d894612a_6-k.htm

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 July 2008

Commission File Number

TOP SHIPS INC.
(Translation of registrant’s name into English)

1 VAS. SOFIAS & MEG.
ALEXANDROU STREET
151 24, MAROUSSI
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): ________.


 
 
 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached to this report on Form 6-K as Exhibit 1 are the first quarter financial results for the fiscal year 2008 for Top Ships Inc. (the "Company").

 
 
 

EXHIBIT 1
 
 
 
Key indicators highlighting changes in the financial performance of the Company’s vessels during the first quarters of 2007 and 2008:

   
Suezmax Vessels
  
   
Three Months Ended March 31,
  
(In U.S. Dollars unless otherwise stated)
  
2007
    
2008
    
Change
  
Total available ship days
     1,170       970       -17.1 %
Total operating days
     1,084       724       -33.2 %
Utilization
     92.6 %     74.6 %     -19.4 %
TCE2 per ship per day under spot voyage charter
     38,565       47,548       23.3 %
TCE per ship per day under time charter
     35,123       38,574       9.8 %
Average TCE
     37,428       43,123       15.2 %
Other vessel operating expenses per ship per day
     8,231 *     15,391 *     87.0 %
                         
   
Handymax Vessels
  
   
Three Months Ended March 31,
  
(In U.S. Dollars unless otherwise stated)
  
2007
    
2008
    
Change
  
Total available ship days
     990       728       -26.5 %
Total operating days
     911       621       -31.8 %
Utilization
     92.0 %     85.3 %     -7.3 %
TCE per ship per day under spot voyage charter
     -       16,000       -  
TCE per ship per day under time charter
     20,279       18,360       -9.5 %
Average TCE
     20,279       18,356       -9.5 %
Other vessel operating expenses per ship per day
     6,576       10,789 *     64.1 %
                         
   
Tanker Fleet
  
   
Three Months Ended March 31,
  
(In U.S. Dollars unless otherwise stated)
  
2007
    
2008
    
Change
  
Total available ship days
     2,160       1,698       -21.4 %
Total operating days
     1,995       1,345       -32.6 %
Utilization
     92.4 %     79.2 %     -14.2 %
TCE per ship per day under spot voyage charter
     38,565       47,462       23.1 %
TCE per ship per day under time charter
     24,467       25,746       5.2 %
Average TCE
     29,597       31,688       7.1 %
Other vessel operating expenses per ship per day
     7,473       13,418       79.6 %
                         
   
Drybulk Fleet
  
   
Three Months Ended March 31,
  
(In U.S. Dollars unless otherwise stated)
  
2007
    
2008
    
Change
  
Total available ship days
     -       390       -  
Total operating days
     -       385       -  
Utilization
     -       98.7 %     -  
TCE per ship per day under spot voyage charter
     -       -       -  
TCE per ship per day under time charter
     -       51,151       -  
Average TCE
     -       51,151       -  
Other vessel operating expenses per ship per day
     -       7,842 *     -  
       
 
_______________________ 
2 Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE rate is consistent with industry standards and is determined by dividing time charter equivalent revenues or TCE revenues by voyage days for the relevant time period. TCE revenues are revenues minus voyage expenses. 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 revenues and TCE rate non-GAAP measures, provide additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.

 
 
 
 
 
 
   
Total Fleet
  
   
Three Months Ended March 31,
  
(In U.S. Dollars unless otherwise stated)
  
2007
    
2008
    
Change
  
Total available ship days
     2,160       2,088       -3.3 %
Total operating days
     1,995       1,730       -13.3 %
Utilization
     92.4 %     82.9 %     -10.3 %
TCE per ship per day under spot voyage charter
     38,565       47,462       23.1 %
TCE per ship per day under time charter
     24,467       32,927       34.6 %
Average TCE
     29,597       36,019       21.7 %
Other vessel operating expenses per ship per day
     7,473       12,376       65.6 %
General and administrative expenses per ship per day**
     2,406       3,690       53.3 %
                         
 
 
* The daily Other vessel operating expenses for the Suezmax, Handymax and Drybulk Vessels for the first quarter of 2007 include approximately $332, $0 and $0, respectively, and for the first quarter of 2008 include approximately $5,269, $1,621 and $890, respectively, for specific unexpected repairs.

** The daily General and Administrative expenses include approximately $218 and $322 for the first quarter of 2007 and 2008, respectively, of non-cash restricted stock expense, specific legal fees and depreciation for other fixed assets.
 
