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 November 2018

Commission File Number:  000-29106

GOLDEN OCEAN GROUP LTD.
(Translation of registrant's name into English)

Par-la-Ville Place
14 Par-la-Ville Road,
Hamilton, HM 08, Bermuda
(Address of principal executive offices)

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 [ X ]     Form 40-F [   ]

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): ________.

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

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): ________.

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.



INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 99.1 is the interim financial information of Golden Ocean Group Ltd. (the "Company") for the quarter ended September 30, 2018.

The information contained in this Report on Form 6-K, except for the commentary of the Company's Chief Executive Officer, is hereby incorporated by reference into the Company's Registration Statement on Form F-3 (File No. 333-219715) filed with the U.S. Securities and Exchange Commission with an effective date of August 14, 2017.


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, thereunto duly authorized.

 
GOLDEN OCEAN GROUP LTD.
 
 
 
 
 
 
 
 
 
By:  /s/ Per Heiberg
Date: November 21, 2018
Name:  Per Heiberg
 
Title:    Principal Financial Officer


Exhibit 99.1
 







INTERIM FINANCIAL INFORMATION

GOLDEN OCEAN GROUP LIMITED




Third Quarter 2018
November 20, 2018


1

Hamilton, Bermuda, November 20, 2018 - Golden Ocean Group Limited (NASDAQ: GOGL / OSE: GOGL) (the "Company" or "Golden Ocean"), a leading dry bulk shipping company, today announced its results for the quarter ended September 30, 2018.


Highlights

Net income of $35.3 million and earnings per share of $0.24 for the third quarter of 2018, compared with net income of $9.0 million and earnings per share of $0.06 for the second quarter of 2018 and net income of $0.4 million and earnings per share of $0.00 for the third quarter of 2017.
Adjusted EBITDA1 of $78.8 million for the third quarter of 2018, compared with $54.0 million for the second quarter of 2018 and $40.4 million for the third quarter of 2017.
Declared the first four options to install exhaust gas scrubbers on Capesize vessels in addition to previously announced contracts to install scrubbers on 16 Capesize vessels.
Announced a cash dividend of $0.15 per share for the third quarter of 2018, the Company's fourth consecutive quarterly dividend.



Birgitte Ringstad Vartdal, Chief Executive Officer of Golden Ocean Management AS, commented:

"Golden Ocean's third quarter result reflects a strong rate environment during the summer, particularly for Capesize vessels. The result also reflects the competitive advantage of our modern, fuel efficient fleet. Our focus on operational efficiency resulted in stable costs and low offhire during the quarter, which also contributed positively to our results. The Company's operating cash flow during the quarter further strengthened our balance sheet, and we took advantage of market volatility to secure incremental time charter coverage prior to the recent drop in rates. We have further strengthened our fleet's competitive advantage by declaring options for additional scrubbers. A large part of our Capesize fleet that have exposure to fuel cost will be retrofitted with scrubbers, and is expected to significantly increase the company's cash generation from 2020 and onwards."



2

Fleet Development

As of September 30, 2018, the Company's fleet consisted of 77 vessels, with an aggregate capacity of approximately 10.7 million dwt. The Company's fleet consisted of:

(i) 67 vessels owned by the Company (38 Capesize, 27 Panamax and two Ultramax vessels);
(ii) eight Capesize vessels under operating leases with a profit sharing arrangement;
(iii) one Panamax vessel under a capital lease; and
(iv) one Supramax vessel under an operating lease.

In August 2018, the Company completed the sale of the Golden Eminence, a Panamax vessel, to an unrelated third party.

Since issuing its earnings report for the quarter ended June 30, 2018, the Company has taken the following additional coverage:

For Capesize vessels:
(i)
Converted a time charter contract for one vessel from index linked to fixed rate and sold the equivalent of approximately two vessels in Forward Freight Agreements for 2019, at an average gross rate of $20,965 per day.

For Panamax vessels:
(i)
One vessel fixed out on time charter contract until mid-2020 at a gross rate of $15,650 per day; and
(ii)
Five ice class Panamax vessels fixed out on 5-8 months contracts for the winter period at an average gross rate of $14,300 per day.

The Company's coverage for 2019 and onwards as of the date of this report is as follows:

For Capesize vessels:
(i)
Equivalent of three vessels for 2019 at an average gross rate of $20,965 per day; and   
(ii)
Equivalent of five vessels on floor/ceiling contracts for 2019 and equivalent of two vessels on floor/ceiling contracts for 2020.

For Panamax vessels:
(i)
Equivalent of seven vessels on time charters that expire within first half of 2019 at an average gross rate of $ 14,415 per day; and in addition   
(ii)
Equivalent of six vessels on time charters that expire between July 2020 and December 2021 at a gross rate of $20,500 per day.   

The remaining fleet is trading in the spot market, in spot pools or on short term charters.

In August 2018, the Company entered into an agreement to purchase 16 exhaust gas scrubbers ("scrubbers")
with options to purchase nine additional scrubbers to be installed on certain of its Capesize vessels. In November 2018, the Company declared four of the nine options. The Company is still evaluating whether and when to declare the last five options. The scrubbers will be installed during routine dry dockings, the majority of which are scheduled for 2019 or early 2020.
 
3


Corporate Development

In the third quarter of 2018, the Company purchased $1.4 million notional of the 3.07% $200 million Golden Ocean Group Limited Convertible Bond at a price of 99.05% of par value. Currently, the Company holds $29.8 million, or 14.9%, of the 3.07% $200 million Golden Ocean Group Limited Convertible Bond, which is convertible into 349,437 shares of the Company.

