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. |