OMI Corporation Reports 2007 First Quarter Results.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. -- 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. Corporation (NYSE NYSE See: New York Stock Exchange : OMM OMM Organisation Météorologique Mondiale (French: World Meteorological Organization) OMM Organización Meteorológica Mundial (Spanish: World Meteorological Organization) OMM Organizzazione Meteorologica Mondiale ): Highlights * First quarter Net Income was $50.9 million or $0.82 basic and diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. "). The first quarter gain on disposal of a product carrier was $16.1 million or $0.26 basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS. * Teekay Shipping Corporation ("Teekay"), A/S Dampskibsselskabet TORM A/S Dampskibsselskabet TORM or TORM (NASDAQ: TRMD), based in Copenhagen, Denmark, is a shipping company that owns and operates product tankers and bulk carriers. TORM's company's tankers carry refined oil products such as gasoline, jet fuel, naphtha and diesel oil. ("TORM TORM Transactional or Relationship Message (Federal Trade Commission email message definition) ") and a company jointly owned by Teekay and TORM entered into a definitive agreement to acquire the Company for cash of $29.25 per share. Under the terms of the agreement, OMI will be permitted to pay a dividend at a rate of $0.15 per share per quarter, pro rated from April 1 to the closing of the tender offer, up to a maximum of $0.15 per share in the aggregate. Our 8-K filed with the Securities and Exchange Commission on April 20, 2007 provides a description of the proposed transaction. * Two vessels were sold in February February: see month. 2007, one, the product carrier mentioned above and the other, a vessel sold and leased back in February 2007. The gain of approximately $19.5 million will be amortized over the three year lease. * We currently have approximately $694.9 million in contracted revenue, including $580.3 million in time charter revenue contracts (not including any potential profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of ) for the period from April 2007 through May 2012 and $114.6 million in synthetic time charter revenue from April 2007 through September September: see month. 2009. * During the first quarter, we repurchased $62,500,000 face amount of our 2.875% Convertible Notes. * During the first quarter, the Board of Directors ("BOD BOD: see sewerage. ") declared a quarterly dividend of $0.15 per share, which was paid in March. * During the first quarter, we repurchased and retired 540,000 shares aggregating $11.2 million. OMI Corporation (NYSE: OMM), a major international tanker owner and operator today reported Net Income of $50,878,000 or $0.82 basic and diluted EPS for the first quarter ended March 31, 2007, which included the gain on the disposal of a vessel of $16,112,000 or $0.26 basic and diluted EPS and loss on early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of notes of $1,540,000 or $0.02 basic and diluted EPS, compared to Net Income of $63,563,000 or $0.89 basic and diluted EPS for the first quarter ended March 31, 2006. Revenue of $171,764,000 for the first quarter ended March 31, 2007 decreased $21,428,000 or 11% compared to revenue of $193,192,000 for the first quarter ended March 31, 2006. Revenue decreased in the first quarter of 2007 as a result of decreases in spot rates in both the 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). and product carrier fleets and lower revenue from vessels that began new time charter contracts in 2006 that were previously operating in the spot market at higher rates. RECENT ACTIVITIES AND FIRST QUARTER HIGHLIGHTS
-- OMI to Be Acquired by Teekay and TORM
-- Teekay Shipping Corporation ("Teekay"), A/S
Dampskibsselskabet TORM ("TORM") and a company jointly
owned by Teekay and TORM entered into a definitive
agreement to acquire the Company for cash of $29.25 per
share. Under the terms of the agreement, OMI will be
permitted to pay a dividend at a rate of $0.15 per share
per quarter, pro rated from April 1 to the closing of the
tender offer, up to a maximum of $0.15 per share in the
aggregate. Our 8-K filed with the Securities and Exchange
Commission on April 20, 2007 provides a description of the
proposed transaction.
-- Disposition of Vessels:
-- In February 2007, we sold 2 vessels, for an aggregate sales
price of approximately $91 million. Both vessels (described
below) were held for sale at December 31, 2006.
