UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE
13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2009.
SAFE
BULKERS, INC.
(Translation of registrant’s name into English)
30-32 Avenue Karamanli, P.O. Box 70837, 16605
Voula, Athens, Greece
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the information contained in the Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
EXHIBIT INDEX
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99.1 |
Articles of Amendment of First Amended and Restated Articles of Incorporation of Safe Bulkers, Inc. |
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99.2 |
Safe Bulkers, Inc. – six month period ended June 30, 2009 Unaudited Consolidated Condensed Financial Report. |
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.
Date: October 8, 2009
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SAFE BULKERS, INC. |
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By: |
/s/ Konstantinos Adamopoulos |
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Name: |
Konstantinos Adamopoulos |
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Title: |
Chief Financial Officer |
Exhibit 99.1
ARTICLES
OF AMENDMENT OF
FIRST AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
SAFE BULKERS, INC.
UNDER SECTION 90 OF THE BUSINESS CORPORATIONS ACT
The undersigned, Dr. Loukas Barmparis, President of SAFE BULKERS, INC., a corporation incorporated under the laws of the Republic of the Marshall Islands, for the purpose of amending the First Amended and Restated Articles of Incorporation of said Corporation hereby certifies:
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1. |
The name of the Corporation is: SAFE BULKERS, INC. |
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2. |
The Articles of Incorporation were filed with the Registrar of Corporations on December 11, 2007. Articles of Amendments of Articles of Incorporation were filed with the Registrar of Corporations on December 19, 2007. First Amended and Restated Articles of Incorporation were filed with the Registrar of Corporations on May 9, 2008. |
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3. |
Article III, Section 3.01 of the First Amended and Restated Articles of Incorporation is hereby amended to read as follows: |
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Section 3.01. Purpose . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA and without in any way limiting the generality of the foregoing, the Corporation shall have the power: |
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(a) to purchase or otherwise acquire, own, use, operate, pledge, hypothecate, mortgage, lease, charter, sub-charter, sell, build, and repair steamships, motorships, tankers, sailing vessels, tugs, lighters, barges, and all other vessels and craft of any and all motive power whatsoever, including, landcraft and any and all other means of conveyance and transportation by land or water, together with engines, boilers, machinery equipment and appurtenances of all kinds, including masts, sails, boats, anchors, cables, tackle, furniture and all other necessities thereunto appertaining and belonging, together with all materials, articles, tools, equipment and appliances necessary, suitable or convenient for the construction, equipment, use and operation thereof; and to equip, furnish, and outfit such vessels and ships; |
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(b) to carry on its business, to have one or more offices, and or exercise its powers in foreign countries, subject to the laws of the particular country; |
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(c) to borrow or raise money and contract debts, when necessary, for the transaction of its business or for the exercise of its corporate rights, privileges or franchise or for any other lawful purpose of its incorporation; to draw, make, accept, endorse, execute and issue promissory notes, bills of exchange, bonds, |
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debentures, and other instruments and evidences of indebtedness either secured by mortgage, pledge, deed of trust, or otherwise, or unsecured; |
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(d) to purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and personal property of every class and description; and |
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(e) to act as agent and/or representative of ship-owning companies. |
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4. |
The amendment to the First Amended and Restated Articles of Incorporation was authorized by vote of the holders of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders. |
IN WITNESS WHEREOF, the undersigned, the President of SAFE BULKERS, INC., has executed these Articles of Amendment on this 8th day of July, 2009 and hereby affirms and acknowledges, under the penalty of perjury that these Articles of Amendment of First Amended and Restated Articles of Incorporation are the act and deed of the Corporation.
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/s/ Dr. Loukas Barmparis |
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Name: |
Dr. Loukas Barmparis |
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Title: |
President |
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2
EXHIBIT 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 2009
As used herein, “we”, “us”, “our”, “the Company” and “Safe Bulkers” all refer to Safe Bulkers, Inc. This management’s discussion and analysis of financial condition and results of operations should be read together with the discussion included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2008. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.
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A. |
Overview |
Safe Bulkers, Inc. is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest consumers of marine drybulk transportation services. As of September 30, 2009, we had a fleet of 14 drybulk vessels, with an aggregate carrying capacity of 1,153,900 deadweight tons, or dwt, and an average age of 3.54 years. We have contracted to acquire additional drybulk newbuild vessels to be delivered at various times through 2011.
We employ our vessels on both period-time charters and spot charters,
according to our assessment of market conditions.
We were incorporated on
December 11, 2007 under the laws of the Marshall Islands to act as a holding
company of drybulk vessel owning companies. We are controlled by the Hajioannou
family, which has a long history of operating and investing in the
international shipping industry. Our vessels are managed by our affiliated
management company, Safety Management Overseas S.A.
We successfully completed
our initial public offering (the “IPO”) in the United States on June 3, 2008
and our common stock trades on the New York Stock Exchange under the symbol
“SB”.
