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March 25, 2009

DryShips loses $1 billion in fourth quarter

DryShips Inc. (NasdaqGS:DRYS) today reported a whopping $1.02 billion loss, or $18.42 per share, for the quarter ended December 31, 2008. But the primary cause wasn't the collapse in the dry bulk market. The fourth quarter result included a non-cash loss of $700.5 million related to the impairment of goodwill associated with the acquisition of Ocean Rig ASA, and a non cash loss of $177.0 million associated with the valuation of the interest rate swaps.

Financial Highlights

For the fourth quarter of 2008, the company reported a loss of $1.02 billion or $18.42 per share. Included in the fourth quarter results are a non-cash loss of $700.5 million or $12.68 per share related to the impairment of goodwill associated with the acquisition of Ocean Rig ASA, a loss related to contract termination fees and forfeiture of vessel deposits of $160.0 million or $2.90 per share, a non cash loss of $177.0 million or $3.20 per share associated with the valuation of the company's interest rate swaps, a loss on the sale of one vessel of $3.0 million or $0.05 per share, amortization of stock based compensation of $9.5 million or $0.17 per share and a gain on the contract cancellation of one vessel of $9.1 million or 0.16 per share . Excluding these items, Net Income would amount to $23.5 million or $0.43 per share.

For the year ended December 31, 2008, the company reported a loss of $361.3 million or $8.11 per share. Included in the year ended December 31, 2008 results are a non-cash loss of $700.5 million or $15.71 per share related to impairment of goodwill associated with the acquisition of our wholly owned subsidiary Ocean Rig ASA, a loss related to contract termination fees and forfeiture of vessel deposits of $160.0 million or $3.59 per share, a non cash loss of $207.9 or $4.66 per share associated with the valuation of the Company's interest rate swaps, a gain on the sale of eight vessels of $223.0 million or $5.00 per share, amortization of stock based compensation of $31.5 million or $0.71 per share and a gain on the contract cancellation of one vessel of $9.1 million or 0.20 per share. Excluding these items, net Income would amount to $506.2 million or $11.35 per share.

George Economou, Chairman and Chief Executive Officer of the company, commented:

"Since the collapse of the world economy in the latter part of 2008 we have taken a pro-active approach implementing innovative steps to address the current market environment. DryShips has dramatically reduced its capital expenditures while minimizing the use of cash. The cancellation of 17 contracts associated with vessels previously announced worth $2 billion have dramatically reduced remaining CAPEX in 2009 to $149.6 million excluding payments associated with our newbuilding drillships. We have shored up the balance sheet by raising significant amounts of fresh equity for DryShips in an extremely difficult environment enhancing our liquidity position. These actions have garnered the support of our bankers as demonstrated by the waiver obtained by our three main lenders on the Primelead facility. These three lenders, acting as agents or direct lenders, represent 75% of the total loans outstanding. The latest fixture of the Leiv Eiriksson justifies the decision taken about a year ago to diversify into the ultra deep water offshore drilling segment by acquiring Ocean Rig ASA. In combination with the fixed revenue from the second operating rig and the period employment secured at the peak of the drybulk market for over 50% of our vessel operating days, we estimate our fixed EBITDA for the next three years will total approximately $1.70 billion. DryShips is ahead of the curve in facing the challenges of tomorrow. We remain cautiously optimistic about the future as we continue to build the company for the long term."

You can access the entire DryShips press release HERE


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