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OMI Corporation News Release February 25, 1999 for the Quarter Ended December 31, 1998.



STAMFORD Stamford, town, England
Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles.
, Conn.--(BUSINESS WIRE)--Feb. 25, 1999--OMI Corporation (OMM OMM Organisation Météorologique Mondiale (French: World Meteorological Organization)
OMM Organización Meteorológica Mundial (Spanish: World Meteorological Organization)
OMM Organizzazione Meteorologica Mondiale
:NYSE NYSE

See: New York Stock Exchange
) today announced a net loss for the quarter ended December December: see month.  31, 1998 of $4,665,000 or $0.11 basic earnings per share compared to net income of $2,630,000 or $0.06 basic earnings per share, for the quarter ended December 31, 1997. Net income for the year ended December 31, 1998 was $42,917,000, or $1.01 basic earnings per share, compared to net income of $16,922,000, or $0.39 basic earnings per share, for the year ended December 31, 1997. Net income for the year ended December 31, 1998 includes a reversal of deferred income taxes in the amount of $38,887,000 or $0.91 basic earnings per share. The 1997 results include income of $10,063,000 (net of income taxes), or $0.23 basic earnings per share, for the cumulative effect of a change in the method of accounting for drydock costs from the accrual accrual,
n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest.
 to the prepaid pre·pay  
tr.v. pre·paid, pre·pay·ing, pre·pays
To pay or pay for beforehand.



pre·payment n.
 method. -0-

                         For The                 For The Three
                       Year Ended                Months Ended
                       December 31,             December 31,
RESULTS OF
 OPERATIONS          1998         1997          1998        1997
                        (In thousands except per share data)
(UNAUDITED)
Operating
 revenues
 (TCE revenues)   $ 111,711    $ 108,734    $  24,346     $ 32,528
Operating
 expenses
 (includes
  charter hire
  expenses)          70,380       53,341       15,364       16,122


Net voyage
 revenues            41,331       55,393        8,982       16,406

Depreciation
 and
 amortization        24,314       22,675        6,494        5,619
General and
 administrative
 expenses            10,773       12,540        3,932        5,675


Operating
 income (loss)        6,244       20,178       (1,444)       5,112
Net interest
 expense             (9,772)      (9,534)      (3,731)      (1,835)
Gain (loss) on
 disposal of
 assets-net           6,485          885         (140)          (1)
Other-net              (882)        --            128         --
Equity in
 operations of
 joint ventures       3,684          737          522          827

Income (loss)
 before income
 taxes                5,759       12,266       (4,665)       4,103
(Benefit)
 provision for
 income taxes       (37,158)       5,407         --          1,473
Cumulative
 effect of
 change in
 accounting
  principle            --         10,063         --


Net income
 (loss)           $  42,917    $  16,922    $  (4,665)   $   2,630


Net income
 (loss) per
 common share:
Basic:
Net income
 (loss) before
 cumulative
 effect of
 change in
 accounting
 principle         $   1.01     $   0.16     $  (0.11)    $   0.06
Net income
 (loss)            $   1.01     $   0.39     $  (0.11)    $   0.06
Weighted
 average
 shares
 outstanding         42,671       42,914       41,609       43,056
Diluted:
Net income
 (loss) before
 cumulative
 effect of
 change in
 accounting
 principle         $   1.00    $    0.16    $   (0.11)   $    0.06
Net income
 (loss)            $   1.00    $    0.39    $   (0.11)   $    0.06
Weighted
 average
 shares
 outstanding         42,860       43,657       41,609       43,799

EBITDA (1)         $ 33,499   $   43,845    $   5,627    $  11,168

(1) "EBITDA" represents net income from operations before interest
    expense, income taxes, depreciation and amortization expense,
    gains and losses on disposal of assets and cumulative effect of
    change in accounting principle. EBITDA is not required by
    generally accepted accounting principles and should not be
    considered as an alternative to net income or any other measure of
    performance required by generally accepted accounting principles
    or as an indicator of the Company's operating performance.


