UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





ý Annual Report Pursuant
to Section 13 or 15(d)


of
the Securities Exchange Act of 1934





For
the fiscal year ended December 31, 2009





or




o Transition Report
Pursuant to Section 13 or 15(d) of the


Securities
Exchange Act of 1934





For
the transition period from
                
to





Commission
file number 000-51442





GENCO
SHIPPING & TRADING LIMITED


(Exact
name of registrant as specified in its charter)





Republic
      of the Marshall Islands
            
            98-043-9758(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      No.)299
      Park Avenue, 20th
      Floor, New York, New York
            
            10171(Address
      of principal executive offices)
            
            (Zip
      Code)








Registrant’s
telephone number, including area code:(646) 443-8550





Securities
registered pursuant to Section 12(b) of the Act:





Title of
Each Class





Common
Stock, par value $.01 per share







Name of
Each Exchange on Which Registered




New
York Stock Exchange







Securities
registered pursuant to Section 12(g) of the Act:


None





Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.


Yeso Noý





Indicated by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.


Yeso Noý





Indicate by checkmark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90
days.










Yesý
Noo





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).


Yes oNoo





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.


ý





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definition of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large
accelerated filer ý        Accelerated
filer o      Non-accelerated
fileroSmaller reporting company o





Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Act).


Yeso Noý








The aggregate market value of the
registrant's voting common equity held by non-affiliates of the registrant on
the last business day of the registrant’s most recently completed second fiscal
quarter, computed by reference to the last sale price of such stock of $21.72
per share as of June 30, 2009 on the New York Stock Exchange, was approximately
$559.0 million.  The registrant has no non-voting common equity issued
and outstanding.  The determination of affiliate status for purposes
of this paragraph is not necessarily a conclusive determination for any other
purpose.





The
number of shares outstanding of the registrant's common stock as of March 1,
2010 was 31,842,798 shares.








DOCUMENTS
INCORPORATED BY REFERENCE





Portions of our Proxy Statement for the
2010 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission not later than 120 days after December 31, 2009, are
incorporated by reference in Part III herein.







2





PART
I





ITEM
1.  BUSINESS





OVERVIEW





We are a New York City-based company,
incorporated in the Marshall Islands in 2004.  We transport iron ore,
coal, grain, steel products and other drybulk cargoes along worldwide shipping
routes.  Our fleet currently consists of 35 drybulk carriers, 14 of
which we acquired from a subsidiary of The China National Cereals Oil and
Foodstuffs Corp., or COFCO, a Chinese conglomerate, in December 2004 and
during the first six months of 2005.  The Genco Muse was acquired in
October 2005 from Western Bulk Carriers, and in November 2006, we took delivery
of three drybulk vessels from affiliates of Franco Compania Naviera
S.A.  In July 2007, we entered into an agreement to acquire nine
Capesize vessels from companies within the Metrostar Management Corporation
group for a net purchase price of $1,111 million.  The Company
completed delivery of all of these vessels during 2009.  In August
2007, the Company also agreed to acquire six drybulk vessels (three Supramax and
three Handysize) from affiliates of Evalend Shipping Co. S.A. for a net purchase
price of $336 million.  The Company took delivery of five of these
vessels in December 2007 and the sixth vessel in January 2008.  During
2007, the Company sold the Genco Glory, a Handymax vessel, and the Genco
Commander, a Handymax vessel, and realized a gain of $27
million.  During February 2008, the Genco Trader, a Panamax vessel,
was sold to SW Shipping Co., Ltd. for $44 million, less a 2% third party
brokerage commission.  In June 2008, we entered into an agreement to
acquire six drybulk newbuildings (three Capesize and three Handysize) from
Lambert Navgation Ltd., Northville Navigation Ltd., Providence Navigation Ltd.,
and Primebulk Navigation Ltd., for an aggregate purchase price of $530
million.  We subsequently cancelled this acquisition in November 2008,
in order to strengthen our liquidity and in light of market conditions at the
time.  The cancellation resulted in a realized loss during the fourth
quarter of 2008 of $53.8 million as a result of the forfeiture of the deposit
and related interest.  Additionally, during May 2008, we agreed to
acquire three 2007-built vessels, consisting of two Panamax vessels and one
Supramax vessel from Bocimar Internation N.V. and Delphis N.V., for an aggregate
purchase price of approximately $257 million, which were delivered during
2008.  The majority of the vessels in our fleet are currently on time
charter contracts, and have an average remaining life of approximately 10.2
months as of December 31, 2009.  Six of our vessels currently operate
in vessel pools, such as the Bulkhandling Handymax Pool and the Lauritzen
Pool.   Under a pool arrangement, the vessels operate under a
time charter agreement whereby the cost of bunkers and port expenses are borne
by the pool and operating costs including crews, maintenance and insurance are
typically paid by the owner of the vessel.  Since the members of the
pool share in the revenue generated by the entire group of vessels in the pool,
and the pool operates in the spot market, the revenue earned by these three
vessels are subject to the fluctuations of the spot market.  Most of
our vessels are chartered to well-known charterers, including Lauritzen Bulkers
A/S or LB/IVS Pool, in which Lauritzen Bulkers A/S acts as the pool manager
(collectively, “Lauritzen Bulkers”), Cargill International S.A. (“Cargill”),
Pacific Basin Chartering Ltd. (“Pacbasin”), STX Panocean (UK) Co. Ltd. (“STX”),
COSCO Bulk Carriers Co., Ltd. (“Cosco”), and Hyundai Merchant Marine Co. Ltd.
(“HMMC”).





We intend to continue to grow our fleet
through timely and selective acquisitions of vessels in a manner that is
accretive to our cash flow.  In connection with the acquisitions made
in 2007 and our growth strategy, we negotiated a credit facility which we
entered into as of July 20, 2007 (our “2007 Credit Facility”) for a total amount
of $1,377 million that we have used to acquire vessels.  During
January 2009, we agreed to an amendment to our 2007 Credit Facility that
contained a waiver of the collateral maintenance requirement.  As a
condition of this waiver, among other things, we agreed to suspend our cash
dividends and share repurchases until such time as we can satisfy the collateral
maintenance requirement.  As of March 1, 2010, we had approximately
$12.5 million of available borrowing capacity under our 2007 Credit
Facility.





Our
management team and our other employees are responsible for the commercial and
strategic management of our fleet.  Commercial management includes the
negotiation of charters for vessels, managing the mix of various types of
charters, such as time charters and voyage charters, and monitoring the
performance of our vessels under their







3


charters.  Strategic
management includes locating, purchasing, financing and selling
vessels.  We currently contract with two independent technical
managers to provide technical management of our fleet at a lower cost than we
believe would be possible in-house.  Technical management involves the
day-to-day management of vessels, including performing routine maintenance,
attending to vessel operations and arranging for crews and
supplies.  Members of our New York City-based management team oversee
the activities of our independent technical managers.





We hold an investment in the capital
stock of Jinhui Shipping and Transportation Limited
(“Jinhui”).   Jinhui is a drybulk shipping owner and operator
focused on the Supramax segment of drybulk shipping.  At December 31,
2008, we deemed ourinvestment in Jinhui to
be other-than-temporarily impaired due to the severity of the decline in its
market value versus our original cost basis.  As a result, during the
fourth quarter of 2008, the Company recorded a $103.9 million impairment charge
in its Consolidated Statement of Operations.  During 2009, there were
no indicators of impairment as the market value of Jinhui shares exceeded our
new cost basis.





Our fleet currently consists of nine
Capesize, eight Panamax, four Supramax, six Handymax and eight Handysize drybulk
carriers, with an aggregate carrying capacity of approximately 2,903,000
deadweight tons (dwt).  As of December 31, 2009, the average age of
the vessels currently in our fleet was 7.0 years, as compared to the average age
for the world fleet of approximately 15 years for the drybulk shipping segments
in which we compete.  All of the vessels in our fleet were built in
shipyards with reputations for constructing high-quality vessels.





On
October 14, 2009, Baltic Trading Limited (“Baltic Trading”), our wholly owned
subsidiary, filed a registration statement on Form S-1 with the Securities and
Exchange Commission, or SEC.  Baltic Trading is a newly formed New
York City-based company incorporated in October 2009 in the Marshall Islands to
conduct a shipping business focused on the drybulk industry spot
market.  Baltic Trading is currently in the process of preparing for
its initial public offering.  If such initial public offering is
successful, we plan to enter into certain business arrangements with Baltic
Trading. Please see “Management’s Discussion & Analysis of Financial
Condition and Results of Operations” for further details of these
arrangements.





AVAILABLE
INFORMATION





We file annual, quarterly and current
reports, proxy statements, and other documents with the SEC, under the
Securities Exchange Act of 1934, or the Exchange Act.  The public may
read and copy any materials that we file with the SEC at the SEC’s Public
Reference Room at 100 F Street, NE, Washington, DC 20549.  The public
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330.  Also, the SEC maintains an Internet
website that contains reports, proxy and information statements, and other
information regarding issuers, including us, that file electronically with the
SEC.  The public can obtain any documents that we file with the SEC at
www.sec.gov.





In addition, our company website can be
found on the Internet at www.gencoshipping.com.  The website contains
information about us and our operations.  Copies of each of our
filings with the SEC on Form 10-K, Form 10-Q and Form 8-K, and all amendments to
those reports, can be viewed and downloaded free of charge after the reports and
amendments are electronically filed with or furnished to the SEC.  To
view the reports, access www.gencoshipping.com, click on Investor, then SEC
Filings.  No information on our company website is incorporated by
reference into this annual report on Form 10-K.





Any of the above documents can also be
obtained in print by any shareholder upon request to our Investor Relations
Department at the following address:





Corporate
Investor Relations


Genco
Shipping & Trading Limited


299 Park
Avenue, 20th
Floor


New York,
NY 10171









4






BUSINESS
STRATEGY





Our strategy is to manage and expand
our fleet in a manner that maximizes our cash flows from
operations.  To accomplish this objective, we intend to:





·
            Strategically expand the size
      of our fleet - We intend to acquire additional modern,
      high-quality drybulk carriers through timely and selective acquisitions of
      vessels in a manner that is accretive to our cash flows.  We
      expect to fund acquisitions of additional vessels using cash reserves set
      aside for this purpose, debt and utilizing equity financing
      alternatives.




·
            Continue to operate a
      high-quality fleet - We intend to maintain a modern,
      high-quality fleet that meets or exceeds stringent industry standards and
      complies with charterer requirements through our technical managers’
      rigorous and comprehensive maintenance program.  In addition,
      our technical managers maintain the quality of our vessels by carrying out
      regular inspections, both while in port and at
  sea.





·
            Pursue an appropriate balance
      of time and spot charters - Twenty-eight of our thirty-five
      vessels are under time charters or fixed pool agreements with an average
      remaining life of approximately 10.2 months as of December 31,
      2009.  These charters provide us with relatively stable revenues
      and a high fleet utilization.  We may in the future pursue other
      market opportunities for our vessels to capitalize on market conditions,
      including arranging longer or shorter charter periods and entering into
      short-term time charters, voyage charters and use of vessel
      pools.





·
            Maintain low-cost, highly
      efficient operations – During the year ended December 31,
      2009, we outsourced technical management of our fleet, primarily to Wallem
      Shipmanagement Limited (“Wallem”), Anglo-Eastern Group (“Anglo”), and
      Barber International Ltd. (“Barber”), third-party independent technical
      managers, at a cost we believe is lower than what we could achieve by
      performing the function in-house.  Commencing in 2009, we
      limited our technical managers to Wallem and Anglo to utilize more cost
      efficient crews.  Our management team actively monitors and
      controls vessel operating expenses incurred by the independent technical
      managers by overseeing their activities.  Finally, we seek to
      maintain low-cost, highly efficient operations by capitalizing on the cost
      savings and economies of scale that result from operating sister
      ships.





·
            Capitalize on our management
      team's reputation - We will continue to capitalize on our
      management team's reputation for high standards of performance,
      reliability and safety, and maintain strong relationships with major
      international charterers, many of whom consider the reputation of a vessel
      owner and operator when entering into time charters.  We believe
      that our management team's track record improves our relationships with
      high quality shipyards and financial institutions, many of which consider
      reputation to be an indicator of
  creditworthiness.





OUR
FLEET





Our fleet consists of nine Capesize,
eight Panamax, four Supramax, six Handymax and eight Handysize drybulk carriers,
with an aggregate carrying capacity of approximately 2,903,000
dwt.  As of December 31, 2009, the average age of the vessels
currently in our fleet was approximately 7.0 years, as compared to the average
age for the world fleet of approximately 15 years for the drybulk shipping
segments in which we compete.  All of the vessels in our fleet were
built in shipyards with reputations for constructing high-quality
vessels.  The table below summarizes the characteristics of our
vessels:





5





Vessel
            Class
            Dwt
            Year
      BuiltGenco
      Augustus
            Capesize
            180,151
            2007Genco
      Claudius
            Capesize
            169,025
            2010
      (1)Genco
      Constantine
            Capesize
            180,183
            2008Genco
      Commodus
            Capesize
            169,025
            2009Genco
      Hadrian
            Capesize
            169,694
            2008Genco
      London
            Capesize
            177,833
            2007Genco
      Maximus
            Capesize
            169,025
            2009Genco
      Tiberius
            Capesize
            175,874
            2007Genco
      Titus
            Capesize
            177,729
            2007Genco
      Acheron
            Panamax
            72,495
            1999Genco
      Beauty
            Panamax
            73,941
            1999Genco
      Knight
            Panamax
            73,941
            1999Genco
      Leader
            Panamax
            73,941
            1999Genco
      Raptor
            Panamax
            76,499
            2007Genco
      Surprise
            Panamax
            72,495
            1998Genco
      Thunder
            Panamax
            76,588
            2007Genco
      Vigour
            Panamax
            73,941
            1999Genco
      Cavalier
            Supramax
            53,617
            2007Genco
      Hunter
            Supramax
            58,729
            2007Genco
      Predator
            Supramax
            55,407
            2005Genco
      Warrior
            Supramax
            55,435
            2005Genco
      Carrier
            Handymax
            47,180
            1998Genco
      Marine
            Handymax
            45,222
            1996Genco
      Muse
            Handymax
            48,913
            2001Genco
      Prosperity
            Handymax
            47,180
            1997Genco
      Success
            Handymax
            47,186
            1997Genco
      Wisdom
            Handymax
            47,180
            1997Genco
      Challenger
            Handysize
            28,428
            2003Genco
      Champion
            Handysize
            28,445
            2006Genco
      Charger
            Handysize
            28,398
            2005Genco
      Explorer
            Handysize
            29,952
            1999Genco
      Pioneer
            Handysize
            29,952
            1999Genco
      Progress
            Handysize
            29,952
            1999Genco
      Reliance
            Handysize
            29,952
            1999Genco
      Sugar
            Handysize
            29,952
            1998(1)  On
      December 30, 2009, the Company took delivery of the Genco
      Claudius.  However, the vessel has been designated by Lloyd’s
      Register of Shipping as having been built in
  2010.




FLEET
MANAGEMENT





Our management team and other employees
are responsible for the commercial and strategic management of our
fleet.  Commercial management involves negotiating charters for
vessels, managing the mix of various types of charters, such as time charters
and voyage charters, and monitoring the performance of our vessels under their
charters.  Strategic management involves locating, purchasing,
financing and selling vessels.







6





We utilize the services of reputable
independent technical managers for the technical management of our
fleet.  We currently contract with Wallem and Anglo, independent
technical managers, for our technical management.  Commencing in 2009,
we limited our technical managers to Wallem and Anglo due to their access to
more cost effective crews.   Technical management involves the
day-to-day management of vessels, including performing routine maintenance,
attending to vessel operations and arranging for crews and
supplies.  Members of our New York City-based management team oversee
the activities of our independent technical managers.  The head of our
technical management team has over 30 years of experience in the shipping
industry.





Wallem, founded in 1971, and Anglo,
founded in 1974, are among the largest ship management companies in the
world.  These technical managers are known worldwide for their agency
networks, covering all major ports in China, Hong Kong, Japan, Vietnam, Taiwan,
Thailand, Malaysia, Indonesia, the Philippines and Singapore.  These
technical managers provide services to over 500 vessels of all types, including
Capesize, Panamax, Supramax, Handymax and Handysize drybulk carriers that meet
strict quality standards.





Under our technical management
agreements, our technical manager is obligated to:




·
              provide
      personnel to supervise the maintenance and general efficiency of our
      vessels;


·
            arrange
      and supervise the maintenance of our vessels to our standards to assure
      that our vessels comply with applicable national and international
      regulations and the requirements of our vessels' classification
      societies;





·
            select
      and train the crews for our vessels, including assuring that the crews
      have the correct certificates for the types of vessels on which they
      serve;





·
            check
      the compliance of the crews' licenses with the regulations of the vessels'
      flag states and the International Maritime Organization, or
      IMO;


·
              arrange
      the supply of spares and stores for our vessels;
  and


·
              report
      expense transactions to us, and make its procurement and accounting
      systems available to
us.




OUR
CHARTERS





As of February 26, 2010, we employed 29
of our 35 drybulk carriers under time charters.  A time charter
involves the hiring of a vessel from its owner for a period of time pursuant to
a contract under which the vessel owner places its ship (including its crew and
equipment) at the disposal of the charterer.  Under a time charter,
the charterer periodically pays a fixed daily charterhire rate to the owner of
the vessel and bears all voyage expenses, including the cost of bunkers
(“fuel”), port expenses, agents’ fees and canal dues.  Three of our
vessels, the Genco Constantine, Genco Titus and Genco Hadrian, are chartered
under time charters which include a profit-sharing element.  Under
these charter agreements, the Company receives a fixed rate of $52,750, $45,000
and $65,000 per day, respectively, and an additional profit-sharing
payment.  The profit-sharing between the Company and the respective
charterer for each 15-day period is calculated by taking the average over that
period of the published Baltic Cape Index of the four time charter routes as
reflected in daily reports.  If such average is more than the base
rate payable under the charter, the excess amount is allocable 50% to the
Company and 50% to the charterer.  A commission of 3.75% based on the
profit sharing amount due to the Company is incurred out of the Company’s
share.





Subject
to any restrictions in the contract, the charterer determines the type and
quantity of cargo to be carried and




7


the ports
of loading and discharging.  Our vessels operate worldwide within the
trading limits imposed by our insurance terms.  The technical
operation and navigation of the vessel at all times remains the responsibility
of the vessel owner, which is generally responsible for the vessel's operating
expenses, including the cost of crewing, insuring, repairing and maintaining the
vessel, costs of spares and consumable stores, tonnage taxes and other
miscellaneous expenses.





Each of our current time charters
expires within a range of dates (for example, a minimum of 11 and maximum of 13
months following delivery), with the exact end of the time charter left
unspecified to account for the uncertainty of when a vessel will complete its
final voyage under the time charter.  The charterer may extend the
charter period by any time that the vessel is off-hire.  If a vessel
remains off-hire for more than 30 consecutive days, the time charter may be
cancelled at the charterer's option.





In connection with the charter of each
of our vessels, we incur commissions generally ranging from 1.25% to 5.00% of
the total daily charterhire rate of each charter to third parties, depending on
the number of brokers involved with arranging the relevant charter.





Six of
our drybulk carriers are currently in vessel pools.  The Genco
Predator is in the Bulkhandling Handymax Pool and the Genco Explorer, Genco
Pioneer, Genco Progress, Genco Reliance and Genco Sugar are in the Lauritzen
Pool.  We believe that vessel pools provide cost-effective commercial
management activities for a group of similar class vessels.  The pool
arrangement provides the benefits of a large-scale operation and chartering
efficiencies that might not be available to smaller fleets.  Under the
pool arrangement, the vessels operate under a time charter agreement whereby the
cost of bunkers and port expenses are borne by the charterer and operating costs
including crews, maintenance and insurance are typically paid by the owner of
the vessel.  Since the members of the pool share in the revenue
generated by the entire group of vessels in the pool, and the pool operates in
the spot market, the revenue earned by these six vessels is subject to the
fluctuations of the spot market.





We monitor developments in the drybulk
shipping industry on a regular basis and strategically adjust the charterhire
periods for our vessels according to market conditions as they become available
for charter.


During
the beginning of 2009, the Genco Cavalier, a 2007-built Supramax vessel, was on
charter to Samsun Logix Corporation (“Samsun”), when Samsun filed for the
equivalent of bankruptcy protection in South Korea, otherwise referred to as a
rehabilitation application.  On February 5, 2010, the rehabilitation
plan submitted by Samsun was approved by the South Korean courts.  As
part of the rehabilitation process, our claim of approximately $17.2 million
will be settled in the following manner; thirty-four percent, or approximately
$5.9 million, will be paid in cash in annual installments on December 30th of
each year from 2010 through 2019 ranging in percentages from eight to seventeen;
the remaining sixty-six percent, or approximately $11.3 million, will be
converted to Samsun shares at a specified value per share.  Any cash
received from Samsun will be recorded as income upon receipt.





The
following table sets forth information about the current employment of the
vessels currently in our fleet as of February 24, 2010:





Vessel
            Year
              Built
            Charterer
            Charter
              Expiration
      (1)
            Cash
      Daily
              Rate
      (2)
            Revenue
              Daily
      Rate (3)Capesize VesselsGenco
      Augustus
            2007
            Cargill
      International S.A.
            December
      2010
            39,000Genco
      Tiberius
            2007
            Cargill
      International S.A.
            March
      2010
            45,263Genco
      London
            2007
            SK
      Shipping Co., Ltd
            August
      2010
            57,500
            64,250Genco
      Titus
            2007
            Cargill
      International S.A.
            September
      2011
            45,000(4)
            46,250Genco
      Constantine
            2008
            Cargill
      International S.A.
            August
      2012
            52,750(4)Genco
      Hadrian
            2008
            Cargill
      International S.A.
            October
      2012
            65,000(4)    8
   Genco
      Commodus
            2009
            Morgan
      Stanley Capital Group Inc.
            June
      2011
            36,000Genco
      Maximus
            2009
            Cargill
      International S.A.
            March
      2010
            31,750Genco
      Claudius
            2010
            Cargill
      International S.A.
            November
      2010
            36,000(5)Panamax VesselsGenco
      Beauty
            1999
            LD
      Commodities Suisse, Geneva
            March
      2010
            19,125Genco
      Knight
            1999
            Swissmarine
      Services S.A.
            March
      2010
            16,500Genco
      Leader
            1999
            Klaveness
      Chartering
            December
      2010
            20,000Genco
      Vigour
            1999
            Global
      Maritime Investments Ltd.
            November
      2010
            24,000Genco
      Acheron
            1999
            Global
      Chartering Ltd
              (a
      subsidiary of ArcelorMittal Group)
            July
      2011
            55,250Genco
      Surprise
            1998
            Hanjin
      Shipping Co., Ltd.
            December
      2010
            42,100Genco
      Raptor
            2007
            COSCO
      Bulk Carriers Co., Ltd.
            April
      2012
            52,800Genco
      Thunder
            2007
            Klaveness
      Chartering
            April
      2010
            20,000Supramax VesselsGenco
      Predator
            2005
            Bulkhandling
      Handymax A/S
            April
      2010
            Spot(6)Genco
      Warrior
            2005
            Hyundai
      Merchant Marine Co. Ltd.
            November
      2010
            38,750Genco
      Hunter
            2007
            Pacific
      Basin Chartering Ltd.
            March
      2010
            17,000Genco
      Cavalier
            2007
            Clipper
      Bulk Shipping NV
            Apr
      10
            20,000(7)Handymax VesselsGenco
      Success
            1997
            Korea
      Line Corporation
            February
      2011
            33,000(8)Genco
      Carrier
            1998
            Louis
      Dreyfus Corporation
            March
      2011
            37,000Genco
      Prosperity
            1997
            Pacific
      Basin Chartering Ltd
            June
      2011
            37,000Genco
      Wisdom
            1997
            Hyundai
      Merchant Marine Co. Ltd.
            February
      2011
            34,500Genco
      Marine
            1996
            STX
      Pan Ocean Co. Ltd.
            March
      2010
            15,500Genco
      Muse
            2001
            Global
      Maritime Investments Ltd.
            December
      2010
            17,750Handysize VesselsGenco
      Explorer
            1999
            Lauritzen
      Bulkers A/S
            May
      2010
            Spot(9)Genco
      Pioneer
            1999
            Lauritzen
      Bulkers A/S
            May
      2010
            Spot(9)Genco
      Progress
            1999
            Lauritzen
      Bulkers A/S
            February
      2011
            Spot(9)Genco
      Reliance
            1999
            Lauritzen
      Bulkers A/S
            February
      2011
            Spot(9)Genco
      Sugar
            1998
            Lauritzen
      Bulkers A/S
            February
      2011
            Spot(9)Genco
      Charger
            2005
            Pacific
      Basin Chartering Ltd.
            November
      2010
            24,000Genco
      Challenger
            2003
            Pacific
      Basin Chartering Ltd.
            November
      2010
            24,000Genco
      Champion
            2006
            Pacific
      Basin Chartering Ltd.
            November
      2010
            24,000







9








(1) The
charter expiration dates presented represent the earliest dates that our
charters may be terminated in the ordinary course.  Except for the
Genco Titus, Genco Constantine, and Genco Hadrian under the terms of each
contract, the charterer is entitled to extend the time charters from two to four
months in order to complete the vessel's final voyage plus any time the vessel
has been off-hire. The charterer of the Genco Titus and Genco Hadrian has the
option to extend the charter for a period of one year.  The Genco
Constantine has the option to extend the charter for a period of eight
months.





















CLASSIFICATION AND INSPECTION





All of
our vessels have been certified as being “in class” by the American Bureau of
Shipping (“ABS”), Det Norske Veritas (“DNV”) or Lloyd’s Register of Shipping
(“Lloyd’s”).  Each of these classification societies is a member of
the International Association of Classification Societies.  Every
commercial vessel’s hull and machinery is evaluated by a classification society
authorized by its country of registry.  The classification society
certifies that the vessel has been built and maintained in accordance with the
rules of the classification society and complies with applicable rules and
regulations of the vessel’s country of registry and the international
conventions of which that country is a member.  Each vessel is
inspected by a surveyor of the classification society in three surveys of
varying frequency and thoroughness: every year for the annual survey, every two
to three years for the intermediate survey and every four to five years for
special surveys.  Special surveys always require
drydocking.  Vessels that are 15 years old








10








or older
are required, as part of the intermediate survey process, to be drydocked every
24 to 30 months for inspection of the underwater portions of the vessel and for
necessary repairs stemming from the inspection.





In addition to the classification
inspections, many of our customers regularly inspect our vessels as a
precondition to chartering them for voyages.  We believe that our
well-maintained, high-quality vessels provide us with a competitive advantage in
the current environment of increasing regulation and customer emphasis on
quality.





We have implemented the International
Safety Management Code, which was promulgated by the International Maritime
Organization, or IMO (the United Nations agency for maritime safety and the
prevention of marine pollution by ships), to establish pollution prevention
requirements applicable to vessels.  We obtained documents of
compliance for our offices and safety management certificates for all of our
vessels for which the certificates are required by the IMO.





CREWING
AND EMPLOYEES





Each of our vessels is crewed with 20
to 24 officers and seamen.  Our technical managers are responsible for
locating and retaining qualified officers for our vessels.  The
crewing agencies handle each seaman's training, travel and payroll, and ensure
that all the seamen on our vessels have the qualifications and licenses required
to comply with international regulations and shipping conventions.  We
typically man our vessels with more crew members than are required by the
country of the vessel's flag in order to allow for the performance of routine
maintenance duties.





As of February 26, 2010, we employed 21
shore-based personnel and approximately 770 seagoing personnel on our
vessels.





CUSTOMERS





Our assessment of a charterer's
financial condition and reliability is an important factor in negotiating
employment for our vessels.  We generally charter our vessels to major
trading houses (including commodities traders), major producers and
government-owned entities rather than to more speculative or undercapitalized
entities.  Our customers include national, regional and international
companies, such as Lauritzen Bulkers, Cargill, Pacbasin, STX, Cosco, and HMMC.
For 2009, two of our charterers, Pacbasin and Cargill, accounted for more than
10% of our revenues.





COMPETITION





Our
business fluctuates in line with the main patterns of trade of the major drybulk
cargoes and varies according to changes in the supply and demand for these
items.  We operate in markets that are highly competitive and based
primarily on supply and demand.  We compete for charters on the basis
of price, vessel location and size, age and condition of the vessel, as well as
on our reputation as an owner and operator.  We compete with other
owners of drybulk carriers in the Capesize, Panamax, Supramax, Handymax and
Handysize class sectors, some of whom may also charter our vessels as
customers.  Ownership of drybulk carriers is highly fragmented and is
divided among approximately 1,450
independent drybulk carrier owners.





PERMITS
AND AUTHORIZATIONS





We are required by various governmental
and quasi-governmental agencies to obtain certain permits, licenses,
certificates and other authorizations with respect to our
vessels.  The kinds of permits, licenses, certificates and other
authorizations required for each vessel depend upon several factors, including
the commodity transported, the waters in which the vessel operates, the
nationality of the vessel’s crew and the age of the vessel.  We
believe that we have all material permits, licenses, certificates and other
authorizations necessary for the conduct of our operations.  However,
additional laws and regulations, environmental or otherwise, may be adopted
which could limit our ability to do business or increase the cost of our doing
business.








11





INSURANCE





General





The operation of any drybulk vessel
includes risks such as mechanical failure, collision, property loss, cargo loss
or damage and business interruption due to political circumstances in foreign
countries, piracy, hostilities and labor strikes.  In addition, there
is always an inherent possibility of marine disaster, including oil spills and
other environmental mishaps, and the liabilities arising from owning and
operating vessels in international trade.  The U.S. Oil Pollution Act
of 1990, or OPA, which imposes virtually unlimited liability upon owners,
operators and demise charterers of vessels trading in the U.S.-exclusive
economic zone for certain oil pollution accidents in the United States, has made
liability insurance more expensive for ship owners and operators trading in the
U.S. market.





While we maintain hull and machinery
insurance, war risks insurance, protection and indemnity cover, and freight,
demurrage and defense cover and loss of hire insurance for our fleet in amounts
that we believe to be prudent to cover normal risks in our operations, we may
not be able to achieve or maintain this level of coverage throughout a vessel's
useful life.  Furthermore, while we believe that our present insurance
coverage is adequate, not all risks can be insured, and there can be no
guarantee that any specific claim will be paid, or that we will always be able
to obtain adequate insurance coverage at reasonable rates.





Hull
and Machinery, War Risks, Kidnap and Ransom Insurance





We maintain marine hull and machinery,
war risks and kidnap and ransom insurance which cover the risk of actual or
constructive total loss, for all of our vessels.  Our vessels are each
covered up to at least fair market value with deductibles of $67,313 per vessel
per incident for our Handysize vessels, $83,125 per vessel per incident for our
Panamax, Supramax and Handymax vessels and $133,125 per vessel per incident for
our Capesize vessels.  The Company is covered, subject to limitations
in our policy, to have the crew released in the case of kidnapping due to piracy
in the Gulf of Aden / Somalia.





Protection
and Indemnity Insurance





Protection and indemnity insurance is
provided by mutual protection and indemnity associations, or P&I
Associations, which insure our third-party liabilities in connection with our
shipping activities.  This includes third-party liability and other
related expenses resulting from the injury or death of crew, passengers and
other third parties, the loss or damage to cargo, claims arising from collisions
with other vessels, damage to other third-party property, pollution arising from
oil or other substances and salvage, towing and other related costs, including
wreck removal.  Protection and indemnity insurance is a form of mutual
indemnity insurance, extended by protection and indemnity mutual associations,
or “clubs.” Our coverage is unlimited, with the exception of pollution incidents
as discussed below.





Our current protection and indemnity
insurance coverage for pollution is $1 billion per vessel per
incident.  The 13 P&I Associations that comprise the International
Group insure approximately 90% of the world's commercial tonnage and have
entered into a pooling agreement to reinsure each association's
liabilities.  As a member of a P&I Association, which is a member
of the International Group, we are subject to calls payable to the associations
based on the group's claim records as well as the claim records of all other
members of the individual associations and members of the pool of P&I
Associations comprising the International Group.





Loss
of Hire Insurance





We maintain loss of hire insurance,
which covers business interruptions and related losses that result from the loss
of use of a vessel.  Our loss of hire insurance has a 14-day
deductible and provides claim coverage for up to











12








90 days.  Loss
of hire insurance for piracy in the Gulf of Aden / Somalia has a 20-day
deductible and provides claim coverage for up to 50 days.





ENVIRONMENTAL
AND OTHER REGULATION





Government regulation significantly
affects the ownership and operation of our vessels.  We are subject to
international conventions and treaties, national, state and local laws and
regulations in force in the countries in which our vessels may operate or are
registered relating to safety and health and environmental protection including
the storage, handling, emission, transportation and discharge of hazardous and
non-hazardous materials, and the remediation of contamination and liability for
damage to natural resources.  Compliance with such laws, regulations
and other requirements entails significant expense, including vessel
modifications and implementation of certain operating procedures.





A variety
of governmental and private entities subject our vessels to both scheduled and
unscheduled inspections.  These entities include the local port
authorities, (applicable national authorities such as the U.S. Coast Guard and
harbor masters), classification societies, flag state administrations (countries
of registry) and charterers.  Some of these entities require us to
obtain permits, licenses, certificates and other authorizations for the
operation of our vessels.  Our failure to maintain necessary permits,
licenses, certificates or authorizations could require us to incur substantial
costs or temporarily suspend the operation of one or more of our
vessels.





In recent periods, heightened levels of
environmental and operational safety concerns among insurance underwriters,
regulators and charterers have led to greater inspection and safety requirements
on all vessels and may accelerate the scrapping of older vessels throughout the
drybulk shipping industry.  Increasing environmental concerns have
created a demand for vessels that conform to the stricter environmental
standards.  We believe that the operation of our vessels is in
substantial compliance with applicable environmental laws and regulations and
that our vessels have all material permits, licenses, certificates or other
authorizations necessary for the conduct of our operations.  However,
because such laws and regulations are frequently changed and may impose
increasingly stricter requirements, we cannot predict the ultimate cost of
complying with these requirements, or the impact of these requirements on the
resale value or useful lives of our vessels.  In addition, a future
serious marine incident that results in significant oil pollution or otherwise
causes significant adverse environmental impact could result in additional
legislation or regulation that could negatively affect our
profitability.





International Maritime Organization
(IMO)





The IMO,
the United Nations agency for maritime safety and the prevention of pollution by
ships, has adopted the International Convention for the Prevention of Marine
Pollution, 1973, as modified by the related Protocol of 1978, which has been
updated through various amendments, or the MARPOL Convention.  The
MARPOL Convention establishes environmental standards relating to oil leakage or
spilling, garbage management, sewage, air emissions, handling and disposal of
noxious liquids and the handling of harmful substances in packaged
forms.  The IMO adopted regulations that set forth pollution
prevention requirements applicable to drybulk carriers.  These
regulations have been adopted by over 150 nations, including many of the
jurisdictions in which our vessels operate.







13







In September 1997, the IMO adopted
Annex VI to the MARPOL Convention to address air pollution from
ships.  Effective May 2005, Annex VI sets limits on sulfur oxide and
nitrogen oxide emissions from all commercial vessel exhausts and prohibits
deliberate emissions of ozone depleting substances (such as halons and
chlorofluorocarbons), emissions of volatile organic compounds from cargo tanks,
and the shipboard incineration of specific substances.  Annex VI also
includes a global cap on the sulfur content of fuel oil and allows for special
areas to be established with more stringent controls on sulfur
emissions.  In October 2008, the IMO adopted amendments to Annex VI
regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and
ozone-depleting substances, which amendments enter into force on July 1,
2010.  The amended Annex VI will reduce air pollution from vessels by,
among other things, (i) implementing a progressive reduction of sulfur oxide
emissions from ships by reducing the global sulfur fuel cap reduced initially to
3.50% (from the current cap of 4.50%), effective from January 1, 2012, then
progressively to 0.50%, effective from January 1, 2020, subject to a feasibility
review to be completed no later than 2018; and (ii) establishing new tiers of
stringent nitrogen oxide emissions standards for new marine engines, depending
on their date of installation.  The United States ratified the Annex
VI amendments in October 2008, and the U.S. Environmental Protection Agency, or
EPA, promulgated equivalent emissions standards in late 2009.





The
United States and Canada have requested IMO to designate the area extending 200
nautical miles from the Atlantic/Gulf and Pacific coasts of the U.S. and Canada
and the Hawaiian Islands as Emission Control Areas under the MARPOL Annex VI
amendments, which would subject ocean-going vessels in these areas to stringent
emissions controls and cause us to incur additional costs.  In July
2009, the IMO accepted the proposal in principle, and all member states party to
MARPOL Annex VI will vote on the proposal in March 2010.  Even if the
proposal is not adopted, we cannot assure you that the United States or Canada
will not adopt more stringent emissions standards independent of the
IMO.





Safety
Management System Requirements





The IMO
also adopted the International Convention for the Safety of Life at Sea, or
SOLAS and the International Convention on Load Lines, or the LL Convention,
which impose a variety of standards that regulate the design and operational
features of ships.  The IMO periodically revises the SOLAS Convention
and LL Convention standards.





Under
Chapter IX of SOLAS, the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention, or ISM Code, our operations are
also subject to environmental standards and requirements contained in the ISM
Code promulgated by the IMO.  The ISM Code requires the party with
operational control of a vessel to develop an extensive safety management system
that includes, among other things, the adoption of a safety and environmental
protection policy setting forth instructions and procedures for operating its
vessels safely and describing procedures for responding to
emergencies.  We rely upon the safety management system that we and
our technical manager have developed for compliance with the ISM
Code.  The failure of a ship owner or bareboat charterer to comply
with the ISM Code may subject such party to increased liability, may decrease
available insurance coverage for the affected vessels and may result in a denial
of access to, or detention in, certain ports.





The ISM Code requires that vessel
operators also obtain a safety management certificate for each vessel they
operate.  This certificate evidences compliance by a vessel’s
management with code requirements for a safety management system.  No
vessel can obtain a certificate unless its manager has been awarded a document
of compliance, issued by each flag state, under the ISM Code.  We
believe that we have all material requisite documents of compliance for our
offices and safety management certificates for all of our vessels for which such
certificates are required by the IMO.  We renew these documents of
compliance and safety management certificates as required.





Pollution
Control and Liability Requirements





IMO has negotiated international
conventions that impose liability for pollution in international waters and the
territorial waters of the nations signatory to such conventions.  For
example, IMO adopted an International








14








Convention
for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM
Convention, in February 2004.  The BWM Convention’s implementing
regulations call for a phased introduction of mandatory ballast water exchange
requirements (beginning in 2009), to be replaced in time with mandatory
concentration limits.  The BWM Convention will not become effective
until 12 months after it has been adopted by 30 states, the combined merchant
fleets of which represent not less than 35% of the gross tonnage of the world’s
merchant shipping.  To date, there has not been sufficient adoption of
this standard for it to take force.





Although the United States is not a
party, many countries have ratified and follow the liability plan adopted by the
IMO and set out in the International Convention on Civil Liability for Oil
Pollution Damage of 1969, as amended in 2000, or the CLC.  Under this
convention and depending on whether the country in which the damage results is a
party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly
liable, subject to certain defenses, for pollution damage caused in the
territorial waters of a contracting state by discharge of persistent
oil.  The limits on liability outlined in the 1992 Protocol use the
International Monetary Fund currency unit of Special Drawing Rights, or
SDR.  Under an amendment to the 1992 Protocol that became effective on
November 1, 2003, for vessels between 5,000 and 140,000 gross tons (a unit
of measurement for the total enclosed spaces within a vessel), liability is
limited to approximately 4.51 million SDR plus 631 SDR for each additional gross
ton over 5,000.  For vessels of over 140,000 gross tons, liability is
limited to 89.77 million SDR.  The exchange rate between
SDRs and dollars was 0.655892 SDR per dollar on February 19, 2010.The
right to limit liability is forfeited under the CLC where the spill is caused by
the vessel owner’s actual fault and under the 1992 Protocol where the spill is
caused by the vessel owner’s intentional or reckless conduct.  Vessels
trading with states that are parties to these conventions must provide evidence
of insurance covering the liability of the owner.  In jurisdictions
where the CLC has not been adopted, various legislative schemes or common law
govern, and liability is imposed either on the basis of fault or in a manner
similar to that of the CLC.  We believe that our protection and
indemnity insurance covers the liability under the plan adopted by the
IMO.





Noncompliance with the ISM Code or
other IMO regulations may subject the vessel owner or bareboat charterer to
increased liability, lead to decreases in available insurance coverage for
affected vessels or result in the denial of access to, or detention in, some
ports.  The U.S. Coast Guard and European Union authorities have
indicated that vessels not in compliance with the ISM Code by the applicable
deadlines will be prohibited from trading in U.S. and European Union ports,
respectively.  As of the date of this report, each of our vessels is
ISM Code certified.  However, there can be no assurance that such
certificate will be maintained.





The IMO continues to review and
introduce new regulations.  It is impossible to predict what
additional regulations, if any, may be passed by the IMO and what effect, if
any, such regulations might have on our operations.





The U.S. Oil Pollution Act of
1990 and Comprehensive
Environmental Response, Compensation and Liability Act





The U.S. Oil Pollution Act of 1990, or
OPA, established an extensive regulatory and liability regime for the protection
and cleanup of the environment from oil spills.  OPA affects all
owners and operators whose vessels trade in the United States, its territories
and possessions or whose vessels operate in U.S. waters, which includes the U.S.
territorial sea and its 200 nautical mile exclusive economic
zone.  The United States has also enacted the Comprehensive
Environmental Response, Compensation and Liability Act, or CERCLA, which applies
to the discharge of hazardous substances other than oil, whether on land or at
sea.  Both OPA and CERCLA impact our operations.





Under OPA, vessel owners, operators and
bareboat charterers are “responsible parties” and are jointly, severally and
strictly liable (unless the spill results solely from the act or omission of a
third party, an act of God or an act of war) for all containment and clean-up
costs and other damages arising from discharges or threatened discharges of oil
from their vessels.  OPA defines these other damages broadly to
include:





·
            natural
      resources damage and related assessment
costs;








15







·
            real
      and personal property damage;





·
            net
      loss of taxes, royalties, rents, fees and other lost
    revenues;





·
            lost
      profits or impairment of earning capacity due to property or natural
      resources damage; and





·
            net
      cost of public services necessitated by a spill response, such as
      protection from fire, safety or health hazards, and loss of subsistence
      use of natural resources.





Effective July 31, 2009, the U.S. Coast
Guard adjusted the limits of OPA liability for non-tank vessels to the greater
of $1,000 per gross ton or $854,400 (subject to possible adjustment for
inflation). CERCLA, which applies to owners and operators of vessels, contains a
similar liability regime and provides for cleanup, removal and natural resource
damages. Liability under CERCLA is limited to the greater of $300 per gross ton
or $5 million for vessels carrying a hazardous substance as cargo and the
greater of $300 per gross ton or $0.5 million for any other vessel. These OPA
and CERCLA limits of liability do not apply if an incident was directly caused
by violation of applicable U.S. federal safety, construction or operating
regulations or by a responsible party’s gross negligence or willful misconduct,
or if the responsible party fails or refuses to report the incident or to
cooperate and assist in connection with oil removal activities.





