Commission File No. 333-8878
FORM 6-K/A
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 August, 2003
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 six months
ended June 30, 2003, 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 SIX
MONTHS ENDED JUNE 30, 2003 AND 2002
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 six months ended June
30, 2003 and 2002 included elsewhere in this report.
General
-------
The Company was formed on December 23, 1997 to hold all the capital stock
of Princely International Finance Corporation (a Panamanian Company) and
Ultrapetrol S.A. (an Argentine Company). The following discussion covers the
unaudited financial results of the consolidated entity for the six months period
ended June 30, 2003 with a comparison to the unaudited consolidated financial
results for the same six months period in 2002.
Currently the Company owns and operates fourteen oceangoing vessels
primarily in South America with additional operations between the Caribbean,
United States, Europe, Far East and West Africa. One of our vessels is owned by
Ultracape (Holdings) Ltd. ("Ultracape"), an affiliate company that was formed
through an association between us and the AIG-GE Capital Latin America
Infrastructure Fund L.P. ("LAIF") in 2002 of which we own 60%. The Company also
charters three push boats and 69 wet and dry barges to UABL (Bahamas) Limited
("UABL"), a company that we formed in a joint venture with ACBL Hidrovias, Ltd.
in October 2000 and of which we own 50%.
During the first half of 2003 the Company employed a significant part of
its fleet on time charter for different customers.
During the first six months of 2003, the international freight market
maintained rates above those experienced in 2002.
The Princess Susana and the Princess Marina were out of service undergoing
mayor repairs during 15 days and 61 days and the Princess Pia and Princess Eva
were out of service due to accidents for 42 days and 124 days, respectively, in
the first half of 2003.
In January 2003 the Company renewed the employment of its vessel Princess
Katherine for another 11 months on a time charter contract.
On March 13th the Princess Marina was delivered under a time charter for
three years to the National Petroleum Company of Chile. As a requirement of this
transaction the vessel was re-flagged and registered under the ownership of a
related company. The ownership of the vessel will revert to us upon expiration
of the charter. All the arrangements with DVB Nedship Bank (America) N.V.
regarding the vessel's financing, remain in place.
On March 11th, 2003 we entered into a Memorandum of Agreement, or MOA,
under the standard format NSF 1993 to sell the Princess Sofia for a total price
of $2.3 million. The vessel was delivered to its new owners on April 25th, 2003.
On April 18th, 2003, the Alianza G1 suffered an accident in her main engine
while the vessel was in transit from Argentina to Chile as a result of this
accident the crankshaft of the vessel was damaged requiring a significant repair
to restore the engine to its full operational power. The Company settled with
its hull and machinery insurers for a total compensation of $1.9 million in
addition to which the Company agreed to receive $0.2 million from its loss of
hire underwriters and entered into an agreement to sell the vessel for $2.5
million on August 11th,2003.
On May 22th, 2003 we entered into a Memorandum of Agreement, or MOA, to
sell the Princess Veronica for a total price of $2.0 million. The vessel was
delivered to its new owners on June 5th, 2003.
Our affiliate UABL (50% of which we hold through our unrestricted
subsidiary UP River Holdings Ltd.) entered into loan agreements on February 27,
2003 with the International Finance Corporation ("IFC"), and Kreditanstalt Fur
Wiederaufbau ("KFW") with a repayment schedule that starts in June 2005 and
continues until December 2011 in the case of the (A) of the IFC tranche of the
IFC Loan and until December 2009 in the case of the (B) tranche of the IFC Loan.
IFC and KFW have agreed to provide a total of $40 million to finance the capital
expenditures of UABL Limited over the next 3 years. The loans are provided under
two separate agreements to wholly owned subsidiaries of UABL: UABL Barges
(Panama) Inc. $30 million and UABL Paraguay S.A. $10 million. The agreements in
connection with this financing impose restrictions on the ability of UABL to pay
dividends or make other payments to its shareholders if UABL is in default of
its obligations under the loan and require that in conjunction with ACBLH the
Company retain control of UABL
On June 11th, 2003 the Company entered into a share purchase agreement with
International Finance Corporation "IFC "through which is has agreed to sell
357shares representing 7.14% of the total stock capital of its unrestricted
subsidiary Up River Holdings for a total price of $5.0 million
Revenue
-------
The majority of the Company's oceangoing vessels are employed on time
charters to affiliated and unaffiliated companies. The revenue from this
operation is derived from a daily rate that is paid to the Company for the use
of its vessel. Hire revenue accounted for 57% of the Company's total revenues
for the six months ended June 30, 2003.
