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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2020
SAFE BULKERS, INC.
(Translation of registrant’s name into English)
Apt. D11, Les Acanthes 6, Avenue des Citronniers, MC98000 Monaco
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ý          Form 40-F   o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the information contained in the Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o          No  ý
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Included in this Report on Form 6-K are the unaudited consolidated interim financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations of Safe Bulkers, Inc. (the “Company”) for the six-month period ended June 30, 2020, formatted in inline eXtensible Business Reporting Language (iXBRL).
INCORPORATION BY REFERENCE
This Report on Form 6-K shall be incorporated by reference into our registration statement on Form F-3, as filed with the Securities and Exchange Commission on July 1, 2020 (File No. 333-239618) and as may be further amended, to the extent not superseded by documents or reports subsequently filed by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.










MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020

ABOUT THIS REPORT

As used herein, “we”, “us”, “our”, and the “Company” all refer to Safe Bulkers, Inc. and its subsidiaries (as well as the predecessors of the foregoing). This management’s discussion and analysis of financial condition and results of operations should be read together with the discussion included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019. These expressions are also used where no useful purpose is served by identifying the particular company or companies. Our affiliated management companies, Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management”), and Safe Bulkers Management Limited, a company organized and existing under the laws of the Republic of Cyprus (“Safe Bulkers Management”), are each sometimes referred to as a “Manager,” and together as our “Managers.” This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.

A. Overview

We are an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest consumers of marine drybulk transportation services. As of July 31, 2020, our fleet comprised 42 vessels, of which 14 are Panamax class vessels, 10 are Kamsarmax class vessels, 14 are Post-Panamax class vessels and four are Capesize class vessels, with an aggregate carrying capacity of 3,862,000 deadweight tons, or dwt and an average age of 9.7 years. We have not contracted to acquire any other vessels.

We employ our vessels on both period time charters and spot time charters, according to our assessment of market conditions, with some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with visible and relatively stable cash flow, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions and have a potential upside in our revenue when charter market conditions improve. The majority of vessels in our fleet have sister ships with similar specifications in our existing fleet. We believe using sister ships provides cost savings because it facilitates efficient inventory management and allows for the substitution of sister ships to fulfill our period time charter obligations.

Safe Bulkers, Inc. (“Safe Bulkers”) was incorporated in the Republic of the Marshall Islands on December 11, 2007, under the Marshall Islands Business Corporations Act, for the purpose of acquiring ownership of various subsidiaries that either owned or were scheduled to own vessels. We are controlled by the Hajioannou family, which has a long history of operating and investing in the international shipping industry, including a long history of vessel ownership. Our vessels are managed by our affiliated management companies, Safety Management and Safe Bulkers Management.



B. Recent Developments in Our Fleet and Employment Profile

During the period from January 1, 2020, until July 31, 2020 the following developments occurred with respect to our fleet and employment profile:

In April 2020, the Company took delivery from an unaffiliated seller of a Japanese built, 85,000 dwt, resale, newbuild vessel named Troodos Oak (ex-Hull S No.1772). The Company as of July 31, 2020, does not have any newbuilds on order or capital expenditure requirements in relation to orderbook.

In May 2020, the Company entered into period time charters for three of its non-scrubber fitted Panamax class vessels, for a duration of 5-years each, with a forward delivery in the third quarter of 2020 at a gross daily charter rate of $11,750 for the first two years and a gross daily charter rate linked to the Baltic Exchange Kamsarmax Index (“BPI-82 5TC”) times 97% minus $2,150, for the remaining three years. In addition, the Company entered into a period time charter for a non-scrubber fitted Post-Panamax class vessel, for a duration of 11 to 13 months, at a gross daily charter rate linked to the BPI-82 5TC times 109%.

In July 2020, the Company entered into period time charters for another three of its non-scrubber fitted Panamax class vessels, for a duration of 5-years each, with a forward delivery in the third quarter of 2020 at a gross daily charter rate of $13,800 for the first two years and a gross daily charter rate linked to the BPI-82 5TC times 97% minus $2,150, for the remaining three years.



In addition, the Company entered into a period time charter for a non-scrubber fitted Kamsarmax class vessel, for a duration of 8 to 10 months, at a gross daily charter rate of $13,000.

Set out below is a table showing the Company’s existing vessels and their contracted employment as of July 31, 2020. Scrubber benefit for scrubber fitted vessels, (the ''Scrubber Benefit'') is calculated on the basis of the price differential between high sulfur fuel oil with 3.5% sulfur content and the new fuel with reduced sulfur content below 0.5% for the specific voyage and in the table below it is stated whether the Scrubber Benefit is included in the referenced charter rate; i.e. in cases where the Scrubber Benefit can be calculated it is included in the daily charter rate and in cases where it cannot be calculated, it is not part of the stated daily charter rate.



Vessel Name Dwt
Year
Built 1
Country of
Construction
Charter
Type
Charter
Rate 2
Commissions 3
Charter Period 4
CURRENT FLEET            
Panamax              
Maria 76,000 2003 Japan Period $9,349 5.00% February 2020 December 2020
Koulitsa 76,900 2003 Japan Period $7,154 5.00% April 2020 August 2020
Paraskevi 74,300 2003 Japan Spot $10,000 5.00% July 2020 September 2020
Vassos 76,000 2004 Japan Spot $8,353 5.00% March 2020 August 2020
Katerina 76,000 2004 Japan Period $8,094 5.00% March 2020 December 2020
Maritsa 76,000 2005 Japan Period $9,464 5.00% February 2020 December 2020
Efrossini 75,000 2012 Japan Spot $7,612 5.00% May 2020 August 2020
Zoe 10
75,000 2013 Japan Spot $6,619 4.38% April 2020 August 2020
Kypros Land 10 , 15
77,100 2014 Japan Spot $8,247 5.00% May 2020 August 2020
Period $13,800 3.75% August 2020 August 2022
BPI 82 5TC * 97% - $2,150 3.75% August 2022 August 2025
Kypros Sea 15
77,100 2014 Japan Spot $9,135 5.00% April 2020 July 2020
Period $13,800 3.75% July 2020 July 2022
BPI 82 5TC * 97% - $2,150 3.75% July 2022 July 2025
Kypros Bravery 13
78,000 2015 Japan Period $11,750 3.75 August 2020 August 2022
BPI 82 5TC * 97% - $2,150 3.75% August 2022 August 2025
Kypros Sky 8 , 13
77,100 2015 Japan Period $11,750 3.75% August 2020 August 2022
BPI 82 5TC * 97% - $2,150 3.75% August 2022 August 2025
Kypros Loyalty 13
78,000 2015 Japan Period $11,750 3.75% July 2020 July 2022
BPI 82 5TC * 97% - $2,150 3.75% July 2022 July 2025
Kypros Spirit 8 , 15
78,000 2016 Japan Spot $12,000.00 5.00% May 2020 August 2020
Period $13,800.00 3.75% August 2020 August 2022
BPI 82 5TC * 97% - $2,150 3.75% August 2022 August 2025
Kamsarmax
Pedhoulas Merchant 82,300 2006 Japan Spot $11,000 5.00% July 2020 August 2020
Pedhoulas Trader 82,300 2006 Japan Period $10,000 5.00% June 2020 August 2020
Pedhoulas Leader 82,300 2007 Japan Spot $8,185 5.00% May 2020 August 2020
Pedhoulas Commander 83,700 2008 Japan Period $9,950 5.00% June 2019 June 2021
Pedhoulas
Builder 16
81,600 2012 China
Spot 12
$7,650 5.00% April 2020 August 2020
Pedhoulas Fighter 16
81,600 2012 China
Spot 12
$7,191 4.38% May 2020 August 2020
Pedhoulas Farmer 5 , 16
81,600 2012 China
Spot 12
$8,851 5.00% June 2020 November 2020