 
 
 
Fleet Report:

As of March 31, 2008, the Company’s fleet consisted of 23 vessels, or 2.1 million dwt (including 12 owned, one under capital lease and 10 vessels sold and leased back for a period of five to seven years) as compared to 24 vessels, or 2.5 million dwt on March 31, 2007 (including 18 vessels sold and leased back for a period of 5 to 7 years).
 
In December 2007, the Company entered into an agreement to sell the vessel M/T Noiseless to an unrelated party. The gain from the sale of $0.6 million was recognized upon the delivery of the vessel to the buyer on January 30, 2008.

In January 2008, the Company agreed to sell the vessel M/T Stainless to an unrelated party and entered into a bareboat charter with the buyer until July 31, 2008 (the vessel’s delivery date). According to the terms of the bareboat charter, all bareboat hire payments made up to the end of the charter period will be deducted from the purchase price and ownership of the vessel will be transferred to the buyer at the end of the charter period. As ownership of the vessel will be transferred to the buyer at the end of the bareboat charter, the Company classified the charter and vessel’s sale as a capital lease.

In August 2007, the Company entered into an agreement to acquire the M/V Astrale, a panamax drybulk vessel of 75,933 dwt built in Japan in 2000, from an unrelated third party with an expected delivery date between January and March 2008. In February 2008, the Company agreed with the owners of the M/V Astrale to charter the vessel up to April 27, 2008, for a daily hire. On May 1, 2008, the Company took ownership of the M/V Astrale, which was entered into a time charter contract for a period of 1 year at a net daily rate of $67,500. As the ownership of the vessel was transferred to the Company at the end of the charter the Company accounted for the purchase and related charter as a capital lease.

In February 2008, the Company took delivery of the M/V Voc Gallant, a super handymax, or supramax, drybulk vessel of 51,200 dwt built in China in 2002, from an unrelated third party. The vessel was chartered back to the sellers for a period of 18 months at a daily net rate of $25,650 on a bareboat basis. This employment agreement was later extended for an additional period of three years at a daily net rate of $23,580.

In March 2008, the Company took delivery of the M/V Pepito, a panamax drybulk vessel of 75,928 dwt built in Japan in 2001 and entered into a time charter contract for a period of 5 years at a net daily rate of $38,950.

In March 2008, the owner and lessor of M/T Faultless agreed to sell the vessel to a third party. The Company and the lessor mutually agreed to terminate the bareboat charter. The Company had sold the vessel in 2006 in a sale and lease-back transaction. The termination of the bareboat charter became effective upon the vessel’s delivery to its new owners, on March 31, 2008.

In April 2008, the Company entered into an agreement to sell the vessel M/V Bertram with an attached time charter contract to a third party and the vessel was delivered to its new owners later in the month. Until its delivery, an amount of $4.2 million, relating to the fair value of the time charter contract, had been amortized to the Company’s revenues. Consequently, on the delivery to its new owners, the Company wrote-off the unamortized amount, which resulted in a loss of approximately $2.0 million that will be recognized in the second quarter of 2008.

 
 
 


Fleet Deployment:

During the first quarter of 2008, the Company had approximately 79% of the fleet’s operating days on long-term employment contracts. As of March 31, 2008, seventeen of the Company’s 23 vessels were on time charter contracts with an average term of over two years with all but nine of the time charters including profit sharing agreements.

Tanker Vessels:

During the first quarter of 2008, seven of the Company’s Suezmax tankers operated in the spot market, earning on average $47,548 per vessel per day on a time charter equivalent (TCE) basis.

During the first quarter of 2008, five of the Company’s Suezmax tankers operated under time charter contracts, earning on average $38,574 per vessel per day on a time charter equivalent (TCE) basis.

Seven out of the eight Company’s Handymax tankers operate under long term employment agreements that provide for a base rate and additional profit-sharing.

During the first quarter of 2008, seven of the Company’s Handymax tankers earned on average $18,360 per vessel per day on a time charter equivalent (TCE) basis, including the profit-sharing allocated to the Company.

During the first quarter of 2008, one of the Company’s Handymax tankers operated in the spot market, earning on average $16,000 per vessel per day on a time charter equivalent (TCE) basis.

Drybulk Vessels:

During the first quarter of 2008, all Company’s drybulk vessels operated under time charter contracts, earning on average $51,151 per vessel per day on a time charter equivalent (TCE) basis, including the amortization of the fair value of time charter contracts of $15,842 per vessel per day.