As of September 30, 2018, the Company had 144,247,697 issued and outstanding common shares, each with a par value of $0.05. For the three and nine months ended September 30, 2018, the weighted average number of shares outstanding was 144,247,697 and 144,104,840, respectively

The Company announced today a cash dividend for the third quarter of 2018 of $0.15 per share. The record date for the dividend will be December 6, 2018. The ex-dividend date is expected to be December 5, 2018 and the dividend will be paid on or about December 20, 2018.

Third Quarter 2018 Results

The Company reported net income of $35.3 million and earnings per share of $0.24 for the third quarter of 2018, compared with net income of $9.0 million and earnings per share of $0.06 for the second quarter of 2018.

Adjusted EBITDA was $78.8 million for the third quarter of 2018, an increase of $24.8 million from $54.0 million during the second quarter of 2018.

Operating revenues amounted to $189.3 million in the third quarter of 2018, an increase of $48.4 million, from $140.9 million during the second quarter of 2018. The increase in revenues was primarily as a result of improved freight rates for the Company's Capesize vessels. Voyage expenses increased by $21.9 million in the third quarter of 2018 compared with the second quarter of 2018 primarily due to an increase in the number of vessels trading on voyage charter compared to time charter. The average TCE rate2 for the fleet was $17,730 per day in the third quarter of 2018 compared with $15,215 per day in the second quarter of 2018.

Ship operating expenses amounted to $36.7 million in the third quarter of 2018, a decrease of $2.5 million from $39.2 million during the second quarter of 2018. In addition to slightly lower running ship operating costs, the decrease was mainly driven by a decrease in dry docking activity in the third quarter of 2018; only one vessel was dry docked and related expenses of $0.7 million were incurred, compared with three vessels and $2.4 million in expenses in the second quarter of 2018. Charterhire expenses were $21.0 million in the third quarter of 2018, an increase from $19.1 million in the second quarter of 2018, mainly driven by an increase in short term charters. Administrative expenses were $3.6 million in the third quarter of 2018, compared with $3.7 million in the second quarter of 2018.  Depreciation was $23.3 million in the third quarter of 2018, compared with $23.4 million in the second quarter of 2018.

Net interest expense was $17.3 million in the third quarter of 2018, compared with $17.4 million in the second quarter of 2018. The Company recorded a $1.3 million net gain on derivatives, primarily driven by an increase in the fair value of $2.5 million in USD interest rate swaps and $1.1 million in bunker hedges and foreign currency contracts, offset by a total loss of $2.3 million on forward freight derivatives.
 
4


The Company's total net cash balance increased by $46.7 million in the third quarter of 2018. Total cash, cash equivalents and restricted cash was $368.4 million as of September 30, 2018. In the third quarter of 2018, the Company generated positive operating cash flow of $63.6 million. Total net cash provided by investing activities was $12.4 million, mainly due to proceeds from the sale of the Golden Eminence. Net cash used in financing activities was $29.3 million. In the third quarter of 2018, the Company drew down $17.0 million of its remaining financing under its $120.0 million loan facility. The Company repaid $25.8 million in installments and made $4.8 million in payments for purchases in the Company's convertible bond. The Company also paid $14.4 million in dividends to its shareholders in the third quarter of 2018.

As of September 30, 2018, long-term debt was $1,131.5 million. The current portion of long-term debt was $244.9 million, which includes $166.9 million in carrying value of the convertible bond maturing in January 2019 and $78.0 million in ordinary debt repayments, of which $11.6 million represents deferred debt repayments through the cash sweep mechanism of the Company's non-recourse loans due for payment in the fourth quarter of 2018.

The Dry Bulk Market

Freight rates in the third quarter of 2018 started strong for Capesize vessels and improved significantly from the previous quarter on average. The Panamax and Supramax markets also experienced a steady improvement from the second quarter of 2018. The table below summarizes observed gross rates as reported by the Baltic Exchange for the indicated time periods:

$/DAY (GROSS)
   
Q3-18
     
Q2-18
     
Q3-17
 
Capesize (CS5TC)
   
22,206
     
14,980
     
14,653
 
Panamax (PM4TC)
   
12,118
     
10,523
     
10,135
 
Supramax (SM6TC)
   
11,560
     
11,031
     
9,243
 

Global dry bulk fleet utilization (calculated as total demand in tonne miles transported divided by total available fleet capacity) improved by more than 2% in the quarter, consistent with the positive trend observed over the last two years. According to Maritime Analytics, global fleet utilization was 87.2% in the third quarter of 2018, up from 85.1% in the second quarter of 2018 and 84.4% in the third quarter of 2017. According to the same source, total seaborne transportation of dry bulk goods was 1,173 mt in the third quarter of 2018, compared to 1,138 mt in the second quarter of 2018 and 1,140 mt in the third quarter of 2017.

Steel production continued to increase during the third quarter of 2018, and in particular Chinese steel production growth was consistent with recent quarters. Despite a significant drop in steel prices and steel margins the last few weeks, steel margins are still positive. Combined with the weakening exchange rate of the Chinese yuan vs USD there are indications that the steel mills have switched sourcing to domestic lower quality iron ore in stock, to compensate for the lower steel margins. Steel stock piles in China continue to be at low levels, indicating that domestic production is still being consumed. Uncertainties relating to potential tariffs have led the Chinese government to encourage new infrastructure projects to support the economy at a time where there is uncertainty in the outlook for exports. Iron ore imports to China have been flat year to date despite a drop in domestic production. In addition to increased use of scrap steel in production, there has been a draw down on stock piles - at both ports and steel mills. There is however no official data for stock piles at Chinese steel mills - the estimate is based on other publicly available data. However, the data helps explain why Chinese imports are flat year to date while steel production is up 6.1%.

