thousands except share amounts)
                                                             --------------------------------------------------------------------
                                                                              Years Ended December 31,
                                                             --------------------------------------------------------------------
                                                               1997(4)      1998(4)        1999(2)         2000           2001
                                                             ---------     ---------      ---------      ---------      ---------
<S>                                                          <C>           <C>            <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:
  Revenues                                                   $ 142,499     $ 136,762      $ 168,343      $ 210,455      $ 202,160
  Costs of revenues                                            122,939       105,888        137,665        181,334        165,079
  Gross profit                                                  19,560        30,874         30,678         29,121         37,081
  Administrative expenses                                        7,735         9,500          8,745          9,717         10,584
  Operating income                                              11,825        20,574         16,084         19,404         24,280
  Interest expense(1)                                           16,874        16,851         14,286         12,759         13,193
  Provision for income taxes                                       780           320            780            938          1,039
  Net income (loss) available to common
   shareholders                                                 (8,361)       (1,503)        (5,136)         6,094         10,901
  Diluted income (loss) per class A common share(2)                 --            --          (0.17)          0.57           1.07
  Cash distributions declared per class A common
   share (2)                                                        --            --         0.7665           0.45           1.55
BALANCE SHEET DATA:
  Total assets                                                 246,479       245,610        236,297        240,738        236,908
  Long-term debt(2)(3)                                         135,000       135,000        101,000        106,931        105,764
  Redeemable preferred stock Series A through C(2)              40,000        40,000             --             --             --
  Preferred stock Series D and E(2)(4)                          61,000        54,824             --             --             --
  Total shareholders' equity(2)                                 50,621        43,331        109,698        106,406        105,652
NET CASH FLOW FROM (USED IN):
  Operating activities                                           9,770        18,190         13,665         23,410         25,019
  Investing activities                                         (12,935)       (4,092)        (8,578)        (9,078)        (7,151)
  Financing activities(2)                                           --        (6,150)       (13,490)        (2,518)       (12,932)
OPERATING DATA:
  EBITDA (5)                                                    22,489        30,116         27,729         32,252         37,252
  Adjusted EBITDA (6)                                           22,489        32,568         33,578         31,710         38,796
  Consolidated fixed charge coverage ratio under
   the indenture (7)                                             1.45x          2.0x           2.0x           2.4x           3.0x

  Operations sustaining capital expenditures                     4,401         9,000          7,591          8,148          6,013
  Total capital expenditures                                     5,344        10,714          8,593          8,578          7,017
  Capacity (in thousands of barrels)                            20,387        19,566         18,738         18,835         18,835
  Percentage capacity leased                                        70%           91%            86%            80%            91%
  Throughput (in thousands of barrels)                         118,275       119,502         99,230        133,134        176,160
  Vessel calls                                                   1,030         1,027          1,028            987          1,030


</TABLE>




                                       24
<PAGE>
NOTES TO SELECTED FINANCIAL DATA

(1)      Interest expense includes commitment fees on our revolving credit
         facility, amortization expense related to deferred financing costs, and
         certain bank charges.

(2)      On April 28, 1999, we completed our initial public equity offering of
         7.6 million class A common shares. The offering price was $20 per share
         raising gross proceeds of $152,000. The gross proceeds of the offering
         were used primarily to redeem all of our outstanding Series A, B, C, D,
         and E preferred stock and pay accrued dividends, underwriters'
         discounts and fees, and certain other costs directly associated with
         the offering. The remaining proceeds were used during May 1999, along
         with existing cash, to repurchase in the open market a principal amount
         of $34,000 of our former subsidiaries' Notes for $39,522, including
         acquisition costs and accrued interest of $3,681 and $1,841,
         respectively. The acquisition costs and the unamortized deferred
         financing costs of $1,062 related to the repurchased debt were recorded
         as an extraordinary charge.

(3)      These amounts exclude the current portion of long-term debt. In
         December 2000, a subsidiary of Group borrowed $7,000 from an equipment
         financing company. The loan required monthly payments of principal and
         interest and was to have matured on January 1, 2007. Interest accrued
         at the three month London InterBank Offered Rates plus 3.2% and
         adjusted monthly. The principal and accrued interest on this loan were
         repaid and all security for the loan was released on March 12, 2002.

(4)      On July 29, 1998, our former subsidiaries sold the Brownsville, Texas,
         facility and a payment of $6,150 was made from our former subsidiaries
         to Group for redemption of a portion of the Series D Preferred Stock.
         The selected financial data includes the results of operations and
         balance sheet data of the Brownsville, Texas, facility through June 30,
         1998.

(5)      EBITDA is defined as the sum of (a) income before provision for income
         taxes, (b) interest expense and (c) depreciation and amortization of
         certain intangible assets. 1998 EBITDA includes the loss recognized on
         the sale of Statia Terminals Southwest, Inc. and a hurricane charge of
         $1,652 and $800, respectively. 1999 EBITDA includes the special
         compensation expense and a hurricane charge of $4,099 and $1,750,
         respectively. 2000 EBITDA includes $542 from the settlement of an
         insurance claim. 2001 EBITDA includes $1,544 of costs related to the
         sale of our former subsidiaries to Kaneb and an impairment charge of
         $673 related to an investment in a technology company. EBITDA is
         presented not as an alternative measure of operating results or cash
         flow from operations (as determined in accordance with U.S. generally
         accepted accounting principles), but rather to provide additional
         information related to our debt servicing ability.

(6)      Adjusted EBITDA is defined as EBITDA adjusted for the effects of
         certain non-recurring transactions and represents the primary measure
         of profit and loss utilized by our management to make decisions about
         resources to be allocated to our operating segments. 1998 Adjusted
         EBITDA excludes the loss recognized on the sale of Statia Terminals
         Southwest, Inc. and a hurricane charge of $1,652 and $800,
         respectively. 1999 Adjusted EBITDA excludes the special compensation
         expense and a hurricane charge of $4,099 and $1,750, respectively. 2000
         Adjusted EBITDA excludes $542 from the settlement of an insurance
         claim. 2001 Adjusted EBITDA excludes $1,544 of costs related to the
         sale of our former subsidiaries to Kaneb.

(7)      The consolidated fixed charge coverage ratio is the ratio of
         International's Adjusted EBITDA to fixed charges, both computed as set
         forth in the indenture to the Notes. International's ability to pay
         dividends is restricted by the indenture to the Notes which generally
         requires, among other things, that it pay dividends only when its
         consolidated fixed charge coverage ratio is at least 2.0 to 1. A fixed
         charge coverage ratio of less than 2.0 to 1 also limits the amount of
         indebtedness International may incur.

         The selected quarterly financial data required by this Item 6 is
included in note 18 of notes to consolidated financial statements beginning on
page F-1 of this Report.



                                       25
<PAGE>
       ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

         For purposes of the discussion below, reference is made to our
consolidated balance sheets as of December 31, 2000 and 2001. Reference is also
made to our consolidated statements of operations, shareholders' equity and cash
flows for the years ended December 31, 1999, 2000, and 2001. Substantially all
of our transactions are denominated in U.S. dollars and all figures are in U.S.
dollars unless otherwise indicated. We prepare our financial statements in
accordance with U.S. generally accepted accounting principles.

         As more fully discussed in the Recent Developments section below, on
February 28, 2002, Group sold its three subsidiaries consisting of International
and its subsidiaries, Technology, and Marine. These former subsidiaries
represented our operations and substantially all of our assets prior to the
sale. We have no other operations and are in the process of liquidation.
Therefore, references made in this section to our operations cover only the
periods indicated and, where not indicated, the period through the closing of
the sale on February 28, 2002. We disclaim any responsibility for our former
subsidiaries subsequent to February 28, 2002.

RECENT DEVELOPMENTS

         On February 22, 2002, Group's shareholders voted (i) to sell its
subsidiaries consisting of International, Technology and Marine (representing
Group's operations and substantially all of its assets prior to the sale) to
Kaneb, (ii) to dissolve and liquidate Group, and (iii) to appoint Group's board
of directors as its liquidator and custodian of its corporate documents. The
sale transaction was completed on February 28, 2002. The purchase price paid by
Kaneb at closing was approximately $311.5 million and includes approximately
$19.9 million of cash on hand and approximately $106.7 million of our former
subsidiaries' debt, consisting of the Notes and the loan collateralized by the
M/V STATIA RESPONDER. The purchase price is subject to adjustment based on the
amount of cash and cash equivalents held by Group's former subsidiaries on
February 28, 2002.

         Substantially all of the proceeds from the sale transaction (less
approximately $3.0 million that will be held by Group until its liquidation is
complete, and fees and expenses related to the sale transaction) were
distributed to Group's shareholders beginning on February 28, 2002. Fees and
expenses are estimated at approximately $6.3 million which includes $1.5 million
of costs expensed during 2001. Holders of Group's class A common shares and
class B subordinated shares received distributions of $18.4998 per share and
$16.8844 per share, respectively. Group's class C shareholder received a
distribution of $7.0 million, and Group estimates its class C shareholder will
receive a further distribution of approximately $3.0 million following Group's
liquidation, assuming no adjustments to the purchase price received from Kaneb
are required and no additional costs are incurred. The $18.4998 distribution per
class A common share eliminated all arrearages in target quarterly distributions
and Group is not obligated to pay or accrue any further arrearages in target
quarterly distributions. Additionally, the $16.8844 distribution per class B
subordinated share eliminated all deferred distributions payable in respect of
these shares which aggregated $2.9 million.

         At the close of trading on February 28, 2002, Group terminated the
listing of its class A common shares on the Nasdaq National Market and Group's
transfer agent closed its stock transfer books and ceased recording transfers of
Group's class A common shares as of that date. Group's dissolution under
Netherlands Antilles law occurred on March 2, 2002 and Group is currently in the
process of liquidation.




                                       26
<PAGE>

Under Netherlands Antilles law, Group is no longer authorized to undertake
actions other than those necessary to wind up its affairs. The steps taken to
wind up its affairs will be completed when no more assets are available for
distribution, all required filings have been made, and the report of the
liquidator has become binding and final.

          Shareholders of record on February 28, 2002, will remain shareholders
until the liquidation is complete, which Group anticipates will occur before
December 31, 2002. After satisfaction of Group's creditors, any cash remaining
at the end of the liquidation period will be paid to the holder of Group's class
C shares. No further distributions will be made in respect of Group's class A
common shares and class B subordinated shares.

         In connection with the sale transaction, we forgave all the notes
receivable from shareholders discussed in note 8 of the notes to consolidated
financial statements. Additionally, the sale transaction qualified as a change
of control for purposes of the stock options discussed in note 11 of the notes
to consolidated financial statements and the employment agreements discussed in
note 12 of the notes to consolidated financial statements. As a result, we
cashed out all outstanding stock options on February 28, 2002, for $18.4998 per
share less the exercise prices and the change of control bonuses were paid. We
recognized $5.1 million of compensation expense on February 28, 2002, related to
the options we granted on August 27, 2001, which represented the unamortized
balance of the deferred compensation on February 28, 2002.

         As a result of the sale transaction, we estimate that non-employee
members of our board of directors will receive an aggregate of $74.9 million,
consisting of (i) their beneficial interest in our class A common shares, class
B subordinated shares and class C shares of $74.7 million, and (ii) net proceeds
on the sale of stock options of $0.2 million. By virtue of his control position
with Castle Harlan Partners II, L.P., our director, John K. Castle, may be
deemed to be the beneficial owner of all of our class B subordinated shares and
class C shares. The amount referenced of $74.7 million includes distributions
payable to Castle Harlan Partners II, L.P. which Mr. Castle disclaims except to
the extent of his pro rata partnership interest in Castle Harlan Partners II,
L.P. We estimate that our executive officers will receive an aggregate of
approximately $30.3 million, consisting of (i) their beneficial interest in our
class A common shares, class B subordinated shares and class C shares of $12.4
million, (ii) net proceeds from the cash-out of stock options of $12.5 million,
(iii) change of control bonuses of $4.1 million, (iv) forgiveness of notes
receivable from shareholders of $1.0 million, and (v) the employer portion of
payroll taxes resulting from these transactions of $0.3 million.

         On March 1, 2002, one of our former subsidiaries funded an irrevocable
trust in the amount of $0.5 million the purpose of which is to pay all the
future commitments related to split dollar life insurance policies benefiting
one of our executive officers.

OVERVIEW OF OPERATIONS PRIOR TO FEBRUARY 28, 2002

         Our former subsidiaries began operations in 1982 as Statia Terminals
N.V., a Netherlands Antilles corporation, operating an oil products terminal
located on the island of St. Eustatius. In 1984, CBI Industries, an industrial
gases and contracting services company, acquired a controlling interest in
Statia Terminals N.V. In 1986, Statia Terminals N.V. purchased Statia Terminals
Southwest, with its facility at Brownsville, Texas. CBI Industries became the
sole owner of Statia Terminals N.V. and Statia Terminals Southwest in 1990. In
1992 and 1993, our former subsidiaries acquired an interest in, and ultimately
all of, the predecessor of Statia Terminals Canada, Incorporated, the managing
partner of Statia Terminals Canada Partnership, which owned the facility located
at Point Tupper, Nova Scotia, Canada.




                                       27
<PAGE>

         In January 1996, Praxair acquired CBI Industries. Castle Harlan
Partners II, L.P., our management and others acquired from Praxair all of the
outstanding capital stock of Statia Terminals N.V., the predecessor to Statia
Terminals Canada, Incorporated, Statia Terminals, Inc., their subsidiaries and
certain of their affiliates in November 1996. Castle Harlan Partners II, L.P. is
a private equity investment fund managed by Castle Harlan, Inc., a private
merchant bank. At the same time, Statia Terminals Point Tupper was amalgamated
into Statia Terminals Canada, Inc. Statia Terminals Canada, International and
Group were organized for purposes of facilitating the Castle Harlan acquisition.
To assist with the financing of the Castle Harlan acquisition, two of our former
subsidiaries sold $135 million of Notes. In July 1998, our former subsidiaries
sold Statia Terminals Southwest to an unaffiliated third party purchaser.

         On April 28, 1999, we completed our initial public equity offering of
7.6 million class A common shares. The offering price was $20 per share, raising
gross proceeds of $152 million. As more fully discussed above under Recent
Developments, Group sold its three subsidiaries on February 28, 2002 and has
begun a process under Netherlands Antilles law whereby it will be liquidated.

         The operations of our former subsidiaries were organized around several
different factors, the two most significant of which were services and products
and geographic location. The primary services and products were terminaling
services (resulting in revenue from storage, throughput, dock usage, emergency
response, and other terminal services) and product sales (including bunker fuels
and bulk oil sales). A majority of our revenues prior to closing were generated
by product sales, which fluctuate with global oil prices. As a result, we
experienced volatility in our revenue stream, which was not necessarily
indicative of our profitability. Gross profit from terminaling services was
generally higher than gross profit from product sales. Vessels called at our
former subsidiaries' facilities to load and/or discharge cargo and/or to take on
bunker fuel. We earned higher port charges (which consist of dock charges,
emergency response fees, and other terminal charges) when a vessel called to
load and/or discharge cargo than we earned when a vessel called only to take on
bunker fuel.

         Our operating costs for terminaling services were relatively fixed and
generally did not change significantly with changes in storage capacity leased.
However, our operating costs were impacted by inflationary cost increases, and
we had certain variable operating expenses which increased or decreased based on
changes in storage capacity available, storage capacity leased, throughput,
vessel calls, and changes in ancillary services offered by us. Additions or
reductions in storage, throughput, port charges, and ancillary service revenues
directly impacted our gross profit. Costs for the procurement of petroleum
products for sale were variable and linked to global oil prices. Our product
costs were also impacted by market supply conditions, types of products sold,
and volumes delivered.

         The following table sets forth for the periods indicated total
capacity, capacity leased, throughput and vessel calls for each operating
location. "Total capacity" represents the average storage capacity available for
lease for a period. "Capacity leased" represents the storage capacity leased to
third parties weighted for the number of days leased in the month divided by the
capacity available for lease. "Throughput" volume is the total number of inbound
barrels discharged from a vessel, tank, rail car or tanker truck, and generally
does not include across-the-dock or tank-to-tank transfers. A "vessel call"
occurred when a vessel docked or anchored at one of our former subsidiaries'
terminal locations in order to load and/or discharge cargo and/or to take on
bunker fuel. Such dockage or anchorage was counted as one vessel call regardless
of the number of activities carried on by the vessel. A vessel call also
occurred when we sold and delivered bunker fuel to a vessel not calling at our
former subsidiaries' terminals for



                                       28
<PAGE>

the above purposes. Each of these statistics is a measure of the utilization of
our former subsidiaries' facilities and equipment.

       Capacity, Capacity Leased, Throughput and Vessel Calls by Location
             (Total Capacity and Throughput in thousands of barrels)

<TABLE>
<CAPTION>

                                                                       For the years ended
                                                                           December 31,
                                                                 ---------------------------------
                                                                 1999          2000          2001
                                                                 ------       -------       -------
<S>                                                              <C>           <C>           <C>
             Netherlands Antilles and the Caribbean
                 Total capacity                                  11,334        11,334        11,334
                 Capacity leased                                    90%           88%           95%
                 Throughput                                      61,737        81,632        98,347
                 Vessel calls                                       936           854           808

             Canada
                 Total capacity                                   7,404         7,501         7,501
                 Capacity leased                                    79%           68%           85%
                 Throughput                                      37,493        51,502        77,813
                 Vessel calls                                        92           133           222

             All locations
                 Total capacity                                  18,738        18,835        18,835
                 Capacity leased                                    86%           80%           91%
                 Throughput                                      99,230       133,134       176,160
                 Vessel calls                                     1,028           987         1,030


</TABLE>




                                       29
<PAGE>
RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage of revenues represented by some items in our consolidated statements
of operations.

                              Results of Operations
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                            For the Years Ended December 31,
                                                          --------------------------------------------------------------------
                                                                  1999                   2000                     2001
                                                          --------------------     ---------------------    ------------------
                                                                        % of                     % of                   % of
                                                           Dollars    Revenues     Dollars     Revenues     Dollars   Revenues
                                                           -------    --------     -------     --------     -------   --------
<S>                                                       <C>           <C>       <C>            <C>       <C>          <C>
Revenues:
   Terminaling services                                   $ 61,665      36.6%     $ 61,547       29.2%     $ 73,687     36.4%
   Product sales                                           106,678      63.4       148,908       70.8       128,473     63.6
                                                          --------    ------      --------      -----      --------    -----
     Total revenues                                        168,343     100.0       210,455      100.0       202,160    100.0
                                                          --------    ------      --------      -----      --------    -----
 Costs of revenues:
   Terminaling services                                     38,064      22.6        40,136       19.1        44,669     22.1
   Product sales                                            99,601      59.2       141,198       67.1       120,410     59.6
                                                          --------    ------      --------      -----      --------    -----
     Total costs of revenues                               137,665      81.8       181,334       86.2       165,079     81.7
                                                          --------    ------      --------      -----      --------    -----
 Gross profit:
   Terminaling services                                     23,601      14.0        21,411       10.2        29,018     14.3
   Product sales                                             7,077       4.2         7,710        3.6         8,063      4.0
                                                          --------    ------      --------      -----      --------    -----
     Total gross profit                                     30,678      18.2        29,121       13.8        37,081     18.3
                                                          --------    ------      --------      -----      --------    -----
 Administrative expenses                                     8,745       5.2         9,717        4.6        10,584      5.2
 Special compensation expense                                4,099       2.4            --         --            --       --
 Hurricane charges                                           1,750       1.0            --         --            --       --
 Costs related to sale of subsidiaries                          --        -             --         --         1,544      0.8
 Impairment charge                                              --        -             --         --           673      0.3
                                                          --------    ------      --------      -----      --------    -----
   Operating income                                         16,084       9.6        19,404        9.2        24,280     12.0
 Interest expense                                           14,286       8.5        12,759        6.1        13,193      6.5
 Interest income                                               846       0.5           387        0.2           853      0.4
                                                          --------    ------      --------      -----      --------    -----
Income before provision for income taxes, preferred
    stock dividends and extraordinary charge                 2,644       1.6         7,032        3.3        11,940      5.9
 Provision for income taxes                                    780       0.5           938        0.4         1,039      0.5
 Preferred stock dividends                                   2,257       1.4            --         --            --       --
 Extraordinary charge related to early extinguishment
  of debt                                                    4,743       2.8            --         --            --       --
                                                          --------    ------      --------      -----      --------    -----
   Net income (loss)                                      $ (5,136)     (3.1%)    $  6,094        2.9%     $ 10,901      5.4%
                                                          =========    ======     ========      =====      ========    =====

</TABLE>

         During September 1998, Hurricane Georges caused $8.5 million in damage
to components of the St. Eustatius facility. Insulation on certain storage
tanks, electrical transmission systems, and roofs of several buildings sustained
damage. During the third quarter of 1998, we recorded a charge of $0.8 million
consisting of an insurance deductible of $0.5 million related to the hurricane
damage and other expenses. Insurance proceeds related to this storm aggregated
$7.7 million, of which $3.1 million was collected through December 31, 1999, and
the remaining $4.6 million was collected in 2000. Hurricane Georges did not
significantly impact operations of the facility, which returned to normal within
days of the storm. Repair work related to the damage caused by Hurricane Georges
is complete.

         As a result of damages sustained to the St. Eustatius facility from
Hurricane Lenny in late November 1999, we incurred a one-time non-cash charge of
$1.5 million to partially reduce the carrying value of the shoreline protection
system at the facility and a one-time cash charge of $0.25 million to cover
other hurricane related expenses. The damaged shoreline protection system was
not covered by insurance and, together with other civil work, was substantially
replaced during 2000 at a cost of $2.8 million.




                                       30
<PAGE>

         Our operations were not significantly impacted by adverse weather
conditions during 2000 and 2001.

         The following tables set forth, for the periods indicated (a) the total
revenues and total operating income, after allocation of administrative expenses
and elimination of certain intercompany transactions, at each operating location
and (b) the percentage such revenues and operating income relative to our total
revenues and operating income.

                              Revenues by Location
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                             For the Years Ended December 31,
                                              -----------------------------------------------------------------
                                                    1999                   2000                   2001
                                              ------------------     -------------------    -------------------
                                                           % of                    % of                   % of
                                              Dollars      Total     Dollars       Total    Dollars       Total
                                              -------      -----     -------       -----    -------       -----

<S>                                         <C>           <C>      <C>            <C>     <C>            <C>
   Netherlands Antilles and the Caribbean   $ 149,852     89.0%    $ 192,165      91.3%   $ 171,813      85.0%
   Canada                                      18,491     11.0%       18,290       8.7%      30,347      15.0%
                                            ---------     -----     --------       ----    --------      -----

       Total                                $ 168,343    100.0%    $ 210,455     100.0%   $ 202,160     100.0%
                                            =========    ======    =========     ======   =========     ======

</TABLE>

                          Operating Income by Location
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                             For the Years Ended December 31,
                                              -----------------------------------------------------------------
                                                    1999                   2000                   2001
                                              ------------------     -------------------    -------------------
                                                           % of                    % of                   % of
                                              Dollars      Total     Dollars       Total    Dollars       Total
                                              -------      -----     -------       -----    -------       -----

<S>                                         <C>           <C>      <C>            <C>     <C>            <C>
   Netherlands Antilles and the Caribbean    $ 12,981     80.7%     $ 15,616      80.5%    $ 14,802      61.0%
   Canada                                       3,103     19.3%        3,788      19.5%       9,478      39.0%
                                             --------     -----     --------      -----    --------      -----

       Total                                 $ 16,084    100.0%     $ 19,404     100.0%    $ 24,280     100.0%
                                             ========   =======     ========    =======    ========    =======

</TABLE>

YEAR ENDED DECEMBER 31, 2001, COMPARED WITH YEAR ENDED DECEMBER 31, 2000

         REVENUES

         Total revenues for the year ended December 31, 2001, were $202.2
million compared to $210.5 million for the year ended December 31, 2000, a
decrease of $8.3 million, or 3.9%. The decrease in total revenues was primarily
due to lower average selling prices within our product sales segment, partially
offset by increased revenues from terminaling services.

         Revenues from terminaling services for the year ended December 31,
2001, were $73.7 million, compared to $61.5 million for the year ended December
31, 2000, an increase of $12.2 million or 19.7%. The increase in terminaling
services revenues for the year ended December 31, 2001, compared to 2000, was
principally due to improved leasing of our available capacity, additional
barrels of throughput, and increased vessel calls working cargo. Additionally,
we believe our operations for the first six months of 2000 were adversely
impacted by the accord established between many of the oil exporting nations in
1999, some of whom were our customers during this period, to raise crude oil
prices by reducing supply. Members of the accord reduced their production of
crude oil during the period from April 1999 through late March 2000, which
reduced the worldwide quantity of crude oil and petroleum products in storage.




                                       31
<PAGE>

The accord primarily impacted our terminaling services revenues beginning with
the second half of 1999 and continuing through most of the first half of 2000.

         As of December 31, 2001, approximately 71% of our total storage
capacity was leased pursuant to long-term contracts. For the year ended December
31, 2001, approximately 61% of our storage and throughput revenues, excluding
related ancillary services, were derived from long-term contracts.

         Revenues from terminaling services at St. Eustatius increased
approximately $3.5 million, or 8.1%, during the year ended December 31, 2001, as
compared to the year ended December 31, 2000. The increase in revenues from
terminaling services was due primarily to improved leasing of our available
capacity, additional barrels of throughput, and increased vessel calls working
cargo. For the year ended December 31, 2001, the overall percentage of capacity
leased at this facility was 95% compared to 88% for the same period of 2000,
reflecting an increase in the percentage of storage capacity leased for both
residual fuel oil and clean products. The increase in the percentage of capacity
leased for fuel oil and clean product storage resulted principally from new
short-term and long-term product storage contracts. Our crude oil storage tanks
at this facility were fully leased during 2001 and 2000. During the year ended
December 31, 2001, our average revenue per barrel leased for all products stored
increased for this facility by 3.5% over the prior year average.

         Total throughput at St. Eustatius increased 20.5%, from 81.6 million
barrels during the year ended December 31, 2000, to 98.3 million barrels during
2001 due primarily to increased throughput of crude oil. Twenty additional cargo
vessels (excluding vessels calling only to take on bunker fuel) called at the
St. Eustatius facility during the year ended December 31, 2001, than during the
same period of 2000, resulting in higher average port charges per vessel call
and revenues from port charges. Port charges consist of dock charges, emergency
response fees, and other terminal charges.

