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, 2004
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
H & J Corporate Services Ltd.
Shirlaw House
87 Shirley Street
Nassau, The Bahamas
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [_] No [X]
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein are a copy of the Company's report for the six months
ended June 30, 2004, containing certain unaudited financial information and a
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
ULTRAPETROL (BAHAMAS) LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION FOR THE SIX MONTHS
ENDED JUNE 30, 2004 AND 2003
The following discussion and analysis should be read in conjunction with
the unaudited condensed consolidated financial statements of Ultrapetrol
(Bahamas) Limited ("the Company") and subsidiaries for the six months ended June
30, 2004 and 2003 included elsewhere in this report.
General
-------
The Company was formed on December 23, 1997 to hold all the capital stock
of Princely International Finance Corporation (a Panamanian Company) and
Ultrapetrol S.A. (an Argentine Company). The following discussion covers the
unaudited financial results of the consolidated entity for the six month period
ended June 30, 2004 with a comparison to the unaudited consolidated financial
results for the same six month period in 2003.
Currently, the Company owns and operates seven oceangoing vessels operating
in South America, the Caribbean, United States, Europe and Far East. One of our
vessels (Cape Pampas) is owned through our subsidiary Ultracape (Holdings) Ltd.
("Ultracape"). The Company's Suezmax Obo's (Princess Katherine, Princess Nadia
and Princess Susana), are designed to carry oil as well as ore and other dry
bulk commodities. These vessels together with our Cape Pampas are currently
employed in the carriage of bulk dry cargoes.
During the first six months of 2004 the Company employed a significant part
of its fleet on time charter for different customers.
During the first six months of 2004, the international freight market
maintained rates significantly above those experienced in 2003.
Of the Company's ocean going fleet, the Princess Marina was out of service
due to accidents in her main engine for 52 days (in the first quarter of 2004)
and the Cape Pampas and the Alianza G3 were out of service undergoing mayor
repairs during 53 days and 22 days respectively
On December 12, 2003 we entered into a Memorandum of Agreement, or MOA, to
sell the Princess Laura for a total price of $4.1 million. The vessel was
delivered to its new owners on January 9, 2004.
On April 23, 2004 we entered into a MOA to sell the Princess Eva for a
total price of $4.2 million. The vessel was delivered to its new owners on June
2, 2004.
On April 23, 2004 the Company acquired, in a series of related transactions
through two wholly-owned subsidiaries, from ACBL Hidrovias, Ltd. the remaining
50% equity interest in UABL Limited, "UABL", that it did not own along with a
fleet of 50 barges and 7 pushboats. The total purchase price paid in these
transactions was $26.1 million, $17.7 million of which was derived from the
proceeds of previous vessel sales made by Ultrapetrol. The barges and pushboats
enter Ultrapetrol's fleet as "Qualified Substitute Vessels" under the Indenture.
Following this transaction in the second quarter of 2004, the Company has
indirectly controls of UABL.
During the first half of 2004, the Company through its subsidiaries,
repurchased $5.7 million nominal value of its 10.5% First Preferred Ship
Mortgage Notes due 2008 at a net amount of $4.3 million.
Revenue
-------
The majority of the Company's vessels are employed on time charters to
affiliated and unaffiliated companies. The revenue from this operation is
derived from a daily rate that is paid to the Company for the use of its
vessels. Hire revenue accounted for 64% of the Company's total revenues for the
six months ended June 30, 2004.
Also, the Company's vessels are from time to time employed on a contract of
affreightment ("COA") basis either for single or repetitive voyages. For a COA,
the vessel owner or operator generally pays all voyage and vessel operating
expenses and has the right to substitute one vessel for another. The rate is
generally expressed in dollars per metric ton of cargo. Revenues earned under
COA's are referred to as "freight". COA revenue accounted for 36% of the
Company's total revenues for the six months ended June 30, 2004
From the total revenues obtained from COA's during the first half of 2004,
98% were in respect of repetitive voyages for the Company's regular customers
and 2% in respect of single voyages for occasional customers.
Expenses
--------
When vessels are operated on a COA basis (as well as any time when they are
not operating under time or bareboat charter), all costs relating to a given
voyage, including port charges, canal dues and fuel costs, are paid by the
vessel owner and are recorded as voyage expenses.
The Company's operating expenses, or running expenses, are generally paid
through Ravenscroft Shipping Inc., a Miami based affiliate of the Company, which
provides ship management services for the Company's vessels ("Ravenscroft").
Operating expenses include the cost of all ship management, crewing, spares and
stores, insurance, lubricants, repairs and maintenance. The most significant of
these expenses are maintenance and repairs, wages paid to marine personnel and
marine insurance costs. In the case of our river barges chartered to UABL the
Company has contracted the shipmanagement responsibilities to Lonehort Inc, an
affiliate of UABL.