OPA and the U.S. Coast Guard also
require owners and operators of vessels to establish and maintain with the U.S.
Coast Guard evidence of financial responsibility sufficient to meet the limit of
their potential liability under OPA and CERCLA. Vessel owners and operators may
satisfy their financial responsibility obligations by providing a proof of
insurance, a surety bond, self-insurance or a guaranty. We plan to comply with
the U.S. Coast Guard’s financial responsibility regulations by providing a
certificate of responsibility evidencing sufficient self-insurance.





We currently maintain pollution
liability coverage insurance in the amount of $1 billion per incident for
each of our vessels.  If the damages from a catastrophic spill were to
exceed our insurance coverage, it could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.





Other
Environmental Initiatives





The U.S. Clean Water Act, or CWA,
prohibits the discharge of oil or hazardous substances in U.S. navigable waters
unless authorized by a duly-issued permit or exemption, and imposes strict
liability in the form of penalties for any unauthorized
discharges.  The CWA also imposes substantial liability for the costs
of removal, remediation and damages and complements the remedies available under
OPA and CERCLA.





The EPA regulates the discharge of
ballast water and other substances in U.S. waters under the
CWA.  Effective February 6, 2009, EPA regulations require vessels 79
feet in length or longer (other than commercial fishing and recreational
vessels) to comply with a Vessel General Permit authorizing ballast water
discharges and other discharges incidental to the operation of
vessels.  The Vessel General Permit imposes technology and
water-quality based effluent limits for certain types of discharges and
establishes specific inspection, monitoring, recordkeeping and reporting
requirements to ensure the effluent limits are met. U.S. Coast Guard
regulations adopted under the U.S. National Invasive Species Act, or NISA, also
impose mandatory ballast water management practices for all vessels equipped
with ballast water tanks entering or operating in U.S. waters, and in 2009 the
Coast Guard proposed new ballast water management standards and practices,
including limits regarding ballast water releases.  Compliance with
the EPA and the U.S. Coast Guard regulations could require the installation of
equipment on our vessels to treat ballast water before it is discharged or the
implementation of other port facility disposal arrangements or procedures at
potentially substantial cost, and/or otherwise restrict our vessels from
entering U.S. waters.












16






European Union
Regulations




In October 2009, the
European Union amended a directive to impose criminal sanctions for illicit
ship-source discharges of polluting substances, including minor discharges, if
committed with intent, recklessly or with serious negligence
and the discharges individually or in the aggregate result in deterioration of
the quality of water. Criminal liability for pollution may result in substantial
penalties or fines and increased civil liability
claims.




Greenhouse Gas Regulation





In February 2005, the Kyoto Protocol to
the United Nations Framework Convention on Climate Change, or UNFCCC, which we
refer to as the Kyoto Protocol, entered into force. Pursuant to the Kyoto
Protocol, adopting countries are required to implement national programs to
reduce emissions of certain gases, generally referred to as greenhouse gases,
which are suspected of contributing to global warming. Currently, the emissions
of greenhouse gases from international shipping are not subject to the Kyoto
Protocol. However, international negotiations are continuing with respect to a
successor to the Kyoto Protocol, which sets emission reduction targets through
2012, and restrictions on shipping emissions may be included in any new treaty.
In December 2009, more than 27 nations, including the United States and China,
signed the Copenhagen Accord, which includes a non-binding commitment to reduce
greenhouse gas emissions. The European Union has indicated that it intends to
propose an expansion of the existing European Union emissions trading scheme to
include emissions of greenhouse gases from vessels, if such emissions are not
regulated through the IMO or the UNFCCC by December 31, 2010. In the United
States, the EPA has issued a final finding that greenhouse gases threaten public
health and safety, and has promulgated regulations, expected to be finalized in
March 2010, regulating the emission of greenhouse gases from motor vehicles and
stationary sources.  The EPA may decide in the future to regulate
greenhouse gas emissions from ships and has already been petitioned by the
California Attorney General to regulate greenhouse gas emissions from
ocean-going vessels.  Other federal and state regulations relating to
the control of greenhouse gas emissions may follow, including the climate change
initiatives that are being considered in the U.S. Congress.  In
addition, the IMO is evaluating various mandatory measures to reduce greenhouse
gas emissions from international shipping, including market-based
instruments.  Any passage of climate control legislation or other
regulatory initiatives by the EU, U.S., IMO or other countries where we operate
that restrict emissions of greenhouse gases could require us to make significant
financial expenditures that we cannot predict with certainty at this
time.





Vessel
Security Regulations





Since the
terrorist attacks of September 11, 2001, there have been a variety of
initiatives intended to enhance vessel security.  On November 25,
2002, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, came
into effect.  To implement certain portions of the MTSA, in July 2003,
the U.S. Coast Guard issued regulations requiring the implementation of certain
security requirements aboard vessels operating in waters subject to the
jurisdiction of the United States.  Similarly, in December 2002,
amendments to SOLAS created a new chapter of the convention dealing specifically
with maritime security.  The new chapter became effective in July 2004
and imposes various detailed security obligations on vessels and port
authorities, most of which are contained in the newly created International Ship
and Port Facilities Security Code, or the ISPS Code.  The ISPS Code is
designed to protect ports and international shipping against
terrorism.  After July 1, 2004, to trade internationally, a vessel
must attain an International Ship Security Certificate from a recognized
security organization approved by the vessel’s flag state.  Among the
various requirements are:





·
            on-board
      installation of automatic identification systems to provide a means for
      the automatic transmission of safety-related information from among
      similarly equipped ships and shore stations, including information on a
      ship’s identity, position, course, speed and navigational
      status;


·
            on-board
      installation of ship security alert systems, which do not sound on the
      vessel but only alert the authorities on shore;


·
            the
      development of vessel security plans;


·
            ship
      identification number to be permanently marked on a vessel’s
      hull;


·
            a
      continuous synopsis record kept onboard showing a vessel’s history
      including the name of the ship and of the state whose flag the ship is
      entitled to fly, the date on which the ship was registered with that
      state, the ship’s identification number, the port at which the ship is
      registered and the name of the registered owner(s) and their registered
      address; and


·
            compliance
      with flag state security certification
  requirements.








17





The U.S. Coast Guard regulations,
intended to align with international maritime security standards, exempt from
MTSA vessel security measures non-U.S. vessels that have on board, as of July 1,
2004, a valid International Ship Security Certificate attesting to the vessel’s
compliance with SOLAS security requirements and the ISPS Code.  We
have implemented the various security measures addressed by the MTSA, SOLAS and
the ISPS Code.





Inspection
by Classification Societies





Every
oceangoing vessel must be ‘‘classed’’ by a classification
society.  The classification society certifies that the vessel is ‘‘in
class,’’ signifying that the vessel has been built and maintained in accordance
with the rules of the classification society and complies with applicable rules
and regulations of the vessel’s country of registry and the international
conventions of which that country is a member.  In addition, where
surveys are required by international conventions and corresponding laws and
ordinances of a flag state, the classification society will undertake them on
application or by official order, acting on behalf of the authorities
concerned.





The
classification society also undertakes on request other surveys and checks that
are required by regulations and requirements of the flag state.  These
surveys are subject to agreements made in each individual case and/or to the
regulations of the country concerned.





For
maintenance of the class certification, regular and extraordinary surveys of
hull, machinery, including the electrical plant, and any special equipment
classed are required to be performed as follows:





·
            Annual
      Surveys:  For seagoing ships, annual surveys are
      conducted for the hull and the machinery, including the electrical plant,
      and where applicable for special equipment classed, at intervals of 12
      months from the date of commencement of the class period indicated in the
      certificate.


·
            Intermediate
      Surveys:  Extended annual surveys are referred to as
      intermediate surveys and typically are conducted two and one-half years
      after commissioning and each class renewal.  Intermediate
      surveys may be carried out on the occasion of the second or third annual
      survey.


·
            Class Renewal
      Surveys:  Class renewal surveys, also known as special
      surveys, are carried out for the ship’s hull, machinery, including the
      electrical plant, and for any special equipment classed, at the intervals
      indicated by the character of classification for the hull.  At
      the special survey, the vessel is thoroughly examined, including
      audio-gauging to determine the thickness of the steel
      structures.  Should the thickness be found to be less than class
      requirements, the classification society would prescribe steel
      renewals.  The classification society may grant a one-year grace
      period for completion of the special survey.  Substantial
      amounts of money may have to be spent for steel renewals to pass a special
      survey if the vessel experiences excessive wear and tear.  In
      lieu of the special survey every four or five years, depending on whether
      a grace period was granted, a vessel owner has the option of arranging
      with the classification society for the vessel’s hull or machinery to be
      on a continuous survey cycle, in which every part of the vessel would be
      surveyed within a five-year cycle.  Upon a vessel owner’s
      request, the surveys required for class renewal may be split according to
      an agreed schedule to extend over the entire period of
      class.  This process is referred to as continuous class
      renewal.





All areas
subject to survey as defined by the classification society are required to be
surveyed at least once per class period, unless shorter intervals between
surveys are prescribed elsewhere.  The period between two subsequent
surveys of each area must not exceed five years.





Most
vessels are also drydocked every 30 to 36 months for inspection of the
underwater parts and for repairs related to inspections.  If any
defects are found, the classification surveyor will issue a ‘‘recommendation’’
which must be rectified by the vessel owner within prescribed time
limits.








18





Most
insurance underwriters make it a condition for insurance coverage that a vessel
be certified as ‘‘in class’’ by a classification society which is a member of
the International Association of Classification Societies.  All of our
vessels have been certified as being “in class” by ABS, BV, NK, DNV or
Lloyd’s.  All new and secondhand vessels that we purchase must be
certified prior to their delivery under our standard agreements.





SEASONALITY





We operate our vessels in markets that
have historically exhibited seasonal variations in demand and, as a result,
charter rates.  We seek to mitigate the risk of these seasonal
variations by entering into long-term time charters for our vessels, where
possible.  However, this seasonality may result in quarter-to-quarter
volatility in our operating results, depending on when we enter into our time
charters or if our vessels trade on the spot market.  The drybulk
sector is typically stronger in the fall and winter months in anticipation of
increased consumption of coal and raw materials in the northern hemisphere
during the winter months.  As a result, our revenues could be weaker
during the fiscal quarters ended June 30 and September 30, and conversely, our
revenues could be stronger during the quarters ended December 31 and March
31.





ITEM
1A.  RISK FACTORS





ADDITIONAL
FACTORS THAT MAY AFFECT FUTURE RESULTS





This annual report on Form 10-K
contains forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.  Such
forward-looking statements use words such as “anticipate,” “budget,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of
similar meaning in connection with a discussion of potential future events,
circumstances or future operating or financial performance.  These
forward-looking statements are based on our management’s current expectations
and observations.  Included among the factors that, in our view, could
cause actual results to differ materially from the forward looking statements
contained in this annual report on Form 10-K are the following: (i) changes in
demand or rates in the drybulk shipping industry; (ii) changes in the supply of
or demand for drybulk products, generally or in particular regions; (iii)
changes in the supply of drybulk carriers including newbuilding of vessels or
lower than anticipated scrapping of older vessels; (iv) changes in rules and
regulations applicable to the cargo industry, including, without limitation,
legislation adopted by international organizations or by individual countries
and actions taken by regulatory authorities; (v) increases in costs and expenses
including but not limited to: crew wages, insurance, provisions, repairs,
maintenance and general and administrative expenses; (vi) the adequacy of our
insurance arrangements; (vii) changes in general domestic and international
political conditions; (viii) changes in the condition of the Company’s vessels
or applicable maintenance or regulatory standards (which may affect, among other
things, our anticipated drydocking or maintenance and repair costs) and
unanticipated drydock expenditures; (ix) the amount of offhire time needed to
complete repairs on vessels and the timing and amount of any reimbursement by
our insurance carriers for insurance claims including offhire days; (x) our
acquisition or disposition of vessels; (xi) the completion of definitive
documentation with respect to time charters; (xii) charterers’ compliance with
the terms of their charters in the current market environment; (xiii) those
other risks and uncertainties discussed below under the heading “RISK FACTORS
RELATED TO OUR BUSINESS & OPERATIONS”, and (xiv) other factors listed from
time to time in our filings with the Securities and Exchange
Commission.





The following risk factors and other
information included in this report should be carefully
considered.  If any of the following risks actually occur, our
business, financial condition, operating results or cash flows could be
materially and adversely affected and the trading price of our common stock
could decline.





RISK
FACTORS RELATED TO OUR BUSINESS AND OPERATIONS





Industry
Specific Risk Factors






19





The current
global economic downturn may continue to negatively impact our
business.





In the
current global economy, operating businesses have been facing tightening credit,
weakening demand for goods and services, deteriorating international liquidity
conditions, and declining markets.  Lower demand for drybulk cargoes
as well as diminished trade credit available for the delivery of such cargoes
have led to decreased demand for drybulk vessels, creating downward pressure on
charter rates.  Although vessel values have stabilized over the past
few months, general market volatility has resulted from uncertainty about
sovereign debt and fears of countries such as Greece, Portugal and Spain
defaulting on their governments’ financial obligations.   If the
current global economic environment persists or worsens, we may be
negatively affected in the following ways:





·
            We
      may not be able to employ our vessels at charter rates as favorable to us
      as historical rates or operate our vessels
  profitably.





·
            The
      market value of our vessels could decrease, which may cause us to
      recognize losses if any of our vessels are sold or if their values are
      impaired.  In connection with this risk, we recently amended our
      credit facility to obtain a waiver of the collateral maintenance
      requirement until we can satisfy the requirement and meet certain other
      conditions.   If we did not have such a waiver, such a
      decline in the market value of our vessels could prevent us from borrowing
      under our credit facility or trigger a default under its
      covenants.





·
            Our
      charterers with long-term time charters may request to renegotiate the
      terms of our charters with them.  As a general matter, we do not
      agree to make changes to the terms of our charters in response to such
      requests.  As a result, our charterers may fail to meet their
      obligations under our long-term time
charters.





·
            The
      value of our investment in Jinhui could decline in future years, and we
      may recognize impairment losses if we were to sell our shares or if the
      value of our investment is
impaired.





The
occurrence of any of the foregoing could have a material adverse effect on our
business, results of operations, cash flows, financial condition and ability to
pay dividends.





Charterhire rates for drybulk
carriers are volatile and are currently at relatively low levels as compared to
historical levelsand may further decrease in the
future, which may adversely affect our earnings.




The
abrupt and dramatic downturn in the drybulk charter market, from which we derive
the large majority of our revenues, has severely affected the drybulk shipping
industry. The Baltic Dry Index, an index published by The Baltic Exchange of
shipping rates for 20 key drybulk routes, fell 94% from a peak of 11,793 in May
2008 to a low of 663 in December 2008. It subsequently rose to a high of 4,291
on June 3, 2009 and then declined to 2,163 as of September 24, 2009. It was
2,707 as of February 24, 2010. There can be no assurance that the drybulk
charter market will recover over the next several months and the market could
continue to decline further. These circumstances, which result from the economic
dislocation worldwide and the disruption of the credit markets, have had a
number of adverse consequences for drybulk shipping, including, among other
things:





·
            an
      absence of financing for vessels;





·
            no
      active second-hand market for the sale of
  vessels;





·
            extremely
      low charter rates, particularly for vessels employed in the spot
      market;





·
            widespread
      loan covenant defaults in the drybulk shipping industry;
    and





·
            declaration
      of bankruptcy by some operators and shipowners as well as
      charterers.








20





The
occurrence of one or more of these events could adversely affect our business,
results of operations, cash flows, financial condition and ability to pay
dividends.




Because
we generally charter our vessels pursuant to time charters, we are exposed to
changes in spot market rates for drybulk carriers at the time of entering into
charterhire contracts and such changes may affect our earnings and the value of
our drybulk carriers at any given time.  We cannot assure you that we
will be able to successfully charter our vessels in the future or renew existing
charters at rates sufficient to allow us to meet our obligations or to pay
dividends to our shareholders.  The supply of and demand for shipping
capacity strongly influences freight rates.  Because the factors
affecting the supply and demand for vessels are outside of our control and are
unpredictable, the nature, timing, direction and degree of changes in industry
conditions are also unpredictable.




Factors that influence demand for
vessel capacity include:




·
            demand
      for and production of drybulk
products;




·
            global
      and regional economic and political conditions including developments in
      international trade, fluctuations in industrial and agricultural
      production and armed conflicts;




·
            the
      distance drybulk cargo is to be moved by
sea;




·
            environmental
      and other regulatory developments;
and




·
            changes
      in seaborne and other transportation
patterns.




The factors that influence the supply
of vessel capacity include:




·
            the
      number of newbuilding deliveries;




·
            port
      and canal congestion;




·
            the
      scrapping rate of older vessels;




·
            vessel
      casualties; and




·
            the
      number of vessels that are out of service, i.e., laid-up, drydocked,
      awaiting repairs or otherwise not available for
  hire.




In addition to the prevailing and
anticipated freight rates, factors that affect the rate of newbuilding,
scrapping and laying-up include newbuilding prices, secondhand vessel values in
relation to scrap prices, costs of bunkers and other operating costs, costs
associated with classification society surveys, normal maintenance and insurance
coverage, the efficiency and age profile of the existing fleet in the market and
government and industry regulation of maritime transportation practices,
particularly environmental protection laws and regulations.  These
factors influencing the supply of and demand for shipping capacity are outside
of our control, and we may not be able to correctly assess the nature, timing
and degree of changes in industry conditions.




We anticipate that the future demand
for our drybulk carriers will be dependent upon economic growth in the world's
economies, including China and India, seasonal and regional changes in demand,
changes in the capacity of the global drybulk carrier fleet and the sources and
supply of drybulk cargo to be transported by sea.  The capacity of the
global drybulk carrier fleet seems likely to increase and we can provide no
assurance as to the timing or extent of future economic
growth.  Adverse economic, political, social or other developments
could have a material adverse effect on our business, results of operations,
cash flows, financial condition and ability to pay dividends.








21





An
oversupply of drybulk carrier capacity may lead to reductions in charterhire
rates and profitability.




The
market supply of drybulk carriers has been increasing as a result of the
delivery of numerous newbuilding orders over the last few
years.  Currently, we believe there is an oversupply of vessels, as
evidenced by some carriers letting their ships sit idle rather than operate them
at current rates.





Newbuildings
were delivered in significant numbers starting at the beginning of 2006 and
continued to be delivered in significant numbers through 2007, 2008 and
2009.  An oversupply of drybulk carrier capacity may result in a
reduction of charterhire rates, as evidenced by historically low rates in
December 2008.  If such a reduction continues, upon the expiration or
termination of our vessels’ current charters, we may only be able to re-charter
our vessels at reduced or unprofitable rates, or we may not be able to charter
these vessels at all.  The occurrence of these events could have a
material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





The
market values of our vessels may decrease, which could adversely affect our
operating results, cause us to breach one or more of the covenants in our 2007
Credit Facility or limit the total amount that we may borrow under our 2007
Credit Facility.




If the book value of one of our vessels
is impaired due to unfavorable market conditions or a vessel is sold at a price
below its book value, we would incur a loss that could adversely affect our
financial results.  Also, we have entered into a credit agreement with
a syndicate of commercial lenders that provides us with the 2007 Credit
Facility.  If the market value of our fleet declines, we may not be in
compliance with certain provisions of our 2007 Credit Facility, and we may not
be able to refinance our debt or obtain additional financing under the 2007
Credit Facility or otherwise.  In January 2009, we obtained a waiver
of the collateral maintenance requirement under our 2007 Credit Facility,
subject to certain conditions as mentioned above.  This requirement is
waived effective for the year ended December 31, 2008 and until the Company can
represent that it is in compliance with all of its financial covenants and is
otherwise able to pay a dividend and purchase or redeem shares of common stock
under the terms of the 2007 Credit Facility in effect before the 2009
Amendment.  With the exception of the collateral maintenance financial
covenant, the Company believes that it is in compliance with its covenants under
the 2007 Credit Facility.  Without a waiver of the kind provided in
the recent amendment to our 2007 Credit Facility, a decrease in the fair market
value of our vessels may cause us to breach one or more of the covenants in our
2007 Credit Facility, which could accelerate the repayment of outstanding
borrowings under the facility, or may limit the total amount that we may borrow
under the facility.  We cannot assure you that we will satisfy all our
debt covenants in the future or that our lenders will waive any future failure
to satisfy these covenants.  The occurrence of these events could have
a material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





A further economic slowdown in the
Asia Pacific region could have a material adverse effect on our business,
financial position and results of operations.





A significant number of the port calls
made by our vessels involve the loading or discharging of raw materials and
semi-finished products in ports in the Asia Pacific region.  As a
result, a negative change in economic conditions in any Asia Pacific country,
and particularly in China or Japan, could have an adverse effect on our
business, results of operations, cash flows, financial condition and ability to
pay dividends.  In particular, in recent years, China has been one of
the world's fastest growing economies in terms of gross domestic product,
especially during 2009, when China was one of the few countries that recorded
substantial gross domestic product growth. We cannot assure you that the Chinese
economy will not experience a significant contraction in the
future.  Moreover, a significant or protracted slowdown in the
economies of the United States, the European Union or various Asian countries
may adversely affect economic growth in China and elsewhere.  Our
business, results of operations, cash flows, financial condition and ability to
pay dividends will likely be materially and adversely affected by an economic
downturn in any of these countries.








22





We are subject to regulation and
liability under environmental and operational safety laws that could require
significant expenditures and affect our cash flows and net income and could
subject us to increased liability under applicable law or
regulation.




Our business and the operation of our
vessels are materially affected by government regulation in the form of
international conventions and national, state and local laws and regulations in
force in the jurisdictions in which the vessels operate, as well as in the
countries of their registration.  Because such conventions, laws, and
regulations are often revised, we cannot predict the ultimate cost of complying
with them or their impact on the resale prices or useful lives of our
vessels.  Additional conventions, laws and regulations may be adopted
that could limit our ability to do business or increase the cost of our doing
business and that may materially adversely affect our business, results of
operations, cash flows, financial condition and ability to pay
dividends.  We are required by various governmental and
quasi-governmental agencies to obtain certain permits, licenses, certificates
and financial assurances with respect to our operations.




The
operation of our vessels is affected by the requirements set forth in the United
Nations' International Maritime Organization's International Management Code for
the Safe Operation of Ships and Pollution Prevention, or ISM
Code.  The ISM Code requires shipowners, ship managers and bareboat
charterers to develop and maintain an extensive "Safety Management System" that
includes the adoption of a safety and environmental protection policy setting
forth instructions and procedures for safe operation and describing procedures
for dealing with emergencies.  The failure of a shipowner or bareboat
charterer to comply with the ISM Code may subject it to increased liability, may
invalidate existing insurance or decrease available insurance coverage for the
affected vessels and may result in a denial of access to, or detention in,
certain ports.




Although
the United States is not a party, many countries have ratified and follow the
liability scheme adopted by the IMO and set out in the International Convention
on Civil Liability for Oil Pollution Damage of 1969, as amended in 2000, or the
CLC, and the Convention for the Establishment of an International Fund for Oil
Pollution of 1971, as amended.  Under these conventions, a vessel's
registered owner is strictly liable for pollution damage caused on the
territorial waters of a contracting state by discharge of persistent oil,
subject to certain complete defenses.




Many of
the countries that have ratified the CLC have increased the liability limits
through a 1992 Protocol to the CLC.  The right to limit liability is
also forfeited under the CLC where the spill is caused by the owner's actual
fault and, under the 1992 Protocol, where the spill is caused by the owner's
intentional or reckless conduct.  Vessels trading to contracting
states must provide evidence of insurance coverage.  In jurisdictions
where the CLC has not been adopted, various legislative schemes or common law
govern, and liability is imposed either on the basis of fault or in a manner
similar to the CLC.




The
United States Oil Pollution Act of 1990, or OPA, established an extensive
regulatory and liability regime for the protection and cleanup of the
environment from oil spills.  OPA affects all owners and operators
whose vessels trade in the United States, its territories and possessions or
whose vessels operate in U.S. waters.  OPA allows for potentially
unlimited liability without regard to fault of vessel owners, operators and
bareboat charterers for all containment and clean-up costs and other damages
arising from discharges or threatened discharges of oil from their vessels,
including bunkers, in U.S. waters.  OPA also expressly permits
individual states to impose their own liability regimes with regard to hazardous
materials and oil pollution materials occurring within their
boundaries.




While we
do not carry oil as cargo, we do carry bunkers in our drybulk
carriers.  We currently maintain, for each of our vessels, pollution
liability coverage insurance of $1 billion per incident.  Damages from
a catastrophic spill exceeding our insurance coverage could have a material
adverse effect on our business, results of operations, cash flows, financial
condition and ability to pay dividends.





Increased
inspection procedures and tighter import and export controls could increase
costs and disrupt our business.








23





International
shipping is subject to various security and customs inspection and related
procedures in countries of origin and destination.  Inspection
procedures can result in the seizure of the contents of our vessels, delays in
the loading, offloading or delivery and the levying of customs duties, fines or
other penalties against us.




Since the
terrorist attacks of September 11, 2001, there have been a variety of
initiatives intended to enhance vessel security. On November 25, 2002, the U.S.
Maritime Transportation Security Act of 2002, or the MTSA, came into effect. To
implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard vessels operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to the International Convention
for the Safety of Life at Sea, or SOLAS, created a new chapter of the convention
dealing specifically with maritime security. The new chapter became effective in
July 2004 and imposes various detailed security obligations on vessels and port
authorities, most of which are contained in the newly created International Ship
and Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed
to protect ports and international shipping against terrorism. After July 1,
2004, to trade internationally, a vessel must attain an International Ship
Security Certificate from a recognized security organization approved by the
vessel's flag state.




The
United States Coast Guard (USCG) has developed the Electronic Notice of
Arrival/Departure (e-NOA/D) application to provide the means of fulfilling the
arrival and departure notification requirements of the USCG and Customs and
Border Protection (CBP) online. Prior to September 11, 2001, ships or their
agents notified the Marine Safety Office (MSO)/Captain Of The Port (COTP) zone,
within 24 hours of the vessel's arrival via telephone, facsimile (fax), or
electronic mail (e-mail). Due to the events of September 11, 2001, the USCG's
National Vessel Movement Center (NVMC)/Ship Arrival Notification System (SANS)
was set up as part of the U.S. Department of Homeland Security (DHS) initiative.
Also, as a result of this initiative, the advanced notice time requirement
changed from 24 hours' notice to 96 hours' notice (or 24 hours' notice,
depending upon normal transit time). The NOAs and/or NODs continue to be
submitted via telephone, fax, or e-mail, but are now to be submitted to the
NVMC, where watch personnel entered the information into a central USCG
database. Additionally, the National Security Agency has identified certain
countries known for high terrorist activities and if a vessel has either called
some of these identified countries in its previous ports and/or the members of
the crew are from any of these identified countries, more stringent security
requirements must be met.




On June
6, 2005, the Advanced Passenger Information System (APIS) Final Rule became
effective (19CFR 4.7b and 4.64). Pursuant to these regulations, a commercial
carrier arriving into or departing from the United States is required to
electronically transmit an APIS manifest to U.S. Customs and Border Protection
(CBP) through an approved electronic interchange and programming format. All
international commercial carriers transporting passengers and /or crewmembers
must obtain an international carrier bond and place it on file with the CBP
prior to entry or departure from the United States. The minimum bond amount is
$50,000.




It is
possible that changes to inspection procedures could impose additional financial
and legal obligations on us.  Furthermore, changes to inspection
procedures could also impose additional costs and obligations on our customers
and may, in certain cases, render the shipment of certain types of cargo
uneconomical or impractical.  Any such changes or developments may
have a material adverse effect on our business, results of operations, cash
flows, financial condition and ability to pay dividends.




We
operate our vessels worldwide and as a result, our vessels are exposed to
international risks which could reduce revenue or increase
expenses.





The
international shipping industry is an inherently risky business involving global
operations.  Our vessels will be at risk of damage or loss because of
events such as mechanical failure, collision, human error, war, terrorism,
piracy, cargo loss and bad weather.  All these hazards can result in
death or injury to persons, increased costs, loss of revenues, loss or damage to
property (including cargo), environmental damage, higher insurance rates, damage
to our customer relationships, harm to our reputation as a safe and reliable
operator and delay or rerouting.  In addition, changing economic,
regulatory and political conditions in some countries, including political and
military conflicts,








24








have from
time to time resulted in attacks on vessels, mining of waterways, piracy,
terrorism, labor strikes and boycotts.  These sorts of events could
interfere with shipping routes and result in market disruptions which could have
a material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





If our
vessels suffer damage, they may need to be repaired at a drydocking
facility.  The costs of drydock repairs are unpredictable and can be
substantial.  We may have to pay drydocking costs that our insurance
does not cover in full.  In addition, space at drydocking facilities
is sometimes limited and not all drydocking facilities are conveniently
located.  We may be unable to find space at a suitable drydocking
facility or we may be forced to travel to a drydocking facility that is distant
from the relevant vessel's position.  The loss of earnings while our
vessels are being repaired and repositioned or from being forced to wait for
space or to travel to more distant drydocking facilities, as well as the actual
cost of repairs, could negatively impact our business, results of operations,
cash flows, financial condition and ability to pay dividends.





The operation of drybulk carriers
has certain unique operational risks which could affect our earnings and cash
flow.




The
operation of certain ship types, such as drybulk carriers, has certain unique
risks.  With a drybulk carrier, the cargo itself and its interaction
with the vessel can be an operational risk.  By their nature, drybulk
cargoes are often heavy, dense, easily shifted, and react badly to water
exposure.  In addition, drybulk carriers are often subjected to
battering treatment during unloading operations with grabs, jackhammers (to pry
encrusted cargoes out of the hold) and small bulldozers.  This
treatment may cause damage to the vessel.  Vessels damaged due to
treatment during unloading procedures may be more susceptible to breach to the
sea.  Hull breaches in drybulk carriers may lead to the flooding of
the vessels' holds.  If a drybulk carrier suffers flooding in its
forward holds, the bulk cargo may become so dense and waterlogged that its
pressure may buckle the vessel's bulkheads, leading to the loss of a
vessel.  If we are unable to adequately maintain our vessels, we may
be unable to prevent these events.  Any of these circumstances or
events may have a material adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay
dividends.  In addition, the loss of any of our vessels could harm our
reputation as a safe and reliable vessel owner and operator.




Acts
of piracy on ocean-going vessels have continued and could adversely affect our
business.




Acts of
piracy have historically affected ocean-going vessels trading in regions of the
world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off
the coast of Somalia.  Throughout 2008 and 2009, the frequency of
piracy incidents increased significantly, particularly in the Gulf of Aden off
the coast of Somalia.  If these piracy attacks result in regions in
which our vessels are deployed being characterized by insurers as “war risk”
zones, or Joint War Committee (JWC) “war and strikes” listed areas, premiums
payable for such coverage could increase significantly and such insurance
coverage may be more difficult to obtain.  In addition, crew costs,
including costs which may be incurred to the extent we employ onboard security
guards, could increase in such circumstances.  We may not be
adequately insured to cover losses from these incidents, which could have a
material adverse effect on us.  In addition, detention hijacking as a
result of an act of piracy against our vessels, or an increase in cost, or
unavailability of insurance for our vessels, could have a material adverse
impact on our business, results of operations, cash flows, financial condition
and ability to pay dividends.





In
response to piracy incidents in 2008 and 2009, particularly in the Gulf of Aden
off the coast of Somalia, following consultation with regulatory authorities, we
may station guards on some of our vessels in some instances. While our use of
guards is intended to deter and prevent the hijacking of our vessels, it may
also increase our risk of liability for death or injury to persons or damage to
personal property. While we believe we will generally have adequate insurance in
place to cover such liability, if we do not, it could adversely impact our
business, results of operations, cash flows, and financial
condition.






25






Terrorist
attacks, such as the attacks on the United States on September 11, 2001,
and other acts of violence or war may affect the financial markets, our vessels,
our operations, or our customer and may therefore have an adverse effect
on our business, results of operations and financial
condition.




Terrorist
attacks such as the attacks in the United States on September 11, 2001 and
the United States’ continuing response to these attacks, the attacks in London
on July 7, 2005, as well as the threat of future terrorist attacks, continue to
cause uncertainty in the world financial markets, including the energy
markets.  The continuing conflict in Iraq may lead to
additional acts of terrorism, armed conflict and civil disturbance around the
world, which may contribute to further instability including in the drybulk
shipping markets.  Terrorist attacks, such as the attack on the M.T.
Limburg in Yemen in October 2002, may also negatively affect our trade patterns
or other operations and directly impact our vessels or our
customers.  Future terrorist attacks could result in increased
volatility of the financial markets in the United States and globally and could
result in an economic recession in the United States or the
world.  Any of these occurrences, or the perception that drybulk
carriers are potential terrorist targets, could have a material adverse impact
on our business, results of operations, cash flows, financial condition and
ability to pay dividends.





Compliance
with safety and other vessel requirements imposed by classification societies
may be costly and could reduce our net cash flows and net income.





The hull and machinery of every
commercial vessel must be certified as being "in class" by a classification
society authorized by its country of registry.  The classification
society certifies that a vessel is safe and seaworthy in accordance with the
applicable rules and regulations of the country of registry of the vessel and
the Safety of Life at Sea Convention.  Our vessels are currently
enrolled with the ABS, NK, DNV, or Lloyd’s, each of which is a member of the
International Association of Classification Societies.





A vessel must undergo annual surveys,
intermediate surveys and special surveys.  In lieu of a special
survey, a vessel's machinery may be placed on a continuous survey cycle, under
which the machinery would be surveyed periodically over a five-year
period.  Our vessels are on special survey cycles for hull inspection
and continuous survey cycles for machinery inspection.  Every vessel
is also required to be drydocked every two to three years for inspection of its
underwater parts.





If any vessel does not maintain its
class or fails any annual, intermediate or special survey, the vessel will be
unable to trade between ports and will be unemployable and we could be in
violation of certain covenants in our 2007 Credit Facility, which could have a
material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





We
may be unable to attract and retain qualified, skilled employees or crew
necessary to operate our business.





Our
success depends in large part on our ability to attract and retain highly
skilled and qualified personnel.  In crewing our vessels, we require
technically skilled employees with specialized training who can perform
physically demanding work.  Competition to attract and retain
qualified crew members is intense.  If we are not able to increase our
rates to compensate for any crew cost increases, it could have a material
adverse effect on our business, results of operations, cash flows, financial
condition and ability to pay dividends.  Any inability we experience
in the future to hire, train and retain a sufficient number of qualified
employees could impair our ability to manage, maintain and grow our business,
which could have a material adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay
dividends.





Labor
interruptions could disrupt our business.





Our vessels are manned by masters,
officers and crews that are employed by third parties.  If not
resolved in a timely and cost-effective manner, industrial action or other labor
unrest could prevent or hinder our operations from








26








being
carried out normally and could have a material adverse effect on our business,
results of operations, cash flows, financial condition and ability to pay
dividends.





The
smuggling of drugs or other contraband onto our vessels may lead to governmental
claims against us.





We expect that our vessels will call in
ports in South America and other areas where smugglers attempt to hide drugs and
other contraband on vessels, with or without the knowledge of crew
members.  To the extent our vessels are found with contraband, whether
inside or attached to the hull of our vessel and whether with or without the
knowledge of any of our crew, we may face governmental or other regulatory
claims which could have an adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay
dividends.





Arrests
of our vessels by maritime claimants could cause a significant loss of earnings
for the related off-hire period.




Crew
members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages.  In many jurisdictions, a
maritime lienholder may enforce its lien by “arresting” or “attaching” a vessel
through foreclosure proceedings.  The arrest or attachment of one or
more of our vessels could result in a significant loss of earnings for the
related off-hire period.  In addition, in jurisdictions where the
“sister ship” theory of liability applies, a claimant may arrest the vessel
which is subject to the claimant’s maritime lien and any “associated” vessel,
which is any vessel owned or controlled by the same owner.  In
countries with “sister ship” liability laws, claims might be asserted against us
or any of our vessels for liabilities of other vessels that we own.





Governments
could requisition our vessels during a period of war or emergency, resulting in
loss of earnings.





A government of a vessel's registry
could requisition for title or seize our vessels.  Requisition for
title occurs when a government takes control of a vessel and becomes the
owner.  A government could also requisition our vessels for
hire.  Requisition for hire occurs when a government takes control of
a vessel and effectively becomes the charterer at dictated charter
rates.  Generally, requisitions occur during a period of war or
emergency.  Government requisition of one or more of our vessels could
have a material adverse effect on our business, results of operations, cash
flows, financial condition and ability to pay dividends.





Increases
in fuel prices could adversely affect our profits.




From time
to time, we may operate our vessels on spot charters either directly or by
placing them in pools with similar vessels.  Spot charter arrangements
generally provide that the vessel owner or pool operator bear the cost of fuel
in the form of bunkers, which is a significant vessel operating
expense.  We currently have three vessels operating in vessel pools,
and we may arrange for more vessels to do so, depending on market
conditions.  Also, the cost of fuel may also be a factor in
negotiating charter rates in the future.  As a result, an increase in
the price of fuel beyond our expectations may adversely affect our
profitability, cash flows and ability to pay dividends.  The price and
supply of fuel is unpredictable and fluctuates as a result of events outside our
control, including geo-political developments, supply and demand for oil and
gas, actions by members of the Organization of the Petroleum Exporting Countries
and other oil and gas producers, war and unrest in oil producing countries and
regions, regional production patterns and environmental concerns and
regulations.





Our
results of operations are subject to seasonal fluctuations, which may adversely
affect our financial condition.





We operate our vessels in markets that
have historically exhibited seasonal variations in demand and, as a result,
charter rates.  This seasonality may result in quarter-to-quarter
volatility in our operating results, depending on when we enter into our time
charters or if our vessels trade on the spot market.  The drybulk
sector is typically stronger in the fall and winter months in anticipation of
increased consumption of coal and raw materials in the northern hemisphere
during the winter months.  As a result, our revenues could be weaker
during the fiscal quarters ended June 30 and September 30, and conversely, our
revenue could be stronger during the quarters ended December








27








31 and
March 31.  This seasonality could have a material adverse effect on
our business, results of operations, cash flows, financial condition and ability
to pay dividends.





Company
Specific Risk Factors





Our
earnings will be adversely affected if we do not successfully employ our
vessels.





As of February 26, 2010, all but six of
the vessels in our fleet were engaged under time charter contracts that expire
(assuming the option periods in the time charters are not exercised) between
March 2010 and October 2012.  Six of our vessels currently trade
in the spot charter market through participation in pool
arrangements.  Although time charters provide relatively steady
streams of revenues, our vessels committed to time charters may not be available
for spot voyages during periods of increasing charterhire rates, when spot
voyages might be more profitable.  The drybulk market is volatile, and
in the past charterhire rates for drybulk carriers have sometimes declined below
operating costs of vessels.  If our vessels become available for
employment in the spot market or under new time charters during periods when
market prices have fallen, we may have to employ our vessels at depressed market
prices, which would lead to reduced or volatile earnings.  To the
extent our vessels trade in the spot charter market, we may experience
fluctuations in revenue, cash flow and net income.  The spot charter
market is highly competitive, and spot market voyage charter rates may fluctuate
dramatically based primarily on the worldwide supply of drybulk vessels
available in the market and the worldwide demand for the transportation of
drybulk cargoes.  We can provide no assurance that future charterhire
rates will enable us to operate our vessels profitably.  In addition,
our standard time charter contracts with our customers specify certain
performance parameters, which if not met can result in customer
claims.  Such claims may have a material adverse effect on our
business, results of operations, cash flows, financial condition and ability to
pay dividends.





If
we cannot find profitable employment for additional vessels that we acquire, our
earnings will be adversely affected.





We generally acquire vessels free of
charter, although we have and may again acquire some vessels with continuing
time charters.  In addition, where a vessel has been under a voyage
charter, it is rare in the shipping industry for the last charterer of the
vessel in the seller's hands to continue as the first charterer of the vessel in
the buyer's hands.  To the extent we operate our vessels in vessel
pools, the profitable employment of our vessels depends to some degree on the
ability of the pool operators.  We provide no assurance that we will
be able to arrange immediate or profitable employment for vessels that we
acquire.  If we cannot do so, it could have a material adverse effect
on our business, results of operations, cash flows, financial condition and
ability to pay dividends.





We
depend upon a small number of charterers for a large part of our
revenues.  The loss of one or more of these charterers could adversely
affect our financial performance.





We have derived a significant part of
our revenues from a small number of charterers.  For the year ended
December 31, 2009, 100% of our revenues were derived from 23
charterers.  Additionally, approximately 44.4% of our revenues were
derived from two charterers, Pacbasin and Cargill.  If we were to lose
any of these charterers, or if any of these charterers significantly reduced its
use of our services or was unable to make charter payments to us, it could have
a material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





Our
practice of purchasing and operating previously owned vessels may result in
increased operating costs and vessels off-hire, which could adversely affect our
earnings.





All of our drybulk carriers, other than
the Genco Augustus, Genco Tiberius, Genco Titus, Genco London, Genco
Constantine, Genco Raptor, Genco Cavalier, Genco Thunder, Genco Hadrian, Genco
Commodus, Genco Maximus and Genco Claudius, were previously owned by third
parties.  Our current business strategy includes additional growth
through the acquisition of previously owned vessels.  While we
typically inspect previously owned vessels before purchase, this does not
provide us with the same knowledge about their condition that we would
have








28








had if
these vessels had been built for and operated exclusively by
us.  Accordingly, we may not discover defects or other problems with
such vessels before purchase.  Any such hidden defects or problems,
when detected, may be expensive to repair, and if not detected, may result in
accidents or other incidents for which we may become liable to third
parties.  Also, when purchasing previously owned vessels, we do not
receive the benefit of any builder warranties if the vessels we buy are older
than one year.





In general, the costs to maintain a
vessel in good operating condition increase with the age of the
vessel.  Older vessels are typically less fuel-efficient than more
recently constructed vessels due to improvements in engine
technology.





Governmental regulations, safety and
other equipment standards related to the age of vessels may require expenditures
for alterations or the addition of new equipment to some of our vessels and may
restrict the type of activities in which these vessels may engage.  We
cannot assure you that, as our vessels age, market conditions will justify those
expenditures or enable us to operate our vessels profitably during the remainder
of their useful lives.  As a result, regulations and standards could
have a material adverse effect on our business, results of operations, cash
flows, financial condition and ability to pay dividends.




An
increase in operating costs could adversely affect our cash flow and financial
condition.




Our vessel operating expenses include
the costs of crew, provisions, deck and engine stores, lube oil, bunkers,
insurance and maintenance and repairs, which depend on a variety of factors,
many of which are beyond our control.  Some of these costs, primarily
relating to insurance and enhanced security measures implemented after
September 11, 2001 and as a result of a recent increase in the frequency of
acts of piracy, have been increasing.  In addition, to the extent we
enter the spot charter market, we need to include the cost of bunkers as part of
our voyage expenses.  The price of bunker fuel may increase in the
future.  If our vessels suffer damage, they may need to be repaired at
a drydocking facility.  The costs of drydock repairs are unpredictable
and can be substantial.  Increases in any of these costs could have a
material adverse effect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





We
depend to a significant degree upon third-party managers to provide the
technical management of our fleet.  Any failure of these technical
managers to perform their obligations to us could adversely affect our
business.





We have contracted the technical
management of our fleet, including crewing, maintenance and repair services, to
third-party technical management companies.  The failure of these
technical managers to perform their obligations could materially and adversely
affect our business, results of operations, cash flows, financial condition and
ability to pay dividends.  Although we may have rights against our
third-party managers if they default on their obligations to us, our
shareholders will share that recourse only indirectly to the extent that we
recover funds.





