Report
of independent registered public accounting firm
|
1
|
Consolidated
balance sheets as of December 31, 2007 and December 31,
2006
|
2
|
Consolidated
income statements for the years ended December 31, 2007 and 2006 and the
period from January 13, 2005 (inception) to December 31,
2005
|
3
|
Consolidated
statements of shareholders’ equity for the years ended December 31, 2007
and 2006 and the period from January 13, 2005 (inception) to December 31,
2005
|
4
|
Consolidated
statements of cash flows for the years ended December 31, 2007 and 2006
and the period from January 13, 2005 (inception) to December 31,
2005
|
5
|
Notes
to consolidated financial statements
|
6
|
|
December 31,
|
|||||||
|
2007
|
2006
|
||||||
ASSETS
|
|
|||||||
Current
assets:
|
|
|||||||
Cash
and cash equivalents
|
|
$
|
115,959
|
$
|
21,335
|
|||
Inventories
|
|
2,402
|
1,649
|
|||||
Due
from charterers, net
|
|
371
|
1,159
|
|||||
Other
receivables
|
|
1,782
|
1,196
|
|||||
Prepaid
expenses and other current assets
|
|
2,692
|
986
|
|||||
Total
current assets
|
|
123,206
|
26,325
|
|||||
Property
and equipment:
|
|
|||||||
Vessels,
net of accumulated depreciation of $55,883 and $40,899
|
|
1,020,735
|
987,623
|
|||||
Advances
for acquisition of vessels / newbuildings
|
|
63,137
|
26,310
|
|||||
Other
fixed assets, net of accumulated depreciation of $601 and
$265
|
|
818
|
429
|
|||||
Total
property and equipment
|
|
1,084,690
|
1,014,362
|
|||||
Deferred
charges:
|
|
|||||||
Financing
costs, net of accumulated amortization of $1,295 and $210
|
|
4,657
|
4,588
|
|||||
Time
charter premium, net of accumulated amortization of $4,662 and
$2,551
|
|
4,838
|
6,949
|
|||||
Dry
docking costs, net of accumulated amortization of $1,721 and
$970
|
|
8,659
|
5,216
|
|||||
Loss
on sale-leaseback, net of accumulated amortization of $188 and
$0
|
|
3,180
|
—
|
|||||
Total
assets
|
|
$
|
1,229,230
|
$
|
1,057,440
|
|||
|
||||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|||||||
Current
liabilities:
|
|
|||||||
Current
portion of long-term debt
|
|
$
|
77,218
|
$
|
47,000
|
|||
Accounts
payable
|
|
4,309
|
5,369
|
|||||
Sundry
liabilities and accruals
|
|
14,233
|
2,776
|
|||||
Deferred
income
|
|
14,497
|
2,777
|
|||||
Total
current liabilities
|
|
110,257
|
57,922
|
|||||
Long-term
debt
|
|
612,600
|
564,960
|
|||||
Unrealized
interest-rate swap loss
|
|
30,093
|
9,840
|
|||||
Total
liabilities
|
|
752,950
|
632,722
|
|||||
|
||||||||
Commitments
and contingencies
|
|
|||||||
Minority
interests in equity of consolidated joint ventures
|
|
9,053
|
—
|
|||||
Shareholders’
equity:
|
|
|||||||
Common
stock at $0.01 par value—100,000,000 shares authorized, 56,515,218 and
50,026,533 shares outstanding
|
|
566
|
501
|
|||||
Preferred
stock at $0.01 par value—100,000 shares authorized, none
issued
|
|
—
|
—
|
|||||
Additional
paid-in capital
|
|
495,053
|
442,776
|
|||||
Common
stock to be issued for warrants exercised
|
|
—
|
1,438
|
|||||
Accumulated
deficit
|
|
(28,392
|
)
|
(19,997
|
)
|
|||
Total
shareholders’ equity
|
|
467,227
|
424,718
|
|||||
Total
liabilities and shareholders’ equity
|
|
$
|
1,229,230
|
$
|
1,057,440
|
|||
|
|
Year
Ended
December 31, 2007
|
Year
Ended
December 31, 2006
|
Period From January 13,
2005
(inception) to
December 31,
2005
|
|||||||||
Revenues:
|
|
|||||||||||
Time
charter revenue
|
|
$
|
244,688
|
$
|
103,667
|
$
|
42,062
|
|||||
Voyage
revenue
|
|
3,096
|
4,474
|
—
|
||||||||
Commissions
|
|
(11,381
|
)
|
(4,824
|
)
|
(1,787
|
)
|
|||||
Net
revenue
|
|
236,403
|
103,317
|
40,275
|
||||||||
Expenses:
|
|
|||||||||||
Vessel
operating expenses
|
|
36,721
|
17,489
|
7,411
|
||||||||
Voyage
expenses
|
|
104
|
4,083
|
—
|
||||||||
Charter
hire expense
|
|
14,592
|
—
|
—
|
||||||||
General
and administrative expenses
|
|
17,063
|
10,790
|
5,301
|
||||||||
Costs
related to sale process
|
|
1,380
|
—
|
—
|
||||||||
Depreciation
and amortization
|
|
52,124
|
30,486
|
11,648
|
||||||||
Total
expenses
|
|
121,984
|
62,848
|
24,360
|
||||||||
Operating
income
|
|
114,419
|
40,469
|
15,915
|
||||||||
Other
(expenses) / income:
|
|
|||||||||||
Interest
expense
|
|
(44,379
|
)
|
(16,615
|
)
|
(5,367
|
)
|
|||||
Interest
income
|
|
3,200
|
1,199
|
228
|
||||||||
Finance
costs
|
|
(1,085
|
)
|
(2,169
|
)
|
(5,190
|
)
|
|||||
Interest-rate
swap loss, net
|
|
(19,367
|
)
|
(9,840
|
)
|
—
|
||||||
Foreign
exchange gains / (losses) and other, net
|
|
800
|
(300
|
)
|
(58
|
)
|
||||||
Total
other expenses
|
|
(60,831
|
)
|
(27,725
|
)
|
(10,387
|
)
|
|||||
Minority
interest in net loss of consolidated joint ventures
|
|
180
|
—
|
—
|
||||||||
Net
income
|
|
$
|
53,768
|
$
|
12,744
|
$
|
5,528
|
|||||
|
||||||||||||
Weighted
average shares outstanding:
|
|
|||||||||||
Basic
|
|
54,675,962
|
33,568,793
|
14,134,268
|
||||||||
Diluted
|
|
56,630,332
|
34,680,371
|
14,239,907
|
||||||||
|
||||||||||||
Per
share amounts:
