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 November 2005
DryShips Inc.
(Translation of registrant's name into English)
80 Kifissias Avenue
Amaroussion 15125, Athens Greece
(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
Attached hereto as Exhibit I is a copy of the press release issued by DryShips
Inc. on November 28, 2005. Attached hereto as Exhibit II are the financial
results of DryShips Inc. for the third quarter of 2005.
EXHIBIT I
DRYSHIPS FILES DETAILED REPORT FOR THE THIRD QUARTER 2005
ATHENS, Greece, November 28, 2005 - DryShips Inc. (NASDAQ: DRYS) announced that
after the close of the market today, Monday, November 28, 2005, it will file
with the Securities and Exchange Commission (SEC) under cover of form 6-K a
quarterly report that is in line with the requirements applicable to Form 10-Q
for the quarterly period ended September 30, 2005.
George Economou, Chairman and CEO commented: "As a foreign issuer, DryShips is
not subject to the same reporting requirements as US domestic issuers.
Nevertheless, DryShips is voluntarily committed to adhere to the same high
standards of reporting information regarding our company's operations and
financial position as US companies. Therefore, as of today and on a quarterly
basis going forward, DryShips will file reports substantially similar to those
issued by US companies along the lines of the 10Q Filings."
This quarterly report can be accessed after the close of the market today on the
SEC website with the Edgar Filings and also on the corporate website of
DryShips, at www.dryships.com, in the investor relations section under
"Quarterly and Annual Reports"
Once available, to get direct access to the filing, please click the link below
or copy and paste it into your browser:
http://www.irwebpage.com/dryships/ir_reports.html
-------------------------------------------------
About DryShips Inc.
DryShips Inc., based in Greece, is an owner and operator of drybulk carriers
that operate worldwide. As of the day of this Release, DryShips owns a fleet of
27 drybulk consisting 4 Capesize, 21 Panamax and 2 Handymax vessels, with a
combined deadweight tonnage of approximately 2.3 million. DryShips is the second
largest Panamax operator in the world.
DryShips Inc.'s common stock is listed on NASDAQ National Market where it trades
under the symbol "DRYS".
Visit our website at www.dryships.com
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Company Contact:
Christopher J. Thomas
Chief Financial Officer
DryShips Inc.
Tel. 011-30-210-809-0570
E-mail: management@dryships.com
Investor Relations / Media:
Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. 212-661-7566
E-mail: nbornozis@capitallink.com
Exhibit II
DRYSHIPS INC. AND SUBSIDIARIES
INDEX
PART I
1. FINANCIAL INFORMATION AND OTHER DATA
Consolidated Balance Sheets (unaudited) as of September 30, 2005 and
December 31, 2004
Consolidated Statements of Operations (unaudited) for the three months and
nine months ended September 30, 2005 and 2004
Consolidated Statement of Shareholders' Equity (unaudited) for the nine
months ended September 30, 2005
Consolidated Statement of Cash Flows (unaudited) for the nine months ended
September 30, 2005
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II.
1. LEGAL PROCEEDINGS
5. OTHER INFORMATION
1. FINANCIAL INFORMATION AND OTHER DATA
DRYSHIPS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2005 2004
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents 24,958 8,371
Restricted cash 0 463
Accounts receviable trade, net 5,085 2,068
Insurance claims 99 13
Due from related parties 0 13,368
Inventories 879 409
Prepayments and advances 4,585 718
Total Current Assets 35,829 25,410
FIXED ASSETS
Vessels, net 870,934 50,882
Total Fixed Assets 870,934 50,882
OTHER NON-CURRENT ASSETS
Due from related parties 0 58,740
Deferred charges 5,222 3,007
Total Assets 911,762 138,039
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt 111,015 15,004
Trade accounts payable 5,982 2,101
Other payables 177 75
Due to related parties 6,972 214
Dividends payable 6,070 17,995
Accrued liabilities 8,959 438
Financial instruments (223) 0
Unearned revenue 3,748 2,141
Total Current Liabilities 142,923 37,968
LONG-TERM DEBT, net of currrent portion 438,419 93,590
STOCKHOLDERS' EQUITY
Capital stock, $0.01 par value: 75,000,000
15,400,000 and 30,350,000 shares issued
and outstanding as at December 31, 2004
and September 30, 2005, respectively 303 154
Additional paid-in capital 264,327 13,465
Retained earnings 66,013 (7,138)
Total Stockholders' Equity 330,643 6,481
Total Liabilities and Stockholders' Equity 911,762 138,039
DRYSHIPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
REVENUES
Revenue from vessels $58,081 $15,188 $162,488 $50,713
Voyage expenses (789) (1,192) (6,372) (3,936)
--------------- ----- ------- ------- -------
Revenue on a TCE basis 57,292 13,996 156,116 46,777
---------------------- ------ ------ ------- ------
EXPENSES
Vessel operating expenses 11,496 1,828 23,150 6,672
Depreciation 14,012 1,148 27,498 3,638
Amortization of deferred charges 548 377 1,537 1,334
Management fees 1,573 326 3,551 946
Other general and administrative expenses 1,155 0 2,682 0
Total operating expenses 28,784 3,679 58,418 12,590
------------------------ ------ ----- ------ ------
Operating Income 28,508 10,317 97,698 34,187
---------------- ------ ------ ------ ------
OTHER INCOME (EXPENSES)
Interest and finance costs (5,608) (446) (12,888) (1,193)
Interest income 38 0 650 0
Foreign currency losses, net 87 (11) 57 (25)
Other, net (171) (39) (226) 83
---------- ----- ---- ----- --
Total other income (expenses), net (5,654) (4,496) (12,407) (1,135)
---------------------------------- ------- ----- -------- -------
NET INCOME $22,854 $9,821 $85,291 $33,052
---------- ------- ------ ------- -------
Basic earnings per common share $0.75 $0.64 $3.02 $2.15
Diluted earnings per common share $0.75 $0.64 $3.02 $2.15
Weighted average shares outstanding:
