NASSAU, Bahamas, Aug. 12, 2010 (GLOBE NEWSWIRE) -- Ultrapetrol (Bahamas) Limited (Nasdaq:ULTR), an industrial transportation company serving marine transportation needs in three markets (River Business, Offshore Supply Business and Ocean Business), today announced financial results for the second quarter ended June 30, 2010.

Highlights:
  • Recorded revenues of $60.6 million in the second quarter 2010;
  • Recorded adjusted EBITDA of $17.6 million for the second quarter of 2010; and
  • Recorded total adjusted net income and adjusted EPS of $1.7 million and $0.06, respectively, in the second quarter of 2010, which include the effect of a net gain on FFAs of $1.3 million corresponding to the second quarter of 2010 and exclude the effect of a $0.2 million income tax benefit for unrealized foreign exchange rate losses on U.S. dollar-denominated debt of our Brazilian subsidiary in the Offshore Supply Business.
  • Revenues, adjusted EBITDA, adjusted net income and adjusted EPS for the first half of 2010 were $114.8 million, $37.2 million, $6.0 million and $0.2 per share, respectively.

Felipe Menendez, Ultrapetrol's President and Chief Executive Officer, said, "During the second quarter we generated strong results in all three of our businesses. In the River Business, our volumes grew 57% and margins improved, as we transported a much larger soybean volume and benefited from a more efficient cost structure. In our Offshore Supply Business we also posted strong results, as our six state-of-the-art existing PSV's operated on favorable time charter contracts in Brazil. Finally, in our Ocean Business our five Product Tankers continued to successfully operate on existing time charters contracts and our remaining Capesize vessel earned profitable time charter rates, as a result of our successful FFA coverage of the vessel's earnings throughout 2010."

Mr. Menendez continued, "Our expansion program continues to progress as planned and we expect our results to begin to gradually reflect the investments we have made over the past three years. In our River Business, we began operations at our new yard which has already launched five jumbo tank barges which will commence service in the third quarter and will continue to deliver new barges into our fleet on a regular basis. We are pleased that our new 8,300BHP heavy fuel powered pushboat Zonda I started service in May and that her operational performance has exceeded expectations. Before year's-end, we expect three additional re-engined pushboats to commence service and anticipate completing eleven units by the end of 2011. In our Offshore Supply Business, the Company's strong presence in the Brazilian market remains a cornerstone of Ultrapetrol's growth. With an offshore fleet that is expected to double in size in the next two years, we are well positioned to help meet Brazil's equipment needs to support a drilling program that will make the region the second largest market in the world for offshore services. In our Ocean Business we made a timely reduction of our Capesize exposure. We acquired a modern container vessel at the very attractive price prevailing in the market and initiated a new container feeder service in South America positioning the Company in the domestic, flag-protected container trade. Going forward, we believe there will be compelling opportunities to expand this service as well as grow our tanker and dry bulk fleet."

Overview of Financial Results

Total revenues for second quarter 2010 were $60.6 million, as compared with $54.9 million in the same period of 2009.

Adjusted EBITDA for second quarter 2010 was $17.6 million as compared with $18.1 million in the same period of 2009. For a reconciliation of adjusted EBITDA to cash flows from operating activities, please see the tables at the end of this release.

Reported net income for the second quarter 2010 was $0.7 million or $0.02 per share, as compared with a net loss of $0.09 million, or $0.00 per share, during the same period of 2009. Second quarter 2010 net income includes a $0.2 million, or $0.01 per share, income tax benefit for unrealized foreign exchange rate losses on U.S. dollar-denominated debt of our Brazilian subsidiary in the Offshore Supply Business and does not include $1.3 million or $0.04 per share, on account of a net gain on FFAs. Considering these effects, the adjusted net income for the second quarter of 2010 was $1.7 million or $0.06 per share.

Len Hoskinson, Ultrapetrol's Chief Financial Officer, said, "During the quarter, we increased our financial strength. Our CAPEX plan is adequately funded and we continue to have ample liquidity. Our focus on conservatively financing assets ensures that the Company has a strong financial foundation for the future."