         Revenues from terminaling services at Point Tupper increased
approximately $8.6 million, or 47.3%, during the year ended December 31, 2001,
as compared to the year ended December 31, 2000. The increase in revenues from
terminaling services was due primarily to improved leasing of our available
capacity, additional barrels of throughput, and increased vessel calls working
cargo. The percentage of tank capacity leased at Point Tupper increased from 68%
for the year ended December 31, 2000, to 85% for the same period of 2001,
reflecting an increase in the percentage of storage capacity leased for crude,
clean, and fuel oil product storage. The increase in the percentage of capacity
leased resulted principally from new short-term storage contracts, a long-term
storage contract with a gasoline blender, and a long-term crude oil storage
contract. During the year ended December 31, 2001, our average revenue per
barrel leased increased for this facility.

         Total throughput at Point Tupper increased from 51.5 million barrels
during the year ended December 31, 2000, to 77.8 million barrels during 2001 due
primarily to increased throughput of crude oil and clean products. Eighty-four
additional cargo vessels (excluding vessels calling only to take on bunker fuel)
called at the Point Tupper facility during the year ended December 31, 2001,
than during the same period of 2000, resulting in higher revenues from port
charges.

         Revenues from product sales were $128.5 million for the year ended
December 31, 2001, compared to $148.9 million for the same period in 2000, a
decrease of $20.4 million, or 13.7%. This decrease was primarily due to a lower
average selling price which was partially offset by increases in the volume of
products delivered, including increased bunkering operations at Point Tupper.
Metric tons of bunkers and bulk oil delivered increased 9.9% during the year
ended December 31, 2001, as compared to the same period of 2000. The average
selling price decreased 16.0% when comparing the year ended December 31, 2001,
with the same period of 2000. This decrease in the average selling price was
primarily the result of significantly lower global oil market prices.



                                       32
<PAGE>
         GROSS PROFIT

         Gross profit for the year ended December 31, 2001, was $37.1 million
compared to $29.1 million for the same period of 2000, representing an increase
of $8.0 million, or 27.3%. The increase in gross profit was primarily the result
of the increased revenues from terminaling services discussed above.
Additionally, during the first quarter of 2000, we replaced certain hoses
attached to the single point mooring system at St. Eustatius. As a result, we
changed the estimated useful lives of certain hoses and incurred a non-cash
charge of $0.8 million to depreciation expense during the first quarter of 2000,
which is included in costs of terminaling services revenues.

         Gross profit from our product sales segment for the year ended December
31, 2001, was $8.1 million compared to $7.7 million for the same period of 2000,
representing an increase of $0.4 million, or 4.6%. This increase in gross profit
from product sales is primarily due to greater quantities of bunker fuels
delivered and higher margins realized due to improved purchasing of products.

         Our operating expenses, which are included in costs of revenues, have
been relatively fixed. However, operating expenses at both St. Eustatius and
Point Tupper have increased during the year ended December 31, 2001, as compared
to the same period of 2000, primarily due to increased personnel costs, contract
labor, and marine equipment expenses resulting from the significantly higher
throughput and number of vessels working cargo at both facilities during the
year ended December 31, 2001.

         ADMINISTRATIVE EXPENSES

         Administrative expenses were $10.6 million for the year ended December
31, 2001, as compared to $9.7 million for the same period of 2000, representing
an increase of $0.9 million, or 8.9%. The increase during the year ended
December 31, 2001, as compared to the same period of 2000, is primarily the
result of higher personnel costs (including certain performance-based
compensation), and higher depreciation costs primarily related to computer
software. The increase was partially offset by a decrease in professional fees.
Administrative expenses primarily relate to costs incurred at our U.S.
administrative offices.

         COSTS RELATED TO SALE OF SUBSIDIARIES

         As more fully discussed in note 19 of the notes to consolidated
financial statements and the Recent Developments section above, on February 28,
2002, Group sold its three subsidiaries. During the year ended December 31,
2001, we incurred certain direct costs to third parties (including professional
fees) of $1.5 million which were expensed.

         IMPAIRMENT CHARGE

         As more fully discussed in note 2 of the notes to consolidated
financial statements and below, during the fourth quarter of 2001, the Company
determined the amount it had invested in a technology investment company which
invested in an online petroleum products trading company was impaired and
recognized an impairment charge of $0.7 million.



                                       33
<PAGE>
         INTEREST EXPENSE

         During the years ended December 31, 2001 and 2000, we incurred $13.2
million and $12.8 million, respectively, of interest expense. The increase
during the year ended December 31, 2001, as compared to the same period of 2000,
was primarily due to interest on equipment financing secured by the M/V STATIA
RESPONDER, which is discussed further below. Interest expense includes interest
accrued on our long-term debt, interest expense and commitment fees on our
revolving credit facility, amortization expense related to deferred financing
costs, and bank charges.

         PROVISION FOR INCOME TAXES

         The provision for income taxes was $1.0 million for the year ended
December 31, 2001, as compared to $0.9 million for the same period of 2000. The
increase in the provision for income taxes was primarily due to large
corporation tax paid in Canada, and higher state taxes incurred in the U.S. For
a further discussion of income taxes, please see note 10 of the notes to
consolidated financial statements and the Tax Matters section below.

         NET INCOME

         Net income was $10.9 million for the year ended December 31, 2001, as
compared to $6.1 million for the year ended December 31, 2000. The improvement
in our results is attributable to the net effect of the operating factors
discussed above.

YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999

         COMPARABILITY

         Our initial public offering of equity, which was completed on April 28,
1999, has impacted our financial condition and results of operations and,
therefore, comparability between years.

         REVENUES

         Total revenues for the year ended December 31, 2000, were $210.5
million compared to $168.3 million for the year ended December 31, 1999, an
increase of $42.2 million, or 25.0%. The increase in total revenues was
primarily due to increases in the average selling prices within our product
sales segment.

         Revenues from terminaling services, for the year ended December 31,
2000, were $61.5 million, a small decrease from $61.7 million for the previous
year. We believe the small decrease in terminaling services revenues for the
year ended December 31, 2000, compared to 1999, was principally due to the
adverse effects of the accord established between many of the oil exporting
nations, some of whom were our customers during this period, to raise crude oil
prices by reducing supply. Members of the accord reduced their production of
crude oil during the period from April 1999 through late March 2000, which
reduced the worldwide quantity of crude oil and petroleum products in storage.
The accord primarily impacted our terminaling services revenues beginning with
the second half of 1999 and continuing through most of the first half of 2000.
The impact of the accord during the first half of 2000 was partially offset by
uncertain conditions in the crude oil and petroleum products markets during the
second half of 2000 which created trading opportunities for several of our
customers and resulted in these customers




                                       34
<PAGE>

leasing storage capacity from us. Additionally, during the second half of 2000,
increased throughput of crude oil favorably impacted our revenues.

         As of December 31, 2000, approximately 73% of our total storage
capacity was leased pursuant to long-term contracts. For the year ended December
31, 2000, approximately 65% of our storage and throughput revenues, excluding
related ancillary services, were derived from long-term contracts.

         Revenues from terminaling services at St. Eustatius decreased
approximately $0.2 million, or 0.4%, during the year ended December 31, 2000, as
compared to the year ended December 31, 1999. Lower storage revenues, resulting
from a lower percentage capacity leased, were partially offset by increased
revenues from port charges. Port charges consisted of dock charges, emergency
response fees, and other terminal charges. For the year ended December 31, 2000,
the overall percentage of capacity leased at this facility was 88% compared to
90% for the same period of 1999, reflecting a decrease in the percentage of
storage capacity leased for both residual fuel oil and clean products. During
the year ended December 31, 2000, our average revenue per barrel leased
decreased 10.1% for this facility.

         Total throughput at St. Eustatius increased 32.2%, from 61.7 million
barrels during the year ended December 31, 1999, to 81.6 million barrels during
2000 due primarily to increased throughput of crude oil. Although 18 fewer cargo
vessels (excluding vessels calling only to take on bunker fuel) called at the
St. Eustatius facility during the year ended December 31, 2000, than during the
same period of 1999, the average size of the vessels increased. The net result
of these two factors was increased revenues from port charges.

         Revenues from terminaling services at Point Tupper were virtually
unchanged during the year ended December 31, 2000, as compared to the year ended
December 31, 1999. Lower storage revenues, resulting from a lower percentage
capacity leased, were offset by higher revenues from port charges. The
percentage of tank capacity leased at Point Tupper decreased from 79% for the
year ended December 31, 1999, to 68% for the same period of 2000. This decrease
was primarily the result of the decision by a customer of this facility, which
is a participant in the accord, not to renew its crude oil storage contract at
the end of the second quarter of 1999. During the year ended December 31, 2000,
our average revenue per barrel leased decreased for this facility. Another
customer significantly increased its throughput of crude oil during 2000.
Forty-one more vessels called during the year ended December 31, 2000, as
compared to the same period of 1999, which led to higher revenues from port
charges at this facility.

         Revenues from product sales were $148.9 million for the year ended
December 31, 2000, compared to $106.7 million for the same period in 1999, an
increase of $42.2 million, or 39.6%. This increase was primarily due to an
increase in the average selling price which was partially offset by decreases in
the volume of products delivered. Metric tons of product sold decreased 12.0%
during the year ended December 31, 2000, as compared to the same period of 1999.
The average selling price increased 56.1% when comparing the year ended December
31, 2000, with the same period of 1999. This increase in the average selling
price was primarily the result of significantly higher oil market prices.



                                       35
<PAGE>

         GROSS PROFIT

         Gross profit for the year ended December 31, 2000, was $29.1 million
compared to $30.7 million for the same period of 1999, representing a decrease
of $1.6 million, or 5.1%. The decrease in gross profit was primarily the result
of lower gross profits realized on terminaling services, which were partially
offset by higher dollar gross margins realized on product sales. Gross profit
from terminaling services decreased primarily as a result of lower percentage of
capacity leased and increases in the operating costs associated with the
providing of our terminaling services at both of our former subsidiaries'
operating locations. Additionally, during the year ended December 31, 2000, we
replaced certain hoses attached to the single point mooring system at St.
Eustatius. As a result, we changed the estimated useful lives of certain hoses
and incurred a non-cash charge of $0.8 million to depreciation expense during
the first quarter of 2000, which is included in costs of terminaling services
revenues.

         Gross profit from our product sales segment for the year ended December
31, 2000 was $7.7 million compared to $7.1 million for the same period of 1999,
representing an increase of $0.6 million, or 8.9%. This increase in gross profit
from product sales is primarily due to higher margins realized due to improved
purchasing of products.

         Our operating expenses, which are included in costs of revenues, have
been relatively fixed. However, operating expenses at both St. Eustatius and
Point Tupper have increased during the year ended December 31, 2000, as compared
to the same period of 1999, primarily due to increased personnel costs, contract
labor and marine equipment expenses resulting from the significantly higher
throughput at both facilities and the increased number of vessels working cargo
at Point Tupper during the year ended December 31, 2000.

         ADMINISTRATIVE EXPENSES

         Administrative expenses were $9.7 million for the year ended December
31, 2000, as compared to $8.7 million for the same period of 1999, representing
an increase of $1.0 million, or 11.1%. The increase during the year ended
December 31, 2000, as compared to the same period of 1999, is primarily the
result of higher personnel costs (including certain performance-based
compensation), and higher depreciation costs primarily related to computer
software. Administrative expenses primarily relate to costs incurred at our U.S.
administrative offices.

         SPECIAL COMPENSATION EXPENSES

         As more fully discussed in notes 3 and 11 of the notes to consolidated
financial statements, we recorded special compensation expense during the year
ended December 31, 1999, of $4.1 million, of which $2.2 million was a non-cash
charge related to the vesting of certain stock options.

         HURRICANE CHARGES

         As a result of damages sustained to our St. Eustatius facility from
Hurricane Lenny in late November 1999, we incurred a one-time non-cash charge of
$1.5 million to partially reduce the carrying value of the shoreline protection
system and a one-time cash charge of $0.25 million to cover other hurricane
related expenses. The damaged shoreline protection system was not covered by
insurance and, together with certain other civil work, was substantially
replaced during 2000 at a cost of $2.8 million.



                                       36
<PAGE>
         INTEREST EXPENSE

         During the years ended December 31, 2000 and 1999, we incurred $12.8
million and $14.3 million, respectively, of interest expense. Interest expense
includes interest accrued on our long-term debt, interest expense and commitment
fees on our revolving credit facility, amortization expense related to deferred
financing costs, and bank charges. In May 1999, we repurchased $34.0 million of
the Notes, which resulted in lower interest and amortization expense related to
this debt.

         PROVISION FOR INCOME TAXES

         Provision for income taxes was $0.9 million for the year ended December
31, 2000, as compared to $0.8 million for the same period of 1999. The provision
for income taxes was increased, as compared to the previous year, in
contemplation of potential additional income tax assessments from jurisdictions
in which our former subsidiaries operate, offset by the effect of certain tax
benefits. For a further discussion of income taxes, please see note 10 of the
notes to consolidated financial statements and the Tax Matters section below.

         PREFERRED STOCK DIVIDENDS

         During 1999, we redeemed all of our outstanding preferred stock in
connection with our initial public offering of equity. Preferred stock dividends
accrued were $2.3 million for the year ended December 31, 1999.

         EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF DEBT

         As more fully discussed in note 3 of the notes to consolidated
financial statements, we recognized an extraordinary charge of $4.7 million
during the year ended December 31, 1999, in connection with the repurchase of
$34.0 million of the Notes. This charge represented the premium paid to acquire
Notes in the open market and other acquisition costs. There was no income tax
effect associated with this extraordinary charge.

         NET INCOME (LOSS)

         Net income was $6.1 million for the year ended December 31, 2000, as
compared to a net loss to common shareholders of $5.1 million for the year ended
December 31, 1999. The improvement in our results is attributable to the
elimination of the extraordinary charge and preferred stock dividends, the
reduction of our interest expense, and the net effect of the operating factors
discussed above.



                                       37
<PAGE>
SELECTED QUARTERLY FINANCIAL INFORMATION

         The following table sets forth selected unaudited quarterly operating
results for each of our last eight quarters. EBITDA is our earnings before
interest expense, taxes, depreciation and amortization and represents a measure
of cash flow. This information was prepared by us on a basis consistent with our
audited financial statements and includes all adjustments, consisting of normal
and recurring adjustments, that we consider necessary for a fair presentation of
the data. These quarterly results are not necessarily indicative of future
results of operations. This information should be read in conjunction with our
consolidated financial statements and notes thereto included elsewhere in this
Report and our quarterly reports on Form 10-Q.

<TABLE>
<CAPTION>

                                                           Quarters Ended
                                                        (Dollars in thousands)
                                    -------------------------------------------------------------------------
                                    March 31,      June 30,       September 30,      December 31,       Total
                                    ---------      --------       -------------      ------------       -----
<S>                                <C>             <C>            <C>                  <C>            <C>
      2000

      Total revenues               $  42,305       $  54,227      $  57,542            $ 56,381       $  210,455
      Operating income                 l,813           3,660          6,859               7,072           19,404
      EBITDA                           5,428           6,684          9,940              10,200           32,252

      2001

      Total revenues               $  50,213       $  53,860      $  51,068            $ 47,019       $  202,160
      Operating income                 6,807           7,114          5,813               4,546           24,280
      EBITDA                          10,008          10,349          9,092               7,803           37,252

</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

         CASH FLOW FROM OPERATING ACTIVITIES

         Net cash provided by operating activities was $13.7 million, $23.4
million, and $25.0 million for the years ended December 31, 1999, 2000, and
2001, respectively. Cash flow from operations has been our primary source of
liquidity during these periods. Differences between net income and positive
operating cash flow have resulted primarily from depreciation and amortization
burdens, non-cash charges, and changes in various working capital accounts.

         Prior to the sale of our former subsidiaries, we periodically purchased
refined petroleum products for resale as product sales, and our inventory
balances changed based on these activities. As of December 31, 2000, and 2001,
our inventory balances were $1.6 million and $2.0 million, respectively.

         CASH FLOW FROM INVESTING ACTIVITIES

         Net cash used in investing activities, consisting primarily of
purchases of property and equipment, was $8.6 million, $9.1 million, and $7.2
million for the years ended December 31, 1999, 2000, and 2001, respectively. See
the Capital Expenditures section below.

         During the year ended December 31, 2000, we acquired an interest for
$0.5 million in a technology investment company which held as its sole
investment an investment in a company providing



                                       38
<PAGE>

on-line trading of certain petroleum products. During the year ended December
31, 2001, we invested an additional $0.1 million in the technology investment
company and provided the online petroleum products trading company $0.07 million
in the form of a convertible loan in conjunction with similar loans from other
investors. During the fourth quarter of 2001, we determined the amounts we had
invested in these entities were impaired and recognized an impairment charge of
$0.7 million.

         CASH FLOW FROM FINANCING ACTIVITIES

         Our cash flows from financing activities for the year ended December
31, 1999, were impacted by our initial public offering of equity which is more
fully discussed in note 3 of the notes to consolidated financial statements. The
gross proceeds of the offering were used primarily to redeem all of our
outstanding Series A, B, C, D, and E preferred stock ($94.8 million) and pay
accrued preferred stock dividends ($9.7 million) and underwriters' discounts,
fees, and other costs directly associated with the offering ($15.2 million). In
addition, proceeds from the offering were invested and used during May 1999,
along with existing cash, to repurchase in the open market a principal amount of
$34 million of the Notes previously issued by two of our subsidiaries ($37.7
million, including a premium and costs). In connection with the repurchase of
the Notes, we incurred a $4.7 million loss on the early extinguishment of debt.

         During the years ended December 31, 1999, 2000, and 2001, we declared
and paid distributions on our class A common shares of $5.8 million ($0.7665 per
share), $3.1 million ($0.45 per share), and $9.4 million ($1.55 per share),
respectively. Additionally, during 1999, distributions on our class B
subordinated shares aggregating $2.9 million ($0.7665 per share) were declared.
Distributions on the class B subordinated shares were deferred and were to
remain deferred until expiration of the deferral period as defined in our
articles of incorporation. No distributions on our class B subordinated shares
were declared during 2000 and 2001. See "SALE OF SUBSIDIARIES AND LIQUIDATION"
under Item 5 of this Report for additional information with regards to the sale
to Kaneb and our distributions.

         Our board of directors authorized the open market purchase of up to two
million shares of our class A common shares. As of December 31, 2001, we had
acquired 1,586,747 class A common shares, at an aggregate cost of $11.1 million.
We made no purchases of our class A common shares after March 2001.

         On May 2, 2000, we granted options to purchase 228,000 class A common
shares to certain of our employees and non-employee directors at an exercise
price of $5.59 per share, representing the fair market value of the class A
common shares on the date of grant. On January 24, 2001, we granted options to
purchase 235,500 class A common shares to certain of our employees and
non-employee directors at an exercise price of $8.094 per share, representing
the fair market value of the class A common shares on the date of grant. On
August 27, 2001, we granted options to purchase 680,000 class A common shares to
certain of our employees at an exercise price of $5.00 per share which was below
the fair market value of the class A common shares of $12.975 on the date of
grant. These options were granted pursuant to our 1999 share option plan and
were to be exercised on or after the ninth anniversary of the grant date;
provided, however, that the options were to become exercisable earlier under
certain conditions including immediately prior to any change of control, as
defined in the 1999 share option plan. As of April 16, 2002, options on 4,000
shares of our class A common shares remained available for grant under our
existing stock option plan. As further discussed in note 19 of the notes to
consolidated financial statements and the Recent Developments section above, all
outstanding stock options vested and were cashed out on February 28, 2002.




                                       39
<PAGE>

         In December 2000, we borrowed $7.0 million (excluding direct costs of
the borrowing of $0.1 million) from an equipment financing company. This loan
was repaid on March 12, 2002, which resulted in the release of Group's guarantee
of this loan. The loan required monthly payments of principal and interest, and
would have matured on January 1, 2007. Interest accrued at three month London
InterBank Offered Rates plus 3.2% (5.06% and 5.12% at December 31, 2001 and
February 28, 2002, respectively) and adjusted monthly. At December 31, 2000 and
2001, the outstanding principal balance of this loan was $7.0 million and $5.9
million, respectively. The loan was collateralized by a security interest in the
M/V STATIA RESPONDER, one of our emergency response and maintenance support
vessels, which was operated at our former subsidiaries' Caribbean terminal. The
loan was subject to certain financial covenants, the most restrictive of which,
included, but was not limited to the following: (i) a debt service coverage
ratio of at least 1.50 to 1, (ii) the maintenance of $70.0 million of net worth
by Group, and (iii) the maintenance of specified insurance coverage limits on
the collateral. During the year ended December 31, 2001, we repaid $1.1 million
of the loan principal.

         We had a $17.5 million revolving credit facility secured by certain of
our accounts receivable and oil inventory, which was to renew annually under the
original terms of the agreement unless otherwise canceled by either party. The
credit facility was terminated on March 20, 2002. The revolving credit facility
was available for working capital needs and letter of credit financing, and it
permitted us to borrow in accordance with a defined available borrowing base,
which was approximately $8.8 million at December 31, 2001. The revolving credit
facility bore interest at the prime rate plus 0.5% per annum (5.25% at December
31, 2001 and February 28, 2002) and was to expire on November 27, 2002. During
December 1999 and the first and second quarters of 2000, we borrowed against the
revolving credit facility, and all of such borrowings were repaid by May 2000.
No subsequent borrowings were made.

         As more fully discussed in notes 5 and 19 of the notes to consolidated
financial statements, Kaneb redeemed the Notes on April 5, 2002. The debt
service costs associated with the borrowings of our former subsidiaries under
the Notes imposed a significant burden on our liquidity. The Notes accrued
interest at 11 3/4% per annum payable semi-annually on May 15 and November 15.
The Notes were scheduled to mature on November 15, 2003. As further discussed in
note 5 of the notes to consolidated financial statements, the Notes were
redeemable in whole or in part at the option of our former subsidiaries at
redemption prices set forth in the indenture relating to the Notes. Under the
terms of the indenture, the issuers could forego the redemption process and
repurchase the Notes in the open market. Any time on or prior to November 15,
1999, we were permitted to redeem or repurchase up to 35% of the aggregate
principal amount of the Notes with the proceeds of one or more equity offerings.
As further discussed above and in note 3 of the notes to consolidated financial
statements, during May 1999, and in connection with our initial public offering
of equity, we repurchased in the open market a principal amount of $34 million
of the Notes.

         The indenture relating to the Notes provided that an offer be made by
the issuers to repurchase all outstanding Notes at a repurchase price of 101% of
the principal amount, plus accrued and unpaid interest, if any, within 30 days
should a change of control, as defined in the indenture, occur. If such an offer
was not made within such 30 day period, the trustee under the indenture (or at
least 25 percent of the holders of the Notes) could accelerate payment of the
Notes. As more fully discussed in note 19 of the notes to consolidated financial
statements, a change of control occurred on February 28, 2002, after which Group
had no continuing liability with regard to the Notes. Prior to the change of
control, we were in compliance with all the financial covenants set forth in the
indenture.

         The indenture generally limited the incurrence of additional debt by
International, limited the ability of International to pay Group dividends or
make any other distribution to Group, and limited the



                                       40
<PAGE>

ability of International to sell its assets. Under the indenture, International
and its subsidiaries could incur additional indebtedness as long as
International's consolidated fixed charge coverage ratio was at least 2.0 to 1.
The fixed charge coverage ratio is the ratio of Adjusted EBITDA to fixed
charges, each computed as set forth in the indenture with respect to the Notes.
The indenture required EBITDA for International to be adjusted for specified
non-cash income and expense items to compute Adjusted EBITDA. Adjusted EBITDA
for International also excluded certain administrative expenses, and prior to
the termination of the Castle Harlan management fee, excluded that fee incurred
by Group. Under the terms of the indenture, International could not pay Group
any dividend if at the time of declaration:

         o        a default or event of default under the indenture shall have
                  occurred and be continuing or shall occur as a consequence
                  thereof;
         o        International's consolidated fixed charge coverage ratio (as
                  defined in the indenture) for the prior four full quarters was
                  less than 2.0 to 1; or
         o        the amount of such dividend, when added to the aggregate
                  amount of all other dividends and specific other restricted
                  payments made by International after November 27, 1996, and
                  not covered by other exceptions in the indenture, exceeded the
                  sum specified below.

         Such sum is:

         50% of International's consolidated net income, as defined in the
         indenture and taken as one accounting period, from November 27, 1996,
         to the end of International's most recently ended fiscal quarter for
         which internal financial statements were available at the time of such
         dividend or, if such aggregate consolidated net income was a deficit,
         minus 100% of such aggregate deficit,

         PLUS

         the net cash proceeds from the issuance and sale after November 27,
         1996, of International capital stock to Group and/or third parties.

         Some other dividends, generally unrelated to operating cash flow, were
permitted notwithstanding the second and third items above.

         Prior to closing on February 28, 2002, no event of default existed and
was continuing under the indenture to the Notes, of which $101.0 million were
outstanding. The consolidated fixed charge coverage ratio as defined in the
indenture was 3.0 to 1 at December 31, 2001. Additionally, at December 31, 2001
and based upon calculations specified in the indenture, International was
allowed to pay additional dividends of approximately $13.7 million.



                                       41
<PAGE>

CAPITAL EXPENDITURES

         We spent $8.6 million, $8.6 million, and $7.0 million during the years
ended December 31, 1999, 2000, and 2001, respectively, primarily on property and
equipment. These amounts include $1.0 million, $0.4 million, and $1.0 million,
respectively, which was spent to enhance our ability to generate incremental
revenues. During 1999, 2000, and 2001, a majority of capital expenditures were
related to sustaining our existing operations, including our terminal and marine
maintenance programs. The amount spent during 2000 also includes $2.8 million
related to repairs to our shoreline protection system at St. Eustatius which was
damaged by Hurricane Lenny in 1999.

         As of February 28, 2002, our former subsidiaries had evaluated the
economic feasibility of a salt deposit, for approximately four years and we
believed our former subsidiaries planned to continue to investigate it during
2002. As of February 28, 2002, our former subsidiaries had a license from
governmental authorities to perform work to further analyze the usefulness of
the property and the deposit for the storage of natural gas or other
hydrocarbons. The license may be withdrawn under certain circumstances. As of
February 28, 2002, our former subsidiaries had not established sufficient
information to determine whether or not this project would ever produce income.
However, as of December 31, 2001, and February 28, 2002, our former subsidiaries
determined further development of this project was probable based on potential
natural gas and other hydrocarbon development in eastern Canada. Furthermore, as
of February 28, 2002, we believed that should the project prove successful, it
would not produce revenues until at least two years from that date. Through
December 31, 2001, our former subsidiaries had expended management time on this
project and capitalized approximately $1.0 million of third-party costs.

