FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of September 2006
Commission File Number 000-51141
DRYSHIPS INC.
80 Kifissias Avenue
Amaroussion 15125, Athens Greece
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-______________.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 1 are the interim unaudited financial statements and
related information and data of DryShips Inc. (the "Company") as of and for the
period June 30, 2006.
This Report on Form 6-K is hereby incorporated by reference into the Company's
Registration Statement on Form F-3/A, File no. 333-133482, filed on May 3, 2006.
Exhibit 1
MANAGEMENT'S DISCUSSION AND ANLYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise specified herein, references to "DryShips or the "Company"
shall include DryShips Inc. and its applicable subsidiaries.
Three Months ended June 30, 2006
For the second quarter ended June 30, 2006, Net Revenues (voyage revenues less
voyage expenses) amounted to $51.5 million as compared to $74.3 million for the
second quarter ended June 30, 2005 and Operating Income was $23.4 million for
the second quarter ended June 30, 2006 as compared to $49.8 million for the
quarter ended June 30, 2005. Net Income for the second quarter of 2006 was $12.1
million after non recurring items totalling $3.8 million, as compared to $42.5
million in the quarter ended June 30, 2005 and Earnings Per Share (EPS)
calculated on 30.41 million weighted average basic and diluted shares
outstanding were $0.40 as compared to $1.40 in the quarter ended June 30, 2005
calculated on 30.35 million weighted average basic and diluted shares
outstanding. EBITDA for the second quarter of 2006 was $37.8 million as compared
to $61.4 million in the quarter ended June 30, 2005.
An average of 28.3 vessels were owned and operated during the second quarter of
2006, earning an average time charter equivalent or TCE rate of $20,603 per day
as compared to an average of 23.9 vessels owned and operated during the second
quarter of 2005 earning an average TCE rate of $34,691 per day.
Six Months ended June 30, 2006
For the first half year ended June 30, 2006, Net Revenues (voyage revenues less
voyage expenses) amounted to $102.3 million as compared to $102.5 million for
the first half year ended June 30, 2005 and Operating Income was $47.5 million
as compared to $69.7 million for the first half year ended June 30, 2005. Net
Income for the first half year of 2006 was $30.2 million as compared to $62.1
million in the first half year ended June 30, 2005 and Earnings Per Share (EPS)
calculated on 30.38 million weighted average basic and diluted shares
outstanding were $0.99 as compared to $2.26 in the first half year ended June
30, 2005 calculated on 27.5 million weighted average basic and diluted shares
outstanding. EBITDA for the first half year of 2006 was $75.9 million as
compared to $84.5 million in the first half year ended June 30, 2005.(1)
----------
(1) Please see below for the reconciliation of EBITDA to net cash provided by
operating activities.
An average of 27.65 vessels were owned and operated during the first half year
of 2006, earning an average TCE rate of $20,955 per day as compared to an
average of 16.32 vessels owned and operated during the first half year of 2005
earning an average TCE rate of $35,116 per day.
Fleet Expansion
During the second quarter 2006, DryShips took delivery of the two vessels it had
agreed to acquire during the first quarter of 2006. Specifically, on April 19th,
2006, DryShips took delivery of "Hille Oldendorff", a 2005 built, 55,566 dwt,
handymax drybulk carrier. Also, on May 15th, 2006, DryShips took delivery of
"Maganari", a 2001 built second-hand 75,941 dwt Panamax drybulk carrier.
During the second quarter 2006, DryShips entered into agreements to acquire five
additional Panamax vessels for a total consideration of approximately $154
million. Four of these vessels are sister ships to vessels in the existing
DryShips fleet. These five vessels have a total carrying capacity of 358,625
dwt; two were built in 1994, two in 1996 and one in 2004. DryShips expects to
take delivery of these vessels between September and October 2006. All of them
were acquired with time charters attached terminating between December 2006 and
September 2007 at daily rates between $ 16,100 and $ 18,000.
Following delivery of these five vessels, DryShips fleet will consist of a total
of 34 vessels that will include 4 Capesize, 27 Panamax and 3 Handymax dry bulk
carriers with an aggregate carrying capacity of approximately 2.75 dwt and an
average age of 10.5 years.
