OMI Corporation Reports Record 2005 Second 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. -- Highlights for the Second Quarter of 2005 --Record second quarter net income of $47,136,000 or $0.56 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. ") exceeded the previous record 2004 second quarter net income by 55%. --Net Income excluding gain on 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 $803,000 was $46,333,000 (see Reconciliation of net income before special items) or $0.55 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 for the 2005 quarter. --Revenues increased $49.1 million or 49% over the second quarter last year. --Secured new time charter contracts aggregating approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $113 million of contracted revenue for five vessels Vessels are a post-rock band from Leeds, UK. Vessels were born from the ashes of A Day Left in September 2005. In 2006 they self-released a 5 track eponymous ep, and played many gigs including the unsigned stage at Leeds Festival. benefiting years from 2005 to 2010. --Continued expansion of fleet through the acquisition of modern vessels. During the second quarter, 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. took delivery of one 2005 built product carrier under a previously announced acquisition agreement and one 2005 built 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). vessel VESSEL, mar. law. A ship, brig, sloop or other craft used in navigation. 1 Boul. Paty, tit. 1, p. 100. See sup. 2. By an act of congress, approved July 29, 1850, it is provided that any person, not being an owner, who shall on the high seas, willfully, with. chartered-in for the next 7 years. --Paid a quarterly dividend of $0.08 per share. --Purchased and retired 3,200,900 shares of stock. --Amended and restated debt agreements, reducing margins and increasing available liquidity. OMI 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 ) a major international tanker owner and operator today reported net income of $47,136,000 or $0.56 basic and diluted EPS, which includes a gain of $0.8 million or $0.01 basic and diluted EPS, for the second quarter ended June June: see month. 30, 2005 compared to net income of $30,312,000 or $0.38 basic and diluted EPS. The quarter ended June 30, 2004 included losses for special items aggregating $2.7 million or $0.04 basic EPS. For the six months ended June 30, 2005 net income was $122,917,000 or $1.45 basic and diluted EPS, which includes gains on disposals of $3.7 million or $0.05 basic EPS, compared to net income of $86,721,000 or $1.08 basic and $1.07 diluted EPS, including special items aggregating $2.7 million or $0.04 basic EPS for the six months ended June 30, 2004. Net income reported for the second quarter of 2005 was higher than net income reported in any of the second quarters since the Company's inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. in 1998. Revenue of $148,474,000 for the second quarter ended June 30, 2005 increased $49,131,000 or 49 percent compared to revenue of $99,343,000 for the second quarter ended June 30, 2004. Revenue of $319,916,000 for the six months ended June 30, 2005 increased $92,557,000 or 41 percent compared to revenue of $227,359,000 for the six months ended June 30, 2004. Craig Craig , Edward Gordon 1872-1966. British theatrical producer, director, and designer whose innovative productions and simplified stage designs influenced modern theater. H. Stevenson, Jr., Chairman and Chief Executive Officer of the Company commented that, "We are pleased to report record second quarter earnings. We had approximately 50% more Suezmax operating days in the quarter than in the same quarter of 2004 due to acquisition of Suezmaxes in the third quarter of 2004. The increased fleet achieved time charter equivalent rates marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. above those earned in the second quarter of 2004. Additionally, we had very strong spot rates for our spot product carrier fleet, which numbered eight in 2005 compared to one in the period of 2004, and from average time charter rates on our time chartered product carriers being higher than in the 2004 period. For the six month period, Suezmax spot rates were only slightly lower than in 2004, which as you may recall, had perhaps the strongest rates in the last 30 years. However, while rates for spot Suezmaxes and product carriers are stronger than usual for this time of year, they are lower than last year. To date, we have booked approximately 46% of our Suezmax days for the third quarter at approximately $33,000 per day, which is below last year's third quarter average of approximately $50,000 per day." RECENT ACTIVITIES AND SECOND QUARTER HIGHLIGHTS Operational Increases in Operating Fleet: --We took delivery of the FOX and the TEVERE Tevere, river: see Tiber. , 37,000 deadweight ton ("dwt") product carriers, from the shipyard in May and July July: see month. 2005, respectively. Both vessels began five year time charters with 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 arrangements upon delivery. --In June 2005, we took delivery of a 2005 built Suezmax vessel, which is being time chartered to us for seven years. Vessel Spot Performance:
