UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2014
OR
|
o |
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 001-34648
BALTIC TRADING LIMITED
(Exact name of registrant as specified in its charter)
|
Republic of the Marshall Islands |
|
98-0637837 |
|
(State or other jurisdiction of |
|
(I.R.S. Employer |
299 Park Avenue, 12th Floor, New York, New York 10171
(Address of principal executive offices) (Zip Code)
(646) 443-8550
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer o |
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Accelerated filer x |
|
|
|
|
|
Non-accelerated filer o |
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares outstanding of each of the issuer’s classes of common stock, as of August 8, 2014: common stock, $0.01 per share — 51,205,241 shares and Class B stock, $0.01 per share — 6,356,471 shares.
Website Information
We intend to use our website, www.BalticTrading.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Receive E-mail Alerts” link in the Investor Relations section of our website and submit your email address. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.
Baltic Trading Limited
Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013
(U.S. Dollars in Thousands, Except for Share and Per Share Data)
(Unaudited)
|
|
|
June 30, 2014 |
|
December 31, |
| ||
|
|
|
|
|
|
| ||
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Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
27,270 |
|
$ |
58,193 |
|
|
Due from charterers, net of a reserve of $34 and $104, respectively |
|
3,018 |
|
4,412 |
| ||
|
Prepaid expenses and other current assets |
|
4,705 |
|
4,085 |
| ||
|
Total current assets |
|
34,993 |
|
66,690 |
| ||
|
|
|
|
|
|
| ||
|
Noncurrent assets: |
|
|
|
|
| ||
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Vessels, net of accumulated depreciation of $62,632 and $52,459, respectively |
|
477,339 |
|
486,069 |
| ||
|
Deposits on vessels |
|
28,634 |
|
1,013 |
| ||
|
Deferred drydock, net of accumulated amortization of $153 and $0, respectively |
|
3,321 |
|
108 |
| ||
|
Fixed assets, net of accumulated depreciation of $52 and $47, respectively |
|
111 |
|
678 |
| ||
|
Deferred financing costs, net of accumulated amortization of $2,163 and $1,785, respectively |
|
2,463 |
|
2,809 |
| ||
|
Total noncurrent assets |
|
511,868 |
|
490,677 |
| ||
|
|
|
|
|
|
| ||
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Total assets |
|
$ |
546,861 |
|
$ |
557,367 |
|
|
|
|
|
|
|
| ||
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Liabilities and Shareholders’ Equity |
|
|
|
|
| ||
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Current liabilities: |
|
|
|
|
| ||
|
Accounts payable and accrued expenses |
|
$ |
5,347 |
|
$ |
3,782 |
|
|
Deferred revenue |
|
135 |
|
409 |
| ||
|
Due to Parent |
|
163 |
|
198 |
| ||
|
Current portion of long-term debt |
|
4,250 |
|
4,250 |
| ||
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Total current liabilities |
|
9,895 |
|
8,639 |
| ||
|
|
|
|
|
|
| ||
|
Noncurrent liabilities: |
|
|
|
|
| ||
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Long-term debt |
|
161,500 |
|
163,625 |
| ||
|
Total noncurrent liabilities: |
|
161,500 |
|
163,625 |
| ||
|
|
|
|
|
|
| ||
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Total liabilities |
|
171,395 |
|
172,264 |
| ||
|
|
|
|
|
|
| ||
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Commitments and contingencies |
|
|
|
|
| ||
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|
|
|
|
|
| ||
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Shareholders’ equity: |
|
|
|
|
| ||
|
Common stock, par value $0.01; 500,000,000 shares authorized; issued and outstanding 51,205,241 and 51,168,896 shares at June 30, 2014 and December 31, 2013, respectively |
|
512 |
|
512 |
| ||
|
Class B stock, par value $0.01; 100,000,000 shares authorized; issued and outstanding 6,356,471 at June 30, 2014 and December 31, 2013 |
|
64 |
|
64 |
| ||
|
Additional paid-in capital |
|
412,306 |
|
412,736 |
| ||
|
Accumulated deficit |
|
(37,416 |
) |
(28,209 |
) | ||
|
Total shareholders’ equity |
|
375,466 |
|
385,103 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities and shareholders’ equity |
|
$ |
546,861 |
|
$ |
557,367 |
|
See accompanying notes to condensed consolidated financial statements.
Baltic Trading Limited
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013
(U.S. Dollars in thousands, Except for Per Share Data)
(Unaudited)
|
|
|
For the Three Months |
|
For the Six Months |
| ||||||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
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Revenues |
|
$ |
10,703 |
|
$ |
6,379 |
|
$ |
23,794 |
|
$ |
12,365 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Voyage expenses |
|
368 |
|
157 |
|
788 |
|
738 |
| ||||
|
Voyage expenses to Parent |
|
135 |
|
82 |
|
303 |
|
155 |
| ||||
|
Vessel operating expenses |
|
6,332 |
|
4,248 |
|
12,883 |
|
8,113 |
| ||||
|
General, administrative, and technical management fees |
|
1,931 |
|
1,184 |
|
3,904 |
|
2,475 |
| ||||
|
Management fees to Parent |
|
887 |
|
614 |
|
1,765 |
|
1,222 |
| ||||
|
Depreciation and amortization |
|
5,258 |
|
3,682 |
|
10,361 |
|
7,325 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Total operating expenses |
|
14,911 |
|
9,967 |
|
30,004 |
|
20,028 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
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Operating loss |
|
(4,208 |
) |
(3,588 |
) |
(6,210 |
) |
(7,663 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
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Other (expense) income: |
|
|
|
|
|
|
|
|
| ||||
|
Other (expense) income |
|
(10 |
) |
(3 |
) |
(30 |
) |
4 |
| ||||
|
Interest income |
|
5 |
|
2 |
|
15 |
|
3 |
| ||||
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Interest expense |
|
(1,436 |
) |
(1,023 |
) |
(2,945 |
) |
(2,039 |
) | ||||
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|
|
|
|
|
|
|
|
|
| ||||
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Other expense, net |
|
(1,441 |
) |
(1,024 |
) |
(2,960 |
) |
(2,032 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Loss before income taxes |
|
(5,649 |
) |
(4,612 |
) |
(9,170 |
) |
(9,695 |
) | ||||
|
Income tax expense |
|
(25 |
) |
(13 |
) |
(37 |
) |
(13 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net loss |
|
$ |
(5,674 |
) |
$ |
(4,625 |
) |
$ |
(9,207 |
) |
$ |
(9,708 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net loss per share of common and Class B Stock: |
|
|
|
|
|
|
|
|
| ||||
|
Net loss per share-basic |
|
$ |
(0.10 |
) |
$ |
(0.19 |
) |
$ |
(0.16 |
) |
$ |
(0.41 |
) |
|
Net loss per share-diluted |
|
$ |
(0.10 |
) |
$ |
(0.19 |
) |
$ |
(0.16 |
) |
$ |
(0.41 |
) |
|
Dividends declared and paid per share of common and Class B Stock |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.04 |
|
$ |
0.02 |
|
See accompanying notes to condensed consolidated financial statements.