(1) The GANGES (renamed KING ERNEST), was sold in February
2007 and chartered back; the gain on sale of
approximately $19.5 million was deferred and is being
amortized over the three year charter period. The vessel
is operating in the Libra Pool.
(2) The ASHLEY (renamed KING ERIC), was sold in February
2007 and a gain of approximately $16.1 million was
recognized. The vessel is operating in the Libra Pool.
-- In March 2007, the sale of the SEINE, previously announced,
was canceled with no penalties to either party to the
transaction.
-- Vessel Spot Performance:
[TABLE OMITTED]
-- In the first quarter of 2007, the average TCE rates for
our crude (Suezmax) fleet and clean (product carrier)
fleet were lower than average TCE rates for first quarter
of 2006 (see Market Overview section).
-- Financial:
(Note: For more detailed information refer to the Liquidity and
Capital Expenditures section.)
-- In the first quarter of 2007, we repurchased 540,000 shares
at an average price of $20.77 per share aggregating $11.2
million. We currently have 61,984,900 shares outstanding.
-- During the first quarter of 2007, we repurchased
$62,500,000 of our 2.875% Convertible Notes for $62,248,000
and recorded a loss of approximately $1,540,000 primarily
from the write off of unamortized finance fees and
discount.
-- In February 2007, the BOD increased the quarterly dividend
by 7% and declared a dividend of $0.15 per share to
shareholders of record on March 19, 2007. The dividend of
$9.3 million was paid on March 28, 2007. Total dividends of
$0.29 per share (including the $8.8 million or $0.14 per
share paid on January 8, 2007) have been paid in the first
quarter of 2007. When the March dividend was paid, the
conversion ratio and conversion price for our 2.875%
Convertible Notes ($81,851,000 currently outstanding, net
of $405,000 unamortized discount) were adjusted, as per the
agreement, because the dividend threshold of $0.28 per
share was reached. The conversion ratio increased from
32.7842 to 32.7989 for each $1,000 bond, and the conversion
price decreased from $30.50 to $30.49 per share, which is
12% above our stock price of $26.86 per share on
March 31, 2007. The conversion ratio and conversion price
will change upon the payment of the pro rated dividend
mentioned above.
MARKET OVERVIEW Suezmax Tanker Overview The tanker market continued at a very profitable level in the first quarter of 2007, notwithstanding an increase in the world tanker fleet. The average spot 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. rate for Suezmax tankers in the West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. to U.S. trade was marginally higher than the preceding quarter, but below the rate prevailing in the same period of last year. Tanker 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 have been adversely affected by the cuts in 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, and have been supported by world oil demand growth, weather delays in the Bosporous and delays due to a labor strike in a French Mediterranean Port. Freight rates in the crude oil tanker market are at profitable levels thus far in the second quarter of 2007. The average OPEC oil production in the first quarter of 2007 totaled about 28.7 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. ("b/d b/d abbr. barrels per day "), about 0.6 million b/d lower compared to the preceding quarter and 1.0 million b/d below the level prevailing in the same quarter of last year. Most of the decrease was from the long haul Long distance. Long haul implies traversing a state or a country. Contrast with short haul. Middle East. This was due to OPEC's agreement to cut its oil production by 1.2 million b/d beginning November November: see month. 