UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Emerging growth company | |
Non-accelerated filer ☐ | Smaller reporting company |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Former name, former address and former fiscal year, if changed since last report
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date. The number of shares outstanding of the issuer’s common stock as of May 2, 2022: common stock, no par value
INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DOLLARS IN THOUSANDS
(UNAUDITED)
March 31, 2022 |
| December 31, 2021 | ||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Voyage receivables, net of allowance for credit losses of $ | ||||||
including unbilled receivables of $ | | | ||||
Other receivables | | | ||||
Inventories | | | ||||
Prepaid expenses and other current assets | | | ||||
Current portion of derivative asset | | | ||||
Vessels held for sale | | | ||||
Total Current Assets | | | ||||
Restricted cash | | | ||||
Vessels and other property, less accumulated depreciation of $ | | | ||||
Vessels construction in progress | | | ||||
Deferred drydock expenditures, net | | | ||||
Operating lease right-of-use assets | | | ||||
Investments in and advances to affiliated companies | | | ||||
Long-term derivative asset | | | ||||
Time charter contracts acquired, net | | | ||||
Other assets | | | ||||
Total Assets | $ | | $ | | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable, accrued expenses and other current liabilities | $ | | $ | | ||
Current portion of operating lease liabilities | | | ||||
Current installments of long-term debt | | | ||||
Current portion of derivative liability | | | ||||
Total Current Liabilities | | | ||||
Long-term operating lease liabilities | | | ||||
Long-term debt | | | ||||
Long-term derivative liability | | | ||||
Other liabilities | | | ||||
Total Liabilities | | | ||||
Commitments and contingencies | ||||||
Equity: | ||||||
Capital - | ||||||
shares and | | | ||||
Accumulated deficit | ( | ( | ||||
| | |||||
Accumulated other comprehensive loss | ( | ( | ||||
Total equity before noncontrolling interests | | | ||||
Noncontrolling interests | | | ||||
Total Equity | | | ||||
Total Liabilities and Equity | $ | | $ | |
See notes to condensed consolidated financial statements
1
INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
Three Months Ended March 31, | ||||||
2022 | 2021 | |||||
Shipping Revenues: | ||||||
Pool revenues, including $ | ||||||
from companies accounted for by the equity method | $ | | $ | | ||
Time and bareboat charter revenues | | | ||||
Voyage charter revenues | | | ||||
| | |||||
Operating Expenses: | ||||||
Voyage expenses | | | ||||
Vessel expenses | | | ||||
Charter hire expenses | | | ||||
Depreciation and amortization | | | ||||
General and administrative | | | ||||
Third-party debt modification fees | | | ||||
(Gain)/loss on disposal of vessels and other assets, net of impairments | ( | | ||||
Total operating expenses | | | ||||
Loss from vessel operations | ( | ( | ||||
Equity in income of affiliated companies | | | ||||
Operating loss | ( | ( | ||||
Other (expense)/income | ( | | ||||
Loss before interest expense and income taxes | ( | ( | ||||
Interest expense | ( | ( | ||||
Loss before income taxes | ( | ( | ||||
Income tax provision | ( | | ||||
Net loss attributable to the Company | $ | ( | $ | ( | ||
Weighted Average Number of Common Shares Outstanding: | ||||||
Basic and diluted | | | ||||
Per Share Amounts: | ||||||
Basic and diluted net loss per share | ( | ( |
See notes to condensed consolidated financial statements
2
INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
DOLLARS IN THOUSANDS
(UNAUDITED)
Three Months Ended March 31, | ||||||
2022 | 2021 | |||||
Net loss | $ | ( | $ | ( | ||
Other comprehensive income/(loss), net of tax: | ||||||
Net change in unrealized losses on cash flow hedges | | | ||||
Defined benefit pension and other postretirement benefit plans: | ||||||
Net change in unrecognized prior service costs | | ( | ||||
Net change in unrecognized actuarial losses | | ( | ||||
Other comprehensive income, net of tax | | | ||||
Comprehensive loss attributable to the Company | $ | ( | $ | ( |
See notes to condensed consolidated financial statements
3
INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)
Three Months Ended March 31, | ||||||
2022 | 2021 | |||||
Cash Flows from Operating Activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Items included in net loss not affecting cash flows: | ||||||
Depreciation and amortization | | | ||||
Loss on write-down of vessels and other assets | | | ||||
Amortization of debt discount and other deferred financing costs | | | ||||
Amortization of time charter hire contracts acquired | | | ||||
Deferred financing costs write-off | | | ||||
Stock compensation | | | ||||
Earnings of affiliated companies | ( | ( | ||||
Write-off of registration statement costs | | | ||||
