Commission File No. 333-8878
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2005
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
H & J Corporate Services Ltd.
Shirlaw House
87 Shirley Street
Nassau, The Bahamas
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein is a copy of the Company's report for the six
months ended June 30, 2005, containing certain unaudited financial information
and 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, 2005 AND 2004
The following discussion and analysis should be read in conjunction with
the unaudited condensed consolidated financial statements of Ultrapetrol
(Bahamas) Limited ("the Company") and its subsidiaries for the six months ended
June 30, 2005 and the six months ended June 30, 2004 included elsewhere in this
report.
General
We are a diversified ocean and river transportation company involved in the
carriage of dry and liquid bulk cargoes as well as passengers. In our Ocean
Business, we are an owner and operator of oceangoing vessels that transport
petroleum products, dry cargo and passengers around the world. Our Ocean
Business fleet dedicated to the carriage of cargo has a capacity of
approximately 634,000 dwt, and our three versatile Suezmax/OBO vessels are
capable of carrying either dry bulk or liquid cargoes. Our passenger fleet is
comprised of two vessels with a total carrying capacity of approximately 1,550
passengers. Our River Business is the largest owner and operator of river barges
and push boats in the Hidrovia Region of South America, a fertile agricultural
region of navigable waters on the Parana, Paraguay and Uruguay Rivers and part
of the River Plate, which flow through Brazil, Bolivia, Uruguay, Paraguay and
Argentina. In addition, in November, 2002, we entered into a joint venture to
form UP Offshore (Bahamas) Ltd. ("UP Offshore"), a company in which we own a
27.78% interest and which will provide transportation services to offshore
petroleum exploration and production companies, with a particular emphasis on
the Brazilian market.
Our business strategy focuses on maintaining an efficient and flexible
fleet, which allows us to provide an array of transportation services to
customers in several different industries. We believe that the flexibility of
our fleet and the diversity of industries that we service reduce our dependency
on any particular sector of the transportation industry.
Currently, we own eight oceangoing vessels (one of which is currently used
as a transfer station in our River Business and two are passenger vessels with
approximately 1,550 passenger capacity) that operate in South America, the
Caribbean, the United States, Europe and the Far East. The Company's Suezmax
OBO's (Princess Katherine, Princess Nadia and Princess Susana), are designed to
carry oil as well as ore and other dry bulk commodities. These vessels are
currently employed in the carriage of bulk dry cargoes.
During the first six months ended June 30, 2005, we employed a significant
part of our ocean fleet on time charter for different customers. During the
first half of 2005, the international freight market maintained average rates
significantly above those experienced in 2004.
On January 7, 2005 International Finance Corporation "IFC" and
Kreditanstalt Fur Wiederaufbau "KfW" disbursed the remaining $7.5 million of the
$30 million loan granted to UABL Limited ("UABL") in 2002. These funds were used
to finance the purchase and transportation from the United States to the River
Plate of 35 dry barges. The Company used existing funds to purchase two
pushboats and other auxiliary equipment.
We entered into a contract on March 4, 2005 to sell our vessel, Cape
Pampas, for approximately $39.9 million. The vessel was delivered to the new
owners on May 6, 2005.
We also entered into a contract on March 4, 2005 to buy the cruise vessel,
New Flamenco, for a price of $13.5 million. This transaction was consummated on
March 24, 2005. The New Flamenco is managed by Ravenscroft Shipping Inc.
("Ravenscroft"), an affiliate of ours, and we have agreed to continue her
employment agreement with a large European tour operator.
On April 6, 2005 we purchased the cruise vessel, World Renaissance renamed
Grand Victoria, at auction for a price of $3.4 million. This vessel was
delivered and fully paid for on April 19, 2005. This vessel will have to pass
her drydock and surveys before she enters into service.
On April 28, 2005 we agreed to purchase the product tanker, mt Sun Chemist,
renamed Miranda I, for a total price of $10.3 million which was delivered and
fully paid on July 7, 2005.
Contractual Methods of Earning Revenues and Allotting Expenses
Ocean revenues of our cargo vessels can be contracted either on a time
charter basis or on a contract of affreightment, or COA, basis. Under the terms
of a time charter, the charterer pays the ship owner a daily rate for the use of
the vessel and, in addition, the charterer pays directly for all voyage expenses
(including fuel and port charges). In contrast, under the terms of a COA, the
charterer pays the ship owner a rate based on tonnage shipped (expressed in
dollars per metric ton of cargo), but the ship owner pays all voyage expenses.
Accordingly, the charterer pays a higher overall sum under a COA than under a
time charter to compensate the ship owner for having to pay the voyage expenses.
Consequently, time charters result in lower revenues and lower expenses for the
ship owner than COAs, while COAs result in higher revenues and higher expenses
for the shipowner than time charters. Both time charters and COAs at comparable
price levels result in approximately the same operating income. However, the
margin as a percentage of revenues may differ significantly. The differences
between time charters and COAs are summarized below:
o Time Charter:
o Revenue is derived from a daily rate paid for the use of the
vessel
o Charterer pays for all voyage expenses
o COA:
o Revenue is derived from a rate based on tonnage shipped expressed
in dollars per metric ton of cargo
o Vessel owner pays for all voyage expenses
Our passenger vessels can either be employed on time charter, or by the
sale of the individual cabins or mixed formulas that provide a minimum
guaranteed income for the Shipowner.
Revenues
Time charter revenues accounted for 56% of our total revenues (ocean,
passenger and river) for the six months ended June 30, 2005. COA revenues
accounted for 44% of our total revenues for the six months ended June 30, 2005.
With respect to COAs entered into in connection with our Ocean and River
Business, of the total revenues obtained from COAs during the first half of
2005, 90% were in respect of repetitive voyages for our regular customers and
10% in respect of single voyages for occasional customers.
In our Passenger Business, demand for our services is driven by the global
movements of tourists. Our primary market is Europe.
In our River Business, demand for our services is driven by agricultural,
mining and forestry activities in the Hidrovia Region. Products move from the
inland areas of the Hidrovia Region out to the Atlantic Ocean via the Parana and
Paraguay Rivers. Conversely, our tanker barges carry petroleum products from the
Atlantic Ocean to inland regions of South America via the Parana and Paraguay
Rivers. Substantially all of the push boats and barges in our River Business are
employed on a COA basis whereby we enter into contracts with our customers to
carry set volumes of dry or liquid cargo, typically for periods of up to one
year.
Expenses
In our Ocean and Passenger Business, our vessel operating expenses, or
running costs, are generally paid through Ravenscroft, a related party, which
provides ship management services for our oceangoing vessels. Operating expenses
include the cost of all ship management, crewing, spares and stores, insurance,
lubricants, repairs and maintenance. The most significant of these expenses are
maintenance and repairs, wages paid to marine personnel, catering and marine
insurance costs.
Our other primary operating expenses include general and administrative
expenses as well as ship management and administration fees paid to Ravenscroft
and Oceanmarine, another related party, who provide certain administrative
services. We pay Oceanmarine a monthly fee of $10,000 per oceangoing cargo
vessel for administrative services including general administration and
accounting (financial reporting and preparation of tax returns), use of office
premises, a computer network, secretarial assistance and other general duties.
We pay Ravenscroft a monthly technical ship management fee of $12,500 per
oceangoing vessel and (euro)20,000 per passenger vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. We pay Ravenscroft (euro)25,000 administrative and
operational fee per month per passenger vessel for all operational functions as
well as administering the subcontractors, concessions and credit card/collection
system onboard. We do not expect to pay fees to any related party other than
those described here for management and administration functions.