 
 
 

The following table presents the Company’s current fleet list and employment:

   
Dwt
  
Year
Built
Charter Type
  
ExpiryE
    
Daily Base Rate
  
Profit Sharing
Above Base Rate (2008)
9 Suezmax Tankers
                        
TimelessB
     154,970  
1991
Spot
              
FlawlessB
     154,970  
1991
Spot
              
StoplessB
     154,970  
1991
Time Charter
     Q3/2008     $ 35,000  
50% thereafter
PricelessB
     154,970  
1991
Spot
                  
EndlessD
     135,915  
1992
Time Charter
     Q3/2008 C   $ 36,500  
None
LimitlessD
     136,055  
1993
Spot
                  
StormlessD
     150,038  
1993
Time Charter
     Q2/2010     $ 35,000  
None
Ellen PD.
     146,286  
1996
Time Charter
     Q2/2009     $ 44,500  
None
EdgelessD
     147,048  
1994
Spot
                  
                               
                               
8 Handymax Tankers
                              
SovereignA
     47,084  
1992
Spot
                  
RelentlessA
     47,084  
1992
Time Charter
     Q3/2009     $ 14,000  
50% thereafter
VanguardB
     47,084  
1992
Time Charter
     Q1/2010     $ 15,250  
50% thereafter
SpotlessB
     47,094  
1991
Time Charter
     Q1/2010     $ 15,250  
50% thereafter
DoubtlessB
     47,076  
1991
Time Charter
     Q1/2010     $ 15,250  
50% thereafter
FaithfulB
     45,720  
1992
Time Charter
     Q2/2010     $ 14,500  
100% first $500 + 50% thereafter
DauntlessD
     46,168  
1999
Time Charter
     Q1/2010     $ 16,250  
100% first $1,000 + 50% thereafter
Ioannis PD.
     46,346  
2003
Time Charter
     Q4/2010     $ 18,000  
100% first $1,000 + 50% thereafter
6 Newbuilding Product Tankers
                              
Hull S-1025
     50,000  
2009
Bareboat Charter
     Q1-2/2019     $ 14,400  
None
Hull S-1026
     50,000  
2009
Bareboat Charter
     Q1-2/2019     $ 14,550  
None
Hull S-1027
     50,000  
2009
Bareboat Charter
     Q1-2/2016     $ 14,300  
None
Hull S-1029
     50,000  
2009
Bareboat Charter
     Q1-2/2016     $ 14,300  
None
Hull S-1031
     50,000  
2009
Bareboat Charter
     Q1-2/2019     $ 14,550  
None
Hull S-1033
     50,000  
2009
Bareboat Charter
     Q1-2/2019     $ 14,550  
None
                               
Total Tanker dwt
     2,008,878                        
                               
5 Drybulk Vessels
                              
CycladesD
     75,681  
2000
Time Charter
     Q2/2011     $ 50,860  
None
AmalfiD
     45,526  
2000
Time Charter
     Q1/2009     $ 22,000  
None
Voc GallantD
     51,200  
2002
Bareboat Charter
     Q2/2012     $ 25,650 F
None
PepitoD
     75,928  
2001
Time Charter
     Q2/2013     $ 38,950  
None
AstraleD
     75,933  
2000
Time Charter
     Q2/2009     $ 67,500  
None
                               
Total Drybulk dwt
     324,268                        
                               
TOTAL DWT
     2,333,146                        
                               
 
A.  Vessels sold and leased back in August and September 2005 for a period of 7 years
  
B.  Vessels sold and leased back in March 2006 for a period of 5 years
  
C.  Charterers have option to extend contract for an additional four-year period
  
D.  Owned vessels
E.   For the newbuilding product tankers we refer to the initial charter period excluding extension options
F.   From May/June 2009 until May/June 2012 the net daily base rate will be $23,580
  

 
 
 


Liquidity and Capital Resources

As of March 31, 2008, Top Ships had total indebtedness under senior secured credit facilities of $502.4 million with its lenders, the Royal Bank of Scotland (“RBS”), HSH Nordbank (“HSH”), DVB Bank, ALPHA BANK and EMPORIKI BANK maturing from 2008 through 2015.

Since the Company’s formation, the sources of funds have been cash from operations, long-term borrowings and equity provided by the shareholders. The Company’s principal use of funds has been capital expenditures to establish and grow its fleet, maintain the quality of its vessels, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and make principal repayments on outstanding served loan facilities. The Company expects to rely upon operating cash flows, long-term borrowings and equity financings to implement its future growth plan.

In December 2007 and in April 2008, the Company raised $120.0 million of equity capital to fund its diversification in the dry bulk sector and its newbuilding program. All drybulk vessels of the Company have been chartered in long-term employment agreements that are expected to provide a secured stream of drybulk revenues. Moreover, the long-term employment agreements for the majority of the tanker fleet, in combination with the significantly improved spot market rates are expected to increase tanker revenues.