Other – net | | | ||||
Items included in net loss related to investing and financing activities: | ||||||
(Gain)/loss on disposal of vessels and other assets, net | ( | | ||||
Cash distributions from affiliated companies | | | ||||
Payments for drydocking | ( | ( | ||||
Insurance claims proceeds related to vessel operations | | | ||||
Changes in operating assets and liabilities: | ||||||
Increase in receivables | ( | ( | ||||
Decrease in deferred revenue | | ( | ||||
Net change in inventories, prepaid expenses and other current assets, accounts | ||||||
payable, accrued expenses and other current and long-term liabilities | ( | ( | ||||
Net cash used in operating activities | ( | ( | ||||
Cash Flows from Investing Activities: | ||||||
Expenditures for vessels and vessel improvements | ( | ( | ||||
Proceeds from disposal of vessels and other property, net | | ( | ||||
Expenditures for other property | ( | ( | ||||
Investments in and advances to affiliated companies, net | ( | | ||||
Net cash used in investing activities | ( | ( | ||||
Cash Flows from Financing Activities: | ||||||
Extinguishment of debt | ( | | ||||
Payments on debt | ( | ( | ||||
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs | | | ||||
Payments on sale and leaseback financing | ( | | ||||
Borrowings on revolving credit facilities | | | ||||
Cash payments on derivatives containing other-than-insignificant financing element | | ( | ||||
Cash dividends paid | ( | ( | ||||
Cash paid to tax authority upon vesting of stock-based compensation | ( | ( | ||||
Net cash provided by/(used in) financing activities | | ( | ||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | ||||
Cash, cash equivalents and restricted cash at beginning of year | | | ||||
Cash, cash equivalents and restricted cash at end of period | $ | | $ | |
See notes to condensed consolidated financial statements
4
INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
DOLLARS IN THOUSANDS
(UNAUDITED)
Accumulated | |||||||||||||||
Other | |||||||||||||||
Accumulated | Comprehensive | Noncontrolling | |||||||||||||
Capital | Deficit | Loss | Interests | Total | |||||||||||
For the three months ended | |||||||||||||||
Balance at January 1, 2022 | $ | | $ | ( | $ | ( | $ | | $ | | |||||
Net loss | | ( | | | ( | ||||||||||
Other comprehensive income | | | | | | ||||||||||
Dividends declared | ( | | | | ( | ||||||||||
Forfeitures of vested restricted stock awards | ( | | | | ( | ||||||||||
Compensation relating to restricted stock awards | | | | | | ||||||||||
Compensation relating to restricted stock units awards | | | | | | ||||||||||
Compensation relating to stock option awards | | | | | | ||||||||||
Balance at March 31, 2022 | $ | | $ | ( | $ | ( | $ | | $ | | |||||
Balance at January 1, 2021 | $ | | $ | ( | $ | ( | — | $ | | ||||||
Net loss | | ( | | | ( | ||||||||||
Other comprehensive income | | | | | | ||||||||||
Dividends declared | ( | | | — | ( | ||||||||||
Forfeitures of vested restricted stock awards | ( | | | | ( | ||||||||||
Compensation relating to restricted stock awards | | | | | | ||||||||||
Compensation relating to restricted stock units awards | | | | | | ||||||||||
Compensation relating to stock option awards | | | | | | ||||||||||
Balance at March 31, 2021 | $ | | $ | ( | $ | ( | $ | — | $ | |
See notes to condensed consolidated financial statements
5
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 — Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements include the accounts of International Seaways, Inc. (“INSW”), a Marshall Islands corporation, and its wholly owned subsidiaries. Unless the context indicates otherwise, references to “INSW”, the “Company”, “we”, “us” or “our”, refer to International Seaways, Inc. and its subsidiaries. As of March 31, 2022, the Company’s operating fleet consisted of
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by generally accepted accounting principles in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
All intercompany balances and transactions within INSW have been eliminated. Investments in 50% or less owned affiliated companies, in which INSW exercises significant influence, are accounted for by the equity method.
Note 2 — Merger Transaction:
Completion of Merger Transaction
On July 16, 2021 (the “Effective Time”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of March 30, 2021, by and among INSW, Diamond S Shipping Inc., a Republic of the Marshall Islands corporation (“Diamond S”), and Dispatch Transaction Sub, Inc., a Republic of the Marshall Islands corporation and wholly-owned subsidiary of INSW (“Merger Sub”), Merger Sub merged with and into Diamond S (the “Merger”), with Diamond S surviving such merger as a wholly owned subsidiary of INSW. Immediately following the Effective Time, the Company contributed all of the outstanding stock of Diamond S to International Seaways Operating Corporation, a direct wholly-owned subsidiary of the Company.
