Commission File No. 333-8878
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2005
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
H & J Corporate Services Ltd.
Shirlaw House
87 Shirley Street
Nassau, The Bahamas
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein are a copy of the Company's report for the three
months ended March 31, 2005, containing certain unaudited financial information
and a Management's Discussion and Analysis of Financial Condition and Results of
Operations.
ULTRAPETROL (BAHAMAS) LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION FOR THE THREE MONTHS
ENDED MARCH 31, 2005 AND 2004
The following discussion and analysis should be read in conjunction with
the unaudited condensed consolidated financial statements of Ultrapetrol
(Bahamas) Limited ("the Company") and subsidiaries for the three months ended
March 31, 2005 and 2004 included elsewhere in this report.
General
We are a diversified ocean and river transportation company involved in the
carriage of dry liquid bulk cargoes as well as passengers. In our Ocean
Business, we are an owner and operator of oceangoing vessels that transport
petroleum products, dry cargo and passengers around the world. Our Ocean
Business fleet dedicated to the carriage of cargo has a capacity of
approximately 785,000 dwt, and our three versatile Suezmax/OBO vessels are
capable of carrying either dry bulk or liquid cargoes. Our River Business is the
largest owner and operator of river barges and push boats in the Hidrovia region
of South America, a fertile agricultural region of navigable waters on the
Parana, Paraguay and Uruguay Rivers and part of the River Plate, which flow
through Brazil, Bolivia, Uruguay, Paraguay and Argentina. In addition, in
November, 2002, we entered into a joint venture to form UP Offshore (Bahamas)
Ltd. ("UP Offshore"), a company in which we own a 27.78% interest and which will
provide transportation services to offshore petroleum exploration and production
companies, with a particular emphasis on the Brazilian market.
Our business strategy focuses on maintaining an efficient and flexible
fleet, which allows us to provide an array of transportation services to
customers in several different industries. We believe that the flexibility of
our fleet and the diversity of industries that we service reduce our dependency
on any particular sector of the transportation industry.
Currently, we own eight oceangoing vessels (one of which is currently used
as a transfer station in our River Business and another is a passenger vessel)
that operate in South America, the Caribbean, the United States, Europe and the
Far East. One of our vessels (Cape Pampas) is owned through our 60% owned
subsidiary, Ultracape (Holdings) Ltd. ("Ultracape"). The Company's Suezmax OBO's
(Princess Katherine, Princess Nadia and Princess Susana), are designed to carry
oil as well as ore and other dry bulk commodities. These vessels together with
our Cape Pampas are currently employed in the carriage of bulk dry cargoes.
During the first quarter ended March 31, 2005, we employed a significant
part of our ocean fleet on time charter for different customers. During the
first quarter of 2005, the international freight market maintained average rates
significantly above those experienced in 2004.
On January 7, 2005 IFC and KfW disbursed the remaining $7.5 million of the
$30 million loan granted to UABL in 2002. These funds were used to finance the
purchase and transportation from USA to the River Plate of 35 dry barges
additionally using the Company's internally generated funds we purchased two
pushboats and other auxiliary equipment.
We entered into a contract on March 4, 2005 to sell our vessel, Cape
Pampas, for a price of approximately $39.9 million. The vessel was delivered to
the new owners on May 6, 2005.
We also entered into a contract on March 4, 2005 to buy the cruise vessel,
New Flamenco, for a price of $13.5 million. This transaction was consummated on
March 24, 2005. The New Flamenco is managed by Ravenscroft (an affiliate of
ours) and we have agreed to continue her employment agreement with a large
European tour operator.
Contractual Methods of Earning Revenues and Allotting Expenses
Ocean revenues can be contracted either on a time charter basis or on a COA
basis. Under the terms of a time charter, the charterer pays the ship owner a
daily rate for the use of the vessel and, in addition, the charterer pays
directly for all voyage expenses (including fuel and port charges). In contrast,
under the terms of a COA, the charterer pays the ship owner a rate based on
tonnage shipped (expressed in dollars per metric ton of cargo), but the ship
owner pays all voyage expenses. Accordingly, the charterer pays a higher overall
sum under a COA than under a time charter to compensate the ship owner for
having to pay the voyage expenses. Consequently, time charters result in lower
revenues and lower expenses for the ship owner than COAs, while COAs result in
higher revenues and higher expenses for the shipowner than time charters. Both
time charters and COAs at comparable price levels result in approximately the
same operating income. However, the margin as a percentage of revenues may
differ significantly. The differences between time charters and COAs are
summarized below:
o Time Charter:
o Revenue is derived from a daily rate paid for the use of the
vessel
o Charterer pays for all voyage expenses
o COA:
o Revenue is derived from a rate based on tonnage shipped
expressed in dollars per metric ton of cargo
o Vessel owner pays for all voyage expenses
Revenues
Time charter revenues accounted for 58% of our total revenues (ocean and
river) for the three months ended March 31, 2005. COA revenues accounted for 42
% of our total revenues for the three months ended March 31, 2005. With respect
to COAs entered into in connection with our Ocean Business and River Business,
of the total revenues obtained from COAs during the first quarter of 2005, 86%
were in respect of repetitive voyages for our regular customers and 14% in
respect of single voyages for occasional customers.
In our Ocean Business, demand for our services is driven by the global
movements of liquid and dry bulk cargoes. Our primary liquid cargo is petroleum
and our key dry bulk cargoes include various agricultural products, coal and
iron ores.
In our River Business, demand for our services is driven by agricultural,
mining and forestry activities in the Hidrovia region. Products move from the
inland areas of the Hidrovia region out to the Atlantic Ocean via the Parana and
Paraguay Rivers. Conversely, our tanker barges carry petroleum products from the
Atlantic Ocean to inland regions of South America via the Parana and Paraguay
Rivers. Substantially all of the push boats and barges in our River Business are
employed on a COA basis whereby we enter into contracts with our customers to
carry set volumes of dry or liquid cargo, typically for periods of up to one
year.
As of March 31, 2005, UP Offshore had not formally entered into any
contracts to provide offshore transportation services.
Expenses
In our Ocean Business, our vessel operating expenses, or running costs, are
generally paid through Ravenscroft, a related party, which provides ship
management services for our oceangoing vessels. Operating expenses include the
cost of all ship management, crewing, spares and stores, insurance, lubricants,
repairs and maintenance. The most significant of these expenses are maintenance
and repairs, wages paid to marine personnel and marine insurance costs.
Our other primary operating expenses include general and administrative
expenses as well as ship management and administration fees paid to Ravenscroft
and Oceanmarine, another related party, which provides certain administrative
services. We pay Oceanmarine a monthly fee of $10,000 per oceangoing vessel for
administrative services including general administration and accounting
(financial reporting, preparation of tax returns), use of office premises, a
computer network, secretarial assistance and other general duties. We pay
Ravenscroft a monthly ship management fee of $12,500 per oceangoing vessel for
services including technical management, crewing, provisioning, superintendence
and related accounting functions. We do not expect to pay fees to any related
party other than those described here for management and administration
functions.