Vessels are depreciated to an estimated scrap value on a straight-line
basis over their estimated useful lives. The Company follows the deferral method
of accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.
The Company's other primary operating expenses include general and
administrative expenses as well as ship management and administration fees paid
to Ravenscroft and Oceanmarine S.A., another affiliate of the Company, which
provides certain administrative services. The Company pays Oceanmarine S.A.
("Oceanmarine") a monthly fee of $10,000 per vessel for administrative services
including general administration and accounting (financial reporting,
preparation of tax returns), use of office premises, a computer network,
secretarial assistance and other general duties. The Company pays Ravenscroft a
monthly ship management fee of $12,500 per vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. The Company does not expect to pay fees to any affiliated
entity other than those described here for management and administration
functions.
Through UABL the Company owns a drydock and a repair facility for its river
fleet at Pueblo Esther, Argentina and rents offices in Asuncion, Paraguay and
Buenos Aires, Argentina.
Foreign Currency Transactions
-----------------------------
Substantially all of the Company's revenues are denominated in U.S.
dollars, but 7% of the Company total revenues is denominated in US dollars but
collected in local currency at the equivalent amount of US dollars at the
payment date and 5% of our total out of pocket operating expenses are paid in
local currency. The Company's operating results, which are reported in U.S.
dollars, may be affected by fluctuations in the exchange rate between the U.S.
dollar and the local currency. For accounting purposes, revenue and expense
accounts are translated into U.S. dollars at the exchange rate prevailing on the
date of each transaction. We do not hedge our exposure to foreign currency
fluctuations except for the China construction contract where our subsidiary UP
Offshore has a hedge for the portion of supplies of the vessel construction
contract that is denominated in Euros for a total of Euros 2.9 million at
approximately $1.14 per dollar.
Inflation
---------
The Company does not believe that inflation has had a material impact on
the Company's operations, although certain of the Company's operating expenses
(e.g., crewing, insurance and dry docking costs) are subject to fluctuations as
a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on the Company's future operations since freight rates for voyage
charters are generally sensitive to the price of ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level.
Legal proceedings
-----------------
On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
United States District Court for the District of New Jersey against the Princess
Susana and Noble Shipping Ltd. ("Noble") seeking damages arising out of the
delay in delivery of a cargo of Kirkuk crude oil to the Valero terminal in
Paulsboro, New Jersey. (Ursa Shipping v. the Princess Susana, et al. Civil
Action No. 03-CV-747(FLW).) The Princess Susana (the "Vessel") was detained by
the United States Coast Guard prior to her arrival in Paulsboro when, during a
routine Coast Guard tank vessel examination, a small amount of cargo was found
to have leaked from one of the cargo tanks into one of the void spaces aboard
the Vessel. On or about February 25, 2003, Valero Marketing and Supply Co.
("Valero") commenced an action against Noble. (Valero Marketing and Supply Co.
v. Noble Shipping Ltd., Civil Action No. 03-CV-843 (FLW). The Valero and Ursa
complaints sought damages in excess of $9 million. Noble took the position that
the claims were overstated.
In connection with the above complaints, the Vessel was arrested. Security
was posted by the Vessel owner's protection and indemnity insurers in the amount
of $11.2 million and the Vessel was released from arrest. Both the Ursa and the
Valero complaints were answered, defenses were raised, and a counterclaim was
raised in the Ursa action seeking, inter alia, unpaid freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd. ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
Following extensive settlement negotiations on May 26, 2004 the parties
reached a global settlement of all the issues in the litigation and full
releases were exchanged. In connection with the settlement, among other things,
Noble's protection and indemnity insurers paid $2.25 million in full settlement
of Valero's claims and Noble's freight and demurrage counterclaim was paid in
the amount of $275,000. The matter is now fully concluded.
On November 25, 1995, Ultrapetrol S.A. registered with the Customs
Authority of Bahia Blanca the temporary importation of the Princess Pia.
According to Decree No. 1493/92, such temporary importation was authorized
for three years.
In compliance with CIC No. 98 003 IT 01 300083-4 also registered with the
Customs Authority of Bahia Blanca, the above mentioned term was extended, as
confirmed by the Transport Secretariat which authorized the navigation,
communication and commerce of Princess Pia as a vessel of Argentine flag up to
November 21, 2001.
On October 23, 2001 Ultrapetrol S.A.'s customs agent registered the
re-exportation of Princess Pia with the Customs Authority of Bahia Blanca.
Subsequently, as for November 22, 2001 the Transport Secretariat authorized
the navigation of Princess Pia as a vessel of Panamanian flag, allowing her to
carry domestic cargoes between Argentine ports within the country.
On November 16, 2001, Ultrapetrol S.A.'s customs agent requested the
cancellation of the vessel's temporary importation, stating that due to
operative reasons such vessel was not able to enter the jurisdiction of the
Custom Authority of Campana.
