SOURCE: TOP Ships Inc.

TOP Ships Inc.

November 09, 2009 16:05 ET

TOP Ships Reports Third Quarter and Nine Months Ended September 30, 2009 Financial Results

ATHENS, GREECE--(Marketwire - November 9, 2009) - TOP Ships Inc. (NASDAQ: TOPS) today announced its operating results for the third quarter and nine months ended September 30, 2009.

For the third quarter of 2009, the Company reported net income of $329,000 or $0.01 per share, compared with net income of $41,640,000 or $1.44 per share, for the third quarter of 2008. Third quarter operating income was $6,672,000 for 2009, compared with operating income of $49,127,000 for the corresponding period in 2008. Revenues for the third quarter of 2009, were $25,153,000, compared to $71,094,000 recorded in the third quarter of 2008.

For the nine months ended September 30, 2009, the Company reported net loss of $14,251,000 or $0.52 per share, compared with net income of $17,210,000 or $0.69 per share, for the nine months ended September 30, 2008. For the nine months ended September 30, 2009, operating loss was $2,473,000 compared with operating income of $53,771,000 for the nine months ended September 30, 2008. Revenues for the nine months ended September 30, 2009 were $83,582,000, compared to $220,418,000 recorded in the nine months ended September 30, 2008.

Evangelos J. Pistiolis, President and Chief Executive Officer of TOP Ships Inc., commented:

"We are happy to report a profitable quarter despite the current dire market conditions. Our financial results for the third quarter of 2009 include non-recurring charges of $1,386,000 relating to the termination of leases and one-off cash and accelerated stock-based compensation of retiring board members. Excluding these expenses, net income for the third quarter of 2009 would have been $1,715,000 or $0.06 per share.

"During the third quarter of 2009 we achieved average TCE rates of $26,777 for the vessels that we operated under time charters and approximately $22,700 for the vessels that we operated under bareboat charters. Given our fixed contracts we expect similar rates to be achieved during the fourth quarter of 2009.

"As of September 30, 2009, we were in breach of our loan covenants and we are currently in discussions with all our banks to receive waivers for these breaches and extend existing waivers that were scheduled to expire in 2010, to 2011."

The following indicators serve to highlight the operational performance of the Company's current fleet during the three and nine month periods ended September 30, 2009, and 2008:

CURRENT FLEET DATA

                                             Three Months     Nine Months
                                                Ended -         Ended -
                                            September 30,   September 30,
                                            --------------  --------------
                                             2008    2009    2008    2009
                                            ------  ------  ------  ------
Total number of vessels at the end of the
 period                                          7      13       7      13
                                            ------  ------  ------  ------
Total calendar days for fleet (1)              644   1,163   1,762   2,930
                                            ------  ------  ------  ------
Total available days for fleet (2)             638   1,161   1,708   2,864
                                            ------  ------  ------  ------
Total operating days for fleet (3)             627   1,160   1,692   2,834
                                            ------  ------  ------  ------
Fleet utilization (4)                        98.28%  99.91%  99.06%  98.95%
                                            ------  ------  ------  ------

(1) We define calendar days as the total days the vessels were in our possession for the relevant period. Calendar days are an indicator of the size of our fleet over the relevant period and affect both the amount of revenues and expenses that we record during that period.

(2) We define available days as the number of calendar days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or scheduled guarantee inspections in the case of newbuildings, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues. We determined to use available days as a performance metric for the first time, in the second quarter and first half of 2009. We have decided to adjust the calculation method of utilization to include available days in order to be comparable with shipping companies that calculate utilization using operating days divided by available days.

(3) We define operating days as the number of available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which the vessels actually generate revenues.

(4) We calculate fleet utilization by dividing the number of operating days during a period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or scheduled guarantee inspections in the case of newbuildings, vessel upgrades, special or intermediate surveys and vessel positioning. We used a new calculation method for fleet utilization for the first time, in the second quarter and first half of 2009. In all prior filings and reports, utilization was calculated by dividing operating days by calendar days. We have decided to change the calculation method in order to be comparable with most shipping companies, which calculate utilization using operating days divided by available days.