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B. |
Recent Developments in Our Fleet and Employment Profile |
During the first half of 2009, the following recent developments occurred with respect to our fleet and employment profile:
Our subsidiary Eniadefhi Shipping Corporation (“Eniadefhi”) took delivery on February 12, 2009 of the newbuild vessel Martine , a 87,000 dwt Post-Panamax-class vessel.
Our subsidiary Maxdeka Shipping Corporation (“Maxdeka”) and our subsidiary Maxenteka Shipping Corporation (“Maxenteka”) entered into an agreement with a third-party seller, whereby the parties agreed to cancel a Memorandum of Agreement (“MOA”) for the acquisition of two 82,000 dwt Kamsarmax-class newbuilds, and Maxdeka and Maxenteka agreed to forfeit the advance deposits of $7.2 million which had been paid per newbuild. There is no charter party agreement associated with these newbuilds.
Our subsidiary Eptaprohi Shipping Corporation (“Eptaprohi”) entered into an agreement to delay the delivery of a 176,000 dwt Capesize-class newbuild until September 2011, and to reduce its purchase price to $80.0 million. The newbuild is subject to a period time charter agreement, and the relevant charterer agreed to postpone delivery until 2012 in exchange for a decrease in the gross daily charter rate from $40,000 to $38,000.
Our subsidiary Maxpente Shipping Corporation (“Maxpente”) entered into an agreement to cancel a shipbuilding contract for the acquisition of a 176,000 dwt Capesize-class newbuild for a cancellation cost of $6.0 million excluding brokerage commission, forfeited from advanced payment. The outstanding balance of the advance payment of $10.1 million will be used to settle the second advance payment for the acquisition of the 176,000 dwt Capesize-class newbuild being acquired by Eptaprohi. In addition, Maxpente replaced the cancelled newbuild by signing a MOA with a third-party seller for the acquisition of a 177,000 dwt Capesize-class newbuild to be delivered in April 2010 for $63.0 million including commissions. The cancelled newbuild was subject to a period time charter agreement, and the relevant charterer has agreed to substitute the cancelled newbuild with the newly contracted 177,000 dwt Capesize-class vessel under its charter agreement.
Our subsidiary Shikoku Friendship Shipping Company (“Shikoku”) agreed to accept delayed delivery of a 95,000 dwt Post-Panamax-class newbuild from the second half of 2010 until a later date between June and August, 2011. There is no charter party agreement associated with this newbuild.
Our subsidiary Efragel Shipping Corporation (“Efragel”) entered into a MOA to sell its 76,000 dwt Panamax-class vessel Efrossini for $33.0 million excluding commissions, expected to be delivered during December 2009. The vessel is currently trading in the spot market.
Marathassa Shipping Corporation (“Marathassa”), Efragel, Kerasies Shipping Corporation (“Kerasies”) and Marindou Shipping Corporation (“Marindou”) have agreed with the charterers of their respective vessels to terminate their respective time charter agreements and to accept early redelivery of these vessels in exchange for compensation. As a result, the Company recorded aggregate early redelivery income of $72.1 million during the first six months of 2009.
Significant events subsequent to June 30, 2009 are described in Note 13 to our unaudited condensed consolidated financial statements included elsewhere herein.
2
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C. |
Selected Unaudited Information |
The following tables present unaudited selected consolidated financial and other data of Safe Bulkers, Inc. for the six months ended June 30, 2009. All amounts are in thousands of U.S. Dollars, except for per share data, and data on days, fleet and daily rates.