1, 2006, and an additional 0.5 million b/d from February 1, 2007, in an attempt to reverse a decrease in oil prices. World oil demand in the first quarter of 2007 was about 1.2 million b/d higher than the preceding quarter and averaged 1.1 million b/d higher compared to the same period of last year. Total preliminary commercial crude oil and petroleum products inventories in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). and Japan at the end of March 2007 were about 24 million barrels, or 1.1%, below the year earlier level, but 2.1% above the average of the last five years. At the same time, crude oil inventories were 1.6% lower and petroleum products inventories were 4.3% higher than the average of the last five years, respectively. The world tanker fleet totaled 350.2 million dwt at the end of the first quarter of 2007, up by about 4.9 million dwt or 1.4% from the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2006 level. The total tanker fleet includes 46.8 million dwt Suezmaxes, excluding shuttle shuttle: see loom. shuttle In the weaving of cloth, a spindle-shaped device used to carry the crosswise threads (weft) through the lengthwise threads (warp). Not all modern looms use a shuttle; shuttleless looms draw the weft from a nonmoving supply. and U.S. flag Suezmaxes, up by 2.4% from the year-end 2006 level. The tanker orderbook totaled about 133.4 million dwt, or 38.1% of the existing fleet at the end of March 2007. Approximately 24.1 million dwt are for delivery in 2007, 36.3 million dwt in 2008, 49.5 million dwt in 2009, and most of the balance in 2010. The tanker orderbook includes 129 Suezmaxes of about 20.4 million dwt or 43.6% of the existing internationally trading Suezmax tanker fleet. Nineteen Suezmaxes are for delivery in 2007, 23 in 2008, 65 in 2009 and the balance in 2010. At the end of March 2007, approximately 34.3 million dwt or 9.8% of the total tanker fleet was 20 or more years old, including 12.3 million dwt or 3.5% of the fleet which was 25 or more years old. Furthermore, eight Suezmaxes were 20 or more years old, including one which was 25 or more years old. Tanker sales for scrap totaled about 0.9 million dwt in the first quarter of 2007. The EU adopted tanker regulations which commenced on October October: see month. 21, 2003. In response to the EU regulations, the IMO "In my opinion." See IMHO and digispeak. IMO - IMHO adopted new strict tanker regulations which commenced on April 5, 2005. At the end of March 2007, there were about 89.7 million dwt of tankers or 25.6% of the total tanker fleet which will be affected by these regulations. Product Tanker Overview Freight rates in the product tanker market continued at high levels in the first quarter of 2007, and the average spot TCE for handysize Although there is no official definition in terms of exact tonnages, Handysize most usually refers to a dry bulk vessel (or, less commonly, to a product tanker) with deadweight of about 15,000–35,000 tons. product tankers in the Caribbean was higher than the preceding quarter rate and the rate prevailing in the same period of last year. The product tanker market strength was the result of continuous growth in the demand for oil and shortage of refinery capacity in consuming areas, notwithstanding an increase of the world product tanker fleet. Freight rates in the product tanker market have continued at high levels thus far in the second quarter of 2007. The world product tanker fleet, (which ranges from small 10,000 dwt product carriers to larger than 100,000 dwt for coated Aframax An Aframax ship is an oil tanker with capacity between 80,000 dwt and 120,000 dwt. The Aframax class tanker is largely used in the basins of the Black Sea, the North Sea, the Caribbean Sea, the China Sea and the Mediterranean. tankers) totaled about 83.6 million dwt at the end of March 2007, up by about 0.5% from the year-end 2006 level. The total product tanker fleet includes about 46.2 million dwt handysize and handymax Handymax is a naval architecture term for a bulk carrier, typically between 35,000 and 60,000 deadweight tonnage (DWT). A handymax ship is typically 150-200 meters (492-656 feet) in length, though certain bulk terminal restrictions, such as those in Japan, mean that many product tankers, up by 1.1% from the year-end 2006 level. The product tanker orderbook for delivery over the next few years totaled about 43.3 million dwt, or about 51.8% of the existing product tanker fleet at the end of March 2007. Approximately 10.3 million dwt are for delivery in 2007, 13.8 million dwt in 2008, 15.0 million dwt in 2009 and most of the balance in 2010. At the end of March 2007, approximately 14.6 million dwt or 17.5% of the existing flee flee v. fled , flee·ing, flees v.intr. 1. To run away, as from trouble or danger: fled from the house into the night. 