EX-99 2 jvsaleex99.htm
Exhibit 99

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Overview

On October 7, 2019, International Seaways, Inc. (the “Company” or “INSW”) sold its 49.9% interest in its joint venture with Qatar Gas Transport Company Ltd. (Nakilat) (“Nakilat”) which owns four liquefied natural gas carriers to Nakilat for $123 million in cash (the “Transaction”).

Basis of preparation

The unaudited pro forma condensed consolidated financial statements of the Company as set forth below are comprised of our unaudited pro forma condensed consolidated balance sheet as of June 30, 2019 and our unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2018 and the six months ended June 30, 2019. The unaudited pro forma condensed consolidated financial statements of the Company have been derived from our historical audited consolidated financial statements for the year ended December 31, 2018, and our historical unaudited condensed consolidated financial statements for the six months ended June 30, 2019 and have been prepared in accordance with Article 11 of Regulation S-X. Such unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the audited consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, (ii) the unaudited condensed consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2019 included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 and (iii) the risk factors outlined in detail under the caption “Risk Factors” within each of the Reports described above.

The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2019 and for the year ended December 31, 2018, reflect the Company’s results as if the Transaction had occurred on January 1, 2018. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2019 gives effect to the Transaction as if it occurred on June 30, 2019.

The unaudited pro forma condensed consolidated financial statements are subject to the assumptions and adjustments described in the accompanying notes. The pro forma adjustments are based on available information and assumptions that the Company’s management believes are reasonable, that reflect the impacts of adjustments directly attributable to the Transaction that are factually supportable, and for purposes of the statements of operations, are expected to have a continuing impact on the Company. The unaudited pro forma condensed consolidated statements of operations do not give effect to items of expense that, although directly attributable to the Transaction, will not have a continuing impact on the statement of operations.

The unaudited pro forma condensed consolidated financial statements are provided for illustrative and information purposes only and are not intended to represent or necessarily be indicative of the Company’s results of operations or financial condition had the Transaction been completed on the dates indicated, nor do they purport to project our results of operations or financial condition for any future period or as of any future date.

 
INTERNATIONAL SEAWAYS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2019
DOLLARS IN THOUSANDS
(UNAUDITED)
 
 
  
INSW Historical
    
Investment in LNG JV (a)
    
Pro Forma
Adjustments for
LNG Sale
    
Pro Forma INSW Continuing Operations
  
ASSETS
                        
Current Assets:
                        
Cash and cash equivalents
  
$
91,662
    
$
36
    
$
-
    
$
91,698
  
Voyage receivables, including unbilled
    
74,460
      
-
      
-
      
74,460
  
Other receivables
    
5,576
      
-
      
-
      
5,576
  
Inventories
    
4,110
      
-
      
-
      
4,110
  
Prepaid expenses and other current assets
    
6,916
      
-
      
-
      
6,916
  
Current portion of derivative asset
    
30
      
-
      
-
      
30
  
  Total Current Assets
    
182,754
      
36
      
-
      
182,790
  
Restricted cash
    
58,630
      
122,790
      
-
      
181,420
  
Vessels and other property, less accumulated depreciation
    
1,291,862
      
-
      
-
      
1,291,862
  
Vessel held for sale
    
6,754
      
-
      
-
      
6,754
  
Deferred drydock expenditures, net
    
23,382
      
-
      
-
      
23,382
  
Operating lease right-of-use assets
    
33,216
      
-
      
-
      
33,216
  
Investments in and advances to affiliated companies
    
265,959
      
(116,203
)
    
-
      
149,756
  
Long-term derivative asset
    
26
      
-
      
-
      
26
  
Other assets
    
2,626
      
-
      
-
      
2,626
  
  Total Assets
  
$
1,865,209
    
$
6,623
    
$
-
    
$
1,871,832
  
                                 
LIABILITIES AND EQUITY
                                
Current Liabilities:
                                
Accounts payable, accrued expenses and other current liabilities
  
$
34,427
    
$
36
    
$
-
    
$
34,463
  
Current portion of operating lease liabilities
    
11,481
      
-
      
-
      
11,481
  
Current installments of long-term debt
    
57,680
      
-
      
-
      
57,680
  
Current portion of derivative liability
    
1,912
      
-
      
-
      
1,912
  
  Total Current Liabilities
    
105,500
      
36
      
-
      
105,536
  
Long-term operating lease liabilities
    
19,030
      
-
      
-
      
19,030
  
Long-term debt
    
736,826
      
-
      
-
      
736,826
  
Long-term derivative liability
    
6,386
      
-
      
-
      
6,386
  
Other liabilities
    
2,129
      
-
      
-
      
2,129
  
Total Liabilities
    
869,871
      
36
      
-
      
869,907
  
                                 
Commitments and contingencies
                                
                                 
Equity:
                                