Also, the Company's vessels are employed from time to time on a contract of
affreightment ("COA") basis either for single or repetitive voyages. For a COA,
the vessel owner or operator generally pays all voyage and vessel operating
expenses and has the right to substitute one vessel for another. The rate is
generally expressed in dollars per metric ton of cargo. Revenues earned under
COA's are referred to as "freight". COA revenue accounted for 43% of the
Company's total revenues for the six months ended June 30, 2003
From the total revenues obtained from COA's during the first half of 2003
36% were in respect of repetitive voyages for the Company's regular customers
and 64% in respect of single voyages for occasional customers.
Expenses
--------
When vessels are operated on a COA basis (as well as any time when they are
not operating under time or bareboat charter), all costs relating to a given
voyage, including port charges, canal dues and fuel costs, are paid by the
vessel owner and are recorded as voyage expenses.
The Company's operating expenses, or running expenses, are generally paid
through Ravenscroft Shipping Inc., a Miami based affiliate of the Company, which
provides ship management services for the Company's vessels ("Ravenscroft").
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. In the case of our river barges chartered to UABL Ltd.
the Company has contracted the shipmanagement responsibilities to Lonehort Inc,
an affiliate of UABL Ltd.
Vessels are depreciated to an estimated scrap value on a straight-line
basis over their estimated useful lives. The Company follows the deferral method
of accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.
The Company's other primary operating expenses include general and
administrative expenses as well as ship management and administration fees paid
to Ravenscroft and Oceanmarine S.A., another affiliate of the Company, which
provides certain administrative services. The Company pays Oceanmarine
("Oceanmarine") a monthly fee of $9,000 per 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. The Company pays Ravenscroft a
monthly ship management fee of $12,500 per vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. The Company does not expect to pay fees to any affiliated
entity other than those described here for management and administration
functions.
The Company does not own any buildings and does not pay any rental expense
other than as a portion of the administration fees paid to Oceanmarine.
Foreign Currency Transactions
-----------------------------
Substantially all of the Company's revenues are denominated in U.S.
dollars, but 4% of the Company total revenues is denominated in US dollars but
collected in Argentine pesos at the equivalent amount of US dollars at the
payment date and 12% of our total out of pocket operating expenses are paid in
Argentine pesos. However, the Company's 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 Argentinean peso. For accounting purposes, revenue and
expense accounts are translated into U.S. dollars at the exchange rate
prevailing on the date of each transaction. The Company does not hedge its
exposure to foreign currency fluctuations.
Inflation
---------
The Company does not believe that inflation has had a material impact on
the Company's operations, although certain of the Company's operating expenses
(e.g., crewing, insurance and dry docking 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 the Company's future operations since freight rates for voyage
charters are generally sensitive to the price of 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.
Legal proceedings
-----------------
On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
United States District Court for the District of New Jersey against the Princess
Susana and Noble Shipping Ltd. seeking damages arising out of the delay in
delivery of a cargo of Kirkuk crude oil to the Valero terminal in Paulsboro, New
Jersey. (Ursa Shipping v. the Princess Susana, et al. Civil Action No.
03-CV-747(FLW).) The Princess Susana (the "Vessel") was detained by the United
States Coast Guard prior to her arrival in Paulsboro when, during a routine
Coast Guard tank vessel examination, a small amount of cargo was found to have
leaked from one of the cargo tanks into one of the void spaces aboard the
Vessel. On or about February 25, 2003, Valero Marketing and Supply Co.
("Valero") commenced an action against Noble Shipping Ltd. (Valero Marketing and
Supply Co. v. Noble Shipping Ltd., Civil Action No. 03-CV-843 (FLW). The Valero
and Ursa complaints seek damages in excess of $9 million. Noble has taken the
position that the claims are overstated.