The following table presents the Company's current fleet and employment
profile:

                                                              Profit
                                                      Daily   Sharing
                            Year   Charter             Base   Above Base
                      Dwt   Built   Type     Expiry    Rate   Rate (2009)
                    ------- ----- -------- --------- -------- ------------
Eight Tanker Vessels
                                                              100% first
                                     Time                     $1,000 + 50%
Dauntless            46,168  1999  Charter   Q1/2010 $ 16,250 thereafter

                                                              100% first
                                     Time                     $1,000 + 50%
Ioannis P.           46,346  2003  Charter   Q4/2010 $ 18,000 thereafter

                                  Bareboat
Miss Marilena        50,000  2009  Charter Q1-2/2019 $ 14,400            -

                                  Bareboat
Lichtenstein         50,000  2009  Charter Q1-2/2019 $ 14,550            -

                                  Bareboat
Ionian Wave          50,000  2009  Charter Q1-2/2016 $ 14,300            -

                                  Bareboat
Tyrrhenian Wave      50,000  2009  Charter Q1-2/2016 $ 14,300            -

                                  Bareboat
Britto               50,000  2009  Charter Q1-2/2019 $ 14,550            -

                                  Bareboat
Hongbo               50,000  2009  Charter Q1-2/2019 $ 14,550            -

Total Tanker dwt    392,514

Five Drybulk Vessels
                                     Time
Cyclades             75,681  2000  Charter   Q2/2011 $ 54,250            -

                                     Time
Amalfi               45,526  2000  Charter   Q4/2009 $ 12,500            -

Papillon (ex Voc                  Bareboat
 Gallant)            51,200  2002  Charter   Q2/2012 $ 24,000            -

                                     Time
Pepito               75,928  2001  Charter   Q2/2013 $ 41,000            -

                                     Time
Astrale              75,933  2000  Charter   Q2/2011 $ 18,000            -

Total Drybulk dwt   324,268

TOTAL DWT           716,782

Outstanding Indebtedness

As of September 30, 2009, we had total indebtedness under senior secured and unsecured credit facilities with our lenders of $407.3 million with maturity dates from 2010 through 2019.

Loan Covenants and Discussions with Banks

As of the date of this release, we have received waivers and signed amendments to our loan agreements with all five of our lending banks in relation to certain loan covenant breaches that have taken place since December 31, 2008. However, as of September 30, 2009, we were in breach of additional covenants with all of our banks, which have not been previously waived. These breaches relate to EBITDA, our overall cash position (minimum liquidity covenants), adjusted net worth and the asset value cover of our product tankers with certain banks. We expect that our lenders will not demand payment of our loans before their maturity, provided that we pay loan installments and accumulated or accrued interest as they fall due under the existing credit facilities.

If we are unable to obtain covenant waivers or modifications for current covenant breaches or for covenant breaches that may occur in future reporting periods, our lenders may require that we post additional collateral, enhance our equity and liquidity, increase our interest payments or pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels, or they may accelerate our indebtedness, which would impair our ability to continue to conduct our business. In order to further enhance our liquidity, we may find it necessary to sell vessels at a time when vessel prices are low, in which case we will recognize losses and a reduction in earnings, which could affect our ability to raise additional capital necessary to comply with our loan covenants and/or the additional lender requirements described above.

Conference Call and Webcast

TOP Ships' management team will host a conference call on Tuesday, November 10, 2009, at 11:00 a.m. EST to discuss the Company's financial results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK), or (+44) (0) 1452 542 301 (from outside the US). Please quote "TOP Ships."

A replay of the conference call will be available until November 18, 2009. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 39394642#.

Slides and Audio webcast:

There will also be a simultaneous live webcast over the Internet, through the TOP Ships Inc. website (www.topships.org) under "Investor Relations." Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About TOP Ships Inc.

TOP Ships Inc., formerly known as TOP Tankers Inc., is an international provider of worldwide seaborne crude oil and petroleum products and drybulk transportation services. The Company operates a combined tanker and drybulk fleet as follows:

--  A fleet of eight double-hull Handymax tankers and an average age of
    2.6 years with a total carrying capacity of approximately 0.4 million dwt,
    of which 76% are sister ships. Two of the Company's Handymaxes are on time
    charter contracts with an average term of 9 months with both of the time
    charters including profit sharing agreements above their base rates. Six of
    the Company's Handymax tankers are fixed on a bareboat charter basis with
    an average term of 8.4 years.
--  A fleet of five drybulk vessels with a total carrying capacity of
    approximately 0.3 million dwt and an average age of 8.5 years, of which 47%
    are sister ships. All of the Company's drybulk vessels have fixed rate
    employment contracts for an average period of 23 months.
    