5


Seaborne transportation of coal continued to be strong in the third quarter of 2018 as imports to China, India and other Asian countries continued to increase. Both China and India saw strong growth in electricity consumption that has not been met by comparable growth in domestic production of coal, a trend that has been reversed in China in the fourth quarter. While Indian stock piles continue at low levels, China has built stocks during this period. In the fourth quarter China also imposed an import ban towards the end of the year, and it is expected that volumes will go down, but also congestion go up, in the final months of 2018. Coking coal trade has also trended positively, with more long haul trade from North America to China.

Transportation of agribulks grew by 2.1% year-over-year through the end of the third quarter of 2018. Wheat and soy beans volumes have been flat compared to last year, while corn and other smaller agribulks have seen growth. As we enter the U.S. crop season, the impact of trade tensions is being felt. China has increased imports from Brazil considerably this year, supporting long haul trade and extending the season. This has partly compensated for U.S. volumes normally going into China, which we expect will go to Europe instead.

China has increased its share of global aluminum production and has accounted for 57% of global production thus far in 2018. Aluminum is produced from alumina, an intermediate product, which is produced from the raw material bauxite. Either the intermediate product or the raw material can be imported to be used for aluminum production, and it takes two and a half tonnes of bauxite to produce one ton of alumina. As China's preference seems to be to import bauxite rather than the intermediate product, increased Chinese aluminum production is positive for dry bulk trade volumes. Significantly, bauxite to China is becoming a long haul trade performed on Capesize vessels, as a large portion of the volumes come from Guinea in West Africa replacing short haul trades on Supramax vessels from Indonesia. In 2017, it was reported that 32 mt were exported from Guinea on Capesize vessels. This year, it is expected that the Guinea to China bauxite trade will amount to 40 mt. Given that this trade route to China is as long as a Brazil roundtrip voyage, this is a positive factor for Capesize tonne mile demand going forward.

The global fleet of dry bulk vessels amounted to 826 million dwt at the end of the third quarter of 2018. Deliveries in the third quarter of 2018 were 7.0 million dwt, on par with deliveries in the second quarter of 2018 and only slightly down from the first quarter of 2018. A similar amount of vessels is scheduled to be delivered in the fourth quarter of 2018, but we expect deliveries to decline compared to the third quarter of 2018 as deliveries typically slow towards the end of the year. The total orderbook was 89.9 million dwt, or approximately 11% of the capacity on the water, at the end of the third quarter of 2018. This is unchanged from the end of the second quarter of 2018.

Scrapping in the third quarter of 2018 remained at the same level as in the second quarter of 2018 with only 0.6 million dwt scrapped. Scrapping is correlated with the development of the spot market. If average market rates remain above breakeven levels, owners will likely postpone any decisions related to scrapping for as long as possible. Although the amount of vessels due for scrap has increased slightly to 1 million dwt this month, up from 0.4 million dwt last month, we expect low scrapping levels to continue until we approach the implementation dates of ballast water regulations in 2019 and low sulphur fuel regulations in 2020. Any changes to the current minimal scrapping activity should be positive for net fleet growth going forward. Net fleet growth for 2018 is therefore expected to end up in the range of 3%.

Asset prices were largely unchanged during the third quarter of 2018, although the spread between modern tonnage (built 2014 or later) and older tonnage is widening. This is a clear indication that vessel fuel efficiency is impacting valuations and may point to a further premium for modern tonnage as the implementation dates of new regulations approach. Going into the fourth quarter of 2018, activity has increased in the sale and purchase market after a relatively quiet summer period. Newbuilding prices have continued to trend upwards, although the pace of orders has slowed. This is a positive for the longer-term fundamentals of the market as any additional orders placed at a yard today would likely not be delivered before 2021.

6


Strategy and Outlook
 
Golden Ocean's results for the third quarter of 2018 improved on higher rates across its vessel classes as a result of the earnings sensitivity of Golden Ocean's modern fleet of Capesize and Panamax vessels to periods of market strength. The Company has taken advantage of market strength to opportunistically increase time charter coverage for its Panamax fleet at profitable levels. Capesize rates have declined in recent weeks, and we expect this segment of the market to continue to be particularly volatile.
The Company's Board of Directors has determined to pay a dividend of $0.15 per share, the Company's fourth consecutive quarterly dividend and a $0.05 per share increase from the prior three quarters. The decision to increase the dividend this quarter follows the strong improvement in the Company's results and substantial cash flow generation in the quarter. Future decisions relating to dividends will depend on a variety of factors, including expectations regarding market conditions, and capital will continue to be allocated to a combination of deleveraging the Company's assets, repayment of the convertible bond, growth opportunities and dividends.
The Company has thus far committed to install scrubbers on 20 of its Capesize vessels and maintains firm options to install a further five scrubbers on vessels in its fleet. The Company expects to finance its full scrubber commitment through a combination of debt financing, cash on hand and also by sharing the cost of the installation with the ship owner in the case of vessels under operating lease. The Company will continue to evaluate its options for further scrubber installations, and any additional scrubber installations will most likely be performed during future scheduled vessel dry-dockings. As 10 of the Company's Capesize vessels are currently on index-linked time charter contracts and are not directly exposed to changes in fuel costs for the remainder of the charter period, approximately two-thirds of the Company's Capesize fleet exposed to fluctuations in fuel costs is expected to have scrubbers fitted at the start of 2020.
Deliveries of new vessels have been steady throughout this year, and scrapping has been extremely low. At the same time, the order book for dry bulk vessels has remained relatively stable at approximately 10% of the global fleet. The installation of scrubbers on vessels in the global fleet is expected to take capacity out of the market next year, particularly for Capesize vessels, as the majority of announced scrubber installations will be done on the larger vessels. This is expected to have the effect of reducing the available fleet in the market as scrubber installations will prolong normal dry dockings and also take vessels out of service outside the ordinary dry docking schedule. In addition, the cleaning of fuel tanks and replacement of fuel towards the end of next year is expected to create logistical challenges for the worldwide fleet, which also may have an impact on the market rates.

