RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY

9 Months Ended

Sep. 30, 2015

RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY

RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS

23 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE SUCCESSOR COMPANY

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

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

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

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

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

Predecessor

RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY

RESTATEMENT OF CONSOLIDATING FINANCIAL STATEMENTS

22 — RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS OF THE PREDECESSOR COMPANY

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

The Company determined its previously issued consolidated financial statements for the Predecessor Company for the period ended July 9, 2014 should be restated to correct for these errors. The effect of correcting for these errors resulted in (1) changing the Company’s previously reported gain on Reorganization items, net to a loss, (2) changing the Company’s previously reported Net income and Net income per share to a Net loss and Net loss per share, respectively, (3) changing the Company’s previously reported Net income attributable to Genco Shipping & Trading Limited to a Net loss attributable to Genco Shipping & Trading Limited, and increasing the Company’s previously reported Net loss attributable to noncontrolling interest for the period from January 1, 2014 to July 9, 2014 and July 1, 2014 to July 9, 2014. The effect of correcting these errors for the period from January 1, 2014 to July 9, 2014 has been disclosed in the 2014 10-K. The effect of correcting these errors for the period from July 1 to July 9, 2014 is summarized in the following tables:

Condensed Consolidated Statement of Operations

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

	Predecessor						Predecessor
	Period from July 1 to July 9, 2014 As Reported			Adjustment			Period from July 1 to July 9, 2014 As Restated
Loss before reorganization items, net	$	(9,884	)	—			$	(9,884	)
Reorganization items, net	902,273			(1,797,807		)(a)	(895,534		)


(Loss) income before income taxes	892,389			(1,797,807		)	(905,418		)
Income tax expense	(38		)	—			(38		)
Net (loss) income	892,351			(1,797,807		)	(905,456		)
Less: Net loss attributable to noncontrolling interest	(568		)	(53,367		)(b)	(53,935		)

Net (loss) income attributable to Genco Shipping & Trading Limited	$	892,919		$	(1,744,440	)	$	(851,521	)


Net (loss) income per share-basic	$	20.49		N/A			$	(19.54	)

Net (loss) income per share-diluted	$	20.49		N/A			$	(19.54	)

Weighted average common shares outstanding-basic	43,568,942			N/A			43,568,942

Weighted average common shares outstanding-diluted	43,568,942			N/A			43,568,942

Dividends declared per share	$	—		N/A			$	—

(a)

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

	Adjustment
Discharge of Predecessor equity <1>	$	(829,974	)
Issuance of Successor equity <2>	(1,133,900		)
Recording of goodwill in fresh-start accounting <3>	166,067

Total	$	(1,797,807	)

<1>The accounting consequences related to the discharge of Predecessor equity were previously reported as a component in the computation of “Reorganization items, net”. The adjustment is to exclude the accounting consequences related to the discharge of Predecessor equity from the computation of “Reorganization items, net”.

<2>The accounting consequences related to the issuance of Successor equity were previously excluded as a component in the computation of “Reorganization items, net”. The adjustment is to include from the accounting consequences related to the issuance of Successor equity in the computation of “Reorganization items, net”.

<3>The accounting consequences related to the recognition of goodwill were previously excluded as a component in the computation of “Reorganization items, net”. The adjustment is to include the accounting consequences related to the establishment of goodwill in the computation of “Reorganization items, net”.

(b)

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

Condensed Consolidated Statement of Comprehensive Loss

(U.S. Dollars in Thousands)

	Predecessor						Predecessor
	Period from July 1 to July 9, 2014 As Reported			Adjustment			Period from July 1 to July 9, 2014 As Restated
Net (loss) income	$	892,351		$	(1,797,807	)	(905,456		)

Change in unrealized (loss) gain on investments	2,186			—			2,186
Unrealized gain on cash flow hedges, net	95			—			95

Other comprehensive (loss) income	2,281			—			2,281


Comprehensive (loss) income	894,632			(1,797,807		)	(903,175		)
Less: Comprehensive loss attributable to noncontrolling interest	(568		)	(53,367		)	(53,935		)

Comprehensive (loss) income attributable to Genco Shipping & Trading Limited	$	895,200		$	(1,744,440	)	$	(849,240	)