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Daily TCE rate
------------------------------------------------------
Three Months Ended Percent Six Months Ended Percent
June 30, June 30,
Vessels on Spot 2005 2004 Change 2005 2004 Change
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Suezmax vessels $43,543 $43,415 0% $52,255 $52,984 -1%
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Product carriers $28,731 $14,880 93% $27,885 $18,301 52%
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--In the second quarter of 2005, time charter equivalent ("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. ") average rate for OMI's Suezmax fleet of $43,543 per day was comparable to the second quarter of 2004 average rate of $43,415 per day (see Market Overview section). Second quarter rates decreased in comparison to the first quarter of 2005 average rate of $60,316 per day resulting from expected seasonal rate declines in the second quarter. --We currently have 8 product carriers operating in the spot market. The 2004 product carrier daily rate reflects the TCE on one vessel only, a single hull product carrier sold later in 2004. Increases in 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. : --Our vessel expenses increased during 2005 compared to the prior year because of increases in crew and the cost of "storing" the ships (purchasing supplies). Time Charter Contracts (contracts initiated in the second quarter): --We revised the time charter contracts for the OHIO Ohio, state, United States Ohio, midwestern state in the Great Lakes region of the United States. It is bordered by Pennsylvania (NE) West Virginia (SE), Kentucky (S), Indiana (W), and Michigan and Lake Erie (N). and ORONTES Orontes (ōrŏn`tēs), Arab. Nahr al-Asi, river, c.250 mi (400 km) long, rising in the northern part of the Al Biqa valley, Lebanon, and flowing generally N through Syria, then W into S Turkey and into the Mediterranean Sea; , both 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 carriers. The time charter contracts now expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. in June 2010 and are at a higher rate. --We signed a three year time charter contract commencing in September September: see month. 2005 for the SEINE Seine (sān, Fr. sĕn), Lat. Sequana, river, c.480 mi (770 km) long, rising in the Langres Plateau and flowing generally NW through N France. , a handysize product carrier. The new time charter is a higher rate than the current time charter 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 July 2005. --We signed three year time charter contracts for the MOSELLE Moselle, department, France Moselle (mōzĕl`), department (1990 pop. 1,011,400), NE France, bordering on Luxembourg and Germany. Metz is the capital. and ROSETTA Rosetta (rōzĕt`ə), former name of Rashid (räshēd`), city (1986 pop. 51,789), N Egypt, in the Nile River delta. , both 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 carriers. The new contracts begin when the current time charters expire in February February: see month. and March 2006, respectively, and are at a higher rate. Financial: (Note: for more detailed information refer to the Liquidity and Capital Expenditures Section) --On May 11, 2005, OMI 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 restated our $348,000,000 facility with an original due date of July 27, 2006 (with an original rate of LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus margin of 1.375%) with a ten year $320,000,000 secured reducing revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Borrowings under the $320,000,000 facility bear interest at LIBOR plus a margin of 0.675%. --In the second quarter of 2005, seven of our term loans were modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. to reduce the margin above LIBOR to 0.675%, modify certain covenants (consistent with 2005 loans) and extend two term loans by four years each. --During the second quarter of 2005, we repurchased an aggregate of $25,500,000 of 2.875% Convertible Notes for a net gain of approximately $803,000. --On May 19, 2005, the Board of Directors of OMI declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a dividend on its common stock of $0.08 per share, $6,628,000 was paid on July 13, 2005 to holders of record on June 23, 2005. On April 12, 2005 the first quarter dividend was paid. --During the second quarter of 2005, we repurchased an aggregate 3,200,900 shares of common stock under the authority to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 4,250,000 shares announced in December December: see month. 