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 June 2006
DRYSHIPS INC.
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 of 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
Included in this Report on Form 6-K as Exhibit 1 is the operating report of
DryShips Inc. (the "Company") for the quarter ended March 31, 2006.
This Report on Form 6-K is hereby incorporated by reference into the Company's
Registration Statement on Form F-3 filed on May 3, 2006 (Registration No. 333-
133482).
Exhibit 1
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DRYSHIPS INC.
First Quarter 2006 Financial Results
For the first quarter ended March 31, 2006, Net Revenues (Voyage revenues less
voyage expenses) amounted to $ 50.8 million as compared to $27.4 million for the
first quarter ended March 31, 2005 and Operating Income was $ 24.1 million as
compared to $19.6 million as of March 31, 2005. Net Income for the first quarter
of 2006 was $18.1 million as compared to $19.1 million in the quarter ended
March 31, 2005 and Earnings Per Share (EPS) calculated on 30,350,000 weighted
average basic and diluted shares outstanding were $0.60 as compared to $0.80 in
the quarter ended March 31, 2005 calculated on 23,871,667 weighted average basic
and diluted shares outstanding. EBITDA(1) for the first quarter of 2006 was
$37.0 million as compared to $22.9 million in the quarter ended March 31, 2005.
An average of 27 vessels were owned and operated during the first quarter of
2006, earning an average Time Charter Equivalent, or TCE, rate of $21,325 per
day as compared to an average of 8.6 vessels owned and operated during the first
quarter of 2005 earning an average TCE rate of $35,453 per day.
New Credit Facility
On March 22, 2006 DryShips accepted a new credit facility with HSH Nordbank
acting as Lead Arranger and Agent while HSH Nordbank and Bank of Scotland acted
as joint underwriters.
The new facility provides for an amount of up to $624.5 million in total of
which $553.3 million is to be used for the purpose of refinancing existing
indebtedness with a term of 10 years maturing in May 2016 and up to $71.25
million for the acquisition of new vessels.
On April 5, 2006, the Company drew down $553.3 million for the refinancing of
existing debt together with the financing for the Hille Oldendorff.
Total principal repayments under the new facility are $36.0 million for the
remainder (9 months) of 2006, followed by $55.5 million in 2007, $49.0 million
in 2008, $45.5 million in 2009 and $42.0 million in 2010 thru 2015 and $115.3
million in 2016.
Capitalization
Debt to total capitalization (debt, net of deferred financing fees and
stockholders' equity) at March 31, 2006 was 57.88% and net debt (total debt less
cash and cash equivalents and restricted cash) to total capitalization was
56.48%.
As of May 31, 2006 the Company had a total liquidity of approximately $84.45
million consisting of $39.7 million in cash and cash equivalents (including
restricted cash) and an undrawn balance of $44.75 million available under the
new credit facility.
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(1) Please see below for a reconciliation of EBITDA to Net cash provided by
Operating activities.
Fleet Expansion
During the first quarter of 2006, DryShips announced two accretive acquisitions
that expanded the fleet to a total of 29 vessels with a total carrying capacity
of approximately 2.4 million dwt, while at the same time enhancing the
predictability and stability of the Company's earnings as both vessels were
acquired with period employment.
In March 2006, DryShips exercised its purchase option for the Hille Oldendorff,
a 2005 built, 55,566 dwt, handymax drybulk carrier, which was delivered on April
19, 2006. The vessel was purchased for a total price of $40.76 million with a
bareboat charter attached at $19,745 per day, net of commissions, until March
2007. The seller was an affiliated company of DryShips that acquired the vessel
in late October 2005 from an unaffiliated company. The vessel was partly
financed by a short-term unsecured fully subordinated loan provided by an
affiliated company for an amount of $3.25 million that carries a fixed interest
rate of 6.55% p.a. until not later than March 2007.
In April, 2006, DryShips entered into an agreement to acquire the Maganari, a
2001 built second-hand 75,941 dwt Panamax drybulk carrier, which was delivered
on May 15, 2006. The vessel was purchased for a total price of $35.4 million
with a time charter attached at a daily rate of $29,000 until February 2007 and
thereafter at a daily rate of $18,400 until February 2008. The seller was an
unaffiliated company. The vessel was partly financed with a $8.84 million short
term unsecured fully subordinated bridge loan provided by an affiliated company
that carries an interest rate of $100,000 per month pro-rata until December 31,
2006.
Dividend Payment
In April 2006, DryShips declared and paid its quarterly dividend of $0.20 per
common share. This was the fourth consecutive dividend payment since the Company
went public in 2005. Since that time, DryShips has paid a total of $0.80 per
share in dividends.