In our River Business, prior to our acquisition of the remaining 50% equity
interest in UABL, our subsidiaries that owned push boats and barges contracted
with Lonehort, Inc., a subsidiary of UABL, for ship management services and
generally paid our operating expenses through Lonehort. Our operating expenses
include the cost of all ship management, crewing, spares and stores, insurance,
lubricants, repairs and maintenance. Following the acquisition of the remaining
50% equity interest in UABL, all ship management services are performed, and all
operating expenses are paid, in-house. UABL employs the services of Tecnical
Services S.A. to provide crew recruitment services in Argentina and Paraguay. We
pay Tecnical Services S.A. $140,000 per year, plus an additional $50 for each
active crew member. We do not expect to pay fees to any related entity other
than those described here for management and administration functions.
In the Offshore Business, we expect operating expenses to include the cost
of all ship management, crewing, spares and stores, insurance, lubricants,
repairs and maintenance.
Through UABL, we own a drydock and a repair facility for our river fleet at
Pueblo Esther, Argentina and land for the construction of two terminals in
Argentina and 50% joint venture participations in two grain loading terminals in
Paraguay. UABL also rents offices in Asuncion, Paraguay and Buenos Aires,
Argentina. We do not own any other buildings and do not pay any other rental
expense other than as a portion of the administration fees paid to Oceanmarine.
Also through Ultracape Delaware LLC, we own land for expansion of a maritime oil
products terminal in Mexico.
Foreign Currency Transactions
Substantially all of our revenues are denominated in U.S. dollars. However,
for the three months ended March 31, 2005, 14% of our total revenues were
denominated in U.S. dollars but collected in Argentine Pesos and Paraguayan
Guaranies at the equivalent amount of U.S. dollars at the payment date, and 22%
of our total out of pocket operating expenses were paid in Argentine Pesos and
Paraguayan Guaranies. Our operating results, which are reported in U.S. dollars,
may be affected by fluctuations in the exchange rate between the U.S. dollar and
the local currencies. For accounting purposes, revenue and expense accounts are
translated into U.S. dollars at the exchange rate prevailing on the date of each
transaction.
Inflation
We do not believe that inflation has had a material impact on our
operations, although certain of our operating expenses (e.g., crewing, insurance
and drydocking costs) are subject to fluctuations as a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on our future operations in the case of our ocean vessels which are
mostly time chartered to third parties since it is the charterers who pay for
fuel. If the ocean vessels are employed under COA's, freight rates for voyage
charters are generally sensitive to the price of a ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level. In our river business,
we have some of our freight agreements adjusted by bunker prices automatically,
in other cases we have periodic renegotiations which adjust for fuel prices and
in other cases we adjust the fuel component of our cost into the freights on a
seasonal or yearly basis.
Legal proceedings
1) Bahia Blanca Customs Dispute
Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Customs Authority of Bahia Blanca in Argentina over the alleged unauthorized
operation of the Princess Pia in Argentina during 2001. As a result, the Customs
Authority of Bahia Blanca issued a resolution claiming the sum of Argentine
pesos 4,689,695 (approximately U.S. $1,610,000) as import taxes and the sum of
Argentine pesos 4,689,695 (approximately U.S. $1,610,000) as fines. In response
to said resolution, on March 16, 2004, Ultrapetrol S.A. submitted an appeal with
the Argentine Tax Court arguing that it did not breach any applicable customs
laws since the Princess Pia operated within Argentine territory only during the
periods in which it was expressly authorized by the competent authorities. Said
appeal is pending resolution by the Argentine Tax Court. Based upon the facts
and circumstances of the case, the existing regulations and our insurance
coverage, we do not believe that the outcome of this matter should have a
material impact on our financial position or results of operations.
2) Brazilian Customs Dispute
Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Brazilian Customs tax authorities over the alleged infringement of customs
regulations by the Alianza G3 and Alianza Campana (collectively, the "Vessel")
in Brazil during 2004. As a result, the Brazilian Customs tax authorities
commenced an administrative proceeding and applied the penalty of apprehension
of the Vessel which required the Vessel to remain in port or within a maximum of
five nautical miles from the Brazilian maritime coast. The maximum customs
penalty that could be imposed would be confiscation of the Vessel, which is
estimated by the Brazilian Customs tax authorities to be valued at U.S.
$4,560,000. On February 22, 2005, we were notified of the decision that grounds
on which the tax assessment was based were ratified. In response to this
decision, on February 28, 2005, we presented a specific request for
clarification of the decision. We simultaneously presented a petition to the
Secretary of the Brazilian Internal Revenue Service requesting the replacement
of the confiscation penalty applied to the Vessel by a penalty corresponding to
1% (one percent) of the value of the Vessel. Both of our requests made on
February 28, 2005 are still pending judgment.
On the same day that Ultrapetrol S.A. presented its defense to the above
mentioned administrative proceeding, a writ of injunction was filed on behalf of
Ultrapetrol S.A. seeking a judicial authorization allowing the return of the
Vessel to Boias de Xareu, which is located almost 20 nautical miles from the
Brazilian maritime coast, so the Vessel could resume its prior services. The
preliminary injunction was granted by the court in favor of Ultrapetrol S.A. on
September 17, 2004, conditioned on the weekly presentation of shipping letters
describing the location of the Vessel and the Vessel is now back in service at
Boias de Xareu. The tax authorities filed an interlocutory appeal against the
preliminary injunction that was granted in our favor. Currently, our lawsuit and
the interlocutory appeal by the tax authorities are pending judgment.
We note that in case we are not successful on the merits, under our
insurance coverage, we could request from The Standard Club, the Vessel's P&I
insurer, an indemnity corresponding to the value of the Vessel. Based upon the
facts and circumstances of the case, including the fact that the Vessel was
operating under a specific written authorization officially granted by the
Brazilian government, the existing regulations and our insurance coverage, we do
not believe that the outcome of this matter should have a material impact on our
financial position or results of operations.Various other legal proceedings
involving us may arise from time to time in the ordinary course of business.
However, we are not presently involved in any legal proceedings that, if
adversely determined, would have a material adverse effect on us .
Results of Operations
Three months ended March 31, 2005 compared to the three months ended March 31,
2004.
The following table sets forth certain historical income statement data for the
periods indicated derived from the Company's statements of operations expressed
in thousands of dollars.
Three Months ended Three Months ended
31.Mar.05 31.Mar.04
Revenues
Attributable to ocean fleet 17,442 16,099
Attributable to river fleet 12,533 2,710
Total Revenues 29,975 18,809
--------- --------
Voyage expenses
Attributable to ocean fleet (343) (482)
Attributable to river fleet (5,903)
--------- --------
Total (6,246) (482)
Running cost
Attributable to ocean fleet (3,814) (3,816)
Attributable to river fleet (3,854) (1,751)
--------- --------
Total (7,668) (5,567)
Amortization of dry-dock expense (1,771) (973)
Depreciation of property and equipment (3,524) (2,884)
Management fees and administrative expenses (1,992) (1,516)
Other operating income (expenses) - (200)
--------- --------
Operating profit 8,774 7,187
Financial expense (4,613) (3,767)
Financial gain (loss) on extinguishments of debts 188
Revenues. Total revenues from our ocean fleet, net of commissions,
increased from $16.1 million in the first quarter 2004 to $17.4 million in 2005,
or an increase of 8 %. This increase is primarily attributable to the effect of
the revenues of the new vessel New Flamenco and the higher time charter rates of
our Princess Nadia, Princess Katherine and Cape Pampas during the first three
months of 2005. These increases were partially offset by the decrease of
revenues due to the sale of our vessel Princess Eva.