2004 at an average price of $18.61 per share. As of June 30, 2005, 737,500 shares remain under this authority. There are currently 82,818,791 shares of common stock outstanding. MARKET OVERVIEW Suezmax Tanker Overview The tanker market continued at a very profitable level in the second quarter of 2005, and the average TCE 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, though lower than the preceding quarter rate and the rate prevailing in the same period of last year, was the second highest level for this period since at least 1990. This was the result of higher world oil demand due to improving world economic activity especially in the U.S., China and 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 high 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, especially from the long-haul long haul n. 1. A long distance: It is a long haul from New York to Los Angeles. 2. A long period of time: Over the long haul the candidates performed well. Middle East, notwithstanding an increase in the world tanker fleet. 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 in the crude oil tanker market have 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. thus far in the third quarter, due to the usual summer tanker market slow-down. The average OPEC oil production in the second quarter of 2005 totaled about 29.7 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 "), an average increase of 1.4 million b/d, or 4.9% compared to the same period last year. Most of OPEC's oil production growth came from the long-haul Middle East. After a reduction to its oil production quota quota In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Quotas are more effective than tariffs in restricting trade, since they limit the availability of goods rather , beginning April 1, 2004, OPEC has increased its quota five times by a total of 4.5 million b/d, to 28 million b/d (excluding Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. ). The OPEC quota increases were the result of strong world oil demand growth, as well as tight oil markets and high oil prices. As these economic conditions are expected to persist, OPEC oil production, including Iraq, in the third quarter of 2005 is expected to average more than the preceding quarter and higher than the same period a year ago. World oil demand decreased seasonally in the second quarter of 2005, but still averaged about 0.9 million b/d or 1.1% higher compared to the same period of last year, due to increasing world economic activity. World oil demand is expected to increase further in the second half of 2005 due to increasing world economic activity, especially 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. , 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 China and the usual seasonal oil demand gains late in the year. World oil demand in 2005 is expected to increase at a slower rate than last year as measures are taken to moderate economic activity, especially in the U.S. and China as well as expected persistent Permanent. See persistent data, persistent name and persistent object. persistent - persistence high oil prices due to low spare oil production capacity and ongoing geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. risks. Total preliminary commercial crude oil and petroleum products inventories in the United States, 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 the second quarter of 2005 were about 109 million barrels, or 5.2% higher than the year earlier level, and 2.6% above the average of the last five years. At the same time, crude oil inventories were 5.4% and petroleum products inventories were 1.0% higher than the average of the last five years, respectively. Oil inventories in terms of days forward consumption are expected to decrease for the rest of the year, and by 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. be below the end 2004 level. The world tanker fleet totaled 316.1 million deadweight tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. ("dwt") at the end of the second quarter of 2005, up by 11.5 million dwt or 3.8% from the year-end 2004 level. The tanker orderbook totaled about 80.9 million dwt, or 25.6% of the existing fleet at the end of the second quarter of 2005. Approximately 12.5 million dwt are for delivery in 2005, 24.5 million dwt in 2006, 26.5 million dwt in 2007 and most of the balance in 2008. The tanker orderbook includes 65 Suezmaxes of about 10.25 million dwt or 24.5% of the existing internationally trading Suezmax tanker fleet. At the end of the second quarter of 2005, approximately 32.3 million dwt or 10.2% of the total tanker fleet was 20 or more years old, including 11.2 million dwt or 3.6% of the fleet which was 25 or more years old. Furthermore, 10 Suezmaxes were 20 or more years old, including 4 which were 25 or more years old. Tanker sales for scrap and for Floating Production Storage Offloading ("FPSO FPSO Floating Production Storage and Off-loading (shipping & oil industry) FPSO Foster Parent Society of Ontario FPSO Fleet Publication Supply Office ") conversion totaled about 3.8 million dwt in the first half of 2005, including three Suezmaxes and three VLCCs. 