Volatility in the dry bulk shipping market is high in the short term, and average rates have sharply declined in recent weeks. The fact that the order book has remained at modest levels combined with the supply side disruptions expected next year is supportive for the long-term fundamentals of the dry bulk market and should have a positive impact on the rate environment if no significant demand disruptions occur.

7


Forward-Looking Statements
Matters discussed in this earnings report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "will," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this report are based upon various assumptions.  Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 20-F for the year ended December 31, 2017.


The Board of Directors
Golden Ocean Group Limited
Hamilton, Bermuda
November 19, 2018

Questions should be directed to:

Birgitte Ringstad Vartdal: Chief Executive Officer, Golden Ocean Management AS
+47 22 01 73 53

Per Heiberg: Chief Financial Officer, Golden Ocean Management AS
+47 22 01 73 45

8




INTERIM FINANCIAL INFORMATION

THIRD QUARTER 2018


Index

Unaudited Interim Condensed Consolidated Statements of Operations
 
Unaudited Interim Condensed Consolidated Statements of Other Comprehensive Income
 
Unaudited Interim Condensed Consolidated Balance Sheets
 
Unaudited Interim Condensed Consolidated Cash Flow Statements
 
Unaudited Interim Condensed Consolidated Statements of Changes in Equity
 
Selected Notes to the Unaudited Interim Condensed Consolidated Financial Statements

9

GOLDEN OCEAN GROUP LIMITED
Unaudited Interim Condensed Consolidated Statements of Operations

(in thousands of $, except per share data)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Operating revenues
                             
Time charter revenues
   
87,768
     
80,984
     
59,506
     
247,413
     
144,682
 
Voyage charter revenues
   
101,097
     
59,526
     
67,178
     
231,118
     
162,999
 
Other revenues
   
391
     
379
     
266
     
1,556
     
927
 
Total operating revenues
   
189,256
     
140,889
     
126,950
     
480,087
     
308,608
 
                                         
Gain (loss) on sale of assets and amortization of deferred gains
   
65
     
64
     
65
     
194
     
193
 
Other operating income (expenses)
   
749
     
3,102
     
1,591
     
1,798
     
4,584
 
                                         
Operating expenses
                                       
Voyage expenses and commissions
   
54,533
     
32,603
     
34,970
     
117,978
     
89,980
 
Ship operating expenses
   
36,699
     
39,150
     
37,206
     
113,128
     
95,815
 
Charterhire expenses
   
21,022
     
19,056
     
20,837
     
67,720
     
50,291
 
Administrative expenses
   
3,621
     
3,688
     
3,151
     
10,977
     
9,279
 
Impairment loss on vessels
   
     
1,080
     
1,066
     
1,080
     
1,066
 
Depreciation
   
23,345
     
23,358
     
21,235
     
68,815
     
57,220
 
Total operating expenses
   
139,220
     
118,935
     
118,465
     
379,698
     
303,651
 
                                         
Net operating income (loss)
   
50,851
     
25,121
     
10,141
     
102,381
     
9,734
 
                                         
Other income (expenses)
                                       
Interest income
   
2,011
     
1,754
     
520
     
5,167
     
1,350
 
Interest expense
   
(19,298
)
   
(19,202
)
   
(16,245
)
   
(55,805
)
   
(43,363
)
Gain (loss) on derivatives
   
1,290
     
1,301
     
1,523
     
9,221
     
(2,273
)
Equity results of associated companies
   
172
     
71
     
4,117
     
497
     
4,361
 
Other financial items
   
271
     
(53
)
   
337
     
(475
)
   
792
 
Net other (expenses) income
   
(15,553
)
   
(16,128
)
   
(9,748
)
   
(41,395
)
   
(39,134
)
Net income (loss) before income taxes
   
35,298
     
8,993
     
393
     
60,986
     
(29,400
)
Income tax expense (credit)
   
13
     
13
     
25
     
38
     
72
 
Net income (loss)
   
35,285
     
8,980
     
368
     
60,948
     
(29,472
)
                                         
Per share information:
                                       
Earnings (loss) per share: basic and diluted
 
$
0.24
   
$
0.06
   
$
0.00
   
$
0.42
   
-0.25
 



The accompanying selected notes are an integral part of these unaudited condensed consolidated financial statements.
10

GOLDEN OCEAN GROUP LIMITED
Unaudited Interim Condensed Consolidated Statements of Other Comprehensive Income

(in thousands of $)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Comprehensive income (loss), net
                             
Net income (loss)
   
35,285
     
8,980
     
368
     
60,948
     
(29,472
)
Unrealized gain (loss) of marketable equity securities (Note 2)
   
     
     
(65
)
   
     
2,584
 
Other comprehensive income (loss)
   
     
     
(65
)
   
     
2,584
 
                                         
Comprehensive income (loss), net
   
35,285
     
8,980
     
303
     
60,948
     
(26,888
)


 


 





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

11

GOLDEN OCEAN GROUP LIMITED
Unaudited Interim Condensed Consolidated Balance Sheets


(in thousands of $)
 