In our River Business, prior to our acquisition of the remaining 50% equity
interest in UABL, our subsidiaries that owned push boats and barges contracted
with Lonehort, Inc., a subsidiary of UABL, for ship management services and
generally paid our operating expenses through Lonehort. Our operating expenses
include the cost of all ship management, crewing, spares and stores, insurance,
lubricants, repairs and maintenance. Following the acquisition of the remaining
50% equity interest in UABL, all ship management services are performed, and all
operating expenses are paid, in-house. UABL employs the services of Tecnical
Services S.A. to provide crew recruitment services in Argentina and Paraguay. We
pay Tecnical Services S.A. $144,000 per year, plus an additional $50 for each
active crew member. We do not expect to pay fees to any related entity other
than those described here for management and administration functions.
In the Offshore Business, we expect operating expenses to include the cost
of all ship management, crewing, spares and stores, insurance, lubricants,
repairs and maintenance.
Through UABL, we own a drydock and a repair facility for our river fleet at
Pueblo Esther, Argentina, land for the construction of two terminals in
Argentina and 50% joint venture participations in two grain loading terminals in
Paraguay. UABL also rents offices in Asuncion, Paraguay and Buenos Aires,
Argentina. We do not own any other buildings and do not pay any other rental
expense other than as a portion of the administration fees paid to Oceanmarine.
Also, through Ultracape Delaware LLC, we own land for expansion of a maritime
oil products terminal in Mexico.
Foreign Currency Transactions
Substantially all of our revenues are denominated in U.S. dollars. However,
for the six months ended June 30, 2005, 11% of our total revenues were
denominated in U.S. dollars but collected in Argentine Pesos and Paraguayan
Guaranies at the equivalent amount of U.S. dollars at the payment date, and 20%
of our total out of pocket operating expenses were paid in Argentine Pesos and
Paraguayan Guaranies. Also, for the first half of 2005, 10% of our revenues were
denominated and collected in Euros and 3% of our operating expenses were paid in
Euros.
Our operating results, which are reported in U.S. dollars, may be affected
by fluctuations in the exchange rate between the U.S. dollar and the local
currencies. For accounting purposes, revenue and expense accounts are translated
into U.S. dollars at the exchange rate prevailing on the date of each
transaction.
Inflation
We do not believe that inflation has had a material impact on our
operations, although certain of our operating expenses (e.g., crewing, insurance
and drydocking costs) are subject to fluctuations as a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on our future operations in the case of our ocean vessels which are
mostly time chartered to third parties since it is the charterers who pay for
fuel. If our ocean vessels are employed under COA's, freight rates for voyage
charters are generally sensitive to the price of a ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level. In our river business,
we have some of our freight agreements adjusted by bunker prices automatically,
we have partial hedges against increases in bunker prices for a minor part of
our consumption and finally in other cases we have periodic renegotiations which
adjust for fuel prices. In the majority of cases, we adjust the fuel component
of our cost into the freights on a seasonal or yearly basis and therefore we are
affected during that particular period by variation in bunker prices.
Legal proceedings
1) Bahia Blanca Customs Dispute
Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Customs Authority of Bahia Blanca in Argentina over the alleged unauthorized
operation of the Princess Pia in Argentina during 2001. As a result, the Customs
Authority of Bahia Blanca issued a resolution claiming the sum of Argentine
pesos 4,689,695 (approximately U.S. $1,610,000) as import taxes and the sum of
Argentine pesos 4,689,695 (approximately U.S. $1,610,000) as fines. In response
to said resolution, on March 16, 2004, Ultrapetrol S.A. submitted an appeal with
the Argentine Tax Court arguing that it did not breach any applicable customs
laws since the Princess Pia operated within Argentine territory only during the
periods in which it was expressly authorized by the competent authorities. Said
appeal is pending resolution by the Argentine Tax Court. Based upon the facts
and circumstances of the case, the existing regulations and our insurance
coverage, we do not believe that the outcome of this matter should have a
material impact on our financial position or results of operations.
2) Brazilian Customs Dispute
Our subsidiary, Ultrapetrol S.A., is involved in a customs dispute with the
Brazilian Customs tax authorities over the alleged infringement of customs
regulations by the Alianza G3 and Alianza Campana (collectively, the "Vessel")
in Brazil during 2004. As a result, the Brazilian Customs tax authorities
commenced an administrative proceeding and applied the penalty of apprehension
of the Vessel which required the Vessel to remain in port or within a maximum of
five nautical miles from the Brazilian maritime coast. The maximum customs
penalty that could be imposed would be confiscation of the Vessel, which is
estimated by the Brazilian Customs tax authorities to be valued at U.S.
$4,560,000. On February 22, 2005, we were notified of the decision that grounds
on which the tax assessment was based were ratified. In response to this
decision, on February 28, 2005, we presented a specific request for
clarification of the decision. We simultaneously presented a petition to the
Secretary of the Brazilian Internal Revenue Service requesting the replacement
of the confiscation penalty applied to the Vessel by a penalty corresponding to
1% (one percent) of the value of the Vessel. Both of our requests made on
February 28, 2005 are still pending judgment.
On the same day that Ultrapetrol S.A. presented its defense to the above
mentioned administrative proceeding, a writ of injunction was filed on behalf of
Ultrapetrol S.A. seeking a judicial authorization allowing the return of the
Vessel to Boias de Xareu, which is located almost 20 nautical miles from the
Brazilian maritime coast, so the Vessel could resume its prior services. The
preliminary injunction was granted by the court in favor of Ultrapetrol S.A. on
September 17, 2004, conditioned on the weekly presentation of shipping letters
describing the location of the Vessel and the Vessel is now back in service at
Boias de Xareu. The tax authorities filed an interlocutory appeal against the
preliminary injunction that was granted in our favor. Currently, our lawsuit and
the interlocutory appeal by the tax authorities are pending judgment.
We note that in case we are not successful on the merits, under our
insurance coverage, we could request from The Standard Club, the Vessel's P&I
insurer, an indemnity corresponding to the value of the Vessel. Based upon the
facts and circumstances of the case, including the fact that the Vessel was
operating under a specific written authorization officially granted by the
Brazilian government, the existing regulations and our insurance coverage, we do
not believe that the outcome of this matter should have a material impact on our
financial position or results of operations. Various other legal proceedings
involving us may arise from time to time in the ordinary course of business.
However, we are not presently involved in any legal proceedings that, if
adversely determined, would have a material adverse effect on us.
Results of Operations
Six months ended June 30, 2005 compared to the six months ended June 30, 2004.
The following table sets forth certain historical income statement data for the
periods indicated derived from the Company's statements of operations expressed
in thousands of dollars.
===================================================================
2005 2004
===================================================================
-------------------------------------------------------------------
Second Accumulative Second Accumulative
Quarter 30-Jun-05 Quarter 30-Jun-04
-------------------------------------------------------------------
Revenues
Attributable to ocean fleet 15,674 31,739 12,700 28,799
Attributable to passenger fleet 5,251 6,628
Attributable to river fleet 17,074 29,607 15,877 18,587
-------------------------------------------------------------------
Total 37,999 67,974 28,577 47,386
-------------------------------------------------------------------
Voyage expenses
Attributable to ocean fleet (1) (8) 24 (459)
Attributable to passenger fleet (276) (611)
Attributable to river fleet (6,670) (12,574) (4,887) (4,887)
-------------------------------------------------------------------
Total (6,947) (13,193) (4,863) (5,346)
-------------------------------------------------------------------
Running cost
Attributable to ocean fleet (3,077) (6,238) (2,881) (6,697)
Attributable to passenger fleet (2,832) (3,485)
Attributable to river fleet (4,589) (8,443) (4,001) (5,752)
-------------------------------------------------------------------
Total (10,498) (18,166) (6,882) (12,449)
-------------------------------------------------------------------
Amortization of drydock expense (1,744) (3,515) (1,154) (2,127)
Depreciation of property and equipment (3,648) (7,172) (3,722) (6,607)
Management fees and administrative expenses (2,274) (4,264) (2,445) (3,959)
Other operative income 21,868 21,867 312 111
-------------------------------------------------------------------
Operating profit 34,756 43,531 9,823 17,009
-------------------------------------------------------------------
Financial expense (4,704) (9,317) (4,229) (7,997)
Financial gain on extinguishments of debts 1,156 1,344
Revenues. Total revenues from our ocean fleet, net of commissions,
increased from $28.8 million in the first half 2004 to $31.7 million in 2005, or
an increase of 10%. This increase is primarily attributable to the higher time
charter rates of our Princess Nadia and Princess Katherine during the first six
months of 2005. These increases were partially offset by the decrease of
revenues due to the sale of our vessel Princess Eva.