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. These regulations primarily prevent single-hull tankers of 5,000 dwt and above from carrying heavy fuel oil from early April 2005, accelerate the phase-out Noun 1. phase-out - the act or instance of a planned discontinuation discontinuance, discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) of single-hull tankers to 2010, in line with EU rules, and force all single-hull tankers to comply with the Condition Assessment Scheme ("CAS") from the age of 15 years, commencing in 2005. Finally, tankers with only double sides or double bottoms will be allowed to operate beyond 2010, provided that these tankers were in service on July 1, 2001. Such tankers will not be allowed to operate beyond the date on which they become 25 years of age after the date of delivery. At the end of June 2005, there were about 99.2 million dwt of tankers or 31.4% of the total tanker fleet which will be affected by these regulations. Product Tanker Overview The strong freight rate environment of the product tanker market continued in the second quarter of 2005, and the average spot TCE for handysize product tankers in the Caribbean, though lower than the preceding quarter rate was higher than the rate prevailing in the same period of last year, and, together with the second quarter of 2001, the highest level for this period since at least 1990. The product tanker market strength has been the result of continuous growth in the demand for oil due to increasing world economic activity especially in the U.S., China and Southeast Asia, notwithstanding an increase of the world product tanker fleet. Freight rates in the product tanker market continued strong thus far in the third quarter. 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 63.1 million dwt at the end of the second quarter of 2005, up by about 5.2% from the year-end 2004 level. The product tanker orderbook for delivery over the next few years totaled about 30.0 million dwt, or about 47.5% of the existing product tanker fleet at the end of the second quarter of 2005. Approximately 6.4 million dwt are for delivery in 2005, 11.5 million dwt in 2006, 9.2 million dwt in 2007 and most of the balance in 2008. At the end of the second quarter of 2005, approximately 12.7 million dwt or 20.1% of the existing fleet was 20 or more years old. The orderbook for handysize and handymax product tankers at the end of June 2005 totaled about 12.3 million dwt or 33.0% of the existing handysize and handymax product tanker fleet. Total preliminary commercial inventories of oil products in the United States, Western Europe and Japan at the end of the second quarter of 2005 were 70 million barrels or 5.3% higher than the same time a year ago, and 1.0% higher than 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 3.9% higher than last year and 0.6% above the last five years average. Commercial gasoline stocks in the United States at the end of June 2005 were approximately 3.4% and 0.9% higher than last year and the last five years average, respectively. For the balance of 2005, the tanker market is expected to benefit as a result of improving world economic activity especially in the U.S., China and Southeast Asia, seasonally higher world oil demand in the second half of the year, shortage of refinery capacity in the United States, Western Europe and Asia, possible disruptions due to political instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability in short-haul oil producers Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. and Nigeria Nigeria (nījĭr`ēə), officially Federal Republic of Nigeria, republic (2006 provisional pop. 140,003,542), 356,667 sq mi (923,768 sq km), W Africa. , and the phase out of single-hull tankers without segregated ballast bal·last n. 1. Heavy material that is placed in the hold of a ship or the gondola of a balloon to enhance stability. 2. a. Coarse gravel or crushed rock laid to form a bed for roads or railroads. b. by the end of 2005. FINANCIAL INFORMATION The following table summarizes OMI Corporation's results of operations for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004.