Basic 30,350,000 15,400,000 28,214,286 15,400,000
Diluted 30,350,000 15,400,000 28,214,286 15,400,000
DRYSHIPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Additional
Captial Paid-in Retained
Stock Capital Earnings Total
----- ------- -------- -----
Balance as of January 1, 2005 154 13,465 (7,138) 6,481
Net Income 85,291 85,291
Cash deividends paid (12,140) (12,140)
Issuance of 14,950 common shares 149 250,862 251,011
Balance at September 30, 2005 303 264,327 66,013 330,643
DRYSHIPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SEPTEMBER 30, 2005
Cash Flows from (used in) Operating Activities
Net Income 85,291
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 27,498
Amortization of deferred dry-docking costs 1,537
Amortization and write-off of deferred financing costs 467
(Increase) Decrease in:
Accounts receivable trade (3,017)
Insurance claims (86)
Financial instruments (223)
Due from related parties 3,999
Inventories (470)
Prepayments and advances (3,863)
Increase (Decrease) in:
Trade accounts payable 3,881
Other payables 102
Due to related parties 6,758
Accrued liabilities 8,521
Unearned revenue 1,607
Payments for drydocking (3,752)
Net Cash from Operating Activities 128,250
Cash Flows used in Investing Activities
Additions to vessel cost (847,550)
Net Cash used in Investing Activities (847,550)
Cash Flows from (used in) Financing Activities
Restricted cash 463
Proceeds from long-term debt 578,104
Principal payments of long-term debt (40,522)
Repayment of long-term debt (25,749)
Contributions to additional paid-in capital 250,862
Dividends paid (24,065)
Payment of financing costs (3,206)
Net Cash from (used in) Financing Activities 735,887
Net Increase (Decrease) in Cash and Cash Equivalents 16,587
Cash and Cash Equivalents at beginning of Period 8,371
Cash and Cash Equivalents at End of Period 24,958
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Interest payments 11,245
Non-cash financing activities:
Liabilities assumed in connection with joint and several
borrowings with related parties 68,109
Fleet Data
FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
Average number of vessels(1) 19.7 6.0 26.4 6.0
Number of vessels at end of period 27 6 27 6
Total voyage days for fleet(2) 5,253 1,543 2,302 527
Total calendar days for fleet(3) 5,382 1,644 2,431 552
Fleet utilization(4) 97.6% 93.9% 94.7% 95.5%
Time charter equivalent(5)
Capesize $51,444 $46,194 $43,077 $39,592
Panamax $26,487 $27,609 $21,620 $24,634
Handymax $22,768 n/a $22,650 n/a
Vessel operating expenses(6) $4,301 $4,058 $4,729 $3,311
Management fees $660 $576 $647 $591
General and administrative expenses(7) $498 $0 $475 $0
Total vessel operating expenses(8) $5,459 $4,634 $5,851 $3,902
(1) Average number of vessels is the number of vessels that constituted the
fleet for the relevant period, as measured by the sum of the number of days
each vessel was a part of the fleet during the period divided by the number
of calendar days in that period.
(2) Total voyage days for the fleet are the total days the vessels were in the
Company's possession for the relevant period net of off hire days
associated with major repairs, drydockings or special or intermediate
surveys.
(3) Calendar days are the total days the vessels were in the Company's
possession for the relevant period including off hire days associated with
major repairs, drydockings or special or intermediate surveys.
(4) Fleet utilization is the percentage of time that the vessels were available
for revenue generating voyage days, and is determined by dividing voyage
days by fleet calendar days for the relevant period.
(5) Time charter equivalent, or TCE, is a measure of the average daily revenue
performance of a vessel on a per voyage basis. The Company's method of
calculating TCE is consistent with industry standards and is determined by
dividing voyage revenues (net of voyage expenses) by voyage days for the
relevant time period. Voyage expenses primarily consist of port, canal and
fuel costs that are unique to a particular voyage, which would otherwise be
paid by the charterer under a time charter contract, as well as
commissions. TCE is a standard shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company's
performance despite changes in the mix of charter types (i.e., spot
charters, time charters and bareboat charters) under which the vessels may
be employed between the periods.
(6) Daily vessel operating expenses, which includes crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and repairs
is calculated by dividing vessel operating expenses by fleet calendar days
for the relevant time period.
(7) Daily general and administrative expense is calculated by dividing general
and administrative expense by fleet calendar days for the relevant time
period.
(8) Total vessel operating expenses, or TVOE is a measurement of our total
expenses associated with operating our vessels. TVOE is the sum of vessel
operating expenses, management fees and general and administrative
expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days
for the relevant time period.
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2005 2004 2005 2004
---- ---- ---- ----
EBITDA Reconciliation
Net Income $22,854 $9,821 $85,291 $33,052
+Net interest expense 5,570 446 12,238 1,193
+ Depreciation and amortization 14,560 1,525 29,035 4,972
EBITDA $42,984 $11,792 $126,564 $39,217
(1) EBITDA represents net income plus net interest expense and depreciation and
amortization. EBITDA is included because it is used by the Company and
certain investors as a measure of operating performance. EBITDA is used by
analysts in the shipping industry as a common performance measure to
compare results across peers.
(2) EBITDA is not an item recognized by GAAP, and should not be considered as
an alternative to net income, operating income or any other indicator of a
company's operating performance required by GAAP. The definition of EBITDA
used here may not be comparable to that used by other companies.