Total revenues from our passenger fleet, net of commissions, increased from
$0 million in the first half 2004 to $6.6 million in 2005. This increase is
attributable to the effect of the revenues of the vessel New Flamenco acquired
during the period.
Total revenues from our river fleet, net of commissions, increased by 59%
from $18.6 million in the first half of 2004 to $29.6 million in the same period
of 2005. This increase is primarily attributable to the consolidation of UABL
revenues since the second quarter of 2004, while in the first quarter of 2004
river revenues only included the net proceeds for those of our vessels which
were chartered by UABL.
Voyage expenses. In the first six months of 2005, voyage expenses of our
ocean fleet were $0.0 million, as compared to $0.5 million for the same period
of 2004. The decrease is primarily attributable to the effect of the sale of the
Princess Eva.
Voyage expenses of our passenger fleet were $0.6 in the first half 2005.
This increase is attributable to the effect of the voyages expenses of the new
vessel New Flamenco.
In the first half of 2005, voyage expenses of our river fleet were $12.6
million, as compared to $4.9 million for the same period of 2004, an increase of
$7.7 million. The increase is attributable to the effect of the consolidation of
UABL, as our subsidiary since the second quarter of 2004.
Running costs. Running costs of our ocean fleet were $6.2 million in the
first half of 2005 as compared to $6.7 million in the same of 2004 or a decrease
of 7%. This variance is mainly attributable to the sale of our vessels Princess
Eva and Cape Pampas.
Running costs of our passenger fleet were $3.5 in the first six months of
2005. This increase is attributable to the effect of the running cost of the new
vessel New Flamenco.
In the first half of 2005, running expenses of our river fleet were $8.4
million, as compared to $5.8 million for the same period of 2004, an increase of
$2.6 million. The increase is attributable to the effect of the consolidation of
UABL, as our subsidiary since the second quarter of 2004.
Amortization of drydock expense. Amortization of dry docking and special
survey costs increased by $1.4 million, or 67%, to $3.5 million in the first
half of 2005 as compared to $2.1 million in 2004. The increase is primarily
attributable to the large amortization expenses of the Alianza G3, Princess
Katherine, Princess Susana and our larger river fleet.
Depreciation of property and equipment. Depreciation increased by $0.6
million, or 9%, to $7.2 million in the first six months of 2005 as compared to
$6.6 million in the same period of 2004. This increase is primarily due to the
purchase of a new tugs and river barges and the additional passenger vessel New
Flamenco as well as the depreciation of the UABL fleet attributable to the
effect of the consolidation of UABL as our subsidiary which was partially offset
by the sale of our vessels Princess Eva and Cape Pampas.
Management fees and administrative expenses. Management fees and
administrative expenses were $4.3 million in the first half of 2005 as compared
to $4.0 million in the same period in 2004. This increase of $0.3 million is
attributable mainly to an increase in the overhead expenses produced by the
consolidation of UABL of $0.3 million.
Other operating income (expenses). This account shows a total of $21.9
million in the first six months of 2005 as compared to $0.1 million in 2004. The
increase of $21.8 million is attributable to the effect of Cape Pampas sale.
Operating profit. Operating profit for the first six months of 2005 was
$43.5 million, an increase of $26.5 million from the same period in 2004. In
comparing these figures, the difference is mainly attributable to the result of
the sale of the Cape Pampas and higher results obtained from our vessels,
Princess Nadia and Princess Katherine, the sale of Princess Marisol and Princess
Laura, as well as the results attributable to our passenger fleet.
Interest expense. Interest expenses increased by about $1.3 million or 16%,
to $9.3 million in the first half of 2005 as compared to $8.0 million in the
equivalent 2004 period. This variation is mainly attributable to the higher
level of financial debt on our vessels and an increase of $0.6 million in
interest expenses attributable to the effect of the consolidation of UABL as our
subsidiary.
Financial gain (loss) on extinguishments of debt. During the first six
months of 2004 we recognized a gain of $1.3 million for the repurchase of our
Senior Notes due 2008.
Liquidity and Capital Resources
We operate in a capital-intensive industry requiring substantial ongoing
investments in revenue producing assets. Our subsidiaries have historically
funded their vessel acquisitions through a combination of bank indebtedness,
shareholder loans, cash flow from operations and equity contributions.
As of June 30, 2005, we had total indebtedness of $212.6 million,
consisting of $180.0 million from our Senior Notes due 2014. Also as of June 30,
2005, UABL, as our subsidiary, had the following indebtedness: $18.4 million in
a senior loan facility with IFC; $9.0 million with KfW; $1.4 million with
Citibank NA; $0.5 million with Touax LPG SA and $1.6 million with Transamerica
Leasing Inc. There was an also accrued interest expense for these loans of $1.7
million.
At June 30, 2005, we had cash and cash equivalents on hand of $30.9
million. In addition, we had $3.6 million in restricted cash and $0.2 million in
short term investments. We also had $14.9 million in non-current restricted
cash.
Operating Activities
In the first half of 2005, we generated $15.9 million in cash flow from
operations compared to $11.3 million for the same period in 2004. Net income for
the six months ended June 30, 2005 was $24.8 million which is $14.9 million more
than the net income in the same period of 2004.
Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred charges, and adjusted by changes in working capital and expenditures in
dry dock.
Investing Activities
During the first half ended June 30, 2005, we disbursed $9.0 million in the
purchase of push boats, river barges and additional equipments and $17.4 million
in the purchase of the passenger vessels which we paid partially with funds
available in restricted cash and $1.0 million as deposit for the purchase of
Miranda I. Also we received a net of $37.9 million from the process of the Cape
Pampas sale.
Financing Activities
Net cash provided by financing activities was $(6.7) million during the six
months of 2005, compared to a net cash process of $23.4 million in financing
activities during the comparable period in 2004. The decrease in cash provided
by financing activities in this period is mainly attributable to the repayments
of principal and interest on its financial debt made during 2005, the
distribution of cash in our subsidiary Ultracape (Holdings) Ltd partially offset
with the application $15.2 million of restricted cash to the purchase of the two
passenger vessels and $7.5 million disbursed from IFC and KfW of the remaining
of the $30.0 million loan granted to UABL in 2002.