Vessel Name Dwt Year
Built 1
Country of
Construction
Charter
Type
Charter
Rate 2
Commissions 3 Charter Period 4
Pedhoulas Cherry 16
82,000 2015 China
Spot 12
$7,224 4.38% April 2020 September 2020
Pedhoulas Rose 5 , 16
82,000 2017 China Spot $12,500 5.00% July 2020 August 2020
Pedhoulas Cedrus 81,800 2018 China Spot $8,000 5.00% May 2020 August 2020
Period $13,000 3.75% August 2020 May 2021
Post-Panamax
Marina 16
87,000 2006 Japan Spot $13,900 5.00% July 2020 August 2020
Spot $11,500 5.00% August 2020 September 2020
Xenia 87,000 2006 Japan Dry docking July 2020 August 2020
Sophia 16
87,000 2007 Japan Spot $12,750 5.00% July 2020 August 2020
Eleni 16
87,000 2008 Japan
Spot 11
$13,250 5.00% July 2020 August 2020
Martine 16
87,000 2009 Japan Spot $10,022 5.00% July 2020 August 2020
Andreas K 16
92,000 2009 South Korea Spot $12,500 5.00% June 2020 September 2020
Panayiota K 9 , 16
92,000 2010 South Korea
Spot 12
$14,000 5.00% July 2020 September 2020
Agios Spyridonas 9 , 16
92,000 2010 South Korea
Venus Heritage 10 , 16
95,800 2010 Japan
Venus History 10 , 16
95,800 2011 Japan Spot $11,500 5.00% June 2020 August 2020
Venus Horizon 16
95,800 2012 Japan Spot $8,850 5.00% June 2020 August 2020
Troodos Sun 16
85,000 2016 Japan
Spot 11
$10,500 5.00% May 2020 August 2020
Spot $12,000 5.00% August 2020 October 2020
Troodos Air 16
85,000 2016 Japan Spot $13,000 5.00% July 2020 September 2020
Troodos Oak 14
85,000 2020 Japan Period 109% BPI-82 5TC 5.00% June 2020 May 2021
Capesize
Mount Troodos 16 , 17
181,400 2009 Japan Period 103.5% * BCI + 80%* scrubber benefit 5.00% April 2020 June 2021
Kanaris 16
178,100 2010 China
Period 6
$26,562 5.00% September 2011 September 2031
Pelopidas 176,000 2011 China Period $38,000 5.00% January 2012 January 2022
Lake Despina 181,400 2014 Japan
Period 7
$24,810 5.00% January 2014 January 2024
TOTAL 3,862,000

(1) For existing vessels, the year represents the year built. For any newbuilds, the date shown reflects the expected delivery dates.
(2) Quoted charter rates are the recognized daily gross charter rates. For charter parties with variable rates among periods or consecutive charter parties with the same charterer, the recognized gross daily charter rate represents the weighted average gross daily charter rate over the duration of the applicable charter period or series of charter periods, as applicable. In the case of a charter agreement that provides for additional payments, namely ballast bonus to compensate for vessel repositioning, the gross daily charter rate presented has been adjusted to reflect estimated vessel repositioning expenses. Gross charter rates are inclusive of commissions. Net charter rates are charter rates after the payment of commissions. In the case of voyage charters, the charter rate represents revenue recognized on a pro rata basis over the duration of the voyage from load to discharge port less related voyage expenses.
(3) Commissions reflect payments made to third-party brokers or our charterers.
(4) The start dates listed reflect either actual start dates or, in the case of contracted charters that have not commenced as of July 31, 2020, the scheduled start dates. Actual start dates and redelivery dates may differ from the referenced scheduled start and redelivery dates depending on the terms of the charter and market conditions and does not reflect the options to extend the period time charter.
(5) MV Pedhoulas Farmer and MV Pedhoulas Rose were sold and leased back, in 2015 and 2017, respectively, on a bareboat charter basis for a period of 10 years, with a purchase obligation at the end of the bareboat charter period and purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase prices.
(6) Charterer agreed to reimburse us for part of the cost of the Scrubbers and Ballast Water Treatment System (''BWTS'') to be installed on the vessel, which is recorded by increasing the recognized daily charter rate by $634 over the remaining tenor of the time charter party agreement.
(7) A period time charter of 10 years at a gross daily charter rate of $23,100 for the first two and a half years and of $24,810 for the remaining period. In January 2017, the period time charter was amended to reflect substitution of the initial charterer with its subsidiary guaranteed by the initial charterer and changes in payment terms; all other period charter terms remained unchanged. The charter agreement grants the charterer the option to purchase the vessel at any time beginning at the end of the seventh year of the period time charter period, at a price of $39.0 million less 1.00% commission, decreasing thereafter on a pro-rated basis by $1.5 million per year. The Company holds a right of first refusal to buy back the vessel in the event that the charterer exercises its option to purchase the vessel and subsequently offers to sell such vessel to a third party. The charter agreement also grants the charterer an option to extend the period time charter for an additional twelve months at a time at a gross daily charter rate of $26,330, less 1.25% total commissions, which option may be exercised by the charterer a maximum of two times.
(8) MV Kypros Sky and MV Kypros Spirit were sold and leased back in December 2019 on a bareboat charter basis for a period of eight years, with purchase options in favor of the Company commencing three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.
(9) MV Panayiota K and MV Agios Spyridonas were sold and leased back in January 2020 on a bareboat charter basis for a period of six years, with purchase options in favor of the Company commencing three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.