As a result, the Customs Authority of Bahia Blanca considers that
Ultrapetrol S.A. had incurred in the actions described under the provisions of
Section 970 of the Customs Code and, consequently, issued a resolution claiming
the sum of Argentine pesos 4,689,695 (approximately US $1,610,000) as import
taxes and the sum of Argentine pesos 4,689,695 (approximately US $1,610,000) as
fines. Such resolution was based in the fact that as Ultrapetrol S.A. requested
the cancellation of the regime without making the vessel available to the Custom
Authority, such authority was not able to exercise its control and verifying
functions as set forth in Section 268 of the Customs Code.
In response to said resolution, on March 16, 2004 Ultrapetrol S.A.
submitted an appeal with the Argentine Tax Court.
The main arguments introduced by Ultrapetrol S.A. were, among others, that
it has not caused any breach to the Customs Code since the Princess Pia has
operated within Argentine territory only during the periods in which it was
expressly authorized by the competent authorities and that the issuance of the
appealed resolution was based on an incorrect interpretation of the customs
legislation. The value of the vessel considered by the Custom Authority in order
to establish the tax and fines claimed has also been objected to by Ultrapetrol
S.A.
Said appeal is pending resolution by the Argentine Tax Court.
The management of the Company and its legal counsel do not believe the
outcome of this matter should have (based upon the circumstances of the case,
the existing regulations and the Company's insurances coverage) a material
impact on its financial position or results of operations.
Results of Operations
---------------------
Six months ended June 30, 2004 compared to the six months ended June 30, 2003.
The following table sets forth certain historical income statement data for
the periods indicated derived from the Company's statements of operations
expressed in thousands of dollars.
Six month Six month
ended ended
2* Quarter'04 June 30, 2004 2* Quarter'03 June 30, 2003
------------- ------------- ------------- -------------
Revenues
Attributable to ocean fleet 12,700 28,799 18,086 32,472
Attributable to river fleet 15,877 18,587 2,479 4,973
------------ -------------- ------------ --------------
28,577 47,386 20,565 37,445
Total Revenues
Voyage expenses
Attributable to ocean fleet 24 (459) (4,136) (6,717)
Attributable to river fleet (4,887) (4,887) (16) (39)
------------ -------------- ------------ --------------
(4,863) (5,346) (4,152) (6,756)
Total
Running cost
Attributable to ocean fleet (2,881) (6,697) (5,932) (11,682)
Attributable to river fleet (4,001) (5,752) (1,645) (3,277)
------------ -------------- ------------ --------------
(6,882) (12,449) (7,577) (14,959)
Total
Amortization of dry-dock expense (1,154) (2,127) (2,061) (4,135)
Depreciation of property and equipment (3,722) (6,606) (3,974) (8,020)
Management fees and administrative expenses (2,445) (3,960) (1,784) (3,378)
------------ -------------- ------------ --------------
Operating profit (losses) 9,511 16,898 1,017 197
Financial expense (4,229) (7,996) (3,889) (7,979)
Financial gain on extinguishments of debts 1,156 1,344
Revenues
--------
Total revenues from our ocean fleet, net of commissions, decreased from
$32.5 million in the first half of 2003 to $28.8 million in 2004, or a decrease
of 11%. This decrease is primarily attributable to the effect of reductions in
the revenues deriving from the sale of our vessels Princess Veronica, Princess
Pia, Princess Eva, Princess Laura and Princess Marisol as well as Alianza G1
during the last twelve months. As well as, the fact that our Princess Susana
operated under a time charter during the first half of 2004 while she was
employed on voyage charters during the equivalent period of 2003. These
reductions were partially offset by the higher time charter hire rates of our
Princess Nadia, Princess Susana, Princess Katherine and Cape Pampas during the
first half of 2004.
The total of 75 days out of service experienced by the Cape Pampas and the
Alianza G3 due to major repairs. The Princess Marina was out of service due to
accidents for 52 days during the first quarter affected negatively our revenues
in this period, part of this off hire time is compensated by our loss of hire
insurance.
Total revenues from our river fleet, net of commissions, increased by 272%
from $5.0 to $18.6 million. This increase is primarily attributable to the
consolidation of UABL revenues during the second quarter of 2004 while in the
first quarter of 2003 river revenues only included the net proceeds for those of
our vessels which were chartered by UABL.
Operating profit for the first half of 2004 was $ 16.9 million, an increase
of $16.7 million from the same period in 2003. In comparing these figures, the
difference is mainly attributable to the higher results obtained from our
vessels Princess Susana, Princess Nadia, Princess Katherine and Cape Pampas as
well as the consolidation of the results of UABL following the acquisition of
the remaining 50% of the shares of that company.