Business Segment Highlights

River

The River Business experienced a 57% increase in the volume of cargo loaded in the second quarter of 2010 as compared with the same period of 2009. Second quarter 2010 River segment adjusted EBITDA was $10.4 million versus $0.6 million in 2009. For a reconciliation of adjusted EBITDA to segment operating profit, please see the tables at the end of this release.

The soybean production in Paraguay and in the whole of the Hidrovia region is expected to be a record high for 2010. The latest 2010 USDA estimate for the Paraguayan soybean crop of 7.2 million tons implies an eighty percent increase when compared to 2009 levels and is consistent with a larger seeded area and yields with a normal rainfall. River water levels are normal for this time of the year and iron ore production continued to normalize. Consequently, provided water levels do not fall beyond historical lows, we expect to carry increased quantities of iron ore during the second half of 2010.

The Company's new shipyard for building barges inaugurated in December 2009 continued to operate successfully with productivity levels ahead of our plan for the initial eight months of activity. The yard is the most modern of its kind in South America and we believe it will allow the Company to supply the capacity that we expect will be required in the near future due to growing volumes of liquids, soybeans and iron ore produced in the region. On July 30, 2010 the first tanker barge built in our yard entered into operation and was added to our river fleet. We have successfully continued the re-engining and re-powering program that aims to convert the engines on eleven of our main push boats. The first of them, Zonda I, started operations on May 22, 2010, equipped with more powerful heavy fuel engines instead of the diesel consuming engines that we operate in all other push boats today. This should lead to gradually increasing savings in fuel expense and to an increase in tow size and navigation speed both of which we have already started to benefit from through the operation of Zonda I.

Offshore Supply

In the Offshore Supply Business, six vessels operated in the second quarter of 2010. The adjusted EBITDA generated by the Offshore Supply segment during the quarter was $5.1 million or 42% higher, than the $3.6 million generated in the same period of 2009. For a reconciliation of adjusted EBITDA to segment operating profit, please see the tables at the end of this release.

Total revenues from the Offshore Supply Business increased by 44% attributable primarily to a full three months' operation in 2010 of the UP Rubi, which started its employment with Petrobras under a long-term time charter in August 2009, and to the full quarter operation of our vessels, UP Esmeralda and UP Safira. Both the UP Esmeralda and UP Safira are operating under long-term time charter with Petrobras after arriving in Brazil from the North Sea during the first quarter of 2010 at improved rates from those prevailing in the North Sea in the same period of 2009. All of our six existing PSVs are now chartered to Petrobras on long-term employments at attractive rates for periods ranging between three to four years.

Ultrapetrol has continued with the construction of an additional six new PSVs that will be added to the fleet. The two PSVs under construction in China, Up Turquoise and UP Jasper, are expected to be delivered in the fourth quarter of 2010, while the first of the four vessels under construction in India is now expected to be delivered in the first quarter of 2011.

The Company has continued to invest heavily in the expansion of its PSV fleet since it believes that the Brazilian market will grow substantially due to the support of Petrobras' aggressive capital expenditure plans.

Ocean

The Ocean segment generated adjusted EBITDA of $3.3 million in the second quarter of 2010, as compared to $11.4 million in the same period of 2009. For a reconciliation of adjusted EBITDA to segment operating profit, please see the tables at the end of this release.

The 50% decrease in revenues is mainly attributable to the sale of two of our Capesize vessels, M.V. Princess Susana and M.V. Princess Nadia, which were sold and delivered to their buyers on December 10, 2009 and January 28, 2010, respectively. In addition, our Ocean revenues during the second quarter were also reduced by the partial operation of our Princess Marisol which was sold on April 23, 2010, coupled with a $5.7 million decrease in the net settlements of FFAs which qualified as cash flow hedges in the second quarter of 2010 compared to the same period of 2009 and to a 19% decrease in Time Charter rates of the BCI; partially offset by the entry into operation of our new container vessel Asturiano.

Our only remaining Capesize vessel, Princess Katherine, is fully covered with FFAs at rates higher than those prevailing in the spot and future markets for Capesize vessels. On August 4, 2010 we entered into an agreement (MOA) to sell our Princess Katherine for a total price of $10.5 million with expected delivery between September 1 and October 15, 2010. This transaction remains subject to completion and might not materialize as expected.

