GENCO SHIPPING & TRADING LTD, 10-Q filed on 11/8/2013
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Nov. 8, 2013
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
GENCO SHIPPING & TRADING LTD 
 
Entity Central Index Key
0001326200 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2013 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
No 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
44,449,407 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q3 
 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 109,492 
$ 72,600 
Restricted cash
9,850 
Due from charterers, net of a reserve of $361 and $488, respectively
14,780 
11,714 
Prepaid expenses and other current assets
18,390 
18,146 
Total current assets
152,512 
102,460 
Noncurrent assets:
 
 
Vessels, net of accumulated depreciation of $696,621 and $597,214, respectively
2,604,147 
2,662,403 
Deferred drydock, net of accumulated amortization of $11,119 and $8,086, respectively
9,707 
12,037 
Other assets, net of accumulated amortization of $20,025 and $13,162, respectively
23,517 
29,561 
Fixed assets, net of accumulated depreciation and amortization of $3,998 and $3,311, respectively
5,198 
5,258 
Other noncurrent assets
514 
514 
Restricted cash
300 
10,150 
Investments
41,829 
20,988 
Total noncurrent assets
2,685,212 
2,740,911 
Total assets
2,837,724 
2,843,371 
Current liabilities:
 
 
Accounts payable and accrued expenses
24,495 
23,667 
Current portion of long-term debt
1,313,689 
Current interest payable
13,199 
Convertible senior note payable
114,571 
Deferred revenue
1,422 
1,324 
Current portion of lease obligations
284 
682 
Fair value of derivative instruments
9,292 
Total current liabilities
1,476,952 
25,680 
Noncurrent liabilities:
 
 
Long-term lease obligations
3,015 
2,465 
Time charters acquired
135 
418 
Fair value of derivative instruments
16,045 
Convertible senior note payable
110,918 
Long-term interest payable
13,199 
Long-term debt
122,750 
1,413,439 
Total noncurrent liabilities
125,900 
1,556,484 
Total liabilities
1,602,852 
1,582,164 
Commitments and contingencies
   
   
Genco Shipping & Trading Limited shareholders' equity:
 
 
Common stock, par value $0.01; 100,000,000 shares authorized; issued and outstanding 44,449,407 and 44,270,273 shares at September 30, 2013 and December 31, 2012, respectively
445 
443 
Additional paid-in capital
849,021 
863,303 
Accumulated other comprehensive income (loss)
15,763 
(11,841)
Retained earnings
85,821 
214,391 
Total Genco Shipping & Trading Limited shareholders' equity
951,050 
1,066,296 
Noncontrolling interest
283,822 
194,911 
Total equity
1,234,872 
1,261,207 
Total liabilities and equity
$ 2,837,724 
$ 2,843,371 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Due from charterers, reserve
$ 361 
$ 488 
Noncurrent assets:
 
 
Vessels, accumulated depreciation
696,621 
597,214 
Deferred drydock, accumulated amortization
11,119 
8,086 
Other assets, accumulated amortization
20,025 
13,162 
Fixed assets, accumulated depreciation and amortization
$ 3,998 
$ 3,311 
Genco Shipping & Trading Limited shareholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (in shares)
100,000,000 
100,000,000 
Common stock, shares issued (in shares)
44,449,407 
44,270,273 
Common stock, shares outstanding (in shares)
44,449,407 
44,270,273 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Revenues:
 
 
 
 
Voyage revenues
$ 58,605 
$ 53,603 
$ 143,222 
$ 174,740 
Service revenues
828 
828 
2,457 
2,466 
Total revenues
59,433 
54,431 
145,679 
177,206 
Operating expenses:
 
 
 
 
Voyage expenses
2,212 
2,693 
6,352 
5,099 
Vessel operating expenses
27,515 
28,272 
81,400 
85,622 
General, administrative, and management fees
7,871 
8,622 
24,543 
25,680 
Depreciation and amortization
35,222 
35,038 
104,322 
103,954 
Total operating expenses
72,820 
74,625 
216,617 
220,355 
Operating loss
(13,387)
(20,194)
(70,938)
(43,149)
Other (expense) income:
 
 
 
 
Other expense
(45)
(43)
(58)
(40)
Interest income
14 
49 
49 
352 
Interest expense
(23,079)
(21,546)
(65,922)
(65,160)
Other expense
(23,110)
(21,540)
(65,931)
(64,848)
Loss before income taxes
(36,497)
(41,734)
(136,869)
(107,997)
Income tax expense
(479)
(303)
(997)
(918)
Net loss
(36,976)
(42,037)
(137,866)
(108,915)
Less: Net loss attributable to noncontrolling interest
(1,942)
(3,588)
(9,300)
(9,626)
Net loss attributable to Genco Shipping & Trading Limited
$ (35,034)
$ (38,449)
$ (128,566)
$ (99,289)
Net loss per share-basic (in dollars per share)
$ (0.81)
$ (0.90)
$ (2.98)
$ (2.40)
Net loss per share-diluted (in dollars per share)
$ (0.81)
$ (0.90)
$ (2.98)
$ (2.40)
Weighted average common shares outstanding-basic (in shares)
43,231,510 
42,885,810 
43,196,895 
41,290,719 
Weighted average common shares outstanding-diluted (in shares)
43,231,510 
42,885,810 
43,196,895 
41,290,719 
Dividends declared per share (in dollars per share)
$ 0 
$ 0 
$ 0 
$ 0 
Condensed Consolidated Statements of Comprehensive Loss (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Condensed Consolidated Statements of Comprehensive Loss [Abstract]
 
 
 
 
Net loss
$ (36,976)
$ (42,037)
$ (137,866)
$ (108,915)
Change in unrealized gain on investments
14,514 
(3,561)
20,841 
(643)
Unrealized gain on cash flow hedges, net
2,076 
1,525 
6,763 
6,394 
Other comprehensive income (loss)
16,590 
(2,036)
27,604 
5,751 
Comprehensive loss
(20,386)
(44,073)
(110,262)
(103,164)
Less: Comprehensive loss attributable to noncontrolling interest
(1,942)
(3,588)
(9,300)
(9,626)
Comprehensive loss attributable to Genco Shipping & Trading Limited
$ (18,444)
$ (40,485)
$ (100,962)
$ (93,538)
Condensed Consolidated Statements of Equity (USD $)
In Thousands, unless otherwise specified
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Genco Shipping & Trading Limited Shareholders' Equity [Member]
Noncontrolling Interest [Member]
Total
Balance at Dec. 31, 2011
$ 363 
$ 809,443 
$ (17,549)
$ 359,349 
$ 1,151,606 
$ 210,012 
$ 1,361,618 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Net loss
 
 
 
(99,289)
(99,289)
(9,626)
(108,915)
Change in unrealized gain on investments
 
 
(643)
 
(643)
(643)
Unrealized gain on cash flow hedges, net
 
 
6,394 
 
6,394 
6,394 
Issuance of nonvested stock
 
 
Issuance of 7,500,000 shares of common stock
75 
49,799 
 
 
49,874 
49,874 
Nonvested stock amortization
 
3,214 
 
 
3,214 
1,377 
4,591 
Cash dividends paid by Baltic Trading Limited
 
 
 
(29)
(29)
(3,881)
(3,910)
Vesting of restricted shares issued by Baltic Trading Limited
 
32 
 
 
32 
(32)
Balance at Sep. 30, 2012
438 
862,488 
(11,798)
260,031 
1,111,159 
197,850 
1,309,009 
Balance at Dec. 31, 2012
443 
863,303 
(11,841)
214,391 
1,066,296 
194,911 
1,261,207 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Net loss
 
 
 
(128,566)
(128,566)
(9,300)
(137,866)
Change in unrealized gain on investments
 
 
20,841 
 
20,841 
20,841 
Unrealized gain on cash flow hedges, net
 
 
6,763 
 
6,763 
6,763 
Issuance of nonvested stock
(2)
 
 
Nonvested stock amortization
 
2,314 
 
 
2,314 
1,156 
3,470 
Issuance of common stock of Baltic Trading Limited
 
(16,568)
 
 
(16,568)
97,609 
81,041 
Cash dividends paid by Baltic Trading Limited
 
 
 
(4)
(4)
(580)
(584)
Vesting of restricted shares issued by Baltic Trading Limited
 
(26)
 
 
(26)
26 
Balance at Sep. 30, 2013
$ 445 
$ 849,021 
$ 15,763 
$ 85,821 
$ 951,050 
$ 283,822 
$ 1,234,872 
Condensed Consolidated Statements of Equity (Parenthetical)
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Increase (Decrease) in Shareholders' Equity
 
 
Issuance of common stock (in shares)
 
7,500,000 
Issuance of shares of nonvested stock (in shares)
200,634 
15,000 
Forfeiture of shares of nonvested stock (in shares)
21,500 
1,500 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Cash flows from operating activities:
 
 
Net loss
$ (137,866)
$ (108,915)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
104,322 
103,954 
Amortization of deferred financing costs
6,862 
3,555 
Amortization of time charters acquired
(283)
(558)
Amortization of discount on Convertible Senior Notes
3,653 
3,345 
Unrealized loss (gain) on derivative instruments
(76)
Amortization of nonvested stock compensation expense
3,470 
4,591 
Change in assets and liabilities:
 
 
(Increase) decrease in due from charterers
(3,066)
5,072 
(Increase) decrease in prepaid expenses and other current assets
(244)
689 
Increase (decrease) in accounts payable and accrued expenses
146 
(3,751)
Increase (decrease) in deferred revenue
98 
(2,351)
Increase in lease obligations
152 
875 
Deferred drydock costs incurred
(1,873)
(10,442)
Net cash used in operating activities
(24,626)
(4,012)
Cash flows from investing activities:
 
 
Purchase of vessels
(41,097)
(894)
Purchase of other fixed assets
(427)
(1,948)
Changes in deposits of restricted cash
(400)
Net cash used in investing activities
(41,524)
(3,242)
Cash flows from financing activities:
 
 
Repayments on the 2007 Credit Facility
(118,588)
Proceeds from issuance of common stock
50,721 
Payment of common stock issuance costs
(847)
Proceeds from issuance of common stock by subsidiary
81,700 
Payment of common stock issuance costs by subsidiary
(379)
Payment of dividend by subsidiary
(584)
(3,910)
Payment of deferred financing costs
(695)
(4,327)
Net cash provided by (used in) financing activities
103,042 
(132,936)
Net increase (decrease) in cash and cash equivalents
36,892 
(140,190)
Cash and cash equivalents at beginning of period
72,600 
227,968 
Cash and cash equivalents at end of period
109,492 
87,778 
$100 Million Term Loan Facility [Member]
 
 
Cash flows from financing activities:
 
 
Repayments on Term Loan Facility
(15,385)
$253 Million Term Loan Facility [Member]
 
 
Cash flows from financing activities:
 
 
Repayments on Term Loan Facility
(40,600)
Baltic Trading Credit Facility 2010 [Member]
 
 
Cash flows from financing activities:
 
 
Proceeds from the Baltic Trading Credit Facility
1,000 
Baltic Trading Credit Facility 2013 [Member]
 
 
Cash flows from financing activities:
 
 
Proceeds from the Baltic Trading Credit Facility
$ 22,000 
$ 0 
Condensed Consolidated Statements of Cash Flows (Parenthetical) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Sep. 30, 2012
$100 Million Term Loan Facility [Member]
 
 
Term Loan Facility
$ 100,000 
$ 100,000 
$253 Million Term Loan Facility [Member]
 
 
Term Loan Facility
$ 253,000 
$ 253,000 
GENERAL INFORMATION
GENERAL INFORMATION
1 - GENERAL INFORMATION

The accompanying condensed consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”), its wholly-owned subsidiaries, and its subsidiary, Baltic Trading Limited (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T is incorporated under the laws of the Marshall Islands and as of September 30, 2013, is the sole owner of all of the outstanding shares of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco Management (USA) Limited; Genco RE Investments LLC; and the ship-owning subsidiaries set forth below.