In
the highly competitive international drybulk shipping industry, we may not be
able to compete for charters with new entrants or established companies with
greater resources.




We employ our vessels in a highly
competitive market that is capital intensive and highly
fragmented.  Competition arises primarily from other vessel owners,
some of whom have substantially greater resources than we
do.  Competition for the transportation of drybulk cargoes can be
intense and depends on price, location, size, age, condition and the
acceptability of the vessel and its managers to the charterers.  Due
in part to the highly fragmented market, competitors with greater resources
could enter and operate larger fleets through consolidations or acquisitions
that may be able to offer better prices and fleets than we are able to
offer.






29





The
aging of our fleet may result in increased operating costs in the future, which
could adversely affect our earnings.




In
general, the costs to maintain a drybulk carrier in good operating condition
increase with the age of the vessel.  The average age of the vessels
in our current fleet is approximately 7.0 years as of December 31,
2009.  Older vessels are typically less fuel-efficient and more costly
to maintain than more recently constructed drybulk carriers due to improvements
in engine technology.  Cargo insurance rates increase with the age of
a vessel, making older vessels less desirable to charterers.





We are currently prohibited from
paying dividends or repurchasing our stock, and it is unlikely this prohibition
will be lifted until market conditions improve.





We agreed
to an amendment to our 2007 Credit Facility that contained a waiver of the
collateral maintenance requirement.  As a condition of this waiver,
among other things, we agreed to suspend our cash dividends and share
repurchases until such time as we can satisfy the collateral maintenance
requirement.  Until market conditions which have resulted in a decline
in the value of drybulk vessels improve, it is unlikely that we will be able to
meet that condition to reinstate our cash dividends and share
repurchases.





Even if we were able to satisfy the
condition in our 2007 Credit Facility to reinstate the payment of cash
dividends, we would make dividend payments to our shareholders only if our board
of directors, acting in its sole discretion, determines that such payments would
be in our best interest and in compliance with relevant legal and contractual
requirements.  The principal business factors that our board of
directors considers when determining the timing and amount of dividend payments
will be our earnings, financial condition and cash requirements at the
time.    Marshall Islands law generally prohibits the
declaration and payment of dividends other than from
surplus.  Marshall Islands law also prohibits the declaration and
payment of dividends while a company is insolvent or would be rendered insolvent
by the payment of such a dividend.





We may incur other expenses or
liabilities that would reduce or eliminate the cash available for distribution
as dividends.  We may also enter into new agreements or the Marshall
Islands or another jurisdiction may adopt laws or regulations that place
additional restrictions on our ability to pay dividends.  If we do not
pay dividends, the return on your investment would be limited to the price at
which you could sell your shares.





We
may not be able to grow or effectively manage our growth, which could cause us
to incur additional indebtedness and other liabilities and adversely affect our
business.





A principal focus of our business
strategy is to grow by expanding our business.  Our future growth will
depend on a number of factors, some of which we can control and some of which we
cannot.  These factors include our ability to:





·
            identify
      vessels for acquisition;





·
            consummate
      acquisitions or establish joint
ventures;





·
            integrate
      acquired vessels successfully with our existing
  operations;





·
            expand
      our customer base; and





·
            obtain
      required financing for our existing and new
  operations.





Growing any business by acquisition
presents numerous risks, including undisclosed liabilities and obligations,
difficulty obtaining additional qualified personnel, managing relationships with
customers and suppliers and integrating newly acquired operations into existing
infrastructures.  Future acquisitions could result in the incurrence
of additional indebtedness and liabilities that could have a material adverse
effect on our business, results








30








of
operations, cash flows, financial condition and ability to pay
dividends.  In addition, competition from other buyers for vessels
could reduce our acquisition opportunities or cause us to pay a higher price
than we might otherwise pay.  We cannot assure you that we will be
successful in executing our growth plans or that we will not incur significant
expenses and losses in connection with these plans.





Restrictive
covenants in our 2007 Credit Facility may impose financial and other
restrictions on us which could negatively impact our growth and adversely affect
our operations.





Our
ability to borrow amounts under our 2007 Credit Facility are subject to the
satisfaction of certain customary conditions precedent and compliance with terms
and conditions included in the related credit documents.  It is a condition
precedent to each drawdown under the facility that the aggregate fair market
value of the mortgaged vessels must at all times be at least 130% of the
aggregate outstanding principal amount under the credit facility plus all
letters of credit outstanding (determined on a pro forma basis giving effect to
the amount proposed to be drawn down), although this condition is currently
subject to a waiver as noted above.  To the extent that we are not
able to satisfy these requirements, we may not be able to draw down the full
amount under our 2007 Credit Facility without obtaining a further waiver or
consent from the lenders.  In addition, the covenants in our 2007
Credit Facility include the following requirements:




·
              The
      leverage covenant requires the maximum average net debt to EBITDA ratio to
      be at least 5.5:1.0;




·
              cash
      and cash equivalents must not be less than $0.5 million per mortgaged
      vessel;




·
                the
      ratio of EBITDA to interest expense, on a rolling last four-quarter basis,
      must be no less than 2.0:1.0;and




·
            after
      July 20, 2007, consolidated net worth must be no less than $263.3 million
      plus 80% of the value of any new equity issuances of the Company from June
      30, 2007.  Based on the equity offerings completed in October
      2007 and May 2008, consolidated net worth must be no less than $590.8
      million.





We cannot assure you that we will be
able to comply with these covenants in the future.





Our 2007
Credit Facility imposes operating and financial restrictions on
us.  These restrictions may limit our ability to:





·
            incur
      additional indebtedness on satisfactory terms or at
  all;





·
            incur
      liens on our assets;





·
            sell
      our vessels or the capital stock of our
  subsidiaries;





·
            make
      investments;





·
            engage
      in mergers or acquisitions;




·
              pay
      dividends (following an event of default or our breach of a covenant) in
      the event we are able to resume dividend payments under the waiver of our
      collateral maintenance covenant which is currently in
      effect);





·
            make
      capital expenditures;








31






·
            compete
      effectively to the extent our competitors are subject to less onerous
      financial restrictions; and




·
              change
      the management of our vessels or terminate or materially amend the
      management agreement relating to any of our
  vessels.





Therefore, we may need to seek
permission from our lenders in order to engage in some corporate
actions.  Our lenders' interests may be different from ours, and we
cannot guarantee that we will be able to obtain our lenders' permission when
needed.  This may prevent us from taking actions that are in our best
interest and from executing our business strategy of growth through acquisitions
and may restrict or limit our ability to pay dividends and finance our future
operations.





We
currently maintain all of our cash and cash equivalents with two financial
institutions, which subjects us to credit risk.





We
currently maintain all of our cash and cash equivalents with two financial
institutions.  None of our balances are covered by insurance in the
event of default by the financial institutions.  The occurrence of
such a default of any of these institutions could therefore have a material
adverse effect on our business, financial condition, results of operations and
cash flows.





If
we are unable to fund our capital expenditures, we may not be able to continue
to operate some of our vessels, which would have a material adverse effect on
our business and our ability to pay dividends.





In order to fund our capital
expenditures, we may be required to incur borrowings or raise capital through
the sale of debt or equity securities.  Our ability to borrow money
and access the capital markets through future offerings may be limited by our
financial condition at the time of any such offering as well as by adverse
market conditions resulting from, among other things, general economic
conditions and contingencies and uncertainties that are beyond our
control.  Our failure to obtain the funds for necessary future capital
expenditures would limit our ability to continue to operate some of our vessels
or impair the value of our vessels and could have a material adverse effect on
our business, results of operations, financial condition, cash flows and ability
to pay dividends.  Even if we are successful in obtaining such funds
through financings, the terms of such financings could further limit our ability
to pay dividends.





We
are a holding company, and we depend on the ability of our subsidiaries to
distribute funds to us in order to satisfy our financial obligations or to make
dividend payments.





We are a holding company, and our
subsidiaries, which are all wholly owned by us, either directly or indirectly,
conduct all of our operations and own all of our operating assets.  We
have no significant assets other than the equity interests in our wholly owned
subsidiaries.  As a result, our ability to satisfy our financial
obligations and to pay dividends to our shareholders depends on the ability of
our subsidiaries to distribute funds to us.  In turn, the ability of
our subsidiaries to make dividend payments to us will be dependent on them
having profits available for distribution and, to the extent that we are unable
to obtain dividends from our subsidiaries, this will limit the discretion of our
board of directors to pay or recommend the payment of dividends.





Our
ability to obtain additional debt financing may depend on the performance of our
then existing charters and the creditworthiness of our charterers, and market
conditions.





The actual or perceived credit quality
of our charterers, and any defaults by them, or market conditions affecting the
time charter market and the credit markets, may materially affect our ability to
obtain the additional capital resources that may be required to purchase
additional vessels or may significantly increase our costs of obtaining such
capital.  Our inability to obtain additional financing at all or at a
higher than anticipated cost may have








32








a
material adverse affect on our business, results of operations, cash flows,
financial condition and ability to pay dividends.





If
management is unable to continue to provide reports as to the effectiveness of
our internal control over financial reporting or our independent registered
public accounting firm is unable to continue to provide us
with  unqualified attestation reports as to the effectiveness of our
internal control over financial reporting, investors could lose confidence in
the reliability of our financial statements, which could result in a decrease in
the value of our common stock.





Under Section 404 of the
Sarbanes-Oxley Act of 2002, we are required to include in this and each of our
future annual reports on Form 10-K a report containing our management's
assessment of the effectiveness of our internal control over financial reporting
and a related attestation of our independent registered public accounting
firm.  If, in such future annual reports on Form 10-K, our management
cannot provide a report as to the effectiveness of our internal control over
financial reporting or our independent registered public accounting firm is
unable to provide us with an unqualified attestation report as to the
effectiveness of our internal control over financial reporting as required by
Section 404, investors could lose confidence in the reliability of our financial
statements, which could result in a decrease in the value of our common
stock.





If
we are unable to operate our financial and operations systems effectively or to
recruit suitable employees as we expand our fleet, our performance may be
adversely affected.





Our current financial and operating
systems may not be adequate as we implement our plan to expand the size of our
fleet, and our attempts to improve those systems may be
ineffective.  In addition, as we expand our fleet, we will have to
rely on our outside technical managers to recruit suitable additional seafarers
and shore-based administrative and management personnel.  We cannot
assure you that our outside technical managers will be able to continue to hire
suitable employees as we expand our fleet.





We
may be unable to attract and retain key management personnel and other employees
in the shipping industry, which may negatively affect the effectiveness of our
management and our results of operations.





Our success depends to a significant
extent upon the abilities and efforts of our management team and our ability to
hire and retain key members of our management team.  The loss of any
of these individuals could adversely affect our business prospects and financial
condition.  Difficulty in hiring and retaining personnel could have a
material adverse effect our business, results of operations, cash flows,
financial condition and ability to pay dividends.  We do not intend to
maintain "key man" life insurance on any of our officers.





Arrangements
relating to our newly-formed Baltic Trading subsidiary could require significant
time and attention from our personnel and may result in conflicts of
interest.





Our
newly-formed subsidiary Baltic Trading intends to conduct a shipping business
focused on the drybulk industry spot market and has filed a registration
statement on Form S-1 with the Securities and Exchange Commission in preparation
for an initial public offering.  Some of our personnel will provide
services to Baltic Trading, including our Chief Financial Officer. This may
require substantial time and attention from these individuals and reduce their
availability to serve us.  We also expect that our Chairman and two of
our directors will serve on the Baltic Trading board of
directors.  Our officers and directors who also serve Baltic Trading
may encounter situations in which their fiduciary obligations to us and to
Baltic Trading are in conflict.  The Omnibus Agreement to be entered
into between us and Baltic Trading is intended to reduce these conflicts by
granting a right of first refusal to Baltic Trading for certain spot chartering
opportunities and to us for other business opportunities.  However,
these arrangements and/or the resolutions of these conflicts may not always be
in our best interest or that of our shareholders and could have a material
adverse effect on our business, results of operations, cash flows, financial
condition and ability to pay dividends.






33





Our
Chairman may pursue business opportunities in our industry.





Our
Chairman, Peter C. Georgiopoulos, is not an employee of our company and is not
contractually committed to remain as a director of our company or to refrain
from other activities in our industry.  Mr. Georgiopoulos actively
reviews potential investment opportunities in the shipping industry, including
the drybulk sector, from time to time.  Mr. Georgiopoulos has informed
us that so long as he is a director of our company, prior to making an
investment in an entity owning or operating drybulk vessels, he intends to make
a disclosure to our board and our independent directors and allow us to pursue
the opportunity to the extent we choose to do so and are
able.  However, in the event we choose not to pursue any such
opportunity or are not able to obtain such an opportunity, Mr. Georgiopoulos may
proceed, either alone or with others, with such investments.  In the
event he makes such investments, Mr. Georgiopoulos may have independent
interests in the ownership and operation of drybulk vessels that may conflict
with our interests.




We may not have adequate insurance
to compensate us if we lose our vessels or to compensatethird parties.




There are
a number of risks associated with the operation of ocean-going vessels,
including mechanical failure, collision, human error, war, terrorism, piracy,
property loss, cargo loss or damage and business interruption due to political
circumstances in foreign countries, hostilities and labor
strikes.  Any of these events may result in loss of revenues,
increased costs and decreased cash flows.  In addition, the operation
of any vessel is subject to the inherent possibility of marine disaster,
including oil spills and other environmental mishaps, and the liabilities
arising from owning and operating vessels in international trade.




We are
insured against tort claims and some contractual claims (including claims
related to environmental damage and pollution) through memberships in protection
and indemnity associations or clubs, or P&I Associations.  As a
result of such membership, the P&I Associations provide us coverage for such
tort and contractual claims.  We also carry hull and machinery
insurance and war risk insurance for our fleet.  We insure our vessels
for third-party liability claims subject to and in accordance with the rules of
the P&I Associations in which the vessels are entered.  We
currently maintain insurance against loss of hire, which covers business
interruptions that result in the loss of use of a vessel.  We can give
no assurance that we will be adequately insured against all risks.  We
may not be able to obtain adequate insurance coverage for our fleet in the
future.  The insurers may not pay particular claims.  Our
insurance policies contain deductibles for which we will be responsible and
limitations and exclusions which may increase our costs or lower our
revenue.




We cannot assure you that we will be
able to renew our insurance policies on the same or commercially reasonable
terms, or at all, in the future.  For example, more stringent
environmental regulations have led in the past to increased costs for, and in
the future may result in the lack of availability of, protection and indemnity
insurance against risks of environmental damage or pollution.  Any
uninsured or underinsured loss could harm our business, results of operations,
cash flows, financial condition and ability to pay dividends.  In
addition, our insurance may be voidable by the insurers as a result of certain
of our actions, such as our ships failing to maintain certification with
applicable maritime self-regulatory organizations.  Further, we cannot
assure you that our insurance policies will cover all losses that we incur, or
that disputes over insurance claims will not arise with our insurance
carriers.  Any claims covered by insurance would be subject to
deductibles, and since it is possible that a large number of claims may be
brought, the aggregate amount of these deductibles could be
material.  In addition, our insurance policies are subject to
limitations and exclusions, which may increase our costs or lower our revenues,
thereby possibly having a material adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay
dividends.





We are subject to funding calls by
our protection and indemnity associations, and our associations may not have
enough resources to cover claims made against them.





We are indemnified for legal
liabilities incurred while operating our vessels through membership in P&I
Associations.  P&I Associations are mutual insurance associations
whose members must contribute to cover losses








34








sustained
by other association members.  The objective of a P&I Association
is to provide mutual insurance based on the aggregate tonnage of a member's
vessels entered into the association.  Claims are paid through the
aggregate premiums of all members of the association, although members remain
subject to calls for additional funds if the aggregate premiums are insufficient
to cover claims submitted to the association.  Claims submitted to the
association may include those incurred by members of the association, as well as
claims submitted to the association from other P&I Associations with which
our P&I Association has entered into interassociation
agreements.  We cannot assure you that the P&I Associations to
which we belong will remain viable or that we will not become subject to
additional funding calls which could adversely affect us.





We
may have to pay U.S. tax on U.S. source income, which would reduce our net
income and cash flows.




If we do
not qualify for an exemption pursuant to Section 883 of the U.S. Internal
Revenue Code of 1986, as amended, or the Code, which we refer to as Section 883,
then we will be subject to U.S. federal income tax on our shipping income that
is derived from U.S. sources.  If we are subject to such tax, our net
income and cash flows would be reduced by the amount of such tax.




We will
qualify for exemption under Section 883 if, among other things, our stock is
treated as primarily and regularly traded on an established securities market in
the United States.  Under applicable Treasury regulations, we may not
satisfy this publicly traded requirement in any taxable year in which 50% or
more of our stock is owned for more than half the days in such year by persons
who actually or constructively own 5% or more of our stock, which we sometimes
refer to as 5% shareholders.




We
believe that, based on the ownership of our stock in 2009, we satisfied the
publicly traded requirement for 2009.  However, if 5% shareholders
were to own more than 50% of our common stock for more than half the days of any
future taxable year, we may not be eligible to claim exemption from tax under
Section 883 for such taxable year.  We can provide no assurance that
changes and shifts in the ownership of our stock by 5% shareholders will not
preclude us from qualifying for exemption from tax in 2010 or in future years.




If we do
not qualify for the Section 883 exemption, our shipping income derived from U.S.
sources, or 50% of our gross shipping income attributable to transportation
beginning or ending in the United States, would be subject to a 4% tax without
allowance for deductions.




U.S.
tax authorities could treat us as a “passive foreign investment company,” which
could have adverse U.S. federal income tax consequences to U.S.
shareholders.




A foreign
corporation generally will be treated as a “passive foreign investment company,”
which we sometimes refer to as a PFIC, for U.S. federal income tax purposes if
either (1) at least 75% of its gross income for any taxable year consists of
“passive income” or (2) at least 50% of its assets (averaged over the year and
generally determined based upon value) produce or are held for the production of
“passive income.”  U.S. shareholders of a PFIC are subject to a
disadvantageous U.S. federal income tax regime with respect to distributions
they receive from the PFIC and gain, if any, they derive from the sale or other
disposition of their stock in the PFIC.




For
purposes of these tests, “passive income” generally includes dividends,
interest, gains from the sale or exchange of investment property and rents and
royalties other than rents and royalties which are received from unrelated
parties in connection with the active conduct of a trade or business, as defined
in applicable Treasury regulations.  For purposes of these tests,
income derived from the performance of services does not constitute “passive
income.” By contrast, rental income would generally constitute passive income
unless we were treated under specific rules as deriving our rental income in the
active conduct of a trade or business.  We do not believe that our
existing operations would cause us to be deemed a PFIC with respect to any
taxable year.  In this regard, we treat the gross income we derive or
are deemed to derive from our time and spot chartering activities as services
income, rather than rental income.  Accordingly, we believe that (1)
our income from our time and spot chartering activities does not constitute
passive income and (2) the assets that we own and operate in connection with the
production of that income do not constitute passive assets.






35






While
there is no direct legal authority under the PFIC rules addressing our method of
operation, there is legal authority supporting this position consisting of case
law and pronouncements by the United States Internal Revenue Service, which we
sometimes refer to as the IRS, concerning the characterization of income derived
from time charters and voyage charters as services income for other tax
purposes.  However, it should be noted that there is also authority
which characterizes time charter income as rental income rather than services
income for other tax purposes.  Accordingly, no assurance can be given
that the IRS or a court of law will accept our position, and there is a risk
that the IRS or a court of law could determine that we are a
PFIC.  Moreover, because there are uncertainties in the application of
the PFIC rules, because the PFIC test is an annual test, and because, although
we intend to manage our business so as to avoid PFIC status to the extent
consistent with our other business goals, there could be changes in the nature
and extent of our operations in future years, there can be no assurance that we
will not become a PFIC in any taxable year.




If we
were to be treated as a PFIC for any taxable year (and regardless of whether we
remain a PFIC for subsequent taxable years), our U.S. shareholders would face
adverse U.S. tax consequences.  Under the PFIC rules, unless a
shareholder makes certain elections available under the Code (which elections
could themselves have adverse consequences for such shareholder), such
shareholder would be liable to pay U.S. federal income tax at the highest
applicable income tax rates on ordinary income upon the receipt of excess
distributions and upon any gain from the disposition of our common stock, plus
interest on such amounts, as if such excess distribution or gain had been
recognized ratably over the shareholder’s holding period of our common
stock.




Because
we generate all of our revenues in U.S. dollars but incur a portion of our
expenses in other currencies, exchange rate fluctuations could hurt our results
of operations.





We generate all of our revenues in U.S.
dollars, but we may incur drydocking costs and special survey fees in other
currencies.  If our expenditures on such costs and fees were
significant, and the U.S. dollar were weak against such currencies, our
business, results of operations, cash flows, financial condition and ability to
pay dividends could be adversely affected.





RISK
FACTORS RELATED TO OUR COMMON STOCK





Peter
Georgiopoulos owns a large portion of our outstanding common stock, which may
limit your ability to influence our actions.





As of December 31, 2009, Peter C.
Georgiopoulos, our Chairman, owned approximately 13.24% of our common stock
directly or through Fleet Acquisition LLC.  As a result of this share
ownership and for so long as he owns a significant percentage of our outstanding
common stock, Mr. Georgiopoulos will be able to influence the outcome of any
shareholder vote, including the election of directors, the adoption or amendment
of provisions in our articles of incorporation or by-laws and possible mergers,
corporate control contests and other significant corporate
transactions.  This concentration of ownership may have the effect of
delaying, deferring or preventing a change in control, merger, consolidation,
takeover or other business combination involving us.  This
concentration of ownership could also discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of us, which
could in turn have an adverse effect on the market price of our common
stock.




Because
we are a foreign corporation, you may not have the same rights or protections
that a shareholder in a United States corporation may have.




We are
incorporated in the Republic of the Marshall Islands, which does not have a
well-developed body of corporate law and may make it more difficult for our
shareholders to protect their interests.  Our corporate affairs are
governed by our amended and restated articles of incorporation and bylaws and
the Marshall Islands Business








36








Corporations
Act, or BCA.  The provisions of the BCA resemble provisions of the
corporation laws of a number of states in the United States.  The
rights and fiduciary responsibilities of directors under the law of the Marshall
Islands are not as clearly established as the rights and fiduciary
responsibilities of directors under statutes or judicial precedent in existence
in certain U.S. jurisdictions and there have been few judicial cases in the
Marshall Islands interpreting the BCA.  Shareholder rights may differ
as well.  While the BCA does specifically incorporate the
non-statutory law, or judicial case law, of the State of Delaware and other
states with substantially similar legislative provisions, our public
shareholders may have more difficulty in protecting their interests in the face
of actions by the management, directors or controlling shareholders than would
shareholders of a corporation incorporated in a U.S.
jurisdiction.  Therefore, you may have more difficulty in protecting
your interests as a shareholder in the face of actions by the management,
directors or controlling shareholders than would shareholders of a corporation
incorporated in a United States jurisdiction.





Provisions
of our amended and restated articles of incorporation and by-laws may have
anti-takeover effects which could adversely affect the market price of our
common stock.





Several
provisions of our amended and restated articles of incorporation and by-laws,
which are summarized below, may have anti-takeover effects.  These
provisions are intended to avoid costly takeover battles, lessen our
vulnerability to a hostile change of control and enhance the ability of our
board of directors to maximize shareholder value in connection with any
unsolicited offer to acquire our company.  However, these
anti-takeover provisions could also discourage, delay or prevent (1) the
merger or acquisition of our company by means of a tender offer, a proxy contest
or otherwise that a shareholder may consider in its best interest and
(2) the removal of incumbent officers and directors.





Blank
Check Preferred Stock.





Under the terms of our amended and
restated articles of incorporation, our board of directors has the authority,
without any further vote or action by our shareholders, to authorize our
issuance of up to 25,000,000 shares of blank check preferred
stock.  Our board of directors may issue shares of preferred stock on
terms calculated to discourage, delay or prevent a change of control of our
company or the removal of our management.





Classified
Board of Directors.





Our amended and restated articles of
incorporation provide for the division of our board of directors into three
classes of directors, with each class as nearly equal in number as possible,
serving staggered, three-year terms beginning upon the expiration of the initial
term for each class.  Approximately one-third of our board of
directors is elected each year.  This classified board provision could
discourage a third party from making a tender offer for our shares or attempting
to obtain control of us.  It could also delay shareholders who do not
agree with the policies of our board of directors from removing a majority of
our board of directors for up to two years.





Election
and Removal of Directors.





Our amended and restated articles of
incorporation prohibit cumulative voting in the election of
directors.  Our by-laws require parties other than the board of
directors to give advance written notice of nominations for the election of
directors.  Our articles of incorporation also provide that our
directors may be removed only for cause and only upon the affirmative vote of
662⁄3% of the outstanding shares of our capital stock entitled to vote for those
directors or by a majority of the members of the board of directors then in
office.  These provisions may discourage, delay or prevent the removal
of incumbent officers and directors.





Limited
Actions by Shareholders.





Our amended and restated articles of
incorporation and our by-laws provide that any action required or permitted to
be taken by our shareholders must be effected at an annual or special meeting of
shareholders or by the








37








unanimous
written consent of our shareholders.  Our amended and restated
articles of incorporation and our by-laws provide that, subject to certain
exceptions, our Chairman, President, or Secretary at the direction of the board
of directors may call special meetings of our shareholders and the business
transacted at the special meeting is limited to the purposes stated in the
notice.





Advance
Notice Requirements for Shareholder Proposals and Director
Nominations.





Our by-laws provide that shareholders
seeking to nominate candidates for election as directors or to bring business
before an annual meeting of shareholders must provide timely notice of their
proposal in writing to the corporate secretary.  Generally, to be
timely, a shareholder's notice must be received at our principal executive
offices not less than 150 days nor more than 180 days before the date
on which we first mailed our proxy materials for the preceding year's annual
meeting.  Our by-laws also specify requirements as to the form and
content of a shareholder's notice.  These provisions may impede
shareholder's ability to bring matters before an annual meeting of shareholders
or make nominations for directors at an annual meeting of
shareholders.





It
may not be possible for our investors to enforce U.S. judgments against
us.





We are incorporated in the Republic of
the Marshall Islands and most of our subsidiaries are also organized in the
Marshall Islands.  Substantially all of our assets and those of our
subsidiaries are located outside the United States.  As a result, it
may be difficult or impossible for United States shareholders to serve process
within the United States upon us or to enforce judgment upon us for civil
liabilities in United States courts.  In addition, you should not
assume that courts in the countries in which we are incorporated or where our
assets are located (1) would enforce judgments of United States courts
obtained in actions against us based upon the civil liability provisions of
applicable United States federal and state securities laws or (2) would
enforce, in original actions, liabilities against us based upon these
laws.





Future
sales of our common stock could cause the market price of our common stock to
decline.





The
market price of our common stock could decline due to sales of a large number of
shares in the market, including sales of shares by our large shareholders, or
the perception that these sales could occur.  These sales could also
make it more difficult or impossible for us to sell equity securities in the
future at a time and price that we deem appropriate to raise funds through
future offerings of common stock.  We have entered into a registration
rights agreement with Fleet Acquisition LLC that entitles it to have all the
shares of our common stock that it owns registered for sale in the public market
under the Securities Act and, pursuant to the registration rights agreement,
registered Fleet Acquisition LLC’s shares on a registration statement on Form
S-3 in February 2007.  We also registered on Form S-8 an aggregate of
2,000,000 shares issued or issuable under our equity compensation
plan.





Future
issuances of our common stock could dilute our shareholders’ interests in our
company.





We may,
from time to time, issue additional shares of common stock to support our growth
strategy, reduce debt or provide us with capital for other purposes that our
board of directors believes to be in our best interest.  To the extent
that an existing shareholder does not purchase additional shares that we may
issue, that shareholder’s interest in our company will be diluted, which means
that its percentage of ownership in our company will be
reduced.  Following such a reduction, that shareholder’s common stock
would represent a smaller percentage of the vote in our board of directors’
elections and other shareholder decisions.  In addition, if additional
shares are issued, depending on the circumstances, our dividends per share could
be reduced.





ITEM
1B.  UNRESOLVED STAFF COMMENTS





Not
applicable.





ITEM
2.  PROPERTIES






38





We do not own any real
property.  In September 2005, we entered into a 15-year lease for
office space in New York, New York.  The monthly rental is as
follows:  Free rent from September 1, 2005 to July 31, 2006, forty
thousand dollars per month from August 1, 2006 to August 31, 2010, forty-three
thousand dollars per month from September 1, 2010 to August 31, 2015, and
forty-six thousand dollars per month from September 1, 2015 to August 31,
2020.  The monthly straight-line rental expense from September 1, 2005
to August 31, 2020 is thirty-nine thousand dollars.  We have the
option to extend the lease for a period of five years from September 1, 2020 to
August 31, 2025.  The rent for the renewal period will be based on the
prevailing market rate for the six months prior to the commencement date of the
extension term.




Future
minimum rental payments on the above lease for the next five years and
thereafter are as follows:  $0.5 million per year for 2010 through
2014 and a total of $3.1 million for the remaining term of the
lease.





For a
description of our vessels, see “Our Fleet” in Item 1, “Business” in this
report.





We
consider each of our significant properties to be suitable for its intended
use.





ITEM
3.  LEGAL PROCEEDINGS





We
have not been involved in any legal proceedings which we believe are likely to
have, or have had a significant effect on our business, financial position,
results of operations or cash flows, nor are we aware of any proceedings that
are pending or threatened which we believe are likely to have a significant
effect on our business, financial position, results of operations or
liquidity.  From time to time, we may be subject to legal proceedings
and claims in the ordinary course of business, principally personal injury and
property casualty claims.  We expect that these claims would be
covered by insurance, subject to customary deductibles.  Those claims,
even if lacking merit, could result in the expenditure of significant financial
and managerial resources.




ITEM
4.  RESERVED




PART
II





ITEM
5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
PURCHASES OF EQUITY SECURITIES





MARKET
INFORMATION, HOLDERS AND DIVIDENDS





Our common stock is traded on the New
York Stock Exchange (“NYSE”) under the symbol “GNK.”  Trading of our
common stock on the NYSE commenced April 11, 2007.  Previously, our
common stock was traded on the NASDAQ under the symbol “GSTL” from our initial
public offering on July 22, 2005 through April 10, 2007.  The
following table sets forth for the periods indicated the high and low prices for
the common stock as reported by the NYSE and NASDAQ:





FISCAL YEAR ENDED DECEMBER 31, 2009
            
            HIGH
            
            LOW1st
      Quarter
            
            $
            22.76
            
            $
            9.012nd
      Quarter
            
            $
            29.89
            
            $
            11.753rd
      Quarter
            
            $
            25.98
            
            $
            17.124th
      Quarter
            
            $
            29.20
            6
            $
            18.95





FISCAL YEAR ENDED DECEMBER 31, 2008
            
            HIGH
            
            LOW1st
      Quarter
            
            $
            64.35
            
            $
            33.392nd
      Quarter
            
            $
            84.51
            
            $
            51.003rd
      Quarter
            
            $
            69.40
            
            $
            29.504th
      Quarter
            
            $
            33.21
            
            $
            6.43






39





As of February 22, 2010, there were
approximately 79 holders of record of our common stock.





Until
January 26, 2009, our dividend policy was to declare quarterly distributions to
shareholders, which commenced in November 2005, by each February, May, August
and November substantially equal to our available cash from operations during
the previous quarter, less cash expenses for that quarter (principally vessel
operating expenses and debt service) and any reserves our board of directors
determined we should maintain.  These reserves covered, among other
things, drydocking, repairs, claims, liabilities and other obligations, interest
expense and debt amortization, acquisitions of additional assets and working
capital.  Under the terms of an amendment to our 2007 Credit Facility
(discussed in the “Liquidity and Capital Resources” section of “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
this report and in Note 8 – Long-Term Debt of our financial statements), we have
suspended payment of cash dividends indefinitely beginning the quarter ended
December 31, 2008.  We will be able to reinstate our cash dividends
only when can represent to the lenders under our 2007 Credit Facility that we
are in a position to again satisfy the collateral maintenance covenant of the
2007 Credit Facility.  The following table summarizes the dividends
declared based on the results of the respective fiscal quarter:





Dividend
      per
                share
            Declaration
                dateFISCAL YEAR ENDED DECEMBER 31, 20094th
      Quarter
            $  —
            N/A3rd
      Quarter
            $  —
            N/A2nd
      Quarter
            $  —
            N/A1st
      Quarter
            $  —
            N/AFISCAL YEAR ENDED DECEMBER 31, 20084th
      Quarter
            $  —
            N/A3rd
      Quarter
            $1.00
            10/23/082nd
      Quarter
            $1.00
            7/24/081st
      Quarter
            $1.00
            4/29/08


EQUITY
COMPENSATION PLAN INFORMATION
 
 The
following table provides information as of December 31, 2009 regarding the
number of shares of our common stock that may be issued under the 2005 Equity
Incentive Plan, which is our sole equity compensation plan:


Number
      of securities to be
      issued
              upon
      exercise
              of
      outstanding options, warrants
                and
      rights
                (a)
            
            Weighted-average

              exercise
              price
      of
              outstanding
              options,
      warrants
              and
      rights
              (b)
            
            Number
      of securities

                remaining
      available
                for
      future
      issuance
                under
      equity
      compensation
                plans
      (excluding
                securities
      reflected
                  incolumn
      (a))
                  (c)Plan
      categoryEquity
      compensationplans
      approved by security holders
            
            
            —
            
            $
            —
            
            1,196,650Equity
      compensation plans not approved bysecurity
      holders
            
            
            —
            
            
            —
            
            —Total
            
            
            —
            
            $
            —
            
            1,196,650








40





SHARE
REPURCHASE PROGRAM
 
 Refer to
the “Share Repurchase Program” section of Item 7 for a summary of cumulative
share repurchases made pursuant to the Share Repurchase Program.
 
 ITEM
6.  SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA





For
      the years ended December 31,2009
            
            
            2008
            
            
            2007
            
            
            2006
            
            
            2005
      (1)Income
      Statement Data:(U.S.
      dollars in thousands except for share and per share
    amounts)Revenues
            
            $
            379,531
            
            
            $
            405,370
            
            
            $
            185,387
            
            
            $
            133,232
            
            
            $
            116,906Operating
      Expenses:Voyage
      expenses
            
            
            5,024
            
            
            
            5,116
            
            
            
            5,100
            
            
            
            4,710
            
            
            
            4,287Vessel
      operating expenses
            
            
            57,311
            
            
            
            47,130
            
            
            
            27,622
            
            
            
            20,903
            
            
            
            15,135General
      and administrative expenses
            
            
            15,024
            
            
            
            17,027
            
            
            
            12,610
            
            
            
            8,882
            
            
            
            4,937Management
      fees
            
            
            3,530
            
            
            
            2,787
            
            
            
            1,654
            
            
            
            1,439
            
            
            
            1,479Depreciation
      and amortization
            
            
            88,150
            
            
            
            71,395
            
            
            
            34,378
            
            
            
            26,978
            
            
            
            22,322Loss
      on forfeiture of vessel deposits
            
            
            -
            
            
            
            53,765
            
            
            
            -
            
            
            
            -
            
            
            
            -Gain
      on sale of vessels
            
            
            -
            
            
            
            (26,227
            )
            
            
            (27,047
            )
            
            
            -
            
            
            
            -Total operating
      expenses
            
            
            169,039
            
            
            
            170,993
            
            
            
            54,317
            
            
            
            62,912
            
            
            
            48,160Operating
      income
            
            
            210,492
            
            
            
            234,377
            
            
            
            131,070
            
            
            
            70,320
            
            
            
            68,746Other
      (expense) income
            
            
            (61,868
            )
            
            
            (147,797
            )
            
            
            (24,261
            )
            
            
            (6,798
            )
            
            
            (14,264
            )Net
      income
            
            $
            148,624
            
            
            $
            86,580
            
            
            $
            106,809
            
            
            $
            63,522
            
            
            $
            54,482Earnings
      per share - Basic
            
            $
            4.75
            
            
            $
            2.86
            
            
            $
            4.08
            
            
            $
            2.51
            
            
            $
            2.91Earnings
      per share - Diluted
            
            $
            4.73
            
            
            $
            2.84
            
            
            $
            4.06
            
            
            $
            2.51
            
            
            $
            2.90Dividends
      declared and paid per share
            
            
            —
            
            
            $
            3.85
            
            
            $
            2.64
            
            
            $
            2.40
            
            
            $
            0.60Weighted
      average common shares outstanding - Basic
            
            
            31,295,212
            
            
            
            30,290,016
            
            
            
            26,165,600
            
            
            
            25,278,726
            
            
            
            18,751,726Weighted
      average common shares outstanding - Diluted
            
            
            31,445,063
            
            
            
            30,452,850
            
            
            
            26,297,521
            
            
            
            25,351,297
            
            
            
            18,755,195Balance
      Sheet Data:(U.S.
      dollars in thousands, at end of period)Cash
      and cash equivalents
            
            $
            188,267
            
            
            $
            124,956
            
            
            $
            71,496
            
            
            $
            73,554
            
            
            $
            46,912Total
      assets
            
            
            2,336,802
            
            
            
            1,990,006
            
            
            
            1,653,272
            
            
            
            578,262
            
            
            
            489,958Total
      debt (current and long-term)
            
            
            1,327,000
            
            
            
            1,173,300
            
            
            
            936,000
            
            
            
            211,933
            
            
            
            130,683Total
      shareholders’ equity
            
            
            928,925
            
            
            
            696,478
            
            
            
            622,185
            
            
            
            353,533
            
            
            
            348,242Other
      Data:(U.S.
      dollars in thousands)Net
      cash provided by operating activities
            
            $
            219,729
            
            
            $
            267,416
            
            
            $
            120,862
            
            
            $
            90,068
            
            
            $
            88,230Net
      cash used in investing activities
            
            
            (306,210
            )
            
            
            (514,288
            )
            
            
            (984,350
            )
            
            
            (82,840
            )
            
            
            (268,072
            )Net
      cash provided by financing activities
            
            
            149,792
            
            
            
            300,332
            
            
            
            861,430
            
            
            
            19,414
            
            
            
            219,323EBITDA
      (2)
            
            $
            298,330
            
            
            $
            208,807
            
            
            $
            164,183
            
            
            $
            97,406
            
            
            $
            91,068







41







(1)
            On
      July 18, 2005, prior to the closing of the public offering of our common
      stock, our board of directors and stockholder approved a split (in the
      form of a stock dividend, giving effect to a 27,000:1 common stock split)
      of our common stock.  All share and per share amounts relating
      to common stock, included in the accompanying consolidated financial
      statements and footnotes, have been restated to reflect the stock split
      for all periods presented.




(2)
            EBITDA
      represents net income plus net interest expense and depreciation and
      amortization.  EBITDA is included because it is used by
      management and certain investors as a measure of operating performance.
      EBITDA is used by analysts in the shipping industry as a common
      performance measure to compare results across peers.  Our
      management uses EBITDA as a performance measure in our consolidated
      internal financial statements, and it is presented for review at our board
      meetings.  The Company believes that EBITDA is useful to
      investors as the shipping industry is capital intensive which often
      results in significant depreciation and cost of
      financing.  EBITDA presents investors with a measure in addition
      to net income to evaluate the Company’s performance prior to these
      costs.  EBITDA is not an item recognized by U.S. GAAP and should
      not be considered as an alternative to net income, operating income or any
      other indicator of a company’s operating performance required by U.S.
      GAAP.  EBITDA is not a measure of liquidity or cash flows as
      shown in our consolidated statement of cash flows.  The
      definition of EBITDA used here may not be comparable to that used by other
      companies.  The following table demonstrates our calculation of
      EBITDA and provides a reconciliation of EBITDA to net income for each of
      the periods presented above:




For
      the years ended December 31,2009
            
            
            2008
            
            
            2007
            
            
            2006
            
            
            2005Net
      income
            
            $
            148,624
            
            
            $
            86,580
            
            
            $
            106,809
            
            
            $
            63,522
            
            
            $
            54,482Net
      interest expense
            
            
            61,556
            
            
            
            50,832
            
            
            
            22,996
            
            
            
            6,906
            
            
            
            14,264Depreciation
      and amortization
            
            
            88,150
            
            
            
            71,395
            
            
            
            34,378
            
            
            
            26,978
            
            
            
            22,322EBITDA
            
            $
            298,330
            
            
            $
            208,807
            
            
            $
            164,183
            
            
            $
            97,406
            
            
            $
            91,068






ITEM
7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





General




We are a
Marshall Islands company incorporated in September 2004 to transport iron
ore, coal, grain, steel products and other drybulk cargoes along worldwide
shipping routes through the ownership and operation of drybulk carrier
vessels.  As of February 26, 2010, our fleet consisted of nine
Capesize, eight Panamax, four Supramax, six Handymax and eight Handysize drybulk
carriers, with an aggregate carrying capacity of approximately 2,903,000 dwt,
and the average age of our fleet was approximately 7.0 years at December 31,
2009, as compared to the average age for the world fleet of approximately 15
years for the drybulk shipping segments in which we compete.  Most of
the vessels in our fleet are on time charters to well known charterers,
including Lauritzen Bulkers, Cargill, Pacbasin, STX, Cosco, and
HMMC.  As of February 26, 2010, 29 of the 35 vessels in our fleet are
presently engaged under time charter contracts that expire (assuming the option
periods in the time charters are not exercised) between March 2010 and October
2012, and six of our vessels are currently operating in vessel
pools.  See page 6 for a table indicating the delivery dates of all
vessels currently in our fleet.





We intend
to acquire additional modern, high-quality drybulk carriers through timely and
selective acquisitions of vessels in a manner that is accretive to our cash
flow.  We expect to fund acquisitions of additional








42








vessels
using cash reserves set aside for this purpose, additional borrowings and may
consider additional debt and equity financing alternatives from time to
time.





Our
management team and our other employees are responsible for the commercial and
strategic management of our fleet.  Commercial management includes the
negotiation of charters for vessels, managing the mix of various types of
charters, such as time charters and voyage charters, and monitoring the
performance of our vessels under their charters.  Strategic management
includes locating, purchasing, financing and selling vessels.  We
currently contract with three independent technical managers, to provide
technical management of our fleet at a lower cost than we believe would be
possible in-house.  Technical management involves the day-to-day
management of vessels, including performing routine maintenance, attending to
vessel operations and arranging for crews and supplies.  Members of
our New York City-based management team oversee the activities of our
independent technical managers.




On
October 14, 2009, Baltic Trading, our wholly owned subsidiary, filed a
registration statement on Form S-1 with the Securities and Exchange Commission,
or SEC.  Baltic Trading is a newly formed New York City-based company
incorporated in October 2009 in the Marshall Islands to conduct a shipping
business focused on the drybulk industry spot market.  Baltic Trading
is currently in the process of preparing for its initial public
offering.





On or
prior to the consummation of Baltic Trading’s public offering, we plan to enter
into certain arrangements with Baltic Trading as follows:





·
            a
      Subscription Agreement under which our wholly owned subsidiary, Genco
      Investments LLC, will subscribe for shares of Class B Stock of Baltic
      Trading in exchange for a capital contribution of $75 million (with
      amounts we may advance to Baltic Trading for vessel purchase deposits or
      other purposes prior to its initial public offering being credited towards
      such $75 million);





·
            a
      Management Agreement pursuant to which we will provide Baltic Trading with
      commercial, technical, administrative and strategic services in exchange
      for certain fees; and





·
            an
      Omnibus Agreement in which Baltic Trading will be granted a right of first
      refusal for certain spot chartering opportunities and we will be granted a
      right of first refusal for other business opportunities
      generally.