(10) MV Zoe, MV Kypros Land, MV Venus Heritage and MV Venus History were sold and leased back in November 2019, on a bareboat charter basis, one for a period of eight years and three for a period of seven and a half years, with a purchase option in favor of the Company five years and nine months following the commencement of the bareboat charter period at a predetermined purchase price.
(11) Scrubber benefit was agreed on the basis of fuel consumption of heavy fuel oil and the price differential between the heavy fuel oil and the compliant fuel cost for the voyage and is included in the daily gross charter rate presented.
(12) Scrubber benefit was agreed on the basis of fuel consumption of heavy fuel oil and the price differential between the heavy fuel oil and the compliant fuel cost for the voyage and is not included in the daily gross charter rate presented.
(13) A period time charter of 5 years at a daily gross charter rate of $11,750 for the first two years and a gross daily charter rate linked to the BPI-82 5TC times 97% minus $2,150, for the remaining period.
(14) A period time charter of 11 to 13 months at a gross daily charter rate linked to the BPI-82 5TC times 109%.
(15) A period time charter of 5 years at a daily gross charter rate of $13,800 for the first two years and a gross daily charter rate linked to the BPI-82 5TC times 97% minus $2,150, for the remaining period.
(16) Scrubber fitted vessel.
(17) A period time charter at a gross daily charter rate linked to the Baltic Exchange Capesize Index (“BCI'') times 103.5% plus 80% of Scrubber Benefit.


C. Selected Unaudited Financial and Operations Information

The following tables present selected unaudited consolidated financial and other data of Safe Bulkers, Inc. for each of the six -month periods ended June 30, 2019 and 2020. The unaudited financial statement data was derived from our interim unaudited consolidated condensed financial statements and notes thereto included elsewhere herein. All amounts are in thousands of U.S. Dollars, except for per share data, fleet data, par value data and average daily results.
six -month periods ended June 30,
2019 2020
STATEMENT OF OPERATIONS
Revenues $ 98,044    $ 97,640   
Commissions (4,244)   (3,644)  
Net revenues 93,800    93,996   
Voyage expenses (5,083)   (31,787)  
Vessel operating expenses (32,543)   (35,799)  
Depreciation (24,706)   (26,565)  
General and administrative expenses
Management fee to related parties (9,047)   (9,013)  
Company administration expenses (1,120)   (1,332)  
Operating income/(loss) 21,301    (10,500)  
Interest expense (14,008)   (12,292)  
Other finance costs (117)   (359)  
Interest income 821    519   
Loss on derivatives —    (736)  
Foreign currency (loss)/gain (82)   434   
Amortization and write-off of deferred finance charges (678)   (896)  
Net income/(loss) $ 7,237    $ (23,830)  
Less Preferred dividend 5,745    5,746   
Less Revaluation Adjustment 304    135   
Net Income/(loss) available to common shareholders 1,188    (29,711)  
Earnings/(loss) per share of Common Stock, basic and diluted $ 0.01    $ (0.29)  
Cash dividends declared per share of Common Stock —    —   
Cash dividends declared per share of Preferred C Shares $ 1.00    $ 1.00   
Cash dividends declared per share of Preferred D Shares $ 1.00    $ 1.00   
Weighted average number of shares of Common Stock outstanding, basic and diluted 101,412,749    103,067,556   




Six Month Periods Ended June 30,
2019 2020
CASH FLOW DATA
Net cash provided by operating activities $ 23,959    $ 20,362   
Net cash used in investing activities (360)   (40,877)  
Net cash (used in)/provided by financing activities (15,655)   11,427   
Net increase/(decrease) in cash and cash equivalents and restricted cash 7,944    (9,088)  



As of December 31, As of June 30,
2019 2020
BALANCE SHEET DATA
Total current assets 135,989    121,283   
Total fixed assets 964,000    973,841   
Other non-current assets 14,654    18,465   
Total assets 1,114,643    1,113,589   
Total current liabilities 86,784    89,271   
Long-term debt, net of current portion and of deferred finance charges 536,995    563,030   
Other non-current liabilities 922    3,793   
Total liabilities 624,701    656,094   
Mezzanine equity 17,200    17,208   
Total shareholders’ equity 472,742    440,287   
Total liabilities and shareholders’ equity 1,114,643    1,113,589   

The following table reflects our ownership days, available days, time charter equivalent rates, daily vessel operating expenses, daily vessel operating expenses excluding drydocking and pre-delivery expenses, daily general and administrative expenses for the periods indicated:
  six -month periods ended June 30,
FLEET DATA 2019 2020
Number of vessels at period’s end 41 42
Average age of fleet (in years) 8.8 9.6
Ownership days (1) 7,421    7,537   
Available days (2) 7,316    7,246   
Average number of vessels in the period (3) 41.0    41.4   
AVERAGE DAILY RESULTS
Time Charter Equivalent Rate (4) $ 12,126    $ 8,585   
Daily vessel operating expenses (5) $ 4,385    $ 4,750   
Daily vessel operating expenses excluding drydocking and pre-delivery expenses (6) $ 4,217    $ 4,246   
Daily general and administrative expenses (7) $ 1,370    $ 1,373   

The following table reflects our time charter revenues, commissions, voyage expenses, time charter equivalent revenue, available days and time charter equivalent rate for the periods indicated:
 



  six -month periods ended June 30,
  2019 2020
Time Charter Equivalent Rate Reconciliation (in thousands of U.S. dollars except available days and
time charter equivalent rate)
Revenues $ 98,044    $ 97,640   
Less commissions (4,244)   (3,644)  
Less voyage expenses (5,083)   (31,787)  
Time charter equivalent revenue $ 88,717    $ 62,209   
Available days (2) 7,316    7,246   
Time charter equivalent rate (4) $ 12,126    $ 8,585   

(1) Ownership days represents the aggregate number of days in a period during which each vessel in our fleet has been owned by us.
(2) Available days represents the total number of days in a period during which each vessel in our fleet was in our possession, net of off-hire days associated with scheduled maintenance, which includes major repairs, drydockings, vessel upgrades or special or intermediate surveys.
(3) Average number of vessels in the period is calculated by dividing ownership days in the period by the number of days in that period.
(4) Time charter equivalent rate, or TCE rate, represents our charter revenues less commissions and voyage expenses during a period divided by the number of
available days during such period. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels
on period time charters and spot time charters with daily earnings generated by vessels on voyage charters, because charter rates for vessels on voyage charters
are generally not expressed in per day amounts, while charter rates for vessels on period time charters and spot time charters generally are expressed in such
amounts. We have only rarely employed our vessels on voyage charters and, as a result, generally our TCE rates approximate our time charter rates.
(5) Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period. Vessel
operating expenses include crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance including dry-docking, statutory and classification expenses and other miscellaneous items.
(6) Daily vessel operating expenses excluding dry-docking and pre-delivery expenses are calculated by dividing vessel operating expenses excluding dry-docking and pre-delivery expenses for the relevant period by ownership days for such period. Dry-docking expenses include costs of shipyard, paints and agent expenses and pre-delivery expenses include initially supplied spare parts, stores, provisions and other miscellaneous items provided to a newbuild or second hand acquisition prior to their operation.
(7) Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by ownership days for such
period. Daily general and administrative expenses include daily management fees payable to our Managers and daily company administration expenses.