Below is the list of GS&T’s wholly owned ship-owning subsidiaries as of September 30, 2013:

Wholly Owned Subsidiaries
 
Vessels Acquired
 
Dwt
 
Delivery Date
 
Year Built
 
 
 
 
 
 
 
 
 
 
 
Genco Reliance Limited
 
Genco Reliance
 
29,952
 
12/6/04
 
1999
 
Genco Vigour Limited
 
Genco Vigour
 
73,941
 
12/15/04
 
1999
 
Genco Explorer Limited
 
Genco Explorer
 
29,952
 
12/17/04
 
1999
 
Genco Carrier Limited
 
Genco Carrier
 
47,180
 
12/28/04
 
1998
 
Genco Sugar Limited
 
Genco Sugar
 
29,952
 
12/30/04
 
1998
 
Genco Pioneer Limited
 
Genco Pioneer
 
29,952
 
1/4/05
 
1999
 
Genco Progress Limited
 
Genco Progress
 
29,952
 
1/12/05
 
1999
 
Genco Wisdom Limited
 
Genco Wisdom
 
47,180
 
1/13/05
 
1997
 
Genco Success Limited
 
Genco Success
 
47,186
 
1/31/05
 
1997
 
Genco Beauty Limited
 
Genco Beauty
 
73,941
 
2/7/05
 
1999
 
Genco Knight Limited
 
Genco Knight
 
73,941
 
2/16/05
 
1999
 
Genco Leader Limited
 
Genco Leader
 
73,941
 
2/16/05
 
1999
 
Genco Marine Limited
 
Genco Marine
 
45,222
 
3/29/05
 
1996
 
Genco Prosperity Limited
 
Genco Prosperity
 
47,180
 
4/4/05
 
1997
 
Genco Muse Limited
 
Genco Muse
 
48,913
 
10/14/05
 
2001
 
Genco Acheron Limited
 
Genco Acheron
 
72,495
 
11/7/06
 
1999
 
Genco Surprise Limited
 
Genco Surprise
 
72,495
 
11/17/06
 
1998
 
Genco Augustus Limited
 
Genco Augustus
 
180,151
 
8/17/07
 
2007
 
Genco Tiberius Limited
 
Genco Tiberius
 
175,874
 
8/28/07
 
2007
 
Genco London Limited
 
Genco London
 
177,833
 
9/28/07
 
2007
 
Genco Titus Limited
 
Genco Titus
 
177,729
 
11/15/07
 
2007
 
Genco Challenger Limited
 
Genco Challenger
 
28,428
 
12/14/07
 
2003
 
Genco Charger Limited
 
Genco Charger
 
28,398
 
12/14/07
 
2005
 
Genco Warrior Limited
 
Genco Warrior
 
55,435
 
12/17/07
 
2005
 
Genco Predator Limited
 
Genco Predator
 
55,407
 
12/20/07
 
2005
 
Genco Hunter Limited
 
Genco Hunter
 
58,729
 
12/20/07
 
2007
 
Genco Champion Limited
 
Genco Champion
 
28,445
 
1/2/08
 
2006
 
Genco Constantine Limited
 
Genco Constantine
 
180,183
 
2/21/08
 
2008
 
Genco Raptor LLC
 
Genco Raptor
 
76,499
 
6/23/08
 
2007
 
Genco Cavalier LLC
 
Genco Cavalier
 
53,617
 
7/17/08
 
2007
 
Genco Thunder LLC
 
Genco Thunder
 
76,588
 
9/25/08
 
2007
 
Genco Hadrian Limited
 
Genco Hadrian
 
169,694
 
12/29/08
 
2008
 
Genco Commodus Limited
 
Genco Commodus
 
169,025
 
7/22/09
 
2009
 
Genco Maximus Limited
 
Genco Maximus
 
169,025
 
9/18/09
 
2009
 
Genco Claudius Limited
 
Genco Claudius
 
169,025
 
12/30/09
 
2010
 
Genco Bay Limited
 
Genco Bay
 
34,296
 
8/24/10
 
2010
 
Genco Ocean Limited
 
Genco Ocean
 
34,409
 
7/26/10
 
2010
 
Genco Avra Limited
 
Genco Avra
 
34,391
 
5/12/11
 
2011
 
Genco Mare Limited
 
Genco Mare
 
34,428
 
7/20/11
 
2011
 
Genco Spirit Limited
 
Genco Spirit
 
34,432
 
11/10/11
 
2011
 
Genco Aquitaine Limited
 
Genco Aquitaine
 
57,981
 
8/18/10
 
2009
 
 
Wholly Owned Subsidiaries
Vessels Acquired
Dwt
Delivery Date
Year Built
 
Genco Ardennes Limited
 
Genco Ardennes
 
57,981
 
8/31/10
 
2009
 
Genco Auvergne Limited
 
Genco Auvergne
 
57,981
 
8/16/10
 
2009
 
Genco Bourgogne Limited
 
Genco Bourgogne
 
57,981
 
8/24/10
 
2010
 
Genco Brittany Limited
 
Genco Brittany
 
57,981
 
9/23/10
 
2010
 
Genco Languedoc Limited
 
Genco Languedoc
 
57,981
 
9/29/10
 
2010
 
Genco Loire Limited
 
Genco Loire
 
53,416
 
8/4/10
 
2009
 
Genco Lorraine Limited
 
Genco Lorraine
 
53,416
 
7/29/10
 
2009
 
Genco Normandy Limited
 
Genco Normandy
 
53,596
 
8/10/10
 
2007
 
Genco Picardy Limited
 
Genco Picardy
 
55,257
 
8/16/10
 
2005
 
Genco Provence Limited
 
Genco Provence
 
55,317
 
8/23/10
 
2004
 
Genco Pyrenees Limited
 
Genco Pyrenees
 
57,981
 
8/10/10
 
2010
 
Genco Rhone Limited
 
Genco Rhone
 
58,018
 
3/29/11
 
2011
 
 
On May 28, 2013, Baltic Trading closed an equity offering of 6,419,217 shares of Baltic Trading common stock at an offering price of $3.60 per share.  Baltic Trading received net proceeds of $21,560 after deducting underwriters’ fees and expenses.

On September 25, 2013, Baltic Trading closed an equity offering of 13,800,000 shares of Baltic Trading common stock at an offering price of $4.60 per share.  Baltic Trading received net proceeds of $59,481 after deducting underwriters’ fees and expenses.

Baltic Trading Limited (“Baltic Trading”) was a wholly-owned indirect subsidiary of GS&T until Baltic Trading completed its initial public offering, or IPO, on March 15, 2010.  As of September 30, 2013 and December 31, 2012, Genco Investments LLC owned 6,103,471 and 5,699,088 shares of Baltic Trading’s Class B Stock, which represented a 13.97% and 24.78% ownership interest in Baltic Trading, respectively, and 70.90% and 83.17% of the aggregate voting power of Baltic Trading’s outstanding shares of voting stock, respectively.  Additionally, pursuant to the Subscription Agreement between Genco Investments LLC and Baltic Trading, for so long as GS&T directly or indirectly holds at least 10% of the aggregate number of outstanding shares of Baltic Trading’s common stock and Class B stock, Genco Investments LLC will be entitled to receive an additional number of shares of Baltic Trading’s Class B stock equal to 2% of the number of common shares issued in the future, other than shares issued under Baltic Trading’s 2010 Equity Incentive Plan.  As such, when Baltic Trading closed the equity offerings of 6,419,217 on May 28, 2013 and 13,800,000 on September 25, 2013 as noted above, GS&T was issued 128,383 and 276,000 shares, respectively, of Baltic Trading’s Class B Stock which represents 2% of the number of common shares issued.

Below is the list of Baltic Trading’s wholly owned ship-owning subsidiaries as of September 30, 2013:

Baltic Trading’s Wholly Owned
Subsidiaries
 
Vessel
 
Dwt
 
Delivery Date
 
Year
Built
 
 
 
 
 
 
 
 
 
 
 
Baltic Leopard Limited
 
Baltic Leopard
 
53,447
 
4/8/10
 
2009
 
Baltic Panther Limited
 
Baltic Panther
 
53,351
 
4/29/10
 
2009
 
Baltic Cougar Limited
 
Baltic Cougar
 
53,432
 
5/28/10
 
2009
 
Baltic Jaguar Limited
 
Baltic Jaguar
 
53,474
 
5/14/10
 
2009
 
Baltic Bear Limited
 
Baltic Bear
 
177,717
 
5/14/10
 
2010
 
Baltic Wolf Limited
 
Baltic Wolf
 
177,752
 
10/14/10
 
2010
 
Baltic Wind Limited
 
Baltic Wind
 
34,409
 
8/4/10
 
2009
 
Baltic Cove Limited
 
Baltic Cove
 
34,403
 
8/23/10
 
2010
 
Baltic Breeze Limited
 
Baltic Breeze
 
34,386
 
10/12/10
 
2010
 
Baltic Fox Limited
 
Baltic Fox
 
31,883
 
9/6/2013
 
2010
 
Baltic Hare Limited
 
Baltic Hare
 
31,887
 
9/5/2013
 
2009
 
Baltic Lion Limited
 
Baltic Lion
 
179,185
 
Q4 2013 (1)
 
2012
 
Baltic Tiger Limited
 
Baltic Tiger
 
179,185
 
Q4 2013 (1)
 
2011
 


(1) Delivery dates for vessels being delivered in the future are estimates based on guidance received from the sellers.

The Company provides technical services for drybulk vessels purchased by Maritime Equity Partners LLC (“MEP”). Peter C. Georgiopoulos, Chairman of the Board of Directors of GS&T, controls and has a minority interest in MEP.  These
services include oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but do not include chartering services.  The services are provided for a fee of $750 per ship per day plus reimbursement of out-of-pocket costs.  MEP has the right to cancel provision of the services on 60 days’ notice with payment of a one-year termination fee upon a change in control of the Company.  The Company may terminate provision of the services at any time on 60 days’ notice.
 
Given the current drybulk rate environment, it is probable that the Company will be unable to make required payments under its credit facilities commencing during the quarter ending March 31, 2014 without modifications to or waivers of the terms of these facilities.  Moreover, once current waivers expire and are re-measured at March 31, 2014, the Company believes it is probable that the Company will not be in compliance with the maximum leverage ratio covenants and the minimum permitted consolidated interest ratio covenants under its credit facilities.  The Company is also subject to minimum cash covenants for which compliance is measured at the end of every fiscal quarter.  These minimum cash covenants have not been waived, and the Company believes it is probable that the Company will not be in compliance with such covenants at or after March 31, 2014, and the Company may not be in compliance earlier in the event of sustained weakness in the drybulk shipping sector.  The Company’s debt facilities are described further in Note 9 — Debt.

The Company is in discussions with its lenders and expects to seek waivers or modifications to its credit agreements, which, if available, may be subject to conditions, and may also seek to refinance indebtedness, raise additional capital through equity or debt offerings or selling assets (including vessels), reduce or delay capital expenditures, or pursue other restructuring options.  Absent such waivers or modifications, if the Company does not comply with such payment obligations or these covenants and fails to cure such non-compliance following applicable notice and expiration of applicable cure periods, the Company would be in default of one or more of its credit facilities. If such a default occurs, the Company may also be in default under the Indenture for the 5.00% Convertible Senior Notes, or the 2010 Notes (discussed in Note 10 — Convertible Senior Notes). As a result, some or all of the Company’s indebtedness could be declared immediately due and payable, and alternative sources of financing would need to be sought on terms that may not be favorable to the Company.