Year
ended December 31, 2009 compared to the year ended December 31,
2008




Factors
Affecting Our Results of Operations




We
believe that the following table reflects important measures for analyzing
trends in our results of operations.  The table reflects our ownership
days, available days, operating days, fleet utilization, TCE rates and daily
vessel operating expenses for the years ended December 31, 2009 and
2008.









43


For the years ended December
      31,
                
                Increase2009
                
                2008
                
                (Decrease)
                
                
                %
      Change


Fleet
      Data:Ownership
      days (1)Capesize
            2,458.9
            1,781.6
            677.3
            38.0%Panamax
            2,920.0
            2,541.3
            378.7
            14.9%Supramax
            1,460.0
            1,265.5
            194.5
            15.4%Handymax
            2,190.0
            2,196.0
            (6.0)
            (0.3%)Handysize
            2,920.0
            2,926.4
            (6.4)
            (0.2%)Total
            11,948.9
            10,710.8
            1,238.1
            11.6%Available
      days (2)Capesize
            2,456.1
            1,780.8
            675.3
            37.9%Panamax
            2,896.8
            2,478.5
            418.3
            16.9%Supramax
            1,430.1
            1,263.6
            166.5
            13.2%Handymax
            2,156.6
            2,196.0
            (39.4)
            (1.8%)Handysize
            2,891.0
            2,863.0
            28.0
            1.0%Total
            11,830.6
            10,581.9
            1,248.7
            11.8%Operating
      days (3)Capesize
            2,450.4
            1,780.5
            669.9
            37.6%Panamax
            2,838.9
            2,425.8
            413.1
            17.0%Supramax
            1,404.3
            1,215.7
            188.6
            15.5%Handymax
            2,144.4
            2,180.8
            (36.4)
            (1.7%)Handysize
            2,874.9
            2,857.9
            17.0
            0.6%Total
            11,712.9
            10,460.7
            1,252.2
            12.0%Fleet
      utilization (4)Capesize
            99.8%
            100.0%
            (0.2%)
            (0.2%)Panamax
            98.0%
            97.9%
            0.1%
            0.1%Supramax
            98.2%
            96.2%
            2.0%
            2.0%Handymax
            99.4%
            99.3%
            0.1%
            0.1%Handysize
            99.4%
            99.8%
            (0.4%)
            (0.4%)Fleet average
            99.0%
            98.9%
            0.1%
            0.1%







44





For the years ended December
      31,
            
            
            Increase2009
            
            
            2008
            
            
            (Decrease)
            
            
            %
      Change(U.S.
      dollars)Average
      Daily Results:Time
      Charter Equivalent (5)Capesize
            
            $
            56,359
            
            
            $
            69,922
            
            
            $
            (13,563
            )
            
            
            (19.4
            %)Panamax
            
            
            29,213
            
            
            
            34,194
            
            
            
            (4,981
            )
            
            
            (14.6
            %)Supramax
            
            
            25,845
            
            
            
            46,881
            
            
            
            (21,036
            )
            
            
            (44.9
            %)Handymax
            
            
            27,922
            
            
            
            33,875
            
            
            
            (5,953
            )
            
            
            (17.6
            %)Handysize
            
            
            18,776
            
            
            
            20,035
            
            
            
            (1,259
            )
            
            
            (6.3
            %)Fleet average
            
            
            31,656
            
            
            
            37,824
            
            
            
            (6,168
            )
            
            
            (16.3
            %)Daily
      vessel operating expenses (6)Capesize
            
            $
            5,359
            
            
            $
            4,822
            
            
            $
            537
            
            
            
            11.1
            %Panamax
            
            
            5,126
            
            
            
            4,641
            
            
            
            485
            
            
            
            10.5
            %Supramax
            
            
            4,876
            
            
            
            4,629
            
            
            
            247
            
            
            
            5.3
            %Handymax
            
            
            4,569
            
            
            
            4,380
            
            
            
            189
            
            
            
            4.3
            %Handysize
            
            
            4,123
            
            
            
            3,851
            
            
            
            272
            
            
            
            7.1
            %Fleet average
            
            
            4,796
            
            
            
            4,400
            
            
            
            396
            
            
            
            9.0
            %







(1)  We
define ownership days as the aggregate number of days in a period during which
each vessel in our fleet has been owned by us.  Ownership days are an
indicator of the size of our fleet over a period and affect both the amount of
revenues and the amount of expenses that we record during a period.




(2) We
define available days as the number of our ownership days less the aggregate
number of days that our vessels are off-hire due to scheduled repairs or repairs
under guarantee, vessel upgrades or special surveys and the aggregate amount of
time that we spend positioning our vessels.  Companies in the shipping
industry generally use available days to measure the number of days in a period
during which vessels should be capable of generating revenues.




(3)  We
define operating days as the number of our available days in a period less the
aggregate number of days that our vessels are off-hire due to unforeseen
circumstances.  The shipping industry uses operating days to measure
the aggregate number of days in a period during which vessels actually generate
revenues.




(4)  We
calculate fleet utilization by dividing the number of our operating days during
a period by the number of our available days during the period.  The
shipping industry uses fleet utilization to measure a company’s efficiency in
finding suitable employment for its vessels and minimizing the number of days
that its vessels are off-hire for reasons other than scheduled repairs or
repairs under guarantee, vessel upgrades, special surveys or vessel
positioning.




(5)  We
define TCE rates as net voyage revenue (voyage revenues less voyage expenses)
divided by the number of our available days during the period, which is
consistent with industry standards.  TCE rate is a common shipping
industry performance measure used primarily to compare daily earnings generated
by vessels on time charters with daily earnings generated by vessels on voyage
charters, because charterhire rates for vessels on voyage charters are generally
not expressed in per-day amounts while charterhire rates for vessels on time
charters generally are expressed in such amounts.







45





For the years ended December 31,2009
            
            2008Income statement data(U.S.
      dollars in thousands)Voyage
      revenues
            $
            379,531
            
            $
            405,370Voyage
      expenses
            
            5,024
            
            
            5,116Net
      voyage revenue
            $
            374,507
            
            $
            400,254




(6)  We
define daily vessel operating expenses to include crew wages and related costs,
the cost of insurance, expenses relating to repairs and maintenance (excluding
drydocking), the costs of spares and consumable stores, tonnage taxes and other
miscellaneous expenses.  Daily vessel operating expenses are
calculated by dividing vessel operating expenses by ownership days for the
relevant period.




Operating
Data




The
following compares our operating income and net income for the years ended
December 31, 2009 and 2008.





For the years ended December
      31,
              
              
              Increase2009
              
              
              2008
              
              
              (Decrease)
              
              
              %
      ChangeIncome
      Statement Data:(U.S.
      dollars in thousands except for per share amounts)Revenues
              
              $
              379,531
              
              
              $
              405,370
              
              
              $
              (25,839
              )
              
              
              (6.4
              %)Operating
      Expenses:Voyage
      expenses
              
              
              5,024
              
              
              
              5,116
              
              
              
              (92
              )
              
              
              (1.8
              %)Vessel
      operating expenses
              
              
              57,311
              
              
              
              47,130
              
              
              
              10,181
              
              
              
              21.6
              %General
      and administrative expenses
              
              
              15,024
              
              
              
              17,027
              
              
              
              (2,003
              )
              
              
              (11.8
              %)Management
      fees
              
              
              3,530
              
              
              
              2,787
              
              
              
              743
              
              
              
              26.7
              %Depreciation
      and amortization
              
              
              88,150
              
              
              
              71,395
              
              
              
              16,755
              
              
              
              23.5
              %Loss
      on forfeiture of vessel deposits
              
              
              —
              
              
              
              53,765
              
              
              
              (53,765
              )
              
              
              100.0
              %Gain
      on sale of vessels
              
              
              —
              
              
              
              (26,227
              )
              
              
              26,227
              
              
              
              (100.0
              %)Total operating
      expenses
              
              
              169,039
              
              
              
              170,993
              
              
              
              (1,954
              )
              
              
              (1.1
              %)Operating
      income
              
              
              210,492
              
              
              
              234,377
              
              
              
              (23,885
              )
              
              
              (10.2
              %)Other
      (expense) income
              
              
              (61,868
              )
              
              
              (147,797
              )
              
              
              85,929
              
              
              
              (58.1
              %)Net
      income
              
              $
              148,624
              
              
              $
              86,580
              
              
              $
              62,044
              
              
              
              71.7
              %
    46
   Earnings
      per share - Basic
            
            $
            4.75
            
            
            $
            2.86
            
            
            $
            1.89
            
            
            
            66.1
            %Earnings
      per share - Diluted
            
            $
            4.73
            
            
            $
            2.84
            
            
            $
            1.89
            
            
            
            66.5
            %Dividends
      declared and paid per share
            
            $
            –
            
            
            $
            3.85
            
            
            $
            (3.85
            )
            
            
            (100.0
            %)Weighted
      average common shares outstanding - Basic
            
            
            31,295,212
            
            
            
            30,290,016
            
            
            
            1.005.196
            
            
            
            3.3
            %Weighted
      average common shares outstanding - Diluted
            
            
            31,445,063
            
            
            
            30,452,850
            
            
            
            992.213
            
            
            
            3.3
            %Balance
      Sheet Data:(U.S.
      dollars in thousands,
              at
      end of period)Cash
      and cash equivalents
            
            $
            188,267
            
            
            $
            124,956
            
            
            $
            63,311
            
            
            
            50.7
            %Total
      assets
            
            
            2,336,802
            
            
            
            1,990,006
            
            
            
            346,796
            
            
            
            17.4
            %Total
      debt (current and long-term)
            
            
            1,327,000
            
            
            
            1,173,300
            
            
            
            153,700
            
            
            
            13.1
            %Total
      shareholders’ equity
            
            
            928,925
            
            
            
            696,478
            
            
            
            232,447
            
            
            
            33.4
            %Other
      Data:(U.S.
      dollars in thousands)Net
      cash provided by operating activities
            
            $
            219,729
            
            
            $
            267,416
            
            
            $
            (47,687
            )
            
            
            (17.8
            %)Net
      cash used in investing activities
            
            
            (306,210
            )
            
            
            (514,288
            )
            
            
            208,078
            
            
            
            (40.5
            %)Net
      cash provided by financing activities
            
            
            149,792
            
            
            
            300,332
            
            
            
            (150,540
            )
            
            
            (50.1
            %)EBITDA
      (1)
            
            $
            298,330
            
            
            $
            208,807
            
            
            $
            89,523
            
            
            
            42.9
            %





(1)
            EBITDA
      represents net income plus net interest expense and depreciation and
      amortization.  Refer to page 42 included in Item 6 where the use
      of EBITDA is discussed.  The following table demonstrates our
      calculation of EBITDA and provides a reconciliation of EBITDA to net
      income for each of the periods presented
above:




For the years ended December
      31,2009
            
            
            2008(U.S.
      dollars in thousands
              except for per share amounts)Net
      income
            
            $
            148,624
            
            
            $
            86,580Net
      interest expense
            
            
            61,556
            
            
            
            50,832Depreciation
      and amortization
            
            
            88,150
            
            
            
            71,395EBITDA
            
            $
            298,330
            
            
            $
            208,807







Results
of Operations




REVENUES-





Our
revenues are driven primarily by the number of vessels in our fleet, the number
of days during which our vessels operate and the amount of daily charterhire
that our vessels earn, that, in turn, are affected by a number of factors,
including:








47






·
            the
      duration of our charters;




·
            our
      decisions relating to vessel acquisitions and
  disposals;




·
            the
      amount of time that we spend positioning our
  vessels;




·
            the
      amount of time that our vessels spend in drydock undergoing
      repairs;




·
            maintenance
      and upgrade work;




·
            the
      age, condition and specifications of our
  vessels;




·
            levels
      of supply and demand in the drybulk shipping industry;
  and




·
            other
      factors affecting spot market charter rates for drybulk
      carriers.




For 2009,
revenues decreased 6.4% to $379.5 million versus $405.4 million for
2008.  Revenues in both periods consisted of charter payments for our
vessels, including revenue realized from pools.  The decrease in
revenues during the twelve months ended December 31, 2009 was due to lower
charter rates achieved for some of our vessels, reflecting the generally lower
rates for charters entered into in current market conditions, offset by
additional revenue from the operation of a larger fleet.




The
average TCE rate of our fleet decreased to $31,656 a day for 2009 from $37,824 a
day for 2008.  The decrease in TCE rates was primarily due to lower
time charter rates achieved in 2009 versus the prior year for six of our Panamax
vessels, three of our Supramax vessels, two of our Handymax vessels, as well as
six of our Handysize vessels in our current fleet.  Additionally,
there were lower revenues for two of our Capesize vessels due to profit sharing
agreements.  This was offset by higher revenues on two of our Panamax
vessels and four of our Handymax vessels.  Furthermore, the overall
decrease in the average TCE rate of our fleet during 2009 was offset by revenue
earned due to the operation of three of the Capesize vessels acquired as part of
the Metrostar acquisition, the Genco Hadrian, Genco Commodus and Genco
Maximus.




Charterhire
rates are volatile, as evidenced by seasonally high rates during May 2009,
followed by weaker rates for the following six months followed by a peak during
December 2009.




For 2009
and 2008, we had ownership days of 11,948.9 days and 10,710.8 days,
respectively.  Our fleet utilization for 2009 and 2008 was consistent
for both period at approximately 99.0%.




Please
see page 8 for table that sets forth information about the current employment of
the vessels currently in our fleet as of February 24, 2010.





VOYAGE
EXPENSES




Voyage
expenses include port and canal charges, fuel (bunker) expenses and brokerage
commissions payable to unaffiliated third parties.  Port and canal
charges and bunker expenses primarily increase in periods during which vessels
are employed on voyage charters because these expenses are for the account of
the vessel owner.




For the
years ended 2009 and 2008, we did not incur port and canal charges or any
significant expenses related to the consumption of bunkers as part of our
vessels’ overall expenses, because all of our vessels were employed under time
charters or pool arrangements that required the charterer to bear all of those
expenses.






48






For 2009
and 2008, voyage expenses were $5.0 million and $5.1 million, respectively, and
consisted primarily of brokerage commissions paid to third parties.




VESSEL
OPERATING EXPENSES




Vessel
operating expenses increased to $57.3 million from $47.1 million for 2009 and
2008, respectively.  This was primarily due to the operation of a
larger fleet, higher insurance expenses and other expenses related to spares as
well as the operation of more Capesize vessels during 2009.




For 2009
and 2008, the average daily vessel operating expenses for our fleet were $4,796
and $4,400 per day, respectively.  The increase in 2009 was due mostly
to increased costs for insurance and spareparts, as well as the operation of
larger fleet consisting of additional Capesize vessels for 2009 as compared to
2008.  We believe daily vessel operating expenses are best measured
for comparative purposes over a 12-month period in order to take into account
all of the expenses that each vessel in our fleet will incur over a full year of
operation.




Our
vessel operating expenses, which generally represent fixed costs, will increase
as a result of the expansion of our fleet. Other factors beyond our control,
some of which may affect the shipping industry in general, including, for
instance, developments relating to market prices for crewing, lubes, and
insurance, may also cause these expenses to increase.  We have
increased our 2010 budget for these expenses based primarily on the anticipated
increased cost for repairs and maintenance and lubricants.




Based on
our management’s estimates and budgets provided by our technical manager, we
expect our vessels to have daily vessel operating expenses during 2010
of:




Vessel Type
            Average
      Daily
              Budgeted AmountCapesize.............................................................................
            $
            6,400Panamax.............................................................................
            
            5,300Supramax...........................................................................
            
            4,900Handymax..........................................................................
            
            5,000Handysize..........................................................................
            
            4,700





Based
on these average daily budgeted amounts by vessel type, we expect our fleet to
have average daily vessel operating expenses of $5,350 during 2010.




GENERAL
AND ADMINISTRATIVE EXPENSES




We incur
general and administrative expenses, which relate to our onshore
non-vessel-related activities. Our general and administrative expenses include
our payroll expenses, including those relating to our executive officers, rent,
legal, auditing and other professional expenses.




For 2009
and 2008, general and administrative expenses were $15.0 million and $17.0
million, respectively.  The decrease in general and administrative
expenses was due to a decrease in costs associated with employee compensation
and other administrative costs.




MANAGEMENT
FEES-




We incur management fees to third-party
technical management companies for the day-to-day management of our vessels,
including performing routine maintenance, attending to vessel operations and
arranging for crews and supplies.  For 2009 and 2008, management fees
were $3.5 million and $2.8 million, respectively.  The increase
was








49








primarily
due to the operation of a larger fleet as well as an increase in monthly
management fees.  Based on the operation of 35 vessels, we expect
management fees to increase to approximately $4.5 million during 2010 due to the
operation of a larger fleet of vessels over 2009 and an increase to management
fees paid to our technical managers.





DEPRECIATION
AND AMORTIZATION-




We
depreciate the cost of our vessels on a straight-line basis over the expected
useful life of each vessel. Depreciation is based on the cost of the vessel less
its estimated residual value. We estimate the useful life of our vessels to be
25 years.  Furthermore, we estimate the residual values of our
vessels to be based upon $175 per lightweight ton, which we believe to be the
anticipated scrap value of our vessels.




For years
ended December 31, 2009 and 2008, depreciation and amortization charges were
$88.2 million and $71.4 million, respectively, resulting in an increase of
$16.8 million.  The increase primarily was due to the operation of a
larger fleet.




LOSS ON
FORFEITURE OF VESSEL DEPOSITS-




For year
ended December 31, 2009 and 2008, the loss on forfeiture of vessel deposits was
$0 million and $53.8 million, respectively.  The loss recorded during
2008 was attributable to our cancellation of the acquisition of six vessels
during the fourth quarter of 2008.  The Company decided to cancel this
acquisition in order to strengthen its liquidity and in light of market
conditions at that time.





GAIN ON
SALE OF VESSELS-




For year
ended December 31, 2009 and 2008, the gain on the sale of vessels was $0 and
$26.2 million, respectively.  The gain in 2008 was attributable to the
sale of the Genco Trader.





OTHER
(EXPENSE) INCOME-





IMPAIRMENT
OF INVESTMENT-





For 2009
and 2008, impairment of investment was $0 and $103.9 million,
respectively.  During 2008, the impairment of investment balance
consists of the write-down of the Company’s investment in Jinhui to its
estimated fair value as the Company deemed the investment to be
other-than-temporarily impaired as of December 31, 2008.  The
impairment loss was reclassified from equity and recorded in the Consolidated
Statement of Operations.  The Company investment was considered to be
other-than-temporarily impaired as of December 31, 2008 due to the severity of
the decline in its market value versus our cost basis.   During
the year ended December 31, 2009, no impairment charges were recorded as the
market value exceeded our new cost basis.





NET
INTEREST EXPENSE-





For 2009
and 2008, net interest expense was $61.6 million and $50.8 million,
respectively.  Net interest expense consisted primarily of interest
expense under our 2007 Credit Facility during both periods, as well us interest
expense under our 2008 Term Facility during 2008.  Due to the 2009
Amendment, the Company recorded a non-cash charge of $1.9 million associated
with capitalized costs related to deferred financing costs on the facility and
prior amendments during the fourth quarter of 2008.  Additionally,
during the fourth quarter of 2008, the Company cancelled the 2008 Term Facility
resulting in a charge of $2.2 million associated with unamortized deferred
financing costs.  Interest income as well as amortization of deferred
financing costs related to our respective credit facilities is included in both
periods.  The increase in net interest expense for 2009 versus 2008
was mostly a result of higher outstanding debt due to the acquisition of
additional vessels during the second quarter through the fourth quarter of 2008
and the third quarter through the fourth quarter of
2009.  Additionally, the increase in net interest expense was
attributable to the increase in the Applicable Margin as a result of the 2009
Amendment to the 2007 Credit Facility.




50


Year
ended December 31, 2008 compared to the year ended December 31,
2007




Factors
Affecting Our Results of Operations




We
believe that the following table reflects important measures for analyzing
trends in our results of operations.  The table reflects our ownership
days, available days, operating days, fleet utilization, TCE rates and daily
vessel operating expenses for the years ended December 31, 2008 and
2007.




For the years ended December
      31,
                
                
                Increase2008
                
                
                2007
                
                
                (Decrease)
                
                
                %
      Change


Fleet
      Data:Ownership
      days (1)Capesize
            1,781.6
            403.5
            1,378.1
            341.5%Panamax
            2,541.3
            2,555.0
            (13.7)
            (0.5%)Supramax
            1,265.5
            37.3
            1,228.2
            3,292.8%Handymax
            2,196.0
            2,578.3
            (382.3)
            (14.8%)Handysize
            2,926.4
            1,860.0
            1,066.4
            57.3%Total
            10,710.8
            7,434.1
            3,276.7
            44.1%Available
      days (2)Capesize
            1,780.8
            396.8
            1,384.0
            348.8%Panamax
            2,478.5
            2,535.5
            (57.0)
            (2.2%)Supramax
            1,263.6
            32.0
            1,231.6
            3,848.8%Handymax
            2,196.0
            2,502.5
            (306.5)
            (12.2%)Handysize
            2,863.0
            1,847.2
            1,015.8
            55.0%Total
            10,581.9
            7,314.0
            3,267.9
            44.7%Operating
      days (3)Capesize
            1,780.5
            396.8
            1,383.7
            348.7%Panamax
            2,425.8
            2,473.5
            (47.7)
            (1.9%)Supramax
            1,215.7
            32.0
            1,183.7
            3,699.1%Handymax
            2,180.8
            2,483.7
            (302.9)
            (12.2%)Handysize
            2,857.9
            1,833.8
            1,024.1
            55.8%Total
            10,460.7
            7,219.9
            3,240.8
            44.9%







51





Fleet  utilization
      (4)Capesize
            100.0%
            100.0%
            0.0%
            0.0%Panamax
            97.9%
            97.6%
            0.3%
            0.3%Supramax
            96.2%
            100.0%
            (3.8%)
            (3.8%)Handymax
            99.3%
            99.3%
            0.0%
            0.0%Handysize
            99.8%
            99.3%
            0.5%
            0.5%Fleet average
            98.9%
            98.7%
            0.2%
            0.2%








For the years ended December
      31,
            
            Increase2008
            
            2007
            
            (Decrease)
            
            %
      Change(U.S.
      dollars)Average
      Daily Results:Time
      Charter Equivalent (5)Capesize
            $
            69,922
            
            $
            68,377
            
            $
            1,545
            
            
            2.3
            %Panamax
            
            34,194
            
            
            26,952
            
            
            7,242
            
            
            26.9
            %Supramax
            
            46,881
            
            
            44,959
            
            
            1,922
            
            
            4.3
            %Handymax
            
            33,875
            
            
            22,221
            
            
            11,654
            
            
            52.4
            %Handysize
            
            20,035
            
            
            15,034
            
            
            5,001
            
            
            33.3
            %Fleet
      average
            
            37,824
            
            
            24,650
            
            
            13,174
            
            
            53.4
            %Daily
      vessel operating expenses (6)Capesize
            $
            4,822
            
            $
            4,190
            
            $
            632
            
            
            15.1
            %Panamax
            
            4,641
            
            
            4,261
            
            
            380
            
            
            8.9
            %Supramax
            
            4,629
            
            
            4,334
            
            
            295
            
            
            6.8
            %Handymax
            
            4,380
            
            
            3,395
            
            
            985
            
            
            29.0
            %Handysize
            
            3,851
            
            
            3,295
            
            
            556
            
            
            16.9
            %Fleet average
            
            4,400
            
            
            3,716
            
            
            684
            
            
            18.4
            %







(1)  We
define ownership days as the aggregate number of days in a period during which
each vessel in our fleet has been owned by us.  Ownership days are an
indicator of the size of our fleet over a period and affect both the amount of
revenues and the amount of expenses that we record during a period.




(2) We
define available days as the number of our ownership days less the aggregate
number of days that our vessels are off-hire due to scheduled repairs or repairs
under guarantee, vessel upgrades or special surveys and the aggregate amount of
time that we spend positioning our vessels.  Companies in the shipping
industry generally use available days to measure the number of days in a period
during which vessels should be capable of generating revenues.




(3)  We
define operating days as the number of our available days in a period less the
aggregate number of days that our vessels are off-hire due to unforeseen
circumstances.  The shipping industry uses operating days to measure
the aggregate number of days in a period during which vessels actually generate
revenues.




52





(4)  We
calculate fleet utilization by dividing the number of our operating days during
a period by the number of our available days during the period.  The
shipping industry uses fleet utilization to measure a company’s efficiency in
finding suitable employment for its vessels and minimizing the number of days
that its vessels are off-hire for reasons other than scheduled repairs or
repairs under guarantee, vessel upgrades, special surveys or vessel
positioning.




(5)  We
define TCE rates as net voyage revenue (voyage revenues less voyage expenses)
divided by the number of our available days during the period, which is
consistent with industry standards.  TCE rate is a common shipping
industry performance measure used primarily to compare daily earnings generated
by vessels on time charters with daily earnings generated by vessels on voyage
charters, because charterhire rates for vessels on voyage charters are generally
not expressed in per-day amounts while charterhire rates for vessels on time
charters generally are expressed in such amounts.





For the years ended December 31,2008
            
            2007Income statement data(U.S.
      dollars in thousands)Voyage
      revenues
            
            $
            405,370
            
            $
            185,387Voyage
      expenses
            
            
            5,116
            
            
            5,100Net
      voyage revenue
            
            $
            400,254
            
            $
            180,287




(6)  We
define daily vessel operating expenses to include crew wages and related costs,
the cost of insurance, expenses relating to repairs and maintenance (excluding
drydocking), the costs of spares and consumable stores, tonnage taxes and other
miscellaneous expenses.  Daily vessel operating expenses are
calculated by dividing vessel operating expenses by ownership days for the
relevant period.




Operating
Data




The
following discusses our operating income and net income for the years ended
December 31, 2008 and 2007.




53





For the years ended December
      31,
              
              
              Increase2008
              
              
              2007
              
              
              (Decrease)
              
              
              %
      ChangeIncome
      Statement Data:(U.S.
      dollars in thousands except for per share amounts)Revenues
              
              $
              405,370
              
              
              $
              185,387
              
              
              $
              219,983
              
              
              
              118.7
              %Operating
      Expenses:Voyage
      expenses
              
              
              5,116
              
              
              
              5,100
              
              
              
              16
              
              
              
              0.3
              %Vessel
      operating expenses
              
              
              47,130
              
              
              
              27,622
              
              
              
              19,508
              
              
              
              70.6
              %General
      and administrative expenses
              
              
              17,027
              
              
              
              12,610
              
              
              
              4,417
              
              
              
              35.0
              %Management
      fees
              
              
              2,787
              
              
              
              1,654
              
              
              
              1,133
              
              
              
              68.5
              %Depreciation
      and amortization
              
              
              71,395
              
              
              
              34,378
              
              
              
              37,017
              
              
              
              107.7
              %Loss
      on forfeiture of vessel deposits
              
              
              53,765
              
              
              
              -
              
              
              
              53,765
              
              
              
              100.0
              %Gain
      on sale of vessels
              
              
              (26,227
              )
              
              
              (27,047
              )
              
              
              820
              
              
              
              (3.0
              %)Total operating
      expenses
              
              
              170,993
              
              
              
              54,317
              
              
              
              116,676
              
              
              
              214.8
              %Operating
      income
              
              
              234,377
              
              
              
              131,070
              
              
              
              103,307
              
              
              
              78.8
              %Other
      (expense) income
              
              
              (147,797
              )
              
              
              (24,261
              )
              
              
              (123,536
              )
              
              
              509.2
              %Net
      income
              
              $
              86,580
              
              
              $
              106,809
              
              
              $
              (20,229
              )
              
              
              (18.9
              %)Earnings
      per share - Basic
              
              $
              2.86
              
              
              $
              4.08
              
              
              $
              (1.22
              )
              
              
              (29.9
              %)Earnings
      per share - Diluted
              
              $
              2.84
              
              
              $
              4.06
              
              
              $
              (1.22
              )
              
              
              (30.0
              %)Dividends
      declared and paid per share
              
              $
              3.85
              
              
              $
              2.64
              
              
              $
              1.21
              
              
              
              45.8
              %Weighted
      average common shares outstanding - Basic
              
              
              30,290,016
              
              
              
              26,165,600
              
              
              
              4,124,416
              
              
              
              15.8
              %Weighted
      average common shares outstanding - Diluted
              
              
              30,452,850
              
              
              
              26,297,521
              
              
              
              4,155,329
              
              
              
              15.8
              %Balance
      Sheet Data:(U.S.
      dollars in thousands, at end of period)Cash
      and cash equivalents
              
              $
              124,956
              
              
              $
              71,496
              
              
              $
              53,460
              
              
              
              74.8
              %Total
      assets
              
              
              1,990,006
              
              
              
              1,653,272
              
              
              
              336,734
              
              
              
              20.4
              %Total
      debt (current and long-term)
              
              
              1,173,300
              
              
              
              936,000
              
              
              
              237,300
              
              
              
              25.4
              %Total
      shareholders’ equity
              
              
              696,478
              
              
              
              622,185
              
              
              
              74,293
              
              
              
              11.9
              %
    54
   Other
      Data:(U.S.
      dollars in thousands)Net
      cash flow provided by operating activities
              
              $
              267,416
              
              
              $
              120,862
              
              
              $
              146,554
              
              
              
              121.3
              %Net
      cash flow used in investing activities
              
              
              (514,288
              )
              
              
              (984,350
              )
              
              
              470,062
              
              
              
              (47.8
              %)Net
      cash provided by financing activities
              
              
              300,332
              
              
              
              861,430
              
              
              
              (561,098
              )
              
              
              (65.1
              %)EBITDA
      (1)
              
              $
              208,807
              
              
              $
              164,183
              
              
              $
              44,624
              
              
              
              27.2
              %





(1)
            EBITDA
      represents net income plus net interest expense and depreciation and
      amortization.  Refer to page 42 included in Item 6 where the use
      of EBITDA is discussed.  The following table demonstrates our
      calculation of EBITDA and provides a reconciliation of EBITDA to net
      income for each of the periods presented
above:





For the years ended December
      31,2008
            
            
            2007(U.S.
      dollars in thousands
              except for per share amounts)Net
      income
            
            $
            86,580
            
            
            $
            106,809Net
      interest expense
            
            
            50,832
            
            
            
            22,996Depreciation
      and amortization
            
            
            71,395
            
            
            
            34,378EBITDA
            
            $
            208,807
            
            
            $
            164,183




Results of
Operations




REVENUES-




For 2008,
revenues grew 118.7% to $405.4 million versus $185.4 million for
2007.  Revenues in both periods consisted of charter payments for our
vessels, including revenue realized from pools.  The increase in
revenues during the twelve months ended December 31, 2008 was primarily due to
the growth of our fleet and favorable market conditions at the time we entered
into time charter agreements, as evidenced by the increase in the average TCE
rate as discussed below.




The
average TCE rate of our fleet increased to $37,824 a day for 2008 from $24,650 a
day for 2007.  The increase in TCE rates was primarily due to higher
time charter rates achieved in 2008 versus the prior year for three of the
Panamax vessels, the six Handymax vessels, as well as six of the Handysize
vessels in our current fleet.  Furthermore, higher TCE rates were
achieved during 2008 versus 2007 due to the operation of one of the Capesize
vessels acquired as part of the Metrostar acquisition and the two Panamax and
one Supramax vessel acquired as part of the Bocimar acquisition.




For 2008
and 2007, we had ownership days of 10,710.8 days and 7,434.1 days,
respectively.  Our fleet utilization for 2008 and 2007 was 98.9% and
98.7%, respectively. The utilization was higher during the year ended December
31, 2008 due to additional unscheduled offhire days during 2007 as compared to
2008.  During 2007, we experienced unscheduled offhire of
approximately 50 days in aggregate for the Genco Trader, Genco Glory and Genco
Sugar associated with maintenance and other delays, as compared to 41
unscheduled offhire days during 2008 related to the repair of the Genco
Hunter.




VOYAGE
EXPENSES-




Voyage
expenses include port and canal charges, fuel (bunker) expenses and brokerage
commissions payable to unaffiliated third parties.  Port and canal
charges and bunker expenses primarily increase in periods during which vessels
are employed on voyage charters because these expenses are for the account of
the vessel owner.






55








For the
years ended 2008 and 2007, we did not incur port and canal charges or any
significant expenses related to the consumption of bunkers as part of our
vessels’ overall expenses, because all of our vessels were employed under time
charters or pool arrangements that required the charterer to bear all of those
expenses.




For both
2008 and 2007, voyage expenses were $5.1 million and consisted primarily of
brokerage commissions paid to third parties.




VESSEL
OPERATING EXPENSES-




Vessel
operating expenses increased to $47.1 million from $27.6 million for 2008 and
2007, respectively.  This was mostly due to the expansion of our fleet
during 2008 as compared to 2007.  Furthermore, the increased costs
were due to higher expenses for crewing, repairs and maintenance and
insurance.




For 2008
and 2007, the average daily vessel operating expenses for our fleet were $4,400
and $3,716 per day, respectively.  The increase in 2008 was due mostly
to increased costs for crewing, repairs and maintenance and insurance, as well
as the operation of larger, capesize vessels for all of 2008 as compared to
2007.  We believe daily vessel operating expenses are best measured
for comparative purposes over a 12-month period in order to take into account
all of the expenses that each vessel in our fleet will incur over a full year of
operation.




GENERAL
AND ADMINISTRATIVE EXPENSES-




For 2008
and 2007, general and administrative expenses were $17.0 million and
$12.6 million, respectively.  The increase in general and
administrative expenses was due to costs associated with higher employee
non-cash compensation and other employee-related costs.




MANAGEMENT
FEES-




We incur management fees to third-party
technical management companies for the day-to-day management of our vessels,
including performing routine maintenance, attending to vessel operations and
arranging for crews and supplies.  For 2008 and 2007, management fees
were $2.8 million and $1.7 million, respectively.  The increase was
due primarily to increased rates charged by the management companies we use as
well to as the operation of a larger fleet.





DEPRECIATION
AND AMORTIZATION-




For years
ended December 31, 2008 and 2007, depreciation and amortization charges were
$71.4 million and $34.4 million, respectively, an increase of $37.0
million.  The increase primarily was due to the growth in our fleet
during 2008 as compared to 2007.




LOSS ON
FORFEITURE OF VESSEL DEPOSITS-




For year
ended December 31, 2008 and 2007, the loss on forfeiture of vessel deposits was
$53.8 million and $0 million, respectively.  This loss was
attributable to our cancellation of the acquisition of six vessels during the
fourth quarter of 2008.  The Company decided to cancel this
acquisition in order to strengthen its liquidity and in light of market
conditions at the time.




GAIN ON
SALE OF VESSELS-




For year
ended December 31, 2008 and 2007, the gain on the sale of vessels was $26.2
million and $27.0 million, respectively.  These amounts were
attributable to the sale of the Genco Trader in 2008 and the sale of the Genco
Glory and Genco Commander in 2007.








56





OTHER
(EXPENSE) INCOME-




OTHER
EXPENSE-





Effective
August 16, 2007, the Company elected hedge accounting for forward currency
contracts in place associated with the cost basis of shares of Jinhui stock it
has purchased.  However, the hedge is
limited to the lower of the cost basis or the market value of the Jinhui
stock.  On October 10, 2008, the Company elected to discontinue the
purchase of forward currency contracts associated with Jinhui and has eliminated
the hedge due to the current market value of Jinhui.  The forward
currency contract for a notional amount of 739.2 million NOK (Norwegian Kroner)
or $128,105, was settled on October 22, 2008.  For further details of
the application of hedge accounting, please refer to the discussion under the
subheading “Currency risk management.” For 2008 and 2007, other expense was
($0.1) million and ($1.3) million, respectively.  The loss for the
year ended December 31, 2008 is primarily due to the difference paid between the
spot and forward rate on the forward currency contracts associated with our
investment.  The loss for the year ended December 31, 2007 is
primarily attributable to the forward currency contracts associated with Jinhui
prior to electing hedge accounting.





IMPAIRMENT
OF INVESTMENT-





For 2008
and 2007, impairment of investment was $103.9 million and $0 million,
respectively.  During 2008, the impairment of investment balance
consists of the write-down of the Company’s investment in Jinhui to its
estimated fair value as the Company deemed the investment to be
other-than-temporarily impaired as of December 31, 2008.  The
impairment loss was reclassified from equity and recorded in the Consolidated
Statement of Operations.  The Company investment was considered to be
other-than-temporarily impaired as of December 31, 2008 due to the severity of
the decline in its market value versus our cost basis.





NET
INTEREST EXPENSE-




For 2008
and 2007, net interest expense was $50.8 million and $23.0 million,
respectively.  Net interest expense consisted primarily of interest
expense under our 2007 Credit Facility and 2008 Term Facility during 2008 and
the 2005 Credit Facility, the Short-term Line, and the 2007 Credit Facility
during 2007.  Due to the 2009 Amendment, the Company recorded a
non-cash charge of $1.9 million associated with capitalized costs related to
deferred financing costs on the facility and prior
amendments.   Additionally, during the fourth quarter of 2008,
the Company cancelled the 2008 Term Facility resulting in a charge of $2.2
million associated with unamortized deferred financing costs.  During
the third quarter of 2007, the Company refinanced the 2005 Credit Facility and
the Short-term Line with the 2007 Credit Facility resulting in a non-cash charge
of $3.6 million associated with the write-down of unamortized deferred bank
charges related to our former facilities.  Interest income as well as
amortization of deferred financing costs related to our respective credit
facilities is included in both periods.  The increase in net interest
expense for 2008 versus 2007 was mostly a result of higher outstanding debt due
to the acquisition of additional vessels in the fourth quarter of 2007 through
the third quarter of 2008.




LIQUIDITY
AND CAPITAL RESOURCES




To date,
we have financed our capital requirements with cash flow from operations, equity
offerings and bank debt.  We have used our funds primarily to fund
vessel acquisitions, regulatory compliance expenditures, the repayment of bank
debt and the associated interest expense and the payment of
dividends.  We will require capital to fund ongoing operations,
acquisitions and debt service.  We expect to rely on operating cash
flows to implement our growth plan and our anticipated $75 million capital
contribution to Baltic Trading, as we currently have only $12.5 million of
available borrowing capacity under our 2007 Credit Facility.Please refer to the
discussion under the subheading “Dividend Policy” below for additionally
information regarding dividends.  We also may consider
debt








57








and
additional equity financing alternatives from time to time.  However,
if market conditions become negative, we may be unable to raise additional
equity capital or debt financing on acceptable terms or at all.




We
anticipate that internally generated cash flow will be sufficient to fund the
operations of our fleet, including our working capital requirements, for the
next twelve months as well as our anticipated capital contribution to Baltic
Trading.  As a result of the reduction in the market values of
vessels, the Company entered into an amendment to the 2007 Credit Facility on
January 26, 2009 which waived the existing collateral maintenance financial
covenant, which required us to maintain pledged vessels with a value equal to at
least 130% of our current borrowings, and accelerated the reductions of the
total facility which began on March 31, 2009.  Please read the “2007
Credit Facility” section below for further details of the terms of the
amendment.  The collateral maintenance covenant will be waived until
we can represent that we are in compliance with all of our financial
covenants.





Dividend
Policy





Historically,
our dividend policy, which commenced in November 2005, has been to declare
quarterly distributions to shareholders by each February, May, August and
November, substantially equal to our available cash from operations during the
previous quarter, less cash expenses for that quarter (principally vessel
operating expenses and debt service) and any reserves our board of directors
determines we should maintain.  These reserves covered, among other
things, drydocking, repairs, claims, liabilities and other obligations, interest
expense and debt amortization, acquisitions of additional assets and working
capital.  In the future, we may incur other expenses or liabilities
that would reduce or eliminate the cash available for distribution as
dividends.  On January 26, 2009, we entered into an amendment to the
2007 Credit Facility (the “2009 Amendment”) pursuant to which we are required to
suspend the payment of cash dividends until we can represent that we are in a
position to satisfy the collateral maintenance covenant.  Refer to the
“2007 Credit Facility” section below for further information regarding this
amendment.  As such, a dividend has not been declared during
2009.  The following table summarizes the dividends declared based on
the results of the respective fiscal quarter:





Dividend
      per share
            
            
            Declaration
      dateFISCAL YEAR ENDED DECEMBER 31, 20094th
      Quarter
            
            $
            —
            
            
            
            N/A3rd
      Quarter
            
            $
            —
            
            
            
            N/A2nd
      Quarter
            
            $
            —
            
            
            
            N/A1st
      Quarter
            
            $
            —
            
            
            
            N/AFISCAL YEAR ENDED DECEMBER 31, 20084th
      Quarter
            
            $
            —
            
            
            
            N/A3rd
      Quarter
            
            $
            1.00
            
            
            10/23/082nd
      Quarter
            
            $
            1.00
            
            
            7/24/081st
      Quarter
            
            $
            1.00
            
            
            4/29/08FISCAL YEAR ENDED DECEMBER 31, 20074th
      Quarter
            
            $
            0.85
            
            
            2/13/083rd
      Quarter
            
            $
            0.66
            
            
            10/25/072nd
      Quarter
            
            $
            0.66
            
            
            7/26/071st
      Quarter
            
            $
            0.66
            
            
            4/26/07




The
aggregate amount of the dividend paid in 2009, 2008 and 2007 was $0, $117.1
million and $69.6 million, respectively, which we funded from cash on
hand.  As a result of the 2009 Amendment to the 2007 Credit Facility,
we have suspended the payment of cash dividends effective for the fourth quarter
of 2008, and payment of cash dividends will remain suspended until we can meet
the collateral maintenance covenant contained in the 2007 Credit
Facility.






58





The
declaration and payment of any dividend is subject to the discretion of our
board of directors and our compliance with the collateral maintenance covenant,
which is currently waived as part of the 2009 Amendment.  The timing
and amount of dividend payments will depend on our earnings, financial
condition, cash requirements and availability, fleet renewal and expansion,
restrictions in our loan agreements, the provisions of Marshall Islands law
affecting the payment of distributions to shareholders and other
factors.  Our board of directors may review and amend our dividend
policy from time to time in light of our plans for future growth and other
factors.





We
believe that, under current law, our dividend payments from earnings and profits
will constitute “qualified dividend income” and, as such, will generally be
subject to a 15% U.S. federal income tax rate with respect to non-corporate U.S.
shareholders that meet certain holding period and other requirements (through
2010). Distributions in excess of our earnings and profits will be treated first
as a non-taxable return of capital to the extent of a U.S. shareholder's tax
basis in its common stock on a dollar-for-dollar basis and, thereafter, as
capital gain.





Share
Repurchase Program





On February 13, 2008, our board of
directors approved our share repurchase program for up to a total of $50.0
million of our common stock.   Share repurchases will be made from
time to time for cash in open market transactions at prevailing market prices or
in privately negotiated transactions.  The timing and amount of
purchases under the program were determined by management based upon market
conditions and other factors.  Purchases may be made pursuant to a
program adopted under Rule 10b5-1 under the Securities Exchange
Act.  The program does not require us to purchase any specific number
or amount of shares and may be suspended or reinstated at any time in our
discretion and without notice.  Repurchases under the program are
subject to restrictions under the 2007 Credit Facility.  The 2007
Credit Facility was amended as of February 13, 2008 to permit the share
repurchase program and provide that the dollar amount of shares repurchased is
counted toward the maximum dollar amount of dividends that may be paid in any
fiscal quarter.  Subsequently, on January 26, 2009, we entered into
the 2009 Amendment, which amended the 2007 Credit Facility to require us to
suspend all share repurchases until we can represent that we are in a position
to again satisfy the collateral maintenance covenant.  Refer to the
“2007 Credit Facility” section below for further information regarding this
amendment.  Pursuant to the 2009 Amendment, there were no share
repurchases made during the twelve months ended December 31, 2009.