Voyage expenses
---------------
In the first six months of 2004 voyage expenses of our ocean fleet were
$0.5 million, as compared to $6.7 million for the first half of 2003, a decrease
of $6.2 million, or 93%. The decrease is primarily attributable to the combined
effect of a large portion of the Panamax fleet under COA employment during the
first half of 2003 was sold during last year and the time charter employment of
the Princess Susana instead of COA employment.
In the first six months of 2004 voyage expenses of our river fleet were
$4.9 million, as compared to $0 million for the first half of 2003, an increase
of $4.9 million. The increase is attributable to the effect of the consolidation
of UABL, as owned subsidiary in the second quarter of 2004.
Running costs
-------------
Running costs of our ocean fleet decreased by about 43%, to $6.7 million in
the first half of 2004 as compared to $11.7 million in the equivalent 2003
period. This decrease is mainly attributable to the sale of Princess Pia,
Princess Veronica, Princess Eva, Princess Marisol, Princess Laura and Alianza G1
during the last twelve months.
In the first half of 2004 running expenses of our river fleet were $5.8
million, as compared to $3.3 million for the first half of 2003, an increase of
$2.5 million The increase is attributable to the effect of the consolidation of
UABL, as owned subsidiary.
Amortization of dry-dock expense
--------------------------------
Amortization of dry docking and special survey costs decreased by $2.0
million, or 49%, to $2.1 million in 2004 as compared to $4.1 million in 2003.
The decrease is primarily attributable to the vessels sold during the last year.
The unamortized balance is included in the gain or loss resulting from the
vessels sale.
Depreciation of property and equipment
--------------------------------------
Depreciation and amortization decreased by $1.4 million, or 18%, to $6.6
million in the first six months of 2004 as compared to $8.0 million in 2003.
This decrease is primarily due to the sale of the Princess Veronica, Princess
Laura, Princess Pia, Princess Marisol and Alianza G1 partially compensated by
the purchase of the new tug and river barges and the depreciation of the UABL
fleet
Management fees and administrative expenses
-------------------------------------------
Management fees and administrative expenses were $3.4 million in the first
six months of 2003 as compared to $3.9 million in 2004. This increase $0.5
million is attributable mainly to an increase in the overhead expenses of UABL
partially compensated by a decrease in management fees.
Interest expense
----------------
Interest expense has not changed in the first half of 2004 compared with
the same period of 2003. This null variation is primarily attributable to the
lower level of financial debt and consequential interest costs compensated with
an increase of $0.5 million in interest expenses attributable to the effect of
the consolidation of UABL, as owned subsidiary.
Financial gain on extinguishments of debt
-----------------------------------------
During the first half of 2004, the Company through its subsidiaries,
repurchased $5.7 million nominal value of its 10.50% First Preferred Ship
Mortgage Notes due 2008. We recognized a gain of $1.3 for the retirement of such
debt.
Liquidity and Capital Resources
-------------------------------
The Company is a holding company with no material assets other than those
of its subsidiaries. Consequently, it must fund its capital requirements through
other sources, including cash dividends from subsidiaries, borrowings and
shareholder contributions. The Company operates in a capital-intensive industry
requiring substantial ongoing investments in revenue producing assets. The
Company's subsidiaries have historically funded their vessel acquisitions
through a combination of bank indebtedness, shareholder loans, cash flow from
operations and equity contributions. As of June 30, 2004, the Company had total
indebtedness of $184.0 million, $122.6 million from the Note Issue, $4.5 million
in a senior loan facility with DVB Bank (America) N.V. for Kattegat Shipping
Inc., a wholly owned subsidiary, for the purchase of the vessel Princess Marina,
$13.0 million in a senior loan facility with Deutsche Shiffsbank
Aktiengesellschaft for Majestic Maritime Ltd., a wholly owned subsidiary,
re-financing the purchase of the vessel Princess Katherine, $8.0 million in a
senior loan facility with Calyon for Braddock Shipping Inc, a 60% owned
subsidiary, for the purchase of the vessel Cape Pampas. In April 2004, as result
of the consolidation of UABL as owned subsidiary, an amount of $29.5 millions of
financing debts were incorporated according to the following detail: $15.0
millions in a senior loan facility with International Finance Corporation, $7.5
millions Kreditanstalt F W, $1.7 millions with Citibank NA, $1.2 millions with
Touax LPG SA and $4.1 millions with Transamerica Leasing INC. Also, accrued
interest expenses for these loans of $3.4 million On January 23, 2004 UP
Offshore (Bahamas) Ltd, a subsidiary, issued $3.0 million in preferred shares in
favor of the International Finance Corporation ("IFC").
At June 30, 2004, the Company had cash and cash equivalents on hand of $4.2
million.