Baltic Trading Limited
Condensed Consolidated Statements of Shareholders’ Equity
For the Six Months Ended June 30, 2014 and 2013
(U.S. Dollars in Thousands, Except for Share and Per Share Data)
(Unaudited)
|
|
|
Common |
|
Class B |
|
Additional |
|
Accumulated |
|
Total |
| |||||
|
Balance — January 1, 2014 |
|
$ |
512 |
|
$ |
64 |
|
$ |
412,736 |
|
$ |
(28,209 |
) |
$ |
385,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net loss |
|
|
|
|
|
|
|
(9,207 |
) |
(9,207 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash dividends paid ($0.04 per share) |
|
|
|
|
|
(2,301 |
) |
|
|
(2,301 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Issuance of 36,345 shares of nonvested common stock |
|
— |
|
|
|
— |
|
|
|
— |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Nonvested stock amortization |
|
|
|
|
|
1,871 |
|
|
|
1,871 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Balance — June 30, 2014 |
|
$ |
512 |
|
$ |
64 |
|
$ |
412,306 |
|
$ |
(37,416 |
) |
$ |
375,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
Common |
|
Class B |
|
Additional |
|
Accumulated |
|
Total |
| |||||
|
Balance — January 1, 2013 |
|
$ |
173 |
|
$ |
57 |
|
$ |
277,249 |
|
$ |
(16,817 |
) |
$ |
260,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net loss |
|
|
|
|
|
|
|
(9,708 |
) |
(9,708 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash dividends paid ($0.02 per share) |
|
|
|
|
|
(460 |
) |
|
|
(460 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Issuance of 6,419,217 shares of common stock |
|
64 |
|
|
|
21,495 |
|
|
|
21,559 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Issuance of 128,383 shares of Class B Stock |
|
|
|
1 |
|
(1 |
) |
|
|
— |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Issuance of 59,680 shares of nonvested common stock |
|
1 |
|
|
|
(1 |
) |
|
|
— |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Nonvested stock amortization |
|
|
|
|
|
815 |
|
|
|
815 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Balance — June 30, 2013 |
|
$ |
238 |
|
$ |
58 |
|
$ |
299,097 |
|
$ |
(26,525 |
) |
$ |
272,868 |
|
See accompanying notes to condensed consolidated financial statements.
Baltic Trading Limited
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013
(U.S. Dollars in Thousands)
(Unaudited)
|
|
|
For the Six Months Ended June 30, |
| ||||
|
|
|
2014 |
|
2013 |
| ||
|
Cash flows from operating activities: |
|
|
|
|
| ||
|
Net loss |
|
$ |
(9,207 |
) |
$ |
(9,708 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
| ||
|
Depreciation and amortization |
|
10,361 |
|
7,325 |
| ||
|
Amortization of deferred financing costs |
|
378 |
|
231 |
| ||
|
Amortization of nonvested stock compensation expense |
|
1,871 |
|
815 |
| ||
|
Change in assets and liabilities: |
|
|
|
|
| ||
|
Decrease (increase) in due from charterers |
|
1,394 |
|
(287 |
) | ||
|
Increase in prepaid expenses and other current assets |
|
(620 |
) |
(488 |
) | ||
|
Increase in accounts payable and accrued expenses |
|
2,176 |
|
238 |
| ||
|
Decrease in due to Parent |
|
(50 |
) |
(5 |
) | ||
|
(Decrease) increase in deferred revenue |
|
(274 |
) |
31 |
| ||
|
Deferred drydock costs incurred |
|
(3,367 |
) |
— |
| ||
|
|
|
|
|
|
| ||
|
Net cash provided by (used in) operating activities |
|
2,662 |
|
(1,848 |
) | ||
|
|
|
|
|
|
| ||
|
Cash flows from investing activities: |
|
|
|
|
| ||
|
Purchase of vessels, including deposits |
|
(28,905 |
) |
— |
| ||
|
Purchase of fixed assets |
|
(96 |
) |
(61 |
) | ||
|
|
|
|
|
|
| ||
|
Net cash used in investing activities |
|
(29,001 |
) |
(61 |
) | ||
|
|
|
|
|
|
| ||
|
Cash flows from financing activities: |
|
|
|
|
| ||
|
Proceeds from the 2010 Credit Facility |
|
— |
|
1,000 |
| ||
|
Repayments on the $22 Million Term Loan Facility |
|
(750 |
) |
— |
| ||
|
Repayments on the $44 Million Term Loan Facility |
|
(1,375 |
) |
— |
| ||
|
Cash dividends paid |
|
(2,238 |
) |
(460 |
) | ||
|
Proceeds from issuance of common stock |
|
— |
|
21,838 |
| ||
|
Payment of common stock issuance costs |
|
(111 |
) |
(17 |
) | ||
|
Payment of deferred financing costs |
|
(110 |
) |
— |
| ||
|
|
|
|
|
|
| ||
|
Net cash (used in) provided by financing activities |
|
(4,584 |
) |
22,361 |
| ||
|
|
|
|
|
|
| ||
|
Net (decrease) increase in cash and cash equivalents |
|
(30,923 |
) |
20,452 |
| ||
|
|
|
|
|
|
| ||
|
Cash and cash equivalents at beginning of period |
|
58,193 |
|
3,280 |
| ||
|
|
|
|
|
|
| ||
|
Cash and cash equivalents at end of period |
|
$ |
27,270 |
|
$ |
23,732 |
|
See accompanying notes to condensed consolidated financial statements.
Baltic Trading Limited
(U.S. Dollars in Thousands, Except Per Share and Share Data)
Notes to Condensed Consolidated Financial Statements (unaudited)
1 - GENERAL INFORMATION
The accompanying condensed consolidated financial statements include the accounts of Baltic Trading Limited (“Baltic Trading”) and its wholly-owned subsidiaries (collectively, the “Company”). The Company was formed to own and employ drybulk vessels in the spot market. The spot market represents immediate chartering of a vessel, usually for single voyages, or employing vessels on spot market-related time charters. Baltic Trading was formed on October 6, 2009 (the “inception date”), under the laws of the Republic of the Marshall Islands.
At June 30, 2014, the Company was the sole owner of all of the outstanding shares of the following ship-owning subsidiaries as set forth below:
|
Wholly Owned |
|
Vessels |
|
Dwt |
|
Delivery Date |
|
Year |
|
|
|
|
|
|
|
|
|
|
|
Baltic Leopard Limited |
|
Baltic Leopard |
|
53,447 |
|
April 8, 2010 |
|
2009 |
|
Baltic Panther Limited |
|
Baltic Panther |
|
53,351 |
|
April 29, 2010 |
|
2009 |
|
Baltic Cougar Limited |
|
Baltic Cougar |
|
53,432 |
|
May 28, 2010 |
|
2009 |
|
Baltic Jaguar Limited |
|
Baltic Jaguar |
|
53,474 |
|
May 14, 2010 |
|
2009 |
|
Baltic Bear Limited |
|
Baltic Bear |
|
177,717 |
|
May 14, 2010 |
|
2010 |
|
Baltic Wolf Limited |
|
Baltic Wolf |
|
177,752 |
|
October 14, 2010 |
|
2010 |
|
Baltic Wind Limited |
|
Baltic Wind |
|
34,409 |
|
August 4, 2010 |
|
2009 |
|
Baltic Cove Limited |
|
Baltic Cove |
|
34,403 |
|
August 23, 2010 |
|
2010 |
|
Baltic Breeze Limited |
|
Baltic Breeze |
|
34,386 |
|
October 12, 2010 |
|
2010 |
|
Baltic Fox Limited |
|
Baltic Fox |
|
31,883 |
|
September 6, 2013 |
|
2010 |
|
Baltic Hare Limited |
|
Baltic Hare |
|
31,887 |
|
September 5, 2013 |
|
2009 |
|
Baltic Lion Limited |
|
Baltic Lion |
|
179,185 |
|
December 27, 2013 |
|
2012 |
|
Baltic Tiger Limited |
|
Baltic Tiger |
|
179,185 |
|
November 26, 2013 |
|
2011 |
|
Baltic Hornet Limited |
|
Baltic Hornet |
|
64,000 |
|
Q3 2014 (1) |
|
2014 (1) |
|
Baltic Wasp Limited |
|
Baltic Wasp |
|
64,000 |
|
Q4 2014 (1) |
|
2014 (1) |
|
Baltic Scorpion Limited |
|
Baltic Scorpion |
|
64,000 |
|
Q2 2015 (1) |
|
2015 (1) |
|
Baltic Mantis Limited |
|
Baltic Mantis |
|
64,000 |
|
Q3 2015 (1) |
|
2015 (1) |
(1) Built dates and dates for vessels being delivered in the future are estimates based on the guidance received from the sellers and the respective shipyards.