In addition, notwithstanding the waiver of certain covenants as described above, for purposes of preparing financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the Company is required to assess future compliance with the original covenants at all quarterly measurement dates within twelve months from the date of such financial statements. The Company believes it is probable that the Company will not be in compliance with certain covenants at measurement dates within twelve months of March 31, 2013.  Accordingly, the outstanding debt under the 2007 Credit Facility, the $253 Million Term Loan Facility and the $100 Million Term Loan Facility (as defined in Note 9 — Debt) was reclassified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013.  This reclassification does not affect the existing waivers, although there can be no assurance that the Company could obtain further waivers upon their expiration.  If the Company fails to comply with its covenants under its credit facilities, the Company may also be in default under the Indenture for the 2010 Notes and its interest rate swaps.  Accordingly, the 2010 Notes and one swap previously classified as a long-term liability were likewise reclassified as current liabilities in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which include the accounts of GS&T, its wholly-owned subsidiaries and Baltic Trading, a subsidiary in which the Company owns a majority of the voting interests and exercises control.  All intercompany accounts and transactions have been eliminated in consolidation.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).  In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012 (the “2012 10-K”). The results of operations for the three and nine month periods ended September 30, 2013 and 2012 are not necessarily indicative of the operating results for the full year.
 
Vessels, net

Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended September 30, 2013 and 2012 was $33,591 and $33,462, respectively.  Depreciation expense for vessels for the nine months ended September 30, 2013 and 2012 was $99,432 and $99,646, respectively.

Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $245/lwt multiplied by the weight of the ship in lightweight tons (lwt).

Deferred revenue

Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of September 30, 2013 and December 31, 2012, the Company had an accrual of $323 and $407, respectively, related to these estimated customer claims.

Voyage expense recognition

In time charters, spot market-related time charters and pool agreements, operating costs including crew, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. These differences in bunkers resulted in net (losses) gains of ($296) and $242 during the three months ended September 30, 2013 and 2012, respectively, and $47 and $1,665 during the nine months ended September 30, 2013 and 2012, respectively.  Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.

Noncontrolling interest

Net loss attributable to noncontrolling interest during the three and nine months ended September 30, 2013 and 2012 reflects the noncontrolling interest’s share of the net loss of Baltic Trading, a subsidiary of the Company, which owns and employs drybulk vessels in the spot market or on spot market-related time charters.  The spot market represents immediate chartering of a vessel, usually for single voyages.  At September 30, 2013, the noncontrolling interest held an 86.03% economic interest in Baltic Trading while only holding 29.10% of the voting power.  At December 31, 2012, the noncontrolling interest held a 75.22% economic interest in Baltic Trading while only holding 16.83% of the voting power.

Income taxes

Pursuant to certain agreements, GS&T technically and commercially manages vessels for Baltic Trading as well as provides technical management of vessels for MEP in exchange for specified fees for these services provided.  These services are performed by Genco Management (USA) Limited (“Genco (USA)”), which has elected to be taxed as a corporation for United States federal income tax purposes.  As such, Genco (USA) is subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services.  Genco (USA) has entered into a cost-sharing agreement with the Company and Genco Ship Management LLC, collectively Manco, pursuant to which Genco (USA) agrees to reimburse Manco for the costs incurred by Genco (USA) for the use of Manco’s personnel and services in connection with the provision of the services for both Baltic Trading and MEP’s vessels.
 
Total revenues earned for these services during the three months ended September 30, 2013 and 2012 was $2,010 and $1,530, respectively, of which $772 and $703, respectively, was eliminated upon consolidation.  After allocation of certain expenses, there was taxable income of $1,045 associated with these activities for the three months ended September 30, 2013.  This resulted in estimated income tax expense of $471 for the three months ended September 30, 2013.  After allocation of certain expenses, there was taxable income of $664 associated with these activities for the three months ended September 30, 2012.  This resulted in income tax expense of $299 for the three months ended September 30, 2012.

Total revenues earned for these services during the nine months ended September 30, 2013 and 2012 was $5,015 and $4,575, respectively, of which $2,148 and $2,109, respectively, was eliminated upon consolidation.  After allocation of certain expenses, there was taxable income of $2,262 associated with these activities for the nine months ended September 30, 2013.  This resulted in estimated income tax expense of $975 for the nine months ended September 30, 2013.  After allocation of certain expenses, there was taxable income of $1,985 associated with these activities for the nine months ended September 30, 2012.  This resulted in income tax expense of $892 for the nine months ended September 30, 2012.

Baltic Trading is subject to income tax on its United States source income.  During the three months ended September 30, 2013 and 2012, Baltic Trading had United States operations which resulted in United States source income of $420 and $200, respectively.  Baltic Trading’s United States income tax expense for the three months ended September 30, 2013 and 2012 was $8 and $4, respectively.

During the nine months ended September 30, 2013 and 2012, Baltic Trading had United States operations which resulted in United States source income of $1,059 and $1,321, respectively.  Baltic Trading’s United States income tax expense for the nine months ended September 30, 2013 and 2012 was $22 and $26, respectively.

Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), to improve the transparency of changes in other comprehensive income (loss) (“OCI”) and items reclassified out of accumulated other income (loss) (“AOCI”).  The amendments in ASU 2013-02 are required to be applied prospectively and are effective for reporting periods beginning after December 15, 2012.  The adoption of ASU 2013-02 will not have any impact on the Company’s consolidated financial statements other than separately disclosing in the footnotes to the consolidated financial statements amounts reclassified out of AOCI and the individual line items in the Condensed Consolidated Statement of Operations that are affected.  The Company has adopted ASU 2013-02 and the impact of adoption is not material to the Company’s condensed consolidated financial statements.  Refer to Note 12 — Accumulated Other Comprehensive Income (Loss) for additional disclosure.
SEGMENT INFORMATION
SEGMENT INFORMATION
3 - SEGMENT INFORMATION

The Company determines its operating segments based on the information utilized by the chief operating decision maker to assess performance.  Based on this information, the Company has two operating segments, GS&T and Baltic Trading.  Both GS&T and Baltic Trading are engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels.  GS&T seeks to deploy its vessels on time charters, spot market-related time charters or in vessel pools trading in the spot market and Baltic Trading seeks to deploy its vessel charters in the spot market, which represents immediate chartering of a vessel, usually for single voyages, or employing vessels on spot market-related time charters.  Segment results are evaluated based on net (loss) income.  The accounting policies applied to the reportable segments are the same as those used in the preparation of the Company’s condensed consolidated financial statements.

The following table presents a reconciliation of total voyage revenue from external (third party) customers for the Company’s two operating segments to total consolidated voyage revenue from external customers for the Company for the three and nine months ended September 30, 2013 and 2012.
 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Voyage revenue from external customers
 
  
  
  
 
GS&T
 
$
49,503
  
$
47,312
  
$
121,755
  
$
154,552
 
Baltic Trading
  
9,102
   
6,291
   
21,467
   
20,188
 
Total operating segments
  
58,605
   
53,603
   
143,222
   
174,740
 
Eliminating revenue
  
   
   
   
 
Total consolidated voyage revenue from external customers
 
$
58,605
  
$
53,603
  
$
143,222
  
$
174,740
 

The following table presents a reconciliation of total intersegment revenue, which eliminates upon consolidation, for the Company’s two operating segments for the three and nine months ended September 30, 2013 and 2012. The intersegment revenue noted in the following table represents revenue earned by GS&T pursuant to the management agreement entered into with Baltic Trading, which includes commercial service fees, technical service fees and sale and purchase fees, if any.

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Intersegment revenue
 
  
  
  
 
GS&T
 
$
1,187
  
$
703
  
$
2,563
  
$
2,109
 
Baltic Trading
  
   
   
   
 
Total operating segments
  
1,187
   
703
   
2,563
   
2,109
 
Eliminating revenue
  
(1,187
)
  
(703
)
  
(2,563
)
  
(2,109
)
Total consolidated intersegment revenue
 
$
  
$
  
$
  
$
 

The following table presents a reconciliation of total net loss for the Company’s two operating segments to total consolidated net loss for the three and nine months ended September 30, 2013 and 2012. The eliminating net income noted in the following table consists of the elimination of intercompany transactions between GS&T and Baltic Trading, as well as dividends received by GS&T from Baltic Trading for its Class B shares of Baltic Trading.

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Net loss
 
  
  
  
 
GS&T
 
$
(34,277
)
 
$
(36,969
)
 
$
(125,422
)
 
$
(94,779
)
Baltic Trading
  
(2,270
)
  
(4,822
)
  
(11,979
)
  
(12,942
)
Total operating segments
  
(36,547
)
  
(41,791
)
  
(137,401
)
  
(107,721
)
Eliminating net income
  
429
   
246
   
465
   
1,194
 
Total consolidated net loss
 
$
(36,976
)
 
$
(42,037
)
 
$
(137,866
)
 
$
(108,915
)

The following table presents a reconciliation of total assets for the Company’s two operating segments to total consolidated assets as of September 30, 2013 and December 31, 2012. The eliminating assets noted in the following table consist of the elimination of intercompany transactions resulting from the capitalization of fees paid to GS&T by Baltic Trading as vessel assets, including related accumulated depreciation, as well as the outstanding receivable balance due to GS&T from Baltic Trading as of September 30, 2013 and December 31, 2012.

 
 
September 30,
2013
  
December 31,
2012
 
Total assets
 
  
 
GS&T
 
$
2,384,172
  
$
2,482,486
 
Baltic Trading
  
457,397
   
364,370
 
Total operating segments
  
2,841,569
   
2,846,856
 
Eliminating assets
  
(3,845
)
  
(3,485
)
Total consolidated assets
 
$
2,837,724
  
$
2,843,371
 
CASH FLOW INFORMATION
CASH FLOW INFORMATION
4 - CASH FLOW INFORMATION

As of September 30, 2013 and December 31, 2012, the Company had four and five interest rate swaps, respectively, which are described and discussed in Note 11 — Interest Rate Swap Agreements.  At September 30, 2013, the fair values of the four swaps are in a liability position of $9,292, all of which was classified within current liabilities.  At December 31, 2012, the five swaps were in a liability position of $16,052, $7 of which was classified within current liabilities.

For the nine months ended September 30, 2013, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses consisting of $79 for the purchase of vessels and $200 for the purchase of other fixed assets.  For the nine months ended September 30, 2013, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses consisting of $123 associated with deferred financing fees and $280 for the payment of common stock issuance costs by its subsidiary.  For the nine months ended September 30, 2013, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in current interest payable consisting of $13,199 associated with deferred financing fees.

For the nine months ended September 30, 2012, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses consisting of $31 for the purchase of vessels and $77 for the purchase of other fixed assets.  Additionally, for the nine months ended September 30, 2012, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses and long-term interest payable consisting of $246 and $13,199, respectively, associated with deferred financing fees.

During the nine months ended September 30, 2013 and 2012, cash paid for interest, including bond coupon interest paid, was $58,043 and $61,632, respectively.

During the nine months ended September 30, 2013 and 2012, cash paid for estimated income taxes was $775 and $926, respectively.

On May 16, 2013, the Company made grants of nonvested common stock under the Genco Shipping & Trading Limited 2012 Equity Incentive Plan in the amount of 200,634 shares in the aggregate to directors of the Company.  The aggregate fair value of such nonvested stock was $315.  On May 16, 2013, Baltic Trading made grants of nonvested common stock in the amount of 59,680 shares to directors of Baltic Trading.  The aggregate fair value of such nonvested stock was $225.