The Company believes, based upon current levels of operation, cash flow
from operations, together with other sources of funds, that it will have
adequate liquidity to make required payments of principal and interest on the
Company's debt, including obligations under the Notes, complete anticipated
capital expenditures and fund working capital requirements.
Operating Activities
--------------------
In the first six months of 2004, the Company generated a positive $12.9
million in cash flow from operations compared to $5.7 million for in the same
period in 2003. Net earning for the first half of 2004 were $ 9.9 million which
is $13.4 million more than net losses in the first half of 2003. Net cash
provided by operating activities consists of our net income increased by
non-cash expenses, such as depreciation and amortization of deferred, and
adjusted by changes in working capital.
Investing Activities
--------------------
During the first six months of 2004 the Company disbursed $21.0 million in
the purchase of 7 river tugs and 50 river barges partially paid ($17.7 million)
with funds available in restricted cash of the Company and our subsidiary UP
Offshore (Bahamas) Ltd. disbursed $14.8 million in advances to the yards
contracted to build the new offshore vessels. Of this total we made equity
contributions to UP Offshore for a total of $ 4.8 million. In April 2004, as
result of the consolidation of UABL as owned subsidiary, the Company
incorporated $49.8 million in river assets and exposed a decrease of $24.0
million in Investment in affiliates.
Financing Activities
--------------------
Net cash provided by financing activities increased by $50.7 million. The
increase in cash provided by financing activities in first half 2004 is mainly
attributable to an increase on UABL financial debts of $29.5 milllion, the
issuance of preference shares in UP Offshore of $3.0 million and the
re-financing of Princess Katherine purchase of $3.5 million partially offset
with the repayments of principal on its financial debt made during the first
half 2004. Also during the first half 2004, the Company through its
subsidiaries, repurchased $5.7 million nominal value of its 10.5% First
Preferred Ship Mortgage Notes due 2008 at a net amount of $4.3 million and
applied $17.7 million of restricted fund of the Company in the purchase of new
river equipment. (See Investing Activities)
Recent Developments
-------------------
N/A.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
Contents Page
-------- ----
o Financial Statements
- Condensed Consolidated Balance Sheets as of June 30,
2004 and 2003 - F-1 -
- Condensed Consolidated Statements of Income for the six
months periods ended June 30, 2004 and 2003 - F-2 -
- Condensed Consolidated Statements of Changes in
Stockholders' Equity for the six months periods ended
June 30, 2004 and 2003 - F-3 -
- Condensed Consolidated Statements of Cash Flows for the
six months periods ended June 30, 2004 and 2003 - F-4 -
- Notes To Condensed Consolidated Financial Statements as
of June 30, 2004 and 2003 - F-5 -
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars, except par value and share amounts)
2004 2003
------------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,174 5,905
Restricted cash 3,936 6,384
Investments 7,033 322
Accounts receivable, net 11,286 9,919
Due from affiliates 4,029 8,851
Inventories 1,931 2,050
Prepaid expenses 3,520 4,195
Other receivables 5,432 3,973
--------------------------------
Total current assets 41,341 41,599
--------------------------------
NONCURRENT ASSETS
Dry Dock 7,123 7,909
Other receivables 7,583 7,408
Other receivables related parties 2,506 -
Property and equipment, net 193,436 123,806
Investment in affiliates 1,866 25,621
Restricted cash 4,041 -
Other assets 3,640 5,032
--------------------------------
Total noncurrent assets 220,195 169,776
--------------------------------
Total assets 261,536 211,375
================================
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 8,854 6,833
Due to affiliates - 542
Other financial debt (note 3) 13,670 11,269
Other payables 615 308
--------------------------------
Total current liabilities 23,139 18,952
--------------------------------
NONCURRENT LIABILITIES
Long-term debt (note 3) 122,641 135,000
Other financial debt, net of current portion (note 3) 47,751 19,398
--------------------------------
Total noncurrent liabilities 170,392 154,398
--------------------------------
Total liabilities 193,531 173,350
--------------------------------
MINORITY INTERESTS 29,562 6,479
MINORITY INTEREST SUBJECT TO PUT RIGHT 4,787 -
STOCKHOLDERS' EQUITY
Common stock, $.01 par value: authorized shares 2,134,451,
issued and outstanding 2,109,239 (note 7) 21 21
Paid-in capital 68,884 68,884
Treasury stock (note 7) (20,332) (20,332)
Accumulated other comprehensive income 171 -
Accumulated deficit (15,088) (17,027)
--------------------------------
Total stockholders' equity 33,656 31,546
--------------------------------
Total liabilities, minority interest and stockholders' equity 261,536 211,375
================================
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollar)
2004 2003
------------ -----------
REVENUES
Revenues ocean fleet 27,539 32,418
Revenues ocean fleet from related parties 1,260 54
Revenues river fleet 15,877 43