RESULTS OF OPERATIONS
---------------------
(In thousands, except per share For The Three For The Six
data) Months Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
--------- -------- --------- ---------
Voyage and time charter
revenue $148,244 $99,155 $319,133 $226,936
Voyage expense 33,025 15,771 63,078 32,485
--------- -------- --------- ---------
Time charter equivalent
revenue 115,219 83,384 256,055 194,451
Other revenue 230 188 783 423
Vessel expenses and charter
hire expense 35,019 26,435 70,725 55,920
Depreciation and amortization 17,054 12,124 33,599 25,487
General and administrative
expenses 7,136 4,534 13,502 8,917
Gain on disposal of vessels
(1) - (360) (2,874) (360)
--------- -------- --------- ---------
Operating income 56,240 40,839 141,886 104,910
--------- -------- --------- ---------
Loss on investment (2) - (3,098) - (3,098)
Gain on extinguishment of
notes 803 - 803 -
Interest expense (10,312) (7,578) (20,843) (15,397)
Interest income 185 141 463 298
Other (3) 220 8 608 8
--------- -------- --------- ---------
Net income $47,136 $30,312 $122,917 $86,721
========= ======== ========= =========
Basic earnings per share $0.56 $0.38 $1.45 $1.08
Diluted earnings per share $0.56 $0.38 $1.45 $1.07
Weighted average shares
outstanding-basic 83,874 80,372 84,755 80,640
Weighted average shares
outstanding-diluted 83,938 80,494 84,826 80,771
(1) For the six months ended June 30, 2005 the gain on disposal of
vessels of $2,874,000 resulted from the disposal of two non
double-hull handysize crude oil tankers built in 1993. The gain on
disposal of $360,000 for the three and six months ended June 30,
2004, resulted from the sale of two single hull vessels previously
held for sale, a 1981 and 1984 built product carrier.
(2) The 2004 loss on investment of $3,098,000 resulted from expenses
related to the terminated Stelmar acquisition.
(3) Other income includes realized and unrealized gains on freight
forward agreements aggregating $220,000 and $608,000 for the three
and six months ended June 30, 2005, respectively.
RECONCILIATION OF NET INCOME BEFORE SPECIAL ITEMS The following table is a reconciliation of Net income to Net income without special items for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004:
For The Three For The Six
Months Ended Months Ended
June 30, June 30,
(In thousands, except per share
data) 2005 2004 2005 2004
-------- -------- --------- --------
Net income $47,136 $30,312 $122,917 $86,721
Add (subtract) special items:
Gain on disposal of vessels - (360) (2,874) (360)
Loss on investment - 3,098 - 3,098
Gain on extinguishment of notes (803) - (803) -
-------- -------- --------- --------
Net income without special items $46,333 $33,050 $119,240 $89,459
======== ======== ========= ========
Basic EPS:
----------
Basic EPS $0.56 $0.38 $1.45 $1.08
Add (subtract) special items:
Gain on disposal of vessels - - (0.04) -
Loss on investment - 0.04 - 0.04
Gain on extinguishment of notes (0.01) - (0.01) -
-------- -------- --------- --------
Basic EPS without special items $0.55 $0.42 $1.40 $1.12
======== ======== ========= ========
Diluted EPS without special items $0.55 $0.41 $1.40 $1.11
======== ======== ========= ========
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Net income without special items is presented to provide additional
information, in the opinion of management, with respect to the
Company's ability to compare from period to period operating revenues
and expenses without gains and losses such as the gain on
extinguishment of notes in 2005, the amount written off in 2004
relating to the expenses from the proposed acquisition of Stelmar and
gains and losses from dispositions of non double hull vessels. While
net income without special items is frequently used by management as a
measure of the operating performance in a particular period, it is not
necessarily comparable to other similarly titled captions of other
companies due to differences in methods of calculations. Net income
without special items should not be considered an alternative to net
income or other performance measurements under generally accepted
accounting principles.
