Edgar Filing: GENCO SHIPPING & TRADING LTD

Form 10Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2006

r	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to _________________________

Commission file number ___________

GENCO SHIPPING & TRADING LIMITED

(Exact name of registrant as specified in its charter)

Republic of the Marshall Islands (State or other jurisdiction 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’s telephone number, including area code)

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

Yes X No

Indicate by checkmark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

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

Yes No X

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of each of the issuer’s classes of common stock, as of May 11, 2006:

Common stock, $0.01 per share 25,434,212 shares.

Genco Shipping & TradingLimited

Form 10-Qfor the three months ended March 31, 2006 and 2005

Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	a) Consolidated Balance Sheets
	March 31, 2006 and December 31, 2005	3

	b) Consolidated Statements of Operations For the three months ended March 31, 2006 and 2005	4

	c) Consolidated Statements of Shareholders’ Equity and Comprehensive Income For the three months ended March 31, 2006 and 2005	5

	d) Consolidated Statements of Cash Flows For the three months ended March 31, 2006 and 2005	6

	e) Notes to Consolidated Financial Statements For the three months ended March 31, 2006 and 2005	7

Item 2.	Management’s Discussion and Analysis of Financial Position and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Control and Procedures	36

	PART II OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Submission of Matters to a Vote of Security Holders	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

Genco Shipping & Trading Limited

Consolidated Balance Sheets as of March 31, 2006

And December 31, 2005

(U.S. Dollars in thousands)

	March 31, 2006		December 31, 2005
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	54,894	$	46,912
Due from charterers		306		219
Prepaid expenses and other current assets		2,444		2,574

Total current assets		57,644		49,705

Noncurrent assets:
Vessels, net of accumulated depreciation of $28,997 and $22,659, respectively		423,972		430,287
Deferred drydock, net of accumulated depreciation of $60 and $35, respectively		426		152
Other assets, net of accumulated amortization of $200 and $126, respectively		5,464		5,967
Fixed assets, net of accumulated depreciation and amortization of $104 and $49, respectively		1,745		1,522
Fair value of derivative instruments		6,785		2,325
Total noncurrent assets		438,392		440,253

Total assets	$	496,036	$	489,958

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	5,909	$	5,978

Total current liabilities		5,909		5,978

Noncurrent liabilities:
Deferred revenue		4,786		4,576
Deferred rent credit		596		479
Long term debt		130,683		130,683
Total noncurrent liabilities		136,065		135,738

Total liabilities		141,974		141,716

Commitments and contingencies

Shareholders’ equity:
Common stock, par value $0.01; 100,000,000 shares authorized; issued and
outstanding 25,434,212 and 13,500,000 shares at March 31, 2006 and December 31, 2005, respectively		254		254
Paid in capital		306,019		305,500
Accumulated other comprehensive income		6,309		2,325
Retained earnings		41,480		40,163

Total shareholders’ equity		354,062		348,242

Total liabilities and shareholders’ equity	$	496,036	$	489,958

See accompanying notes to consolidated financial statements.

Genco Shipping & Trading Limited

Consolidated Statements of Operations for the Three Ended March 31, 2006 and 2005

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

(Unaudited)

	For the Three Months Ended March 31,
	2006			2005

Revenues	$	32,572		$	21,399

Operating expenses:
Voyage expenses		1,104			890
Vessel operating expenses		4,559			2,016
General and administrative expenses		2,449			260
Management fees		347			331
Depreciation and amortization		6,417			3,981

Total operating expenses		14,876			7,478

Operating income		17,696			13,921

Other (expense) income:
Income from derivative instruments		476			-
Interest income		569			83
Interest expense		(2,163	)		(2,620	)

Other (expense) income		(1,118	)		(2,537	)

Net income	$	16,578		$	11,384

Earnings per share-basic	$	0.66		$	0.84
Earnings per share-diluted	$	0.66		$	0.84
Weighted average common shares outstanding-basic		25,260,000			13,500,000
Weighted average common shares outstanding-diluted		25,304,448			13,500,000

See accompanying notes to consolidated financial statements.

Genco Shipping & Trading Limited

Consolidated Statement of Shareholders’ Equity (Unaudited)

For the Three Months Ended March 31, 2006

(U.S. Dollars in Thousands)

	Common Stock		Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Income		Comprehensive Income		Total
Balance - January 1, 2006	$	254	$	305,500	$	40,163		$	2,325			$	348,242

Net income						16,578					16,578		16,,578

Unrealized derivative gains from cash flow hedge									3,984		3,984		3,984

Comprehensive income											20,562

Cash dividends paid						(15,261	)						(15,261	)

Restricted stock amortization				519									519

Balance - March 31, 2006	$	254	$	306,019	$	41,480		$	6,309			$	354,062

See accompanying notes to consolidated financial statements.

Genco Shipping & Trading Limited

Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2006 and 2005

(U.S. Dollars in Thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2006			2005


Cash flows from operating activities:
Net income	$	16,578		$	11,384
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,417			3,981
Amortization of deferred financing costs		74			202
Amortization of value of time charter acquired		456			-
Unrealized gain on derivative instruments		(476	)		-
Amortization of restricted stock compensation expense		519			-
Change in assets and liabilities:
(Increase) decrease in due from charterers		(87	)		635
Decrease (increase) in prepaid expenses and other current assets		130			(729	)
Increase in accounts payable and accrued expenses		273			1,074
Increase in deferred revenue		210			1,128
Increase in deferred rent credit		117			-
Deferred drydock costs incurred		(299	)		-

Net cash provided by operating activities		23,912			17,675

Cash flows from investing activities:
Purchase of vessels, net of deposits		(23	)		(193,270	)
Purchase of other fixed assets		(619	)		-

Net cash used in investing activities		(642	)		(193,270	)

Cash flows from financing activities:
Proceeds from credit facilities		-			192,907
Cash dividends paid		(15,261	)		-
Payment of deferred financing costs		(27	)		(305	)
Increase in restricted cash		-			(7,108	)

Net cash (used in) provided by financing activities		(15,288	)		185,494

Net increase in cash		7,982			9,899

Cash at beginning of period		46,912			7,431

Cash at end of period	$	54,894		$	17,330

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	2,225		$	1,418

See accompanying notes to consolidated financial statements.

Genco Shipping & Trading Limited

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

Notes to Consolidated Financial Statements for the Three Months Ended March 31, 2006 and 2005(unaudited)

1 - GENERAL INFORMATION

The accompanying consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its wholly owned subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T was incorporated on September 27, 2004 under the laws of the Marshall Islands and is the sole owner of all of the outstanding shares of the following subsidiaries: Genco Ship Management LLC, and the 17 ship-owning subsidiaries as set forth below. The Company began operations on December 6, 2004 with the delivery of its first vessel.

The Company agreed to acquire a fleet of 16 drybulk carriers from an unaffiliated third party on November 19, 2004. As of October 14, 2005, the Company had taken delivery of all of the vessels as shown below:


Wholly Owned Subsidiaries	Vessels Acquired	dwt	Date Delivered	Year Built

Genco Reliance Limited	Genco Reliance	29,952	12/6/04	1999
Genco Glory Limited	Genco Glory	41,061	12/8/04	1984
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 Trader Limited	Genco Trader	69,338	6/7/05	1990
Genco Muse Limited	Genco Muse	48,913	10/14/05	2001

The purchase price of the initial 16 vessels aggregated to approximately $421,900, which was funded from initial capital contributions of $75,172 in conjunction with GS&T’s issuance of common stock to Fleet Acquisition LLC (the “Former Parent Company”), and from borrowings under the Company’s Original Credit Facility, and from the Company’s cash flows from operations. Additionally, on October 14, 2005 the Company acquired the Genco Muse with an existing time charter for $34,450, which was funded entirely by the Company’s New Credit Facility. The portion of the purchase price attributable to the vessel was $30,958 (see Note 4).

On July 22, 2005, the Company completed its initial public offering of 11,760,000 shares at $21 per share resulting in gross proceeds of $246,960. After underwriting commissions and other offering expenses, net proceeds to the Company were $230,305.