As of June 30, 2014 and December 31, 2013, Genco Shipping & Trading Limited’s (“Genco” or “Parent”) ownership of 6,356,471 shares of the Company’s Class B stock represented an 11.04% and 11.05% ownership interest in the Company, respectively, and 65.06% and 65.08% of the aggregate voting power of the Company’s outstanding shares of voting stock, respectively. Pursuant to an amendment to Genco’s $1.4 billion credit facility entered into on August 1, 2012, all of the Company’s Class B stock is pledged as security for Genco’s obligations under such facility.
On April 21, 2014, Genco and certain of its direct and indirect subsidiaries (the “Debtors”) filed petitions for chapter 11 in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On April 24, 2014, the Bankruptcy Court approved the form of combined notice of commencement of the Chapter 11 Cases, the combined hearing on the Debtors’ solicitation procedures, confirmation of the Debtors’ prepackaged plan of reorganization (the “Prepack Plan”) and the adequacy of the related disclosure statement. Subsequently, on July 2, 2014, the Bankruptcy Court entered an order (the “Confirmation Order”) which confirmed the First Amended Prepackaged Plan of Reorganization of the Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”). On July 9, 2014, the Debtors completed their financial restructuring and emerged from Chapter 11 through a series of transactions contemplated by the Plan, and the Plan became effective pursuant to its terms. Refer to Note 7 — Debt — for a discussion of the potential effects of a change of control and the Genco bankruptcy case under the covenants of the Company’s credit facilities and the Management Agreement.
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which include the accounts of Baltic Trading and its wholly-owned ship-owning subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulation of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and operating results, have been included in the financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 10-K”). The results of operations for the three and six month periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year.
Vessels, net
Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended June 30, 2014 and 2013 was $5,133 and $3,680, respectively. Depreciation expense for vessels for the six months ended June 30, 2014 and 2013 was $10,200 and $7,319, respectively.
Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. The undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $245 per light weight ton (“lwt”) times the weight of the ship in lwt’s.
Income taxes
The Company is incorporated in the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, the Company is not subject to Marshall Islands income tax. During the three months ended June 30, 2014 and 2013, the Company had United States operations that resulted in United States source income of $1,245 and $639, respectively. The Company’s estimated United States income tax expense for the three months ended June 30, 2014 and 2013 was $25 and $13, respectively. Additionally, during the six months ended June 30, 2014 and 2013, the Company had United States operations that resulted in United States source income of $1,813 and $639, respectively. The Company’s estimated United States income tax expense for the six months ended June 30, 2014 and 2013 was $37 and $13, respectively.
Deferred revenue
Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of June 30, 2014 and December 31, 2013, the Company had an accrual of $135 and $231, respectively, related to these estimated customer claims.
Voyage expense recognition
In spot market-related time charters, short-term time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. These differences in bunkers resulted in net (gains) losses of ($10) and $2 during the three months ended June 30, 2014 and 2013, respectively, and $18 and ($9) during the six months ended June 30, 2014 and 2013, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
3 - CASH FLOW INFORMATION
For the six months ended June 30, 2014, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses of $178 for the purchase of vessels, including deposits, and $19 for the purchase of fixed assets. For the six months ended June 30, 2014, the Company also had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Due to Parent of $15 for the purchase of vessels, including deposits. Lastly, for the six months ended June 30, 2014, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Due to Parent of $64 for payment of dividends on Genco’s Class B shares.
For the six months ended June 30, 2013, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses of $262 for the payment of common stock issuance costs.
During the six months ended June 30, 2014, the Company made a reclassification of $675 from fixed assets to vessel assets for items that should be capitalized and depreciated over the remaining life of the respective vessels.
During the six months ended June 30, 2014 and 2013, cash paid for interest, net of amount capitalized, was $2,579 and $1,788, respectively.
During the six months ended June 30, 2014 and 2013, cash paid for estimated income taxes was $35 and $12, respectively.
On April 9, 2014, the Company made grants of nonvested common stock in the amount of 36,345 shares in the aggregate to directors of the Company. The fair value of such nonvested stock was $225.
On May 16, 2013, the Company made grants of nonvested common stock in the amount of 59,680 shares in the aggregate to directors of the Company. The fair value of such nonvested stock was $225. The shares vested on April 9, 2014.
4 — VESSEL ACQUISITIONS
On July 2, 2013, the Company entered into agreements to purchase two Handysize drybulk vessels from subsidiaries of Clipper Group for an aggregate purchase price of $41,000. The Baltic Hare, a 2009-built Handysize vessel, was delivered on September 5, 2013 and the Baltic Fox, a 2010-built Handysize vessel, was delivered on September 6, 2013. The Company financed the vessel acquisitions with proceeds from its May 28, 2013 common stock offering and borrowings under its $22 Million Term Loan Facility entered into on August 30, 2013.
On October 31, 2013, the Company entered into agreements to purchase two Capesize drybulk vessels from affiliates of SK Shipping Co. Ltd. for an aggregate purchase price of $103,000. The Baltic Lion, a 2012-built Capesize vessel, was delivered on December 27, 2013, and the Baltic Tiger, a 2011-built Capesize vessel, was delivered on November 26, 2013. The Company financed the vessel acquisitions with cash on hand and borrowings under its $44 Million Term Loan Facility.
On November 13, 2013, the Company entered into agreements to purchase up to four 64,000 dwt Ultramax newbuilding drybulk vessels from Yangfan Group Co., Ltd. for a purchase price of $28,000 per vessel, or up to $112,000 in the aggregate. The Company agreed to purchase two such vessels, to be renamed the Baltic Hornet and Baltic Wasp, and obtained an option to purchase up to two additional such vessels for the same purchase price, which the Company exercised on January 8, 2014. These vessels are to be renamed the Baltic Mantis and the Baltic Scorpion. The purchases are subject to completion of customary additional documentation and closing conditions. The Baltic Hornet and Baltic Wasp are expected to be delivered to the Company during the third and fourth quarters of 2014, respectively. The Baltic Scorpion and the Baltic Mantis are expected to be delivered to the Company during the second and third quarters of 2015, respectively. As of June 30, 2014 and December 31, 2013, deposits on vessels were $28,634 and $1,013, respectively, related to these newbuilding vessels. The Company intends to use a combination of cash on hand, future cash flow from operations as well as debt or equity financing to fully finance the acquisition of these four Ultramax newbuilding drybulk vessels.
Capitalized interest expense associated with newbuilding contracts for the three months ended June 30, 2014 and 2013 was $177 and $0, respectively. Capitalized interest expense associated with newbuilding contracts for the six months ended June 30, 2014 and 2013 was $276 and $0, respectively.
5 - NET LOSS PER COMMON AND CLASS B SHARE
The computation of net loss per share of common stock and Class B shares is in accordance with Accounting Standards Codification (“ASC”) 260 — “Earnings Per Share” (“ASC 260”), using the two-class method. Under these provisions, basic net loss per share is computed using the weighted-average number of common shares and Class B shares outstanding during the year, except that it does not include nonvested stock awards subject to repurchase or cancellation. Diluted net loss per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of nonvested stock awards (see Note 14 — Nonvested Stock Awards) for the common shares, for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive. Of the 1,241,594 nonvested shares outstanding at June 30, 2014 (see Note 14 — Nonvested Stock Awards), all are anti-dilutive. The computation of the diluted net loss per share of common stock assumes the conversion of Class B shares, while the diluted net loss per share of Class B stock does not assume the conversion of those shares.