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Six-Month Period Ended |
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June 30, 2008 |
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June 30, 2009 |
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STATEMENTS OF INCOME |
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Net revenues |
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100,725 |
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91,132 |
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Vessel operating expenses |
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(8,827 |
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(9,378 |
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Early redelivery (cost)/income |
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(565 |
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72,064 |
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Loss on asset cancellations |
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- |
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(20,699 |
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Operating income |
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81,329 |
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122,629 |
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Net income |
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68,077 |
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120,087 |
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Earnings per share - basic and diluted |
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1.25 |
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2.20 |
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CASH FLOW DATA |
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Net Cash Provided by Operating Activities |
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170,702 |
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107,418 |
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Net Cash Used in Investing Activities |
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(47,910 |
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(126,887 |
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Net Cash (Used in)/Provided by Financing Activities |
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(100,401 |
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1,914 |
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Net increase / (decrease) in cash and cash equivalents |
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22,391 |
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(17,555 |
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December 31, |
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June 30, |
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2008 |
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2009 |
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BALANCE SHEET DATA |
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Total assets |
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482,282 |
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602,310 |
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Total liabilities |
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517,827 |
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534,090 |
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Total shareholders’ (deficit)/equity |
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(35,545 |
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68,220 |
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Six Months Ended |
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June 30, 2008 |
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June 30, 2009 |
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FLEET DATA |
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Number of vessels at period’s end |
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11.00 |
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13.00 |
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Weighted average age of fleet (in years) |
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3.12 |
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3.56 |
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Ownership days (1) |
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2,002 |
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2,311 |
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Available days (2) |
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1,977 |
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2,303 |
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Operating days (3) |
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1,970 |
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2,303 |
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Fleet utilization (4) |
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98.4 |
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99.6 |
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Average number of vessels in the period (5) |
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11.00 |
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12.77 |
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AVERAGE DAILY RESULTS |
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Time charter equivalent rate (6) |
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$ |
50,889 |
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39,479 |
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Daily vessel operating expenses (7) |
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$ |
4,409 |
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$ |
4,064 |
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(1) |
Ownership days represent the aggregate number of days in a period during which each vessel in our fleet has been owned by us. |
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(2) |
Available days represent the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with scheduled maintenance, which includes major repairs, drydockings, vessel upgrades or special or intermediate surveys. |
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(3) |
Operating days represent the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, excluding scheduled maintenance. |
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(4) |
Fleet utilization is calculated by dividing the number of our operating days during a period by the number of our ownership days during that period. |
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(5) |
Average number of vessels in the period is calculated by dividing ownership days in the period by the number of days in that period. |
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(6) |
Time charter equivalent rates, or TCE rates, represent our charter revenues less commissions and voyage expenses during a period divided by the number of our available days during the period. |
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(7) |
Daily vessel operating expenses include the costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other miscellaneous items. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period. |
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D. |
Results of Operations |
Net income was $120.1 million, or earnings per share of $2.20, in the first half of 2009, an increase of 76% from net income of $68.1 million, or earnings per share of $1.25, in the first half of 2008. The increase in net income of $52.0 million reflects mainly: (i) net revenue of $91.1 million compared to $100.7 million, (ii) early redelivery income of $72.1 million, compared to early redelivery cost of $0.6 million, (iii) loss on asset cancellations of $20.7 million, compared to none, and (iv) foreign exchange gain of $1.0 million, compared to a foreign exchange loss of $9.9 million for the corresponding periods of 2009 and 2008, respectively, which are further discussed below:
4
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Operating Activities |
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Net cash from operating activities amounted to $107.4 million for the six months ended June 30, 2009, consisting of net income after non-cash items of $140.4 million less an increase in working capital of $33.0 million. Net cash from operating activities amounted to $170.7 million for the six months ended June 30, 2008, consisting of net income after non-cash items of $78.0 million and a decrease in working capital of $92.7 million. The decrease in working capital was mainly attributable to the settlement of amounts due from the Manager of $96.4 million prior to the Company’s initial public offering. |
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Investing Activities |
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Net cash used in investing activities was $126.9 million for the six months ended June 30, 2009, compared to net cash flows used in investing activities of $47.9 million for the six months ended June 30, 2008. The increase of net cash used in investing activities is mainly attributable to the increase in restricted cash of $93.6 million following supplemental agreements to certain of our loan facilities that we entered into during the first six months of 2009, compared to an increase of $4.0 million in the six months ended June 30, 2008. |
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Financing Activities |
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Net cash provided by financing activities was $1.9 million for the six months ended June 30, 2009, compared to $100.4 million net cash used in financing activities for the six months ended June 30, 2008. The increase in net cash provided by financing activities is mainly attributable to lower dividends paid as partially offset by lower net proceeds from long-term debt during the relevant period. Dividends paid during the period ended June 30, 2009 was $16.4 million, compared to $175.4 million during the six months ended June 30, 2008. Net proceeds from long-term debt during the period ended June 30, 2009 was $18.3 million, compared to $73.7 million during the six months ended June 30, 2008. |
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Loan Facilities
For information relating to our credit facilities, please see Note 7 to our unaudited condensed consolidated financial statements included elsewhere herein.
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D. |
Liquidity and Capital Resources |
As of June 30, 2009, we had $154.4 million in cash, of which $10.1 million consisted of cash and cash equivalents, $13.3 million consisted of short-term bank deposits with original maturities longer than three months and shorter than twelve months, $126.1 million consisted of short-term restricted cash and $4.9 million consisted of long-term restricted cash.
As of June 30, 2009, we, through our subsidiaries, had aggregate debt outstanding of $485.5 million, of which $58.1 million was payable within the next 12 months, including the entire outstanding balance of the loan secured by the Efrossini , which will be fully repaid upon the sale and delivery of the vessel to the new owners. As of June 30, 2009, we had additional borrowing capacity of $5.0 million under one of our credit facilities.