Total revenues from our river fleet, net of commissions, increased by 363%
from $2.7 million in the first quarter of 2004 to $12.5 million in the same
period of 2005. This increase is primarily attributable to the consolidation of
UABL revenues since the second quarter of 2004, while in the first quarter of
2004 river revenues only included the net proceeds for those of our vessels
which were chartered by UABL.
Voyage expenses. In the first three months of 2005, voyage expenses of our
ocean fleet were $0.3 million, as compared to $0.5 million for the same period
of 2004, a decrease of $0.2 million, or 40%. The decrease is primarily
attributable to the effect of the sale of the Princess Eva.
In the first quarter of 2005, voyage expenses of our river fleet were $5.9
million, as compared to $0 million for the same period of 2004, an increase of
$5.9 million. The increase is attributable to the effect of the consolidation of
UABL, as our subsidiary since the second quarter of 2004.
Running costs. Running costs of our ocean fleet were $3.8 million in the
first quarter of 2005 and 2004 period . This non variance is mainly attributable
to the net effect of the sale of our vessel Princess Eva offset by the increase
of the running cost of the new vessel New Flamenco.
In the first three months of 2005, running expenses of our river fleet were
$3.9 million, as compared to $1.8 million for the same period of 2004, an
increase of $2.1 million. The increase is attributable to the effect of the
consolidation of UABL, as our subsidiary since the second quarter of 2004.
Amortization of drydock expense. Amortization of dry docking and special
survey costs increased by $0.8 million, or 80%, to $1.8 million in the first
quarter of 2005 as compared to $1.0 million in 2004. The increase is primarily
attributable to the large amortization expenses of the Alianza G3 and Princess
Katherine.
Depreciation of property and equipment. Depreciation increased by $0.6
million, or 21%, to $3.5 million in the first three months of 2005 as compared
to $2.9 million in the same period of 2004. This increase is primarily due to
the purchase of a new tugs and river barges and the new cruiser vessel New
Flamenco and the depreciation of the UABL fleet which was partially offset by
the sale of our vessel Princess Eva.
Management fees and administrative expenses. Management fees and
administrative expenses were $2.0 million in the first quarter of 2005 as
compared to $1.5 million in the same period in 2004. This increase of $0.5
million is attributable mainly to an increase in the overhead expenses produced
by the consolidation of UABL of $0.6 million which was partially offset by a
decrease in management fees of our ocean fleet in the amount of $0.1 million
resulting from a reduced number of vessels in operation.
Other operating income (expenses). This account disclosed an income of $0.0
million in the first three months of 2005 and a loss of $0.2 million in 2004.
The difference is mainly attributable to the effect of a decrease in the losses
from the sale of property, plant and equipment of $0.2.
Operating profit. Operating profit for the first three months of 2005 was
$8.8 million, an increase of $1.6 million from the same period in 2004. In
comparing these figures, the difference is mainly attributable to the higher
results obtained from our vessels Princess Nadia and Princess Katherine, the
sale of our Princess Marisol and Princess Laura as well as the consolidation of
the results of UABL following the acquisition of the remaining 50% equity
interest in that company.
Interest expense. Interest expense increased by about $0.8 million or 21%,
to $4.6 million in the first quarter of 2005 as compared to $3.8 million in the
equivalent 2004 period. This variation is primarily attributable to the higher
level of financial debt on our vessels and an increase of $0.6 million in
interest expenses attributable to the effect of the consolidation of UABL, as
our subsidiary.
Financial gain (loss) on extinguishments of debt. During the first three
months of 2004 we recognized a gain of $0.2 million for the repurchase of our
senior Notes due 2008.
Liquidity and Capital Resources
We operate in a capital-intensive industry requiring substantial ongoing
investments in revenue producing assets. Our subsidiaries have historically
funded their vessel acquisitions through a combination of bank indebtedness,
shareholder loans, cash flow from operations and equity contributions.
As of March 31, 2005, we had total indebtedness of $231.5 million,
consisting of: $180.0 million from our Senior Notes due 2014; $9.6 million in a
senior loan facility with DSB for Braddock Shipping Inc., a 60% owned
subsidiary, for the refinancing of the vessel Cape Pampas. Also as of March 31,
2005, UABL, as our subsidiary, had the following indebtedness: $20.0 million in
a senior loan facility with IFC, $10.0 million with KfW, $2.0 million with
Citibank NA, $0.7 million with Touax LPG SA and $2.9 million with Transamerica
Leasing Inc. There was also accrued interest expenses for these loans of $6.3
million.
At March 31, 2005, we had cash and cash equivalents on hand of $19.2
million. In addition, we had $3.0 million in restricted cash and $0.2 million in
short term investments. Also we have $19.6 million in non-current restricted
cash.
Operating Activities
In the first quarter of 2005, we generated $12.1 million in cash flow from
operations compared to $11.8 million for the same period in 2004. Net income for
the three months ended March 31, 2005 was $3.8 million which is $0.7 million
more than the net income in the same period of 2004.
Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred charges, and adjusted by changes in working capital and expenditures in
dry dock.
Investing Activities
During the first quarter ended March 31, 2005, we disbursed $6.0 million in
the purchase of push boats and river barges and $13.5 million in the purchase of
the vessel New Flamenco which we paid partially with funds available in
restricted cash.
Financing Activities
Net cash provided by financing activities was $16.8 million during the
three months of 2005 , compared to a net cash process of $1.1 million in
financing activities during the comparable period in 2004. The increase in cash
provided by financing activities in this period is mainly attributable to the
application $12.1 million of restricted cash to the purchase of the vessel New
Flamenco and $7.5 million disbursed from IFC and KfW of the remaining of the $30
million loan granted to UABL in 2002 , partially offset with the repayments of
principal on its financial debt made during 2005.
Recent Developments
On April 6, 2005 we purchased at auction for a price of $3.4 million the
cruise vessel, World Renaissance, which was delivered and fully paid for on
April 19, 2005. This vessel will have to pass her drydock and surveys before she
enters into service.