2. was 20 or more years old. The orderbook for handysize and handymax product tankers at the end of March 2007 totaled about 15.3 million dwt or 33.1% of the existing handysize and handymax product tanker fleet. Approximately 4.9 million dwt are for delivery in 2007, 5.4 million dwt in 2008, 3.6 million dwt in 2009 and most of the balance in 2010. Total preliminary commercial inventories of oil products in the United States, Western Europe and Japan at the end of March 2007 were 25 million barrels or 1.9% higher than the same time a year ago, and 4.3% above the average of the last five years. At the same time, inventories of 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 , the seasonal product, in these areas were marginally lower than last year and the last five years average. FLEET SUMMARY Our fleet is concentrated into two vessel types: Suezmax tankers ("crude" vessels), which generally carry crude oil from areas of oil production to refinery areas, and product carriers ("clean" vessels), which generally carry refined petroleum products (such as gasoline and aviation fuel) from refineries to distribution areas. At March 31, 2007, our fleet comprised 45 vessels, excluding the vessels contributed by participants to our wholly owned Gemini and Libra Libra (lē`brə, lī`–) [Lat.,=the scales], southern constellation lying on the ecliptic (the sun's apparent path through the heavens) between Virgo and Scorpius; it is one of the constellations of the zodiac. Pools. We charter-in 10 vessels, 6 Suezmax tankers and 4 product carriers (See Exhibit 1 for OMI's Fleet Report by vessel). The following table includes wholly owned and chartered-in vessels at March 31, 2007 and revenue days for the first quarter: [TABLE OMITTED] FINANCIAL INFORMATION The following table summarizes the Company's results of operations for the three months ended March 31, 2007 compared to the three months ended March 31, 2006: [TABLE OMITTED] Time Charter Equivalent Revenue ("TCE") OMI operates vessels on 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. (or "spot") charters and on time charters ("TC"). TCE revenue comprises revenue from vessels operating on time charters and voyage revenue less voyage expenses from vessels operating in the spot market. TCE revenue is used to measure and analyze fluctuations between financial periods and as a method of equating e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. TCE revenue generated from a voyage charter to time charter revenue. Time charter revenue is earned by vessels under contract for a specific period of time with duration usually greater than one year. At March 31, 2007 our fleet 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. operates on time charters and spot charters as follows:
-- 66% of our fleet tonnage (or 36 vessels, 6 Suezmax vessels and
30 product carriers) operated on time charters (see Contracted
Time Charter Revenue section):
(a) 63% of our tonnage on TC (or 21 vessels, 4 Suezmax vessels
and 17 product carriers) operated on fixed rate time
charters, and
(b) 37% of our tonnage on TC (or 15 vessels, 2 Suezmax vessels
and 13 product carriers) operated on time charters with
profit sharing arrangements, giving us the ability to
benefit from strong spot markets. Our time charters with
profit sharing arrangements have a floor rate. If earnings
exceed that rate, we share in the profit above that rate
equally. This enables us to benefit from strong tanker
markets while protecting our downside.
-- 34% of our fleet tonnage (or 9 vessels, 7 Suezmax vessels and 2
product carriers) operated in the spot market.
Revenue generated by time charters gives the Company the ability to cover certain fixed charges (vessel expenses and charter hire expenses for vessels on time charter, consolidated general and administrative expenses and interest expense). We currently have the equivalent of 3.75 Suezmax synthetic time charters ("STC STC Supplemental Type Certificate (FAA) STC Society for Technical Communication STC Subject to Change STC Surf the Channel (website) STC Sound Transmission Class STC Singapore Turf Club ") which reduces our exposure to the spot market for Suezmaxes from 7 to 3.25 vessels. Synthetic time charters are similar to time charters, as they mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the risk associated with the
spot market.