Revenues river fleet from related parties 2,710 4,930
----------- -----------
Total revenues 47,386 37,445
----------- -----------
OPERATING EXPENSES
Voyage expenses ocean fleet (459) (6,717)
Voyage expenses river fleet (4,887) (39)
Running costs ocean fleet (6,697) (11,682)
Running costs river fleet (5,752) (3,277)
Amortization of dry dock expense (2,127) (4,135)
Depreciation of property and equipment (6,606) (8,020)
Management fees to related parties (837) (1,529)
Administrative expenses (3,123) (1,849)
----------- -----------
Total operating expenses (30,488) (37,248)
----------- -----------
Operating profit 16,898 197
=========== ===========
OTHER INCOME (EXPENSES)
Financial expense (7,996) (7,979)
Financial gain on extinguishment of debt 1,344 -
Financial income 77 135
Investment in subsidiaries 112 3,149
Other net income 163 1,385
----------- -----------
Total other expenses (6,300) (3,310)
----------- -----------
Income (loss) before tax on minimum presumed
income and minority interest 10,598 (3,113)
Minority interest (519) (339)
Tax on minimum presumed income (165) (91)
----------- -----------
Net income (loss) for the period 9,914 (3,543)
=========== ===========
The accompanying notes to condensed consolidated financial stat ements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
Accumulated
Additional other
Common paid-in Treasury comprehensive Accumulated Total Total
Balances stock A capital stock income deficit 2004 2003
-------- ----- --------- ----- ------ ------- ---- ----
At beginning of year 21 68,884 (20,332) 222 (25,002) 23,793 35,089
Comprehensive income:
- Net income (loss)
for the period 9,914 9,914 (3,543)
- Changes in value
of derivates (51) (51) -
-------- --------
Total Comprehensive 9,863 (3,543)
income (loss)
At end of period 2004 21 68,884 (20,332) 171 (15,088) 33,656
======= ======= ======== ======= ======== =======
At end of period 2003
21 68,884 (20,332) - (17,027) 31,546
======= ======= ======== ======= ======== =======
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) for the period 9,914 (3,543)
Adjustments to reconcile net (loss) to cash provided by
operating activities:
Depreciation of property and equipment 6,606 8,020
Amortization of dry dock expenses 2,127 4,135
Note issuance expenses amortization 368 292
Accrued interest (36) 125
Net income from investment in subsidiaries (112) (3,149)
Income from fixed assets sale (101) (905)
Changes in assets and liabilities, net:
(Increase) decrease in assets:
Accounts receivable (5,552) (2,275)
Due from affiliates 5,328 4,395
Inventories (922) (458)
Prepaid expenses (946) (896)
Other receivables (4,533) (911)
Other assets (1,641) (807)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 3,863 1,804
Due to affiliates (1,655) 274
Other payables 284 (426)
---------- ----------
Net cash provided by operating activities 12,992 5,675
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment purchase (85,629) (126)
Investment in affiliate 23,975 (4)
(Decrease) Increase in time deposit (6,839) (52)
Dry dock expenses (5,758) (3,187)
Sales of property and equipment 6,491 4,002
---------- ----------
Net cash used in investing activities (67,760) 633
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayment of ) financial payables 33,944 (3,452)
Cash outflow from long term debt (5,700) -
Minority interest in equity of subsidiary 12,812 3,047
Increase in paid in capital - -
Repayment of other finance - -
Decrease (increase) restricted cash-time deposit 9,639 (4,722)
---------- ----------
Net cash used in financing activities 50,695 (5,127)
---------- ----------
Net (decrease) increase in cash and cash equivalents (4,074) 1,181
Cash and cash equivalents at the beginning of year 8,248 4,724
---------- ----------
Cash and cash equivalents at the end of period 4,174 5,905
========== ==========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars, except otherwise indicated)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the six months periods
ended June 30, 2004 and 2003, were prepared by the Company without audit.
In the opinion of management, all normal recurring nature adjustments
necessary to present fairly the financial position, results of operations,
and cash flows for the interim periods were made.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, were condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the consolidated financial statements for the years ended December 31,
2003, 2002 and 2001.
2. SHARE SALE AGREEMENTS SIGNED BY THE COMPANY
On June 28, 2001, the Company issued 138.443 new shares for 5,296 which
were totally subscribed by Los Avellanos, one of the Company's original
shareholders and was paid with 3,297 in 2001 and 1,104 in 2002 and the
balance are payable in July 2004.
3. LONG-TERM DEBT AND OTHER FINANCIAL PAYABLES
On March 30, 1998, the Company successfully completed its offering of
135,000 principal amount of its 10.5% First Preferred Ship Mortgage Notes
due 2008 ("the Notes"). In accordance with the terms provided in such
Offering, the Notes to be issued are fully and unconditionally guaranteed
on a joint and several basis by certain subsidiaries of the Company, and
are secured by first ship mortgage on vessels already owned by the
guarantors and on additional vessels that the Company purchased with the
proceeds obtained from the Offering.