Prior to its initial public offering, the Company was 100% owned by Fleet Acquisition LLC, a limited liability company organized on November 3, 2004 under the laws of the Marshall Islands. Fleet Acquisition LLC was owned 66.53% by OCM Principal Opportunities III Fund, L.P. and OCM Principal Opportunities Fund IIIA, L.P., collectively, (“Oaktree”) of which Oaktree Management LLC is the General Partner, 26.63% by Peter Georgiopoulos, and 6.84% by others. As of December 31, 2005 and March 31, 2006, Fleet Acquisition LLC maintained a 53.08% ownership in the Company. On April 14, 2006, Fleet Acquisition LLC distributed 1,050,210 shares to certain of its members, all of whom except Peter Georgiopoulos ceased to be members upon such distribution. The remaining 12,449,790 shares of the Company stock owned by Fleet Acquisition LLC continue to be held by Oaktree and by Peter

Georgiopoulos, our chairman. Of Fleet Acquisition LLC’s remaining equity holders, Oaktree owns approximately 71.4% of its equity and Mr. Georgiopoulos owns approximately 28.6% of its equity. As a result of this share distribution, Oaktree and Peter Georgiopoulos own approximately 48.96% of the Company through Fleet Acquisition, LLC.

On July 18, 2005, prior to the closing of the public offering of GS&T’s common stock, GS&T’s Board of Directors and stockholder approved a split (in the form of a stock dividend, giving effect to a 27,000:1 common stock split) of the Company’s common stock. All share and per share amounts relating to common stock, included in the accompanying consolidated financial statements and footnotes, have been restated to reflect the stock split for all periods presented.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

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

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of financial position and operating results have been included in the statements. Interim results are not necessarily indicative of results for a full year. Reference is made to the December 31, 2005 consolidated financial statements of Genco Shipping & Trading Ltd. contained in its Annual Report on Form 10-K for the year ended December 31, 2005.

Business geographics

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

Vessel acquisitions

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

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

Segment reporting

The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not use discrete financial information to evaluate the operating results for different types of charters. Although revenue can be identified for these types of charters, management cannot and does not separately identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus, the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

Revenue and voyage expense recognition

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

In December 2005 and February 2006, the Genco Trader and Genco Leader, respectively, entered into the Baumarine Panamax Pool. Vessel pools, such as the Baumarine Panamax Pool, provide cost effective commercial management activities for a group of similar class vessels. The pool arrangement provides the benefits of a large-scale operation, and chartering efficiencies that might not be available to smaller fleets. Under the pool arrangement, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the charterer and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel. Since the members of the pool share in the revenue generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these two vessels is subject to the fluctuations of the spot market.

Included in the standard time charter contracts with our customers, are certain performance parameters, which if not met can result in customer claims. As of March 31, 2006 and December 31, 2005, the Company had a reserve of $382 and $316, respectively, associated with estimated customer claims against the Company for time charter performance issues.

Vessel operating expenses

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

Vessels, net

Vessels, net are stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard.

Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is

estimated by the Company by taking the cost of steel times the weight of the ship noted in lightweight ton (lwt). At March 31, 2006 and December 31, 2005, the Company estimated the residual value of vessels to be $175/lwt.

Fixed assets, net

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

Description	Useful lives
Leasehold improvements	15 years
Furniture, fixtures & other equipment	10 years
Vessel equipment	2-5 years
Computer equipment	4 years

Deferred drydocking costs

The Company’s vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. The Company capitalizes the costs associated with the drydockings as they occur and depreciate these costs on a straight-line basis over the period between drydockings. Costs capitalized as part of a vessel’s drydocking include actual costs incurred at the drydocking yard; cost of parts that are reasonably made in anticipation of reducing the duration or cost of the drydocking; cost of travel, lodging and subsistence of personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking.

Inventory

Inventory consists of lubricants and stores which are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.

Impairment of long-lived assets

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

For three months ended March 31, 2006 and 2005, no impairment charges were recorded, based on the analysis described above.

Deferred financing costs

Deferred financing costs, included in other assets, consist of fees, commissions and legal expenses associated with securing loan facilities. These costs are amortized over the life of the related debt, which is included in interest expense. In July 2005, the Company entered into a new credit facility (the “New Credit Facility”), which resulted in a write-off of $4,103, in July 2005, of unamortized deferred financing costs associated with the Original Credit Facility.

Cash and cash equivalents

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

Income taxes

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

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

Based on the ownership of our common stock prior to our initial public offering on July 22, 2005 as discussed in note 1, we qualified for exemption from income tax for 2005 under Section 883, since for more than half of 2005, we were a Controlled Foreign Corporation (“CFC”) and satisfied certain other criteria in the Section 883 regulations. We were a CFC, as defined in the Code, since until the initial public offering on July 22, 2005, over 50% of our stock was owned by United States holders each of whom owned ten percent or more of our voting stock, or US 10% Owners. During that time, approximately 93% of our common stock was held by US 10% Owners.

Immediately following the initial public offering, the US 10% Owners beneficially owned less than 50% of our stock. If such owners were to continue to own less than 50% of our stock and there were no additional US 10% Owners during 2006, we would no longer be eligible to qualify for exemption from tax under Section 883 based on being a CFC. Instead, we could only qualify for exemption if we satisfy the publicly traded requirement of the Section 883 regulations. In order to meet the publicly traded requirements for 2006 and future years, our stock must be treated as being primarily and regularly traded on Nasdaq for more than half the days of any such year. Under the Section 883 regulations, our qualification for the publicly traded requirement may be jeopardized if shareholders of our common stock that own five percent or more of our stock own, in the aggregate, 50% or more of our common stock. As of March 31, 2006, we believe that such five percent or more shareholders are limited to Oaktree and Peter Georgiopoulos, our Chairman which own approximately 48.96% of our common stock through Fleet Acquisition, LLC. However if such shareholders were to increase their ownership in excess of 50% of our common stock for more than half the days of 2006, we would not be eligible to claim exemption from tax under Section 883. We can therefore give no assurance that changes and shifts in the ownership of our stock by five percent or more shareholders will permit us to qualify for exemption from tax in 2006 or in future years.

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

Deferred revenue

Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned.

Comprehensive income

The Company follows Statement of Financial Accounting Standards No. 130 “Reporting Comprehensive Income,” which establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is comprised of net income and amounts related to the adoption of SFAS No. 133.

Restricted stock awards

In 2006 the Company has adopted the Financial Accounting Standards Board issued SFAS No. 123R, Share-Based Payment, for restricted stock issued under its equity incentive plan. Adoption of this new accounting policy did not change the method of accounting for restricted stock awards. However deferred compensation costs from restricted stock have been classified as a component of paid in capital as required by SFAS No. 123R.

Accounting estimates

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

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk are amounts due from charterers. With respect to amounts due from charterers, the Company attempts to limit its credit risk by performing ongoing credit evaluations and, when deemed necessary, requiring letters of credit, guarantees or collateral. Although the Company earned 100% and 100% of revenues from eleven and ten customers, for the three months ended March 31, 2006 and 2005, respectively, management does not believe significant risk exists in connection with the Company’s concentrations of credit at March 31, 2006 and December 31, 2005.

For the three months ended March 31, 2006 and 2005, there are three and two customers respectively, which individually account for more than 10% of revenue for the respective period.

Fair value of financial instruments

The estimated fair values of the Company’s financial instruments such as amounts due from charterers, accounts payable and long term debt approximate their individual carrying amounts as of March 31, 2006 and December 31, 2005 due to their short-term maturity or the variable-rate nature of the respective borrowings.

The fair value of the interest rate swaps (used for purposes other than trading) is the estimated amount the Company would receive to terminate the swap agreements at the reporting date, taking into account current interest rates and the creditworthiness of the swaps’ counterparty.

Interest rate risk management

The Company is exposed to the impact of interest rate changes. The Company’s objective is to manage the impact of interest rate changes on its earnings and cash flow in relation to its borrowings. The Company held three interest rate risk management instruments at March 31, 2006 and one at December 31, 2005, in order to manage future interest costs and the risk associated with changing interest rates.

For the swap that is effectively hedged the differential to be paid or received for this swap agreement is recognized as an adjustment to interest expense as incurred. The change in value on this swap is reflected as a component of other comprehensive income (“OCI”).

