Commission File No. 333-8878
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 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 three
months ended March 31, 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 THREE MONTHS ENDED MARCH 31, 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 three months ended
March 31, 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 three month
period ended March 31, 2004 with a comparison to the unaudited consolidated
financial results for the same three month period in 2003.
Currently, the Company owns and operates eight oceangoing vessels
operating in South America, the Caribbean, United States, Europe and Far East.
One of our vessel is owned through our subsidiary Ultracape (Holdings) Ltd.
("Ultracape"). During the periods discussed, the Company also chartered three
push boats and 89 wet and dry barges to UABL (Bahamas) Limited ("UABL"), a
company that we formed in a joint venture with ACBL Hidrovias, Ltd. in October
2000, as of March 31, 2004 and which we owned 50%..
During the first three months of 2004 the Company employed a significant
part of its fleet on time charter for different customers.
During the first three 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.
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.
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 vessel.
Hire revenue accounted for 93% of the Company's total revenues for the three
months ended March 31, 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 7% of the
Company's total revenues for the three months ended March 31, 2004
From the total revenues obtained from COA's during the first quarter of
2004 99% were in respect of repetitive voyages for the Company's regular
customers and 1% 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
(Bahamas) Ltd. the Company has contracted the shipmanagement responsibilities to
Lonehort Inc, an affiliate of UABL Ltd.
Vessels are depreciated to an estimated scrap value on a straight-line
basis over their estimated useful lives. The Company follows the deferral method
of accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.
The Company's other primary operating expenses include general and
administrative expenses as well as ship management and administration fees paid
to Ravenscroft and Oceanmarine S.A., another affiliate of the Company, which
provides certain administrative services. The Company pays Oceanmarine 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.
The Company does not own any buildings and does not pay any rental expense
other than as a portion of the administration fees paid to Oceanmarine.
Foreign Currency Transactions
-----------------------------
Substantially all of the Company's revenues are denominated in U.S.
dollars, but 4% of the Company total revenues is denominated in US dollars but
collected in Argentine pesos at the equivalent amount of US dollars at the
payment date and 9% of our total out of pocket operating expenses are paid in
Argentine pesos. The Company's operating results, which are reported in U.S.
dollars, may be affected by fluctuations in the exchange rate between the U.S.
dollar and the Argentinean peso. For accounting purposes, revenue and expense
accounts are translated into U.S. dollars at the exchange rate prevailing on the
date of each transaction. The Company does not hedge its exposure to foreign
currency fluctuations.
Inflation
---------
The Company does not believe that inflation has had a material impact on
the Company's operations, although certain of the Company's operating expenses
(e.g., crewing, insurance and dry docking costs) are subject to fluctuations as
a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on the Company's future operations since freight rates for voyage
charters are generally sensitive to the price of ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level.
Legal proceedings
-----------------
On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
United States District Court for the District of New Jersey against the Princess
Susana and Noble Shipping Ltd. ("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 Shipping Ltd. (Valero Marketing
and Supply Co. v. Noble Shipping Ltd., Civil Action No. 03-CV-843 (FLW).
The Valero and Ursa complaints seek damages in excess of $9 million. Noble has
taken the position that the claims are overstated.
In connection with the above complaints, the Vessel was arrested. Security
was posted by the Vessel owner's protection and indemnity insurers in the amount
of $11.2 million and the Vessel was released from arrest (insurance coverage is
in place). Both the Ursa and the Valero complaints have been answered, defenses
have been raised, and a counterclaim has been raised in the Ursa action seeking,
inter alia, unpaid freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd. ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
The parties to the action are in the final stages of settlement
negoatiations and we believe a global settlement of all the issues in the
litigation can be reached soon.
We believe this claim is covered by insurance. The insurer is actively
participating in its defense and has not asserted any objections or defenses to
the claim. We would expect any damages arising from this action (less our policy
deductible) to be covered by the proceeds of such insurance.
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 the rendering of supplying services 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
---------------------
Three months ended March 31, 2004 compared to the three months ended March 31,
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.