Therefore, the Company expects that its working capital generation, in combination with the existing cash balances and its recent equity offerings will be sufficient to cover its liquidity requirements for the next year, other than the financing of the newbuildings. The Company is currently in the process of obtaining debt financing for the newbuildings.

As of March 31, 2008, the Company has three interest rate swap agreements with RBS for the amounts of $28.5 million, $10.0 million and $10.0 million for a remaining period of one, five and five years, respectively. Under these agreements the interest rate is fixed at an effective annual rate of 4.66% (in addition to the applicable margin), 4.23% and 4.11%, respectively. The Company also has one interest rate swap agreement with HSH for the amount of $36.4 million for a remaining period of three years, at a fixed interest rate of 4.80% in addition to the applicable margin. The Company also has one interest rate swap agreement with Egnatia Bank for the amount of $10.0 million for a remaining period of five years, respectively. Under this agreement the interest rate is fixed at an effective annual rate of 4.76%. In addition, the Company has two interest rate swap agreements with HSH for the amounts of $17.9 million and $8.3 million for a remaining period of five years. The above swaps of $10.0 million, $10.0 million and $10.0 million, include steepening terms based on the two and 10 year U.S. Dollar swap difference, which is calculated quarterly in arrears. The interest rate for the remaining balance of the loans is LIBOR, plus the margin.

In November 2007, the Company entered into an interest rate derivative product. Under this agreement, the Company will pay five annual interest payments on a notional amount of $85.0 million. Based on the cumulative performance of a portfolio of systematic foreign exchange trading strategies, the interest payments will have a minimum floor at 0.00% and a cap at 7.50%.

In April 2008, the Company mutually agreed with Deutsche Bank for the termination of the $50.0 million swap. The Company is in the process of restructuring all or part of the then outstanding amount.


 
 
 

In May 2008, the Company entered into an interest rate swap agreement for a notional amount of $20.0 million for a seven year period. This swap includes steepening terms based on the two and 10 year Euro swap difference, which is calculated quarterly in arrears.

On March 31, 2008, the Company’s ratio of indebtedness to total capital was approximately 72.1%.

In April 2008, the Company privately placed 7.3 million common unregistered shares for aggregate proceeds of approximately $51.0 million with various investors. The 7.3 million shares were sold for $7.00 per share, which represents a discount of 15.5 percent based on the closing share price of $8.28 on April 23, 2008.

In April 2008, following the sale of M/V Bertram, the then outstanding loan amount was fully repaid. In May 2008, the Company took delivery of the drybulk vessel M/V Astrale. The acquisition cost was partially financed through a long-term bank loan, maturing in April 2013.

In addition, in May 2008, the Company paid the second installment for the construction of two vessels, which was partly financed from the revolving credit facility with RBS. Finally, in May 2008, following the private placement, the Company prepaid a portion from the bridge loan with DVB Bank.
 
 
 
 
 
 
 


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
  
   
March 31,
  
 
2007
    
2008
  
 
As adjusted
        
REVENUES:
          
           
Revenues
 $ 73,988     $ 72,637  
               
EXPENSES:
              
               
Voyage expenses
   14,942       10,324  
Charter hire expense
   29,498       17,988  
Amortization of deferred gain on sale and leaseback of vessels
   (2,433 )     (1,297 )
Other vessel operating expenses
   16,141       25,842  
Dry-docking costs
   1,984       4,049  
Depreciation
   5,239       10,510  
Amortization of dry-docking costs
   -       -  
General and administrative expenses
   5,198       7,705  
Foreign currency (gains) / losses, net
   (29 )     532  
Gain on sale of vessel
   -       (582 )
               
     Operating income (loss)
   3,448       (2,434 )
               
OTHER INCOME (EXPENSES):
              
               
Interest and finance costs
   (2,973 )     (7,946 )
Fair value change of financial instruments
   1,711       (8,859 )
Interest income
   825       430  
Other, net
   (12 )     (32 )
               
     Total other expenses, net
   (449 )     (16,407 )
               
Net Income (loss)
 $ 2,999     $ (18,841 )
               
Earnings (loss) per share, basic and diluted
 $ 0.28     $ (0.93 )
               
Weighted average common shares outstanding, basic
   10,777,043       20,295,240  
               
Weighted average common shares outstanding, diluted
   10,785,688       20,295,240  


 
 
 


TOP SHIPS INC.
            