         In February 2002, we entered into an agreement with a third-party
software company whereby the software company will complete the development of
our former subsidiaries' terminal operations software, oversee and coordinate
implementation of the terminal operations software at our former subsidiaries'
terminals for specified fees, and will also incorporate the terminal operations
software into a separate commercial product being developed by the software
company. Under the agreement, our former subsidiaries will purchase the software
company's product at a discount from listed prices and will participate in
future sales and license revenues from sales of the software company's products
if such products include our former subsidiaries' terminals operations software.
As of December 31, 2001, capitalized costs related to this internally developed
software were approximately $0.7 million.

         As of February 28, 2002, the capital expenditure budget of our former
subsidiaries for 2002 was $8.3 million, primarily for items to sustain our
former subsidiaries' existing operations. Spending for producing incremental
revenues was estimated at $0.5 million and contingent upon the securing of
additional business or continuation of certain development projects. Our former
subsidiaries' 2002 maintenance-related capital expenditure forecast of $7.8
million included certain expenditures originally budgeted for prior periods, but
which were not completed in those prior periods.



                                       42
<PAGE>
         The following table sets forth capital expenditures by location and
separates such expenditures into those which produce, or have the potential to
produce, incremental revenue and those which sustain our operations.

                   Summary of Capital Expenditures by Location
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                    Produce           Sustain
                                                  Incremental         Existing
                                                    Revenues         Operations          Total           % of Total
                                                    --------         ----------       ----------         ----------
<S>                                                 <C>             <C>               <C>                  <C>
YEAR ENDED DECEMBER 31, 1999
   Netherlands Antilles                             $    586        $   4,613         $    5,199              60.5%
   Canada                                                416            1,602              2,018              23.5%
   United States(1)                                       --            1,376              1,376              16.0%
                                                    --------        ---------         ----------           --------
     Total                                          $  1,002        $   7,591         $    8,593             100.0%
                                                    ========        =========         ==========           ========

YEAR ENDED DECEMBER 31, 2000
   Netherlands Antilles                             $    136        $   6,548         $    6,684              77.9%
   Canada                                                294              759              1,053              12.3%
   United States(1)                                       --              841                841               9.8%
                                                    --------        ---------         ----------           --------
     Total                                          $    430        $   8,148         $    8,578             100.0%
                                                    ========        =========         ==========           ========

YEAR ENDED DECEMBER 31, 2001
   Netherlands Antilles                             $    132        $   3,457         $    3,589              51.2%
   Canada                                                872            1,194              2,066              29.4%
   United States (1)                                      --            1,362              1,362              19.4%
                                                    --------        ---------         ----------           --------
     Total                                          $  1,004        $   6,013         $    7,017             100.0%
                                                    ========        =========         ==========           ========

</TABLE>

(1)      Includes expenditures for U.S. flagged marine equipment utilized
         primarily in the Netherlands Antilles.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

         Our former subsidiaries were subject to comprehensive and periodically
changing environmental, health, and safety laws and regulations within the
jurisdictions of their operations, including those governing oil spills,
emissions of air pollutants, discharges of wastewater and storm water, and the
disposal of non-hazardous and hazardous waste. In 1999, 2000, and 2001, our
former subsidiaries' capital expenditures for compliance with environmental,
health and safety laws and regulations were approximately $2.5 million, $1.8
million, and $1.0 million, respectively. These figures do not include routine
operational compliance costs, such as the costs for the disposal of hazardous
and non-hazardous solid waste, which were approximately $1.2 million, $0.3
million, and $0.07 million in 1999, 2000, and 2001, respectively. We believe as
of February 28, 2002, we were in substantial compliance with applicable laws and
regulations governing environmental, health, and safety matters.

         The 1996 Castle Harlan acquisition agreement with Praxair, Inc.
includes a covenant whereby Praxair shall assume financial responsibility for
some environmental investigation, remediation, and upgrade costs at Point
Tupper. With respect to seven identified items of environmental investigation
and remediation, this covenant is subject to dollar limitations aggregating $4.2
million. With respect to all other costs covered by the Praxair covenant there
are no dollar limitations. However, we cannot guarantee that Praxair will pay
all of the indemnified amounts without dispute or delay.



                                       43
<PAGE>
         Past use of the Point Tupper facility, including its past operation by
others as an oil refinery, have resulted in particular on-site areas of known
and potential contamination, as described below. Under Canadian environmental,
health, and safety laws, the owner and operator of the facility can be held
liable for mitigation or remediation of, and damages arising from, these or
other as yet unknown environmental, health, and safety conditions at the
facility.

         In connection with the Castle Harlan acquisition in 1996, Phase I and
limited Phase II environmental site assessments were conducted at the Point
Tupper terminal to identify potential environmental, health, and safety matters.
Particular environmental matters and conditions that were likely to require the
incurrence of costs were identified, and Praxair agreed to pay the costs of
addressing some of these matters, subject in some cases to monetary limitations
as discussed above. Since then, we have undertaken, in accordance with
environmental, health and safety laws, investigation, remediation and upgrade
actions to address these and other more recently identified matters.

         With respect to the foregoing environmental liabilities and costs,
Praxair, in connection with the Castle Harlan acquisition, has paid
approximately $5.6 million through December 31, 2001. Based on investigations
conducted and information available through February 28, 2002, the potential
cost of additional remediation and compliance was estimated at approximately $13
million, substantially all of which we believe is the responsibility of Praxair,
Inc. per the Castle Harlan acquisition agreement. We believe that environmental,
health, and safety costs will not have a material adverse effect on our
financial position, cash flows, or results of operations, subject to
reimbursements from Praxair, Inc.

         Our former subsidiaries accrued a total of $1.5 million during 1996 to
cover environmental, health, and safety costs we had identified as not being
covered by the Praxair agreement. Through December 31, 2001, $0.3 million of the
$1.25 million allocated to the Point Tupper terminal had been charged against
this accrual. We have periodically reviewed the adequacy of this accrual and,
during 1999 and 2000, determined $0.25 million and $0.18 million, respectively,
originally provided for environmental contingencies at the St. Eustatius and
Point Tupper facilities, respectively, were no longer necessary. Accordingly,
this portion of the accrual was eliminated and credited to costs of terminaling
services. We believe that environmental, health, and safety costs will not have
a material adverse effect on our financial position, cash flows, or results of
operations, subject to reimbursements from Praxair. We can give no assurance
that additional liabilities discovered in the future, under existing or future
environmental, health, and safety laws and outside the scope of the Praxair
agreement will not be material. In addition, we can give no assurance that we
will not have to incur material expenses before Praxair pays amounts for which
Praxair ultimately would be responsible. Group's obligations for environmental,
health and safety matters generally transferred to Kaneb at February 28, 2002.



                                       44
<PAGE>
POLITICAL, INFLATION, CURRENCY, AND INTEREST RATE RISKS

         We periodically evaluate the political stability and economic
environment in the countries in which we operate. As a result of these
evaluations, we are not presently aware of any matters that may adversely impact
our business, financial condition, or results of operations. The general rate of
inflation in the countries where we have operated has been relatively low in
recent years causing a modest impact on operating costs. Historically,
inflationary cost increases have resulted in adjustments to storage and
throughput revenues because long-term contracts have generally contained price
escalation provisions. Product sales prices are based on active markets, and we
have generally been able to pass any cost increases to customers. Except for
minor local operating expenses in Canadian dollars and Netherlands Antilles
guilders, and certain Canadian dollar-denominated revenues, all of the
transactions were in U.S. dollars. Through February 28, 2002, we believed we
were not significantly exposed to exchange rate fluctuations.

         Through February 28, 2002, most of our debt obligations carried a fixed
rate of interest. The cost of the revolving credit facility varied with changes
in the lender's prime lending rate, and the loan collateralized by the M/V
STATIA RESPONDER was indexed to three month London InterBank Offered Rates.
Therefore, through February 28, 2002, we believed our exposure to interest rate
fluctuations was minimal.

TAX MATTERS

         The St. Eustatius facility of our former subsidiaries has been
qualified for designation as a free trade zone and the Point Tupper facility of
our former subsidiaries has been qualified for designation as a customs bonded
warehouse. Such status allowed our customers and us to transship commodities to
other destinations with minimal Netherlands Antilles or Canadian tax effects.

         On June 1, 1989, the governments of the Netherlands Antilles and St.
Eustatius approved a Free Zone and Profit Tax Agreement retroactive to January
1, 1989, which expired on December 31, 2000. This agreement required a former
subsidiary of Group to pay a 2% rate on taxable income, as defined, or a minimum
payment of 500,000 Netherlands Antilles guilders ($0.3 million) per year. This
agreement further provided that any amounts paid in order to meet the minimum
annual payment would be available to offset future tax liabilities under the
agreement to the extent that the minimum annual payment was greater than 2% of
taxable income. The former subsidiary continued to honor the provisions of the
expired Free Zone and Profit Tax Agreement and made payments as required
thereunder through February 28, 2002.

         During 1999, the Company and representatives appointed by the
governments of the Netherlands Antilles and St. Eustatius completed a draft of a
new agreement applicable to the subsidiary and certain affiliates and submitted
the draft for approval to each government. The draft as submitted called for the
new agreement to be effective retroactively from January 1, 1998, through
December 31, 2010, with extension provisions to 2015. The Company has proposed
certain modifications to the 1999 draft including extension of the expiration of
the new agreement to January 1, 2026 to match certain Netherlands Antilles
legislation. The subsidiary has accrued within Other accrued liabilities amounts
which may become payable should the new agreement become effective. In
connection with the sale of Group's subsidiaries to Kaneb, Kaneb has committed
to pay Group, when a new tax agreement is executed, 80% of the excess, if any,
of the estimated tax liability recorded as of February 28, 2002 over the actual
liability incurred under such new tax agreement for periods prior to February
28, 2002.

         Tax rates in the jurisdictions in which we operated did not change
significantly during 1999, 2000, and 2001.




                                       45
<PAGE>

         On September 30, 2001, and October 1, 2001, Statia Terminals Canada,
Incorporated, together with Point Tupper Marine Services Limited and Statia
Terminals Canada Holdings, Inc., a newly formed wholly-owned subsidiary of
Statia Terminals Canada, Inc., reorganized such that the businesses previously
carried on by these corporations, other than the spill response business of
Point Tupper Marine Services Limited, were transferred to Statia Terminals
Canada Partnership, a general partnership formed under the laws of the Province
of Nova Scotia, Canada. We effected the reorganization of our Canadian
operations in order to consolidate certain activities and gain operational
efficiencies. Additionally, as a result of the reorganization, Canadian net
operating loss carry-forwards, substantially all of which were to expire
unutilized at the end of 2001, were applied against the tax gain arising from
the transfer of certain assets to the partnership. The resultant step-up in the
tax basis of the assets transferred will be available for future years' tax
depreciation deductions by our former subsidiaries. We have provided a full
valuation allowance against the net deferred tax asset resulting from this
reorganization, aggregating approximately $20.7 million, at December 31, 2001,
because we could not determine that it was likely that the deferred tax asset
would be utilized in the future by our former subsidiaries.

         We had no net operating tax loss carry-forwards available to offset
Canadian taxable income at December 31, 2001. The investment tax credit
carry-forwards available to reduce Canadian income taxes were $1.2 million at
December 31, 2001, and expire in various amounts through 2010. The net operating
tax loss carry-forwards available to offset U.S. taxable income at December 31,
2001, were $4.4 million and expire in various amounts through 2020. We have
provided a full valuation allowance against these tax assets because we cannot
determine that it is likely that the deferred tax assets will be utilized in the
future. All Canadian and U.S. tax assets were effectively transferred to Kaneb
as a result of the closing on February 28, 2002.

INSURANCE

         Prior to February 28, 2002, our property insurance covered damage to
the real and personal property located at our two terminals and administrative
offices. The property loss limit was $150 million with a $0.3 million
deductible, except for a loss limit of $125 million with a 2.5% of loss (subject
to a minimum of $1.0 million) deductible for certain losses (wind, flood,
earthquake, etc.) at St. Eustatius. We carried $31 million of coverage on the
offshore single point mooring system at St. Eustatius with a deductible of
approximately $0.3 million. Our former subsidiaries had coverage up to scheduled
values for damage to our marine vessels with a $50,000 deductible. We carried
various layers of liability coverage of up to $200 million with a deductible of
approximately $0.3 million (including coverage for liabilities associated with
certain accidental spills). We also carried other insurance customary in the
industry.

         Prior to February 28, 2002, we maintained insurance policies on
insurable risks at levels we considered appropriate. We did not carry business
interruption insurance due to, what we believed, were excessive premium costs
for the coverage provided. However, we did, prior to February 28, 2002, carry
business interruption insurance for our offshore single point mooring system.



                                       46
<PAGE>

NEW ACCOUNTING STANDARDS AND POLICIES

         Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS Nos. 137 and 138, which establishes standards of
accounting for derivative instruments including specific hedge accounting
criteria. The adoption of SFAS No. 133 did not have a material impact on us.

         The Accounting Standards Executive Committee ("AcSEC") of the American
Institute of Certified Public Accountants is currently formulating a new
accounting standard, which is expected to modify the accounting rules for major
repairs and maintenance expenditures, among other things. AcSEC has released a
proposed Statement of Position entitled "Accounting for Certain Costs and
Activities Related to Property, Plant, and Equipment." As of February 28, 2002,
we had not determined whether the ultimate implementation of the final standard
by us would have a material effect on our business, financial condition, results
of operations, or cash flows.

         The Financial Accounting Standards Board recently issued SFAS No. 143,
"Accounting for Asset Retirement Obligations." The new rule modifies the
accounting rules for obligations associated with the retirement of an asset and
must be adopted for fiscal years beginning after June 15, 2002. As of February
28, 2002, we had not determined whether the ultimate implementation of this
standard by us would have a material effect on our business, financial
condition, results of operations, or cash flows.

         Effective January 1, 2002, we adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets,
establishes a single accounting model for long-lived assets to be disposed of by
sale and resolves significant implementation issues related to SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." The adoption of SFAS No. 144 did not have a material impact on
us.

                ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

         Prior to February 28, 2002, our former subsidiaries periodically
purchased refined petroleum products from their customers and others for resale
as bunker fuel, for small volume sales to commercial interests, and to maintain
an inventory of blendstocks for their customers. Petroleum product inventories
were held for short periods, generally not exceeding 90 days. Our former
subsidiaries did not have any derivative positions to hedge their inventory of
petroleum products. Therefore, during the period our former subsidiaries held
inventory of petroleum products, they were subject to market risk from changes
in the global oil markets which may have caused the value of this inventory to
increase or decrease from the amounts paid. Such changes were reflected in the
gross margins of the product sales segment.

         The following table indicates the aggregate carrying amount of
petroleum products on hand at December 31, 2001, computed at average costs, net
of any lower of cost or market valuation provisions, and the estimated fair
value of such products. The fair value of such products is estimated based on
recent sales activity at the facilities. At December 31, 2001, we determined
that certain inventory held at the Point Tupper facility might be in excess of
current needs as determined by historical sales rates. Therefore, we provided a
reserve against this inventory to reduce its carrying amount to estimated net




                                       47
<PAGE>

realizable value. Inventory balances at December 31, 2001 are net of valuation
reserves of approximately $0.3 million.

                       On Balance Sheet Commodity Position
                             (Dollars in thousands)


                                                 As of December 31, 2001
                                              -----------------------------
                                              Carrying Amount    Fair Value
                                              ---------------    ----------

            Petroleum Inventory:
              Statia Terminals N.V.              $     933        $  1,100
              Statia Terminals Canada                1,098           1,379
                                                 ---------        --------

            Total                                $   2,031        $  2,479
                                                 =========        ========


               ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and supplementary data are included herein
beginning on Page F-1.

       ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                            AND FINANCIAL DISCLOSURE

         None.




                                       48
<PAGE>
                                    PART III.

           ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Group's board of directors is divided into three classes. The directors
serve six-year terms which are staggered such that approximately one-third of
the directors is appointed every two years. Group's board of directors duly
elects the executive officers to serve until their respective successors are
elected and qualified.

         The following table sets forth certain information with respect to the
directors and executive officers of the Company as of April 16, 2002:

<TABLE>
<CAPTION>

                                                                                                    Term
      Name                                       Age                  Position                    Expires
      ----                                       ---                  --------                    -------
<S>                   <C>                         <C>                                               <C>
      James G. Cameron(1)                         56    Director                                    2005
      John K. Castle(1)(2)                        61    Director                                    2005
      Admiral James L. Holloway, III(3)           80    Director                                    2003
      Francis Jungers(2)                          75    Director                                    2003
      David B. Pittaway(1)(2)(3)                  50    Director                                    2005
      Jonathan R. Spicehandler, M.D.(3)           53    Director                                    2007
      Ernest "Jackie" Voges                       71    Director                                    2007
      Justin B. Wender                            32    Director                                    2003
      Thomas M. Thompson, Jr.                     57    Vice President                               --
      Robert R. Russo                             46    Vice President                               --
      James F. Brenner                            43    Vice President and Treasurer                 --
      Jack R. Pine                                62    Secretary                                    --

</TABLE>

(1)      Member of Executive Committee
(2)      Member of Compensation Committee
(3)      Member of Audit Committee

         Pursuant to a shareholders agreement among all of the shareholders of
Statia Terminals Holdings N.V., the board of directors of Statia Terminals
Holdings N.V. determines how the class B subordinated shares and any class A
common shares held by Statia Terminals Holdings N.V. are voted, including voting
for directors of Group. Castle Harlan Partners II, L.P. and its affiliates
control Statia Terminals Holdings N.V.

         The directors of Statia Terminals, Inc., an indirect former subsidiary
of Group, were elected annually by its shareholder to serve during the ensuing
year or until their successors were duly elected and qualified. The board of
directors of Statia Terminals, Inc. duly elected the executive officers to serve
until their respective successors were elected and qualified. The following
table sets forth certain information with respect to certain directors and
executive officers of Statia Terminals, Inc. as of February 28, 2002:





                                       49
<PAGE>

<Table>
<Caption>

    Name                              Age                                Position
    ----                              ---                                --------
<S>                                    <C>
    James G. Cameron                   55    Director, Chairman of the Board, and President
    Thomas M. Thompson, Jr.            56    Director and Executive Vice President
    Robert R. Russo                    46    Director and Senior Vice President
    Jack R. Pine                       62    Senior Vice President, General Counsel, and Secretary
    John D. Franklin                   45    Vice President--Marine Fuel Marketing
    James F. Brenner                   43    Vice President--Finance, Treasurer, and Assistant Secretary

</Table>

         JAMES F. BRENNER. Mr. Brenner has been Vice President and Treasurer of
Group since December 1996, and serves as our principal financial and accounting
officer. Mr. Brenner joined our former subsidiary, Statia Terminals, Inc., in
1992, as Controller, and was appointed Vice President-Finance, Treasurer, and
Assistant Secretary of Statia Terminals, Inc. in May 1996. Immediately prior to
joining Statia Terminals, Inc., he served three years as Vice President, Finance
and Chief Financial Officer of Margo Nursery Farms, Inc., a publicly traded
agribusiness firm with European and Latin American operations. From 1986 to
1990, Mr. Brenner was Treasurer of Latin American Agribusiness Development
Corp., a company providing debt and equity financing to agribusinesses
throughout Latin America. From 1981 to 1986, Mr. Brenner held various positions
with the international accounting firm of PricewaterhouseCoopers (formerly Price
Waterhouse LLP).

         JAMES G. CAMERON. Mr. Cameron has been a director of Group since
February 1997. Mr. Cameron has been with Group or our former subsidiaries since
1981. From 1981 to 1984, Mr. Cameron served as the Project Manager spearheading
the design and construction of the St. Eustatius terminal facility. Mr. Cameron
was promoted in 1984 to Executive Vice President of our former subsidiary,
Statia Terminals, Inc. Since being named Chairman of the Board and President of
Statia Terminals, Inc. in 1993, Mr. Cameron has served on the board of directors
of Tankstore (a joint venture company of CBI Industries, GATX Corporation, and
Paktank International B.V.). Mr. Cameron has also served on the board of
directors of Petroterminal de Panama, where he represented CBI Industries'
ownership in the pipeline traversing the isthmus of Panama. His prior experience
in the petroleum industry dates back to 1969 when he joined Cities Service
Company as a marine engineer. Mr. Cameron subsequently joined Pakhoed USA, Inc.,
where he served in a variety of positions including Project Engineer, Manager of
Engineering & Construction, Maintenance Manager, and Terminal Manager, which
included the management of Paktank's largest facility in Deer Park, Texas.

         JOHN K. CASTLE. Mr. Castle has been a director of Group since February
1997. Mr. Castle is Chairman and Chief Executive Officer of Branford Castle,
Inc., an investment company formed in 1986. Since 1987, Mr. Castle has been
Chairman of Castle Harlan, Inc., a private merchant bank in New York City. Mr.
Castle is Chief Executive Officer of Castle Harlan Partners II, G.P. Inc., the
general partner of the general partner of Castle Harlan Partners II, L.P., which
is our controlling shareholder. Immediately prior to forming Branford Castle,
Inc. in 1986, Mr. Castle was President and Chief Executive Officer and a
director of Donaldson Lufkin & Jenrette, Inc., which he joined in 1965. Mr.
Castle is a director of Sealed Air Corporation, Morton's Restaurant Group, Inc.,
Commemorative Brands, Inc. and American Achievement Corporation. He is a member
of The New York Presbyterian Hospital's Board of Trustees, a member of the board
of the Whitehead Institute for Biomedical Research and is a member of the
Corporation of the Massachusetts Institute of Technology.



                                       50
<PAGE>

         JOHN D. FRANKLIN. Mr. Franklin joined Statia Terminals, Inc. in March
1992 as Manager, Marine Sales and became the Vice President-Marine Fuel Sales in
1996 and Vice President-Marine Fuel Marketing in March 2000. Since 1998, he has
served as a director of Petroterminal de Panama which owns and operates
electrical generating facilities, a cargo port, and two marine petroleum
terminals and an associated pipeline traversing the isthmus of Panama.
Immediately prior to joining Statia Terminals, Inc., he was employed for 14
years with The Coastal Corporation, and its former subsidiary, Belcher Oil Co.
Inc. His duties with Coastal included management of the company's marine sales
division; Manager, National Accounts, and Terminal Manager at Coastal's New
Orleans facility. He has extensive experience in marketing, terminal operations,
and technical sales support.

         ADMIRAL JAMES L. HOLLOWAY III, U.S.N. (RET.). Admiral Holloway has been
a director of Group since April 1997. Admiral Holloway is a retired Naval
Officer who served as Chief of Naval Operations and a member of the Joint Chiefs
of Staff from 1974 to 1978. After his retirement, from 1981 to 1989 he was
President of the Council of American Flag Ship Operators, a national trade
association representing the owners and operators of U.S. flag vessels in
foreign trade. From 1985 to 1989 he was a member of the President's Blue Ribbon
Commission on Merchant Marine and Defense and the Commission for a Long-Term
Integrated Defense Strategy. In 1986, Admiral Holloway was appointed Special
Envoy of the Vice President to the Middle East and from 1990 to 1992 he served
in a presidential appointment as U.S. Representative to the South Pacific
Commission. Admiral Holloway is currently Chairman of the Naval Historical
Foundation, Chairman emeritus of the Naval Academy Foundation, and Chairman
emeritus of the Board of Trustees of Saint James School.

         FRANCIS JUNGERS. Mr. Jungers has been a director of Group since April
1997. Mr. Jungers is a private investor and business consultant in Portland,
Oregon. Mr. Jungers has been a consultant since January 1, 1978. From 1973 to
1978, he was Chairman and Chief Executive Officer of Arabian American Oil
Company which is the largest producer of crude oil and liquefied gas in the
world and holds the concession for all of Saudi Arabia's oil production. Mr.
Jungers is a director of Thermo Electron Corporation, The AES Corporation, and
ESCO Corporation. Mr. Jungers is Chairman of the Advisory Board of Common Sense
Partners, L.P., a hedge fund. Mr. Jungers is a member of the Visiting Committee,
The University of Washington. Mr. Jungers is Advisory Trustee of the Board of
Trustees, The American University in Cairo, Trustee of the Oregon Health
Sciences University Foundation, and a director of Goodwill Industries of the
Columbia Willamette.

         JACK R. PINE. Mr. Pine has been Group's Secretary since December 1996.
Mr. Pine has been involved with our legal affairs since 1978 and was formally
transferred to our former subsidiary, Statia Terminals, Inc., from CBI
Industries in May 1996 as Senior Vice President, General Counsel, and Secretary.
Since 1996, Mr. Pine has served as a director of Petroterminal de Panama which
owns and operates electrical generating facilities, a cargo port, and two marine
petroleum terminals and an associated pipeline traversing the isthmus of Panama.
He has over 30 years of combined experience with Liquid Carbonic Industries
Corporation, CBI Industries, Statia Terminals, Inc., and Group. Mr. Pine joined
the legal staff of CBI Industries in 1974 as Assistant Counsel and was appointed
Associate General Counsel in 1984. Prior to joining CBI Industries, Mr. Pine
practiced law in the private sector.

         DAVID B. PITTAWAY. Mr. Pittaway has been a director of Group since
September 1996. Mr. Pittaway is Senior Managing Director and has been Vice
President and Secretary of Castle Harlan, Inc. a private merchant bank in New
York City, since February 1987. Mr. Pittaway is an executive officer of Castle
Harlan Partners II, G.P. Inc., the general partner of the general partner of
Castle Harlan Partners II, L.P., our controlling shareholder. Mr. Pittaway has
been Vice President and Secretary of Branford Castle, Inc., an investment
company, since October 1986. From 1987 to 1998 he was Vice President and




                                       51
<PAGE>

Chief Financial Officer and a director of Branford Chain, Inc., a marine
wholesale company where he is now a director and Vice Chairman. Mr. Pittaway is
also a director of Morton's Restaurant Group, Inc., Charlie Brown's Holdings,
Inc., Equipment Support Services, Inc., and American Achievement Corporation.

         ROBERT R. RUSSO. Mr. Russo has been a Vice President of Group since
December 1996. Mr. Russo joined our former subsidiary, Statia Terminals, Inc.,
in 1990 as Manager, Sales, and was promoted to his present position as Senior
Vice President with Statia Terminals, Inc. in May 1996. His prior experience in
the petroleum industry dates back to 1979 when he joined Belcher Oil Co. Inc., a
subsidiary of The Coastal Corporation. Mr. Russo was Coastal's Vice President,
Heavy Products Trading, from 1987 until his departure to join us in 1990.