|
|
|||||||||||
Basic
earnings per share
|
|
$
|
0.98
|
$
|
0.38
|
$
|
0.39
|
|||||
Diluted
earnings per share
|
|
$
|
0.95
|
$
|
0.37
|
$
|
0.39
|
|||||
Cash
dividends declared per ordinary share
|
|
$
|
1.10
|
$
|
0.84
|
$
|
0.25
|
|||||
|
|
Number
of Shares
|
|
Common
Stock,
$0.01
Par
Value
|
|
Additional
Paid-in
Capital
|
|
Common
Stock
To
Be
Issued
For
Warrants
Exercised
|
Accumulated
Deficit
|
Total
|
|||||||||||
Balance
at January 13, 2005
|
|
—
|
|
—
|
|
—
|
|
—
|
—
|
—
|
||||||||||
Issuance
of common stock and capital contributions
|
|
6,319,492
|
|
63
|
|
68,342
|
|
—
|
—
|
68,405
|
||||||||||
Initial
public offering, net of issuance costs
|
|
16,968,500
|
|
170
|
|
180,592
|
|
—
|
—
|
180,762
|
||||||||||
Stock-based
compensation
|
|
—
|
|
—
|
|
616
|
|
—
|
—
|
616
|
||||||||||
Dividends
paid
|
|
—
|
|
—
|
|
—
|
|
—
|
(5,888
|
)
|
(5,888
|
)
|
||||||||
Net
income
|
|
—
|
|
—
|
|
—
|
|
—
|
5,528
|
5,528
|
||||||||||
|
|
|
|
|||||||||||||||||
Balance,
December 31, 2005
|
|
23,287,992
|
|
$
|
233
|
|
$
|
249,550
|
|
—
|
$
|
(360
|
)
|
$
|
249,423
|
|||||
Preferred
stock conversion, net of issuance costs
|
|
25,569,462
|
|
256
|
|
182,443
|
|
—
|
—
|
182,699
|
||||||||||
Warrants
exercised, net
|
|
1,062,079
|
|
11
|
|
8,486
|
|
—
|
—
|
8,497
|
||||||||||
Common
stock to be issued for warrants exercised
|
|
—
|
|
—
|
|
—
|
|
1,438
|
—
|
1,438
|
||||||||||
Stock-based
compensation
|
|
107,000
|
|
1
|
|
2,297
|
|
—
|
—
|
2,298
|
||||||||||
Dividends
paid
|
|
—
|
|
—
|
|
—
|
|
—
|
(32,381
|
)
|
(32,381
|
)
|
||||||||
Net
income
|
|
—
|
|
—
|
|
—
|
|
—
|
12,744
|
12,744
|
||||||||||
|
|
|
|
|||||||||||||||||
Balance,
December 31, 2006
|
|
50,026,533
|
|
$
|
501
|
|
$
|
442,776
|
|
$
|
1,438
|
$
|
(19,997
|
)
|
$
|
424,718
|
||||
Warrants
exercised, net
|
|
6,096,085
|
|
61
|
|
46,762
|
|
—
|
—
|
46,823
|
||||||||||
Common
stock to be issued for warrants exercised
|
|
188,400
|
|
2
|
|
1,436
|
|
(1,438
|
)
|
—
|
—
|
|||||||||
Stock-based
compensation
|
|
204,200
|
|
2
|
|
4,079
|
|
—
|
—
|
4,081
|
||||||||||
Dividends
paid
|
|
—
|
|
—
|
|
—
|
|
—
|
(62,163
|
)
|
(62,163
|
)
|
||||||||
Net
income
|
|
—
|
|
—
|
|
—
|
|
—
|
53,768
|
53,768
|
||||||||||
|
|
|
|
|||||||||||||||||
Balance,
December 31, 2007
|
|
56,515,218
|
|
$
|
566
|
|
$
|
495,053
|
|
—
|
$
|
(28,392
|
)
|
$
|
467,227
|
|||||
|
|
|
|
|
Year
Ended
December 31, 2007
|
Year
Ended
December 31, 2006
|
Period
from
January 13, 2005
(inception) to
December 31, 2005
|
|||||||||
Cash
flows from operating activities:
|
|
|||||||||||
Net
income
|
|
$
|
53,768
|
$
|
12,744
|
$
|
5,528
|
|||||
Adjustments
to reconcile net income to net cash from operating
activities:
|
|
|||||||||||
Depreciation
and amortization
|
|
52,124
|
30,486
|
11,648
|
||||||||
Amortization
of deferred finance costs
|
|
1,085
|
2,169
|
5,190
|
||||||||
Amortization
of time charter fair value
|
|
2,111
|
2,111
|
440
|
||||||||
Amortization
of loss on sale-leaseback
|
|
188
|
—
|
—
|
||||||||
Stock-based
compensation
|
|
4,081
|
2,298
|
616
|
||||||||
Minority
interest share in net loss of consolidated joint ventures
|
|
(180
|
)
|
—
|
—
|
|||||||
Unrealized
interest rate swap loss
|
|
20,253
|
9,840
|
—
|
||||||||
Changes
in assets and liabilities:
|
|
|||||||||||
Increase
in inventories
|
|
(753
|
)
|
(1,271
|
)
|
(378
|
)
|
|||||
Decrease
/ (Increase) in due from charterers, net
|
|
788
|
85
|
(1,244
|
)
|
|||||||
Increase
in other receivables
|
|
(586
|
)
|
(716
|
)
|
(480
|
)
|
|||||
Increase
in prepaid expenses and other current assets
|
|
(1,706
|
)
|
(119
|
)
|
(867
|
)
|
|||||
(Decrease)
/ Increase in accounts payable
|
|
(1,060
|
)
|
3,895
|
1,474
|
|||||||
Increase
/ (Decrease) in sundry liabilities and accruals
|
|
11,265
|
(637
|
)
|
3,413
|
|||||||
Increase
in deferred income
|
|
11,720
|
1,061
|
1,716
|
||||||||
Deferred
dry-dock costs paid
|
|
(5,202
|
)
|
(4,986
|
)
|
(1,200
|
)
|
|||||
|
||||||||||||
Net
cash from operating activities
|
|
$
|
147,896
|
$
|
56,960
|
$
|
25,856
|
|||||
|
||||||||||||
Cash
flows from investing activities:
|
|
|||||||||||
Vessel
acquisitions
|
|
(309,360
|
)
|
(570,738
|
)
|
(457,784
|
)
|
|||||
Advances
for vessel acquisitions / newbuildings
|
|
(63,137
|
)
|
(26,310
|
)
|
—
|
||||||
Vessel
disposal, net of commissions
|
|
249,354
|
—
|
—
|
||||||||
Purchases
of other fixed assets
|
|
(725
|
)
|
(251
|
)
|
(443
|
)
|
|||||
Time
charter premium
|
|
—
|
—
|
(9,500
|
)
|
|||||||
|
||||||||||||
Net
cash used in investing activities
|
|
$
|
(123,868
|
)
|
$
|
(597,299
|
)
|
$
|
(467,727
|
)
|
||
|
||||||||||||
Cash
flows from financing activities:
|
|
|||||||||||
Proceeds
from long-term debt
|
|
282,857
|
611,960
|
628,621
|
||||||||
Repayment
of long-term debt
|
|
(205,000
|
)
|
(210,000
|
)
|
(418,621
|
)
|
|||||
Payment
of financing costs
|
|
(1,154
|
)
|
(4,798
|
)
|
(7,149
|
)
|
|||||
Proceeds
from preferred stock issuance, net