September 30, 2018
   
June 30, 2018
   
December 31, 2017
 
ASSETS
                 
Current assets
                 
Cash and cash equivalents
   
295,035
     
249,970
     
309,029
 
Restricted cash
   
17,737
     
15,535
     
8,110
 
Other current assets
   
162,274
     
148,057
     
127,361
 
Total current assets
   
475,046
     
413,562
     
444,500
 
Restricted cash
   
55,633
     
56,156
     
54,845
 
Vessels and equipment, net
   
2,429,561
     
2,452,707
     
2,215,003
 
Vessels held for sale
   
     
14,357
     
 
Vessels under capital leases, net
   
1,391
     
1,617
     
2,061
 
Newbuildings
   
     
     
105,727
 
Other long term assets
   
37,484
     
39,128
     
47,922
 
Total assets
   
2,999,115
     
2,977,526
     
2,870,058
 
                         
LIABILITIES AND EQUITY
                       
Current liabilities
                       
Current portion of long-term debt
   
244,851
     
231,462
     
109,671
 
Current portion of obligations under capital leases
   
5,543
     
5,438
     
5,239
 
Other current liabilities
   
82,494
     
73,067
     
66,817
 
Total current liabilities
   
332,888
     
309,967
     
181,727
 
Long-term debt
   
1,131,504
     
1,152,146
     
1,178,788
 
Obligations under capital leases
   
3,250
     
4,687
     
7,435
 
Other long term liabilities
   
7,501
     
7,723
     
8,059
 
Total liabilities
   
1,475,143
     
1,474,523
     
1,376,009
 
Equity
   
1,523,972
     
1,503,003
     
1,494,049
 
Total liabilities and equity
   
2,999,115
     
2,977,526
     
2,870,058
 


 






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

12

GOLDEN OCEAN GROUP LIMITED
Unaudited Interim Condensed Consolidated Cash Flow Statements
(in thousands of $)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Net income (loss)
   
35,285
     
8,980
     
368
     
60,948
     
(29,472
)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities;
                                       
Depreciation
   
23,345
     
23,358
     
21,236
     
68,815
     
57,220
 
Impairment loss on vessels
   
     
1,080
     
1,066
     
1,080
     
1,066
 
(Gain) loss on sale of assets and amortization of deferred gains
   
(65
)
   
(63
)
   
(65
)
   
(193
)
   
(193
)
Dividends from associated companies
   
     
271
     
     
1,096
     
256
 
Equity results from associated companies
   
(172
)
   
(71
)
   
(4,118
)
   
(497
)
   
(4,361
)
Amortization of time charter party out contracts
   
4,722
     
4,670
     
4,033
     
14,011
     
15,799
 
Amortization of time charter party in contracts
   
(170
)
   
(167
)
   
(170
)
   
(503
)
   
(503
)
Amortization of convertible bond fair value adjustment
   
2,500
     
2,515
     
2,681
     
7,503
     
7,667
 
Other, net
   
(1,171
)
   
(1,859
)
   
(441
)
   
(7,953
)
   
3,591
 
Change in operating assets and liabilities
   
(643
)
   
(5,057
)
   
2,845
     
(18,479
)
   
(13,089
)
Net cash provided by (used in) operating activities
   
63,631
     
33,657
     
27,435
     
125,828
     
37,981
 
                                         
Investing activities
                                       
Additions to newbuildings
   
     
     
(29,587
)
   
(144,630
)
   
(152,129
)
Proceeds from the sale of vessels
   
14,357
     
     
     
14,357
     
 
Addition to vessels and fixed assets
   
(1,985
)
   
(1,207
)
   
(1,646
)
   
(10,659
)
   
(1,646
)
Proceeds from sale of marketable securities
   
     
     
     
224
     
 
Investments in associated companies, net
   
     
45
     
7,000
     
45
     
6,000
 
Other investing activities, net
   
57
     
939
     
     
996
     
(120
)
Net cash provided by (used in) investing activities
   
12,429
     
(223
)
   
(24,233
)
   
(139,667
)
   
(147,895
)
                                         
Financing activities
                                       
Repayment of long-term debt
   
(30,565
)
   
(156,232
)
   
(2,932
)
   
(211,594
)
   
(71,463
)
Proceeds from long term debt
   
17,007
     
102,993
     
     
270,000
     
50,000
 
Net proceeds from share issuance
   
     
     
     
210
     
58,183
 
Debt fees paid
   
     
(1,200
)
   
     
(1,200
)
       
Dividends paid
   
(14,425
)
   
(14,425
)
   
     
(43,275
)
   
 
Repayment of capital leases
   
(1,333
)
   
(1,293
)
   
(1,235
)
   
(3,881
)
   
(3,598
)
Net cash provided by (used in) financing activities
   
(29,316
)
   
(70,157
)
   
(4,167
)
   
10,260
     
33,122
 
Net change in cash, cash equivalents and restricted cash
   
46,744
     
(36,723
)
   
(965
)
   
(3,579
)
   
(76,792
)
Cash, cash equivalents and restricted cash at start of period
   
321,661
     
358,384
     
191,227
     
371,984
     
267,054
 
Cash, cash equivalents and restricted cash at end of period
   
368,405
     
321,661
     
190,262
     
368,405
     
190,262
 
The accompanying selected notes are an integral part of these unaudited condensed consolidated financial statements.
13

GOLDEN OCEAN GROUP LIMITED
Unaudited Interim Condensed Consolidated Statements of Changes in Equity

(in thousands of $)
 
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Number of shares outstanding
           
Balance at beginning of period
   
142,197,697
     
105,965,192
 
Shares issued
   
2,050,000
     
26,407,800
 
Balance at end of period
   
144,247,697
     
132,372,992
 
                 
Share capital
               
Balance at beginning of period
   
7,111
     
5,298
 
Shares issued
   
103
     
1,320
 
Balance at end of period
   
7,214
     
6,618
 
                 
Additional paid in capital
               
Balance at beginning of period
   
454,694
     
201,864
 
Shares issued
   
17,448
     
173,745
 
Stock option expense
   
397
     
432
 
Transfer to contributed surplus
   
(472,539
)
   
