Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**x****      QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended March 31, 2010**

 

**OR**

 

**o****         TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thetransition period from                                                  to                                                  **

 

**Commissionfile number****000-51442**

 

----

 

**GENCO SHIPPING & TRADING LIMITED**

(Exact name ofregistrant as specified in its charter)

 

| **Republic  of the Marshall Islands**(State or other  jurisdiction of  incorporation or organization) | ** ** | **98-043-9758**(I.R.S.  Employer  Identification No.) |
|-------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------|

 

| **299  Park Avenue, 20****th**** Floor, New  York, New York** | ** ** | **10171**  |
|--------------------------------------------------------------------|------------|------------|
| (Address of principal  executive offices)                          |       | (Zip Code) |

 

**(646)443-8550**

(Registrant’stelephone number, including area code)

 

----

 

Indicate by check markwhether the registrant: (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes xNo o

 

Indicate bycheck mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).  Yes oNoo

 

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

 
| Large accelerated filer x                                            | Accelerated filer o         |
|----------------------------------------------------------------------|-----------------------------|
|                                                                 |                        |
| Non-accelerated filer o(Do not check if a smaller reporting company) | Smaller reporting company o |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o No x

 

The number of sharesoutstanding of each of the issuer’s classes of common stock, as of May 10,2010:

Common stock,$0.01 per share — 31,917,798 shares.

 

 

 

----

Table of Contents

 

**GencoShipping & Trading Limited**

 
| ** ** | ** **                                                                                  | **Page**                                                                                                            |
|------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|       |                                                                                        |                                                                                                                |
|       | PART I —  FINANCIAL INFORMATION                                                   |                                                                                                                |
|       |                                                                                        |                                                                                                                |
| Item 1.    | Financial Statements  (unaudited)                                                           |                                                                                                                |
|       |                                                                                        |                                                                                                                |   |
|       | a)                                                                                          | Condensed  Consolidated Balance Sheets as of March 31, 2010 and December 31,  2009                        | 2 |
|       |                                                                                        |                                                                                                                |   |
|       | b)                                                                                          | Condensed  Consolidated Statements of Operations for the Three Months ended  March 31, 2010 and 2009           | 3 |
|       |                                                                                        |                                                                                                                |   |
|       | c)                                                                                          | Condensed  Consolidated Statements of Equity for the Three Months ended March 31,  2010 and 2009               | 4 |
|       |                                                                                        |                                                                                                                |   |
|       | d)                                                                                          | Condensed  Consolidated Statements of Comprehensive Income for the Three Months ended  March 31, 2010 and 2009 | 5 |
|       |                                                                                        |                                                                                                                |   |
|       | e)                                                                                          | Condensed  Consolidated Statements of Cash Flow for the Three Months ended  March 31, 2010 and 2009            | 6 |
|       |                                                                                        |                                                                                                                |   |
|       | f)                                                                                          | Notes to  Condensed Consolidated Financial Statements for the Three Months ended  March 31, 2010 and 2009      | 7 |
|       |                                                                                        |                                                                                                                |   |
| Item 2.    | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 23                                                                                                                  |
|       |                                                                                        |                                                                                                                |   |
| Item 3.    | Quantitative  and Qualitative Disclosures About Market Risk                                 | 37                                                                                                                  |
|       |                                                                                        |                                                                                                                |   |
| Item 4.    | Controls and  Procedures                                                                    | 38                                                                                                                  |
|       |                                                                                        |                                                                                                                |   |
|       |                                                                                        | PART II OTHER INFORMATION                                                                                      |   |
|       |                                                                                        |                                                                                                                |   |
| Item 1.    | Legal Proceedings                                                                           | 39                                                                                                                  |
|       |                                                                                        |                                                                                                                |   |
| Item 2.    | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 39                                                                                                                  |
|       |                                                                                        |                                                                                                                |   |
| Item 6.    | Exhibits                                                                                    | 40                                                                                                                  |

 

1

----

Table of Contents

 

**Genco Shipping & Trading Limited**

CondensedConsolidated Balance Sheets as of March 31, 2010 and December 31,2009

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

(Unaudited)

 
| ** **                                                                                                                                                                         | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Assets                                                                                                                                                                             |       |                     |       |                        |       |
| Current assets:                                                                                                                                                                    |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                                                          |       | $                        | 405,483    |                        | $          | 188,267 |   |
| Restricted cash                                                                                                                                                                    |       | 17,500                   |       | 17,500                      |       |
| Due from charterers, net of a reserve of $287 and  $171, respectively                                                                                                              |       | 2,430                    |       | 2,117                       |       |
| Prepaid expenses and other current assets                                                                                                                                          |       | 11,642                   |       | 10,184                      |       |
| Total current assets                                                                                                                                                               |       | 437,055                  |       | 218,068                     |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Noncurrent assets:                                                                                                                                                                 |       |                     |       |                        |       |
| Vessels, net of accumulated depreciation of  $248,218 and $224,706, respectively                                                                                                   |       | 2,000,180                |       | 2,023,506                   |       |
| Deposits on vessels                                                                                                                                                                |       | 35,674                   |       | —                      |       |
| Deferred drydock, net of accumulated depreciation  of $4,891 and $4,384, respectively                                                                                              |       | 10,556                   |       | 10,153                      |       |
| Other assets, net of accumulated amortization of  $2,849 and $2,585, respectively                                                                                                  |       | 7,601                    |       | 8,328                       |       |
| Fixed assets, net of accumulated depreciation and  amortization of $1,672 and $1,554, respectively                                                                                 |       | 2,418                    |       | 2,458                       |       |
| Fair value of derivative instruments                                                                                                                                               |       | 372                      |       | 2,108                       |       |
| Investments                                                                                                                                                                        |       | 76,423                   |       | 72,181                      |       |
| Total noncurrent assets                                                                                                                                                            |       | 2,133,224                |       | 2,118,734                   |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Total assets                                                                                                                                                                       |       | $                        | 2,570,279  |                        | $          | 2,336,802 |   |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Liabilities and Equity                                                                                                                                                             |       |                     |       |                        |       |
| Current liabilities:                                                                                                                                                               |       |                     |       |                        |       |
| Accounts payable and accrued expenses                                                                                                                                              |       | $                        | 20,142     |                        | $          | 18,609 |   |
| Current portion of long term debt                                                                                                                                                  |       | 50,000                   |       | 50,000                      |       |
| Fair value of derivative instruments                                                                                                                                               |       | 1,020                    |       | —                      |       |
| Deferred revenue                                                                                                                                                                   |       | 9,217                    |       | 10,404                      |       |
| Total current liabilities                                                                                                                                                          |       | 80,379                   |       | 79,013                      |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Noncurrent liabilities:                                                                                                                                                            |       |                     |       |                        |       |
| Deferred revenue                                                                                                                                                                   |       | 2,221                    |       | 2,427                       |       |
| Deferred rent credit                                                                                                                                                               |       | 682                      |       | 687                         |       |
| Fair market value of time charters acquired                                                                                                                                        |       | 3,278                    |       | 4,611                       |       |
| Fair value of derivative instruments                                                                                                                                               |       | 45,062                   |       | 44,139                      |       |
| Long-term debt                                                                                                                                                                     |       | 1,264,500                |       | 1,277,000                   |       |
| Total noncurrent liabilities                                                                                                                                                       |       | 1,315,743                |       | 1,328,864                   |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Total liabilities                                                                                                                                                                  |       | 1,396,122                |       | 1,407,877                   |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Commitments and contingencies                                                                                                                                                      |       | —                   |       | —                      |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Equity:                                                                                                                                                                            |       |                     |       |                        |       |
| Genco Shipping & Trading Limited  shareholders’ equity:                                                                                                              |       |                     |       |                        |       |
| Common stock, par value $0.01; 100,000,000 shares  authorized; issued and outstanding 31,917,798 and 31,842,798 shares at  March 31, 2010 and December 31, 2009, respectively |       | 319                      |       | 318                         |       |
| Paid-in capital                                                                                                                                                                    |       | 720,667                  |       | 722,198                     |       |
| Accumulated other comprehensive income                                                                                                                                             |       | 14,131                   |       | 13,589                      |       |
| Retained earnings                                                                                                                                                                  |       | 226,270                  |       | 192,820                     |       |
| Total Genco Shipping & Trading Limited  shareholders’ equity                                                                                                         |       | 961,387                  |       | 928,925                     |       |
| Noncontrolling interest                                                                                                                                                            |       | 212,770                  |       | —                      |       |
| Total equity                                                                                                                                                                       |       | 1,174,157                |       | 928,925                     |       |
|                                                                                                                                                                               |       |                     |       |                        |       |
| Total liabilities and equity                                                                                                                                                       |       | $                        | 2,570,279  |                        | $          | 2,336,802 |   |

 

See accompanying notes to unaudited condensed consolidated financialstatements.

 

2

----

Table of Contents

 

**Genco Shipping & Trading Limited**

CondensedConsolidated Statements of Operations for the Three Months Ended March 31,2010 and 2009

(U.S. Dollars inThousands, Except for Earnings per share and share data)

(Unaudited)

 
| ** **                                                            | ** ** | **For the Three Months********Ended March 31,** | ** ** |
|-----------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                            | ** ** | **2010**                                             | ** ** | **2009** | ** ** |
|                                                                  |       |                                                 |       |   |   |
| Revenues                                                              |       | $                                                    | 94,681     |   | $ | 96,650 |   |
|                                                                  |       |                                                 |       |   |   |
| Operating  expenses:                                                  |       |                                                 |       |   |   |
| Voyage  expenses                                                      |       | 737                                                  |       | 1,579 |   |
| Vessel  operating expenses                                            |       | 14,887                                               |       | 14,202 |   |
| General,  administrative and management fees                          |       | 5,797                                                |       | 4,772 |   |
| Depreciation  and amortization                                        |       | 24,834                                               |       | 20,949 |   |
|                                                                  |       |                                                 |       |   |   |
| Total  operating expenses                                             |       | 46,255                                               |       | 41,502 |   |
|                                                                  |       |                                                 |       |   |   |
| Operating  income                                                     |       | 48,426                                               |       | 55,148 |   |
|                                                                  |       |                                                 |       |   |   |
| Other  (expense) income:                                              |       |                                                 |       |   |   |
| Other  income                                                         |       | 29                                                   |       | 18 |   |
| Interest  income                                                      |       | 76                                                   |       | 23 |   |
| Interest expense                                                      |       | (15,430                                              | )          | (13,948 | ) |
|                                                                  |       |                                                 |       |   |   |
| Other  expense                                                        |       | (15,325                                              | )          | (13,907 | ) |
|                                                                  |       |                                                 |       |   |   |
| Net  income                                                           |       | 33,101                                               |       | 41,241 |   |
| Less:  Net loss attributable to noncontrolling interest               |       | (349                                                 | )          | — |   |
| Net  income attributable to Genco Shipping & Trading Limited |       | $                                                    | 33,450     |   | $ | 41,241 |   |
|                                                                  |       |                                                 |       |   |   |
| Earnings  per share-basic                                             |       | $                                                    | 1.07       |   | $ | 1.32 |   |
| Earnings  per share-diluted                                           |       | $                                                    | 1.06       |   | $ | 1.32 |   |
| Weighted  average common shares outstanding-basic                     |       | 31,405,798                                           |       | 31,260,482 |   |
| Weighted  average common shares outstanding-diluted                   |       | 31,543,465                                           |       | 31,351,390 |   |
| Dividends  declared per share                                         |       | $                                                    | —     |   | $ | — |   |

 

See accompanyingnotes to unaudited condensed consolidated financial statements

 

3

----

Table of Contents

 

**Genco Shipping & Trading Limited**CondensedConsolidated Statement of Equity

For the Three Months Ended March 31, 2010 and March 31,2009

(U.S. Dollars in Thousands)

(Unaudited)

 
| ** **                                                                      | ** ** | **Common  Stock** | ** ** | **Paid in  Capital** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Income** | ** ** | **Genco  Shipping &  Trading  Limited  Shareholders’  Equity** | ** ** | **Noncontrolling  Interest** | ** ** | **Total  Equity** | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------|------------|----------------------|------------|------------------------|------------|-----------------------------------------------|------------|------------------------------------------------------------------------------|------------|------------------------------|------------|-------------------|------------|
| Balance  — January 1, 2010                                            |       | $                 | 318        |                 | $          | 722,198                |       | $                                             | 192,820    |                                                                         | $          | 13,589                       |       | $                 | 928,925    |   | $ | — |   | $ | 928,925 |   |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Net  income (loss)                                                              |       |              |       |                 |       | 33,450                 |       |                                          |       | 33,450                                                                       |       | (349                         | )          | 33,101            |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Change  in unrealized gain on investments                                       |       |              |       |                 |       |                   |       | 5,168                                         |       | 5,168                                                                        |       |                         |       | 5,168             |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Change  in currency translation gain on investments                             |       |              |       |                 |       |                   |       | (925                                          | )          | (925                                                                         | )          |                         |       | (925              | )          |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Unrealized  loss on cash flow hedges, net                                       |       |              |       |                 |       |                   |       | (3,701                                        | )          | (3,701                                                                       | )          |                         |       | (3,701            | )          |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Issuance  of 75,000 shares of nonvested stock                                   |       | 1                 |       | (1                   | )          |                   |       |                                          |       | —                                                                       |       |                         |       | —            |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Nonvested  stock amortization                                                   |       |              |       | 1,111                |       |                   |       |                                          |       | 1,111                                                                        |       | 144                          |       | 1,255             |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Issuance  of common stock of Baltic Trading Limited                             |       |              |       | (1,071               | )          |                   |       |                                          |       | (1,071                                                                       | )          | 211,405                      |       | 210,334           |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Dilutive  effect of issuance of Baltic Trading Limited stock-based compensation |       |              |       | (1,570               | )          |                   |       |                                          |       | (1,570                                                                       | )          | 1,570                        |       | —            |       |
|                                                                            |       |              |       |                 |       |                   |       |                                          |       |                                                                         |       |                         |       |              |       |
| Balance  — March 31, 2010                                             |       | $                 | 319        |                 | $          | 720,667                |       | $                                             | 226,270    |                                                                         | $          | 14,131                       |       | $                 | 961,387    |   | $ | 212,770 |   | $ | 1,174,157 |   |

 
| ** **                                          | ** ** | **Common  Stock** | ** ** | **Paid in  Capital** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Deficit** | ** ** | **Genco  Shipping &   Trading  Limited  Shareholders’ Equity** | ** ** | **Noncontrolling  Interest** | ** ** | **Total  Equity** | ** ** |
|-----------------------------------------------------|------------|-------------------|------------|----------------------|------------|------------------------|------------|------------------------------------------------|------------|------------------------------------------------------------------------------|------------|------------------------------|------------|-------------------|------------|
| Balance  — January 1, 2009                |       | $                 | 317        |                 | $          | 717,979                |       | $                                              | 44,196     |                                                                         | $          | (66,014                      | )          | $                 | 696,478    |   | $ | — |   | $ | 696,478 |   |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Net  income                                         |       |              |       |                 |       | 41,241                 |       |                                           |       | 41,241                                                                       |       |                         |       | 41,241            |       |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Change  in unrealized gain on investments           |       |              |       |                 |       |                   |       | 5,544                                          |       | 5,544                                                                        |       |                         |       | 5,544             |       |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Change  in currency translation gain on investments |       |              |       |                 |       |                   |       | 719                                            |       | 719                                                                          |       |                         |       | 719               |       |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Unrealized  gain on cash flow hedges, net           |       |              |       |                 |       |                   |       | 4,281                                          |       | 4,281                                                                        |       |                         |       | 4,281             |       |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Nonvested  stock amortization                       |       |              |       | 1,232                |       |                   |       |                                           |       | 1,232                                                                        |       |                         |       | 1,232             |       |
|                                                |       |              |       |                 |       |                   |       |                                           |       |                                                                         |       |                         |       |              |       |
| Balance  — March 31, 2009                 |       | $                 | 317        |                 | $          | 719,211                |       | $                                              | 85,437     |                                                                         | $          | (55,470                      | )          | $                 | 749,495    |   | $ | — |   | $ | 749,495 |   |

 

See accompanying notes to unaudited condensedconsolidated financial statements.

 

4

----

Table ofContents

 

**Genco Shipping & Trading Limited**

Condensed ConsolidatedStatements of Comprehensive Income

For the Three Months Ended March 31, 2010 and2009(U.S. Dollars in Thousands)

 

(Unaudited)

 
| ** **                                                                      | ** ** | **For the Three Months********Ended March 31,** | ** ** |
|---------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                      | ** ** | **2010**                                             | ** ** | **2009** | ** ** |
|                                                                            |       |                                                 |       |   |   |
| Net  income                                                                     |       | $                                                    | 33,101     |   | $ | 41,241 |   |
| Change  in unrealized gain on investments                                       |       | 5,168                                                |       | 5,544 |   |
| Change  in currency translation gain on investments                             |       | (925                                                 | )          | 719 |   |
| Unrealized  (loss) gain on cash flow hedges, net                                |       | (3,701                                               | )          | 4,281 |   |
| Comprehensive  income                                                           |       | 33,643                                               |       | 51,785 |   |
| Less:  Comprehensive loss attributable to noncontrolling interests              |       | (349                                                 | )          | — |   |
| Comprehensive  income attributable to Genco Shipping & Trading Limited |       | $                                                    | 33,992     |   | $ | 51,785 |   |

 

See accompanying notes to unaudited condensedconsolidated financial statements.