At the Effective Time, each common share of Diamond S (the “Diamond S Common Shares”) issued and outstanding immediately prior to the Effective Time (excluding Diamond S Common Shares owned by Diamond S, the Company, Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries) was cancelled in exchange for the right to receive
As provided for under the terms of the Merger Agreement, on July 15, 2021, prior to the Effective Time, INSW paid a special dividend to its shareholders of record as of July 14, 2021 in an aggregate amount equal to $
6
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3 — Significant Accounting Policies:
For a description of all of the Company’s material accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K. The following is a summary of any changes or updates to the Company’s critical accounting policies for the current period:
Concentration of Credit Risk — The allowance for credit losses is recognized as an allowance or contra-asset and reflects our best estimate of probable losses inherent in the voyage receivables balance. Activity for allowance for credit losses is summarized as follows:
(Dollars in thousands) | Allowance for Credit Losses - | ||
Balance at December 31, 2021 | $ | | |
Reversal of expected credit losses | ( | ||
Balance at March 31, 2022 | $ | |
We are also exposed to credit losses from off-balance sheet exposures related to guarantees of joint venture debt. See Note 7, “Equity Method Investments,” for more information on these off-balance sheet exposures.
During the three months ended March 31, 2022 and 2021, the Company did not have any individual customers who accounted for 10% or more of its revenues apart from the pools in which it participates. The pools in which the Company participates accounted in aggregate for
Deferred finance charges — Finance charges, excluding original issue discount, incurred in the arrangement and/or amendments resulting in the modification of debt are deferred and amortized to interest expense on either an effective interest method or straight-line basis over the term of the related debt. Unamortized deferred finance charges of $
Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized during the three months ended March 31, 2022 totaled $
Time Charter Contracts Acquired — The Company’s intangible assets consist of charter-out contracts with contractual rates in excess of fair market charter rates that were acquired as part of the Merger. These assets are amortized on a straight-line basis as a reduction of time charter revenues over the remaining term of such charters. For the three months ended March 31, 2022, amortization totaled $
Recently Issued Accounting Standards — In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (ASC 848),
7
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
which provides relief for companies preparing for discontinuation of interest rates such as LIBOR. A contract modification is eligible to apply the optional relief to account for the modifications as a continuation of the existing contracts without additional analysis and consider embedded features to be clearly and closely related to the host contract without reassessment, if all of the following criteria are met: (1) contract references a rate that will be discontinued; (2) modified terms directly replace (or have potential to replace) this reference rate; and (3) changes to any other terms that change (or have potential to change) amount and timing of cash flows must be related to replacement of the reference rate. In addition, this guidance provides relief from certain hedge accounting requirements. Hedge accounting may continue uninterrupted when critical terms change due to reference rate reform. For cash flow hedges, entities can (1) disregard potential discontinuation of a referenced interest rate when assessing whether a hedged forecasted interest payment is probable; (2) continue hedge accounting upon a change in the hedged risk as long as the hedge is still highly effective; (3) assess effectiveness of the hedge relationship in ways that essentially disregards a potential mismatch in the variable rate indices between the hedging instrument and the hedged item; and (4) disregard the requirement that individual hedged transactions must share the same risk exposure for hedges of portfolios of forecasted transactions that reference a rate affected by reference rate reform. Relief provided by this ASU is optional and expires December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (ASC 848) to refine the scope of ASC 848 and to clarify some of its guidance. The Company has determined that its primary exposure to LIBOR is in relation to its floating rate debt facilities and the interest rate derivatives to which it is a party. On November 30, 2020, the benchmark administrator for the U.S. Dollar (“USD”) LIBOR announced a proposal to extend the publication of the most commonly used USD LIBOR settings until June 30, 2023. In light of this proposal, in an interagency statement, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued guidance, strongly encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021. Only in limited circumstances will it be appropriate for banks to enter into new contracts referencing USD LIBOR after December 31, 2021. The principal objective, and result, of these actions appears to be that legacy USD LIBOR-based instruments (i.e., those maturing after December 31, 2021) may continue to use USD LIBOR as a reference rate through June 30, 2023, without undermining the regulators’ determination that LIBOR should not be available for any other purpose. On January 25, 2021, the International Swaps and Derivatives Association, Inc. (“ISDA”), published new fallback provisions for derivatives linked to key interbank offered rates (“IBOR”) which will be incorporated into all new derivatives contracts that reference ISDA’s standard interest rate derivatives definitions. Such fallback provisions will also be included in legacy non-cleared derivatives if the counterparties have bilaterally agreed to include them or both have adhered to the IBOR fallback protocol. The Company has engaged and will continue to engage in discussions with its lending banks and the counterparties to its interest rate derivative contracts in advance of the June 30, 2023 sunset date for the USD LIBOR reference rate settings used in its agreements to evaluate the Company’s options. Based on information available today, the Company’s current view is that the Secured Overnight Financing Rate (“SOFR”) will be the alternative reference rate that the Company’s LIBOR-based agreements will transition to as the sunset date draws closer.