 
Balance at end of period
   
     
376,041
 
                 
Contributed capital surplus
               
Balance at beginning of period
   
1,378,824
     
1,378,824
 
Distributions to shareholders
   
(43,275
)
   
 
Transfer from additional paid in capital
   
472,539
     
 
Balance at end of period
   
1,808,088
     
1,378,824
 
                 
Other comprehensive income
               
Balance at beginning of period
   
5,323
     
2,287
 
Adjustment on adoption of changes in ASC 825 (Note 2)
   
(5,323
)
   
 
Other comprehensive income, net
   
     
2,584
 
Balance at end of period
   
     
4,871
 
                 
Accumulated deficit
               
Balance at beginning of period
   
(351,903
)
   
(349,555
)
Adjustment on adoption of changes in ASC 825 (Note 2)
   
5,323
     
 
Adjustment on adoption of ASC 606 (Note 2)
   
(5,698
)
   
 
Net income (loss)
   
60,948
     
(29,472
)
Balance at end of period
   
(291,330
)
   
(379,027
)
                 
Total equity
   
1,523,972
     
1,387,327
 



The accompanying selected notes are an integral part of these unaudited condensed consolidated financial statements.
14

GOLDEN OCEAN GROUP LIMITED
SELECTED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General

Golden Ocean Group Limited (the "Company" or "Golden Ocean") is a Bermuda incorporated shipping company specializing in the transportation of dry bulk cargoes. The Company's ordinary shares are listed on the Nasdaq Global Select Market with a secondary listing on the Oslo Stock Exchange.

2. Accounting policies

Basis of accounting
The unaudited condensed consolidated financial statements are stated in accordance with accounting principles generally accepted in the United States. The unaudited condensed consolidated financial statements do not include all of the disclosures required in the annual and interim consolidated financial statements and should be read in conjunction with the Company's annual financial statements included in the Company's annual report on Form 20-F for the year ended December 31, 2017, which was filed with the U.S. Securities and Exchange Commission on March 21, 2018.

Significant accounting policies
The accounting policies adopted in the preparation of the unaudited condensed consolidated financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended December 31, 2017, with the exception of implementation of new accounting standards as described below.

In the first quarter of 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers. The Company has determined that under the new standard voyage charter revenue will continue to be recognized over time; however, the period over which it is recognized will change from discharge-to-discharge to load-to-discharge. The Company believes that performance obligations under a voyage charter begin to be met from the point at which a cargo is loaded until the point at which a cargo is discharged. While this represents a change in the period over which revenue is recognized, the total voyage results recognized over all periods would not change.

The new guidance also specifies revised treatment for certain contract related costs, being either incremental costs to obtain a contract or cost to fulfill a contract. Under the new guidance, certain voyage expenses occurred between signing the charter party and arrival at loading port has been deferred and amortized during the charter period.

The Company has elected to apply the modified retrospective approach. Upon adoption, the Company recognized a cumulative effect of $5.7 million as an adjustment to, and increasing, its opening balance of accumulated deficit as of January 1, 2018. Prior periods have not been retrospectively adjusted.

In the first quarter of 2018, the Company adopted ASU No. 2016-01 financial instruments. Upon the adoption of the standard, the Company recognized a cumulative-effect adjustment of $5.3 million to its opening balance as of January 1, 2018 from other comprehensive income to accumulated deficit in the equity statement. As a result of the adoption of the standard, the Company recognizes changes in the fair value of its marketable equity securities in the statement of operations.
 
In the first quarter of 2018, the Company adopted ASU No. 2016-15, Statement of cash flows: Classification of certain cash receipts and cash payments. This ASU addresses specific cash flow issues, including distributions received from equity method investees. The Company adopted the amendments of the standard using a retrospective transition method to each period presented. As a result, distributions from equity method investees that are considered return on investment are presented under cash flow from operating activities in the statement of cash flows.
 
15

 
In the first quarter of 2018, the Company adopted ASU No. 2016-18, Statement of cash flows: Restricted Cash. The new standard requires that the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted the amendments of the standard using a retrospective transition method to each period presented. As a result, amounts generally described as restricted cash in prior periods are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows.

3. Earnings per share

Basic earnings per share amounts for the three and nine months ended September 30, 2018 are based on the weighted average number of shares outstanding of 144,247,697 and 144,104,840, respectively.

For determining diluted number of shares, the impact of the Company's share options on the weighted average number of shares using the treasury stock method was 245,700 and 254,264 dilutive shares for the three and nine months ended September 30, 2018, respectively. The conversion of the convertible bonds using the if-converted method was antidilutive.

4. Amortization of favorable and unfavorable charter party contracts

Favorable time charter-out contracts that were acquired as a result of the merger (the "Merger") between Knightsbridge Shipping Limited and the former Golden Ocean Group Limited on March 31, 2015 have a carrying value of $39.7 million as of September 30, 2018. Operating revenues in the three and nine months ended September 30, 2018 have been reduced by $4.7 million and $14.0 million, respectively, as a result of the amortization of these favorable time charter-out contracts.

Unfavorable time charter-in contracts that were acquired as a result of the Merger have a carrying value of $4.3 million as of September 30, 2018. Charterhire expenses in the three and nine months ended September 30, 2018 have been reduced by $0.2 million and $0.5 million, respectively, as a result of the amortization of these unfavorable time charter contracts.

The net effect of amortization of the contract portfolio was a reduction in net income of $4.6 million and $13.5 million in the three and nine months ended September 30, 2018, respectively.