 

5

----

Table ofContents

 

**Genco Shipping & Trading Limited**

Condensed ConsolidatedStatements of Cash Flows for the Three Months Ended March 31, 2010 and2009

(U.S. Dollars in Thousands)

(Unaudited)

 
| ** **                                                                         | ** ** | **For the Three Months********Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2010**                                             | ** ** | **2009** | ** ** |
| Cash  flows from operating activities:                                             |       |                                                 |       |   |   |
| Net  income                                                                        |       | $                                                    | 33,101     |   | $ | 41,241 |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |       |                                                 |       |   |   |
| Depreciation  and amortization                                                     |       | 24,834                                               |       | 20,949 |   |
| Amortization  of deferred financing costs                                          |       | 264                                                  |       | 230 |   |
| Amortization  of fair market value of time charterers acquired                     |       | (1,333                                               | )          | (4,708 | ) |
| Unrealized  (gain) loss on derivative instruments                                  |       | (21                                                  | )          | 4 |   |
| Amortization  of nonvested stock compensation expense                              |       | 1,255                                                |       | 1,232 |   |
| Change  in assets and liabilities:                                                 |       |                                                 |       |   |   |
| (Increase)  decrease in due from charterers                                        |       | (313                                                 | )          | 1,150 |   |
| Increase  in prepaid expenses and other current assets                             |       | (1,458                                               | )          | (3,236 | ) |
| Increase  in accounts payable and accrued expenses                                 |       | 1,636                                                |       | 885 |   |
| Decrease  in deferred revenue                                                      |       | (1,393                                               | )          | (1,419 | ) |
| Decrease  in deferred rent credit                                                  |       | (5                                                   | )          | (5 | ) |
| Deferred  drydock costs incurred                                                   |       | (1,574                                               | )          | (837 | ) |
|                                                                               |       |                                                 |       |   |   |
| Net  cash provided by operating activities                                         |       | 54,993                                               |       | 55,486 |   |
|                                                                               |       |                                                 |       |   |   |
| Cash  flows from investing activities:                                             |       |                                                 |       |   |   |
| Purchase  of vessels                                                               |       | (745                                                 | )          | (473 | ) |
| Deposits  on vessels                                                               |       | (35,578                                              | )          | (695 | ) |
| Purchase  of other fixed assets                                                    |       | (96                                                  | )          | (45 | ) |
|                                                                               |       |                                                 |       |   |   |
| Net  cash used in investing activities                                             |       | (36,419                                              | )          | (1,213 | ) |
|                                                                               |       |                                                 |       |   |   |
| Cash  flows from financing activities:                                             |       |                                                 |       |   |   |
| Repayments  on the 2007 Credit Facility                                            |       | (12,500                                              | )          | — |   |
| Proceeds  from issuance of common stock by subsidiary                              |       | 214,508                                              |       | — |   |
| Payments  of subsidiary common stock issuance costs                                |       | (3,053                                               | )          | — |   |
| Payment  of deferred financing costs                                               |       | (313                                                 | )          | (3,444 | ) |
|                                                                               |       |                                                 |       |   |   |
| Net  cash provided by (used in) financing activities                               |       | 198,642                                              |       | (3,444 | ) |
|                                                                               |       |                                                 |       |   |   |
| Net  increase in cash and cash equivalents                                         |       | 217,216                                              |       | 50,829 |   |
|                                                                               |       |                                                 |       |   |   |
| Cash  and cash equivalentsat beginning of period                                   |       | 188,267                                              |       | 124,956 |   |
|                                                                               |       |                                                 |       |   |   |
| Cash  and cash equivalentsat end of period                                         |       | $                                                    | 405,483    |   | $ | 175,785 |   |

 

See accompanying notes to unaudited condensedconsolidated financial statements.

 

6

----

Table of Contents

 

**Genco Shipping & Trading Limited**

 (U.S. Dollars in Thousands Except Per Shareand Share Data)

 

Notes to CondensedConsolidated Financial Statements for the Three Months Ended March 31,2010 and 2009 (unaudited)

 

1 -GENERAL INFORMATION

 

The accompanying condensed consolidated financialstatements include the accounts of Genco Shipping & Trading Limited (“GS&T”),its wholly owned subsidiaries, and its subsidiary, Baltic Trading Limited(collectively, the “Company”). The Company is engaged in the oceantransportation of drybulk cargoes worldwide through the ownership and operationof drybulk carrier vessels. GS&T was incorporated on September 27,2004 under the laws of the Marshall Islands and as of March 31, 2010, isthe sole owner of all of the outstanding shares of the following subsidiaries:Genco Ship Management LLC; Genco Investments LLC; and the ship-owningsubsidiaries as set forth below.

 

Below is the list of the Company’s wholly owned ship-owning subsidiaries as of March 31,2010:

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

 

----

(1) OnDecember 30, 2009, the Company took delivery of the Genco Claudius.  However, the vessel has been designated byLloyd’s Register of Shipping as having been built in 2010.

 

7

----

Table of Contents

 

Baltic Trading Limited (“BalticTrading”), formerly a wholly-owned indirect subsidiary of GS&T at December 31,2009, completed its initial public offering, or IPO, on March 15,2010.  As of March 31, 2010,GS&T indirectly owned 5,699,088 shares of Baltic Trading’s Class BStock, which represents a 25.35% ownership interest in Baltic Trading at March 31,2010 and 83.59% of the aggregate voting power of Baltic Trading’s outstandingshares of voting stock.  Additionally,pursuant to the subscription agreement between Genco Investments LLC and BalticTrading, for so long as Genco Investments LLC directly or indirectly holds atleast 10% of the aggregate number of outstanding shares of  Baltic Trading’s common stock and Class Bstock, Genco Investments LLC will be entitled to receive an additional numberof shares of  Baltic Trading’s Class Bstock equal to 2% of the number of common shares issued in the future, otherthan shares issued under Baltic Trading’s 2010 Equity Incentive Plan.

 

Below is the list of Baltic Trading’s wholly owned ship-owning subsidiaries as of March 31,2010:

 
| **Baltic Trading’s Wholly Owned  Subsidiaries** | ** ** | **Vessel**      | ** ** | **Dwt** | ** ** | **Delivery Date (1)** | ** ** | **Year  Built** | ** ** |
|------------------------------------------------------|------------|-----------------|------------|---------|------------|-----------------------|------------|-----------------|------------|
|                                                 |       |            |       |    |       |                  |       |            |       |
| Baltic Leopard Limited                               |       | Baltic  Leopard |       | 53,000  |       | April 2010       |       | 2009            |       |
| Baltic Panther Limited                               |       | Baltic  Panther |       | 53,000  |       | April 2010       |       | 2009            |       |
| Baltic Cougar Limited                                |       | Baltic  Cougar  |       | 53,000  |       | May 2010         |       | 2009            |       |
| Baltic Jaguar Limited                                |       | Baltic  Jaguar  |       | 53,000  |       | May 2010         |       | 2009            |       |
| Baltic Bear Limited                                  |       | Baltic  Bear    |       | 177,000 |       | May 2010         |       | 2010  (2)       |       |
| Baltic Wolf Limited                                  |       | Baltic  Wolf    |       | 177,000 |       | October 2010     |       | 2010  (2)       |       |

 

----

(1) Datesfor vessels being delivered in the future are estimates based on guidancereceived from the sellers and the respective shipyards.  Baltic Trading took delivery of the BalticLeopard on April 8, 2010 and the Baltic Panther on April 29, 2010.

(2) Builtdates for vessels delivering in the future are estimates based on guidancereceived from the sellers and respective shipyards.

 

2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principlesof consolidation

 

The accompanying condensed consolidated financialstatements have been prepared in accordance with accounting principlesgenerally accepted in the United States of America (“U.S. GAAP”), which includethe accounts of Genco Shipping & Trading Limited, its wholly ownedsubsidiaries and Baltic Trading, a subsidiary in which the Company owns amajority of the voting interests and exercises control.  All intercompany accounts and transactionshave been eliminated in consolidation.

 

Basis of presentation

 

Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with U.S. GAAP for interim financial information and therules and regulations of the Securities and Exchange Commission (the “SEC”).  In the opinion of management of the Company,all adjustments, consisting of normal recurring adjustments, necessary for afair presentation of financial position and operating results have beenincluded in the statements. Interim results are not necessarily indicative ofresults for a full year. The accompanying unaudited condensed consolidatedfinancial statements shouldbe read in conjunction with the Company’s consolidated financial statementsincluded in the Annual Report on Form 10-K for the year ended December 31,2009 (the “2009 10-K”).

 

Deferred revenue

 

Deferred revenue primarily relates to cash received fromcharterers prior to it being earned. These amounts are recognized as incomewhen earned.  Additionally, deferred revenue includes estimatedcustomer claims mainly

 

8

----

Table of Contents

 

due to time charter performance issues.  As of March 31, 2010 and December 31,2009, the Company had an accrual of $992 and $959, respectively, related to these estimated customer claims.

 

Concentration of creditrisk

 

Financial instruments that potentially subject theCompany to concentrations of credit risk are amounts due from charterers andcash and cash equivalents. With respect to amounts due from charterers, theCompany attempts to limit its credit risk by performing ongoing creditevaluations and, when deemed necessary, requires letters of credit, guaranteesor collateral.  During both the threemonths ended March 31, 2010 and 2009, the Company earned 100% of itsrevenues from nineteen customers. Management does not believe significant risk exists in connection withthe Company’s concentrations of credit at March 31, 2010 and December 31,2009.

 

For the three months ended March 31, 2010, therewere two customers that individually accounted for more than 10% of revenues,Cargill International S.A. and Pacific Basin Chartering Ltd., which represented28.83% and 11.02% of revenues, respectively. For the three months ended March 31, 2009, there were two customers that individuallyaccounted for more than 10% of revenues, Cargill International S.A. and PacificBasin Chartering Ltd., which represented 29.50% and 15.36% of revenues,respectively.

 

The Companymaintains all of its cash and cash equivalents with two financial institutions.  None of the Company’s cash and cashequivalent balances are covered by insurance in the event of default by thesefinancial institutions.

 

Derivative financial instruments

 

Interest rate risk management

 

The Company is exposed to the impact of interest ratechanges.  The Company’s objective is tomanage the impact of interest rate changes on its earnings and cash flow inrelation to borrowings primarily for the purpose of acquiring drybulkvessels.  These borrowings are subject toa variable borrowing rate.  The Companyuses pay-fixed receive-variable interest rate swaps to manage future interestcosts and the risk associated with changing interest rate obligations.  These swaps are designated as cash flowhedges of future variable rate interest payments and are tested foreffectiveness on a quarterly basis.

 

The differential to bepaid or received for the effectively hedged portion of any swap agreement isrecognized as an adjustment to interest expense as incurred.  Additionally, the changes in value for theportion of the swaps that are effectively hedging future interest payments arereflected as a component of accumulated other comprehensive income (“AOCI”).

 

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

 

Noncontrolling interests

 

Net loss attributable tononcontrolling interests during the three months ended March 31, 2010reflects noncontrolling interests’ share of the loss of Baltic Trading, asubsidiary of the Company, which owns and employs drybulk vessels in the spotmarket or on spot market-related time charters. The spot market represents immediate chartering of a vessel, usually forsingle voyages.  At March 31, 2010,noncontrolling interests held a 74.65% economic interest in Baltic Tradingwhile only holding 16.41% of voting power.

 

3 - CASH FLOW INFORMATION

 

Asof March 31, 2010, the Company had ten interest rate swaps, and theseswaps are described and discussed in Note 9 — Interest Rate Swap Agreements.The fair value of nine of the swaps is in a liability position of $46,082,$1,020 of which is a current liability, and one of the swaps is in an assetposition of $372 as of March 31, 2010. At December 31, 2009, eight swaps were in a liability position of$44,139 and two swaps were in an asset position of $2,108.

 

9

----

Table of Contents

 

Forthe three months ended March 31, 2010, the Company had non-cash investingactivities not included in the Condensed Consolidated Statement ofCash Flows for items included in accounts payable and accrued expensesconsisting of $105 for the purchase of vessels, $96 associated with deposits onvessels and $68 for the purchase of other fixed assets.  Additionally, for the three months ended March 31,2010, the Company had non-cash financing activities not included in the Condensed Consolidated Statement ofCash Flows for items included in accounts payable and accrued expensesconsisting of $64 associated with deferred financing fees and $763 associatedwith common stock issuance costs related to the initial public offering ofBaltic Trading.  For the three monthsended March 31, 2009, the Company had non-cash investing activities notincluded in the Condensed ConsolidatedStatement of Cash Flows for items included in accounts payable and accrued expensesconsisting of $359 for the purchase of vessels, $279 associated with depositson vessels and $157 for the purchase of other fixed assets.  For the three months ended March 31,2009, the Company also had non-cash financing activities not included in the Condensed Consolidated Statement ofCash Flows for items in accounts payable and accrued expenses consisting of$107 associated with deferred financing fees. Additionally, for the three months ended March 31, 2009, theCompany had non-cash investing activities not included in the Condensed Consolidated Statement ofCash Flows for items included in prepaid expenses and other current assetsconsisting of $176 which reduced the deposits on vessels.

 

During the three months ended March 31, 2010 and 2009, cash paidfor interest, net of amounts capitalized, was $13,213 and $12,639,respectively.

 

4 - VESSEL ACQUISITIONSAND DISPOSITIONS

 

Belowmarket time charters acquired were amortized as a net increase to revenue inthe amount of $1,333 and $4,708 for the three months ended March 31, 2010and 2009, respectively.

 

Capitalizedinterest expense associated with newbuilding contracts for the three monthsended March 31, 2010 and 2009 was $0 and $458, respectively.

 

OnFebruary 19, 2010, Baltic Trading entered into agreements withsubsidiaries of an unaffiliated third-party seller to purchase four 2009 builtSupramax drybulk vessels for an aggregate price of $140,000.  On February 22, 2010, Baltic Tradingalso entered into agreements with subsidiaries of another unaffiliatedthird-party seller to purchase two Capesize drybulk vessels for an aggregateprice of $144,200.  These Capesizevessels are in the process of being built. The purchases are subject to customary documentation and closingconditions.  Following the execution ofthese agreements, Baltic Trading paid cumulative deposits totaling $35,540 tothe aforementioned unaffiliated parties. Baltic Trading intends to finance these vessels using proceeds from itsinitial public offering and $75,000 in capital contributed from GS&T.  Refer to Note 1 — General Information for alisting of the vessels for which Baltic Trading has entered into agreements topurchase.

 

5 —INVESTMENTS

 

The Company holds an investment in the capital stockof Jinhui Shipping and Transportation Limited (“Jinhui”).  Jinhui isa drybulk shipping owner and operator focused on the Supramax segment ofdrybulk shipping.  This investment is designated as Available ForSale (“AFS”) and is reported at fair value, with unrealized gains and losses recordedin shareholders’ equity as a component of AOCI.  At March 31,2010 and December 31, 2009, the Company held 16,335,100 shares of Jinhuicapital stock which is recorded at its fair value of $76,423 and $72,181,respectively, based on the closing price on March 31, 2010 and December 30,2009 (the last trading date on the Oslo exchange in 2009) of 27.80 NOK and25.60 NOK, respectively.

 

The Company reviews the investment in Jinhui for otherthan temporary impairment on a quarterly basis. There were no impairment charges recognized for the three months ended March 31,2010 and March 31, 2009.

 

The unrealized currency translation gain on the Jinhuicapital stock remains a component of AOCI since this investment is designatedas an AFS security.

 

Refer to Note 10 — Accumulated Other ComprehensiveIncome for a breakdown of the components of AOCI.

 

10

----

Table of Contents

 

6 - EARNINGS PER COMMONSHARE

 

Thecomputation of basic earnings per share is based on the weighted average numberof common shares outstanding during the year. The computation of dilutedearnings per share assumes the vesting of nonvested stock awards (see Note 19 —Nonvested Stock Awards), for which the assumed proceeds upon vesting are deemedto be the amount of compensation cost attributable to future services and arenot yet recognized using the treasury stock method, to the extent dilutive.  Of the 512,000 nonvested shares outstandingat March 31, 2010 (see Note 19 — Nonvested Stock Awards), 374,333 sharesare anti-dilutive.

 

Thecomponents of the denominator for the calculation of basic earnings per shareand diluted earnings per share are as follows:

 
| ** **                                           | ** ** | **Three Months Ended********March 31,** | ** ** |
|------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                           | ** ** | **2010**                                     | ** ** | **2009** | ** ** |
|                                                 |       |                                         |       |   |   |
| **Common shares outstanding, basic:**                |       |                                         |       |   |   |
| Weighted  average common shares outstanding, basic   |       | 31,405,798                                   |       | 31,260,482 |   |
|                                                 |       |                                         |       |   |   |
| **Common shares outstanding, diluted:**              |       |                                         |       |   |   |
| Weighted  average common shares outstanding, basic   |       | 31,405,798                                   |       | 31,260,482 |   |
|                                                 |       |                                         |       |   |   |
| Dilutive  effect of restricted stock awards          |       | 137,667                                      |       | 90,908 |   |
|                                                 |       |                                         |       |   |   |
| Weighted  average common shares outstanding, diluted |       | 31,543,465                                   |       | 31,351,390 |   |

 

7 - RELATED PARTYTRANSACTIONS

 

The following are related party transactions notdisclosed elsewhere in these condensed consolidated financial statements:

 

The Company makes available an employee performinginternal audit services to General Maritime Corporation (“GMC”), where theCompany’s Chairman, Peter C. Georgiopoulos, also serves as Chairman of theBoard.   For the three months ended March 31,2010 and 2009, the Company invoiced $35 and $35, respectively, to GMC, whichincludes time associated with such internal audit services.  Additionally, during the three months ended March 31,2010 and 2009, the Company incurred travel and other related expenditurestotaling $135 and $65, respectively, reimbursable to GMC or its serviceprovider.   At March 31, 2010 and December 31,2009, the amount due to the Company from GMC was $6 and $41, respectively.

 

During the three months ended March 31, 2010 and2009, the Company incurred legal services aggregating $44 and $5, respectively,from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, Chairmanof the Board.  At March 31, 2010 andDecember 31, 2009, $47 and $3, respectively, were outstanding toConstantine Georgiopoulos.

 

During 2009, the Company entered into an agreementwith Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchaselubricating oils for certain vessels in the Company’s fleet.  Peter C. Georgiopoulos, Chairman of theBoard, is Chairman of the Board of Aegean. During the three months ended March 31, 2010 and 2009, Aegeansupplied lubricating oils to the Company’s vessels aggregating $208 and $0,respectively.  At March 31, 2010 andDecember 31, 2009, $135 and $226 remained outstanding, respectively.