Three Months Ended March 31, 2007 vs. Three Months Ended March 31, 2006 The Company earned TCE revenue of $140,535,000 for the three months ended March 31, 2007 and $156,543,000 for the three months ended March 31, 2006, which is a reduction of $16,008,000 or 10%. The following table illustrates the TCE revenue fluctuation Fluctuation A price or interest rate change. for the three months ended March 31, 2007 compared to the three months ended March 31, 2006: [TABLE OMITTED] During the three months ended March 31, 2007, TCE revenue decreased by $16,008,000. The decrease was attributed to less revenue earned by vessels operating on spot charters, which decreased by $50,641,000 offset by increases of $34,633,000 for vessels operating on time charters. Aside from changes in rates earned by vessels which operated on spot and time charters in both 2006 and 2007, we began operating more of our vessels on fixed rate contracts, as mentioned above (some with profit sharing arrangements), that previously were operating at higher rates in the spot market. During the three months ended March 31, 2007, the majority of our TCE revenue (59%) or $83,014,000 was earned by vessels operating on time charters, compared to the three months ended March 31, 2006, during which the majority of our TCE revenue (69%) or $108,162,000 was earned by vessels operating on spot charters. The decrease of $50,641,000 in TCE revenue for vessels operating on spot charters was due to a decrease of $46,059,000 in the crude fleet and $4,582,000 in the clean fleet. The decrease in TCE revenue was primarily due to 768 less operating days from vessels previously operating on spot charters and lower TCE rates for vessels on spot charters in both the first quarter of 2007 and 2006 due to the following: * 6 Suezmax vessels previously operating on spot charters at an average daily rate of $57,770 for 536 days in the first quarter of 2006 began operating on time charter contracts at a lower average rate of $33,691 per day. * 3.75 Suezmax vessels previously operating on spot charters at an average daily TCE rate of $57,770 in the first quarter of 2006, were subject to STC contracts with an average daily TCE rate of $41,337 in first quarter of 2007. * A 13% decrease in average daily spot TCE rates in 2007 for 3.25 Suezmax vessels owned by OMI and for the 7 pool member vessels (Gemini) that operated in both 2007 and 2006 first quarters and 11% decrease in average daily spot TCE rates for 2 product carrier vessels chartered-in and 2 pool member (Libra) vessels compared to the first quarter of 2006 (see Market Overview section for explanations of rate fluctuations). Note: The number of operating days did not change for 2 Suezmax vessels and 2 product carrier vessels that were sold and chartered back (3 in 2006 and 1 in 2007), that began operating in the Gemini and Libra pools; however, charter hire expense increased. (See 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. .) The increase of $34,633,000 in TCE revenue for vessels on time charters offsetting the above decreases for vessels operating on spot charters was due to an increase of $26,621,000 in the crude fleet and $8,012,000 in the clean fleet. The increase in TCE revenue was primarily due to 980 additional operating days from vessels previously operating on spot charters, mentioned above, and higher TCE rates for vessels on time charters in both periods due to the following: * As mentioned above, the primary increase in Suezmax TCE revenue is the result of additional operating days, 536 more days from 6 Suezmax vessels on time charters in 2007, previously on spot in 2006, and 338 more days equivalent to 3.75 Suezmax vessels operating on STCs in 2007, that are included with contracted time charter revenue. * 5 newbuilding product carrier vessels delivered in 2006 increased TCE revenue in the first quarter of 2007 resulting in 304 more operating days at an average daily rate of $19,686 per day. * Increases in time charter rates in the first quarter of 2007 compared to the first quarter of 2006, (23% increase in the crude fleet and 6% in the clean fleet), which resulted primary from higher rates negotiated for new or renewed charters that expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in 2006. The clean fleet increase includes additional profit sharing of $1,575,000 from 2 vessels earning profit sharing for the first time in 2007. Increases in TCE revenue were partially offset by 90 fewer operating days from a product carrier vessel that was sold in September 2006. Note: For detailed information of fluctuations by vessel type, see Breakdown by Fleet sections. Operating Expenses Vessel expenses increased $855,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. Increases in vessel expenses during the first quarter of 2007 were primarily attributable to the 5 vessels acquired in the clean fleet during 2006 offset by decreases in vessel expense for vessels sold; 4 Suezmax vessels in 2006 and 5 product carriers (3 in 2006 and 2 in 2007). Additionally, the clean fleet's average daily vessel expense was approximately 2% higher in the three months ended March 31, 2007 than our expected daily rate for 2007 of $6,400 per day and 15% higher compared to the first quarter of 2006. Although the crude fleet's vessel expenses decreased overall because of vessel sales in 2006, the average daily vessel expense was approximately 6% higher in the three months ended March 31, 2007 than our expected daily rate for 2007 of $7,200 per day and 25% higher compared to the first quarter of 2006. Our 2007 expected average daily vessel expenses for our crude and clean fleets are based on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. daily rate. The clean and crude fleet's 2% and 6% increase, respectively, above our expected daily vessel expenses in 2007 was primarily a result of timing of purchasing stores and supplies and miscellaneous expenses. The increase of 15% and 25% over the 2006 period, for the clean and crude fleet's daily vessel expense, respectively, include the previously mentioned timing differences and increases made to crew, stores items and miscellaneous expenses to continue to maintain our vessels, crew needs and to better serve our customers' requirements. Charter hire expense, other than relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc pool vessels, increased $8,674,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. Increases in charter hire expense were primarily the result of chartering in 5 additional vessels in 2006 (the OTTAWA, TAMAR, CAPE BANTRY, HS ALCINA and KING EDWARD King Edward has been the name of several monarchs in English history:
Note: Gemini Tankers LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Gemini"), a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of OMI, began operating in December 2003. Gemini is a pool for double hull A double hull is a ship hull design and construction method where the bottom and sides of the ship have two complete layers of watertight hull surface: one outer layer forming the normal hull of the ship, and a second inner hull which is somewhat further into the ship, perhaps a Suezmax vessels. As of March 31, 2007, there were 16 Suezmax vessels (9 from OMI and 7 from other pool members) operating in the Gemini pool. Libra Shipping LLC ("Libra") is also a wholly owned subsidiary of OMI that began operating in November 2006. Libra is a pool for double hull product carrier vessels. As of March 31, 2007, there were 4 product carriers (2 from OMI and 2 from another pool member) operating in the Libra pool. The earnings of the pools are allocated to the pool members using an agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy formula. The gross revenues of Gemini and Libra are reflected in OMI's consolidated revenues, and the charter hire expense for the other participants' vessels are included in OMI's consolidated charter hire expense. Depreciation and amortization expense decreased $2,505,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. The decrease in depreciation expense was primarily due to the disposal of 11 vessels, 9 in 2006 (4 Suezmax vessels and 5 product carriers) and 2 product carriers in 2007. Decreases in depreciation expense were partially offset by additional expense for 5 product carriers acquired in 2006. General and administrative expense increased $1,240,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. The increase for the three months ended March 31, 2007 was in line with our 2007 expectation and is primarily higher than the 2006 period as a result of higher compensation and employee benefits expense, including increases in non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) from amortization of restricted stock awards from 2006 grants, in addition to other corporate expenses. LIQUIDITY AND CAPITAL EXPENDITURES At March 31, 2007, we had Cash and cash equivalents of $143,556,000 and Marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has (short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. auction bonds) of $77,325,000. During the three months ended March 31, 2007, we received net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $88,813,000 from the disposal of 2 vessels, repaid $65,850,000 in debt ($62,248,000 of which were unscheduled unscheduled Adjective not planned or intended Adj. 1. unscheduled - not scheduled or not on a regular schedule; "an unscheduled meeting"; "the plane made an unscheduled stop at Gander for refueling" repayments for early extinguishment of convertible notes) and spent $12,289,000 for capital expenditures, primarily for the initial payments for 2 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. under construction. We also paid cash dividends of $18,050,000 and bought back $11,215,000 of the Company's common stock. Our debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. ratio (debt and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. ) at March 31, 2007 was 38% and net debt (total debt less cash, cash equivalents and marketable securities) to total net capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. (total capitalization less cash, cash equivalents and marketable securities) was 26%. As of April 23, 2007, we have approximately $672,022,000 in available liquidity (including cash, cash equivalents, marketable securities and undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely lines of credit). 