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RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY
 12 Months Ended
Dec. 31, 2016
RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY  
RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE COMPANY

26 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE SUCCESSOR COMPANY

 

Subsequent to the issuance of the Company’s 2014 consolidated financial statements on March 2, 2015, the Company became aware of an error in its allocation of goodwill impairment to the noncontrolling interest recognized in December 2014 by the Company associated with its consolidated subsidiary Baltic Trading (refer to Note 4 — Goodwill Impairment). As a result of this error, amounts allocated to the Company’s noncontrolling interest in the Company’s previously reported Consolidated Statement of Operations of the Successor Company for the period from July 9, 2014 to December 31, 2014 and the Company’s previously reported Consolidated Balance Sheet of the Successor Company as of December 31, 2014 were incorrect.

 

The error affected the Company’s previously reported Net loss allocable to GS&T and the noncontrolling interest and Net loss per share allocable to GS&T on the Company’s Consolidated Statement of Operations of the Successor Company for the period from July 9, 2014 to December 31, 2014, as well as the Company’s previously reported allocation of shareholders’ equity to the shareholders of the Company and the noncontrolling interest on the Company’s Consolidated Balance Sheet of the Successor Company as of December 31, 2014. The error did not impact the Company’s previously reported consolidated revenues, operating expenses, net loss or cash flows for the Successor Company for the period from July 9, 2014 to December 31, 2014, or the Company’s previously reported consolidated assets, liabilities or total equity of the Successor Company as of December 31, 2014.

 

The Company determined its previously issued consolidated financial statements for the year ended December 31, 2014 should be restated to correct for this error. The effect of correcting for this error resulted in: 1) a decrease in previously reported net loss attributable to GS&T and an increase in previously reported Net loss attributable to noncontrolling interest for the period from July 9, 2014 to December 31, 2014 by the same amount; and 2) an increase in GS&T’s equity attributable to its shareholders and a decrease in the Noncontrolling interest in the Consolidated Balance Sheet as of December 31, 2014 by the same amount. The effect of correcting these errors is summarized as follows:

 

·

For the period from July 9, 2014 to December 31, 2014, the previously reported Net loss attributable to GS&T decreased by $21,823 to $182,294 from $204,117 as a result of the restatement. This also resulted in a change in Net loss per share from $3.38 to $3.02, or $30.20 on a post-reverse stock split basis, as a result of the restatement. After the restatement, the Net loss attributable to noncontrolling interest for the period from July 9, 2014 to December 31, 2014 increased by $21,823 to $31,064 from $9,241. The Company’s consolidated Net loss for the period from July 9, 2014 to December 31, 2014 was unchanged at $213,358.

 

·

As of December 31, 2014, the previously reported equity recorded by GS&T attributable to its shareholders increased by $21,823 to $1,044,201 from $1,022,378 as a result of the restatement. After restatement, as of December 31, 2014, the noncontrolling interest’s equity decreased by $21,823 to $248,573 from $270,396. The Company’s consolidated total equity in its Consolidated Balance Sheet as of December 31, 2014 was unchanged at $1,292,774.  

 

Predecessor  
RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY  
RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE COMPANY

25 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY

 

Subsequent to the issuance of the Company’s 2014 consolidated financial statements on March 2, 2015, the Company became aware of errors in its determination of certain previously reported amounts in its Predecessor period financial reporting for the period from January 1, 2014 to July 9, 2014 related to its application of fresh-start accounting under ASC 852. These errors were related to the items included in the determination of the “Reorganization items, net” account balance on the Company’s Consolidated Statement of Operations of the Predecessor for the period from January 1, 2014 to July 9, 2014, which affected the Company’s previously reported Net income and Net income per share, Net income attributable to Genco Shipping & Trading Limited and Net loss attributable to noncontrolling interest for this period.