 

8 -LONG-TERM DEBT

 

Long-term debt consists of the following:

 
| ** **             | ** ** | **March 31, 2010** | ** ** | **December 31, 2009** | ** ** |
|------------------------|------------|-------------------------|------------|----------------------------|------------|
|                   |       |                    |       |                       |       |
| Outstanding total debt |       | $                       | 1,314,500  |                       | $          | 1,327,000 |   |
| Less:  Current portion |       | (50,000                 | )          | (50,000                    | )          |
|                   |       |                    |       |                       |       |
| Long-term debt         |       | $                       | 1,264,500  |                       | $          | 1,277,000 |   |

 

11

----

Table ofContents

 

2007 Credit Facility

 

On July 20, 2007, the Company entered into acredit facility with DnB Nor Bank ASA (the “2007 Credit Facility”) for thepurpose of acquiring nine new Capesize vessels and refinancing the Company’sprior credit facility which it had entered into as of July 29, 2005 (the “2005Credit Facility”) and short-term line of credit facility entered into as of May 3,2007 (the “Short-Term Line”).  DnB NorBank ASA is also Mandated Lead Arranger, Bookrunner, and Administrative Agent.The Company has used borrowings under the 2007 Credit Facility to repay amountsoutstanding under the Company’s previous credit facilities, which have beenterminated.  The maximum amount that maybe borrowed under the 2007 Credit Facility at March 31, 2010 is$1,314,500.  As of March 31, 2010,the Company has utilized its maximum borrowing capacity under the 2007 CreditFacility.

 

The collateralmaintenance financial covenant is currently waived and the Company’s cashdividends and share repurchases have been suspended until this covenant can besatisfied.  The Company’s borrowings bearinterest at the London Interbank Offered Rate (“LIBOR”) plus an applicablemargin of 2.00% per annum.  A commitmentfee of 0.70% per annum is payable on the unused daily portion of the 2007Credit Facility.

 

The significant covenants in the 2007 Credit Facility have beendisclosed in the 2009 10-K.  As of March 31, 2010, the Companybelieves it is in compliance with all of the financial covenants under its 2007Credit Facility, as amended, with the exception of the collateral maintenancefinancial covenant, which has been waived as discussed above.

 

The Company hasrecorded $17,500 of restricted cash, or $500 per vessel, as a current asset at March 31,2010.  Since the Company has utilized itsmaximum borrowing capacity under the 2007 Credit Facility at March 31,2010, the Company was required to hold this balance at March 31, 2010 tocomply with the minimum cash balance covenant under its 2007 Credit Facility,as amended.

 

At March 31,2010, there were no letters of credit issued under the 2007 Credit Facility.

 

The following table sets forth the repayment of theoutstanding debt of $1,314,500 at March 31, 2010 under the 2007 CreditFacility, as amended:

 
| **Period Ending December 31,**                     | ** ** | **Total** | ** ** |
|---------------------------------------------------------|------------|-----------|------------|
|                                                    |       |      |       |
| 2010 (April 1, 2010 – December 31, 2010) |       | $         | 37,500     |   |
| 2011                                                    |       | 50,000    |       |
| 2012                                                    |       | 108,890   |       |
| 2013                                                    |       | 192,780   |       |
| 2014                                                    |       | 192,780   |       |
| Thereafter                                              |       | 732,550   |       |
| Total long-term debt                                    |       | $         | 1,314,500  |   |

 

2010 Baltic TradingCredit Facility

 

On April 16, 2010, Baltic Trading entered into a$100,000 senior secured revolving credit facility with Nordea BankFinland plc, acting through its New York branch (the “2010 Baltic TradingCredit Facility”).  The 2010 BalticTrading Credit Facility matures on April 16, 2014, and borrowings underthe facility bear interest at LIBOR plus an applicable margin of 3.25% perannum.  A commitment fee of 1.25% perannum is payable on the unused daily portion of the 2010 Baltic Trading CreditFacility which began accruing on March 18, 2010 under the terms of thecommitment letter entered into on February 25, 2010.  In connection with the commitment letter,Baltic Trading paid an upfront fee of $313. Additionally, upon executing the 2010 Baltic Trading Credit Facility,Baltic Trading paid the remaining upfront fee of $938, for total fees of$1,250.

 

12

----

Table of Contents

 

Baltic Trading intends to use the 2010 Baltic TradingCredit Facility primarily for bridge financing for future vesselacquisitions.  In addition, under thisfacility, borrowings of up to $25,000 of the 2010 Baltic Trading CreditFacility are available for working capital purposes.  Borrowings, except those for working capitalpurposes, are to be repaid with proceeds from Baltic Trading’s follow-on equityofferings or otherwise within twelve months from drawdown.  Borrowings not repaid within such twelvemonths will be converted into term loans and repaid in equal monthlyinstallments over the subsequent twelve-month period.  All amounts outstanding must be repaid infull on the 2010 Baltic Trading Credit Facility’s maturity date.

 

Borrowings under the 2010 Baltic Trading CreditFacility will be secured by liens on Baltic Trading’s initial vessels, oncedelivered (and any acceptable replacement vessels), and other relatedassets.   Borrowings under the facilityare subject to the delivery of security documents with respect to BalticTrading’s initial vessels. Alternatively, Baltic Trading may provide cash collateral equal to$225,000 minus the aggregate purchase price of Baltic Trading’s first fivevessels expected to be delivered if Baltic Trading wishes to draw down on the2010 Baltic Trading Credit Facility while awaiting delivery of the Capesizevessel expected to be delivered in October 2010.  This cash collateral would be released orforwarded to the seller of the vessel once such vessel is delivered andconcurrently made subject to a lien under the 2010 Baltic Trading CreditFacility.  Baltic Trading’s subsidiariesowning the initial vessels will act as guarantors under the 2010 Baltic TradingCredit Facility.

 

All amounts owing under the 2010 Baltic Trading Credit Facility arealso secured by the following:

 

·                  cross-collateralized first priority mortgages of each of Baltic Trading’sinitial vessels;

 

·                  an assignment of any and all earnings of Baltic Trading’s vessels; and

 

·                  an assignment of all insurance on the mortgaged vessels.

 

The2010 Baltic Trading Credit Facility requires Baltic Trading to comply with anumber of covenants, including financial covenants related to liquidity,consolidated net worth, and collateral maintenance; delivery of quarterly andannual financial statements and annual projections; maintaining adequateinsurances; compliance with laws (including environmental); compliance withERISA; maintenance of flag and class of Baltic Trading’s initial vessels;restrictions on consolidations, mergers or sales of assets; restrictions onchanges in the Manager of Baltic Trading’s initial vessels (or acceptablereplacement vessels); limitations on changes to the Management Agreementbetween Baltic Trading and GS&T; limitations on liens; limitations onadditional indebtedness; restrictions on paying dividends; restrictions ontransactions with affiliates; and other customary covenants.

 

The 2010 BalticTrading Credit Facility includes the following financial covenants which applyto Baltic Trading and its subsidiaries on a consolidated basis and are measuredat the end of each fiscal quarter beginning with March 31, 2010, exceptfor the minimum cash covenant, which is to be tested starting June 30,2010:

 

·                  Cash and cash equivalents plus the undrawn amount available for workingcapital under the facility must not be less than $750 per vessel.

 

·                  Consolidated net worth must be greater than (i) 75% of the netproceeds of the IPO of Baltic Trading’s stock, plus (ii) the $75,000equity contribution from GS&T plus (iii) 50% of the value of anysubsequent primary equity offerings of Baltic Trading.

 

·                  The aggregate fair market value of the mortgaged vessels must at alltimes be at least 160% of the aggregate outstanding principal amount under the2010 Baltic Trading Credit Facility. However, if any borrowings, other than working capital borrowings, arenot repaid with 12 months of the drawdown thereof, then the aggregate fairmarket value of the mortgaged vessels must at all times be at least 200% of theaggregate outstanding principal amount under the 2010 Baltic Trading CreditFacility.

 

Under the 2010 Baltic Trading Credit Facility, Baltic Trading is notpermitted to make loans to GS&T or Genco Investments LLC if an event ofdefault existed at the time of the loan or could be reasonably expected toresult therefrom.  In addition, BalticTrading would not be permitted under the facility to declare or pay dividendsto its shareholders (including Genco Investments LLC) if an event of defaultexisted at the time of payment or

 

13

----

Table ofContents

 

would be causedthereby.  As of March 31, 2010, toremain in compliance with a net worth covenant in the facility, Baltic Tradingwould need to maintain a net worth of $232,752 after the payment of anydividends.

 

The Companybelieves it is in compliance with all of the financial covenants under the 2010Baltic Trading Credit Facility as of March 31, 2010.

 

Interest rates

 

The following tables setsforth the effective interest rate associated with the interest expense for theCompany’s debt facilities, including the rate differential between the payfixed receive variable rate on the interest rate swap agreements that were ineffect (refer to Note 9 — Interest Rate Swap Agreements), combined, and thecost associated with unused commitment fees. Additionally, it includes the range of interest rates on the debt,excluding the impact of swaps and unused commitment fees:

 
| ** **                                                                      | ** ** | **Three months ended March 31,** | ** ** |
|---------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                      | ** ** | **2010**                              | ** ** | **2009** | ** ** |
| Effective  Interest Rate                                                        |       | 4.61%                                 |       | 5.06% |   |
| Range  of Interest Rates (excluding impact of swaps and unused commitment fees) |       | 2.25% to 2.31%                        |       | 1.23% to 5.56% |   |

 

9 —INTEREST RATE SWAP AGREEMENTS

 

TheCompany has entered into eleven interest rate swap agreements with DnB NOR Bankto manage interest costs and the risk associated with changing interest ratesrelated to our 2007 Credit Facility, ten of which were outstanding at March 31,2010. The total notional principal amount of the swaps at March 31, 2010was $756,233 and the swaps have specified rates and durations.

 

Thefollowing table summarizes the interest rate swaps designated as cash flowhedges that were in place as of March 31, 2010 and December 31, 2009:

 
| **Interest Rate Swap Detail** | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|-------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **Trade  Date**               | ** ** | **Fixed  Rate**          | ** ** | **Start Date  of Swap**     | ** ** | **End date  of Swap** | ** ** | **Notional  Amount  Outstanding** | ** ** | **Notional  Amount  Outstanding** | ** ** |
| 9/6/05                        |       | 4.485                    | %          | 9/14/05                     |       | 7/29/15 |   | $ | 106,233 |   | $ | 106,233 |   |
| 3/29/06                       |       | 5.25                     | %          | 1/2/07                      |       | 1/1/14 |   | 50,000 |   | 50,000 |   |
| 3/24/06                       |       | 5.075                    | %          | 1/2/08                      |       | 1/2/13 |   | 50,000 |   | 50,000 |   |
| 7/31/07                       |       | 5.115                    | %          | 11/30/07                    |       | 11/30/11 |   | 100,000 |   | 100,000 |   |
| 8/9/07                        |       | 5.07                     | %          | 1/2/08                      |       | 1/3/12 |   | 100,000 |   | 100,000 |   |
| 8/16/07                       |       | 4.985                    | %          | 3/31/08                     |       | 3/31/12 |   | 50,000 |   | 50,000 |   |
| 8/16/07                       |       | 5.04                     | %          | 3/31/08                     |       | 3/31/12 |   | 100,000 |   | 100,000 |   |
| 1/22/08                       |       | 2.89                     | %          | 2/1/08                      |       | 2/1/11 |   | 50,000 |   | 50,000 |   |
| 1/9/09                        |       | 2.05                     | %          | 1/22/09                     |       | 1/22/14 |   | 100,000 |   | 100,000 |   |
| 2/11/09                       |       | 2.45                     | %          | 2/23/09                     |       | 2/23/14 |   | 50,000 |   | 50,000 |   |
|                          |       |                     |       |                        |       |   |   |   |   |   |   |
|                          |       |                     |       |                        |       |   |   | $ | 756,233 |   | $ | 756,233 |   |

 

14

----

Table of Contents

 

The following tablesummarizes the derivative asset and liability balances at March 31, 2010and December 31, 2009:

 
| ** **                                               | ** ** | **Asset Derivatives**                                     | ** ** | **Liability Derivatives** | ** ** |
|----------------------------------------------------------|------------|-----------------------------------------------------------|------------|---------------------------|------------|
| ** **                                               | ** ** | **Balance**                                               | ** ** | **Fair Value**            | ** ** | **Balance** | ** ** | **Fair Value** | ** ** |
| ** **                                               | ** ** | **Sheet  Location**                                       | ** ** | **March 31,  2010**  | ** ** | **December  31, 2009** | ** ** | **Sheet  Location** | ** ** | **March 31,  2010** | ** ** | **December  31, 2009** | ** ** |
| **Derivatives designated as  hedging instruments**       |       |                                                      | ** ** | ** **                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest rate contracts                                  |       | Fair  value of derivative instruments (Current Assets)    |       | $                         | —     |   | $ | — |   | Fair  value of derivative instruments (Current Liabilities) |   | $ | 1,020 |   | $ | — |   |
| Interest rate contracts                                  |       | Fair  value of derivative instruments (Noncurrent Assets) |       | 372                       |       | 2,108 |   | Fair  value of derivative instruments (Noncurrent Liabilities) |   | 45,062 |   | 44,139 |   |
|                                                     |       |                                                      |       |                      |       |   |   |   |   |   |   |   |   |
| **Total derivatives designated as  hedging instruments** |       | $                                                         | 372        |                      | $          | 2,108 |   |   |   | $ | 46,082 |   | $ | 44,139 |   |
|                                                     |       |                                                      |       |                      |       |   |   |   |   |   |   |   |   |
| **Total Derivatives**                                    |       |                                                      |       | $                         | 372        |   | $ | 2,108 |   |   |   | $ | 46,082 |   | $ | 44,139 |   |

 

The following tables present the impact of derivativeinstruments and their location within the unaudited Condensed ConsolidatedStatement of Operations:

 

**The Effect of Derivative Instruments on the CondensedConsolidated Statement of Operations**

**For the Three Month Period Ended March 31,2010**

 
| **Derivatives  in Cash  Flow Hedging** | ** ** | **Amount of  Gain (Loss)  Recognized  in AOCI on  Derivative  (Effective  Portion)** | ** ** | **Location of  Gain (Loss)  Reclassified  from AOCI  into income  (Effective** | ** **        | **Amount of  Gain (Loss)  Reclassified  from AOCI  into income  (Effective  Portion)** | ** ** | **Location of  Gain (Loss)  Recognized in  Income on  Derivative  (Ineffective** | ** ** | **Amount of  Gain (Loss)  Recognized in  Income on  Derivative  (Ineffective  Portion)** | ** ** |
|----------------------------------------|------------|--------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|-------------------|----------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------|------------|
| **Relationships**                      | ** ** | **2010**                                                                             | ** ** | **Portion)**                                                                   | ** **        | **2010**                                                                               | ** ** | **Portion)**                                                                     | ** ** | **2010**                                                                                 | ** ** |
| Interest rate contracts                |       | $                                                                                    | (11,311    | )                                                                              | Interest  Expense |                                                                                   | $          | (7,610                                                                           | )          | Other  Income  (Expense)                                                                 |       | $ | 21 |   |
|                                        |            |                                                                                      |            |                                                                                |                   |                                                                                        |            |                                                                                  |            |                                                                                          |            |  |  |  |

 

15

----

Table of Contents

 

**TheEffect of Derivative Instruments on the Condensed Consolidated Statement ofOperations**

**For theThree Month Period Ended March 31, 2009**

 
| **Derivatives in Cash  Flow Hedging** | ** ** | **Amount of  Gain (Loss)  Recognized  in AOCI on  Derivative  (Effective  Portion)** | ** ** | **Location of  Gain (Loss)  Reclassified  from AOCI  into income  (Effective** | ** **        | **Amount of  Gain (Loss)  Reclassified  from AOCI  into income  (Effective  Portion)** | ** ** | **Location of  Gain (Loss)  Recognized in  Income on  Derivative  (Ineffective** | ** ** | **Amount of  Gain (Loss)  Recognized in  Income on  Derivative  (Ineffective  Portion)** | ** ** |
|---------------------------------------|------------|--------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|-------------------|----------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------|------------|
| **Relationships**                     | ** ** | **2009**                                                                             | ** ** | **Portion)**                                                                   | ** **        | **2009**                                                                               | ** ** | **Portion)**                                                                     | ** ** | **2009**                                                                                 | ** ** |
| Interest rate contracts               |       | $                                                                                    | (1,332     | )                                                                              | Interest  Expense |                                                                                   | $          | (5,613                                                                           | )          | Other  Income  (Expense)                                                                 |       | $ | (4 | ) |
|                                       |            |                                                                                      |            |                                                                                |                   |                                                                                        |            |                                                                                  |            |                                                                                          |            |  |  |  |

 

At March 31, 2010, ($28,009) of othercomprehensive income is expected to be reclassified into interest expense overthe next 12 months associated with interest rate derivatives.

 

The Company is required to provide collateral in theform of vessel assets to support the interest rate swap agreements, excludingvessel assets of Baltic Trading.  Each ofthe Company’s thirty-five vessels, excluding Baltic Trading’s vessels, servesas collateral in the aggregate amount of $100,000.