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect" "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, failure of a seller to deliver one or more vessels or of a buyer to accept delivery of one or more vessels, inability to procure acquisition financing, default by one or more charterers of our ships, changes in the demand for crude oil and petroleum products, changes in demand for dry bulk shipping capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

TABLES FOLLOW


TOP SHIPS INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Expressed in thousands of U.S. Dollars - except for share and per share
data)

                           Three Months Ended         Nine Months Ended
                              September 30,             September 30,
                        ------------------------  ------------------------
                            2008         2009         2008         2009
                        -----------  -----------  -----------  -----------
                        (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
REVENUES:

  Revenues              $    71,094  $    25,153  $   220,418  $    83,582

EXPENSES:

  Voyage expenses            13,327          367       36,944        2,952
  Charter hire expense       14,032           21       47,874       10,827
  Amortization of
   deferred gain on sale
   and leaseback of
   vessels and write-off
   of seller's credit       (15,197)         (49)     (17,900)      (7,799)
  Lease termination
   expense                        -            6            -       15,391
  Other vessel
   operating expenses        13,503        3,166       57,930       21,325
  Dry-docking costs             640          382        9,672        4,584
  Depreciation                5,856        8,550       26,808       22,859
  Sub-manager fees              243           68          974          351
  General and
   administrative
   expenses                   9,011        5,861       23,442       15,447
  Foreign currency
   (gains) / losses, net       (470)         109           81          118
  Gain on sale of
   vessels                  (18,978)           -      (19,178)           -
                        -----------  -----------  -----------  -----------

    Operating income
     (loss)                  49,127        6,672       53,771       (2,473)
                        -----------  -----------  -----------  -----------

OTHER INCOME (EXPENSES):

  Interest and finance
   costs                     (4,394)      (3,868)     (22,531)      (9,632)
  Loss on financial
   instruments               (3,331)      (2,569)     (14,938)      (2,305)
  Interest income               353            9        1,016          217
  Other, net                   (115)          85         (108)         (58)
                        -----------  -----------  -----------  -----------

    Total other
     expenses, net           (7,487)      (6,343)     (36,561)     (11,778)
                        -----------  -----------  -----------  -----------

Net Income (loss)       $    41,640  $       329  $    17,210  $   (14,251)
                        ===========  ===========  ===========  ===========

Earnings (loss) per
 share, basic and
 diluted                $      1.44  $      0.01  $      0.69  $     (0.52)
                        ===========  ===========  ===========  ===========

Weighted average common
 shares outstanding,
 basic and diluted       28,153,538   27,840,863   24,556,897   27,621,301
                        ===========  ===========  ===========  ===========

On January 1, 2009 the Company adopted ASC 260-10-45-61A "Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" (formerly known as FSP FASB 03-6-1). Upon
adoption of the new guidance, unvested share-based payment awards that
contain rights to receive non forfeitable dividends or dividend equivalents
(whether paid or unpaid) are participating securities, and thus, should be
included in the two-class method of computing earnings per share (EPS).
This standard was applied retroactively to all periods presented and
reduced basic EPS by $0.04 and $0.01 for the three and nine months ended
September 30, 2008, respectively.





TOP SHIPS INC.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Expressed in thousands of U.S. Dollars - except for share and per share
data)

                                                December 31,  September 30,
                                                    2008          2009
                                                ------------- -------------
ASSETS                                           (Unaudited)   (Unaudited)

CASH AND CASH EQUIVALENTS                       $      46,242 $           -
ADVANCES FOR VESSELS ACQUISITIONS / UNDER
 CONSTRUCTION                                         159,971             -
VESSELS, NET                                          414,515       688,317
RESTRICTED CASH                                        52,575        24,465
OTHER ASSETS                                           25,072        11,679
                                                ------------- -------------
  Total assets                                  $     698,375 $     724,461
                                                ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