Recent Developments
On July 25, 2005 the Company's option to repurchase 25,212 of its shares
from Inversiones Los Avellanos S.A. for a total price of $0.9 million expired
and was extended till July 25, 2006.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
Contents Page
-------------------------------------------------------------------------------------------------------- ------
o Financial Statements
- Condensed Consolidated Balance Sheets as of June 30, 2005 and 2004 - F-1 -
- Condensed Consolidated Statements of Income for the six months periods ended June 30, 2005 and 2004 - F-2 -
- Condensed Consolidated Statements of Changes in Stockholders' Equity for the six months periods ended June 30,
2005 and 2004 - F-3 -
- Condensed Consolidated Statements of Cash Flows for the six months periods ended June 30, 2005 and 2004 - F-4 -
- Notes To Condensed Consolidated Financial Statements as of June 30, 2005 and 2004 - F-5 -
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Stated in thousands of U.S. dollars, except par value and share amounts)
June 30, December 31, 2004
2005
--------------------- ------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 30,889 $ 11,602
Restricted cash 3,587 2,975
Investments 214 217
Accounts receivable, net of allowance for doubtful accounts of 860 and 739
in 2005 and 2004, respectively 8,615 6,385
Receivables from related parties 7,110 3,933
Marine and river operating supplies 3,046 2,194
Prepaid expenses 5,742 4,101
Other receivables 5,459 5,724
--------------------- -------------
Total current assets 64,662 37,131
--------------------- -------------
NONCURRENT ASSETS
Dry dock 10,499 11,716
Other receivables 6,510 7,944
Receivables from related parties 2,280 2,540
Property and equipment, net 165,752 160,535
Restricted cash 14,878 30,010
Investment in affiliates 16,002 15,607
Other assets 8,069 8,165
--------------------- -------------
Total noncurrent assets 223,990 236,517
--------------------- -------------
Total assets $ 288,652 $ 273,648
===================== =============
LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,238 $ 11,487
Payable to related parties 383 768
Other financial debt 8,690 10,108
Current portion of capital lease obligations 533 695
Other payables 301 632
------------------- -------------
Total current liabilities 24,145 23,690
------------------- -------------
NONCURRENT LIABILITIES
Long-term debt 180,000 180,000
Other financial debt, net of current portion 23,397 29,430
Capital lease obligations, less current portion - 180
Account payable and accrued expenses 219 219
------------------- ------------
Total noncurrent liabilities 203,616 209,829
------------------- ------------
Total liabilities $ 227,761 $ 233,519
------------------- ------------
MINORITY INTEREST $ 2,490 $ 6,468
------------------- ------------
MINORITY INTEREST SUBJECT TO PUT RIGHTS $ 4,713 $ 4,751
------------------- ------------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: authorized shares 2,134,452, issued
and outstanding 2,109,240 21 21
Treasury stock (20,332) (20,332)
Additional paid-in capital 68,884 68,884
Accumulated deficit 4,915 (19,863)
Accumulated other comprehensive income 200 200
------------------- ------------
Total shareholders' equity $ 53,688 $ 28,910
------------------ ------------
Total liabilities, minority interests and shareholders' equity $ 288,652 $ 273,648
================== ============
See accompanying notes.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Stated in thousands of U.S. dollars)
Six-month periods ended June 30,
---------------------------------------
2005 2004
------------------ -----------------
REVENUES
Revenues from third parties $ 66,741 $ 43,416
Revenues from related parties 1,233 3,970
------------------ ------------------
Total revenues 67,974 47,386
------------------ ------------------
OPERATING EXPENSES
Voyage expenses (13,193) (5,346)
Running costs (18,166) (12,449)
Amortization of dry dock (3,515) (2,127)
Depreciation of property and equipment (7,172) (6,607)
Management fees to related parties (864) (837)
Administrative expenses (3,400) (3,122)
Gain on disposal of vessels 21,867 111
------------------ ------------------
(24,443) (30,377)
------------------ ------------------
Operating profit 43,531 17,009
------------------ ------------------
OTHER INCOME (EXPENSES)
Financial expense (9,317) (7,997)
Financial gain on extinguishment of debt 1,344
Financial income 263 77
Investment in affiliates (163) 112
Other income (22) 53
------------------ ------------------
Total other expenses (9,239) (6,411)
------------------ ------------------
Income before income taxes and minority interest 34,292 10,598
Income taxes (11) (165)
Minority interest (9,503) (519)
------------------ ------------------
Net income for the period $ 24,778 $ 9,914
================== ==================
See accompanying notes.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(Stated in thousands of U.S. dollars)
Accumulated
Additional other
Common paid-in Treasury comprehensive Accumulated
Balance stock capital stock income deficit Total
------------------------------------ --------------- ---------------- ----------------- -------------- -------------- -------------
December 31, 2003 $ 21 $ 68,884 $ (20,332) $ 222 $ (25,002) $ 23,793
Comprehensive income:
- Change in value of derivatives - - - (51) - (51)
- Net income for the period - - - - 9,914 9,914
Total comprehensive income 9,863
----------- ---------------- ----------------- ------------ ----------------- -------------
June 30, 2004 $ 21 $ 68,884 $ (20,332) $ 171 $ (15,088) $ 33,656
=========== ================ ================= ============ ================= =============
December 31, 2004 $ 21 $ 68,884 $ (20,332) $ 200 $ (19,863) $ 28,910
Net income and comprehensive income - - - - 24,778 24,778
----------- ---------------- ----------------- ------------ ----------------- -------------
June 30, 2005 $ 21 $ 68,884 $ (20,332) $ 200 $ 4,915 $ 53,688
=========== ================ ================= ============ ================= =============
See accompanying notes.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in thousands of U.S. dollars)
Six-month periods ended
June 30,
------------------- -------------------
2005 2004
-------------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period $ 24,778 $ 9,914
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation of property and equipment 7,172 6,607
Amortization of dry dock 3,515 2,127
Expenditure for dry dock (2,872) (5,758)
Note issuance expenses amortization 406 274
Minority interest in equity of subsidiaries 9,503 519
Financial gain on extinguishment of debt - (1,344)
(Gain) on disposal of vessels (21,867) (111)
Net gain (loss) from investment in affiliates 163 (112)
Allowance for doubtful account 121 431
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivables (2,351) 388
Receivable from related parties (2,917) 8,872
Marine and river operating supplies (852) 668
Prepaid expenses (1,641) 1,222
Other receivables 1,699 382
Other (310) (14)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 2,751 (2,517)
Payable to related parties (385) (9,523)
Current portion of other financial debt - (346)
Other (1,016) (410)
----------------------------------
Net cash provided by operating activities 15,897 11,269
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (27,819) (36,795)
Proceeds from disposals of vessels 37,880 6,501
Purchase of UABL Limited and UABL Terminals companies, net of cash
acquired - (1,713)
Decrease (increase) in time deposit 3 (6,739)
----------------------------------
Net cash provided by (used in) investing activities 10,064 (38,746)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in restricted cash 14,520 11,674
Payments of long-term financial debt (15,175) (12,349)
Proceeds from long-term financial debt 7,500 16,000
Minority interest in equity of subsidiaries - 12,458
Payments of dividends (13,400) -
Funds used in reacquisition of Notes - (4,261)
Other (119) (119)
----------------------------------
Net cash (used in) provided by financing activities (6,674) 23,403
----------------------------------
Net increase (decrease) in cash and cash equivalents 19,287 (4,074)
Cash and cash equivalents at the beginning of year $ 11,602 $ 8,248
----------------------------------
Cash and cash equivalents at the end of period $ 30,889 $ 4,174
----------------------------------
See accompanying notes.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars, except otherwise indicated)
(Information to the six-month periods ended June 30, 2005 and 2004 is unaudited)
1. CORPORATE ORGANIZATION AND CONSOLIDATED COMPANIES
Organization
Ultrapetrol (Bahamas) Limited ("Ultrapetrol Bahamas" or "the Company", "us"
or "we") is a company organized and registered as a Bahamas Corporation
since December 1997.
The Company is a diversified ocean and river transportation company
involved in the carriage of dry and liquid cargoes as well as passengers.
In its Ocean Business, it is an owner and operator of oceangoing vessels
that transport petroleum products, dry cargo and passengers around the
world. In its River Business it is an operator of river barges and push
boats in the Hidrovia Region of South America, a region of navigable waters
on the Parana, Paraguay and Uruguay Rivers and part of the River Plate,
which flow through Brazil, Bolivia, Uruguay, Paraguay and Argentina. In
addition we recently made an investment in an offshore services
transportation company, which will commence operations in the second half
of 2005.