The following table sets forth the computation of basic and diluted net loss per share of common stock and Class B stock:
|
|
|
For the |
| ||||
|
|
|
Common |
|
Class B |
| ||
|
Basic net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(5,033 |
) |
$ |
(641 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding, basic |
|
49,958,400 |
|
6,356,471 |
| ||
|
|
|
|
|
|
| ||
|
Basic net loss per share |
|
$ |
(0.10 |
) |
$ |
(0.10 |
) |
|
|
|
|
|
|
| ||
|
Diluted net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(5,033 |
) |
$ |
(641 |
) |
|
Reallocation of undistributed loss as a result of conversion of Class B to common shares |
|
(704 |
) |
— |
| ||
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
63 |
|
— |
| ||
|
Allocation of loss |
|
$ |
(5,674 |
) |
$ |
(641 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding used in basic computation |
|
49,958,400 |
|
6,356,471 |
| ||
|
Add: |
|
|
|
|
| ||
|
Conversion of Class B to common shares |
|
6,356,471 |
|
— |
| ||
|
|
|
|
|
|
| ||
|
Weighted-average shares outstanding, diluted |
|
56,314,871 |
|
6,356,471 |
| ||
|
|
|
|
|
|
| ||
|
Diluted net loss per share |
|
$ |
(0.10 |
) |
$ |
(0.10 |
) |
|
|
|
For the |
| ||||
|
|
|
Common |
|
Class B |
| ||
|
Basic net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(3,559 |
) |
$ |
(1,066 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding, basic |
|
19,176,913 |
|
5,747,055 |
| ||
|
|
|
|
|
|
| ||
|
Basic net loss per share |
|
$ |
(0.19 |
) |
$ |
(0.19 |
) |
|
|
|
|
|
|
| ||
|
Diluted net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(3,559 |
) |
$ |
(1,066 |
) |
|
Reallocation of undistributed loss as a result of conversion of Class B to common shares |
|
(1,123 |
) |
— |
| ||
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
57 |
|
— |
| ||
|
Allocation of loss |
|
$ |
(4,625 |
) |
$ |
(1,066 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding used in basic computation |
|
19,176,913 |
|
5,747,055 |
| ||
|
Add: |
|
|
|
|
| ||
|
Conversion of Class B to common shares |
|
5,747,055 |
|
— |
| ||
|
|
|
|
|
|
| ||
|
Weighted-average shares outstanding, diluted |
|
24,923,968 |
|
5,747,055 |
| ||
|
|
|
|
|
|
| ||
|
Diluted net loss per share |
|
$ |
(0.19 |
) |
$ |
(0.19 |
) |
|
|
|
|
| ||||
|
|
|
For the Six Months Ended June 30, 2014 |
| ||||
|
|
|
Common |
|
Class B |
| ||
|
Basic net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(8,166 |
) |
$ |
(1,041 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding, basic |
|
49,884,348 |
|
6,356,471 |
| ||
|
|
|
|
|
|
| ||
|
Basic net loss per share |
|
$ |
(0.16 |
) |
$ |
(0.16 |
) |
|
|
|
|
|
|
| ||
|
Diluted net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(8,166 |
) |
$ |
(1,041 |
) |
|
Reallocation of undistributed loss as a result of conversion of Class B to common shares |
|
(1,295 |
) |
— |
| ||
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
254 |
|
— |
| ||
|
Allocation of loss |
|
$ |
(9,207 |
) |
$ |
(1,041 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding used in basic computation |
|
49,884,348 |
|
6,356,471 |
| ||
|
Add: |
|
|
|
|
| ||
|
Conversion of Class B to common shares |
|
6,356,471 |
|
— |
| ||
|
|
|
|
|
|
| ||
|
Weighted-average shares outstanding, diluted |
|
56,240,819 |
|
6,356,471 |
| ||
|
|
|
|
|
|
| ||
|
Diluted net loss per share |
|
$ |
(0.16 |
) |
$ |
(0.16 |
) |
|
|
|
For the Six Months Ended June 30, 2013 |
| ||||
|
|
|
Common |
|
Class B |
| ||
|
Basic net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(7,358 |
) |
$ |
(2,350 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding, basic |
|
17,924,791 |
|
5,723,204 |
| ||
|
|
|
|
|
|
| ||
|
Basic net loss per share |
|
$ |
(0.41 |
) |
$ |
(0.41 |
) |
|
|
|
|
|
|
| ||
|
Diluted net loss per share: |
|
|
|
|
| ||
|
Numerator: |
|
|
|
|
| ||
|
Allocation of loss |
|
$ |
(7,358 |
) |
$ |
(2,350 |
) |
|
Reallocation of undistributed loss as a result of conversion of Class B to common shares |
|
(2,464 |
) |
— |
| ||
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
114 |
|
— |
| ||
|
Allocation of loss |
|
$ |
(9,708 |
) |
$ |
(2,350 |
) |
|
|
|
|
|
|
| ||
|
Denominator: |
|
|
|
|
| ||
|
Weighted-average shares outstanding used in basic computation |
|
17,924,791 |
|
5,723,204 |
| ||
|
Add: |
|
|
|
|
| ||
|
Conversion of Class B to common shares |
|
5,723,204 |
|
— |
| ||
|
|
|
|
|
|
| ||
|
Weighted-average shares outstanding, diluted |
|
23,647,995 |
|
5,723,204 |
| ||
|
|
|
|
|
|
| ||
|
Diluted net loss per share |
|
$ |
(0.41 |
) |
$ |
(0.41 |
) |
6 - RELATED PARTY TRANSACTIONS
The following include related party transactions not disclosed elsewhere in these condensed consolidated financial statements. Due to Parent, Voyage expenses to Parent and Management fees to Parent have been disclosed above in these condensed consolidated financial statements.
During the six months ended June 30, 2014 and 2013, the Company incurred legal services aggregating $3 and $7, respectively, from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, Chairman of the Board. At June 30, 2014 and December 31, 2013, $0 and $25, respectively, was outstanding to Constantine Georgiopoulos.
During 2010, the Company entered into an agreement with Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchase lubricating oils for certain vessels in the Company’s fleet. Peter C. Georgiopoulos, Chairman of the Board of the Company, is also the Chairman of the Board of Aegean. During the six months ended June 30, 2014 and 2013, Aegean supplied lubricating oils to the Company’s vessels aggregating $534 and $204, respectively. At June 30, 2014 and December 31, 2013, $104 and $51 remained outstanding to Aegean, respectively.
The Company receives internal audit services from employees of Genco, the Company’s Parent. For the six months ended June 30, 2014 and 2013, the Company incurred internal audit service fees of $21 and $14, respectively, which are reimbursable to Genco pursuant to the Management Agreement (Refer to Note 16 — Commitments and Contingencies for further information regarding the Management Agreement). At June 30, 2014 and December 31, 2013, the amount due to Genco from the Company was $11 and $18, respectively, for such services and is included in Due to Parent.
During the six months ended June 30, 2014 and 2013, Genco, the Company’s Parent, incurred costs of $179 and $40, respectively, on the Company’s behalf to be reimbursed to Genco pursuant to the Management Agreement. Included in the costs of $179 during the six months ended June 30, 2014 was the second quarter 2014 dividend payment due to Genco for its Class B shares in the amount of $64. At June 30, 2014 and December 31, 2013, the amount due to Genco from the Company was $100 and $75, respectively, and is included in Due to Parent.
Genco also provides the Company with commercial, technical, administrative and strategic services pursuant to the Management Agreement. During the six months ended June 30, 2014 and 2013, the Company incurred costs of $2,067 and $1,376, respectively, pursuant to the Management Agreement. At June 30, 2014, the amount due to Genco of $52 consisted of commercial service fees and is included in Due to Parent. At December 31, 2013, the amount due to Genco of $105 consisted of commercial service fees and is included in Due to Parent.
7 - DEBT
2010 Credit Facility
On April 16, 2010, the Company entered into a $100,000 senior secured revolving credit facility with Nordea Bank Finland plc, acting through its New York branch (as amended, the “2010 Credit Facility”). An amendment to the 2010 Credit Facility was entered into by the Company effective November 30, 2010. Among other things, this amendment increased the commitment amount of the 2010 Credit Facility from $100,000 to $150,000. An additional amendment to the 2010 Credit Facility was entered into by the Company effective August 29, 2013 (the “August 2013 Amendment”). Among other things, the August 2013 Amendment implements the following modifications to the 2010 Credit Facility:
· The requirement that certain additional vessels acquired by the Company be mortgaged as collateral under the 2010 Credit Facility was eliminated.
· Restrictions on the incurrence of indebtedness by the Company and its subsidiaries were amended to apply only to those subsidiaries acting as guarantors under the 2010 Credit Facility.