FINANCIAL INSTRUMENTS                                  16,438        15,499
FAIR VALUE OF BELOW MARKET TIME CHARTER                 3,911             -
BANK DEBT                                             342,479       407,304
DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS         15,479             -
OTHER LIABILITIES                                      28,017        20,184
                                                ------------- -------------

Total liabilities                                     406,324       442,987

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY                                  292,051       281,474

                                                ------------- -------------
  Total liabilities and stockholders' equity    $     698,375 $     724,461
                                                ============= =============





TOP SHIPS INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in thousands of U.S. Dollars)

                                                     Nine Months Ended
                                                        September 30,
                                                  ------------------------
                                                      2008         2009
                                                  -----------  -----------
                                                  (Unaudited)  (Unaudited)
Cash Flows provided by Operating Activities:

  Net income (loss)                               $    17,210  $   (14,251)
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
    Depreciation and amortization                      32,156       24,887
    Stock-based compensation expense                    4,431        2,512
    Change in fair value of financial instruments      13,943         (939)
    Financial instrument termination payments          (7,500)           -
    Amortization of deferred gain on sale and
     leaseback of vessels and write-off of
     seller's credit                                  (17,900)      (7,799)
    Amortization of fair value below market time
     charter                                          (15,418)      (3,911)
    Loss on sale of other fixed assets                    112           93
    Gain on sale of vessels                           (19,178)           -
  Change in operating assets and liabilities            4,251          482
                                                  -----------  -----------

Net Cash provided by Operating Activities              12,107        1,074

Cash Flows provided by (used in) Investing
 Activities:

  Principal payments received under capital lease      42,950            -
  Principal payments paid under capital lease         (68,828)           -
  Advances for vessels acquisitions / under
   construction                                       (64,520)           -
  Vessel acquisitions and improvements               (118,142)    (136,663)
  Insurance claims recoveries                           2,285        1,374
  Increase in restricted cash                          (3,500)           -
  Decrease in restricted cash                               -       28,110
  Net proceeds from sale of vessels                   338,143            -
  Net proceeds from sale of other fixed assets             65          204
  Acquisition of other fixed assets                    (1,443)        (668)
                                                  -----------  -----------

Net Cash provided by (used in) Investing
 Activities                                           127,010     (107,643)

Cash Flows (used in) provided by Financing
 Activities:

  Proceeds from long-term debt                        180,789      111,708
  Payments of long-term debt                         (307,676)     (45,221)
  Financial instrument upfront receipt                  1,500            -
  Financial instrument termination payments                 -       (5,000)
  Proceeds from issuance of common stock, net of
   issuance costs                                      50,601        2,160
  Cancellation of fractional shares                        (2)           -
  Repurchase and cancellation of common stock               -         (732)
  Payment of financing costs                           (2,631)      (2,588)
                                                  -----------  -----------

Net Cash (used in) provided by Financing
 Activities                                           (77,419)      60,327

Net increase (decrease) in cash and cash
 equivalents                                           61,698      (46,242)

Cash and cash equivalents at beginning of period       26,012       46,242
                                                  -----------  -----------

Cash and cash equivalents at end of period        $    87,710  $         0
                                                  ===========  ===========

SUPPLEMENTAL CASH FLOW INFORMATION

  Interest paid                                   $    17,411  $    11,915
                                                  ===========  ===========

NON-CASH TRANSACTIONS

  Fair value below market time charter            $    12,647  $         -
                                                  ===========  ===========
  Amounts owed for capital expenditures at the
   end of period                                  $        47  $       126
                                                  ===========  ===========

Contact Information

  • Contacts:

    Investor Relations / Media:
    Ramnique Grewal
    Vice President
    Capital Link, Inc.
    230 Park Avenue, Suite 1536
    New York, N.Y. 10169
    Tel.: (212) 661-7566
    Fax: (212) 661-7526
    E-Mail: topships@capitallink.com

    Company:
    Alexandros Tsirikos
    Chief Financial Officer
    TOP Ships Inc.
    1, Vassilissis Sofias Str. & Meg.
    Alexandrou Str.
    151 24, Maroussi, Greece
    Tel: +30 210 812 8180
    Email: atsirikos@topships.org