On May 17, 2012, the Company made grants of nonvested common stock under the Genco Shipping & Trading Limited 2005 Equity Incentive Plan in the amount of 15,000 shares in the aggregate to directors of the Company.  These shares vested on May 16, 2013.  The aggregate fair value of such nonvested stock was $53.  On May 17, 2012, Baltic Trading made grants of nonvested common stock in the amount of 12,500 shares to directors of Baltic Trading.  These shares vested on May 16, 2013.  The aggregate fair value of such nonvested stock was $48.
VESSEL ACQUISITIONS AND DISPOSITIONS
VESSEL ACQUISITIONS AND DISPOSITIONS
5 - VESSEL ACQUISITIONS AND DISPOSITIONS

On July 2, 2013, Baltic Trading entered into agreements to purchase two Handysize drybulk vessels from subsidiaries of Clipper Group for an aggregate purchase price of $41,000.  The Baltic Hare, a 2009 built Handysize vessel, was delivered on September 5, 2013 and the Baltic Fox, a 2010 built Handysize vessel, was delivered on September 6, 2013.  Baltic Trading financed the vessel purchases with proceeds from its May 28, 2013 common stock offering and borrowings under its 2013 Credit Facility entered into on August 30, 2013.  Refer to Note 9 – Debt below for further information regarding the 2013 Credit Facility.

Refer to Note 1 — General Information for a listing of the vessel delivery dates for the vessels in the Company’s fleet and the estimated delivery dates for vessels that Baltic Trading has entered into agreements to purchase.

Below market time charters, including those acquired during previous periods, were amortized as an increase to voyage revenue in the amount of $51 and $187 for the three months ended September 30, 2013 and 2012, respectively, and $283 and $558 for the nine months ended September 30, 2013 and 2012, respectively.
INVESTMENTS
INVESTMENTS
6 - INVESTMENTS
 
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”).  Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping.  This investment is designated as Available For Sale (“AFS”) and is reported at fair value, with unrealized gains and losses recorded in shareholders’ equity as a component of AOCI.  At September 30, 2013 and December 31, 2012, the Company held 16,335,100 shares of Jinhui capital stock which is recorded at its fair value of $41,829 and $20,988, respectively, based on the closing price on September 30, 2013 and December 28, 2012, respectively.

The Company reviews the investment in Jinhui for other than temporary impairment on a quarterly basis.  There were no impairment charges recognized for the three and nine months ended September 30, 2013 and 2012.

The unrealized gain on the Jinhui capital stock remains a component of AOCI, since this investment is designated as an AFS security.

Refer to Note 12 — Accumulated Other Comprehensive Income (Loss) for a breakdown of the components of AOCI.
NET LOSS PER COMMON SHARE
NET LOSS PER COMMON SHARE
7 — NET LOSS PER COMMON SHARE

The computation of basic net loss per share is based on the weighted-average number of common shares outstanding during the year. The computation of diluted net loss per share assumes the vesting of nonvested stock awards (refer to Note 20 — Nonvested Stock Awards), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive.  Of the 1,217,896 nonvested shares outstanding at September 30, 2013 (refer to Note 20 — Nonvested Stock Awards), all are anti-dilutive.  The Company’s diluted net loss per share will also reflect the assumed conversion under the Company’s convertible debt if the impact is dilutive under the “if converted” method. The impact of the shares convertible under the Company’s convertible notes is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

The components of the denominator for the calculation of basic net loss per share and diluted net loss per share are as follows:

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
 
 
  
  
  
 
Common shares outstanding, basic:
 
  
  
  
 
Weighted-average common shares outstanding, basic
  
43,231,510
   
42,885,810
   
43,196,895
   
41,290,719
 
 
                
Common shares outstanding, diluted:
                
Weighted-average common shares outstanding, basic
  
43,231,510
   
42,885,810
   
43,196,895
   
41,290,719
 
 
                
Dilutive effect of convertible notes
  
   
   
   
 
 
                
Dilutive effect of restricted stock awards
  
   
   
   
 
 
                
Weighted-average common shares outstanding, diluted
  
43,231,510
   
42,885,810
   
43,196,895
   
41,290,719
 

The following table sets forth a reconciliation of the net loss attributable to GS&T and the net loss attributable to GS&T for diluted net loss per share under the “if-converted” method:

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
 
 
  
  
  
 
Net loss attributable to GS&T
 
$
(35,034
)
 
$
(38,449
)
 
$
(128,566
)
 
$
(99,289
)
 
                
Interest expense related to convertible notes, if dilutive
  
   
   
   
 
 
                
Net loss attributable to GS&T for the computation of diluted net loss per share
 
$
(35,034
)
 
$
(38,449
)
 
$
(128,566
)
 
$
(99,289
)
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
8 - RELATED PARTY TRANSACTIONS

The following represent related party transactions reflected in these condensed consolidated financial statements:

The Company makes available employees performing internal audit services to General Maritime Corporation (“GMC”), where the Company’s Chairman, Peter C. Georgiopoulos, also serves as Chairman of the Board.  For the nine months ended September 30, 2013 and 2012, the Company invoiced $110 and $140, respectively, to GMC, which includes time associated with such internal audit services and other expenditures.  Additionally, during the nine months ended September 30, 2013 and 2012, the Company incurred travel and other expenditures totaling $82 and $45, respectively, reimbursable to GMC or its service provider.  At September 30, 2013 and December 31, 2012, the amount due to GMC from the Company was $0 and $12, respectively.

During the nine months ended September 30, 2013 and 2012, the Company incurred legal services aggregating $20 and $16, respectively, from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, Chairman of the Board.  At September 30, 2013 and December 31, 2012, the amount due to Constantine Georgiopoulos was $20 and $0, respectively.

GS&T and Baltic Trading have entered into agreements with Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchase lubricating oils for certain vessels in their fleets.  Peter C. Georgiopoulos, Chairman of the Board of the Company, is Chairman of the Board of Aegean.  During the nine months ended September 30, 2013 and 2012, Aegean supplied lubricating oils to the Company’s vessels aggregating $1,022 and $1,170, respectively.  At September 30, 2013 and December 31, 2012, $139 and $278 remained outstanding, respectively.

During the nine months ended September 30, 2013 and 2012, the Company invoiced MEP for technical services provided and expenses paid on MEP’s behalf aggregating $2,570 and $2,541, respectively.  Peter C. Georgiopoulos, Chairman of the Board, controls and has a minority interest in MEP.  At September 30, 2013 and December 31, 2012, $5 and $5, respectively, was due to the Company from MEP.  Total service revenue earned by the Company for technical services provided to MEP for the nine months ended September 30, 2013 and 2012 was $2,457 and $2,466, respectively.  Lastly, as of September 30, 2013, MEP paid the Company approximately $70 of October 2013 service revenue, which is reflected in the September 30, 2013 deferred revenue balance.
DEBT
DEBT
9 - DEBT

Long-term debt consists of the following:

 
 
September 30,
2013
  
December 31,
2012
 
 
 
  
 
2007 Credit Facility
 
$
1,055,912
  
$
1,055,912
 
$100 Million Term Loan Facility
  
75,484
   
75,484
 
$253 Million Term Loan Facility
  
180,793
   
180,793
 
2010 Baltic Trading Credit Facility
  
102,250
   
101,250
 
2013 Baltic Trading Credit Facility
  
22,000
   
 
Less: Current portion
  
(1,313,689
)
  
 
 
        
Long-term debt
 
$
122,750
  
$
1,413,439
 

2007 Credit Facility

On July 20, 2007, the Company entered into a credit facility with DnB NOR Bank ASA (as amended, the “2007 Credit Facility”). The maximum amount that may be borrowed under the 2007 Credit Facility at September 30, 2013 is $1,055,912.  As of September 30, 2013, the Company has utilized its maximum borrowing capacity under the 2007 Credit Facility.
 
The maximum leverage ratio covenant and minimum permitted consolidated interest ratio covenants are currently waived for the periods ending on and including December 31, 2013 pursuant to the August 1, 2012 agreements to amend or waive certain provisions of the agreements for the 2007 Credit Facility, $100 Million Term Loan Facility and the $253 Million Term Loan Facility (as defined below) (the “August 2012 Agreements”).  Additionally, the collateral maintenance financial covenant is currently waived until the Company can represent that it is in compliance with all of its financial covenants.  The Company’s cash dividends and share repurchases have been suspended until the collateral maintenance financial covenant can be satisfied.

The gross interest-bearing debt to total capital covenant ends during the period ending on and including December 31, 2013 pursuant to the August 2012 Agreements.  This covenant limits the ratio of the Company’s interest-bearing indebtedness to the sum of its interest-bearing indebtedness and its consolidated net worth in accordance with U.S. GAAP to 62.5% on the last day of any fiscal quarter during the waiver period.

Additionally, pursuant to the August 2012 Agreements, the total applicable margin over LIBOR payable on the principal amount of debt outstanding increased from 2.0% to 3.0% per annum.  The minimum cash balance required was also increased from $500 to $750 per vessel mortgaged under this facility pursuant to the August 2012 Agreements.

Pursuant to the amendment to the 2007 Credit Facility which was entered into on December 21, 2011, the Company was subject to a facility fee of 2.0% per annum on the average daily outstanding principal amount of the loans outstanding, payable quarterly in arrears, which was subject to a reduction to 1.0% if the Company consummated an equity offering resulting in an aggregate amount of $50,000 of gross proceeds.  On February 28, 2012, the Company completed an equity offering of 7,500,000 shares which resulted in gross proceeds of $53,250.  As such, effective February 28, 2012, the facility fee was reduced to 1.0%.

As of September 30, 2013, the Company believes it is in compliance with all of the financial covenants under its 2007 Credit Facility, as amended.  However, as of September 30, 2013, the Company believes it is probable that the Company will not be in compliance with certain covenants at measurement dates within the next twelve months.  As such, the debt outstanding under this facility of $1,055,912 was classified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of  September 30, 2013.

At September 30, 2013, there were no letters of credit issued under the 2007 Credit Facility.

$100 Million Term Loan Facility

On August 12, 2010, the Company entered into the $100,000 secured term loan facility (“$100 Million Term Loan Facility”). As of September 30, 2013, the Company has utilized its maximum borrowing capacity of $100,000. The Company has used the $100 Million Term Loan Facility to fund or refund the Company a portion of the purchase price of the acquisition of five vessels from companies within the Metrostar group of companies.  As of September 30, 2013, there was no availability under the $100 Million Term Loan Facility.

Pursuant to the amendments to the $100 Million Term Loan Facility that were entered into on December 21, 2011 and the August 2012 Agreements, the maximum leverage ratio covenant and the minimum permitted consolidated interest ratio covenant are currently waived for the periods ending on and including December 31, 2013.

As of September 30, 2013, the Company believes it is in compliance with all of the financial covenants under the $100 Million Term Loan Facility, as amended.  However, as of September 30, 2013, the Company believes it is probable that the Company will not be in compliance with certain covenants at measurement dates within the next twelve months.  As such, the debt outstanding under this facility of $75,484 was classified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013.

$253 Million Term Loan Facility

On August 20, 2010, the Company entered into the $253,000 senior secured term loan facility (“$253 Million Term Loan Facility”).  As of September 30, 2013, the Company has utilized its maximum borrowing capacity of $253,000 to fund or refund to the Company a portion of the purchase price of the 13 vessels purchased from Bourbon SA during the third quarter of 2010 and first quarter of 2011.  As of September 30, 2013, there was no availability under the $253 Million Term Loan Facility.
 