During the last quarter of 2003, the Company through its subsidiaries,
repurchase 6,659 nominal value of its 10,5% First Preferred Ship Mortgage
Notes due 2008.
Afterwards, during 2004, the Company through its subsidiaries, repurchase
5,700 nominal value of its 10,5% First Preferred Ship Mortgage Notes due
2008.
The Company recognized a gain de 1,344 (a gain of 1,439 for the excess of
the net carrying amount over the reacquisition price less 95 for the
unamortized deferred issuance expenses associated with these Notes) in the
statement of operations for the six months periods ended June 30, 2004, for
the extinguishment of the debt and derecognized a liability for 5,700.
As of June 30, 2004, the Company's noncurrent portion of long-term debt
amounts to 122,641. It exclusively comprises the debt principal amount of
the Notes. The related interest expense, totaling 3,220 is accrued in other
financial payables.
The balances of financial payables as of June 30, 2004 and 2003 are as
follows:
Nominal value
----------------------------
Financial institution / Agreement Accrued
other year Current Noncurrent expenses Total Average rate
---------------------------------------------------------------------------------------------------------
Total 2003 7,432 154,398 3,837 165,667
======= ======= ====== =======
Ultrapetrol Bahamas Private Investors (Notes) 1998 - 122,640 3,221 125,861 10,5%
Kattegat Nedship Bank 2000 1,000 3,500 73 4,573 Libor + 1,25%
Braddock Calyon 2002 2,574 5,425 53 8,052 Libor + 1,5%
Majestic Deustche Schiffsbank A. 2004 4,000 9,000 41 13,041 Libor + 1,625%
UABL Barges Panama IFC 2002 - 11,250 28 11,278 Libor + 3,75%
UABL Barges Panama IFC 2002 - 3,750 9 3,759 Libor + 3,50%
UABL Barges Panama Kreditanstalt F W 2003 - 7,500 18 7,518 Libor + 3,50%
UABL Paraguay Citibank NA 2002 64 - - 64 Libor + 2,00%
UABL Paraguay Citibank NA 2002 247 1,359 - 1,606 Libor + 2,75%
UABL Paraguay Touax LPG SA 2002 673 533 - 1,206 6,50%
UABL Limited Transamerica Leasing Inc 2001 1,665 2,435 - 4,100 7,94%
Others 2004 - 3,000 - 3,000 Libor + 1,5%
Others overdraft Citibank Asuncion 2004 4 - - 4
--------- ----------- ------------ --------
Total 2004 10,227 170,392 3,443 184,062
======= ======= ====== =======
4. NON-CURRENT RESTRICTED CASH
As of June 30, 2004, 4,041 corresponding to the proceeds from the sale of
vessels has disclosed in noncurrent assets is related to cash which, under
the terms and conditions of the Notes, should only be used to acquire
another vessels to guarantee the Notes.
5. PROPERTY AND EQUIPMENT
On March 11, 2003 the Company entered into a Memorandum of Agreement,
("MOA"), to sell the Princess Sofia for a total price of $2.3 million. The
vessel was delivered to its new owners on April 25, 2003.
On May 22, 2003 we entered into MOA, to sell the Princess Veronica for a
total price of $1.965 million. The vessel was delivered to its new owners
on June 5, 2003.
The proceeds from the sale of the Princess Veronica and the Princess Sofia
Vessel were deposited in a restricted cash account and can only be used to
buy another vessel to guarantee the Notes.
On April 23, 2004 we entered into a MOA, to sell the Princess Eva for a
total price of $4.2 million. The vessel was delivered to its new owners on
June 2, 2004.
The proceeds from the sale of the Princess Eva Vessel were deposited in a
restricted cash account and can only be used to buy another vessel to
guarantee the Notes.
On April 23, 2004 the Company purchased 50 river barges and 7 river
tugboats. The total purchase price paid in these transactions was $20.8
million, $17.7 million of which were derived from the proceeds of previous
vessels sales by the Company. The barges enter the Company's fleet as a
guarantee to the Notes.
6. PURCHASE OF 50% EQUITY INTEREST IN UABL LIMITED
On April 23, 2004 the Company acquired in a series of related transactions,
through two wholly owned subsidiaries, from ACBL Hidrovias Ltd. the
remaining 50% equity interest in UABL Limited that it did not own along
with the fleet of 50 river barges and 7 river tugboats.
As of June 30, 2004 the consolidated financial statements of the Company
include the accounts of UABL Limited.
7. COMMON AND TREASURY STOCK
Ultrapetrol Bahamas has an authorized capital of 21, and one class of
shares of one series comprising 2,134,451 (2,065,760 paid-in and 68,691 not
yet paid-in) as of June 30, 2004 and 2003 respectively, common shares with
a par value of 0.01 each.