 

The Company determined its previously issued consolidated financial statements for the Predecessor Company for the period ended July 9, 2014 should be restated to correct for these errors. The effect of correcting for these errors resulted in (1) changing the Company’s previously reported gain on Reorganization items, net to a loss, (2) changing the Company’s previously reported Net income and Net income per share to a Net loss and Net loss per share, respectively, (3) changing the Company’s previously reported Net income attributable to Genco Shipping & Trading Limited to a Net loss attributable to Genco Shipping & Trading Limited, and increasing the Company’s previously reported Net loss attributable to noncontrolling interest for the period from January 1, 2014 to July 9, 2014. The effect of correcting these errors is summarized in the following tables:

 

Consolidated Statement of Operations

 

(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Predecessor

 

 

 

 

Predecessor

 

 

 

Period from

 

 

 

 

Period from

 

 

 

January 1 to

 

 

 

 

January 1 to

 

 

 

July 9,

 

 

 

 

July 9,

 

 

 

2014

 

 

 

 

2014

 

 

    

As Reported

    

Adjustment

    

As Restated

 

Loss before reorganization items, net

 

$
(96,795)

 

 

 —

 

$
(96,795)

 

Reorganization items, net

 

 
882,167

 

 
(1,797,807)

(a)

 
(915,640)

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

 
785,372

 

 
(1,797,807)

 

 
(1,012,435)

 

Income tax expense

 

 
(815)

 

 

 —

 

 
(815)

 

Net (loss) income

 

 
784,557

 

 
(1,797,807)

 

 
(1,013,250)

 

Less: Net loss attributable to noncontrolling interest

 

 
(8,734)

 

 
(53,367)

(b)

 
(62,101)

 

Net (loss) income attributable to Genco Shipping & Trading Limited

 

$
793,291

 

$
(1,744,440)

 

$
(951,149)

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share-basic

 

$
18.21

 

 

N/A

 

$
(21.83)

 

Net (loss) income per share-diluted

 

$
18.21

 

 

N/A

 

$
(21.83)

 

Weighted average common shares outstanding-basic

 

 
43,568,942

 

 

N/A

 

 
43,568,942

 

Weighted average common shares outstanding-diluted

 

 
43,568,942

 

 

N/A

 

 
43,568,942

 

Dividends declared per share

 

$

 —

 

 

N/A

 

$

—

 

(a)

The adjustment is the result of errors in the Company’s prior accounting for the following transactions associated with the application of fresh—start accounting:

 

 

 

 

 

 

 

    

Adjustment

 

Discharge of Predecessor equity (1)

 

$
(829,974)

 

Issuance of Successor equity (2)

 

 
(1,133,900)

 

Recording of goodwill in fresh-start accounting (3)

 

 
166,067

 

Total

 

$
(1,797,807)

 

(1)

The accounting consequences related to the discharge of Predecessor equity were previously reported as a component in the computation of “Reorganization items, net”. The adjustment is to exclude the accounting consequences related to the discharge of Predecessor equity from the computation of “Reorganization items, net”.

 

(2)

The accounting consequences related to the issuance of Successor equity were previously excluded as a component in the computation of “Reorganization items, net”. The adjustment is to include from the accounting consequences related to the issuance of Successor equity in the computation of “Reorganization items, net”.

 

(3)

The accounting consequences related to the recognition of goodwill were previously excluded as a component in the computation of “Reorganization items, net”. The adjustment is to include the accounting consequences related to the establishment of goodwill in the computation of “Reorganization items, net”.

 

(b)

The adjustment is the result of errors in the Company’s prior accounting for the consequences to non-controlling interests of certain transactions associated with the application of fresh-start accounting.

 

Consolidated Statement of Comprehensive Loss

 

(U.S. Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Predecessor

 

 

 

 

Predecessor

 

 

 

Period from

 

 

 

 

Period from

 

 

 

January 1 to

 

 

 

 

January 1 to

 

 

 

July 9,

 

 

 

 

July 9,

 

 

 

2014

 

 

 

 

2014

 

 

    

As Reported

    

Adjustment

    

As Restated

 

Net (loss) income

 

$
784,557

 

$
(1,797,807)

 

 
(1,013,250)

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized (loss) gain on investments

 

 
(25,766)

 

 

 —

 

 
(25,766)

 

Unrealized gain on cash flow hedges, net

 

 
2,401

 

 

 —

 