5. Vessels and equipment, net and vessels held for sale

In the first quarter of 2018, the Company capitalized $43.4 million in acquisition costs for the Golden Monterrey. Refer to "Note 10 Related party" for additional information. An aggregate of $253.4 million was transferred from newbuildings to vessel and equipment as a result of deliveries in the first quarter of 2018.

In the third quarter of 2018, the Company completed the sale of the Golden Eminence, a Panamax vessel, to an unrelated third party for $14.7 million. In the second quarter of 2018, the Company recorded an impairment loss of $1.1 million related to the sale.

Refer to "Note 7 Newbuildings" for additional information.
 
16


6. Vessels under capital leases, net

The Company has one vessel, the Golden Eclipse, classified as a capital lease in 2018. The bareboat charter expires in April 2020.

7. Newbuildings

In January and February 2018, the Company took delivery of the Golden Arcus, Golden Cirrus, Golden Cumulus, Golden Incus and Golden Calvus, and paid $144.6 million in final installments.

Following these deliveries, the Company has taken delivery of all its newbuildings and has no further outstanding contractual newbuilding commitments.

8. Long-term debt

In the first quarter of 2018 and in connection with the deliveries of the Golden Arcus, Golden Cirrus, Golden Cumulus, Golden Incus and Golden Calvus, an aggregate of $150.0 million was drawn down under the Company's $425.0 million senior secured post-delivery term loan facility.

In May 2018, the Company entered into a $120 million loan facility to refinance 10 vessels and subsequently repaid $58.3 million due under two loan facilities maturing in 2018 and prepaid the full outstanding amounts under its related party seller credit loans of $65.5 million. The facility has a seven year tenor, will be repaid in quarterly installments based on a 20-year age profile and bears interest of LIBOR plus a margin of 2.25%. As of September 30, 2018, the full amount under the $120.0 million loan facility was drawn.

In the first nine months of 2018, the Company has repaid an aggregate of $211.6 million under its bank facilities, related party seller credit loans and through repurchases in its 3.07% $200 million Golden Ocean Group Limited Convertible Bond.

In the third quarter of 2018, the Company acquired an aggregate of $1.4 million notional of its 3.07% $200 million Golden Ocean Group Limited Convertible Bond for approximately $1.4 million in total and recognized a loss of $30 thousand, presented under other financial items. As of September 30, 2018, the Company holds $29.8 million notional of the 3.07% $200 million Golden Ocean Group Limited Convertible Bond.

As of September 30, 2018, the Company had $244.9 million of long term debt classified under current liabilities, which includes $166.9 million in carrying value of the convertible bond maturing in January 2019 and $78.0 million in installments, of which $11.6 million represents deferred debt repayments through the cash sweep mechanism of the Company's non-recourse loans due for payment in the fourth quarter of 2018.



17



9. Share capital

In January 2018, the Company issued 2,000,000 shares in connection with the delivery of the Golden Monterrey, a Capesize vessel acquired from affiliates of Hemen Holding Limited ("Hemen").

In March 2018, the Company issued 50,000 shares in relation to the Company's 2016 share option plan.

As of September 30, 2018, the Company had 144,247,697 issued common shares, each with a par value of $0.05.

10. Related party

In January 2018, the Company took delivery of the Golden Monterrey, a Capesize vessel acquired from affiliates of Hemen, and issued 2,000,000 common shares to Hemen to satisfy the purchase price.

In connection with the acquisitions of four vessels from affiliates of Hemen in 2017 and January 2018, the Company assumed an aggregate of $65.5 million in debt under seller's credit agreements. In June 2018, the Company repaid the full outstanding amount of $65.5 million under the seller's credit agreements in  connection with the new $120.0 million loan facility entered into in May 2018. Refer to "Note 8 Long-term debt" for additional information.

In the third quarter of 2018, the Company recognized $0.2 million in profit sharing expense for its eight Capesize vessels chartered in from Ship Finance International Ltd.

11. Commitment and contingencies

As of September 30, 2018, the Company has committed to the acquisition of scrubbers on 16 vessels with a remaining financial commitment of $22.9 million for the scrubbers, excluding estimated installation costs. The Company also has options to purchase nine additional scrubbers to be installed on certain of its Capesize vessels. With reference to "Note 12 Subsequent events" the Company declared four options to install scrubbers, which increases the number of installations to 20 and the aggregated financial commitments to $28.8 million at the date of this report.

12. Subsequent events

In November 2018, the Company declared four options to install scrubbers, which increases the number of installations to 20 at the date of this report.

On November 19, 2018, the Company's Board of Directors determined to announce a cash dividend to the Company's shareholders of $0.15 per share.

18

(A) Reconciliation of Net Income (loss) to EBITDA and Adjusted EBITDA (Earnings before Interest Taxes Depreciation and Amortization)

EBITDA represents net income (loss) plus net interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude the items set forth in the table below, which represent certain non-cash other items that we believe are not indicative of the ongoing performance of our core operations. EBITDA and Adjusted EBITDA are used by analysts in the shipping industry as common performance measures to compare results across peers. EBITDA and Adjusted EBITDA are not items recognized by accounting principles generally accepted in the United States of America ("GAAP"), and should not be considered in isolation or used as alternatives to net income, operating income, cash flow from operating activity or any other indicator of our operating performance or liquidity required by GAAP.

Our presentation of EBITDA and Adjusted EBITDA is intended to supplement investors' understanding of our operating performance by providing information regarding our ongoing performance that exclude items we believe do not directly affect our core operations and enhancing the comparability of our ongoing performance across periods. Our management considers EBITDA and Adjusted EBITDA to be useful to investors because such performance measures provide information regarding the profitability of our core operations and facilitate comparison of our operating performance to the operating performance of our peers. Additionally, our management uses EBITDA and Adjusted EBITDA as measures when reviewing the Company's operating performance. While we believe these measures are useful to investors, the definitions of EBITDA and Adjusted EBITDA used by us may not be comparable to similar measures used by other companies.