In addition, as of June 30, 2004 the Company registered $20,332, in the
Treasury Stock account, $20,000 of which corresponding to the amount
payable for the shares, and $332 to direct cost of acquisition.
8. CLAIMS AGAINST THE COMPANY
On February, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the United
States District Court for the District of New Jersey against M/T Princess
Susana and Noble Shipping Ltd. ("Noble"), a wholly owned subsidiary of the
Company, seeking damages arising out of the delay in delivery of a cargo of
Kirkuk crude oil to the Valero terminal in Paulsboro, New Jersey. Also in
February 2003, Valero Marketing and Supply Co. ("Valero") commenced an
action against Noble (Valero Marketing and Supply Co. v. Noble Shipping
Ltd., Civil Action No. 03-CV-843 (FLW). The Valero and Ursa complaints
sought damages in excess of 9 million. Noble took the position that the
claims were overstated.
In connection with the above complaints, the vessel was arrested. Security
was posted by the vessel owners' protection and indemnity insurers in the
amount of 11.2 million and the vessel was released from arrest. Both the
Ursa and the Valero complaints were answered, defenses were raised, and a
counterclaim was raised in the Ursa action seeking, inter alia, unpaid
freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd, ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
On May 26, 2004 the parties reached a global settlement of all the issues
in the litigation and full releases were exchanged. In connection with the
settlement, among other things, Noble's protection and indemnity insurers
paid 2,250 in full settlement of Valero's claims and Noble's freight and
demurrage counterclaim was paid in the amount of 0,275. The matter is now
fully concluded.
9. CLAIMS AGAINST INSURANCE COMPANIES
As of June 30, 2004 and 2003, the "Other receivables" account includes
8,108 and 9,139, respectively, related to claims against insurance
companies.
For the period of six months ended June 30, 2004, there are not amounts
related to claims for loss of income (business interruption).
The "Other net income" account for the period of six months ended June 30,
2003, includes 1,563 related to claims for loss of income (business
interruption) corresponding to the Princess Pia, Princess Eva and Alianza
G1.
10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest and income taxes paid for the six month period ended June 30, 2004
and 2003 are as follows:
Six months period
ended, June 30
-------------------------------
2004 2003
-------------- -------------
- Interest 7,970 7,683
- Income taxes 160 67
11. SUPPLEMENTAL GUARANTOR INFORMATION
The First Preferred Ship Mortgage Notes issued on March 30, 1998 described
in note 3., are fully and unconditionally guaranteed by certain
subsidiaries of the Company.
The subsidiaries which offered its assets in collateral of the above -
mentioned indebtedness are: Ultrapetrol Argentina, Imperial, Cavalier,
Regal, Baldwin, Tipton, Kingsway, Plate Princess, Panpetrol, Oceanview,
Kingly, Sovereign, Monarch, Noble, Oceanpar and Parfina ("Subsidiary
Guarantors").
Supplemental combining financial information for the Guarantors
Subsidiaries is presented below. This information is prepared in accordance
with the Company's accounting policies. This supplemental financial
disclosure should be read in conjunction with these condensed consolidated
financial statements.
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
BALANCE SHEETS
AS OF JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
--------------------------
ASSETS
Current assets 10,380 27,215
Noncurrent assets 83,018 92,209
--------------------------
Total assets 93,398 119,424
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 99,546 113,897
Stockholders' equity (6,148) 5,527
--------------------------
Total liabilities and stockholders' equity 93,398 119,424
========= =========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF INCOME (LOSS)
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
------------ ------------
Revenues 25,224 29,411
Operating expenses (15,975) (30,012)
------------ ------------
Operating profit (loss) 9,250 (601)
Other expenses (6,993) (5,518)
------------ ------------
Income (loss) before tax on minimum 2,257 (6,119)
presumed income and minority interest
Tax on minimum presumed income (34) (82)
------------ ------------
Net (loss) income for the period 2,223 (6,201)
======= =======
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
--------- ---------
Net (loss) income for the period 2,223 (6,201)
Adjustments to reconcile net (loss) income to cash
provided by (used in) operating activities: 12,265 4,084
--------- ---------
Net cash (used in) provided by operating activities 14,488 (2,117)
Net cash (used in) provided by investing activities (15,924) 3,007
Net cash provided by (used in) financing activities 6 (52)
--------- ---------
Net increase in cash and cash equivalents (1430) 838
Cash and cash equivalents at the beginning of the year 2,363 931
--------- ---------
Cash and cash equivalents at the end of the period 933 1,769
======= =======
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, 2004 By: /s/ Felipe Menendez
-------------------------------
Felipe Menendez
President
99999.0010 #506535