 

10 — ACCUMULATED OTHERCOMPREHENSIVE INCOME

 

Thecomponents of AOCI included in the accompanying condensed consolidated balancesheets consist of net unrealized gain (loss) on cash flow hedges, netunrealized gain (loss) from investments, and cumulative translation adjustmentson the investment in Jinhui stock as of March 31, 2010 and December 31,2009.

 
| ** **                          | ** ** | **AOCI** | ** ** | **Net Unrealized  Loss on Cash  Flow Hedges** | ** ** | **Unrealized  Gain on  Investments** | ** ** | **Currency  Translation  Gain (Loss)  on  Investments** | ** ** |
|-------------------------------------|------------|----------|------------|-----------------------------------------------|------------|--------------------------------------|------------|---------------------------------------------------------|------------|
| AOCI  – January 1, 2010   |       | $        | 13,589     |                                          | $          | (41,819                              | )          | $                                                       | 43,364     |   | $ | 12,044 |   |
| Unrealized gain on investments      |       | 5,168    |       |                                          |       | 5,168                                |       |                                                    |       |
| Translation loss on investments     |       | (925     | )          |                                          |       |                                 |       | (925                                                    | )          |
| Unrealized loss on cash flow hedges |       | (3,701   | )          | (3,701                                        | )          |                                 |       |                                                    |       |
| AOCI  – March 31, 2010    |       | $        | 14,131     |                                          | $          | (45,520                              | )          | $                                                       | 48,532     |   | $ | 11,119 |   |

 

11 - FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The estimated fair values of the Company’s financialinstruments, which are equal to such instrument’s carrying values at March 31,2010 and December 31, 2009, are as follows:

 
| ** **                                        | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|---------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Cash  and cash equivalents                        |       | $                        | 405,483    |                        | $          | 188,267 |   |
| Restricted  cash                                  |       | 17,500                   |       | 17,500                      |       |
| Investments                                       |       | 76,423                   |       | 72,181                      |       |
| Floating  rate debt                               |       | 1,314,500                |       | 1,327,000                   |       |
| Derivative  instruments –asset position      |       | 372                      |       | 2,108                       |       |
| Derivative  instruments – liability position |       | 46,082                   |       | 44,139                      |       |
|                                                   |            |                          |            |                             |            |  |  |

 

16

----

Table of Contents

 

The fair value of theinvestments is based on quoted market rates. The fair value of the 2007 Credit Facility is estimated based on currentrates offered to the Company for similar debt of the same remaining maturities.  Additionally, the Company considers itscreditworthiness in determining the fair value of the revolving creditfacility.  The carrying valueapproximates the fair market value for the floating rate loans.  The fair value of the interest rate swaps isthe estimated amount the Company would receive to terminate the swap agreementsat the reporting date, taking into account current interest rates and thecreditworthiness of both the swap counterparty and the Company.

 

The Accounting Standards Codification subtopic 820-10,“Fair Value Measurements & Disclosures” (“ASC 820-10”) (formerly SFAS No. 157,“Fair Value Measurements”) applies to all assets and liabilities that are beingmeasured and reported on a fair value basis.  This guidance enables thereader of the financial statements to assess the inputs used to develop thosemeasurements by establishing a hierarchy for ranking the quality andreliability of the information used to determine fair values. The guidancerequires that assets and liabilities carried at fair value be classified anddisclosed in one of the following three categories:

 

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

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

Level 3: Unobservable inputs that are not corroborated bymarket data.

 

The following tablesummarizes the valuation of our investments and financial instruments by theabove pricing levels as of the valuation dates listed:

 
| ** **                                        | ** ** | **March 31, 2010** | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|
| ** **                                        | ** ** | **Total**               | ** ** | **Quoted  market  prices in  active  markets  (Level 1)** | ** ** | **Significant  Other  Observable  Inputs********(Level 2)** | ** ** |
| Cash  equivalents                                 |       | $                       | —     |   | $ | — |   | $ | — |   |
| Investments                                       |       | 76,423                  |       | 76,423 |   | — |   |
| Derivative  instruments –asset position      |       | 372                     |       | — |   | 372 |   |
| Derivative  instruments – liability position |       | 46,082                  |       | — |   | 46,082 |   |
|                                                   |            |                         |            |  |  |  |  |  |  |  |

 
| ** **                                        | ** ** | **December 31, 2009** |       |
|---------------------------------------------------|------------|----------------------------|------------|
| ** **                                        | ** ** | **Total**                  | ** ** | **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                      |       | — |   | 2,108 |   |
| Derivative  instruments – liability position |       | 44,139                     |       | — |   | 44,139 |   |
|                                                   |            |                            |            |  |  |  |  |  |  |  |

 

The Companyhad an investment of $0 and $75,057 in the JPMorgan US Dollar Liquidity FundInstitutional at March 31, 2010 and December 31, 2009,respectively.  The JPMorgan US DollarLiquidity Fund Institutional is a money market fund which invests its assets inhigh quality transferable short term US Dollar

 

17

----

Tableof Contents

 

denominated fixed and floating rate debtsecurities and has a portfolio with a weighted average investment maturity notto exceed sixty days.  The value of thisfund is publicly available and is considered a Level 1 item.  The Company holds an investment in thecapital stock of Jinhui, which is classifiedas a long-term investment.  The stock ofJinhui is publicly traded on the Oslo Stock Exchange and is considered a Level1 item.  The Company’s interest ratederivative instruments are pay-fixed, receive-variable interest rate swapsbased on LIBOR.  The Company has electedto use the income approach to value the derivatives, using observable Level 2market inputs at measurement date and standard valuation techniques to convertfuture amounts to a single present amount assuming that participants aremotivated, but not compelled to transact. Level 2 inputs for the valuations are limited to quoted prices forsimilar assets or liabilities in active markets (specifically futures contractson LIBOR for the first two years) and inputs other than quoted prices that areobservable for the asset or liability (specifically LIBOR cash and swap ratesand credit risk at commonly quoted intervals). Mid-market pricing is used as a practical expedient for fair valuemeasurements.  Refer to Note 9 — InterestRate Swap Agreements for further information regarding the Company’s interestrate swap agreements.  ASC 820-10 statesthat the fair value measurement of an asset or liability must reflect thenonperformance risk of the entity and the counterparty. Therefore, the impactof the counterparty’s creditworthiness when in an asset position and theCompany’s creditworthiness when in a liability position has also been factoredinto the fair value measurement of the derivative instruments in an asset orliability position and did not have a material impact on the fair value ofthese derivative instruments.  As of March 31,2010, both the counterparty and the Company are expected to continue to performunder the contractual terms of the instruments.

 

12 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

Prepaidexpenses and other current assets consist of the following:

 
| ** **                            | ** ** | **March  31, 2010** | ** ** | **December  31, 2009** | ** ** |
|---------------------------------------|------------|---------------------|------------|------------------------|------------|
| Lubricant  inventory and other stores |       | $                   | 4,088      |                   | $          | 3,971 |   |
| Prepaid  items                        |       | 4,945               |       | 3,086                  |       |
| Insurance  receivable                 |       | 1,370               |       | 1,408                  |       |
| Other                                 |       | 1,239               |       | 1,719                  |       |
| Total                                 |       | $                   | 11,642     |                   | $          | 10,184 |   |

 

13 — OTHER ASSETS, NET

 

Other assets, net consist of the following:

 

(i) Deferred financing costs, which include fees, commissions and legal expensesassociated with securing loan facilities. These costs are amortized over the life of the related debt, and areincluded in interest expense.  TheCompany had unamortized deferred financing costs of $7,601 and $7,494 at March 31,2010 and December 31, 2009, respectively. The December 31, 2009 deferred financing costs consist entirely offees associated with the 2007 Credit Facility; however, the March 31, 2010deferred financing costs consists of $7,225 of fees related to the 2007 CreditFacility and $376 of fees related to Baltic Trading’s 2010 Baltic TradingCredit Facility.  The $376 of feesassociated with the 2010 Baltic Trading Credit Facility will be amortizedbeginning April 16, 2010 when the credit agreement was signed.  Refer to Note 22 — Subsequent Events forfurther information. Accumulated amortization of deferred financing costsrelated to the 2007 Credit Facility as of March 31, 2010 and December 31,2009 was $2,849 and $2,585, respectively.  The Company has incurred deferred financing costs of $10,074 in totalfor the existing 2007 Credit Facility and $376 in total for the 2010 BalticTrading Credit Facility.  Amortizationexpense for deferred financing costs for the three months ended March 31,2010 and 2009 was $264 and $230, respectively.

 

(ii) Deferredregistration costs include costs associated with preparing Baltic Trading for apublic offering.  These costs, whichexisted as of December 31, 2009, were offset against proceeds receivedfrom the initial public offering which was completed on March 15,2010.  The Company has deferredregistration costs of $0 and $834 at March 31, 2010 and December 31,2009, respectively.

 

18

----

Table of Contents

 

14- FIXED ASSETS

 

Fixed assetsconsist of the following:

 
| ** **                                      | ** ** | **March  31, 2010** | ** ** | **December  31, 2009** | ** ** |
|-------------------------------------------------|------------|---------------------|------------|------------------------|------------|
| Fixed assets:                                   |       |                |       |                   |       |
| Vessel equipment                                |       | $                   | 2,164      |                   | $          | 2,118 |   |
| Leasehold improvements                          |       | 1,146               |       | 1,146                  |       |
| Furniture and fixtures                          |       | 347                 |       | 347                    |       |
| Computer equipment                              |       | 433                 |       | 401                    |       |
| Total cost                                      |       | 4,090               |       | 4,012                  |       |
| Less: accumulated depreciation and amortization |       | 1,672               |       | 1,554                  |       |
| Total                                           |       | $                   | 2,418      |                   | $          | 2,458 |   |

 

Depreciation and amortizationexpense for fixed assets for the three months ended March 31, 2010 and2009 was $118 and $82, respectively.

 

15 —ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accountspayable and accrued expenses consist of the following:

 
| ** **                                  | ** ** | **March  31, 2010** | ** ** | **December  31, 2009** | ** ** |
|---------------------------------------------|------------|---------------------|------------|------------------------|------------|
| Accounts payable                            |       | $                   | 3,248      |                   | $          | 3,171 |   |
| Accrued general and administrative expenses |       | 11,128              |       | 8,409                  |       |
| Accrued vessel operating expenses           |       | 5,766               |       | 7,029                  |       |
|                                        |       |                |       |                   |       |
| Total                                       |       | $                   | 20,142     |                   | $          | 18,609 |   |

 

16- REVENUE FROM TIME CHARTERS

 

Total revenue earned on time charters, includingrevenue earned in vessel pools, for the three months ended March 31, 2010and 2009 was $94,681 and $96,650, respectively. Included in revenues for the three months ended March 31, 2010 and2009 was $0 and $0 of profit sharing revenue, respectively.  Future minimum time charter revenue, based onvessels committed to noncancelable time charter contracts as of April 27,2010 is expected to be $218,241 for the remaining three quarters of 2010,$99,279 during 2011 and $35,570 during 2012, assuming off-hire due to anyscheduled drydocking and that no additional off-hire time is incurred.  For most drydockings, the Company assumestwenty days of offhire.  Future minimumrevenue excludes revenue earned for the six vessels currently in poolarrangements, namely the Genco Predator, Genco Explorer, Genco Pioneer, GencoProgress, Genco Reliance, and Genco Sugar, as pool rates cannot beestimated.  Additionally, future minimumrevenue excludes revenue to be earned for Baltic Trading’s vessels, as thesevessels will be on spot market-related time charters and spot rates cannot beestimated.

 

17 - LEASE PAYMENTS

 

In September 2005, the Company entered into a15-year lease for office space in New York, New York for which there was a freerental period from September 1, 2005 to July 31, 2006.  The monthly straight-line rental expense fromSeptember 1, 2005 to August 31, 2020 is $39.  As a result of the straight-line rentcalculation generated by the free rent period and the tenant work credit, theCompany had a deferred rent credit at March 31, 2010 and December 31,2009 of $682 and $687, respectively. Rent expense for the three months ended March 31, 2010 and 2009 was$117 for each respective period.

 

Future minimum rental payments on the above lease for the next fiveyears and thereafter are as follows: $375 for the remainder of 2010, $518annually for 2011 through 2014 and a total of $3,097 for the remaining term ofthe lease.

 

19

----

Table of Contents

 

18 - SAVINGS PLAN

 

In August 2005, the Company established a 401(k) plan which is available to full-timeemployees who meet the plan’s eligibility requirements.  This 401(k) planis a defined contribution plan, which permits employees to make contributionsup to maximum percentage and dollar limits allowable by IRS Code Sections401(k), 402(g), 404 and 415 with the Company matching up to the first sixpercent of each employee’s salary on a dollar-for-dollar basis.  The matching contribution vestsimmediately.  For the three months ended March 31,2010 and 2009, the Company’s matching contribution to the Plan was $57 and $53,respectively.

 

19- NONVESTED STOCK AWARDS

 

On July 12, 2005, the Company’s board ofdirectors approved the Genco Shipping & Trading Limited 2005 EquityIncentive Plan (the “GS&T Plan”). Under this plan, the Company’s board of directors, the compensation committee, or another designated committee of theboard of directors may grant a variety of stock-based incentive awards toemployees, directors and consultants whom the compensation committee (or othercommittee of the board of directors) believes are key to the Company’ssuccess.  Awards may consist ofincentive stock options, nonqualified stock options, stock appreciation rights,dividend equivalent rights, nonvested stock, unrestricted stock and performanceshares.  The aggregate number of sharesof common stock available for award under the GS&T Plan is 2,000,000shares.

 

Grants of nonvested common stock to executives andemployees vest ratably on each of the four anniversaries of the determinedvesting date.  Grants of nonvested commonstock to directors vest the earlier of the first anniversary of the grant dateor the date of the next annual shareholders’ meeting, which are typically heldduring May.  Grants of nonvested commonstock to the Company’s Chairman, Peter C. Georgiopoulos, which are not grantedas part of grants made to all directors vest ratably on each of the tenanniversaries of the vesting date.

 

The following table presents a summary of the Company’snonvested stock awards for the three months ended March 31, 2010 under theGS&T Plan:

 
| ** **                          | ** ** | **Number of  Shares** | ** ** | **Weighted  Average Grant  Date Price** | ** ** |
|-------------------------------------|------------|-----------------------|------------|-----------------------------------------|------------|
| Outstanding at January 1, 2010 |       | 437,000               |       | $                                       | 25.86      |   |
| Granted                             |       | 75,000                |       | 22.90                                   |       |
| Vested                              |       | —                |       | —                                  |       |
| Forfeited                           |       | —                |       | —                                  |       |
|                                |       |                  |       |                                    |       |
| Outstanding at March 31, 2010  |       | 512,000               |       | $                                       | 25.43      |   |

 

The total fair value of shares that vested under theGS&T Plan during the three months ended March 31, 2010 and 2009 was $0during both periods.

 

For the three months ended March 31, 2010 and2009, the Company recognized nonvested stock amortization expense for theGS&T Plan, which is included in general, administrative and managementfees, as follows:

 
| ** **                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------|------------|----------------------------------------|------------|
| ** **                                   | ** ** | **2010**                               | ** ** | **2009** | ** ** |
| General,  administrative and management fees |       | $                                      | 1,044      |   | $ | 1,232 |   |
|                                              |            |                                        |            |  |  |  |  |

 

The fair value of nonvested stock at the grant date isequal to the closing stock price on that date. The Company is amortizing these grants over the applicable vestingperiods, net of anticipated forfeitures. As of March 31, 2010, unrecognized compensation cost related tononvested stock will be recognized over a weighted average period of 5.22years.

 

20

----

Table of Contents

 

On March 3, 2010, Baltic Trading’s board ofdirectors approved the Baltic Trading Limited 2010 Equity Incentive Plan (the “BalticTrading Plan”).  Under the Baltic TradingPlan, Baltic Trading’s boardof directors, the compensation committee, or another designated committee of the board of directors may granta variety of stock-based incentive awards to officers, directors, andexecutive, managerial, administrative and professional employees of andconsultants to Baltic Trading or the Company whom the compensation committee(or other committee of the board of directors) believes are key to BalticTrading’s success.  Awards may consist of restricted stock, restricted stock units, stock options,stock appreciation rights and other stock or cash-based awards.  The aggregate number of shares of commonstock available for award under the Baltic Trading Plan is 2,000,000 commonshares.

 

Grants of restricted stock to Peter Georgiopoulos,Chairman of the Board of Baltic Trading, and John Wobensmith, President andChief Financial Officer of Baltic Trading, made in connection with BalticTrading’s IPO vest ratably on each of the first four anniversaries of March 15,2010.  Grants of restricted common stockto Baltic Trading’s directors made following Baltic Trading’s IPO (whichexclude the foregoing grant to Mr. Georgiopoulos) vest the earlier of thefirst anniversary of the grant date or the date of Baltic Trading’s next annualshareholders’ meeting, which is expected to be held in May 2011.

 

The following table presents a summary of BalticTrading’s nonvested stock awards for the three months ended March 31, 2010under the Baltic Trading Plan:

 
| ** **                          | ** ** | **Number of  Common  Shares** | ** ** | **Weighted  Average Grant  Date Price** | ** ** |
|-------------------------------------|------------|-------------------------------|------------|-----------------------------------------|------------|
| Outstanding at January 1, 2010 |       | —                        |       | $                                       | —     |   |
| Granted                             |       | 478,500                       |       | 14.00                                   |       |
| Vested                              |       | —                        |       | —                                  |       |
| Forfeited                           |       | —                        |       | —                                  |       |
|                                |       |                          |       |                                    |       |
| Outstanding at March 31, 2010  |       | 478,500                       |       | $                                       | 14.00      |   |

 

The total fair value of shares that vested under theBaltic Trading Plan during the three months ended March 31, 2010 and 2009was $0 during both periods.

 

For the three months ended March 31, 2010, theCompany recognized nonvested stock amortization expense for the Baltic TradingPlan, which is included in general, administrative and management fees, asfollows:

 
| ** **                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------|------------|----------------------------------------|------------|
| ** **                                   | ** ** | **2010**                               | ** ** | **2009** | ** ** |
| General,  administrative and management fees |       | $                                      | 211        |   | $ | — |   |
|                                              |            |                                        |            |  |  |  |  |

 

The Company is amortizing Baltic Trading’s grants overthe applicable vesting periods, net of anticipated forfeitures.  As of March 31, 2010, unrecognizedcompensation cost related to nonvested stock will be recognized over a weightedaverage period of 3.88 years.

 

20 — SHARE REPURCHASE PROGRAM

 

On February 13, 2008, our board ofdirectors approved a share repurchase program for up to a total of $50,000 ofthe Company’s common stock.  Sharerepurchases will be made from time to time for cash in open market transactionsat prevailing market prices or in privately negotiated transactions.  The timing and amount of purchases under theprogram will be determined by management based upon market conditions and otherfactors.  Purchases may be made pursuantto a program adopted under Rule 10b5-1 under the Securities Exchange Actof 1934, as amended (the “Exchange Act”). The program does not require the Company to purchase any specific numberor amount of shares and may be suspended or reinstated at any time in theCompany’s discretion and without notice. Repurchases will be subject to restrictions under the 2007 CreditFacility.  Currently, the terms of

 

21

----

Table of Contents

 

the 2007 Credit Facility require the Company tosuspend all share repurchases until the Company can represent that it is in aposition to again satisfythe collateral maintenance covenant. Refer to Note 8 — Long-Term Debt.