On the April 28, 2005 we agreed to purchase the product tanker, Mt Sun
Chemist, for a total price of $10.3 million.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2005 AND 2004
(Unaudited)
Contents Page
Financial Statements
- Condensed Consolidated Balance Sheets as of
March 31, 2005 and 2004 F-1
- Condensed Consolidated Statements of Income
for the three months periods ended March 31, 2005 and 2004 F-2
- Condensed Consolidated Statements of Changes
in Stockholders' Equity for the three
months periods ended March 31, 2005 and 2004 F-3
- Condensed Consolidated Statements of Cash Flows
for the three months periods ended March 31, 2005 and 2004 F-4
- Notes To Condensed Consolidated Financial
Statements as of March 31, 2005 and 2004 F-5
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Stated in thousands of U.S. dollars, except par value and share amounts)
March 31, December 31,
2005 2004
----------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,245 $ 11,602
Restricted cash 2,980 2,975
Investments 222 217
Accounts receivable, net of allowance for doubtful
accounts of 799 and 739 in 2005 and 2004, respectively 8,809 6,385
Receivables from related parties 4,244 3,933
Marine and river operating supplies 2,696 2,194
Prepaid expenses 5,597 4,101
Other receivables 5,437 5,724
----------------- -----------------
Total current assets 49,230 37,131
================= =================
NONCURRENT ASSETS
Dry dock 11,604 11,716
Other receivables 7,133 7,944
Receivables from related parties 2,983 2,540
Property and equipment, net 176,617 160,535
Restricted cash 19,632 30,010
Investment in affiliates 15,901 15,607
Other assets 7,899 8,165
----------------- -----------------
Total noncurrent assets 241,769 236,517
----------------- -----------------
Total assets $ 290,999 $ 273,648
================= =================
LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 13,920 $ 11,487
Payable to related parties 521 768
Other financial debt 16,200 10,108
Current portion of capital lease obligations 704 695
Other payables 624 632
----------------- -----------------
Total current liabilities 31,969 23,690
----------------- -----------------
NONCURRENT LIABILITIES
Long-term debt 180,000 180,000
Other financial debt, net of current portion 34,565 29,430
Capital lease obligations, less current portion - 180
Account payable and accrued expenses 219 219
----------------- -----------------
Total noncurrent liabilities 214,784 209,829
----------------- -----------------
Total liabilities $ 246,753 $ 233,519
----------------- -----------------
MINORITY INTEREST $ 6,814 $ 6,468
----------------- -----------------
MINORITY INTEREST SUBJECT TO PUT RIGHTS $ 4,732 $ 4,751
----------------- -----------------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: authorized
shares 2,134,452, issued and outstanding 2,109,240 21 21
Treasury stock (20,332) (20,332)
Additional paid-in capital 68,884 68,884
Accumulated deficit (16,073) (19,863)
Accumulated other comprehensive income 200 200
----------------- -----------------
Total shareholders' equity $ 32,700 $ 28,910
----------------- -----------------
Total liabilities, minority interests and shareholders' equity $ 290,999 $ 273,648
================= =================
See accompanying notes.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Stated in thousands of U.S. dollars)
Three month period ended
March 31,
--------------------------
2005 2004
------------ -------------
REVENUES
Revenues from third parties $ 29,358 $ 15,455
Revenues from related parties 617 3,354
------------ -------------
Total revenues 29,975 18,809
------------ -------------
OPERATING EXPENSES
Voyage expenses (6,246) (482)
Running costs (7,668) (5,567)
Amortization of dry dock (1,771) (973)
Depreciation of property and equipment (3,524) (2,884)
Management fees to related parties (426) (490)
Administrative expenses (1,566) (1,026)
Other operating income (expenses) - (200)
------------ -------------
(21,201) (11,622)
------------ -------------
Operating profit 8,774 7,187
------------ -------------
OTHER INCOME (EXPENSES)
Financial expense (4,613) (3,767)
Financial gain on extinguishment of debt - 188
Financial income 179 44
Investment in affiliates 5 (254)
Other income 4 59
------------ -------------
Total other expenses (4,425) (3,730)
------------ -------------
Income before income taxes and minority interest 4,349 3,457
Income taxes (172) (52)
Minority interest (387) (314)
------------ ------------
Net income for the period $ 3,790 $ 3,091
============ =============
See accompanying notes.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(Stated in thousands of U.S. dollars)
Additional Accumulated other Accumulated
Common paid-in Treasury comprehensive Accumulated
Balance stock capital stock income deficit Total
-------------------------------- ------------ ----------- ------------- ------------------ -------------- -------------
December 31, 2003 $ 21 $ 68,884 $ (20,332) $ 222 $ (25,002) $ 23,793
Comprehensive income:
- Change in value of derivatives - - - (42) - (42)
- Net income for the period - - - - 3,091 3,091
-------------
Total comprehensive income 3,049
---------- ----------- ------------- ------------------ -------------- -------------
March 31, 2004 21 68,884 (20,332) 180 (21,911) 26,842
========== =========== ============= ================== ============== =============
December 31, 2004 21 68,884 (20,332) 200 (19,863) 28,910
Net income and comprehensive income - - - - 3,790 3,790
---------- ----------- ------------- ------------------ -------------- -------------
March 31, 2005 $ 21 $ 68,884 $ (20,332) $ 200 $ (16,073) $ 32,700
========== =========== ============= ================== ============== =============
See accompanying notes.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in thousands of U.S. dollars)
Three month period
ended March 31,
2005 2004
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period $ 3,790 $ 3,091
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation of property and equipment 3,524 2,884
Amortization of dry dock 1,771 973
Expenditure for dry dock (1,659) (979)
Note issuance expenses amortization 166 152
Minority interest in equity of subsidiaries 387 314
Financial gain on extinguishment of debt - (188)
Loss from disposal of property and equipment - 200
Net gain (loss) from investment in affiliates (5) 254
Allowance for doubtful accounts 60 -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivables (2,484) 2,869
Receivable from related parties 939 (1,171)
Marine and river operating supplies (502) 18
Prepaid expenses (1,496) (664)
Other receivables 1,098 945
Other 100 -
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 2,433 118
Payable to related parties (247) (503)
Other 4,225 3,495
----------------------------------
Net cash provided by operating activities 12,100 11,808
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (19,606) (6,667)
Proceeds from disposals of property and equipment - 3,825
Increase in loan to related parties (1,693) -
Other (5) (4,386)
----------------------------------
Net cash used in investing activities (21,304) (7,228)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease (Increase) in restricted cash 10,373 (3,471)
Payments of long-term financial debt (966) (1,444)
Proceeds from long-term financial debt 7,500 -
Proceeds from issuance of redeemable preference shares of subsidiary - 3,000
Minority interest in equity of subsidiaries - 3,557
Funds used in reacquisition of Notes - (499)
Other (60) -
----------------------------------
Net cash provided by financing activities 16,847 1,143
----------------------------------
Net increase in cash and cash equivalents 7,643 5,723
Cash and cash equivalents at the beginning of year $ 11,602 8,248
----------------------------------
Cash and cash equivalents at the end of period $ 19,245 13,971
----------------------------------
See accompanying notes.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars, except otherwise indicated)
(Information to the three-month periods ended
March 31, 2005 and 2004 is unaudited)
1. CORPORATE ORGANIZATION AND CONSOLIDATED COMPANIES
Organization
Ultrapetrol (Bahamas) Limited ("Ultrapetrol Bahamas" or "the Company", "us"
or "we") is a company organized and registered as a Bahamas Corporation
since December 1997.
The Company is a diversified ocean and river transportation company
involved in the carriage of dry and liquid cargoes. In its Ocean Business,
it is an owner and operator of oceangoing vessels that transport petroleum
products and dry cargo around the world. In its River Business is operator
of river barges and push boats in the Hidrovia region of South America, a
region on navigable waters on the Parana, Paraguay and Uruguay Rivers and
part of the River Plate, which flow through Brazil, Bolivia, Uruguay,
Paraguay and Argentina. In addition we recently made an investment in an
offshore services transportation company, which will commence operations in
2005.