|
|
—
|
182,699
|
—
|
||||||||
Proceeds
from exercise of warrants, net
|
|
46,823
|
8,497
|
—
|
||||||||
Common
stock to be issued for warrants exercised
|
|
—
|
1,438
|
—
|
||||||||
Paid-in
capital and common stock
|
|
—
|
—
|
68,405
|
||||||||
Proceeds
from initial public offering
|
|
—
|
—
|
182,942
|
||||||||
Issuance
costs of initial public offering
|
|
—
|
—
|
(2,180
|
)
|
|||||||
Contributions
from minority interest holders of consolidated joint
ventures
|
|
9,233
|
—
|
—
|
||||||||
Dividends
paid
|
|
(62,163
|
)
|
(32,381
|
)
|
(5,888
|
)
|
|||||
|
||||||||||||
Net
cash from financing activities
|
|
$
|
70,596
|
$
|
557,415
|
$
|
446,130
|
|||||
|
||||||||||||
Net
increase in cash and cash equivalents
|
|
94,624
|
17,076
|
4,259
|
||||||||
Cash
and cash equivalents at beginning of period
|
|
21,335
|
4,259
|
—
|
||||||||
|
||||||||||||
Cash
and cash equivalents at end of the period
|
|
$
|
115,959
|
$
|
21,335
|
$
|
4,259
|
|||||
|
||||||||||||
Supplemental
disclosure of cash flow information:
|
|
|||||||||||
Cash
paid during the period for interest
|
|
$
|
36,352
|
$
|
18,994
|
$
|
3,064
|
|||||
Capitalized
interest on newbuildings
|
|
2,232
|
—
|
—
|
||||||||
Non-cash
investing and financing activities:
|
|
|||||||||||
Conversion
of 12% Mandatorily Convertible Preference Stock
|
|
—
|
190,938
|
—
|
||||||||
|
Company
|
Vessel
Type
|
Deadweight
Tonnage (in
tonnes)
|
Built
|
Vessel
Delivery Date
|
||||
Fearless
Shipco LLC (1)
|
Panamax
|
73,427
|
1997
|
April 11,
2005
|
||||
King
Coal Shipco LLC (1)
|
Panamax
|
72,873
|
1997
|
April
12, 2005
|
||||
Coal
Glory Shipco LLC (1)
|
Panamax
|
73,670
|
1995
|
April
13, 2005
|
||||
Coal
Age Shipco LLC (1)
|
Panamax
|
72,861
|
1997
|
May
4, 2005
|
||||
Iron
Man Shipco LLC (1)
|
Panamax
|
72,861
|
1997
|
May
6, 2005
|
||||
Barbara
Shipco LLC (1)
|
Panamax
|
73,390
|
1997
|
July
20, 2005
|
||||
Coal
Pride Shipco LLC
|
Panamax
|
72,600
|
1999
|
August 16, 2005
|
||||
Linda
Leah Shipco LLC (1)
|
Panamax
|
73,390
|
1997
|
August
22, 2005
|
||||
Iron
Beauty Shipco LLC
|
Capesize
|
165,500
|
2001
|
October 18, 2005
|
||||
Kirmar
Shipco LLC
|
Capesize
|
165,500
|
2001
|
November 11, 2005
|
||||
Iron
Vassilis Shipco LLC
|
Kamsarmax
|
82,000
|
2006
|
July
27, 2006
|
||||
Iron
Fuzeyya Shipco LLC
|
Kamsarmax
|
82,229
|
2006
|
August 14, 2006
|
||||
Iron
Bradyn Shipco LLC
|
Kamsarmax
|
82,769
|
2006
|
August
21, 2006
|
||||
Grain
Harvester Shipco LLC
|
Panamax
|
76,417
|
2004
|
September
5, 2006
|
||||
Santa
Barbara Shipco LLC
|
Kamsarmax
|
82,266
|
2006
|
September
5, 2006
|
||||
Iron
Bill Shipco LLC(2)
|
Kamsarmax
|
82,000
|
2006
|
September
7, 2006
|
||||
Ore
Hansa Shipco LLC
|
Kamsarmax
|
82,229
|
2006
|
September 15, 2006
|
||||
Iron
Anne Shipco LLC
|
Kamsarmax
|
82,000
|
2006
|
September
25, 2006
|
||||
Iron
Kalypso Shipco LLC
|
Kamsarmax
|
82,204
|
2006
|
September
25, 2006
|
||||
Grain
Express Shipco LLC
|
Panamax
|
76,466
|
2004
|
October
9, 2006
|
||||
Iron
Knight Shipco LLC
|
Panamax
|
76,429
|
2004
|
January 24,
2007
|
||||
Coal
Gypsy Shipco LLC
|
Kamsarmax
|
82,300
|
2006
|
November 24, 2006
|
||||
Pascha
Shipco LLC
|
Kamsarmax
|
82,300
|
2006
|
December 15, 2006
|
||||
Coal
Hunter Shipco LLC
|
Kamsarmax
|
82,300
|
2006
|
December
20, 2006
|
||||
Iron
Lindrew Shipco LLC
|
Kamsarmax
|
82,300
|
2007
|
February
16, 2007
|
||||
Iron
Miner Shipco LLC
|
Capesize
|
177,000
|
2007
|
March
13, 2007
|
||||
Iron
Brooke Shipco LLC
|
Kamsarmax
|
82,300
|
2007
|
March
20, 2007
|
||||
Iron
Manolis Shipco LLC
|
Kamsarmax
|
82,300
|
2007
|
April
3, 2007
|
||||
Lowlands
Beilun Shipco LLC(3)
|
Capesize
|
170,162
|
1999
|
April
10, 2007
|
||||
Iron
Endurance Shipco LLC
|
Capesize
|
180,000
|
TBD 2008
|
Expected
Q4, 2008
|
||||
Christine
Shipco LLC(4)
|
Capesize
|
180,000
|
TBD
2010
|
Expected
Q1, 2010
|
||||
Hope
Shipco LLC(5)
|
Capesize
|
181,000
|
TBD
2010
|
Expected
Q4, 2010
|
||||
Lillie
Shipco LLC(5)
|
Capesize
|
181,000
|
TBD
2010
|
Expected
Q4, 2010
|
||||
Fritz
Shipco LLC(5)
|
Capesize
|
180,000
|
TBD
2010
|
Expected
Q2, 2010
|
||||
Benthe
Shipco LLC(5)
|
Capesize
|
180,000
|
TBD
2010
|
Expected
Q2, 2010
|
||||
Gayle
Frances Shipco LLC(5)
|
Capesize
|
180,000
|
TBD
2010
|
Expected
Q3, 2010
|
||||
Iron
Lena Shipco LLC(5)
|
Capesize
|
180,000
|
TBD
2010
|
Expected
Q4, 2010
|
(1)
|
Indicates
a vessel sold to a third party in July 2007 and subsequently leased back
to Company
|
(2)
|
Formerly
Iron Elisabeth Shipco LLC
|
(3)
|
Formerly
Coal Heat Shipco LLC
|
(4)
|
Christine
Shipco is owned 42.8% by the
Company
|
(5)
|
Consolidated
joint venture 50% owned by the
Company
|
Description
of Asset
|
|
Useful
Life
|
Leasehold
improvement (1)
|
|
2 years
|
Furniture,
fixtures, and other equipment
|
|
4
years
|
Computer
equipment
|
|
4 years
|
(1)
|
Leasehold
improvements are depreciated over the shorter of 2 years or the remaining
term of the lease.