ITEM 3. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
This report contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward looking statements are based on the Company's current expectations and
observations. Included among the factors that, in the Company's view, could
cause actual results to differ materially from the forward looking statements
contained in this report are the following: changes in demand or a material
decline in rates or prolonged weakness in the drybulk market, generally or in
particular regions; greater than anticipated levels of drybulk carrier
newbuilding orders or lower than anticipated rates of drybulk carrier scrapping;
changes in rules and regulations applicable to the drybulk carrier industry,
including, without limitation, legislation adopted by international
organizations such as the International Maritime Organization and the European
Union or by individual countries; actions taken by regulatory authorities;
changes in trading patterns significantly impacting overall drybulk carrier
tonnage requirements; changes in the seasonal variations in drybulk carrier
charter rates; changes in the cost of other modes of transportation; increases
in costs including but not limited to: crew wages, insurance, provisions,
repairs, maintenance and overhead expenses; changes in general domestic and
international political conditions; changes in the condition of the Company's
vessels or applicable maintenance or regulatory standards (which may affect,
among other things, anticipated drydocking or maintenance and repair costs); and
other factors listed from time to time in the Company's public filings with the
Securities and Exchange Commission. Our ability to pay dividends in any period
will depend upon factors including the limitations under the Company's loan
facilities, applicable provisions of Marshall Islands law and the final
determination by the Board of Directors each quarter after its review of our
financial performance. The timing and amount of dividends, if any, could also be
affected by factors affecting cash flows, results of operations, required
capital expenditures, or reserves. As a result, the amount of dividends actually
paid may vary.
The following is a discussion of the financial condition and results of
operations for the three months and nine months ended September 30, 2005 and
2004. Investors should consider the foregoing when reviewing the consolidated
unaudited financial statements included in this report and this discussion. Our
financial results for the nine months ended September 30, 2005 and the three
months ended September 30, 2005 may not be indicative of the results that may be
expected for the year ending December 31, 2005.
DryShips Inc. (the "Company") is a Marshall Islands corporation with its
principal executive offices in Athens, Greece. The Company was incorporated in
September 2004. The Company owns and operates, through its subsidiaries, 27
drybulk carriers, 21 of which we have acquired since our initial public offering
of 14,950,000 shares of common stock in February 2005 (the "Offering"). Since
our inception in 2004, we have increased the size and carrying capacity of our
fleet from 6 vessels and approximately 514,890 deadweight tons, or dwt, to 27
vessels of approximately 2,264,225 dwt. Our affiliate, Cardiff Marine Inc., or
Cardiff, manages our vessels under separate ship management agreements. The
Company operates in one business segment, which is the transportation of
international seaborne drybulk cargoes.
The following table presents certain information concerning our fleet:
Name Type Dwt Year
---- ---- --- ----
Manasota Capesize Bulk Carrier 171,061 2004
Alameda Capesize Bulk Carrier 170,662 2001
Shibumi Capesize Bulk Carrier 166,058 1984
Netadola Capesize Bulk Carrier 149,475 1993
Mendocino Panamax Bulk Carrier 76,623 2002
Coronado Panamax Bulk Carrier 75,706 2000
Waikiki Panamax Bulk Carrier 75,473 1995
Mostoles Panamax Bulk Carrier 75,395 1981
Linda Oldendorff Panamax Bulk Carrier 75,100 1995
Sonoma Panamax Bulk Carrier 74,786 2001
Catalina Panamax Bulk Carrier 74,432 2005
Samsara Panamax Bulk Carrier 73,688 1999
Belmonte Panamax Bulk Carrier 73,601 2004
Toro Panamax Bulk Carrier 73,034 1995
Xanadu Panamax Bulk Carrier 72,270 1999
La Jolla Panamax Bulk Carrier 72,126 1997
Lacerta Panamax Bulk Carrier 71,862 1994
Panormos Panamax Bulk Carrier 71,747 1995
Paragon Panamax Bulk Carrier 71,250 1995
Iguana Panamax Bulk Carrier 70,349 1996
Daytona Panamax Bulk Carrier 69,703 1989
Lanikai Panamax Bulk Carrier 68,676 1988
Tonga Panamax Bulk Carrier 66,798 1984
Flecha Panamax Bulk Carrier 65,081 1982
Striggla Panamax Bulk Carrier 64,747 1982
Alona Panamax Bulk Carrier 48,040 2002
Matira Panamax Bulk Carrier 45,863 1994
Lack of historical operating data for vessels prior to their acquisition
Consistent with shipping industry practice, each of the Company's vessels, which
are all secondhand drybulk carriers, was acquired pursuant to a memorandum of
agreement, the standard form of ship sale contract used in the shipping
industry. The standard memorandum of agreement, among other things, provides a
vessel buyer with the right to inspect the vessel and the vessel's
classification society records. The standard agreement does not give the buyer
the right to inspect, or receive copies of, the historical operating data of the
vessel. Accordingly, in connection with each acquisition of a secondhand vessel,
neither the Company nor the vessel-owning subsidiaries requested or received
from the sellers any historical financial statements or other historical
operating data in respect of the vessels. Therefore, the Company has not
included any historical financial results or any historical financial
information or data relating to the results of operations of the vessels for any
period prior to the acquisition of the vessels. The Company does not consider a
vessel's prior operating history under the previous owner material to the
decision to make any particular acquisition nor does the Company believe such
information would be helpful to the Company or to investors of common stock in
assessing the future financial results or profitability. Other than inspection
of the physical condition of the vessels, examinations of classification society
records and a requirement that the seller evidence that the vessel is free of
any encumbrances, the Company does not perform any historical financial due
diligence in respect of the secondhand drybulk carriers acquired. The decision
to acquire secondhand drybulk carriers is based on the assessment of future
market opportunities and the belief in the ability of the managers to employ the
vessels in favorable chartering arrangements.
Although vessels are generally acquired free of charter, we have acquired (and
may in the future acquire) some vessels with time charters. Where a vessel has
been under a voyage charter, the vessel is delivered to the buyer free of
charter. It is rare in the shipping industry for the last spot charterer of the
vessel in the hands of the seller to continue as the first spot charterer of the
vessel in the hands of the buyer. In most cases, when a vessel is under time
charter and the buyer wishes to assume that charter, the vessel cannot be
acquired without the charterer's consent and the buyer's agreement to enter into
a separate agreement with the charterer to assume the charter. The purchase of a
vessel itself does not transfer the charter, because it is a separate service
agreement between the vessel owner and the charterer.