· The total commitment under this facility was reduced to $110,000 and will be further reduced in three consecutive semi-annual reductions of $5,000 commencing on May 30, 2015.
· Borrowings bear interest at an applicable margin over LIBOR of 3.00% per annum if the ratio of the maximum facility amount of the aggregate appraised value of vessels mortgaged under the facility is 55% or less, measured quarterly; otherwise, the applicable margin is 3.35% per annum.
· Financial covenants corresponding to the liquidity and leverage under the $22 Million Term Loan Facility (as defined below) have been incorporated into the 2010 Credit Facility.
As of June 30, 2014, $7,750 remained available under the 2010 Credit Facility as the total commitment was reduced to $110,000 on August 29, 2013. The total available working capital borrowings of $25,000 are subject to the total remaining availability under the 2010 Credit Facility; therefore, only $7,750 is available for working capital purposes as of June 30, 2014.
As of June 30, 2014, the Company believes it is in compliance with all of the financial covenants under the 2010 Credit Facility, as amended.
The following table sets forth the repayment of the outstanding debt of $102,250 at June 30, 2014 under the 2010 Credit Facility:
|
Period Ending December 31, |
|
Total |
| |
|
|
|
|
| |
|
2014 (July 1, 2014 — December 31, 2014) |
|
$ |
— |
|
|
2015 |
|
2,250 |
| |
|
2016 |
|
100,000 |
| |
|
|
|
|
| |
|
Total debt |
|
$ |
102,250 |
|
$22 Million Term Loan Facility
On August 30, 2013, Baltic Hare Limited and Baltic Fox Limited, wholly-owned subsidiaries of the Company, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $22,000 (the “$22 Million Term Loan Facility”). Amounts borrowed and repaid under the $22 Million Term Loan Facility may not be reborrowed. This facility has a maturity date of the sixth anniversary of the drawdown date for borrowings for the second vessel to be purchased, or September 4, 2019. Borrowings under the $22 Million Term Loan Facility bear interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. A commitment fee of 1.00% per annum is payable on the unused daily portion of the credit facility, which began accruing on August 30, 2013 and ended on September 4, 2013, the date which the entire $22,000 was borrowed. Borrowings are to be repaid in 23 quarterly installments of $375 each commencing three months after the last vessel delivery date, or December 4, 2013, and a final payment of $13,375 due on the maturity date.
Borrowings under the $22 Million Term Loan Facility are secured by liens on the Company’s vessels purchased with borrowings under the facility, namely the Baltic Fox and the Baltic Hare, and other related assets. Under a Guarantee and Indemnity entered into concurrently with the $22 Million Term Loan Facility, the Company agreed to guarantee the obligations of its subsidiaries under the $22 Million Term Loan Facility.
On September 4, 2013, Baltic Hare Limited and Baltic Fox Limited made drawdowns of $10,730 and $11,270 for the Baltic Hare and the Baltic Fox, respectively. As of June 30, 2014, the Company has utilized its maximum borrowing capacity of $22,000 and there was no further availability. At June 30, 2014 and December 31, 2013, the total outstanding debt balance was $20,875 and $21,625, respectively, as required repayments began on December 4, 2013.
As of June 30, 2014 the Company believes it is in compliance with all of the financial covenants under the $22 Million Term Loan Facility.
The following table sets forth the repayment of the outstanding debt of $20,875 at June 30, 2014 under the $22 Million Term Loan Facility:
|
Period Ending December 31, |
|
Total |
| |
|
|
|
|
| |
|
2014 (July 1, 2014 — December 31, 2014) |
|
$ |
750 |
|
|
2015 |
|
1,500 |
| |
|
2016 |
|
1,500 |
| |
|
2017 |
|
1,500 |
| |
|
2018 |
|
1,500 |
| |
|
Thereafter |
|
14,125 |
| |
|
|
|
|
| |
|
Total debt |
|
$ |
20,875 |
|
$44 Million Term Loan Facility
On December 3, 2013, Baltic Tiger Limited and Baltic Lion Limited, wholly-owned subsidiaries of the Company, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $44,000 (the “$44 Million Term Loan Facility”). Amounts borrowed and repaid under the $44 Million Term Loan Facility may not be reborrowed. The $44 Million Term Loan Facility has a maturity date of the sixth anniversary of the drawdown date for borrowings for the second vessel to be purchased, or December 23, 2019. Borrowings under the $44 Million Term Loan Facility bear interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. A commitment fee of 0.75% per annum is payable on the unused daily portion of the credit facility, which began accruing on December 3, 2013 and ended on December 23, 2013, the date which the entire $44,000 was borrowed. Borrowings are to be repaid in 23 quarterly installments of $688 each commencing three months after the last drawdown date, or March 24, 2014, and a final payment of $28,188 due on the maturity date.
Borrowings under the $44 Million Term Loan Facility are to be secured by liens on the Company’s vessels to be financed or refinanced with borrowings under the facility, namely the Baltic Tiger and the Baltic Lion, and other related assets. Upon the prepayment of $18,000 plus any additional amounts necessary to maintain compliance with the collateral maintenance covenant, the Company may have the lien on the Baltic Tiger released. Under a Guarantee and Indemnity entered into concurrently with the $44 Million Term Loan Facility, the Company agreed to guarantee the obligations of its subsidiaries under the $44 Million Term Loan Facility.
On December 23, 2013, Baltic Tiger Limited and Baltic Lion Limited made two drawdowns of $21,400 and $22,600 for the Baltic Tiger and Baltic Lion, respectively. As of June 30, 2014, the Company has utilized its maximum borrowing capacity of $44,000 and there was no further availability. At June 30, 2014 and December 31, 2013, the total outstanding debt balance was $42,625 and $44,000, respectively, as required repayments began on March 24, 2014.
As of June 30, 2014, the Company believes it is in compliance with all of the financial covenants under the $44 Million Term Loan Facility.
The following table sets forth the repayment of the outstanding debt of $42,625 at June 30, 2014 under the $44 Million Term Loan Facility:
|
Period Ending December 31, |
|
Total |
| |
|
|
|
|
| |
|
2014 (July 1, 2014 — December 31, 2014) |
|
$ |
1,375 |
|
|
2015 |
|
2,750 |
| |
|
2016 |
|
2,750 |
| |
|
2017 |
|
2,750 |
| |
|
2018 |
|
2,750 |
| |
|
Thereafter |
|
30,250 |
| |
|
|
|
|
| |
|
Total debt |
|
$ |
42,625 |
|
Change of Control
If Genco’s ownership in the Company were to decrease to less than 10% of the aggregate number of shares of common stock and Class B Stock, the outstanding Class B Stock held by Genco would automatically convert into common stock, and the voting power held by Genco in the Company would decrease to less than 30%. This would result in a change of control as defined under the Company’s 2010 Credit Facility, $22 Million Term Loan Facility and $44 Million Term Loan Facility, and would therefore constitute an event of default. Additionally, a change of control constituting an event of default under the Company’s credit facilities would also occur if any party or group other than Genco or certain other permitted holders beneficially owns more than 30% of the Company’s outstanding voting or economic equity interests, which may occur if a party or group were deemed to control Genco. Refer to Note 1 — General Information for discussion of Genco’s current economic status. In addition, the Company has the right to terminate the Management Agreement upon the occurrence of certain events, including a Manager Change of Control (as defined in the Management Agreement), without making a termination payment. Some of these have occurred as a result of the transactions contemplated by the Prepack Plan, including the consummation of any transaction that results in (i) any “person” (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934), other than Peter Georgiopoulos or any of his affiliates, becoming the beneficial owner of 25% of Genco’s voting securities or (ii) Genco’s stock ceasing to be traded on the New York Stock Exchange or any other internationally recognized stock exchange. Therefore, the Company may have the right to terminate the Management Agreement, although the Company may be prevented or delayed from doing so because of the effect of applicable bankruptcy law, including the automatic stay provisions of the United States Bankruptcy Code and the provisions of the Prepack Plan and the Confirmation Order.