Since the inception of the share
repurchase program through December 31, 2009, we had repurchased and retired
278,300 shares of our common stock for $11.5 million (average per share purchase
price of $41.32) using  funding from cash generated from operations
pursuant to its share repurchase program.  An additional 3,130 shares
of common stock were repurchased from employees for $0.04 million during 2008
pursuant to our Equity Incentive Plan rather than the share repurchase
program.  No share repurchases were made during the year ended
December 31, 2009, and the maximum dollar amount that may yet be purchased under
our share repurchase program is $38,499,962.





Period
            
            Total
      Number of Shares Purchased
            
            
            Average
      Price Paid Per Share
            
            
            Total
      Dollar Amount as Part of Publicly Announced Plans or
      Programs
            
            
            Maximum
      Dollar Amount that May Yet Be Purchased Under the Plans or
      ProgramsJan.
      1, 2009 – Jan. 31, 2009
            
            
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            38,499,962Feb.
      1, 2009 – Feb. 28, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Mar.
      1, 2009 – Mar. 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Apr.
      1, 2009 – Apr. 30, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962May
      1, 2009 – May 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Jun.
      1, 2009 – Jun. 30, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Jul.
      1, 2009 – Jul. 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Aug.
      1, 2009 – Aug. 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962   59
   Sept.
      1, 2009 – Sept. 30, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Oct.
      1, 2009 – Oct. 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Nov.
      1, 2009 – Nov. 30, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Dec.
      1, 2009 – Dec. 31, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,499,962Total
            
            
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            38,499,962





Cash
Flow





Net cash provided by operating
activities for the twelve months ended December 31, 2009 and 2008 was $219.7
million and $267.4 million, respectively. The decrease in cash provided by
operating activities was primarily due to a decrease in cash flows generated by
the operation of our fleet due to lower charter rates and higher operating
expenses. In addition, cash paid for interest increased during the twelve months
ended December 31, 2009 as a result of an increase in the debt outstanding under
the Company’s 2007 Credit Facility.





Net
cash used in investing activities for the twelve months ended December 31, 2009
and 2008 was $306.2 million and $514.3 million, respectively.  The
decrease was primarily due to less cash used for the purchase of vessels, and
the decrease on payments on the forfeiture of vessel deposits during 2008,
offset by a decline in cash provided by the sale of vessels. For the twelve
months ended December 31, 2009, cash used in investing activities primarily
related to the purchase of vessels in the amount of $287.6 million and deposits
of restricted cash in the amount of $17.5 million. For the twelve months ended
December 31, 2008, net cash used in investing activities primarily related to
the purchase of vessels in the amount of $510.3 million, payments on the
forfeiture of vessel deposits related to the cancellation of our six vessel
acquisition in the amount of $53.8 million and the purchase of investments of
$10.3 million, offset by the proceeds from the sale of the Genco Trader in the
amount of $43.1 million and $13.7 million of proceeds from currency
contracts.





Net cash
provided by financing activities was $149.8 million during the twelve months
ended December 31, 2009 as compared to $300.3 million during the twelve months
ended December 31, 2008. The $150.5 million decrease in net cash provided by
financing activities was primarily due to the issuance of common stock in the
amount of $195.4 million, completed during the twelve month period last year,
offset by the suspension of the company’s dividend in 2009, for which $117.1
million of cash dividends had been paid. For the twelve months ended December
31, 2009 cash provided by financing activities consisted of $166.2 million of
proceeds from the 2007 Credit Facility slightly offset by $12.5 million from the
repayment of debt under the 2007 Credit Facility and $3.9 million of deferred
financing costs. For the same period last year, net cash provided by financing
activities consisted of the drawdown of $558.3 million related to the purchase
of vessels and $195.4 million in net proceeds from our May 2008 follow-on
offering. These inflows were offset by the repayment of $321.0 million under the
2007 Credit Facility and the payment of cash dividends of $117.1
million.





2008 Term
Facility





On
September 4, 2008, the Company executed a credit agreement for its $320 million
credit facility (“2008 Term Facility”).  The Company had previously
announced the bank commitment for this facility in a press release on August 18,
2008.  The 2008 Term Facility was underwritten by Nordea Bank Finland
Plc, New York Branch, who serves as Administrative Agent, Bookrunner, and
Collateral Agent, as well as other banks.  The terms of the 2008 Term
Facility provided that it was to be cancelled upon a cancellation of the
acquisition contracts for the six vessels as described in Note 4 – Vessel
Acquisitions and Dispositions of our financial statements.





The 2008
Term Facility was cancelled in the fourth quarter of 2008, resulting in a charge
to interest expense of $2.2 million associated with unamortized deferred
financing costs during 2008.





2007
Credit Facility






60





On July
20, 2007, we entered into a credit facility with DnB Nor Bank ASA (the “2007
Credit Facility”) for the purpose of acquiring nine Capesize vessels and
refinancing the our 2005 Credit Facility and Short-Term Line.  DnB Nor
Bank ASA is also Mandated Lead Arranger, Bookrunner, and Administrative
Agent.  We have used borrowings under the 2007 Credit Facility to
repay amounts outstanding under our previous credit facilities, which have been
terminated.  The maximum amount that could be borrowed under the 2007
Credit Facility at December 31, 2009 was $1.3 million.  At December
31, 2009, we utilized our maximum borrowing capacity under the 2007 Credit
Facility.




On
January 26, 2009, we entered into the 2009 Amendment which implemented the
following modifications to the terms of the 2007 Credit Facility:





·
            Compliance
      with the existing collateral maintenance financial covenant was waived
      effective for the year ended December 31, 2008 and until we can represent
      that we are in compliance with all of our financial covenants and we are
      otherwise able to pay a dividend and purchase or redeem shares of common
      stock under the terms of the Credit Facility in effect before the 2009
      Amendment.  Our cash dividends and share repurchases will be
      suspended until we can represent that we are in a position to again
      satisfy the collateral maintenance
covenant.





·
            The
      total amount of the 2007 Credit Facility will be subject to quarterly
      reductions of $12.5 million beginning March 31, 2009 through March 31,
      2012 and quarterly reductions of $48.2 million beginning July 20, 2012 and
      thereafter until the maturity date.  A final payment of $250.6
      million will be due on the maturity
date.





·
            The
      Applicable Margin to be added to the London Interbank Offered Rate to
      calculate the rate at which the Company’s borrowings bear interest is
      2.00% per annum.





·
            The
      commitment commission payable to each lender is 0.70% per annum of the
      daily average unutilized commitment of such
  lender.




Amounts
borrowed and repaid under the 2007 Credit Facility may be reborrowed if
available under the 2007 Credit Facility.  The 2007 Credit Facility
has a maturity date of July 20, 2017.




Loans
made under the 2007 Credit Facility may be and have been used for the
following:





·
            up
      to 100% of the en bloc purchase price of $1,111.0 million for nine modern
      drybulk Capesize vessels, which we agreed to purchase from companies
      within the Metrostar Management Corporation
  group;





·
            repayment
      of amounts previously outstanding under our 2005 Credit Facility, or
      $206.2 million;





·
            the
      repayment of amounts previously outstanding under our Short-Term Line, or
      $77.0 million;









61





·
            possible
      acquisitions of additional drybulk carriers between 25,000 and 180,000 dwt
      that are up to ten years of age at the time of delivery and not more than
      18 years of age at the time of maturity of the new credit
      facility;





·
            up
      to $50.0 million of working capital;
and





·
            the
      issuance of up to $50.0 million of standby letters of
      credit.  At December 31, 2009, there were no letters of credit
      issued under the 2007 Credit
Facility.





All
      amounts owing under the 2007 Credit Facility are secured by the
      following:





·
            cross-collateralized
      first priority mortgages of each of our existing vessels and any new
      vessels financed with the 2007 Credit
Facility;





·
            an
      assignment of any and all earnings on the mortgaged
    vessels;





·
            an
      assignment of all insurances of the mortgaged
  vessels;





·
            a
      first priority perfected security interest in all of the shares of Jinhui
      owned by us;





·
            an
      assignment of the shipbuilding contracts and an assignment of the
      shipbuilder’s refund guarantees meeting the Administrative Agent’s
      criteria for any additional newbuildings financed under the 2007 Credit
      Facility; and





·
            a
      first priority pledge of our ownership interests in each subsidiary
      guarantor.





We have
completed a pledge of our ownership interests in the subsidiary guarantors that
own the nine Capesize vessels acquired.  The other collateral
described above was pledged, as required, within thirty days of the effective
date of the 2007 Credit Facility.




Our
borrowings under the 2007 Credit Facility bear interest at the London Interbank
Offered Rate (“LIBOR”) for an interest period elected by us of one, three, or
six months, or longer if available, plus the Applicable Margin of
0.85%.  Effective January 26, 2009, due to the 2009 Amendment, the
Applicable Margin increased to 2.00%.  In addition to other fees
payable by us in connection with the 2007 Credit Facility, we paid a commitment
fee at a rate of 0.20% per annum of the daily average unutilized commitment of
each lender under the facility until September 30, 2007, and 0.25%
thereafter.  Effective January 26, 2009, due to the 2009 Amendment,
the rate increased to 0.70% per annum of the daily average unutilized commitment
of such lender.




The 2007
Credit Facility includes the following financial covenants which will apply to
us and our subsidiaries on a consolidated basis and will be measured at the end
of each fiscal quarter beginning with June 30, 2007:







62





·
            The
      leverage covenant requires the maximum average net debt to EBITDA ratio to
      be at least 5.5:1.0.




·
              Cash
      and cash equivalents must not be less than $0.5 million per mortgaged
      vessel.





·
            The
      ratio of EBITDA to interest expense, on a rolling last four-quarter basis,
      must be no less than 2.0:1.0.





·
            After
      July 20, 2007, consolidated net worth must be no less than $263.3 million
      plus 80% of the value of the any new equity issuances by us from June 30,
      2007.  Based on the equity offerings completed in October 2007
      and May 2008, consolidated net worth must be no less than $590.8
      million.





·
            The
      aggregate fair market value of the mortgaged vessels must at all times be
      at least 130% of the aggregate outstanding principal amount under the new
      credit facility plus all letters of credit outstanding; we have a 30 day
      remedy period to post additional collateral or reduce the amount of the
      revolving loans and/or letters of credit outstanding.  This
      covenant was waived effective for the year ended December 31, 2008 and
      indefinitely until we can represent that we are in compliance with all of
      our financial covenants as per the 2009 Amendment as described
      above.





As of
December 31, 2009, we believe we are in compliance with all of the financial
covenants under our 2007 Credit Facility, as amended.





On June
18, 2008, we entered into an amendment to the 2007 Credit Facility allowing us
to prepay vessel deposits to give us flexibility in refinancing potential vessel
acquisitions.





Due to
refinancing of our previous facilities, we incurred a non-cash write-off of the
unamortized deferred financing cost in the amount of $3.6 million associated
with our previous facilities and this charge was reflected in interest expense
in the third quarter of 2007.





Due to
refinancing of the 2007 Credit Facility as a result of entering into the 2009
Amendment, we incurred a non-cash write off of unamortized deferred financing
cost in the amount of $1.9 million associated with capitalized costs related to
prior amendments, and this charge was reflected in interest expense in the
fourth quarter of 2008.




Short-Term
Line - Refinanced by the 2007 Credit Facility




On May 3,
2007, we entered into a short-term line of credit facility under which DnB NOR
Bank ASA, Grand Cayman Branch and Nordea Bank Norge ASA, Grand Cayman Branch are
serving as lenders (the “Short-Term Line”).  The Short-Term Line was
used to fund a portion of acquisitions we made of in the shares of capital stock
of Jinhui.  Under the terms of the Short-Term Line, we were allowed to
borrow up to $155.0 million for such acquisitions, and we had borrowed a total
of $77.0 million under the Short-Term Line prior to its
refinancing.  The term of the Short-Term Line was for 364 days, and
the interest on amounts drawn was payable at the rate of LIBOR plus a margin of
0.85% per annum for the first six month period and LIBOR plus a margin of 1.00%
for the remaining term.  We were obligated to pay certain commitment
and administrative fees in connection with the Short-Term Line.  The
Company, as required, pledged all of the Jinhui shares it has purchased as
collateral against the Short-Term Line.  The Short-Term Line
incorporated by reference certain covenants from our 2005 Credit
Facility.





63





The
Short-Term Line was refinanced in July 2007 by the 2007 Credit
Facility.





2005
Credit Facility - Refinanced by the 2007 Credit Facility





Our 2005
Credit Facility was with a syndicate of commercial lenders consisting of Nordea
Bank Finland Plc, New York Branch, DnB NOR Bank ASA, New York Branch and
Citigroup Global Markets Limited.  The 2005 Credit Facility was used
to refinance our indebtedness under our Original Credit Facility, and was used
to acquire vessels.  Under the terms of our 2005 Credit Facility,
borrowings in the amount of $106.2 million were used to repay indebtedness under
our Original Credit Facility.





The 2005
Credit Facility was refinanced in July 2007 with the 2007 Credit
Facility.





Interest
Rate Swap Agreements, Forward Freight Agreements and Currency Swap
Agreements




At
December 31, 2009, we have ten interest rate swap agreements with DnB NOR Bank
to manage interest costs and the risk associated with changing interest
rates.  The total notional principal amount of the swaps is $756.2
million and the swaps have specified rates and durations.





Refer to
the table in Note 8 – Long-Term Debt of our financial statements, which
summarizes the interest rate swaps in place as of December 31, 2009 and
2008.





We have
considered the creditworthiness of both ourselves and the counterparty in
determining the fair value of the interest rate derivatives, and such
consideration resulted in an immaterial adjustment to the fair value of
derivatives on the balance sheet.  Valuations prior to any adjustments
for credit risk are validated by comparison with counterparty
valuations.  Amounts are not and should not be identical due to the
different modeling assumptions.  Any material differences are
investigated.





We had
entered into a number of short-term forward currency contracts to protect
ourselves from the risk associated with the fluctuation in the exchange rate
associated with the cost basis of the Jinhui shares as described below in Note 5
– Investment of our financial statements.  As forward contracts
expired, we continued to enter into new forward currency contracts for the cost
basis of the investment, excluding commissions.  However, hedge
accounting is limited to the lower of the cost basis or the market value at time
of designation.  We elected to discontinue the forward currency
contracts as of October 10, 2008 due to the declining underlying market value of
Jinhui.






64





As part
of our business strategy, we may enter into arrangements commonly known as
forward freight agreements, or FFAs, to hedge and manage market risks relating
to the deployment of our existing fleet of vessels.  These
arrangements may include future contracts, or commitments to perform in the
future a shipping service between ship owners, charters and
traders.  Generally, these arrangements would bind us and each
counterparty in the arrangement to buy or sell a specified tonnage freighting
commitment “forward” at an agreed time and price and for a particular
route.  Although FFAs can be entered into for a variety of purposes,
including for hedging, as an option, for trading or for arbitrage, if we decided
to enter into FFAs, our objective would be to hedge and manage market risks as
part of our commercial management. It is not currently our intention to enter
into FFAs to generate a stream of income independent of the revenues we derive
from the operation of our fleet of vessels.  If we determine to enter
into FFAs, we may reduce our exposure to any declines in our results from
operations due to weak market conditions or downturns, but may also limit our
ability to benefit economically during periods of strong demand in the
market.  We have not entered into any FFAs as of December 31,
2009.




Interest
Rates




The
effective interest rate associated with the interest expense for the 2007 Credit
Facility, as amended, including the rate differential between the pay fixed
receive variable rate on the swaps that were in effect, combined, including the
cost associated with unused commitment fees with these facilities for 2009 was
5.12%.  The effective interest rate associated with the interest
expense for the 2008 Term Facility and the 2007 Credit Facility, as amended,
including the rate differential between the pay fixed receive variable rate on
the swaps that were in effect, combined, including the cost associated with
unused commitment fees with these facilities for 2008 was 5.24%.  The
interest rate on the debt, excluding impact of swaps and the unused commitment
fees, ranged from 1.23% to 5.56% and from 1.35% to 6.10% for 2009 and 2008,
respectively.




Contractual
Obligations




The
following table sets forth our contractual obligations and their maturity dates
as of December 31, 2009.  The table incorporates the employment
agreement entered into in September 2007 with the Chief Financial Officer, John
Wobensmith, and contracts for the purchase price of vessels for Baltic
Trading.  The interest and fees are also reflective of the 2007 Credit
Facility, including the 2009 Amendment, and the interest rate swap agreements as
discussed above under “Interest Rate Swap Agreements, Forward Freight Agreements
and Currency Swap Agreements.”   The interest and fees related to
the 2007 Credit Facility reflect the repayment of $12.5 million of debt which
was paid on January 4, 2010, which is prior to the required repayment date of
March 31, 2010.





Total
            
            
            Within
      One
                Year
      (1)
            
            
            One
      to Three
                Years
            
            
            Three
      to Five
                Years
            
            
            More
      than
                Five
      Years(U.S.
      dollars in thousands)2007
      Credit Facility
            
            $
            1,327,000
            
            
            $
            50,000
            (2)
            
            $
            158,890
            
            
            $
            385,560
            
            
            $
            732,550Interest
      and borrowing fees
            
            $
            249,777
            
            
            $
            61,075
            
            
            $
            100,338
            
            
            $
            57,388
            
            
            $
            30,976Executive
      employment agreement
            
            $
            337
            
            
            $
            337
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —Office
      lease
            
            $
            5,665
            
            
            $
            496
            
            
            $
            1,036
            
            
            $
            1,036
            
            
            $
            3,097Purchase
      price of vessels (3)
            
            $
            284,200
            
            
            $
            284,200
            (4)
            
            $
            —
            
            
            $
            —
            
            
            $
            —





(1)
            Represents
      the twelve month period ending December 31,
  2010.


(2)
            $12.5
      million of outstanding debt was repaid on January 4,
  2010.


(3)
            On
      February 19, 2010, Baltic Trading entered into agreements with Inta
      Navigation Ltd., Malta, Borak Shipping Ltd., Malta, Sinova Shipping Ltd.,
      Malta and Spic Shipping Ltd. Malta to purchase four 2009 built Supramax
      drybulk vessels for an aggregate price of
      $140,000.  Additionally, on February 22, 2010, Baltic Trading
      entered into agreement with Shipping Trust Ltd. and Oceanways Trust Ltd.
      to purchase two newbuilding Capesize drybulk veesels for an aggregate
      price of $144,200.  Baltic Trading’s obligations under these
      agreements are subject to the completion of its initial public offering on
      or pior to March 16, 2010.  In the event such offering is not
      completed by such date, either party may terminate the respective
      agreements.


(4)
            Following
      the execution of the agreements as noted in (3) above, Baltic Trading paid
      cumulative deposits totaling $35.5 million during February 2010 to the
      aforementioned unaffiliated parties using funds advanced by the
      Company.








65





Interest
expense has been estimated using the fixed hedge rate for the effective period
and notional amount of the debt which is effectively hedged and 0.3125% for the
portion of the debt that has no designated swap against it, plus the applicable
bank margin of 2.00%.  We are obligated to pay certain commitment fees
in connection with the 2007 Credit Facility, which have been reflected within
interest and borrowing fees.




Capital
Expenditures




We make
capital expenditures from time to time in connection with our vessel
acquisitions.  Our fleet currently consists of nine Capesize drybulk
carriers, eight Panamax drybulk carriers, four Supramax drybulk carriers, six
Handymax drybulk carriers and eight Handysize drybulk carriers.





In
addition to acquisitions that we may undertake in future periods, we will incur
additional capital expenditures due to special surveys and
drydockings.  We estimate our drydocking costs and scheduled off-hire
days for our fleet through 2011 to be:


Estimated Drydocking Cost
            
            Estimated Offhire Days(U.S.
      dollars in millions)Year2010
            
            $
            5.4
            
            
            1702011
            
            $
            3.7
            
            
            100




The costs
reflected are estimates based on drydocking our vessels in China.  We
estimate that each drydock will result in 20 days of off-hire.  Actual
costs will vary based on various factors, including where the drydockings are
actually performed.  One of our Capesize drybulk carriers that is
drydocking during 2010 is anticipated to complete the required maintenance in
only ten days.  We expect to fund these costs with cash from
operations.





During
2009, we incurred a total of $4.6 million of drydocking costs.





During
2008, we incurred a total of $6.4 million of drydocking costs.




We
estimate that nine of our vessels will be drydocked during 2010 and an
additional five vessels in 2011.




Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.




Inflation




Inflation
has only a moderate effect on our expenses given current economic
conditions.  In the event that significant global inflationary
pressures appear, these pressures would increase our operating, voyage, general
and administrative, and financing costs.  However, we expect our 2010
costs to increase based on the anticipated increased cost for repairs and
maintenance and lubricants.




66


CRITICAL
ACCOUNTING POLICIES




The
discussion and analysis of our financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with U.S. GAAP.  The preparation of those financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets and liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities at the date of our financial
statements.  Actual results may differ from these estimates under
different assumptions and conditions.




Critical
accounting policies are those that reflect significant judgments of
uncertainties and potentially result in materially different results under
different assumptions and conditions.  We have described below what we
believe are our most critical accounting policies, because they generally
involve a comparatively higher degree of judgment in their
application.  For an additional description of our significant
accounting policies, see Note 2 to our consolidated financial statements
included in this 10-K.




Vessel
acquisitions




When we
enter into an acquisition transaction, we determine whether the acquisition
transaction was the purchase of an asset or a business based on the facts and
circumstances of the transaction.  As is customary in the shipping
industry, the purchase of a vessel is normally treated as a purchase of an asset
as the historical operating data for the vessel is not reviewed nor is material
to our decision to make such acquisition.




When a
vessel is acquired with an existing time charter, we allocate the purchase price
of the vessel and the time charter based on, among other things, vessel market
valuations and the present value (using an interest rate which reflects the
risks associated with the acquired charters) of the difference between (i) the
contractual amounts to be paid pursuant to the charter terms and (ii)
management's estimate of the fair market charter rate, measured over a period
equal to the remaining term of the charter.  The capitalized
above-market (assets) and below-market (liabilities) charters are amortized as a
reduction or increase, respectively, to voyage revenues over the remaining term
of the charter.





Revenue and voyage expense
recognition




Revenues
are generated from time charter agreements and pool agreements.  A
time charter involves placing a vessel at the charterer’s disposal for a set
period of time during which the charterer may use the vessel in return for the
payment by the charterer of a specified daily hire rate.  In time
charters, operating costs including crews, maintenance and insurance are
typically paid by the owner of the vessel and specified voyage costs such as
fuel and port charges are paid by the charterer.  There are certain
other non-specified voyage expenses such as commissions which are borne by the
Company.




We record
time charter revenues over the term of the charter as service is
provided.  Revenues are recognized on a straight-line basis as the
average revenue over the term of the respective time charter
agreement.  We recognize vessel operating expenses when
incurred.




Three of
our vessels, the Genco Constantine, Genco Titus and Genco Hadrian, are chartered
under time charters which include a profit-sharing element.  Under
these charter agreements, we receive a fixed rate of $52,750, $45,000 and
$65,000 per day, respectively, and an additional profit-sharing
payment.  The profit-sharing between us and the respective charterer
for each 15-day period is calculated by taking the average over that period of
the published Baltic Cape Index of the four time charter routes as reflected in
daily reports.  If such average is more than the base rate payable
under the charter, the excess amount is allocable 50% to us and 50% to the
charterer.  A commission of 3.75% based on the profit sharing amount
due to us is incurred out of our share.  Profit sharing revenue is
recorded when the average of the published Baltic Cape Index for the four time
charter routes is available for the entire 15-day period, which is when the
profit sharing revenue is fixed and determinable.






67






At
December 31, 2009, seven of our vessels are in vessel pools, six of these are
earning variable rates and one is earning a fixed rate based on our option to
convert to a fixed rate.  The Genco Predator entered into the
Bulkhandling Handymax Pool in November 2008, the Genco Leader entered into the
Baumarine Pool during December 2008 and the Genco Explorer, Genco Pioneer, Genco
Progress, Genco Reliance and Genco Sugar entered the Lauritzen Pool during
August 2009.   Vessel pools, such as the Bulkhandling Handymax
Pool, Baumarine Pool and the Lauritzen Pool, provide cost-effective commercial
management activities for a group of similar class vessels.  The pool
arrangement provides the benefits of a large-scale operation, and chartering
efficiencies that might not be available to smaller fleets.  Under the
pool arrangement, the vessels operate under a time charter agreement whereby the
cost of bunkers and port expenses are borne by the pool and operating costs
including crews, maintenance and insurance are typically paid by the owner of
the vessel.  Since the members of the pool share in the revenue
generated by the entire group of vessels in the pool, and the pool operates in
the spot market, the revenue earned by these vessels is subject to the
fluctuations of the spot market.  We recognize revenue from these pool
arrangements based on the net distributions reported by the applicable
pool.




Due from charterers,
net




Due from
charterers, net includes accounts receivable from charters, net of the provision
for doubtful accounts.  At each balance sheet date, we provide for the
provision based on a review of all outstanding charter
receivables.  Included in the standard time charter contracts with our
customers are certain performance parameters, which if not met can result in
customer claims.  As of December 31, 2009, we had a reserve of $0.2
million against due from charterers balance and an additional accrual of $1.0
million in deferred revenue, each of which is associated with estimated customer
claims against us including vessel performance issues under time charter
agreements.  As of December 31, 2008, we had a reserve of $0.2 million
against due from charterers balance and an additional accrual of $1.4 million in
deferred revenue, each of which is associated with estimated customer claims
against us, including time charter performance issues.





Revenue
is based on contracted charterparties.  However, there is always the
possibility of dispute over terms and payment of hires and
freights.  In particular, disagreements may arise as to the
responsibility of lost time and revenue due to us as a
result.  Accordingly, we periodically assess the recoverability of
amounts outstanding and estimates a provision if there is a possibility of
non-recoverability.  Although we believe its provisions to be
reasonable at the time they are made, it is possible that an amount under
dispute is not ultimately recovered and the estimated provision for doubtful
accounts is inadequate.




Depreciation




We record
the value of our vessels at their cost (which includes acquisition costs
directly attributable to the vessel and expenditures made to prepare the vessel
for its initial voyage) less accumulated depreciation.  We depreciate
our drybulk vessels on a straight-line basis over their estimated useful lives,
estimated to be 25 years from the date of initial delivery from the
shipyard.  Depreciation is based on cost less the estimated residual
scrap value.  We estimate the residual values of our vessels to be
based upon $175 per lightweight ton.  An increase in the useful life
of a drybulk vessel or in its residual value would have the effect of decreasing
the annual depreciation charge and extending it into later periods.  A
decrease in the useful life of a drybulk vessel or in its residual value would
have the effect of increasing the annual depreciation
charge.  However, when regulations place limitations over the ability
of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful
life to end at the date such regulations preclude such vessel’s further
commercial use.




Deferred drydocking
costs




Our
vessels are required to be drydocked approximately every 30 to 60 months
for major repairs and maintenance that cannot be performed while the vessels are
operating.  We defer the costs associated with drydockings as they
occur and amortize these costs on a straight-line basis over the period between
drydockings.  Deferred drydocking costs include actual costs incurred
at the drydock yard; cost of travel, lodging and subsistence of our








68








personnel
sent to the drydocking site to supervise; and the cost of hiring a third party
to oversee the drydocking.  We believe that these criteria are
consistent with U.S. GAAP guidelines and industry practice and that our policy
of capitalization reflects the economics and market values of the
vessels.  Costs that are not related to drydocking are expensed as
incurred.




Impairment of long-lived
assets




We follow
the Accounting Standards Codification (“ASC”) subtopic 360-10, Property, Plant
and Equipment (“ASC 360-10”) (formerly Financial Accounting Standards Board
(“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets”), which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than their carrying
amounts.  If indicators of impairment are present, we would evaluate
the fair value and future benefits of long-lived assets, by performing an
analysis of the anticipated undiscounted future net cash flows of the related
long-lived assets.  If the carrying value of the related asset exceeds
the undiscounted cash flows, the carrying value is reduced to its fair
value.  Various factors including anticipated future charter rates,
estimated scrap values, future drydocking costs and estimated vessel operating
costs, are included in this analysis.




Investments




We hold
an investment in the capital stock of Jinhui Shipping and Transportation Limited
(“Jinhui”).  Jinhui is a drybulk shipping owner and operator focused
on the Supramax segment of drybulk shipping.  This investment is
designated as available-for-sale and is reported at fair value, with unrealized
gains and losses recorded in shareholders’ equity as a component of
OCI.  The Company classifies the investment as a current or noncurrent
asset based on the Company’s intent to hold the investment at each reporting
date.  Effective August 16, 2007, the Company elected hedge accounting
for forward currency contracts in place associated with the cost basis of the
Jinhui shares and therefore the unrealized currency gain or loss associated with
Jinhui cost basis is reflected in the income statement as a component of other
expense to off-set the gain or loss associated with these forward currency
contracts.  On October 10, 2008, the Company elected to discontinue
the purchase of forward currency contracts associated with Jinhui by entering
into an offsetting trade that closed the previously opened currency contract,
thereby eliminating the hedge on Jinhui.  The cost of securities when
sold is based on the specific identification method.  Realized gains
and losses on the sale of these securities will be reflected in the consolidated
statement of operations in other expense.  Additionally, the realized
gain or loss on the forward currency contracts is reflected in the Consolidated
Statement of Cash Flows as an investing activity and is reflected in the caption
Payments on forward currency contracts, net.





Investments
are reviewed quarterly to identify possible other-than-temporary impairment in
accordance ASC subtopic 320-10, Investments – Debt and Equity Securities (“ASC
320-10”) (formerly FASB Staff Position 115-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments”).  When evaluating the investments, we review factors
such as the length of time and extent to which fair value has been below the
cost basis, the financial condition of the issuer, the underlying net asset
value of the issuers assets and liabilities, and the our ability and intent to
hold the investment for a period of time which may be sufficient for anticipated
recovery in market value Should the decline in the value of any investment be
deemed to be other-than-temporary, the investment basis would be written down to
fair market value, and the write-down would be recorded to earnings as a
loss.  Investments that are not expected to be sold within the next
year are classified as noncurrent.




During
the fourth quarter of 2008, our investment in Jinhui was deemed to be
other-than-temporarily impaired due to the severity of the decline in its market
value versus our cost basis.  We recorded a $103.9 million impairment
loss during 2008 which was reclassified from the statement of equity and
recorded as a loss in the income statement.  We will continue to
evaluate the investment on a quarterly basis to determine the likelihood of any
further significant adverse effects on the fair value and amount of any
additional impairments.  In the event we determine that the Jinhui
investment is subject to any additional other-than-temporary impairment, the
amount of the impairment








69








would be
reclassified from the statement of equity and recorded as a loss in the income
statement for the amount of the impairment.




Income
taxes




Pursuant
to Section 883 of the U.S. Internal Revenue Code of 1986 as amended (the
“Code”), qualified income derived from the international operations of ships is
excluded from gross income and exempt from U.S. federal income tax if a company
engaged in the international operation of ships meets certain
requirements.  Among other things, in order to qualify, a company must
be incorporated in a country which grants an equivalent exemption to U.S.
corporations and must satisfy certain qualified ownership
requirements.





We are
incorporated in the Marshall Islands.  Pursuant to the income tax laws
of the Marshall Islands, we are not subject to Marshall Islands income
tax.  The Marshall Islands has been officially recognized by the
Internal Revenue Service as a qualified foreign country that currently grants
the requisite equivalent exemption from tax.





Based on
the publicly traded requirement of the Section 883 regulations, we believe that
we qualified for exemption from income tax for 2009, 2008 and
2007.  In order to meet the publicly traded requirement, our stock
must be treated as being primarily and regularly traded for more than half the
days of any such year.  Under the Section 883 regulations, our
qualification for the publicly traded requirement may be jeopardized if
shareholders of our common stock that own five percent or more of our stock (“5%
shareholders”) own, in the aggregate, 50% or more of our common stock for more
than half the days of the year.  We believe that during 2009, 2008 and
2007, the combined ownership of our 5% shareholders did not equal 50% or more of
our common stock for more than half the days of 2009, 2008 and
2007.  However if our 5% shareholders were to increase their ownership
to 50% or more of our common stock for more than half the days of 2010 or any
future taxable year, we would not be eligible to claim exemption from tax under
Section 883 for that taxable year.  We can therefore give no assurance
that changes and shifts in the ownership of our stock by 5% shareholders will
not preclude us from qualifying for exemption from tax in 2010 or in future
years.





If the
Company does not qualify for the exemption from tax under Section 883, it would
be subject to a 4% tax on the gross “shipping income” (without the allowance for
any deductions) that is treated as derived from sources within the United States
or “United States source shipping income.” For these purposes, “shipping income”
means any income that is derived from the use of vessels, from the hiring or
leasing of vessels for use, or from the performance of services directly related
to those uses; and “United States source shipping income” includes 50% of
shipping income that is attributable to transportation that begins or ends, but
that does not both begin and end, in the United States.




Baltic
Trading is also incorporated in the Marshall Islands.  Pursuant to the
income tax laws of the Marshall Islands, the Company is not subject to Marshall
Islands income tax.  Baltic Trading has no United States operations
and no United States source income.  Thus, Baltic Trading is not
currently subject to income tax in the United States. However, we anticipate
that Baltic Trading will not qualify for an exemption under Section 883 upon
consummation of initial public offering because it will not satisfy the publicly
traded requirement described above.  The Company plans to indirectly
own shares of Baltic Trading’s Class B Stock, which will not be publicly traded
but which will provide the Company with over 50% of the combined voting power of
all classes of Baltic Trading’s voting stock.  Holders of a majority of
the Class B Stock can irrevocably elect to reduce the voting power of the
Class B Stock to constitute not more than 49% of the total voting power of
all classes of stock, although there can be no assurance that this election will
be made.




Fair value of financial
instruments




The
estimated fair values of our financial instruments such as amounts due to / due
from charterers, accounts payable and long-term debt approximate their
individual carrying amounts as of December 31, 2009 and December 31, 2008 due to
their short-term maturity or the variable-rate nature of the respective
borrowings under the credit facility.








70





The fair
value of the interest rate swaps and forward currency contracts (used for
purposes other than trading) is the estimated amount we would receive to
terminate these agreements at the reporting date, taking into account current
interest rates and the creditworthiness of the counterparty for assets and
creditworthiness of us for liabilities.  See Note 10 - Fair Value of
Financial Instruments for additional disclosure on the fair values of long term
debt, derivative instruments, and available-for-sale securities.





The
Company adopted ASC subtopic 820-10, Fair Value Measurements & Disclosures
(“ASC 820-10”) (formerly SFAS No. 157, “Fair Value Measurements”) in the first
quarter of 2007, which did not have a material impact on the financial
statements of the Company.





Derivative financial
instruments




Interest rate risk
management




We are
exposed to the impact of interest rate changes.  Our objective is to
manage the impact of interest rate changes on its earnings and cash flow in
relation to borrowings primarily for the purpose of acquiring drybulk
vessels.  These borrowings are subject to a variable borrowing
rate.  We use pay-fixed receive-variable interest rate swaps to manage
future interest costs and the risk associated with changing interest rate
obligations.  These swaps are designated as cash flow hedges of future
variable rate interest payments and are tested for effectiveness on a quarterly
basis.




The
differential to be paid or received for the effectively hedged portion of any
swap agreement is recognized as an adjustment to interest expense as
incurred.  Additionally, the changes in value for the portion of the
swaps that are effectively hedging future interest payments are reflected as a
component of OCI.





For the
interest rate swaps that are not designated as an effective hedge, the change in
the value and the rate differential to be paid or received is recognized as
other expense and is listed as a component of other (expense)
income.





Currency risk
management





We
currently hold an investment in Jinhui shares that are traded on the Oslo Stock
Exchange located in Norway, and as such, the Company is exposed to the impact of
exchange rate changes on this available-for-sale (“AFS”) security denominated in
Norwegian Kroner.  Our objective is to manage the impact of exchange
rate changes on its earnings and cash flows in relation to its cost basis
associated with its investments.  We utilized foreign currency forward
contracts to protect its original investment from changing exchange rates
through October 10, 2008 when the use of these contracts was discontinued due to
the decline in the underlying value of Jinhui.





The
change in the value of the forward currency contracts is recognized as other
expense and is listed as a component of other (expense)
income.  Effective August 16, 2007, we elected to utilize fair value
hedge accounting for these instruments whereby the change in the value in the
forward contracts continues to be recognized as other expense and is listed as a
component of other (expense) income.  Fair value hedge accounting then
accelerates the recognition of the effective portion of the currency translation
gain or (loss) on the AFS Security from August 16, 2007 from OCI into other
expense and is listed as a component of other (expense) income.  Time
value of the forward contracts is excluded from effectiveness testing and
recognized currently in income.  On October 10, 2008, we elected to
discontinue the purchase of forward currency contracts associated with Jinhui by
entering into an offsetting trade that closed the previously opened currency
contract, thereby eliminating the hedge on Jinhui.








71





ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





INTEREST
RATE RISK





Interest rate
risk




We are
exposed to the impact of interest rate changes.  Our objective is to
manage the impact of interest rate changes on our earnings and cash flow in
relation to our borrowings.  We held ten interest rate risk management
instruments at December 31, 2009 and nine interest rate risk management
instruments at December 31, 2008, in order to manage future interest costs and
the risk associated with changing interest rates.




At
December 31, 2009, the Company held ten interest rate swap agreements which were
entered into with DnB NOR Bank to manage interest costs and the risk associated
with changing interest rates.  The total notional principal amount of
the swaps is $756.2 million, and the swaps have specified rates and
durations.  Refer to the table in Note 8 – Long-Term Debt of our
financial statements which summarizes the interest rate swaps in place as of
December 31, 2009 and December 31, 2008.





The swap
agreements, with effective dates prior to December 31, 2009 synthetically
convert variable rate debt to fixed rate debt at the fixed interest rate of swap
plus the Applicable Margin as defined in the “2007 Credit Facility” section of
Note 8 – Long-Term Debt of our financial statements.




The
liability associated with the swaps at December 31, 2009 is $44.1 million and
$65.9 million at December 31, 2008, and are presented as the fair value of
derivatives on the balance sheet.   The asset associated with the
swaps at December 31, 2009 is $2.1 million.  There were no swaps in an
asset position at December 31, 2008.  As of December 31, 2009 and
2008, the Company has accumulated other comprehensive deficit of ($41.8) million
and ($66.0) million, respectively, related to the effectively hedged portion of
the swaps.  Hedge ineffectiveness associated with the interest rate
swaps resulted in other (expense) income of  ($0.3) million and $0.1
million for 2009 and 2008, respectively.  At December 31, 2009,
($27.3) million of OCI is expected to be reclassified into income over the next
12 months associated with interest rate derivatives.





The
Company is subject to market risks relating to changes in interest rates because
we have significant amounts of floating rate debt outstanding.  For
the year ended December 31, 2008, we paid LIBOR plus 0.85% on the 2007 Credit
Facility for the debt in excess of any designated swap’s notional amount for
such swap’s effective period.  During the year ended December 31,
2009, effective January 26, 2009 as a result of the 2009 amendment to the 2007
Credit Facility, we paid LIBOR plus 2.00% on the 2007 Credit Facility for the
debt in excess of any designated swap’s notional amount for such swap’s
effective period.  A 1% increase in LIBOR would result in an increase
of $3.6 million in interest expense for the year ended December 31, 2009,
considering the increase would be only on the unhedged portion of the
debt.




Derivative financial
instruments




As of
December 31, 2009, the Company held ten interest rate swap agreements that it
entered into with DnB NOR Bank to manage interest costs and the risk associated
with changing interest rates.  The total notional principal amount of
the swaps is $756.2 million, and the swaps have specified rates and
durations.  Refer to the table in Note 8 – Long-Term Debt of our
financial statements which summarized the interest rate swaps in place as of
December 31, 2009 and December 31, 2008.





The
differential to be paid or received for these swap agreements is recognized as
an adjustment to interest expense as incurred.  The interest rate
differential pertaining to the interest rate swaps for the years ended December
31, 2009 and 2008 was $28.6 million and $9.5 million,
respectively.  The Company is currently utilizing cash
flow








72








hedge
accounting for the swaps whereby the effective portion of the change in value of
the swaps is reflected as a component of OCI.  The ineffective portion
is recognized as other expense, which is a component of other (expense)
income.  For any period of time that the Company did not designate the
swaps for hedge accounting, the change in the value of the swap agreements prior
to designation was recognized as other expense and was listed as a component of
other (expense) income.





Amounts
receivable or payable arising at the settlement of hedged interest rate swaps
are deferred and amortized as an adjustment to interest expense over the period
of interest rate exposure provided the designated liability continues to
exist.  Amounts receivable or payable arising at the settlement of
unhedged interest rate swaps are reflected as other expense and is listed as a
component of other (expense) income.




Refer to
the “Interest rate risk” section above for further information regarding the
interest rate swap agreements.





The
Company has entered into a number of short-term forward currency contracts to
protect the Company from the risk associated with the fluctuation in the
exchange rate associated with the cost basis of the Jinhui shares as described
in Note 5 – Investments of our financial statements.  The use of
short-term forward currency contracts was discontinued on October 10, 2008 due
to the underlying value of Jinhui.  For further information on these
forward currency contracts, please see page 64 under the heading “Interest Rate
Swap Agreements, Forward Freight Agreements and Currency Swap
Agreements”.





FOREIGN
EXCHANGE RATE RISK





Currency and exchange rate
risk




The
international shipping industry’s functional currency is the U.S.
Dollar.  Virtually all of our revenues and most of our operating costs
are in U.S. Dollars.  We incur certain operating expenses in
currencies other than the U.S. dollar, and the foreign exchange risk associated
with these operating expenses is immaterial.





The
Company had entered into a number of short-term forward currency contracts to
protect the Company from the risk associated with the fluctuation in the
exchange rate associated with the cost basis of the Jinhui shares as described
in Note 5 - Investments of our financial statements.  For further
information on these forward currency contracts, please see page 64 under the
heading “Interest Rate Swap Agreements, Forward Freight Agreements and Currency
Swap Agreements.”





The
Company utilized hedge accounting on the cost basis of the Jinhui stock through
October 10, 2008 when the use of the forward currency contract was discontinued
due to the decline in the underlying value of Jinhui.