         JONATHAN R. SPICEHANDLER, M.D. Dr. Spicehandler has been a director of
Group since April 1997. On March 14, 2002, Dr. Spicehandler was appointed
Chairman of Schering-Plough Research Institute, the pharmaceutical research arm
of Schering-Plough Corporation, a research based company engaged in the
discovery, development, manufacturing and marketing of pharmaceutical and health
care products worldwide. From 1993 until his appointment as Chairman, Dr.
Spicehandler was President of Schering-Plough Research Institute. Dr.
Spicehandler is a diplomat of the American Board of Internal Medicine. He was
also elected to the Alpha Omega Alpha Honor Society. He serves as president
emeritus, board of managers, of the New Jersey division of Cancer Care, Inc. Dr.
Spicehandler is a member of the boards of trustees of the Kessler Institute for
Rehabilitation, Inc., Montclair State University, and the Liberty Science
Center. He also serves on the board of directors of the National Foundation of
Infectious Diseases. Dr. Spicehandler is a member of the board of associates of
the Whitehead Institute for Biomedical Research.

         THOMAS M. THOMPSON, JR. Mr. Thompson has been a Vice President of Group
since December 1996. Mr. Thompson joined our former subsidiary, Statia
Terminals, Inc., in 1985, as Vice President, Sales & Marketing. He has also held
the position of Senior Vice President, with full responsibility for our former
Houston, Texas, sales and operations and President of JASTATIA, Inc., a marine
vessel operating joint venture between Jahre Ship Services A/S and us. Mr.
Thompson became Executive Vice President of Statia Terminals, Inc. in May 1996.
His prior experience in the petroleum and chemical industry dates back to 1968
when he joined GATX Corporation as a sales representative. He subsequently
worked as both a sales manager and General Manager with Pakhoed USA, Inc.

         ERNEST "JACKIE" VOGES. Mr. Voges has been a director of Group since
February 1998. From 1982 to 1996, Mr. Voges was General Managing Director of the
Curacao Ports Authority. From 1977 to 1982, Mr. Voges held various positions
including Dean of the Law School of the University of the Netherlands Antilles,
permanent lecturer for the history of law and a member of the International
Advisory Council of Florida International University. From 1973 to 1977, he
served in various positions within the government for Land Territory of the
Netherlands Antilles including Vice Prime Minister, Minister of Justice, and
Minister of Transport and Communications. From 1967 to 1969, Mr. Voges served as
Minister of Public Health. From 1959 to 1967, he was a member of the Island
Council of the Island Territory of Curacao and from 1966 to 1967 he was
Commissioner of the Island Territory of Curacao. Mr. Voges is Managing Director
of Leeward News Holding N.V., Chairman of the Foundation Stichting
Monumentenzorg Curacao, and Supervisory Director of Stadsherstel Corporation
N.V. He is also Chairman of the Foundation Stichting JEKA, Supervisory Director
of Smit International Corporation N.V., and Managing Director of Voges Inc.,
N.V. In 1979, Mr. Voges was Knighted in the Order of the Dutch Lion.





                                       52
<PAGE>

         JUSTIN B. WENDER. Mr. Wender has been a director of Group since
September 1996. Since 1993, he has been employed by Castle Harlan, Inc. He
currently serves as Managing Director. From 1991 to 1993, Mr. Wender worked in
the Investment Banking Group of Merrill Lynch & Co. He is a board member of
Charlie Brown's Holdings, Inc. and McCormick & Schmick Management Group.


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the directors, officers, and persons who own more than 10% of any
registered class of our securities (the "10% Shareholders") to file reports of
ownership and reports of changes in ownership (Forms 3, 4, and 5) with the U.S.
Securities and Exchange Commission and the Nasdaq Stock Market. The directors,
officers, and 10% Shareholders are also required by U.S. Securities and Exchange
Commission regulation to furnish us with copies of all such forms that they
file.

         To our knowledge, based solely on our review of the copies of such
forms furnished to the Company by the directors, officers, and 10% Shareholders,
we believe that during the financial year ended December 31, 2001, our
directors, officers, and 10% Shareholders complied with all Section 16(a) filing
requirements applicable to them.





                                       53
<PAGE>
                         ITEM 11. EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

         The following table sets forth information concerning the compensation
paid or accrued for the three years ended December 31, 2001, for Mr. James G.
Cameron and each of our five other most highly compensated executive officers
(the "named executive officers").

<TABLE>
<CAPTION>

                                                                                                   Long-Term
                                                                                                 Compensation
                                                                                                    Awards
                                                                                                 ------------
                                                Annual Compensation                                 Shares
                               ----------------------------------------------------------------   Underlying
Name and Principal                                               Bonus         Other Annual      Options/SARs        All Other
Position(1)                    Year          Salary($)          ($)(2)       Compensation($)(3)     (#)(4)       Compensation($)(5)
------------------             ----          ---------          ------       ------------------  ------------    ------------------
<S>                            <C>           <C>               <C>              <C>                 <C>              <C>
James G. Cameron               2001          $318,270          $287,195                --           238,000          $ 71,019
                               2000           299,616           227,077                --            39,000            69,419
                               1999           292,596           187,514           576,959                --            69,476

Thomas M. Thompson, Jr.        2001           268,049           245,506                --           152,000            18,249
                               2000           260,270           191,754                --            33,000            17,798
                               1999           253,269           158,417           449,857                --            16,696

Robert R. Russo                2001           249,616           231,609                --           151,000            16,060
                               2000           239,615           181,662                --            32,000            15,642
                               1999           228,846           148,718           395,589                --            14,897

Jack R. Pine                   2001           199,181           180,655                --            93,000            13,640
                               2000           164,808           100,923                --            13,000            12,377
                               1999           163,010            77,592           196,604                --            12,098

John D. Franklin               2001           169,825           152,862                --            93,000            12,057
                               2000           156,731           100,923                --            13,000            11,658
                               1999           149,616            77,592           173,278                --            11,162

James F. Brenner               2001           167,711           152,862                --            93,000            12,330
                               2000           156,731           100,923                --            13,000            12,000
                               1999           154,731            77,592           154,713                --            11,462

</TABLE>

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

(1)      James G. Cameron: Director of Group and Director, Chairman of the
         Board, and President of Statia Terminals, Inc.; Thomas M. Thompson,
         Jr.: Vice President of Group and Director and Executive Vice President
         of Statia Terminals, Inc.; Robert R. Russo: Vice President of Group and
         Director and Senior Vice President of Statia Terminals, Inc.; Jack R.
         Pine: Secretary of Group and Senior Vice President, General Counsel,
         and Secretary of Statia Terminals, Inc.; John D. Franklin: Vice
         President - Marine Fuel Marketing of Statia Terminals, Inc.; and James
         F. Brenner: Vice President and Treasurer of Group and Vice President -
         Finance, Treasurer, and Assistant Secretary of Statia Terminals, Inc.

(2)      The compensation reported represents an annual cash incentive bonus
         based on our attaining specified levels of earnings before interest
         expense, taxes, depreciation, and amortization. This program is
         discussed further in the "COMPENSATION COMMITTEE REPORT ON EXECUTIVE
         COMPENSATION" section below. The 1999, 2000, and 2001 amounts were paid
         in early 2000, 2001, and 2002, respectively.

(3)      The compensation reported for 1999 represents a bonus of $1,947,000, in
         aggregate, paid to the named executive officers. The purpose of this
         special management bonus was to partially reimburse these individuals
         with respect to adverse tax consequences that resulted from our initial
         public offering of equity and other past compensation arrangements.





                                       54
<PAGE>

(4)      Options were granted during 2001 on January 24 and August 27, and are
         discussed further under "Option Grants During the Year Ended December
         31, 2001" below.

(5)      The compensation reported for 2001 represents: (a) the dollar value of
         split dollar life insurance benefits paid by us, (b) matching and
         discretionary contributions made to our 401(k) plan, and (c) the cost
         of life insurance in excess of limits prescribed by the Internal
         Revenue Code. These benefits, expressed in the same order as listed in
         the preceding sentence, amounted to $50,789, $17,650, and $2,580 for
         Mr. Cameron; $0, $15,850, and $2,399 for Mr. Thompson; $0, $15,250, and
         $810 for Mr. Russo; $0, $12,650, and $990 for Mr. Pine; $0, $11,850,
         and $207 for Mr. Franklin; and $0, $11,850, and $480 for Mr. Brenner.

         We were committed to pay the premiums of two split dollar life
         insurance policies for Mr. Cameron generally until Mr. Cameron reached
         age 65 at which time either Mr. Cameron or his designated beneficiaries
         would receive the cash surrender value of the policies. Assuming
         premium payments were made until age 65, the full cost to us of
         remaining payments as of December 31, 2001, was $507,890. On March 1,
         2002, one of our former subsidiaries funded an irrevocable trust in the
         amount of approximately $512,000, the purpose of which is to pay all
         our future commitments related to these split dollar life insurance
         policies.

              OPTION GRANTS DURING THE YEAR ENDED DECEMBER 31, 2001

         The following tables summarize option grants to the named executive
officers during the calendar year 2001 pursuant to the Group 1999 Share Option
Plan. We have never granted stock appreciation rights.

<TABLE>
<CAPTION>

                                             Individual Grants
                         ----------------------------------------------------------
                          Number of    % of Total                                         Potential Realizable Value at
                           Shares       Options                                           Assumed Annual Rates of Stock
                         Underlying    Granted to                                            Appreciation for Option Term
                          Options      Employees   Exercise    Market   Expiration   ---------------------------------------------
Name                     Granted (1)    in 2001      Price    Price(1)     Date            0%             5%              10%
----                     -----------   ----------  --------   --------  ----------   -------------   -------------   -------------
<S>                        <C>             <C>       <C>         <C>     <C>         <C>             <C>             <C>
James G. Cameron           38,000          4.2%      $8.094      $8.094  1/24/11     $          --   $  193,430.38   $  490,190.56
                          200,000         22.0%       5.00       12.975  8/27/11      1,595,000.00    3,226,981.56    5,730,761.68

Thomas M. Thompson, Jr.    32,000          3.5%       8.094       8.094  1/24/11                --      162,888.74      412,792.05
                          120,000         13.2%       5.00       12.975  8/27/11        957,000.00    1,936,188.93    3,438,457.01

Robert R. Russo            31,000          3.4%       8.094       8.094  1/24/11                --      157,798.47      399,892.30
                          120,000         13.2%       5.00       12.975  8/27/11        957,000.00    1,936,188.93    3,438,457.01

Jack R. Pine               13,000          1.4%       8.094       8.094  1/24/11                --       66,173.55      167,696.77
                           80,000          8.8%       5.00       12.975  8/27/11        638,000.00    1,290,792.62    2,292,304.67

John D. Franklin           13,000          1.4%       8.094       8.094  1/24/11                --       66,173.55      167,696.77
                           80,000          8.8%       5.00       12.975  8/27/11        638,000.00    1,290,792.62    2,292,304.67

James F. Brenner           13,000          1.4%       8.094       8.094  1/24/11                --       66,173.55      167,696.77
                           80,000          8.8%       5.00       12.975  8/27/11        638,000.00    1,290,792.62    2,292,304.67

</TABLE>

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

(1)      On January 24, 2001, and August 27, 2001, we granted to employees
         options on 227,500 and 680,000 of our class A common shares,
         respectively. The exercise price for the January 24, 2001, grant was
         determined to be fair market value on that date, and was calculated as
         the average of the closing bid and ask prices of our class A common
         shares, as reported on the Nasdaq National Market System on that date.
         The exercise price for the August 27, 2001, grant was $5.00 per share
         which was below the fair market value of the class A common shares on
         the date of grant ($12.975 per



                                       55
<PAGE>

         share). Each option allowed the holder to purchase the specified number
         of our class A common shares at the exercise price.

         Prior to February 28, 2002, the options were to expire after ten years
         and were to be exercisable on or after the ninth anniversary of the
         date of grant; provided, however, that the option exercise date was to
         be accelerated upon the conversion of our class B subordinated shares
         into class A common shares in accordance with our articles of
         incorporation. The percentage of the class A common shares for which
         options were to become exercisable upon any such conversion equals the
         number of class B subordinated shares converted pursuant to such
         conversion divided by 3,800,000. Immediately prior to any change of
         control, as defined in our articles of incorporation, the unexercised
         portions of the options were to become exercisable. Under certain
         specified circumstances, which included the holder's death or
         disability, termination without substantial cause and normal
         retirement, the unexercised portions of the options were also to become
         exercisable by the holder or his or her beneficiary or heir, but only
         for certain specified periods after the occurrence of such an event.
         The sale of our former subsidiaries to Kaneb on February 28, 2002,
         qualified as a change of control and, as a result, all outstanding
         stock options were cashed out on February 28, 2002, for $18.4998 per
         share less the respective exercise prices.

                    Aggregated Option Exercises in Last Year
                           and Year-end Option Values

<TABLE>
<CAPTION>

                                                                      Number of Shares
                                                                   Underlying Unexercised        Value of Unexercised
                                           Shares                        Options At             In-the-money Options At
                                          Acquired                   December 31, 2001             December 31, 2001
                                             On        Value    --------------------------  ----------------------------
       Name                               Exercise    Realized  Exercisable  Unexercisable  Exercisable    Unexercisable
       ----                               --------    --------  -----------  -------------  -----------    -------------
<S>                                        <C>           <C>        <C>       <C>              <C>        <C>
       James G. Cameron                    0             0          0          277,000          0          $3,470,113.00
       Thomas M. Thompson, Jr.             0             0          0          185,000          0           2,292,997.00
       Robert R. Russo                     0             0          0          183,000          0           2,270,611.00
       Jack R. Pine                        0             0          0          106,000          0           1,333,818.00
       John D. Franklin                    0             0          0          106,000          0           1,333,818.00
       James F. Brenner                    0             0          0          106,000          0           1,333,818.00
</TABLE>

                            COMPENSATION OF DIRECTORS

         We pay four of our directors, Admiral James L. Holloway III, Francis
Jungers, Jonathan R. Spicehandler, M.D., and Ernest Voges, $1,000 plus
reimbursement of out-of-pocket expenses, per board of directors meeting
attended. The aforementioned directors were each granted 2,000 stock options on
May 2, 2000, and 2,000 stock options on January 24, 2001, pursuant to the
Company's 1999 Share Option Plan. All of the options were to expire after ten
years. The options granted in 2000 were exercisable on or after May 2, 2009, at
an exercise price of $5.59 per share and the options granted in 2001 were
exercisable on or after January 24, 2010, at an exercise price of $8.094 per
share; provided, however, that in both cases the exercise date may have been
accelerated upon the same terms as explained in note (1) to the table in the
"Option Grants During the Year Ended December 31, 2001" section above. The sale
of our former subsidiaries to Kaneb on February 28, 2002 qualified as a change
of control, and as a result, all outstanding stock options were cashed out on
February 28, 2002, for $18.4998 per share less the exercise prices.




                                       56
<PAGE>

         Each of the foregoing directors had entered into consulting agreements
with International for advisory and consulting services related to investment
and strategic planning, financial, and other matters. In consideration of
services provided to International, each consultant received a consulting fee of
$6,250 per quarter plus reimbursement of out-of-pocket expenses. These
agreements were canceled effective as of February 28, 2002.

                              EMPLOYMENT AGREEMENTS

         In August and November 2001, Group and Statia Terminals, Inc., entered
into amended and restated employment agreements with James G. Cameron, Thomas M.
Thompson, Jr., Robert R. Russo, Jack R. Pine, John D. Franklin, and James F.
Brenner. As of February 28, 2002, these agreements provide for an annual base
salary which is subject to review at least annually by our board of directors or
a committee thereof, increasing at least at the growth rate of the consumer
price index. The respective annual base salaries in effect at February 28, 2002
were $318,680 for Mr. Cameron, $272,420 for Mr. Thompson, $257,000 for Mr.
Russo, $200,460 for Mr. Pine, $169,620 for Mr. Franklin, and $169,620 for Mr.
Brenner. These agreements also provide for an annual cash incentive bonus to be
awarded based on the difference between a target earnings before interest
expense, taxes, depreciation, and amortization ("EBITDA") and actual EBITDA.
Additional benefits include participation in an executive life insurance plan
for Mr. Cameron. The employment agreements generally continue for consecutive
three-year periods and currently extend to December 31, 2004. These agreements
automatically extend for an additional year beginning January 1, 2003 (i.e., on
January 1, 2003, the agreements extend to December 31, 2005) unless either party
gives notice of non-renewal ninety days prior to January 1. No such notices had
been given prior to February 28, 2002. The employment agreements contain three
year non-compete arrangements beginning at the termination of employment.

         As of February 28, 2002, in the event that we or Statia Terminals,
Inc., terminate any of these employment agreements without substantial cause or
the employee terminates for good reason, as these terms are defined in each of
the employment agreements, the employee is entitled to his current compensation,
welfare benefits and an incentive bonus for the remaining portion of the term of
the relevant employment agreement. Upon a change of control, as this term is
defined in each of the employment agreements, these employees were entitled to a
change of control bonus aggregating $4.1 million. The respective change of
control bonuses were $1.4 million for Mr. Cameron, $0.75 million for Mr.
Thompson, $0.65 million for Mr. Russo, $0.5 million for Mr. Pine, $0.4 million
for Mr. Franklin, and $0.4 million for Mr. Brenner. The sale of our former
subsidiaries to Kaneb on February 28, 2002, qualified as a change of control for
purposes of these agreements and such bonuses were paid on that date. Should any
of these agreements be terminated after a change of control, the employee is
entitled to his current compensation, welfare benefits and an incentive bonus
for the remaining portion of the term of the relevant employment agreement
payable in a lump-sum cash payment. Effective February 28, 2002, Group has no
continuing liability under these employment agreements.



                                       57
<PAGE>
                      COMPENSATION COMMITTEE INTERLOCKS AND
                 INSIDER PARTICIPATION IN COMPENSATION DECISIONS

         Our Compensation Committee is comprised of three members: John K.
Castle, David B. Pittaway, and Francis Jungers. Messrs. Castle, Pittaway, and
Jungers are not, nor have they ever been, officers or employees of Group or any
of its subsidiaries.

             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

         Prior to February 28, 2002, our executive compensation program was
administered and reviewed by the Compensation Committee.

 OVERALL OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM

         Our compensation philosophy and program objectives were guided by two
primary objectives. First, the program was intended to provide competitive
levels of compensation, at expected levels of performance, in order to attract,
motivate, and retain talented executives. Second, the program was intended to
create an alignment of interests between our executives and shareholders such
that a significant portion of each executive's compensation was directly linked
to maximizing shareholder value.

         In support of this philosophy, the executive compensation program was
designed to reward performance that was directly relevant to our short-term and
long-term success. As such, we attempted to provide both short-term and
long-term incentive pay that varied based on corporate and individual
performance.

         To accomplish these objectives, the Compensation Committee structured
the executive compensation program with three primary underlying components:
base salary, annual incentives, and long-term incentives. Certain other
executive benefits were also provided. The following sections describe our
program by element of compensation and discuss how each component related to our
overall compensation philosophy.

         In reviewing this information, reference is often made to the use of
competitive market data as criteria for establishing targeted compensation
levels. Several market data sources were used by us, including gas and oil
industry norms for selected publicly traded peer companies, as reflected in
these companies' proxy statements. In addition, we used published survey data
and data obtained from independent consultants that were for general industry
companies similar to us in size. However, there was no effort to assess how our
executive pay levels compared to the levels of pay provided by the other
companies used in our performance graph since these companies vary significantly
in size and scope of operations.

BASE SALARY

         Our base salary philosophy was to provide base pay levels that were
competitive in the oil and gas industry and local geographic areas where we
operated. We periodically reviewed our executive pay levels to assure
consistency with the external market. We believed it was crucial to provide
strongly competitive salaries over time in order to attract and retain
executives who were highly talented and capable of creating added shareholder
value.




                                       58
<PAGE>

         Annual salary adjustments for our executive officers were based on
several factors including: changes in the U.S. Department of Labor Consumer
Price Index for All Urban Consumers, general levels of market salary increases,
individual performance, competitive base salary levels, and our overall
financial results. We reviewed performance qualitatively considering total
shareholder returns, the level of earnings, return on equity, return on total
capital, and individual performance. These criteria were assessed qualitatively
and were not weighted. All base salary increases were based on a philosophy of
pay-for-performance and perceptions of an individual's long-term value to us. As
a result, employees with higher levels of performance sustained over time were
paid correspondingly higher salaries.

ANNUAL INCENTIVES

         Each of our executive officers had an employment agreement that
specified he be paid an annual cash incentive bonus based on our attaining
certain levels of EBITDA as compared to an annual goal set by our board of
directors and the chief executive officer of Statia Terminals, Inc. Under this
bonus program, target award opportunities varied by individual position and were
typically expressed as a percent of base salary. In addition, the president of
Statia Terminals, Inc. and the Compensation Committee could award discretionary
bonuses for meeting specific objectives and outstanding performance. Our annual
incentives were intended to: (1) reward key employees based on company
performance, (2) motivate key employees, and (3) provide competitive cash
compensation opportunities to plan participants.

LONG-TERM INCENTIVES

         The long-term incentives component of our program was designed to focus
executive efforts on our long-term goals and to maximize total return to
shareholders. While the Compensation Committee was allowed to use a variety of
long-term incentive devices, in recent years it had relied primarily on stock
option awards to provide long-term incentive opportunities.

         Stock options align the interests of employees and shareholders by
providing value to the executive through stock price appreciation and the
relationship of the exercise price to the market value on the date of the option
grant. Pursuant to the Company's 1999 Share Option Plan and the underlying share
option award agreements, all share options were to become exercisable on the
ninth anniversary of the grant date and had a ten year term before expiration;
provided, however, that the option exercise date could be accelerated upon the
same terms as explained in note (1) to the table in the "Option Grants During
the Year Ended December 31, 2001" section above.

         The number of shares actually granted to a particular participant was
based on our financial success, our future business plans, and the individual's
position and level of responsibility. All of these factors were assessed
subjectively and were not weighted.

2001 COMPENSATION FOR MR. CAMERON

         As previously described, the Compensation Committee considered several
factors in developing an executive's compensation package. For Mr. Cameron,
these factors included competitive market practices consistent with the
philosophy described for other executives, experience, achievement of strategic
goals, and our financial success considering the factors outlined under the
annual incentives component of our program described above.



                                       59
<PAGE>

         Mr. Cameron's salary for 2001 was increased primarily as a result of
competitive market factors. Mr. Cameron's bonus for 2001 was $287,195, payable
in 2002. This award was above targeted levels since our aggregate performance on
the measures described in the annual incentives section of this report was above
our targets. In January 2001 and August 2001, we granted Mr. Cameron options to
purchase 38,000 and 200,000 class A common shares, respectively, the details of
which are set forth under the "Option Grants During the Year Ended December 31,
2001" section above. As detailed in note 5 of the Summary Compensation Table
above, Mr. Cameron received $71,019 of other compensation in 2001.

                                             Compensation Committee:
                                                  John K. Castle, Chairman
                                                  Francis Jungers
                                                  David B. Pittaway

                                PERFORMANCE GRAPH

         The United States Securities and Exchange Commission ("SEC") requires
that we present a line graph comparing cumulative returns, from April 28, 1999,
(the date our initial public offering of equity closed) through December 31,
2001, on an indexed basis with the Nasdaq US & Foreign Stock Index (or another
broad-based index) and either a nationally-recognized industry standard or a
group of peer companies selected by us. We have selected, for purposes of this
performance comparison, four public companies believed to offer services or
products similar to those offered by us, and the provision of which products or
services represents a significant portion of their respective businesses. A list
of these companies follows the graph below. The graph assumes that $100 was
invested on April 28, 1999, in each of our class A common shares, the Nasdaq US
& Foreign Stock Index, and the self-constructed peer group (weighted on the
basis of capitalization), and that all dividends were reinvested.

                          [Performance Graph Omitted]



                                          4/28/99  12/31/99 12/31/00  12/31/01
                                          -------  -------- --------- --------
The Company                               $100.00  $ 32.20   $ 44.76  $ 130.47

The Nasdaq US & Foreign Stock Index        100.00   160.35     96.76     76.28

The Peer Group                             100.00    74.47    101.76    149.18





                                       60
<PAGE>

         Our self-constructed peer group consists of the following companies:
Kaneb Pipeline Partners L.P., TransMontaigne, Inc., El Paso Energy Partners
L.P., and Plains All American Pipeline L.P. Cumulative total shareholder return
for each investment may be calculated from the values presented in the table
above.

            ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

         The following table sets forth, as of April 16, 2002, the beneficial
ownership of the issued and outstanding class A common shares, class B
subordinated shares, and class C shares by: (1) each person known by us to be a
beneficial owner of more than 5% of any class of our voting securities, (2) each
of our directors and named executive officers, and (3) all of our directors and
named executive officers as a group. The address of each owner is our principal
office unless otherwise indicated.

<Table>
<Caption>

                                                    Class A                  Class B
                                                 Common Shares       Subordinated Shares(1)       Class C Shares(1)
                                                 -------------       ----------------------       -----------------
                                               # of     Percent of      # of      Percent of      # of     Percent of
Name & Address of Beneficial Owner(2)(3)      Shares   Outstanding     Shares     Outstanding    Shares    Outstanding
----------------------------------------      ------   -----------     ------     -----------    ------    -----------
<S>                                           <C>        <C>           <C>             <C>      <C>              <C>
James G. Cameron                                 --        --           195,908         5.2      1,959.08         5.2
Thomas M. Thompson, Jr.                         110         *           152,751         4.0      1,527.51         4.0
Robert R. Russo                                  --        --           134,323         3.5      1,343.23         3.5
Jack R. Pine                                     --        --            66,758         1.8        667.58         1.8
John D. Franklin                                 --        --            58,837         1.5        588.37         1.5
James F. Brenner                                 --        --            52,533         1.4        525.33         1.4
John K. Castle(4)
  c/o Castle Harlan, Inc.
  150 East 58th Street
  New York, NY 10155                             --        --         3,800,000       100.0     38,000          100.0
David B. Pittaway                                --        --            16,164         *          161.64         *
Justin B. Wender                                 --        --               808         *            8.08         *
James L. Holloway III                            --        --            12,123         *          121.23         *
Francis Jungers                              31,050         *            16,164         *          161.64         *
Jonathan R. Spicehandler                         --        --            16,164         *          161.64         *
Ernest Voges                                     --        --             8,082         *           80.82         *
All directors and executive officers as
  a group (13 in number)                     31,160         *         3,800,000       100.0     38,000          100.0
Castle Harlan Partners II, L.P.,
  affiliates and Castle Harlan
  employees(4)                                   --        --         3,800,000       100.0     38,000          100.0
  c/o Castle Harlan, Inc.
  150 East 58th Street
  New York, NY 10155
Statia Terminals Holdings N.V.                   --        --         3,800,000       100.0     38,000          100.0

</TABLE>

* Beneficially owns less than one percent of such class of shares.