F. Results of Operations

Six-month period ended June 30, 2020 compared to six-month period ended June 30, 2019
 
Net loss attributed to common shareholders was $29.7 million, or loss per share of $0.29, in the six-month period ended June 30, 2020, from net income available to common shareholders of $1.2 million, or earnings per share of $0.01, in the six -month periods ended June 30, 2019. The change from net income to net loss attributed to common shareholders of $30.9 million is attributed mainly to: (a) voyage expenses of $31.8 million compared to $5.1 million, (b) vessel operating expenses of $35.8 million, compared to $32.5 million, and (c) depreciation of $26.6 million, compared to $24.7 million partially offset by interest expense of $12.3 million, compared to $14.0 million, for the six -month periods ended June 30, 2020 and 2019, respectively.


During the six-month period ended June 30, 2020, we had an average of 41.4 drybulk vessels in our fleet. During the six-month period ended June 30, 2019, we had an average of 41.0 drybulk vessels in our fleet.
 
During the six-month period ended June 30, 2020, we acquired Troodos Oak, a Post-Panamax resale newbuild vessel.
 
During the six-month period ended June 30, 2019, we did not acquire any vessels.

Revenues
 
Revenues decreased marginally by 0.4%, or $0.4 million, to $97.6 million during the six-month period ended June 30, 2020 from $98.0 million during the six-month period ended June 30, 2019.
 
Commissions
 
Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the six months ended June 30, 2020 amounted to $3.6 million, a decrease of $0.6 million, or 14.1%, compared to $4.2 million during the six months ended June 30, 2019. Commissions as a percentage of revenues decreased to 3.7% of revenues during the six months ended June 30, 2020 compared to 4.3% of revenues during the six months ended June 30, 2019.
 
Vessel operating expenses
 
Vessel operating expenses increased by 10.0% to $35.8 million during the six months ended June 30, 2020 from $32.5 million during the six months ended June 30, 2019, with the contribution of the 1.6% increase of ownership days from 7,421 in 2019 to 7,537 in 2020. The increase in vessel operating expenses was primarily attributed to:

(i) the increase in repairs, maintenance and drydocking costs by 106.7% to $6.1 million during the six months ended June 30, 2020, compared to $2.9 million during the six months ended June 30, 2019, primary due to the six drydockings fully completed and one partially completed, including two Capesize class vessels, during the six months ended June 30, 2020, compared to three completed during the same period of 2019, and

(ii) the increase in cost for spares, stores and provisions by 11.4% to $8.0 million during the six months ended June 30, 2020, compared to $7.2 million during the six months ended June 30, 2019 due to completed and forthcoming drydockings affecting costs of spares and repairs and maintenance as above,

partially offset by

(iii) the decrease in crew wages and related cost by 4.8% to $16.2 million during the six months ended June 30, 2020, compared to $17.0 million during the six months ended June 30, 2019, due to fewer crew changes performed as a result of COVID 19 restrictions.
 
The Company expenses drydocking and pre-delivery costs as incurred, which costs may vary from period to period. Drydocking expense is related to the number of drydockings in each period and pre-delivery expense is related to the number of vessel deliveries and secondhand acquisitions in each period. Excluding dry-docking and pre-delivery costs of $3.8 and $1.2



million for the six months ended June 30, 2020 and 2019, respectively, vessel operating expenses increased by 2.3% to $32.0 million during the six months ended June 30, 2020, compared to $31.3 million during the six months ended June 30, 2019. Certain other shipping companies may defer and amortize drydocking expense.

Daily operating expenses, calculated by dividing vessel operating expenses by the ownership days of the relevant period, increased by 8.3% to $4,750 during the six months ended June 30, 2020 from $4,385 during the six months ended June 30, 2019. Daily operating expenses, excluding vessel drydocking and pre-delivery costs, remained stable at $4,246 during the six months ended June 30, 2020 from $4,217 during the six months ended June 30, 2019.

Voyage expenses
 
During the six months ended June 30, 2020, we recorded voyage expenses of $31.8 million, compared to $5.1 million during the six months ended June 30, 2019, an increase mainly due to higher vessel repositioning expenses, higher loss on bunkers sales and consumption costs for scrubber fitted vessels under charter agreements which provide for variable consideration based on the bunker consumption.

Depreciation
 
Depreciation expense increased by 7.5% to $26.6 million during the six months ended June 30, 2020, compared to $24.7 million during the six months ended June 30, 2019, due to the acquisition of the MV Troodos Oak in April 2020 and the environmental investments in Scrubbers and BWTS, which increased the carrying value of our vessels.

Interest expense 
 
Interest expense decreased by 12.2% to $12.3 million during the six months ended June 30, 2020, compared to $14.0 million, during the six months ended June 30, 2019. This was the result of the decrease in the weighted average interest rate of our outstanding indebtedness of 4.008% per annum (“p.a.”) for the six months ended June 30, 2020, compared to the weighted average interest rate of our outstanding indebtedness of 4.832% p.a. for the six months ended June 30, 2019, partly offset by the increase in average loans outstanding of $615.8 million during the six months ended June 30, 2020, compared to the average loans outstanding of $576.5 million during the six months ended June 30, 2019. The total principal amount of loans outstanding as of June 30, 2020 was $630.3 million, compared to $573.1 million as of June 30, 2019.
 

Cash Flows
 
Cash and cash equivalents increased to $64.1 million as of June 30, 2020, compared to $59.9 million as of June 30, 2019. We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents were primarily held in U.S. dollars.
 
Net Cash Provided by Operating Activities
 
Net cash provided by operating activities amounted to $20.4 million in the six months ended June 30, 2020 and $24.0 million the six months ended June 30, 2019, consisting of net income after non-cash items of $4.6 million and $32.6 million respectively plus an increase in working capital of $15.8 million during the six months ended June 30, 2020, and a decrease in working capital of $8.6 million during the same period of 2019, respectively.

The major drivers of the change of net cash provided by operating activities are the increased cash outflows related to operating expenses of $3.3 million for the six months ended June 30, 2020, compared to the same period of 2019, and the increased cash outflows related to voyage expenses of $26.7 million for the six months ended June 30, 2020, compared to the same period of 2019. The major drivers of the cash inflow of the working capital are the accounts receivable inflow of $10.9 million for the six months ended June 30, 2020, and the unearned revenue inflow of $2.5 million for the six months ended June 30, 2020, as a result of the decreased outstanding bunkers settlement and advances collection of hire from charterers, respectively.