Where we identify any intangible assets or liabilities associated with the
acquisition of a vessel, we record all identified tangible and intangible assets
or liabilities at fair value. Fair value is determined by reference to market
data and the discounted amount of expected future cash flows. Where we have
assumed an existing charter obligation or entered into a time with the existing
charterer in connection with the purchase of a vessel at charter rates that are
less than market charter rates, we record a liability, based on the difference
between the assumed charter rate and the market charter rate for an equivalent
vessel to the extent the vessel's capitalized cost would not exceed its fair
value without the time charter. Conversely, where we assume an existing charter
obligation or enter into a time charter with the existing charterer in
connection with the purchase of a vessel at charter rates that are above market
charter rates, we record an asset, based on the difference between the market
charter rate and the contracted charter rate for an equivalent vessel.
Following the acquisition of each of the vessels, the commercial and technical
management is transferred to Cardiff. The Company has concluded, based on the
unique characteristics of the commercial management, including with respect to,
among other things, their customer base, industry contacts, trades, routes,
land-based personnel, geographic and commercial focus, business strategy and
commercial strengths, that the nature of the revenue generating activities of
each of the vessels materially changed when such vessel was acquired. The
Company has also concluded, based on the unique characteristics related to the
technical management, including with respect to, among other things, specific
crews, insurance coverage, maintenance and repair decisions and financing
structure, that the cost structure of each of the vessels materially changed
when such vessels were acquired. Therefore, the Company believes that the
overall operational structure of each of the vessels acquired changed and,
together with the change in the commercial and technical management of the
vessels, the business attributes stemming from the operations of each of the
Company's drybulk vessels by its previous owner did not survive the change in
ownership and would not be relevant to the Company or to investors in its common
stock.
The following discussion is intended to help investors understand how
acquisitions of vessels affect the Company's business and results of operations.
The Company's business is comprised of the following main elements:
o employment and operation of vessels; and
o management of the financial, general and administrative elements
involved in the conduct of the Company's business and ownership of our
vessels.
The employment and operation of vessels require the following main components:
o vessel maintenance and repair;
o crew selection and training;
o vessel spares and stores supply;
o contingency response planning;
o onboard safety procedures auditing;
o accounting;
o vessel insurance arrangement;
o vessel chartering;
o vessel hire management;
o vessel surveying; and
o vessel performance monitoring.
The management of financial, general and administrative elements involved in the
conduct of the Company's business and ownership of vessels requires the
following main components:
o management of financial resources, including banking relationships,
that is, administration of bank loans and bank accounts;
o management of the accounting system and records and financial
reporting;
o administration of the legal and regulatory requirements affecting the
Company's business and assets; and
o management of the relationships with service providers and customers.
The principal factors that affect the Company's profitability, cash flows and
stockholders' return on investment include:
o rates and periods of charterhire;
o levels of vessel operating expenses;
o depreciation expenses;
o financing costs; and
o fluctuations in foreign exchange rates.
Factors Affecting the Results of Operations
The Company believes that the important measures for analyzing trends in the
results of operations consist of the following:
o Calendar days. Calendar days are defined as the total number of days
in a period during which each vessel in the fleet was in the Company's
possession including off hire days associated with major repairs,
drydockings or special or intermediate surveys. Calendar days are an
indicator of the size of the Company's fleet over a period and affect
both the amount of revenues and the amount of expenses that are
recorded during that period.
o Voyage days. Voyage days are defined as the total number of days in a
period during which each vessel in the fleet was in the Company's
possession net of off hire days associated with major repairs,
drydockings or special or intermediate surveys. The shipping industry
uses voyage days (also referred to as available days) to measure the
number of days in a period during which vessels actually generate
revenues.
o Fleet utilization. Fleet utilization is calculated by dividing the
number of voyage days during a period by the number of calendar days
during that period. The shipping industry uses fleet utilization to
measure a company's efficiency in finding suitable employment for its
vessels and minimizing the amount of days that its vessels are off
hire for reasons such as scheduled repairs, vessel upgrades,
drydockings or special or intermediate surveys.
o Spot Charter Rates. Spot charter rates are volatile and fluctuate on a
seasonal and year to year basis. Fluctuations are caused by imbalances
in the availability of cargoes for shipment and the number of vessels
available at any given time to transport these cargoes.
Voyage Revenues
The Company's voyage revenues are driven primarily by the number of vessels in
the fleet, the number of voyage days during which the vessels generate revenues
and the amount of daily charterhire that the vessels earn under charters, which,
in turn, are affected by a number of factors, including the Company's decisions
relating to vessel acquisitions and disposals, the amount of time spent
positioning vessels, the amount of time that vessels spend in drydock undergoing
repairs, maintenance and upgrade work, the age, condition and specifications of
the vessels, levels of supply and demand in the drybulk transportation market
and other factors affecting spot market charter rates for drybulk carriers.
Vessels operating on period time charters provide more predictable cash flows,
but can yield lower profit margins than vessels operating in the spot charter
market during periods characterized by favorable market conditions. Vessels
operating in the spot charter market generate revenues that are less predictable
but may enable us to capture increased profit margins during periods of
improvements in drybulk carrier rates although the Company is exposed to the
risk of declining charter rates, which may have a materially adverse impact on
the Company's financial performance. If vessels are employed on period time
charters, future spot market rates may be higher or lower than the rates at
which the Company has employed our vessels on period time charters.
Pool Revenues
Cardiff has placed 11 of the Company's 27 vessels in two pools, one Panamax pool
with 10 vessels and one Handymax pool with one vessel. The Company is paid a
percentage of revenues generated by the pool calculated in accordance with a
"pool point formula," which is determined by points awarded to each vessel based
on the vessel's age, dwt, speed, fuel consumption and certain other factors. For
example, a younger vessel with higher carrying capacity and greater fuel
efficiency would earn higher pool points than an older vessel with lower
carrying capacity and lesser fuel efficiency. Revenues are paid every 15 days in
arrears based on the points earned by each vessel. The Company believes that by
placing vessels in a pool of similar vessels, we achieve benefits from certain
economies of scale available to the pool relating to negotiations with major
charterers and flexibility in positioning vessels to obtain maximum utilization.