On June 28, 2001, the Company issued 138,443 new shares for $5,295 which
were totally subscribed by Inversiones Los Avellanos S.A., one of the
Company's original shareholders, and was paid $3,297 in 2001 and $1,104 in
2002 and the balance will be payable in July 2006. As of June 30, 2005, the
outstanding payment was $894 and was shown as a reduction of shareholders'
equity. The Company has an option to repurchase 25,212 of its shares for a
total price of $894 from Inversiones Los Avellanos S.A. until July 25,
2006.
As of June 30, 2005, the shareholders of Ultrapetrol Bahamas are Solimar
Holdings Ltd., Inversiones Los Avellanos S.A. and Avemar Holdings (Bahamas)
Ltd., a wholly owned subsidiary of the Company, in the proportions of
46.7%, 28.2% and 25.1%, respectively. Since Avemar Holdings (Bahamas) Ltd.
granted an irrevocable proxy to Inversiones Los Avellanos S.A. in full for
all of its voting powers related to its interest in the Company as of June
30, 2005, Inversiones Los Avellanos S.A. held 53.3% of the Company's voting
rights.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with U.S. generally accepted accounting
principles ("US GAAP") for interim financial information. The consolidated
balance sheet at December 31, 2004 has been derived from the audited
financial statement at that date. The unaudited condensed consolidated
financial statements and the consolidated balance sheet do not include all
of the information and footnotes required by US GAAP for complete financial
statements. All adjustments which, in the opinion of management, are
considered necessary for a fair presentation of the results of operations
for the periods shown are of a normal, recurring nature and have been
reflected in the unaudited condensed consolidated financial statements. The
results of operations for the periods presented are not necessarily
indicative of the results expected for the full fiscal year or for any
future period.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries, both majority and wholly owned. Significant
intercompany accounts and transactions have been eliminated in this
consolidation. Investments in 50% or less owned affiliates, in which the
Company exercises significant influence, are accounted for by the equity
method.
The condensed statements of operations and cash flows for 2004 have been
reclassified to conform with the 2005 presentation of certain items.
3. PROPERTY AND EQUIPMENT, NET
The capitalized cost of the property and equipment, and the related
accumulated depreciation as of June 30, 2005, and December 31, 2004 is as
follows:
June 30, December 31,
2005 2004
------------------------ -------------------------
Original book value
------------------------ -------------------------
Ocean-going vessels $ 116,098 $ 134,825
River barges and pushboats 114,464 105,426
Passenger vessels 17,405 -
Furniture and equipment 4,842 4,672
Land and operating base 6,123 4,758
Prepayment to supplies 1,079 1,242
------------------------ -------------------------
Total original book value 260,011 250,923
Accumulated depreciation (94,259) (90,388)
------------------------ -------------------------
Net book value $ 165,752 $ 160,535
======================== =========================
As of June 30, 2005, the net book value of the assets pledged as a guarantee of
the debt was approximately $150 million.
- Cape Pampas sale
In March 2005, the Company entered into an agreement to sell its vessel,
Cape Pampas for a total price of approximately $37,880, net of the related
expenses. The vessel was delivered to the new owners on May 6, 2005, at
which time a gain on sale of approximately $22 million was recognized.
The Company used part of the proceeds from the sale mentioned above to
cancel our financial obligations related with the purchase of this vessel.
- New Flamenco acquisition
In March 2005, the Company entered into a contract with Cruise Elysia Inc.
to purchase a passenger vessel, named New Flamenco for a total purchase
price of $13.5 million. The purchase price was funded by a combination of
funds deposited in the Escrow Account and available cash.
- World Renaissance acquisition
On April 6, 2005, the Company purchased at auction for a price of $3.4
million the cruise vessel World Renaissance, renamed Grand Victoria, which
was delivered and fully paid for on April 19, 2005. The purchase price was
funded by a combination of funds deposited in the Escrow Account and
available cash.
- Mt Sun Chemist acquisition
On April 28, 2005 the Company agreed to purchase the product tanker Mt Sun
Chemist, renamed Miranda I, for a total price of $10.3 million. The vessel
was delivered and fully paid for on July 7, 2005.
4. LONG-TERM DEBT AND OTHER FINANCIAL DEBT
Nominal value
Financial institution / -------------------------- Accrued
Other Due-year Current Noncurrent interest Total Average rate
------------------------------------------ ----------- ------------- ----------- -------- ------------
Ultrapetrol Bahamas Notes 2014 $ - $ 180,000 $ 1,620 $ 181,620 9.00 %
UABL Barges IFC through 2011 2,143 11,785 46 13,974 Libor + 3.75%
UABL Barges IFC through 2009 1,000 3,500 14 4,514 Libor + 3.50%
UABL Barges KfW through 2009 2,000 7,000 30 9,030 Libor + 3.50%
UABL Paraguay Citibank NA through 2010 247 1,112 - 1,359 Libor + 2.75%
UABL Limited Transamerica Leasing Inc through 2006 1,590 - - 1,590 7.94%
----------- ------------- -------- ---------------
June 30, 2005 $ 6,980 $ 203,397 $ 1,710 $ 212,087
=========== =========== ========== ==============
December 31, 2004 $ 8,337 $ 209,430 $ 1,771 $ 219,538
=========== =========== =========== =============
5. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings, claims and contingencies
arising in the ordinary course of business. When such amounts can be
estimated and the contingency is probable, management accrues the
corresponding liability. While the ultimate outcome of lawsuits or other
proceedings against the Company cannot be predicted with certainty,
management does not believe the costs of such actions will have a material
effect on the Company's consolidated financial position or results of
operations.
Bahia Blanca Customs Dispute
Ultrapetrol S.A., one of the Company's subsidiaries, is involved in a
customs dispute with the Customs Authority of Bahia Blanca in Argentina
over the alleged unauthorized operation of the Princess Pia in Argentina
during 2001. As a result, the Customs Authority of Bahia Blanca issued a
resolution claiming the equivalent to $1,610 as import taxes and the
equivalent to $1,610 as fines. In response to said resolution, on March 16,
2004, Ultrapetrol S.A. submitted an appeal with the Argentine Tax Court
arguing that it did not breach any applicable customs laws since the
Princess Pia operated within Argentine territory only during the periods in
which it was expressly authorized by the competent authorities. Said appeal
is pending resolution by the Argentine Tax Court. Based upon the facts and
circumstances of the case, the existing regulations and applicable
insurance coverage, the Company does not believe that the outcome of this
matter should have a material impact on its financial position or results
of operations.
Brazilian Customs Dispute
Ultrapetrol S.A. is involved in a customs dispute with the Brazilian
Customs tax authorities over the alleged infringement of customs
regulations by the Alianza G3 and Alianza Campana (collectively, the
"Vessel") in Brazil during 2004. As a result, the Brazilian Customs tax
authorities commenced an administrative proceeding and applied the penalty
of apprehension of the Vessel which required the Vessel to remain in port
or within a maximum of five nautical miles from the Brazilian maritime
coast. The maximum custom penalty that could be imposed would be
confiscation of the Vessel, which is estimated by the Brazilian Customs tax
authorities to be valued at $4,560. On the same day that Ultrapetrol S.A.
presented its defense to this administrative proceeding, a writ of
injunction was filed on behalf of Ultrapetrol S.A. seeking a judicial
authorization allowing the return of the Vessel to Boias de Xareu, which is
located almost 20 nautical miles from the Brazilian maritime coast, so the
Vessel could resume its prior services. The preliminary injunction was
granted by the court in favor of Ultrapetrol S.A. on September 17, 2004,
conditioned on the weekly presentation of shipping letters describing the
location of the Vessel.