Three months ended March 31,
2004 2003
(dollars in thousands)
Freight revenues
Attributable to wholly owned vessels 1,283 5,939
Attributable to wholly chartered-in vessels 42
---------------- ----------------
Total 1,283 5,981
Hire revenues
Attributable to wholly owned vessels 17,526 10,900
Attributable to wholly chartered-in vessels 0 0
---------------- ----------------
Total 17,526 10,900
---------------- ----------------
Total Revenues 18,809 16,881
---------------- ----------------
Voyage expenses
Attributable to wholly owned vessels (482) (2,582)
Attributable to wholly chartered-in vessels (23)
---------------- ----------------
Total (482) (2,605)
Running costs (5,567) (7,382)
Amortization of dry-dock expense (973) (2,074)
Depreciation of property and equipment (2,884) (4,046)
Management fees and administrative expenses (1,516) (1,595)
---------------- ----------------
Operating profit 7,387 (821)
Interest expense (3,767) (4,090)
Financial gain on retirement of debts 188 -
Revenues
--------
Total revenues from freight net of commissions decreased from $6.0
million in the first three months 2003 to $1.3 million in 2004, or a decrease of
78%. This decrease is primarily attributable to the Princess Susana time charter
employment instead of COA employment and the effect of losses in the freight
revenues of the Panamax vessels sold during last year.
Hire revenues net of commissions, increased by 61% from $10.9 to $17.5
million. This increase is primarily attributable to the high time charter hire
rates of our Suezmax fleet during this period.
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.
Operating profit for the first three months of 2004 was $ 7.4 million, an
increase of $8.2 million from the same period in 2003. In comparing the results
of the first quarter 2004 with the same period in 2003, in addition to the
factors mentioned above, we also note that during the first quarter of 2004 our
Suezmax vessels were all under comparatively higher rate time charters while
during the first quarter of 2003 a significant portion of our Suezmax fleet was
still under lower charters fixed in 2002 all of which expired during the first
quarter of 2003.
Voyage expenses
---------------
In the first three months of 2004 voyage expenses were $0.5 million, as
compared to $2.6 million for the first quarter of 2003, a decrease of $2.1
million, or 81%. The decrease is primarily attributable to the combined effect
of a large portion of the Panamax fleet under COA employment sold during last
year and the time charter employment of the Princess Susana instead of COA
employment.
Running costs
-------------
Running costs decreased by about 24%, to $5.6 million in the first quarter
of 2004 as compared to $7.4 million in the equivalent 2003 period. This decrease
is mainly attributable to the Panamax fleet being sold during the last year.
Amortization of dry-dock expense
--------------------------------
Amortization of dry docking and special survey costs decreased by $1.1
million, or 52%, to $1.0 million in 2004 as compared to $2.1 million in 2003.
The decrease is primarily attributable to the elimination of amortization for
the vessels sold during the last year. The unamortized balance is included in
the gain or loss disposal calculation.
Depreciation of property and equipment
--------------------------------------
Depreciation and amortization decreased by $1.1 million, or 28%, to $2.9
million in the first three months of 2004 as compared to $4.0 million in 2003.
This decrease is primarily due to the sale of the Princess Veronica, Princess
Laura, Princess Pia and Princess Marisol.
Management fees and administrative expenses
-------------------------------------------
Management fees and administrative expenses were $1.6 million in the first
three months of 2003 as compared to $1.5 million in 2004. This decrease $0.1
million is attributable mainly to a decrease in management fees.
Interest expense
----------------
Interest expense decreased by $0.3 million, or 7%, to $3.8 million in the
first quarter of 2004 as compared to $4.1 million in 2003. The decrease is
primarily attributable to the lower level of financial debt and consequential
interest costs.