Liquidity and Capital Resources
On June 30, 2006, debt to total capitalization (debt, net of deferred financing
fees and stockholders' equity) was 62% and net debt (total debt less cash and
cash equivalents and restricted cash) to total capitalization was 57%.
As of August 29, 2006 the Company had a total liquidity of approximately $128.0
million consisting of $83.3 million in cash and cash equivalents (including
restricted cash) and an undrawn balance of $44.7 million available under the new
credit facility.
Dividend Payment
On June 19, 2006, DryShips declared its quarterly dividend of $0.20 per common
share. This was the fifth consecutive dividend payment since the Company went
public in 2005. Since that time, DryShips has paid a total of $1.00 per share in
dividends.
New Credit Facility
On March 22, 2006 DryShips accepted a new credit facility with HSH Nordbank
acting as Lead Arranger and Agent while HSH Nordbank and Bank of Scotland acted
as joint underwriters.
The new facility provides for an amount of up to $624.5 million in total of
which $553.3 million is to be used for the purpose of refinancing existing
indebtedness with a term of 10 years maturing in May 2016 and up to $71.25
million for the acquisition of new vessels.
On April 5, 2006, the Company drew down $553.3 million for the refinancing of
existing debt together with the financing for the Hille Oldendorff.
Total principal repayments under the new facility are $36.0 million for the
remainder (6 months) of 2006, followed by $55.5 million in 2007, $49.0 million
in 2008, $45.5 million in 2009 and $42.0 million in 2010 through 2015 and $115.3
million in 2016. The aforementioned repayments exclude principal repayments for
the five additional panamax vessels for which DryShips has entered into
agreements to purchase. DryShips expects to take delivery of these vessels
between September and October 2006.
Fleet Data
Three Months Ended June 30, 2006
(Dollars in thousands, except per share data and
Average Daily Results - unaudited)
3 Months Ended 3 Months Ended
June 30, 2006 June 30, 2005
Average numbers of vessels (1) 28.3 23.9
Total voyage days for fleet (2) 2,501 2,143
Calandar days (3) 2,575 2,177
Fleet Ultilization (4) 97.1% 98.4%
Time charter equivalent (5) 20,603 34,691
Capesize 29,823 53,953
Panamax 19,897 30,449
Handymax 16,805 25,571
Vessel operating expenses (6) 4,311 4,457
Management fees 586 671
General and administrative expenses (7) 402 672
Total vessel operating expenses (8) 5,299 5,800
Six Months Ended June 30, 2006
(Dollars in thousands, except per share data and
Average Daily Results - unaudited)
6 Months Ended 6 Months Ended
June 30, 2006 June 30, 2005
Average numbers of vessels (1) 27.7 16.3
Total voyage days for fleet (2) 4,882 2,920
Calandar days (3) 5,005 2,954
Fleet Ultilization (4) 97.5% 98.8%
Time charter equivalent (5) 20,955 35,116
Capesize 31,829 59,052
Panamax 19,799 30,619
Handymax 16,083 22,570
Vessel operating expenses (6) 4,314 4,616
Management fees 590 680
General and administrative expenses (7) 400 758
Total vessel operating expenses (8) 5,304 6,054
(1) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of days
each vessel was a part of our fleet during the period divided by the number
of calendar days in that period.
(2) Total voyage days for fleet are the total days the vessels were in our
possession for the relevant period net of off hire days associated with
major repairs, drydockings or special or intermediate surveys.
(3) Calendar days are the total days the vessels were in our possession for the
relevant period including off hire days associated with major repairs,
drydockings or special or intermediate surveys.
(4) Fleet utilization is the percentage of time that our vessels were available
for revenue generating voyage days, and is determined by dividing voyage
days by fleet calendar days for the relevant period.
(5) Time charter equivalent, or TCE, is a measure of the average daily revenue
performance of a vessel on a per voyage basis. Our method of calculating
TCE is consistent with industry standards and is determined by dividing
voyage revenues (net of voyage expenses) by voyage days for the relevant
time period. Voyage expenses primarily consist of port, canal and fuel
costs that are unique to a particular voyage, which would otherwise be paid
by the charterer under a time charter contract, as well as commissions. TCE
is a standard shipping industry performance measure used primarily to
compare period-to-period changes in a shipping company's performance
despite changes in the mix of charter types (i.e., spot charters, time
charters and bareboat charters) under which the vessels may be employed
between the periods.