|
|
Vessels,
net
|
|||
|
(in thousands)
|
|||
January 1,
2006
|
|
$
|
446,475
|
|
Additions
|
|
570,738
|
||
Depreciation
charge for the year
|
|
(29,590
|
)
|
|
|
||||
December 31,
2006
|
|
$
|
987,623
|
|
Advances
for vessel acquisitions paid in 2006 for vessels delivered in
2007
|
|
26,310
|
||
Additions
|
|
309,360
|
||
Vessel
disposals (1)
|
|
(252,722
|
)
|
|
Depreciation
charge for the year
|
|
(49,836
|
)
|
|
|
||||
December 31,
2007
|
|
$
|
1,020,735
|
|
|
(1)
|
Please
refer to Note 11 for a discussion of the vessels
sold.
|
January 1,
2006
|
|
$ |
—
|
Vessel
acquisition advances
|
|
26,310
|
||
|
||||
December 31,
2006
|
|
$
|
26,310
|
|
Advances
paid in 2006 for vessels delivered in 2007
|
|
(26,310
|
)
|
|
Newbuilding
advances
|
|
63,137
|
||
|
||||
December 31,
2007
|
|
$
|
63,137
|
|
|
|
December 31,
|
|||||
|
2007
|
|
2006
|
|||
|
(in
thousands)
|
|||||
Value
added tax
|
|
$
|
466
|
|
$
|
420
|
Advances
to crew
|
|
465
|
|
221
|
||
Other
|
|
851
|
|
555
|
||
|
|
|||||
Total
|
|
$
|
1,782
|
|
$
|
1,196
|
|
|
|
Finance Costs
|
Drydocking
|
Time Charter
Premium
|
Loss on Sale-
Leaseback
|
||||||||||||
|
(in
thousands)
|
|||||||||||||||
January 1,
2006
|
|
$
|
1,959
|
$
|
920
|
$
|
9,060
|
—
|
||||||||
Additions
|
|
4,798
|
4,986
|
—
|
—
|
|||||||||||
Amortizations
|
|
(336
|
)
|
(690
|
)
|
(2,111
|
)
|
—
|
||||||||
Write-offs
|
|
(1,833
|
)
|
—
|
—
|
—
|
||||||||||
|
||||||||||||||||
December 31,
2006
|
|
$
|
4,588
|
$
|
5,216
|
$
|
6,949
|
—
|
||||||||
Additions
|
|
1,154
|
5,394
|
—
|
3,368
|
|||||||||||
Amortization
|
|
(1,085
|
)
|
(1,951
|
)
|
(2,111
|
)
|
(188
|
)
|
|||||||
|
||||||||||||||||
December 31,
2007
|
|
$
|
4,657
|
$
|
8,659
|
$
|
4,838
|
$
|
3,180
|
|||||||
|
Year
|
|
Amortization
(in thousands)
|
|
2008
|
|
$
|
2,111
|
2009
|
|
2,111
|
|
2010
|
|
616
|
|
|
|||
Total
|
|
$
|
4,838
|
|
|
December 31,
|
|||||
Prepaid
Expenses and Other Current Assets
|
|
2007
|
|
2006
|
||
|
(in
thousands)
|
|||||
Prepaid
insurance
|
|
$
|
531
|
|
$
|
595
|
Prepaid
bareboat hire (1)
|
|
1,183
|
|
—
|
||
Other
prepaid expenses and other current assets
|
|
978
|
|
391
|
||
|
|
|||||
Total
|
|
$
|
2,692
|
|
$
|
986
|
|
|
(1)
|
Relates
to prepaid bareboat hire to owners of vessels that are operated by the
Company under operating leases.
|
|
December 31,
|
|||||
Sundry
Liabilities and Accruals
|
|
2007
|
|
2006
|
||
|
(in
thousands)
|
|||||
Accrued
interest expense
|
|
$
|
10,618
|
|
$
|
211
|
Accrued
office expenses
|
|
1,459
|
|
1,255
|
||
Other
sundry liabilities and accruals
|
|
2,156
|
|
1,310
|
||
|
|
|||||
Total
|
|
$
|
14,233
|
|
$
|
2,776
|
|
|
|
December 31,
|
|||||||
Long-Term
Debt
|
|
2007
|
2006
|
|||||
|
(in
thousands)
|
|||||||
Revolving
credit facility
|
|
$
|
660,000
|
$
|
611,960
|
|||
Credit
facilities of consolidated joint ventures (1)
|
|
29,818
|
—
|
|||||
|
689,818
|
611,960
|
||||||
Less:
Current portion of long-term debt
|
|
(77,218
|
)
|
(47,000
|
)
|
|||
|
||||||||
Long-term
debt, net of current portion
|
|
$
|
612,600
|
$
|
564,960
|
|||
|
(1)
|
The
Company is responsible for repaying 50% of the outstanding credit
facilities of Hope Shipco LLC and Lillie Shipco LLC. Christine Shipco LLC
has a credit facility for pre-delivery financing, but the Company has no
repayment obligations with respect to that
facility.