Revenue from these pooling arrangements is recognized when we are notified by
the pools as to the allocation of any period results and collectability has been
reasonably assured.
Time Charter Equivalent (TCE)
A standard maritime industry performance measure used to evaluate performance is
the daily time charter equivalent, or daily TCE. Daily TCE revenues are voyage
revenues minus voyage expenses divided by the number of voyage days during the
relevant time period. Voyage expenses primarily consist of port, canal and fuel
costs that are unique to a particular voyage, which would otherwise be paid by a
charterer under a time charter, as well as commissions. The Company believes
that the daily TCE neutralizes the variability created by unique costs
associated with particular voyages or the employment of vessels on time charter
or on the spot market and presents a more accurate representation of the
revenues generated by the Company's vessels.
Vessel Operating Expenses
Vessel operating expenses include crew wages and related costs, the cost of
insurance, expenses relating to repairs and maintenance, the costs of spares and
consumable stores, tonnage taxes and other miscellaneous expenses. Vessel
operating expenses, which generally represent fixed costs, have historically
increased as a result of the enlargement of the Company's fleet. Other factors
beyond the Company's control, some of which may affect the shipping industry in
general, include, for instance, developments relating to market prices for
insurance, may also cause these expenses to increase.
Depreciation and Amortization
Vessels are depreciated on a straight-line basis over their estimated useful
lives determined to be 25 years from the date of their initial delivery from the
shipyard. Depreciation is based on cost less the estimated residual value. The
Company capitalizes the total costs associated with a drydocking and amortizes
these costs on a straight-line basis over the period when the next drydocking
becomes due, which is typically 30 months. Regulations and/or incidents may
change the estimated dates of next drydockings.
General and Administrative Expenses
General and administrative expenses include the fees payable to Cardiff under
the management agreements and certain other expenses.
Nine months ended September 30, 2005 compared to the nine months ended
September 30, 2004
VOYAGE REVENUES--Voyage revenues increased by $111.7 million, or 220.3% to
$162.4 million for 2005, compared to $50.7 million for 2004. This increase is
due to the delivery of 21 vessels delivered between February and August 2005
increasing voyage days from 1,543 for the nine months ended September 30, 2004
to 5,253 for the nine months ended September 30, 2005.
VOYAGE EXPENSES--Voyage expenses, which primarily consist of port, canal and
fuel costs that are unique to a particular voyage which would otherwise be paid
by the charterer under a time charter contract, as well as commissions,
increased $2.4 million, or 61.5%, to $6.3 million for the nine months ended
September 30, 2005, compared to $3.9 million for the nine months ended September
30, 2004. This increase is primarily due to the increase in the amount of
commissions paid as a result of higher voyage revenues. Commissions are
calculated as a percentage of voyage revenues.
VESSEL OPERATING EXPENSES--Vessel operating expenses, which include crew costs,
provisions, deck and engine stores, lubricating oil, insurance, maintenance and
repairs, increased by $16.5 million, or 250.0%, to $23.1 million for the nine
months ended September 30, 2005 compared to $6.6 million for the nine months
ended September 30, 2004. Daily vessel operating expenses per vessel increased
by $243, or 6.0%, to $4,301 for the nine months ended September 30, 2005
compared to $4,058 for September 30, 2004. This increase is primarily due to the
one-off payment of $1.6 million of expenses incurred for the delivery of 21
vessels.
GENERAL AND ADMINISTRATIVE EXPENSES--General and administrative expenses,
inclusive of management fees that Cardiff charges to manage the Company's
vessels, and charges expensed in the operations of the Company increased by $5.3
million, or 588.8%, to $6.2 million for the nine months ended September 30, 2005
compared to $0.9 million for the nine months ended September 30, 2004. This
increase is due to the delivery of 21 vessels during the period February 2005 to
August 2005 which increased the number of calendar days from 1,644 for the nine
months ended September 30, 2004 compared to 5,382 days for the nine months ended
September 30, 2005. Cardiff charges a daily fee of $650 for each vessel. In
addition, any visit to a vessel by a superintendent engineer of Cardiff to
evaluate or supervise any repairs, drydockings or other activities entitles
Cardiff to expenses incurred and, for visits in excess of five days per annum
per vessel, $550 for each additional day. In addition $2.7 million was charged
for the operations of the Company for the nine months ended September 30, 2005
compared to $0.0 million for the nine months ended September 30, 2004 as a
direct result of the Offering, which closed in February 2005.
DEPRECIATION AND AMORTIZATION--
Nine months ended September 30,
2004 2005
---- ----
Vessels depreciation expense 3,638 27,498
Amortization of dry-dockings 1,334 1,537
4,972 29,035
Depreciation and amortization, which includes depreciation of vessels as well as
amortization of drydockings, increased by $24.1 million, or 483.9% to $29.0
million for the nine months ended September 30, 2005 compared to $4.9 million
for the nine months ended September 30, 2004. This increase is primarily due to
the delivery of 21 vessels during the period February 2005 and August 2005, plus
an increase in amortization of drydocking expenses due to the drydocking of
Daytona, La Jolla, Panormos, Flecha and Waikiki,during 2005.
INTEREST AND FINANCE COSTS, NET--Net interest expense increased by $11.0
million, or 916.7%, to $12.2 million for the nine months ended September 30,
2005 compared to $1.2 million for the nine months ended September 30, 2004. This
increase is primarily the result of additional debt incurred to finance in part
the acquisition of 21 vessels delivered during the period February 2005 and
August 2005.
We anticipate that all of the foregoing expenses will increase in 2005 primarily
as a result of the acquisition of the 21 vessels and as a result of becoming a
public company.
FOREIGN CURRENCY LOSSES--We incurred a $57,457 foreign currency gain for the
nine months ended September 30, 2005 compared to a loss of $25,511 for the nine
months ended September 30, 2004.
OTHER NET--A loss of $0.2 million was recognized during the nine months ended
September 30, 2005 compared to a gain of $0.08 during the nine months ended
September 30, 2004. The loss relates to expenses not directly related to the
operation of the vessels while the gains relate to the excess amount we received
in connection with claims for damages to vessels compared to the actual costs
associated with the repairs.