Our primary liquidity needs are to fund capital expenditures in relation to newbuild contracts, financing expenses, debt repayment, vessel operating expenses, general and administrative expenses and dividend payments to our shareholders. We anticipate that our primary sources of funds will be cash from operations, additional indebtedness to be raised and, possibly, equity financings. Following payments to the shipyards or third-party sellers and amendments to newbuild purchase prices, our commitments of $283.3 million as of June 30, 2009 have been reduced to $209.4 million as of September 30, 2009, $136.9 million of which is payable in 2010 and $72.5 million of which is payable in 2011. These commitments represent payments for the delivery of four newbuild vessels, one Capesize-class drybulk vessel and one Post-Panamax-class drybulk vessel due to be delivered each in 2010 and in 2011.
We currently estimate that internally generated cash flow will be sufficient to fund the operations of our fleet, including our working capital requirements, through at least the end of 2009. During 2010, we expect to require additional indebtedness to partially fund our remaining commitments of an estimated $209.4 million with respect to our newbuilds. To the extent that we are unable to obtain such additional indebtedness, we will need to find alternative financing, unless delivery of one or more of our newbuilds is delayed or cancelled. If we are unable to find alternative financing, our subsidiaries will not be capable of funding their relevant commitments for capital expenditures relating to our contracted newbuilds, which could adversely impact the dividends we intend to pay, and could have a material adverse effect on our business, financial condition and results of operations.
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During 2009, we paid to our shareholders two consecutive quarterly dividends of $0.15 per share each, in the aggregate amount of $16.4 million. Our future liquidity will impact our dividend policy. We currently intend to use a portion of our free cash to pay dividends to our shareholders. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (a) our earnings, financial condition and cash requirements and availability, (b) our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy, (c) provisions of Marshall Islands and Liberian law governing the payment of dividends, (d) restrictive covenants in our existing and future debt instruments and (e) global financial conditions. We can give no assurance that dividends will be paid in the future.
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E. |
Capitalization and Indebtedness |
The following table sets forth our consolidated capitalization and indebtedness as of June 30, 2009:
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(Unaudited)
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Debt: |
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Current portion of long-term debt |
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19,104 |
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Liability associated with asset held for sale |
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39,000 |
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Long-term debt, net of current portion |
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427,434 |
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Total debt (1)(2) |
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485,538 |
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Shareholders’ equity: |
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Common stock |
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55 |
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Additional paid-in capital |
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60 |
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Retained earnings |
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68,105 |
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Total shareholders’ equity |
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68,220 |
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Total capitalization and indebtedness |
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$ |
553,758 |
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(1) All of our indebtedness is secured. |
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(2) All bank debt is issued by our subsidiaries. All bank debt is guaranteed by the Company. |
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F. |
Trading on the New York Stock Exchange |
Since our initial public offering in the U.S. on May 29, 2008, our common stock has been listed on the New York Stock Exchange under symbol “SB”. The following table shows the high and low closing sale prices for our common stock during the indicated periods.
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2009 |
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High |
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Low |
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April |
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$ |
4.51 |
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3.17 |
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May |
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7.70 |
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4.89 |
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June |
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7.95 |
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6.00 |
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Second Quarter |
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7.95 |
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3.17 |
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July |
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8.28 |
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6.02 |
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August |
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8.62 |
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7.33 |
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September |
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8.57 |
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6.77 |
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Third Quarter |
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8.62 |
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6.02 |
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6
INDEX TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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Page |
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Unaudited Condensed Consolidated Balance Sheets as of December 31, 2008 and June 30, 2009 |
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F-2 |
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Unaudited Condensed Consolidated Statements of Income for the six month periods ended June 30, 2008 and 2009 |
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F-3 |
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Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the six months ended June 30, 2009 |
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F-4 |
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Unaudited Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2008 and June 30, 2009 |
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F-5 |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
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F-6 |
F-1
SAFE BULKERS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars)
The accompanying notes are an integral part of these condensed consolidated statements.
F-2
SAFE BULKERS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. Dollars, except for share and per share data)
The accompanying notes are an integral part of these condensed consolidated statements.
F-3
SAFE BULKERS, INC. UNAUDITED CONDENSED CONSOLIDATED
STATEMENT
OF SHAREHOLDERS’ EQUITY FOR THE SIX MONTHS
ENDED JUNE 30, 2009
(In thousands of U.S. Dollars, except for per share data)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Additional
|
|
Retained
|
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
|
Balance as of December 31, 2008 |
|
|
|
55 |
|
|
|
|
30 |
|
|
|
(35,630 |
) |
|
|
(35,545 |
) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
— |
|
|
|
|
— |
|
|
|
120,087 |
|
|
|
120,087 |
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation |
|
|
|
— |
|
|
|
|
30 |
|
|
|
|
— |
|
|
|
|
30 |
|
|
|
Dividends – ($0.30 per
share)
|
|
|
|
— |
|
|
|
|
— |
|
|
|
(16,352 |
) |
|
|
(16,352 |
) |
|
||
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2009 |
|
|
|
55 |
|
|
|
|
60 |
|
|
|
|
68,105 |
|
|
|
|
68,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated statements.