Pursuant to the amendments to the $253 Million Term Loan Facility that were entered into on December 21, 2011 and August 2012 Agreements, the maximum leverage ratio covenant and the minimum permitted consolidated interest ratio covenant are currently waived for the periods ending on and including December 31, 2013.

As of September 30, 2013 and December 31, 2012, the Company has deposited $9,750 that has been reflected as restricted cash.  Restricted cash will be released only if the underlying collateral is sold or disposed of.

As of September 30, 2013, the Company believes it is in compliance with all of the financial covenants under the $253 Million Term Loan Facility, as amended.  However, as of September 30, 2013, the Company believes it is probable that the Company will not be in compliance with certain covenants at measurement dates within the next twelve months.  As such, the debt outstanding under this facility of $180,793 was classified as a current liability and the restricted cash related to this facility was classified as a current asset in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability and a current asset, respectively, as of September 30, 2013.

2010 Baltic Trading Credit Facility

On April 16, 2010, Baltic Trading entered into a $100,000 senior secured revolving credit facility with Nordea Bank Finland plc, acting through its New York branch (as amended, the “2010 Baltic Trading Credit Facility”).  An amendment to the 2010 Baltic Trading Credit Facility was entered into by Baltic Trading effective November 30, 2010.  Among other things, this amendment increased the commitment amount of the 2010 Baltic Trading Credit Facility from $100,000 to $150,000.  An additional amendment to the 2010 Baltic Trading Credit Facility was entered into by Baltic Trading effective August 29, 2013 (the “August 2013 Amendment”).  Among other things, the August 2013 Amendment implemented the following modifications to the 2010 Baltic Trading Credit Facility:

·The requirement that certain additional vessels acquired by Baltic Trading be mortgages as collateral under the 2010 Baltic Trading Credit Facility was eliminated.

·Restrictions on the incurrence of indebtedness by Baltic Trading and its subsidiaries were amended to apply only to those subsidiaries acting as guarantors under the 2010 Baltic Trading Credit Facility.

·The total commitment under this facility was reduced to $110,000 and will be further reduced in three consecutive semi-annual reductions of $5,000 commencing on May 30, 2015.

·Borrowings bear interest at an applicable margin over LIBOR of 3.00% per annum if the ratio of the maximum facility amount of the aggregate appraised value of vessels mortgaged under the facility is 55% or less, measured quarterly; otherwise, the applicable margin is 3.35% per annum.

·Financial covenants corresponding to the liquidity and leverage under the 2013 Baltic Trading Credit Facility (as defined below) have been incorporated into the 2010 Baltic Trading Credit Facility.

As of September 30, 2013, $7,750 remained available under the 2010 Baltic Trading Credit Facility as the total commitment was reduced to $110,000 on August 29, 2013.  The total available working capital borrowings of $25,000 are subject to the total remaining availability under the 2010 Baltic Trading Credit Facility; therefore, only $7,750 is available for working capital purposes as of September 30, 2013.

As of September 30, 2013, the Company believes Baltic Trading is in compliance with all of the financial covenants under the 2010 Baltic Trading Credit Facility, as amended.

2013 Baltic Trading Credit Facility

On August 30, 2013, Baltic Hare Limited and Baltic Fox Limited, wholly-owned subsidiaries of Baltic Trading, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $22,000 (the “2013 Baltic Trading Credit Facility”).  Amounts borrowed and repaid under the 2013 Baltic Trading Credit Facility may not be reborrowed.  This facility has a maturity date of the sixth anniversary of the drawdown date for borrowings for the second vessel to be purchased, or September 4, 2019.  Borrowings under the 2013 Baltic Trading Credit Facility bear interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum.  A commitment fee of 1.00% is payable on the unused daily portion of the credit facility, which began accruing on August 30, 2013 and ended on September 4, 2013, the date which the entire $22,000 was borrowed.  Borrowings are to be repaid in 23 quarterly installments of $375 each commencing three months after the last vessel delivery date, or December 4, 2013, and a final payment of $13,375 due on the maturity date.  Amounts repaid under the 2013 Baltic Trading Credit Facility may not be reborrowed.
 
Borrowings under the 2013 Baltic Trading Credit Facility are secured by liens on Baltic Trading’s vessels purchased with borrowings under the facility, namely the Baltic Fox and the Baltic Hare, and other related assets.  Under a Guarantee and Indemnity entered into concurrently with the 2013 Baltic Trading Credit Facility, Baltic Trading agreed to guarantee the obligations of its subsidiaries under the 2013 Credit Facility.

The 2013 Baltic Trading Credit Facility also requires Baltic Trading, Baltic Hare Limited and Baltic Fox Limited to comply with a number of covenants, including financial covenants related to liquidity, leverage, consolidated net worth, and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; limitations on changes in the manager of Baltic Trading’s vessels; limitations on changes to the Management Agreement; limitations on liens and additional indebtedness; prohibitions on paying dividends if an event of default has occurred or would occur as a result of payment of a dividend; restrictions on transactions with affiliates; and other customary covenants. The liquidity covenants under the facility require Baltic Hare Limited and Baltic Fox Limited to maintain $500 in its earnings account and Baltic Trading to maintain $750 per vessel in its fleet in cash or cash equivalents plus undrawn working capital lines of credit. The facility’s leverage covenant requires that the ratio of Baltic Trading’s total financial indebtedness to the value of its total assets as adjusted based on vessel appraisals not exceed 70%. The facility also requires that Baltic Trading maintains a minimum consolidated net worth of $232,796 plus fifty percent of the value of Baltic Trading’s equity offering completed on or after May 28, 2013. The facility’s collateral maintenance covenant requires that the minimum fair market value of vessels mortgaged under the facility be 130% of the amount outstanding under the facility through August 30, 2016 and 135% of such amount thereafter.

On September 4, 2013, Baltic Trading made two drawdowns of $10,730 and $11,270 for the Baltic Hare and the Baltic Fox, respectively.  As of September 30, 2013, Baltic Trading has utilized its maximum borrowing capacity of $22,000, and there was no further availability.

As of September 30, 2013, the Company believes Baltic Trading is in compliance with all of the financial covenants under the 2013 Baltic Trading Credit Facility.

Interest payable

As required under the August 2012 Agreements, lenders under the 2007 Credit Facility will receive a fee equal to 1.25% of the principal amount outstanding following such prepayment, or $13,199, on the earlier date of the maturity date of this facility or the date on which all obligations under this facility have been paid in full.  The $13,199 was classified as current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013, consistent with the classification of the principal amount of the 2007 Credit Facility.

Interest rates

The following tables sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the rate differential between the pay fixed, receive variable rate on the interest rate swap agreements that were in effect (refer to Note 11 — Interest Rate Swap Agreements), combined, the cost associated with unused commitment fees as well as the facility fee for the 2007 Credit Facility which was reduced from 2.0% to 1.0% on February 28, 2012 as noted above. Additionally, it includes the range of interest rates on the debt, excluding the impact of swaps and unused commitment fees:

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Effective Interest Rate
  
4.69
%
  
4.65
%
  
4.72
%
  
4.60
%
Range of Interest Rates (excluding impact of swaps and unused commitment fees)
 
3.18% to 4.31
%
 
3.22% to 4.50
%
 
3.18% to 4.38
%
 
3.22% to 4.63
%
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES
10 — CONVERTIBLE SENIOR NOTES

The Company issued $125,000 of 5.0% Convertible Senior Notes on July 27, 2010.  The Indenture includes customary agreements and covenants, including with respect to events of default.
 
The following tables provide additional information about the Company’s 2010 Notes:

 
 
September 30,
2013
  
December 31,
2012
 
Carrying amount of the equity component (additional paid-in capital)
 
$
24,375
  
$
24,375
 
Principal amount of the 2010 Notes
  
125,000
   
125,000
 
Unamortized discount of the liability component
  
10,429
   
14,082
 
Net carrying amount of the liability component
  
114,571
   
110,918
 


 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Effective interest rate on liability component
  
10.0
%
  
10.0
%
  
10.0
%
  
10.0
%
Cash interest expense recognized
 
$
1,575
  
$
1,580
  
$
4,687
  
$
4,696
 
Non-cash interest expense recognized
  
1,265
   
1,158
   
3,653
   
3,345
 
Non-cash deferred financing amortization costs included in interest expense
  
181
   
181
   
537
   
540
 

The remaining period over which the unamortized discount will be recognized is 1.87 years. As of September 30, 2013, the if-converted value of the 2010 Notes does not exceed their principal amount.

The Company believes it is probable that the Company will not be in compliance with certain covenants under its credit facilities at measurement dates within the twelve months after March 31, 2013.  If such a default occurs, the Company may also be in default under the Indenture for the 2010 Notes.  A default would occur under the Indenture, following applicable notice and expiration of applicable cure periods, if the Company fails to pay indebtedness in excess of $50,000 at final maturity (or when otherwise due) or if such indebtedness is accelerated.  As such, the 2010 Notes were classified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013.
INTEREST RATE SWAP AGREEMENTS
INTEREST RATE SWAP AGREEMENTS
11 - INTEREST RATE SWAP AGREEMENTS

As of September 30, 2013 and December 31, 2012, the Company had four and five interest rate swap agreements outstanding, respectively, with DnB Bank ASA to manage interest costs and the risk associated with changing interest rates related to the Company’s 2007 Credit Facility. The total notional principal amount of the swaps at September 30, 2013 and December 31, 2012 was $306,233 and $356,233, respectively, and the swaps have specified rates and durations.

The following table summarizes the interest rate swaps designated as cash flow hedges that were in place as of September 30, 2013 and December 31, 2012:
 
 
 
 
 
    
 
September 30,
2013
  
December 31,
2012
 
Interest Rate Swap Detail
 
Notional
  
Notional
 
Trade
 
Fixed
 
Start Date
End date
 
Amount
  
Amount
 
Date
 
Rate
 
of Swap
of Swap
 
Outstanding
  
Outstanding
 
9/6/05
  
4.485
%
9/14/05
7/29/15
 
$
106,233
  
$
106,233
 
3/29/06
  
5.25
%
1/2/07
1/1/14
  
50,000
   
50,000
 
3/24/06
  
5.075
%
1/2/08
1/2/13
  
   
50,000
 
1/9/09
  
2.05
%
1/22/09
1/22/14
  
100,000
   
100,000
 
2/11/09
  
2.45
%
2/23/09
2/23/14
  
50,000
   
50,000
 
 
    
 
 
        
 
    
 
    
 
$
306,233
  
$
356,233
 
The following table summarizes the derivative asset and liability balances at September 30, 2013 and December 31, 2012:
 
Asset Derivatives
 
Liability Derivatives
 
 
Balance
Fair Value
Balance
Fair Value
 
Sheet
Location
September 30,
2013
December
31, 2012
Sheet
Location
September 30,
2013
December
31, 2012
Derivatives designated as hedging instruments
 
 
 
 
 
 
Interest rate contracts
Fair value of derivative instruments (Current Assets)
 
$
  
$
 
Fair value of derivative instruments (Current Liabilities)
 
$
9,292
  
$
7
 
Interest rate contracts
Fair value of derivative instruments (Noncurrent Assets)
  
   
 
Fair value of derivative instruments (Noncurrent Liabilities)
  
   
16,045
 
 
 
        
 
        
Total derivatives designated as hedging instruments
 
  
   
 
 
  
9,292
   
16,052
 
 
 
        
 
        
Total Derivatives
 
 
$
  
$
 
 
 
$
9,292
  
$
16,052
 

As of September 30, 2013, the Company believes it is probable that the Company will not be in compliance with certain covenants under its credit facilities at measurement dates within the next twelve months.  If such a default occurs, the Company may also be in default under the terms of the interest rate swap agreements.  Accordingly, one swap previously classified as a long-term liability was classified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of September 30, 2013.