CONDENSED BALANCE SHEET     12/31/98   12/31/97


Cash and cash equivalents   $ 22,698   $ 30,608
Other current assets          24,397     22,002
Vessels-net                  393,862    286,996
Construction in progress
  (newbuildings)              34,733     56,032
Other assets                  54,437     45,070


Total assets                $530,127   $440,708


Current liabilities         $ 45,181   $ 21,062
Long-term liabilities        239,763    136,088
Total equity                 245,183    283,558


Total liabilities
  and equity                $530,127   $440,708


RESULTS

Operating or TCE TCE

trichloroethylene.

TCE Environment A volatile chlorinated hydrocarbon that boils at 88ºC and is highly soluble–1000 ppm in water, with various industrial uses Toxicity Peripheral neuropathy, carcinogenic.
 ("Time Charter Equivalent") revenues, which is voyage VOYAGE, marine law. The passage of a ship upon the seas, from one port to another, or to several ports.
     2. Every voyage must have a terminus a quo and a terminus ad quem.
 revenues less voyage expenses, increased $2,977,000, and decreased $8,182,000 for the twelve months and three months ended December 31, 1998, respectively, compared to the twelve months and three months ended December 31, 1997.

TCE revenues increased a net of $2,977,000 in the year ended 1998 compared to 1997. Increases in TCE revenue in the crude group of $22,001,000 in 1998 were from additional revenue earned aggregating $12,139,000 from four chartered-in vessels which operated for an aggregate of 755 more days in 1998 compared to 1997; revenue of $8,724,000 earned from three Suezmax Suezmax is a naval architecture term for the largest ships capable of transiting the Suez Canal fully loaded, and is almost exclusively used in reference to tankers. Since the canal has no locks, the only serious limiting factor is draft (maximum depth below waterline).  vessels which were delivered in 1998 and operated for an aggregate of 511 days in 1998; increases in revenue of $8,153,000 due to three Panamax vessels carrying crude oil in 1998 which previously were included in the clean products group. Increased revenues in the crude group were offset by decreases resulting from 77 more offhire days in 1998 compared to 1997 relating to relating to relate prepconcernant

relating to relate prepbezüglich +gen, mit Bezug auf +acc 
 drydocking of vessels, $3,109,000 less revenues from a vessel sold in August 1998 and a decline in rates in 1998 compared to 1997.

Decreases in TCE revenues for the clean group of $17,520,000 in the year 1998 were due to revenues previously included in this group earned by the three Panamaxes in addition to decreases in revenue earned while operating in the clean products market aggregating $10,285,000, 71 more offhire days relating to drydocking of vessels in 1998 compared to 1997 and declines in rates earned in 1998 compared to 1997. Other TCE revenues for vessels not included in either the crude or the clean group in 1998 decreased $1,504,000.

TCE revenues decreased $8,182,000 for the quarter ended December 31, 1998, compared to the same period in 1997, resulting from a decline in rates, 53 more offhire days for drydocking in 1998 and vessels chartered-in for 35 less days during 1998.

Although TCE revenues increased a net of $2,977,000 for the year ended 1998 compared to 1997, net voyage revenues (TCE revenues less vessel expenses and charter hire expenses) decreased $14,062,000. This decrease comprises an increase in the crude group of $3,968,000 and a decrease in the clean group of $14,885,000. Other operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted.
 not included in either crude or clean groups increased $3,145,000. The primary reasons for the increase in the crude group's net voyage revenues of $3,968,000 are the same explanations for increases in the TCE revenues of $22,001,000 with the exception of the increase in charter hire expense in 1998 of $16,623,000 which coincides with additional TCE revenue earned on chartered-in vessels, increases in operating expenses related to the new Suezmax vessels and Panamax vessels included in crude in 1998.

Net voyage revenues for the clean group decreased by $14,885,000 in 1998. This decrease relates to decreases in TCE revenues mentioned above of $17,520,000, offset by decreased expenses from Panamax vessels included in the crude group in 1998. Increases in operating expenses include $3,145,000 relating to management fee allocations.