On June 28, 2001, the Company issued 138,443 new shares for $5,295 which
were totally subscribed by Inversiones Los Avellanos S.A., one of the
Company's original shareholders and was paid $3,297 in 2001 and $1,104 in
2002 and the balance will be payable in July 2005. As of March 31, 2005 the
outstanding payment was $894 and was shown as a reduction of shareholders'
equity. The Company has an option to repurchase 25,212 of its shares for a
total price of $894 from Inversiones Los Avellanos S.A. until July 31,
2005.
As of March 31, 2005, the shareholders of Ultrapetrol Bahamas are Solimar
Holdings Ltd., Inversiones Los Avellanos S.A. and Avemar Holdings (Bahamas)
Ltd., a wholly owned subsidiary of the Company, in the proportion of 46.7%,
28.2% and 25.1%, respectively. Since Avemar Holdings (Bahamas) Ltd. granted
an irrevocable proxy to Inversiones Los Avellanos S.A. in full for all of
its voting powers related to its interest in the Company, as of March 31,
2005, Inversiones Los Avellanos S.A. held 53.3% of the Company's voting
rights.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with U.S. generally accepted accounting
principles ("US GAAP") for interim financial information. The consolidated
balance sheet at December 31, 2004 has been derived from the audited
financial statement at that date. The unaudited condensed consolidated
financial statements and the consolidated balance sheet do not include all
of the information and footnotes required by US GAAP for complete financial
statements. All adjustments which, in the opinion of management, are
considered necessary for a fair presentation of the results of operations
for the periods shown are of a normal, recurring nature and have been
reflected in the unaudited condensed consolidated financial statements. The
results of operations for the periods presented are not necessarily
indicative of the results expected for the full fiscal year or for any
future period.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries, both majority and wholly owned. Significant
intercompany accounts and transactions have been eliminated in
consolidation. Investments in 50% or less owned affiliates, in which the
Company exercises significant influence, are accounted for by the equity
method.
The condensed statements of operations and cash flows for 2004 have been
reclassified to conform with the 2005 presentation of certain items.
3. PROPERTY AND EQUIPMENT, NET
The capitalized cost of the property and equipment, and the related
accumulated depreciation as of March 31, 2005, and December 31, 2004 is as
follows:
March 31, 2005 December 31, 2004
---------------- -------------------
Original book value
------------------------------------
Ocean-going vessels $ 134,825 $ 134,825
River barges and pushboats 112,689 105,426
Passengers vessel 13,500 -
Furniture and equipment 4,757 4,672
Land and operating base 4,758 4,758
Prepayment to supplies - 1,242
---------------- -------------------
Total original book value 270,529 250,923
Accumulated depreciation (93,912) (90,388)
---------------- -------------------
Net book value $ 176,617 $ 160,535
================ ===================
As of March 31, 2005, the net book value of the assets pledged as a
guarantee of the debt was approximately $167 million.
- Cape Pampas sale
In March 2005 Braddock Shipping Inc. a 60% owned subsidiary, entered into
an agreement to sell its vessel, Cape Pampas for a total price of
approximately $39,900. The vessel was delivered to the new owners on May 6,
2005, at which time a gain on sale of approximately $22 million was
recognized.
Braddock Shipping Inc. will use part of the proceeds from the sale
mentioned above to cancel its financial obligations.
- New Flamenco acquisition
In March 2005, the Company entered into a contract with Cruise Elysia Inc.
to purchase a Passengers Vessel, named New Flamenco for a total purchase
price of $13.5 million. The purchase price was funded by a combination of
funds deposited in the Escrow Account and available cash.
4. LONG-TERM DEBT AND OTHER FINANCIAL DEBT
Nominal value
---------------
Financial institution/ Accrued
Other Due-year Current Noncurrent interest Total Average rate
---------------------------------------------------------------------------------------------------
Ultrapetrol Bahamas Notes 2014 $ - $ 180,000 5,670 185,670 9.00 %
Braddock Deustche Schiffsbank through 2006 2,250 7,375 73 9,698 Libor + 1.625%
UABL Barges IFC through 2011 2,143 12,857 274 15,274 Libor + 3.75%
UABL Barges IFC through 2009 1,000 4,000 107 5,107 Libor + 3.50%
UABL Barges KfW through 2009 2,000 8,000 160 10,160 Libor + 3.50%
UABL Paraguay Citibank NA through 2010 247 1,235 - 1,482 Libor + 2.75%
UABL Limited Transamerica Leasing Inc through 2006 1,767 1,098 - 2,865 7.94%
UABL Paraguay Citibank N.K. through 2005 500 - 9 509 5.58%
----------------------------------------------
March 31, 2005 $ 9,907 $ 214,565 $ 6,293 $ 230,765
==============================================
December 31, 2004 $ 8,337 $ 209,430 $ 1,771 $ 219,538
==============================================
5. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings, claims and contingencies
arising in the ordinary course of business. When such amounts can be
estimated and the contingency is probable, management accrues the
corresponding liability. While the ultimate outcome of lawsuits or other
proceedings against the Company cannot be predicted with certainty,
management does not believe the costs of such actions will have a material
effect on the Company's consolidated financial position or results of
operations.
Bahia Blanca Customs Dispute
Ultrapetrol S.A., one of the Company's subsidiaries, is involved in a
customs dispute with the Customs Authority of Bahia Blanca in Argentina
over the alleged unauthorized operation of the Princess Pia in Argentina
during 2001. As a result, the Customs Authority of Bahia Blanca issued a
resolution claiming the equivalent to $1,610 as import taxes and the
equivalent to $1,610 as fines. In response to said resolution, on March 16,
2004, Ultrapetrol S.A. submitted an appeal with the Argentine Tax Court
arguing that it did not breach any applicable customs laws since the
Princess Pia operated within Argentine territory only during the periods in
which it was expressly authorized by the competent authorities. Said appeal
is pending resolution by the Argentine Tax Court. Based upon the facts and
circumstances of the case, the existing regulations and applicable
insurance coverage, the Company does not believe that the outcome of this
matter should have a material impact on its financial position or results
of operations.
Brazilian Customs Dispute
Ultrapetrol S.A. is involved in a customs dispute with the Brazilian
Customs tax authorities over the alleged infringement of customs
regulations by the Alianza G3 and Alianza Campana (collectively, the
"Vessel") in Brazil during 2004. As a result, the Brazilian Customs tax
authorities commenced an administrative proceeding and applied the penalty
of apprehension of the Vessel which required the Vessel to remain in port
or within a maximum of five nautical miles from the Brazilian maritime
coast. The maximum custom penalty that could be imposed would be
confiscation of the Vessel, which is estimated by the Brazilian Customs tax
authorities to be valued at $4,560. On the same day that Ultrapetrol S.A.
presented its defense to this administrative proceeding, a writ of
injunction was filed on behalf of Ultrapetrol S.A. seeking a judicial
authorization allowing the return of the Vessel to Boias de Xareu, which is
located almost 20 nautical miles from the Brazilian maritime coast, so the
Vessel could resume its prior services. The preliminary injunction was
granted by the court in favor of Ultrapetrol S.A. on September 17, 2004,
conditioned on the weekly presentation of shipping letters describing the
location of the Vessel.