 

Since the inception ofthe share repurchase program through March 31, 2010, the Companyrepurchased and retired 278,300 shares of its common stock for $11,500.  No repurchases were made during the threemonths ended March 31, 2010 and 2009.

 

21 - LEGAL PROCEEDINGS

 

From time to time the Company may be subject to legalproceedings and claims in the ordinary course of its business, principallypersonal injury and property casualty claims. Such claims, even if lackingmerit, could result in the expenditure of significant financial and managerialresources.  The Company is not aware ofany legal proceedings or claims that it believes will have, individually or inthe aggregate, a material adverse effect on the Company, its financialcondition, results of operations or cash flows.

 

22 — SUBSEQUENT EVENTS

 

On April 8, 2010 and April 29, 2010, BalticTrading took delivery of the Baltic Leopard and Baltic Panther, both 53,000 dwtSupramax vessels built in 2009.  BalticTrading paid $63,000,000, representing ninety percent of the remaining purchaseprice of these two vessels.

 

On April 16, 2010, Baltic Trading executed a creditagreement and other definitive documentation for the 2010 Baltic Trading CreditFacility.  The 2010 Baltic Trading CreditFacility is underwritten by Nordea Bank Finland plc, acting through its NewYork branch.  See Note 8 —Long-Term Debt for a further description of the 2010 Baltic Trading CreditFacility.

 

In April 2010, anindependent committee of the Board of Directors of the Company agreed inprinciple that the Company would provide technical services for a group of ninedrybulk vessels which a company managed by an affiliate of Peter C.Georgiopoulos has agreed to buy.  These services will include oversight ofcrew management, insurance, drydocking, ship operations and financial statementpreparation.  They will not includechartering services.  The services will be provided for a fee of $750 pership per day plus reimbursement of out-of-pocket costs and will be provided foran initial term of one year.  The recipient company will have the right tocancel provision of services on 60 days’ notice with payment of a one-yeartermination fee or without fee upon a Company change of control.  The Company may terminate provision of theservices at any time on 60 days’ notice. Mr. Georgiopoulos is a minorityinvestor, and affiliates of Oaktree Capital Management, L.P., of which StephenA.Kaplan is a principal, are majority investors in the recipient company.  The purchase of these vessels was reviewed byan independent committee of the Company’s Board of Directors, which declined topursue the transaction on behalf of the Company. Neither Mr. Georgiopoulosnor Mr. Kaplan participated in the committee review.  The arrangementis subject to definitive documentation.

 

22

----

Tableof Contents

 

| ITEM  2. | MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|----------|---------------------------------------------------------------------------------------------|

 

This report contains forward-looking statements madepursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995. Such forward-looking statements use words such as “anticipate,”“estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other wordsand terms of similar meaning in connection with a discussion of potentialfuture events, circumstances or future operating or financial performance.  These forward-looking statements are based onmanagement’s current expectations and observations. Included among thefactors that, in our view, could cause actual results to differ materially fromthe forward looking statements contained in this report are the following: (i) changesin demand or rates in the drybulk shipping industry; (ii) changes in thesupply of or demand for drybulk products, generally or in particular regions; (iii) changesin the supply of drybulk carriers including newbuilding of vessels or lowerthan anticipated scrapping of older vessels; (iv) changes in rules andregulations applicable to the cargo industry, including, without limitation,legislation adopted by international organizations or by individual countriesand actions taken by regulatory authorities; (v) increases in costs andexpenses including but not limited to: crew wages, insurance, provisions,repairs, maintenance and general and administrative expenses; (vi) theadequacy of our insurance arrangements; (vii) changes in general domesticand international political conditions; (viii) changes in the condition ofthe our vessels or applicable maintenance or regulatory standards (which mayaffect, among other things, our anticipated drydocking or maintenance andrepair costs) and unanticipated drydock expenditures; (ix) the number ofoffhire days needed to complete repairs on vessels and the timing and amount ofany reimbursement by our insurance carriers for insurance claims includingoffhire days; (x) our acquisition or disposition of vessels; (xi) thecompletion of definitive documentation with respect to time charters; (xii)charterers’ compliance with the terms of their charters in the current marketenvironment; and other factors listed from time to time in our filings with theSecurities and Exchange Commission, including, without limitation, our AnnualReport on Form 10-K for the year ended December 31, 2009 andsubsequent reports on Form 8-K and Form 10-Q.

 

The following management’s discussion and analysisshould be read in conjunction with our historical consolidated financialstatements and the related notes included in this Form 10-Q.

 

General

 

We are a Marshall Islands company incorporated on September 27, 2004to transport iron ore, coal, grain, steel products and other drybulk cargoesalong worldwide shipping routes through the ownership and operation of drybulkcarrier vessels.  Excluding vessels ofBaltic Trading Limited (“Baltic Trading”), as of May 3, 2010, our fleetconsisted of nine Capesize, eight Panamax, four Supramax, six Handymax andeight Handysize drybulk carriers, with an aggregate carrying capacity ofapproximately 2,903,000 dwt, and the average age of our fleet was approximately7.2 years, as compared to the average age for the world fleet of approximately15 years for the drybulk shipping segments in which we compete. ** **We seek to deploy ourvessels on time charters, or in vessel pools trading in the spot market, toreputable charterers, including Lauritzen Bulkers A/S or LB/IVS Pool, in whichLauritzen Bulkers A/S acts as the pool manager (collectively, “LauritzenBulkers”), Cargill International S.A., Pacific Basin Chartering Ltd., COSCOBulk Carriers Co., Ltd., and Hyundai Merchant Marine Co. Ltd.  The majority of the vessels in our currentfleet are presently engaged under time charter contracts that expire (assumingthe option periods in the time charters are not exercised) between May 2010and October 2012.

 

In addition, after the delivery of four vesselsexpected in May and October 2010, our subsidiary Baltic Trading willown a fleet of six drybulk vessels, consisting of two Capesize and fourSupramax vessels with an aggregate carrying capacity of approximately 566,000dwt.  Baltic Trading currently operates a fleet oftwo Supramax vessels delivered in April 2010.

 

See pages 28-29 for atable of all vessels currently in our fleet, excluding Baltic Trading’svessels.

 

We intend to continue to grow our fleet through timelyand selective acquisitions of vessels in a manner that is accretive to our cashflow. In connection with the acquisitions and deliveries made in 2007, 2008 and2009 and our growth strategy, we negotiated the 2007 Credit Facility that wehave used to acquire vessels.

 

Our management team and our other employees areresponsible 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 voyagecharters, and monitoring the performance of our 

 

23

----

Table of Contents

 

vessels under their charters. Strategic management includes locating,purchasing, financing and selling vessels. We currently contract with twoindependent technical managers to provide technical management of our fleet ata lower cost than we believe would be possible in-house. Technical managementinvolves the day-to-day management of vessels, including performing routinemaintenance, attending to vessel operations and arranging for crews andsupplies. Members of our New York City-based management team oversee theactivities of our independent technical managers.

 

From time totime in the current global economic environment, our charterers with long-termtime charters may request to renegotiate the terms of our charters withthem.  As a general matter, we do notagree to make changes to the terms of our charters in response to suchrequests.  The failure of any chartererto meet its obligations under our long-term time charters could have an adverseeffect on our results of operations.

 

Baltic Trading, formerly a wholly-owned subsidiary ofthe Company at December 31, 2009, completed its initial public offering onMarch 15, 2010.  As of March 31,2010, the Company owned, directly or indirectly, 5,699,088 shares of BalticTrading’s Class B Stock, which represents a 25.35% ownership interest inBaltic Trading at March 31, 2010 and 83.59% of the aggregate voting powerof Baltic Trading’s outstanding shares of voting stock.  Baltic Trading is consolidated with theCompany as we control a majority of the voting interest in Baltic Trading.  Management’s discussion and analysis of theCompany’s results of operations and financial condition in this sectionincludes consideration of Baltic Trading.

 

We entered into a long-term management agreement (the “ManagementAgreement”) with Baltic Trading pursuant to which we will apply our expertiseand experience in the drybulk industry to provide Baltic Trading withcommercial, technical, administrative and strategic services.  The Management Agreement is for an initialterm of approximately fifteen years and will automatically renew for additionalfive-year periods unless terminated in accordance with its terms.  Baltic Trading will pay us for the serviceswe provide it as well as reimburse us for our costs and expenses incurred inproviding certain of these services. Management fee income we earn from the Management Agreement net of anyallocated shared expenses, such as salary, office expenses and other generaland administrative fees, will be taxable to us. Upon consolidation with Baltic Trading, any management fee income earnedwill be eliminated for financial reporting purposes.  For the quarter ended March 31, 2010,there were no commercial, technical or administrative and strategic servicefees as these fees are earned upon delivery and/or operation of Baltic Trading’svessels, which did not begin being delivered until the second quarter of 2010.

 

In April 2010, anindependent committee of the Board of Directors of the Company agreed inprinciple that the Company would provide technical services for a group of ninedrybulk vessels which a company managed by an affiliate of Peter C.Georgiopoulos has agreed to buy.  Theseservices will include oversight of crew management, insurance, drydocking, shipoperations and financial statement preparation.  They will not include charteringservices.  The services will be provided for a fee of $750 per ship perday plus reimbursement of out-of-pocket costs and will be provided for aninitial term of one year.  The recipient company will have the right tocancel provision of services on 60 days’ notice with payment of a one-yeartermination fee or without fee upon a Company change of control.  TheCompany may terminate provision of the services at any time on 60 days’ notice.Mr. Georgiopoulos is a minority investor, and affiliates of OaktreeCapital Management, L.P., of which Stephen A.Kaplan is a principal, aremajority investors in the recipient company. The purchase of these vessels was reviewed by an independent committeeof the Company’s Board of Directors, which declined to pursue the transactionon behalf of the Company. Neither Mr. Georgiopoulos nor Mr. Kaplanparticipated in the committee review.  The arrangement is subject todefinitive documentation.

 

**Factors AffectingOur Results of Operations**

 

We believe that the following table reflects importantmeasures for analyzing trends in our results of operations.  The table reflects our ownership days,available days, operating days, fleet utilization, TCE rates and daily vesseloperating expenses for the three months ended March 31, 2010 and 2009.

 
| ** **              | ** ** | **For the three months ended March 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|-------------------------|------------|-----------------------------------------------|------------|--------------|------------|----------------|------------|
| ** **              | ** ** | **2010**                                      | ** ** | **2009**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| **Fleet Data:**         |       |                                          |       |         |       |           |       |   |   |
| *Ownership days (1)*    |       |                                          |       |         |       |           |       |   |   |
| Capesize                |       | 810.0                                         |       | 540.0        |       | 270.0          |       | 50.0 | % |
| Panamax                 |       | 720.0                                         |       | 720.0        |       | —         |       | — |   |
| Supramax                |       | 360.0                                         |       | 360.0        |       | —         |       | — |   |
| Handymax                |       | 540.0                                         |       | 540.0        |       | —         |       | — |   |
| Handysize               |       | 720.0                                         |       | 720.0        |       | —         |       | — |   |
|                    |       |                                          |       |         |       |           |       |   |   |
| Total                   |       | 3,150.0                                       |       | 2,880.0      |       | 270.0          |       | 9.4 | % |
|                    |       |                                          |       |         |       |           |       |   |   |
| *Available days (2)*    |       |                                          |       |         |       |           |       |   |   |
| Capesize                |       | 794.8                                         |       | 540.0        |       | 254.8          |       | 47.2 | % |
| Panamax                 |       | 720.0                                         |       | 720.0        |       | —         |       | — |   |
| Supramax                |       | 348.6                                         |       | 360.0        |       | (11.4          | )          | (3.2 | )% |
| Handymax                |       | 526.1                                         |       | 523.4        |       | 2.7            |       | 0.5 | % |
| Handysize               |       | 716.2                                         |       | 720.0        |       | (3.8           | )          | (0.5 | )% |
|                    |       |                                          |       |         |       |           |       |   |   |
| Total                   |       | 3,105.7                                       |       | 2,863.4      |       | 242.3          |       | 8.5 | % |
|                    |       |                                          |       |         |       |           |       |   |   |
| *Operating days (3)*    |       |                                          |       |         |       |           |       |   |   |
| Capesize                |       | 794.8                                         |       | 540.0        |       | 254.8          |       | 47.2 | % |
| Panamax                 |       | 717.4                                         |       | 695.5        |       | 21.9           |       | 3.1 | % |
| Supramax                |       | 347.7                                         |       | 344.2        |       | 3.5            |       | 1.0 | % |
| Handymax                |       | 516.7                                         |       | 518.4        |       | (1.7           | )          | (0.3 | )% |
| Handysize               |       | 716.2                                         |       | 718.2        |       | (2.0           | )          | (0.3 | )% |
|                    |       |                                          |       |         |       |           |       |   |   |
| Total                   |       | 3,092.8                                       |       | 2,816.3      |       | 276.5          |       | 9.8 | % |
|                    |       |                                          |       |         |       |           |       |   |   |
| *Fleet utilization (4)* |       |                                          |       |         |       |           |       |   |   |
| Capesize                |       | 100.0                                         | %          | 100.0        | %          | —         |       | — |   |
| Panamax                 |       | 99.6                                          | %          | 96.6         | %          | 3.0            | %          | 3.1 | % |
| Supramax                |       | 99.7                                          | %          | 95.6         | %          | 4.1            | %          | 4.3 | % |
| Handymax                |       | 98.2                                          | %          | 99.0         | %          | (0.8           | )%         | (0.8 | )% |
| Handysize               |       | 100.0                                         | %          | 99.8         | %          | 0.2            | %          | 0.2 | % |
| Fleet  average          |       | 99.6                                          | %          | 98.4         | %          | 1.2            | %          | 1.2 | % |

 

24

----

Table ofContents

 
| ** **                            | ** ** | **For the three months ended March 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|---------------------------------------|------------|-----------------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                            | ** ** | **2010**                                      | ** ** | **2009**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| ** **                            | ** ** | **(U.S. dollars)**                            | ** ** | ** **   | ** ** | ** **     | ** ** |
| **Average Daily Results:**            |       |                                          |       |         |       |           |       |   |   |
| *Time Charter Equivalent (5)*         |       |                                          |       |         |       |           |       |   |   |
| Capesize                              |       | $                                             | 45,332     |         | $          | 58,238         |       | $ | (12,906 | ) | (22.2 | )% |
| Panamax                               |       | 30,086                                        |       | 29,784       |       | 302            |       | 1.0 | % |
| Supramax                              |       | 24,591                                        |       | 30,654       |       | (6,063         | )          | (19.8 | )% |
| Handymax                              |       | 29,796                                        |       | 31,968       |       | (2,172         | )          | (6.8 | )% |
| Handysize                             |       | 18,960                                        |       | 20,016       |       | (1,056         | )          | (5.3 | )% |
|                                  |       |                                          |       |         |       |           |       |   |   |
| Fleet  average                        |       | 30,248                                        |       | 33,203       |       | (2,955         | )          | (8.9 | )% |
|                                  |       |                                          |       |         |       |           |       |   |   |
| *Daily vessel operating expenses (6)* |       |                                          |       |         |       |           |       |   |   |
| Capesize                              |       | $                                             | 5,498      |         | $          | 5,179          |       | $ | 319 |   | 6.2 | % |
| Panamax                               |       | 4,500                                         |       | 5,531        |       | (1,031         | )          | (18.6 | )% |
| Supramax                              |       | 4,618                                         |       | 4,908        |       | (290           | )          | (5.9 | )% |
| Handymax                              |       | 4,716                                         |       | 4,720        |       | (4             | )          | (0.1 | )% |
| Handysize                             |       | 4,145                                         |       | 4,316        |       | (171           | )          | (4.0 | )% |
|                                  |       |                                          |       |         |       |           |       |   |   |
| Fleet  average                        |       | 4,726                                         |       | 4,931        |       | (205           | )          | (4.2 | )% |

 

**Definitions**

 

In order to understand our discussion of our resultsof operations, it is important to understand the meaning of the following termsused in our analysis and the factors that influence our results of operations.

 

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

 

(2) Availabledays.  We defineavailable days as the number of our ownership days less the aggregate number ofdays that our vessels are off-hire due to scheduled repairs or repairs underguarantee, vessel upgrades or special surveys and the aggregate amount of timethat we spend positioning our vessels. Companies in the shipping industrygenerally use available days to measure the number of days in a period duringwhich vessels should be capable of generating revenues.

 

25

----

Table of Contents

 

(3) Operatingdays.  We defineoperating days as the number of our available days in a period less theaggregate number of days that our vessels are off-hire due to unforeseencircumstances. The shipping industry uses operating days to measure theaggregate number of days in a period during which vessels actually generaterevenues.

 

(4) Fleetutilization.  Wecalculate fleet utilization by dividing the number of our operating days duringa period by the number of our available days during the period. The shippingindustry uses fleet utilization to measure a company’s efficiency in findingsuitable employment for its vessels and minimizing the number of days that itsvessels are off-hire for reasons other than scheduled repairs or repairs underguarantee, vessel upgrades, special surveys or vessel positioning.

 

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

 
| ** **                        | ** ** | **For the  three months ended********March 31,** | ** ** |
|-----------------------------------|------------|-------------------------------------------------------|------------|
| ** **                        | ** ** | **2010**                                              | ** ** | **2009** | ** ** |
|                              |       |                                                  |       |   |   |
| Voyage revenues (in thousands)    |       | $                                                     | 94,681     |   | $ | 96,650 |   |
| Voyage expenses (in thousands)    |       | 737                                                   |       | 1,579 |   |
| Net voyage revenue (in thousands) |       | $                                                     | 93,944     |   | $ | 95,071 |   |
| Total available days              |       | 3,105.7                                               |       | 2,863.4 |   |
| Total TCE rate                    |       | $                                                     | 30,248     |   | $ | 33,203 |   |

 

(6) Dailyvessel operating expenses.  We define daily vessel operating expenses asvessel operating expenses divided by ownership days for the period.  Vessel operating expenses include crew wagesand related costs, the cost of insurance, expenses relating to repairs andmaintenance (excluding drydocking), the costs of spares and consumable stores,tonnage taxes and other miscellaneous expenses.