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

(1)      Share amounts for directors and named executive officers and all
         directors and officers as a group are beneficially held as shareholders
         of Statia Terminals Holdings N.V., which holds 3,800,000 class B
         subordinated shares and 38,000 class C shares.




                                       61
<PAGE>

(2)      Share amounts for directors and named executive officers and all
         directors and officers as a group include shares held by immediate
         family members.

(3)      The following is a list of directors and officers of the Company and of
         Statia Terminals, Inc. at February 28, 2002. Mr. Cameron is a director
         of Group and a director, Chairman of the Board, and President of Statia
         Terminals, Inc. Mr. Thompson is the Vice President of Group and a
         director and Executive Vice President of Statia Terminals, Inc. Mr.
         Russo is the Vice President of Group and a director and Senior Vice
         President of Statia Terminals, Inc. Mr. Pine is the Secretary of Group
         and Senior Vice President, General Counsel, and Secretary of Statia
         Terminals, Inc. Mr. Franklin is the Vice President--Marine Fuel
         Marketing of Statia Terminals, Inc. Mr. Brenner is the Vice President
         and Treasurer of Group and the Vice President--Finance, Treasurer, and
         Assistant Secretary of Statia Terminals, Inc. Messrs. Castle, Pittaway,
         Wender, Holloway, Jungers, Spicehandler, and Voges are each directors
         of Group.

(4)      Castle Harlan Partners II, L.P. and certain of its affiliates own a
         majority of the voting securities of Statia Terminals Holdings N.V. Mr.
         Castle is the controlling stockholder of the general partner of the
         general partner of Castle Harlan Partners II, L.P. Mr. Castle may,
         therefore, be deemed to be the beneficial owner of shares beneficially
         owned by Castle Harlan Partners II, L.P. or its affiliates and Castle
         Harlan employees. Mr. Castle disclaims beneficial ownership of the
         shares owned by Castle Harlan Partners II, L.P., its affiliates and
         Castle Harlan employees, other than such shares that represent his pro
         rata partnership interests in Castle Harlan Partners II, L.P. and its
         affiliates.

             ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                     TRANSACTIONS WITH MANAGEMENT AND OTHERS

MANAGEMENT AGREEMENT

         As part of its acquisition in 1996 by Castle Harlan Partners II, L.P.,
Group entered into a management agreement with Castle Harlan, Inc. providing for
the payment to Castle Harlan, Inc., subject to certain conditions, of an annual
management fee of $1.35 million, plus expenses, for advisory and strategic
planning services in relation to our day-to-day affairs. Such services were
performed at the discretion of Castle Harlan, Inc. This management agreement was
amended and restated at the closing of our initial public offering of equity on
April 28, 1999, to eliminate the $1.35 million management fee and require that
any such services be provided only at our request. We have not requested any
such services subsequent to April 28, 1999, nor has Castle Harlan, Inc. provided
any such services. Accordingly, no management fee expense has been recorded
subsequent to April 28, 1999. The amended and restated management agreement
provides for reimbursement of ordinary and necessary expenses and a continuing
indemnity for the period up to the termination date of November 27, 2006, and
any extension thereto. During 2001, we paid Castle Harlan, Inc. approximately
$68,000 in reimbursable expenses pursuant to the agreement.

LOANS TO MANAGEMENT

         On November 27, 1996, Messrs. Cameron, Thompson, Russo, Pine, Franklin,
Brenner, and certain other of our officers and managers were granted loans by us
to purchase shares of our common stock and Series E preferred stock. The loans
totaled $1.5 million and were secured by pledges of such stock. The loans bore
interest at 6.49% annually and were due on the earlier of: (1) November 26,
2003, (2) the sale of the pledged stock, or (3) a "change of control," as
defined in the loan agreement. In April



                                       62
<PAGE>

1999, and in conjunction with our initial public offering of equity, these loans
were replaced with new loans aggregating $1.5 million and bearing interest at
5.17%. All such loans were forgiven on February 28, 2002, in connection with the
sale of our former subsidiaries to Kaneb.

CONSULTING AGREEMENT WITH A DIRECTOR

         On July 1, 2000, one of our former subsidiaries entered into a one-year
consulting agreement with Voges Inc., N.V., a company owned 100% by our director
Ernest Voges. The consulting agreement required Voges Inc., N.V. to provide
certain consulting and negotiation services related to our business interests in
the Netherlands Antilles in exchange for a monthly fee of $6,000, plus
reimbursement of out-of-pocket expenses. This agreement was terminated effective
July 1, 2001. For the year ending December 31, 2001, we paid Voges Inc., N.V.
$72,000 for consulting services and expenses pursuant to this agreement.

PURCHASE OF CLASS A COMMON SHARES FROM STATIA TERMINALS CAYMAN, INC.

         During March and June 2000, Statia Terminals Cayman, Inc. purchased
61,000 shares of our class A common shares on the open market. On January 8,
2001, we purchased the 61,000 class A common shares from Statia Terminals
Cayman, Inc. at fair value of $480,375 as part of our stock purchase program.

         As previously mentioned, Statia Terminals Holdings N.V., a non-public
company, owns 100% of our 3.8 million outstanding class B subordinated shares.
The shareholders of Statia Terminals Cayman, Inc. are the same, and in the same
proportions, as the shareholders of Statia Terminals Holdings N.V. set forth in
the table under "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"
above.

TRANSACTIONS WITH EMPLOYEES AND DIRECTORS RESULTING FROM SALE OF ASSETS TO KANEB

         In conjunction with the sale of our former subsidiaries to Kaneb on
February 28, 2002, we entered into various transactions with, and made various
payments to, certain of our employees, directors and other shareholders. These
transactions and payments are described in detail in our Definitive Proxy
Statement on Schedule 14A, dated January 24, 2002, and in the Recent
Developments section of ITEM 7. "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and note 19 of the notes to
consolidated financial statements of ITEM 14. "EXHIBITS, FINANCIAL STATEMENTS
SCHEDULES AND REPORTS ON FORM 8-K" of this Report.



                                       63
<PAGE>
                                    PART IV.

    ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.  Financial Statements Index

         The following consolidated financial statements of Group and
         its subsidiaries are filed in response to Item 8 of this
         Report:

                                                                           Page
                                                                           ----

         Report of Independent Certified Public Accountants                 F-1

         Consolidated Balance Sheets
              as of December 31, 2000 and 2001                              F-2

         Consolidated Statements of Operations
             for the years ended December 31, 1999, 2000, and 2001          F-3

         Consolidated Statements of Shareholders' Equity
             for the years ended December 31, 1999, 2000, and 2001          F-4

         Consolidated Statements of Cash Flows
             for the years ended December 31, 1999, 2000, and 2001          F-5

         Notes to Consolidated Financial Statements                         F-6

     2.  Financial Statement Schedules

         See Note 17 to our Consolidated Financial Statements for
         required financial statement schedules.

     3.  Exhibits Index

         See the Exhibits Index on Pages E - 1 through E - 5 following
         the signature pages.

(b)  Reports on Form 8-K

         On November 14, 2001, Group filed a Current Report on Form 8-K
         in which it disclosed that it had entered into a Stock
         Purchase Agreement with Kaneb pursuant to which Group will
         sell the former subsidiaries to Kaneb.



                                       64
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
    Statia Terminals Group N.V.:

We have audited the accompanying consolidated balance sheets of Statia Terminals
Group N.V. (a Netherlands Antilles corporation) and subsidiaries as of December
31, 2000 and 2001, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Statia Terminals Group N.V. and
subsidiaries as of December 31, 2000 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

Arthur Andersen LLP

West Palm Beach, Florida,
    January 29, 2002 (except with respect to the matters
    discussed in Note 19, as to which the date is April 5, 2002).



                                      F-1
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)
                           CONSOLIDATED BALANCE SHEETS
                   (Dollars in Thousands Except Share Amounts)


<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                        -----------------------------
                                                                                          2000             2001
                                                                                        ---------           ---------
<S>                                                                                     <C>                 <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                            $  17,472           $  22,408
   Accounts receivable-
     Trade, less allowance for doubtful accounts of $953 and $842
           in 2000 and 2001, respectively                                                  13,482              11,451
     Other                                                                                  1,156                 582
   Inventory, net                                                                           1,552               2,031
   Prepaid expenses                                                                         1,591               1,907
                                                                                        ---------           ---------
           Total current assets                                                            35,253              38,379

PROPERTY AND EQUIPMENT, net                                                               202,061             196,963

OTHER NONCURRENT ASSETS, net                                                                3,424               1,566
                                                                                        ---------           ---------

              Total assets                                                              $ 240,738           $ 236,908
                                                                                        =========           =========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                                     $  12,145           $   9,879
   Accrued interest payable                                                                 1,535               1,520
   Other accrued expenses                                                                   9,739              10,013
   Current maturities of long-term debt                                                     1,069               1,167
                                                                                        ---------           ---------
     Total current liabilities                                                             24,488              22,579

DISTRIBUTIONS PAYABLE                                                                       2,913               2,913
LONG-TERM DEBT, net of current maturities                                                 106,931             105,764
                                                                                        ---------           ---------

              Total liabilities                                                           134,332             131,256
                                                                                        ---------           ---------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
   Class A common shares, $0.01 par value, 20,000,000 shares authorized;
     7,600,000 shares issued and 6,299,753 and 6,013,253 shares outstanding at
     December 31, 2000 and 2001, respectively                                                  76                  76
   Class B subordinated shares, $0.01 par value, 7,800,000 shares authorized;
     3,800,000 shares issued and outstanding at December 31, 2000 and 2001                     38                  38
   Class C shares, $0.01 par value, 2,200,000 shares authorized;
     38,000 shares issued and outstanding at December 31, 2000 and 2001                        --                  --
   Additional paid-in capital                                                             129,834             135,257
   Notes receivable from shareholders                                                      (1,448)             (1,448)
   Accumulated deficit                                                                    (13,509)            (11,964)
   Class A common shares in treasury, at cost, 1,300,247 and 1,586,747 shares
     at December 31, 2000 and 2001, respectively                                           (8,585)            (11,092)
   Deferred compensation related to stock options, net                                         --              (5,215)
                                                                                        ---------           ---------
              Total shareholders' equity                                                  106,406             105,652
                                                                                        ---------           ---------

              Total liabilities and shareholders' equity                                $ 240,738           $ 236,908
                                                                                        =========           =========

</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   (Dollars in Thousands Except Share Amounts)

<TABLE>
<CAPTION>

                                                                                                December 31,
                                                                             ------------------------------------------------
                                                                                1999                2000              2001
                                                                             ---------           ---------          ---------
<S>                                                                          <C>                 <C>                <C>
REVENUES:
   Terminaling services                                                      $  61,665           $  61,547          $  73,687
   Product sales                                                               106,678             148,908            128,473
                                                                             ---------           ---------          ---------
     Total revenues                                                            168,343             210,455            202,160
                                                                             ---------           ---------          ---------

COSTS OF REVENUES:
   Terminaling services                                                         38,064              40,136             44,669
   Product sales                                                                99,601             141,198            120,410
                                                                             ---------           ---------          ---------
     Total costs of revenues                                                   137,665             181,334            165,079
                                                                             ---------           ---------          ---------

   Gross profit                                                                 30,678              29,121             37,081

ADMINISTRATIVE EXPENSES                                                          8,745               9,717             10,584
SPECIAL COMPENSATION EXPENSE                                                     4,099                  --                 --
HURRICANE CHARGES                                                                1,750                  --                 --
COSTS RELATED TO SALE OF SUBSIDIARIES                                               --                  --              1,544
IMPAIRMENT CHARGE                                                                   --                  --                673
                                                                             ---------           ---------          ---------

   Operating income                                                             16,084              19,404             24,280

INTEREST EXPENSE                                                                14,286              12,759             13,193
INTEREST INCOME                                                                    846                 387                853
                                                                             ---------           ---------          ---------
   Income before provision for income taxes, preferred stock                     2,644               7,032             11,940
     dividends and extraordinary charge

PROVISION FOR INCOME TAXES                                                         780                 938              1,039
                                                                             ---------           ---------          ---------

   Income before preferred stock dividends and extraordinary charge              1,864               6,094             10,901

PREFERRED STOCK DIVIDENDS                                                        2,257                  --                 --
                                                                             ---------           ---------          ---------

   Income (loss) before extraordinary charge                                      (393)              6,094             10,901

EXTRAORDINARY CHARGE RELATED TO EARLY
   EXTINGUISHMENT OF DEBT                                                        4,743                  --                 --
                                                                             ---------           ---------          ---------

     Net income (loss)                                                       $  (5,136)          $   6,094          $  10,901
                                                                             =========           =========          =========
BASIC EARNINGS (LOSS) PER CLASS A COMMON SHARE:
  Income (loss) before extraordinary charge                                  $    0.66           $    0.90          $    1.80
  Extraordinary charge                                                            0.92                  --                 --
                                                                             ---------           ---------          ---------
     Net income (loss)                                                       $   (0.26)          $    0.90          $    1.80
                                                                             =========           =========          =========

DILUTED EARNINGS (LOSS) PER CLASS A COMMON SHARE:
  Income (loss) before extraordinary charge                                  $    0.44           $    0.57          $    1.07
  Extraordinary charge                                                            0.61                  --                 --
                                                                             ---------           ---------          ---------
     Net income (loss)                                                       $   (0.17)          $    0.57          $    1.07
                                                                             =========           =========          =========

BASIC AND DILUTED EARNINGS (LOSS) PER CLASS B
   SUBORDINATED SHARE:
     Income (loss) before extraordinary charge                               $   (1.04)          $      --          $      --
     Extraordinary charge                                                           --                  --                 --
                                                                             ---------           ---------          ---------
       Net income (loss)                                                     $   (1.04)          $      --          $      --
                                                                             =========           =========          =========

</TABLE>


          See accompanying notes to consolidated financial statements.





                                      F-3
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                   (Dollars in Thousands Except Share Amounts)


<TABLE>
<CAPTION>
                                                                                                                Deferred
                                                                                  Notes                          Compen-
                                                                                 Receiv-                          sation
                                 Preferred Stock-                       Addi-     able                 Class A   Related
                                  Series D and E      Common Shares    tional     from      Accumu-     Common     to
                                 ----------------   -----------------  Paid-in    Share      lated    Shares in   Stock
                                 Shares   Amount     Shares    Amount  Capital   holders    Deficit   Treasury   Options    Total
                                 ------  --------   ---------- ------ --------   --------  --------   --------   -------  --------
<S>                              <C>     <C>            <C>     <C>   <C>        <C>       <C>        <C>        <C>      <C>
BALANCE, December 31, 1998       54,824  $ 54,824       40,974  $  4  $  2,669   $(1,474)  $(10,386)  $     --   $(2,306) $ 43,331

Net loss to common
 shareholders                        --        --           --    --        --        --     (5,136)        --        --    (5,136)
Net proceeds from initial
 public offering of class
 A common shares                     --        --    7,600,000    76   136,681        --         --         --        --   136,757
Exercise of stock options,
 reclassification of class
 B subordinated shares and
 issuance of additional class
 B subordinated shares and
 class C shares                      --        --    3,797,026    34        --        --         --         --        --        34
Redemption of preferred
 stock                          (54,824)  (54,824)          --    --        --        --         --         --        --   (54,824)
Compensation to Castle Harlan
 for services performed in
 relation to initial public
 offering of class A common
 shares                              --        --           --    --      (778)       --          --        --        --      (778)
Dividend of Panamanian
 investment                          --        --           --    --        --        --      (1,000)       --        --    (1,000)
Vesting of compensatory
 stock options                       --        --           --    --        --        --         --         --     2,152     2,152
Amortization expense
 related to stock options            --        --           --    --        --        --         --         --       154       154
Class A common shares and
 class B subordinated shares
 distributions declared              --        --           --    --    (8,738)       --         --         --        --    (8,738)
Purchase of class A common
 shares as treasury stock            --        --           --    --       --         --         --     (2,254)       --    (2,254)
                                -------  --------   ----------  ----  --------   -------   --------   --------   -------  --------

BALANCE, December 31, 1999           --        --   11,438,000   114   129,834    (1,474)   (16,522)    (2,254)       --   109,698

Net income                           --        --           --    --        --        --      6,094         --        --     6,094
Class A common shares
 distributions declared              --        --           --    --        --        --     (3,081)        --        --    (3,081)
Purchase of class A common
 shares as treasury stock            --        --           --    --        --        --         --     (6,331)       --    (6,331)
Cancellation related to
 employment termination              --        --           --    --        --        26         --         --        --        26
                                -------  --------   ----------  ----  --------   -------   --------   --------   -------  --------

BALANCE, December 31, 2000           --        --   11,438,000   114   129,834    (1,448)   (13,509)    (8,585)       --   106,406

Net income                           --        --           --    --        --        --     10,901         --        --    10,901
Class A common shares
 distributions declared              --        --           --    --        --        --     (9,356)        --        --    (9,356)
Purchase of class A common
 shares as treasury stock            --        --           --    --        --        --         --     (2,507)       --    (2,507)
Issuance of compensatory
 stock options                       --        --           --    --     5,423        --         --         --    (5,423)       --
Amortization expense related
 to stock options                    --        --           --    --        --        --         --         --       208       208
                                -------  --------   ----------  ----  --------   -------   --------   --------   -------  --------

BALANCE, December 31, 2001           --  $     --   11,438,000  $114  $135,257   $(1,448)  $(11,964)  $(11,092)  $(5,215) $105,652
                                =======  ========   ==========  ====  =======    =======   ========   ========   =======  ========

</TABLE>


          See accompanying notes to consolidated financial statements.





                                      F-4
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                                      December 31,
                                                                                      ---------------------------------------------
                                                                                        1999              2000              2001
                                                                                      ---------         ---------         ---------
<S>                                                                                   <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Income before preferred stock dividends and extraordinary charge                   $   1,864         $   6,094         $  10,901
     Adjustments to reconcile income before preferred stock dividends
      and extraordinary charge to net cash provided by operating activities:-
        Depreciation, amortization, and non-cash charges                                 11,532            13,256            12,776
        Amortization expense related to stock options                                       154                --               208
        Provision for possible bad debts                                                     20               149                29
        Non-cash hurricane charge                                                         1,500                --                --
        Non-cash special compensation expense                                             2,152                --                --
        Impairment charge                                                                    --                --               673
     Changes in operating assets and liabilities:-
        Accounts receivable - trade                                                      (5,415)             (674)            2,002
        Accounts receivable - other                                                      (1,376)            2,548               574
        Inventory                                                                         1,289             1,687              (479)
        Prepaid expenses                                                                 (1,084)              132              (316)
        Other noncurrent assets                                                             (70)             (515)              658
        Accounts payable                                                                  4,780            (1,941)           (2,266)
        Accrued interest payable and other accrued expenses                              (1,681)            2,674               259
                                                                                      ---------         ---------         ---------
          Net cash provided by operating activities                                      13,665            23,410            25,019
                                                                                      ---------         ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                                                   (8,593)           (8,578)           (7,017)
   Proceeds from sale of property and equipment                                              15                --                39
   Investment in and loan to technology company                                              --              (500)             (173)
                                                                                      ---------         ---------         ---------
           Net cash used in investing activities                                         (8,578)           (9,078)           (7,151)
                                                                                      ---------         ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of loan principal                                                               --                --            (1,069)
   Proceeds from borrowing                                                                   --             7,000                --
   Borrowing costs paid                                                                      --              (106)               --
   Net proceeds from initial public offering of class A common shares                   136,757                --                --
   Redemption of preferred stock                                                        (94,824)               --                --
   Repurchase of 11 3/4% First Mortgage Notes                                           (34,000)               --                --
   Acquisition costs related to the repurchase of 11 3/4% First Mortgage Notes           (3,681)               --                --
   Payment of preferred stock dividends                                                  (9,697)               --                --
   Payment of class A common share distributions                                         (5,825)           (3,081)           (9,356)
   Purchase of class A common shares as treasury stock                                   (2,254)           (6,331)           (2,507)
   Issuance of additional class B subordinated shares and class C shares                     34                --                --
                                                                                      ---------         ---------         ---------
         Net cash used in financing activities                                          (13,490)           (2,518)          (12,932)
                                                                                      ---------         ---------         ---------

         Increase (decrease) in cash and cash equivalents                                (8,403)           11,814             4,936

CASH AND CASH EQUIVALENTS, at beginning of year                                          14,061             5,658            17,472
                                                                                      ---------         ---------         ---------

CASH AND CASH EQUIVALENTS, at end of year                                             $   5,658         $  17,472         $  22,408
                                                                                      =========         =========         =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for income taxes                                                         $     677         $     671         $     507
                                                                                      =========         =========         =========
   Cash paid for interest                                                             $  14,012         $  12,058         $  12,509
                                                                                      =========         =========         =========

</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>


                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)


1. ORGANIZATION AND OPERATIONS PRIOR TO FEBRUARY 28, 2002

         Statia Terminals Group N.V. was formed on September 4, 1996, by Castle
Harlan Partners II, L.P. ("Castle Harlan"), a private equity investment fund
managed by Castle Harlan, Inc., a private merchant bank, certain members of
management, and others and commenced operations on November 27, 1996
("Inception"). Statia Terminals Group N.V. and Subsidiaries (the "Company")
owned and operated petroleum blending, transshipment and storage facilities
located on the island of St. Eustatius, Netherlands Antilles, and near Point
Tupper, Nova Scotia, Canada. The Company's terminaling services were furnished
to many of the world's largest producers of crude oil, integrated oil companies,
oil traders, refiners, and petrochemical companies. In addition to storage, the
Company provided a variety of related terminal services including the supplying
of bunkering, crude oil and petroleum product blending and processing, emergency
and spill response services, brokering of product trades, and ship services. A
subsidiary of the Company provided administrative services for the Company from
its office in Deerfield Beach, Florida.

         The Company included the following primary entities (collectively, the
"Statia Operations"): Statia Terminals Group N.V. ("Group"), Statia Terminals
International N.V. ("International"), Statia Terminals N.V. (each incorporated
in the Netherlands Antilles), Statia Terminals Canada, Incorporated
(incorporated in Nova Scotia, Canada) ("STCI"), and Statia Terminals Canada
Partnership (formed under the laws of Nova Scotia, Canada) ("STCP"). Significant
intercompany balances and transactions have been eliminated.

         As further discussed in Note 3, on April 28, 1999, Group completed its
initial public offering of equity.

         On February 28, 2002, Group sold substantially all of its assets,
consisting of the outstanding capital stock of International, Statia Technology,
Inc. ("Technology"), and Statia Marine, Inc. ("Marine"), representing Group's
operations and substantially all of its assets prior to the sale, to Kaneb Pipe
Line Holding Company, LLC ("Kaneb") and began dissolution and liquidation
proceedings shortly thereafter. See the further discussion of this transaction
and related matters in Note 19 below. Unless specifically stated otherwise,
these financial statements speak as of January 29, 2002.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

         These consolidated financial statements have been prepared in
conformity with generally accepted accounting principles as promulgated in the
United States which require management to make estimates and assumptions that
affect the reported amounts of assets and liabilities. Significant estimates
primarily include: the accrual for environmental expenses, accruals for legal
and personnel related expenses, allowance for doubtful accounts, inventory
reserve, estimated useful lives of depreciable assets, realizability of certain
capitalized development costs and costs related to internally developed
software, and other valuation allowances related to deferred tax assets.
Management is also required to make judgments regarding disclosure of contingent
assets and liabilities at the date of the financial



                                      F-6
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

     REVENUE RECOGNITION

         Revenues from storage and throughput operations are recognized ratably
as the services are provided. Revenues and commissions from other terminaling
services, sales of bunker fuels, and bulk oil sales are recognized upon
completion of delivery of the service or product.

         During 2000, the Company adopted the U.S. Securities and Exchange
Commission's ("SEC")'s Staff Accounting Bulletin 101, "Revenue Recognition"
("SAB 101"), which provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements filed with the SEC. The adoption
of SAB 101 did not have a material effect on the Company's business, financial
condition, results of operations, or cash flows.

     FOREIGN CURRENCY TRANSLATION AND EXCHANGE

         Except for certain operating expenses denominated in Netherlands
Antilles guilders and Canadian dollars, and certain Canadian dollar-denominated
revenues, all of the Company's transactions are in U.S. dollars. Therefore, the
U.S. dollar has been determined to be the functional currency of the Company. In
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 52, "Foreign Currency Translation," transaction gains and losses
that arise from exchange rate fluctuations are included in the results of
operations as incurred. Such transaction gains and losses have not been
significant.

     IMPAIRMENT OF LONG-LIVED ASSETS

         SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of any asset may not be recoverable. SFAS No. 121 also requires
that long-lived assets and certain identifiable long-lived assets to be disposed
of be reported at the lower of carrying amount or fair value less cost to sell.
The Company continually evaluates factors, events, and circumstances which
include, but are not limited to, its historical and projected operating
performance, specific industry trends, and general economic conditions to assess
whether the remaining estimated useful lives of long-lived assets may warrant
revision or that the remaining balance of long-lived assets may not be
recoverable. When such factors, events, or circumstances indicate that
long-lived assets should be evaluated for possible impairment, the Company uses
an estimate of undiscounted cash flow over the remaining lives of the long-lived
assets in measuring whether an impairment exists. The Company measures an asset
impairment loss as the amount by which the carrying amount exceeds the fair
value of the asset.


<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


     STOCK-BASED COMPENSATION PLANS

         SFAS No. 123, "Accounting for Stock-Based Compensation," allows for
either the adoption of a fair value method for accounting for stock-based
compensation plans or for the continuation of accounting under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations with supplemental disclosures.

         The Company has chosen to account for its stock options using the
intrinsic value based method prescribed in APB Opinion No. 25 and, accordingly,
does not recognize compensation expense for stock option grants made at an
exercise price equal to or in excess of the fair market value of the stock at
the date of grant. Compensation expense is recognized over the estimated vesting
period for stock option grants made at an exercise price below the fair market
value of the stock at the date of grant. In such instances, deferred
compensation offsetting shareholders' equity and additional paid-in capital are
recognized at the date of grant. The deferred compensation is then amortized as
compensation expense over the vesting period of the options.

     CASH AND CASH EQUIVALENTS

         The Company's cash and cash equivalents consist of short-term, highly
liquid investments with maturities of three months or less. Such short-term
investments are carried at cost, which approximates market value, and are
classified as cash and cash equivalents.