On February 22, 2005, the Company was notified of the decision that grounds
on which the tax assessment was based were ratified. In response to this
decision, on February 28, 2005, the Company presented a specific request
for clarification of the decision. The Company simultaneously presented a
petition to the Secretary of the Brazilian Internal Revenue Service
requesting the replacement of the confiscation penalty applied to the
vessel by a penalty corresponding to 1% (one percent) of the value of the
vessel. Both of the Company request made on February 28, 2005 are still
pending judgment.
In case the Company is not successful on the merits, under applicable
insurance coverage, it could request from The Standard Club, the Vessel's
P&I insurer, an indemnity corresponding to the value of the Vessel. Based
upon the facts and circumstances of the case, including the fact that the
Vessel was operating under a specific written authorization officially
granted by the Brazilian government, the existing regulations and
applicable insurance coverage, the Company does not believe that the
outcome of this matter should have a material impact on its financial
position or results of operations.
6. INCOME TAXES
The Company operates through its subsidiaries, which are subject to several
tax jurisdictions, as follows:
a) Panama
The earnings from shipping operations were derived from sources
outside Panama and such earnings were not subject to Panamanian taxes.
b) Paraguay
Two of the Company's subsidiaries, Parfina S.A. and Oceanpar S.A. are
subject to Paraguayan corporate income taxes. In addition, since
acquisition of UABL, four subsidiaries of UABL Limited, UABL Paraguay,
Parabal S.A., Yataiti and Riverpar are subject to Paraguayan corporate
income taxes.
c) Argentina
Ultrapetrol S.A. is subject to Argentine corporate income taxes. Since
the UABL acquisition, in addition to this subsidiary, two
subsidiaries, UABL S.A. and Sernova are subject to Argentine corporate
income taxes.
In Argentina, the tax on minimum presumed income ("TOMPI"),
supplements income tax since it applies a minimum tax on the potential
income from certain income generating-assets at a 1% tax rate. The
Company's tax obligation in any given year will be the higher of these
two tax amounts. However, if in any given tax year tax on minimum
presumed income exceeds income tax, such excess may be computed as
payment on account of any excess of income tax over TOMPI that may
arise in any of the ten following years.
d) Chile
Corporacion de Navegacion Mundial S.A. is subject to Chilean corporate
income taxes.
e) The United States
Certain entities, defined as "Qualified Foreign Corporations", are
exempt from United States of America ("U.S.") corporate income tax on
U.S. source income from their international shipping operations
("shipping income"), pursuant to Section 883 of the US tax code. A
corporation will be considered a Qualified Foreign Corporation if (i)
its country of incorporation is a "Qualified Foreign Country" which,
as defined, is a foreign country that exempts US corporations from
income tax on its shipping income (the "Incorporation Test"), (ii) it
meets the "Ultimate Owner Test", and (iii) it files a US Federal
income tax return (Form 1120F) to claim the Section 883 exemption. A
corporation meets the Ultimate Owner Test if (a) more than 50% of the
value of its stocks is ultimately owned by "Qualified Shareholders"
which, as defined, includes individuals who are tax residents of one
or more Qualified Foreign Countries that exempt U.S. persons from tax
on shipping earnings, (b) the scope of the exemption provided by such
jurisdictions is broad enough to cover the type of shipping income
(e.g. freight income, time charter hire or bareboat charter hire)
earned by the foreign corporation and (c) the corporation obtains
ownership statements, signed under penalties of perjury, from its
beneficial owners and all intermediate owners, that enable the
corporation to evidence that more than 50% of the value of its stock
is ultimately owned by individuals who are tax residents of one or
more foreign countries that exempt U.S. persons from tax on shipping
earnings. For the three months period ended March 31, 2005 and 2004
Princely and Ultracape (Holdings) Ltd. satisfied the Incorporation
Test because they are incorporated in Panama and Bahamas,
respectively, which provide the required exemption to U.S.
corporations as confirmed by Revenue Ruling 2001-48. In addition, we
believe that each of Princely and Ultracape have obtained ownership
statements from their ultimate individual owners and all intermediate
owners to evidence that more than 50% of the value of their
outstanding shares are ultimately owned by Qualified Shareholders.
Consistent with the prior years, Princely and Ultracape will file IRS
Form 1120F for the year 2005 to claim the Section 883 exemption.
Based on the foregoing, the Company expects all of its income to be
exempt from U.S. income taxes for the year ended December 31, 2005.
Ultrapetrol Bahamas accounts for income taxes under the liability
method in accordance with SFAS No. 109 Accounting for Income Taxes.
Under this method, deferred tax assets and liabilities are established
for temporary differences between the financial reporting basis and
the tax basis of the Company's assets and liabilities at each period
end. Deferred tax assets are recognized for all temporary items and an
offsetting valuation allowance is recorded to the extent that it is
not more likely than not that the asset will be realized.
7. RELATED PARTY TRANSACTIONS
As of March 31, 2005 and December 31, 2004, the balances of receivable from
related parties were as follows:
March 31, 2005 December 31, 2004
----------------- ----------------
Current:
Receivable from related parties
- Ravenscroft Shipping Inc. $ 1,631 $ 2,533
- Up offshore and its subsidiaries 54 76
- Maritima Sipsa S.A. 446 754
- Oceanmarine 437 204
- Comintra 1,500 250
- Other 176 116
--------------- ----------------
$ 4,244 $ 3,933
=============== ================
Noncurrent:
Loans receivable from related parties
- OTS S.A. (1) $ 703 $ 260
- Puerto del Sur S.A. (2) 2,280 2,280
--------------- ----------------
$ 2,983 $ 2,540
=============== ================
(1) This loan accrues no interest and has no maturity date.
(2) This loan accrues interest at a nominal interest rate of 3% per year,
payable semiannually. The principal will be repaid in 8 equal
semiannual installments, beginning on June 30, 2006.
As of March 31, 2005 and December 31, 2004 the balance of payable to
related parties were as follows:
March 31, 2005 December 31, 2004
----------------- ----------------
Payable to related parties
- Ravencroft Shipping Inc $ 148 $ 587
- OTS S.A. 346 146
- Other 27 35
--------------- ----------------
$ 521 $ 768
=============== ================
For the three months period ended March 31, 2005 and 2004, the revenues
derived from related parties were as follows:
For the three-month period
ended March 31
2005 2004
- UABL and its subsidiaries $ - $ 2,737
- Maritima Sipsa S.A. 617 617
--------------- ----------------
Total $ 617 $ 3,354
=============== ================
Management fee and other services
The Company through certain of its subsidiaries has contracted with
Oceanmarine, a company under the same common control as Ultrapetrol, for
certain administrative services. This agreement stipulates a fee of $10 per
month and per vessel. Pursuant to the individual ship management agreement
between Ravenscroft Ship Management Ltd., a Bahamas Corporation
("Ravenscroft Bahamas") under the same common control as Ultrapetrol, and
the Company's relevant vessel-owning subsidiaries, Ravenscroft Bahamas has
agreed to provide certain ship management services for all of the Company's
vessels. Ravenscroft Bahamas has subcontracted the provision of these
services to Ravenscroft Shipping Inc., a Miami-based related party of the
Company. This agreement stipulates a fee of $12.5 per month and per vessel.