Investments





The
Company holds investments in Jinhui of $72.2 million which are classified as AFS
under Accounting Standards Codification 320-10, Investments – Debt and Equity
Securities (“ASC 320-10”) (formerly SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”).  The Company classifies
the investment as a current or noncurrent asset based on the Company’s intent to
hold the investment at each reporting date.  The investments that are
classified as AFS are subject to risk of changes in market value, which if
determined to be impaired (other than temporarily impaired), could result in
realized impairment losses.  The Company reviews the carrying value of
such investments on a quarterly basis to determine if any valuation adjustments
are appropriate under ASC 320-10.  During 2008, we reviewed the
investment in Jinhui for indicators of other-than-temporary
impairment.  This determination required significant
judgment.  In making this judgment, we evaluated, among other factors,
the duration and extent to which the fair value of the investment is less than
its cost; the general market conditions, including factors such as industry and
sector performance, and our intent and ability to hold the
investment.  The Company’s investment in Jinhui was deemed to be
other-than-temporarily impaired at December 31, 2008 due to the








73








severity
of the decline in its market value versus our cost basis.  During the
quarter ended December 31, 2008, the Company recorded a $103.9 million
impairment loss which was reclassified from OCI and recorded as a loss in the
income statement for the quarter ended December 31, 2008.  We will
continue to evaluate the investment on a quarterly basis to determine the
likelihood of any further significant adverse effects on the fair value and
amount of any additional impairment.  For the year ended December 31,
2009, we have not deemed our investment to be impaired.  In the event
we determine that the Jinhui investment is subject to any additional impairment,
the amount of the impairment would be reclassified from OCI and recorded as a
loss in the income statement for the amount of the impairment.



























ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





Genco
Shipping & Trading Limited


Consolidated
financial statements as of December 31, 2009 and 2008 and for the years ended
December 31, 2009, 2008 and 2007


Index to
consolidated financial statements




Page




a)
              Report
      of Independent Registered Public Accounting Firm   
      F-2


b)
              Consolidated
      Balance Sheets -
                December
      31, 2009 and December 31, 
      2008                    
       F-3




c)
            Consolidated
      Statements of Operations -
              For
      the Years Ended December 31, 2009, 2008 and 2007 F-4




d)
            Consolidated
      Statements of Shareholders’ Equity and Comprehensive Income -
              For
      the Years Ended December 31, 2009, 2008 and 2007 F-5




e)
            Consolidated
      Statements of Cash Flows -
              For
      the Years Ended December 31, 2009, 2008 and 2007 F-6




f)
            Notes
      to Consolidated Financial Statements
              For
      the Years Ended December 31, 2009, 2008 and 2007 F-7


















F-1





REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Genco
Shipping & Trading Limited


New York,
New York




We have
audited the accompanying consolidated balance sheets of Genco Shipping &
Trading Limited and subsidiaries (the "Company") as of December 31, 2009 and
2008, and the related consolidated statements of operations, shareholders'
equity and comprehensive income, and cash flows for each of the three years in
the period ended December 31, 2009.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.




In our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of Genco Shipping & Trading Limited and
subsidiaries at December 31, 2009 and 2008, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2009, in conformity with accounting principles generally accepted in the
United States of America.




We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company's internal control over financial
reporting as of December 31, 2009, based on the criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 1, 2010 expressed an
unqualified opinion on the Company's internal control over financial
reporting.





/s/ DELOITTE & TOUCHE
LLP





New York,
New York


March 1,
2010















F-2


Genco
      Shipping & Trading Limited


Consolidated
Balance Sheets as of December 31, 2009


and
December 31, 2008


(U.S.
Dollars in thousands, except share and per share data)





December
      31,2009
            
            
            2008AssetsCurrent
      assets:Cash
      and cash equivalents
            
            $
            188,267
            
            
            $
            124,956Restricted
      cash
            
            
            17,500
            
            
            
            —Due
      from charterers, net
            
            
            2,117
            
            
            
            2,297Prepaid
      expenses and other current assets
            
            
            10,184
            
            
            
            13,495Total
      current assets
            
            
            218,068
            
            
            
            140,748Noncurrent
      assets:Vessels,
      net of accumulated depreciation of $224,706 and $140,388,
      respectively
            
            
            2,023,506
            
            
            
            1,726,273Deposits
      on vessels
            
            
            —
            
            
            
            90,555Deferred
      drydock, net of accumulated amortization of $4,384 and $2,868,
      respectively
            
            
            10,153
            
            
            
            8,972Other
      assets, net of accumulated amortization of $2,585 and $1,548,
      respectively
            
            
            8,328
            
            
            
            4,974Fixed
      assets, net of accumulated depreciation and amortization of $1,554 and
      $1,140, respectively
            
            
            2,458
            
            
            
            1,712Fair
      value of derivative instruments
            
            
            2,108
            
            
            
            —Investments
            
            
            72,181
            
            
            
            16,772Total
      noncurrent assets
            
            
            2,118,734
            
            
            
            1,849,258Total
      assets
            
            $
            2,336,802
            
            
            $
            1,990,006Liabilities and Shareholders’
      EquityCurrent
      liabilities:Accounts
      payable and accrued expenses
            
            $
            18,609
            
            
            $
            17,345Current
      portion of long term debt
            
            
            50,000
            
            
            
            —Deferred
      revenue
            
            
            10,404
            
            
            
            10,356Fair
      value of derivative instruments
            
            
            —
            
            
            
            2,491Total
      current liabilities
            
            
            79,013
            
            
            
            30,192Noncurrent
      liabilities:Deferred
      revenue
            
            
            2,427
            
            
            
            2,298Deferred
      rent credit
            
            
            687
            
            
            
            706Fair
      market value of time charters acquired
            
            
            4,611
            
            
            
            23,586Fair
      value of derivative instruments
            
            
            44,139
            
            
            
            63,446Long
      term debt
            
            
            1,277,000
            
            
            
            1,173,300Total
      noncurrent liabilities
            
            
            1,328,864
            
            
            
            1,263,336Total
      liabilities
            
            
            1,407,877
            
            
            
            1,293,528Commitments
      and contingenciesShareholders’
      equity:Common
      stock, par value $0.01; 100,000,000 shares authorized; issued
      andoutstanding
      31,842,798 and 31,709,548 shares at December 31, 2009 and December 31,
      2008, respectively
            
            
            318
            
            
            
            317Paid
      in capital
            
            
            722,198
            
            
            
            717,979Accumulated
      other comprehensive income/(deficit)
            
            
            13,589
            
            
            
            (66,014
            )Retained
      earnings
            
            
            192,820
            
            
            
            44,196Total
      shareholders’ equity
            
            
            928,925
            
            
            
            696,478Total
      liabilities and shareholders’ equity
            
            $
            2,336,802
            
            
            $
            1,990,006See
      accompanying notes to consolidated financial statements.











F-3


Genco
Shipping & Trading Limited


Consolidated
Statements of Operations for the Years Ended December 31, 2009, 2008 and
2007


(U.S.
Dollars in Thousands, Except Earnings per Share and share data)





For
      the Years Ended December 31,2009
            
            
            2008
            
            
            2007Revenues
            
            $
            379,531
            
            
            $
            405,370
            
            
            $
            185,387Operating
      expenses:Voyage
      expenses
            
            
            5,024
            
            
            
            5,116
            
            
            
            5,100Vessel
      operating expenses
            
            
            57,311
            
            
            
            47,130
            
            
            
            27,622General
      and administrative expenses
            
            
            15,024
            
            
            
            17,027
            
            
            
            12,610Management
      fees
            
            
            3,530
            
            
            
            2,787
            
            
            
            1,654Depreciation
      and amortization
            
            
            88,150
            
            
            
            71,395
            
            
            
            34,378Loss
      on forfeiture of vessel deposits
            
            
            —
            
            
            
            53,765
            
            
            
            —Gain
      on sale of vessels
            
            
            —
            
            
            
            (26,227
            )
            
            
            (27,047
            )Total
      operating expenses
            
            
            169,039
            
            
            
            170,993
            
            
            
            54,317Operating
      income
            
            
            210,492
            
            
            
            234,377
            
            
            
            131,070Other
      (expense) income:Other
      expense
            
            
            (312
            )
            
            
            (74
            )
            
            
            (1,265
            )Impairment
      of investment
            
            
            —
            
            
            
            (103,892
            )
            
            
            —Interest
      income
            
            
            240
            
            
            
            1,757
            
            
            
            3,507Interest
      expense
            
            
            (61,796
            )
            
            
            (52,589
            )
            
            
            (26,503
            )Income
      from investments
            
            
            —
            
            
            
            7,001
            
            
            
            —Other
      expense
            
            
            (61,868
            )
            
            
            (147,797
            )
            
            
            (24,261
            )Net
      income
            
            $
            148,624
            
            
            $
            86,580
            
            
            $
            106,809Earnings
      per share-basic
            
            $
            4.75
            
            
            $
            2.86
            
            
            $
            4.08Earnings
      per share-diluted
            
            $
            4.73
            
            
            $
            2.84
            
            
            $
            4.06Weighted
      average common shares outstanding-basic
            
            
            31,295,212
            
            
            
            30,290,016
            
            
            
            26,165,600Weighted
      average common shares outstanding-diluted
            
            
            31,445,063
            
            
            
            30,452,850
            
            
            
            26,297,521Dividends
      declared per share
            
            $
            —
            
            
            $
            3.85
            
            
            $
            2.64See
      accompanying notes to consolidated financial statements.





F-4


Genco
Shipping & Trading Limited


Consolidated
Statements of Shareholders’ Equity and Comprehensive Income


for the
Years Ended December 31, 2009, 2008 and 2007






Common
              Stock
            
            
            Paid
      in
              Capital
            
            
            Retained
              Earnings
            
            
            Accumulated
      Other Comprehensive Income (Deficit)
            
            
            Comprehensive
      Income
            
            
            TotalBalance
      – January 1, 2007
            
            $
            255
            
            
            $
            307,088
            
            
            $
            42,644
            
            
            $
            3,546
            
            
            
            
            
            $
            353,533Net
      income
            
            
            
            
            
            
            
            
            
            
            106,809
            
            
            
            
            
            
            $
            106,809
            
            
            
            106,809Change
      in unrealized gain on investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            38,540
            
            
            
            38,540
            
            
            
            38,540Change
      in unrealized gain on currency translation on investments,
    net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,545
            
            
            
            1,545
            
            
            
            1,545Unrealized
      loss on cash flow hedges, net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (24,614
            )
            
            
            (24,614
            )
            
            
            (24,614
            )Comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            122,280Cash
      dividends paid ($2.64 per share)
            
            
            
            
            
            
            
            
            
            
            (69,577
            )
            
            
            
            
            
            
            
            
            
            
            (69,577
            )Issuance
      of common stock, 3,358,209 shares
            
            
            34
            
            
            
            213,837
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            213,871Issuance
      of 109,200 shares of nonvested stock, less forfeitures of 7,062
      shares
            
            
            1
            
            
            
            (1
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Nonvested
      stock amortization
            
            
            
            
            
            
            2,078
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,078Balance
      – December 31, 2007
            
            $
            290
            
            
            $
            523,002
            
            
            $
            79,876
            
            
            $
            19,017
            
            
            
            
            
            
            $
            622,185Net
      income
            
            
            
            
            
            
            
            
            
            
            86,580
            
            
            
            
            
            
            $
            86,580
            
            
            
            86,580Change
      in unrealized loss on investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (38,540
            )
            
            
            (38,540
            )
            
            
            (38,540
            )Change
      in unrealized gain on currency translation on investments,
    net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,545
            )
            
            
            (1,545
            )
            
            
            (1,545
            )Unrealized
      loss on cash flow hedges, net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (44,946
            )
            
            
            (44,946
            )
            
            
            (44,946
            )Comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            1,549Cash
      dividends paid ($3.85 per share)
            
            
            
            
            
            
            
            
            
            
            (117,109
            )
            
            
            
            
            
            
            
            
            
            
            (117,109
            )Issuance
      of common stock 2,702,669 shares
            
            
            27
            
            
            
            195,415
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            195,442Issuance
      of 322,500 shares of nonvested stock
            
            
            3
            
            
            
            (3
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Acquisition
      and retirement of 281,430 shares of common stock
            
            
            (3
            )
            
            
            (6,388
            )
            
            
            (5,151
            )
            
            
            
            
            
            
            
            
            
            
            (11,542
            )Nonvested
      stock amortization
            
            
            
            
            
            
            5,953
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,953Balance
      – December 31, 2008
            
            $
            317
            
            
            $
            717,979
            
            
            $
            44,196
            
            
            $
            (66,014
            )
            
            
            
            
            
            $
            696,478Net
      income
            
            
            
            
            
            
            
            
            
            
            148,624
            
            
            
            
            
            
            $
            148,624
            
            
            
            148,624Change
      in unrealized gain on investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            43,364
            
            
            
            43,364
            
            
            
            43,364Change
      in unrealized gain on currency translation on investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,044
            
            
            
            12,044
            
            
            
            12,044Unrealized
      gain on cash flow hedges, net
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            24,195
            
            
            
            24,195
            
            
            
            24,195Comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            228,227Issuance
      of 133,250 shares of nonvested stock
            
            
            1
            
            
            
            (1
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Nonvested
      stock amortization
            
            
            
            
            
            
            4,220
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            4,220Balance
      – December 31, 2009
            
            $
            318
            
            
            $
            722,198
            
            
            $
            192,820
            
            
            $
            13,589
            
            
            
            
            
            
            $
            928,925





See
accompanying notes to consolidated financial statements.







F-5


Genco
Shipping & Trading Limited


Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and
2007


(U.S.
Dollars in Thousands)


Year
      ended December 31,2009
            
            
            2008
            
            
            2007Cash
      flows from operating activities:Net
      income
            
            $
            148,624
            
            
            $
            86,580
            
            
            $
            106,809Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
            
            
            88,150
            
            
            
            71,395
            
            
            
            34,378Amortization
      of deferred financing costs
            
            
            1,037
            
            
            
            4,915
            
            
            
            4,128Amortization
      of fair market value of time charter acquired
            
            
            (18,975
            )
            
            
            (22,447
            )
            
            
            (5,139
            )Realized
      (gain) loss on forward currency contracts
            
            
            -
            
            
            
            (13,691
            )
            
            
            9,864Impairment
      of investment
            
            
            -
            
            
            
            103,892
            
            
            
            -Unrealized
      loss (gain) on derivative instruments
            
            
            288
            
            
            
            (46
            )
            
            
            80Unrealized
      loss (gain) on hedged investment
            
            
            -
            
            
            
            15,361
            
            
            
            (10,160
            )Unrealized
      (gain) loss on forward currency contract
            
            
            -
            
            
            
            (1,448
            )
            
            
            1,448Realized
      income on investments
            
            
            -
            
            
            
            (7,001
            )
            
            
            -Amortization
      of nonvested stock compensation expense
            
            
            4,220
            
            
            
            5,953
            
            
            
            2,078Gain
      on sale of vessel
            
            
            -
            
            
            
            (26,227
            )
            
            
            (27,047
            )Loss
      on forfeiture of vessel deposits
            
            
            -
            
            
            
            53,765
            
            
            
            -Change
      in assets and liabilities:Decrease
      (increase) in due from charterers
            
            
            180
            
            
            
            46
            
            
            
            (1,872
            )Increase
      in prepaid expenses and other current assets
            
            
            (236
            )
            
            
            (3,063
            )
            
            
            (2,241
            )Increase
      in accounts payable and accrued expenses
            
            
            874
            
            
            
            2,514
            
            
            
            6,164Increase
      in deferred revenue
            
            
            177
            
            
            
            3,284
            
            
            
            5,908Decrease
      in deferred rent credit
            
            
            (19
            )
            
            
            (19
            )
            
            
            (19
            )Deferred
      drydock costs incurred
            
            
            (4,591
            )
            
            
            (6,347
            )
            
            
            (3,517
            )Net
      cash provided by operating activities
            
            
            219,729
            
            
            
            267,416
            
            
            
            120,862Cash
      flows from investing activities:Purchase
      of vessels
            
            
            (287,637
            )
            
            
            (510,345
            )
            
            
            (764,574
            )Deposits
      on vessels
            
            
            -
            
            
            
            (3,489
            )
            
            
            (150,279
            )Purchase
      of investments
            
            
            -
            
            
            
            (10,290
            )
            
            
            (115,577
            )Payments
      on forward currency contracts, net
            
            
            -
            
            
            
            -
            
            
            
            (9,897
            )Proceeds
      from forward currency contracts, net
            
            
            -
            
            
            
            13,723
            
            
            
            -Realized
      income on investments
            
            
            -
            
            
            
            7,001
            
            
            
            -Deposits
      of restricted cash
            
            
            (17,500
            )
            
            
            -
            
            
            
            -Proceeds
      from sale of vessels
            
            
            -
            
            
            
            43,084
            
            
            
            56,536Payments
      on forfeiture of vessel deposits
            
            
            -
            
            
            
            (53,765
            )
            
            
            -Purchase
      of other fixed assets
            
            
            (1,073
            )
            
            
            (207
            )
            
            
            (559
            )Net
      cash used in investing activities
            
            
            (306,210
            )
            
            
            (514,288
            )
            
            
            (984,350
            )Cash
      flows from financing activities:Proceeds
      from the 2007 Credit Facility
            
            
            166,200
            
            
            
            558,300
            
            
            
            1,193,000Repayments
      on the 2007 Credit Facility
            
            
            (12,500
            )
            
            
            (321,000
            )
            
            
            (257,000
            )Proceeds
      from the 2005 Credit Facility, Short-term Line and Original Credit
      Facility
            
            
            -
            
            
            
            -
            
            
            
            77,000Repayments
      on the 2005 Credit Facility, Short-term Line and Original Credit
      Facility
            
            
            -
            
            
            
            -
            
            
            
            (288,933
            )Payment
      of deferred financing costs and deferred registration
costs
            
            
            (3,908
            )
            
            
            (3,759
            )
            
            
            (6,931
            )Cash
      dividends paid
            
            
            -
            
            
            
            (117,109
            )
            
            
            (69,577
            )Payments
      to acquire and retire common stock
            
            
            -
            
            
            
            (11,542
            )
            
            
            -Net
      proceeds from issuance of common stock
            
            
            -
            
            
            
            195,442
            
            
            
            213,871Net
      cash provided by financing activities
            
            
            149,792
            
            
            
            300,332
            
            
            
            861,430Net
      increase (decrease) in cash and cash equivalents
            
            
            63,311
            
            
            
            53,460
            
            
            
            (2,058
            )Cash
      and cash equivalents at beginning of period
            
            
            124,956
            
            
            
            71,496
            
            
            
            73,554Cash
      and cash equivalents at end of period
            
            $
            188,267
            
            
            $
            124,956
            
            
            $
            71,496See
      accompanying notes to consolidated financial statements.











F-6








Genco
Shipping & Trading Limited


(U.S.
Dollars in Thousands)




Notes to
Consolidated Financial Statements for the Years Ended December 31, 2009, 2008
and 2007





1 - GENERAL
INFORMATION




The
accompanying consolidated financial statements include the accounts of Genco
Shipping & Trading Limited (“GS&T”) and its wholly owned
subsidiaries (collectively, the “Company”).  The Company is engaged in
the ocean transportation of drybulk cargoes worldwide through the ownership and
operation of drybulk carrier vessels.  GS&T was incorporated on
September 27, 2004 under the laws of the Marshall Islands and is the sole
owner of all of the outstanding shares of the following subsidiaries: Genco Ship
Management LLC; Genco Investments LLC; Baltic Trading Limited (“Baltic
Trading”); and the ship-owning subsidiaries as set forth below.




The
Company began operations on December 6, 2004 with the delivery of its first
vessel.  At December 31, 2009, 2008 and 2007, the Company’s fleet
consisted of thirty-five, thirty-two and twenty-six vessels.





Below is
the list of the Company’s wholly owned ship-owning subsidiaries as of December
31, 2009:





Wholly
      Owned
                Subsidiaries
              Vessels
                Acquired
              Dwt
              Date
                Delivered
              Year
                BuiltGenco
      Reliance Limited...........................
              Genco
      Reliance
              29,952
              12/6/04
              1999Genco
      Vigour Limited..............................
              Genco
      Vigour
              73,941
              12/15/04
              1999Genco
      Explorer Limited............................
              Genco
      Explorer
              29,952
              12/17/04
              1999Genco
      Carrier Limited...............................
              Genco
      Carrier
              47,180
              12/28/04
              1998Genco
      Sugar Limited................................
              Genco
      Sugar
              29,952
              12/30/04
              1998Genco
      Pioneer Limited.............................
              Genco
      Pioneer
              29,952
              1/4/05
              1999Genco
      Progress Limited...........................
              Genco
      Progress
              29,952
              1/12/05
              1999Genco
      Wisdom Limited............................
              Genco
      Wisdom
              47,180
              1/13/05
              1997Genco
      Success Limited............................
              Genco
      Success
              47,186
              1/31/05
              1997Genco
      Beauty Limited..............................
              Genco
      Beauty
              73,941
              2/7/05
              1999Genco
      Knight Limited..............................
              Genco
      Knight
              73,941
              2/16/05
              1999Genco
      Leader Limited..............................
              Genco
      Leader
              73,941
              2/16/05
              1999Genco
      Marine Limited.............................
              Genco
      Marine
              45,222
              3/29/05
              1996Genco
      Prosperity Limited.......................
              Genco
      Prosperity
              47,180
              4/4/05
              1997Genco
      Muse Limited .......................
              Genco
      Muse
              48,913
              10/14/05
              2001Genco
      Acheron Limited ...................
              Genco
      Acheron
              72,495
              11/7/06
              1999Genco
      Surprise Limited ....................
              Genco
      Surprise
              72,495
              11/17/06
              1998Genco
      Augustus Limited ................
              Genco
      Augustus
              180,151
              8/17/07
              2007Genco
      Tiberius Limited ....................
              Genco
      Tiberius
              175,874
              8/28/07
              2007Genco
      London Limited ...................
              Genco
      London
              177,833
              9/28/07
              2007Genco
      Titus Limited ........................
              Genco
      Titus
              177,729
              11/15/07
              2007Genco
      Challenger Limited ...............
              Genco
      Challenger
              28,428
              12/14/07
              2003Genco
      Charger Limited ...................
              Genco
      Charger
              28,398
              12/14/07
              2005Genco
      Warrior Limited ...................
              Genco
      Warrior
              55,435
              12/17/07
              2005Genco
      Predator Limited .................
              Genco
      Predator
              55,407
              12/20/07
              2005Genco
      Hunter Limited ...................
              Genco
      Hunter
              58,729
              12/20/07
              2007Genco
      Champion Limited ................
              Genco
      Champion
              28,445
              1/2/08
              2006Genco
      Constantine Limited ............
              Genco
      Constantine
              180,183
              2/21/08
              2008Genco
      Raptor LLC.........................
              Genco
      Raptor
              76,499
              6/23/08
              2007Genco
      Cavalier LLC.......................
              Genco
      Cavalier
              53,617
              7/17/08
              2007
    F-7
   Genco
      Thunder LLC.....................
            Genco
      Thunder
            76,588
            9/25/08
            2007Genco
      Hadrian Limited .................
            Genco
      Hadrian
            169,694
            12/29/08
            2008Genco
      Commodus Limited ............
            Genco
      Commodus
            169,025
            7/22/09
            2009Genco
      Maximus Limited ...............
            Genco
      Maximus
            169,025
            9/18/09
            2009Genco
      Claudius Limited ................
            Genco
      Claudius
            169,025
            12/30/09
            2010
      (1)  (1)  On
      December 30, 2009, the Company took delivery of the Genco
      Claudius.  However, the vessel has been designated by Lloyd’s
      Register of Shipping as having been built in 2010.





In
January 2007, the Company filed a registration statement on Form S-3 with the
Securities and Exchange Commission (the “SEC”) to register possible future
offerings, including possible resales by Fleet Acquisition LLC.  That
registration statement, as amended, was declared effective by the SEC on
February 7, 2007.  Fleet Acquisition LLC utilized that registration
statement to conduct an underwritten offering of 4,830,000 shares it owned,
including an over-allotment option granted to underwriters for 630,000 shares
which the underwriters exercised in full.  Following completion of
that offering, Fleet Acquisition LLC owned 15.80% of the Company’s common
stock.  During October 2007, the Company closed on an equity offering
of 3,358,209 shares of Genco common stock (with the exercise of the
underwriters’ over-allotment option) at an offering price of $67.00 per
share.  The Company received net proceeds of $213,871 after deducting
underwriters’ fees and expenses.  On October 5, 2007, the Company
utilized $214,000 including these proceeds to repay outstanding borrowings under
the 2007 Credit Facility.  Additionally, in the same offering, Fleet
Acquisition LLC sold 1,076,291 shares (with the exercise of the underwriters’
over-allotment option) at the same offering price of $67.00 per
share.  The Company did not receive any proceeds from the common stock
sold by Fleet Acquisition LLC.





On
January 10, 2008, the Board of Directors approved a grant of 100,000 nonvested
common stock to Peter Georgiopoulos, Chairman of the Board.  This
grant vests ratably on each of the ten anniversaries of the determined vesting
date beginning with November 15, 2008.  On March 10, 2008, Fleet
Acquisition LLC distributed 2,512,532 shares of the Company's common stock to
OCM Fleet Acquisition LLC, as a member thereof, pursuant to an agreement among
Fleet Acquisition LLC's members.  In connection with this
distribution, Mr. Georgiopoulos became the sole member of the Management
Committee of Fleet Acquisition LLC, which currently retains 443,606 shares of
the Company's common stock of which Mr. Georgiopoulos may be deemed to be the
beneficial owner.





Lastly,
during May 2008, the Company closed on an equity offering of 2,702,669 shares of
Genco common stock at an offering price of $75.47 per share.  The
Company received net proceeds of $195,442 after deducting underwriters' fees and
expenses.  On May 28, 2008, the Company utilized $195,000 of these
proceeds to repay outstanding borrowings under the 2007 Credit
Facility.  Additionally, in the same offering, OCM Fleet Acquisition
LLC sold 1,000,000 shares at the same offering price of $75.47 per
share.  The Company did not receive any proceeds from the common stock
sold by OCM Fleet Acquisition LLC.  Additionally, on December 24,
2008, the Board of Directors approved a grant of 75,000 nonvested common stock
to Peter Georgiopoulos.  As a result of the foregoing transactions,
Mr. Georgiopoulos may be deemed to beneficially own 13.24% of the Company’s
common stock (including shares held through Fleet Acquisition LLC), and OCM
Fleet Acquisition LLC may be deemed to beneficially own 4.75% of the Company’s
common stock.





During
October 2009, Baltic Trading filed a registration statement on Form S-1 with the
SEC.  Baltic Trading was incorporated in October 2009 in the Marshall
Islands for the purpose of conducting a shipping business focused on the drybulk
industry spot market.  At December 31, 2009, Baltic Trading was a
wholly owned subsidiary of the Company, as Baltic Trading has not yet completed
its initial public offering.  Baltic Trading has no vessel operating
history.




2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES




Principles of
consolidation




The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted transactions in the United States of
America (“U.S. GAAP”), which include the accounts of Genco Shipping &
Trading Limited and its wholly owned subsidiaries.  All intercompany
accounts and have been eliminated in consolidation.






F-8




Business
geographics




The
Company’s vessels regularly move between countries in international waters, over
hundreds of trade routes and, as a result, the disclosure of geographic
information is impracticable.




Vessel
acquisitions




When the
Company enters into an acquisition transaction, it determines whether the
acquisition transaction was the purchase of an asset or a business based on the
facts and circumstances of the transaction.  As is customary in the
shipping industry, the purchase of a vessel is normally treated as a purchase of
an asset as the historical operating data for the vessel is not reviewed nor is
material to the Company’s decision to make such acquisition.




When a
vessel is acquired with an existing time charter, the Company allocates the
purchase price to the vessel and the time charter based on, among other things,
vessel market valuations and the present value (using an interest rate which
reflects the risks associated with the acquired charters) of the difference
between (i) the contractual amounts to be paid pursuant to the charter terms and
(ii) management's estimate of the fair market charter rate, measured over a
period equal to the remaining term of the charter.  The capitalized
above-market (assets) and below-market (liabilities) charters are amortized as a
reduction or increase, respectively, to revenues over the remaining term of the
charter.





Segment
reporting




The
Company reports financial information and evaluates its operations by charter
revenues and not by the length of ship employment for its customers, i.e., spot
or time charters.  Each of the Company’s vessels serve the same type
of customer, have similar operations and maintenance requirements, operate in
the same regulatory environment, and are subject to similar economic
characteristics. Based on this, the Company has determined that it operates in
one reportable segment, the transportation of various drybulk cargoes with its
fleet of vessels.




Revenue and voyage expense
recognition




Since the
Company’s inception, revenues have been generated from time charter agreements
and pool agreements.  A time charter involves placing a vessel at the
charterer’s disposal for a set period of time during which the charterer may use
the vessel in return for the payment by the charterer of a specified daily hire
rate.  In time charters, operating costs including crews, maintenance
and insurance are typically paid by the owner of the vessel and specified voyage
costs such as fuel and port charges are paid by the charterer.  There
are certain other non-specified voyage expenses such as commissions which are
typically borne by the Company.




The
Company records time charter revenues over the term of the charter as service is
provided.  Revenues are recognized on a straight-line basis as the
average revenue over the term of the respective time charter
agreement.  The Company recognizes vessel operating expenses when
incurred.




Three of
the Company’s vessels, the Genco Constantine, Genco Titus and Genco Hadrian, are
chartered under time charters which include a profit-sharing
element.  Under these charter agreements, the Company receives a fixed
rate of $52,750, $45,000 and $65,000 per day, respectively, and an additional
profit-sharing payment.  The profit-sharing between the Company and
the respective charterer for each 15-day period is calculated by taking the
average over that period of the published Baltic Cape Index of the four time
charter routes as reflected in daily reports.  If such average is more
than the base rate payable under the charter, the excess amount is allocable 50%
to the Company and 50% to the charterer.  A commission of 3.75% based
on the profit sharing amount due to the Company is incurred out of the Company’s
share.  Profit sharing revenue is recorded when the average of the
published Baltic Cape Index for the four time charter routes is available for
the entire 15-day period, which is when the profit sharing revenue is fixed and
determinable.





At
December 31, 2009, seven of the Company’s vessels are in vessel pools, six of
these are earning variable rates and one is earning a fixed rate.  The
Genco Predator entered into the Bulkhandling Handymax Pool in November 2008, the
Genco Leader entered into the Baumarine Pool during December 2008 and the Genco
Explorer, Genco








F-9








Pioneer,
Genco Progress, Genco Reliance and Genco Sugar entered the Lauritzen Pool during
August 2009.   Vessel pools, such as the Bulkhandling Handymax
Pool, Baumarine Pool and the Lauritzen Pool, provide cost-effective commercial
management activities for a group of similar class vessels.  The pool
arrangement provides the benefits of a large-scale operation, and chartering
efficiencies that might not be available to smaller fleets.  Under the
pool arrangement, the vessels operate under a time charter agreement whereby the
cost of bunkers and port expenses are borne by the pool and operating costs
including crews, maintenance and insurance are typically paid by the owner of
the vessel.  Since the members of the pool share in the revenue
generated by the entire group of vessels in the pool, and the pool operates in
the spot market, the revenue earned by these vessels is subject to the
fluctuations of the spot market.  The Company recognizes revenue from
these pool arrangements based on the net distributions reported by the
respective pool.





Due from charterers,
net




Due from
charterers, net includes accounts receivable from charters, net of the provision
for doubtful accounts.  At each balance sheet date, the Company
provides for the provision based on a review of all outstanding charter
receivables.  Included in the standard time charter contracts with the
Company’s customers are certain performance parameters which if not met, can
result in customer claims.  As of December 31, 2009 and 2008, the
Company had a reserve of $171 and $244, respectively, against due from
charterers balance and an additional accrual of $959 and $1,350, respectively,
in deferred revenue, each of which is primarily associated with estimated
customer claims against the Company including vessel performance issues under
time charter agreements.





Revenue
is based on contracted charterparties.   However, there is always
the possibility of dispute over terms and payment of hires and
freights.  In particular, disagreements may arise concerning the
responsibility of lost time and revenue.  Accordingly, the Company
periodically assesses the recoverability of amounts outstanding and estimates a
provision if there is a possibility of non-recoverability.  The
Company believes its provisions to be reasonable based on information
available.




Vessel operating
expenses




Vessel
operating expenses include crew wages and related costs, the cost of insurance,
expenses relating to repairs and maintenance, the cost of spares and consumable
stores, and other miscellaneous expenses.  Vessel operating expenses
are recognized when incurred.




Vessels,
net




Vessels,
net is stated at cost less accumulated depreciation.  Included in
vessel costs are acquisition costs directly attributable to the acquisition of a
vessel and expenditures made to prepare the vessel for its initial
voyage.  The Company also capitalizes interest costs for a vessel
under construction as a cost which is directly attributable to the acquisition
of a vessel.  Vessels are depreciated on a straight-line basis over
their estimated useful lives, determined to be 25 years from the date of
initial delivery from the shipyard.  Depreciation expense for vessels
for the years ended December 31, 2009, 2008 and 2007 was $84,326, $69,050, and
$32,900, respectively.




Depreciation
expense is calculated based on cost less the estimated residual scrap
value.  The costs of significant replacements, renewals and
betterments are capitalized and depreciated over the shorter of the vessel’s
remaining estimated useful life or the estimated life of the renewal or
betterment.  Undepreciated cost of any asset component being replaced
that was acquired after the initial vessel purchase is written off as a
component of vessel operating expense.  Expenditures for routine
maintenance and repairs are expensed as incurred.  Scrap value is
estimated by the Company by taking the cost of steel times the weight of the
ship noted in lightweight tons (lwt).  At December 31, 2009 and 2008,
the Company estimated the residual value of vessels to be $175/lwt.




Fixed assets,
net




Fixed
assets, net are stated at cost less accumulated depreciation and
amortization.  Depreciation and amortization are based on a straight
line basis over the estimated useful life of the specific asset placed in
service.  The following table is used in determining the typical
estimated useful lives:








F-10








Description
            Useful
      livesLeasehold
      improvements
            Lesser of the useful
      life of the asset or life of the leaseFurniture, fixtures
      & other equipment
            5 yearsVessel
      equipment
            2-15
  yearsComputer
      equipment
            3
  years





Depreciation
and amortization expense for fixed assets for the years ended December 31, 2009,
2008 and 2007 was $414, $418, and $393, respectively.




Deferred drydocking
costs




The
Company’s vessels are required to be drydocked approximately every 30 to 60
months for major repairs and maintenance that cannot be performed while the
vessels are operating.  The Company defers the costs associated with
the drydockings as they occur and amortizes these costs on a straight-line basis
over the period between drydockings.  Costs deferred as part of a
vessel’s drydocking include actual costs incurred at the drydocking yard; cost
of travel, lodging and subsistence of personnel sent to the drydocking site to
supervise; and the cost of hiring a third party to oversee the
drydocking.  If the vessel is drydocked earlier than originally
anticipated, any remaining deferred drydock costs that have not been amortized
are expensed at the beginning of the next drydock.  Amortization
expense for drydocking for the years ended December 31, 2009, 2008 and 2007 was
$3,410, $1,927, and $1,084, respectively.  All other costs incurred
during drydocking are expensed as incurred.




Impairment of long-lived
assets




The
Company follows the Accounting Standards Codification (“ASC”) subtopic 360-10,
Property, Plant and Equipment (“ASC 360-10”) (formerly Financial Accounting
Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”)
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”),
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than their carrying
amounts.  In the evaluation of the fair value and future benefits of
long-lived assets, the Company performs an analysis of the anticipated
undiscounted future net cash flows of the related long-lived
assets.  If the carrying value of the related asset exceeds the
undiscounted cash flows, the carrying value is reduced to its fair
value.  Various factors including anticipated future charter rates,
estimated scrap values, future drydocking costs and estimated vessel operating
costs, are included in this analysis.




For the
years ended December 31, 2009, 2008 and 2007, no impairment charges were
recorded on the Company’s long-lived assets.




Deferred financing
costs




Deferred
financing costs, included in other assets, consist of fees, commissions and
legal expenses associated with obtaining loan facilities.  These costs
are amortized over the life of the related debt and are included in interest
expense.




Cash and cash
equivalents




The
Company considers highly liquid investments such as money market funds and
certificates of deposit with an original maturity of three months or less to be
cash equivalents.




Investments




The
Company holds an investment in the capital stock of Jinhui Shipping and
Transportation Limited (“Jinhui”).  Jinhui is a drybulk shipping owner
and operator focused on the Supramax segment of drybulk
shipping.  This investment is designated as Available For Sale (“AFS”)
and is reported at fair value, with unrealized gains and losses recorded in
shareholders’ equity as a component of accumulated other comprehensive income
(“OCI”).  The








F-11








Company
classifies the investment as a current or noncurrent asset based on the
Company’s intent to hold the investment at each reporting date. Effective August
16, 2007, the Company elected hedge accounting for forward currency contracts in
place associated with the cost basis of the Jinhui shares, and therefore the
unrealized currency gain or loss associated with the cost basis in the Jinhui
shares was reflected in the income statement as other expense to offset the gain
or loss associated with these forward currency contracts.  On October
10, 2008, the Company elected to discontinue the purchase of forward currency
contracts associated with Jinhui by entering into an offsetting trade that
closed the previously opened currency contract, thereby eliminating the hedge on
Jinhui.  The cost of securities when sold is based on the specific
identification method.  Realized gains and losses on the sale of these
securities are reflected in the consolidated statement of operations in other
expense.  Additionally, the realized gain or loss on the forward
currency contracts is reflected in the Consolidated Statement of Cash Flows as
an investing activity and is reflected in the caption Payments on forward
currency contracts, net.





Investments
are reviewed quarterly to identify possible other-than-temporary impairment in
accordance with ASC subtopic 320-10, Investments – Debt and Equity Securities
(“ASC 320-10”) (formerly FASB Staff Position 115-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments”).  When evaluating its investments, the Company reviews
factors such as the length of time and extent to which fair value has been below
the cost basis, the financial condition of the issuer, the underlying net asset
value of the issuers assets and liabilities, and the Company’s ability and
intent to hold the investment for a period of time which may be sufficient for
anticipated recovery in market value.  Should the decline in the value
of any investment be deemed to be other-than-temporary, the investment basis
would be written down to fair market value, and the write-down would be recorded
to earnings as a loss.  Refer to Note 5 – Investments.




Income
taxes




Pursuant
to Section 883 of the U.S. Internal Revenue Code of 1986 as amended (the
“Code”), qualified income derived from the international operations of ships is
excluded from gross income and exempt from U.S. federal income tax if a company
engaged in the international operation of ships meets certain
requirements.  Among other things, in order to qualify, the Company
must be incorporated in a country which grants an equivalent exemption to U.S.
corporations and must satisfy certain qualified ownership
requirements.





The
Company is incorporated in the Marshall Islands.  Pursuant to the
income tax laws of the Marshall Islands, the
Company is not subject to Marshall Islands income tax.  The Marshall
Islands has been officially recognized by the Internal Revenue Service as a
qualified foreign country that currently grants the requisite equivalent
exemption from tax.





Based on
the publicly traded requirement of the Section 883 regulations as described in
the next paragraph, the Company believes that it qualified for exemption from
income tax for 2009, 2008 and 2007.





Based on
the publicly traded requirement of the Section 883 regulations, the Company
qualified for exemption from income tax for 2009, 2008 and 2007.  In
order to meet the publicly traded requirement, the Company’s stock must be
treated as being primarily and regularly traded for more than half the days of
any such year.  Under the Section 883 regulations, the Company’s
qualification for the publicly traded requirement may be jeopardized if
shareholders of the Company’s common stock that own five percent or more of the
Company’s stock (“5% shareholders”) own, in the aggregate, 50% or more of the
Company’s common stock for more than half the days of the
year.  Management believes that during 2009, 2008 and 2007, the
combined ownership of its 5% shareholders did not equal 50% or more of its
common stock for more than half the days of 2009, 2008 and 2007, as
applicable.





If the
Company does not qualify for the exemption from tax under Section 883, it would
be subject to a 4% tax on the gross “shipping income” (without the allowance for
any deductions) that is treated as derived from sources within the United States
or “United States source shipping income.” For these purposes, “shipping income”
means any income that is derived from the use of vessels, from the hiring or
leasing of vessels for use, or from the performance of services directly related
to those uses; and “United States source shipping income” includes 50% of
shipping income that is attributable to transportation that begins or ends, but
that does not both begin and end, in the United States.






F-12






Baltic
Trading is also incorporated in the Marshall Islands.  Pursuant to the
income tax laws of the Marshall Islands, Baltic Trading is not subject to
Marshall Islands income tax.  Baltic Trading has no United States
operations and no United States source income.  Thus, Baltic Trading
is not currently subject to income tax in the United
States.   However, we anticipate that Baltic Trading will not
qualify for an exemption under Section 883 upon consummation of initial public
offering because it will not satisfy the publicly traded requirement described
above.  The Company plans to indirectly own shares of Baltic Trading’s
Class B Stock, which will not be publicly traded but which will provide the
Company with over 50% of the combined voting power of all classes of Baltic
Trading’s voting stock.  Holders of a majority of
the Class B Stock can irrevocably elect to reduce the voting power of the
Class B Stock to constitute not more than 49% of the total voting power of
all classes of stock, although there can be no assurance that this election will
be made.




Deferred
revenue




Deferred
revenue primarily relates to cash received from charterers prior to it being
earned.  These amounts are recognized as income when
earned.  Additionally, deferred revenue includes estimated customer
claims mainly due to time charter performance issues.





Comprehensive
income




The
Company follows ASC subtopic 220-10, Comprehensive Income (“ASC 220-10”)
(formerly SFAS No. 130, “Reporting Comprehensive Income”), which establishes
standards for reporting and displaying comprehensive income and its components
in financial statements.  Comprehensive income is comprised of net
income and amounts related to the Company’s interest rate swaps accounted for as
hedges, as well as unrealized gains or losses associated with the Company’s
investments.




Nonvested stock
awards




The
Company follows ASC subtopic 718-10, Compensation – Stock Compensation (“ASC
718-10”) (formerly SFAS No. 123R, “Share-Based Payment”) for nonvested
stock issued under its equity incentive plan.  Deferred compensation
costs from nonvested stock have been classified as a component of paid-in
capital.




Accounting
estimates




The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Significant estimates include vessel valuations,
the valuation of amounts due from charterers, performance claims, residual value
of vessels, useful life of vessels and fair value of derivative
instruments.  Actual results could differ from those
estimates.





Concentration of credit
risk




Financial
instruments that potentially subject the Company to concentrations of credit
risk are amounts due from charterers.  With respect to amounts due
from charterers, the Company attempts to limit its credit risk by performing
ongoing credit evaluations and, when deemed necessary, requires letters of
credit, guarantees or collateral.  The Company earned 100% of revenues
from 23 customers in 2009, 22 customers in 2008 and 18 customers in
2007.  Management does not believe significant risk exists in
connection with the Company’s concentrations of credit at December 31, 2009 and
2008.




For the
year ended December 31, 2009 there were two customers that individually
accounted for more than 10% of revenue, Cargill International S.A. and Pacific
Basin Chartering Ltd., which represented 30.77% and 13.61% of revenue,
respectively.  For the year ended December 31, 2008 there were two
customers that individually accounted for more than 10% of revenue, Cargill
International S.A. and Pacific Basin Chartering Ltd., which represented 27.79%
and 14.64% of revenue, respectively.  For the year ended December 31,
2007 there were two customers that








F-13








individually
accounted for more than 10% of revenue, Lauritzen Bulkers A/S and Cargill
International S.A., which represented 15.42% and 13.74% of revenue,
respectively.




At
December 31, 2009, the Company maintained all of its cash and cash equivalents
with three financial institutions.  None of the Company's cash and
cash equivalent balances are covered by insurance in the event of default by
these financial institutions.





Fair value of financial
instruments




The
estimated fair values of the Company’s financial instruments such as amounts due
to / due from charterers, accounts payable and long-term debt approximate their
individual carrying amounts as of December 31, 2009 and December 31, 2008 due to
their short-term maturity or the variable-rate nature of the respective
borrowings under the credit facility.