Net voyage revenues for the quarter ended December 31, 1998 declined a net of $7,424,000, compared to the 1997 quarter, consisting of net decreases in the clean products group operating profits Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.


operating profit

See operating income.
 of $3,502,000 and net decreases of $3,959,000 in the crude group operating profits, offset by decreased operating expenses of $37,000.

The Company drydocked eight vessels for an aggregate of 265 days in 1998, of which two vessels were drydocked for 71 days in the fourth quarter. In 1997, five vessels were drydocked an aggregate of 123 days and there was 82 offhire days, of which 25 offhire days occurred in the fourth quarter of 1997.

Operating income Operating Income

The profit realized from a business' own operations.

Notes:
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit.
 declined $13,934,000 from $20,178,000 for the year ended December 31, 1997 compared to $6,244,000 for 1998. The net decrease in operating income resulted from operating activities in 1998 mentioned above, in addition to increased depreciation expense of $1,639,000 from additional depreciation expense on the three new vessels delivered in 1998 offset by one vessel sold. Also, general and administrative expenses declined $1,767,000 primarily because of relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation.
     2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation.
 accruals Accruals

Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense.
 and additional professional fees for the reorganization of OMI (1) See Open Market.

(2) (Open Microprocessor Initiative, Brussels, Belgium) An organization that functions under the umbrella of the European Commission. It funds projects that research and develop advanced microcontroller technologies.
 included in the 1997 expenses. The operating loss operating loss

The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income.
 for the quarter ended December 31,1998 of $1,444,000 decreased $6,556,000 from net income of $5,112,000 in the comparable period in 1997.

FLEET REPORT

Currently, OMI's fleet comprises 27 vessels (including two chartered-in, one delivered in January January: see month.  1999, and three jointly owned vessels). In June June: see month. , July and August of 1998, OMI took delivery of three Suezmax newbuildings New Buildings (officially written as Newbuildings) is a large village in County Londonderry, Northern Ireland. It lies about 1 km (0.6 mi) from the shores of the River Foyle and 5 km (3 mi) south of the city of Derry/Londonderry. .

OMI Corporation operates primarily Suezmax and product tankers. Its fleet currently comprises eight wholly owned Suezmaxes, two chartered-in Suezmaxes, one Aframax, three 66,000 dwt. product tankers currently carrying crude oil, ten handysize product carriers transporting clean products and those jointly vessels. Two product carriers aggregating 70,000 dwt. are to be delivered in mid 1999. The Company also has on order one additional Suezmax tanker which will be delivered in May 2000. -0-

BREAKDOWN BY FLEET FOR THE YEAR ENDED DECEMBER 31,

                          CRUDE              CLEAN
(UNAUDITED)           1998       1997     1998      1997
                      ( In thousands, except Daily TCE rate)

Voyage revenue       $98,517   $74,417   $50,649   $66,163
Voyage expenses       25,313    23,214    12,128    10,122

Operating
 revenues
 (TCE revenues)       73,204    51,203    38,521    56,041
Operating expenses    20,828    19,418    21,388    24,023
Charter hire
 expenses             25,529     8,906      --        --

Net voyage
 revenues             26,847    22,879    17,133    32,018
Depreciation
  expense             11,976     8,406    11,481    13,371

Operating income     $14,871   $14,473   $ 5,652   $18,647

Daily average
 TCE rate            $17,165   $25,209   $ 9,599   $13,863


Rates in the Product market began to decline in the second half of 1997. Therefore, OMI placed three Panamaxes which previously carried clean products, into a marketing pool in November 1997, May 1998 and July 1998, carrying crude oil. Decreases in the clean group in 1998 pertaining per·tain  
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.