|
•
|
To
increase the maximum available amount for borrowing to $865
million;
|
•
|
To
reschedule the quarterly commitment reductions as
follows:
|
•
|
Two
reductions of $14.5 million each, beginning on July 1, 2007, followed
by
|
•
|
Four
reductions of $18 million each, followed
by
|
•
|
23
reductions of $15 million each, with the final reduction occurring on the
maturity date together with a balloon reduction equal to the lesser of
$419 million or remaining amounts outstanding under the
facility.
|
•
|
To
waive compliance with the minimum-liquidity covenant through
December 31, 2007.
|
•
|
approval
of the release of the security interests on the ships sold in the
sale-leaseback and other related collateral contemporaneously with
consummation of the sale-leaseback;
|
•
|
approval
of the Company’s guarantee of the obligations under the
sale-leaseback;
|
•
|
permission
to borrow up to $55.2 million, which is equal to 60% of the purchase price
of a newbuilding Capesize vessel to be purchased by the Company from an
affiliate of Itochu Corporation, and is expected to be delivered in the
fourth quarter of 2008, thereby adjusting the maximum available amount
under the facility to $735.2 million after the borrowings for this vessel;
and
|
•
|
a
revised schedule of quarterly commitment reductions as
follows:
|
¡
|
Two
reductions of $10,000,000 each, beginning on July 1, 2007, followed
by
|
¡
|
Four
reductions of $13,750,000 each, followed
by
|
¡
|
23
reductions of $12,125,000 each, with the final reduction occurring on the
maturity date together with a balloon reduction equal to the lesser of
$381,325,000 or remaining amounts outstanding under the
Facility.
|
Period
|
|
Principal
Repayment
|
|
|
(in thousands)
|
||
January 1,
2008 to December 31, 2008 (1)
|
|
$
|
55,000
|
January 1,
2009 to December 31, 2009
|
|
48,500
|
|
January 1,
2010 to December 31, 2010
|
|
48,500
|
|
January 1,
2011 to December 31, 2011
|
|
48,500
|
|
January 1,
2012 to December 31, 2012
|
|
48,500
|
(1)
|
The
Company paid an installment of $13.75 million on January 2,
2008.
|
Period
|
|
Principal
Repayment
|
|
|
(in thousands)
|
||
January 1,
2008 to December 31, 2008
|
|
$
|
22,218
|
January 1,
2009 to December 31, 2009
|
|
—
|
|
January 1,
2010 to December 31, 2010
|
|
7,600
|
|
January 1,
2011 to December 31, 2011
|
|
—
|
|
January 1,
2012 to December 31, 2012
|
|
—
|
|
December 31,
2007
|
||
|
(in thousands)
|
||
January 1,
2008 to December 31, 2008
|
|
$
|
818
|
January 1,
2009 to December 31, 2009
|
|
580
|
|
|
|||
Total
|
|
$
|
1,398
|
|
|
Company Commitments
|
|
Joint Venture Partner
Commitments
|
|
Total
Commitments
|
||||
|
(in
millions)
|
||||||||
January 1,
2008 to December 31, 2008
|
|
$
|
108.4
|
|
$
|
46.0
|
|
$
|
154.4
|
January 1,
2009 to December 31, 2009
|
|
46.6
|
|
61.1
|
|
107.7
|
|||
January 1,
2010 to December 31, 2010
|
|
173.4
|
|
137.3
|
|
310.7
|
|||
|
|
|
|||||||
|
$
|
328.4
|
|
$
|
244.4
|
|
$
|
572.8
|
|
|
|
|
Period
|
|
Amount
|
|
|
(in thousands)
|
||
January 1,
2008 to December 31, 2008
|
|
$
|
32,649
|
January 1,
2009 to December 31, 2009
|
|
32,560
|
|
January 1,
2010 to December 31, 2010
|
|
32,560
|
|
January 1,
2011 to December 31, 2011
|
|
32,560
|
|
January 1,
2012 to December 31, 2012
|
|
32,560
|
|
Thereafter
|
|
83,367
|
|
|
|||
Total
future minimum lease payments
|
|
$
|
246,256
|
|
•
|
The
conversion of the Company’s 12% Mandatorily Convertible Preferred Stock
into shares of common stock;
|
•
|
The
exercisability of the 8,182,232 Class A Warrants to purchase shares
of the Company’s common stock; and
|
•
|
The
issuance of shares of the Company’s common stock upon conversion of the
shares of Preferred Stock and the exercise of the
Warrants.
|
•
|
Restricted
stock outstanding under the Company’s Stock Incentive Plan;
and
|
•
|
Common
shares issuable upon exercise of the Company’s outstanding
warrants.
|
•
|
The
Company had no other dilutive securities for the periods
indicated.
|
|
Year
Ended
December 31, 2007
|
|
Year
Ended
December 31, 2006
|
|
Period
from
January 13, 2005 to
December 31, 2005
|
|
Weighted
average common shares outstanding, basic
|
|
54,675,962
|
|
33,568,793
|
|
14,134,268
|
Weighted
average restricted stock awards
|
|
479,537
|
|
681,167
|
|
105,639
|
Weighted
average warrants(1)
|
|
1,474,833
|
|
430,411
|
|
—
|
|
|
|
||||
Weighted
average common shares outstanding, diluted
|
|
56,630,332
|
|
34,680,371
|
|
14,239,907
|
|
|
|
(1)
|
On
May 11, 2006, the Company sold Units consisting of 12% Mandatorily
Convertible Preferred Stock and Class A Warrants in a private
placement. 8,182,232 Warrants, with an exercise price of $8.00 and an
expiration date of May 11, 2009, were issued. The conversion of the
preferred stock and the exercisability of the warrants were approved by
the shareholders on August 11, 2006. The warrants have been included
in diluted earnings per share beginning on August 11, 2006. As of
December 31, 2007, 835,668 warrants were outstanding, which includes
91,408 warrants held by the Company in connection with cashless
exercise.