Net Cash Used in Investing Activities
 
Net cash flows used in investing activities were $40.9 million for the six months ended June 30, 2020 compared to $0.4 million for the six months ended June 30, 2019. The increase in cash flows used in investing activities of $40.5 million from the six months ended June 30, 2019 is mainly attributable to the following factors: (i) an increase of $22.7 million in payments for vessel acquisitions and advances for vessels under construction and major improvements during the six months ended June 30,



2020 compared to the same period of 2019 and (ii) a net increase of $7.6 million in time deposits during the year ended June 30, 2020, compared to a net decrease of $10.2 million during the same period of 2019.
 
        Net Cash (Used in)/ Provided by Financing Activities

Net cash flows provided by financing activities were $11.4 million for the six months ended June 30, 2020, compared to net cash flows used in financing activities of $15.7 million for the six months ended June 30, 2019. This increase in cash flows provided by financing activities of $27.1 million, compared to the six months ended June 30, 2019, is mainly attributable to an increase in proceeds from long-term debt of $37.1 million, offset by an increase of $6.2 million in long term debt principal payments and an increase in repurchases of common and preferred stock by $3.7 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019.
 

G. Loan Facilities

For information relating to our credit facilities, please see Note 5 to our unaudited interim condensed consolidated financial statements included elsewhere herein.


H. Liquidity and Capital Resources
 
As of June 30, 2020, we had liquidity of $119.8 million consisting of cash, cash equivalents and bank time deposits of $99.1 million, $19.7 million in restricted cash and $1.0 million available under a revolving credit facility. As of July 31, 2020, we had liquidity of $111.3 million consisting of cash, cash equivalents and bank time deposits of $89.9 million, $19.4 million in restricted cash and $2.0 million available under the revolving credit facility. The Company has an existing fleet of 42 vessels. We have not contracted to acquire any other vessels and as a result we do not have capital expenditure requirements in relation to newbuilds. Other capital expenditure requirements are related to BWTS contractual obligations amounting to $3.6 million, with scheduled payments of $2.3 million in 2021 and $1.3 million in 2022. As of June 30, 2020, our aggregate debt outstanding was $630.3 million of which $63.9 million consists of the current portion of long term debt.
 
Our primary liquidity needs are to fund financing expenses, debt repayment or refinancing, vessel operating expenses, general and administrative expenses, capital expenditure requirements related to BWTS, and dividend payments to our stockholders. We anticipate that our primary sources of funds will be existing cash and cash equivalents and bank time deposits, cash generated from operations, available borrowing capacity of up to $1.0 million as of June 30, 2020 and, possibly, other future equity or debt financing.
 
In our opinion, the contracted cash flow from operations, the available borrowing capacity, and the existing cash and cash equivalents will be sufficient to fund the operations of our fleet and any other present financial requirements of the Company, including our working capital requirements, and our capital expenditure requirements at least through the end of the third quarter of 2021. However, we may seek additional indebtedness to refinance our debt and to maintain a strong cash position. Future needs in relation to financing and investing activities may involve refinancing of existing debt and financing of any future fleet replacement and expansion program or fleet upgrades and improvements. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, including the actual or perceived credit quality of our charterers and the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial and equity markets and contingencies and uncertainties that are beyond our control. To the extent that market conditions deteriorate, charterers may default or seek to renegotiate charter contracts, and vessel valuations may decrease, resulting in a breach of our debt covenants. In addition, refinancing of our existing debt in the future may be difficult. Our contracted revenues may decrease and we may be required to make additional prepayments under existing loan facilities, resulting in additional financing needs. If we acquire additional vessels, our capital expenditure requirements will increase and we will need to rely on existing cash and time deposits, debt financing and operating cash surplus.
 
A failure to satisfy our financial commitments could result in the acceleration of our indebtedness and foreclosure on our vessels. Such events could adversely impact the dividends we intend to pay, and could have a material adverse effect on our business, financial condition and results of operations.

We paid dividends to our common stockholders each quarter between the date of our initial public offering in June 2008 and the second quarter of 2015. We have not paid any dividends to our common stockholders since the second quarter of 2015. During 2019, we declared and paid four quarterly consecutive dividends of $0.50 per share for each of our Series C Cumulative



Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”), totaling $4.6 million, and of our Series D Cumulative Redeemable Perpetual Preferred Shares (the “Series D Preferred Shares”), totaling $6.4 million. During 2020, we declared and paid three quarterly consecutive dividends of $0.50 per share for each of the Series C Preferred Shares, totaling $3.4 million, and Series D Preferred Shares, totaling $4.8 million.

Our future liquidity needs will impact our dividend policy. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to our leverage and growth strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in our existing and future debt instruments; and (v) global financial conditions. Dividends on our common stock might continue not to be paid in the future. In addition, cash dividends on our common stock are subject to the priority of dividends on our preferred shares.

I. Purchases of equity securities

Preferred Stock

On March 19, 2020, the Company announced a share repurchase program under which it may from time to time purchase up to 100,000 Series C Preferred Shares and up to 100,000 Series D Preferred Shares on the open market. The Company’s share repurchase program does not obligate it to purchase any of its Preferred Shares, and the share repurchase program may be modified or terminated at any time without prior notice. Any such purchases will be made in the open market in compliance with applicable laws and regulations. As of July 31, 2020, the Company has repurchased 2,496 Series C Preferred Shares and 4,950 of Series D Preferred Shares under the program. As of July 31, 2020, the Company had 2,297,504 Series C Preferred Shares and 3,195,050 Series D Preferred Shares.

Common Stock

In June 2019, the Company implemented a new program for the repurchase of an amount of up to 5,000,000 shares of its common stock. Any such purchases were made in the open market in compliance with applicable laws and regulations. In March 2020, we expanded such share repurchase program to provide for the repurchase of an additional 1,500,000 shares of Common Stock on the open market. All shares of common stock repurchased under the share repurchase program were canceled. As of July 31, 2020, the Company had 102,122,399 shares of common stock issued and outstanding. Details on the shares purchased under such program are set forth in the table below:

Period Total Number of Shares of Common Stock Purchased(a) Average Price Paid per Share of Common Stock Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs
January 2020 69,788 1.39 69,788
February 2020 1,017,724 1.33 1,017,724
March 2020 1,853,225 1.17 1,853,225
April 2020 916,179 1.10 916,179
May 2020 989,490 0.97 989,490
June 2020 277,877 1.03 277,877
Total 5,124,283 1.15 5,124,283


J. Significant Accounting Policies and Critical Accounting Policies

For a description of all of our significant accounting policies, see Note 2 to our audited financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019 and Note 2 to our unaudited interim condensed consolidated financial statements included elsewhere herein. For a discussion of our critical accounting policies please see Item 5 included in our Annual Report on Form 20-F for the year ended December 31, 2019.

K. Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2 to our unaudited interim condensed consolidated financial statements included elsewhere herein.




INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 




SAFE BULKERS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2019 AND JUNE 30, 2020
(In thousands of U.S. Dollars, except for share and per share data)
    December 31 June 30,
  Notes 2019 2020
ASSETS  
CURRENT ASSETS:  
Cash and cash equivalents   $ 78,938    $ 64,135   
Time deposits   27,440    35,000   
Accounts receivable   15,359    4,461   
Due from Manager 558    23   
Inventories   9,265    11,733   
Accrued revenue 158    504   
Restricted cash
  —    2,000   
Prepaid expenses and other current assets   4,271    3,427   
Total current assets   135,989    121,283   
FIXED ASSETS:  
Vessels, net 3 944,706    971,377   
Advances for vessels 4 19,294    2,464   
Total fixed assets   964,000    973,841   
OTHER NON CURRENT ASSETS:  
Deferred financing costs 258    —   
Restricted cash   13,701    17,651   
Derivative assets – Long-term 9 —    234   
Accrued revenue - Long-term 455    375   
Other non current assets 240    205   
Total assets   1,114,643    1,113,589   
LIABILITIES AND SHAREHOLDERS’ EQUITY  
CURRENT LIABILITIES:  
Current portion of long-term debt, net 5 64,054    62,418   
Unearned revenue 3,040    4,647   
Trade accounts payable   12,965    17,017   
Accrued liabilities 6,595    5,132   
Derivative liabilities 9 121    —   
Due to Manager   57   
Total current liabilities   86,784    89,271   
Long-term debt, net 5 536,995    563,030   
Unearned revenue Long-term 648    1,520   
Derivative liabilities – Long-term 9 —    1,514   
Other non-current liabilities 274    759   
Total liabilities   624,701    656,094   
COMMITMENTS AND CONTINGENCIES 6
MEZZANINE EQUITY - Redeemable non-controlling interest
17,200    17,208   
SHAREHOLDERS’ EQUITY:  
Common stock, $0.001 par value; 200,000,000 authorized, 104,251,019 and 102,122,399 issued and outstanding at December 31, 2019 and June 30, 2020, respectively
104    102   
Preferred stock, $0.01 par value; 20,000,000 authorized, 2,300,000 and 2,297,504 Series C Preferred Shares, 3,200,000 and 3,195,050 Series D Preferred Shares, issued and outstanding at December 31, 2019 and June 30, 2020, respectively
55    55   
Additional paid in capital   356,963    354,224   
Retained earnings   115,620    85,906   
Total shareholders’ equity   472,742    440,287   
Total liabilities, mezzanine equity and shareholders’ equity   $ 1,114,643    $ 1,113,589   
           
          The accompanying notes are an integral part of these interim condensed consolidated financial statements.



SAFE BULKERS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2020
(In thousands of U.S. Dollars, except for share and per share data)

Periods Ended June 30,
Notes 2019 2020
REVENUES:      
Revenues 7 $ 98,044    $ 97,640   
Commissions   (4,244)   (3,644)  
Net revenues   93,800    93,996   
EXPENSES:  
Voyage expenses   (5,083)   (31,787)  
Vessel operating expenses 8 (32,543)   (35,799)  
Depreciation 3 (24,706)   (26,565)  
General and administrative expenses  
- Management fee to related parties (9,047)   (9,013)  
- Company administration expenses (1,120)   (1,332)  
Operating income/(loss)   21,301    (10,500)  
OTHER (EXPENSE)/INCOME:  
Interest expense 5 (14,008)   (12,292)  
Other finance cost (117)   (359)  
Interest income   821    519   
Loss on derivatives 9 —    (736)  
Foreign currency (loss)/gain   (82)   434   
Amortization and write-off of deferred finance charges   (678)   (896)  
Net income/(loss)   7,237    (23,830)  
Less Preferred dividend 10 5,745    5,746   
Less Mezzanine equity measurement 304    135   
Net income/(loss) available to common shareholders   $ 1,188    $ (29,711)  
Earnings/(loss) per share in U.S. Dollars, basic and diluted 11 $ 0.01    $ (0.29)  
Weighted average number of shares, basic and diluted   101,412,749    103,067,556   
 
The accompanying notes are an integral part of these interim condensed consolidated financial statements.




SAFE BULKERS, INC. UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF SHAREHOLDERS’ EQUITY FOR THE SIX MONTH PERIODS
ENDED June 30, 2019 AND 2020
(In thousands of U.S. Dollars)
  Common
Stock
Treasury
Stock
Preferred
Stock
Additional
Paid in
Capital
Retained
Earnings
Total
Balance as of December 31, 2018 $ 103    $ (737)   $ 55    $ 355,134    $ 111,279    $ 465,834   
Net Income —    —    —    —    7,237    7,237   
Repurchase and cancellation of common stock (2)   735    (3,153)   (2,420)  
Mezzanine equity measurement —    (304)   (304)  
Share based compensation —    —    —    60    —    60   
Preferred share dividends declared —    —    —    —    (5,744)   (5,744)  
Balance at June 30, 2019 $ 101    $ (2)   $ 55    $ 352,041    $ 112,468    $ 464,663   
Balance as of December 31, 2019 $ 104    $ —    $ 55    $ 356,963    $ 115,620    $ 472,742   
Net Loss —    —    —    —    (23,830)   (23,830)  
Mezzanine equity measurement —    —    —    —    (135)   (135)  
Issuance of common stock   —    —    3,297    —    3,300   
Repurchase and cancellation of common stock (5)   —    —    (6,007)   —    (6,012)  
Repurchase and cancellation of preferred stock —    —    —    (89)   —    (89)  
Share based compensation —    —    —    60    —    60   
Preferred share dividends declared —    —    —    —    (5,749)   (5,749)  
Balance at June 30, 2020 $ 102    $ —    $ 55    $ 354,224    $ 85,906    $ 440,287   

The accompanying notes are an integral part of these interim condensed consolidated financial statements.