The fair
value of the interest rate swaps and forward currency contracts (used for
purposes other than trading) is the estimated amount the Company would receive
or have to pay in order to terminate these agreements at the reporting date,
taking into account current interest rates and the creditworthiness of the
counterparty for assets and creditworthiness of the Company for
liabilities.  See Note 10 - Fair Value of Financial Instruments for
additional disclosure on the fair values of long term debt, derivative
instruments, and AFS securities.





Derivative financial
instruments




Interest rate risk
management




The
Company is exposed to the impact of interest rate changes.  The
Company’s objective is to manage the impact of interest rate changes on its
earnings and cash flow in relation to borrowings primarily for the purpose of
acquiring drybulk vessels.  These borrowings are subject to a variable
borrowing rate.  The Company uses pay-fixed receive-variable interest
rate swaps to manage future interest costs and the risk associated with changing
interest rate obligations.  These swaps are designated as cash flow
hedges of future variable rate interest payments and are tested for
effectiveness on a quarterly basis.




The
differential to be paid or received for the effectively hedged portion of any
swap agreement is recognized as an adjustment to interest expense as
incurred.  Additionally, the changes in value for the portion of the
swaps that are effectively hedging future interest payments are reflected as a
component of OCI.





For the
interest rate swaps that are not designated as an effective hedge, the change in
the value and the rate differential to be paid or received is recognized as
other expense and is listed as a component of other (expense)
income.





Currency risk
management





The
Company currently holds an investment in Jinhui shares that are traded on the
Oslo Stock Exchange located in Norway, and as such, the Company is exposed to
the impact of exchange rate changes on this AFS security denominated in
Norwegian Kroner.  The Company’s objective is to manage the impact of
exchange rate changes on its earnings and cash flows in relation to its cost
basis associated with its investments.  The Company utilized foreign
currency forward contracts to protect its original investment from changing
exchange rates through October 10, 2008 when the use of these contracts were
discontinued due to the decline in the underlying value of Jinhui.





The
change in the value of the forward currency contracts is recognized as other
expense and is listed as a component of other (expense)
income.  Effective August 16, 2007, the Company elected to utilize
fair value hedge accounting for these instruments whereby the change in the
value in the forward contracts continues to be recognized as other expense and
is listed as a component of other (expense) income.  Fair value hedge
accounting then accelerates the recognition of the effective portion of the
currency translation gain or (loss) on the AFS Security from August 16, 2007
from OCI into other expense and is listed as a component of other (expense)
income.  Time value of the forward contracts are excluded from
effectiveness testing and recognized currently in income.  On October
10, 2008, the








F-14








Company
elected to discontinue the purchase of forward currency contracts associated
with Jinhui by entering into an offsetting trade that closed the previously
opened currency contract, thereby eliminating the hedge on Jinhui.





New accounting
pronouncements




In
February 2010, the FASB issued Accounting Standards Update No. 2010-09,
“Subsequent Events (Topic 855):  Amendments to certain Recognition and
Disclosure Requirements” (“ASU No. 2010-09”).  ASU No. 2010-09 removes
the requirement for an SEC filer to disclose the date through which subsequent
events have been evaluated.  This guidance is effective upon issuance
of the final ASU No. 2010-09 during February 2010.  The adoption of
this guidance for the year ended December 31, 2009 did not have a material
impact on the Company’s consolidated financial statements.




In June 2009, the FASB issued the FASB
Accounting Standard Codification (the “Codification”), which replaced prior
guidance and modified the U.S. GAAP hierarchy to include only two levels of U.S.
GAAP:  authoritative and nonauthoritative.  The Codification
became the source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities.  Rules and interpretive releases
of the SEC under authority of federal securities laws are also sources of
authoritative U.S. GAAP for SEC registrants.  On the effective date of
the Codification, it superseded all then-existing non-SEC accounting and
reporting standards.  All other nongrandfathered non-SEC accounting
literature not included in the Codification became
nonauthoritative.  The Codification is effective for fiscal years and
interim periods ending after September 15, 2009.  The adoption of the
Codification during the year ended December 31, 2009 did not have a material
impact on the Company’s consolidated financial statements.





In May 2009, the FASB issued additional
guidance related to subsequent events (formerly SFAS No. 165, “Subsequent
Events”).  This guidance is intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued.  Specifically, it sets forth the period after the balance
sheet date during which management of a reporting entity should evaluate events
or transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.  This
guidance is effective for fiscal years and interim periods ended after June 15,
2009 and is applied prospectively.  The adoption of this guidance
during the year ended December 31, 2009 did not have a material impact on the
Company’s consolidated financial statements.





In April 2009, the FASB issued guidance
related to interim disclosures about fair value of financial instruments which
requires disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements (formerly FASB Staff Position 107-1 and Accounting Principles Board
28-1, “Interim Disclosures about Fair Value of Financial
Instruments”).  This guidance is effective for interim reporting
periods ended after June 15, 2009, with early adoption permitted for periods
ended after March 15, 2009.  The adoption of this guidance during the
year ended December 31, 2009 did not have an impact on the Company’s
consolidated financial statements.  See Note 10 – Fair Value of
Financial Instruments for the Company’s disclosures about the fair value of
financial instruments.





In March 2008, the
FASB issued guidance related to disclosures about derivative instruments
and hedging activities, which amends previous guidance (formerly SFAS No. 161,
“Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement 133”). The new guidance is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entity’s financial position, results of operations and cash flows. The new
standard also improves transparency about how and why a company uses derivative
instruments and how derivative instruments and related hedged items are
accounted for under previous hedging guidance. It is effective for financial
statements issued for fiscal years and interim periods which began
November 15, 2008, with early application encouraged.  The
Company adopted the provisions of this guidance effective January 1,
2009.  See Note 8 – Long-Term Debt and Note 2 – Summary of Significant
Accounting Policies, for the Company’s disclosures about its derivative
instruments and hedging activities





In February 2008, the FASB issued
guidance delaying the effective date of fair value measurement
guidance








F-15








to fiscal
years beginning after November 15, 2008 and interim periods with those fiscal
years for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually) until January 1, 2009 for calendar year end entities
(formerly FASB Staff Position 157-2, “Effective Date of FASB Statement No.
157”).  The adoption of this guidance related to nonfinancial assets
and liabilities did not have a material impact on the Company’s consolidated
financial statements.





In
December 2007, the FASB issued guidance that will significantly change the
accounting for business combinations (formerly SFAS No. 141 (Revised 2007),
“Business Combinations”).  Under this guidance, an acquiring entity
will be required to recognize all the assets acquired and liabilities assumed in
a transaction at the acquisition-date fair value, with limited exceptions. This
guidance also includes a substantial number of new disclosure requirements and
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. The Company adopted this guidance effective
January 1, 2009.  As these provisions are applied prospectively, the
impact to the Company cannot be determined until any such transactions
occur.





In February 2007, the FASB issued
guidance that allows the Company to elect to report financial instruments and
certain other items at fair value on a contract-by-contract basis with changes
in value reported in earnings (formerly SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”).  This election is
irrevocable.  This guidance was effective for the Company commencing
in 2008.  The Company adopted this guidance on January 1, 2008 and
elected not to report financial instruments and certain other items at fair
value on a contract-by-contract basis with changes in value reported in
earnings.





3 - CASH FLOW
INFORMATION





As of
December 31, 2009, the Company had ten interest rate swaps, and these swaps are
described and discussed in Note 8 – Long-Term Debt.  The fair value of
eight of the swaps is in a liability position of $44,139 and the fair value of
two of the swaps is in an asset position of $2,108 as of December 31,
2009.  At December 31, 2008, there were a total of nine interest rate
swaps which were in a liability position of $65,937, of which $2,491 was a
current liability.





For the
year ended December 31, 2009, the Company had non-cash investing activities not
included in the Consolidated Statement of Cash Flows for items included in
accounts payable and accrued expenses consisting of $630 for the purchase of
vessels and $87 for the purchase of other fixed assets.  Additionally,
for the year ended December 31, 2009, the Company had non-cash financing
activities not included in the Consolidated Statement of Cash Flows for items
included in accounts payable and accrued expenses consisting of $483 associated
with deferred registration costs for Baltic Trading.  For the year
ended December 31, 2008, the Company had non-cash investing activities not
included in the Consolidated Statement of Cash Flows for items included in
accounts payable and accrued expenses consisting of $473 for the purchase of
vessels and $337 associated with deposits on vessels.  Additionally,
for the year ended December 31, 2008, the Company had items in prepaid expenses
and other current assets consisting of $3,524 which had reduced the deposits on
vessels.   For the year ended December 31, 2007, the Company had
non-cash investing activities not included in the Consolidated Statement of Cash
Flows for items included in accounts payable and accrued expenses consisting of
$682 for the purchase of vessels, $1,227 associated with deposits on vessels,
$1,670 for the purchase of investments, and $16 for the purchase of fixed
assets.





For the
year ended December 31, 2009, the Company made a non-cash reclassification of
$90,555 from deposits on vessels to vessels due to the completion of the
purchases of the Genco Commodus, Genco Maximus and Genco
Claudius.  For the year ended December 31, 2008, the Company made a
non-cash reclassification of $60,128 from deposits on vessels to vessels due to
the completion of the purchases of the Genco Champion, Genco Constantine and
Genco Hadrian.





During
the years ended December 31, 2009, 2008 and 2007, cash paid for interest, net of
amounts capitalized, was $58,188, $47,885, and $18,779
respectively.





On July
24, 2009, the Company made grants of nonvested common stock under the Genco
Shipping and Trading Limited 2005 Equity Incentive Plan in the amount of 15,000
shares to directors of the Company.  The fair








F-16








value of
such nonvested stock was $374 on the grant date and was recorded in
equity.  On December 27, 2009, the Company granted nonvested stock to
certain employees.  The fair value of such nonvested stock was $2,648
on the grant date and was recorded in equity.





On
January 10, 2008 and December 24, 2008 the Board of Directors approved grants of
100,000 and 75,000 shares, respectively, of nonvested common stock to Peter
Georgiopoulos, Chairman of the Board.  The fair value of such
nonvested stock was $4,191 and $905, respectively, on the grant date and was
recorded in equity.  Additionally, on February 13, 2008 and July 24,
2008 the Company made grants of nonvested common stock under the Plan in the
amount of 12,500 and 15,000 shares, respectively, to directors of the
Company.  The fair value of such nonvested stock was $689 and $938,
respectively, on the grant dates and was recorded in equity.  Lastly,
on December 24, 2008 the Company granted nonvested stock to certain
employees.  The fair value of such nonvested stock was $1,448 on the
grant date and was recorded in equity.




On
February 8, 2007, the Company granted nonvested stock to certain directors and
employees.  The fair value of such nonvested stock was $494 on the
grant date and was recorded in equity.  Additionally, during January
2007, nonvested stock forfeited amounted to $54 for shares granted in 2005 and
is recorded in equity.  During May 2007, nonvested stock forfeited
amounted to $88 for shares granted in 2006 and 2005 and is recorded in
equity.  Lastly, on December 21, 2007, the Company granted nonvested
stock to certain employees.  The fair value of such nonvested stock
was $4,935 on the grant date and was recorded in equity.





4 - VESSEL ACQUISITIONS AND
DISPOSITIONS





On July
22, 2009, September 18, 2009 and December 30, 2009, the Company completed the
acquisition of the Genco Commodus, Genco Maximus and Genco Claudius,
respectively.  In July 2007, the Company entered into an agreement to
acquire nine Capesize vessels from companies within the Metrostar Management
Corporation group for a net purchase price of $1,111,000, consisting of the
value of the vessels and the liability for the below market time charter
contracts acquired.  As of December 31, 2009, all nine Capesize
vessels, the Genco Claudius, Genco Maximus, Genco Commodus, Genco Hadrian, Genco
Constantine, Genco Augustus, Genco Tiberius, Genco London, and Genco Titus have
been delivered to Genco.





On June
16, 2008 the Company agreed to acquire six drybulk newbuildings from Lambert
Navigation Ltd., Northville Navigation Ltd., Providence Navigation Ltd., and
Primebulk Navigation Ltd., for an aggregate purchase price of
$530,000.  On November 3, 2008, the Company agreed to cancel the
acquisition of these six drybulk newbuildings.  As part of the
agreement, the selling group retained the deposits totaling $53,000 plus the
interest earned on such deposits for the six vessels, comprised of three
Capesize and three Handysize vessels.  This transaction resulted in a
charge in the fourth quarter of 2008 to the Company’s income statement of
$53,765 related to the forfeiture of these deposits.  This amount
included $53,213, which was recorded in Deposits on vessels and included net
capitalized interest, approximately $546 of interest income receivable which was
recorded as part of Prepaid expenses and other current assets, and $6 of other
expenses.  Additionally, on May 9, 2008, the Company agreed to acquire
three 2007 built vessels, consisting of two Panamax vessels and one Supramax
vessel, from Bocimar International N.V. and Delphis N.V for an aggregate
purchase price of approximately $257,000 which have all been acquired during
2008.  Upon completion the remaining three Capesize vessels from
companies within the Metrostar Management Corporation group during 2009, Genco's
fleet currently consists of 35 drybulk vessels, consisting of nine Capesize,
eight Panamax, four Supramax, six Handymax and eight Handysize vessels, with an
aggregate carrying capacity of approximately 2,903,000 dwt and an average age of
7.0 years.





On
February 26, 2008, the Company completed the sale of the Genco
Trader.  The Company realized a net gain of approximately $26,227 and
had net proceeds of $43,084 from the sale of the vessel in the first quarter of
2008.  The Company had previously reached an agreement, on October 2,
2007, to sell the Genco Trader, a 1990-built Panamax vessel, to SW Shipping Co.,
Ltd for $44,000 less a 2% brokerage commission payable to a third
party.





On
January 2, 2008, the Company completed the acquisition of the Genco Champion,
the last vessel acquired from affiliates of Evalend Shipping Co.
S.A.  On August 10 and August 13, 2007, the Company had agreed to
acquire six drybulk vessels (three Supramax and three Handysize) from affiliates
of Evalend Shipping Co. S.A. for a net purchase price of $336,000, consisting of
the value of the vessels and the liability for the below market time
charter








F-17








contract
acquired.  The Company completed the acquisition of all six of the
vessels, the Genco Champion, Genco Predator, Genco Warrior, Genco Hunter, Genco
Charger, and Genco Challenger, during 2008.





On August
15, 2007, the Company decided to sell the two oldest vessels in its fleet, the
Genco Commander and the Genco Trader.  On September 3, 2007, the
Company reached an agreement to sell the Genco Commander, a 1994-built Handymax
vessel, to Dan Sung Shipping Co. Ltd. for $44,450 less a 2% brokerage commission
payable to a third party.  On December 3, 2007, the Company realized a
net gain of $23,472 and received net proceeds of $43,532.  Lastly, on
October 2, 2007, the Company reached an agreement to sell the Genco Trader, a
1990-built Panamax vessel, to SW Shipping Co., Ltd for $44,000 less a 2%
brokerage commission payable to a third party.  The Company recorded a
net gain of $26,227 from the sale of the vessel in the first quarter of
2008.





As four
of the Capesize vessels and two of the Supramax vessels delivered during 2007
and 2008 had existing below market time charters at the time of the acquisition,
the Company recorded the fair market value of time charter acquired of $52,584
which is being amortized as an increase to revenues during the remaining term of
each respective time charter.  For the years ended December 31, 2009,
2008 and 2007; $18,975, $22,447 and $6,382, respectively, was amortized into
revenue.  The remaining unamortized fair market value of time charter
acquired at December 31, 2009 and December 31, 2008 is $4,611 and $23,586,
respectively.  This balance will be amortized into revenue over a
weighted average period of 1.16 years and will be amortized as follows: $3,635
for 2010 and $976 for 2011.  The 2008 amortization amount includes the
accelerated amortization of the unamortized fair market value of the time
charter acquired related to the Genco Cavalier as a result of the charterer of
the vessel going bankrupt.





On
February 21, 2007, the Genco Glory was sold to Cloud Maritime S.A. for $13,004
net of a brokerage commission of 1% was paid to WeberCompass (Hellas)
S.A.  Based on the selling price and the net book value of the vessel,
the Company recorded a gain of $3,575 during the first quarter of
2007.





Capitalized
interest expense associated with the vessels acquired for the years ended
December 31, 2009, 2008 and 2007 was $1,473, $5,778 and $4,340,
respectively.





5
–INVESTMENTS





The
Company holds an investment in the capital stock of Jinhui.  Jinhui is
a drybulk shipping owner and operator focused on the Supramax segment of drybulk
shipping.  This investment is designated as AFS and is reported at
fair value, with unrealized gains and losses recorded in shareholders’ equity as
a component of OCI.  At December 31, 2009 and December 31, 2008, the
Company held 16,335,100 shares of Jinhui capital stock which is recorded at its
fair value of $72,181 and $16,772, respectively, based on the closing price on
December 30, 2009 (the last trading date on the Oslo exchange in 2009) and
December 31, 2008 of 25.60 NOK and 7.14 NOK, respectively.




During
the fourth quarter of 2008, the Company reviewed the investment in Jinhui for
indicators of other-than-temporary impairment in accordance with ASC
320-10.  Based on this review, the Company deemed the investment in
Jinhui to be other-than-temporarily impaired as of December 31, 2008 due to the
severity of the decline in its market value versus its cost basis.  As
a result, during the fourth quarter of 2008, the Company recorded a $103,892
impairment charge.  As a result of the other-than-temporary
impairment, the new cost basis of this investment is 7.14 NOK per share, the
value of the investment at December 31, 2008.  The Company reviews the
investment in Jinhui for impairment on a quarterly basis.  There were
no impairment charges recognized during the years ended December 31, 2009 and
December 31, 2007.




The
unrealized currency translation gain for the Jinhui capital stock remains a
component of OCI since this investment is designated as an AFS
security.  For the years ended December 31, 2008 and 2007, the hedged
portion of the currency translation (loss)/gain has been reclassified to the
income statement as a component of other (expense) income.




Refer to
Note 9 – Accumulated Other Comprehensive Income (Deficit) for a breakdown of the
components of accumulated OCI.






F-18






Effective
on August 16, 2007, the Company elected to utilize hedge accounting for forward
contracts hedging the currency risk associated with the Norwegian Kroner cost
basis in the Jinhui stock.  The hedge accounting is limited to the
lower of the cost basis or the market value at time of the
designation.  The unrealized appreciation in the stock and the
currency translation gain above the cost basis was recorded as a component of
OCI.  Realized gains and losses on the sale of these securities will
be reflected in the Consolidated Statement of Operations in other (expense)
income once sold.  Time value of the forward contracts are excluded
from effectiveness testing and recognized in income.  For the years
ended December 31, 2008 and 2007, an immaterial amount was recognized in other
expense income associated with excluded time value and
ineffectiveness.  For the year ended December 31, 2009, no hedges were
utilized.




At
December 31, 2009 and 2008, the Company did not have a short-term forward
currency contract to hedge the Company’s exposure to the Norwegian Kroner
related to the cost basis of Jinhui stock as described above.  The
Company elected to discontinue the forward currency contract and hedge due to
the decline of the underlying market value of Jinhui in October
2008.  The gain (loss) associated with these short-term forward
currency contracts held during the year is included as a component of other
(expense) income and is offset by a reclassification from OCI for the hedged
portion of the currency gain (loss) on investment.





The
following table sets forth the net loss, realized and unrealized, related to the
forward currency contracts and to the hedged translation on the cost basis of
the Jinhui stock.  These are included as a component of other
expense.





Year
      ended December 31,2009
            
            
            2008
            
            
            2007Net
      loss, realized and unrealized
            
            $
            —
            
            
            $
            (189
            )
            
            $
            (1,185
            )





6 - EARNINGS PER COMMON
SHARE





The
computation of basic earnings per share is based on the weighted average number
of common shares outstanding during the year.  The computation of
diluted earnings per share assumes the vesting of nonvested stock awards (see
Note 18 – Nonvested Stock Awards), for which the assumed proceeds upon vesting
are deemed to be the amount of compensation cost attributable to future services
and are not yet recognized using the treasury stock method, to the extent
dilutive.





The
components of the denominator for the calculation of basic earnings per share
and diluted earnings per share are as follows:





Years
      Ended December 31,2009
            
            
            2008
            
            
            2007Common
      shares outstanding, basic:Weighted
      average common shares outstanding, basic
            
            
            31,295,212
            
            
            
            30,290,016
            
            
            
            26,165,600Common
      shares outstanding, diluted:Weighted
      average common shares outstanding, basic
            
            
            31,295,212
            
            
            
            30,290,016
            
            
            
            26,165,600Dilutive
      effect of restricted stock awards
            
            
            149,851
            
            
            
            162,834
            
            
            
            131,921Weighted
      average common shares outstanding, diluted
            
            
            31,445,063
            
            
            
            30,452,850
            
            
            
            26,297,521









F-19






7 - RELATED PARTY
TRANSACTIONS




The
following are related party transactions not disclosed elsewhere in these
financial statements:




The
Company makes an employee performing internal audit services available to
General Maritime Corporation (“GMC”), where the Company’s Chairman, Peter C.
Georgiopoulos, also serves as Chairman of the Board.  For the years
ended December 31, 2009, 2008 and 2007, the Company invoiced $162, $175 and
$167, respectively, to GMC for the time associated with such internal audit
services.  During 2009, the amount invoiced of $162 included $4 of
office expenses.  Additionally, during the years ended December 31,
2009, 2008 and 2007, the Company incurred travel and other related expenditures
totaling $139, $337 and $248, respectively, reimbursable to GMC or its service
provider.  For the year ended December 31, 2009, 2008 and 2007
approximately $0, $9 and $0 of these travel expenditures were paid from the
gross proceeds received from the May 2008 equity offering and as such were
included in the determination of net proceeds.  At December 31, 2009
and 2008, the amount due the Company from GMC is $41 and $62,
respectively.




During
the years ended December 31, 2009, 2008 and 2007, the Company incurred legal
services (primarily in connection with vessel acquisitions) aggregating $80,
$99, and $219, respectively, from Constantine Georgiopoulos, the father of Peter
C. Georgiopoulos, Chairman of the Board.  At December 31, 2009 and
2008, $3 and $1, respectively, was outstanding to Constantine
Georgiopoulos.




During
2009, the Company entered into an agreement with Aegean Marine Petroleum
Network, Inc. (“Aegean”) to purchase lubricating oils for six vessels in the
Company’s fleet.  Peter C. Georgiopoulos, Chairman of the Board, is a
director of Aegean.  During the year ended December 31, 2009, Aegean
supplied lubricating oils to the Company’s vessels aggregating
$230.  At December 31, 2009, $226 remains
outstanding.  There were no purchases of lubricating oils made from
Aegean during 2008.




During
March 2007, the Company utilized the services of North Star Maritime, Inc.
(“NSM”) which is owned and operated by one of the Company’s directors, Rear
Admiral Robert C. North, USCG (ret.).  NSM, a marine industry
consulting firm, specializes in international and domestic maritime safety,
security and environmental protection issues.  NSM was paid $12 for
services rendered.  There are no amounts due to NSM at December 31,
2009 and 2008.




8 - LONG-TERM
DEBT




Long-term
debt consists of the following:




December
      31,2009
            
            
            2008Outstanding
      total
      debt................................................................
            
            $
            1,327,000
            
            
            $
            1,173,300Less:
      Current
      portion...................................................................
            
            
            (50,000
            )
            
            
            —Long-term
      debt.............................................................................
            
            $
            1,277,000
            
            
            $
            1,173,300





2008 Term
Facility





On
September 4, 2008, the Company executed a Credit Agreement and other definitive
documentation for its $320 million credit facility (the “2008 Term
Facility”).   The 2008 Term Facility was underwritten by Nordea Bank
Finland Plc, New York Branch, who served as Administrative Agent,
Bookrunner, and Collateral Agent; Bayerische Hypo- und Vereinsbank AG, who
served as Bookrunner; DnB NOR Bank ASA; Sumitomo Mitsui Banking Corporation,
acting through its Brussels Branch; and Deutsche Schiffsbank
Akteingesellschaft.  DnB NOR Bank ASA underwrote the Company’s
existing 2007 Credit Facility and served under that facility as Administrative
Agent and Collateral Agent.







F-20






Under
the 2008 Term Facility, subject to the conditions set forth in the Credit
Agreement, the Company was able to borrow an amount up to $320
million.  Amounts borrowed and repaid under the 2008 Term Facility
could not be reborrowed.  The 2008 Term Facility had a maturity date
of the earlier of the fifth anniversary of the initial borrowing date under the
facility or December 31, 2013.





Loans
made under the 2008 Term Facility were able to be used to fund or refund to the
Company the acquisition costs of six drybulk newbuildings, consisting of three
Capesize and three Handysize vessels, which the Company agreed on June 16, 2008
to acquire from Lambert Navigation Ltd., Northville Navigation Ltd., Providence
Navigation Ltd., and Prime Bulk Navigation Ltd.





The
terms of the 2008 Term Facility provide that it was to be cancelled upon a
cancellation of the acquisition contracts for the six vessels described
above.  As such, the 2008 Term Facility was cancelled effective
November 4, 2008 upon the cancellation of the acquisition of six drybulk
newbuildings from Lambert Navigation Ltd., Northville Navigation Ltd.,
Providence Navigation Ltd., and Primebulk Navigation Ltd., for an aggregate
purchase price of $530,000.  Cancellation of the facility resulted in
a charge in the fourth quarter of 2008 to interest expense of $2,191 associated
with unamortized deferred financing costs.





2007 Credit
Facility





On July
20, 2007, the Company entered into a credit facility with DnB Nor Bank ASA (the
“2007 Credit Facility”) for the purpose of acquiring nine Capesize vessels and
refinancing the Company’s existing 2005 Credit Facility and Short-Term
Line.  DnB Nor Bank ASA is also Mandated Lead Arranger, Bookrunner,
and Administrative Agent.  The Company has used borrowings under the
2007 Credit Facility to repay amounts outstanding under the 2005 Credit Facility
and the Short-Term Line, and these two facilities have accordingly been
terminated.  As of December 31, 2009 and 2008, $1,327,000 and
$1,173,000 was outstanding under the 2007 Credit Facility.  The
maximum amount that may be borrowed under the 2007 Credit Facility at December
31, 2009 is $1,327,000.  As of December 31, 2009, the Company has
utilized its maximum borrowing capacity under the 2007 Credit
Facility.




On
January 26, 2009, the Company entered into an amendment to the 2007 Credit
Facility (the “2009 Amendment”) which implemented the following modifications to
the terms of the 2007 Credit Facility:





·
            Compliance
      with the existing collateral maintenance financial covenant was waived
      effective for the year ended December 31, 2008 and until the Company can
      represent that it is in compliance with all of its financial covenants and
      is otherwise able to pay a dividend and purchase or redeem shares of
      common stock under the terms of the Credit Facility in effect before the
      2009 Amendment.  With the exception of the collateral
      maintenance financial covenant, the Company believes that it is in
      compliance with its financial covenants under the 2007 Credit
      Facility.  The Company’s cash dividends and share repurchases
      were suspended until the Company can represent that it is in a position to
      again satisfy the collateral maintenance
  covenant.





·
            The
      total amount of the 2007 Credit Facility is subject to quarterly
      reductions of $12,500 beginning March 31, 2009 through March 31, 2012 and
      quarterly reductions of $48,195 beginning July 20, 2012 and thereafter
      until the maturity date.  A final payment of $250,600 will be
      due on the maturity date.





·
            The
      Applicable Margin to be added to the London Interbank Offered Rate to
      calculate the rate at which the Company’s borrowings bear interest is
      2.00% per annum (the “Applicable
Margin”).





·
            The
      commitment commission payable to each lender is 0.70% per annum of the
      daily average unutilized commitment of such
  lender.




Amounts
borrowed and repaid under the 2007 Credit Facility may be reborrowed if
available under the 2007 Credit Facility.  The 2007 Credit Facility
has a maturity date of July 20, 2017.




Loans
made under the 2007 Credit Facility may be and have been used for the
following:








F-21





·
            up
      to 100% of the en bloc purchase price of $1,111,000 for nine modern
      drybulk Capesize vessels, which the Company has agreed to purchase from
      companies within the Metrostar Management Corporation
    group;





·
            repayment
      of amounts previously outstanding under the Company’s 2005 Credit
      Facility, or $206,233;





·
            the
      repayment of amounts previously outstanding under the Company’s Short-Term
      Line, or $77,000;





·
            possible
      acquisitions of additional drybulk carriers between 25,000 and 180,000 dwt
      that are up to ten years of age at the time of delivery and not more than
      18 years of age at the time of maturity of the new credit
      facility;





·
            up
      to $50,000 of working capital; and





·
            the
      issuance of up to $50,000 of standby letters of credit.  At
      December 31, 2009, there were no letters of credit issued under the 2007
      Credit Facility.





All
amounts owing under the 2007 Credit Facility are secured by the
following:





·
            cross-collateralized
      first priority mortgages of each of the Company’s existing vessels and any
      new vessels financed with the 2007 Credit
  Facility;





·
            an
      assignment of any and all earnings of the mortgaged
    vessels;





·
            an
      assignment of all insurances on the mortgaged
  vessels;





·
            a
      first priority perfected security interest in all of the shares of Jinhui
      owned by the Company;





·
            an
      assignment of the shipbuilding contracts and an assignment of the
      shipbuilder’s refund guarantees meeting the Administrative Agent’s
      criteria for any additional newbuildings financed under the 2007 Credit
      Facility; and





·
            a
      first priority pledge of the Company’s ownership interests in each
      subsidiary guarantor.





The Company has completed a pledge of
its ownership interests in the subsidiary guarantors that own the nine Capesize
vessels acquired.  The other collateral described above was pledged,
as required, within thirty days of the effective date of the 2007 Credit
Facility.




The
Company’s borrowings under the 2007 Credit Facility bear interest at the London
Interbank Offered Rate (“LIBOR”) for an interest period elected by the Company
of one, three, or six months, or longer if available, plus the Applicable Margin
which was 0.85% per annum.  Effective January 26, 2009, due to the
2009 Amendment, the Applicable Margin increased to 2.00%.  In addition
to other fees payable by the Company in connection with the 2007 Credit
Facility, the Company paid a commitment fee at a rate of 0.20% per annum of the
daily average unutilized commitment of each lender under the facility until
September 30, 2007, and 0.25% thereafter.  Effective January 26, 2009,
due to the 2009 Amendment, the rate increased to 0.70% per annum of the daily
average unutilized commitment of such lender.




The 2007
Credit Facility includes the following financial covenants which apply to the
Company and its subsidiaries on a consolidated basis and are measured at the end
of each fiscal quarter beginning with June 30, 2007:








F-22





·
            The
      leverage covenant requires the maximum average net debt to EBITDA ratio to
      be at least 5.5:1.0.




·
              Cash
      and cash equivalents must not be less than $500 per mortgaged
      vessel.




·
            The
      ratio of EBITDA to interest expense, on a rolling last four-quarter basis,
      must be no less than 2.0:1.0.





·
            After
      July 20, 2007, consolidated net worth, as defined in the 2007 Credit
      Facility, must be no less than $263,300 plus 80% of the value of the any
      new equity issuances of the Company from June 30, 2007.  Based
      on the equity offerings completed in October 2007 and May 2008,
      consolidated net worth must be no less than
  $590,750.





·
            The
      aggregate fair market value of the mortgaged vessels must at all times be
      at least 130% of the aggregate outstanding principal amount under the new
      credit facility plus all letters of credit outstanding; the Company has a
      30 day remedy period to post additional collateral or reduce the amount of
      the revolving loans and/or letters of credit outstanding.  This
      covenant was waived effective for the year ended December 31, 2008 and
      indefinitely until the Company can represent that it is in compliance with
      all of its financial covenants as per the 2009 Amendment as described
      above.





As of
December 31, 2009, the Company believes it is in compliance with all of the
financial covenants under its 2007 Credit Facility, as amended.





On June
18, 2008, the Company entered into an amendment to the 2007 Credit Facility
allowing the Company to prepay vessel deposits to give the Company flexibility
in refinancing potential vessel acquisitions.





Due to
refinancing of the Company’s previous facilities, the Company incurred a
write-off of the unamortized deferred financing costs in the amount of $3,568
associated with the Company’s previous facilities and this charge was reflected
in interest expense in the third quarter of 2007.





Due to
refinancing of the 2007 Credit Facility as a result of entering into the 2009
Amendment, the Company incurred a non-cash write off of unamortized deferred
financing costs in the amount of $1,921 associated with capitalized costs
related to prior amendments and this charge was reflected in interest expense in
the fourth quarter of 2008.





The
following table sets forth the repayment of the outstanding debt of $1,327,000
at December 31, 2009 under the 2007 Credit Facility, as amended:





Period
      Ending December 31,
            Total2010..............................................................................................................
            $
            50,0002011..............................................................................................................
            
            50,0002012..............................................................................................................
            
            108,8902013..............................................................................................................
            
            192,7802014..............................................................................................................
            
            192,780Thereafter....................................................................................................
            
            732,550Total
      long-term debt
            $
            1,327,000












F-23




Interest
rates


The
following table sets forth the effective interest rate associated with the
interest expense for the 2005 Credit Facility, the Short-term Line, the 2008
Term Facility and the 2007 Credit Facility, as amended, including the rate
differential between the pay fixed receive variable rate on the swaps that were
in effect, combined, and the cost associated with unused
commitment.  Additionally, it includes the range of interest rates on
the debt, excluding the impact of swaps and unused commitment fees:





Year
      ended December 31,2009
            
            
            2008
            
            
            2007Effective
      Interest Rate
            
            
            5.12
            %
            
            
            5.24
            %
            
            
            6.25
            %Range
      of Interest Rates (excluding impact of swaps and unused commitment
      fees)
            
            
            1.23%
      to 5.56
            %
            
            
            1.35%
      to 6.10
            %
            
            
            5.54%
      to 6.66
            %





Short-Term Line-Refinanced
by the 2007 Credit Facility




On May 3,
2007, the Company entered into a short-term line of credit facility under which
DnB NOR Bank ASA, Grand Cayman Branch and Nordea Bank Norge ASA, Grand Cayman
Branch served as lenders (the “Short-Term Line”).  The Short-Term Line
was used to fund a portion of acquisitions the Company made in the shares of
capital stock of Jinhui.  Under the terms of the Short-Term Line, the
Company was allowed to borrow up to $155,000 for such acquisitions, and the
Company had borrowed a total of $77,000 under the Short-Term Line prior to its
refinancing.  The term of the Short-Term Line was for 364 days, and
the interest on amounts drawn was payable at the rate of LIBOR plus a margin of
0.85% per annum for the first six month period and LIBOR plus a margin of 1.00%
for the remaining term.  The Company was obligated to pay certain
commitment and administrative fees in connection with the Short-Term
Line.  The Company, as required, pledged all of the Jinhui shares it
has purchased as collateral against the Short-Term Line.  The
Short-Term Line incorporated by reference certain covenants from the Company’s
2005 Credit Facility.





The
Short-Term Line was refinanced in July 2007 with the 2007 Credit
Facility.





2005 Credit
Facility-Refinanced by the 2007 Credit Facility





The
Company entered into the 2005 Credit Facility as of July 29,
2005.  The 2005 Credit Facility was with a syndicate of commercial
lenders including Nordea Bank Finland plc, New York Branch, DnB NOR Bank ASA,
New York Branch and Citibank, N.A.  The 2005 Credit Facility was used
to refinance the Company’s indebtedness under the Company’s original credit
facility entered into on December 3, 2004 (the “Original Credit
Facility”).  The obligations under the 2005 Credit Facility were
secured by a first-priority mortgage on each of the vessels in the Company’s
fleet as well as any future vessel acquisitions pledged as collateral and funded
by the 2005 Credit Facility.  The 2005 Credit Facility was also
secured by a first-priority security interest in the Company’s earnings and
insurance proceeds related to the collateral vessels.





All of
the Company’s vessel-owning subsidiaries were full and unconditional joint
and several guarantors of the Company’s 2005 Credit Facility.  Each of
these subsidiaries was wholly owned by Genco Shipping & Trading
Limited.  Genco Shipping & Trading Limited had no independent
assets or operations.





Interest
on the amounts drawn was payable at the rate of 0.95% per annum over LIBOR until
the fifth anniversary of the closing of the 2005 Credit Facility and 1.00% per
annum over LIBOR thereafter.  The Company was also obligated to pay a
commitment fee equal to 0.375% per annum on any undrawn amounts available under
the facility.





The 2005
Credit Facility has been refinanced with the 2007 Credit Facility.











F-24




Letter of
credit


In
conjunction with the Company entering into a long-term office space lease (See
Note 16 - Lease Payments), the Company was required to provide a letter of
credit to the landlord in lieu of a security deposit.  As of September
21, 2005, the Company obtained an annually renewable unsecured letter of credit
with DnB NOR Bank.  The letter of credit amount as of December 31,
2009 and 2008 was in the amount of $333 and $416, respectively, at a fee of 1%
per annum.  The letter of credit was reduced to $333 on August 3, 2009
and is cancelable on each renewal date provided the landlord is given 150 days
minimum notice.





Interest rate swap
agreements





The
Company has entered into eleven interest rate swap agreements with DnB NOR Bank
to manage interest costs and the risk associated with changing interest rates,
ten of which are outstanding at December 31, 2009.  The total notional
principal amount of the swaps at December 31, 2009 is $756,233 and the swaps
have specified rates and durations.





The
following table summarizes the interest rate swaps designated as cash flow
hedges that are in place as of December 31, 2009 and 2008:


Interest
      Rate Swap Detail
            
            December
      31, 2009
            
            
            December
      31, 2008Trade
      Date
            
            
            Fixed
      Rate
            
            Start
      Date
              of  Swap
            
            End
      date
              of  Swap
            
            Notional
      Amount Outstanding
            
            
            Notional
      Amount Outstanding9/6/05
            
            
            4.485
            %
            9/14/05
            
            7/29/15
            $
            106,233
            
            $
            106,2333/29/06
            
            
            5.25
            %
            1/2/07
            
            1/1/14
            
            50,000
            
            
            50,0003/24/06
            
            
            5.075
            %
            1/2/08
            
            1/2/13
            
            50,000
            
            
            50,0009/7/07
            
            
            4.56
            %
            10/1/07
            
            12/31/09
            
            —
            
            
            75,0007/31/07
            
            
            5.115
            %
            11/30/07
            
            11/30/11
            
            100,000
            
            
            100,0008/9/07
            
            
            5.07
            %
            1/2/08
            
            1/3/12
            
            100,000
            
            
            100,0008/16/07
            
            
            4.985
            %
            3/31/08
            
            3/31/12
            
            50,000
            
            
            50,0008/16/07
            
            
            5.04
            %
            3/31/08
            
            3/31/12
            
            100,000
            
            
            100,0001/22/08
            
            
            2.89
            %
            2/1/08
            
            2/1/11
            
            50,000
            
            
            50,0001/9/09
            
            
            2.05
            %
            1/22/09
            
            1/22/14
            
            100,000
            
            
            —2/11/09
            
            
            2.45
            %
            2/23/09
            
            2/23/14
            
            50,000
            
            
            —$
            756,233
            
            $
            681,233





The
differential to be paid or received for these swap agreements are recognized as
an adjustment to interest expense as incurred.  The Company is
currently utilizing cash flow hedge accounting for these swaps whereby the
effective portion of the change in value of the swaps is reflected as a
component of OCI.  The ineffective portion is recognized as other
expense, which is a component of other (expense) income.  For any
period of time that the Company did not designate the swaps for hedge
accounting, the change in the value of the swap agreements prior to designation
was recognized as other expense and was listed as a component of other (expense)
income.





The
interest (expense) income pertaining to the interest rate swaps for the years
ended December 31, 2009, 2008 and 2007 was ($28,585), ($9,470) and $1,039,
respectively.





The swap
agreements, with effective dates prior to December 31, 2009 synthetically
convert variable rate debt to fixed rate debt at the fixed interest rate of the
swap plus the Applicable Margin, as defined in the “2007 Credit Facility”
section above.





The
following table summarizes the derivative asset and liability balances at
December 31, 2009:






F-25







Asset
      Derivatives
            
            Liability
      DerivativesAs
      of December 31
            2009
            
            2009Balance Sheet Location
            
            Fair Value
            
            Balance Sheet Location
            
            Fair ValueDerivatives
      designated as hedging instrumentsInterest
      rate contracts
            Fair
      value of derivative instruments (Current Assets)
            
            $
            –
            
            Fair
      value of derivative instruments (Current Liabilities)
            
            $
            –Interest
      rate contracts
            Fair
      value of derivative instruments (Noncurrent Assets)
            
            
            2,108
            
            Fair
      value of derivative instruments (Noncurrent Liabilities)
            
            
            44,139Total
      derivatives designated as hedging instruments
            
            
            $
            2,108
            
            
            
            $
            44,139Total
      Derivatives
            
            
            $
            2,108
            
            
            
            $
            44,139





The
following tables present the impact of derivative instruments and their location
within the Consolidated Statement of Operations:





The
      Effect of Derivative Instruments on the Consolidated Statement of
      OperationsFor
      the Year Ended December 31, 2009Derivatives
      in Cash
              Flow
      Hedging
              Relationships
            
            
            Amount
      of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective
      Portion)
            
            Location
      of
              Gain
      or (Loss)
              Reclassified
              from
              Accumulated
              OCI
      into
              income
              (Effective
              Portion)
            
            Amount
      of
              Gain
      or (Loss)
              Reclassified
              from
              Accumulated
              OCI
      into
              income
              (Effective
              Portion)
            
            Location
      of
              Gain
      or (Loss)
              Recognized
      in
              Income
      on
              Derivative
              (Ineffective
              Portion)
            
            Amount
      of
              Gain
      or (Loss)
              Recognized
      in
              Income
      on
              Derivative
              (Ineffective
              Portion)2009
            
            
            
            2009
            
            
            
            2009Interest
      rate contracts
            
            $
            (4,390
            )
            Interest
      Expense
            $
            (28,585
            )
            Other
      Expense
            $
            (288
            )




The
liability associated with the swaps at December 31, 2008 was $65,937, which was
presented as the fair value of derivatives on the balance
sheet.  There were no swaps in an asset position at December 31,
2008.  As of December 31, 2008, the Company had an accumulated other
comprehensive deficit of ($66,014) related to the effectively hedged portion of
the swaps.  Hedge ineffectiveness associated with the interest rate
swaps resulted in other (expense) income of $98 and ($98) for the years ended
December 31, 2008 and 2007, respectively.





At
December 31, 2009, ($27,269) of OCI is expected to be reclassified into interest
expense over the next 12 months associated with interest rate
swaps.






F-26





The
Company is required to provide collateral in the form of vessel assets to
support the interest rate swap agreements.  Each of the Company’s
thirty-five vessels serves as collateral in the aggregate amount of
$100,000.




9 – ACCUMULATED OTHER
COMPREHENSIVE INCOME (DEFICIT)




The
components of accumulated other comprehensive income
(deficit)  included in the accompanying consolidated balance sheets
consist of net unrealized gain (loss) from investments, net gain (loss) on
derivative instruments designated and qualifying as cash-flow hedging
instruments, and cumulative translation adjustments on the investment in Jinhui
stock as December 31, 2009 and 2008.