In connection with the above complaints, the Vessel was arrested. Security
was posted by the Vessel owners' protection and indemnity insurers in the amount
of $11.2 million and the Vessel was released from arrest (insurance coverage is
in place). Both the Ursa and the Valero complaints have been answered, defenses
have been raised, and a counterclaim has been raised in the Ursa action seeking,
inter alia, unpaid freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd. ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
Discovery is presently underway and the parties have exchanged documents.
It is too early in the course of the litigations to form an opinion as to their
ultimate outcome.
We believe this claim is covered by insurance. The insurer is actively
participating in its defense and has not asserted any objections or defenses to
the claim. We would expect any damages arising from this action (less our policy
deductible) to be covered by the proceeds of such insurance.
Results of Operations
---------------------
Six months ended June 30, 2003 compared to the six months ended June 30, 2002.
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.
Six month Six month
ended ended
2* June 30, 2* June 30,
Quarter'03 2003 Quarter'02 2002
Freight revenues
Attributable to wholly
owned vessel 9,932 16,111 4,480 10,080
Attributable to wholly
chartered-in vessel 0 42 748 836
----------------------------------------------
Total 9,932 16,153 5,228 10,916
Hire revenues
Attributable to wholly
owned vessel 10,633 21,292 12,168 24,835
Attributable to wholly
chartered-in vessel 0 0 0 0
----------------------------------------------
Total 10,633 21,292 12,168 24,835
Total Revenues 20,565 37,445 17,396 35,571
Voyage expenses
Attributable to wholly
owned vessel (4,136) (6,718) (849) (3,492)
Attributable to wholly
chartered-in vessel (16) (38) (721) (808)
----------------------------------------------
Total (4,152) (6,756) (1,570) (4,300)
Running cost (7,577) (14,959) (6,642) (13,376)
Amortization of dry-dock
expense (2,061) (4,135) (2,419) (4,351)
Depreciation of property
and equipment (3,974) (4,084) (8,020) (8,177)
Management fees and
administrative expenses (1,784) (3,378) (1,552) (3,336)
Special exchange difference (1,716) (2,704)
----------------------------------------------
Operating profit (losses) 1,017 197 (587) (493)
Financial expense (3,889) (7,979) (4,002) (8,256)
Revenues
--------
Total revenues from freight net of commissions increased from $10.9 million
in the first half 2002 to $16.1 million in 2003, or an increase of 48%. This
increase is primarily attributable to the Princess Susana and Princess Veronica
COA's employment instead of time charter operation of the Princess Marisol .
Hire revenues net of commissions, decreased by 14% from $24.8 to $21.3
million. This decrease is attributable to the Princess Susana and Princess
Veronica COA's employment instead of time charter employment partially
compensated by the time charter employment of the Princess Marisol and Cape
Pampas, a new vessel incorporated in July 2002.
The total of 76 days out of service experienced by our Princess Marina and
Princess Susana due to major repairs, Princess Eva and Princess Pia which were
out of service due to accidents for 170 days during the first six months of 2003
affected negatively our revenues in this period. Part of this off hire time is
compensated by our loss of hire insurance for which a total of $1.5 million has
been included as other income (outside our operational result)
Operating profit for the first half of 2003 was $ 0.2 million, an increase
of $0.7 million from the same period in 2002. Operating profit for the second
quarter of 2003 was 1.0 million an increase of $1.6 million from the same period
of 2002 In comparing the results of the first quarter 2003 with the same period
2002 in addition to the factors mentioned above it should also be considered
that during the first quarter of 2002 our Suezmax vessels were all under
comparatively higher time charters fixed in 2001. While during the first quarter
of 2003 a number of our Suezmax vessels remained employed under comparatively
low time charter fixed in 2002 these contracts came to an end in the first
quarter allowing this fleet to fix alternative employment at higher levels in
the second quarter.
Voyage expenses
---------------
The first six months of 2003 voyage expenses were $6.7 million, as compared
to $4.3 million for the first half of 2002, an increase of $2.4 million, or 56%.
The increase is primarily attributable to the Princess Susana and Princess
Veronica COA's employment instead of time charter employment.