The Company has operated a total of five vessels in its Product Carrier fleet in the second quarter of 2010, which continued to be employed in the South American coastal trade mostly under medium/long-term charters with the oil majors that operate in the region.

On April 16, 2010, the Company took delivery of the 1,100-TEU, 2003-built container vessel M.V. Frisian Commander (renamed Asturiano). The vessel was ballasted from the Caribbean, positioned in South America and entered into operation on May 21, 2010 in a regular flag-protected container service to Patagonia, where she had completed its third voyage by June 30, 2010.

Use of Non-GAAP Measures

Ultrapetrol believes that the disclosed non-Generally Accepted Accounting Principles ("GAAP") measures such as adjusted EBITDA, and any other adjustments thereto, when presented in conjunction with comparable GAAP measures, are useful for investors in evaluating the liquidity of the company. These non-GAAP measures should not be considered a substitute for, or superior to, measures of liquidity prepared in accordance with GAAP. A reconciliation of adjusted EBITDA to segment operating profit and cash flow from operations is presented in the tables that accompany this press release.

Investment Community Conference Call

Ultrapetrol will host a conference call for investors and analysts on Friday, August 13, 2010, at 10:00 a.m. ET accessible via telephone and Internet with an accompanying slide presentation. Investors and analysts may participate in the live conference call by dialing 1-800-857-9651 (toll-free U.S.) or + 1-630-395-0221 (outside of the U.S.); passcode: ULTR. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at 1-800-645-7408 (toll-free U.S.) or +1-402-220-0252 (outside of the U.S.); passcode:0813. The webcast will be archived on Ultrapetrol's website for 30 days after the call.

About Ultrapetrol

Ultrapetrol is an industrial transportation company serving the marine transportation needs of its clients in the markets on which it focuses. It serves the shipping markets for grain, forest products, minerals, crude oil, petroleum and refined petroleum products, as well as the offshore oil platform supply market, with its extensive and diverse fleet of vessels. These include river barges and push boats, platform supply vessels, tankers and a Capesize bulk carrier. More information on Ultrapetrol can be found at www.ultrapetrol.net .

The Ultrapetrol (Bahamas) Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3164

Forward-Looking Language

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe 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, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include future operating or financial results; pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including dry docking and insurance costs; general market conditions and trends, including charter rates, vessel values, and factors affecting vessel supply and demand; our ability to obtain additional financing; our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities; our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or vessels' useful lives; our dependence upon the abilities and efforts of our management team; changes in governmental rules and regulations or actions taken by regulatory authorities; adverse weather conditions that can affect production of the goods we transport and navigability of the river system; the highly competitive nature of the oceangoing transportation industry; the loss of one or more key customers; fluctuations in foreign exchange rates and devaluations; potential liability from future litigation; and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

ULTR-G

The following table shows our unaudited consolidated balance sheet as of June 30, 2010 and our audited consolidated balance sheet as of December 31, 2009:
($000's) At June 30, 2010 (Unaudited) At December 31, 2009
ASSETS    
     
CURRENT ASSETS    
     
Cash and cash equivalents  $ 45,968  $ 53,201
Restricted cash 1,661 1,658
Accounts receivable, net of allowance for doubtful accounts of $270 and $411 in 2010 and 2009, respectively   20,910 16,402
Operating supplies 3,853 3,743
Prepaid expenses 4,464 4,210
Receivables from derivative instruments 10,643 16,885
Other receivables 19,181 15,547
Other current assets 649 2,684
Total current assets 107,329 114,330
NONCURRENT ASSETS    
     
Other receivables 16,269 16,256
Restricted cash 1,181 1,181
Vessels and equipment, net 574,549 571,478
Dry dock 6,062 5,281
Investment in affiliates 1,632 1,787
Intangible assets 1,238 1,456
Goodwill 5,015 5,015
Other noncurrent assets 7,920 8,390
Deferred income tax assets 7,997 7,760
Total noncurrent assets 621,863 618,604
Total assets  $  729,192   $ 732,934
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES    
     