For the forward interest rate swaps, the change in the value for these swaps and the rate differential to be paid or received for these swaps is recognized as income from derivative instruments and is listed as a component of other (expense) income until such time the Company has obligations which are designated against the swap.

Derivative financial instruments

To manage its exposure to fluctuating interest rates, the Company uses interest rate swap agreements. Interest rate differentials to be paid or received under these agreements are accrued and recognized as an adjustment of interest expense related to the designated debt. The interest rate differential on the swaps that do not have designated debt associated with them will be reflected as income from derivative instruments and is listed as a component of other (expense) income. The fair value of the interest rate swap agreements and changes in fair value are recognized in the financial statements as non-current asset or liability.

Amounts receivable or payable arising at the settlement of interest rate swaps are deferred and amortized as an adjustment to interest expense over the period of interest rate exposure provided the designated liability continues to exist.

3 - CASH FLOW INFORMATION

The Company had non-cash operating and investing activities not included in the Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses for the purchase of fixed assets of approximately $82 and $0 for the three months ended March 31, 2006 and 2005, respectively.

The Company entered into the 4.485% Swap during 2005 and the 5.075% Swap and 5.25% Swap during March 2006, collectively (the “Swaps”). The Swaps are described and discussed in Note 2. The Swaps have a fair value of $6,785 and $2,325 as of March 31, 2006 and December 31, 2005, respectively.

The Company granted restricted stock to its employees in 2005. The fair value of such restricted stock was $2,940 on the grant dates and was recorded in equity as part of paid in capital.

4 - VESSEL ACQUISITION

On October 14, 2005, the Company took delivery of the Genco Muse, a 48,913 dwt Handymax drybulk carrier and the results of its operations is included in the consolidated results of the Company after that date. The vessel is a 2001 Japanese-built vessel. The total purchase price of the vessel was $34,450. The purchase price included the assumption of an existing time charter with Qatar Navigation QSC at a rate of $26.5 per day. Due to the above market rate of the existing time charter, the Company has capitalized $3,492 of the purchase price as an asset which is being amortized as a reduction of voyage revenues through September 2007 (the remaining term of the charter). For the three months ended March 31, 2006 and 2005, $456 and $0 was amortized. At March 31, 2006 and December 31, 2005 $2,638 and $3,094, respectively, remains unamortized.

The purchase of the Genco Muse is consistent with the Company's strategy of selectively expanding the number of high-quality vessels in the fleet.

5 - EARNINGS PER COMMON SHARE

The computation of basic earnings (loss) per share is based on the weighted average number of common shares outstanding during the year. The computation of diluted earnings (loss) per share assumes the vesting of granted restricted stock awards (see Note 16), for which the assumed proceeds upon grant are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive. For the three months ended March 31, 2006, the restricted stock grants are dilutive. For the three months ended March 31, 2005 there were no restricted shares granted.

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

	Three Months Ended March 31,
	2006	2005

Common shares outstanding, basic:
Weighted average common shares outstanding, basic	25,260,0000	13,500,000

Common shares outstanding, diluted:
Weighted average common shares outstanding, basic	25,260,000	13,500,000

Weighted average restricted stock awards	44,448	-

Weighted average common shares outstanding, diluted	25,304,448	13,500,000

6 - RELATED PARTY TRANSACTIONS

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

During the three months ended March 31, 2006 and 2005, the Company incurred travel related expenditures totaling $139 and $0, respectively, reimbursable to General Maritime Corporation or its service provider, where the Company Chairman, Peter C. Georgiopoulos also serves as Chairman of the Board, Chief Executive Officer and President, and Stephen A. Kaplan also serves as a director. Approximately, $49 of these travel expenditures were paid from the gross proceeds received from the initial public offering and as such were included in the determination of net proceeds. At March 31, 2006 there was $139 owed to General Maritime Corporation. There were no amounts due to General Maritime Corporation at December 31, 2005.

During the three months ended March 31, 2006 and 2005, the Company incurred legal services aggregating $1 and $107 from Constantine Georgiopoulos, father of Peter C. Georgiopoulos, Chairman of the Board. At March 31, 2006 and December 31, 2005, $1 and $27, respectively, were outstanding to Constantine Georgiopoulos.

The Company has obtained an insurance policy through Leeds & Leeds Company Inc., a broker. Leeds & Leeds Company Inc. which at March 31, 2006 holds less than 0.1% ownership in Fleet Acquisition LLC. The Company incurred $693 and $361 of insurance expense to them for the three months ended March 31, 2006 and 2005, respectively. The amounts due to Leeds & Leeds Company, Inc. at March 31, 2006 and December 31, 2005 were $181 and $0, respectively.

7 - LONG-TERM DEBT

Long-term debt consists of the following:

	March 31, 2006		December 31, 2005

Revolver, New Credit Facility	$	130,683	$	130,683
Less: Current portion of revolver		-		-

Long-term debt	$	130,683	$	130,683

New credit facility

The Company entered into the New Credit Facility as of July 29, 2005. The New Credit Facility is with a syndicate of commercial lenders consisting of Nordea Bank Finland Plc, New York Branch, DnB NOR Bank ASA, New York Branch and Citigroup Global Markets Limited. The New Credit Facility has been used to refinance our indebtedness under the Company's Original Credit Facility, and may be used in the future to acquire additional vessels and for working capital requirements. Under the terms of the New Credit Facility, borrowings in the amount

of $106,233 were used to repay indebtedness under the Original Credit Facility, and additional net borrowings of $24,450 were obtained to fund the acquisition of the Genco Muse. After these net borrowings $319,317 remains available to fund future vessel acquisitions. The Company may borrow up to $20,000 of the $319,317 for working capital purposes.

The New Credit Facility has a term of ten years maturing on July 29, 2015. The facility permits borrowings up to 65% of the fair value of the vessels that secure the obligations under the New Credit Facility up to the facility limit, provided that conditions to drawdown are satisfied. Certain of these conditions require the Company, among other things, to provide to the lenders acceptable valuations of the vessels in our fleet confirming that the aggregate amount outstanding under the facility (determined on a pro forma basis giving effect to the amount proposed to be drawn down) will not exceed 65% of the value of the vessels pledged as collateral. The New Credit Facility limit is $450,000 for a period of six years. Thereafter, the facility limit is reduced by an amount equal to 8.125% of the total $450,000 commitment, semi-annually over a period of four years and is reduced to $0 on the tenth anniversary.

The obligations under the New Credit Facility are secured by a first priority mortgage on each of the vessels in our fleet as well as any future vessel acquisitions pledged as collateral and funded by this facility. The New Credit Facility is also secured by a first priority security interest in our earnings and insurance proceeds related to the collateral vessels. The Company may grant additional security interest in vessels acquired that are not mortgaged.

All of our vessel-owning subsidiaries are full and unconditional joint and several guarantors of our New Credit Facility. Each of these subsidiaries is wholly owned by GS&T. GS&T has no independent assets or operations.

Interest on the amounts drawn is payable at the rate of 0.95% per annum over LIBOR until the fifth anniversary of the closing of the New Credit Facility and 1.00% per annum over LIBOR thereafter. The Company is also obligated to pay a commitment fee equal to 0.375% per annum on any undrawn amounts available under the facility. On July 29, 2005, the Company paid an arrangement fee to the lenders of $2,700 which equates to 0.6% of the total commitment of $450,000. The $2,700 along with other costs has been capitalized as deferred financing costs to date.

Under the terms of the New Credit Facility, the Company is permitted to pay or declare dividends in accordance with its dividend policy so long as no default or event of default has occurred and is continuing or would result from such declaration or payment.

The New Credit Facility has certain financial covenants that require among other things to ensure that the fair market value of the collateral vessels maintains a certain multiple as compared to the outstanding indebtedness; maintain a certain ratio of total indebtedness to total capitalization; maintain a certain ratio of earnings before interest, taxes, depreciation and amortization to interest expense; maintain a net worth of approximately $263 million; and maintain working capital liquidity in an amount of not less than $500 per vessel securing the borrowings. Additionally there are certain non-financial covenants that require among other things to provide the lender with certain legal documentation such as the mortgage on a newly acquired vessel using funds from the New Credit Facility, and other periodic communications with the lender that include certain compliance certificates at the time of borrowing and on a quarterly basis. For the period since facility inception through March 31, 2006, the Company has been in compliance with these covenants.