F-4
SAFE BULKERS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30, 2008 AND 2009
(In thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
June 30. |
|
||||
|
|
|
|
|||||
|
|
|
2008 |
|
2009 |
|
||
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
|
170,702 |
|
|
107,419 |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Vessel acquisitions including advances for vessels under construction and other fixed assets |
|
|
(43,910 |
) |
|
(41,239 |
) |
|
(Increase) in restricted cash |
|
|
(4,000 |
) |
|
(93,632 |
) |
|
Decrease in bank time deposits |
|
|
- |
|
|
7,984 |
|
|
Net Cash Used in Investing Activities |
|
|
(47,910 |
) |
|
(126,887 |
) |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
120,000 |
|
|
40,000 |
|
|
Principal payments of long-term debt |
|
|
(46,272 |
) |
|
(21,724 |
) |
|
Advances from shareholders |
|
|
11,489 |
|
|
- |
|
|
Repayment of advances to shareholders |
|
|
(10,086 |
) |
|
- |
|
|
Dividends paid |
|
|
(175,390 |
) |
|
(16,352 |
) |
|
Payment of deferred financing costs |
|
|
(197 |
) |
|
(10 |
) |
|
Proceeds on issuance of common stock |
|
|
55 |
|
|
- |
|
|
Net Cash (Used in)/Provided by Financing Activities |
|
|
(100,401 |
) |
|
1,914 |
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
22,391 |
|
|
(17,554 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
- |
|
|
27,702 |
|
|
Cash and cash equivalents at end of period |
|
|
22,391 |
|
|
10,148 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
F-5
SAFE BULKERS, INC.
(In thousands of U.S. Dollars, except for share and per share data, unless
otherwise stated)
1. Basis of Presentation and General Information:
Safe Bulkers, Inc., referred to herein as “Safe Bulkers”, is a public company incorporated on December 11, 2007 under the laws of the Marshall Islands to act as a holding company of drybulk vessel owning companies. The accompanying condensed consolidated financial statements include the accounts of Safe Bulkers and its wholly owned subsidiaries listed below (collectively the “Company”).
|
|
|
|
|
|
|
|
|
Subsidiary |
|
Vessel Name |
|
Type |
|
Built |
|
|
|
|
||||
|
Efragel Shipping Corporation |
|
Efrossini |
|
Panamax |
|
February 2003 |
|
Marindou Shipping Corporation |
|
Maria |
|
Panamax |
|
April 2003 |
|
Avstes Shipping Corporation |
|
Vassos |
|
Panamax |
|
February 2004 |
|
Kerasies Shipping Corporation |
|
Katerina |
|
Panamax |
|
May 2004 |
|
Marathassa Shipping Corporation |
|
Maritsa |
|
Panamax |
|
January 2005 |
|
Pemer Shipping Ltd. |
|
Pedhoulas Merchant |
|
Kamsarmax |
|
March 2006 |
|
Petra Shipping Ltd. |
|
Pedhoulas Trader |
|
Kamsarmax |
|
May 2006 |
|
Pelea Shipping Ltd. |
|
Pedhoulas Leader |
|
Kamsarmax |
|
March 2007 |
|
Staloudi Shipping Corporation |
|
Stalo |
|
Post—Panamax |
|
January 2006 |
|
Marinouki Shipping Corporation |
|
Marina |
|
Post—Panamax |
|
January 2006 |
|
Soffive Shipping Corporation |
|
Sophia |
|
Post—Panamax |
|
June 2007 |
|
Eniaprohi Shipping Corporation |
|
Eleni |
|
Post—Panamax |
|
November 2008 |
|
Eniadefhi Shipping Corporation |
|
Martine |
|
Post—Panamax |
|
February 2009 |
|
Maxdodeka Shipping Corporation |
|
Andreas K |
|
Post—Panamax |
|
2009 (2) |
|
Maxpente Shipping Corporation |
|
TBN (3) |
|
Capesize |
|
2010 (1) |
|
Maxdekatria Shipping Corporation |
|
TBN (3) |
|
Post—Panamax |
|
2010 (1) |
|
Eptaprohi Shipping Corporation |
|
TBN (3) |
|
Capesize |
|
2011 (1) |
|
Shikoku Friendship Shipping Company |
|
TBN (3) |
|
Post—Panamax |
|
2011 (1) |
|
Maxdeka Shipping Corporation |
|
— |
|
— |
|
— |
|
Maxenteka Shipping Corporation |
|
— |
|
— |
|
— |
|
Maxtessera Shipping Corporation |
|
— |
|
— |
|
— |
|
|
|
|
|
|
(1) |
Estimated completion date for newbuild vessels. |
|
|
(2) |
Refer to Subsequent Events Note 13(d). |
|
|
(3) |
To be named (‘TBN”). |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the management of Safe Bulkers, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, operating results and cash flows have been included in the statements. Interim results are not necessarily indicative of results that may be expected for the year ended December 31, 2009. These financial statements should be read in conjunction with the consolidated financial statements and footnotes for the year ended December 31, 2008 included in the Company’s Annual Report on Form 20-F.