Financial gain on retirement of debt
------------------------------------
During the first quarter of 2004, the Company through its subsidiaries,
repurchased $0.7 million nominal value of its 10.50% First Preferred Ship
Mortgage Notes due 2008. We recognized a gain of $0.2 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 March 31, 2004, the Company had total
indebtedness of $160.0 million, $127.6 million from the Note Issue, $2.0 million
drawn under a revolving credit facilities from M&T Bank, the trustee of the
Company's Notes, for Majestic Maritime Ltd., a wholly owned subsidiary, $4.8
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, $7.2 million in a senior loan facility with M&T Bank for
Majestic Maritime Ltd., a wholly owned subsidiary, for the purchase of the
vessel Princess Katherine, $8.6 million in a senior loan facility with Credit
Agricole Indosuez for Braddock Shipping Inc, a 60% owned subsidiary, for the
purchase of the vessel Cape Pampas and accrued interest expenses for these loans
of $6.8 million.. Also 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 March 31, 2004, the Company had cash and cash equivalents on hand of
$14.0 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 three months of 2004, the Company generated a positive $12.5
million in cash flow from operations compared to $8.4 million for in the same
period in 2003. Net earning for the first quarter of 2004 were $ 3.1 million
which is $6.4 million more than net losses in the first quarter 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 three months of 2004 our subsidiary UP Offshore (Bahamas)
Ltd. disbursed $6.7 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 $ 1.4 million.
Financing Activities
--------------------
Net cash provided by financing activities increased by $1.5 million. The
increase in cash provided by financing activities in first quarter 2004 is
mainly attributable to the issuance of preference shares in UP Offshore of $ 3.0
million partially offset with the capital payments made during the first quarter
2004. Also during the first quarter of 2004, the Company through its
subsidiaries, repurchased $0.7 million nominal value of its 10.5% First
Preferred Ship Mortgage Notes due 2008 at a net amount of $0.5 million.
Recent Developments
-------------------
On April 23, 2004 we entered into a MOA (Memorandum of Agreement) to sell
its Princess Eva for a total price of $4.2 million. The vessel shall be
delivered to its new owners between May 25th and June 15th, 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 Ltd. 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.
Also during May 2004, the Company through its subsidiaries, repurchased
$5.0 million nominal value of its 10.5% First Preferred Ship Mortgage Notes due
2008 at a net amount of $3.8 million.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
Contents Page
--------------------------------------------------------------------------------------- -----------------
- Financial Statements
- Condensed Consolidated Balance Sheets as of March 31, 2004 and 2003 - F-1 -
- Condensed Consolidated Statements of Income for the three months periods
ended March 31, 2004 and 2003 - F-2 -
- Condensed Consolidated Statements of Changes in Stockholders' Equity for the
three months periods ended March 31, 2004 and 2003 - F-3 -
- Condensed Consolidated Statements of Cash Flows for the three months periods
ended March 31, 2004 and 2003 - F-4 -
- Notes To Condensed Consolidated Financial Statements as of March 31, 2004
and 2003 - F-5 -
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 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 13,971 9,818
Restricted cash 1,845 2,029
Investments 4,299 301
Accounts receivable 2,865 8,970
Due from affiliates 10,529 9,392
Inventories 990 1,487
Prepaid expenses 3,239 4,519
Other receivables 3,637 4,442
------------ ------------
Total current assets 41,375 40,958
------------ ------------
NONCURRENT ASSETS
Dry Dock 3,498 9,068
Other receivables 6,414 6,800
Property and equipment 120,561 130,750
Investment in affiliates 25,756 22,591
Restricted cash 19,243 -
Other assets 2,215 4,744
------------ ------------
Total noncurrent assets 177,687 173,953
------------ -------------
Total assets 219,062 214,911
============ =============
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 5,109 6,753
Due to affiliates 1,152 727
Other financial debt 13,558 14,795
Other payables 534 297
------------ ------------
Total current liabilities 20,353 22,572
------------ ------------
NONCURRENT LIABILITIES
Long-term debt 127,641 135,000
Other financial payable, net of current portion 18,818 20,592
------------ ------------
Total noncurrent liabilities 146,459 155,592
------------ ------------
Total liabilities 166,812 178,164
------------ ------------
Minority interest 20,604 4,949
Minority interest subject to put right 4,804 -
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: authorized