     FINANCIAL INSTRUMENTS

         The Company uses various methods and assumptions to estimate the fair
value of each class of financial instrument. Due to their nature, the carrying
value of cash and cash equivalents (including restricted cash, if any), accounts
receivable, accounts payable, accrued interest payable, and variable rate debt
approximates fair value. The fair value of the Company's fixed rate debt is
estimated based on market "bid" prices and approximates carrying value as of
December 31, 2000 and 2001. The fair value of the notes receivable from
shareholders is based on their estimated discounted cash flows. The Company's
other financial instruments are not significant.

     CONCENTRATIONS OF CREDIT RISK

         Financial instruments, which potentially subject the Company to a
concentration of credit risk, primarily consist of cash and cash equivalents
(including restricted cash, if any), accounts receivable-trade, and notes
receivable from shareholders. The Company maintains cash and cash equivalents
with various major financial institutions. The Company performs periodic
evaluations of the relative credit standing of the investment vehicles included
in cash equivalents. Additionally, these financial institutions and financial
instruments must meet the qualifications specified in certain of the Company's
debt agreements. To reduce credit risk related to its trade accounts receivable,
the Company performs periodic credit evaluations of its customers and has
certain maritime lien rights against ships to which it has sold



                                      F-7
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


bunker fuel. Furthermore, virtually all customers of the Company's terminaling
services segment are required to pay in advance of services being rendered.

          Substantially all of the Company's revenues are derived from customers
in the global petroleum and shipping industries. At December 31, 2000 and 2001,
$11,885 and $10,041 of the Company's accounts receivable-trade, respectively,
were from customers of the Company's product sales segment. Such receivables are
typically collected within thirty days of the product sale. A substantial
portion of these customers represent shipping concerns providing services to the
global petroleum industry.

     INVENTORY

         Inventory consists of oil products. Provision has been made to reduce
excess or obsolete inventory to the lower of weighted average cost or estimated
market value. Inventory balances at December 31, 2000 and 2001, are net of
valuation reserves of $400 and $269, respectively.

     PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost less accumulated
depreciation. Depreciation expense is computed using the straight-line method
over the estimated useful lives of the respective assets. Additions to property
and equipment, replacements, betterments, and major renewals are capitalized.

         The Company capitalizes certain costs associated with software
developed or obtained for internal use in accordance with the American Institute
of Certified Public Accountants' ("AICPA") Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." Capitalized costs are amortized using the straight-line method
over the estimated useful lives of the respective assets.

         Development costs, including costs of geological studies related to
projects whose completion as determined by management is probable, are
capitalized. Development costs are amortized using the straight-line method over
the estimated useful lives of the respective assets upon completion of the
project. Development costs related to projects, which are no longer probable of
completion, are expensed when such determination as to probability is made.
Development costs which are exploratory in nature are expensed as incurred.

         Repair and maintenance expenditures, which do not materially increase
asset values or extend useful lives, are expensed.

     OTHER NONCURRENT ASSETS

         Other noncurrent assets primarily consist of net deferred financing
costs in the amounts of $2,126 and $1,426, which are net of accumulated
amortization of $2,790 and $3,490, as of December 31, 2000 and 2001,
respectively. The deferred financing costs related to establishing debt
obligations are amortized ratably over the life of the underlying obligation.
Deferred financing cost amortization



                                      F-8
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


expense, included in interest expense in the accompanying statements of
operations, was $767, $682, and $699 for the years ended December 31, 1999,
2000, and 2001, respectively.

         The Company's investment in a technology investment company was carried
at cost of $500, which approximated fair value, and is included in other
noncurrent assets at December 31, 2000. The technology investment company's only
significant asset was its investment in an online petroleum products trading
company. During 2001, the Company invested an additional $100 in the technology
investment company and also provided the online petroleum products trading
company $73 in the form of a convertible loan in conjunction with similar loans
from other investors. During the fourth quarter of 2001, the Company determined
the amounts it had invested in these entities were impaired and recognized an
impairment charge of $673.

         Other noncurrent assets as of December 31, 2000, also include cash of
$620 restricted by terms of the indenture to the 11 3/4% First Mortgage Notes
due November 15, 2003 (the "Notes"). These restrictions were released in 2001.

     CLASS A COMMON SHARES IN TREASURY

         The Company accounts for purchases of treasury shares under the cost
method with the aggregate cost recorded as a reduction of shareholders' equity.

     ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS

         The Company is subject to comprehensive and periodically changing
environmental, health, and safety laws and regulations within the jurisdictions
of its operations, including those governing oil spills, emissions of air
pollutants, discharges of wastewater and storm water, and the disposal of
non-hazardous and hazardous waste. Expenditures for environmental, health, and
safety matters, which benefit future periods and qualify as property and
equipment, are capitalized and depreciated over the respective lives of the
assets.

         The Company accrues for costs associated with environmental remediation
when it becomes probable that a liability has been incurred and the amount can
be reasonably estimated. The Company recognizes amounts recoverable from third
parties when the collection of such amounts is probable. Recoverable amounts and
accrued costs are included in Accounts receivable - Other and Other accrued
expenses, respectively. See Note 12 for a further discussion of such matters.



                                      F-9
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


     INCOME TAXES

         The Company determines its tax provision and deferred tax balances in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this
approach, the provision for income taxes represents income taxes paid or payable
for the current year adjusted for the change in deferred taxes during the year.
Deferred income tax assets and liabilities reflect the net tax effects of
temporary differences between the financial statement bases and the tax bases of
assets and liabilities and are adjusted for changes in tax rates and tax laws
when changes are enacted. The Company provides a valuation allowance against
deferred tax assets when it determines that it is not more likely than not that
the deferred tax asset will be utilized in the future.

     EARNINGS (LOSS) PER SHARE

         In connection with its initial public offering of equity discussed in
Note 3 below, the Company adopted SFAS No. 128, "Earnings per Share." Earnings
per share are computed based upon the "Participating Securities and Two-Class
Common Stock" methodology as required by SFAS No. 128. Earnings and losses have
been allocated to each class of shares based upon changes in the historical
basis liquidation values of the classes of shares during the periods presented
as determined in accordance with the Company's articles of incorporation. Under
this methodology, all of the earnings and losses prior to the closing of the
Company's initial public offering of equity on April 28, 1999, have been
allocated to the class B subordinated shareholders. All of the earnings and
losses subsequent to April 28, 1999, have been allocated to the class A common
shareholders.

         Basic earnings (loss) per share is computed by dividing the earnings
and losses allocated to each class of equity by the weighted average number of
shares outstanding for each class during the period. Diluted earnings (loss) per
share is computed the same as basic earnings (loss) per share except the
denominator is adjusted for the effect of class A common share and class B
subordinated share equivalents outstanding.

         For periods prior to April 28, 1999, class B subordinated share
equivalents include, where appropriate, the assumed exercise of previously
outstanding stock options and the assumed conversion of the Company's previously
outstanding Series B preferred stock. The assumed conversion of the Company's
previously outstanding Series B preferred stock (330,653 class B subordinated
shares) was antidilutive for 1999. For periods subsequent to April 28, 1999,
class A common share equivalents include, where appropriate, the assumed
exercise of outstanding share options. Earnings per share amounts presented have
been adjusted to give retroactive effect, as of the beginning of 1999, to the
reclassification and issuance of additional class B subordinated shares and
class C shares that occurred in connection with the initial public offering of
equity (see Note 3).



                                      F-10
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         The following additional information is presented with respect to the
Company's earnings (loss) per share amounts:

<TABLE>
<CAPTION>

                                                                                     For the Years Ended December 31,
                                                                            --------------------------------------------------
                                                                                1999               2000               2001
                                                                            -----------         -----------        -----------
<S>                                                                         <C>                 <C>                <C>
EARNINGS PER CLASS A COMMON SHARE

Earnings and losses allocated to class A common shares:
   Income before extraordinary charge                                       $     3,410         $     6,094        $    10,901
   Extraordinary charge                                                           4,743                  --                 --
                                                                            -----------         -----------        -----------
   Net income (loss)                                                        $    (1,333)        $     6,094        $    10,901
                                                                            ===========         ===========        ===========

Weighted average class A common shares outstanding                            5,156,421           6,794,192          6,044,098
Dilutive effect of weighted average class B subordinated shares
outstanding                                                                   2,571,507           3,800,000          3,800,000
Dilutive effect of weighted average stock options outstanding                        --              26,093            344,053
                                                                            -----------         -----------        -----------
Diluted common shares outstanding                                             7,727,928          10,620,285         10,188,151
                                                                            ===========         ===========        ===========

EARNINGS PER CLASS B SUBORDINATED SHARE

Earnings and losses allocated to class B subordinated shares:

   Loss before extraordinary charge                                         $    (3,803)        $        --        $        --
   Extraordinary charge                                                              --                  --                 --
                                                                            -----------         -----------        -----------
   Net income (loss)                                                        $    (3,803)        $        --        $        --
                                                                            ===========         ===========        ===========

Weighted average class B subordinated shares outstanding                      3,641,144           3,800,000          3,800,000
Dilutive effect of stock options and preferred stock with conversion
features                                                                             --                  --                 --
                                                                            -----------         -----------        -----------
Diluted subordinated shares outstanding                                       3,641,144           3,800,000          3,800,000
                                                                            ===========         ===========        ===========

</TABLE>

     COMPREHENSIVE INCOME (LOSS)

         SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive income and its components in the
financial statements. The following types of items, among others, are to be
considered in computing comprehensive income: foreign currency translation
adjustments, pension liability adjustments, and unrealized gain/loss on
securities available for sale. For all periods presented herein, there were no
differences between net income (loss) and comprehensive income (loss).

     RECLASSIFICATIONS

         Certain reclassifications were made to the 1999 financial statements in
order to conform to the 2001 presentation.

     RECENT ACCOUNTING PRONOUNCEMENTS

         Effective January 1, 2001, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS Nos. 137 and 138, which establishes standards of accounting for derivative
instruments including specific hedge accounting criteria. The adoption of SFAS
No. 133 did not have a material impact on the Company.



                                      F-11
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         The Accounting Standards Executive Committee ("AcSEC") of the AICPA is
currently formulating a new accounting standard, which is expected to modify the
accounting rules for major repairs and maintenance expenditures, among other
things. AcSEC has released a proposed SOP entitled "Accounting for Certain Costs
and Activities Related to Property, Plant, and Equipment." The Company cannot
determine at the present time whether or not the ultimate implementation of the
final standard by the Company will have a material effect on its business,
financial condition, results of operations, or cash flows.

         The Financial Accounting Standards Board ("FASB") recently issued SFAS
No. 143, "Accounting for Asset Retirement Obligations." The new rule modifies
the accounting rules for obligations associated with the retirement of an asset
and must be adopted for fiscal years beginning after June 15, 2002. The Company
is currently evaluating the new standard, but has not determined whether or not
the ultimate implementation of this standard by the Company will have a material
effect on its business, financial condition, results of operations, or cash
flows.

         Effective January 1, 2002, the Company adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets,"which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets, establishes a single accounting model for long-lived assets to be
disposed of by sale and resolves significant implementation issues related to
SFAS No. 121. The adoption of SFAS No. 144 did not have a material impact on the
Company.

3. INITIAL PUBLIC OFFERING OF EQUITY AND RELATED TRANSACTIONS

         On April 28, 1999, the Company completed its initial public equity
offering of 7.6 million class A common shares. The offering price was $20 per
share, raising gross proceeds of $152,000. The gross proceeds of the offering
were used primarily to redeem all of the Company's outstanding Series A, B, C,
D, and E preferred stock and pay accrued dividends, pay underwriters' discounts
and fees, and pay certain other costs directly associated with the offering. The
remaining proceeds were used during May 1999, along with existing cash, to
repurchase in the open market a principal amount of $34,000 of the Notes for
$39,522, including acquisition costs and accrued interest of $3,681 and $1,841,
respectively. During the second quarter of 1999, the acquisition costs and the
unamortized deferred financing costs related to the repurchased Notes ($1,062)
were recorded as an extraordinary charge. There was no income tax effect
associated with this extraordinary charge.

         Immediately prior to the initial public offering of equity, the Company
transferred its ownership interest in a Panamanian investment, valued at $1,000,
to its shareholders as a dividend. The shareholders then contributed this
interest to Statia Terminals Cayman, Inc. ("Cayman"). In connection with a
restructuring effected contemporaneously with the offering, all outstanding
stock options were exercised and converted, along with all existing common
stock, into 3.8 million class B subordinated shares and 38,000 class C shares.

         During the three months ended March 31, 1999, the Company recorded as
special compensation expense a bonus in the amount of $1,947 for particular
members of the Company's management. The




                                      F-12
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


purpose of this special management bonus was to partially reimburse these
individuals with respect to adverse tax consequences that resulted from the
offering and other past compensation arrangements.

4. PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following as of December 31:

<TABLE>
<CAPTION>

                                                                                     Useful Lives
                                                             2000          2001        In Years
                                                          ----------    ----------   ------------
<S>                                                       <C>           <C>             <C>
Land                                                      $    1,291    $    1,291
Land improvements                                              7,832        10,855       5 - 20
Buildings and improvements                                     3,985         4,229      20 - 40
Plant machinery and terminals                                165,261       168,072       4 - 40
Mooring facilities and marine equipment                       54,889        57,129       4 - 40
Field and office equipment                                     4,784         5,087       3 - 15
Spare parts and hoses                                            793         1,189
Capital projects in process                                    5,017         2,978
                                                          ----------    ----------

     Total property and equipment, at cost                   243,852       250,830
     Less accumulated depreciation                            41,791        53,867
                                                          ----------   -----------

     Property and equipment, net                          $  202,061    $  196,963
                                                          ==========    ==========
</TABLE>


         The Company has investigated a salt deposit for approximately four
years. As of December 31, 2001, the Company had a license from governmental
authorities to perform work to further analyze the usefulness of the property
and the deposit for the storage of natural gas or other hydrocarbons. The
license may be withdrawn under certain circumstances. As of December 31, 2001,
the Company had not established sufficient information to determine whether or
not this project would ever produce income. However, as of December 31, 2001,
the Company determined further development of this project was probable based on
potential natural gas and other hydrocarbon development in eastern Canada. As of
December 31, 2000 and 2001, capital projects in process included $605 and $1,021
of development costs, respectively, including costs of geological studies
related to the salt cavern storage project in Nova Scotia, Canada.

         During the first quarter of 2000, the Company replaced certain large
hoses attached to its single point mooring system (the "SPM"). In connection
with this hose change-out, the Company adopted the component depreciation method
for the SPM and its hoses as of January 1, 2000, which resulted in a change in
the estimated useful lives for depreciation purposes for these hoses. As a
result, in addition to recurring depreciation charges, the Company incurred a
non-cash charge to depreciation expense of $832 during the first quarter of
2000, which is included in costs of terminaling services revenues and represents
the full year effect of this change.

         On February 27, 2002, the Company entered into an agreement with a
third-party software company whereby the software company will complete the
development of the Company's terminal operations software, oversee and
coordinate implementation of the terminal operations software at the Company's
terminals for specified fees, and will also incorporate the terminal operations
software into a separate commercial product being developed by the software
company. Under the agreement, the Company will purchase the software company's
product at a discount from listed prices and will participate in future sales
and license revenues from sales of the software company's products if such




                                      F-13
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


products include the Company's terminals operations software. As of December 31,
2001, capitalized costs related to this internally developed software were
approximately $677.

5. DEBT PRIOR TO FEBRUARY 28, 2002

         The Notes were issued by subsidiaries of Group (the "Issuers") on
November 27, 1996, in connection with the acquisition of certain of the Statia
Operations from Praxair, Inc. by Castle Harlan (the "Castle Harlan Acquisition")
and pay interest on May 15 and November 15 of each year. The Notes are
redeemable, in whole or in part, at the option of the Issuers at the redemption
prices listed below (expressed as percentages of principal amount), together
with accrued and unpaid interest, if any, thereon to the redemption date, if
redeemed during the 12-month period beginning November 15, in the year
indicated. As further discussed in Note 19 below, on March 1, 2002, Kaneb
announced that International had commenced the procedure to redeem all of the
Notes in a mandatory redemption at 102.938% of the outstanding principal amount
plus accrued interest. Such redemption was completed on April 5, 2002.

                                            Optional
                        Year            Redemption Price
                        ----            ----------------

                        2001                102.938%
                        2002                100.000%

         Notwithstanding the foregoing, any time on or prior to November 15,
1999, the Issuers were allowed to redeem or repurchase up to 35% of the
aggregate principal amount of the Notes with the proceeds of one or more equity
offerings, plus accrued and unpaid interest, if any, to the date of redemption
or repurchase, provided that after giving effect to such redemption or
repurchase, at least 65% of the aggregate principal amount of the Notes would
remain outstanding. As further discussed in Note 3, during May 1999 and in
connection with its initial public offering of equity, the Company repurchased
in the open market a principal amount of $34,000 of the Notes.

         The Notes are guaranteed on a full, unconditional, joint and several
basis by each of the indirect and direct active subsidiaries of International.
The Notes are also subject to certain financial covenants as set forth in the
indenture and related security documents to these Notes, the most restrictive of
which include, but are not limited to the following: (i) a consolidated fixed
charge coverage ratio for the prior four full fiscal quarters of at least 2.0 to
1 which, if met, will permit the Company to make additional borrowings above the
Company's revolving credit facility discussed below, (ii) other limitations on
indebtedness, and (iii) restrictions on certain payments. In addition, the Notes
place restrictions on the Company's ability to pay dividends other than
distributions from the proceeds of assets held for sale and certain management
fees as discussed in Note 13 below. At December 31, 2001, International was
restricted by the indenture from making aggregate distributions in excess of
$13,692 subsequent to December 31, 2001. Except with the occurrence of an event
of default, subsidiaries of International have no restrictions upon transfers of
funds in the form of dividends, loans, or cash advances.

         The indenture relating to the Notes provided that an offer be made by
the Issuers to repurchase all outstanding Notes at a repurchase price of 101% of
the principal amount, plus accrued interest and unpaid interest, if any, within
30 days should a change of control, as defined in the indenture, occur. If such




                                      F-14
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


offer was not made within such 30 day period, the trustee under the indenture
(or at least 25 percent of the holders of the Notes) could accelerate payment of
the Notes. As more fully discussed in Note 19 below, a change of control
occurred on February 28, 2002 after which Group had no continuing liability with
regard to the Notes. Prior to the change of control, the Company was in
compliance with all the financial covenants set forth in the indenture.

         In December 2000, Marine borrowed $7,000 (excluding direct costs of the
borrowing of $106) from an equipment financing company (the "Responder Loan").
As further discussed in Note 19 below, Marine repaid the Responder Loan on March
12, 2002, which resulted in the release of Group's guarantee of the Responder
Loan. The Responder Loan required monthly payments of principal and interest,
and would have matured on January 1, 2007. Interest accrued at three month
London InterBank Offered Rates plus 3.2% and adjusted monthly. The Responder
Loan interest rate was 5.06% at December 31, 2001. At December 31, 2000 and
2001, the outstanding principal balance on the Responder Loan was $7,000 and
$5,931, respectively. The Responder Loan was collateralized by a security
interest in the M/V STATIA RESPONDER, one of the Company's emergency response
and maintenance support vessels, which was operated at the Company's St.
Eustatius terminal.

         The Responder Loan was subject to certain financial covenants, the most
restrictive of which included, but were not limited to the following: (i) a debt
service coverage ratio of at least 1.50 to 1, (ii) the maintenance of $70,000 of
net worth, and (iii) the maintenance of specified insurance coverage limits on
the collateral.

         The Company had a revolving credit facility (the "Credit Facility"),
which allowed certain of the Company's subsidiaries to borrow up to $17,500 or
the limit of the borrowing base as defined in the Credit Facility. As further
discussed in Note 19 below, the Credit Facility was terminated on February 28,
2002. The Credit Facility called for a commitment fee of 0.375% per annum on a
portion of the unused funds. The Credit Facility bore interest at a rate of
prime plus 0.5% (5.25% at December 31, 2001). The Credit Facility constituted
senior indebtedness of the Company and was secured by a first priority lien on
certain of the Company's accounts receivable and inventory. The Credit Facility
was subject to certain restrictive covenants; however, it was not subject to
financial covenants. The Credit Facility did not restrict the Company's
subsidiaries from transferring funds to the Company in the form of dividends,
loans or cash advances; however, the failure to pay interest when due
constituted an event of default under the Credit Facility and such event of
default, until cured, prohibited dividend payments to the Company. At December
31, 2000 and 2001, the Company had approximately $11,047 and $8,813,
respectively, available for borrowing under the Credit Facility, as limited by
the borrowing base computation, and no outstanding borrowings.



                                      F-15
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         At December 31, 2001, the scheduled maturities of the Company's
long-term debt were as follows:

            Year Ending December 31,
            ------------------------

            2002                                     $  1,167
            2003                                      102,167
            2004                                        1,167
            2005                                        1,167
            2006                                        1,167
            Thereafter                                     96
                                                     --------
                                                     $106,931
                                                     ========

6. CAPITAL STRUCTURE

         Each class A common share and class B subordinated share is entitled to
one vote on issues brought before the Company's shareholders. Except in very
limited circumstances, the class C shares have no voting privileges. Statia
Terminals Holdings N.V. ("Holdings") owns all of the Company's class B
subordinated shares and class C shares.

     PROVISIONS OF ARTICLES OF INCORPORATION SUBSEQUENT TO FEBRUARY 22, 2002

         As more fully discussed in Note 19 below, the Company's articles of
incorporation were amended on February 22, 2002, to significantly modify
provisions related to distributions and liquidating distributions, among other
things. The most significant change is that holders of the Company's class A
common shares and class B subordinated shares will receive no distributions
after the liquidating distributions of $18.4998 and $16.8844 per share,
respectively, which the Company began making on February 28, 2002.

     PROVISIONS OF ARTICLES OF INCORPORATION PRIOR TO FEBRUARY 22, 2002

         The class A common shares were entitled, to the extent there was
sufficient available cash as defined in the Company's articles of incorporation,
to a target quarterly distribution of $0.45 per share, before the Company made
any distributions on its class B subordinated shares. In general, the Company
would make distributions of available cash, if any, first to the class A common
shares until each had received $0.45 per quarter plus any arrearages from prior
quarters and second to the class B subordinated shares until each had received
$0.45 per quarter. Class B subordinated shares did not accrue distribution
arrearages. If the Company made quarterly distributions of available cash to the
class A common shares and class B subordinated shares above specified additional
distribution levels, the holders of class C shares would receive distributions
that represented an increasing percentage of the total distributions made above
those specified distribution levels. However, there were no assurances that the
Company would be able to pay distributions to any of its classes of shares.




                                      F-16
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         The Company was required to defer making payment on the first $6,800 of
distributions that would otherwise have been made on the class B subordinated
shares until the end of the deferral period, as defined in the Company's
articles of incorporation. The subordination period would generally end once the
Company met certain financial tests, which were defined in the Company's
articles of incorporation. The subordination period generally could not end
prior to June 30, 2004. Under particular circumstances, a portion of the class B
subordinated shares, not exceeding 50%, were eligible to convert into class A
common shares before the expiration of the subordination period. After the
deferral period, the Company would pay to the class B subordinated shares, until
the deferred distributions had been paid in full, all available cash from
operating surplus remaining after all class A common share arrearages were paid,
and the target quarterly distribution was paid on all class A common shares and
class B subordinated shares, prior to any further distribution.

         During the years ended December 31, 1999, 2000 and 2001, the Company
declared and paid distributions on the class A common shares of $5,825 ($0.7665
per share), $3,081 ($0.45 per share) and $9,356 ($1.55 per share), respectively.
Additionally, during 1999, the Company declared distributions on the class B
subordinated shares aggregating $2,913 ($0.7665 per share), payment of which was
deferred as described in the immediately preceding paragraph. No distributions
on the Company's class B subordinated shares were declared during 2000 or 2001.

         On January 18, 2002, the Company's board of directors declared a
distribution of $0.45 per share on the class A common shares, payable on
February 14, 2002, for the benefit of shareholders of record at the close of
business on January 31, 2002. Since the distribution equaled the target
quarterly distribution rate stated in the Company's articles of incorporation,
the aggregate class A common share arrearage remained unchanged at $1.60 per
share. No distribution was declared on the class B subordinated shares.

         At the end of the subordination period as defined in the Company's
articles of incorporation, each class B subordinated share would have converted
to one class A common share and participated equally with the other class A
common shares, subject to the distribution rights of the class C shares, in
future distributions of available cash. The class A common shares would then no
longer accrue distribution arrearages.

         The Company's board of directors authorized the open market purchase of
up to two million shares of the Company's class A common shares. As of December
31, 2000 and 2001, the Company had acquired 1,300,247 and 1,586,747 class A
common shares at an aggregate cost of $8,585 and $11,092, respectively, pursuant
to this program. On January 8, 2001, the Company purchased 61,000 class A common
shares pursuant to this program from Cayman at an aggregate fair value of $480.
The same shareholders who own Holdings own Cayman.



                                      F-17
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


7. PREFERRED STOCK

         Prior to its initial public offering of equity, the Company had
authorized preferred stock of $26,950 divided into 269,500 shares with a par
value of $0.10 consisting of the following shares: (i) 20,000 shares of 8%
Series A Cumulative Preferred Stock (the "Series A Preferred Stock"); (ii)
10,000 shares of 8% Series B Cumulative Preferred Stock (the "Series B Preferred
Stock"); (iii) 10,000 shares of 8% Series C Cumulative Preferred Stock (the
"Series C Preferred Stock"); (iv) 20,000 shares of 2% Series D Preferred Stock
(the "Series D Preferred Stock"); and (v) 209,500 shares of 2% Series E
Preferred Stock (the "Series E Preferred Stock").

         The Series A, B and C Preferred Stock in the aggregate of $40,000 were
contributed from Praxair, Inc. as non-cash equity and contained provisions for
redemption beyond the control of the Company. On July 29, 1998 the Company sold
its Brownsville, Texas facility and a restricted payment of $6,150 was made from
Statia to Group to redeem a portion of the Series D Preferred Stock. As the
Series B Preferred Stock was not redeemed by the Company prior to November 27,
1998, the dividend rate on the Company's Series A, B and C Preferred Stock
increased from 8% to 14.75% effective November 28, 1998, in accordance with the
Company's preferred stock agreements and its prior articles of incorporation.
Dividends on the Series D and E Preferred Stock were waived.

         All remaining preferred stock was redeemed and all accrued preferred
stock dividends were paid on April 28, 1999, with a portion of the proceeds from
the Company's initial public offering of equity.