2007 Capital Expenditures Projected for Vessels Under Construction Contracts As of March 31, 2007, we have contracts to build two handysize (ice class 1A) product carriers with a shipyard, estimated to be delivered in the first quarter of 2009. The aggregate contract cost for the vessels is $91,300,000. The initial payment of $9,130,000 was made in January 2007. The remaining installments and final payments are scheduled as follows; an additional $9,130,000 in June 2007, $13,695,000 in 2008 and $59,345,000 in 2009. Contracted Time Charter Revenue The contracted TC revenue schedule below does not include any estimates for profit sharing in the future periods; however, actual profit sharing for 3 vessels aggregating approximately $4.2 million earned during the three months ended March 31, 2007 is included. We have reduced future contracted revenue for any estimated off-hire days relating to drydocks. The following table reflects our current contracted time charter revenue through 2012, including synthetic time charter contracts: [TABLE OMITTED] In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , we recognize profit sharing, if any, for each vessel with a profit sharing provision in the time charter contract when the minimum threshold is met, which is the minimum charter hire revenue. Historically, we have recognized profit sharing on or about the anniversary of each time charter contract. The table below reflects the number of vessels for which we recorded profit sharing in the first quarter of 2007 and the number of contracts for which we expect to record profit sharing in future periods, by quarter:
> > > > 2007 >
2008
2009
2010
> > > > >
First Quarter > > > > 3 >
3
1
Second Quarter > > > > 7 >
6
6
3
Third Quarter > > > > 4 >
4
2
1
Fourth Quarter > > > > 1 >
> > > > >
> > > > 15 >
13
9
4
ABOUT OMI OMI is a leading seaborne sea·borne adj. 1. Conveyed by sea; transported by ship. 2. Carried on or over the sea. seaborne Adjective 1. carried on or by the sea 2. transporter of crude oil and refined petroleum products operating in the international shipping markets. We believe our modern fleet of 45 vessels of approximately 3.5 million dwt, is the youngest large fleet of tankers in the world, with an average age at March 31, 2007 of approximately 4.3 years [see Note (1)], which is significantly lower than the industry average. Our customers include many of the world's largest commercial and government owned oil companies and oil trading companies. OMI trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "OMM." Note (1): All averages referring to vessel age in this release are weighted averages based on dwt and are calculated as of March 31, 2007. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the total weight a vessel can carry when loaded to a particular load line. OTHER FINANCIAL INFORMATION CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. The following are OMI's Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006: [TABLE OMITTED] CONDENSED CONSOLIDATED CASH FLOWS The following are OMI's Condensed Consolidated Cash Flows for the three months ended March 31, 2007 and 2006: [TABLE OMITTED] RESULTS BY FLEET The following discussion of 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. includes TCE revenue less vessel expense, charter hire expense and depreciation and amortization, General and administrative ("G & A") expenses allocated to vessels and gain/loss on disposal of vessels for the crude and clean segments. Crude Fleet - Operating Income decreased $26,408,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. The net decrease in Operating Income during the three months ended March 31, 2007 was primarily due to (1) a decrease in TCE revenue of $19,438,000 from lower revenue earned for vessels on spot that began operating on fixed rate time charters at lower rates and a 13% decrease in the average daily TCE rates for vessels on spot compared to the 2006 period (see Market Overview and TCE section), (2) $6,476,000 higher non-Gemini charter hire expense relating to 2 vessels that were chartered-in during April and August 2006 and (3) $3,850,000 higher Gemini pool charter hire expense relating to 2 vessels added to the pool in 2006. Decreases in TCE revenue were offset partially by a 23% increase in average daily TCE rates for time chartered vessels for new time charters that began in 2006 and $1,242,000 lower vessel expenses and $1,868,000 lower depreciation and amortization expenses relating to vessels sold. The following table illustrates the crude