The New Credit Facility permits the issuance of letters of credit up to a maximum amount of $50,000. The conditions under which the letter of credit amounts can be issued are substantially the same as the conditions for borrowing funds under the facility. Each letter of credit must terminate within twelve months, but can be extended for successive periods also not exceeding twelve months. The Company pays a fee of 1/8 of 1% per annum on the amount of letters of credit outstanding. At March 31, 2006 and December 31, 2005, there were no letters of credit issued under the New Credit Facility.

The following table sets forth our maturity dates of the revolver as of:


Period Ending December 31,	Total

2006 (April 1, 2006 - December 31, 2006)	$	-
2007		-
2008		-
2009		-
2010		-
Thereafter		130,683

	$	130,683

Letter of credit

In conjunction with the Company entering into a new long-term office space lease (See Note 14 - Lease Payments), the Company was required to provide a letter of credit to the landlord in lieu of a security deposit. As of September 21, 2005, the Company obtained an annually renewable unsecured letter of credit with DnB NOR Bank in the amount of $650 at a fee of 1% per annum. The letter of credit is reduced to $520 on August 1, 2006 and is cancelable on each renewal date provided the landlord is given 150 days minimum notice.

Original Credit Facility

The Original Credit Facility, entered into on December 3, 2004, has been refinanced by the New Credit Facility. The Original Credit Facility had a five year maturity at a rate of LIBOR plus 1.375% per year until $100 million had been repaid and thereafter at LIBOR plus 1.250%. This facility was retired with proceeds from the initial public offering and proceeds from our New Credit Facility.

The Company's entry into the New Credit Facility in July 2005 which resulted in a write-off to interest expense of $4,103 of unamortized deferred financing costs associated with the Original Credit Facility, in the third quarter of 2005.

Interest rate swap agreements

Effective September 14, 2005, the Company entered into an interest rate swap agreement with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The notional principal amount of the swap is $106,233 and has a fixed interest rate on the notional amount of 4.485% through July 29, 2015 (the “4.485% Swap”). The swap's expiration date coincides with the expiration of the New Credit Facility on July 29, 2015. The differential to be paid or received for this swap agreement is recognized as an adjustment to interest expense as incurred. The change in value on this swap is reflected as a component of other comprehensive income (“OCI”).

The Company has determined that the 4.485% Swap continues to effectively hedge the debt. Interest income pertaining to this interest rate swap for the three months ended March 31, 2006 and 2005 was $11 and $0, respectively.

The Company, on March 24, 2006, entered into a forward interest rate swap agreement with a notional amount of $50,000,and has a fixed interest rate on the notional amount of 5.075% from January 2, 2008 through January 2, 2013 (the “5.075% Swap”) The change in the value of this swap and the rate differential to be paid or received for this swap agreement is recognized as income from derivative instruments and is listed as a component of other (expense) income until such time the Company has obligations which are designated against the swap.

The Company, on March 29, 2006, entered into a forward interest rate swap agreement with a notional amount of $50,000 and has a fixed interest rate on the notional amount of 5.25% from January 2, 2007 through January 2, 2014 (the“5.25% Swap”). The change in the value of this swap and the rate differential to be paid or received for this swap agreement is recognized as income from derivative instruments and is listed as a component of other (expense) income until such time the Company has obligations which are designated against the swap.

For the swap agreements for which there is designated debt associated with it, the total interest rate is fixed at the fixed interest rate of swap plus the applicable margin on the debt of 0.95% in the first 5 years of the New Credit Facility and 1.0% in the last five years.

The 5.075% Swap and the 5.25% Swap do not have any interest income or expense as the swaps are not effective until, January 2, 2008 and January 2, 2007, respectively. The rate differential on these two instruments will be reflected as income from derivative instruments and is listed as a component of other (expense) income once effective.

The asset associated with all the swaps at March 31, 2006 and December 31, 2005 is $6,785 and $2,325, respectively, and is presented as the fair value of derivatives on the balance sheet. As of March 31, 2006 and December 31, 2005, the Company has OCI of $3,984 and $2,325, respectively, related to the 4.485% Swap. The 5.075% Swap and 5.25% Swap, combined, resulted in income from derivative instruments of $476 for the three months ended March 31, 2006, due to the increase in the value of these instruments.

Interest rates

The effective interest rates, including the cost associated with unused commitment fees, and the rate differential on the 4.485% Swap, for the three months ended March 31, 2006 and 2005, were 6.39% and 3.91%, respectively. The interest rates on the debt, excluding the unused commitment fess ranged from 5.20% to 5.83% and from 3.69% to 4.25% for the three months ended March 31, 2006 and 2005, respectively.

8 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

	March 31, 2006				December 31, 2005
	Carrying Value		Carrying Value		Carrying Value		Carrying Value
Cash	$	54,894	$	54,894	$	46,912	$	46,912
Floating rate debt		130,683		130,683		130,683		130,683
Derivative instruments - net asset position		6,785		6,785		2,325		2,325

The fair value of the revolving credit facilities are estimated based on current rates offered to the Company for similar debt of the same remaining maturities. The carrying value approximates the fair market value for the variable rate loans. The fair value of the interest rate swap (used for purposes other than trading) is the estimated amount the Company would receive to terminate the swap agreement at the reporting date, taking into account current interest rates and the creditworthiness of the swap counterparty.

9 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

	March 31, 2006		December 31, 2005
Lubricant inventory and other stores	$	1,096	$	1,019
Prepaid items		791		809
Other		557		746
Total	$	2,444	$	2,574

10 - OTHER ASSETS, NET

Other assets consist of the following:

(i) Deferred financing costs which include fees, commissions and legal expenses associated with securing loan facilities. These costs are amortized over the life of the related debt, which is included in interest expense. In July 2005, the Company entered into the New Credit Facility, which resulted in a write-off of $4,103, in the third quarter of 2005, of unamortized deferred financing costs associated with the Original Credit Facility. The Company has incurred additional deferred financing costs of $3,027 on the New Credit Facility. Accumulated amortization of deferred financing costs as of March 31, 2006 and December 31, 2005 was $200 and $126, respectively.

(ii) Value of time charter acquired which represents the value assigned to the time charter acquired with the Genco Muse in October 2005. The value assigned to the time charter was $3,492. This intangible asset is amortized as a component of revenue over the minimum life of the time charter. The amount amortized for this intangible asset was $456 and $0 for the three months ended March 31, 2006 and 2005. At March 31, 2006 and December 31, 2005, $2,638 and $3,094, respectively, remains unamortized.

11 - FIXED ASSETS

Fixed assets consist of the following:

	March 31, 2006		December 31, 2005
Fixed assets:
Vessel equipment	$	207	$	69
Leasehold improvements		1,270		1,146
Furniture and fixtures		96		96
Computer equipment		276		260
Total cost		1,849		1,571
Less: accumulated depreciation and amortization		104		49
Total	$	1,745	$	1,522

12 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

	March 31, 2006		December 31, 2005
Accounts payable	$	1,691	$	1,018
Accrued general and administrative		1,846		2,701
Accrued vessel operating expenses		2,372		2,259

Total	$	5,909	$	5,978

13 - REVENUE FROM TIME CHARTERS

Total revenue earned on time charters for the three months ended March 31, 2006 and 2005 was $32,572 and $21,399, respectively. Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts as of March 31, 2006 is expected to be $78,911 for the balance of 2006 and $10,581 during 2007, assuming no off-hire time is incurred.

14 - LEASE PAYMENTS

In September 2005, the Company entered into a 15-year lease for office space in New York, New York. The monthly rental is as follows: Free rent from September 1, 2005 to July 31, 2006, $40 per month from August 1, 2006 to August 31, 2010, $43 per month from September 1, 2010 to August 31, 2015, and $46 per month from September 1, 2015 to August 31, 2020. The Company obtained a tenant work credit of $324. The monthly straight-line rental expense from September 1, 2005 to August 31, 2020 is $39. As a result of the straight-line rent calculation generated by the free rent period and the tenant work credit, the Company has a deferred rent credit at March 31, 2006 and December 31, 2005 $596 and $479, respectively. The Company has the option to extend the lease for a period of 5 years from September 1, 2020 to August 31, 2025. The rent for the renewal period will be based on prevailing market rate for the six months prior to the commencement date of the extension term.

Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $202 for 2006, $486 per year for 2007 through 2009, $496 for 2010 and $5,168 thereafter.

15 - SAVINGS PLAN

In August 2005, the Company established a 401(K) Plan (the “Plan”) which is available to full-time employees who meet the Plan’s eligibility requirements. This Plan is a defined contribution plan, which permits employees to make contributions up to 96 percent of their annual salaries with the Company matching up to the first six percent. The matching contribution vests immediately. For three months ended March 31, 2006 and 2005, the Company’s matching contribution to the Plan was $34 and $0, respectively.

16- STOCK AWARDS

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

On October 31, 2005, the Company made grants of restricted common stock under its equity incentive plan in the amount of 118,612 shares to the executive officers, employees and directors of the Company. The executive and employee grants vest ratably on each of the four anniversaries of the date of the Company’s initial public offering (July 22, 2005). Grants to directors vest in full on the earliest of the first anniversary of the grant date, the date of the next annual shareholders meeting of the Company, which is scheduled for May 18, 2006, and the first anniversary of the Company’s initial public offering. Upon grant of the restricted stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $1,949, was recorded as a component of paid in capital in shareholders’ equity. The unamortized portion of this award at March 31, 2006 and December 31, 2005 was $1,311 and $1,689, respectively. Amortization of this charge, which is included in general and administrative expenses was $378 and $0, for the three months ended March 31, 2006 and 2005, respectively, and the remaining expense for the years ended 2006, 2007, 2008 and 2009 will be $653, $394, $200, and $64, respectively.

On December 21, 2005, the Company made grants of restricted common stock under its equity incentive plan in the amount of 55,600 shares to the executive officers and employees of the Company. These grants vest ratably on each of the four anniversaries of the determined vesting date beginning with November 15, 2006. Upon grant of the restricted stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $991, was recorded as a component of paid in capital in shareholders’ equity. The unamortized portion of this award at March 31, 2006 and December 31, 2005 was $833 and $974, respectively. Amortization of this charge, which is included in general and administrative expenses was $141 and $0, for the three months ended March 31, 2006 and 2005, respectively, and remaining expense for the years ended 2006, 2007, 2008 and 2009 will be $392, $253, $134, and $54, respectively.

17 - LEGAL PROCEEDINGS

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

18 - SUBSEQUENT EVENTS

On April 27, 2006, the Board of Directors declared a dividend of $0.60 per share to be paid on or about May 26, 2006 to shareholders of record as of May 15, 2006. The aggregate amount of the dividend is expected to be $15,261, which the Company anticipates will be funded from cash on hand at the time payment is to be made.

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

This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) changes in demand or rates in the drybulk shipping industry; (ii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iii) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (iv) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (v) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, repairs, maintenance and general and administrative expenses; (vi) the adequacy of our insurance arrangements; (vii) changes in general domestic and international political conditions; (viii) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; and other factors listed from time to time in our public filings with the Securities and Exchange Commission including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2005 and subsequent reports on Form 8-K. Our ability to pay dividends in any period will depend upon factors including the limitations under our loan agreements, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its review of our financial performance. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary.

The following management’s discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included in this 10-Q.

General

We are a Marshall Islands company incorporated in September 2004 to transport iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels. As of March 31, 2006, our fleet consisted of five Panamax, seven Handymax and five Handysize drybulk carriers, with an aggregate carrying capacity of approximately 839,000 dwt. The average age of our fleet was approximately 8.8 years as of December 31, 2005 as compared to the average age for the world fleet of approximately 15 years for the drybulk shipping segments in which we compete. All of the vessels in our fleet are on time charters to reputable charterers, including Lauritzen Bulkers, Cargill, HMMC, BHP, DS Norden, EDF Man Shipping, and NYK Europe or operate in the Baumarine panamax pool. With the exception of the Genco Leader and the Genco Trader, our vessels are fixed on long-term time charters with original terms greater than one year that expire (assuming the option periods in the time charters are not exercised) between August 2006 and September 2007.

Each vessel in our fleet was delivered to us on the date specified in the following chart:


Vessel Acquired	Date Delivered	Class	Year Built

Genco Reliance	12/6/04	Handysize	1999
Genco Glory	12/8/04	Handymax	1984
Genco Vigour	12/15/04	Panamax	1999
Genco Explorer	12/17/04	Handysize	1999
Genco Carrier	12/28/04	Handymax	1998
Genco Sugar	12/30/04	Handysize	1998
Genco Pioneer	1/4/05	Handysize	1999
Genco Progress	1/12/05	Handysize	1999
Genco Wisdom	1/13/05	Handymax	1997
Genco Success	1/31/05	Handymax	1997
Genco Beauty	2/7/05	Panamax	1999
Genco Knight	2/16/05	Panamax	1999
Genco Leader	2/16/05	Panamax	1999
Genco Marine	3/29/05	Handymax	1996
Genco Prosperity	4/4/05	Handymax	1997
Genco Trader	6/7/05	Panamax	1990
Genco Muse	10/14/05	Handymax	2001

We intend to grow our fleet through timely and selective acquisitions of vessels in a manner that is accretive to our cash flow. In connection with this growth strategy, we negotiated the New Credit Facility, which has been used to refinance the outstanding indebtedness under our previous credit facility (“Original Credit Facility”) remaining after application of a portion of the net proceeds of the initial public offering on July 22, 2005.

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

Factors Affecting Our Results of Operations

	For the three months ended March 31,						Increase
	2006			2005			(Decrease)			% Change
Fleet Data:
Ownership days (1)
Panamax		450.0			230.7			219.3			95.1	%
Handymax		630.0			320.7			309.3			96.4	%
Handysize		450.0			435.9			14.1			3.2	%

Total		1,530.0			987.3			542.7			55.0	%

Available days (2)
Panamax		441.1			227.6			213.5			93.8	%
Handymax		630.0			318.5			311.5			97.8	%
Handysize		450.0			435.0			15.0			3.4	%

Total		1,521.1			981.1			540.0			55.0	%

Operating days (3)
Panamax		439.5			221.5			218.0			98.4	%
Handymax		629.1			317.2			311.9			98.3	%
Handysize		448.3			435.0			13.3			3.1	%

Total		1,516.9			973.7			543.2			55.8	%

Fleet utilization (4)
Panamax		99.6	%		97.3	%		2.3	%		2.4	%
Handymax		99.9	%		99.6	%		0.3	%		0.3	%
Handysize		99.6	%		100.0	%		(0.4	%)		(0.4	%)
Fleet average		99.7	%		99.2	%		0.5	%		0.5	%

We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the three months ended March 31, 2006 and 2005. Because predominately all of our vessels have operated on time charters, our TCE rates equal our time charter rates less voyage expenses consisting primarily of brokerage commissions paid by us to unaffiliated parties.

	For the three months ended March 31,				Increase
	2006		2005		(Decrease)			% Change
	(U.S. dollars)
Average Daily Results:
Time Charter Equivalent (5)
Panamax	$	23,403	$	28,234		($4,831	)		(17.1	%)
Handymax		21,400		20,877		523			2.5	%
Handysize		17,025		17,091		(66	)		(0.4	%)

Fleet average		20,687		20,904		(217	)		(1.0	%)

Daily vessel operating expenses (6)
Panamax	$	3,239	$	2,503	$	736			29.4	%
Handymax		2,884		1,917		967			50.4	%
Handysize		2,854		1,893		961			50.8	%

Fleet average		2,980		2,042		938			45.9	%

Definitions

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

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

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

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

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

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

	For the three months ended March 31,
	2006		2005
	(U.S. dollars in thousands)
Voyage revenues	$	32,572	$	21,399
Voyage expenses		1,104		890
Net voyage revenue	$	31,468	$	20,509

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

Operating Data


	For the three months ended March 31,						Increase
	2006			2005			(Decrease)			% Change
	(U.S. dollars in thousands, except for per share amounts)

Revenues	$	32,572		$	21,399		$	11,173			52.2	%

Operating Expenses:
Voyage expenses		1,104			890			214			24.0	%
Vessel operating expenses		4,559			2,016			2,543			126.1	%
General and administrative expenses		2,449			260			2,189			841.9	%
Management fees		347			331			16			4.8	%
Depreciation and amortization		6,417			3,981			2,436			61.2	%

Total operating expenses		14,876			7,478			7,398			98.9	%

Operating income		17,696			13,921			3,775			27.1	%
Other (expense) income		(1,118	)		(2,537	)		1,419			(55.9	%)

Net income	$	16,578		$	11,384			5,194			45.6	%

Earnings per share - Basic	$	0.66		$	0.84			($0.18	)		(21.4	%)
Earnings per share - Diluted	$	0.66		$	0.84			($0.18	)		(21.4	%)
Dividends declared and paid per share	$	0.60			-		$	0.60			N/A
Weighted average common shares outstanding - Basic		25,260,000			13,500,000			11,760,000			87.1	%
Weighted average common shares outstanding - Diluted		25,304,448			13,500,000			11,804,448			87.4	%

EBITDA (1)	$	25,045		$	17,902		$	7,143			39.9	%

(1)

EBITDA represents net income plus net interest expense, income tax expense, depreciation and amortization, and amortization of the value of time charter acquired, which is included as a component of other long-term assets. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.