2.
 to the Panamaxes relate to a part of the year (367 days in aggregate) in which two of the vessels were carrying clean products and the remainder of the decrease relates to decreased rates earned for these vessels in 1998 in comparison to 1997. The crude group's operating income increased $398,000 in 1998 which includes increases of $1,876,000 for the three Panamax vessels. The clean group operating income decreased $12,995,000 including decreases from the Panamaxes of $4,647,000. The aggregate net decrease in the Panamaxes operating income was $2,771,000 in 1998 compared to 1997. -0-

BREAKDOWN BY FLEET FOR THE QUARTER ENDED DECEMBER 31,

                           CRUDE              CLEAN
(UNAUDITED)           1998      1997      1998       1997
                     ( In thousands, except Daily TCE rate)

Voyage revenues      $22,706   $26,606   $11,516   $15,637
Voyage expenses        6,869     6,848     2,947     2,879


Operating
 revenues
 (TCE revenues)       15,837    19,758     8,569    12,758
Operating expenses     5,205     4,919     5,175     5,862
Charter hire
 expenses              5,118     5,366      --        --

Net voyage
 revenues              5,514     9,473     3,394     6,896
Depreciation
 expense               3,713     2,131     2,530     3,315

Operating  income    $ 1,801   $ 7,342   $   864   $ 3,581

Daily average
 TCE rate            $13,125   $22,190   $ 9,311   $13,863


The aggregate decreases for the three Panamaxes operating income for the quarter ended December 31, 1998 was $2,079,000, consisting of a decrease in crude of $706,000 and a decrease in clean of $1,373,000.

General and administrative expenses, management fee expenses allocated to vessels, and in 1997, operating income for the year generated from a Liquid Petroleum Gas Carrier sold that year are excluded from the preceding tables.

MARKET SUMMARY

CRUDE

The improvement in crude tanker rates, which began in 1995, continued through the early part of 1998. The rate gains in the past few years have been the result of growth in the world oil demand which, together with a modest increase in the supply of tankers, created a better supply/demand balance. Freight rates Noun 1. freight rate - the charge for transporting something by common carrier; "we pay the freight"; "the freight rate is usually cheaper"
freightage, freight
 weakened weak·en  
tr. & intr.v. weak·ened, weak·en·ing, weak·ens
To make or become weak or weaker.



weaken·er n.
 in the second half of 1998 and the tanker market is expected to continue to be weak in the foreseeable fore·see  
tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees
To see or know beforehand: foresaw the rapid increase in unemployment.
 future as a result of OPEC OPEC: see Organization of Petroleum Exporting Countries.
OPEC
 in full Organization of the Petroleum Exporting Countries

Multinational organization established in 1960 to coordinate the petroleum production and export policies of its
 oil production cuts to support oil prices, relatively high world oil inventories, weakness in oil demand due to the continued Southeast Asian economic crisis as well as the onset of a recession in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies.  and the relatively large tanker newbuilding delivery schedule.

However, it should be mentioned that about 37% of the total tanker fleet and 39% and 52% of the Suezmax and VLCC VLCC
abbr.
very large crude (oil) carrier
 fleets, respectively, are 20 or more years old. The combination of the tanker market weakness, the relatively high orderbook, an expensive fifth special survey and stricter environmental regulations would accelerate scrappings of the old tonnage TONNAGE, mar. law. The capacity of a ship or vessel.
     2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c.
.

The Suezmax market was relatively weak in the fourth quarter. Good compliance to cutbacks in oil production, agreed early in the year, by OPEC and other oil producing nations as well as stock withdrawals have reduced oil liftings. In addition, there were a number of temporary regional supply disruptions in the Atlantic basin including pipeline closures in Nigeria, shutdowns in the North Sea and interruptions in the flow of Iraqi oil to Ceyhan, Turkey, due to disputes between Iraq and the United Nations concerning the embargo embargo (ĕmbär`gō), prohibition by a country of the departure of ships or certain types of goods from its ports. Instances of confining all domestic ships to port are rare, and the Embargo Act of 1807 is the sole example of this in  imposed on Iraq after the end of the Iraqi/Kuwaiti conflict in the early 1990s.