Capital
    
1,310,731
      
-
      
-
      
1,310,731
  
Accumulated deficit
    
(275,111
)
    
(14,847
)
    
-
      
(289,958
)
     
1,035,620
      
(14,847
)
    
-
      
1,020,773
  
Accumulated other comprehensive loss
    
(40,282
)
    
21,434
      
-
      
(18,848
)
Total Equity
    
995,338
      
6,587
      
-
      
1,001,925
  
Total Liabilities and Equity
  
$
1,865,209
    
$
6,623
    
$
-
    
$
1,871,832
  
 
See accompanying notes to the unaudited pro forma condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
 
 
  
INSW Historical
    
Investment in LNG JV (a)
    
Pro Forma
Adjustments for
LNG Sale
      
Pro Forma INSW Continuing Operations
  
Shipping Revenues:
                  
 
      
Pool revenues, including revenues from companies accounted for by the equity method
  
$
112,350
    
$
-
    
$
-
  
 
  
$
112,350
  
Time and bareboat charter revenues
    
12,061
      
-
      
-
  
 
    
12,061
  
Voyage charter revenues
    
46,473
      
-
      
-
  
 
    
46,473
  
 
    
170,884
      
-
      
-
  
 
    
170,884
  
 
                        
 
        
Operating Expenses:
                        
 
        
Voyage expenses
    
14,368
      
-
      
-
  
 
    
14,368
  
Vessel expenses
    
61,284
      
-
      
-
  
 
    
61,284
  
Charter hire expenses
    
30,218
      
-
      
-
  
 
    
30,218
  
Depreciation and amortization
    
37,747
      
-
      
-
  
 
    
37,747
  
General and administrative
    
13,070
      
-
      
-
        
13,070
  
Provision for credit losses
    
1,277
      
-
      
-
        
1,277
  
Third-party debt modification fees
    
30
      
-
      
-
        
30
  
Loss/(gain) on disposal of vessels and other property, net of impairments
    
1,500
      
-
                
1,500
  
Total operating expenses
    
159,494
      
-
      
-
  
 
    
159,494
  
(Loss)/income from vessel operations
    
11,390
      
-
      
-
  
 
    
11,390
  
Equity in income of affiliated companies
    
16,085
      
(6,712
)
    
-
        
9,373
  
Operating income/(loss)
    
27,475
      
(6,712
)
    
-
  
 
    
20,763
  
Other income/(expense)
    
1,875
      
-
      
1,408
  
(c)
    
3,283
  
Income before interest expense and income taxes
    
29,350
      
(6,712
)
    
1,408
  
 
    
24,046
  
Interest expense
    
(34,976
)
    
-
      
122
  
(b)
    
(34,854
)
Loss before income taxes
    
(5,626
)
    
(6,712
)
    
1,530
        
(10,808
)
Income tax provision
    
-
      
-
      
-
        
-
  
Net Loss
  
$
(5,626
)
    
(6,712
)
  
$
1,530
  
 
  
$
(10,808
)
 
                        
 
        
Weighted Average Number of Common Shares Outstanding:
                        
 
        
Basic
    
29,200,897
                  
 
    
29,200,897
  
Diluted
    
29,200,897
                  
 
    
29,200,897
  
 
                        
 
        
Per Share Amounts:
                        
 
        
Basic and diluted net loss per share
  
$
(0.19
)
                
     
  
$
(0.37
)
 
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
 

   
INTERNATIONAL SEAWAYS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
 
 
  
INSW Historical
    
Investment in LNG JV (a)
    
Pro Forma
Adjustments for
LNG Sale
      
Pro Forma INSW Continuing Operations
  
Shipping Revenues:
                  
 
      
Pool revenues, including revenues from companies accounted for by the equity method
  
$
177,206
    
$
-
    
$
-
  
 
  
$
177,206
  
Time and bareboat charter revenues
    
25,961
      
-
      
-
  
 
    
25,961
  
Voyage charter revenues
    
67,194
      
-
      
-
  
 
    