	For the three months ended March 31,
	2006		2005
	(U.S. dollars in thousands except for per share amounts)

Net income	$	16,578	$	11,384
Net interest expense		1,594		2,537
Income tax expense		—		—
Amortization of value of time charter acquired (1)		456		—
Depreciation and amortization		6,417		3,981

EBITDA	$	25,045	$	17,902

(1) Amortization of value of time charter acquired is included in other long-term assets.

Results of Operations

REVENUES-

For the three months ended March 31, 2006 revenues grew 52% to $32.6 million versus $21.4 million for the three months ended March 31, 2005. Revenues in both periods consisted of charter payments for our vessels. The increase in revenues was primarily due to the growth of our fleet throughout 2005.

The average TCE rate of our fleet declined by 1% to $20,687 a day for the three months ended March 31, 2006 from $20,904 a day for the three months ended March 31, 2005 mostly due to a lower freight market in 2006 as compared to 2005. The lower freight market in 2006 affected the TCE rates of the Genco Leader, the vessel in our fleet that operates in the Baumarine Pool which is subject to spot market fluctuations.

For the three months ended March 31, 2006 and 2005, we had ownership days of 1,530.0 days and 987.3 days, respectively. Fleet utilization for the same three month periods remained relatively static at 99.7% and 99.2%, respectively.

The following table sets forth information about the charters in our fleet as of March 31, 2006:

Vessel	Time Charter Rate (1)	Charterer	Charter Expiration (2)

Genco Beauty	$ 29,000	Cargill	February 2007
Genco Knight	29,000	BHP	February 2007
Genco Leader	Spot	Baumarine Panamax Pool	Not Applicable
Genco Vigour	29,000	BHP	December 2006
Genco Trader	Spot	Baumarine Panamax Pool	Not Applicable
Genco Success	23,850	KLC	January 2007
Genco Carrier	24,000	DBCN Corporation	December 2006
Genco Prosperity	23,000	DS Norden	March 2007
Genco Wisdom	24,000	HMMC	January 2007
Genco Marine	26,000(3)	NYK Europe	March 2007
Genco Glory	18,250	EDF Man Shipping	December 2006
Genco Muse	26,500(4)	Qatar Navigation QSC	September 2007
Genco Explorer	17,250	Lauritzen Bulkers	August 2006
Genco Pioneer	17,250	Lauritzen Bulkers	September 2006
Genco Progress	17,250(5)	Lauritzen Bulkers	September 2006
Genco Reliance	17,250	Lauritzen Bulkers	August 2006
Genco Sugar	17,250	Lauritzen Bulkers	August 2006

(1) Time charter rates presented are the gross daily charterhire rates before the payments of brokerage commissions ranging from 1.25% to 5% to unaffiliated third parties. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues.

(2) The dates presented on this table represent the earliest dates that our charters may be terminated. Except with respect to the Genco Trader and Genco Leader charters, under the terms of the contracts, charterers are entitled to extend time charters from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire.

(3) The time charter rate is $26,000 until March 2006 and $18,000 thereafter. For purposes of revenue recognition, the charter contract is reflected on a straight-line basis in accordance with U.S. GAAP.

(4) Since this vessel was acquired with an existing time charter at an above market rate, the Company allocates the purchase price between the vessel and an intangible asset for the value assigned to the above market charterhire. This intangible asset is amortized as a reduction to voyage revenues over the remaining term of the charter, resulting in a daily rate of approximately $22,000 recognized as revenue. For cash flow purposes, the Company will continue to receive $26,500 per day.

(5) The time charter rate was $21,560 through March 2005 and $17,250 thereafter. For purposes of revenue recognition, the charter contract is reflected on a straight-line basis in accordance with U.S. GAAP.

VOYAGE EXPENSES-

For the three months ended March 31, 2006 and 2005, we did not incur port and canal charges or any significant expenses related to the consumption of bunkers as part of our vessels’ overall expenses, because all of our vessels were employed under time charters that require the charterer to bear all of those expenses.

For the three months ended March 31, 2006 and 2005, voyage expenses were $1.1and $0.9 million, respectively, and consisted primarily of brokerage commissions paid to unaffiliated parties.

VESSEL OPERATING EXPENSES-

Vessel operating expenses increased to $4.6 million from $2.0 million for the three months ended March 31, 2006 and 2005, respectively. This was mostly due to the expansion of our fleet to 17 vessels for the three months ended March 31, 2006 as compared to an average of 11 vessels in operation for the three months ended March 31, 2005.

For the three months ended March 31, 2006 and 2005, the average daily vessel operating expenses for our fleet were $2,980 and $2,042 per day, respectively. As the first quarter of 2005 was our initial period of operations for the majority of our fleet, we believe the three-month period ended March 31, 2006 is more reflective of our daily vessel operating expenses. We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation.

Based on management’s estimates and budgets provided by our technical manager, we expect our vessels to have daily vessel operating expenses during 2006 of:

Vessel Type	Average Daily Budgeted Amount
Panamax	$	3,468
Handymax		3,101
Handysize		3,016

Our vessel operating expenses, which generally represent fixed costs, will increase as a result of the expansion of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for insurance, may also cause these expenses to increase.

GENERAL AND ADMINISTRATIVE EXPENSES-

For the three months ended March 31, 2006 and 2005, general and administrative expenses were $2.4 and $0.3 million, respectively. The increased general and administrative expenses were due to the expansion of our fleet during 2005 and costs related to operating as a publicly-traded company. We expect general and administrative expenses to increase as a result of the expansion of our fleet and the costs associated with running a public company for a full twelve-month period, including the preparation of disclosure documents, legal and accounting costs, incremental director and officer liability insurance costs, incremental director and executive compensation, and costs related to compliance with the Sarbanes-Oxley Act of 2002.

MANAGEMENT FEES-

For the three months ended March 31, 2006 and 2005, management fees were $0.3 and $0.3 million, respectively. Technical management fees for the three months ended March 31, 2006 were paid to Wallem Shipmanagement at the rate of $6,800 per ship per month.

INCOME FROM DERIVATIVE INSTRUMENTS-

The Company, on March 24, 2006, entered into a forward interest rate swap agreement with a notional amount of $50 million and has a fixed interest rate on the notional amount of 5.075% from January 2, 2008 through January 2, 2013 (the “5.075% Swap”). Additionally, on March 29, 2006, the Company entered into a forward interest rate swap agreement with a notional amount of $50 million and has a fixed interest rate on the notional amount of 5.25% from January 2, 2007 through January 2, 2014 (the “5.25% Swap”).

The purpose of the 5.075% Swap and the 5.25% Swap is to manage future interest costs and the risk associated with changing interest rates. The gain or loss in the value of these swaps will be recognized as income from derivative instruments and listed as a component of other (expense) income until such time the Company has obligations which are designated against the swap. See Note 7- Long-term debt of the financial statements for further details.

For the three months ended March 31, 2006, income from derivative instruments was $0.5 million and is due solely to the gain in value of the 5.075% Swap and the 5.25% Swap. For the three months ended March 31, 2005, the Company had no derivative instruments in place.