2. Significant Accounting Policies
A summary of the Company’s significant accounting policies is identified in Note 2 of the Company’s consolidated financial statements for the year ended December 31, 2008 included in the Company’s Annual Report on Form 20-F. There have been no changes to the Company’s significant accounting policies other than noted below.
Recent Accounting Pronouncements:
In March 2008, the FASB issued SFAS No. 161, “ Disclosures about Derivative Instruments and Hedging Activities ” (“SFAS 161”) which requires enhanced disclosures in respect of derivative instruments and hedging activities. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. As this statement relates only to disclosure requirements, the Company’s adoption of SFAS 161 did not have an impact on its financial position, results of operations or cash flows.
In April 2009, the Financial Accounting Standards Board (“FASB”) issued Staff Position (“FSP”) “ Interim Disclosures about Fair Value of Financial Instruments” (“No. SFAS 107-1 and APB 28-1”). The FSP amends FASB Statement (“SFAS”) No. 107, “ Disclosures about the Fair Value of Financial Instruments” , and APB No. 28, “ Interim Financial Reporting” to include disclosures about the fair value of its financial instruments whenever summarized financial information for interim reporting periods is issued. The FSP is effective for interim periods
F-6
ending after June 15, 2009. The Company’s adoption of FSP SFAS 107-1 and APB 28-1 did not have a material impact on its consolidated financial statements.
|
|
|
|
• |
Clarifies that management must evaluate, as of each reporting period (i.e. interim and annual), events or transactions that occur after the balance sheet date “through the date that the financial statements are issued or are available to be issued.” |
|
• |
Does not change the recognition and disclosure requirements in AICPA Professional Standards, AU Section 560, “ Subsequent Events ” (“AU Section 560”) for Type I and Type II subsequent events; however, Statement 165 refers to them as recognized (Type I) and non-recognized subsequent events (Type II). |
|
• |
Requires management to disclose, in addition to the disclosures in AU Section 560, the date through which subsequent events have been evaluated and whether that is the date on which the financial statements were issued or were available to be issued. |
|
• |
Indicates that management should consider supplementing historical financial statements with the pro forma impact of non-recognized subsequent events if the event is so significant that disclosure of the event could be best made through the use of pro forma financial data. |
In June 2009, the FASB issued SFAS 167, “ Amendments to FASB Interpretation No. 46(R) ” (“SFAS 167”). SFAS 167 eliminates Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement that any term, transaction or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying Interpretation 46(R)’s provisions. The elimination of the qualifying special-purpose entity concept and its consolidation exceptions means more entities will be subject to consolidation assessments and reassessments. SFAS 167 will be effective January 1, 2010. The adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
In June 2009, the FASB issued Statement No. 168, FASB “ Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” — a replacement of FASB Statement No. 162 (“SFAS No. 168”), which became the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Once effective, the Codification’s content will carry the same level of authority, effectively superseding Statement 162. In other words, the GAAP hierarchy will be modified to include only two levels of GAAP: authoritative and non-authoritative. Statement 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company will adopt SFAS No. 168 in the third quarter of 2009 and does not expect this standard will have an impact on the Company’s financial statements.
3. Restricted cash – current assets
The restricted cash represents collateral pledged in favour of our banks in connection with performance guarantees issued on our behalf for payments to shipyards due in 2009 totalling $32.6 million as of December 31, 2008 and June 30, 2009, and cash pledged in favour of our lenders of $93.5 million as of June 30, 2009 pursuant to our loan agreements, as amended.
4. Accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
June 30, |
|
||||
|
|
|
|
|
||||||
|
|
|
2008 |
|
2009 |
|
||||
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Early redelivery compensation receivables |
|
|
- |
|
|
|
37,702 |
|
|
|
Other receivables |
|
|
528 |
|
|
|
2,943 |
|
|
|
|
|
|
|||||||
|
Total |
|
|
528 |
|
|
|
40,645 |
|
|
|
|
|
|
|
||||||
The early redelivery compensation receivables were settled by the respective charterers on July 1, 2009.
5. Asset held for sale
Asset held for sale represents the carrying value of the vessel Efrossini for which the Company entered into a Memorandum of Agreement (“MOA”) with an unrelated third party, dated June 9, 2009, for its sale at a price of $33,000 for delivery from September to December 2009. The Company expects delivery to take place within December 2009.