Interest rates
The following table sets forth the effective interest rate associated with the interest expense for the 2010 Credit Facility, $22 Million Term Loan Facility and the $44 Million Term Loan Facility, excluding the cost associated with unused commitment fees. Additionally, it includes the range of interest rates on the debt, excluding the impact of unused commitment fees:
|
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
| ||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
Effective Interest Rate (excluding impact of unused commitment fees) |
|
3.34 |
% |
3.20 |
% |
3.34 |
% |
3.20 |
% |
|
Range of Interest Rates (excluding impact of unused commitment fees) |
|
3.15% to 3.59 |
% |
3.19% to 3.20 |
% |
3.15% to 3.60 |
% |
3.19% to 3.21 |
% |
8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values and carrying values of the Company’s financial instruments at June 30, 2014 and December 31, 2013 which are required to be disclosed at fair value, but not recorded at fair value, are as follows:
|
|
|
June 30, 2014 |
|
December 31, 2013 |
| ||||||||
|
|
|
Carrying |
|
Fair Value |
|
Carrying |
|
Fair Value |
| ||||
|
Cash and cash equivalents |
|
$ |
27,270 |
|
$ |
27,270 |
|
$ |
58,193 |
|
$ |
58,193 |
|
|
Floating rate debt |
|
165,750 |
|
165,750 |
|
167,875 |
|
167,875 |
| ||||
The fair value of floating rate debt under the 2010 Credit Facility, the $22 Million Term Loan Facility and the $44 Million Term Loan Facility is based on rates that the Company has recently obtained pursuant to the August 2013 Amendment to the existing 2010 Credit Facility, as per the debt agreement for the $22 Million Term Loan Facility that was effective August 30, 2013 and as per the debt agreement for the $44 Million Term Loan Facility that was effective December 3, 2013. Refer to Note 7 — Debt for further information. Additionally, the Company considers its creditworthiness in determining the fair value of the floating rate debt under its credit facilities. The carrying values approximate the fair market value for these floating rate loans. The carrying amounts of the Company’s other financial instruments at June 30, 2014 and December 31, 2013 (principally Due from charterers and Accounts payable and accrued expenses) approximate their fair values because of the relatively short maturity of these instruments.
ASC Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
· Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.
· Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
· Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Cash and cash equivalents is considered a Level 1 item as it represents liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item as the Company considers the estimate of rates it could obtain for similar debt. The Company did not have any Level 3 financial assets or liabilities as of June 30, 2014 and December 31, 2013.
9 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
|
|
|
June 30, 2014 |
|
December 31, |
| ||
|
Lubricant inventory, fuel oil and diesel oil inventory and other stores |
|
$ |
2,188 |
|
$ |
2,027 |
|
|
Prepaid items |
|
1,447 |
|
1,117 |
| ||
|
Insurance receivable |
|
998 |
|
70 |
| ||
|
Other |
|
72 |
|
871 |
| ||
|
Total |
|
$ |
4,705 |
|
$ |
4,085 |
|
10 - DEFERRED FINANCING COSTS
Deferred financing costs include fees, commissions and legal expenses associated with securing loan facilities and amending existing loan facilities. These costs are amortized over the life of the related debt and are included as a component of interest expense in the Condensed Consolidated Statements of Operations. At June 30, 2014 and December 31, 2013, the Company had deferred financing fees associated with the 2010 Credit Facility, the $22 Million Term Loan Facility and the $44 Million Term Loan Facility.
Total net deferred financing costs consist of the following as of June 30, 2014 and December 31, 2013:
|
|
|
June 30, 2014 |
|
December 31, |
| ||
|
2010 Credit Facility |
|
$ |
3,339 |
|
$ |
3,339 |
|
|
$22 Million Term Loan Facility |
|
529 |
|
518 |
| ||
|
$44 Million Term Loan Facility |
|
758 |
|
737 |
| ||
|
Total deferred financing costs |
|
4,626 |
|
4,594 |
| ||
|
Less: accumulated amortization |
|
2,163 |
|
1,785 |
| ||
|
Total |
|
$ |
2,463 |
|
$ |
2,809 |
|
Amortization expense of deferred financing costs for the three months ended June 30, 2014 and 2013 was $190 and $116, respectively. Amortization expense of deferred financing costs for the six months ended June 30, 2014 and 2013 was $378 and $231, respectively.
11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
|
|
|
June 30, 2014 |
|
December 31, |
| ||
|
Accounts payable |
|
$ |
2,293 |
|
$ |
1,011 |
|
|
Accrued vessel operating expenses |
|
2,893 |
|
2,464 |
| ||
|
Accrued general and administrative expenses |
|
161 |
|
307 |
| ||
|
|
|
|
|
|
| ||
|
Total |
|
$ |
5,347 |
|
$ |
3,782 |
|
12 - FIXED ASSETS
Fixed assets consist of the following:
|
|
|
June 30, 2014 |
|
December 31, |
| ||
|
Fixed assets, at cost: |
|
|
|
|
| ||
|
Computer equipment |
|
$ |
54 |
|
$ |
43 |
|
|
Vessel equipment |
|
109 |
|
682 |
| ||
|
Total cost |
|
163 |
|
725 |
| ||
|
Less: accumulated depreciation |
|
52 |
|
47 |
| ||
|
Total |
|
$ |
111 |
|
$ |
678 |
|
Depreciation expense for fixed assets for the three months ended June 30, 2014 and 2013 was $5 and $2, respectively. Depreciation expense for fixed assets for the six months ended June 30, 2014 and 2013 was $7 and $5, respectively. Refer to Note 3 — Cash Flow Information for information regarding the reclassification from fixed assets to vessel assets during the six months ended June 30, 2014.
13 - REVENUE FROM TIME CHARTERS
Total revenue earned on spot market-related time charters, short-term time charters and in vessel pools, as well as the sale of bunkers consumed during short-term time charters, during the three months ended June 30, 2014 and 2013 was $10,703 and $6,379, respectively, and $23,794 and $12,365 during the six months ended June 30, 2014 and 2013, respectively. Future minimum time charter revenue attributable to the Baltic Jaguar, which is committed to a noncancelable pool agreement with a fixed rate period as of July 29, 2014, is expected to be $66 for the remainder of 2014. Future minimum time charter revenue for the remaining vessels cannot be estimated as these vessels are currently on spot market-related time charters or in vessel pools, and future spot rates cannot be estimated. The spot market-related time charters and pool arrangements that the Company’s vessels were employed on as of June 30, 2014 have estimated expiration dates that range from August 2014 to September 2015.
14 - NONVESTED STOCK AWARDS
On March 13, 2014, the Company’s Board of Directors approved an amendment to the Baltic Trading Limited 2010 Equity Incentive Plan (the “Plan”) that increased the aggregate number of shares of common stock available for awards from 2,000,000 to 6,000,000 shares. Additionally, on April 9, 2014, at the Company’s 2014 Annual Meeting of Shareholders, the Company’s shareholders approved the amendment to the Plan.
The following table presents a summary of the Company’s restricted stock awards for the six months ended June 30, 2014:
|
|
|
Number of |
|
Weighted |
| |
|
Outstanding at January 1, 2014 |
|
1,381,429 |
|
$ |
6.03 |
|
|
Granted |
|
36,345 |
|
6.19 |
| |
|
Vested |
|
(176,180 |
) |
10.53 |
| |
|
Forfeited |
|
— |
|
— |
| |
|
|
|
|
|
|
| |
|
Outstanding at June 30, 2014 |
|
1,241,594 |
|
$ |
5.39 |
|
The total fair value of shares that vested under the Plan during the six months ended June 30, 2014 and 2013 was $1,143 and $643, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
For the three and six months ended June 30, 2014 and 2013, the Company recognized nonvested stock amortization expense for the Plan, which is included in general, administrative and technical management fees, as follows:
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
| ||||||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
General, administrative and technical management fees |
|
$ |
908 |
|
$ |
351 |
|
$ |
1,871 |
|
$ |
815 |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of June 30, 2014, unrecognized compensation cost of $4,288 related to nonvested stock will be recognized over a weighted-average period of 3.01 years.