DEPRECIATION AND AMORTIZATION-

For the three months ended March 31, 2006 and 2005, depreciation and amortization charges were $6.4 and $4.0 million, respectively, an increase of $2.4 million or 61%. The increase primarily was due to the growth in our fleet to 17 vessels for the three months ended March 31, 2006 as compared to an average of 11 vessels in operation for the three months ended March 31, 2005.

NET INTEREST EXPENSE-

Net interest expense, which is the difference between interest income and interest expense which are listed as components of other (expense) income, declined to $1.6 million from $2.5 million for the three months ended March 31, 2006 and 2005, respectively. Net interest expense consisted primarily of interest payments made under our Original Credit Facility for the 2005 period, our New Credit Facility for the 2006 period, and interest income as well as amortization of deferred financing costs related to our credit facilities. The decrease in net interest expense was a result of a lower interest margin and a lower debt outstanding under our New Credit Facility offset by higher interest rates during 2006.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have financed our capital requirements with cash flow from operations, equity contributions and bank debt. We have used our funds primarily to fund vessel acquisitions, regulatory compliance expenditures and the repayment of bank debt and the associated interest expense. We will require capital to fund ongoing operations, acquisitions and debt service. We anticipate that internally generated cash flow and borrowing under our New Credit Facility will be sufficient to fund the operations of our fleet, including our working capital requirements for the foreseeable future.

We expect to use our operating cash flows and borrowings and to review debt and equity financing alternatives to fund any acquisitions and our dividend policy. We believe that our current cash balance as well as operating cash flows and available borrowings under our New Credit Facility will be sufficient to meet our liquidity needs for the next year.

Dividend Policy

Our dividend policy is to declare quarterly distributions to shareholders by each February, May, August and November, which commenced in November 2005, substantially equal to our available cash from operations during the previous quarter, less cash expenses for that quarter (principally vessel operating expenses and debt service) and any reserves our board of directors determines we should maintain. These reserves may cover, among other things, drydocking, repairs, claims, liabilities and other obligations, interest expense and debt amortization, acquisitions of additional assets and working capital. On February 9, 2006, the Board of Directors declared a dividend related to the fourth quarter of 2005 of $0.60 per share, paid on March 10, 2006 to shareholders of record as of February 24, 2006. The aggregate amount of the dividend paid was $15.3 million, which the Company funded from cash on hand. However, in the future, we may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Additionally, on April 27, 2006, the Board of Directors declared a dividend of $0.60 per share, to be paid on or about May 26, 2006 to shareholders of record as of May 15, 2006.

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

We believe that, under current law, our dividend payments from earnings and profits will constitute “qualified dividend income” and, as such, will generally be subject to a 15% U.S. federal income tax rate with respect to non-corporate U.S. shareholders that meet certain holding period and other requirements (through 2008). Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of a U.S. shareholder's tax basis in its common stock on a dollar-for-dollar basis and, thereafter, as capital gain.

Cash Flow

Net cash provided by operating activities for the three months ended March 31, 2006 and 2005, was $23.9 and $17.7 million, respectively. The increase primarily was due to higher net income in the quarter ended March 31, 2006 due the operation of a larger fleet. Net cash from operating activities for three months ended March 31, 2006 was primarily a result of recorded net income of $16.6 million, and depreciation and amortization charges of $6.4 million. For the three months ended March 31, 2005, net cash provided from operating activities was primarily a result of recorded net income of $11.4 million, and depreciation and amortization charges of $4.0 million.

During the quarter ended March 31, 2005, the Company acquired a large portion of its fleet and net cash used in investing activities declined to $0.6 million from $193.3 million for the three months ended March 31, 2006 and 2005, respectively, primarily for this reason. For the three months ended March 31 2006, the cash used in investing activities related primarily to the purchase of fixed assets associated with the Company’s office. For the three months ended March 31, 2005, the cash used in investing activities related solely to the acquisition of ten vessels.

Net cash (used in) provided by financing activities for the three months ended March 31, 2006 and 2005 was ($15.3) and $185.5 million, respectively. For the three months ended March 31 2006, net cash used by financing activities consisted primarily of payment of cash dividends of $15.3 million. For the three months ended March 31, 2005, the primary sources of net cash provided by financing activities were proceeds of $192.9 from the Original Credit Facility to fund vessel acquisitions.

New Credit Facility

The Company’s New Credit Facility is with a syndicate of commercial lenders consisting of Nordea Bank Finland Plc, New York Branch, DnB NOR Bank ASA, New York Branch and Citigroup Global Markets Limited. The New Credit Facility has been used to refinance our indebtedness under our Original Credit Facility, and may be used in the future to acquire additional vessels and for working capital requirements. Under the terms of our New Credit Facility, borrowings in the amount of $106.2 million were used to repay indebtedness under our Original Credit Facility and additional net borrowings of $24.5 million were obtained to fund the acquisition of the Genco Muse. After these net borrowings $319.3 million remains available to fund future vessel acquisitions. The Company may borrow up to $20.0 million of the $319.3 million for working capital purposes.

Interest Rate Swap Agreements and Forward Freight Agreements

Effective September 14, 2005, the Company entered into an interest rate swap agreement with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The notional principal amount of the swap is $106.2 million and has a fixed interest rate on the notional amount of 4.485% through July 29, 2015 (the “4.485% Swap”). The swap's expiration date coincides with the expiration of the New Credit Facility on July 29, 2015. The differential to be paid or received for this swap agreement is recognized as an adjustment to interest expense as incurred. The change in value on this swap is reflected as a component of other comprehensive income (“OCI”).

The change in the value for the 5.075% Swap and the 5.25% Swap and the rate differential to be paid or received for these swap agreements is recognized as income from derivative instruments and is listed as a component of other (expense) income until such time the Company has obligations which are designated against the swaps.

For the 4.485% Swap, the Company qualified for hedge accounting treatment and the Company has determined that this interest rate swap agreement continues to perfectly hedge the debt. Interest income pertaining to the 4.485% Swap for the three months ended March 31, 2006 and 2005 was $0.01 million and $0, respectively. As of March 31, 2006, the 5.25% Swap and the 5.075% Swap do not have any interest income or expense as the swaps are not effective until, January 2, 2007 and January 2, 2008, respectively. The rate differential on these two instruments will be reflected as income from derivative instruments and is listed as a component of other (expense) income once effective.

The fair values of the Swaps were $6.8 million and $2.3 million, respectively, as of March 31, 2006 and December 31, 2005. The increase in the value was due to higher LIBOR rates.

As part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage market risks relating to the deployment of our existing fleet of vessels. These arrangements may include future contracts, or commitments to perform in the future a shipping service between ship owners, charters and traders. Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route. Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels. If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market. We have not entered into any FFAs as of March 31, 2006 and December 31, 2005.

Interest Rates

The effective interest rates, including the cost associated with the unused commitment fees and the rate differential on the 4.485% Swap, for the three months ended March 31, 2006 and 2005 were 6.39% and 3.91%, respectively. The interest on the debt, excluding the unused commitment fees ranged from 5.20% to 5.83% and from 3.69% to 4.25%, respectively, for the three months ended March 31, 2006 and 2005.

Contractual Obligations

The following table sets forth our future contractual obligations for the categories set forth below, including the effective fixed rate on the interest rate swap agreement that has designated debt associated with the swap. The interest and fees are also reflective of the New Credit Facility and the interest rate swap agreement.

	Total		Within One Year (1)		One to Three Years		Three to Five Years		More than Five Years
	(U.S. dollars in thousands)
Bank loans	$	130,683	$	-	$	-	$	-	$	130,683
Interest and borrowing fees	$	76,893	$	6,398	$	16,952	$	16.980	$	36,563
Office lease	$	7,323	$	202	$	971	$	982	$	5,168

(1)	Represents the nine month period ending December 31, 2006.

Interest expense has been estimated using the fixed rate of 4.485% for the notional amount of the 4.485% Swap and 5.0% for the unhedged portion, plus the applicable bank margin of 0.95% in the first 5 years of the New Credit Facility and 1.0% in the last five years.

Capital Expenditures

We make capital expenditures from time to time in connection with our vessel acquisitions. Our vessel acquisitions consist of our fleet of five Panamax drybulk carriers, seven Handymax drybulk carriers and five Handysize drybulk carriers.