(6) Daily vessel operating expenses, which includes crew costs, provisions,
deck and engine stores, lubricating oil, insurance, maintenance and repairs
is calculated by dividing vessel operating expenses by fleet calendar days
for the relevant time period.
(7) Daily general and administrative expense is calculated by dividing general
and administrative expense by fleet calendar days for the relevant time
period.
(8) Total vessel operating expenses, or TVOE is a measurement of our total
expenses associated with operating our vessels. TVOE is the sum of vessel
operating expenses, management fees and general and administrative
expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days
for the relevant time period.
Three Months Ended June 30, 2006, Compared to Three Months Ended June 30, 2005
Total TCE revenue decreased during the second quarter of 2006 compared to the
second quarter of 2005, primarily as a result of decrease in the daily average
TCE rate from $34,691 in the second quarter of 2005 compared to $20,603 in the
second quarter of 2006 off-set by an increase in the average number of vessels
operated, from an average of 23.9 vessels in the second quarter of 2005 to 28.3
vessels in the second quarter of 2006.
Vessel operating expenses increased to $11.1 million for the second quarter of
2006 compared to $9.7 million for the second quarter of 2005. The increase is
attributable to the increase in the number of vessels operated from an average
of 23.9 vessels for the second quarter of 2005 to 28.3 vessels for the second
quarter of 2006, plus an increase in daily vessel operating expenses from $4,457
per day for the second quarter of 2005 to $4,311 per day for the second quarter
of 2006. This increase is primarily a result of three vessels passing drydocking
in the second quarter of 2006 compared to one vessel in the second quarter of
2005.
Depreciation and amortization increased to $14.5 million in the second quarter
of 2006 compared to $11.9 million in the second quarter of 2005. This was a
direct result of the increase in the Company's fleet from an average of 23.9
vessels in the second quarter of 2005 to an average of 28.3 vessels in the
second quarter of 2006.
Management fees remained constant at $1.5 million in the second quarter of 2006
and 2005.
General and administrative expense decreased marginally from $1.5 million in the
second quarter of 2005 to $1.0 million in the second quarter of 2006 as a result
of lower accruals in 2006.
Six Months Ended June 30, 2006, Compared to Six Months Ended June 30, 2005
Total TCE revenue decreased marginally during the first half year of 2006
compared to the first half year of 2005, primarily as a result of an increase in
the average number of vessels operated, from an average of 16.3 vessels in the
first half year of 2005 to 27.7 vessels in the first half year of 2006 offset by
a decline in the average daily TCE rate from $35,116 in the first half year of
2005 to $20,955 in the first half year of 2006.
Vessel operating expenses increased to $21.6 million for the first half year of
2006 compared to $13.6 million for the first half year of 2005. The increase is
attributable to the increase in the number of vessels operated from an average
of 16.3 vessels for the first half year of 2005 to 27.7 vessels for the first
half year of 2006, offset by a lower daily vessel operating expenses decreasing
from $4,616 per day for the first half year of 2005 to $4,314 per day for the
first half year of 2006. This decrease is primarily a result of a younger fleet
and only 2 vessel deliveries in the first half year of 2006, whereas 20 vessels
were delivered to the Company during the first half-year of 2005. Generally the
delivery of vessels entails additional associated costs. Depreciation and
amortization increased to $28.3 million in the first half year of 2006 compared
to $15.0 million in the first half year of 2005. This was a direct result of the
increase in the Company's fleet from an average of 16.3 vessels in the first
half year of 2005 to an average of 27.7 vessels in the first half-year of 2006.
Management fees increased to $3.0 million in the first half year of 2006
compared to $2.0 million in the first half year of 2005 as a direct result of
the increase in the number of fleet calendar days from 2,954 in the first half
year of 2005 to 5,005 in the first half year of 2006 due to the growth of the
fleet.
General and administrative expense decreased marginally from $2.2 million in the
first half year of 2005 to $ 2.0 million in the first half year of 2006.
DryShips Inc. Fleet
As at June 30, 2006, our fleet consisted of 29 vessels. We have since entered
into agreements to acquire five additional vessels with expected delivery
between September 2006 and October 2006.