|
Vesting
on February 15,
|
|
Percentage
of
Award
Vesting
|
|
2008
|
|
15.0
|
%
|
2009
|
|
17.5
|
%
|
2010
|
|
20.0
|
%
|
2011
|
|
22.5
|
%
|
2012
|
|
25.0
|
%
|
Vesting
on February 15,
|
|
Percentage
of
Award
Vesting
|
|
2008
|
|
15.0
|
%
|
2009
|
|
17.5
|
%
|
2010
|
|
20.0
|
%
|
2011
|
|
22.5
|
%
|
2012
|
|
25.0
|
%
|
Vesting
on February 15,
|
|
Percentage
of
Award
Vesting
|
|
2007
|
|
15.0
|
%
|
2008
|
|
17.5
|
%
|
2009
|
|
20.0
|
%
|
2010
|
|
22.5
|
%
|
2011
|
|
25.0
|
%
|
|
Number
of
Shares
|
Weighted
Average
Fair
Value Per Share
|
||||
Outstanding
at December 31, 2005
|
|
558,750
|
$
|
10.39
|
||
Granted
|
|
991,500
|
10.27
|
|||
Vested
|
|
(107,000
|
)
|
10.37
|
||
Canceled
or expired
|
|
(4,350
|
)
|
9.87
|
||
|
||||||
Outstanding
at December 31, 2006
|
|
1,438,900
|
$
|
10.31
|
||
Granted
|
|
218,500
|
23.10
|
|||
Vested
|
|
(204,200
|
)
|
10.79
|
||
Canceled
or expired
|
|
(45,550
|
)
|
10.10
|
||
|
||||||
Outstanding
at December 31, 2007
|
|
1,407,650
|
$
|
12.24
|
||
|
Period
in which compensation cost is expensed
|
|
Amount
to be
expensed
in
relevant period
|
|
|
(in thousands)
|
||
2008
|
|
$
|
5,353
|
2009
|
|
3,840
|
|
2010
|
|
3,111
|
|
2011
|
|
1,401
|
|
2012
|
|
153
|
|
|
|||
Total
|
|
$
|
13,858
|
|
Contract
Date
|
|
Notional Amount (€)
|
|
For
Value
|
|
Rate ($/€)
|
August 14,
2007
|
|
1,000,000
|
|
September 14, 2007
|
|
1.345
|
Contract
Date
|
|
Notional Amount (€)
|
|
For
Value
|
|
Rate ($/€)
|
September 26,
2006
|
|
1,000,000
|
|
March 26, 2007
|
|
1.2800
|
September 29,
2006
|
|
1,000,000
|
|
December
29, 2006
|
|
1.2745
|
October 6,
2006
|
|
1,000,000
|
|
June
29, 2007
|
|
1.2795
|
October 10,
2006
|
|
1,000,000
|
|
September 28, 2007
|
|
1.2725
|
|
Percentage of Gross Revenues
|
||||||||
Charterer
|
|
2007
|
2006
|
2005
|
|||||
Bunge
|
|
52.4
|
%
|
22.1
|
%
|
—
|
|||
Cargill
|
|
—
|
10.7
|
%
|
14.9
|
%
|
|||
STX
Panocean
|
|
—
|
11.9
|
%
|
—
|
||||
Energy
Shipping
|
|
—
|
—
|
16.2
|
%
|
||||
Deiulemar
|
|
—
|
—
|
15.7
|
%
|
||||
Safety
Management
|
|
—
|
—
|
12.3
|
%
|
||||
Sinochart
|
|
—
|
—
|
11.8
|
%
|
•
|
Failure
of Quintana’s shareholders to approve the
merger;
|
•
|
Representations,
warrants or covenants under the merger agreement are breached by Quintana
which result in Excel terminating the
merger;
|
•
|
Quintana
takes or fails to take action in breach of the merger agreement which is
the principal cause of the merger not occurring prior to October 31,
2008.
|
Excel
|
Quintana
|
Pro
Forma Adjustments
|
Pro
Forma
|
||||||||||||||
(Note
2)
|
|||||||||||||||||
ASSETS
|
|||||||||||||||||
CURRENT
ASSETS:
|
|||||||||||||||||
Cash
and cash equivalents
|
$ | 243,672 | $ | 115,959 | $ | (230,997 | ) |
(b)
|
$ | 128,634 | |||||||
Restricted
cash
|
3,175 | - | - | 3,175 | |||||||||||||
Other
current assets
|
5,887 | 7,247 | - | 13,134 | |||||||||||||
Total
current Assets
|
252,734 | 123,206 | (230,997 | ) | 144,943 | ||||||||||||
FIXED
ASSETS:
|
|||||||||||||||||
Advances
for vessels’ acquisition/construction
|
- | 63,137 | 99,319 | 162,456 | |||||||||||||
Vessels,
net
|
527,164 | 1,020,735 | 1,190,015 | 2,737,914 | |||||||||||||
Office
furniture and equipment, net
|
1,466 | 818 | - | 2,284 | |||||||||||||
Total
fixed assets, net
|
528,630 | 1,084,690 | 1,289,334 |
(a)
|
2,902,654 | ||||||||||||
OTHER
NON CURRENT ASSETS:
|
- | ||||||||||||||||
Investment
in affiliate
|
15,688 | - | - | 15,688 | |||||||||||||
Goodwill
|
400 | - | 310,129 |
(a)
|
310,529 | ||||||||||||
Deferred
drydockings, net
|
6,427 | 8,659 | (2,211 | ) |
(a)
|
12,875 | |||||||||||
Deferred
financing costs, net
|
4,470 | 4,657 | (4,402 | ) |
(b)
|
4,725 | |||||||||||
Deferred
pre-acquisition costs
|
4,222 | - | (4,222 | ) |
|
- | |||||||||||
Time
charter premium, net
|
- | 4,838 | (4,838 | ) | (a) | - | |||||||||||
Leased-in
contracts
|
- | - | 290,057 |
(a)
|
290,057 | ||||||||||||
Loss
on sale and leaseback, net
|
- | 3,180 | (3,180 | ) |
(a)
|
- | |||||||||||
Restricted
cash
|
11,825 | - | - | 11,825 | |||||||||||||
Total
assets
|
824,396 | 1,229,230 | 1,639,670 | 3,693,296 | |||||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||||||||||||
CURRENT
LIABILITIES:
|
|||||||||||||||||
Current
portion of long-term debt
|
39,179 | 77,218 | 159,980 |
(b)
|
276,377 | ||||||||||||
Other
current liabilities
|
16,811 | 33,039 | - | 49,850 | |||||||||||||
Total
Current Liabilities
|
55,990 | 110,257 | 159,980 | 326,227 | |||||||||||||
LONG-TERM
DEBT, net of current portion
|
368,585 | 612,600 | 380,596 |
(b)
|
1,361,781 | ||||||||||||
Interest rate
swap loss
|
- | 30,093 | 23,170 |
(a)
|
53,263 | ||||||||||||
Leased-out
charters
|
- | - | 67,264 |
(a)
|
67,264 | ||||||||||||
Time
charters assumed
|
- | - | 798,778 |
(a)
|
798,778 | ||||||||||||
Minority
interest
|
- | 9,053 | - | 9,053 | |||||||||||||
STOCKHOLDERS'
EQUITY
|
399,821 | 467,227 | 209,882 |
(1)
|
1,076,930 | ||||||||||||
Total
Liabilities and Stockholders' Equity
|
$ | 824,396 | $ | 1,229,230 | $ | 1,639,670 | $ | 3,693,296 |
(1)
|
The
pro forma adjustment of $209,882 is analyzed as
follows:
|
● | Reversal of Quintana’s net assets adjusted to fair values as of 31 December 2007 ............................................... | (467,227) | ||