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings. We estimate our drydocking costs for our fleet through 2007 to be:


Year	Estimated Drydocking Cost (U.S. dollars in millions)		Estimated Offhire Days

2006	$	2.5		180
2007		2.8		160

The costs reflected depend upon the location where the drydockings are performed and reflect drydocking our vessels in China, except for one vessel we currently expect to drydock in Europe in 2006, and the Company estimates that each drydock will result in 20 days of offhire. Actual results may vary. We believe that the funding of these costs will be met with cash we generate from operations.

During the first quarter of 2006 we had one vessel, the Genco Trader in drydock. We expect one vessel to drydock in the second quarter, and an estimate an additional seven vessels drydock in the second half of 2006.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Inflation

Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, general and administrative, and financing costs.

CRITICAL ACCOUNTING POLICIES

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

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

REVENUE AND VOYAGE EXPENSE RECOGNITION-

Revenues are generated from time charter agreements and pool agreements. A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate. In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel, and port charges are paid by the charterer. There are certain other non-specified voyage expenses such as commissions which are borne by the Company. Time charter revenues are recorded over the term of the charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of the respective time charter agreement. Vessel operating expenses are recognized when incurred.

Our standard time charter contracts with our customers specify certain performance parameters, which if not met can result in customer claims. As of March 31, 2006 and December 31, 2005, the Company had a reserve of $0.4 million and $0.3 million, respectively, associated with estimated customer claims against the Company for time charter performance issues.

VESSEL ACQUISITIONS-

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

DEPRECIATION-

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

IMPAIRMENT OF LONG-LIVED ASSETS-

We follow Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires impairment losses to be recorded on long-lived assets

used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount. In the evaluation of the fair value and future benefits of long-lived assets, we perform an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including future charter rates, scrap values, future drydock costs and vessel operating costs are included in this analysis.

DEFERRED DRYDOCKING COSTS-

Our vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. We capitalize the costs associated with drydockings as they occur and depreciate these costs on a straight-line basis over the period between drydockings. Capitalized drydocking costs include actual costs incurred at the drydock yard; and cost of parts that are believed to be reasonably likely to reduce the duration or cost of the drydocking; cost of travel, lodging and subsistence of our personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee a drydocking. We believe that these criteria are consistent with U.S. GAAP guidelines and industry practice and that our policy of capitalization reflects the economics and market values of the vessels.

FAIR VALUE OF FINANCIAL INSTRUMENTS-

DERIVATIVE FINANCIAL INSTRUMENTS-

To manage its exposure to fluctuating interest rates, the Company uses interest rate swap agreements. Interest rate differentials to be paid or received under these agreements are accrued and recognized as an adjustment of interest expense related to the designated debt. The interest rate differential on the swaps that do not have designated debt associated with it will be reflected as income from derivative instruments and is listed as a component of other (expense) income. The fair value of the interest rate swap agreements and changes in fair value are recognized in the financial statements as non-current asset or liability.

INCOME TAXES-

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

Based on the ownership of our common stock prior to our initial public offering on July 22, 2005, we qualified for exemption from income tax for 2005 under Section 883, since for more than half of 2005, we were a

Controlled Foreign Corporation (“CFC”) and satisfied certain other criteria in the Section 883 regulations. We were a CFC, as defined in the Code, since until the initial public offering on July 22, 2005, over 50% of our stock was owned by United States holders each of whom owned ten percent or more of our voting stock, or US 10% Owners. During that time, approximately 93% of our common stock was held by US 10% Owners.

ITEM 3. QUALITATIVE AND QUANTITATIVE MARKET RISK

Interest rate risk

Effective September 14, 2005, the Company entered into the 4.485% Swap, on March 24, 2006, the 5.075% Swap and on March 29, 2006, the 5.25% Swap, collectively the (the “Swaps”). The Swaps manage interest costs and the risk associated with changing interest rates.

The asset associated with the Swaps at March 31, 2006 and December 31, 2005 is $6.8 and $2.3 million, respectively, and is presented as the fair value of derivatives on the balance sheet. As of March 31, 2006 and December 31, 2005, the Company has other OCI of $4.0 and $2.3 million, respectively, related to the 4.485% Swap. The 5.075% Swap and the 5.25% Swap, combined, resulted in income from derivative instruments of $0.5 million for the three months ended March 31, 2006, due to the increase in the value of these instruments.

Derivative financial instruments

designated debt associated with it will be reflected as income from derivative instruments and is listed as a component of other (expense) income. The fair value of the interest rate swap agreements and changes in fair value are recognized in the financial statements as non-current asset or liability.

The expiration date of the 4.485% Swap coincides with the expiration of the New Credit Facility on July 29, 2015. The differential to be paid or received for this swap agreement is recognized as an adjustment to interest expense as incurred. The change in value on this swap is reflected as a component of other comprehensive income (“OCI”).

For the 4.485% Swap, the Company qualified for hedge accounting treatment and the Company has determined that this interest rate swap agreement, which initially hedged the corresponding debt, continues to perfectly hedge the debt. Interest income pertaining to the 4.485% Swap for the three months ended March 31, 2006 and 2005 was $0.01 million and $0, respectively. As of March 31, 2006, the 5.25% Swap and 5.075% Swap do not have any interest income or expense as the swaps are not effective until, January 2, 2007 and January 2, 2008, respectively. The rate differential on these two instruments will be reflected as income from derivative instruments and listed as a component of other (expense) income once effective.

The fair value of the derivative instruments were $6.8 million and $2.3 million, respectively as of March 31, 2006 and December 31, 2005.

We are subject to market risks relating to changes in interest rates because we have significant amounts of floating rate debt outstanding. We paid interest on this debt based on LIBOR plus an average spread of 1.35% on our Original Credit Facility in the three months ended March 31, 2005. For the three months ended March 31, 2006, we paid LIBOR plus 0.95% for the debt in excess of the swap notional amount on the New Credit Facility, and on the interest rate swap, an effective rate of 4.485% plus a margin of 0.95% on the notional amount of $106.2 million. A 1% increase in LIBOR would result in an increase of $0.06 million in interest expense for the three months ended March 31, 2006 considering the increase would be only on the unhedged portion of the debt.

Currency and exchange rates risk

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

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our President and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 as of the end of the period covered by this Report. Based upon that evaluation, our President and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them at a reasonable assurance level to material information required to be included in our periodic Securities and Exchange Commission filings

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

In compliance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, we have provided certifications of our Principal Executive Officer and Principal Financial Officer to the Securities and Exchange Commission. The certifications provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 accompanying this report have not been filed pursuant to the Securities Exchange Act of 1934.

Item 6. Exhibits

Exhibit	Document
3.1	Amended and Restated Articles of Incorporation of the Company as adopted July 5, 2005 (incorporated by reference to Exhibit 3.1 to report on Form S-1/A dated July 6, 2005).
3.2	Amended and Restated Bylaws of the Company as adopted April 4, 2006 (incorporated by reference to Exhibit 3.2 to report on Form 8-K dated April 4, 2006).
3.3	Articles of Amendment of Articles of Incorporation of the Company as adopted July 21, 2005 (incorporated by reference to Exhibit 3.2 to report on Form S-1/A dated July 21, 2005).
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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

GENCO SHIPPING & TRADING LIMITED


DATE: May 11, 2006		By: /s/ ROBERT GERALD BUCHANAN Robert Gerald Buchanan President (Principal Executive Officer)
DATE: May 11, 2006		By: /s/ JOHN C. WOBENSMITH John C. Wobensmith Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)

Exhibit Index

Exhibit	Document

3.1	Amended and Restated Articles of Incorporation of the Company as adopted July 5, 2005 (incorporated by reference to Exhibit 3.1 to report on Form S-1/A dated July 6, 2005).
3.2	Amended and Restated Bylaws of the Company as adopted April 4, 2006 (incorporated by reference to Exhibit 3.2 to report on Form 8-K dated April 4, 2006).
3.3	Articles of Amendment of Articles of Incorporation of the Company as adopted July 21, 2005 (incorporated by reference to Exhibit 3.2 to report on Form S-1/A dated July 21, 2005).
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.

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