15 - LEGAL PROCEEDINGS
From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows.
16 - COMMITMENTS AND CONTINGENCIES
Genco, the Company’s parent, provides the Company with commercial, technical, administrative and strategic services necessary to support the Company’s business pursuant to the Company’s Management Agreement with Genco. If the Company terminates the agreement without cause, or if Genco terminates the agreement for the Company’s material breach or the Company’s change of control, the Company must make a termination payment to Genco in a single lump sum within 30 days of the termination date. The termination payment is generally calculated as five times the average annual management fees payable to Genco for the last five completed years of the term of the Management Agreement, or such lesser number of years as may have been completed at the time of termination. As of June 30, 2014, the termination payment that would be due to Genco is approximately $20,951. Refer to Note 6 — Related Party Transactions for any costs incurred during the six months ended June 30, 2014 and 2013 pursuant to the Management Agreement.
17 - SUBSEQUENT EVENTS
On July 29, 2014, the Company declared a dividend of $0.01 per share to be paid on or about August 21, 2014 to shareholders of record as of August 14, 2014. The aggregate amount of the dividend is expected to be approximately $576, which the Company anticipates will be funded from cash on hand at the time the payment is to be made.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) declines in demand or rates in the drybulk shipping industry; (ii) prolonged weakness in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers, including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted
by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance and general, administrative and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) changes in the condition of our vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the amount of offhire time needed to complete repairs on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xii) our acquisition or disposition of vessels, (xiii) our ability to leverage Genco’s relationships in the shipping industry; (xiv) the completion of definitive documentation with respect to charters; (xv) charterers’ compliance with the terms of their charters in the current market environment; (xvi) the fulfillment of the closing conditions under, or the execution of additional documentation for, the Company’s agreements to acquire vessels; (xvii) obtaining, completion of definitive documentation for, and funding of financing for the vessel acquisitions on acceptable terms; and other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports on Form 8-K and Form 10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The following management’s discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included in this Form 10-Q.
General
We are a New York City-based company incorporated in October 2009 in the Marshall Islands to conduct a shipping business focused on the drybulk industry spot market. We were formed by Genco Shipping & Trading Limited (“Genco”), an international drybulk shipping company that also serves as our Manager. Our fleet currently consists of four Capesize vessels, four Supramax vessels and five Handysize vessels with an aggregate carrying capacity of approximately 1,095,000 dwt, and the average age of our fleet is currently 4.3 years, as compared to the average age for the world fleet of approximately 9 years for the drybulk shipping segments in which we compete. After the expected delivery of the four Ultramax vessels that we have agreed to acquire, we will own 17 drybulk vessels, consisting of four Capesize vessels, four Ultramax vessels, four Supramax vessels and five Handysize vessels with a total carrying capacity of approximately 1,351,000 dwt. Our fleet contains five groups of sister ships, which are vessels of virtually identical sizes and specifications. We believe that maintaining a fleet that includes sister ships reduces costs by creating economies of scale in the maintenance, supply and crewing of our vessels.
On July 2, 2013, we entered into agreements to purchase two Handysize drybulk vessels from subsidiaries of Clipper Group for an aggregate purchase price of $41,000. The Baltic Hare, a 2009-built Handysize vessel, was delivered on September 5, 2013 and the Baltic Fox, a 2010-built Handysize vessel, was delivered on September 6, 2013. We funded a portion of the purchase price of the vessels using proceeds from our registered follow-on common stock offering completed on May 28, 2013. For the remainder of the purchase price, we drew down $22,000 on our $22 Million Term Loan Facility. Refer to Note 7 — Debt in our condensed consolidated financial statements for further information regarding this credit facility.
On October 31, 2013, we entered into agreements to purchase two Capesize drybulk vessels from affiliates of SK Shipping Co. Ltd. for an aggregate purchase price of $103,000. The Baltic Lion, a 2012-built Capesize drybulk vessel, was delivered on December 27, 2013, and the Baltic Tiger, a 2011-built Capesize vessel, was delivered on November 26, 2013. We funded a portion of the purchase price of the vessels using proceeds from our registered follow-on common stock offering completed on September 25, 2013. For the remainder of the purchase price, we drew down $44,000 on our $44 Million Term Loan Facility. Refer to Note 7 — Debt in our condensed consolidated financial statements for further information regarding this credit facility.
On November 13, 2013, we entered into agreements to purchase up to four 64,000 dwt Ultramax newbuilding drybulk vessels from Yangfan Group Co., Ltd. for a purchase price of $28,000 per vessel, or up to $112,000 in the aggregate. We agreed to purchase two such vessels, to be renamed the Baltic Hornet and Baltic Wasp, and obtained an option to purchase up to two additional such vessels for the same purchase price, which we exercised on January 8, 2014. These vessels are to be renamed the Baltic Mantis and the Baltic Scorpion. The purchases are subject to completion of customary additional documentation and closing conditions. The Baltic Hornet and Baltic Wasp are expected to be delivered to us during the third quarter and fourth quarter of 2014, respectively. The Baltic Scorpion and the Baltic Mantis are expected to be delivered to us during the
second and third quarters of 2015, respectively. We intend to use a combination of cash on hand, future cash flow from operations as well as debt or equity financing to fully finance the acquisition of these four Ultramax newbuilding drybulk vessels.
We seek to leverage the expertise and reputation of Genco and its management to pursue growth opportunities in the drybulk shipping spot market. To pursue these opportunities, we operate a fleet of drybulk ships that transport iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. We currently operate all of our vessels on spot market-related time charters, short-term time charters or in vessel pools trading in the spot market. We may also consider operating vessels in the spot market directly based on our view of market conditions. We have financed our fleet primarily with equity capital and have financed the remainder with our 2010 Credit Facility, $22 Million Term Loan Facility and $44 Million Term Loan Facility. Depending on market conditions, we aim to grow our fleet through timely and selective acquisitions of vessels. We expect to fund acquisitions of additional vessels using equity and debt financing. We intend to distribute to our shareholders on a quarterly basis all of our net income less cash expenditures for capital items related to our fleet, other than vessel acquisitions and related expenses, plus non-cash compensation, during the previous quarter, subject to any additional reserves our Board of Directors may from time to time determine are required for the prudent conduct of our business, as further described below under “Dividend Policy.”
Refer to pages 23 - 24 for a table of all vessels that have been or are expected to be delivered to us.
Our operations are managed, under the supervision of our Board of Directors, by Genco as our Manager. We entered into a long-term management agreement (the “Management Agreement”) pursuant to which our Manager and its affiliates apply their expertise and experience in the drybulk industry to provide us with commercial, technical, administrative and strategic services. The Management Agreement is for an initial term of approximately fifteen years and will automatically renew for additional five-year periods unless terminated in accordance with its terms. We pay our Manager fees for the services it provides us as well as reimburse our Manager for its costs and expenses incurred in providing certain of these services. However, see Note 7 of the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q — Debt — for a discussion of the potential effects of a change of control and the Genco bankruptcy case under the covenants of the Company’s credit facilities and the Management Agreement. Also, see the Risk Factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.
On May 28, 2013, we closed an equity offering of 6,419,217 shares of common stock at an offering price of $3.60 per share. We received net proceeds of $21.6 million after deducting underwriters’ fees and expenses. Additionally, on September 25, 2013, we closed an equity offering of 13,800,000 shares of common stock at an offering price of $4.60 per share. We received net proceeds of $59.5 million after deducting underwriters’ fees and expenses. On November 18, 2013, we closed an equity offering of 12,650,000 shares of common stock at an offering price of $4.60 per share. We received net proceeds of $55.1 million after deducting underwriters’ fees and expenses. Pursuant to the Management Agreement, for so long as Genco directly or indirectly holds at least 10% of the aggregate number of outstanding shares of our common stock and Class B stock, Genco will be entitled to receive at no cost an additional number of shares of Class B stock equal to 2% of the number of common shares issued, other than shares issued under the our 2010 Equity Incentive Plan. As a result of the equity offerings on May 28, 2013, September 25, 2013 and November 18, 2013, Genco was issued 128,383, 276,000 and 253,000 shares, respectively, of Class B stock, which represents 2% of the number of common shares issued.