Accounts payable  $ 18,853  $ 13,707
Accrued interest 2,062 2,008
Current portion of long-term financial debt 21,428 21,286
Other current liabilities 9,777 8,977
Total current liabilities 52,120 45,978
NONCURRENT LIABILITIES    
     
Long-term financial debt 378,736 384,245
Deferred income tax liabilities 12,265 13,033
Other liabilities 1,729 1,095
Total noncurrent liabilities 392,730 398,373
Total liabilities 444,850 444,351
     
EQUITY    
Common stock, $.01 par value: 100,000,000 authorized shares; 29,943,653 shares outstanding 338 338
Additional paid-in capital 270,658 269,958
Treasury stock: 3,923,094 shares at cost (19,488) (19,488)
Accumulated earnings 25,842 17,357
Accumulated other comprehensive income 1,839 15,538
Total Ultrapetrol (Bahamas) Limited stockholders equity 279,189 283,703
     
Non-controlling interest 5,153 4,880
Total equity 284,342 288,583
Total liabilities and equity  $  729,192  $ 732,934

The following table sets forth certain unaudited historical statements of income data for the periods indicated above derived from our unaudited condensed consolidated statements of income expressed in thousands of dollars:
  Three Months Ended June 30, Six Months Ended June 30,
($000's) 2010 2009 2010 2009 Percent Change
Revenues          
Attributable to River Business $ 34,259 $ 19,849 $ 58,534 $ 43,125 36%
Attributable to Offshore Supply Business 13,438 9,284 25,648 18,456 39%
Attributable to Ocean Business 12,910 25,748 30,655 51,116 -40%
Total revenues 60,607 54,881 114,837 112,697 2%
           
Voyage expenses          
Attributable to River Business (12,399) (9,209) (21,628) (19,001) 14%
Attributable to Offshore Supply Business (706) (312) (1,780) (719) 148%
Attributable to Ocean Business (2,083) (4,517) (4,823) (7,831) -38%
Total voyage expenses (15,188) (14,038) (28,231) (27,551) 2%
           
Running costs          
Attributable to River Business (8,410) (7,419) (14,830) (15,368) -4%
Attributable to Offshore Supply Business (5,751) (3,686) (12,212) (7,770) 57%
Attributable to Ocean Business (6,814) (8,020) (14,281) (16,119) -11%
Total running costs (20,975) (19,125) (41,323) (39,257) 5%
           
Amortization of dry dock & intangible assets (989) (1,142) (1,913) (2,225) -14%
Depreciation of vessels and equipment (7,232) (9,161) (15,031) (18,063) -17%
Administrative and commercial expenses (6,694) (6,120) (12,935) (11,616) 11%
Other operating income 65 195 513 961 -47%
           
Operating profit 9,594 5,490 15,917 14,946 6%
           
Financial expense and other financial expenses (7,516) (3,313) (14,968) (10,986) 36%
Financial income 111 123 203 218 -7%
Gains on derivative instruments, net 266 40 9,369 115 8047%
Investment in affiliates (110) 110 (155) 20 --
Other, net (328) (243) (451) (402) 12%
Total other expenses (7,577) (3,283) (6,002) (11,035) -46%
           
Income from continuing operations before income tax 2,017 2,207 9,915 3,911 154%
           
Income taxes expenses (1,232) (1,889) (642) (2,296) -72%
Net income attributable to non-controlling interest 125 95 273 225 21%
           
Net income from continuing operations $660 $223 $9,000 $1,390 547%
           
Loss from discontinued operation 0 (312) (515) (862) -40%
           
Net income (loss) attributable to Ultrapetrol (Bahamas) Ltd. $ 660 $ (89) $ 8,485 $ 528 1507%

The following table contains our unaudited statements of cash flows for the six months period ended June 30, 2010 and 2009:
  For the six-month periods ended June 30,
  2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES    
     
Net income  $ 8,758  $ 753
     
Adjustments to reconcile net income to net cash provided by operating activities:    
     
