12 – VOYAGE REVENUE

Total voyage revenue includes revenue earned on fixed rate time charters, spot market voyage charters, spot market-related time charters and vessel pools, as well as the sale of bunkers consumed during short-term time charters. For the three months ended September 30, 2018 and 2017, the Company earned $92,263 and $51,161 of voyage revenue, respectively. Included in voyage revenue for the three months ended September 30, 2018 and 2017 was $0 and $1 of net profit sharing revenue, respectively. For the nine months ended September 30, 2018 and 2017, the Company earned $255,336 and $134,780 of voyage revenue, respectively. Included in voyage revenue for the nine months ended September 30, 2018 and 2017, the Company earned $0 and $2,325 of net profit sharing revenue, respectively.

On January 1, 2018 the Company adopted the revenue recognition guidance under ASC 606 (refer to Note 2 — Summary of Significant Accounting Policies) using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. The financial results for reporting periods beginning after January 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and will be continued to be reported under previous guidance.

As a result of the adoption of the new revenue recognition guidance on January 1, 2018, the Company recorded a net increase to the opening retained deficit of $659 for the cumulative impact of adopting the new guidance. The impact related primarily to the change in accounting for spot market voyage charters. Prior to the adoption of the new guidance, revenue for spot market voyage charters was recognized ratably over the total transit time of the voyage, which previously commenced the latter of when the vessel departed from its last discharge port and when an agreement was entered into with the charterer, and ended at the time the discharge of cargo was completed at the discharge port. As a result of the adoption of the new guidance, revenue for spot market voyage charters is now being recognized ratably over the total transit time of the voyage which now begins when the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port. Additionally, the Company has identified that the contract fulfillment costs of spot market voyage charters consist primarily of the fuel consumption that is incurred by the Company from the latter of the end of the previous vessel employment and the contract date until the arrival at the loading port in addition to any port expenses incurred prior to arrival at the load port, as well as any charter hire expenses for third-party vessels that are chartered-in. The fuel consumption during this period is capitalized and recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet and is amortized ratably over the total transit time of the voyage from arrival at the loading port until the vessel departs from the discharge port and expensed as part of Voyage Expenses. Refer also to Note 9 — Prepaid Expenses and Other Current Assets.

The following table illustrates the impact of the adoption of the new revenue recognition guidance on the Condensed Consolidated Balance Sheet:


	As of September 30, 2018
			Balance
			without Adoption
			of New Revenue		Effect of
	As Reported		Standard		Change
Assets
Current assets:
Due from charterers	$	18,536	$	20,974	$	(2,438)
Prepaid expenses and other current assets		10,072		8,396		1,676

Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	33,084	$	33,123	$	(39)
Deferred revenue		10,231		8,402		1,829

Equity:
Retained deficit	$	(705,556)	$	(703,004)	$	(2,552)

The following table illustrates the impact of the adoption of the new revenue recognition guidance on the Condensed Consolidated Statement of Operations:


	For the Three Months Ended September 30, 2018
			Balance
			without Adoption
			of New Revenue		Effect of
	As Reported		Standard		Change
Voyage revenues	$	92,263	$	95,123	$	(2,860)

Voyage expenses		31,475		32,512		(1,037)

Net income		5,708		7,531		(1,823)

Net earnings per share-basic	$	0.14	$	0.18	$	(0.04)
Net earnings per share-diluted	$	0.14	$	0.18	$	(0.04)


	For the Nine Months Ended September 30, 2018
			Balance
			without Adoption
			of New Revenue		Effect of
	As Reported		Standard		Change
Voyage revenues	$	255,336	$	258,450	$	(3,114)

Voyage expenses		78,551		79,772		(1,221)

Net loss		(51,224)		(49,331)		(1,893)

Net loss per share-basic	$	(1.37)	$	(1.32)	$	(0.05)
Net loss per share-diluted	$	(1.37)	$	(1.32)	$	(0.05)

The following table illustrates the impact of the adoption of the new revenue recognition guidance on the Condensed Consolidated Statement of Cash Flows:


	For the Nine Months Ended September 30, 2018
			Balance
			without Adoption
			of New Revenue		Effect of
	As Reported		Standard		Change
Cash flows from operating activities:
Change in assets and liabilities:
Increase in due from charterers	$	(6,329)	$	(8,119)	$	1,790
Increase in prepaid expenses and other current assets		(5,966)		(4,765)		(1,201)
Increase in accounts payable and accrued expenses		8,169		8,202		(33)
Increase in deferred revenue		5,017		3,680		1,337

The following table illustrates the cumulative effect of the adoption of the new revenue recognition guidance on the opening Condensed Consolidated Balance Sheet:


			New
	Balance at		Revenue		Balance at
	December 31,		Standard		January 1,
	2017		Adjustment		2018
Assets
Current assets:
Due from charterers	$	12,855	$	(647)	$	12,208
Prepaid expenses and other current assets		7,338		475		7,813

Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	23,230	$	(6)	$	23,224
Deferred revenue		4,722		493		5,215

Equity:
Retained deficit	$	(653,673)	$	(659)	$	(654,332)