The following tables present the impact of derivative instruments and their location within the Condensed Consolidated Statement of Operations:

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
For the Three-Month Period Ended September 30, 2013

Derivatives in Cash
Flow Hedging
Amount of
Gain (Loss)
Recognized
in AOCI on
Derivative
(Effective
Portion)
 
Location of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Amount of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Portion)
 
Location of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Amount of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
 
Relationships
2013
 
Portion)
2013
 
Portion)
2013
 
Interest rate contracts
 
$
(439
Interest Expense
 
$
(2,515
Other Income (Expense)
 
$
2
 

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
For the Three-Month Period Ended September 30, 2012

Derivatives in Cash
Flow Hedging
Amount of
Gain (Loss)
Recognized
in AOCI on
Derivative
(Effective
Portion)
 
Location of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Amount of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Portion)
 
Location of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Amount of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
 
Relationships
2012
 
Portion)
2012
 
Portion)
2012
 
Interest rate contracts
 
$
(1,434
Interest Expense
 
$
(2,959
Other Income (Expense)
 
$
30
 

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
For the Nine-Month Period Ended September 30, 2013

Derivatives in Cash
Flow Hedging
Amount of
Gain (Loss)
Recognized
in AOCI on
Derivative
(Effective
Portion)
 
Location of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Amount of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Portion)
 
Location of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Amount of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
 
Relationships
2013
 
Portion)
2013
 
Portion)
2013
 
Interest rate contracts
 
$
(668
Interest Expense
 
$
(7,431
Other Income (Expense)
 
$
(3
)
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
For the Nine-Month Period Ended September 30, 2012

Derivatives in Cash
Flow Hedging
Amount of
Gain (Loss)
Recognized
in AOCI on
Derivative
(Effective
Portion)
 
Location of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Amount of
Gain (Loss)
Reclassified
from AOCI
into income
(Effective
Portion)
 
Location of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Amount of
Gain (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion)
 
Relationships
2012
 
Portion)
2012
 
Portion)
2012
 
Interest rate contracts
 
$
(3,999
Interest Expense
 
$
(10,392
)
Other Income (Expense)
 
$
76
 

At September 30, 2013, ($6,012) of AOCI is expected to be reclassified into interest expense over the next 12 months associated with interest rate derivatives.

The Company is required to provide collateral in the form of vessel assets to support the interest rate swap agreements, excluding vessel assets of Baltic Trading.  At September 30, 2013, the Company’s 35 vessels mortgaged under the 2007 Credit Facility served as collateral in the aggregate amount of $100,000.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
12 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of AOCI included in the accompanying condensed consolidated balance sheets consist of net unrealized gain (loss) on cash flow hedges and net unrealized gain from investments in Jinhui stock as of September 30, 2013 and December 31, 2012.

Changes in AOCI by Component
For the Nine-Month Period Ended September 30, 2013

 
 
Net Unrealized
Gain (Loss) on
Cash Flow
Hedges
  
Net Unrealized
Gain
on
Investments
  
Total
 
AOCI — January 1, 2013
 
$
(16,057
)
 
$
4,216
  
$
(11,841
)
 
            
OCI before reclassifications
  
14,194
   
20,841
   
35,035
 
Amounts reclassified from AOCI
  
(7,431
)
  
   
(7,431
)
Net current-period OCI
  
6,763
   
20,841
   
27,604
 
 
            
AOCI — September 30, 2013
 
$
(9,294
)
 
$
25,057
  
$
15,763
 

Reclassifications Out of AOCI
For the Nine-Month Period Ended September 30, 2013

Details about AOCI Components
 
Amount
Reclassified from
AOCI
 
Affected Line Item in
the Statement Where
Net Loss is Presented
Gains and losses on cash flow hedges
 
 
  
Interest rate contracts
 
$
7,431
 
Interest expense
 
    
   
Total reclassifications for the period
 
$
7,431
 
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values and carrying values of the Company’s financial instruments at September 30, 2013 and December 31, 2012 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.
 
 
 
September 30, 2013
  
December 31, 2012
 
 
 
Carrying
Value
  
Fair Value
  
Carrying
Value
  
Fair Value
 
Cash and cash equivalents
 
$
109,492
  
$
109,492
  
$
72,600
  
$
72,600
 
Restricted cash
  
10,150
   
10,150
   
10,150
   
10,150
 
Floating rate debt
  
1,436,439
  
See below
   
1,413,439
   
1,413,439
 
2010 Notes
  
114,571
   
63,438
   
110,918
   
44,375
 

The fair value of the floating rate debt under the $100 Million Term Loan Facility and $253 Million Term Loan Facility are based on management’s estimate utilizing rates the Company believes it would be able to obtain for these credit facilities.  However, a portion of the floating rate debt in the 2007 Credit Facility was traded in a private transaction for an amount that is not determinable by the Company, which management believes was lower than the debt’s current carrying value.  The fair value of the 2010 Baltic Trading Credit Facility and the 2013 Baltic Trading Credit Facility is based on management’s estimates of rates it has recently obtained pursuant to the amendment to the existing 2010 Baltic Trading Credit Facility on August 29, 2013, as well as per the debt agreement for the 2013 Baltic Trading Credit Facility that was effective on August 30, 2013.  Refer to Note 9 – Debt for further information.  Additionally, the Company considers its creditworthiness in determining the fair value of floating rate debt under the credit facilities.  The carrying value approximates the fair market value for these floating rate loans except for the 2007 Credit Facility.  The fair value of the convertible senior notes payable represents the market value based on recent transactions of the 2010 Notes at September 30, 2013 and December 31, 2012 without bifurcating the value of the conversion option.  The fair value of the interest rate swaps shown below is the estimated amount the Company would receive to terminate the swap agreements at the reporting date, taking into account current interest rates and the creditworthiness of both the swap counterparty and the Company.  The carrying amounts of the Company’s other financial instruments at September 30, 2013 and December 31, 2012 (principally Due from charterers and Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.

Accounting Standards Codification Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis.  This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumption (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

·Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.

·Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

·Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

As of September 30, 2013 and December 31, 2012, the fair values of the Company’s financial assets and liabilities are categorized as follows:

 
 
September 30, 2013
 
 
 
Total
  
Quoted
Market
Prices in
Active
Markets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
 
Investments
 
$
41,829
  
$
41,829
  
$
 
Derivative instruments — liability position
  
9,292
   
   
9,292
 

 
 
December 31, 2012
 
 
 
Total
  
Quoted
Market
Prices in
Active
Markets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
 
Investments
 
$
20,988
  
$
20,988
  
$
 
Derivative instruments — liability position
  
16,052
   
   
16,052
 
 
The Company holds an investment in the capital stock of Jinhui, which is classified as a long-term investment.  The stock of Jinhui is publicly traded on the Oslo Stock Exchange and is considered a Level 1 item.  The Company’s interest rate derivative instruments are pay-fixed, receive-variable interest rate swaps based on LIBOR.  The Company has elected to use the income approach to value the derivatives, using observable Level 2 market inputs at measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact.  Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on LIBOR for the first two years) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR cash and swap rates and credit risk at commonly quoted intervals).  Mid-market pricing is used as a practical expedient for fair value measurements.  Refer to Note 11 — Interest Rate Swap Agreements for further information regarding the Company’s interest rate swap agreements.  ASC 820-10 states that the fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position have also been factored into the fair value measurement of the derivative instruments.  This credit valuation adjustment did not have a material impact on the fair value measurement of the derivative instruments.  As of September 30, 2013, both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item as the Company considers the estimate of rates it could obtain for similar debt or based upon transaction amongst third parties. The 2010 Notes are publicly traded in the over-the-counter market; however, they are not considered to be actively traded. As such, the 2010 Notes are considered to be a Level 2 item.  The Company did not have any Level 3 financial assets or liabilities during the nine months ended September 30, 2013 and 2012.
PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS
PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS
14 - PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

 
 
September 30,
2013
  
December 31,
2012
 
Lubricant inventory, fuel oil and diesel oil inventory and other stores
 
$
10,989
  
$
10,322
 
Prepaid items
  
3,953
   
5,067
 
Insurance receivable
  
1,352
   
1,817
 
Other
  
2,096
   
940
 
Total prepaid expenses and other current assets
 
$
18,390
  
$
18,146
 

Other noncurrent assets in the amount of $514 at September 30, 2013 and December 31, 2012 represent the security deposit related to the operating lease entered into effective April 4, 2011. Refer to Note 19 — Commitments and Contingencies for further information related to the lease agreement.
OTHER ASSETS, NET
OTHER ASSETS, NET
15 - OTHER ASSETS, NET

Other assets consist of deferred financing costs, which include fees, commissions and legal expenses associated with securing loan facilities and other debt offerings and amending existing loan facilities. Total net deferred financing costs consist of the following as of September 30, 2013 and December 31, 2012:

 
 
September 30,
2013
  
December 31,
2012
 
 
 
  
 
2007 Credit Facility
 
$
29,568
  
$
29,568
 
$100 Million Term Loan Facility
  
1,783
   
1,783
 
$253 Million Term Loan Facility
  
4,708
   
4,708
 
2010 Notes
  
3,637
   
3,637
 
2010 Baltic Trading Credit Facility
  
3,339
   
3,027
 
2013 Baltic Trading Credit Facility
  
507
   
 
Total deferred financing costs
  
43,542
   
42,723
 
Less: accumulated amortization
  
20,025
   
13,162
 
Total
 
$
23,517
  
$
29,561
 
 
Amortization expense for deferred financing costs for the three months ended September 30, 2013 and 2012 was $3,171 and $1,596, respectively.  Amortization expense for deferred financing costs for the nine months ended September 30, 2013 and 2012 was $6,862 and $3,555, respectively.  This amortization expense is recorded as a component of interest expense in the Condensed Consolidated Statements of Operations.
FIXED ASSETS
FIXED ASSETS
16 - FIXED ASSETS

Fixed assets consist of the following:

 
 
September 30,
2013
  
December
31, 2012
 
Fixed assets, at cost:
 
  
 
Vessel equipment
 
$
3,622
  
$
3,043
 
Leasehold improvements
  
3,823
   
3,823
 
Furniture and fixtures
  
997
   
997
 
Computer equipment
  
754
   
706
 
Total costs
  
9,196
   
8,569
 
Less: accumulated depreciation and amortization
  
3,998
   
3,311
 
Total
 
$
5,198
  
$
5,258
 

Depreciation and amortization expense for fixed assets for the three months ended  September 30, 2013 and 2012 was $233 and $230, respectively.  Depreciation and amortization expense for fixed assets for the nine months ended September 30, 2013 and 2012 was $687 and $655, respectively.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
17 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

 
 
September 30,
2013
  
December
31, 2012
 
Accounts payable
 
$
4,617
  
$
4,477
 
Accrued general and administrative expenses
  
10,190
   
8,803
 
Accrued vessel operating expenses
  
9,688
   
10,387
 
Total
 
$
24,495
  
$
23,667
 
REVENUE FROM TIME CHARTERS
REVENUE FROM TIME CHARTERS
18 - REVENUE FROM TIME CHARTERS

Total voyage revenue earned on time charters, including revenue earned in vessel pools and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters, for the three months ended September 30, 2013 and 2012 was $58,605 and $53,603, respectively, and for the nine months ended September 30, 2013 and 2012 was $143,222 and $174,740, respectively.  There was no profit sharing revenue earned during the three and nine months ended September 30, 2013 and 2012.  Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts as of November 1, 2013 is expected to be $9,676 for the remainder of 2013 and $7,068 during 2014, assuming off-hire due to any scheduled drydocking and that no additional off-hire time is incurred.  For drydockings, the Company assumes twenty days of offhire.  Future minimum revenue excludes revenue earned for the vessels currently in pool arrangements, vessels that are currently on or will be on spot market-related time charters as spot rates cannot be estimated, as well as profit sharing revenue.
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
19 - COMMITMENTS AND CONTINGENCIES

In September 2005, the Company entered into a 15-year lease for office space in New York, New York for which there was a free rental period from September 1, 2005 to July 31, 2006.  On January 6, 2012, the Company ceased the use of this space and has recorded net rent (income) expense of ($39) and $255 during the three months ended September 30, 2013 and 2012, respectively, and $92 and $826 during the nine months ended September 30, 2013 and 2012, respectively, representing the present value of the Company’s estimated remaining rent expense for the duration of the lease after taking into account future sublease income based on the sublease agreement entered into effective November 1, 2013 and deferred rent on the facility.  The current lease obligations related to this lease agreement as of September 30, 2013 and December 31, 2012 of $284 and $682, respectively, are recorded in the condensed consolidated balance sheets in Current portion of lease obligations.  The long-term lease obligations related to this lease agreement as of September 30, 2013 and December 31, 2012 of $790 and $672, respectively, are recorded in the condensed consolidated balance sheets in Long-term lease obligations.
 
Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $129 for the remainder of 2013, $518 annually for 2014 through 2015, $529 for 2016, $550 for 2017 and a total of $1,972 for the remaining term of the lease.
 
Effective April 4, 2011, the Company entered into a seven-year sub-sublease agreement for additional office space in New York, New York.  The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments will be $82 per month until May 31, 2015 and thereafter will be $90 per month until the end of the seven-year term.  Pursuant to the sub-sublease agreement, the sublessor is obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space.  The Company has also entered into a direct lease with the over-landlord of such office space that will commence immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provides for a free base rental period from May 1, 2018 to September 30, 2018.  Following the expiration of the free base rental period, the monthly base rental payments will be $186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025.  For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitutes one lease agreement.  As a result of the straight-line rent calculation generated by the free rent period and the tenant work credit, the monthly straight-line rental expense for the term of the entire lease from June 1, 2011 to September 30, 2025 will be $130.  The Company had a long-term lease obligation at September 30, 2013 and December 31, 2012 of $2,225 and $1,793, respectively.  Rent expense pertaining to this lease for the three months ended September 30, 2013 and 2012 was $389.  Rent expense pertaining to this lease for the nine months ended September 30, 2013 and 2012 was $1,168.

Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $245 for the remainder of 2013, $982 annually for 2014, $1,037 annually for 2015, $1,076 annually for 2016 and 2017 and a total of $16,506 for the remaining term of the lease.
NONVESTED STOCK AWARDS
NONVESTED STOCK AWARDS
20 - NONVESTED STOCK AWARDS

The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2013 under the Genco Shipping & Trading Limited 2005 and 2012 Equity Incentive Plans (the “GS&T Plans”):

 
 
Number of
Shares
  
Weighted
Average Grant
Date Price
 
Outstanding at January 1, 2013
  
1,108,762
  
$
9.47
 
Granted
  
200,634
   
1.57
 
Vested
  
(70,000
)
  
2.86
 
Forfeited
  
(21,500
)
  
5.53
 
 
        
Outstanding at September 30, 2013
  
1,217,896
  
$
8.61
 

The total fair value of shares that vested under the GS&T Plans during the nine months ended September 30, 2013 and 2012 was $110 and $53, respectively.  The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the three and nine months ended September 30, 2013 and 2012, the Company recognized nonvested stock amortization expense for the GS&T Plans, which is included in general, administrative and management fees, as follows:

 
For the Three Months Ended
September 30,
 
For the Nine Months Ended
September 30,
 
 
2013
 
2012
 
2013
 
2012
 
General, administrative, and management fees
 
$
749
  
$
1,069
  
$
2,314
  
$
3,214
 
 
The fair value of nonvested stock at the grant date is equal to the closing stock price on that date.  The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures.  As of September 30, 2013, unrecognized future compensation cost of $3,013 related to nonvested stock will be recognized over a weighted-average period of 2.34 years.

The following table presents a summary of Baltic Trading’s nonvested stock awards for the nine months ended September 30, 2013 under the Baltic Trading Limited 2010 Equity Incentive Plan (the “Baltic Trading Plan”):

 
 
Number of Baltic
Trading
Common
Shares
  
Weighted
Average Grant
Date Price
 
Outstanding at January 1, 2013
  
664,249
  
$
7.70
 
Granted
  
59,680
   
3.77
 
Vested
  
(166,500
)
  
10.76
 
Forfeited
  
   
 
 
        
Outstanding at September 30, 2013
  
557,429
  
$
6.37
 

The total fair value of shares that vested under the Baltic Trading Plan during the nine months ended September 30, 2013 and 2012 was $643 and $505, respectively.  The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the three and nine months ended September 30, 2013 and 2012, the Company recognized nonvested stock amortization expense for the Baltic Trading Plan, which is included in general, administrative and management fees, as follows:

 
For the Three Months Ended
September 30,
 
For the Nine Months Ended
September 30,
 
 
2013
 
2012
 
2013
 
2012
 
General, administrative, and management fees
 
$
341
  
$
403
  
$
1,156
  
$
1,377
 

The Company is amortizing Baltic Trading’s grants over the applicable vesting periods, net of anticipated forfeitures.  As of September 30, 2013, unrecognized future compensation cost of $964 related to nonvested stock will be recognized over a weighted-average period of 1.97 years.
SHARE REPURCHASE PROGRAM
SHARE REPURCHASE PROGRAM
21 - SHARE REPURCHASE PROGRAM

Since the inception of its share repurchase program through September 30, 2013, the Company has repurchased and retired 278,300 shares of its common stock for $11,500. Currently, the terms of the 2007 Credit Facility require the Company to suspend all share repurchases until the Company can represent that it is in a position to again satisfy the collateral maintenance covenant.  No share repurchases were made during the three and nine months ended September 30, 2013 and 2012.
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS
22 - LEGAL PROCEEDINGS

From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.  The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows.
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
23 - SUBSEQUENT EVENTS

On October 31, 2013, Baltic Trading declared a dividend of $0.02 per share to be paid on or November 22, 2013 to shareholders of record as of November 18, 2013. The aggregate amount of the dividend is expected to be approximately $874, of which approximately $752 will be paid to minority shareholders, which Baltic Trading anticipates will be funded from cash on hand at the time payment is to be made.
 
On October 31, 2013, Baltic Trading entered into agreements to purchase a 2012 built 179,185 dwt Capesize drybulk vessel and a 2011 built 179,185 dwt Capesize drybulk vessel from affiliates of SK Shipping Co. Ltd. for an aggregate purchase price of $103,000. These vessels are to be renamed the Baltic Lion and the Baltic Tiger, respectively. The purchases are subject to completion of customary additional documentation and closing conditions. The vessels are expected to be delivered to Baltic Trading by the end of the fourth quarter of 2013. Baltic Trading plans to finance this acquisition in part through the proceeds from its common stock offering completed on September 25, 2013 and in part through commercial bank debt financing. Baltic Trading is in negotiations to obtain a commitment for commercial bank financing from a global lending institution.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
Principles of consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which include the accounts of GS&T, its wholly-owned subsidiaries and Baltic Trading, a subsidiary in which the Company owns a majority of the voting interests and exercises control.  All intercompany accounts and transactions have been eliminated in consolidation.
Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).  In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012 (the “2012 10-K”). The results of operations for the three and nine month periods ended September 30, 2013 and 2012 are not necessarily indicative of the operating results for the full year.
Vessels, net

Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended September 30, 2013 and 2012 was $33,591 and $33,462, respectively.  Depreciation expense for vessels for the nine months ended September 30, 2013 and 2012 was $99,432 and $99,646, respectively.

Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $245/lwt multiplied by the weight of the ship in lightweight tons (lwt).
Deferred revenue

Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of September 30, 2013 and December 31, 2012, the Company had an accrual of $323 and $407, respectively, related to these estimated customer claims.
Voyage expense recognition

In time charters, spot market-related time charters and pool agreements, operating costs including crew, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. These differences in bunkers resulted in net (losses) gains of ($296) and $242 during the three months ended September 30, 2013 and 2012, respectively, and $47 and $1,665 during the nine months ended September 30, 2013 and 2012, respectively.  Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Noncontrolling interest

Net loss attributable to noncontrolling interest during the three and nine months ended September 30, 2013 and 2012 reflects the noncontrolling interest’s share of the net loss of Baltic Trading, a subsidiary of the Company, which owns and employs drybulk vessels in the spot market or on spot market-related time charters.  The spot market represents immediate chartering of a vessel, usually for single voyages.  At September 30, 2013, the noncontrolling interest held an 86.03% economic interest in Baltic Trading while only holding 29.10% of the voting power.  At December 31, 2012, the noncontrolling interest held a 75.22% economic interest in Baltic Trading while only holding 16.83% of the voting power.
Income taxes

Pursuant to certain agreements, GS&T technically and commercially manages vessels for Baltic Trading as well as provides technical management of vessels for MEP in exchange for specified fees for these services provided.  These services are performed by Genco Management (USA) Limited (“Genco (USA)”), which has elected to be taxed as a corporation for United States federal income tax purposes.  As such, Genco (USA) is subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services.  Genco (USA) has entered into a cost-sharing agreement with the Company and Genco Ship Management LLC, collectively Manco, pursuant to which Genco (USA) agrees to reimburse Manco for the costs incurred by Genco (USA) for the use of Manco’s personnel and services in connection with the provision of the services for both Baltic Trading and MEP’s vessels.
 
Total revenues earned for these services during the three months ended September 30, 2013 and 2012 was $2,010 and $1,530, respectively, of which $772 and $703, respectively, was eliminated upon consolidation.  After allocation of certain expenses, there was taxable income of $1,045 associated with these activities for the three months ended September 30, 2013.  This resulted in estimated income tax expense of $471 for the three months ended September 30, 2013.  After allocation of certain expenses, there was taxable income of $664 associated with these activities for the three months ended September 30, 2012.  This resulted in income tax expense of $299 for the three months ended September 30, 2012.

Total revenues earned for these services during the nine months ended September 30, 2013 and 2012 was $5,015 and $4,575, respectively, of which $2,148 and $2,109, respectively, was eliminated upon consolidation.  After allocation of certain expenses, there was taxable income of $2,262 associated with these activities for the nine months ended September 30, 2013.  This resulted in estimated income tax expense of $975 for the nine months ended September 30, 2013.  After allocation of certain expenses, there was taxable income of $1,985 associated with these activities for the nine months ended September 30, 2012.  This resulted in income tax expense of $892 for the nine months ended September 30, 2012.

Baltic Trading is subject to income tax on its United States source income.  During the three months ended September 30, 2013 and 2012, Baltic Trading had United States operations which resulted in United States source income of $420 and $200, respectively.  Baltic Trading’s United States income tax expense for the three months ended September 30, 2013 and 2012 was $8 and $4, respectively.