 
2,401

 

Other comprehensive (loss) income

 

 
(23,365)

 

 
0

 

 
(23,365)

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income

 

 
761,192

 

 
(1,797,807)

 

 
(1,036,615)

 

Less: Comprehensive loss attributable to noncontrolling interest

 

 
(8,734)

 

 
(53,367)

 

 
(62,101)

 

Comprehensive (loss) income attributable to Genco Shipping & Trading Limited

 

$
769,926

 

$

(1,744,440)

 

$
(974,514)

 

 

In addition, the effect of correcting for these errors resulted in the restatement of:

 

·

The previously reported components of Reorganization items, net — see Note 20;

 

·

The following previously reported financial information included in the column “Debt Discharge and Equity Issuance” in the table “Fresh-Start Adjustments” in Note 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Debt Discharge

    

 

 

    

Debt Discharge

 

 

 

and Equity

 

 

 

 

and Equity

 

 

 

Issuance

 

 

 

 

Issuance (a)

 

 

 

(as reported)

 

Adjustment

 

(as restated)

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$
87,526

 

$

 —

 

$
87,526

 

Restricted cash

 

 

 —

 

 

 —

 

 

 —

 

Due from charterers, net

 

 

 —

 

 

 —

 

 

 —

 

Prepaid expenses and other current assets

 

 

 —

 

 

 —

 

 

 —

 

Time charters acquired

 

 

 —

 

 

 —

 

 

 —

 

Total current assets

 

 
87,526

 

 

 —

 

 
87,526

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets:

 

 

 

 

 

 

 

 

 

 

Vessels, net

 

 

 —

 

 

 —

 

 

 —

 

Deposits on vessels

 

 

 —

 

 

 —

 

 

 —

 

Deferred drydock, net

 

 

 —

 

 

 —

 

 

 —

 

Deferred financing costs, net

 

 
(11,893)

 

 

 —

 

 
(11,893)

 

Fixed assets, net

 

 

 —

 

 

 —

 

 

 —

 

Other noncurrent assets

 

 

 —

 

 

 —

 

 

 —

 

Restricted cash

 

 

 —

 

 

 —

 

 

 —

 

Investments

 

 

 —

 

 

 —

 

 

 —

 

Goodwill

 

 

 —

 

 

 —

 

 

 —

 

Total noncurrent assets

 

 
(11,893)

 

 

 —

 

 
(11,893)

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$
75,633

 

$

 —

 

$
75,633

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities not subject to compromise:

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$
(1,086)

 

$

 —

 

$
(1,086)

 

Current portion of long-term debt

 

 

 —

 

 

 —

 

 

 —

 

Deferred revenue

 

 

 —

 

 

 —

 

 

 —

 

Time charters acquired

 

 

 —

 

 

 —

 

 

 —

 

Total current liabilities not subject to compromise

 

 
(1,086)

 

 

 —

 

 
(1,086)

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities not subject to compromise:

 

 

 

 

 

 

 

 

 

 

Long-term lease obligations

 

 

 —

 

 

 —

 

 

 —

 

Long-term debt

 

 

 —

 

 

 —

 

 

 —

 

Total noncurrent liabilities not subject to compromises

 

 

 —

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities subject to compromise

 

 
(1,194,687)

 

 

 —

 

 
(1,194,687)

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 
(1,195,773)

 

 

 —

 

 
(1,195,773)

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

Genco Shipping & Trading Limited shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

Predecessor Common stock

 

 
(445)

 

 

 —

 

 
(445)

 

Predecessor Additional paid-in capital

 

 
(849,130)

 

 

 —

 

 
(849,130)

 

Successor Common stock

 

 
603

 

 

 —

 

 
603

 

Successor Additional paid-in capital

 

 
1,232,397

 

 

 —

 

 
1,232,397

 

Accumulated other comprehensive income

 

 
4,574

 

 
(34,931)

 

 
(30,357)

 

Retained (deficit) earnings

 

 
936,774

 

 
(18,436)

 

 
918,338

 

Total Genco Shipping & Trading Limited shareholders’ equity

 