Running costs
-------------
Running costs increased by about 7%, to $15.0 million in the first half of
2003 as compared to $13.4 million in the equivalent 2002 period. This increase
is mainly attributable to the new vessel incorporated in July 2002 the Cape
Pampas and additional expenses incurred in our Panamax fleet.
Amortization of dry-dock expense
--------------------------------
Amortization of dry docking and special survey costs decreased by $0.3
million, or 7%, to $4.1 million in the first half of 2003 as compared to $4.4
million in 2002. The decrease is primarily attributable to the portion of
dry-docks accrued in the vessel Princess Fatima sold in September 2002.
Depreciation of property and equipment
--------------------------------------
Depreciation and amortization decreased by $0.2 million, or 2%, to $8.0
million in the first six months of 2003 as compared to $8.2 million in 2002.
This decrease is primarily due to the sale of the Princess Fatima partially
compensated by an increase attributable to the purchase of the Cape Pampas.
Management fees and administrative expenses
-------------------------------------------
Management fees and administrative expenses were $3.3 million in the first
six months of 2002 as compared to $3.4 million in 2003 this increase $0.1
million is attributable mainly to an increase in administrative expenses.
Interest expense
----------------
Interest expense decreased by $0.3 million, or 4%, to $8.0 million in the
first half of 2003 as compared to $8.3 million in 2002. The decrease is
primarily attributable to the lower level of financial debt and consequential
interest costs associated
Liquidity and Capital Resources
-------------------------------
The Company is a holding company with no material assets other than those
of its subsidiaries. Consequently, it must fund its capital requirements through
other sources, including cash dividends from subsidiaries, borrowings and
shareholder contributions. The Company operates in a capital-intensive industry
requiring substantial ongoing investments in revenue producing assets. The
Company's subsidiaries have historically funded their vessel acquisitions
through a combination loan notes of bank indebtedness, shareholder loans, cash
flow from operations and equity contributions. As of June 30, 2003, the Company
had total indebtedness of $165.7 million, $135 million from the proceeds of the
Note Issue, $2.0 million drawn under a revolving credit facilities from M&T
Bank, the trustee of the Company's Notes, for Majestic Maritime Ltd., a wholly
owned subsidiary, $5.5 million in a senior loan facility with Nedship Bank
(America) N.V. for Kattegat Shipping Inc., a wholly owned subsidiary, for the
purchase of the vessel Princess Marina, $8.1 million in a senior loan facility
with M&T Bank for Majestic Maritime Ltd, a wholly owned subsidiary, for the
purchase of the vessel Princess Katherine, $10.5 million in a senior loan
facility with Credit Agricole Indosuez for Braddock Shipping Inc, a 60% owned
subsidiary, for the purchase of the vessel Cape Pampas. The Company has a
revolving credit facilities of $0.8 million from the M&T Bank for Stanmore
Shipping Inc., a wholly owned subsidiary and accrued interest expenses for these
loans of $ 3.8 million.
At June 30, 2003, the Company had cash and cash equivalents on hand of $5.9
million.
The Company believes, based upon current levels of operation, cash flow
from operations, together with other sources of funds, that it will have
adequate liquidity to make required payments of principal and interest on the
Company's debt, including obligations under the Notes, complete anticipated
capital expenditures and fund working capital requirements.
Operating Activities
--------------------
In the first six months of 2003, the Company generated a positive $5.7
million in cash flow from operations compared to $9.5 million for in the same
period in 2002. Net losses for the first half of 2003 were $ 3.5 million which
is $2.7 million less than net losses in the first six months of 2002.
Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred, and adjusted by changes in working capital.
Investing Activities
--------------------
During the first six months of 2003 the Company disbursed $3.2 million in
dry dock and major repair expenses compared to $5.5 million in the same period
of 2002. Also during the first half of 2003 the Company received from the
process of vessels sale a net of $4.0 million.