Note 4 — Earnings per Common Share:
Basic earnings per common share is computed by dividing earnings, after the deduction of dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period.
The computation of diluted earnings per share assumes the issuance of common stock for all potentially dilutive stock options and restricted stock units not classified as participating securities. Participating securities are defined by ASC 260, Earnings Per Share, as unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents and are included in the computation of earnings per share pursuant to the two-class method.
Weighted average shares of unvested restricted common stock considered to be participating securities totaled
8
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Reconciliations of the numerator of the basic and diluted earnings per share computations are as follows:
Three Months Ended March 31, | ||||||
(Dollars in thousands) | 2022 | 2021 | ||||
Net (loss)/income attributable to the Company allocated to: | ||||||
Common Stockholders | $ | ( | $ | ( | ||
Participating securities | | | ||||
$ | ( | $ | ( |
For the three months ended March 31, 2022 and 2021 earnings per share calculations, there were
Note 5 — Business and Segment Reporting:
The Company has
Information about the Company’s reportable segments as of and for the three months ended March 31, 2022 and 2021 follows:
Crude | Product | |||||||||||
(Dollars in thousands) | Tankers | Carriers | Other | Totals | ||||||||
Three months ended March 31, 2022: | ||||||||||||
Shipping revenues | $ | | $ | | $ | | $ | | ||||
Time charter equivalent revenues | | | | | ||||||||
Depreciation and amortization | | | | | ||||||||
Loss/(gain) on disposal of vessels and other assets, including impairments | | ( | | ( | ||||||||
Adjusted income/(loss) from vessel operations | ( | | ( | | ||||||||
Equity in income of affiliated companies | | | | | ||||||||
Investments in and advances to affiliated companies at March 31, 2022 | | | | | ||||||||
Adjusted total assets at March 31, 2022 | | | | | ||||||||
Expenditures for vessels and vessel improvements | | | | | ||||||||
Payments for drydocking | | | | | ||||||||
Three months ended March 31, 2021: | ||||||||||||
Shipping revenues | $ | | $ | | $ | | $ | | ||||
Time charter equivalent revenues | | | | | ||||||||
Depreciation and amortization | | | | | ||||||||
Loss on disposal of vessels and other assets | | | | | ||||||||
Adjusted loss from vessel operations | ( | ( | ( | ( | ||||||||
Equity in income of affiliated companies | | | | | ||||||||
Investments in and advances to affiliated companies at March 31, 2021 | | | | | ||||||||
Adjusted total assets at March 31, 2021 | | | | | ||||||||
Expenditures for vessels and vessel improvements | | | | | ||||||||
Payments for drydocking | | | | |
9
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Reconciliations of time charter equivalent (“TCE”) revenues of the segments to shipping revenues as reported in the condensed statements of operations follow:
Three Months Ended March 31, | ||||||
(Dollars in thousands) | 2022 | 2021 | ||||
Time charter equivalent revenues | $ | | $ | | ||
Add: Voyage expenses | | | ||||
Shipping revenues | $ | | $ | |
Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represent shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provide additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.