67,194
  
 
    
270,361
      
-
      
-
  
 
    
270,361
  
 
                        
 
        
Operating Expenses:
                        
 
        
Voyage expenses
    
27,261
      
-
      
-
  
   
27,261
  
Vessel expenses
    
135,003
      
-
      
-
  
   
135,003
  
Charter hire expenses
    
44,910
      
-
      
-
  
   
44,910
  
Depreciation and amortization
    
72,428
      
-
      
-
  
   
72,428
  
General and administrative
    
24,304
      
-
      
-
  
   
24,304
  
Third-party debt modification fees
    
1,306
      
-
      
-
  
   
1,306
  
Separation and transition costs
    
-
      
-
      
-
  
   
-
  
Loss on disposal of vessels and other property, including impairments
    
19,680
      
-
      
-
  
   
19,680
  
Total Operating Expenses
    
324,892
      
-
      
-
  
   
324,892
  
(Loss)/income from vessel operations
    
(54,531
)
    
-
      
-
  
   
(54,531
)
Equity in income of affiliated companies
    
29,432
      
(9,850
)
        
   
19,582
  
Operating (loss)/income
    
(25,099
)
    
(9,850
)
    
-
  
   
(34,949
)
Other expense
    
(3,715
)
    
-
      
2,188
  
(c)
    
(1,527
)
(Loss)/income before interest expense, reorganization items and income taxes
    
(28,814
)
    
(9,850
)
    
2,188
  

   
(36,476
)
Interest expense
    
(60,231
)
    
-
      
235
  
(b)
    
(59,996
)
Loss before reorganization items and income taxes
    
(89,045
)
    
(9,850
)
    
2,423
  
   
(96,472
)
Reorganization items, net
    
-
      
-
      
-
  
   
-
  
Loss before income taxes
    
(89,045
)
    
(9,850
)
    
2,423
  
   
(96,472
)
Income tax benefit/(provision)
    
105
      
-
      
-
  
   
105
  
Net Loss
  
$
(88,940
)
    
(9,850
)
  
$
2,423
  
 
$
(96,367
)
 
                        
       
Weighted Average Number of Common Shares Outstanding:
                        
       
Basic
    
29,136,634
                  
   
29,136,634
  
Diluted
    
29,136,634
                  
   
29,136,634
  
 
                        
       
Per Share Amounts:
                        
       
Basic and diluted net loss per share
  
$
(3.05
)
                
 
$
(3.31
)
 
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
 


Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements

(a)
Represents the elimination of the Company’s investment in its joint venture with Nakilat, which had been accounted for as an equity method investment, and its associated interest in the income and other comprehensive loss generated by such joint venture. Upon the sale, the Company’s share of the unrealized losses associated with interest rate swaps held by the joint venture were reclassified to earnings and are reflected as an increase in the “Accumulated deficit” line item in the unaudited pro forma condensed consolidated balance sheet as of June 30, 2019. The investment was sold for net cash proceeds of $122,826, which would have resulted in a gain on sale being recorded by the Company had the Transaction taken place on either January 1, 2018 or June 30, 2019. The Company’s debt agreements restrict the use of such cash proceeds from asset sales and thus the net cash proceeds less $36 of direct transaction costs incurred by the Company are reflected in the “Restricted cash” line item in the unaudited pro forma condensed consolidated balance sheet as of June 30, 2019. The direct transaction costs are reflected as an increase to the “Accounts payable, accrued expenses and other current liabilities” line item in the unaudited pro forma condensed consolidated balance sheet as of June 30, 2019.

(b)
Represents adjustments to exclude contractual fees that the Company paid to Nakilat and Overseas Shipholding Group, Inc. (“OSG”) in association with performance guarantees provided by each of Nakilat and OSG in favor of the charterer of the joint venture’s vessels. Such OSG guarantees and the Company’s obligation to pay fees in connection with such OSG and Nakilat guarantees as well as performance guarantees provided by the Company were all terminated on the date of the Transaction.

(c)
Represents adjustments to include estimated interest income that could have been earned on the cash proceeds received as a part of the Transaction, as the Company has various alternatives as to how it will employ the cash, but at a minimum it would have invested the net cash proceeds in money market accounts in accordance with the terms of the Company’s debt agreements. In arriving at the estimated interest income, average interest rates of 1.78% for the year ended December 31, 2018 and 2.29% for the six months ended June 30, 2019 were used.