fleet Operating Income by vessel type, Average Daily TCE, Number of TCE Revenue Days, Average Daily Vessel Expense and Average Number of Vessels Operated by the crude oil fleet for the three months ended March 31, 2007 compared to the three months ended March 31, 2006: [TABLE OMITTED] Clean Fleet - Operating Income increased $11,699,000 for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. The increase in Operating Income in the 2007 was primarily attributable to (1) the $16,112,000 gain on disposal of a vessel in February and (2) increase of $3,430,000 in TCE revenue from the additional operating days resulting from 5 vessels acquired in 2006 and $1,575,000 additional profit sharing in 2007, offset by decreases from 1 vessel sold in 2006. Increase in Operating income were partially offset by (1) an 11% decrease in average daily TCE spot rates in 2007 (see Market overview and TCE section), (2) increases in vessel expense of $1,985,000, (3) increases in charter hire expense of $4,314,000 relating to 2 vessels in the Libra pool 1 that started in November 2006 and the other in February 2007 and (4) increases in charter hire expense of $2,198,000 for non-pool charter hire relating to 4 vessels sold and chartered back (2 bareboat charters A bareboat charter is an arrangement for the hiring of a boat, whereby no crew or provisions are included as party of the agreement; instead, the people who rent the boat from the owner are responsible for taking care of such things. and 2 time charters) 3 in 2006 and 1 in February 2007. The following table illustrates the clean fleet Operating Income by vessel type, Average Daily TCE, Number of TCE Revenue Days, Average Daily Vessel Expense and Average Number of Vessels operated by the clean fleet for the three months ended March 31, 2007 compared to the three months ended March 31, 2006: [TABLE OMITTED] EXHIBIT 1 FLEET REPORT Our fleet currently comprises 45 wholly owned and chartered-in vessels aggregating approximately 3.5 million dwt. Additionally, the Company has 2 product carriers under construction with 2009 delivery dates. The Company's fleet below comprises 7 owned and 6 chartered-in Suezmaxes and 28 owned and 4 chartered-in product carriers (not including pool members vessels operating in the Gemini and Libra Pools): [TABLE OMITTED] FORWARD-LOOKING INFORMATION This release contains 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. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provided for under these sections. Wherever we use the words "believes," "estimates," "expects," "plans," "anticipates" and similar expressions identify forward-looking statements. Our forward-looking statements sometimes may include, without limitation: statements regarding our proposed merger, management's current views with respect to certain future events and performance, estimates of future earnings and cash flows and the sensitivity of earnings and cash flows to charter rates; estimates of when vessels may be chartered by customers; estimates of when laws, regulations or commercial decisions may remove older vessels from markets or enhance the value or earnings of double hulled vessels; estimates relating to expectations in world economic activity, growth in the demand for crude oil and petroleum products and their affect upon tanker markets; estimates of time charter and time charter equivalent rates being achieved by our vessels, estimates of capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. and the sources of the funding and other factors discussed in OMI's filings to the SEC from time to time. Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that our forward-looking statements will be achieved and our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. Such risks include, but are not limited to, the inability to complete the proposed merger with a subsidiary of Teekay Shipping Corporation and A/S Dampskibsselkabet TORM due to the failure to satisfy conditions to completion of the proposed merger, risks that the proposed merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed merger; supply of tankers, demand for their use, world economic activity, breakdown of vessels and resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials time out of service as well as repair cost, availability and cost of insurance, governmental regulation, customer preferences and availability, claims, demurrage A separate freight charge, in addition to ordinary shipping costs, which is imposed according to the terms of a carriage contract upon the person responsible for unreasonable delays in loading or unloading cargo. , the affect on rates of future voyages and cost of financing. All subsequent written and oral forward-looking statements attributable to persons acting on our behalf are expressly qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by the cautionary statements. We disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. |
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