Factors Affecting Our Results of Operations
We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, available days, operating days, fleet utilization, Time Charter Equivalent (“TCE”) rates and daily vessel operating expenses for the three and six months ended June 30, 2014 and 2013.
|
|
|
For the Three Months Ended June 30, |
|
Increase |
|
|
| |||||
|
|
|
2014 |
|
2013 |
|
(Decrease) |
|
% Change |
| |||
|
Fleet Data: |
|
|
|
|
|
|
|
|
| |||
|
Ownership days (1) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
364.0 |
|
182.0 |
|
182.0 |
|
100.0 |
% | |||
|
Supramax |
|
364.0 |
|
364.0 |
|
— |
|
— |
| |||
|
Handysize |
|
455.0 |
|
273.0 |
|
182.0 |
|
66.7 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
1,183.0 |
|
819.0 |
|
364.0 |
|
44.4 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Available days (2) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
364.0 |
|
182.0 |
|
182.0 |
|
100.0 |
% | |||
|
Supramax |
|
319.9 |
|
358.6 |
|
(38.7 |
) |
(10.8 |
)% | |||
|
Handysize |
|
442.7 |
|
273.0 |
|
169.7 |
|
62.2 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
1,126.6 |
|
813.6 |
|
313.0 |
|
38.5 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Operating days (3) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
363.0 |
|
182.0 |
|
181.0 |
|
99.5 |
% | |||
|
Supramax |
|
319.8 |
|
358.6 |
|
(38.8 |
) |
(10.8 |
)% | |||
|
Handysize |
|
442.7 |
|
271.5 |
|
171.2 |
|
63.1 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
1,125.5 |
|
812.1 |
|
313.4 |
|
38.6 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet utilization (4) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
99.7 |
% |
100.0 |
% |
(0.3 |
)% |
(0.3 |
)% | |||
|
Supramax |
|
100.0 |
% |
100.0 |
% |
— |
|
— |
| |||
|
Handysize |
|
100.0 |
% |
99.5 |
% |
0.5 |
% |
0.5 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
99.9 |
% |
99.8 |
% |
0.1 |
% |
0.1 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Average Daily Results: (U.S. dollars) |
|
|
|
|
|
|
|
|
| |||
|
Time Charter Equivalent (5) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
$ |
11,271 |
|
$ |
5,967 |
|
$ |
5,304 |
|
88.9 |
% |
|
Supramax |
|
7,522 |
|
7,645 |
|
(123 |
) |
(1.6 |
)% | |||
|
Handysize |
|
8,338 |
|
8,473 |
|
(135 |
) |
(1.6 |
)% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
9,054 |
|
7,548 |
|
1,506 |
|
20.0 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Daily vessel operating expenses (6) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
$ |
5,374 |
|
$ |
5,503 |
|
$ |
(129 |
) |
(2.3 |
)% |
|
Supramax |
|
6,181 |
|
5,370 |
|
811 |
|
15.1 |
% | |||
|
Handysize |
|
4,673 |
|
4,733 |
|
(60 |
) |
(1.3 |
)% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
5,353 |
|
5,187 |
|
166 |
|
3.2 |
% | |||
|
|
|
For the Six Months Ended June 30, |
|
Increase |
|
|
| |||||
|
|
|
2014 |
|
2013 |
|
(Decrease) |
|
% Change |
| |||
|
Fleet Data: |
|
|
|
|
|
|
|
|
| |||
|
Ownership days (1) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
724.0 |
|
362.0 |
|
362.0 |
|
100.0 |
% | |||
|
Supramax |
|
724.0 |
|
724.0 |
|
— |
|
— |
| |||
|
Handysize |
|
905.0 |
|
543.0 |
|
362.0 |
|
66.7 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
2,353.0 |
|
1,629.0 |
|
724.0 |
|
44.4 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Available days (2) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
724.0 |
|
362.0 |
|
362.0 |
|
100.0 |
% | |||
|
Supramax |
|
640.4 |
|
706.1 |
|
(65.7 |
) |
(9.3 |
)% | |||
|
Handysize |
|
875.2 |
|
543.0 |
|
332.2 |
|
61.2 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
2,239.6 |
|
1,611.1 |
|
628.5 |
|
39.0 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Operating days (3) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
723.0 |
|
362.0 |
|
361.0 |
|
99.7 |
% | |||
|
Supramax |
|
635.9 |
|
705.7 |
|
(69.8 |
) |
(9.9 |
)% | |||
|
Handysize |
|
874.1 |
|
541.5 |
|
332.6 |
|
61.4 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Total |
|
2,233.0 |
|
1,609.2 |
|
623.8 |
|
38.8 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet utilization (4) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
99.9 |
% |
100.0 |
% |
(0.1 |
)% |
(0.1 |
)% | |||
|
Supramax |
|
99.3 |
% |
99.9 |
% |
(0.6 |
)% |
(0.6 |
)% | |||
|
Handysize |
|
99.9 |
% |
99.7 |
% |
0.2 |
% |
0.2 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
99.7 |
% |
99.9 |
% |
(0.2 |
)% |
(0.2 |
)% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Average Daily Results: (U.S. dollars) |
|
|
|
|
|
|
|
|
| |||
|
Time Charter Equivalent (5) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
$ |
13,547 |
|
$ |
5,950 |
|
$ |
7,597 |
|
127.7 |
% |
|
Supramax |
|
8,112 |
|
7,183 |
|
929 |
|
12.9 |
% | |||
|
Handysize |
|
8,800 |
|
7,821 |
|
979 |
|
12.5 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
10,138 |
|
7,121 |
|
3,017 |
|
42.4 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Daily vessel operating expenses (6) |
|
|
|
|
|
|
|
|
| |||
|
Capesize |
|
$ |
5,299 |
|
$ |
5,458 |
|
$ |
(159 |
) |
(2.9 |
)% |
|
Supramax |
|
6,353 |
|
5,090 |
|
1,263 |
|
24.8 |
% | |||
|
Handysize |
|
4,914 |
|
4,516 |
|
398 |
|
8.8 |
% | |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Fleet average |
|
5,475 |
|
4,980 |
|
495 |
|
9.9 |
% | |||
Definitions
In order to understand our discussion of our results of operations, it is important to understand the meaning of the following terms used in our analysis and the factors that influence our results of operations.
(1) Ownership days. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
(2) Available days. We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels between time charters. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
(3) Operating days. We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
(4) Fleet utilization. We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
(5) TCE rates. We define TCE rates as net voyage revenue (voyage revenues less voyage expenses (including voyage expenses to Parent)) divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
| ||||||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Voyage revenues (in thousands) |
|
$ |
10,703 |
|
$ |
6,379 |
|
$ |
23,794 |
|
$ |
12,365 |
|
|
Voyage expenses (in thousands) |
|
368 |
|
157 |
|
788 |
|
738 |
| ||||
|
Voyage expenses to Parent (in thousands) |
|
135 |
|
82 |
|
303 |
|
155 |
| ||||
|
|
|
$ |
10,200 |
|
$ |
6,140 |
|
22,703 |
|
$ |
11,472 |
| |
|
Total available days |
|
1,126.6 |
|
813.6 |
|
2,239.6 |
|
1,611.1 |
| ||||
|
Total TCE rate |
|
$ |
9,054 |
|
$ |
7,548 |
|
$ |
10,138 |
|
$ |
7,121 |
|
(6) Daily vessel operating expenses. We define daily vessel operating expenses (“DVOE”) as vessel operating expenses divided by ownership days for the period. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses.
Operating Data
The following discusses our financial results for the three and six months ended June 30, 2014 and 2013:
|
|
|
For the Three Months Ended June 30, |
|
Increase |
|
|
| |||||
|
| ||||||||||||