Fleet Data
(Dollars in thousands, except per share data
and Average Daily Results - unaudited) 3 Months Ended 3 Months Ended
March 31, 2006 March 31, 2005
--------------- ---------------
Average number of vessels (1) 27.00 8.6
Total voyage days for fleet (2) 2,381 774
Total calendar days for fleet (3) 2,430 774
Fleet Ultilization (4) 98.0% 100.0%
Time charter equivalent (5) 21,325 35,453
Capesize 33,768 74,244
Panamax 19,698 30,927
Handymax 15,063 15,288
Vessel operating expenses (6) 4,330 5,120
Management fees 594 709
General and administrative expenses (7) 402 938
Total vessel operating expenses (8) 5,326 6,767
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(1) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of days
each vessel was a part of our fleet during the period divided by the number
of calendar days in that period.
(2) Total voyage days for fleet are the total days the vessels were in our
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 our 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 our 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. Our 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.
Fleet Employment
We actively and strategically employ our vessels in the spot charter market
(under charters that generally last for periods of 10 days to four months),
under period time charters (which can last up to several years) and in drybulk
carrier pools.
Total TCE revenue increased during the first quarter of 2006 compared to the
first quarter of 2005, primarily as a result of an increase in the average
number of vessels operated, from an average of 8.6 vessels in the first quarter
of 2005 to 27 vessels in the first quarter of 2006 offset by a decline in the
average daily TCE rate from $35,453 in the first quarter of 2005 to $21,325 in
the first quarter of 2006.
Vessel operating expenses increased to $10.5 million for the first quarter of
2006 compared to $4.0 million for the first quarter of 2005. The increase is
attributable to the increase in the number of vessels operated from an average
of 8.6 vessels for the first quarter of 2005 to 27 vessels for the first quarter
of 2006, offset by a lower daily vessel operating expenses decreasing from
$5,194 per day for the first quarter of 2005 to $4,330 per day for the first
quarter of 2006. This decrease is primarily a result of a younger fleet and no
deliveries in the first quarter of 2006, whereas 11 vessels were delivered to
the Company during the first quarter of 2005. Generally the delivery of vessels
entails additional associated costs.
Depreciation and amortization increased to $13.8 million in the first quarter of
2006 compared to $2.5 million in the first quarter of 2005. This was a direct
result of the increase in the Company's fleet from an average of 8.6 vessels in
the first quarter of 2005 to an average of 27 vessels in the first quarter of
2006.
Management fees increased to $1.4 million in the first quarter of 2006 compared
to $0.5 million in the first quarter of 2005 as a direct result of the increase
in the number of fleet calendar days from 774 in the first quarter of 2005 to
2,430 in the first quarter of 2006 due to the growth of the fleet.
General and administrative expense increased marginally from $0.7 million in the
first quarter of 2005 to $1.0 million in the first quarter of 2006.
DryShips Inc. Fleet
As at March 31, 2006, our fleet consisted of 27 vessels.
During the three month period ended March 31, 2006, the Company operated the
following types of vessels:
Capesize Panamax Handymax Total
-------- -------- -------- -------
Average number of vessels during period 4.00 21.00 2.00 27.00
Number of vessels at end of period 4.00 21.00 2.00 27.00
Dwt at end of period 657,256 1,512,456 94,503 2,264,215
DWT as percentage of total fleet 29.03% 66.80% 4.17% 100.00%
Average age at end of period 10.50 11.81 8.00 11.33
Financial Statements
The following are DryShips Inc.'s Unaudited Condensed Income Statements for the
three-month periods ended March 31, 2006 and March 31, 2005:
(Dollars in thousands, except per share data and 3 Months Ended 3 Months Ended
Average Daily Results - unaudited) March 31, 2006 March 31, 2005
---------------------------------- -------------- --------------
Unaudited Unaudited
INCOME STATEMENT DATA
Voyage revenues $54,809 $29,449
Voyage expenses 4,033 2,008
Vessels operating expenses 10,522 3,963
Depreciation and amortization 13,766 2,536
Management fees 1,444 549
Foreign currency losses 0 32
General and administrative 979 726
Operating Income 24,065 19,635
Interest and finance costs, net (6,104) (522)
Other, net 102 (3)
NET INCOME $18,063 $19,110
Basic and fully diluted earnings per share $0.60 $0.80
Weighted average basic and diluted shares outstanding 30,350,000 23,871,667
The following are DryShips Inc.'s Condensed Balance Sheets as at March 31, 2006
(unaudited) and December 31, 2005 (audited):
(Dollars in thousands) As at As at
March 31, 2006 Dec. 31, 2005
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BALANCE SHEET DATA Unaudited Audited
Cash and cash equivalents 7,891 5,184
Other current assets 16,993 13,593
Vessels, net 851,687 864,733
Other non current assets 26,161 27,049
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TOTAL ASSETS 902,732 910,559
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Current portion of long-term debt 107,726 107,738
Other currrent liabilities 27,097 28,007
Long-term debt, net of currrent portion 398,684 417,615
Other non-current liabilities 726 698
Total Liabilities 534,233 554,058
Total Stockholders' Equity 368,499 356,501
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY' 902,732 910,559
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EBITDA Reconciliation
DryShips Inc. considers EBITDA to represent net income before interest, taxes,
depreciation and amortization. EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from operations, as
determined by United States generally accepted accounting principles, or U.S.