Accumulated
      OCI
            
            
            Unrealized
      Gain (Loss) on Cash Flow Hedges
            
            
            Unrealized
      Gain (Loss) on Investments
            
            
            Currency
      Translation Gain (Loss) on InvestmentsOCI
      – January 1, 2008
            
            $
            19,017
            
            
            $
            (21,068
            )
            
            $
            38,540
            
            
            $
            1,545Unrealized
      loss on investments
            
            
            (38,540
            )
            
            
            
            
            
            
            (38,540
            )Translation
      loss on investments
            
            
            (11,705
            )
            
            
            
            
            
            
            
            
            
            
            (11,705
            )Translation
      gain reclassified to other expense
            
            
            10,160
            
            
            
            
            
            
            
            
            
            
            
            10,160Unrealized
      loss on cash flow hedges
            
            
            (37,629
            )
            
            
            (37,629
            )Interest
      income reclassified to other expense
            
            
            (7,317
            )
            
            
            (7,317
            )OCI
      – December 31, 2008
            
            $
            (66,014
            )
            
            $
            (66,014
            )
            
            $
            —
            
            
            $
            —Unrealized
      gain on investments
            
            
            43,364
            
            
            
            
            
            
            
            43,364Translation
      gain on investments
            
            
            12,044
            
            
            
            
            
            
            
            
            
            
            
            12,044Unrealized
      gain on cash flow hedges
            
            
            24,195
            
            
            
            24,195OCI
      – December 31, 2009
            
            $
            13,589
            
            
            $
            (41,819
            )
            
            $
            43,364
            
            
            $
            12,044





10 - FAIR VALUE OF FINANCIAL
INSTRUMENTS




The
estimated fair values of the Company’s financial instruments are as
follows:





December
      31, 2009
            
            
            December
      31, 2008Cash
      and cash equivalents
            
            $
            188,267
            
            
            $
            124,956Restricted
      cash
            
            
            17,500
            
            
            
            —Investments
            
            
            72,181
            
            
            
            16,772Floating
      rate debt
            
            
            1,327,000
            
            
            
            1,173,300Derivative
      instruments –
              asset
      position
            
            
            2,108
            
            
            
            —Derivative
      instruments – liability position
            
            
            44,139
            
            
            
            65,937




The fair
value of the investments is based on quoted market rates.  The fair
value of the revolving credit facility is estimated based on current rates
offered to the Company for similar debt of the same remaining
maturities.  Additionally, the Company considers its creditworthiness
in determining the fair value of the revolving credit facility.  The
carrying value approximates the fair market value for the floating rate
loans.  The fair value of the interest rate swaps is the estimated
amount the Company would receive to terminate the swap agreements at the
reporting date, taking into account current interest rates and the
creditworthiness of both the swap counterparty and the Company.






F-27






Fair
Value Measurement & Disclosures guidance (ASC 820-10), which was adopted
during 2007, applies to all assets and liabilities that are being measured and
reported on a fair value basis.This guidance enables the
reader of the financial statements to assess the inputs used to develop those
measurements by establishing a hierarchy for ranking the quality and reliability
of the information used to determine fair values.  The guidance
requires that assets and liabilities carried at fair value will be classified
and disclosed in one of the following three categories:




Level 1:
Quoted market prices in active markets for identical assets or
liabilities.


Level 2:
Observable market based inputs or unobservable inputs that are corroborated by
market data.


Level 3:
Unobservable inputs that are not corroborated by market data.





The
following table summarizes the valuation of the Company’s investments and
financial instruments by the above pricing levels as of the valuation dates
listed:





December
      31, 2009Total
            
            
            Quoted
      market prices in
                active
      markets
                (Level
      1)
            
            
            Significant
      Other Observable Inputs
                (Level
      2)Cash
      equivalents
            
            $
            75,057
            
            
            $
            75,057
            
            
            
            —Investments
            
            
            72,181
            
            
            
            72,181
            
            
            
            —Derivative
      instruments – asset  position
            
            
            2,108
            
            
            
            —
            
            
            
            2,108Derivative
      instruments – liability  position
            
            
            44,139
            
            
            
            —
            
            
            
            44,139




December
      31, 2008Total
              
              
              Quoted
      market prices in
                  active
      markets
                  (Level
      1)
              
              
              Significant
      Other Observable Inputs
                  (Level
      2)Cash
      equivalents
              
              $
              —
              
              
              $
              —
              
              
              
              —Investments
              
              
              16,772
              
              
              
              16,772
              
              
              
              —Derivative
      instruments – asset  position
              
              
              —
              
              
              
              —
              
              
              
              —Derivative
      instruments – liability  position
              
              
              65,937
              
              
              
              —
              
              
              
              65,937


The
Company had an investment of $75,057 and $0 in the JPMorgan US Dollar
Liquidity Fund Institutional at December 31, 2009 and December 31, 2008,
respectively.  The JPMorgan US Dollar Liquidity Fund Institutional is
a money market fund which invests its assets in high quality transferable short
term USD-denominated fixed and floating rate debt securities and has a portfolio
with a weighted average investment maturity not to exceed sixty
days.  The value of this fund is publicly available and is considered
a Level 1 item.  The Company holds an investment in the capital stock
of Jinhui, which is classified as a long-term investment.  The stock
of Jinhui is publicly traded on the Oslo Stock Exchange and is considered a
Level 1 item.  The Company’s interest rate derivative instruments are
pay-fixed, receive-variable interest rate swaps based on LIBOR.  The
Company has elected to use the income approach to value the derivatives, using
observable Level 2 market expectations at measurement date and standard
valuation techniques to convert future amounts to a single present amount
assuming that participants are motivated, but not










F-28






11 - PREPAID EXPENSES AND
OTHER CURRENT ASSETS
  Prepaid
      expenses and other current assets consist of the
  following:


December
                31,
      2009
            
            
            December31, 2008Lubricant
      inventory and other stores
            
            $
            3,971
            
            
            $
            3,772Prepaid
      items
            
            
            3,086
            
            
            
            2,581Insurance
      Receivable
            
            
            1,408
            
            
            
            2,345Interest
      receivable on deposits for vessels to be acquired
            
            
            –
            
            
            
            3,547Other
            
            
            1,719
            
            
            
            1,250Total
            
            $
            10,184
            
            
            $
            13,495







12 – OTHER ASSETS,
NET




Other
assets consist of the following:




(i)
Deferred financing costs, which include fees, commissions and legal expenses
associated with securing loan facilities.  These costs are amortized
over the life of the related debt, and are included in interest
expense.  The Company has unamortized deferred financing costs of
$7,494 and $4,974 at December 31, 2009 and 2008, respectively, associated with
the 2007 Credit Facility.  Accumulated amortization of deferred
financing costs as of December 31, 2009 and December 31, 2008 was $2,585
and $1,548, respectively.  During the fourth quarter of 2008, the
cancellation of the 2008 Term Facility resulted in a write-off of the
unamortized deferred financing costs of $2,191 to interest
expense.  Additionally, during the fourth quarter of 2008, the
refinancing of the 2007 Credit Facility due to the 2009 Amendment resulted in a
write-off of a portion of the unamortized deferred financing costs of $1,921 to
interest expense.  During July 2007, the Company refinanced its
previous facilities (the Short-Term Line and the 2005 Credit Facility) resulting
in the write-off of the unamortized deferred financing costs of $3,568 to
interest expense.  The Company has incurred deferred financing costs
of $10,079 in total for the existing 2007 Credit
Facility.  Amortization expense for deferred financing costs,
including the write-off any unamortized costs upon refinancing credit
facilities, for the years ended December 31, 2009, 2008 and 2007 were $1,037,
$4,915 and $4,128, respectively.





(ii)
Deferred registration costs, which includes costs associated with preparing
Baltic Trading for a public offering.  These costs will be offset
against proceeds received from the proposed initial public
offering.  However if Baltic Trading’s public offering is aborted or
significantly delayed, these costs will be charged to the income statement as a
component of general and administrative expense instead of being offset against
the proceeds of  the offering.   The Company has
deferred registration costs of $834 and $0 at December 31, 2009 and 2008,
respectively.






F-29






13 - FIXED
ASSETS
  Fixed
      assets consist of the following:
  December
      31, 2009
              
              
              December
      31, 2008Fixed
      assets:Vessel
      equipment
              
              $
              2,118
              
              
              $
              958Leasehold
      improvements
              
              
              1,146
              
              
              
              1,146Furniture
      and fixtures
              
              
              347
              
              
              
              347Computer
      equipment
              
              
              401
              
              
              
              401Total
      cost
              
              
              4,012
              
              
              
              2,852Less:
      accumulated depreciation and amortization
              
              
              1,554
              
              
              
              1,140Total
              
              $
              2,458
              
              
              $
              1,712


14 – ACCOUNTS PAYABLE AND
ACCRUED EXPENSES




Accounts
      payable and accrued expenses consist of the following:




December
      31, 2009
            
            
            December
      31, 2008Accounts
      payable
            
            $
            3,171
            
            
            $
            4,371Accrued
      general and administrative expenses
            
            
            8,409
            
            
            
            5,937Accrued
      vessel operating expenses
            
            
            7,029
            
            
            
            7,037Total
            
            $
            18,609
            
            
            $
            17,345




15 - REVENUE FROM TIME
CHARTERS




Total
revenue earned on time charters, including revenue earned in vessel pools, for
the years ended December 31, 2009, 2008 and 2007 was $379,531, $405,370, and
$185,387 respectively.  Included in revenue for the year ended
December 31, 2009 is $442 received from loss of hire insurance associated with
unscheduled offhire associated with the Genco Hunter.   Included
in revenues for the year ended December 31, 2008 is $176 and $1,248 received
from loss of hire insurance associated with unscheduled offhire associated with
the Genco Trader and Genco Hunter, respectively.  Included in revenues
for the year ended December 31, 2007 is $400 received from loss of hire
insurance associated with the Genco Trader’s unscheduled off-hire due to repairs
and maintenance in the first half of 2007.  Additionally, included in
revenues for the years ended December 31, 2009, 2008 and 2007 was $2,600,
$22,829 and $2,878 of profit sharing revenue.   At December 31,
2009, future minimum time charter revenue, based on vessels committed to
noncancelable time charter contracts through January 29, 2010, will be
$273,263 during 2010, $97,219 during 2011 and $35,563 during 2012, assuming 20
days of off-hire due to any scheduled drydocking and no additional off-hire time
is incurred.  Additionally, future minimum revenue excludes revenue
earned for the six vessels currently in pool arrangements, namely the Genco
Predator, Genco Explorer, Genco Pioneer, Genco Progress, Genco Reliance and
Genco Sugar, as pool rates cannot be estimated.




16 - LEASE
PAYMENTS




In
September 2005, the Company entered into a 15-year lease for office space in New
York, New York.  The monthly rental is as follows:  Free
rent from September 1, 2005 to July 31, 2006, $40 per month from August 1, 2006
to August 31, 2010, $43 per month from September 1, 2010 to August 31, 2015, and
$46 per month from September 1, 2015 to August 31, 2020.  The monthly
straight-line rental expense from September 1, 2005 to August 31, 2020 is








F-30







will be
based on the prevailing market rate for the six months prior to the commencement
date of the extension term.  Rent expense for the years ended December
31, 2009, 2008 and 2007 was $467, $467 and $468, respectively. 
 Future
minimum rental payments on the above lease for the next five years and
thereafter are as follows: $496 for 2010, $518 for 2011 through 2014 and a total
of $3,097 for the remaining term of the lease.
 
 17 - SAVINGS
PLAN
  In August
2005, the Company established a 401(k) plan which is available to full-time
employees who meet the plan’s eligibility requirements.  This 401(k)
plan is a defined contribution plan, which permits employees to make
contributions up to maximum percentage and dollar limits allowable by IRS Code
Sections 401(k), 402(g), 404 and 415 with the Company matching up to the first
six percent of each employee’s salary on a dollar-for-dollar
basis.  The matching
contribution vests immediately.  For the years ended December 31,
2009, 2008 and 2007, the Company’s matching contributions to this plan were
$177, $166 and $127, respectively.




18- NONVESTED STOCK
AWARDS




On July
12, 2005, the Company’s board of directors approved the Genco Shipping and
Trading Limited 2005 Equity Incentive Plan (the “Plan”).  Under this
plan, the Company’s board of directors, the compensation committee, or another
designated committee of the board of directors may grant a variety of
stock-based incentive awards to employees, directors and consultants whom the
compensation committee (or other committee or the board of directors) believes
are key to the Company’s success.  Awards may consist of incentive
stock options, nonqualified stock options, stock appreciation rights, dividend
equivalent rights, nonvested stock, unrestricted stock and performance
shares.  The aggregate number of shares of common stock available for
award under the Plan is 2,000,000 shares.




Grants of
nonvested common stock to executives and employees vest ratably on each of the
four anniversaries of the determined vesting date.  Grants of
nonvested common stock to directors vest the earlier of the first anniversary of
the grant date or the date of the next annual shareholders’ meeting, which are
typically held during May.  Grants of nonvested common stock to the
Company’s Chairman, Peter C. Georgiopoulos, that are not granted as part of
grants made to all directors vest ratably on each of the ten anniversaries of
the vesting date.




On
January 10, 2008, the Board of Directors approved a grant of 100,000 shares of
nonvested common stock to Peter Georgiopoulos, Chairman of the Board, which
vests ratably on each of the ten anniversaries of the determined vesting date
beginning with November 15, 2008.  Additionally, on December 24, 2008,
the Board of Directors approved a grant of 75,000 shares of nonvested common
stock to Peter Georgiopoulos, Chairman of the Board, which also vests ratably on
each of the ten anniversaries of the determined vesting date beginning with
November 15, 2009.




The table
below summarizes the Company’s nonvested stock awards for the three years ended
December 31, 2009:




Year
      Ended December 31,2009
            
            
            2008
            
            
            2007Number
      of Shares
            
            
            Weighted
      Average Grant Date Price
            
            
            Number
      of Shares
            
            
            Weighted
      Average Grant Date Price
            
            
            Number
      of Shares
            
            
            Weighted
      Average Grant Date PriceOutstanding
      at January 1
            
            
            449,066
            
            
            $
            27.96
            
            
            
            231,881
            
            
            $
            34.32
            
            
            
            196,509
            
            
            $
            20.97Granted
            
            
            133,250
            
            
            
            22.68
            
            
            
            322,500
            
            
            
            25.34
            
            
            
            109,200
            
            
            
            49.72Vested
            
            
            (145,316
            )
            
            
            29.42
            
            
            
            (105,316
            )
            
            
            33.93
            
            
            
            (66,766
            )
            
            
            21.74Forfeited
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (7,062
            )
            
            
            20.03Outstanding
      at December 31
            
            
            437,000
            
            
            $
            25.86
            
            
            
            449,066
            
            
            $
            27.96
            
            
            
            231,881
            
            
            $
            34.22









F-31




The total
fair value of shares vested during the years ended December 31, 2009, 2008 and
2007 was $3,467, $3,614 and $3,682, respectively.
  For the
years ended December 31, 2009, 2008 and 2007, the Company recognized nonvested
stock amortization expense, which is included in general and administrative
expenses, as follows:
 
 Year
      Ended December 31,2009
              
              
              2008
              
              
              2007General
      and administrative expenses
              
              $
              4,220
              
              
              $
              5,953
              
              
              $
              2,078
  The
fair value of nonvested stock at the grant date is equal to the closing stock
price on that date.  The Company is amortizing these grants over the
applicable vesting periods, net of anticipated forfeitures.  As of
December 31, 2009, unrecognized compensation cost related to nonvested stock
will be recognized over a weighted average period of 4.71
years.




19 - LEGAL
      PROCEEDINGS




From time
to time the Company may be subject to legal proceedings and claims in the
ordinary course of its business, principally personal injury and property
casualty claims.  Such claims, even if lacking merit, could result in
the expenditure of significant financial and managerial
resources.  The Company is not aware of any legal proceedings or
claims that it believes will have, individually or in the aggregate, a material
adverse effect on the Company, its financial condition, results of operations or
cash flows.




20 – STOCK REPURCHASE
PROGRAM




On
February 13, 2008, the Company’s board of directors approved a share repurchase
program for up to a total of $50,000 of the Company's common
stock.  Share repurchases will be made from time to time for cash in
open market transactions at prevailing market prices or in privately negotiated
transactions.  The timing and amount of purchases under the program
will be determined by management based upon market conditions and other
factors.  Purchases may be made pursuant to a program adopted under
Rule 10b5-1 under the Securities Exchange Act.  The program does not
require the Company to purchase any specific number or amount of shares and may
be suspended or reinstated at any time in the Company's discretion and without
notice.  Repurchases will be subject to restrictions under the 2007
Credit Facility.  The 2007 Credit Facility was amended as of February
13, 2008 to permit the share repurchase program and provide that the dollar
amount of shares repurchased is counted toward the maximum dollar amount of
dividends that may be paid in any fiscal quarter.  Subsequently, on
January 26, 2009, the Company entered into the 2009 Amendment which amended the
2007 Credit Facility to require the Company to suspend all share repurchases
until the Company can represent that it is in a position to again satisfy the
collateral maintenance covenant.  Refer to Note 8 – Long-Term
Debt.




Since the
inception of the share repurchase program through December 31, 2009, the Company
repurchased and retired 278,300 shares of its common stock for
$11,500.  An additional 3,130 shares of common stock were repurchased
from employees for $41 during 2008 pursuant to the Company’s Equity Incentive
Plan rather than the share repurchase program.  No share repurchases
were made during the year ended December 31, 2009.





21 – UNAUDITED QUARTERLY
RESULTS OF OPERATIONS





In the
opinion of the Company’s management, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation have been
included on a quarterly basis.






F-32
  2009 Quarter Ended
                  
                  
                  
                  2008 Quarter EndedMar
      31
                  
                  
                  
                  Jun 30
                  
                  
                  
                  Sept 30
                  
                  
                  
                  Dec.
      31
                  
                  
                  
                  Mar
      31
                  
                  
                  
                  Jun
      30
                  
                  
                  
                  Sept 30
                  
                  
                  
                  Dec.
      31(In
      thousands, except per share amounts)Revenues
                  
                  $
                  96,650
                  
                  
                  $
                  93,701
                  
                  
                  $
                  92,949
                  
                  
                  $
                  96,231
                  
                  
                  $
                  91,669
                  
                  
                  $
                  104,572
                  
                  
                  $
                  107,557
                  
                  
                  $
                  101,572Operating
      income
                  
                  
                  55,148
                  
                  
                  
                  53,252
                  
                  
                  
                  50,224
                  
                  
                  
                  51,868
                  
                  
                  
                  85,286
                  
                  
                  
                  70,817
                  
                  
                  
                  70,615
                  
                  
                  
                  7,659Net
      income
                  
                  
                  41,241
                  
                  
                  
                  37,617
                  
                  
                  
                  34,271
                  
                  
                  
                  35,495
                  
                  
                  
                  73,987
                  
                  
                  
                  60,899
                  
                  
                  
                  62,999
                  
                  
                  
                  (111,305
                  )Earnings
      per share - Basic
                  
                  $
                  1.32
                  
                  
                  $
                  1.20
                  
                  
                  $
                  1.10
                  
                  
                  $
                  1.13
                  
                  
                  $
                  2.57
                  
                  
                  $
                  2.05
                  
                  
                  $
                  2.00
                  
                  
                  $
                  (3.56
                  )Earnings
      per share - Diluted
                  
                  $
                  1.32
                  
                  
                  $
                  1.20
                  
                  
                  $
                  1.09
                  
                  
                  $
                  1.13
                  
                  
                  $
                  2.56
                  
                  
                  $
                  2.03
                  
                  
                  $
                  1.99
                  
                  
                  $
                  (3.56
                  )Dividends
      declared and paid per share
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  –
                  
                  
                  $
                  0.85
                  
                  
                  $
                  1.00
                  
                  
                  $
                  1.00
                  
                  
                  $
                  1.00
 Weighted
      average common shares outstanding - Basic
            
            
            31,260
            
            
            
            31,268
            
            
            
            31,296
            
            
            
            31,355
            
            
            
            28,734
            
            
            
            29,750
            
            
            
            31,423
            
            
            
            31,230Weighted
      average common shares outstanding - Diluted
            
            
            31,351
            
            
            
            31,435
            
            
            
            31,473
            
            
            
            31,519
            
            
            
            28,914
            
            
            
            29,958
            
            
            
            31,610
            
            
            
            31,230




22 - SUBSEQUENT
EVENTS




On
February 19, 2010, Baltic Trading entered into agreements with subsidiaries of
an unaffiliated third-party seller to purchase four 2009 built Supramax drybulk
vessels for an aggregate price of approximately $140.0 million.  On
February 22, 2010, Baltic Trading also entered into agreements with subsidiaries
of another unaffiiated third-party seller to purchase two Capesize drybulk
vessels for an aggregate price of approximately $144.2 million. These Capesize
vessels are in the process of being built. The purchases are subject to the
completion of the planned initial public offering of Baltic Trading as well as
customary additional documentation and closing conditions. Following the
execution of these agreements, Baltic Trading paid cumulative deposits totaling
$35.5 million to the aforementioned unaffiliated parties using funds advanced by
the Company. Both Baltic Trading and the unaffiiated third-party sellers have
the option to cancel the purchase agreements described above if the planned
initial public offering of Baltic Trading is not completed by March 16, 2010, in
which event the deposits will be returned to Baltic Trading. Baltic Trading
intends to finance these vessels using proceeds from the planned offering as
well as from the sale of shares of Class B Stock to Genco Investments
LLC.





On
February 25, 2010, Baltic Trading entered into a commitment letter from Nordea
Bank Finland plc, acting through its New York branch (‘‘Nordea’’), for a $100
million senior secured revolving credit facility. Under the terms of the
commitment letter, the credit facility would have a maturity date of four years
after the date on which definitive documentation for the facility is executed,
and borrowings under the facility would bear interest at LIBOR plus an
applicable margin of 3.25% per annum. Upon closing of the credit facility, any
upfront fees paid will be deferred and amortized over the term of the credit
facility.





Entry
into the credit facility is subject to completion of the Company’s planned
initial public offering, a concurrent capital contribution to the Company from
the Parent, and customary conditions and documentation. Availability of the
credit facility is subject to the Company’s acquisition of at least five drybulk
carriers and other conditions and documentation relating to the collateral
securing the facility.






F-33
















ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 No
changes were made to, nor was there any disagreement with the Company's
independent registered public accounting firm regarding, the Company's
accounting or financial disclosure.
 
 ITEM
9A.  CONTROLS AND PROCEDURES
 
 EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
 
 Under the
supervision and with the participation of our management, including our
President and Chief Financial Officer, we have evaluated the effectiveness of
the design and operation of our disclosure controls and procedures
pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 as of the end of
the period covered by this Report.  Based upon that evaluation, our
President and Chief Financial Officer have concluded that our disclosure
controls and procedures are effective.





INTERNAL
CONTROL OVER FINANCIAL REPORTING





MANAGEMENT
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Our
management is responsible for establishing and maintaining effective internal
control over financial reporting.  Our internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.





Our
internal control over financial reporting includes those policies and procedures
that:





•
              pertain to the maintenance of
      records that, in reasonable detail, accurately and fairly reflect the
      transactions and dispositions of our
  assets;




•
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and




•
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become ineffective because of changes in conditions, or that the degree or
compliance with the policies or procedures may deteriorate.





Our
management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2009.  In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework.  Based on our assessment and those criteria, our management
believes that we maintained effective internal control over financial reporting
as of December 31, 2009.





Our
independent registered public accounting firm, Deloitte & Touche LLP, has
issued an attestation report on the Company’s internal control over financial
reporting.  The attestation report is included on page F-2 of this
report.





CHANGES
IN INTERNAL CONTROLS





There
have been no changes in our internal controls or over financial reporting that
occurred during our most recent fiscal quarter (the fourth fiscal quarter of
2009) that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.







75





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Genco
Shipping & Trading Limited


New York,
New York




We have
audited the internal control over financial reporting of Genco Shipping &
Trading Limited and subsidiaries (the "Company") as of December 31, 2009, based
on criteria established in Internal Control — Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission.  The Company's management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management Report on Internal Control over
FinancialReporting. Our
responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.  Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances.  We believe
that our audit provides a reasonable basis for our opinion.




A
company's internal control over financial reporting is a process designed by, or
under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company's internal control
over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.




Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis.  Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.




In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2009, based on the criteria
established in Internal
Control — Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.




We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and
for the year ended December 31, 2009 of the Company and our report dated March
1, 2010 expressed an unqualified opinion on those financial
statements.






/s/ DELOITTE & TOUCHE
LLP




New York,
New York


March 1,
2010







76





ITEM
9B.                      OTHER
INFORMATION





Not
applicable.









77





PART
III





ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Information
regarding our directors and executive officers is set forth in our Proxy
Statement for our 2010 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission not later than 120 days after December 31,
2009 (the “2010 Proxy Statement”) under the headings “Election of Directors” and
“Management” and is incorporated by reference herein.  Information relating
to our Code of Conduct and Ethics and to compliance with Section 16(a) of the
1934 Act is set forth in the 2010 Proxy Statement under the heading “Corporate
Governance” and is incorporated by reference herein.





We intend
to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding
amendment to, or waiver from, a provision of the Code of Ethics for Chief
Executive and Senior Financial Officers by posting such information on our
website, www.gencoshipping.com.





ITEM
11.  EXECUTIVE COMPENSATION





Information
regarding compensation of our executive officers and information with respect to
Compensation Committee Interlocks and Insider Participation in compensation
decisions is set forth in the 2010 Proxy Statement under the headings
“Management” and “Compensation Committee’s Report on Executive Compensation” and
is incorporated by reference herein.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





Information
regarding the beneficial ownership of shares of our common stock by certain
persons is set forth in the 2010 Proxy Statement under the heading “Security
Ownership of Certain Beneficial Owners and Management” and is incorporated by
reference herein.





ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDPEENDENCE





Information
regarding certain of our transactions is set forth in the 2010 Proxy Statement
under the heading “Certain Relationships and Related Transactions” and is
incorporated by reference herein.





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Information
regarding our accountant fees and services is set forth in the 2010 Proxy
Statement under the heading “Ratification of Appointment of Independent
Auditors” and is incorporated by reference herein.






PART
IV





ITEM
15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




(a)         The
following documents are filed as a part of this report:





1.
            
            The
      financial statements listed in the “Index to Consolidated Financial
      Statements”2.
            
            The
      financial statement schedules included in the financial
      statements.3.
            
            Exhibits:3.1
            
            Amended
      and Restated Articles of Incorporation of Genco Shipping & Trading
      Limited (1)3.2
            
            Articles
      of Amendment of Articles of Incorporation of Genco Shipping & Trading
      Limited as adopted July 21, 2005
(2)








78





3.3
            
            Articles
      of Amendment of Articles of Incorporation of Genco Shipping & Trading
      Limited as adopted May 18, 2006 (3)3.4
            
            Certificate
      of Designations of Series A Preferred Stock (4)3.5
            
            Amended
      and Restated By-Laws of Genco Shipping & Trading Limited, dated as of
      April 9, 2007 (4)4.1
            
            Form
      of Share Certificate of the Company (5)4.2
            
            Shareholder
      Rights Agreement, dated as of April 11, 2007, between Genco Shipping &
      Trading Limited and Mellon Investor Services LLC, as Rights Agent
      (4)10.1
            
            Registration
      Rights Agreement (5)10.2
            
            2005
      Equity Incentive Plan, as amended and restated effective December 31, 2005
      (6)10.3
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Explorer Limited
      (1)10.4
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Pioneer Limited
      (1)10.5
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Progress Limited
      (1)10.6
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Reliance Limited
      (1)10.7
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Sugar Limited
      (1)10.8
            
            Restricted
      Stock Grant Agreement dated October 31, 2005 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (7)10.9
            
            Restricted
      Stock Grant Agreement dated October 31, 2005 between Genco Shipping &
      Trading Limited and John C. Wobensmith (7)10.10
            
            Restricted
      Stock Grant Agreement dated December 21, 2005 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (7)10.11
            
            Restricted
      Stock Grant Agreement dated December 21, 2005 between Genco Shipping &
      Trading Limited and John C. Wobensmith (7)10.12
            
            Restricted
      Stock Grant Agreement dated December 22, 2006 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (8)10.13
            
            Restricted
      Stock Grant Agreement dated December 22, 2006 between Genco Shipping &
      Trading Limited and John C. Wobensmith (8)10.14
            
            Restricted
      Stock Grant Agreement dated December 21, 2007 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (9)10.15
            
            Restricted
      Stock Grant Agreement dated December 21, 2007 between Genco Shipping &
      Trading Limited and John C. Wobensmith (9)10.16
            
            Restricted
      Stock Grant Agreement dated January 10, 2008 between Genco Shipping &
      Trading Limited and Peter C. Georgiopoulos
(9)   79
   10.17
            
            Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (10)10.18
            
            Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and John C. Wobensmith (10)10.19
            
            Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and Peter C. Georgiopoulos (10)10.20
            
            Restricted
      Stock Grant Agreement dated December 27, 2009 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (*)10.21
            
            Restricted
      Stock Grant Agreement dated December 27, 2009 between Genco Shipping &
      Trading Limited and John C. Wobensmith (*)10.22
            
            Form
      of Director Restricted Stock Grant Agreement dated as of February 13, 2008
      (9)10.23
            
            Form of Director Restricted Stock Grant Agreement dated as of July 24,
      2008 (11)10.24
            
            Form
      of Director Restricted Stock Grant Agreement dated as of July 24, 2009
      (12)10.25
            
            Master
      Agreement by and between Genco Shipping & Trading Limited and
      Metrostar Management Corporation (13)10.26
            
            Form
      of Memorandum of Agreement dated as of August 8, 2007 by and
      between Subsidiaries of Genco Shipping & Trading Limited and
      affiliates of Evalend Shipping Co. S.A. (14)10.27
            
            Memorandum
      of Agreement dated as of May 7, 2008 by and among Genco Cavalier LLC,
      Bocimar International N.V., and Delphis N.V. (11)10.28
            
            Form
      of Memorandum of Agreement dated as of May 7, 2008 by and between
      subsidiaries of Genco Shipping & Trading Limited and Bocimar
      International N.V. (11)10.29
            
            Form
      of Memorandum of Agreement dated as of June 13, 2008 for acquisition of
      vessels from Lambert Navigation Ltd., Northville Navigation Ltd.,
      Providence Navigation Ltd., and Prime Bulk Navigation Ltd.
      (11)10.30
            
            Credit
      Agreement, dated as of July 20, 2007, among Genco Shipping & Trading
      Limited, Various Lenders, DnB NOR Bank ASA, New York Branch, as
      Administrative Agent and Collateral Agent, and DnB NOR Bank ASA, New York
      Branch, as Mandated Lead Arranger and Bookrunner (15)10.31
            
            Pledge
      and Security Agreement, dated as of July 20, 2007, by Genco Augustus
      Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine
      Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus
      Limited, Genco Tiberius Limited and Genco Titus Limited, as pledgors, to
      DnB NOR Bank, ASA, New York Branch, as Collateral Agent, for the benefit
      of the Secured Creditors and Nordea Bank Finland PLC, New York Branch, as
      Deposit Account Bank (15)10.32
            
            Guaranty,
      dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius
      Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian
      Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius
      Limited and Genco Titus Limited, as guarantors, for the benefit of the
      Secured Creditors (15)







80





10.33
            
            Amendment
      and Supplement No. 1 to Senior Secured Credit Agreement, dated as of
      September 21, 2007, among Genco Shipping & Trading Limited, the
      lenders party thereto, and DNB NOR Bank ASA, New York Branch, as
      Administrative Agent.  (16)10.34
            
            Amendment
      and Supplement No. 2 to Senior Secured Credit Agreement, dated as of
      February 13, 2008, among Genco Shipping & Trading Limited, the lenders
      party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative
      Agent (9)10.35
            
            Amendment
      and Supplement No. 3 to Senior Secured Credit Agreement, dated as of June
      18, 2008, by and among Genco Shipping & Trading Limited, the lenders
      signatory thereto, and DnB NOR BANK ASA, New York Branch, as
      Administrative Agent, Collateral Agent, Mandated Lead Arranger and
      Bookrunner.  (11)10.36
            
            Amendment
      and Supplement No. 4 to Senior Secured Credit Agreement, dated as of
      January 26, 2009, among Genco Shipping & Trading Limited, the lenders
      party thereto, DNB NOR Bank ASA, New York Branch, as Administrative Agent,
      mandated lead arranger, bookrunner, security trustee and collateral agent,
      and Bank of Scotland PLC, as mandated lead
      arranger.  (10)10.37
            
            Letter
      Agreement, dated September 21, 2007, between Genco Shipping & Trading
      Limited and John C. Wobensmith.  (16)14.1
            
            Code
      of Ethics (9)21.1
            
            Subsidiaries
      of Genco Shipping & Trading Limited (*)23.1
            
            Consent
      of Independent Registered Public Accounting Firm (*)31.1
            
            Certification
      of President pursuant to Rule 13(a)-14(a) and 15(d)-14(a) of the
      Securities Exchange Act of 1934, as amended (*)31.2
            
            Certification
      of Chief Financial Officer pursuant to Rule 13(a)-14(a) and 15(d)-14(a) of
      the Securities Exchange Act of 1934, as amended (*)32.1
            
            Certification
      of President pursuant to 18 U.S.C. Section 1350 (*)32.2
            
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
      (*)




(*)
            
            Filed
      herewith.(1)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 6, 2005.(2)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 21, 2005.(3)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on May 18,
      2006.(4)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on April 9,
      2007.(5)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 18, 2005.(6)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on November 4,
      2005.(7)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      27, 2006.(8)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      9, 2007.   81
   (9)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      29, 2008.(10)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on March 2,
      2009.(11)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on August 8,
      2008.(12)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on November 11,
      2009.(13)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on July 18,
      2007.(14)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on November 9,
      2007.(15)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on July 26,
      2007.(16)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on September 21,
      2007.







82


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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 on March 1, 2010.








GENCO
      SHIPPING & TRADING LIMITEDBy:
            /s/
      Robert Gerald BuchananName:
      Robert Gerald BuchananTitle:  
      President and Principal Executive Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant and in the
capacity and on March 1, 2010.





SIGNATURE
            
            TITLE/s/
      Robert Gerald Buchanan
            
            PRESIDENTRobert
      Gerald Buchanan
            
            (PRINCIPAL
      EXECUTIVE OFFICER)/s/
      John C. Wobensmith
            
            CHIEF
      FINANCIAL OFFICER, SECRETARY AND TREASURERJohn
      C. Wobensmith
            
            (PRINCIPAL
      FINANCIAL AND ACCOUNTING OFFICER)/s/
      Peter C. Georgiopoulos
            
            CHAIRMAN
      OF THE BOARD AND DIRECTORPeter
      C. Georgiopoulos/s/
      Stephen A. Kaplan
            
            DIRECTORStephen
      A. Kaplan/s/
      Nathaniel C. A. Kramer
            
            DIRECTORNathaniel
      C. A. Kramer/s/
      Harry A. Perrin
            
            DIRECTORHarry
      A. Perrin/s/
      Mark F. Polzin
            
            DIRECTORMark
      F. Polzin/s/
      Robert C. North
            
            DIRECTORRear
      Admiral Robert C. North, USCG (ret.)/s/
      Basil G. Mavroleon
            
            DIRECTORBasil
      G. Mavroleon










83


EXHIBIT
INDEX





Exhibit                        Document


3.1
            
            Amended
      and Restated Articles of Incorporation of Genco Shipping & Trading
      Limited (1)3.2
            
            Articles
      of Amendment of Articles of Incorporation of Genco Shipping & Trading
      Limited as adopted July 21, 2005 (2)3.3
            
            Articles
      of Amendment of Articles of Incorporation of Genco Shipping & Trading
      Limited as adopted May 18, 2006 (3)3.4
            
            Certificate
      of Designations of Series A Preferred Stock (4)3.5
            
            Amended
      and Restated By-Laws of Genco Shipping & Trading Limited, dated as of
      April 9, 2007 (4)4.1
            
            Form
      of Share Certificate of the Company (5)4.2
            
            Shareholder
      Rights Agreement, dated as of April 11, 2007, between Genco Shipping &
      Trading Limited and Mellon Investor Services LLC, as Rights Agent
      (4)10.1
            
            Registration
      Rights Agreement (5)10.2
            
            2005
      Equity Incentive Plan, as amended and restated effective December 31, 2005
      (6)10.3
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Explorer Limited
      (1)10.4
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Pioneer Limited
      (1)10.5
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Progress Limited
      (1)10.6
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Reliance Limited
      (1)10.7
            
            Time
      Charter Party Between Lauritzen Bulkers A/S and Genco Sugar Limited
      (1)10.8
            
            Restricted
      Stock Grant Agreement dated October 31, 2005 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (7)10.9
            
            Restricted
      Stock Grant Agreement dated October 31, 2005 between Genco Shipping &
      Trading Limited and John C. Wobensmith (7)10.10
            
            Restricted
      Stock Grant Agreement dated December 21, 2005 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (7)10.11
            
            Restricted
      Stock Grant Agreement dated December 21, 2005 between Genco Shipping &
      Trading Limited and John C. Wobensmith (7)10.12
            
            Restricted
      Stock Grant Agreement dated December 22, 2006 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (8)10.13
            
            Restricted
      Stock Grant Agreement dated December 22, 2006 between Genco Shipping &
      Trading Limited and John C. Wobensmith (8)   84
   10.14
              
              Restricted
      Stock Grant Agreement dated December 21, 2007 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (9)10.15
              
              Restricted
      Stock Grant Agreement dated December 21, 2007 between Genco Shipping &
      Trading Limited and John C. Wobensmith (9)10.16
              
              Restricted
      Stock Grant Agreement dated January 10, 2008 between Genco Shipping &
      Trading Limited and Peter C. Georgiopoulos
(9)
 10.17
              
              Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (10)10.18
              
              Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and John C. Wobensmith (10)10.19
              
              Restricted
      Stock Grant Agreement dated December 24, 2008 between Genco Shipping &
      Trading Limited and Peter C. Georgiopoulos (10)10.20
              
              Restricted
      Stock Grant Agreement dated December 27, 2009 between Genco Shipping &
      Trading Limited and Robert Gerald Buchanan (*)10.21
              
              Restricted
      Stock Grant Agreement dated December 27, 2009 between Genco Shipping &
      Trading Limited and John C. Wobensmith (*)10.22
              
              Form
      of Director Restricted Stock Grant Agreement dated as of February 13, 2008
      (9)10.23
              
              Form of Director Restricted Stock Grant Agreement dated as of July 24,
      2008 (11)10.24
              
              Form
      of Director Restricted Stock Grant Agreement dated as of July 24, 2009
      (12)10.25
              
              Master
      Agreement by and between Genco Shipping & Trading Limited and
      Metrostar Management Corporation (13)10.26
              
              Form
      of Memorandum of Agreement dated as of August 8, 2007 by and
      between Subsidiaries of Genco Shipping & Trading Limited and
      affiliates of Evalend Shipping Co. S.A. (14)10.27
              
              Memorandum
      of Agreement dated as of May 7, 2008 by and among Genco Cavalier LLC,
      Bocimar International N.V., and Delphis N.V. (11)10.28
              
              Form
      of Memorandum of Agreement dated as of May 7, 2008 by and between
      subsidiaries of Genco Shipping & Trading Limited and Bocimar
      International N.V. (11)10.29
              
              Form
      of Memorandum of Agreement dated as of June 13, 2008 for acquisition of
      vessels from Lambert Navigation Ltd., Northville Navigation Ltd.,
      Providence Navigation Ltd., and Prime Bulk Navigation Ltd.
      (11)10.30
              
              Credit
      Agreement, dated as of July 20, 2007, among Genco Shipping & Trading
      Limited, Various Lenders, DnB NOR Bank ASA, New York Branch, as
      Administrative Agent and Collateral Agent, and DnB NOR Bank ASA, New York
      Branch, as Mandated Lead Arranger and Bookrunner (15)10.31
              
              Pledge
      and Security Agreement, dated as of July 20, 2007, by Genco Augustus
      Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine
      Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus
      Limited, Genco Tiberius Limited and Genco Titus Limited, as pledgors, to
      DnB NOR Bank, ASA, New York Branch, as Collateral Agent, for the benefit
      of the Secured Creditors and Nordea Bank Finland PLC, New York Branch, as
      Deposit Account Bank (15)    85
   10.32
              
              Guaranty,
      dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius
      Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian
      Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius
      Limited and Genco Titus Limited, as guarantors, for the benefit of the
      Secured Creditors (15) 10.33
                
                Amendment
      and Supplement No. 1 to Senior Secured Credit Agreement, dated as of
      September 21, 2007, among Genco Shipping & Trading Limited, the
      lenders party thereto, and DNB NOR Bank ASA, New York Branch, as
      Administrative Agent.  (16)10.34
                
                Amendment
      and Supplement No. 2 to Senior Secured Credit Agreement, dated as of
      February 13, 2008, among Genco Shipping & Trading Limited, the lenders
      party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative
      Agent (9)10.35
                
                Amendment
      and Supplement No. 3 to Senior Secured Credit Agreement, dated as of June
      18, 2008, by and among Genco Shipping & Trading Limited, the lenders
      signatory thereto, and DnB NOR BANK ASA, New York Branch, as
      Administrative Agent, Collateral Agent, Mandated Lead Arranger and
      Bookrunner.  (11)10.36
                
                Amendment
      and Supplement No. 4 to Senior Secured Credit Agreement, dated as of
      January 26, 2009, among Genco Shipping & Trading Limited, the lenders
      party thereto, DNB NOR Bank ASA, New York Branch, as Administrative Agent,
      mandated lead arranger, bookrunner, security trustee and collateral agent,
      and Bank of Scotland PLC, as mandated lead
      arranger.  (10)10.37
                
                Letter
      Agreement, dated September 21, 2007, between Genco Shipping & Trading
      Limited and John C. Wobensmith.  (16)14.1
                
                Code
      of Ethics (9)21.1
                
                Subsidiaries
      of Genco Shipping & Trading Limited (*)23.1
                
                Consent
      of Independent Registered Public Accounting Firm (*)31.1
                
                Certification
      of President pursuant to Rule 13(a)-14(a) and 15(d)-14(a) of the
      Securities Exchange Act of 1934, as amended (*)31.2
                
                Certification
      of Chief Financial Officer pursuant to Rule 13(a)-14(a) and 15(d)-14(a) of
      the Securities Exchange Act of 1934, as amended (*)32.1
                
                Certification
      of President pursuant to 18 U.S.C. Section 1350 (*)32.2
                
                Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
      (*)
 (*)
                  
                  Filed
      herewith.(1)
                  
                  Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 6, 2005.(2)
                  
                  Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 21, 2005.(3)
                  
                  Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on May 18,
      2006.   86








(4)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on April 9,
      2007.(5)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Registration
      Statement on Form S-1/A, filed with the Securities and Exchange Commission
      on July 18, 2005.(6)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on November 4,
      2005.(7)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      27, 2006.(8)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      9, 2007.(9)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on February
      29, 2008.(10)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Annual Report on
      Form 10-K, filed with the Securities and Exchange Commission on March 2,
      2009.(11)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on August 8,
      2008.(12)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on November 11,
      2009.(13)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on July 18,
      2007.(14)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form
      10-Q, filed with the Securities and Exchange Commission on November 9,
      2007.(15)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on July 26,
      2007.(16)
            
            Incorporated
      by reference to Genco Shipping & Trading Limited's Report on Form 8-K,
      filed with the Securities and Exchange Commission on September 21,
      2007.