 
1,324,773

 

 
(53,367)

 

 
1,271,406

 

Noncontrolling interest

 

 
(53,367)

 

 
53,367

 

 

 —

 

Total equity

 

 
1,271,406

 

 

 —

 

 
1,271,406

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$
75,633

 

$

 —

 

$
75,633

 

 

·

The following previously reported financial information included in the column “Revaluation of Assets and Liabilities” in the table “Fresh-Start Adjustments” in Note 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revaluation of

 

 

 

 

Revaluation of

 

 

 

Assets and

 

 

 

 

Assets and

 

 

 

Liabilities

 

 

 

 

Liabilities

 

 

    

(as reported)

    

Adjustment

    

(as restated)

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 —

 

$

 —

 

$

 —

 

Restricted cash

 

 

 —

 

 

 —

 

 

 —

 

Due from charterers, net

 

 

 —

 

 

 —

 

 

 —

 

Prepaid expenses and other current assets

 

 
(41)

 

 

 —

 

 
(41)

 

Time charters acquired

 

 
450

 

 

 —

 

 
450

 

Total current assets

 

 
409

 

 

 —

 

 
409

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets:

 

 

 

 

 

 

 

 

 

 

Vessels, net

 

 
(1,065,882)

 

 

 —

 

 
(1,065,882)

 

Deposits on vessels

 

 
2,317

 

 

 —

 

 
2,317

 

Deferred drydock, net

 

 
(16,396)

 

 

 —

 

 
(16,396)

 

Deferred financing costs, net

 

 

 —

 

 

 —

 

 

 —

 

Fixed assets, net

 

 
(3,443)

 

 

 —

 

 
(3,443)

 

Other noncurrent assets

 

 

 —

 

 

 —

 

 

 —

 

Restricted cash

 

 

 —

 

 

 —

 

 

 —

 

Investments

 

 

 —

 

 

 —

 

 

 —

 

Goodwill

 

 
166,067

 

 

 —

 

 
166,067

 

Total noncurrent assets

 

 
(917,337)

 

 

 —

 

 
(917,337)

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$
(916,928)

 

$

 —

 

$
(916,928)

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities not subject to compromise:

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

 —

 

$

 —

 

$

 —

 

Current portion of long-term debt

 

 

 —

 

 

 —

 

 

 —

 

Deferred revenue

 

 

 —

 

 

 —

 

 

 —

 

Time charters acquired

 

 
(16)

 

 

 —

 

 
(16)

 

Total current liabilities not subject to compromise

 

 
(16)

 

 

 —

 

 
(16)

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities not subject to compromise:

 

 

 

 

 

 

 

 

 

 

Long-term lease obligations

 

 
(2,670)

 

 

 —

 

 
(2,670)

 

Long-term debt

 

 

 —

 

 

 —

 

 

 —

 

Total noncurrent liabilities not subject to compromises

 

 
(2,670)

 

 

 —

 

 
(2,670)

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities subject to compromise

 

 

 —

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 
(2,686)

 

 

 —

 

 
(2,686)

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

Genco Shipping & Trading Limited shareholders’ equity:

 

 

 —

 

 

 —

 

 

 —

 

Predecessor Common stock

 

 

 —

 

 

 —

 

 

 —

 

Predecessor Additional paid-in capital

 

 

 —

 

 

 —

 

 

 —

 

Successor Common stock

 

 

 —

 

 

 —

 

 

 —

 

Successor Additional paid-in capital

 

 

 —

 

 

 —

 

 

 —

 

Accumulated other comprehensive income

 

 
(34,931)

 

 
34,931

 

 

 —

 

Retained (deficit) earnings

 

 
(879,311)

 

 
18,436

 

 
(860,875)

 

Total Genco Shipping & Trading Limited shareholders’ equity

 

 
(914,242)

 

 
53,367

 

 
(860,875)

 

Noncontrolling interest

 

 

 —

 

 
(53,367)

 

 
(53,367)

 

Total equity

 

 
(914,242)

 

 

 —

 

 
(914,242)

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$
(916,928)

 

$

 —

 

$
(916,928)