NET INCOME--Net income was $85.2 million for the nine months ended September 30,
2005 compared to net income of $33.0 million for the nine months ended September
30, 2004.
Three months ended September 30, 2005 compared to the three months ended
September 30, 2004
VOYAGE REVENUES--Voyage revenues increased by $42.9 million, or 284.1% to $58.0
million for the three months ended September 30, 2005, compared to $15.1 million
for the three months ended September 30, 2004. This increase is due to the
delivery of 21 vessels delivered between February and August 2005 increasing the
number of vessels to 27 in 2005 compared to 6 vessels in 2004. As a result,
voyage days increased from 527 for the three months ended September 30, 2004 to
2,302 for the three months ended September 30, 2005.
VOYAGE EXPENSES--Voyage expenses, which primarily consist of port, canal and
fuel costs that are unique to a particular voyage which would otherwise be paid
by the charterer under a time charter contract, as well as commissions,
decreased by $0.4 million, or 36.3%, to $0.7 million for the three months ended
September 30, 2005, compared to $1.1 million for the three months ended
September 30, 2004. This decrease is due to fewer voyage charters performed by
the vessels in the fleet. Commissions are calculated as a percentage of voyage
revenues.
VESSEL OPERATING EXPENSES--Vessel operating expenses, which include crew costs,
provisions, deck and engine stores, lubricating oil, insurance, maintenance and
repairs, increased by $9.6 million, or 533.3%, to $11.4 million for the three
months ended September 30, 2005 compared to $1.8 million for the three months
ended September 30, 2004. Daily vessel operating expenses per vessel increased
by $1,418, or 42.8%, to $4,729 for the three months ended September 30, 2005
compared to $3,311 for the three months ended September 30, 2004. This increase
is primarily due to the one-off payment of $1.6 million of expenses incurred for
the delivery of the 21 vessels which was expensed in the three months ended
September 30, 2005.
GENERAL AND ADMINISTRATIVE EXPENSES--General and administrative expenses,
inclusive of management fees that Cardiff charges to manage the Company's
vessels, and charges expensed in the operations of the Company increased by $2.4
million, or 800.0%, to $2.7 million for the three months ended September 30,
2005 compared to $0.3 million for the three months ended September 30, 2004.
This increase is due to the delivery of 21 vessels during the period February
2005 to August 2005 which increased the number of calendar days from 552 for the
three months ended September 30, 2004 compared to 2,431 days for the three
months ended September 30, 2005. In addition $1.1 million was charged for the
operations of the Company in the three months ended September 30, 2005 compared
to $0.0 million for the three months ended September 30, 2004 as a direct result
of the Offering, which closed in February 2005.
DEPRECIATION AND AMORTIZATION--
Nine months ended September 30,
2004 2005
---- ----
Vessels depreciation expense 1,148 14,012
Amortization of dry-dockings 377 548
1,525 14,560
Depreciation and amortization, which includes depreciation of vessels as well as
amortization of drydockings, increased by $13.0 million, or 866.6% to $14.5
million for the three months ended September 30, 2005 compared to $1.5 million
for the three months ended September 30, 2004. This increase is primarily due to
the delivery of 21 vessels during the period February 2005 and August 2005, plus
an increase in amortization of drydocking expenses due to the drydocking of
Daytona, La Jolla, Panormos, Flecha and Waikiki during 2005.
INTEREST AND FINANCE COSTS, NET--Net interest expense increased by $5.2 million,
or 1,300%, to $5.6 million for 2005 compared to $0.4 million for 2004. This
increase is primarily the result of additional debt incurred to part finance the
acquisition of 21 vessels delivered during the period February 2005 and August
2005.
We anticipate that all of the foregoing expenses will increase in 2005 primarily
as a result of the acquisition of the 21 vessels and as a result of becoming a
public company.
FOREIGN CURRENCY LOSSES--A $0.08 million foreign currency gain was incurred for
the three months ended September 30, 2005 compared to a loss of $0.01 million
for the three months ended September 30, 2004.
OTHER NET--A loss of $0.1 million was incurred during the three months ended
September 30, 2005 compared to a loss of $0.04 million during the three months
ended September 30, 2004. The loss relates to expenses not directly related to
the operation of the vessels.
NET INCOME--Net income was $22.8 million for the three months ended September
30, 2005 compared to net income of $9.8 million for the three months ended
September 30, 2004.
LIQUIDITY AND CAPITAL RESOURCES
Since the Company's formation, the principal sources of funds have been equity
financings, operating cash flows and long-term bank borrowings. The principal
use of funds has been capital expenditures to establish and grow our fleet,
maintain the quality of the vessels, comply with international shipping
standards and environmental laws and regulations, fund working capital
requirements and make principal repayments on outstanding loan facilities.
The Company's practice has been to acquire vessels using a combination of funds
received from equity investors, bank debt secured by mortgages on the vessels
and shares of the common stock of our shipowning subsidiaries. The payment of
dividends is expected to decrease our available cash. We expect to use our
operating cash flows and borrowings to fund acquisitions, if any, on a
short-term basis. We also intend to review debt and equity financing
alternatives to fund such acquisitions.
The Company's business is capital intensive and its future success will depend
on the ability to maintain a high-quality fleet through the acquisition of newer
vessels and the selective sale of older vessels. These acquisitions will be
principally subject to management's expectation of future market conditions as
well as our ability to acquire vessels on favorable terms.
The Company expects to rely on operating cash flows as well as long-term
borrowings and future equity offerings to implement its growth plan and dividend
policy. The Company believes that its current cash balance as well as operating
cash flows will be sufficient to meet our liquidity needs for the next year.
Cash and Working Capital
------------------------
Cash increased to $24.9 million as of September 30, 2005 compared to $8.3
million as of December 31, 2004. Working capital is current assets minus current
liabilities, including the current portion of long-term debt. Working capital
was a negative $107.0 million as of September 30, 2005 compared to a negative
$12.5 million as of December 31, 2004. The current portion of long-term debt
included in our current liabilities was $111.0 million as of September 30, 2005
and $15.0 million as of December 31, 2004.