CLEAN

The product carrier market is the segment of the tanker market which transports refined petroleum products such as gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by , jet fuel, kerosene kerosene or kerosine, colorless, thin mineral oil whose density is between 0.75 and 0.85 grams per cubic centimeter. A mixture of hydrocarbons, it is commonly obtained in the fractional distillation of petroleum as the portion boiling off , naphtha naphtha (năp`thə, năf`–), term usually restricted to a class of colorless, volatile, flammable liquid hydrocarbon mixtures.  and gas oil. Freight rates in this market were relatively strong from 1995 through the first quarter of 1997 showing seasonal improvement in the winter months. After the product tanker market reached a very high level in early 1997 it began receding gradually as a result of reduced oil product imports in the Pacific region due to refinery capacity additions in the area and lower oil consumption because of the financial crisis in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east.  and Korea, higher throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together.

1.
 in industrialized in·dus·tri·al·ize  
v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es

v.tr.
1. To develop industry in (a country or society, for example).

2.
 countries, and higher product tanker fleet growth relative to product tanker ton-mile demand. For 1998, average freight rates for product tankers were substantially lower than rates prevailing in 1997. However, freight rates improved towards the end of 1998, but softened soft·en  
v. soft·ened, soft·en·ing, soft·ens

v.tr.
1. To make soft or softer.

2. To undermine or reduce the strength, morale, or resistance of.

3.
 again early in 1999.

FINANCIAL ITEMS

Net interest expense increased $238,000 for the year ended December 31, 1998 compared to the year ended December 31, 1997 and increased $1,896,000 for the quarter ended December 31, 1998 compared to the 1997 quarter. The increases were primarily due to interest expense on additional borrowings upon delivery of three newbuildings.

Equity in operations of joint ventures increased $2,947,000 for the year and decreased $305,000 for the three months ended December 31, 1998. The increase in joint venture equity in the 1998 year was primarily due to better operating results for a vessel operating in a 49.0% owned venture and a loss in 1997 from the sale of a joint venture vessel. Decreases in the 1998 quarter resulted from losses on the sale of an asset sold by a joint venture, Mosaic Alliance Corporation. This joint venture was dissolved dis·solve  
v. dis·solved, dis·solv·ing, dis·solves

v.tr.
1. To cause to pass into solution: dissolve salt in water.

2.
 in November 1998.

FUTURE PROSPECTS

The total world tanker fleet stands at approximately 273 million dwt. Approximately 37% of this fleet is 20 or more years old. The tanker orderbook totals approximately 47 million dwt or 17.2% of the existing fleet.

World oil demand increased marginally in 1998 and is expected to increase by about 1.3 million barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day.  in 1999. World commercial oil inventories increased substantially in 1998, especially in the first half of the year. World oil inventories are expected to fall in 1999 in line with OPEC oil production cuts and the increase of oil demand.

Any improvement in freight rates in both the clean and crude markets will be largely dependent upon improvement in the Far East and Latin American economic conditions as well as an increase in the rate of tanker scrappings in view of the relatively high tanker orderbook for delivery in the foreseeable future.

Based upon information to date, the Company anticipates that results from operations in the first quarter of 1999 will not produce in a material loss or gain from operations.

FORWARD LOOKING INFORMATION

This release contains certain forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
. These statements are based on management's current expectations and observations, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additional information concerning these statements and other matters is contained in the Company's periodic filings with the Securities and Exchange Commission.

OMI Corporation has made arrangements to use the service of DeraCom for its earnings presentation which is scheduled for February 25,1999 at 2:00 p.m. Conference participants should call 1-800-633-8638, and the international number is 1-609-683-0165. There will be a recorded playback Playback could mean:
  • The re-playing of recorded media.
  • Gapless playback, the seamless playback of digital audio formats (i. e. ipods, mp3 players)
  • Playback singer, a practice in Bollywood musicals.
 available after the teleconference call for two weeks after the original call. The toll free number is 1-800-835-2663 and 1-609-896-8185 for international playbacks.
COPYRIGHT 1999 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:Feb 25, 1999
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