Loss from discontinued operations 515 862
Depreciation of vessels and equipment 15,031 18,063
Amortization of dry docking 1,695 1,855
Expenditure for dry docking (4,222) (2,464)
Gains on derivatives, net (9,369) (115)
Amortization of intangible assets 218 370
Loss on sale of vessels, net 314 --
Share-based compensation 700 889
Debt issuance expense amortization 750 1,059
Net loss (gain) from investment in affiliates 155 (20)
Allowance for doubtful accounts 84 150
Cash settlements of FFAs -- (70)
     
Changes in assets and liabilities:    
Decrease (increase) in assets:    
Accounts receivable (4,592) (4,979)
Other receivables, operating supplies and prepaid expenses (3,247) 5,880
Other 2,226 1,195
Increase (decrease) in liabilities:    
Accounts payable 5,205 (5,969)
Payable to related parties 296 78
Other 241 1,062
Net cash provided by operating activities from continuing operations 14,758 18,599
     
Net cash (used in) provided by operating activities from discontinued operations (1,960) 406
Total cash flows provided by operating activities 12,798 19,005
     
CASH FLOWS FROM INVESTING ACTIVITIES    
     
Purchase of vessels and equipment ($890 and $21,024 in 2010 and 2009 for vessels in construction)   (44,833) (42,081)
Net decrease in funding cash collateral of forward freight agreements 578 --
Cash settlements of FFAs 1,405 --
Proceeds from disposal of assets, net 26,656 --
Other -- 1,701
Net cash (used in) investing activities from continuing operations (16,194) (40,380)
     
Net cash provided by investing activities from discontinued operations 1,950 --
Total cash flows (used in) investing activities (14,244) (40,380)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
     
Scheduled repayments of long-term financial debt (5,507) (7,366)
Early repayments of long-term financial debt -- (22,894)
Proceeds from long-term financial debt -- 3,450
Other (280) (267)
Net cash (used in) financing activities from continuing operations (5,787) (27,077)
Net (decrease) in cash and cash equivalents (7,233) (48,452)
     
Cash and cash equivalents at the beginning of year (including $304 and $2,546 related to discontinued operations)  $ 53,201  $ 105,859
Cash and cash equivalents at the end of period (including $294 and $308 related to discontinued operations)  $ 45,968  $ 57,407

Supplemental Information:

The following table reconciles our EBITDA as defined in the Notes due 2014 and our Adjusted Consolidated EBITDA to our cash flow for the three months ended June 30, 2010 and 2009:

  Three Months Ended June 30,
($000's) 2010 2009
Total cash flows from operating activities 12,156 3,976
Total cash flows provided by (used in) investing activities (17,040) (17,185)
Total cash flows (used in) financing activities 11,786 (17,846)
     
Net cash provided by operating activities from continuing operations 13,685 3,960
Net cash (used in) provided by operating activities from discontinued operations (1,529) 16
Total cash flows from operating activities 12,156 3,976
     
 Plus    
     
Adjustments from continuing operations    
     
Increase / decrease in operating assets and liabilities (6,029) 6,300
Expenditure for dry docking 2,120 1,554
Income taxes 1,232 1,889
Financial expenses 6,247 5,966
(Gain) on disposal of assets (126) --
Net income attributable to non-controlling interest (125) (95)
Adjustment attributable to UP Offshore declassification (1) (4,995) --
Adjustment to gains on derivatives, net 1,486 --
Other adjustments (910) (1,303)
     
Adjustments from discontinued operations    
     
Increase / decrease in operating assets and liabilities 1,529 (632)
Financial expenses 4 3
Other adjustments -- 304
EBITDA as defined in the Notes due 2014 from continuing operations 12,585 18,271
EBITDA as defined in the Notes due 2014 from discontinued operations 4 (309)
Consolidated EBITDA as defined in the Notes due 2014 12,589 17,962
     
Plus    
Adjustment attributable to UP Offshore declassification 4,995 --
Adjustment to gains on derivatives, net (1,486) --
Gain on derivatives, net 266 110
Realized net gain on FFAs 1,251 --
Adjusted Consolidated EBITDA $17,615 $18,072

The following table reconciles our EBITDA as defined in the Notes due 2014 and our Adjusted Consolidated EBITDA to our cash flow for the six months ended June 30, 2010 and 2009:
  Six Months Ended June 30,
($000's) 2010 2009
Total cash flows from operating activities 12,798 19,005
Total cash flows provided by (used in) investing activities (14,244) (40,380)
Total cash flows (used in) financing activities (5,787) (27,077)
     