● | Account for the pro forma adjustments [Refer to Note 2 (b)] .................................................................................... | 677,109 | ||
209,882 |
Excel
|
Quintana
|
Pro
Forma adjustments
|
Pro
Forma
|
||||||||||||||
(Note
2)
|
|||||||||||||||||
REVENUES
|
$ | 177,507 | $ | 236,403 | $ | 297,745 |
(e),(f)
|
$ | 711,655 | ||||||||
EXPENSES:
|
|||||||||||||||||
Voyage
expenses
|
13,281 | 104 | 11,381 |
(f)
|
24,766 | ||||||||||||
Charter
hire expense
|
- | 14,592 | 19,891 |
(e)
|
34,483 | ||||||||||||
Vessel
operating expenses
|
33,637 | 36,721 | - | 70,358 | |||||||||||||
Depreciation
|
27,864 | 50,173 | 35,441 |
(d)
|
113,478 | ||||||||||||
Amortization
of deferred dry-docking and special survey
costs
|
3,904 | 1,951 | - | 5,855 | |||||||||||||
Merger
related costs
|
- | 1,380 | - | 1,380 | |||||||||||||
General
and administrative expenses
|
12,953 | 17,063 | - | 30,016 | |||||||||||||
91,639 | 121,984 | 66,713 | 280,336 | ||||||||||||||
GAIN
ON SALE OF VESSEL
|
6,194 | - | - | 6,194 | |||||||||||||
Operating
Income
|
92,062 | 114,419 | 231,032 | 437,513 | |||||||||||||
OTHER
INCOME (EXPENSES):
|
|||||||||||||||||
Interest
and finance costs
|
(14,975 | ) | (64,831 | ) | 1,071 |
(c)
|
(78,735 | ) | |||||||||
Interest
income
|
7,485 | 3,200 | - | 10,685 | |||||||||||||
Other,
net
|
(66 | ) | 800 | - | 734 | ||||||||||||
Total
other income (expenses), net
|
(7,556 | ) | (60,831 | ) | 1,071 | (67,316 | ) | ||||||||||
Net
Income, before taxes
|
84,506 | 53,588 | 232,103 | 370,197 | |||||||||||||
U.S.
Source Income Taxes
|
(486 | ) | - | - | (486 | ) | |||||||||||
Net
Income, after taxes and before minority interest and income from
investment in affiliate
|
84,020 | 53,588 | 232,103 | 369,711 | |||||||||||||
Minority
interest
|
2 | 180 | - | 182 | |||||||||||||
Income
from investment in affiliate
|
873 | - | - | 873 | |||||||||||||
Net
income
|
$ | 84,895 | $ | 53,768 | $ | 232,103 | $ | 370,766 | |||||||||
Earnings
per common share, basic
|
$ | 4.26 | $ | 8.46 | |||||||||||||
Weighted
average number of shares, basic (2)
|
19,949,644 | 43,803,764 | |||||||||||||||
Earnings
per common share, diluted
|
$ | 4.25 | $ | 8.46 | |||||||||||||
Weighted
average number of shares, diluted (2)
|
19,965,676 | 43,819,796 |
(2)
|
Pro
forma weighted average number of shares, basic and diluted, include
(i) Excel Class A common shares issued upon the consummation of
the merger and calculated on the basis of Quintana's outstanding shares of
common stock of 59,050,786 at the closing of the merger and at an exchange
ratio of 0.3979 of an Excel Class A common share per share of
Quintana common stock and (ii) Excel Class A common shares that
will be issued to Excel Management Ltd., a related party, pursuant to an
anti-dilution clause in the management termination agreement entered into
between Excel and Excel Management Ltd. in 2005 that will permit Excel
Management Ltd. to maintain its current 1.5% ownership of outstanding
Excel Class A common shares after the merger. The difference of
16,032 between the weighted average number of shares basic and diluted for
the year ended December 31, 2007, relates to the dilutive effect of
outstanding stock options and restricted stock granted by Excel in
October 2004 and
January 2007.
|
(a)
|
In accordance with
U.S. GAAP, the fair value of the cash and share consideration to be
issued by Excel as discussed above, or the cost of the acquisition, has
been allocated to the estimated fair value of Quintana's identifiable
assets and liabilities pursuant to the purchase method proscribed by
Statement of Financial Accounting Standards No. 141, "Business
Combinations," and is based on preliminary estimates of their respective
fair values.
|
Purchase
consideration
|
|||||||||||
Amount
to be paid in cash(3)
|
$ | 764,489 | 2(b | ) |
(iv)
|
||||||
Amount
paid in Excel's shares(4)
|
682,333 | ||||||||||
1,446,822 | |||||||||||
Estimated
transaction costs(5)
|
10,484 | 2(b | ) |
(iv)
|
|||||||
$ | 1,457,306 | ||||||||||
Less:
net assets of Quintana as of December 31, 2007, adjusted as
follows:
|
|||||||||||
Net
assets per Quintana's balance sheet as of December 31,
2007
|
$ | 467,227 | |||||||||
Adjustments:
|
|||||||||||
– Write-off
of deferred dry docking costs(6)
|
(2,211 | ) | |||||||||
– Elimination
of time charter premiums(6)
|
(4,838 | ) | |||||||||
– Elimination
of deferred loss on sale and leaseback(6)
|
(3,180 | ) | |||||||||
Adjusted
net assets of Quintana
|
456,998 | (456,998 | ) | ||||||||
$ | 1,000,308 | ||||||||||
Allocation
of purchase consideration to reflect estimated fair value
|
||||||||
Vessels
and under construction vessels
|
$ | 1,289,334 | ||||||
Leased-in
contracts (bareboat charters)
|
290,057 | 2 |
(e)
|
|||||
Interest
rate swap loss(7)
|
(23,170 | ) | ||||||
Leased
out contracts
|
(67,264 | ) | 2 |
(e)
|
||||
Time
charters assumed
|
(798,778 | ) | 2 |
(e)
|
||||
$ | 690,179 | |||||||
Excess
of anticipated purchase consideration over Quintana's net assets
(Goodwill)(8)
|
$ | 310,129 |
(3)
|
Amount
is net of $3,171 related to proceeds received by Excel upon exercise of
396,375 warrants, at a price of $8.0 per warrant, outstanding and issued
by Quintana in a private placement on May 11,
2006.