8. NOTES RECEIVABLE FROM SHAREHOLDERS PRIOR TO FEBRUARY 28, 2002

         Notes receivable from shareholders represent nonrecourse loans made by
the Company to certain members of management and are indirectly secured by
pledges of certain of the Company's class B subordinated shares. The loans bear
interest at 5.17% and mature on the earlier of (i) April 28, 2009, or (ii) sale
of the pledged shares. These loans have been classified as a reduction to
shareholders' equity in the accompanying consolidated financial statements. The
Company recognized interest income related to these notes of $76, $75, and $75
during the years ended December 31, 1999, 2000, and 2001, respectively. The fair
value of these loans was $1,448 at December 31, 2001.

         During 2000, in connection with the termination of an employee, $26 of
these notes were cancelled.

         As more fully discussed in Note 19 below, all notes receivable from
shareholders were forgiven on February 28, 2002.




                                      F-18
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


9. LEASES PRIOR TO FEBRUARY 28, 2002

         The Company rents certain facilities and marine equipment under
cancelable and noncancelable operating leases. Rental expense on operating
leases was $5,518, $6,307, and $7,467 for the years ended December 31, 1999,
2000, and 2001, respectively. At December 31, 2001, future rental commitments
payable under noncancelable operating leases were as follows:

            Year Ending December 31,
            ------------------------

            2002                                      $ 5,360
            2003                                        4,232
            2004                                        1,660
            Thereafter                                     --
                                                      -------
                                                      $11,252
                                                      =======

         The Company leases approximately 65 acres of land at the Point Tupper
facility to a customer. The lease terminates June 30, 2023. At December 31,
2001, future rentals receivable under this lease were as follows:

            Year Ending December 31,
            ------------------------

            2002                                       $  250
            2003                                          250
            2004                                          250
            2005                                          250
            2006                                          250
            Thereafter                                  4,125
                                                       ------
                                                       $5,375
                                                       ======


10. INCOME TAXES PRIOR TO FEBRUARY 28, 2002

         The sources of income (loss) by jurisdiction before the provision for
income taxes, preferred stock dividends and extraordinary charge are:

                               For the Years Ended December 31,
                            --------------------------------------
                               1999          2000          2001
                            ---------     ---------      ---------

               U.S.         $      41     $    (283)     $      32
               Non-U.S.         2,603         7,315         11,908
                            ---------     ---------      ---------
                            $   2,644     $   7,032      $  11,940
                            =========     =========      =========




                                      F-19
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         The provision for income taxes consisted of:

                                 For the Years Ended December 31,
                              --------------------------------------
                                 1999          2000          2001
                              ---------      --------      ---------
   Current:
      U.S.                    $    (123)     $     --      $      --
      State                          --            (1)            40
      Non-U.S.                      903           939            999
                              ---------      --------      ---------
                              $     780      $    938      $   1,039
                              ---------      --------      ---------

         A reconciliation of income taxes at the U.S. statutory rate of 35% to
the Company's provision for income taxes is as follows:


<TABLE>
<CAPTION>
                                                                        For the Years Ended December 31,
                                                                    ---------------------------------------
                                                                     1999            2000            2001
                                                                    -------         -------         -------
<S>                                                                 <C>             <C>             <C>
U.S. federal tax provision at U.S. statutory rate                   $   925         $ 2,461         $ 4,179
U.S. state income taxes                                                  --              (1)             40
Income not effectively connected to a U.S. trade or business         (1,048)         (2,461)         (4,179)
Non-U.S. tax provision                                                  903             939             999
                                                                    -------         -------         -------
                                                                    $   780         $   938         $ 1,039
                                                                    =======         =======         =======
</TABLE>


         The principal temporary differences included in the accompanying
balance sheets, as of December 31, are:

                                                   2000          2001
                                                ---------     ---------

Net operating loss and ITC carryforwards        $  24,565     $   2,500
Canadian depreciation differentials                    --        20,684
Valuation allowance                              (24,565)       (23,184)
                                                --------      ---------
                                                $     --      $      --
                                                ========      =========


         The Company's net deferred tax assets at December 31, 2001, primarily
relate to Canadian investment tax credits and depreciation differentials and
U.S. consolidated net operating loss carry-forwards. The Company provided a full
valuation allowance against these tax assets, because it cannot determine that
it is likely that the deferred tax assets would be utilized in the future.

         On September 30, and October 1, 2001, STCI, together with Point Tupper
Marine Services Limited ("PTMS") and Statia Terminals Canada Holdings, Inc.
("STCHI"), a newly formed wholly-owned subsidiary of STCI, reorganized such that
the businesses previously carried on by these corporations, other than the spill
response business of PTMS, were transferred to STCP. STCP is a general
partnership formed under the laws of the Province of Nova Scotia, Canada, and
its only partners are STCI, PTMS, and STCHI. The Company effected the
reorganization of its Canadian operations in order to consolidate certain
activities and gain operational efficiencies. Additionally, as a result of the




                                      F-20
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


reorganization, Canadian net operating loss carry-forwards, substantially all of
which were to expire unutilized at the end of 2001, were applied against the tax
gain arising from the transfer of certain assets to STCP. The resultant increase
in the tax basis of the assets transferred will be available for future years'
tax depreciation deductions. The Company has provided a full valuation allowance
against the net deferred tax asset resulting from this reorganization,
aggregating approximately $20,684, at December 31, 2001, because it cannot
determine that it is likely that the deferred tax asset will be utilized in the
future.

         The Company's Canadian subsidiaries are subject to a federal large
corporation tax based on 0.225% of the subsidiaries' total equity. As of April
1, 1997, Nova Scotia enacted a provincial capital tax based on 0.25% of the
subsidiaries' total equity. The Company did not have any net operating tax loss
carry-forwards available to offset Canadian taxable income at December 31, 2001.
The investment tax credit carry-forwards available to reduce Canadian income
taxes were $1,178 at December 31, 2001, and expire in various amounts through
2010.

         The net operating tax loss carry-forwards available to offset U.S.
taxable income at December 31, 2001, were $4,378, and expire in various amounts
through 2020.

         On June 1, 1989, the governments of the Netherlands Antilles and St.
Eustatius approved a Free Zone and Profit Tax Agreement retroactive to January
1, 1989, which expired on December 31, 2000. This agreement requires a
subsidiary of the Company to pay a 2% rate on taxable income, as defined, or a
minimum payment of 500,000 Netherlands Antilles guilders ($282) per year. This
agreement further provides that any amounts paid in order to meet the minimum
annual payment will be available to offset future tax liabilities under the
agreement to the extent that the minimum annual payment is greater than 2% of
taxable income. The subsidiary continues to honor the provisions of the expired
Free Zone and Profit Tax Agreement and make payments as required thereunder.

         During 1999, the Company and representatives appointed by the
governments of the Netherlands Antilles and St. Eustatius completed a draft of a
new agreement applicable to the subsidiary and certain affiliates and submitted
the draft for approval to each government. The draft as submitted called for the
new agreement to be effective retroactively from January 1, 1998, through
December 31, 2010, with extension provisions to 2015. The Company has proposed
certain modifications to the 1999 draft including extension of the expiration of
the new agreement to January 1, 2026 to match certain Netherlands Antilles
legislation. The subsidiary has accrued within Other accrued liabilities amounts
which may become payable should the new agreement become effective. In
connection with the sale of Group's subsidiaries to Kaneb, Kaneb has committed
to pay Group, when a new tax agreement is executed, 80% of the excess, if any,
of the estimated tax liability recorded as of February 28, 2002 over the actual
liability incurred under such new tax agreement for periods prior to February
28, 2002.

         Certain of the Company's Netherlands Antilles subsidiaries are not part
of the Free Zone and Profit Tax Agreement and accordingly pay Netherlands
Antilles federal income taxes at effective tax rates of up to 45%. Other
Netherlands Antilles subsidiaries have beneficial tax rulings as customarily
granted to companies operating in the offshore sector. Approximately $48, $55
and $69 of Netherlands Antilles profit tax is included in the non-U.S. tax
provision for the years ended December 31, 1999, 2000, and 2001, respectively.
However, if significant adverse modifications are made to the Netherlands
Antilles tax agreements or tax rulings, or if the new agreement is not completed
and the current beneficial



                                      F-21
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


tax status is terminated, the Company's business, financial condition, results
of operations and cash flows may be adversely affected.

11. STOCK OPTIONS PRIOR TO FEBRUARY 28, 2002

         During 1997, the stockholders of the Company approved the 1997 Stock
Option Plan (the "1997 Plan"), which allowed up to 7,235 shares of $0.10 par
value common stock of the Company to be delivered pursuant to incentive stock
option award agreements or nonqualified stock option award agreements.

         During the period from January 1, 1999, to April 28, 1999, $154 related
to certain compensatory options granted in 1998 was amortized as compensation
expense and credited to additional paid-in capital. In connection with the
initial public offering of equity discussed in Note 3, options granted in 1997
and 1998, less forfeitures, were exercised and converted, along with all
existing common stock, into 3.8 million class B subordinated shares and 38,000
class C shares. On April 28, 1999, the remaining unamortized compensation
expense associated with these options of $2,152 was recorded as a non-cash
special compensation expense and credited to additional paid-in capital.

         In April 1999, in conjunction with the initial public offering of
equity, the shareholders of the Company approved the 1999 Share Option Plan (the
"1999 Plan"), and the 1997 Plan terminated. Under the 1999 Plan, the Company may
deliver up to 1,140,000 class A common shares to employees, directors, and
consultants, subject to adjustment under certain conditions. Any such options
must be exercisable within ten years of the grant date. No options were granted
during 1999 pursuant to the 1999 Plan.

         On May 2, 2000, options on 228,000 shares of class A common shares were
granted to certain employees and non-employee directors of the Company at an
exercise price of $5.59 per share, representing the fair market value of the
Company's class A common shares on the date of grant. As such, no compensation
expense was recognized under APB No. 25. The options were to be exercised on or
after May 2, 2009; provided, however, that the options were to become
exercisable earlier under certain conditions including immediately prior to any
change of control, as defined in the 1999 Plan. During 2000, 7,500 of the
options granted in May 2000 were forfeited.

         On January 24, 2001, options on 235,500 shares of class A common shares
were granted to certain employees and non-employee directors of the Company at
an exercise price of $8.094 per share, representing the fair market value of the
Company's class A common shares on the date of grant. As such, no compensation
expense was recognized under APB No. 25. The options were to become exercisable
on or after January 24, 2010, but were subject to the same terms and conditions
as described above for the options granted on May 2, 2000, including the
accelerated vesting provisions.

         On August 27, 2001, options to purchase 680,000 class A common shares
were granted to certain of the Company's employees at an exercise price of $5.00
per share which was below the fair market value of the class A common shares on
the date of grant ($12.975 per share). Therefore, the Company recognized $5,423
of additional paid-in capital and an offsetting amount to deferred compensation
on



                                      F-22
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


August 27, 2001 within shareholders' equity. During the year ended December 31,
2001, the Company recognized $208 of compensation expense related to the options
granted on August 27, 2001, in accordance with APB No. 25. The options were to
become exercisable on or after August 27, 2010, but were subject to the same
accelerated vesting terms and conditions as described above for the options
granted on May 2, 2000, including the accelerated vesting provisions.

         As of December 31, 2001, options on 4,000 shares of class A common
shares remained available for grant under the 1999 Plan, there were no options
currently exercisable, the range of exercise prices for outstanding options was
$5.00 to $8.094 per share, and the weighted average remaining contractual life
for outstanding options was 9.3 years. As more fully discussed in Note 19 below,
all outstanding stock options vested and were cashed out by the Company on
February 28, 2002, at an amount equal to the difference between the grant price
of the option and $18.4998 per share.

         The following information is presented with respect to the Company's
stock options:


                                                                Weighted
                                                 Number          Average
                                                of Shares      Option Price
                                                ---------      ------------
Outstanding at December 31, 1998                    6,145          $0.10
    Granted                                            --             --
    Exercised                                       6,145           0.10
    Cancelled                                          --             --
                                                ---------          -----
Outstanding at December 31, 1999                       --             --
    Granted                                       228,000           5.59
    Exercised                                          --             --
    Cancelled                                       7,500           5.59
                                                ---------          -----
Outstanding at December 31, 2000                  220,500           5.59
    Granted                                       915,500           5.80
    Exercised                                          --             --
    Cancelled                                          --             --
                                                ---------          -----
Outstanding at December 31, 2001                1,136,000          $5.75
                                                =========          =====





                                      F-23
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         Had compensation expense been recorded for the Company's awards based
on fair value at the grant dates consistent with the methodologies of SFAS No.
123, the Company's reported net income (loss) and earnings per share would have
been changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                                                      For the Years Ended December 31,
                                                         -------------------------------------------------
                                                            1999                2000               2001
                                                         ---------           ---------          ----------
<S>                                                      <C>                 <C>                <C>
Net income (loss):
     As reported                                         $  (5,136)          $   6,094          $   10,901
     Pro forma                                              (6,869)              6,075              10,931

Basic earnings (loss) per share:
     Class A common share as reported                        (0.26)               0.90                1.80
     Class A common share pro forma                          (0.26)               0.89                1.81
     Class B subordinated share as reported                  (1.04)                 --                  --
     Class B subordinated share pro forma                    (1.52)                 --                  --

Diluted earnings (loss) per share:
     Class A common share as reported                        (0.17)               0.57                1.07
     Class A common share pro forma                          (0.17)               0.57                1.07
     Class B subordinated share as reported                  (1.04)                 --                  --
     Class B subordinated share pro forma                    (1.52)                 --                  --

</TABLE>

         The following table summarizes the assumptions used to estimate the
fair value on the grant date using the Black Scholes model:

<TABLE>
<CAPTION>

                                                                                January 24,    August 27,
Grant Dates                            1997          1998           2000           2001           2001
-----------                          -------       --------       --------      -----------    ----------
<S>                                     <C>            <C>            <C>            <C>            <C>
Risk free interest rate                 6.3%           6.3%           6.5%           5.2%           5.0%
Dividend yield                          0.0%           0.0%          10.7%           9.9%          13.9%
Volatility                             31.4%          31.4%          43.8%          47.7%          47.7%
Expected life of the option          10 years       10 years       10 years       10 years       10 years
</TABLE>




                                      F-24
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


12. COMMITMENTS AND CONTINGENCIES

     OTHER ACCRUED EXPENSES

         Other accrued expenses consist of the following as of December 31:

                                                  2000           2001
                                               ---------      ---------

Personnel, payroll taxes and related costs     $   2,281      $   3,343
Retirement liabilities                               729            969
Legal and professional fees                          738            861
Environmental expenses                             1,068          1,024
Accrued income taxes                               1,760          2,292
Deferred revenue                                   1,291            157
Other                                              1,872          1,367
                                               ---------      ---------
                                               $   9,739      $  10,013
                                               =========      =========


     ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS PRIOR TO FEBRUARY 28, 2002

         In connection with the Castle Harlan Acquisition, studies were
undertaken by and for Praxair, Inc. to identify potential environmental, health,
and safety matters. Certain matters involving potential environmental costs were
identified at the Point Tupper, Nova Scotia, Canada facility. Praxair, Inc.
agreed to pay for certain of these environmental costs subject to certain
limitations. Praxair, Inc. paid approximately $5,609 during the period from
November 27, 1996, to December 31, 2001, related to such costs. Based on
investigations conducted and information available to date, the potential cost
of additional remediation and compliance is estimated at approximately $13,000,
substantially all of which the Company believes is the responsibility of
Praxair, Inc. per the Castle Harlan Acquisition agreement. The Company believes
that environmental, health, and safety costs will not have a material adverse
effect on the Company's financial position, cash flows, or results of
operations, subject to reimbursements from Praxair, Inc.

         The Company has also identified certain other environmental, health,
and safety costs not covered by the agreement with Praxair, Inc. for which
$1,500 were accrued in 1996 in conjunction with the Castle Harlan Acquisition.
Through December 31, 2001, $257 of this amount had been expended. The Company
periodically reviews the adequacy of this accrual and during 1999 and 2000
determined $250 and $180, respectively, originally provided for environmental
contingencies were no longer necessary. Accordingly, this portion of the accrual
was eliminated and credited to costs of terminaling services in the accompanying
statements of operations. In 2000 and 2001, the Company identified certain other
environmental, health, and safety costs not covered by the agreement with
Praxair, Inc. and accrued $180 and $31 related to these costs, respectively.



                                      F-25
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


     LITIGATION PRIOR TO FEBRUARY 28, 2002

         Prior to February 28, 2002, Group's former subsidiaries were involved
in various claims and litigation arising in the normal course of business. Based
upon analysis of legal matters and discussions with legal counsel, Group
believes that the ultimate outcome of these matters will not have a material
adverse effect on Group's business, financial condition, results of operations,
or cash flows.

     EMPLOYMENT AGREEMENTS AND SEVERANCE PLAN

         In August and November 2001, the Company entered into amended and
restated employment agreements with six members of senior management. These
agreements provide for an annual base salary which is subject to review at least
annually by the board of directors of Statia Terminals, Inc. increasing at least
at the growth rate of the consumer price index. These agreements also provide
for an annual cash incentive bonus to be awarded based on the difference between
target earnings before interest expense, taxes, depreciation, and amortization
("EBITDA") and actual EBITDA. The employment agreements generally continue to
December 31, 2004, and are automatically extended for an additional year
beginning January 1, 2003 (i.e., on January 1, 2003, the agreements extend to
December 31, 2005) unless either party gives notice of non-renewal ninety days
prior to January 1. No such notices have been given. The employment agreements
contain three year non-compete arrangements beginning at the termination of
employment.

         In the event that Statia Terminals, Inc. terminates any of these
employment agreements without substantial cause or the employee terminates for
good reason, as these terms are defined in each of the employment agreements,
the employee shall be entitled to his current compensation, welfare benefits and
annual incentive bonus for the remaining portion of the term of the relevant
employment agreement. Upon a change of control, as this term is defined in each
of the employment agreements, these employees shall now be entitled to a change
of control bonus aggregating $4,100. Should any of these agreements be
terminated after a change of control, the employee shall be entitled to his
current compensation, welfare benefits, and annual incentive bonus for the
remaining portion of the term of the relevant employment agreement payable in a
lump-sum cash payment. As more fully discussed in Note 19 below, the sale of
Group's subsidiaries to Kaneb qualified as a change of control for purposes of
the employment agreements, and any liability associated with these agreements
remains with Group's former subsidiaries and Kaneb after the closing of the sale
of Group's former subsidiaries.

         A subsidiary of Group is committed to pay the premiums of two split
dollar life insurance policies for one member of senior management generally
until that individual reaches age 65 at which time either that individual or his
designated beneficiaries will receive the cash surrender value of the policy.
Assuming premium payments are made until age 65, the full cost to the Company of
remaining payments as of December 31, 2001, is $508. As more fully discussed in
Note 19, these remaining unpaid premiums became payable upon the change of
control which occurred on February 28, 2002.

         In 2001, the Company adopted a severance plan for certain salaried
employees, excluding members of senior management and others with whom the
Company has entered into employment



                                      F-26
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


agreements. The severance plan provides for a lump-sum payment to covered
employees and the continuation of certain welfare benefits for the severance
term. The severance term is determined based on the employee's length of
service, as defined in the severance plan, and the employee's grade level.
Benefits are provided for a minimum 13 weeks and a maximum 52 weeks. Benefits
are only paid if the employee is terminated within two years of a change of
control, as defined in the severance plan. Any liability associated with this
severance plan remains with Group's former subsidiaries and Kaneb after the
closing of the sale of Group's former subsidiaries.

13. RELATED PARTY TRANSACTIONS

         In November 1996, the Company entered into a ten-year management
agreement with Castle Harlan, Inc., to pay an annual management fee of $1,350,
plus out-of-pocket expenses, for advisory and strategic planning services in
relation to the day-to-day affairs of the Company. Such services were performed
at the discretion of Castle Harlan, Inc. The management agreement also entitled
Castle Harlan, Inc. to additional compensation should it perform services for
the Company related to certain financing activities, including initial public
offerings. The Company compensated Castle Harlan, Inc. $778 for services
performed in relation to the Company's initial public offering of equity and
such amount was charged to additional paid-in capital on April 28, 1999. This
management agreement was amended and restated at the closing of the Company's
initial public offering of equity on April 28, 1999, to eliminate the $1,350
management fee and require that any such services be provided only at the
request of the Company. The Company has not requested any such services
subsequent to April 28, 1999, nor has Castle Harlan, Inc. provided any such
services. Accordingly, no management fee expense has been recorded subsequent to
April 28, 1999.

         The amended and restated management agreement continues to provide for
reimbursement of ordinary and necessary expenses and a continuing indemnity for
the period up to the termination date of November 27, 2006, and any extension
thereto. During the years ended December 31, 1999, 2000, and 2001, the Company
reimbursed Castle Harlan, Inc. $78, $115, and $68, respectively, of expenses
under this agreement. The amended and restated management agreement terminated
with the change of control described in Note 19 below.

         The Company provides and receives other services from various other
related parties. The value of such services is not significant individually or
in the aggregate.



                                      F-27
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


14. SEGMENT INFORMATION PRIOR TO FEBRUARY 28, 2002

         The Company is organized around several different factors, the two most
significant of which are services and products and geographic location. The
Company's primary services are terminaling services (resulting in revenue from
storage, throughput, dock usage, emergency response and other terminal services)
and product sales (including bunker fuels and bulk oil sales).

         The primary measures of profit and loss utilized by the Company's
management to make decisions about resources to be allocated to each segment are
earnings before interest expense, income taxes, depreciation, amortization, and
certain non-recurring income and expenses ("Adjusted EBITDA") and earnings
before interest expense, interest income, income taxes, and certain
non-recurring income and expenses ("Adjusted EBIT").

         The following information is provided for the Company's terminaling
services and product sales segments:

<TABLE>
<CAPTION>

                                                     For the Years Ended December 31,
                                                --------------------------------------------
                                                  1999              2000              2001
                                                --------          --------          --------
<S>                                             <C>               <C>               <C>
REVENUES:
   Terminaling services                         $ 61,665          $ 61,547          $ 73,687
   Product sales                                 106,678           148,908           128,473
                                                --------          --------          --------
     Total                                      $168,343          $210,455          $202,160
                                                ========          ========          ========
ADJUSTED EBITDA:
   Terminaling services                         $ 26,994          $ 25,128          $ 32,061
   Product sales                                   6,584             6,582             6,735
                                                --------          --------          --------
     Total                                      $ 33,578          $ 31,710          $ 38,796
                                                ========          ========          ========
DEPRECIATION AND AMORTIZATION EXPENSE:
   Terminaling services                         $ 11,196          $ 12,452          $ 12,038
   Product sales                                     371               691               780
                                                --------          --------          --------
     Total                                      $ 11,567          $ 13,143          $ 12,818
                                                ========          ========          ========
ADJUSTED EBIT:
   Terminaling services                         $ 15,798          $ 12,676          $ 20,023
   Product sales                                   6,213             5,891             5,955
                                                --------          --------          --------
     Total                                      $ 22,011          $ 18,567          $ 25,978
                                                ========          ========          ========
CAPITAL EXPENDITURES:
   Terminaling services                         $  7,572          $  7,528          $  5,558
   Product sales                                     161               753             1,363
   Other unallocated                                 860               297                96
                                                --------          --------          --------
     Total                                      $  8,593          $  8,578          $  7,017
                                                ========          ========          ========

</TABLE>



                                      F-28
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


                                            As of December 31,
                              --------------------------------------------
                                1999              2000             2001
                              --------          --------          --------
NET ASSETS:
Terminaling services          $203,781          $202,780          $197,073
Product sales                   16,618            14,315            13,372
Unallocated assets              15,898            23,643            26,463
                              --------          --------          --------
   Total assets               $236,297          $240,738          $236,908
                              ========          ========          ========

         A reconciliation of Adjusted EBIT to the Company's income before
provision for income taxes, preferred stock dividends and extraordinary charge
is as follows:

<TABLE>
<CAPTION>

                                                                           For the Years Ended December 31,
                                                                  ----------------------------------------------
                                                                    1999              2000               2001
                                                                  --------           --------           --------
<S>                                                               <C>                <C>                <C>
Adjusted EBIT                                                     $ 22,011           $ 18,567           $ 25,978
Interest expense excluding debt amortization expense               (13,518)           (12,077)           (12,494)
Special compensation expense                                        (4,099)                --                 --
Hurricane charges                                                   (1,750)                --                 --
Settlement of insurance claim                                           --                542                 --
Costs related to sale of subsidiaries                                   --                 --             (1,544)
                                                                  --------           --------           --------
   Income before provision for income taxes,
      preferred stock dividends and extraordinary charge          $  2,644           $  7,032           $ 11,940
                                                                  ========           ========           ========

</TABLE>

         The following information is provided with respect to the geographic
operations of the Company based upon the location where the service is provided
or product delivered:

                                    For the Years Ended December 31,
                             --------------------------------------------
                               1999              2000              2001
                             --------          --------          --------
REVENUES:
   Caribbean                 $149,852          $192,165          $171,813
   Canada                      18,491            18,290            30,347
                             --------          --------          --------
     Total revenues          $168,343          $210,455          $202,160
                             ========          ========          ========

                                           As of December 31,
                            ---------------------------------------------
                               1999             2000              2001
                            --------          --------          --------
LONG-LIVED ASSETS:
   Caribbean                $174,884          $171,689          $166,772
   Canada                     28,705            28,139            28,485
   United States               2,442             2,233             1,706
                            --------          --------          --------
                            $206,031          $202,061          $196,963
                            ========          ========          ========

         Long-lived assets primarily consist of net property and equipment.



                                      F-29
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


     SIGNIFICANT CUSTOMERS

         The Company has a long-term storage and throughput contract with
Bolanter Corporation N.V. (a subsidiary of Saudi Aramco) at the Company's St.
Eustatius facility, which expires in 2005. The Company also derives revenues
from an affiliate of Bolanter as an indirect result of this storage and
throughput agreement. The Company derives revenues from parties unaffiliated
with Bolanter because of the movement of Bolanter's crude oil, or crude oil sold
by Bolanter, through the Company's St. Eustatius facility. Additionally, the
Company sells bunker fuels to an affiliate of Bolanter at its St. Eustatius
facility.

         The following table sets forth such Saudi Aramco-related revenues as a
percentage of the Company's total revenues:

<TABLE>
<CAPTION>

                                                                          For the Years Ended December 31,
                                                                         ----------------------------------
                                                                         1999          2000            2001
                                                                         ----          ----            ----

<S>                                                                       <C>            <C>            <C>
Storage and throughput contract and related indirect revenues             6.1%           4.0%           4.0%
Unaffiliated third parties                                                6.4%           7.7%           9.4%
Bunker sales                                                              2.3%           2.5%           1.0%
                                                                         ----           ----           ----
  Total                                                                  14.8%          14.2%          14.4%
                                                                         ====           ====           ====
</TABLE>

         Although the Company has a long-standing relationship and long-term
contract with this customer, if such long-term contract were not renewed or
replaced at the end of its term, or if the Company otherwise lost any
significant portion of its revenues from this customer, such
non-renewal/replacement or loss could have a material adverse effect on the
Company's business, financial condition, and ability to pay distributions. The
Company also has long-term contracts with other key customers, and there can be
no assurance that these contracts will be renewed at the end of their terms or
that the Company will be able to enter into other long-term contracts on terms
favorable to it, or at all.