 

26

----

Tableof Contents

 

**Operating Data**

 
| ** **                                                            | ** ** | **For the three months ended March 31,**                  | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                            | ** ** | **2010**                                                       | ** ** | **2009**   | ** ** | **Change** | ** ** | **% Change** | ** ** |
| ** **                                                            | ** ** | **(U.S. dollars in thousands, except for per share  amounts)** | ** ** | ** ** | ** ** |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| Revenues                                                              |       | $                                                              | 94,681     |       | $          | 96,650     |       | $ | (1,969 | ) | (2.0 | )% |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| *Operating Expenses:*                                                 |       |                                                           |       |       |       |       |       |   |   |
| Voyage  expenses                                                      |       | 737                                                            |       | 1,579      |       | (842       | )          | (53.3 | )% |
| Vessel  operating expenses                                            |       | 14,887                                                         |       | 14,202     |       | 685        |       | 4.8 | % |
| General,  administrative and management fees                          |       | 5,797                                                          |       | 4,772      |       | 1,025      |       | 21.5 | % |
| Depreciation  and amortization                                        |       | 24,834                                                         |       | 20,949     |       | 3,885      |       | 18.5 | % |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| Total  operating expenses                                             |       | 46,255                                                         |       | 41,502     |       | 4,753      |       | 11.5 | % |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| Operating  income                                                     |       | 48,426                                                         |       | 55,148     |       | (6,722     | )          | (12.2 | )% |
| Other  (expense) income                                               |       | (15,325                                                        | )          | (13,907    | )          | (1,418     | )          | 10.2 | % |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| Net  income                                                           |       | $                                                              | 33,101     |       | $          | 41,241     |       | $ | (8,140 | ) | (19.7 | )% |
| Less:  Net loss attributable to noncontrolling interest               |       | (349                                                           | )          | —     |       | (349       | )          | 100.0 | % |
| Net  income attributable to Genco Shipping & Trading Limited |       | $                                                              | 33,450     |       | $          | 41,241     |       | $ | (7,791 | ) | (18.9 | )% |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| Earnings  per share - Basic                                           |       | $                                                              | 1.07       |       | $          | 1.32       |       | $ | (0.25 | ) | (18.9 | )% |
| Earnings  per share - Diluted                                         |       | $                                                              | 1.06       |       | $          | 1.32       |       | $ | (0.26 | ) | (19.7 | )% |
| Dividends  declared and paid per share                                |       | $                                                              | —     |       | $          | —     |       | $ | — |   | — |   |
| Weighted  average common shares outstanding - Basic                   |       | 31,405,798                                                     |       | 31,260,482 |       | 145,316    |       | 0.5 | % |
| Weighted  average common shares outstanding - Diluted                 |       | 31,543,465                                                     |       | 31,351,390 |       | 192,075    |       | 0.6 | % |
|                                                                  |       |                                                           |       |       |       |       |       |   |   |
| EBITDA  (1)                                                           |       | $                                                              | 73,638     |       | $          | 76,115     |       | $ | (2,477 | ) | (3.3 | )% |

 

----

(1)          EBITDArepresents net income attributable to Genco Shipping & Trading Limitedplus net interest expense, taxes and depreciation and amortization.  EBITDA is included because it is used bymanagement and certain investors as a measure of operating performance. EBITDAis used by analysts in the shipping industry as a common performance measure tocompare results across peers.  Ourmanagement uses EBITDA as a performance measure in our consolidated internalfinancial statements, and it is presented for review at our boardmeetings.  We believe that EBITDA isuseful to investors as the shipping industry is capital intensive which oftenresults in significant depreciation and cost of financing.  EBITDA presents investors with a measure inaddition to net income to evaluate our performance prior to these costs.  EBITDA is not an item recognized by U.S. GAAPand should not be considered as an alternative to net income, operating incomeor any other indicator of a company’s operating performance required by U.S.GAAP.  EBITDA is not a measure ofliquidity or cash flows as shown in our consolidated statement of cashflows.  The definition of EBITDA usedhere may not be comparable to that used by other companies.  The following table demonstrates ourcalculation of EBITDA and provides a reconciliation of EBITDA to net income foreach of the periods presented above:

 

27

----

Table ofContents

 
| ** **                                                            | ** ** | **For the three months ended March 31,** | ** ** |
|-----------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                            | ** ** | **2010**                                      | ** ** | **2009** | ** ** |
|                                                                  |       |                                          |       |   |   |
| Net  income attributable to Genco Shipping & Trading Limited |       | $                                             | 33,450     |   | $ | 41,241 |   |
| Net  interest expense                                                 |       | 15,354                                        |       | 13,925 |   |
| Depreciation  and amortization                                        |       | 24,834                                        |       | 20,949 |   |
|                                                                  |       |                                          |       |   |   |
| EBITDA  (1)                                                           |       | $                                             | 73,638     |   | $ | 76,115 |   |

 

----

(1) See above for an explanation of EBITDA

 

**Results of Operations**

 

The following table sets forth information about thevessels in our fleet as of May 3, 2010, excluding Baltic Trading’svessels:

 
| ****Vessel****           | ** ** | ****Year************Built**** | ** ** | **Charterer**                                                | **** **** | ****Charter  Expiration (1)**** | **** **** | ****Cash Daily************Rate (2)************(US $)**** | **** **** | ****Net  Revenue  Daily  Rate (3)************(US $)**** |
|--------------------------|------------|-------------------------------|------------|--------------------------------------------------------------|----------------|---------------------------------|----------------|----------------------------------------------------------|----------------|---------------------------------------------------------|
|                     |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |
| ****Capesize Vessels**** |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |
| Genco  Augustus          |       | 2007                          |       | Cargill  International S.A.                                  |           | December 2010              |           | 39,000                                                   |           |                                                    |   |
| Genco  Tiberius          |       | 2007                          |       | Cargill  International S.A.                                  |           | June 2010                  |           | 38,000                                                   |           |                                                    |   |
| Genco  London            |       | 2007                          |       | SK  Shipping Co., Ltd                                        |           | August 2010                |           | 57,500                                                   |           |                                                    | 64,250 |
| Genco  Titus             |       | 2007                          |       | Cargill  International S.A.                                  |           | September 2011             |           | 45,000                                                   | (4)            |                                                    | 46,250 |
| Genco  Constantine       |       | 2008                          |       | Cargill  International S.A.                                  |           | August 2012                |           | 52,750                                                   | (4)            |                                                    |   |
| Genco  Hadrian           |       | 2008                          |       | Cargill  International S.A.                                  |           | October 2012               |           | 65,000                                                   | (4)            |                                                    |   |
| Genco  Commodus          |       | 2009                          |       | Morgan  Stanley Capital Group Inc.                           |           | June 2011                  |           | 36,000                                                   |           |                                                    |   |
| Genco  Maximus           |       | 2009                          |       | Cargill  International S.A.                                  |           | June 2010                  |           | 32,000                                                   |           |                                                    |   |
| Genco  Claudius          |       | 2010                          |       | Cargill  International S.A.                                  |           | November 2010              |           | 36,000                                                   |           |                                                    |   |
|                     |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |   |
| ****Panamax Vessels****  |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |   |
| Genco  Beauty            |       | 1999                          |       | LD  Commodities Suisse, Geneva                               |           | May 2010                   |           | 19,125                                                   |           |                                                    |   |
| Genco  Knight            |       | 1999                          |       | Swissmarine  Services S.A.                                   |           | March 2011                 |           | 25,000                                                   |           |                                                    |   |
| Genco  Leader            |       | 1999                          |       | Klaveness  Chartering                                        |           | December 2010              |           | 20,000                                                   |           |                                                    |   |
| Genco  Vigour            |       | 1999                          |       | Global  Maritime Investments Ltd.                            |           | November 2010              |           | 24,000                                                   |           |                                                    |   |
| Genco  Acheron           |       | 1999                          |       | Global  Chartering Ltd (a subsidiary of ArcelorMittal Group) |           | July 2011                  |           | 55,250                                                   |           |                                                    |   |
| Genco  Surprise          |       | 1998                          |       | Hanjin  Shipping Co., Ltd.                                   |           | December 2010              |           | 42,100                                                   |           |                                                    |   |
| Genco  Raptor            |       | 2007                          |       | COSCO  Bulk Carriers Co., Ltd.                               |           | April 2012                 |           | 52,800                                                   |           |                                                    |   |
| Genco  Thunder           |       | 2007                          |       | Klaveness  Chartering                                        |           | June 2010                  |           | 20,000                                                   |           |                                                    |   |
|                     |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |   |
| ***Supramax Vessels***   |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |   |
| Genco  Predator          |       | 2005                          |       | Bulkhandling  Handymax A/S Pacific Basin Chartering Ltd.     |           | May 2010  April 2011  |           | Spot  22,500                                             | (5)            |                                                    |   |
| Genco  Warrior           |       | 2005                          |       | Hyundai  Merchant Marine Co. Ltd.                            |           | November 2010              |           | 38,750                                                   |           |                                                    |   |
| Genco  Hunter            |       | 2007                          |       | Pacific  Basin Chartering Ltd.                               |           | February 2011              |           | 21,750                                                   |           |                                                    |   |
| Genco  Cavalier          |       | 2007                          |       | Clipper  Bulk Shipping NV                                    |           | June 2010                  |           | 20,000                                                   |           |                                                    |   |
| ***Handymax Vessels***   |       |                          |       |                                                         |           |                            |           |                                                     |           |                                                    |   |
| Genco  Success           |       | 1997                          |       | Korea  Line Corporation                                      |           | February 2011              |           | 33,000                                                   | (6)            |                                                    |   |
| Genco  Carrier           |       | 1998                          |       | Louis  Dreyfus Corporation                                   |           | March 2011                 |           | 37,000                                                   |           |                                                    |   |

 

28

----

Tableof Contents

 
| ****Vessel****          | ** ** | ****Year************Built**** | ** ** | **Charterer**                     | **** **** | ****Charter  Expiration (1)**** | **** **** | ****Cash Daily************Rate (2)************(US $)**** | **** **** | ****Net  Revenue  Daily  Rate (3)************(US $)**** |
|-------------------------|------------|-------------------------------|------------|-----------------------------------|----------------|---------------------------------|----------------|----------------------------------------------------------|----------------|---------------------------------------------------------|
|                    |       |                          |       |                              |           |                            |           |                                                     |           |                                                    |
| Genco  Prosperity       |       | 1997                          |       | Pacific  Basin Chartering Ltd     |           | June 2011                  |           | 37,000                                                   |           |                                                    |
| Genco  Wisdom           |       | 1997                          |       | Hyundai  Merchant Marine Co. Ltd. |           | February 2011              |           | 34,500                                                   |           |                                                    |
| Genco  Marine           |       | 1996                          |       | STX  Pan Ocean Co. Ltd.           |           | May 2010  April 2011  |           | 15,500  20,000                                           |           |                                                    |
| Genco  Muse             |       | 2001                          |       | Global  Maritime Investments Ltd. |           | December 2010              |           | 17,750                                                   | ** **     | ** **                                              |
|                    |       |                          |       |                              |           |                            |           |                                                     |           |                                                    |
| ***Handysize Vessels*** |       |                          |       |                              |           |                            |           |                                                     |           |                                                    |
| Genco  Explorer         |       | 1999                          |       | Lauritzen  Bulkers A/S            |           | August 2010                |           | Spot(7)                                                  |           |                                                    |
| Genco  Pioneer          |       | 1999                          |       | Lauritzen  Bulkers A/S            |           | August 2010                |           | Spot(7)                                                  |           |                                                    |
| Genco  Progress         |       | 1999                          |       | Lauritzen  Bulkers A/S            |           | May 2011                   |           | Spot(7)                                                  |           |                                                    |
| Genco  Reliance         |       | 1999                          |       | Lauritzen  Bulkers A/S            |           | May 2011                   |           | Spot(7)                                                  |           |                                                    |
| Genco  Sugar            |       | 1998                          |       | Lauritzen  Bulkers A/S            |           | May 2011                   |           | Spot(7)                                                  |           |                                                    |
| Genco  Charger          |       | 2005                          |       | Pacific  Basin Chartering Ltd.    |           | November 2010              |           | 24,000                                                   |           |                                                    |
| Genco  Challenger       |       | 2003                          |       | Pacific  Basin Chartering Ltd.    |           | November 2010              |           | 24,000                                                   |           |                                                    |
| Genco  Champion         |       | 2006                          |       | Pacific  Basin Chartering Ltd.    |           | December 2010              |           | 24,000                                                   |           |                                                    |

 

----

(1) The charterexpiration dates presented represent the earliest dates that our charters maybe terminated in the ordinary course. Except for the Genco Titus, Genco Constantine, and Genco Hadrian, underthe terms of each contract the charterer is entitled to extend the timecharters from two to four months in order to complete the vessel’s final voyageplus any time the vessel has been off-hire. The charterer of the Genco Titusand Genco Hadrian has the option to extend the charter for a period of oneyear.  The charterer of the GencoConstantine has the option to extend the charter for a period of eight months.

(2) Time charterrates presented are the gross daily charterhire rates before third-partycommissions generally ranging from 1.25% to 5.00%. In a time charter, thecharterer is responsible for voyage expenses such as bunkers, port expenses,agents’ fees and canal dues.

(3) For the vesselsacquired with a below-market time charter rate, the approximate amount ofrevenue on a daily basis to be recognized as revenues is displayed in thecolumn named “Net Revenue Daily Rate” and is net of any third-partycommissions. Since these vessels were acquired with existing time charterswith below-market rates, we allocated the purchase price between the respectivevessels and an intangible liability for the value assigned to the below-marketcharterhire.  This intangible liability is amortized as an increaseto voyage revenues over the minimum remaining term of thecharter.  The minimum remaining term for the Genco Tiberius expiredon January 13, 2010, the Genco London expires on August 30, 2010 andthe Genco Titus on September 16, 2011, at which point the respectiveliabilities are amortized to zero and the vessels begin earning the “Cash DailyRate”. For cash flow purposes, we will continue to receive the rate presentedin the “Cash Daily Rate” column until the charter expires.

(4) These chartersinclude a 50% index-based profit sharing component above the respective baserates listed in the table. The profit sharing between the charterer and us foreach 15-day period is calculated by taking the average over that period of thepublished Baltic Cape Index of the four time charter routes, as reflected indaily reports. If such average is more than the base rate payable under the charter,the excess amount is allocable 50% to each of the charterer and us. Athird-party brokerage commission of 3.75% based on the profit sharing amountdue to us is payable out of our share.

(5) We entered thevessel into the Bulkhandling Handymax Pool with an option to convert thebalance period of the charter party to a fixed rate. In addition to a 1.25%third-party brokerage commission, the charter party calls for a management fee.

(6) We extended thetime charter for an additional 35 to 37.5 months at a rate of $40,000 per dayfor the first 12 months, $33,000 per day for the following 12 months, $26,000per day for the next 12 months and $33,000 per day thereafter less a 5%third-party commission. In all cases, the rate for the duration of the time charterwill average $33,000 per day. For purposes of revenue recognition, the timecharter contract is reflected on a straight-line basis at approximately $33,000per day for 35 to 37.5 months in accordance with U.S. GAAP.

(7) We have reachedan agreement to enter these vessels into the LB/IVS Pool whereby LauritzenBulkers A/S acts as the pool manager. We can withdraw up to two vessels withthree months’ notice and the remaining three vessels with 12 months’ notice.

 

**Three months ended March 31, 2010 compared to the three months endedMarch 31, 2009**

 

REVENUES-

 

For the three months ended March 31, 2010,revenues decreased 2.0% to $94.7 million versus $96.7 million for the threemonths ended March 31, 2009. Revenues in both periods consisted of charter hire revenue earned by ourvessels.  The decrease in revenues wasdue to lower charter rates achieved for some of our vessels, offset by theincrease in the size of our fleet.

 

29

----

Table ofContents

 

The average Time Charter Equivalent (“TCE”) rate ofour fleet decreased 8.9% to $30,248 a day for the three months ended March 31,2010 from $33,203 a day for the three months ended March 31, 2009.  The decrease in TCE rates resulted from lowercharter rates achieved in the first quarter of 2010 versus the first quarter of2009 for nineteen vessels in our fleet offset by higher charter rates forthirteen of the vessels in our fleet.

 

For the three months ended March 31, 2010 and2009, we had ownership days of 3,150.0 days and 2,880.0 days,respectively.  Fleet utilization was99.6% and 98.4% for the three month periods ended March 31, 2010 and 2009,respectively.

 

The current freightenvironment has displayed relative stability throughout the first quarter of2010 with the Baltic Dry Index trading at the 2,000 to 4,000 point range.  Increased demand for iron ore and coalcargoes stemmed from record high steel production in China, as well as increasedsteel production from Japan and South Korea signaling the first signs of betterprospects in world economic environments.

 

VOYAGE EXPENSES-

 

For the three months ended March 31, 2010 and2009, we did not incur port and canal charges or any significant expensesrelated to the consumption of bunkers (fuel) as part of our vessels’ overallexpenses because all of our vessels were employed under time charters or inpools that require the charterer or pool to bear all of those expenses.

 

For the three months ended March 31, 2010 and2009, voyage expenses were $0.7 million and $1.6 million, respectively,and consisted primarily of brokerage commissions paid to third parties.

 

VESSEL OPERATING EXPENSES-

 

Vessel operating expenses increased to $14.9 millionfrom $14.2 million for the three months ended March 31, 2010 and 2009,respectively.  This increase wasprimarily due to the operation of a larger fleet and higher expenses related torepairs during the three months ended March 31, 2010 as compared to thethree months ended March 31, 2009.