On February 22, 2005, the Company was notified of the decision that grounds
on which the tax assessment was based were ratified. In response to this
decision, on February 28, 2005, the Company presented a specific request
for clarification of the decision. The Company simultaneously presented a
petition to the Secretary of the Brazilian Internal Revenue Service
requesting the replacement of the confiscation penalty applied to the
vessel by a penalty corresponding to 1% (one percent) of the value of the
vessel. Both of the Company request made on February 28, 2005 are still
pending judgment.
In case the Company is not successful on the merits, under applicable
insurance coverage, it could request from The Standard Club, the Vessel's
P&I insurer, an indemnity corresponding to the value of the Vessel. Based
upon the facts and circumstances of the case, including the fact that the
Vessel was operating under a specific written authorization officially
granted by the Brazilian government, the existing regulations and
applicable insurance coverage, the Company does not believe that the
outcome of this matter should have a material impact on its financial
position or results of operations.
6. INCOME TAXES
The Company operates through its subsidiaries, which are subject to several
tax jurisdictions, as follows:
a) Panama
The earnings from shipping operations were derived from sources
outside Panama and such earnings were not subject to Panamanian taxes.
b) Paraguay
Two of the Company's subsidiaries, Parfina S.A. and Oceanpar S.A., are
subject to Paraguayan corporate income taxes. In addition, since
acquisition of UABL, four subsidiaries of UABL, UABL Paraguay, Parabal
S.A., Yataiti and Riverpar are subject to Paraguayan corporate income
taxes.
c) Argentina
Ultrapetrol S.A. is subject to Argentine corporate income taxes. Since
the UABL acquisition, in addition to this subsidiary, two
subsidiaries, UABL S.A. and Sernova are subject to Argentine corporate
income taxes.
In Argentina, the tax on minimum presumed income ("TOMPI"),
supplements income tax since it applies a minimum tax on the potential
income from certain income generating-assets at a 1% tax rate. The
Company's tax obligation in any given year will be the higher of these
two tax amounts. However, if in any given tax year tax on minimum
presumed income exceeds income tax, such excess may be computed as
payment on account of any excess of income tax over TOMPI that may
arise in any of the ten following years.
d) Chile
Corporacion de Navegacion Mundial S.A. is subject to Chilean corporate
income taxes.
e) The United States
Certain entities, defined as "Qualified Foreign Corporations", are
exempt from United States of America ("U.S.") corporate income tax on
U.S. source income from their international shipping operations
("shipping income"), pursuant to Section 883 of the US tax code. A
corporation will be considered a Qualified Foreign Corporation if (i)
its country of incorporation is a "Qualified Foreign
Country" which, as defined, is a foreign country that exempts US
corporations from income tax on its shipping income (the
"Incorporation Test"), (ii) it meets the "Ultimate Owner Test", and
(iii) it files a US Federal income tax return (Form 1120F) to claim
the Section 883 exemption. A corporation meets the Ultimate Owner Test
if (a) more than 50% of the value of its stocks is ultimately owned by
"Qualified Shareholders" which, as defined, includes individuals who
are tax residents of one or more Qualified Foreign Countries that
exempt U.S. persons from tax on shipping earnings, (b) the scope of
the exemption provided by such jurisdictions is broad enough to cover
the type of shipping income (e.g. freight income, time charter hire or
bareboat charter hire) earned by the foreign corporation and (c) the
corporation obtains ownership statements, signed under penalties of
perjury, from its beneficial owners and all intermediate owners, that
enable the corporation to evidence that more than 50% of the value of
its stock is ultimately owned by individuals who are tax residents of
one or more foreign countries that exempt U.S. persons from tax on
shipping earnings. For the six months period ended June 30, 2005 and
2004 Princely International Finance Corp. ("Princely") and Ultracape
(Holdings) Ltd. ("Ultracape") satisfied the Incorporation Test because
they are incorporated in Panama and Bahamas, respectively, which
provide the required exemption to U.S. corporations as confirmed by
Revenue Ruling 2001-48. In addition, we believe that each of Princely
and Ultracape have obtained ownership statements from their ultimate
individual owners and all intermediate owners to evidence that more
than 50% of the value of their outstanding shares are ultimately owned
by Qualified Shareholders. Consistent with the prior years, Princely
and Ultracape will file IRS Form 1120F for the year 2005 to claim the
Section 883 exemption.
Based on the foregoing, the Company expects all of its income to be
exempt from U.S. income taxes for the year ended December 31, 2005.
Ultrapetrol Bahamas accounts for income taxes under the liability
method in accordance with SFAS No. 109 Accounting for Income Taxes.
Under this method, deferred tax assets and liabilities are established
for temporary differences between the financial reporting basis and
the tax basis of the Company's assets and liabilities at each period
end. Deferred tax assets are recognized for all temporary items and an
offsetting valuation allowance is recorded to the extent that it is
not more likely than not that the asset will be realized.
7. RELATED PARTY TRANSACTIONS
As of June 30, 2005 and December 31, 2004, the balances of receivable from
related parties were as follows:
June 30, December 31,
2005 2004
---------------------- -------------------------
Current:
Receivable from related parties
- Ravenscroft Shipping Inc. $ 3,438 $ 2,533
- UP Offshore Bahamas Ltd. and its subsidiaries 53 76
- Maritima Sipsa S.A. 1,063 754
- Oceanmarine S.A. 270 204
- Comintra Enterprise, Ltd. 1,500 250
- Other 786 116
---------------------- -------------------------
$ 7,110 $ 3,933
====================== =========================
Noncurrent:
Loans receivable from related parties
- OTS S.A. (1) $ - $ 260
- Puerto del Sur S.A. (2) 2,280 2,280
---------------------- -------------------------
$ 2,280 $ 2,540
====================== =========================
(1) This loan accrues no interest and has no maturity date.
(2) This loan accrues interest at a nominal interest rate of 3% per year,
payable semiannually. The principal will be repaid in 8 equal
semiannual installments, beginning on June 30, 2006.
As of June 30, 2005 and December 31, 2004 the balances payable to related
parties were as follows:
June 30, December 31,
2005 2004
----------------------- ---------------------
Payable to related parties
- Ravencroft Shipping Inc $ 365 $ 587
- OTS S.A. - 146
- Other 18 35
--------------- -------------------------
$ 383 $ 768
================== =========================
For the six-month periods ended June 30, 2005 and 2004, the revenues
derived from related parties were as follows:
For the six-month periods
ended June 30
2005 2004
----------------------- ----------------------
- UABL and its subsidiaries $ - $ 2,737
- Maritima Sipsa S.A. 1,233 1,233
---------------------- ------------------------
Total $ 1,233 $ 3,970
====================== ========================
Management fee and other services
The Company through certain of its subsidiaries has contracted with
Oceanmarine, a company under the same common control as Ultrapetrol, for
certain administrative services. This agreement stipulates a fee of $10 per
month and per vessel. Pursuant to the individual ship management agreement
between Ravenscroft Ship Management Ltd., a Bahamas Corporation
("Ravenscroft Bahamas") under the same common control as Ultrapetrol, and
the Company's relevant vessel-owning subsidiaries, Ravenscroft Bahamas has
agreed to provide certain ship management services for all of the Company's
vessels. Ravenscroft Bahamas has subcontracted the provision of these
services to Ravenscroft Shipping Inc., a Miami-based related party of the
Company. This agreement stipulates a fee of $12.5 per month and per vessel.
Under these contracts, these related parties are to provide all services
necessary for such companies to operate, including but not limited to
crewing, insurance, accounting and other required services. Additionally,
commissions and agency fees are paid to those related parties.