SAFE BULKERS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED June 30, 2019 AND 2020
(In thousands of U.S. Dollars)
June 30,
2019 2020
Cash Flows from Operating Activities:
Net income/(loss) 7,237    (23,830)  
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation 24,706    26,565   
Amortization and write-off of deferred finance charges 678    896   
Unrealized loss on derivatives —    1,159   
Unrealized foreign exchange gain (98)   (235)  
Share based compensation 60    60   
Change in:
Accounts receivable (4,512)   10,898   
Due from Manager 58    —   
Inventories (1,219)   (2,468)  
Accrued revenue 301    (266)  
Prepaid expenses and other current assets (317)   844   
Due to Manager —    583   
Trade accounts payable (266)   1,856   
Accrued liabilities (736)   1,299   
Other liabilities —    522   
Unearned revenue (1,933)   2,479   
Net Cash Provided by Operating Activities 23,959    20,362   
Cash Flows from Investing Activities:
Vessel advances (10,646)   (33,317)  
Increase in bank time deposits (51,134)   (58,500)  
Maturity of bank time deposits 61,420    50,940   
Net Cash Used in Investing Activities (360)   (40,877)  
Cash Flows from Financing Activities:
Proceeds from long-term debt 41,275    78,400   
Principal payments of long-term debt (47,726)   (53,955)  
Dividends paid (5,745)   (5,876)  
Payment of deferred financing costs (1,039)   (1,041)  
Repurchase of common stock (2,420)   (6,012)  
Repurchase of preferred stock —    (89)  
Net Cash (Used in)/Provided by Financing Activities (15,655)   11,427   
Net increase/(decrease) in cash, cash equivalents and restricted cash 7,944    (9,088)  
Effect of exchange rate changes on cash, cash equivalents and restricted cash 98    235   
Cash, cash equivalents and restricted cash at beginning of year 62,590    92,639   
Cash, cash equivalents and restricted cash at end of year 70,632    83,786   
Supplemental cash flow information:
Cash paid for interest (excluding capitalized interest): 15,604    11,868   
Non Cash Investing and Financing Activities:
Unpaid financing fees 38    82   
Part payment of vessel advances through issuance of common stock and preferred stock —    3,300   
Unpaid dividend on preferred stock 126    —   
Unpaid capital expenditures 2,568    5,399   
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Cash and cash equivalents 59,921    64,135   
Restricted cash – Current assets 10    2,000   
Restricted cash – Non current assets 10,701    17,651   
Cash, cash equivalents and restricted cash shown in the statement of cash flows 70,632    83,786   



The accompanying notes are an integral part of these interim condensed consolidated financial statements.



SAFE BULKERS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(In thousands of United States Dollars—except for share and per share data, unless otherwise stated)
 
1. Basis of Presentation and General Information

Safe Bulkers, Inc., (“Safe Bulkers”) was formed on December 11, 2007, under the laws of the Republic of the Marshall Islands. Safe Bulkers’ common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB.”

Polys Hajioannou and his family, by virtue of shares owned indirectly through various private entities are the controlling shareholders of Safe Bulkers and as a result control the outcome of matters on which shareholders are entitled to vote, including the election of the entire board of directors and other significant corporate actions.

Since Safe Bulkers’ initial public offering, Safe Bulkers has successfully completed five additional public common stock offerings and three preferred stock offerings.

As of June 30, 2020, Safe Bulkers held 50 wholly-owned companies (which are referred to herein as “Subsidiaries”) which together owned and operated a fleet of 42 drybulk vessels.

Safe Bulkers and its Subsidiaries are collectively referred to in the notes to the consolidated financial statements as the “Company.”

The Company’s principal business is the ownership and operation of drybulk vessels. The Company’s vessels operate worldwide, carrying drybulk cargo for the world’s largest consumers of marine drybulk transportation services. Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management”) and Safe Bulkers Management Limited, a company incorporated under the laws of the Republic of Cyprus (“Safe Bulkers Management,” and, together with Safety Management, the “Managers,” and either of them “the Manager”), related parties both controlled by Polys Hajioannou, provide technical, commercial and administrative management services to the Company.

The accompanying consolidated financial statements include the operations, assets and liabilities of the Company, and of its Subsidiaries listed below.

Subsidiary   Vessel Name   Type   Built
Maxeikosiepta Shipping Corporation (“Maxeikosiepta”)(1)
  Paraskevi   Panamax   January 2003
Marindou Shipping Corporation (“Marindou”)(1)
  Maria   Panamax   April 2003
Maxeikosiexi Shipping Corporation (“Maxeikosiexi”)(1)
  Koulitsa   Panamax   April 2003
Avstes Shipping Corporation (“Avstes”)(1)
  Vassos   Panamax   February 2004
Kerasies Shipping Corporation (“Kerasies”)(1)
  Katerina   Panamax   May 2004
Marathassa Shipping Corporation (“Marathassa”)(1)
  Maritsa   Panamax   January 2005
Maxeikositessera Shipping Corporation (“Maxeikositessera”)(2)
  Efrossini   Panamax   February 2012
Glovertwo Shipping Corporation (“Glovertwo”)(2)
  Zoe   Panamax   July 2013
Shikokutessera Shipping Inc. (“Shikokutessera”)(2)
  Kypros Land   Panamax   January 2014
Shikokupente Shipping Inc. (“Shikokupente”)(2)
  Kypros Sea   Panamax   March 2014
Gloverfour Shipping Corporation (“Gloverfour”)(2)
  Kypros Bravery   Panamax   January 2015
Shikokuokto Shipping Corporation (“Shikokuokto”)(2)
  Kypros Sky   Panamax   March 2015





Subsidiary   Vessel Name   Type   Built
Gloverfive Shipping Corporation (“Gloverfive”)(2)
  Kypros Loyalty   Panamax   June 2015
Gloversix Shipping Corporation (“Gloversix”)(2)
  Kypros Spirit   Panamax   July 2016
Pemer Shipping Ltd. (“Pemer”)(1)
  Pedhoulas Merchant   Kamsarmax   March 2006
Petra Shipping Ltd. (“Petra”)(1)
  Pedhoulas Trader   Kamsarmax   May 2006
Pelea Shipping Ltd. (“Pelea”)(1)
  Pedhoulas Leader   Kamsarmax   March 2007
Vassone Shipping Corporation (“Vassone”)(2)
  Pedhoulas Commander   Kamsarmax   May 2008
Maxeikosi Shipping Corporation (“Maxeikosi”)(1)
  Pedhoulas Builder   Kamsarmax   May 2012
Maxeikositria Shipping Corporation (“Maxeikositria”)(1)
  Pedhoulas Fighter   Kamsarmax   August 2012
Maxeikosiena Shipping Corporation (“Maxeikosiena”)(1)
  Pedhoulas Farmer   Kamsarmax   September 2012
Youngone Shipping Corporation (“Youngone”)(2)
  Pedhoulas Cherry   Kamsarmax   July 2015
Youngtwo Shipping Corporation (“Youngtwo”)(2)
  Pedhoulas Rose   Kamsarmax   January 2017
Pinewood Shipping Corporation (“Pinewood”)(2)(3)
  Pedhoulas Cedrus   Kamsarmax   June 2018
Marinouki Shipping Corporation (“Marinouki”)(1)
  Marina   Post-Panamax   January 2006
Soffive Shipping Corporation (“Soffive”)(1)
  Sophia   Post-Panamax   June 2007
Vasstwo Shipping Corporation (“Vasstwo”)(1)
  Xenia   Post-Panamax   August 2006
Eniaprohi Shipping Corporation (“Eniaprohi”)(1)
  Eleni   Post-Panamax   November 2008
Eniadefhi Shipping Corporation (“Eniadefhi”)(1)
  Martine   Post-Panamax   February 2009
Maxdodeka Shipping Corporation (“Maxdodeka”)(1)
  Andreas K   Post-Panamax   September 2009
Pentakomo Shipping Corporation (“Pentakomo”)(2)
  Agios Spyridonas   Post-Panamax   January 2010
Maxdekatria Shipping Corporation (“Maxdekatria”)(1)
  Panayiota K   Post-Panamax   April 2010
Maxdeka Shipping Corporation (“Maxdeka”)(2)
  Venus Heritage   Post-Panamax   December 2010
Shikoku Friendship Shipping Company (“Shikoku”)(2)
  Venus History   Post-Panamax   September 2011
Maxenteka Shipping Corporation (“Maxenteka”)(2)
  Venus Horizon   Post-Panamax   February 2012
Shikokuepta Shipping Inc. (“Shikokuepta”)(2)
  Troodos Sun   Post-Panamax   January 2016
Shikokuexi Shipping Inc. (“Shikokuexi”)(2)
  Troodos Air   Post-Panamax   March 2016
Monagrouli Shipping Corporation (“Monagrouli”)(2)
Troodos Oak Post-Panamax April 2020
Maxpente Shipping Corporation (“Maxpente”)(1)
  Kanaris   Capesize   March 2010
Eptaprohi Shipping Corporation (“Eptaprohi”)(1)
  Pelopidas   Capesize   November 2011
Maxtessera Shipping Corporation (“Maxtessera”)(2)
  Lake Despina   Capesize   January 2014
Shikokuennia Shipping Corporation (“Shikokuennia”)(2)
  Mount Troodos   Capesize   November 2009
Gloverthree Shipping Corporation (“Gloverthree”)(2)
     