GAAP, and our calculation of EBITDA may not be comparable to that reported by
other companies. EBITDA is included herein because it is a basis upon which we
assess our liquidity position, because it is used by our lenders as a measure of
our compliance with certain loan covenants and because we believe that it
presents useful information to investors regarding a company's ability to
service and/or incur indebtedness. The following table reconciles net cash from
operating activities to EBITDA:
3 Months ended 3 Months ended
(Dollars in thousands) March 31, 2006 March 31, 2005
---------------------- -------------- --------------
Net cash provided by
Operating activities 22,879 37,078
Net increase (decrease
in current assets 4,352 2,073
Net (increase) decrease
in current liabilities,
excluding current
portion of long term debt. 1,970 (17,036)
Amortization of deferred
revenue 354 -
Amortization of free
lubricants (28) -
Change in fair value
of derivatives 1,654 -
Net interest expense 7,110 976
Amortization of deferred
financing costs included
in interest expense. (119) (123)
Payments for dry-docking costs 848 -
EBITDA 37,050 22,968
Fleet List
The table below describes in detail our fleet development and current employment
profile as of June 5th, 2006:
Year Current Redelivery
Built Deadweight Type Employment Earliest Latest
Capesize
Manasota 2004 171,061 Capesize $46,000 Sep-06 Nov-06
Alameda 2001 170,662 Capesize $28,000 Feb-07 Apr-07
Shibumi 1984 166,058 Capesize Spot - $20,000
Netadola 1993 149,475 Capesize Spot - $29,250
Panamax
Conrad Oldendorff 2002 76,623 Panamax $42,000 Nov-06 Feb-07
Coronado 2000 75,706 Panamax Spot - $16,750
Waikiki 1995 75,473 Panamax Spot - $15,500
Mostoles 1981 75,395 Panamax Baumarine $11,576
Linda Oldendorff 1995 75,100 Panamax $43,250 Jul-06 Oct-06
Sonoma 2001 74,786 Panamax Baumarine $15,905
Catalina 2005 74,432 Panamax $18,100 Sep-06 Oct-06
Ocean Crystal 1999 73,688 Panamax $17,900 Jul-06 Jul-06
Padre 2004 73,601 Panamax $17,800 Jul-06 Jul-06
Toro ** 1995 73,034 Panamax Baumarine $15,739
Xanadu 1999 72,270 Panamax $35,000 Jun-06 Sep-06
La Jolla 1997 72,126 Panamax Spot - $17,500
Lacerta ** 1994 71,862 Panamax Baumarine $15,646
Panormos ** 1995 71,747 Panamax Baumarine $16,237
Paragon 1995 71,259 Panamax $30,000 Aug-06 Oct-06
Iguana 1996 70,349 Panamax $16,500 Jul-06 Jul-06
Daytona ** 1989 69,703 Panamax Baumarine $13,683
Lanikai ** 1988 68,676 Panamax Baumarine $13,881
Tonga ** 1984 66,798 Panamax Baumarine $11,016
Flecha 1982 65,081 Panamax Baumarine $11,571
Striggla ** 1982 64,747 Panamax Baumarine $12,037
Maganari*** 2001 75,941 Panamax $29,000 Feb-07 May-07
$18,400 Feb-08 Jul-08
Handymax
Alona 2002 48,640 Handymax $19,900 Sep-06 Nov-06
Matira 1994 45,863 Handymax $15,800 Sep-06 Nov-06
Hille Oldendorff**** 2005 55,566 Handymax $20,020 Jan-07 May-07
DRYSHIPS FLEET 2,395,722
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* Where the Redelivery column is left blank it signifies that the vessel is
trading in the spot market. For those vessels where rates are quoted, the
Company has calculated the estimated rates under current specific
contracted voyages. The Company gives no guarantee that these rates are
correct, or that the rates are sustainable beyond the duration of the
current voyage. The quoted rates are not indications of future earnings and
the Company gives no assurance or guarantee of future rates after the
current voyage.
** Indicates vessels that are trading in the Baumarine Pool. Rates quoted
refer to the vessels earnings as last reported, usually the previous
month's earnings.
*** Maganari has been fixed on a direct continuation at $18,400 per day for 12
months. Earliest and latest redelivery dates are March 2007 and May 2007
respectively.
**** Hille Oldendorff is employed under a bareboat charter.
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical
facts. The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although DryShips Inc. believes that these assumptions were reasonable
when made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, DryShips Inc. cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
changes in charterhire rates and vessel values, changes in demand that may
affect attitudes of time charterers to scheduled and unscheduled drydocking,
changes in DryShips Inc.' operating expenses, including bunker prices,
dry-docking and insurance costs, or actions taken by regulatory authorities,
potential liability from pending or future litigation, domestic and
international political conditions, potential disruption of shipping routes due
to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by DryShips Inc.
with the US Securities and Exchange Commission.
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)
Dated: June 8, 2006 By /s/ Christopher J. Thomas
-----------------------------
Christopher J. Thomas
Chief Financial Officer
23113.0002 #676843