shares 2,134,451, issued and 21 21
outstanding 2,109,239 in 2003 and 2,080,840 in 2002
Additional paid-in capital 68,884 68,884
Treasury stock (20,332) (20,332)
Other comprehensive income 180 -
Accumulated deficit (21,911) (16,775)
------------ -------------
Total shareholders' equity 26,842 31,798
------------- -------------
Total liabilities, minority interest and
shareholders' equity 219,062 214,911
============= =============
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 THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollar)
2004 2003
------------- ---------------
REVENUES
Freight revenues 1,256 5,954
Freight revenues from related parties 27 27
Hire revenues 14,199 8,448
Hire revenues from related parties 3,327 2,452
--------- ---------
Total revenues 18,809 16,881
--------- ---------
OPERATING EXPENSES
Voyage expenses (482) (2,605)
Running costs (5,567) (7,382)
Amortization of dry dock (973) (2,074)
Depreciation of property and equipment (2,884) (4,046)
Management fees to related parties (490) (814)
Administrative expenses (1,026) (781)
---------- ----------
Total operating expenses (11,422) (17,702)
---------- ----------
Operating profit (loss) 7,387 (821)
====== ======
OTHER INCOME (EXPENSES)
Interest expense (3,767) (4,090)
Financial gain on extinguishment of debt 188 -
Interest income 44 61
Investment in affiliates (254) 123
Other net income (141) 1,538
--------- ---------
Total other expenses (3,930) (2,368)
--------- ---------
Income (loss) before income tax and minority interest 3,457 (3,189)
Tax on minimum presumed income / Income tax (52) (30)
Minority interest (314) (72)
---------- ---------
Income (loss) for the period 3,091 (3,291)
========== =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
Accumulated
Additional other
Common paid-in Treasury comprehensive Accumulated Total Total
Balances stock capital stock income deficit 2004 2003
------------------------------------------ --------------- -------------- ----------------- ------------------ ----------- --------
At beginning of period 21 68,884 (20,332) 222 (25,002) 23,793 35,089
- Net Income (loss) for 3,091 (3,291)
the period - - 3,091
- Changes in value of
derivatives - - - (42) - (42) -
--------- -----
Total comprehensive income
(loss) 3,049 (3,291)
------ ------ ------ ------ ------ ------ -------
At end of period 2004 21 68,884 (20,332) 180 (21,911) 26,842
====== ======= ====== ====== ====== =======
At end of period 2003 21 68,884 (20,332) - (16,775) 31,798
====== ======= ====== ====== ====== ======
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 THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
-------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) for the period 3,091 (3,291)
Adjustments to reconcile net income
(loss) to cash provided by operating
activities:
Depreciation of property and equipment 2,884 4,046
Amortization of dry dock expenses 973 2,074
Note issuance expenses amortization 152 146
Income (loss) from investment in affiliate 254 (123)
Financial gain on extinguishment of debt (188) -
Loss from fixed assets sale 200 -
Changes in assets and liabilities, net:
(Increase) decrease in assets:
Accounts receivable 2,869 (1,326)
Due from affiliates (1,171) 3,647
Inventories 18 105
Prepaid expenses (664) (1,220)
Other receivables 945 (772)
Others (13) -
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 118 1,724
Due to affiliates (503) 460
Other payables 163 (438)
Accrued expenses 3,345 3,397
--------- ---------
Net cash provided by operating activities 12,473 8,429
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (6,667) -
Decrease in loan to affiliate - 207
Dry dock expenses (979) (2,285)
Investment in affiliates (281) -
Sales of property and equipment 3,825 -
Increase in current investments (4,105) (31)
--------- ---------
Net cash used in investing activities (8,207) (2,109)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from financial debt 3,000 -
Cash outflow from long term debts (499) -
Funds used in acquisition of treasury stock - (1,200)
Increase in restricted cash (3,471) (367)
Minority interest in equity of subsidiaries 3,871 1,517
Repayment of financial debt (1,444) (800)
Other - (376)
--------- ---------
Net cash provided by (used in) financing activities 1,457 (1,226)
--------- ---------
Net increase in cash and cash equivalents 5,723 5,094
Cash and cash equivalents at the beginning of year 8,248 4,724
--------- ---------
Cash and cash equivalents at the end of period 13,971 9,818
======= =======
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 MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the three months
periods ended March 31, 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 5,295 which
were totally subscribed by Los Avellanos, one of the Company's original
shareholders and was paid 3,297 in 2001 and 1,104 in 2002 and the balance
are payable in July 2004.