Staloudi Shipping Corporation (“Staloudi”)(1)
     
Gloverseven Shipping Corporation (“Gloverseven”)(2)
     
Kyotofriendo One Shipping Inc. (“Kyotofriendo One”)(2)
     
Kyotofriendo Two Shipping Inc. (“Kyotofriendo
Two”)(2)(3)
     
Maxeikosipente Shipping Corporation
(“Maxeikosipente”)(1)
     
Agros Shipping Corporation (“Agros”)(2)
Lofou Shipping Corporation (“Lofou”)(2)
(1)Incorporated under the laws of the Republic of Liberia.
(2)Incorporated under the laws of the Republic of the Marshall Islands.
(3)On July 29, 2016, the Shipsales Contract relating to Hull No. 1552, initially contracted by Kyotofriendo Two, was novated to Pinewood. Under an agreement with an unaffiliated third party, upon delivery of the vessel, named Pedhoulas Cedrus, to Pinewood in June 2018, 100 shares of Series A Preferred Stock of Pinewood were issued to the unaffiliated third party for proceeds in the equivalent of $16,875 at the time of issuance, which were used to finance part of the cost of such vessel. Such shares have preference over shares of common stock of Pinewood with respect to distributions by, and liquidation of, Pinewood. Furthermore, under this agreement, Pinewood agreed to (i) pay its
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own expenses out of its own funds, (ii) keep its assets and funds separate from the assets and funds of the Company, (iii) refrain from holding its assets and/or creditworthiness as being available to satisfy any of the obligations of the Company and (iv) take, or refrain from taking, certain other actions designed to ensure that the assets of Pinewood are not available to creditors of Safe Bulkers or its other subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the management of Safe Bulkers, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, operating results and cash flows have been included in the statements. Interim results are not necessarily indicative of results that may be expected for the year ended December 31, 2020. These financial statements should be read in conjunction with the consolidated financial statements and footnotes for the year ended December 31, 2019 included in the Company’s Annual Report on Form 20-F.

2. Significant Accounting Policies

Accounting for Revenues and Related Expenses: The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered under time charter. A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. The Company’s time charter agreements are classified as operating leases pursuant to Accounting Standards Codification (“ASC”) 842 - Leases, because (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Time charter revenues are recognized as earned on a straight-line basis over the term of the charter as service is provided. Revenues from time charter may also include ballast bonus, which is an amount paid by the charterer for repositioning the vessel at the charterer’s disposal (delivery point), which is recognized as revenue over the term of the charter, and other miscellaneous revenues from vessel operations. Time charter hire is typically payable 15 or 30 days in advance as determined in the charter party agreement.

Expenses relating to the Company’s time charters are vessel operating expenses and certain voyage expenses, which are paid by the Company and recognized as incurred. Vessel operating expenses that are paid by the Company include costs for crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance, statutory and classification expense, drydocking, intermediate and special surveys and other minor miscellaneous expenses. Voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, hold cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. Voyage expenses relating to bunkers consumption during the ballast period are considered contract fulfilment costs and are capitalized and amortized over the term of the charter when they meet the following criteria according to ASC 340-40-25-5: (i) the costs relate directly to a contract or to an anticipated contract that the entity can specifically identify, (ii) the costs generate or enhance resources of the entity that will be used in satisfying, or in continuing to satisfy, performance obligations in the future and (iii) the costs are expected to be recovered. The charterer is responsible for paying the cost of bunkers and other voyage expenses (e.g., port expenses, agents’ fees, canal dues, extra war risks insurance and any other expenses related to the cargo). Certain voyage expenses paid by the Company such as extra war risk insurance may be recovered from the charterer; such amounts recovered are recorded as Other Income within Revenues.

Certain time charters also provide for the provision of bunkers to be consumed mainly for scrubber fitted vessels for which the Company receives variable consideration. The scrubbers installed on the vessels are sulfur oxide exhaust gas cleaning systems which allow the use of the lower priced high sulfur fuel oil. The variable consideration is recorded in time charter revenues. The cost of the bunkers consumed in these cases is recorded in voyage expenses.

A summary of the Company’s other significant accounting policies is identified in Note 2 of the Company’s consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 20-F. The same accounting policies have been followed in these unaudited interim consolidated condensed financial statements as were applied in the preparation of the Company’s consolidated financial statements for the year end December 31, 2019.

Recent Accounting Pronouncements:

There are no recent accounting pronouncements the adoption of which are expected to have a material effect on the Company’s unaudited interim consolidated condensed financial statements in the current period.
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3. Vessels, Net

Vessels, net are comprised of the following:

Vessel
Cost
Accumulated
Depreciation
Net Book
Value
Balance, January 1, 2019 $ 1,272,351    $ (317,060)   $ 955,291   
Transfer from Advances for vessels 39,725    39,725   
Depreciation expense (50,310)   (50,310)  
Balance, December 31, 2019 $ 1,312,076    $ (367,370)