In addition, the Company pays Ravenscroft a monthly technical ship
management fee of (euro)20,000 per passenger vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. The Company pays Ravenscroft for each passenger
vessel (euro)25,000 administrative and operational fee per month for all
operational functions as well as administering the subcontractors,
concessions and credit card/collection system onboard. The Company does not
expect to pay fees to any related party other than those described here for
management and administration functions.
For the six-month periods ended June 30, 2005 and 2004, management fees
expensed to these related parties for such services amounted to:
2005 2004
---------------- -------------
Oceanmarine $ 300 $ 380
Ravenscroft 564 457
-------------- --------------
Total $ 864 $ 837
============== ==============
For the six-month periods ended June 30, 2005 and 2004, Ravenscroft has
provided certain other services to the Company in the amount of $940 and
$470, respectively.
For the six-month period ended June 30, 2004, ship management fees expensed
for Lonehort S.A., a shipping agent wholly owned by UABL, for vessel
administration services amounted to $1,736.
The expense recovery from UABL totaled $131 for the six-month period ended
June 30, 2004 and the administrative services fees to UABL totaled $87
during the six-month period ended June 30, 2004.
Venecia stock sold
In October 2001, the Company sold Venecia Shipping Co., a wholly owned
subsidiary, to a related party, Windsor Financial Services Inc., at its
book value with a remaining other receivable balance of $634 and $834 as of
June 30, 2005 and December 31, 2004, respectively.
Sale and repurchase of vessel Princess Marina
In 2003 the Company entered into certain transactions to sell, and
repurchase in 2006, to and from Maritima Sipsa S.A., a 49% owned company,
the vessel Princess Marina.
The combined effect of the sale at $15,100, repurchase at $7,700 and a loan
granted to Maritima Sipsa S.A. for $7,400 resulted in no cash flow on
consolidated basis at the time of execution. The loan is repaid to the
Company on a quarterly basis over a six-year period ending in June 2006,
when the vessel will be delivered to the Company.
The transaction was recognized in the Company's statements of operations as
a lease, reflecting quarterly payments as charter revenues for $1,233 in
the six-month periods ended June 30, 2005 and 2004, while the vessel
remains presented in the accompanying balance sheets as an asset.
Administration agreement with UP Offshore
On June 25, 2003 the Company signed an administration agreement with UP
Offshore.
Under this agreement Ultrapetrol agrees to assist UP Offshore by providing
management services required by the latter, including providing the
services of the Chief Executive Officer and to provide ongoing management
and commercial advisory services up to the year 2013.
The parties agreed that Ultrapetrol professional fees under this agreement
shall be the 2% of UP Offshore annual EBITDA. None of such fees has been
recognized in six-month periods ended June 30, 2005 and 2004, because UP
Offshore has not commenced its commercial operations.
8. BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION
Since the UABL Equity Acquisition, the Company organizes its business and
started to evaluate performance by its new three operating segments, ocean,
river and offshore business. Prior to such acquisition the Company operated
with no segments. The accounting policies of the reportable segments are
the same as those for the condensed consolidated financial statement. The
Company does not have significant intersegment transactions. These segments
and their respective operations are as follows:
Ocean business: consists of international and inland transportation of
petroleum and dry-cargo products by oceangoing vessels owned by its
subsidiaries.
River business: consists of river transportation of refined petroleum and
dry-cargo products by barges owned by its subsidiaries.
Offshore business: consists of platform supply vessels to provide
transportation services to the offshore petroleum exploration and
production companies. Such vessels are currently under construction and
expected to operate in the second half of 2005.
Cruise business: consists of transportation of people and our passenger
vessels can either be employed on time charger, or by the sale of the
individual cabins or mixed formulas that provide a minimum guaranteed
income for the shipowner.
Ultrapetrol's oceangoing vessels operate on a worldwide basis and are not
restricted to specific locations. Also, Ultrapetrol's river barges operate
a river transportation business on the Parana, Paraguay and Uruguay rivers
and part of River Plate in Argentina, Bolivia, Brazil, Paraguay and
Uruguay. Accordingly, it is not possible to allocate the assets of these
operations to specific countries. In addition, the Company does not manage
its operating profit on a geographic basis.
For the six-month periods
ended June 30,
--------------------------------------------
2005 2004
------------------- -----------------------
Revenues (1)
- South America $ 29,302 $ 17,188
- Europe 29,262 16,962
- Asia 9,092 10,108
- Central America 318 3,128
---------------------- ---------------------
$ 67,974 $ 47,386
====================== =====================
(1) Classified by country of domicile of charterers.
The following schedule presents segment information about the Company's
operations for the six-month period ended June 30, 2005:
Ocean River Offshore Cruise
business business business business Total
----------------- ----------------- -------------------- ---------------- ---------------------
Revenues $ 31,739 $ 29,607 $ - $ 6,628 $ 67,974
Running and voyage expenses 6,246 21,017 - 4,096 31,359
Depreciation and amortization 6,870 3,375 - 442 10,687
Gain on disposal of vessels 21,867 - - - 21,867
Segment operating profit 37,148 4,482 - 1,901 43,531
Financial income 263 - - - 263
Financial expenses 8,012 1,305 - - 9,317
Income tax (provision) benefit 4 (15) - - (11)
Segment assets 165,765 87,236 13,516 22,135 288,652
Investments in affiliates 125 2,361 13,516 - 16,002
Additions to long-lived assets $ 2,340 $ 8,074 $ - $ 17,405 $ 27,819
The following schedule presents segment information about the Company's
operations for the six-month period ended June 30, 2004:
Ocean River Offshore Cruise
business business business business Total
----------------- ----------------- -------------------- ---------------- ---------------------
Revenues $ 28,799 $ 18,587 $ - - 111
Segment operating profit 11,818 5,191 - - 17,009
Financial income 77 - - - 77
Financial expenses 7,092 905 - - 7,997
Income tax (provision) benefit (34) (170) 39 - (165)
Segment assets 113,486 110,286 36,129 - 259,901
Investments in affiliates - 2,201 - - 2,201
Additions to long-lived assets $ - $ 22,179 $ 14,616 $ - $ 36,795
9. SUPPLEMENTAL GUARANTOR INFORMATION
On November 24, 2004, the Company issued $180 million 9% First Preferred
Ship Mortgage Notes due 2014,
The 2014 Senior Notes are fully and unconditionally guaranteed on a joint
and several senior basis by the majority of the Company's subsidiaries
directly involved in our ocean business,
The Indenture provides that the 2014 Senior Notes and each of the
guarantees granted by Subsidiaries, other than the Mortgages, are governed
by, and construed in accordance with, the laws of the state of New York.