Under these contracts, these related parties are to provide all services
necessary for such companies to operate, including but not limited to
crewing, insurance, accounting and other required services. Additionally,
commissions and agency fees are paid to those related parties.
For the three months period ended March 31, 2005 and 2004, management fees
expensed to these related parties for such services amounted to:
2005 2004
------------------ ---------------
Oceanmarine $ 150 $ 258
Ravenscroft 276 232
----------------- ----------------
Total $ 426 $ 490
================== ===============
Additionally, during December 2004 the Company paid in advance to
Oceanmarine some administrative fees for the year 2005 for about $240. As
of March 31, 2004, such amount was recorded in Prepaid expenses.
For the three months period ended March 31, 2005 and 2004, Ravenscroft has
provided certain other services to the Company in the amount of $241 and
$280, respectively.
For the three months period ended March 31, 2004, ship management fees
expensed for Lonehort S.A., a shipping agent wholly owned by UABL, for
vessel administration services amounted to $1,736.
The expense recovery from UABL totaled $131 for the three months period
ended March 31, 2004 and the administrative services fees to UABL totaled
$87 during the three months period ended March 31, 2004.
Venecia stock sold
In October 2001, the Company sold Venecia, a wholly owned subsidiary, to a
related party, Windsor Financial Services Inc., at its book value with a
remaining other receivable balance of $834 as of March 31, 2005 and
December 31, 2004.
Sale and repurchase of vessel Princess Marina
In 2003 the Company entered into certain transactions to sell, and
repurchase in 2006, to and from Maritima Sipsa S.A., a 49% owned company,
the vessel Princess Marina.
The combined effect of the sale at $15,100, repurchase at $7,700 and a loan
granted to Maritima Sipsa S.A. for $7,400 resulted in no cash flow on
consolidated basis at the time of execution. The loan is repaid to the
Company on a quarterly basis over a three-year period ending in June 2006,
when the vessel will be delivered to the Company.
The transaction was recognized in the Company's statements of operations as
a lease, reflecting quarterly payments as charter revenues for $617 in the
three months period ended March 31, 2005 and 2004, while the vessel remains
presented in the accompanying balance sheets as an asset.
Administration agreement with UP Offshore
On June 25, 2003 the Company signed an administration agreement with UP
Offshore.
Under this agreement Ultrapetrol agrees to assist UP Offshore by providing
management services required by the latter, including providing the
services of the Chief Executive Officer and to provide ongoing management
and commercial advisory services up to 2013.
The parties agreed that Ultrapetrol professional fees under this agreement
shall be the 2% of UP Offshore annual EBITDA. None of such fees has been
recognized in three months period ended March 31, 2005 and 2004, because UP
Offshore has not commenced its commercial operations.
8. BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION
Since the UABL Equity Acquisition, the Company organizes its business and
started to evaluate performance by its new three operating segments, ocean,
river and offshore business. Prior to such acquisition the Company operated
with no segments. The accounting policies of the reportable segments are
the same as those for the condensed consolidated financial statement. The
Company does not have significant intersegment transactions. These segments
and their respective operations are as follows:
Ocean business: consists of international and inland transportation of
petroleum and dry-cargo products by oceangoing vessels owned by its
subsidiaries.
River business: consists of river transportation of refined petroleum and
dry-cargo products by barges owned by its subsidiaries.
Offshore business: consists of platform supply vessels to provide
transportation services to the offshore petroleum exploration and
production companies. Such vessels are currently under construction and
expected to operate in 2005.
Ultrapetrol's oceangoing vessels operate on a worldwide basis and are not
restricted to specific locations. Also, Ultrapetrol's river barges operate
a river transportation business on the Parana, Paraguay and Uruguay rivers
and part of River Plate in Argentina, Bolivia, Brazil, Paraguay and
Uruguay. Accordingly, it is not possible to allocate the assets of these
operations to specific countries. In addition, the Company does not manage
its operating profit on a geographic basis.
For the three-month period
ended March 31,
------------------------------------
2005 2004
------------------- ----------------
Revenues (1)
- South America $ 12,800 $ 2,693
- Europe 13,158 9,747
- Asia 3,859 3,643
- Central America 158 2,726
------------------- -----------------
------------------- -----------------
$ 29,975 $ 18,809
=================== =================
(1) Classified by country of domicile of charterers.
The following schedule presents segment information about the Company's
operations for the three-month period ended March 31, 2005:
Ocean River Offshore Other
business business business business Total
-------- -------- -------- -------- -----
Revenues $ 16,066 $ 12,533 $ - $ 1,376 (1) $ 29,975
Running and voyage expenses 3,169 9,757 - 988 13,914
Depreciation and amortization 3,637 1,549 - 109 5,295
Segment operating profit 8,105 494 - 175 8,774
Financial income 179 - - - 179
Financial expenses 4,025 574 - 14 4,613
Income tax provision 13 159 - - 172
Segment assets 175,822 85,086 13,330 16,761 290,999
Investments in affiliates 195 2,376 13,330 - 15,901
Additions to long-lived assets $ 63 $ 6,043 $ - $ 13,500 $ 19,606
(1) Revenues from segment below the quantitative thresholds are attributable to
cruise business.
9. SUPPLEMENTAL GUARANTOR INFORMATION
On November 24, 2004, the Company issued $180 million 9% First Preferred
Ship Mortagage Notes due 2014.
The 2014 Senior Notes are fully and unconditionally guaranteed on a joint
and several senior basis by the majority of the Company's subsidiaries
directly involved in our ocean business.
The Indenture provides that the 2014 Senior Notes and each of the
guarantees granted by Subsidiaries, other than the Mortgage, are governed
by, and construed in accordance with, the laws of the state of New York.
Each of the mortgaged vessels is registered under either the Panamanian
flag, or another jurisdiction with similar procedures. All of the
Subsidiary Guarantors are outside of the United States.