Reconciliations of adjusted income/(loss) from vessel operations of the segments to loss before income taxes, as reported in the condensed consolidated statements of operations follow:
Three Months Ended March 31, | ||||||
(Dollars in thousands) | 2022 | 2021 | ||||
Total adjusted income/(loss) from vessel operations of all segments | $ | | $ | ( | ||
General and administrative expenses | ( | ( | ||||
Third-party debt modification fees | ( | | ||||
Gain/(loss) on disposal of vessels and other assets, including impairments | | ( | ||||
Consolidated loss from vessel operations | ( | ( | ||||
Equity in income of affiliated companies | | | ||||
Other (expense)/income | ( | | ||||
Interest expense | ( | ( | ||||
Loss before income taxes | $ | ( | $ | ( |
Reconciliations of total assets of the segments to amounts included in the condensed consolidated balance sheets follow:
(Dollars in thousands) | March 31, 2022 | March 31, 2021 | ||||
Adjusted total assets of all segments | $ | | $ | | ||
Corporate unrestricted cash and cash equivalents | | | ||||
Restricted cash | | | ||||
Other unallocated amounts | | | ||||
Consolidated total assets | $ | | $ | |
Note 6 — Vessels:
Impairment of Vessels and Other Property
The Company gave consideration as to whether events or changes in circumstances had occurred since December 31, 2021, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. During the quarter ended March 31, 2022, the Company concluded that the contracted sales of one 2004-built Panamax and one 2006-built Handysize product carrier resulted in the recognition of held for sale impairments charges aggregating $
In addition, the Company concluded that the subsequent execution of a memorandum of agreement in April 2022 for the sale of a 2006-built Handysize product carrier constituted an impairment triggering event. In developing estimates of undiscounted future cash
10
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
flows for performing Step 1 of the impairment test as of March 31, 2022, a 100% probability was attributed to the Handysize product carrier being sold before the end of its useful life. The carrying value for the product carrier was determined to be unrecoverable in the Step 1 test. In estimating the fair value of the vessel for the purposes of Step 2 of the impairment test, the Company considered the market approach by using the sale price per the memorandum of agreement. Based on the test performed, an impairment charge of $
The Company also recognized an aggregate loss of approximately $
Vessel Acquisitions and Construction Commitments
In January 2022, the Company entered into memoranda of agreements for the sale of a 2010-built MR for a sale price of $
On March 11, 2021, the Company entered into agreements to construct
Disposal/Sales of Vessels
As discussed above, during the quarter ended March 31, 2022, the Company delivered a 2010-built MR to buyers and recognized an aggregate gain of $
In addition, in April 2022, the Company entered into memoranda of agreements for the sale of its three remaining 2006-built Handysize product carriers and
Note 7 — Equity Method Investments:
Investments in affiliated companies include joint ventures accounted for using the equity method. As of March 31, 2022, the Company had a
The FSO Joint Venture is a party to a number of contracts: (a) the FSO Joint Venture is an obligor pursuant to a guarantee facility agreement dated as of July 14, 2017, by and among, the FSO Joint Venture, ING Belgium NV/SA, as issuing bank, and Euronav and INSW, as guarantors (the “Guarantee Facility”); (b) the FSO Joint Venture is party to
11
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Service Contracts”) and (c) the FSO Joint Venture is a borrower under a $
The FSO Joint Venture drew down on a $
Investments in and advances to affiliated companies as reflected in the accompanying condensed consolidated balance sheet as of March 31, 2022 consisted of: FSO Joint Venture of $
A condensed summary of the results of operations of the joint ventures follows:
Three Months Ended March 31, | ||||||
(Dollars in thousands) | 2022 | 2021 | ||||
Shipping revenues | $ | | $ | | ||
Ship operating expenses | ( | ( | ||||
Income from vessel operations | | | ||||
Interest expense | ( | ( | ||||
Income tax provision | ( | ( | ||||
Net income | $ | | $ | |
Note 8 — Variable Interest Entities (“VIEs”):
Consolidated VIEs
Diamond Anglo Ship Management Pte. Ltd. — Diamond Anglo Ship Management Pte. Ltd. (“DASM”) was formed in January 2018 by Diamond S and Anglo Eastern Investment Holdings Ltd. (“AE Holdings”), a third-party, to provide ship management services to some of Diamond S’ vessels. DASM is owned
Unconsolidated VIEs
As of March 31, 2022, all of the
12
INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table presents the carrying amounts of assets and liabilities in the condensed consolidated balance sheet related to the unconsolidated VIEs as of March 31, 2022:
(Dollars in thousands) | Condensed | |||||
Investments in Affiliated Companies | $ | |
In accordance with accounting guidance, the Company evaluated its maximum exposure to loss related to these unconsolidated VIEs by assuming a complete loss of the Company’s investment in these VIEs. The table below compares the Company’s liability in the condensed consolidated balance sheet to the maximum exposure to loss at March 31, 2022:
(Dollars in thousands) | Condensed | Maximum Exposure to | ||||
Other Liabilities | $ | – | $ | |
In addition, as of March 31, 2022, the Company had approximately $
Note 9 — Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures:
The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:
(Dollars in thousands) | March 31, 2022 | December 31, 2021 | Fair Value Level | ||||||
Cash and cash equivalents (1) | $ | | $ | | Level 1 | ||||
$ |