During the three month period ended June 30, 2006, the Company operated the
following types of vessels:
Capesize Panamax Handymax Total
Average number of vessels during period 4.00 21.50 2.80 28.30
Number of vessels at end of period 4.00 22.00 3.00 29.00
DWT at end of period 657,256 1,588,397 150,069 2,395,722
DWT as percentage of total fleet 27.43% 66.30% 6.26% 100.00%
Average age at the end of period 10.50 11.50 5.70 11.56
During the six month period ended June 30, 2006, the Company operated the
following types of vessels:
Capesize Panamax Handymax Total
Average number of vessels during period 4.00 21.25 2.40 27.65
Number of vessels at end of period 4.00 22.00 3.00 29.00
DWT at end of period 657,256 1,588,397 150,069 2,395,722
DWT as percentage of total fleet 27.43% 66.30% 6.26% 100.00%
Average age at the end of period 10.50 11.50 5.70 11.56
Financial Statements
The following are DryShips Inc.'s unaudited Condensed Income Statements for the
three-month and six-month periods ended June 30, 2006 and June 30, 2005:
(Dollars in thousands, except per share 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
data and Average Daily Results - unaudited) June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
--------------- ----------------- -------------- ------------------
Unaudited Restated Unaudited Unaudited Restated Unaudited
INCOME STATEMENT DATA
Voyage revenues, net $54,548 $78,001 $109,357 $108,166
Voyage expenses 3,019 3,659 7,057 5,628
Vessels operating expenses 11,102 9,702 21,596 13,635
Depreciation and amortization 14,509 11,891 28,274 14,980
Management fees 1,510 1,460 2,954 2,009
General and administrative 1,035 1,464 2,004 2,240
Operating Income 23,373 49,825 47,472 69,674
Interest and finance costs, net (11,195) (6,945) (17,304) (7,347)
Other, net (121) (353) 1 (206)
NET INCOME $12,057 $42,527 $30,169 $62,121
Basic and fully diluted earnings per share $0.40 $1.40 $0.99 $2.26
Weighted average basic and diluted
shares outstanding 30,412,245 30,350,000 30,381,294 27,541,713
The following are DryShips Inc.'s Condensed Balance Sheets as at June 30, 2006
(unaudited) and December 31, 2005 (audited):
(Dollars in thousands) As at As at
June 30, 2006 December 31, 2005
------------- -----------------
Unaudited Audited
BALANCE SHEET DATA
Cash and cash equivalents 16,663 5,184
Other current assets 38,331 13,593
Vessels, net 905,792 864,733
Restricted cash 20,000 21,011
Other non-current assets 7,535 6,038
-------------- -----------
TOTAL ASSETS 988,321 910,559
-------------- -----------
Current portion of long-term debt 68,862 107,738
Other current liabilities 56,863 28,007
Long-term debt, net of current portion 508,333 417,615
Total Liabilities 634,058 553,360
Other non-current liabilities 615 698
Total Stockholders' equity 353,648 356,501
-------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 988,321 910,559
-------------- ------------
EBITDA Reconciliation
DryShips Inc. considers EBITDA to represent net income before interest, taxes,
depreciation and amortization. EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from operations, as
determined by United States generally accepted accounting principles, or U.S.