Each of the mortgaged vessels is registered under either the Panamanian
flag, or another jurisdiction with similar procedures, All of the
Subsidiary Guarantors are outside of the United States,
Supplemental condensed combining financial information for the Guarantor
Subsidiaries for the 2014 Senior Notes is presented below, This information
is prepared in accordance with the Company's accounting policies, This
supplemental financial disclosure should be read in conjunction with the
condensed consolidated financial statements,
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF JUNE 30, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Total
Combined subsidiary non-subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
---------------- -------------------- ----------------- ----------------- --------------
Current assets
Receivables from related parties $ 116,019 $ 10,806 $ 4,866 $ (124,581) $ 7,110
Other current assets 23,560 11,615 22,377 - 57,552
----------------- ---------------- ------------------ ----------------- ---------------
Total current assets 139,579 22,421 27,243 (124,581) 64,662
----------------- ---------------- ------------------ ----------------- ---------------
Noncurrent assets
Property and equipment, net - 109,653 56,099 - 165,752
Investment in affiliates 77,332 - 16,002 (77,332) 16,002
Other noncurrent assets 21,424 13,327 7,485 - 42,236
----------------- ---------------- ------------------ ----------------- ---------------
Total noncurrent assets 98,756 122,980 79,586 (77,332) 223,990
----------------- ---------------- ------------------ ----------------- ---------------
Total assets $ 238,335 $ 145,401 $ 106,829 $ (201,913) $ 288,652
================= ================ ================== ================= ===============
Current liabilities
Payables to related parties $ 3,000 $ 105,010 $ 16,954 $ (124,581) $ 383
Other financial debt 1,620 - 7,603 - 9,223
Other current liabilities 27 6,477 8,035 - 14,539
----------------- ---------------- ------------------ ----------------- ---------------
Total current liabilities 4,647 111,487 32,592 (124,581) 24,145
----------------- ---------------- ------------------ ----------------- ---------------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Other financial debt, net of current
portion - - 23,397 - 23,397
Other noncurrent liabilities - - 219 - 219
----------------- ---------------- ------------------ ----------------- ---------------
Total noncurrent liabilities 180,000 - 23,616 - 203,616
----------------- ---------------- ------------------ ----------------- ---------------
Total liabilities 184,647 111,487 56,208 (124,581) 227,761
Minority interests - - - 2,490 2,490
Minority interests subject to put right - - - 4,713 4,713
Shareholders' equity $ 53,688 $ 33,914 $ 50,621 $ (84,535) $ 53,688
----------------- ---------------- ------------------ ----------------- ---------------
Total liabilities, minority interests
and shareholders' equity $ 238,335 $ 145,401 $ 106,829 $ (201,913) 288,652
================= ================ ================== ================= ===============
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF DECEMBER 31, 2004
(stated in thousands of U.S. dollars)
Parent Combined Combined Total
subsidiary non-subsidiary Consolidating consolidated
guarantors guarantors adjustments amounts
----------------- ---------------------- ------------ ------------------- -----------------
Current assets
Receivables from related parties $ 101,870 $ 3,332 $ 2,862 $ (104,131) $ 3,933
Other current assets 627 11,440 21,131 - 33,198
----------------- ------------------ ------------------ ----------------- -----------------
Total current assets 102,497 14,772 23,993 (104,131) 37,131
----------------- ------------------ ------------------ ----------------- -----------------
Noncurrent assets
Property and equipment, net - 95,353 65,182 - 160,535
Investment in affiliates 71,646 - 15,607 (71,646) 15,607
Other noncurrent assets 36,588 15,305 8,482 - 60,375
----------------- ------------------ ------------------ ----------------- -----------------
Total noncurrent assets 108,234 110,658 89,271 (71,646) 236,517
----------------- ------------------ ------------------ ----------------- -----------------
Total assets $ 210,731 $ 125,430 $ 113,264 $ (175,777) $ 273,648
================= ================== ================== ================= =================
Current liabilities
Payables to related parties $ - $ 97,184 $ 7,715 $ (104,131) $ 768
Other financial debt 1,620 - 9,183 - 10,803
Other current liabilities 201 4,854 7,064 - 12,119
----------------- ------------------ ------------------ ----------------- -----------------
Total current liabilities 1,821 102,038 23,962 (104,131) 23,690
----------------- ------------------ ------------------ ----------------- -----------------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Other financial debt, net of
current portion - - 29,610 - 29,610
Other noncurrent liabilities - - 219 - 219
----------------- ------------------ ------------------ ----------------- -----------------
Total noncurrent liabilities 180,000 - 29,829 - 209,829
----------------- ------------------ ------------------ ----------------- -----------------
Total liabilities 181,821 102,038 53,791 (104,131) 233,519
Minority interests - - - 6,468 6,468
Minority interests subject to
put right - - - 4,751 4,751
Shareholders' equity $ 28,910 $ 23,392 $ 59,473 $ (82,865) $ 28,910
----------------- ------------------ ------------------ ----------------- -----------------
Total liabilities, minority
interests and shareholders'
equity $ 210,731 $ 125,430 $ 113,264 $ (175,777) $ 273,648
=================== ================== ================== ================= ===============
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined
Combined non- Total
subsidiary subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------------- ---------------- ----------------- ---------------- -----------------
Revenues $ - $ 37,904 $ 33,391 $ (3,321) $ 67,974
Operating expenses (761) (19,252) (7,751) 3,321 (24,443)
----------------------- ----------------- ---------------- ---------------- -------------------
Operating profit (loss) (761) 18,652 25,640 - 43,531
Other income (expenses) 25,539 (8,134) (1,541) (25,103) (9,239)
----------------------- ----------------- ---------------- ---------------- -------------------
Income before income
tax and minority interest 24,778 10,518 24,099 (25,103) 34,292
Income taxes - 4 (15) - (11)
Minority interest - - - (9,503) (9,503)
----------------------- ----------------- ---------------- ---------------- -------------------
Net income $ 24,778 $ 10,522 $ 24,084 $ (34,606) $ 24,778
----------
======================= ================= ================ ================ ===================
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined
Combined non- Total
subsidiary subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
---------------------------------- ----------------- ---------------- ------------
Revenues $ 105 $ 26,378 $ 29,893 $ (8,990) $ 47,386
Operating expenses (56) (17,018) (22,293) 8,990 (30,377)
---------------- ----------------- ----------------- ---------------- ------------------
Operating profit (loss) 49 9,360 7,600 - 17,009
Other income (expenses) 9,865 (7,083) (413) (8,780) (6,411)
---------------- ----------------- ----------------- ---------------- ------------------
Income before income tax
and minority interest 9,914 2,277 7,187 (8,780) 10,598
Income taxes - (34) (131) (519) (165)
Minority interest - - - - (519)
---------------- ----------------- ----------------- ---------------- ------------------
Net income $ 9,914 $ 2,243 $ 7,056 $ (9,299) $ 9,914
================ ================= ================= ================ ==================
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined
Combined non- Total
subsidiary subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------------- ---------------- ----------------- ---------------- -----------------
Net income $ 24,778 $ 10,522 $ 24,084 $ (34,606) $ 24,778
Adjustments to reconcile net
income to net cash
(used in) provided by
operating activities (25,023) 387 (18,851) 34,606 (8,881)
---------------- ------------------ -------------------- ------------------ --------------------
Net cash used in provided by
operating activities (245) 10,909 5,233 - 15,897
Net cash provided by (used in)
investing activities 5,393 (19,745) 26,806 (2,390) 10,064
Net cash provided by (used in)
financing activities 18,006 9,107 (36,177) 2,390 (6,674)
---------------- ------------------ -------------------- ------------------ --------------------
Net increase (decrease) in cash
and cash equivalents $ 23,154 $ 271 $ (4,138) $ - $ 19,287
================ ================== ==================== ================== ====================
SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOW
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined
Combined non- Total
subsidiary subsidiary Consolidating consolidated
Parent guarantors guarantors adjustments amounts
----------------------- ---------------- ----------------- ---------------- -----------------
Net income $ 9,914 $ 2,243 $ 7,056 $ (9,299) $ 9,914
Adjustments to reconcile
net income to net cash
(used in) provided by
operating activities (18,687) 7,158 3,585 9,299 1,355
---------------------- ---------------- ----------------- ----------------- -------------------
Net cash (used in) provided
by operating activities (8,773) 9,401 10,641 - 11,269
Net cash (used in) provided
by investing
activities (4,259) (10,808) (23,679) - (38,746)
Net cash provided by
financing activities 12,304 - 11,099 - 23,403
---------------------- ---------------- ----------------- ----------------- -------------------
Net (decrease) increase in
cash and cash equivalent $ (728) $ (1,407) $ (1,939) $ - $ (4,074)
====================== ================ ================= ================= ===================
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, 2005 By:
-------------------------------
Name: Felipe Menendez Ross
Title: President