Net cash provided by operating activities from continuing operations 14,758 18,599
Net cash (used in) provided by operating activities from discontinued operations (1,960) 406
Total cash flows from operating activities 12,798 19,005
     
 Plus    
     
Adjustments from continuing operations    
     
Increase / decrease in operating assets and liabilities (129) 2,733
Expenditure for dry docking 4,222 2,464
Income taxes 642 2,296
Financial expenses 12,418 12,030
(Gain) on disposal of assets (314) --
Net income attributable to non-controlling interest (273) (225)
Adjustment attributable to UP Offshore declassification (1) (9,419) --
Gain on derivatives, net 9,369 --
Non-cash gains on FFAs (7,883) --
Other adjustments (1,689) (2,078)
     
Adjustments from discontinued operations    
     
Increase / decrease in operating assets and liabilities 1,445 (1,268)
Financial expenses 5 4
Other adjustments -- --
EBITDA as defined in the Notes due 2014 from continuing operations 21,702 35,819
EBITDA as defined in the Notes due 2014 from discontinued operations (510) (858)
Consolidated EBITDA as defined in the Notes due 2014 21,192 34,961
     
Plus    
Adjustment attributable to UP Offshore declassification 9,419 --
Non-cash gain on FFAs 7,883 185
Unrealized non-cash gain on FFAs (1,250) --
Adjusted Consolidated EBITDA $37,244 $35,146

(1) As of September 30, 2009, our Board of Directors declassified UP Offshore (Bahamas) Ltd. as a restricted subsidiary under the terms of the Indenture.

The use of the terms "EBITDA as defined in the Notes due 2014" and "Adjusted Consolidated EBITDA" in the current filing rather than EBITDA as has been used in previous filings, is responsive to the US Securities and Exchange Commission Release No. 34-47226 wherefrom if the measurement being used excludes "non-cash charges" or other similar concepts other than strictly interest, taxes, depreciation and amortization, or were otherwise to depart from the definition of EBITDA as included in the aforementioned release, it should be called "EBITDA as defined in the Notes due 2014" and "Adjusted Consolidated EBITDA" rather than EBITDA.

EBITDA as defined in the Notes due 2014 consists of net income (loss) prior to deductions for interest expense and other financial gains and losses related to the financing of the Company, income taxes, depreciation of vessels and equipment and amortization of drydock expense, intangible assets, financial gain (loss) on extinguishment of debt, premium paid for redemption of preferred shares and certain non-cash charges (including for instance losses on write-downs of vessels). The calculation of EBITDA as defined in the Notes due 2014 excludes from all items those amounts corresponding to unrestricted subsidiaries under the Indenture governing the Company's 9% First Preferred Ship Mortgage Notes due 2014 (the "Indenture") from the time of designation as such. We have provided EBITDA as defined in the Notes due 2014 in this report because we use it to, and believe it provides useful information to investors to evaluate our ability to incur and service indebtedness and it is a required disclosure to comply with a covenant contained in such Indenture. Adjusted Consolidated EBITDA in this filing represents EBITDA as defined in the Notes due 2014 plus EBITDA corresponding to unrestricted subsidiaries designated as such under the terms of the Indenture and other adjustments related to our FFAs. We do not intend for EBITDA as defined in the Notes due 2014 nor Adjusted Consolidated EBITDA to represent cash flows from operations, as defined by GAAP (on the date of calculation) and it should not be considered as an alternative to measure our liquidity. This definition of EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA may not be comparable to similarly titled measures disclosed by other companies. Generally, funds represented by EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA are available for management's discretionary use. Both EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported. These limitations include, among others, the following:
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments,
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not reflect changes in, or cash requirements for, our working capital needs,
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not include income taxes, which are a necessary and ongoing cost of our operations,
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts,
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not reflect the amortization of dry docking, or the cash requirements necessary to fund the required dry docks of our vessels,
  • Although depreciation is a non-cash charge, the assets being depreciated will often have to be replaced in the future, and EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA do not, therefore, reflect any cash requirements for such replacements, and
  • EBITDA as defined in the Notes due 2014 and Adjusted Consolidated EBITDA can be affected by the lease rather than purchase of fixed assets.