Time Charter Equivalent Revenue OMI operates vessels on both 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"). In both 2005 and 2004, the majority of our 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. (primarily our Suezmax vessels) operated in the spot market, giving us the ability to benefit from the strong spot market. Currently 68% of our vessels by dwt (22 vessels) operate in the spot market and 23 of our 45 vessels operate on time charters (see Fleet Report). Ten vessels are under profit sharing arrangements. Our time charters with profit sharing arrangements have a floor rate, and we share in the profit above that rate equally, without a cap. This enables us to benefit from strong tanker markets while protecting our downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. . Revenue generated by time charters gives the Company the ability to cover certain fixed charges (vessel expenses for vessels on time charter, consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: general and administrative expenses and interest expense). Total revenue increased in the three and six months ended June 30, 2005 compared with the three and six months ended June 30, 2004 due primarily to more operating days in 2005 from twelve vessels acquired in 2004 and four in 2005 (including a vessel chartered-in during late June 2005), (six in the crude oil fleet and ten in the product carrier fleet). Thirteen of the vessels acquired operated in the spot market and three were on time charters during the first half of 2005. See discussion below for the fluctuation Fluctuation A price or interest rate change. analysis of TCE revenue and the Market Overview section for explanations for the rate fluctuations during the 2005 and 2004 periods in the spot market. 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 an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. 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. TC revenue is earned by vessels under contract for a specific period of time with duration usually greater than one year. The Company earned TCE revenue of $115,219,000 for the three months and $256,055,000 for the six months ended June 30, 2005 and $83,384,000 for the three months and $194,451,000 for the six months ended June 30, 2004. During the second quarter of 2005, 73 percent or $84,119,000 of our TCE revenue was earned by vessels operating in the spot market and 27 percent or $31,100,000 of our TCE revenue was earned by vessels operating on TC. --TCE revenue of $84,119,000 earned by vessels operating in the spot market during the second quarter of 2005 increased $30,813,000 compared to TCE revenue of $53,306,000 earned by vessels operating in the spot market during the second quarter of 2004. The increase in earnings of 58% was the result of (1) 441 more operating days in 2005 for the Suezmax fleet, primarily from the five Suezmax vessels acquired in the third quarter of 2004 and (2) additional TCE revenue at an average TCE rate of $28,731 per day from 11 vessels for 774 operating days, six product carriers acquired in 2004 and 2005 and five vessels that were previously operating on time charters which began operating in the spot market (three of which have committed to new time charters during the quarter). One single hull vessel that operated in the spot market at an average TCE rate of $14,880 a day during the second quarter of 2004 was sold in December 2004. --TCE revenue of $31,100,000 earned by vessels on time charter during the second quarter of 2005 increased $1,022,000 compared to TCE revenue of $30,078,000 earned by vessels on time charter during the second quarter of 2004. The increase in TCE revenue of 3% was a result of TC revenue from two 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. acquired in April and July 2004, one of which had profit sharing (first anniversary for profit sharing earned over one year) in April 2005. Increases in TC revenue earned during the second quarter in 2005 were partially offset by decreases from the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of five time charters resulting in 227 fewer operating days in the second quarter of 2005 (three vessels whose time charters expired during the 2005 period, operated in the spot market for a short period prior to beginning new time charters). During the six months ended June 30, 2005, 78 percent or $198,921,000 of our TCE revenue was earned by vessels operating in the spot market and 22 percent or $57,134,000 of our TCE revenue was earned by vessels operating on TC. --TCE revenue of $198,921,000 earned by vessels operating in the spot market during the second quarter of 2005 increased $63,316,000 compared to TCE revenue of $135,605,000 earned by vessels operating in the spot market during the six months ended June 30, 2004. The increase in earnings of 47% was the result of (1) 879 more operating days in 2005 for the Suezmax fleet, primarily from the five Suezmax vessels acquired in 2004 and (2) additional TCE revenue from 1,605 operating days at an average TCE rate of $27,885 per day from 11 product carriers. The one single hull vessel that was sold in 2004 operated in the spot market at an average TCE rate of $18,301 a day during the six months ended June 30, 2004. --TCE revenue of $57,134,000 earned by vessels on time charter during the six months ended June 30, 2005 decreased $1,712,000 compared to TCE revenue of $58,846,000 earned by vessels on time charter during the second quarter of 2004. The decrease in TCE revenue of 3% was from the expiration of five time charters resulting in 587 fewer operating days for the six months ended June 30, 2005. Decreases were partially offset by increases in TC revenue from three vessels acquired in February, April and July 2004, one of which earned profit sharing during 2005. Note: For detailed information of fluctuations by vessel type, see Breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. by Fleet sections. Operating Expenses Vessel expenses and charter hire expense increased $8,584,000 for the three months and $14,805,000 for the six months ended June 30, 2005 compared to the same periods in 2004, primarily as a result of vessel expenses for vessels acquired (12 vessels during 2004 and three vessels during 2005) and increases