3. LONG-TERM DEBT AND OTHER FINANCIAL PAYABLES
On March 30, 1998, the Company successfully completed its offering of
135,000 in principal amount of its 10.5% First Preferred Ship Mortgage
Notes due in full in 2008. In accordance with the terms provided in such
Offering, the Notes are fully and unconditionally guaranteed on a joint
and several basis by certain subsidiaries of the Company, and are secured
by first ship mortgages 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 the first quarter of 2004, the Company through its
subsidiaries, repurchase 700 nominal value of its 10,5% First Preferred
Ship Mortgage Notes due 2008.
The Company recognized a gain de 188 (a gain of 201 for the excess of the
net carrying amount over the reacquisition price less 13 for the
unamortized deferred issuance expenses associated with these Notes) in the
statement of operations for the three months periods ended March 31, 2004,
for the extinguishment of the debt and derecognized a liability for 700.
As of March 31, 2004, the Company's noncurrent portion of long-term debt
amounts to 127,641 and is due in full in 2008. It exclusively comprises
the debt principal amount of the Notes. The related interest expense,
totaling 6,686 is accrued in current other financial debt.
The balances of financial payables as of March 31, 2004 and 2003 are as
follows:
Nominal value
------------------------
Financial institution/ Agreement Current Noncurrent Accrued Total Average rate
other year expenses
-----------------------------------------------------------------------------------------------
Total 2003 7,590 155,592 7,205 170,387
===== ====== ====== ======
Ultrapetrol Bahamas Private Investors (Notes) 1998 - 127,641 6,686 134,327 10.5%
Majestic Allfirst Bank 2001 1,200 6,000 - 7,200 Libor + 1.5%
Kattegat Nedship Bank 2000 1,000 3,750 41 4,791 Libor +
1.25%
Majestic Allfirst Bank 2000 2,000 - - 2,000 Libor +
1.75%
Stanmore Allfirst Bank 2000 - - - - Libor + 2%
Braddock Credit Agricole 2002 2,574 6,068 57 8,699 Libor + 1.5%
Indosuez
Others 2004 - 3,000 - 3,000 Libor + 1.5%
--------- ----------- -----------------------
Total 2004 6,774 146,459 6,784 160,017
===== ====== ====== ======
4. NON-CURRENT RESTRICTED CASH
As of March 31, 2004, 19,243 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. TREASURY STOCK
On October 12, 2000 the Company through a wholly owned subsidiary, Avemar
Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares of the
Company previously owned by Societe Internationale D'Investissement S.A.
(Bahamas) ("SII"). The nominal purchase price of said shares was 20,000.
As of March 31, 2004 and 2003, the Company recorded 20,332 in the
"Treasury stock" account, 20,000 of which relates to the amount payable to
SII and 332 relates to direct cost of acquisition.
6. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Three months period
Ended, March 31
-------------------------------------
2004 2003
---------------- -----------------
- Interest
66 378
- Income taxes
33 23
7. CLAIMS AGAINST INSURANCE COMPANIES
As of March 31, 2004 and 2003, the "Other receivables" account includes
8,013 and 8,953, respectively, related to claims against insurance
companies.
The "Other net income" account for the period of three months ended March
31, 2003, includes 1,448 related to claims for loss of income (business
interruption) corresponding to the Princess Pia and Princess Eva.
8. CLAIMS AGAINST THE COMPANY
The Company is subject to legal proceedings, claims and contingencies
arising in the ordinary course of business. When such amounts can be
estimated and are 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.
On February 21, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the
United States District Court for the District of New Jersey against M/T
Princess Susana and Noble Shipping Ltd. (a wholly owned subsidiary of the
Company) seeking damages arising out of the delay in delivery of a cargo
of Kirkuk crude oil to the Valero terminal in Paulsboro, New Jersey.
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.
The Vessel was discharged after a delay of approximately eight days. On or
about February 25, 2003, Valero Marketing and Supply Co. ("Valero")
commenced an action against Noble Shipping Ltd. The Valero and Ursa
complaints seek damages in excess of 9,000. Noble took the position that
the claims are overstated and they have since been reduced to
approximately 7,600.