Cash Flows from Operating Activities
Net cash provided by operating activities was $117.4 million for the nine months
ended September 30, 2005. This amount included $85.2 million of net income and
an adjustment to net cash of $29.0 million relating to depreciation and
amortization. Drydocking costs were $3.5 million for the nine months ended
September 30, 2005.
Cash Flows Used In Investing Activities
Net cash used in investing activities was $847.5 million for the nine months
ended September 30, 2005 which related entirely to the cost of acquiring the 21
vessels delivered to the Company during February and August 2005.
Cash Flows Used By Financing Activities
Net cash used by financing activities was $746.6 million for the nine months
ended September 30, 2005. Cash used by financing activities relates to the
following:
o Proceeds from long-term debt amounted to $593.1 million.
o Principal repayments of long-term debt amounted to $40.1 million
o Repayment of long-term debt amounted to $41.1 million.
o During the nine months ended September 30, 2005 we paid $12.1 million
of dividends to shareholders.
Capital Expenditures for Drydockings and Vessel Acquisitions
------------------------------------------------------------
Drydocking
In addition to vessel acquisitions, other major capital expenditures include
funding our maintenance program of regularly scheduled in-water survey or
drydocking necessary to preserve the quality of vessels as well as to comply
with international shipping standards and environmental laws and regulations.
Management anticipates that vessels which are younger than 15 years are required
to undergo in-water surveys 2.5 years after a drydock and that vessels are to be
drydocked every five years, while vessels 15 years or older are to be drydocked
every 2.5 years in which case the additional drydocks take the place of these
in-water surveys. During the nine months ended September 30, 2005, we have
capitalized costs associated with drydocks or significant in-water surveys on
approximately 6 vessels and estimate that the expenditures to perform these
drydocks or significant in-water surveys will aggregate approximately $4.0
million.
Vessel Acquisitions
During the period February and August 2005 the Company acquired and took
delivery of 21 vessels. The aggregate purchase price of these vessels was $847.5
million.
Credit Facilities
As of September 30, 2005, we had five outstanding loans with an aggregate
outstanding balance of $552.5 million. The balance sheet total of $549.4 million
is net of deferred financing These loans have maturity dates between 2006 and
2011.
The scheduled annual principal payments for our outstanding loans are as
follow:
LOANS
A B C D E TOTAL
Year ended
December 31,
September 30,
2005 to December
31, 2005 $5,833,333 $11,274,504 $6,196,000 $3,994,062 $0 $27,297,899
2006 21,999,999 39,691,873 19,638,000 15,976,250 4,000,000 $101,306,122
2007 18,000,000 31,972,592 4,200,000 15,976,250 2,100,000 $72,248,842
2008 13,500,000 22,072,801 4,200,000 15,976,250 1,200,000 $56,949,051
2009 12,000,000 12,320,790 4,200,000 10,825,125 1,200,000 $40,545,915
Thereafter 77,000,002 68,595,056 46,736,000 53,903,001 8,000,000 $249,612,059
TOTAL $148,333,334 $185,927,616 $85,170,000 $116,650,938 $16,500,000 $552,581,888
The scheduled quarterly principal payments during 2006 for our outstanding
loans are as follows:
LOANS
A B C D E TOTAL
2006
Q1 $5,833,333 $11,274,504 $6,196,000 $3,994,063 $2,500,000 $29,797,900
Q2 5,833,333 10,610,912 6,196,000 3,994,063 0 26,634,308
Q3 5,833,333 9,813,312 6,196,000 3,994,063 1,500,000 27,336,708
Q4 4,500,000 7,993,145 1,050,000 3,994,063 0 22,683,208
TOTAL $21,999,999 $39,691,873 $19,638,000 $15,976,250 $4,000,000 $101,306,122
Capitalization
Debt to total capitalization (debt and stockholders' equity) at September 30,
2005 was 62.4% and net debt (total debt less cash and cash equivalents) to total
capitalization was 59.6%.
Equity Incentive Plan
The Company has adopted an equity incentive plan (the "Plan"), which will
entitle officers, key employees and directors to receive options to acquire
common stock. Under the Plan, a total of 1,000,000 shares of common stock have
been reserved for issuance under the Plan. The Plan is administered by the board
of directors. Under the terms of the Plan, the board of directors may grant new
options exercisable at a price per share to be determined by the board of
directors. The expected price is equal to the average daily closing price for
our common stock over the 20 trading days following the Offering, which closed
in February 2005. Under the terms of the Plan, options are not exercisable
until at least two years after the closing of the Offering. Any shares received
on exercise of the options may not be sold until February 2008. All options
will expire 10 years from the date of grant. The Plan will expire in February
2015.
Dividend Policy
The Company's policy is to declare quarterly dividends from our net profits to
shareholders each January, April, July and October. However, the Company may be
required to make provisions for vessel acquisition and other liabilities that
would reduce or eliminate the cash available for distribution as dividends.
Furthermore, the Company may incur other expenses or liabilities that would
reduce or eliminate the cash available for distribution as dividends. Also, from
time to time, the Board of Directors may determine to declare and pay quarterly
dividends in an amount up to 50% of our net quarterly income as the Board of
Directors deems appropriate.