in crew expense and ship supplies for the fleet. Charter hire expense was comparable in the second quarter 2005 to the second quarter 2004 and decreased by $482,000 for the six months ended June 30, 2005 compared to the same period in 2004. Decreases in 2005 charter hire expense resulted primarily from a reduction of charter hire expense for the two vessels owned by a pool member (see Note below for discussion of Gemini Gemini (jĕm`ənī, –nē) [Lat.,=the twins], northern constellation lying on the ecliptic (the sun's apparent path through the heavens) between Taurus and Cancer, N of Canis Minor; it is one of the constellations of the zodiac. Pool). Increases in depreciation expense of $4,930,000 for the three months and $8,112,000 for the six months ended June 30, 2005 compared to same periods in 2004 resulted from the acquisition of 15 vessels, which were offset in part by reductions to depreciation expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the eight vessels disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of in 2004 and in January January: see month. 2005. General and administrative expenses increased $2,602,000 for the three months and $4,585,000 for the six months ended June 30, 2005 compared to same period in 2004 primarily as a result of increased compensation expense from increases in personnel due to a larger fleet, expenses from OMI's London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. office and other additional corporate requirements. Note: In December 2003, OMI began operating Gemini Tankers ("Gemini"), which is 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. 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. Currently, there are 16 Suezmax vessels (13 from OMI and three from other participants) operating in the pool. The earnings of the pool 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 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. LIQUIDITY AND CAPITAL EXPENDITURES Cash and cash equivalents of $34,187,000 at June 30, 2005 decreased $7,618,000 from $41,805,000 at December 31, 2004. Net cash provided by operating activities of $182,576,000 for the six months ended June 30, 2005 increased $58,834,000 compared to $123,742,000 for the six months ended June 30, 2004, primarily due to increased net income during the 2005 period. During the first half of 2005, we made cash payments for capital expenditures, (including final payments for three vessel acquisitions, capital improvements and construction contracts), aggregating $82,689,000, and we received proceeds from the sale of two vessels of $36,752,000. We funded our capital expenditures, including our acquisitions in 2005, with operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and financing. We paid cash of $65,210,000 to repurchase 3,512,500 shares of common stock. We have also used $23,863,000 in excess proceeds from our operating cash flow to repurchase $25,500,000 of our 2.875% Convertible Notes. Additionally, during the six months ended June 30, 2005, we repaid $80,000,000 of our $375,000,000 reducing revolving credit facility in addition to our scheduled debt payments on term loans. During the second quarter of 2005, we increased our liquidity by modifying a facility with an available balance of $166,000,000 with a $320,000,000 facility, which allows for greater flexibility by reducing certain covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the restrictions, including restrictions on 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 balances available to the Company and extending the maturity of the credit facility from July 2007 to May 2015. We repaid a $24 million term loan on a vessel which is now collateralized under the modified $320,000,000 facility. Other modifications during the second quarter of 2005, included reducing interest rate margins on the $320,000,000 facility and seven term loans and extending two term loan maturities by four years each to 2013 and 2015. As of June 30, 2005, the available undrawn balance for all credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities was $628,750,000. 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. (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 June 30, 2005 was 52 percent and net debt (total debt less cash and cash equivalents) 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 and cash equivalents) was 51 percent. As of July 25, 2005, we have approximately $648,741,000 in available liquidity (including cash and undrawn lines of credit). During July 2005, we drew down approximately $23,000,000 on a term loan upon the delivery of the TEVERE (see Capital Expenditures for Vessels Under Construction Contracts and Drydock section below). We expect to use cash from operations, undrawn balances available to us through our revolving credit facilities, or committed bank debt to finance capital expenditures as discussed below and increase shareholder value at opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. times. Capital Expenditures for Vessels Under Construction Contracts and Drydock Vessels Under Construction Contracts At June 30, 2005, we had commitments to take delivery of seven product carriers, five handymax and two handysize. The contract costs for the seven vessels aggregated $248,240,000. As of June 30, 2005, payments of $83,851,000 had been made on these contracts, $15,769,000 of which was paid during the first six months of 2005. One vessel was delivered in July 2005. Another vessel on order will be delivered at the end of July 2005 and the remaining five vessels will be delivered in 2006. There is $42,862,000 in future construction and delivery payments remaining in 2005 after the payment of $17,112,000 in July 2005 for the delivery of the TEVERE. As of June 30, 2005, future construction and delivery payments (before financing, if any) are as follows:
Year Payments
------------------------------- --------------
2005 (1) $ 59,974
2006 104,415
--------------
Total Remaining Payments $ 164,389
==============
(1) 2005 payments include $17,112,000 paid upon the delivery of the
TEVERE in July 2005, $21,840,000 to be paid for the THAMES, which
is scheduled to be delivered late July and the remainder of the
2005 amounts are for installment payments on the 2006 vessels on
order.