|
(4)
|
Amount
to be paid in Excel Class A common shares is calculated based on
Quintana's outstanding shares of common stock of 59,050,786 (including
56,515,218 common shares outstanding as of December 31, 2007,
1,699,900 restricted stock which immediately vested upon consummation of
the merger and 835,668 warrants, of which 439,293 warrants were exercised
between January 1, 2008 and April 15, 2008, leaving 396,375 warrants
outstanding at April 15, 2008) at the closing of the transaction exchanged
for 0.3979 of a share of Excel Class A common shares and using the
market price of Excel's shares for
a period of five days before and including April 15, 2008 (date of
consummation of the merger).
|
(5)
|
These
costs represent costs directly related to the transaction and mainly refer
to fees to be paid to outside consultants serving as financial and legal
advisors, as well as, for accounting services and
appraisals.
|
(6)
|
These
amounts were written-off because the related underlying assets (vessels,
time and bareboat charters assumed) have been fairly valued through the
purchase price allocation process. The amount of $2,211 relates to
deferred drydocking of the vessels owned by Quintana, while the remaining
amount of $6,448 relates to vessels sold and leased back by
Quintana.
|
(7)
|
This
amount relates to the Interest rate swap agreement that Quintana
had entered into with Fortis bank on June 30, 2006.
|
(8)
|
The goodwill constitutes a premium paid by Excel over the fair value of the net assets of Quintana, which is attributed to anticipated benefits including improved purchasing and placing power and ongoing cost savings and operating efficiencies. |
(b)
|
To
reflect the sources and uses of funds to consummate the Merger and
reconciliation of unaudited pro forma stockholders' equity:
|
Dr / (Cr)
|
||||||||||
Cash
and Cash Equivalents
|
Long-term
debt
|
Deferred
Financing Fees
|
Stockholders’
Equity
|
|||||||
Current
Portion
|
Long-term
Portion
|
|||||||||
As
per Excel's balance sheet as of December 31, 2007
|
243,672
|
(39,179)
|
(368,585)
|
4,470
|
(399,821)
|
|||||
Quintana's
cash acquired
|
115,959
|
—
|
—
|
—-
|
—-
|
|||||
Quintana's
loans assumed and related deferred financing costs, net
|
—
|
(77,218)
|
(612,600)
|
4,657
|
—
|
|||||
Pro
forma adjustments
|
||||||||||
(i)
|
New
loan of $1.4 billion, net of financing costs
|
1,383,000
|
(250,000)
|
(1,133,000)
|
—
|
—
|
||||
(ii)
|
Refinancing
of $660 million of Quintana's existing loans and of $183.2 million of
Excel's existing loans
|
(843,246)
|
90,298
|
752,948
|
—
|
—
|
||||
(iii)
|
Write-off
of deferred financing costs, net of the refinanced loans discussed in
(ii) above (9)
|
—
|
(278)
|
(544)
|
(4,402)
|
5,224
|
||||
(iv)
|
Fund
the anticipated cash portion of the acquisition and of the estimated
transaction costs.
|
(770,751)
|
—
|
—
|
—
|
—
|
||||
(v)
|
Reflect
the anticipated portion of the consideration to be settled in Excel's
shares
|
—
|
—
|
—
|
—
|
(682,333)
|
||||
(230,997)
|
(159,980)
|
(380,596)
|
(4,402)
|
(677,109)
|
||||||
Unaudited
pro forma amounts at December 31, 2007
|
128,634
|
(276,377)
|
(1,361,781)
|
4,725
|
(1,076,930)
|
(9)
|
In Excel’s consolidated financial statements, deferred financing costs are reflected as a contra to debt. Financing costs relating to the new debt facility, will be deferred and amortized over the term of the facility under the effective interest method. Financing fees relating to the refinanced debt will be charged to Excel’s consolidated statement of income upon consummation of the transaction. |
(c)
|
To record interest expense on
additional debt (approximately $1.4 billion) incurred to fund acquisition,
net of savings caused by the refinancing of existing Excel's and
Quintana's assumed debt (approximately $843.2 million) and a
reduction in the applicable margin. Interest rates are based on LIBOR plus
a margin at the date of the announcement of the Merger. A change in the
interest rate of 12.5 basis points would change the pro forma adjustment
for the year ended December 31, 2007 by $1.8
million.
|
YEAR
ENDED
DECEMBER 31, 2007
|
||||
Interest
expense on additional debt
|
$ | 56,294 | ||
Historical
interest expense on refinanced debt
|
(57,365 | ) | ||
$ | (1,071 | ) |
(d)
|
To record increased depreciation
of vessels based on the preliminary assigned fair values to the vessels
and using an estimated useful life of 28 years and the reversal of
the depreciation on the vessels' carrying values:
|
YEAR
ENDED
DECEMBER 31,
2007
|
||||
Depreciation
based on fair value of vessels
|
$ | 85,278 | ||
Historical
depreciation of vessels
|
(49,837 | ) | ||
$ | 35,441 |
(e)
|
The
amounts relate to the assets/liabilities arising from the fair value of
Quintana's leased and time charter contracts ("charters assumed") to be
assumed by Excel upon consummation of the transaction. Fair value is
determined by reference to market data. The preliminary estimated amounts
reflected as an asset or liability in the unaudited pro forma condensed
combined balance sheet are based on the difference between the current
fair value of charters with similar characteristics as the charter assumed
and the net present value of future contractual cash flows from the
charter contract assumed. When the present value of the charter assumed is
greater than the current fair value of such charter, the difference is
recorded as an asset. When the opposite situation occurs, the difference
is recorded as a liability. Such assets and liabilities, respectively, are
amortized as a reduction of, or an increase in, revenue over the period of
the charters assumed. Amortization of the asset recognized in relation to
the leased-in contracts is calculated over the term of the contracts and
reflected as a reduction of the voyage expenses. Remaining useful life of
the charters assumed range from 2 to 91 months.
|
(f)
|
To
reflect commissions of $11,381 paid by Quintana for the year ended
December 31, 2007, as a voyage expense rather than reduction of
revenue (as per Quintana's historical financial statements) to conform
with Excel's presentation.
|
By:
/s/ Stamatis Molaris
|
Stamatis
Molaris
Chief
Executive Officer
|
||
Dated: June
6, 2008
|