Declaration and payment of any dividend is subject to the discretion of our
Board of Directors. The timing and amount of dividend payments will be dependent
upon earnings, financial condition, cash requirements and availability, fleet
renewal and expansion, restrictions in loan agreements, the provisions of
Marshall Islands law affecting the payment of distributions to shareholders and
other factors. The payment of dividends is not guaranteed or assured, and may be
discontinued at any time at the discretion of our Board of Directors. Because
the Company is a holding company with no material assets other than the stock of
our subsidiaries, the ability to pay dividends will depend on the earnings and
cash flow of the Company's subsidiaries and their ability to pay dividends to
the Company. If there is a substantial decline in the drybulk charter market,
earnings would be negatively affected which would limit our ability to pay
dividends. Marshall Islands law generally prohibits the payment of dividends
other than from surplus or while a company is insolvent or would be rendered
insolvent upon the payment of such dividend.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk
We are exposed to various market risks, including changes in interest rates. The
exposure to interest rate risk relates primarily to our debt. At September 30,
2005, we had $552.5 million of floating rate debt compared to $108.5 million as
of December 31, 2004. The company has entered into various interest rate hedging
instruments in order to manage the impact of interest rate changes on earnings
and cash flows. As of September 30, 2005 the Company was party to 6 interest
rate hedging agreements having aggregate notional amounts of $555.8 million.
The Company is exposed to the impact of interest rate changes. The Company's
objective is to manage the impact of interest rate changes on earnings and cash
flows of its borrowings. The Company uses interest rate derivatives to manage
net exposure to interest rate changes related to its borrowings and to lower its
overall borrowing costs. In May 2005, the Company entered into six interest rate
cap and floor agreements with three of our lenders as follows:
o effective as of May 9, 2005, for a period through February 2014, for a
notional amortizing amount of $154.1 million. Under the cap
provisions, we pay interest at 5.59% if three-month LIBOR is between
5.59% and 8.00%. If three-month LIBOR exceeds 8%, we pay three-month
LIBOR. Under the floor provisions, we pay three-month LIBOR if
three-month LIBOR is between 3.00% and 5.59%. If LIBOR is below 3.00%,
we pay 3.00%.
o effective as of May 31, 2005, for a period through May 2015, for a
notional amortizing amount of $120.6 million. Under the cap
provisions, we pay interest at 5.80% if three-month LIBOR is between
5.80% and 8.00%. If three-month LIBOR exceeds 8%, we pay three-month
LIBOR. Under the floor provisions, we pay three-month LIBOR if
three-month LIBOR is between 3.00% and 5.80%. If LIBOR is below 3.00%,
we pay 3.00%.
o effective as of June 29, 2005, for a period through March 2013, for a
notional amortizing amount of $22.0 million. Under the cap provisions,
we pay interest at 5.66% if three-month LIBOR is between 5.66% and
8.00%. If three-month LIBOR exceeds 8%, we pay three-month LIBOR.
Under the floor provisions, we pay three-month LIBOR if three-month
LIBOR is between 3.00% and 5.66%. If LIBOR is below 3.00%, we pay
3.00%.
o effective as of June 30, 2005, for a period through June 30, 2011, for
a notional amortizing amount of $194.3 million. Under the cap
provisions, we pay interest at 5.85% if three-month LIBOR is between
5.85% and 8.00%. If three-month LIBOR exceeds 8%, we pay three-month
LIBOR. Under the floor provisions, we pay three-month LIBOR if
three-month LIBOR is between 3.00% and 5.85%. If LIBOR is below 3.00%,
we pay 3.00%.
o effective as of July, 13, 2005, for a period through April 2015, for a
notional amortizing amount of $42.4 million. Under the cap provisions,
we pay interest at 5.665% if three-month LIBOR is between 5.665% and
8.00%. If three-month LIBOR exceeds 8%, we pay three-month LIBOR.
Under the floor provisions, we pay three-month LIBOR if three-month
LIBOR is between 3.00% and 5.665%. If LIBOR is below 3.00%, we pay
3.00%.
o effective as of July 22, 2005, for a period through April 2012, for a
notional amortizing amount of $22.2 million. Under the cap provisions,
we pay interest at 5.64% if three-month LIBOR is between 5.64% and
8.00%. If three-month LIBOR exceeds 8%, we pay three-month LIBOR.
Under the floor provisions, we pay three-month LIBOR if three-month
LIBOR is between 3.00% and 5.64%. If LIBOR is below 3.00%, we pay
3.00%.
The marking-to-market of our six interest rate hedging contracts at
September 30, 2005 resulted in a loss of $0.2 million.
During September 2005 we fixed a portion of our floating interest rate
obligations for 2006 with two of our lenders as follows:
o weighted average LIBOR rate of 4.21% effective January 23, 2006 to
October 23, 2006, for an amortizing amount of $20.6 million.
o weighted average LIBOR rate of 4.18% effective December 29, 2005 to
September 29, 2006 for an amortizing amount of $20.4 million.
o weighted average LIBOR rate of 4.19% effective January 31, 2006 to
October 13, 2006 for an amortizing amount of $39.3 million.
o weighted average LIBOR rate of 4.21% effective November 22, 2005 to
September 22, 2006 for an amortizing amount of $116.6 million.
In October 2005, we entered into an interest rate swap agreement with one of our
lenders at a rate of 4.72% for the period December 30, 2005 to December 30, 2006
for an amount of $142.9 million.
Foreign Exchange Rate Risk
The international shipping industry's functional currency is the U.S.
Dollar. We generate all of our revenues in U.S. dollars, but incur
approximately 24% of our expenses in currencies other than U.S. dollars.
For accounting purposes, expenses incurred in Euros are converted into
U.S. dollars at the exchange rate prevailing on the date of each
transaction. At September 30, 2005, approximately 31% of our outstanding
accounts payable was denominated in currencies other than the U.S.
dollar (mainly in Euro).
PART II.
ITEM 2. LEGAL PROCEEDINGS
The Company has not been involved in any legal proceedings which may have, or
have had a significant effect on its financial position, results of operations
or liquidity, nor is the Company aware of any proceedings that are pending or
threatened which may have a significant effect on its financial position,
results of operations or liquidity.
ITEM 5. OTHER INFORMATION
Subsequent Events
In October 2005, we entered into an interest rate swap agreement with one of our
lenders at a rate of 4.72% for the period December 30, 2005 to December 30, 2006
for an amount of $142.9 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.
DRYSHIPS INC.
(registrant)
Date: November 28, 2005 By: /s/ Christopher J. Thomas
-----------------------------
Christopher J. Thomas
Chief Financial Officer and Director
23113.0002 #621400v3