Supplemental condensed combining financial information for the Guarantor
Subsidiaries for the 2014 Senior Notes is presented below. This information
is prepared in accordance with the Company's accounting policies. This
supplemental financial disclosure should be read in conjunction with the
condensed consolidated financial statements.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF MARCH 31, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------------------------- ----------------- ----------------
Current assets
Receivables from related parties $ 113,930 $ 10,452 $ 4,049 $ (124,187) $ 4,244
Other current assets 4,262 11,740 28,984 - 44,986
----------------- ---------------------------------- ----------------- ----------------
Total current assets 118,192 22,192 33,033 (124,187) 49,230
----------------- ---------------------------------- ----------------- ----------------
Noncurrent assets
Property and equipment, net - 106,100 70,517 - 176,617
Investment in affiliates 75,799 - 15,901 (75,799 15,901
Other noncurrent assets 24,406 14,605 10,240 - 49,251
----------------- ---------------------------------- ----------------- ----------------
Total noncurrent assets 100,205 120,705 96,658 (75,799) 241,769
----------------- ---------------------------------- ----------------- ----------------
Total assets $ 218,397 $ 142,897 $ 129,691 $ (199,986) $ 290,999
================= ================================== ================= ================
Current liabilities
Payables to related parties $ - $ 109,307 $ 15,401 $ (124,187) $ 521
Other financial debt 5,670 - 11,234 - 16,904
Other current liabilities 27 5,893 8,624 - 14,544
----------------- ---------------------------------- ----------------- ----------------
Total current liabilities 5,697 115,200 35,259 (124,187) 31,969
----------------- ---------------------------------- ----------------- ----------------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Other financial debt, net of current portion - - 34,565 - 34,565
Other noncurrent liabilities - - 219 - 219
----------------- ---------------------------------- ----------------- ----------------
Total noncurrent liabilities 180,000 - 34,784 - 214,784
----------------- ---------------------------------- ----------------- ----------------
Total liabilities 185,697 115,200 70,043 (124,187) 246,753
Minority interests - - - 6,814 6,814
Minority interests subject to put right - - - 4,732 4,732
Shareholders' equity $ 32,700 $ 27,697 $ 59,648 $ (87,345) $ 32,700
----------------- ---------------------------------- ----------------- ----------------
Total liabilities, minority interests
and shareholders' equity $ 218,397 $ 142,897 $ 129,691 $ (199,986) $ 290,999
================= ================================== ================= ================
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF DECEMBER 31, 2004
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------- ----------------- ----------------- ----------------
Current assets
Receivables from related parties $ 101,870 $ 3,332 $ 2,862 $ (104,131) $ 3,933
Other current assets 627 11,440 21,131 - 33,198
----------------- ---------------- ----------------- ----------------- ----------------
Total current assets 102,497 14,772 23,993 (104,131) 37,131
----------------- ---------------- ----------------- ----------------- ----------------
Noncurrent assets
Property and equipment, net - 95,353 65,182 - 160,535
Investment in affiliates 71,646 - 15,607 (71,646) 15,607
Other noncurrent assets 36,588 15,305 8,482 - 60,375
----------------- ---------------- ----------------- ----------------- ----------------
Total noncurrent assets 108,234 110,658 89,271 (71,646) 236,517
----------------- ---------------- ----------------- ----------------- ----------------
Total assets $ 210,731 $ 125,430 $ 113,264 $ (175,777) $ 273,648
================= ================ ================= ================= ================
Current liabilities
Payables to related parties $ - $ 97,184 $ 7,715 $ (104,131) $ 768
Other financial debt 1,620 - 9,183 - 10,803
Other current liabilities 201 4,854 7,064 - 12,119
----------------- ---------------- ----------------- ----------------- ----------------
Total current liabilities 1,821 102,038 23,962 (104,131) 23,690
----------------- ---------------- ----------------- ----------------- ----------------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Other financial debt, net of current portion - - 29,610 - 29,610
Other noncurrent liabilities - - 219 - 219
----------------- ---------------- ----------------- ----------------- ----------------
Total noncurrent liabilities 180,000 - 29,829 - 209,829
----------------- ---------------- ----------------- ----------------- ----------------
Total liabilities 181,821 102,038 53,791 (104,131) 233,519
Minority interests - - - 6,468 6,468
Minority interests subject to put right - - - 4,751 4,751
Shareholders' equity $ 28,910 $ 23,392 $ 59,473 $ (82,865) $ 28,910
----------------- ---------------- ----------------- ----------------- ----------------
Total liabilities, minority interests
and shareholders' equity $ 210,731 $ 125,430 $ 113,264 $ (175,777) $ 273,648
================= ================ ================= ================= ================
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------- ----------------- ----------------- ----------------
Revenues $ - $ 17,024 $ 14,600 $ (1,649) $ 29,975
Operating expenses (289) (8,671) (13,890) 1,649 (21,201)
----------------- ---------------- ----------------- ----------------- ----------------
Operating profit (loss) (289) 8,353 710 - 8,774
Other income (expenses) 4,079 (4,035) (672) (3,797) (4,425)
----------------- ---------------- ----------------- ----------------- ----------------
Income before income tax and
minority interest 3,790 4,318 38 (3,797) 4,349
Income taxes - (13) (159) - (172)
Minority interest - - - (387) (387)
----------------- ---------------- ----------------- ----------------- ----------------
Net income (loss) $ 3,790 $ 4,305 $ (121) $ (4,184) $ 3,790
================= ================ ================= ================= ================
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2004 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------- ----------------- ----------------- ----------------
Revenues $ - $ 16,860 $ 1,949 $ - $ 18,809
Operating expenses (349) (10,187) (1,086) - (11,622)
----------------- ---------------- ----------------- ----------------- ----------------
Operating profit (loss) (349) 6,673 863 - 7,187
Other income (expenses) 3,440 (3,598) 293 (3,865) (3,730)
----------------- ---------------- ----------------- ----------------- ----------------
Income before income tax and
minority interest 3,091 3,075 1,156 (3,865) 3,457
Income taxes - (52) - - (52)
Minority interest - - - (314) (314)
----------------- ---------------- ----------------- ----------------- ----------------
Net income $ 3,091 $ 3,023 $ 1,156 $ (4,179) $ 3,091
================= ================ ================= ================= ================
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------- ----------------- ----------------- ----------------
Net income (loss) $ 3,790 $ 4,305 $ (121) $ (4,184) $ 3,790
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities (3,657) 2,998 4,785 4,184 8,310
----------------- ---------------- ----------------- ----------------- ----------------
Net cash provided by operating 133 7,303 4,664 - 12,100
activities
Net cash used in investing
activities (8,293) (14,840) (6,753) 8,582 (21,304)
Net cash provided by financing
activities 12,016 5,693 7,720 (8,582) 16,847
----------------- ---------------- ----------------- ----------------- ----------------
Net increase (decrease) in cash and
cash equivalents $ 3,856 $ (1,844) $ 5,631 - $ 7,643
================ ================= ================= ================= =================
SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOW
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------- ---------------- ----------------- ----------------- ----------------
Net income $ 3,091 $ 3,023 $ 1,156 $ (4,179) $ 3,091
Adjustments to reconcile net income
to net cash provided by
operating activities (3,865) 7,715 688 4,179 8,717
----------------- ---------------- ----------------- ----------------- ----------------
Net cash (used in) provided by (774) 10,738 1,844 - 11,808
operating activities
Net cash provided by (used in)
investing activities 11,089 3,824 (6,667) (15,474) (7,228)
Net cash provided by (used in)
financing activities (2,782) (16,274) 4,725 15,474 1,143
----------------- ---------------- ----------------- ----------------- ----------------
Net increase (decrease) in cash and
cash equivalents $ 7,533 $ (1,712) $ (98) $ - $ 5,723
================ ================= ================= ================= =================
10. SUBSEQUENT EVENTS
- World Renaissance acquisition
On April 6, 2005 the Company purchased at auction for a price of $3.4
million the cruise vessel World Renaissance which was delivered and fully
paid for on April 19, 2005.
- Mt sun Chemist acquisition
On April 28, 2005 the Company agreed to purchase the product tanker Mt Sun
Chemist for a total price of $10.3 million.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRAPETROL (BAHAMAS) LIMITED
(registrant)
Dated: May 15, 2005 By: /s/ Felipe Menendez
-------------------
Felipe Menendez
President
02351.0008 #571964