F-7
6. Fixed assets, net
Total Fixed assets are comprised of Vessels, Advances for vessel acquisition and Vessels under construction and Other fixed assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fixed assets |
|
Cost |
|
Accumulated
|
|
Net Book
|
|
|||
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|||
|
Balance, December 31, 2008 |
|
|
423,451 |
|
|
(36,155 |
) |
|
387,296 |
|
|
|
||||||||||
|
Depreciation expense |
|
|
- |
|
|
(6,543 |
) |
|
(6,543 |
) |
|
Transfer to asset held for sale |
|
|
(22,120 |
) |
|
5,151 |
|
|
(16,969 |
) |
|
Advances paid for vessel acquisition/construction |
|
|
41,239 |
|
|
- |
|
|
41,239 |
|
|
Forfeiture of advances paid due to newbuild cancellations |
|
|
(20,394 |
) |
|
- |
|
|
(20,394 |
) |
|
|
|
|||||||||
|
Balance, June 30, 2009 |
|
|
422,176 |
|
|
(37,547 |
) |
|
384,629 |
|
|
|
|
|||||||||
During the six months ended June 30, 2009, the Company entered into a MOA with an unrelated third party, dated May 8, 2009, to acquire a Capesize-class drybulk newbuild H1144 upon its completion and delivery from the shipyard, estimated for second quarter of 2010, for $63,000 and took delivery of the newbuild vessel Martine , ex H3255 on February 12, 2009.
7. Bank debt
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2008 |
|
|
468,290 |
|
|
|
Principal payments of long-term debt |
|
|
(21,724 |
) |
|
|
Unrealized foreign exchange (gain) |
|
|
(1,028 |
) |
|
|
Loan proceeds |
|
|
40,000 |
|
|
|
|
|
|||
|
|
Balance as of June 30, 2009 |
|
|
485,538 |
|
|
|
|||||
|
|
Less: Current portion |
|
|
(19,104 |
) |
|
|
Less: Liability associated with asset held for sale |
|
|
(39,000 |
) |
|
|
|
|
|||
|
|
Bank debt - Long term |
|
|
427,434 |
|
|
|
|
|
During the six months ended June 30, 2009, the Company entered into supplemental agreements for certain of its facilities and made drawings on one of its facilities. Details of the amendments to the existing loan facilities and of the new facility are discussed in Notes 8 and 11(a) of the Company’s consolidated financial statements for the year ended December 31, 2008, included in the Company’s annual report on Form 20-F.
The estimated minimum annual principal payments required to be made after June 30, 2009, based on the loan agreements as amended are as follows:
|
|
To June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2010 |
|
|
58,104 |
|
|
|
2011 |
|
|
18,667 |
|
|
|
2012 |
|
|
24,669 |
|
|
|
2013 |
|
|
34,450 |
|
|
|
2014 |
|
|
27,041 |
|
|
|
2015 and thereafter |
|
|
322,607 |
|
|
|
|
|
|
||
|
|
Total |
|
|
485,538 |
|
|
|
|
|
|
8. Early redelivery (cost)/income
Early redelivery income for the six months ended June 30, 2009 relating to the early termination of period time charters of our vessels Maritsa , Efrossini , Katerina and Maria amounted to $72.1 million and represents cash compensation net of commissions of $63.1 million received from the respective charterers and $9.0 million relating to the remaining balance of unearned revenue from the respective terminated time charter contracts.
9. Loss on asset cancellations
|
|
|
|
• |
In April 2009, the Company cancelled the MOAs for two Kamsarmax-class vessels and forfeited the advance deposits. The aggregate loss on terminating these contracts amounted to $13.7 million net of interest earned on the advance deposits. |
|
• |
In June 2009, the Company entered into an agreement to cancel the newbuild contract for one Capesize-class vessel. The cost of cancelling this contract amounted to $7.0 million, inclusive of brokerage commissions, of which $6.0 million represented the forfeiture of advance deposits. |
F-8
10. Commitments and Contingencies
|
|
|
|
(a) |
Commitments under Shipbuilding Contracts and MOAs |
As of June 30, 2009, the Company had commitments under one shipbuilding contract and four MOAs for the acquisition of five newbuilds. The Company expects to settle the commitments under these as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Due to Shipyards / Sellers |
|
Due to Manager |
|
Total |
|
|||||||
|
|
|
|
|
|||||||||||
|
July 1, 2009 – June 30, 2010 |
|
187,790 |
|
|
3,037 |
|
|
190,827 |
|
|
||||
|
July 1, 2010 – June 30, 2011 |
|
39,220 |
|
|
188 |
|
|
39,408 |
|
|
||||
|
July 1, 2011 – December 31, 2011 |
|
|
56,280 |
|
|
1,859 |
|
|
58,139 |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total |
|
283,290 |
|
|
5,084 |
|
|
288,374 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
(b) |
Other contingent liabilities |
The Subsidiaries have not been involved in any legal proceedings that may have, or have had a significant effect on their business, financial position, results of operations or liquidity, nor is the Company aware of any proceedings that are pending or threatened which may have a significant effect on its business, financial position, results of operations or liquidity. From time to time various claims, suits and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance providers and other claims with suppliers relating to the operation of the Company’s vessels. Management is not aware of any material claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying combined and consolidated financial statements.