GAAP, and our calculation of EBITDA may not be comparable to that reported by
other companies. EBITDA is included herein because it is a basis upon which we
assess our liquidity position, because it is used by our lenders as a measure of
our compliance with certain loan covenants and because we believe that it
presents useful information to investors regarding a company's ability to
service and/or incur indebtedness. The following table reconciles net cash from
operating activities to EBITDA:
(Dollars in thousands) 6 Months Ended 6 Months Ended
June 30, 2006 June 30, 2005
------------- -------------
Net cash provided by operating activities 45,867 86,332
Net increase (decrease) in current assets 6,922 6,333
Net (increase) decrease in current liabilities 2,341 (17,199)
excluding current portion of long-term debt
Amortization of deferred revenue (152) 3,812
Amortization of free lubricants 83 (460)
Change in fair value of derivatives 3,122 (1,650)
Net interest expense 17,441 7,347
Amortization of deferred financing costs
included in interest expense (3,108) (268)
Payments for dry-docking costs 3,364 202
EBITDA 75,880 84,449
Fleet List
The table below describes in detail our fleet development and current employment
profile as of August 30, 2006:
Year Current Redelivery
Built Deadweight Type Employment Earliest Latest
Capesize
Manasota 2004 171,061 Capesize $46,000 Sep-06 Nov-06
Alameda 2001 170,662 Capesize $28,000 Feb-07 Apr-07
Shibumi 1984 166,058 Capesize $22,000 Sep-06 Nov-06
Netadola 1993 149,475 Capesize $30,750 Jan-07 Mar-07
Panamax
Conrad Oldendorff 2002 76,623 Panamax $42,000 Nov-06 Feb-07
Coronado 2000 75,706 Panamax $18,500 Apr-07 Jun-07
Waikiki 1995 75,473 Panamax $17,500 Feb-07 Apr-07
Mostoles 1981 75,395 Panamax Baumarine $15,586
Linda Oldendorff 1995 75,100 Panamax Spot - $20,000
Sonoma 2001 74,786 Panamax Baumarine $21,416
Catalina 2005 74,432 Panamax $18,150 Sep-06 Oct-06
Ocean Crystal 1999 73,688 Panamax $24,500 Nov-06 Feb-07
Padre 2004 73,601 Panamax $23,000 Oct-06 Nov-06
Toro ** 1995 73,034 Panamax Baumarine $21,192
Xanadu 1999 72,270 Panamax $18,500 Apr-07 Jun-07
La Jolla 1997 72,126 Panamax $18,500 Sep-06 Oct-06
Lacerta ** 1994 71,862 Panamax Baumarine $21,067
Panormos ** 1995 71,747 Panamax Baumarine $21,862
Paragon 1995 71,259 Panamax Spot - $22,500
Iguana 1996 70,349 Panamax $28,000 Sep-07 Nov-07
Daytona ** 1989 69,703 Panamax Baumarine $18,424
Lanikai ** 1988 68,676 Panamax Baumarine $18,690
Tonga ** 1984 66,798 Panamax Baumarine $14,832
Flecha 1982 65,081 Panamax Baumarine $15,580
Striggla ** 1982 64,747 Panamax Baumarine $16,208
Maganari*** 2001 75,941 Panamax $29,000 Feb-07 May-07
$18,400 Feb-08 Jul-08
Handymax
Alona 2002 48,640 Handymax $19,900 Sep-06 Nov-06
Matira 1994 45,863 Handymax $15,800 Sep-06 Nov-06
Hille Oldendorff**** 2005 55,566 Handymax $20,020 Jan-07 May-07
DRYSHIPS FLEET 2,395,722
Where the Redelivery column is left blank it signifies that the vessel is
trading in the spot market. For those vessels where rates are quoted, the
Company has calculated the estimated rates under current specific contracted
voyages. The Company gives no guarantee that these rates are correct, or that
the rates are sustainable beyond the duration of the current voyage. The quoted
rates are not indications of future earnings and the Company gives no assurance
or guarantee of future rates after the current voyage.
** Indicates vessels that are trading in the Baumarine Pool. Rates quoted refer
to the vessels earnings as last reported, usually the previous month's earnings.
*** Maganari has been fixed on a direct continuation at $18,400 per day for 12
months. Earliest and latest redelivery dates are March 2007 and May 2007
respectively.
**** Hille Oldendorff is employed under a bareboat charter.
Forward-Looking Statement
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical
facts.
The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although DryShips Inc. believes that these assumptions were reasonable
when made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, DryShips Inc. cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
changes in charterhire rates and vessel values, changes in demand that may
affect attitudes of time charterers to scheduled and unscheduled drydocking,
changes in DryShips Inc.' operating expenses, including bunker prices,
dry-docking and insurance costs, or actions taken by regulatory authorities,
potential liability from pending or future litigation, domestic and
international political conditions, potential disruption of shipping routes due
to accidents and political events or acts by terrorists. Risks and uncertainties
are further described in reports filed by DryShips Inc. with the US Securities
and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DryShips Inc.
---------------------------------
(Registrant)
Dated: September 20, 2006
By: /s/ Christopher J. Thomas
----------------------------------
Christopher J. Thomas
Chief Financial Officer
SK 23113 0002 704807