             
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)
            
(Expressed in thousands of U.S. Dollars - except for share and per share data)
            
             
             
   
December 31,
    
March 31,
  
   
2007
    
2008
  
             
ASSETS
        
             
CASH AND CASH EQUIVALENTS
   $ 26,012     $ 8,375  
OTHER CURRENT ASSETS
     29,881       31,026  
NET INVESTMENT IN CAPITAL LEASE
     -       42,300  
VESSEL HELD FOR SALE
     46,268       -  
ADVANCES FOR VESSELS ACQUISITIONS / UNDER CONSTRUCTION
     66,026       60,504  
VESSEL UNDER CAPITAL LEASE
     -       76,532  
VESSELS, NET
     553,891       641,422  
OTHER NON-CURRENT ASSETS
     28,339       26,536  
RESTRICTED CASH
     26,500       30,000  
                 
      Total assets
   $ 776,917     $ 916,695  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
CURRENT PORTION OF LONG-TERM DEBT
   $ 107,488     $ 124,459  
OBLIGATIONS UNDER CAPITAL LEASE
     -       68,571  
OTHER CURRENT LIABILITIES
     45,802       69,229  
FINANCIAL INSTRUMENTS, NET OF CURRENT PORTION
     10,683       13,658  
FAIR VALUE OF BELOW MARKET TIME CHARTER
     29,199       35,748  
LONG-TERM DEBT, NET OF CURRENT PORTION
     331,396       373,630  
DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS
     40,941       38,352  
                 
Total liabilities
     565,509       723,647  
                 
COMMITMENTS AND CONTINGENCIES
                
                 
STOCKHOLDERS' EQUITY
     211,408       193,048  
                 
      Total liabilities and stockholders' equity
   $ 776,917     $ 916,695  


 
 
 


TOP SHIPS INC.
                  
                   
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
              
(Expressed in thousands of U.S. Dollars)
                  
                   
   
Three Months Ended
  
   
March 31,
  
   
2007
    
2008
  
   
As adjusted
        
         
Cash Flows from (used in) Operating Activities:
            
             
Net income (loss)
   $ 2,999     $ (18,841 )
Adjustments to reconcile net income to net cash
                
 provided by operating activities:
                
Depreciation and amortization
     5,447       12,087  
Stock-based compensation expense
     151       483  
Change in fair value of financial instruments
     (1,711 )     8,859  
Amortization of deferred gain on sale and leaseback of vessels
     (2,433 )     (1,297 )
Amortization of fair value below market time charter
     -       (6,099 )
Loss on sale of other fixed assets
     61       25  
Gain on sale of vessels
     -       (582 )
Payments for dry-docking
     -       -  
Change in operating assets and liabilities
     358       13,634  
                 
Net Cash from Operating Activities
     4,872       8,269  
                 
Cash Flows from (used in) Investing Activities:
                
                 
Principal payments received under capital lease
     -       3,700  
Principal payments paid under capital lease
     -       (928 )
Advances for vessels acquisitions / under construction
     (14,778 )     (14,768 )
Vessel acquisitions and improvements
     -       (115,747 )
Insurance claims recoveries
     -       125  
Increase in restricted cash
     -       (3,500 )
Net proceeds from sale of vessels
     -       47,867  
Net proceeds from sale of other fixed assets
     28       49  
Acquisition of other fixed assets
     (1,247 )     (520 )
                 
Net Cash used in Investing Activities
     (15,997 )     (83,722 )
                 
Cash Flows from (used in) Financing Activities:
                
                 
Proceeds from long-term debt
     10,000       100,180  
Payments of long-term debt
     (4,250 )     (42,085 )
Cancellation of fractional shares
     -       (2 )
Payment of financing costs
     -       (277 )
                 
Net Cash from Financing Activities
     5,750       57,816  
                 
Net decrease in cash and cash equivalents
     (5,375 )     (17,637 )
                 
Cash and cash equivalents at beginning of period
     29,992       26,012  
                 
Cash and cash equivalents at end of period
   $ 24,617     $ 8,375  
                 
SUPPLEMENTAL CASH FLOW INFORMATION
                
                 
Interest paid
   $ 1,443     $ 5,477  
                 
NON-CASH TRANSACTIONS
                
                 
Fair value below market time charter
   $ -     $ 12,647  
Amounts owed for capital expenditures
   $ -     $ 2,469  

 
 
 
 

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.


TOP SHIPS INC.
(registrant)


Dated:  July 3, 2008
By:    /s/ Evangelos J. Pistiolis
 
Evangelos J. Pistiolis
 
Chief Executive Officer