We present Adjusted EBITDA in addition to EBITDA because Adjusted EBITDA eliminates the impact of additional non-cash and other items not associated with the ongoing performance of our core operations. To derive adjusted EBITDA, we have excluded certain gains/losses such as those related to sale of vessels, bargain purchase gain arising on consolidation, impairments on vessels and marketable securities, mark to market of derivatives and other financial items that we believe further reduce the comparability of the ongoing performance of our core operations across periods.
 
19



(in thousands of $)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Net income (loss)
   
35,285
     
8,980
     
368
     
60,948
     
(29,472
)
Interest income
   
(2,011
)
   
(1,754
)
   
(520
)
   
(5,167
)
   
(1,350
)
Interest expense
   
19,298
     
19,202
     
16,245
     
55,805
     
43,363
 
Income tax expense
   
13
     
13
     
25
     
38
     
72
 
Depreciation
   
23,345
     
23,358
     
21,235
     
68,815
     
57,220
 
Amortization of time charter party out contracts
   
4,722
     
4,670
     
4,033
     
14,011
     
15,799
 
Amortization of time charter party in contracts
   
(170
)
   
(166
)
   
(170
)
   
(503
)
   
(503
)
Earnings before Interest Taxes Depreciation and Amortization
   
80,482
     
54,303
     
41,216
     
193,947
     
85,129
 
(Gain) loss on sale of assets and amortization of deferred gains
   
(65
)
   
(64
)
   
(65
)
   
(194
)
   
(193
)
Impairment loss on vessels
   
     
1,080
     
1,066
     
1,080
     
1,066
 
(Gain) loss on derivatives
   
(1,290
)
   
(1,301
)
   
(1,523
)
   
(9,221
)
   
2,273
 
Other financial items
   
(281
)
   
28
     
(247
)
   
549
     
(629
)
Adjusted Earnings before Interest Taxes Depreciation and Amortization
   
78,846
     
54,046
     
40,447
     
186,161
     
87,646
 
                                         

(B) Reconciliation of Total Operating Revenues to Time Charter Equivalent Income and Time Charter Equivalent Rate

(i) Time Charter Equivalent Revenue:

Consistent with general practice in the shipping industry, we use TCE income as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. We define TCE income as operating revenues less voyage expenses and commission plus amortization of favorable charter party contracts (being the fair value above market of acquired time charter agreements upon the completion of the Merger). Under time charter agreements, voyage costs, such as bunker fuel, canal and port charges and commissions are borne and paid by the charterer whereas under voyage charter agreements, voyage costs are borne and paid by the owner. TCE income is a common shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters and time charters) under which the vessels may be employed between the periods. Time charter equivalent income, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with operating revenues, the most directly comparable U.S. GAAP measure, because it assists management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, regardless of whether a vessel has been employed on a time charter or a voyage charter.
 
20


(in thousands of $)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Total operating revenues
   
189,256
     
140,889
     
126,950
     
480,087
     
308,608
 
Add: Amortization of time charter party out contracts
   
4,722
     
4,670
     
4,033
     
14,011
     
15,799
 
Add: Other operating income (expenses)
   
749
     
3,102
     
1,591
     
1,798
     
4,584
 
Less: Other revenues*
   
391
     
379
     
266
     
1,556
     
927
 
Net time and voyage charter revenues
   
194,336
     
148,282
     
132,308
     
494,340
     
328,064
 
Less: Voyage expenses & commission
   
54,533
     
32,603
     
34,970
     
117,978
     
89,980
 
Time charter equivalent income
   
139,803
     
115,679
     
97,338
     
376,362
     
238,084
 
*adjustment includes management fee revenue and other non-voyage related revenues or income
 recognized under other revenues.

(ii) Time Charter Equivalent Rate:

Time charter equivalent rate (" TCE rate") represents the weighted average daily TCE income of our entire operating fleet.

TCE rate is a measure of the average daily income performance. Our method of calculating TCE rate is determined by dividing TCE income by onhire days during a reporting period. Onhire days are calculated on a vessel by vessel basis and represent the net of available days and offhire days for each vessel (owned or chartered in) in our possession during a reporting period. Available days for a vessel during a reporting period is the number of days the vessel (owned or chartered in) is in our possession during the period. By definition, available days for an owned vessel equal the calendar days during a reporting period, unless the vessel is delivered by the yard during the relevant period whereas available days for a chartered-in vessel equal the tenure in days of the underlying time charter agreement, pro-rated to the relevant reporting period if such tenure overlaps more than one reporting period. Offhire days for a vessel during a reporting period is the number of days the vessel is in our possession during the period but is not operational as a result of unscheduled repairs, scheduled dry docking or special or intermediate surveys and lay-ups, if any.

(in thousands of $, except for TCE rate and days)
 
Three months ended September 30, 2018
   
Three months ended June 30, 2018
   
Three months ended September 30, 2017
   
Nine months ended September 30, 2018
   
Nine months ended September 30, 2017
 
Time charter equivalent income
   
139,803
     
115,679
     
97,338
     
376,362
     
238,084
 
                                         
Fleet available days
   
7,939
     
7,703
     
7,590
     
23,443
     
19,702
 
Fleet offhire days
   
(54
)
   
(100
)
   
(78
)
   
(201
)
   
(281
)
Fleet onhire days
   
7,885
     
7,603
     
7,512
     
23,242
     
19,421
 
                                         
Time charter equivalent rate
   
17,730
     
15,215
     
12,958
     
16,193
     
12,259
 



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