Financing Activities
--------------------
Net cash provided by financing activities decreased by $5.1 million. The
decrease in cash provided by financing activities in first half 2003 is mainly
attributable to capital payments made during the first six month for $3.5
million
Recent Developments
-------------------
On April 18, 2003, the Company's vessel Alianza G-1 suffered a casualty to
its main engine while in transit from Argentina to San Antonio, Chile with a
cargo of grain. We effected temporary repairs on the vessel to enable it to
continue its voyage. After the discharge of the vessel's cargo the vessel was
inspected to ascertain the full extent of the damage and what costs would need
to be incurred to restore it to full working order. The engine's manufacturers
advised that a new crankshaft was needed and that the delivery time for a
crankshaft of the vessel's specifications was eight months. After consultations
with the engine's manufacturer we determined that the cost of the repair and
fabrication of a new crankshaft would be approximately $3.2 million, an amount
nearly equal to the vessel's current market value as determined by appraisers
retained by us.
In connection with this casualty we have agreed a claim with our insurers
for the temporary repairs. We have also reached agreement with our insurers for
the value of the unrepaired damage amounting to $1.9 million. In addition, we
have agreed to sell the vessel for a total of $ 2.5 million. The total of
insurance plus net sale proceeds equals or exceeds the fair market value of the
vessel in repaired condition.
The option to repurchase 25,212 shares by the Company for a total price of
$0.9 million which expired in July 2003 was extended till July 31st 2004.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
Contents Page
---------------------------------------------------------------- ------------
o Financial Statements
- Condensed Consolidated Balance Sheets as of June 30,
2003 and 2002 - F-1 -
- Condensed Consolidated Statements of Income for the
three months periods ended June 30, 2003 and 2002 - F-2 -
- Condensed Consolidated Statements of Changes in
Stockholders' Equity for the three months periods ended
June 30, 2003 and 2002 - F-3 -
- Condensed Consolidated Statements of Cash Flows for the
three months periods ended June 30, 2003 and 2002 - F-4 -
- Notes To Condensed Consolidated Financial Statements as
of June 30, 2003 and 2002 - F-5 -
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
---------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 5,905 10,463
Restricted cash 6,384 -
Investments 322 149
Accounts receivable, net 9,919 6,011
Due from affiliates 8,851 12,669
Inventories 2,050 1,393
Prepaid expenses 4,195 2,455
Other receivables 3,973 8,333
---------- ----------
Total current assets 41,599 41,473
---------- ----------
NONCURRENT ASSETS
Dry Dock 7,909 14,092
Other receivables 7,408 2,694
Property and equipment, net 123,806 128,776
Investment in affiliates 25,621 23,222
Other assets 5,032 3,366
---------- ----------
Total noncurrent assets 169,776 172,150
---------- ----------
Total assets 211,375 213,623
========== ==========
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 6,833 3,377
Due to affiliates 542 427
Other financial payables (note 4) 11,269 15,471
Other payables 308 252
---------- ----------
Total current liabilities 18,952 19,527
---------- ----------
NONCURRENT LIABILITIES
Long-term debt (note 4) 135,000 135,000
Other financial payable, net of current
portion (note 4) 19,398 13,600
---------- ----------
Total noncurrent liabilities 154,398 148,600
---------- ----------
Total liabilities 173,350 168,127
---------- ----------
MINORITY INTERESTS 6,479 3,300
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 2,134,451
shares authorized and issued (note 5) 21 20
Paid-in capital 68,884 68,346
Treasury stock (note 5) (20,332) (20,332)
Retained earnings (17,027) (5,838)
---------- ----------
Total stockholders' equity 31,546 42,196
---------- ----------
Total liabilities, minority interest and
stockholders' equity 211,375 213,623
========== ==========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollar)
2003 2002
---------- --------
REVENUES
Freight revenues 16,099 10,020
Freight revenues from related parties 54 896
Hire revenues 16,362 19,936
Hire revenues from related parties 4,930 4,899
----------- --------
Total revenues 37,445 35,751
----------- --------
OPERATING EXPENSES
Voyage expenses (6,756) (4,300)
Running costs (14,959) (13,376)
Dry dock expense (4,135) (4,351)
Depreciation of property and equipment (8,020) (8,177)
Management fees to related parties (1,529) (1,620)
Administrative expenses (1,849) (1,716)