During the nine months ended September 30, 2013 and 2012, Baltic Trading had United States operations which resulted in United States source income of $1,059 and $1,321, respectively.  Baltic Trading’s United States income tax expense for the nine months ended September 30, 2013 and 2012 was $22 and $26, respectively.
Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), to improve the transparency of changes in other comprehensive income (loss) (“OCI”) and items reclassified out of accumulated other income (loss) (“AOCI”).  The amendments in ASU 2013-02 are required to be applied prospectively and are effective for reporting periods beginning after December 15, 2012.  The adoption of ASU 2013-02 will not have any impact on the Company’s consolidated financial statements other than separately disclosing in the footnotes to the consolidated financial statements amounts reclassified out of AOCI and the individual line items in the Condensed Consolidated Statement of Operations that are affected.  The Company has adopted ASU 2013-02 and the impact of adoption is not material to the Company’s condensed consolidated financial statements.  Refer to Note 12 — Accumulated Other Comprehensive Income (Loss) for additional disclosure.
GENERAL INFORMATION (Tables)
Below is the list of GS&T’s wholly owned ship-owning subsidiaries as of September 30, 2013:

Wholly Owned Subsidiaries
 
Vessels Acquired
 
Dwt
 
Delivery Date
 
Year Built
 
 
 
 
 
 
 
 
 
 
 
Genco Reliance Limited
 
Genco Reliance
 
29,952
 
12/6/04
 
1999
 
Genco Vigour Limited
 
Genco Vigour
 
73,941
 
12/15/04
 
1999
 
Genco Explorer Limited
 
Genco Explorer
 
29,952
 
12/17/04
 
1999
 
Genco Carrier Limited
 
Genco Carrier
 
47,180
 
12/28/04
 
1998
 
Genco Sugar Limited
 
Genco Sugar
 
29,952
 
12/30/04
 
1998
 
Genco Pioneer Limited
 
Genco Pioneer
 
29,952
 
1/4/05
 
1999
 
Genco Progress Limited
 
Genco Progress
 
29,952
 
1/12/05
 
1999
 
Genco Wisdom Limited
 
Genco Wisdom
 
47,180
 
1/13/05
 
1997
 
Genco Success Limited
 
Genco Success
 
47,186
 
1/31/05
 
1997
 
Genco Beauty Limited
 
Genco Beauty
 
73,941
 
2/7/05
 
1999
 
Genco Knight Limited
 
Genco Knight
 
73,941
 
2/16/05
 
1999
 
Genco Leader Limited
 
Genco Leader
 
73,941
 
2/16/05
 
1999
 
Genco Marine Limited
 
Genco Marine
 
45,222
 
3/29/05
 
1996
 
Genco Prosperity Limited
 
Genco Prosperity
 
47,180
 
4/4/05
 
1997
 
Genco Muse Limited
 
Genco Muse
 
48,913
 
10/14/05
 
2001
 
Genco Acheron Limited
 
Genco Acheron
 
72,495
 
11/7/06
 
1999
 
Genco Surprise Limited
 
Genco Surprise
 
72,495
 
11/17/06
 
1998
 
Genco Augustus Limited
 
Genco Augustus
 
180,151
 
8/17/07
 
2007
 
Genco Tiberius Limited
 
Genco Tiberius
 
175,874
 
8/28/07
 
2007
 
Genco London Limited
 
Genco London
 
177,833
 
9/28/07
 
2007
 
Genco Titus Limited
 
Genco Titus
 
177,729
 
11/15/07
 
2007
 
Genco Challenger Limited
 
Genco Challenger
 
28,428
 
12/14/07
 
2003
 
Genco Charger Limited
 
Genco Charger
 
28,398
 
12/14/07
 
2005
 
Genco Warrior Limited
 
Genco Warrior
 
55,435
 
12/17/07
 
2005
 
Genco Predator Limited
 
Genco Predator
 
55,407
 
12/20/07
 
2005
 
Genco Hunter Limited
 
Genco Hunter
 
58,729
 
12/20/07
 
2007
 
Genco Champion Limited
 
Genco Champion
 
28,445
 
1/2/08
 
2006
 
Genco Constantine Limited
 
Genco Constantine
 
180,183
 
2/21/08
 
2008
 
Genco Raptor LLC
 
Genco Raptor
 
76,499
 
6/23/08
 
2007
 
Genco Cavalier LLC
 
Genco Cavalier
 
53,617
 
7/17/08
 
2007
 
Genco Thunder LLC
 
Genco Thunder
 
76,588
 
9/25/08
 
2007
 
Genco Hadrian Limited
 
Genco Hadrian
 
169,694
 
12/29/08
 
2008
 
Genco Commodus Limited
 
Genco Commodus
 
169,025
 
7/22/09
 
2009
 
Genco Maximus Limited
 
Genco Maximus
 
169,025
 
9/18/09
 
2009
 
Genco Claudius Limited
 
Genco Claudius
 
169,025
 
12/30/09
 
2010
 
Genco Bay Limited
 
Genco Bay
 
34,296
 
8/24/10
 
2010
 
Genco Ocean Limited
 
Genco Ocean
 
34,409
 
7/26/10
 
2010
 
Genco Avra Limited
 
Genco Avra
 
34,391
 
5/12/11
 
2011
 
Genco Mare Limited
 
Genco Mare
 
34,428
 
7/20/11
 
2011
 
Genco Spirit Limited
 
Genco Spirit
 
34,432
 
11/10/11
 
2011
 
Genco Aquitaine Limited
 
Genco Aquitaine
 
57,981
 
8/18/10
 
2009
 
 
Wholly Owned Subsidiaries
Vessels Acquired
Dwt
Delivery Date
Year Built
 
Genco Ardennes Limited
 
Genco Ardennes
 
57,981
 
8/31/10
 
2009
 
Genco Auvergne Limited
 
Genco Auvergne
 
57,981
 
8/16/10
 
2009
 
Genco Bourgogne Limited
 
Genco Bourgogne
 
57,981
 
8/24/10
 
2010
 
Genco Brittany Limited
 
Genco Brittany
 
57,981
 
9/23/10
 
2010
 
Genco Languedoc Limited
 
Genco Languedoc
 
57,981
 
9/29/10
 
2010
 
Genco Loire Limited
 
Genco Loire
 
53,416
 
8/4/10
 
2009
 
Genco Lorraine Limited
 
Genco Lorraine
 
53,416
 
7/29/10
 
2009
 
Genco Normandy Limited
 
Genco Normandy
 
53,596
 
8/10/10
 
2007
 
Genco Picardy Limited
 
Genco Picardy
 
55,257
 
8/16/10
 
2005
 
Genco Provence Limited
 
Genco Provence
 
55,317
 
8/23/10
 
2004
 
Genco Pyrenees Limited
 
Genco Pyrenees
 
57,981
 
8/10/10
 
2010
 
Genco Rhone Limited
 
Genco Rhone
 
58,018
 
3/29/11
 
2011
Below is the list of Baltic Trading’s wholly owned ship-owning subsidiaries as of September 30, 2013:

Baltic Trading’s Wholly Owned
Subsidiaries
 
Vessel
 
Dwt
 
Delivery Date
 
Year
Built
 
 
 
 
 
 
 
 
 
 
 
Baltic Leopard Limited
 
Baltic Leopard
 
53,447
 
4/8/10
 
2009
 
Baltic Panther Limited
 
Baltic Panther
 
53,351
 
4/29/10
 
2009
 
Baltic Cougar Limited
 
Baltic Cougar
 
53,432
 
5/28/10
 
2009
 
Baltic Jaguar Limited
 
Baltic Jaguar
 
53,474
 
5/14/10
 
2009
 
Baltic Bear Limited
 
Baltic Bear
 
177,717
 
5/14/10
 
2010
 
Baltic Wolf Limited
 
Baltic Wolf
 
177,752
 
10/14/10
 
2010
 
Baltic Wind Limited
 
Baltic Wind
 
34,409
 
8/4/10
 
2009
 
Baltic Cove Limited
 
Baltic Cove
 
34,403
 
8/23/10
 
2010
 
Baltic Breeze Limited
 
Baltic Breeze
 
34,386
 
10/12/10
 
2010
 
Baltic Fox Limited
 
Baltic Fox
 
31,883
 
9/6/2013
 
2010
 
Baltic Hare Limited
 
Baltic Hare
 
31,887
 
9/5/2013
 
2009
 
Baltic Lion Limited
 
Baltic Lion
 
179,185
 
Q4 2013 (1)
 
2012
 
Baltic Tiger Limited
 
Baltic Tiger
 
179,185
 
Q4 2013 (1)
 
2011
 


(1) Delivery dates for vessels being delivered in the future are estimates based on guidance received from the sellers.
SEGMENT INFORMATION (Tables)
The following table presents a reconciliation of total voyage revenue from external (third party) customers for the Company’s two operating segments to total consolidated voyage revenue from external customers for the Company for the three and nine months ended September 30, 2013 and 2012.
 
 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Voyage revenue from external customers
 
  
  
  
 
GS&T
 
$
49,503
  
$
47,312
  
$
121,755
  
$
154,552
 
Baltic Trading
  
9,102
   
6,291
   
21,467
   
20,188
 
Total operating segments
  
58,605
   
53,603
   
143,222
   
174,740
 
Eliminating revenue
  
   
   
   
 
Total consolidated voyage revenue from external customers
 
$
58,605
  
$
53,603
  
$
143,222
  
$
174,740
 
The following table presents a reconciliation of total intersegment revenue, which eliminates upon consolidation, for the Company’s two operating segments for the three and nine months ended September 30, 2013 and 2012. The intersegment revenue noted in the following table represents revenue earned by GS&T pursuant to the management agreement entered into with Baltic Trading, which includes commercial service fees, technical service fees and sale and purchase fees, if any.

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Intersegment revenue
 
  
  
  
 
GS&T
 
$
1,187
  
$
703
  
$
2,563
  
$
2,109
 
Baltic Trading
  
   
   
   
 
Total operating segments
  
1,187
   
703
   
2,563
   
2,109
 
Eliminating revenue
  
(1,187
)
  
(703
)
  
(2,563
)
  
(2,109
)
Total consolidated intersegment revenue
 
$
  
$
  
$
  
$
 
The following table presents a reconciliation of total net loss for the Company’s two operating segments to total consolidated net loss for the three and nine months ended September 30, 2013 and 2012. The eliminating net income noted in the following table consists of the elimination of intercompany transactions between GS&T and Baltic Trading, as well as dividends received by GS&T from Baltic Trading for its Class B shares of Baltic Trading.

 
 
For the Three Months Ended
September 30,
  
For the Nine Months Ended
September 30,
 
 
 
2013
  
2012
  
2013
  
2012
 
Net loss
 
  
  
  
 
GS&T
 
$
(34,277
)
 
$
(36,969
)
 
$
(125,422
)
 
$
(94,779
)
Baltic Trading
  
(2,270
)
  
(4,822
)
  
(11,979
)
  
(12,942
)
Total operating segments
  
(36,547
)
  
(41,791
)
  
(137,401
)
  
(107,721
)
Eliminating net income
  
429
   
246
   
465
   
1,194
 
Total consolidated net loss
 
$
(36,976
)
 
$
(42,037
)
 
$
(137,866
)
 
$
(108,915
)
The following table presents a reconciliation of total assets for the Company’s two operating segments to total consolidated assets as of September 30, 2013 and December 31, 2012. The eliminating assets noted in the following table consist of the elimination of intercompany transactions resulting from the capitalization of fees paid to GS&T by Baltic Trading as vessel assets, including related accumulated depreciation, as well as the outstanding receivable balance due to GS&T from Baltic Trading as of September 30, 2013 and December 31, 2012.

 
 
September 30,
2013
  
December 31,
2012
 
Total assets
 
  
 
GS&T
 
$
2,384,172
  
$
2,482,486
 
Baltic Trading
  
457,397
   
364,370
 
Total operating segments
  
2,841,569
   
2,846,856
 
Eliminating assets
  
(3,845
)
  
(3,485
)
Total consolidated assets
 
$
2,837,724
  
$
2,843,371
 
NET LOSS PER COMMON SHARE (Tables)