 

Daily vessel operating expenses decreased to $4,726per vessel per day for the three months ended March 31, 2010 from $4,931per day for the three months ended March 31, 2009.  The decrease in daily vessel operating expenses was due tolower costs associated with insurance and stores and supplies, offset by higherrepair costs during the first quarter of 2010 versus the same period lastyear.  We believe daily vessel operatingexpenses are best measured for comparative purposes over a 12-month period inorder to take into account all of the expenses that each vessel in our fleetwill incur over a full year of operation. For 2010, we budgeted daily vessel operating expenses at aweighted average rate of $5,350 per vessel per day.  Our actual daily vessel operating expensesper vessel for the quarter ended March 31, 2010 have been $624 below thebudgeted rate.

 

Our vessel operating expenses, which generallyrepresent fixed costs, will increase as a result of the expansion of our fleet.Other factors beyond our control, some of which may affect the shippingindustry in general, including, for instance, developments relating to marketprices for crewing, lubes, and insurance, may also cause these expenses toincrease.

 

GENERAL, ADMINISTRATIVE AND MANAGEMENT FEES-

 

For the three months ended March 31, 2010 and2009, general, administrative and management fees were $5.8 million and $4.8million, respectively.  The increase ingeneral, administrative and management fees was primarily due to costsassociated with Baltic Trading Limited during the first quarter of 2010, whichwere not incurred during the first quarter of 2009.  We incur management fees to third-partytechnical management companies for the day-to-day management of our vessels,including performing routine maintenance, attending to vessel operations andarranging for crews and supplies.  Theincrease in general, administrative and management fees was also due to anincrease in management fees as a result of the operation of a larger fleet aswell as an increase in monthly management fees.

 

30

----

Tableof Contents

 

DEPRECIATION AND AMORTIZATION-

 

For the three months ended March 31, 2010, depreciation andamortization charges grew to $24.8 million from $20.9 million for thethree months ended March 31, 2009. The increase was primarily due to the operation of a larger fleet.

 

OTHER(EXPENSE) INCOME-

 

NET INTERESTEXPENSE-

 

For the three months ended March 31, 2010 and2009, net interest expense was $15.4 million and $13.9 million,respectively.  Net interest expenseconsisted primarily of interest expense under our 2007 Credit Facility duringboth periods.  Additionally, interestincome as well as amortization of deferred financing costs related to the 2007Credit Facility are included in both periods. The increase in net interest expense for the first quarter of 2010 versusthe first quarter of 2009 was primarily a result of higher outstanding debt dueto the acquisition of additional vessels during the second quarter through thefourth quarter of 2009.  Additionally,the increase in net interest expense was attributable to the increase in the2007 Credit Facility applicable margin to 2.00% per annum effective Janaury 26,2009 pursuant to the current terms of the 2007 Credit Facility.   Refer to “2007 Credit Facility” sectionbelow for further information.

 

NET LOSS ATTRIBUTABLE TONONCONTROLLING INTEREST-

 

For the three months ended March 31, 2010, netloss attributable to noncontrolling interest was $0.3 million as compared to $0during the three months ended March 31, 2009.  This amount represents the net lossattributable to the noncontrolling interest of Baltic Trading, which completedits IPO on March 15, 2010.

 

LIQUIDITY AND CAPITAL RESOURCES

 

To date, we have financed our capital requirementswith cash flow from operations, equity offerings and bank debt.  We have used our funds primarily to fundvessel acquisitions, regulatory compliance expenditures, the repayment of bank debt and theassociated interest expense and thepayment of dividends.  We willrequire capital to fund ongoing operations, acquisitions and debt service.  Pleaserefer to the discussion under the subheading “Dividend Policy” below foradditional information regarding dividends. We also may consider debt and additional equity financing alternativesfrom time to time.  However, if marketconditions become negative, we may be unable to raise additional equity capitalor debt financing on acceptable terms or at all.

 

Currently, we indirectly own 5,699,088 shares ofBaltic Trading’s Class B Stock, which represents a 25.35% ownershipinterest in Baltic Trading and 83.59% of the aggregate voting power of BalticTrading’s outstanding shares of voting stock. On April 16, 2010, Baltic Trading entered into a $100 millionsenior secured revolving credit facility with Nordea Bank Finland plc,acting through its New York branch, for a $100 million senior securedrevolving credit facility (the “Baltic Trading 2010 Credit Facility”).  The Baltic Trading 2010 Credit Facilitymatures on April 16, 2014.  See “2010Baltic Trading Credit Facility” section below for a full description of thisfacility.  To remain in compliance with anet worth covenant in the Baltic Trading 2010 Credit Facility, Baltic Tradingwould need to maintain a net worth of $232.8 million after the payment of anydividends.  We do not believe these restrictionswould have a significant impact on our liquidity.

 

We anticipate thatinternally generated cash flow will be sufficient to fund the operations of ourfleet, including our working capital requirements, for the next twelvemonths.  Pursuant to the current terms ofthe 2007 Credit Facility, the existing collateral maintenance financialcovenant is waived, which required us to maintain pledged vessels with a valueequal to at least 130% of our current borrowings, and accelerated thereductions of the total facility which began on March 31, 2009.  Please read the “2007 Credit Facility”section below for further details.  Thecollateral maintenance covenant will be waived until we can represent that weare in compliance with all of our financial covenants.

 

**DividendPolicy**

 

Historically, ourdividend policy, which commenced in November 2005, has been to declarequarterly distributions to shareholders by each February, May, August andNovember, substantially equal to our available 

 

31

----

Table ofContents

 

cash from operationsduring the previous quarter, less cash expenses for that quarter (principallyvessel operating expenses and debt service) and any reserves our board ofdirectors 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 orliabilities that would reduce or eliminate the cash available for distributionas dividends.  Under the current terms ofthe 2007 Credit Facility, we are required to suspend the payment of cashdividends until we can represent that we are in a position to satisfy thecollateral maintenance covenant.  Referto the 2009 10-K for further information regarding the current terms of the2007 Credit Facility.  As such, adividend was not declared for the quarter ended March 31, 2010.  The following table summarizes the dividendsdeclared based on the results of each fiscal quarter:

 
| ** **                                                       | ** ** | **Dividend per  share** | ** ** | **Declaration  date** | ** ** |
|------------------------------------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| **FISCAL YEAR ENDED DECEMBER 31, 2010** |       |                    |       |                  |       |
| 1st Quarter                                                 |       | —                  |       | N/A                   |       |
| **FISCAL YEAR ENDED DECEMBER 31, 2009** |       |                    |       |                  |       |
| 4th Quarter                                                 |       | —                  |       | N/A                   |       |
| 3rd Quarter                                                 |       | —                  |       | N/A                   |       |
| 2nd Quarter                                                 |       | —                  |       | N/A                   |       |
| 1st Quarter                                                 |       | —                  |       | N/A                   |       |
| **FISCAL YEAR ENDED DECEMBER 31, 2008** |       |                    |       |                  |       |
| 4th Quarter                                                 |       | —                  |       | N/A                   |       |
| 3rd Quarter                                                 |       | $                       | 1.00       |                  | 10/23/08   |   |
| 2nd Quarter                                                 |       | $                       | 1.00       |                  | 7/24/08    |   |
| 1st Quarter                                                 |       | $                       | 1.00       |                  | 4/29/08    |   |

 

The declaration andpayment of any dividend is subject to the discretion of our board of directorsand our compliance with the collateral maintenance covenant, which is currentlywaived.  The timing and amount ofdividend payments will depend on our earnings, financial condition, cashrequirements and availability, fleet renewal and expansion, restrictions in ourloan agreements, the provisions of Marshall Islands law affecting the paymentof distributions to shareholders and other factors.  Our board of directors may review and amendour dividend policy from time to time in light of our plans for future growthand other factors.

 

We believe that, undercurrent law, our dividend payments from earnings and profits will constitute “qualifieddividend income” and, as such, will generally be subject to a 15% U.S. federalincome tax rate with respect to non-corporate U.S. shareholders that meetcertain holding period and other requirements (through 2010). Distributions inexcess of our earnings and profits will be treated first as a non-taxablereturn of capital to the extent of a U.S. shareholder’s tax basis in its commonstock 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 atotal of $50.0 million of our common stock.   Share repurchases willbe made from time to time for cash in open market transactions at prevailingmarket prices or in privately negotiated transactions.  The timing and amount of purchases under theprogram were determined by management based upon market conditions and otherfactors.  Purchases may be made pursuantto a program adopted under Rule 10b5-1 under the Securities ExchangeAct.  The program does not require us to purchaseany specific number or amount of shares and may be suspended or reinstated atany time in our discretion and without notice. Repurchases under the program are subject to restrictions under the 2007Credit Facility.  Currently, the terms ofthe 2007 Credit Facility require us to suspend all share repurchases until wecan represent that we are in a position to again satisfy thecollateral maintenance covenant.  Referto the “2007 Credit Facility” section below for further information.  There were no share repurchases during thethree months ended March 31, 2010 or 2009.

 

32

----

Table of Contents

 

**CashFlow**

 

Netcash provided by operating activities for the three months ended March 31,2010 and 2009 was $55.0 million and $55.5 million, respectively.  The slight decrease in cash provided byoperating activities was primarily due to changes in cash flows related tooperating activities primarily consisting of due from charters, prepaidexpenses, accounts payable and deferred drydocking costs incurred.

 

Net cash used ininvesting activities for the three months ended March 31, 2010 and 2009was $36.4 million and $1.2 million, respectively.  The increase was primarily due to cash usedfor deposits on vessels relating to the purchase of Baltic Trading’s initialfleet. For the three months ended March 31, 2010, cash used in investingactivities primarily related to the deposit on vessels in the amount of $35.6million. For the three months ended March 31, 2009, cash used in investingactivities primarily related to deposits on vessels to be acquired of $0.7million.

 

Net cash providedby (used in) financing activities was $198.6 million during the three monthsended March 31, 2010 as compared to $(3.4) million during the three monthsended March 31, 2009. The $202.0 million increase in net cash provided byfinancing activities was primarily due to contributions from non-controllinginterests in the amount of $214.5 million from the initial public offering ofBaltic Trading Limited that was completed on March 15, 2010.  Net cash provided by financing activities wasalso offset by the $12.5 million repayment of debt under the 2007 CreditFacility, $3.1 million for payments of common stock issuance costs, and $0.3million of deferred financing costs.  Forthe same period last year, net cash used in financing activities consisted of a$3.4 million payment of deferred financing costs.

 

**2007Credit Facility**

 

On July 20, 2007, we entered into a creditfacility with DnB Nor Bank ASA (the “2007 Credit Facility”) for the purpose ofacquiring the nine Capesize vessels and refinancing our 2005 Credit Facilityand Short-Term Line.  DnB Nor Bank ASA isalso Mandated Lead Arranger, Bookrunner, and Administrative Agent. We have usedborrowings under the 2007 Credit Facility to repay amounts outstanding underour previous credit facilities, which have been terminated.  The maximum amount that may be borrowed underthe 2007 Credit Facility at March 31, 2010 is $1.3 billion.  As of March 31, 2010, we have utilizedour maximum borrowing capacity under the 2007 Credit Facility.

 

Thecollateral maintenance financial covenant is currently waived and our cashdividends and share repurchases have been suspended until this covenant can besatisfied.  Our borrowings bear interestat the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of2.00% per annum.  A commitment fee of0.70% per annum is payable on the unused daily portion of the 2007 CreditFacility.

 

The significant covenants in the 2007 CreditFacility have been disclosed in the 2009 10-K. As of March 31, 2010, we believe we are incompliance with all of the financial covenants under our 2007 Credit Facility,as amended, with the exception of the collateral maintenance financialcovenant, which has been waived as discussed above.

 

We haverecorded $17.5 million of restricted cash, or $0.5 million per vessel, as acurrent asset at March 31, 2010. Since we have utilized our maximum borrowing capacity under the 2007Credit Facility at March 31, 2010, we were required to hold this balanceat March 31, 2010 to comply with the minimum cash balance covenant underthe 2007 Credit Facility, as amended.

 

**2010Baltic Trading Credit Facility**

 

On April 16, 2010, Baltic Trading entered into a$100.0 million senior secured revolving credit facility with Nordea BankFinland plc, acting through its New York branch (the “2010 Baltic TradingCredit Facility”).  The 2010 BalticTrading Credit Facility matures on April 16, 2014, and borrowings underthe facility bear interest at LIBOR plus an applicable margin of 3.25% perannum.  A commitment fee of 1.25% perannum is payable on the unused daily portion of the 2010 Baltic Trading CreditFacility, which began accruing on March 18, 2010 under the terms of thecommitment letter entered into on February 25, 2010.  In connection with the commitment letter,Baltic Trading paid an upfront fee of $0.3 million.  Additionally upon executing the 2010 BalticTrading Credit Facility, Baltic Trading paid the remaining upfront fee of $0.9million, for total fees of $1.3 million.

 

33

----

Table of Contents

 

Baltic Trading intends to use the 2010 Baltic TradingCredit Facility primarily for bridge financing for future vesselacquisitions.  In addition, under thisfacility, borrowings of up to $25.0 million of the 2010 Baltic TradingCredit Facility are available for working capital purposes.  Borrowings, except those for working capitalpurposes, are to be repaid with proceeds from Baltic Trading’s follow-on equityofferings or otherwise within twelve months from drawdown.  Borrowings not repaid within such twelvemonths will be converted into term loans and repaid in equal monthlyinstallments over the subsequent twelve-month period.  All amounts outstanding must be repaid infull on the 2010 Baltic Trading Credit Facility’s maturity date.  Baltic Trading does not anticipate thatborrowings under the 2010 Baltic Trading Credit Facility will be used tosatisfy its long-term capital needs.

 

Borrowings under the 2010 Baltic Trading CreditFacility will be secured by liens on Baltic Trading’s initial vessels, oncedelivered (and any acceptable replacement vessels), and other relatedassets.  Borrowings under the facilityare subject to the delivery of security documents with respect to BalticTrading’s initial vessels. Alternatively, Baltic Trading may provide cash collateral equal to$225.0 million minus the aggregate purchase price of its first five vesselsexpected to be delivered if Baltic Trading wishes to draw down on the 2010Baltic Trading Credit Facility while awaiting delivery of the Capesize vesselexpected to be delivered in October 2010. This cash collateral would be released or forwarded to the seller of thevessel once such vessel is delivered and concurrently made subject to a lienunder the 2010 Baltic Trading Credit Facility. Baltic Trading’s subsidiaries owning the initial vessels will act asguarantors under the 2010 Baltic Trading Credit Facility.

 

All amounts owing under the 2010 Baltic Trading Credit Facility arealso secured by the following:

 

·                  cross-collateralized first priority mortgages of each of Baltic Trading’sinitial vessels;

 

·                  an assignment of any and all earnings of Baltic Trading’s vessels; and

 

·                  an assignment of all insurance on the mortgaged vessels.

 

The2010 Baltic Trading Credit Facility requires Baltic Trading to comply with anumber of covenants, including financial covenants related to liquidity,consolidated net worth, and collateral maintenance; delivery of quarterly andannual financial statements and annual projections; maintaining adequateinsurances; compliance with laws (including environmental); compliance withERISA; maintenance of flag and class of Baltic Trading’s initial vessels;restrictions on consolidations, mergers or sales of assets; restrictions onchanges in the Manager of Baltic Trading’s initial vessels (or acceptablereplacement vessels); limitations on changes to the Management Agreementbetween us and Baltic Trading; limitations on liens; limitations on additionalindebtedness; restrictions on paying dividends; restrictions on transactionswith affiliates; and other customary covenants.

 

The 2010 BalticTrading Credit Facility includes the following financial covenants which applyto Baltic Trading and its subsidiaries on a consolidated basis and are measuredat the end of each fiscal quarter beginning with March 31, 2010, exceptfor the minimum cash covenant, which is to be tested starting June 30,2010:

 

·                  Cash and cash equivalents plus the undrawn amount available for workingcapital under the facility must not be less than $0.8 million per vessel.

 

·                  Consolidated net worth must be greater than (i) seventy-fivepercent of the net proceeds of the IPO of Baltic Trading’s stock, plus (ii) the$75 million equity contribution from the Company plus (iii) 50% of thevalue of any subsequent primary equity offerings of Baltic Trading.

 

·                  The aggregate fair market value of the mortgaged vessels must at alltimes be at least 160% of the aggregate outstanding principal amount under the2010 Baltic Trading Credit Facility. However, if any borrowings other than working capital borrowings are notrepaid with 12 months of the drawdown thereof, then the aggregate fair marketvalue of the mortgaged vessels must at all times be at least 200% of theaggregate outstanding principal amount under the 2010 Baltic Trading CreditFacility.

 

We believe we arein compliance with all of the financial covenants under the 2010 Baltic TradingCredit Facility as of March 31, 2010.

 

34

----

Table of Contents

 

Under the 2010 Baltic Trading Credit Facility, Baltic Trading is notpermitted to make loans to Genco Shipping & Trading Limited or GencoInvestments LLC if an event of default existed at the time of the loan or couldbe reasonably expected to result therefrom. In addition, Baltic Trading would not be permitted under the facility todeclare or pay dividends to its shareholders (including Genco Investments LLC)if an event of default existed at the time of payment or would be causedthereby.   As of March 31, 2010, toremain in compliance with a net worth covenant in the facility, Baltic Tradingwould need to maintain a net worth of $232.8 million after the payment of anydividends.  We do not believe theserestrictions would have a significant impact on our liquidity.

 

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

 

AtMarch 31, 2010, we had ten interest rate swap agreements with DnB NOR Bankto manage interest costs and the risk associated with changing interest rates.The total notional principal amount of the swaps is $756.2 million and theswaps have specified rates and durations.

 

Referto the table in Note 9 — Interest Rate Swap Agreements of our condensedfinancial statements which summarizes the interest rate swaps in place as of March 31,2010 and December 31, 2009.

 

Wehave considered the creditworthiness of both ourselves and the counterparty indetermining the fair value of the interest rate derivatives, and suchconsideration resulted in an immaterial adjustment to the fair value ofderivatives on the balance sheet. Valuations prior to any adjustments for credit risk are validated bycomparison with counterparty valuations. Amounts are not and should not be identical due to the differentmodeling assumptions.  Any materialdifferences are investigated.

 

As part of our businessstrategy, we may enter short-term forward currency contracts to protectourselves from the risk of the fluctuations in the exchange rate associatedwith the cost basis of the Jinhui shares.