Special exchange differences - (2,704)
----------- --------
Total operating expenses (37,248) (36,244)
----------- --------
Operating profit (loss) 197 (493)
========== ========
OTHER INCOME (EXPENSES)
Financial expense (7,979) (8,256)
Financial income 135 193
Investment in subsidiaries 3,149 711
Other income 1,385 1,766
----------- --------
Total other expenses (3,310) (5,586)
----------- ---------
(Loss) income before tax on minimum presumed
income and minority interest (3,113) (6,079)
Minority interest (339) -
Tax on minimum presumed income (91) (128)
----------- --------
Net (loss) for the period (3,543) (6,207)
=========== ========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
Common Paid-in Treasury Retained Total Total
Balances stock capital stock earnings 2003 2002
-------- ----- ------- ------- -------- ---- ----
At beginning of year 21 68,884 (20,332) (13,484) 35,089 47,838
- Increase capital 565
- Net (loss) for the
period (3,543) (3,543) (6,207)
------ ------- -------- -------- ------- -------
At end of period 2003 21 68,884 (20,332) (17,027) 31,546
====== ======= ======== ======== =======
At end of period 2002 20 68,346 (20,332) (5,838) 42,196
====== ====== ======== ======== ======= =======
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) for the period (3,543) (6,207)
Adjustments to reconcile net (loss) to cash
provided by operating activities:
Depreciation of property and equipment 8,019 8,177
Amortization of dry dock expenses 4,135 4,351
Note issuance expenses amortization 292 293
Accrued interest 125 286
Net income from investment in affiliate (3,149) (711)
Income from property and equipment sale (905) -
Changes in assets and liabilities, net:
(Increase) decrease in assets:
Accounts receivable (2,275) 4,953
Due from affiliates 4,395 5,621
Receivable from shareholders - -
Inventories (457) 120
Prepaid expenses (896) 1,339
Other receivables (910) (463)
Other assets (807) 9
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 1,803 (474)
Due to affiliates 275 (7,839)
Other payables (425) 76
---------- ----------
Net cash provided by operating activities 5,677 9,531
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment purchase (125) (1,664)
Investment in affiliate (4) -
(Decrease) Increase in time deposit (52) 43
Dry dock expenses (3,187) (5,524)
Sales of property and equipment 4,002 -
---------- ----------
Net cash used in investing activities 634 (7,145)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of financial payables (3,452) (1,660)
Minority interest in equity of subsidiary 3,047 3,300
Increase in paid in capital - 565
Repayment of other finance - -
Decrease restricted cash-time deposit (4,722) -
---------- ----------
Net cash used in financing activities (5,127) 2,205
---------- ----------
Net increase (decrease) in cash and
cash equivalents 1,182 4,591
Cash and cash equivalents at the beginning of year 4,723 5,872
---------- ----------
Cash and cash equivalents at the end of period 5,905 10,463
========== ==========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the six months periods
ended June 30, 2003 and 2002, were prepared by the Company without audit.
In the opinion of management, all normal recurring nature adjustments
necessary to present fairly the financial position, results of operations,
and cash flows for the interim periods were made.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, were condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the consolidated financial statements for the years ended December 31,
2002, 2001 and 2000.
2. SHARE SALE AGREEMENTS SIGNED BY THE COMPANY
On June 28, 2001, the Company issued 138,443 new shares for 5,295 which
were totally subscribed by Los Avellanos, one of the Company's original
shareholders and was paid 3,297 in 2001 and 1,104 in 2002 and the balance
are payable in July 2003.
3. LONG-TERM DEBT AND OTHER FINANCIAL PAYABLES
On March 30, 1998, the Company successfully completed its offering of
135,000 principal amount of its 10.5% First Preferred Ship Mortgage Notes
due 2008 ("the Notes"). In accordance with the terms provided in such
Offering, the Notes to be issued are fully and unconditionally guaranteed
on a joint and several basis by certain subsidiaries of the Company, and
are secured by first ship mortgage on vessels already owned by the
guarantors and on additional vessels that the Company purchased with the
proceeds obtained from the Offering.
As of June 30, 2002, the Company's noncurrent portion of long-term debt
amounts to 135,000. It exclusively comprises the debt principal amount of
the Notes. The related interest expense, totaling 3,544 is accrued in other
financial payables.