The following tables reconcile the Company's Adjusted Consolidated EBITDA to its Operating profit for the three months ended June 30, 2010 and 2009, on a consolidated and a per segment basis:
  Second Quarter Ended June 30, 2010
($000's) River Offshore Supply Ocean TOTAL
         
Segment operating profit $6,457 $3,535 ($398) $9,594
Depreciation and amortization 4,251 1,699 2,271 8,221
Investment in affiliates / Net income attributable to non-controlling interest in subsidiaries (102) (125) (8) (235)
Gains on derivatives, net  --   --  266 266
Other net (235) -- (93) (328)
Realized net gain on FFAs  --   --  1,251 1,251
         
Segment Adjusted EBITDA $10,371 $5,109 $3,289 $18,769
         
Items not included in Segment Adjusted EBITDA        
Financial income       111
Other financial expenses       (1,269)
         
Adjusted Consolidated EBITDA from continuing operations       $17,611
Adjusted Consolidated EBITDA from discontinued operations       $4
         
Adjusted Consolidated EBITDA       $17,615
         
         
         
  Second Quarter Ended June 30, 2009
($000's) River Offshore Supply Ocean TOTAL
         
Segment operating (loss) profit ($2,784) $2,322 $5,952 $5,490
Depreciation and amortization 3,533 1,369 5,401 10,303
Investment in affiliates / Net loss attributable to non-controlling interest in subsidiaries 78 (95) 32 15
Gains on derivatives, net  --  40  --  40
Other net (239)  (11) 7 (243)
         
Segment Adjusted EBITDA $588 $3,625 $11,392 $15,605
         
Items not included in Segment Adjusted EBITDA        
         
Non-cash (gains) losses on derivatives, net       0
Financial income       123
Other financial expenses       2,653
         
Adjusted Consolidated EBITDA from continuing operations       $18,381
Adjusted Consolidated EBITDA from discontinued operations       ($309)
         
Adjusted Consolidated EBITDA       $18,072

The following tables reconcile the Company's Adjusted Consolidated EBITDA to its Operating profit for the six months ended June 30, 2010 and 2009, on a consolidated and a per segment basis:
  Period Ended June 30, 2010
($000's) River Offshore Supply Ocean TOTAL
         
Segment operating profit $8,432 $5,244 $2,241 $15,917
Depreciation and amortization 8,277 3,360 5,307 16,944
Investment in affiliates / Net income attributable to non-controlling interest in subsidiaries (132) (273) (23) (428)
Net Gains on derivatives, net  --   --  9,369 9,369
Other net (445) 3 (9) (451)
Unrealized non-cash gains on FFAs   --   --  (1,250) (1,250)
         
Segment Adjusted EBITDA $16,132 $8,334 $15,635 $40,101
         
Items not included in Segment Adjusted EBITDA        
Financial income       203
Other financial income       (2,550)
         
Adjusted Consolidated EBITDA from continuing operations       $37,754
Adjusted Consolidated EBITDA from discontinued operations       ($510)
         
Adjusted Consolidated EBITDA       $37,244
         
         
         
         
  Period Ended June 30, 2009
($000's) River Offshore Supply Ocean TOTAL
         
Segment operating (loss) profit ($3,186) $4,384 $13,748 $14,946
Depreciation and amortization 6,774 2,697 10,817 20,288
Investment in affiliates / Net loss attributable to non-controlling interest in subsidiaries (7) (225) 27 (205)
Gains on derivatives, net  --  115  --  115
Other net (418)  (11) 27 (402)
         
Segment Adjusted EBITDA $3,163 $6,960 $24,619 $34,742
         
Items not included in Segment Adjusted EBITDA        
Financial income       218
Other financial expenses       1,044
         
Adjusted Consolidated EBITDA from continuing operations       $36,004
Adjusted Consolidated EBITDA from discontinued operations       ($858)
         
Adjusted Consolidated EBITDA       $35,146
CONTACT:  The IGB Group          Leon Berman          212-477-8438          lberman@igbir.com

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