In connection with the above complaints, the Vessel was detained. Security
was posted by the Vessel owners' protection and indemnity insurers in the
amount of 11,200 and the Vessel was released from arrest (insurance
coverage is in place). Both the Ursa and the Valero complaints have been
answered, defenses have been raised, and a counterclaim has been raised in
the Ursa action seeking, inter alia, unpaid freight and demurrage.
Subsequently, Valero impleaded the seller of the cargo, Taurus Petroleum
Ltd. ("Taurus"), into the action by way of an amended complaint. Noble has
answered the amended complaint, raised defenses, and brought a cross claim
against Taurus for indemnity.
Discovery is ongoing and scheduled to conclude at the end of 2004.
The company's management and its legal counsel believe this claim is
covered by insurance. The insurer is actively conducting the defense
through its designated counsel and has not asserted any objections,
defenses or reserved its rights with respect to Noble's insurance claim.
The Company would expect any damages arising from this action to be
covered by the proceeds of such insurance.
On November 25, 1995, Ultrapetrol S.A. registered with the Customs
Authority of Bahia Blanca the temporary importation of "Princess Pia"
vessel.
According to Decree No. 1493/92, such temporary importation was authorized
for three years.
Besides, 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 (Subsecretaria de
Transporte") 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 the rendering of supplying services 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 dollar 1,610,000) as import taxes and the sum of Argentine pesos
$4,689,695 (approximately US dollar 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 of 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 insurance coverage) a
material impact on its financial position or results of operations.
9. 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. The total
purchase price paid in these transactions was 26,100, 17,700 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.
10. SUPPLEMENTAL GUARANTOR INFORMATION
As described in Note 3, the Notes 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 S.A., Regal International
Investments S.A., Baldwin Maritime Inc., Tipton Marine Inc., Kingsway
Shipping Inc., Plate Princess Shipping Company Ltd., Panpetrol Shipping
S.A., Oceanview Maritime Inc., Kingly Shipping Ltd., Sovereign Maritime
Ltd., Imperial Maritime Ltd., Monarch Shipping Ltd., Noble Shipping Ltd.,
Cavallier Shipping Inc., Oceanpar S.A. and Parfina S.A. ("Subsidiary
Guarantors").
Supplemental condensed 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 MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
------- -------
ASSETS
Current assets 14,135 24,964
Noncurrent assets 66,381 99,777
------- -------
Total assets 80,516 124,747
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 87,942 115,996
Commitments and contingencies -- --
Shareholders' equity (7,426) 8,745
------- -------
Total liabilities and shareholders' equity 80,516 124,741
======= =======
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
------- -------
Freight revenues 1,255 5,954
Hire revenues 11,552 7,006
------- -------
Total revenues 12,807 12,960
Operating expenses (8,071) (13,865)
------- -------
Operating (loss) profit 4,736 (905)
Other expenses (3,741) (2,054)
------- -------
(Loss) income before income tax 995 (2,959)
Tax on minimum presumed income / Income tax (51) (24)
------- -------
Net (loss) income for the period 944 (2,983)
======= =======
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(stated in thousands of U.S. dollars)
2004 2003
--------------- ---------------
Net (loss) income for the period 944 (2,983)
Adjustments to reconcile net (loss)
income to cash provided by operating (5,181) 3,429
activities:
--------- ---------
Net cash provided by (used in) operating activities (4,237) 446
Net cash used in investing activities 3,449 (1,255)
Net cash provided by (used in) financing activities - (31)
--------- ---------
Net increase (decrease) in cash and cash equivalents (788) (840)
Cash and cash equivalents at the beginning of the year 2,363 932
------------ ------------
Cash and cash equivalents at the end of the period 1,575 92
======== ========
11. SUBSEQUENT EVENTS
On April 23, 2004, the Company entered into a MOA (Memorandum of
Agreement) to sell its Princess Eva for a total price of $4.2 million. The
vessel shall be delivered to its new owners between May 25th and June
15th, 2004.
Also in May 2004, the Company through its subsidiaries, repurchased $5,0
million nominal value of its 10,5% First Preferred Ship Mortgage Notes due
2008 at a net amount of $3.8 million.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRAPETROL (BAHAMAS) LIMITED
(registrant)
Dated: May 15, 2004 By: /s/ Felipe Menendez
-------------------------------
Felipe Menendez
President