Nominal value
----------------------
Financial
institution / Agreement Accrued
other year Current Noncurrent expenses Total Average rate
----- ---- ------- ---------- -------- ----- ------------
Total 2002 11,610 148,600 3,861 164,071
====== ======= ======== ========
Ultrapetrol Bahamas Private Investors 1998 - 135,000 3,544 138,544 10.5%
(Notes)
Ultrapetrol Bahamas S.I.I. 2000 - - - - 10.5%
Majestic Allfirst Bank 2001 1,200 6,900 - 8,100 Libor + 1.5%
Kattegat Nedship Bank 2000 1,000 4,500 5 5,505 Libor + 1.25%
Majestic Allfirst Bank 2000 2,000 - - 2,000 Libor + 1.75%
Stanmore Allfirst Bank 2000 750 - - 750 Libor + 2%
Braddock Credit Agricole 2002 2,482 7,998 74 10,554 Libor + 1,5%
Indosuez
UPOffshore Apoio IFC 2002 - - 144 144 Libor + 4,5%
UPOffshore (Panama) IFC 2002 - - 70 70 Libor + 2,5%
====== ======= ======== ========
Total 2003 7,432 154,398 3,837 165,667
====== ======= ======== ========
4. PROPERTY AND EQUIPMENT
On July, 2002, the Company purchased the Cape Pampas, a second hand capsize
bulk carrier through its wholly owned subsidiary, Braddock. The amount of
the acquisition was financed by a mortgage loan agreement with Credit
Agricole Indosuez.
On August 26, 2002, the Company entered into a Memorandum of Agreement
(MOA) through which it committed to sell its vessel Princess Fatima, to an
unrelated company for 1,867, net of associated expenses. On September 19,
2002 the Company delivered the Princess Fatima pursuant to the MOA and
received the purchase price.
The proceeds from the sale of the Princess Fatima Vessel were deposited in
a restricted cash account and can only be used to buy another vessel to
guarantee the Notes. Subsequently, the Princess Sofia was bought with part
of these proceeds and the remainder of the proceeds are included in
restricted cash as of March 31, 2003.
On March 11th, 2003 we entered into a Memorandum of Agreement, or MOA,
under the standard format NSF 1993 to sell the Princess Sofia for a total
price of $2.3 million. The vessel was delivered to its new owners on April
25th, 2003.
On May 22th, 2003 we entered into a Memorandum of Agreement, or MOA, to
sell the Princess Veronica for a total price of $2.0 million. The vessel
was delivered to its new owners on June 5th, 2003.
The proceeds from the sale of the Princess Veronica and the Princess Sofia
Vessel were deposited in a restricted cash account and can only be used to
buy another vessel to guarantee the Notes.
5. COMMON AND TREASURY STOCK
Ultrapetrol Bahamas has an authorized capital of 21, and one class of
shares of one series comprising 2,134,451 (2,065,760 paid-in and 68,691 not
yet paid-in) as of June 30, 2002 and 2001 respectively, common shares with
a par value of 0.01 each.
In addition, as of June 30, 2003 the Company registered $20,332, in the
Treasury Stock account, $20,000 of which corresponding to the amount
payable to SII mentioned in note 2, and $332 to direct cost of acquisition.
6. CLAIMS AGAINST THE COMPANY
On February, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the United
States District Court for the District of New Jersey against M/T Princess
Susana and Noble Shipping Ltd. (a wholly owned subsidiary of the Company)
seeking damages arising out of the delay in delivery of a cargo of Kirkuk
crude oil to the Valero terminal in Paulsboro, New Jersey. Also in February
2003, Valero Marketing and Supply Co. ("Valero") commenced an action
against Noble Shipping Ltd. The Valero and Ursa complaints seek damages in
excess of 9 million. Noble has taken the position that the claims are
overstated.
In connection with the above complaints, the vessel was arrested. Security
was posted by the vessel owners' protection and indemnity insurers in the
amount of 11.2 million and the vessel was released from arrest (insurance
coverage is in place). Both the Ursa and the Valero complaints have been
answered, defenses have been raised, and a counterclaim has been raised in
the Ursa action seeking, inter alia, unpaid freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd, ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
Discovery is presently underway and the parties have exchanged documents.
It is too early in the course of the litigations to form an opinion as to
their ultimate outcome.