         No other customer accounted for more than 10% of the Company's total
revenues in 1999, 2000, or 2001.

15. RETIREMENT PLANS PRIOR TO FEBRUARY 28, 2002

         The Company maintains an employee savings plan in accordance with
Section 401(k) of the U.S. Internal Revenue Code. This plan covers all of the
Company's full-time U.S. employees and allows employees to contribute up to the
lesser of 15% of eligible compensation or $10.5 for the 2001 calendar year. The
Company currently matches at a 50% rate up to 8% of an employee's base salary.
In addition, the Company may contribute, on a discretionary basis, up to 1% of
an employee's base salary per quarter. Amounts charged to expense for matching
and discretionary contributions for the years ended December 31, 1999, 2000, and
2001 were $314, $337 and $346, respectively.



                                      F-30
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         In addition, the Company sponsors certain retirement plans for certain
employees residing in the Netherlands Antilles and Canada. Amounts charged to
expense for non-U.S. plans for the years ended December 31, 1999, 2000, and
2001, were $73, $875, and $271, respectively. Such amounts include mandatory
severance payments accrued in accordance with Netherlands Antilles law, which
are included in Other accrued expenses.

16. HURRICANE CHARGES PRIOR TO FEBRUARY 28, 2002

         As a result of damages sustained to the Company's St. Eustatius
facility from Hurricane Lenny in late November 1999, the Company incurred a
one-time, non-cash charge of $1,500 to partially reduce the carrying value of
its shoreline protection system and a one-time cash charge of $250 to cover
other hurricane related expenses. The damaged shoreline protection system was
not covered by insurance and, together with certain other civil work, was
replaced during 2000 at a cost of approximately $2,800.

17. VALUATION AND QUALIFYING ACCOUNTS PRIOR TO FEBRUARY 28, 2002

         The table below summarizes the activity in the valuation account,
allowance for possible uncollectible trade accounts receivable and the deferred
tax asset valuation allowance for the periods indicated.

<TABLE>
<CAPTION>

                                                     Balance,      Charges      Deductions,     Balance,
                                                    Beginning         to        Write-offs,      End of
                                                    of Period      Expense          Net          Period
                                                    ---------      -------      -----------     -------

<S>                                                  <C>             <C>            <C>            <C>
Trade Accounts Receivable Valuation Account:
   For the year ended December 31, 1999               $ 785          $  20          $  (1)          $ 804
   For the year ended December 31, 2000                 804            149             --             953
   For the year ended December 31, 2001                 953             29           (140)            842
</Table>

<TABLE>
<CAPTION>


                                                  Balance,                         Expirations,         Balance,
                                                 Beginning                            Other,             End of
                                                 of Period         Increases            Net              Period
                                                 ---------         ---------       ------------          ------
<S>                                              <C>               <C>               <C>                <C>
Deferred Tax Asset Valuation Allowance:
   For the year ended December 31, 1999          $ 31,217          $     --          $   (846)          $ 30,371
   For the year ended December 31, 2000            30,371                --            (5,806)            24,565
   For the year ended December 31, 2001            24,565            19,045           (20,426)            23,184
</TABLE>



                                      F-31
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


18. UNAUDITED QUARTERLY FINANCIAL INFORMATION PRIOR TO FEBRUARY 28, 2002

         The following is a summary of the unaudited quarterly results of
operations for 2000 and 2001:

<TABLE>
<CAPTION>

                                                                                      Quarters Ended
                                                         ------------------------------------------------------------------------
                                                         March 31         June 30       September 30    December 31        Total
                                                         --------         --------      ------------    -----------       -------
<S>                                                      <C>              <C>             <C>             <C>             <C>
                     2000

Total revenues                                           $ 42,305         $ 54,227        $ 57,542        $ 56,381        $210,455
Gross profit                                                4,073            6,090           9,228           9,730          29,121
Net income (loss)                                          (1,538)             283           3,572           3,777           6,094

BASIC EARNINGS (LOSS) PER CLASS A COMMON SHARE:             (0.22)            0.04            0.53            0.58            0.90

DILUTED EARNINGS (LOSS) PER CLASS A COMMON SHARE:           (0.22)            0.03            0.34            0.36            0.57

BASIC AND DILUTED EARNINGS PER CLASS B
   SUBORDINATED SHARE:                                         --               --              --              --              --

                     2001

Total revenues                                           $ 50,213         $ 53,860        $ 51,068        $ 47,019        $202,160
Gross profit                                                9,547            9,758           8,546           9,230          37,081
Net income (loss)                                           3,183            4,130           2,434           1,154          10,901

BASIC EARNINGS (LOSS) PER CLASS A COMMON SHARE:              0.52             0.69            0.40            0.19            1.80

DILUTED EARNINGS (LOSS) PER CLASS A COMMON SHARE:            0.32             0.41            0.24            0.11            1.07

BASIC AND DILUTED EARNINGS PER CLASS B
   SUBORDINATED SHARE:                                         --               --              --              --              --

</TABLE>

         Earnings per share have been computed independently for each of the
quarters presented. Therefore, the sum of the quarterly earnings per share in
2000 and 2001 does not equal the total computed for the year.



                                      F-32
<PAGE>
                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


19. SUBSEQUENT EVENTS

         On February 22, 2002, Group's shareholders voted (i) to sell its
subsidiaries consisting of International, Technology and Marine (representing
its operations and substantially all of its assets prior to the sale) to Kaneb,
(ii) to dissolve and liquidate Group, and (iii) to appoint Group's board of
directors as its liquidator and custodian of its corporate documents. The sale
transaction was completed on February 28, 2002. The purchase price paid by Kaneb
at closing was approximately $311,465 and includes approximately $19,857 of cash
on hand and approximately $106,736 of Group's former subsidiaries' debt,
consisting of the Notes and the Responder Loan. The purchase price is subject to
adjustment based on the amount of cash and cash equivalents held by Group's
former subsidiaries on February 28, 2002.

         Substantially all of the proceeds from the sale transaction (less
approximately $3,000 that will be held by Group until its liquidation is
complete, and fees and expenses related to this transaction) were distributed to
Group's shareholders beginning on February 28, 2002. Fees and expenses are
estimated at approximately $6,254 that includes $1,544 of costs expensed during
2001. Holders of Group's class A common shares and class B subordinated shares
received distributions of $18.4998 per share and $16.8844 per share,
respectively. Group's class C shareholder received a distribution of $6,994, and
Group estimates its class C shareholder will receive a further distribution of
approximately $3,000 following Group's liquidation, assuming no adjustments to
the purchase price received from Kaneb are required and costs remain as
estimated. The $18.4998 distribution per class A common share eliminated all
arrearages in target quarterly distributions and Group is not obligated to pay
or accrue any further arrearages in target quarterly distributions.
Additionally, the $16.8844 distribution per class B subordinated share
eliminated all deferred distributions payable in respect of these shares which
aggregated $2,913.

         At the close of trading on February 28, 2002, Group terminated the
listing of its class A common shares on the Nasdaq National Market and Group's
transfer agent closed its stock transfer books and ceased recording transfers of
Group's class A common shares of that date. Group's dissolution under
Netherlands Antilles law occurred on March 2, 2002, and Group is currently in
the process of liquidation. Under Netherlands Antilles law, Group is no longer
authorized to undertake actions other than those necessary to wind up its
affairs. The steps taken to wind up its affairs will be completed when no more
assets are available for distribution, all required filings have been made, and
the report of the liquidator has become binding and final.

          Shareholders of record on February 28, 2002, will remain shareholders
until the liquidation is complete, which Group anticipates will occur before
December 31, 2002. After satisfaction of Group's creditors, any cash remaining
at the end of the liquidation period will be paid to the holder of Group's class
C shares. No further distributions will be made in respect of Group's class A
common shares and class B subordinated shares.




                                      F-33
<PAGE>

                  STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
                              (PENDING LIQUIDATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Dollars in thousands except share amounts)

                                   (Continued)


         In connection with the sale transaction, Group forgave all the notes
receivable from shareholders discussed in Note 8. Additionally, the sale
transaction qualified as a change of control for purposes of the stock options
discussed in Note 11 and the employment agreements discussed in Note 12. As a
result, Group cashed out all outstanding stock options on February 28, 2002, for
$18.4998 per share less the exercise prices, and the change of control bonuses
were paid. Group recognized $5,118 of compensation expense on February 28, 2002,
related to the options Group granted on August 27, 2001, which represents the
unamortized balance of the deferred compensation on February 28, 2002.

         As a result of the sale transaction, Group estimates that non-employee
members of its board of directors will receive an aggregate of $74,916,
consisting of (i) their beneficial interest in Group's class A common shares,
class B subordinated shares and class C shares of $74,729 and (ii) net proceeds
on the sale of stock options of $187. By virtue of his control position with
Castle Harlan, our director, John K. Castle, may be deemed to be the beneficial
owner of all of our class B subordinated shares and class C shares. The amount
referenced of $74,729 includes distributions payable to Castle Harlan which Mr.
Castle disclaims except to the extent of his pro rata partnership interest in
Castle Harlan. Group estimates the Company's executive officers will receive an
aggregate of $30,210, consisting of (i) their beneficial interest in Group's
class A common shares, class B subordinated shares and class C shares of
$12,372, (ii) net proceeds from the cash-out of stock options of $12,483, (iii)
change of control bonuses of $4,100, (iv) forgiveness of notes receivable from
shareholders of $1,000, and (v) the employer portion of payroll taxes resulting
from these transactions of $255.

         On March 1, 2002, the Company funded an irrevocable trust in the amount
of $512 the purpose of which is to pay all the Company's future commitments
related to the split dollar life insurance policies discussed in Note 12.

         On February 28, 2002, the Credit Facility was terminated. On March 1,
2002, Kaneb announced that Statia had commenced the procedure to redeem all of
the Notes in a mandatory redemption at 102.938% of the outstanding principal
amount plus accrued interest. The mandatory redemption was completed on April 5,
2002. Marine repaid the Responder Loan on March 12, 2002, and Group was released
from its guarantee of this debt. Group has no continuing liability with regards
to the Credit Facility, the Notes, or the Responder Loan.



                                      F-34
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       Statia Terminals Group N.V.



                                       By: /s/ James G. Cameron
                                           -------------------------------------
                                               James G. Cameron
                                               Director
                                               April 16, 2002



                                       By: /s/ James F. Brenner
                                           -------------------------------------
                                               James F. Brenner
                                               Vice President and Treasurer
                                               April 16, 2002

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                       By: /s/ John K. Castle
                                           -------------------------------------
                                               John K. Castle
                                               Director
                                               April 16, 2002


                                       By: /s/ David B. Pittaway
                                           -------------------------------------
                                               David B. Pittaway
                                               Director
                                               April 16, 2002


                                       By: /s/ Justin B. Wender
                                           -------------------------------------
                                               Justin B. Wender
                                               Director
                                               April 16, 2002


                                       By: /s/ James G. Cameron
                                           -------------------------------------
                                               James G. Cameron
                                               Director
                                               (As Principal Executive Officer)
                                               April 16, 2002




                                      S-1
<PAGE>



                                       By: /s/ Francis Jungers
                                           -------------------------------------
                                               Francis Jungers
                                               Director
                                               April 16, 2002


                                       By: /s/ Admiral James L. Holloway III
                                           -------------------------------------
                                               Admiral James L. Holloway III
                                               Director
                                               April 16, 2002


                                       By: /s/ Jonathan R. Spicehandler, M.D.
                                           -------------------------------------
                                               Jonathan R. Spicehandler, M.D.
                                               Director
                                               April 16, 2002


                                       By: /s/ Ernest Voges
                                           -------------------------------------
                                               Ernest Voges
                                               Director
                                               April 16, 2002


                                       By: /s/ James F. Brenner
                                           -------------------------------------
                                               James F. Brenner
                                               Vice President and Treasurer
                                               (As Principal Financial Officer
                                               and Principal Accounting Officer)
                                               April 16, 2002




                                      S-2
<PAGE>



                                 EXHIBITS INDEX

 Exhibit
 Number        Description
 ------        -----------

 2.1XIV        Stock Purchase Agreement, dated as of November 12, 2001, by and
               between Statia Terminals Group N.V. and Kaneb Pipe Line Operating
               Partnership, L.P.

 2.1aXV        Stock Purchase Agreement, dated as of November 12, 2001, as
               amended on January 23, 2002, by and between Statia Terminals
               Group N.V. and Kaneb Pipe Line Operating Partnership, L.P.

 3.1IX         Articles of Incorporation Statia Terminals Group N.V.

 3.1aXII       Articles of Incorporation Statia Terminals Group N.V., as amended
               July 30, 2001.

 3.1b          Articles of Incorporation Statia Terminals Group N.V., as amended
               February 22, 2002.

 4.1II         Indenture, dated as of November 27, 1996, among Statia Terminals
               International N.V., Statia Terminals Canada, Incorporated, as
               Issuers, and Statia Terminals Corporation N.V., Statia Terminals
               Delaware, Inc., Statia Terminals, Inc., Statia Terminals N.V.,
               Statia Delaware Holdco II, Inc., Saba Trustcompany N.V., Bicen
               Development Corporation N.V., Statia Terminals Southwest, Inc.,
               W.P. Company, Inc., Seven Seas Steamship Company, Inc., Seven
               Seas Steamship Company (Sint Eustatius) N.V., Point Tupper Marine
               Services Limited, Statia Laboratory Services N.V., Statia Tugs
               N.V. (collectively, the "Subsidiary Guarantors") and Marine
               Midland Bank.

 4.1aVI        First Amendment, dated as of August 14, 1997, to the Indenture,
               dated as of November 27, 1996, among Statia Terminals
               International N.V., a Netherlands Antilles corporation, Statia
               Terminals Canada, Incorporated, a corporation organized under the
               laws of Nova Scotia, Canada, the Subsidiary Guarantors named
               therein and Marine Midland Bank.

 4.1bIV        Second Amendment, dated as of February 25, 1998, to the
               Indenture, dated as of November 27, 1996, among Statia Terminals
               International N.V., a Netherlands Antilles corporation, Statia
               Terminals Canada, Incorporated, a corporation organized under the
               laws of Nova Scotia, Canada, the Subsidiary Guarantors named
               therein and Marine Midland Bank.

 4.1cI         Third Amendment, dated as of July 29, 1998, to the Indenture,
               dated as of November 27, 1996, among Statia Terminals
               International N.V., a Netherlands Antilles corporation, Statia
               Terminals Canada, Incorporated, a corporation organized under the
               laws of Nova Scotia, Canada, the Subsidiary Guarantors named
               therein and Marine Midland Bank.

 4.1dVII       Fourth Amendment of Indenture and Consent Under Securities Pledge
               Agreement, dated April 26, 1999.

 4.1dXIII      Fifth Amendment, dated as of September 30, 2001, to the
               Indenture, dated as of November 27, 1996, among Statia Terminals
               International N.V., a Netherlands Antilles corporation, Statia
               Terminals Canada, Incorporated, a corporation organized under the
               laws of Nova Scotia, Canada, the Subsidiary Guarantors named
               therein and HSBC Bank USA (formerly known as Marine Midland Bank)
               as trustee.

 4.2II         Form of Guarantee of shares issued pursuant to the Indenture
               (included in Exhibit 4.1 hereto).

 4.3VIII       Guarantee issued pursuant to the Indenture, dated as of June 28,
               1999, made by Statia Terminals Antilles N.V.




                                      E-1
<PAGE>

 4.4II         Share Pledge Agreement, dated as of November 27, 1996, by and
               between Statia Terminals International N.V. and Marine Midland
               Bank.

 4.5I          Amendment, dated as of December 18, 1998, by and among Statia
               Terminals Delaware N.V., Marine Midland Bank and Statia Terminals
               Delaware Inc. to Share Pledge Agreement, dated as of November 27,
               1996 by and between Statia Terminals International N.V. and
               Marine Midland Bank.

 4.6II         Share Pledge Agreement, dated as of November 27, 1996, by and
               between Statia Terminals N.V. and Marine Midland Bank.

 4.7II         Share Pledge Agreement, dated as of November 27, 1996, by and
               between Statia Terminals Corporation N.V. and Marine Midland
               Bank.

 4.8II         Share Pledge Agreement, dated as of November 27, 1996, by and
               between Seven Seas Steamship Company, Inc. and Marine Midland
               Bank.

 4.9VIII       Share Pledge Agreement, dated as of June 28, 1999, by and among
               Statia Terminals Antilles N.V., Statia Terminals Delaware, Inc.
               and HSBC Bank USA (formerly known as Marine Midland Bank).

 4.10VIII      Amendment to Share Pledge Agreement, dated as of June 28, 1999,
               by and between Statia Terminals International N.V. and HSBC Bank
               USA (formerly known as Marine Midland Bank).

 4.11II        Fiduciary Transfer of Tangible Assets Agreement, dated as of
               November 27, 1996, by and between Statia Terminals N.V., Saba
               Trustcompany N.V., Bicen Development Corporation N.V., Statia
               Laboratory Services N.V., Statia Tugs N.V., Seven Seas Steamship
               Company (Sint Eustatius) N.V. and Marine Midland Bank.

 4.12II        Fiduciary Assignment of Intangible Assets Agreement, dated as of
               November 27, 1996, by and between Statia Terminals International
               N.V., Statia Terminals Corporation N.V., Statia Terminals N.V.,
               Saba Trustcompany N.V., Bicen Development Corporation N.V.,
               Statia Laboratory Services N.V., Seven Seas Steamship Company
               (Sint Eustatius) N.V., Statia Tugs N.V. and Marine Midland Bank.

 4.13II        Deed of Mortgage, dated as of November 27, 1996, by and among
               Statia Terminals N.V., Statia Laboratory Services N.V., Saba
               Trustcompany N.V. and Bicen Development Corporation N.V. as
               mortgagors and Marine Midland Bank as mortgagee.

 4.14II        Fixed and Floating Charge Debenture, made as of November 27,
               1996, between Statia Terminals Canada, Incorporated and Marine
               Midland Bank.

 4.15II        Debenture Delivery Agreement, dated as of November 27, 1996,
               between Statia Terminals Canada, Incorporated and Marine Midland
               Bank.

 4.16II        Share Pledge Agreement, made as of November 27, 1996, between
               Statia Terminals Canada, Incorporated and Marine Midland Bank.

 4.16aXIII     Amendment to Share Pledge Agreement, dated as of September 30,
               2001, by Statia Terminals Canada, Incorporated.

 4.17II        Share Pledge Agreement, dated as of November 27, 1996, between
               Statia Terminals Corporation N.V. and Marine Midland Bank.

 4.18II        Debt Allocation Agreement, dated as of November 27, 1996,
               between Statia Terminals International N.V. and Statia Terminals
               Canada, Incorporated.

 4.19II        United States Share Pledge and Security Agreement, dated as of
               November 27, 1996, by and among Statia Terminals International
               N.V., Statia Delaware Holdco II, Statia Terminals Delaware, Inc.,
               Statia Terminals, Inc., W.P. Company, Inc. and Marine Midland
               Bank.




                                      E-2
<PAGE>

 4.20I         Form of Registration Rights Agreement between Statia Terminals
               Group N.V. and Statia Terminals Holdings N.V.

 4.21XI        Guaranty executed by Statia Terminals Group N.V. in favor of
               Transamerica Equipment Financial Services Corporation, dated as
               of December 20, 2000.

 4.22XI        Loan Agreement by and between Statia Marine, Inc. and
               Transamerica Equipment Financial Services Corporation, dated as
               of December 20, 2000.

 4.23XI        Promissory Note executed by Statia Marine, Inc. in favor of
               Transamerica Equipment Financial Services Corporation, dated as
               of December 20, 2000.

 4.24XI        First Preferred Ship Mortgage executed by Statia Marine, Inc. in
               favor of Transamerica Equipment Financial Services Corporation,
               dated as of December 20, 2000.

 4.25XIII      Statia Terminals Partnership Agreement made as of September 21,
               2001, between Statia Terminals Canada, Incorporated, Point Tupper
               Marine Services Limited, and Statia Terminals Canada Holdings,
               Inc.

 4.26XIII      Securities Pledge Agreement, dated as of September 30, 2001, by
               and among Point Tupper Marine Services Limited and Statia
               Terminals Canada Holdings, Inc. and HSBC Bank USA (formerly known
               as Marine Midland Bank), as Trustee.

 4.27XIII      Guarantee, dated as of September 30, 2001, made by Statia
               Terminals Canada, Incorporated, Point Tupper Marine Services
               Limited and Statia Terminals Canada Holdings, Inc.

 4.28XIII      Guarantee, dated as of September 30, 2001, made by Statia
               Terminals Canada Holdings, Inc.

 10.1II        Marine Fuel Agreement, dated as of May 6, 1993 ("Marine Fuel
               Agreement").

 10.2II        Amendment, dated as of January 1, 1996 to (i) the Storage and
               Throughput Agreement, dated as of May 6, 1993 ("Storage and
               Throughput Agreement") and (ii) the Marine Fuel Agreement.

 10.3II        Extension to Marine Fuel Agreement, dated as of December 27,
               1996.

 10.3aIV       Amendment, dated as of December 27, 1996 to (i) the Storage and
               Throughput Agreement and (ii) the Marine Fuel Agreement.

 10.3bIV       Amendment, dated as of December 28, 1997 to (i) the Storage
               and Throughput Agreement and (ii) the Marine Fuel Agreement.

 10.3cI        Amendment, dated February 26, 1999 to (i) the Storage and
               Throughput Agreement and (ii) the Marine Fuel Agreement.

 10.3dXI       Amendment, dated June 28, 2000 to (i) the Storage and Throughput
               Agreement and (ii) the Marine Fuel Agreement.

 10.3eXII      Amendment, dated June 26, 2001 to (i) the Storage and Throughput
               Agreement and (ii) the Marine Fuel Agreement.

 10.4II        Storage and Throughput Agreement, dated as of August 20, 1993.

 10.4aX        Amendment, dated as of October 1999 to the Storage and Throughput
               Agreement.

 10.4bXI       Amendment, dated as of January 10, 2001 to the Storage and
               Throughput Agreement.

 10.5II        Storage and Throughput Agreement, dated as of August 1, 1994.

 10.5aV        Letter of extension, dated as of March 23, 1999 to the Storage
               and Throughput Agreement.

 10.5bXI       Amendment, dated as of December 20, 2000 to the Storage and
               Throughput Agreement.

 10.6VII       Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James G. Cameron.

 10.6aXIII     Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James G. Cameron.





                                      E-3
<PAGE>

 10.6bXIII     Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James G. Cameron.

 10.7VII       Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Thomas M. Thompson, Jr.

 10.7aXIII     Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Thomas M. Thompson, Jr.

 10.7bXIII     Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Thomas M. Thompson, Jr.

 10.8VII       Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Robert R. Russo.

 10.8aXIII     Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Robert R. Russo.

 10.8bXIII     Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Robert R. Russo.

 10.9VII       Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and John D. Franklin.

 10.9aXIII     Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and John D. Franklin.

 10.9bXIII     Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and John D. Franklin.

 10.10VII      Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James F. Brenner.

 10.10aXIII    Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James F. Brenner.

 10.10bXIII    Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and James F. Brenner.

 10.11VII      Amended and restated Employment Agreement, effective April 28,
               1999, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Jack R. Pine.

 10.11aXIII    Amended and restated Employment Agreement, effective August 29,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Jack R. Pine.

 10.11bXIII    Amended and restated Employment Agreement, effective November 12,
               2001, between Statia Terminals Group N.V., Statia Terminals, Inc.
               and Jack R. Pine.

 10.12II       Loan Agreement, dated as of November 27, 1996 between Congress
               Financial Corporation (Florida) and Statia Terminals N.V.

 10.13II       Loan Agreement, dated as of November 27, 1996, by and among
               Congress Financial Corporation (Canada), Statia Terminals Canada,
               Incorporated and Point Tupper Marine Services Limited.

 10.15I        Form of 1999 Share Option Plan.

 10.16XIII     Statia Salaried Employee Severance Pay Plan, as adopted effective
               August 29, 2001.

 99.1          Letter Regarding Arthur Andersen LLP




                                      E-4
<PAGE>

I        Incorporated by reference to our Registration Statement on Form S-1,
         dated February 12, 1999, and amendments thereto filed with the U.S.
         Securities and Exchange Commission (Registration Statement No.
         333-72317), which became effective on April 26, 1999.

II       Incorporated by reference to the Registration Statement of Statia
         Terminals International N.V. and Statia Terminals Canada, Incorporated
         on Form S-4, dated December 20, 1996, and amendments thereto filed with
         the U.S. Securities and Exchange Commission (Registration Statement No.
         333-18455), which became effective on February 14, 1997.

III      Incorporated by reference to the December 31, 1996 Form 10-K of Statia
         Terminals International N.V. and Statia Terminals Canada, Incorporated,
         dated May 13, 1997.

IV       Incorporated by reference to the December 31, 1997 Form 10-K of Statia
         Terminals International N.V. and Statia Terminals Canada, Incorporated,
         dated March 31, 1998.

V        Incorporated by reference to the December 31, 1998 10-K of Statia
         Terminals International N.V. and Statia Terminals Canada, Incorporated,
         dated March 31, 1999.

VI       Incorporated by reference to the September 30, 1997 Form 10-Q of Statia
         Terminals International N.V. and Statia Terminals Canada, Incorporated,
         dated November 14, 1997.

VII      Incorporated by reference to our March 31, 1999 Form 10-Q, dated May
         13, 1999.

VIII     Incorporated by reference to our June 30, 1999 Form 10-Q, dated August
         12, 1999.

IX       Incorporated by reference to our September 30, 1999 Form 10-Q, dated
         November 15, 1999.

X        Incorporated by reference to our December 31, 1999 Form 10-K, dated
         March 17, 2000.

XI       Incorporated by reference to our December 31, 2000 Form 10-K, dated
         March 9, 2001.

XII      Incorporated by reference to our June 30, 2001 Form 10-Q, dated August
         14, 2001.

XIII     Incorporated by reference to our September 30, 2001 Form 10-Q, dated
         November 14, 2001.

XIV      Incorporated by reference to our Current Report on Form 8-K, dated
         November 14, 2001.

XV       Incorporated by reference to Appendix A of our Definitive Proxy
         Statement on Schedule 14A, dated January 24, 2002.





                                      E-5