 

As part of our business strategy, we may enter intoarrangements commonly known as forward freight agreements, or FFAs, to hedgeand manage market risks relating to the deployment of our existing fleet ofvessels.  These arrangements may includefuture contract, or commitments to perform in the future a shipping servicebetween ship owners, charterers and traders. Generally, these arrangements would bind us and each counterparty in thearrangement 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 avariety of purposes, including for hedging, as an option, for trading or forarbitrage, if we decided to enter into FFAs, our objective would be to hedgeand manage market risks as part of our commercial management. It is notcurrently our intention to enter into FFAs to generate a stream of incomeindependent of the revenues we derive from the operation of our fleet ofvessels.  If we determine to enter intoFFAs, we may reduce our exposure to any declines in our results from operationsdue to weak market conditions or downturns, but may also limit our ability tobenefit economically during periods of strong demand in the market.  We have not entered into any FFAs as of March 31,2010.

 

**Contractual Obligations**

 

The following table sets forth our contractual obligationsand their maturity dates as of March 31, 2010.  The table incorporates Baltic Trading’sagreements to acquire four 2009-built Supramax vessels for an aggregatepurchase price of $140.0 million and two Capesize vessels for an aggregatepurchase price of $144.2 million.  BalticTrading plans to fund the remaining vessel acquisitions with cash generatedfrom the proceeds from its IPO, which was completed on March 15,2010.  Additionally, the tableincorporates the employment agreement entered into in September 2007 withour Chief Financial Officer, John Wobensmith. The interest and fees also reflect the 2007 Credit Facility, the BalticTrading 2010 Credit Facility, and the interest rate swap agreements as discussed above under “Interest RateSwap Agreements, Forward Freight Agreements and Currency Swap Agreements.”

 

35

----

Table of Contents

 
| ** **                                 | ** ** | **Total**                       | ** ** | **Within the  Year (1)** | ** ** | **One to Three  Years** | ** ** | **Three to Five  Years** | ** ** | **More than  Five Years** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|--------------------------|------------|-------------------------|------------|--------------------------|------------|---------------------------|------------|
| ** **                                 | ** ** | **(U.S. dollars in thousands)** | ** ** |
| 2007  Credit Agreement (2)                 |       | $                               | 1,314,500  |                     | $          | 37,500                  |       | $                        | 158,890    |                      | $          | 385,560 |   | $ | 732,550 |   |
| Remainder  of purchase priceof vessels (3) |       | 248,660                         |       | 248,660                  |       | —                  |       | —                   |       | —                    |       |
| Interest  and borrowing fees               |       | 240,816                         |       | 47,813                   |       | 102,956                 |       | 59,071                   |       | 30,976                    |       |
| Executive  employmentagreement             |       | 221                             |       | 221                      |       | ** **              | —     |                     |       | —                    |       |   | — |   |
| Office  lease                              |       | 5,544                           |       | 375                      |       | 1,036                   |       | 1,036                    |       | 3,097                     |       |
|                                            |            |                                 |            |                          |            |                         |            |                          |            |                           |            |  |  |  |  |  |

 

----

(1)          Represents the nine monthperiod ending December 31, 2010.

(2)          $12.5 million of outstandingdebt was repaid on April 1, 2010.

(3)          The timing of thisobligation is based on the actual or estimated delivery dates for BalticTrading’s four Supramax and two Capesize vessels.   Upon the delivery of the Baltic Leopard andBaltic Panther on April 8, 2010 and April 29, 2010, respectively, theremaining purchase price of $31.5 million was paid to the seller for eachvessel.

 

Interest expense has beenestimated using the fixed hedge rate for the effective period and notionalamount of the debt which is effectively hedged and 0.3125% for the portion ofthe debt that has no designated swap against it, plus the applicable bankmargin of 2.00%.  We are obligated to paycertain commitment fees in connection with the 2007 Credit Facility and theBaltic Trading 2010 Credit Facility, which have been reflected within interestand borrowing fees.

 

**Capital Expenditures**

 

Wemake capital expenditures from time to time in connection with our vesselacquisitions.  Excluding Baltic Trading’svessels, our fleet currently consists of nine Capesize drybulk carriers, eightPanamax drybulk carriers, four Supramax drybulk carriers, six Handymax drybulkcarriers and eight Handysize drybulk carriers. Baltic Trading’s fleet currently consists of two Supramax drybulkcarriers.

 

Inaddition to acquisitions that we may undertake in future periods, we will incuradditional expenditures due to special surveys and drydockings. We estimate ourdrydocking costs and scheduled off-hire days for our fleet through 2011 to be:

 
| **Year**                                    | ** ** | **Estimated Drydocking Cost**  | ** ** | **Estimated Off-hire Days** | ** ** |
|---------------------------------------------|------------|--------------------------------|------------|-----------------------------|------------|
|                                        |       | **(U.S. dollars in millions)** |       |                        |       |
| 2010 (April 1- December 31, 2010) |       | $3.6                           |       | 120                         |       |
| 2011                                        |       | $5.6                           |       | 160                         |       |

 

The costs reflected are estimates based on drydockingour vessels in China.  We estimate that each drydock willresult in 20 days of off-hire.  Actualcosts will vary based on various factors, including where the drydockings areactually performed.  We expect to fund these costs with cash from operations.

 

During the three months ended March 31, 2010, weincurred a total of $1.6 million of drydocking costs.

 

We estimate that six of our vessels will be drydocked in theremainder of 2010.  An additional eight of our vessels will be drydocked in2011.

 

36

----

Table of Contents

 

**Off-Balance SheetArrangements**

 

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

 

**Inflation**

 

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

 

CRITICALACCOUNTING POLICIES

 

Refer to the CriticalAccounting Policies as disclosed in the 2009 10-K.  There have been nochanges in these policies in the three months ended March 31, 2010.

 

ITEM 3.      QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Interestrate risk

 

Weare exposed to the impact of interest rate changes.  Our objective is to manage the impact of interest rate changes onour earnings and cash flow in relation to our borrowings.  We heldten interest rate swap agreements with DnB NOR Bank at March 31, 2010 and December 31,2009 to manage future interest costs and the risk associated with changinginterest rates.  The total notional principal amount ofthe swaps is $756.2 million, and the swaps have specified rates anddurations.  Refer to the table in Note 9 —Interest Rate Swap Agreements of our condensed financial statements whichsummarizes the interest rate swaps in place as of March 31, 2010 and December 31,2009.

 

The swap agreements with effective dates prior to March 31,2010 synthetically convert variable rate debt to fixed rate debt at the fixedinterest rate of swap plus the applicable margin of 2.00% as discussed asdiscussed in the “2007 Credit Facility” section of Note 8 — Long-Term Debt ofour condensed financial statements.

 

The total liabilityassociated with the swaps at March 31, 2010 is $46.1 million and $44.1million at December 31, 2009, and are presented as the fair value ofderivatives on the balance sheet.  Theasset associated with the swaps at March 31, 2010 and December 31,2009 is $0.4 million and $2.1 million, respectively.  As of March 31, 2010 and December 31,2009, the Company has AOCI of ($45.5) million and ($41.8) million,respectively, related to the effectively hedged portion of the swaps.  Hedge ineffectiveness associated with theinterest rate swaps resulted in a minimal amount of other (expense) incomeduring the three months ended March 31, 2010 and March 31, 2009,respectively.  At March 31, 2010,($28.0) million of AOCI is expected to be reclassified into income over thenext 12 months associated with interest rate derivatives.

 

We are subject to marketrisks relating to changes in LIBOR rates because we have significant amounts offloating rate debt outstanding.  For thethree months ended March 31, 2010, we paid LIBOR plus 2.00% on the 2007Credit Facility for the debt in excess of any designated swap’s notional amountfor such swap’seffective period.  During the threemonths ended March 31, 2009, effective January 26, 2009 as a resultof the terms of the current 2007 Credit Facility, as amended, we paid LIBORplus 2.00% on the 2007 Credit Facility for the debt in excess of any designatedswap’s notional amount for such swap’s effective period.  Prior to January 26, 2010, the marginwas only 0.85%.  A 1% increase in LIBORwould result in an increase of $1.40 million in interest expense for the threemonths ended March 31, 2010, considering the increase impacts only theunhedged portion of the debt.

 

Derivativefinancial instruments

 

Asof March 31, 2010, weheld ten interest rate swap agreements with DnB NOR Bank to manage interestcosts and the risk associated with changing interest rates.  The total notional principal amount of theswaps is $756.2 million, and the swaps have specified rates and durations.  Refer to the table in Note 9 — Interest RateSwap 

 

37

----

Table ofContents

 

Agreements of ourcondensed financial statements, which summarizes the interest rate swaps inplace as of March 31, 2010 and December 31, 2009.

 

The differential to be paid or received for these swapagreements is recognized as an adjustment to interest expense as incurred.  The interest rate differential pertaining tothe interest rate swaps for the three months ended March 31, 2010 and 2009was $7.6 million and $5.6 million, respectively.  The Company is currently utilizing cash flowhedge accounting for the swaps whereby the effective portion of the change invalue of the swaps is reflected as a component of accumulated othercomprehensive income (“AOCI”).  Theineffective portion is recognized as other (expense) income, which is acomponent of other (expense) income.  Iffor any period of time, the Company did not designate the swaps for hedgeaccounting, the change in the value of the swap agreements prior to designationwould be recognized as other (expense) income.

 

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

 

Refer to “Interest raterisk” section above for further information regarding the interest rate swapagreements.

 

Currency and exchangerates risk

 

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

 

As part of our businessstrategy, we may enter into short-term forward currency contracts to protectourselves from the risk arising from the fluctuation in the exchange rateassociated with the cost basis of the Jinhui shares.

 

Investments

 

We hold an investment inJinhui of $76.4 million, which is classified as available for sale underAccounting Standards Codification 320-10, Investments — Debt and Equity Securities(“ASC 320-10”) (formerly SFAS No. 115, “Accounting for Certain Investmentsin Debt and Equity Securities”).  The investment is classified as a current ornoncurrent asset based on our intent to hold the investment at each reportingdate.  The investments that areclassified as available for sale are subject to risk of changes in marketvalue, 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 aquarterly basis to determine if any valuation adjustments are appropriate underASC 320-10.  We will continue to evaluatethe investment on a quarterly basis to determine the likelihood of any furthersignificant adverse effects on the fair value. For the quarter ended March 31, 2010, we have not deemed ourinvestment to be impaired.  In the eventwe determine that the Jinhui investment is subject to any impairment, theamount of the impairment would be reclassified from AOCI and recorded as a lossin the income statement for the amount of the impairment.

 

ITEM 4.                        CONTROLSAND PROCEDURES

 

**EVALUATIONOF DISCLOSURE CONTROLS AND PROCEDURES**

 

Underthe supervision and with the participation of our management, including ourPresident and Chief Financial Officer, we have evaluated the effectiveness ofthe design and operation of our disclosure controls and procedures as definedin Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of theend of the period covered by this report. Based upon that evaluation, ourPresident and Chief Financial Officer have concluded that our disclosurecontrols and procedures are effective.

 

38

----

Table of Contents

 

**CHANGESIN INTERNAL CONTROL OVER FINANCIAL REPORTING**

 

Therehave been no changes in our internal control over financial reporting (as suchterm is defined in Rules 13a-15(f) and 15d-15(f) of the ExchangeAct) during our most recent fiscal quarter that have materially affected, orare reasonably likely to materially affect, our internal control over financialreporting.

 

**PART II:    OTHERINFORMATION**

 

ITEM 1.      LEGALPROCEEDINGS

 

From time to time the Company may be subject to legalproceedings and claims in the ordinary course of its business, principallypersonal injury and property casualty claims. Such claims, even if lackingmerit, could result in the expenditure of significant financial and managerialresources.   The Company is not aware ofany legal proceedings or claims that it believes will have, individually or inthe aggregate, a material adverse effect on the Company, its financialcondition, results of operations or cash flows.

 

ITEM 2.      UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three months ended March 31,2010, we did not repurchase any shares of our common stock pursuant to ourshare repurchase program.

 

39

----

Table of Contents

 

**Item 6.  EXHIBITS**

 
| **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 March 24, 2010.(5)                           |
|        |       |                                                                                                                                      |
| 10.1        |       | Memorandum of Agreement dated February 19, 2010  between Inta Navigation Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.2        |       | Memorandum of Agreement dated February 19, 2010  between Borak Shipping Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.3        |       | Memorandum of Agreement dated February 19, 2010  between Sinova Shipping Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.4        |       | Memorandum of Agreement dated February 19, 2010  between Spice Shipping Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.5        |       | Memorandum of Agreement dated February 22, 2010  between Shipping Trust Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.6        |       | Memorandum of Agreement dated February 22, 2010  between Oceanways Trust Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.7        |       | Subscription  Agreement, dated March 3, 2010, between Baltic Trading Limited and Genco Investments  LLC.(7)                          |
|        |       |                                                                                                                                      |
| 10.8        |       | Shareholders Rights Agreement, dated March 5, 2010,  between Baltic Trading Limited and Mellon Investor Services LLC.(7)             |
|        |       |                                                                                                                                      |
| 10.9        |       | Management Agreement dated March 15, 2010 by and  between Genco Shipping & Trading Limited and Baltic Trading  Limited.(8)  |
|        |       |                                                                                                                                      |
| 10.10       |       | Omnibus Agreement dated March 15, 2010 by and between  Genco Shipping & Trading Limited and Baltic Trading Limited.(8)      |
|        |       |                                                                                                                                      |
| 10.11       |       | Registration Rights Agreement dated March 15, 2010 by  and between Genco Investments LLC and Baltic Trading Limited.(8)              |
|        |       |                                                                                                                                      |
| 10.12       |       | Restricted  Stock Grant Agreement dated March 5, 2010between Genco Shipping & Trading  Limited and Peter C. Georgiopoulos.* |
|        |       |                                                                                                                                      |
| 31.1        |       | Certification  of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                              |
|        |       |                                                                                                                                      |
| 31.2        |       | Certification  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.*                               |
|        |       |                                                                                                                                      |
| 32.1        |       | Certification  of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                              |
|        |       |                                                                                                                                      |
| 32.2        |       | Certification  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.*                               |

 

----

(*)           Filed with this report.

 

40

----

Table ofContents

 
| (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 Report on Form 8-K, filed with the Securities and  Exchange Commission on March 25, 2010.                  |
| (6) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on February 25, 2010.               |
| (7) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on March 9, 2010.                   |
| (8) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on March 15, 2010.                  |

 

**(Remainderof page left intentionally blank)**

 

41

----

Tableof Contents

 

**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 

 
|                    | GENCO  SHIPPING & TRADING LIMITED                                                       |
|-------------------------|--------------------------------------------------------------------------------------------------|
|                    |                                                                                             |   |
|                    |                                                                                             |   |
| DATE: May 10, 2010 | By:                                                                                              | /s/  Robert  Gerald Buchanan |
|                    | Robert Gerald Buchanan  President                                                                |
|                    | (Principal Executive  Officer)                                                                   |
|                    |                                                                                             |
|                    |                                                                                             |
| DATE: May 10, 2010 | By:                                                                                              | /s/  John C.  Wobensmith |
|                    | John C. Wobensmith                                                                               |
|                    | Chief Financial  Officer, Secretary and Treasurer   (Principal Financial and Accounting Officer) |

 

42

----

Tableof Contents

 

**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 March 24, 2010.(5)                           |
|        |       |                                                                                                                                      |
| 10.1        |       | Memorandum of Agreement dated February 19, 2010  between Inta Navigation Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.2        |       | Memorandum of Agreement dated February 19, 2010  between Borak Shipping Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.3        |       | Memorandum of Agreement dated February 19, 2010  between Sinova Shipping Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.4        |       | Memorandum of Agreement dated February 19, 2010  between Spice Shipping Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.5        |       | Memorandum of Agreement dated February 22, 2010  between Shipping Trust Ltd. and Baltic Trading Limited.(6)                          |
|        |       |                                                                                                                                      |
| 10.6        |       | Memorandum of Agreement dated February 22, 2010  between Oceanways Trust Ltd. and Baltic Trading Limited.(6)                         |
|        |       |                                                                                                                                      |
| 10.7        |       | Subscription  Agreement, dated March 3, 2010, between Baltic Trading Limited and Genco Investments  LLC.(7)                          |
|        |       |                                                                                                                                      |
| 10.8        |       | Shareholders Rights Agreement, dated March 5, 2010,  between Baltic Trading Limited and Mellon Investor Services LLC.(7)             |
|        |       |                                                                                                                                      |
| 10.9        |       | Management Agreement dated March 15, 2010 by and  between Genco Shipping & Trading Limited and Baltic Trading  Limited.(8)  |
|        |       |                                                                                                                                      |
| 10.10       |       | Omnibus Agreement dated March 15, 2010 by and between  Genco Shipping & Trading Limited and Baltic Trading Limited.(8)      |
|        |       |                                                                                                                                      |
| 10.11       |       | Registration Rights Agreement dated March 15, 2010 by  and between Genco Investments LLC and Baltic Trading Limited.(8)              |
|        |       |                                                                                                                                      |
| 10.12       |       | Restricted  Stock Grant Agreement dated March 5, 2010between Genco Shipping & Trading  Limited and Peter C. Georgiopoulos.* |
|        |       |                                                                                                                                      |
| 31.1        |       | Certification  of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                              |
|        |       |                                                                                                                                      |
| 31.2        |       | Certification  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.*                               |
|        |       |                                                                                                                                      |
| 32.1        |       | Certification  of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                              |
|        |       |                                                                                                                                      |
| 32.2        |       | Certification  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.*                               |

 

----

(*)           Filed with this report.

 

43

----

Table ofContents

 
| (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 Report on Form 8-K, filed with the Securities and  Exchange Commission on March 25, 2010.                  |
| (6) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on February 25, 2010.               |
| (7) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on March 9, 2010.                   |
| (8) |   | Incorporated by reference to Genco Shipping &  Trading Limited’s Report on Form 8-K, filed with the Securities and  Exchange Commission on March 15, 2010.                  |

 

**(Remainder of page left intentionally blank)**

 

44

----