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying combined and consolidated financial statements. A maximum of $1,000,000 of the liabilities associated with the individual vessels actions, mainly for sea pollution, are covered by P&I Club insurance.
11. Fair Value of Financial Instruments
The carrying values of trade accounts receivable, cash and cash equivalents, time deposits, restricted cash and accounts payable are reasonable estimates of their fair value due to the short-term nature of these financial instruments. The fair value of the floating rate debt (loan and credit facilities) approximates the carrying value, due to their variable interest rates.
The Company enters into interest rate swap transactions to manage interest costs and the risk associated with changing interest rates with respect to its variable interest rate loans and credit facilities. These interest rate swap transactions fix the interest rates based on predetermined ranges in current LIBOR rates. As of June 30, 2009, the Company’s outstanding interest rate swaps had a combined notional amount of $461.1 million. The Company from time to time may also enter into foreign exchange forward contracts to create economic hedges for its exposure to currency exchange risk on payments relating to acquisition of vessels and on certain loan obligations or for trading purposes. Foreign exchange forward contracts are agreements entered into with a bank to exchange at a specified future date, currencies of different countries at a specific rate. As of June 30, 2009, the Company had no outstanding derivative instruments relating to currency exchange contracts.
The Company’s interest rate swaps and foreign exchange forward contracts did not qualify for hedge accounting. Under SFAS 133, the Company marks to market the fair market value of the interest rate swaps and foreign exchange forward contracts at the end of every period and reflects the resulting unrealized loss/gain during the period in Gain on derivatives in its condensed consolidated statement of income as well as presenting the fair value at the end of each period in the consolidated balance sheet. Information on the location and amounts of derivative fair values in the condensed consolidated balance sheets and derivative gains/losses in the condensed consolidated statements of income are shown below:
F-9
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss) Recognized in Income on
|
|
||||
|
|
|
|
|||||
|
|
|
Six months ended |
|
||||
|
|
|
|
|||||
|
|
|
June 30, 2008 |
|
June 30, 2009 |
|
||
|
|
|
|
|
||||
|
Foreign Exchange Forward Contracts |
|
1,176 |
|
|
(931 |
) |
|
|
Interest Rate Contracts |
|
3,392 |
|
|
3,762 |
|
|
|
Net Gain Recognized |
|
4,568 |
|
|
2,831 |
|
|
|
|
|
|
|
|
|
|
|
The gain or loss is recognized in the condensed consolidated statement of income and is presented in Other Expense/Income - Gain on Derivatives.
The Company’s interest rate derivative instruments are pay-fixed, receive-variable interest rate swaps based on the USD LIBOR swap rate. The fair value of the interest rate swaps is the estimated amount the Company would pay or receive to terminate the swap agreements at the reporting date, taking into account current LIBOR swap interest rates and the creditworthiness of the swap counterparty. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy as defined in SFAS No. 157 “ Fair Value Measurements ”. The following table summarizes the valuation of our financial instruments as of June 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant Other Observable Inputs |
|
|
Total |
|
|
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(Level 2) |
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Derivative instruments – liability position |
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14,642 |
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14,642 |
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As of June 30, 2009, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the Company’s condensed consolidated balance sheet.
12. Earnings per Share
The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period and gives retroactive effect to the shares issued to Vorini Holdings, Inc. in connection with the initial public offering and includes the shares issuable to Mr. Frank Sica at the end of the each period for services rendered. Diluted earnings per share is the same as basic earnings per share. There are no other potentially dilutive shares.
13. Subsequent Events
(a) Dividend Declaration:
On July 31, 2009, the Board of Directors declared a dividend of $0.15 per common share totaling $8,176 to all shareholders of record as of August 21, 2009.
(b) Vessel early redelivery
On July 17, 2009, our subsidiary Pelea Shipping Ltd. took early redelivery of the Pedhoulas Leader from her charterer. The charterer paid compensation of $2,652, which was recorded as early redelivery income.
(c) Amendment of vessels purchase price:
Following negotiations with the relevant third-party sellers under existing MOAs, our subsidiaries Maxdodeka Shipping Corporation and Maxdekatria Shipping Corporation entered into addenda on September 4, 2009 to such
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MOAs with the respective third-party sellers. These addenda reduced the purchase price for the relevant vessels by $2,500 and $1,500, respectively.
As a result of these subsequent events, the Company’s commitments under shipbuilding contracts and MOAs as disclosed in the table in Note 10 are reduced by $4,000 Due to Shipyards/Sellers in the twelve months until June 30, 2010 and by $40 Due to Manager in the twelve months until June 30, 2010.
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(d) |
Vessel delivery: |
On September 8, 2009 our subsidiary Maxdodeka Shipping Corporation took delivery of the newbuild vessel Andreas K , a 92,000 dwt Post-Panamax-class vessel and paid the balance of the purchase price of $56,300 from surplus from operations.
Management has evaluated subsequent events through October 8, 2009, the date on which the financial statements were issued.
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