The Company's management and its legal counsel believe this claim is
covered by insurance. The insurer is actively participating in its defense
and has not asserted any objections or defenses to the claim. We would
expect any damages arising from this action (less our policy deductible) to
be covered by the proceeds of such insurance.
7. CLAIMS AGAINST INSURANCE COMPANIES
As of June 30, 2003 and 2002, the "Other receivables" account includes
9,139 and 8,953, respectively, related to claims against insurance
companies.
Claims for 4,276 have been made by the Company against the insurance
companies regarding the repair expenses incurred to date for damage to some
vessels in 2003. The "Other net income" account for the period of six
months ended June 30, 2003, includes 1,563 related to claims for loss of
income (business interruption) corresponding to the Princess Pia, Princess
Eva and Alianza G1.
On April 18, 2003, the Alianza G1 suffered an accident in her main engine
while the vessel was in transit from Argentina to Chile. The vessel arrived
in Talcahuano (Chile) and following the engine manufacturer recommendations
proceeded to repair the engine. The vessel's crankshaft had been damaged
and cracked but Sulzer considered that if cracks were only superficial the
crankshaft could be repaired by grinding and polishing. Unfortunately, by
May 30th the maximum allowance grinding of 7 mm. had been completed and the
crack continued Further tests were carried out and it was determined that
in one location the crack had a further depth of 12 mm. The engine
manufacturers condemned the crankshaft and recommended that the vessel
should replace the crankshaft by a new one in order to operate normally.
The "Other net income" account for the period of six months ended June 30,
2002, includes 371, 1,100, 250 and 35 related to claims for loss of income
(business interruption) corresponding to the Alianza G3, Princess Marisol,
Princess Nadia and Princess Marina, respectively.
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Six months period
ended, June 30
----------- ------------
2003 2002
----------- ------------
- Interest 7,683 7,715
- Income taxes 67 68
9. SUPPLEMENTAL GUARANTOR INFORMATION
The First Preferred Ship Mortgage Notes issued on March 30, 1998 described
in note 3., are fully and unconditionally guaranteed by certain
subsidiaries of the Company.
The subsidiaries which offered its assets in collateral of the above -
mentioned indebtedness are: Ultrapetrol Argentina, Imperial, Cavalier,
Regal, Baldwin, Tipton, Kingsway, Oceanview, Kingly, Sovereign, Monarch,
Noble, Oceanpar and Parfina ("Subsidiary Guarantors").
Supplemental combining financial information for the Guarantors
Subsidiaries 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 these condensed consolidated
financial statements.
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
BALANCE SHEETS
AS OF JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
---- ----
ASSETS
Current assets 27,215 23,690
Noncurrent assets 92,209 111,291
-------- --------
Total assets 119,424 134,981
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 113,897 117,039
Stockholders' equity 5,527 17,942
-------- --------
Total liabilities and stockholders'
equity 119,424 134,981
======== ========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF INCOME (LOSS)
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
-------- -------
Freight revenues 16,099 10,435
Hire revenues 13,312 16,582
-------- --------
Total revenues 29,411 27,017
Operating expenses (30,012) (30,254)
-------- --------
Operating (loss) profit (601) (3,237)
Other expenses (5,518) (5,361)
-------- --------
(Loss) income before tax on minimum
presumed income and (6,119) (8,598)
minority interest
Minority interests -
Tax on minimum presumed income (82) (128)
Net (loss) income for the period (6,201) (8,726)
======== ========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
-------- --------
Net (loss) income for the period (6,201) (8,726)
Adjustments to reconcile net (loss)
income to cash provided by (used in)
operating activities: 4084 15,728
-------- --------
Net cash (used in) provided by
operating activities (2,117) 7,002
Net cash provided by (used in)
investing activities 3,007 (6,475)
Net cash (used in) provided by
financing activities (52) 35
-------- --------
Net increase in cash and cash
equivalents 838 562
Cash and cash equivalents at the
beginning of the year 931 247
-------- --------
Cash and cash equivalents at the
end of the period 1,769 809
======== ========
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: August 15, 2003 By: /s/ Felipe Menedez
-------------------
Felipe Menendez
President
02351.0001 423525