Note: See the Fleet Report section for additional information about
the vessels to be acquired.
2005 Drydocks OMI evaluates certain vessels to determine if a drydock, special survey, both a drydock combined with a special survey or a postponement is appropriate for each vessel. We have vessels inspected and evaluated regularly in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of a drydock during the year. Currently, we anticipate drydocking six vessels in the remainder of 2005, two during the third quarter and four during the fourth quarter, for an estimated aggregate cost of $2,050,000. The vessels are expected to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. up to approximately 135 off-hire days. The following is a breakdown of the estimated drydock cost (in thousands) for the third and fourth quarters of 2005 with the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of off-hire days by vessel segment and charter type (spot or TC) for product carriers:
Number of Days Number of Days Projected
Third Qtr. of Fourth Qtr. of Costs
2005 2005
--------------- -------------------------------
Crude Fleet:
Suezmax -spot - 20 $ 350
Suezmax -TC - - -
Clean Fleet:
Products -TC 50 65 1,700
Products -spot - - -
--------------- --------------- --------------
Total 50 85 $ 2,050
=============== =============== ==============
Contracted Time Charter Revenue Currently OMI has time charter contracts for 23 vessels, 10 with profit sharing arrangements. The contracted TC revenue schedule below does not include any estimates for profit sharing in the future periods; however, profit sharing of approximately $6.6 million earned during the first six months of 2005 is included. We have reduced future contracted revenue for any estimated off-hire days relating to drydocks. The following table reflects our actual results for the first six months of 2005 and current contracted time charter revenue through 2009:
2005 2006 2007 2008 2009
------- ------- ------- ------ ------
(In millions)
TC Revenue $125.7 $135.6 $125.3 $95.1 $60.7
Number of Vessels (a) 23 19 19 13 8 (b)
Vessels with Profit
Sharing (a) 10 8 7 7 4
(a) Number of vessels at the end of each year assuming no additional
extensions or new charters.
(b) The remaining eight charters expire as follows: six charters will
expire in 2010 and two will expire in 2012.
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 and approximately 3.8 million deadweight tons is the youngest large fleet of tankers in the world, with an average age of approximately 3.4 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 deadweight tons ("dwt") and are calculated as of June 30, 2005. Dwt, expressed in metric tons each of which is equivalent to 1000 kilograms, refers to the total weight a vessel can carry when loaded to a particular load line. Unless otherwise indicated, when we refer to our fleet of 45 vessels, we include three Suezmax tankers "chartered-in" to our fleet under long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. time charters and one product carrier delivered in July 2005. EARNINGS CONFERENCE CALL OMI Corporation will hold an earnings conference call presentation on Tuesday Tuesday: see week. , July 26, 2005 at 8:30 a.m. (eastern time). The presentation will be simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics webcast and will be available on the Company's website, http://www.omicorp.com along with a slide presentation. A replay of the call will be available at 11:30 a.m. on July 26, 2005 at (888) 203-1112 for North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and (719) 457-0820 for International callers (Pass code 5672740). 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. BALANCE SHEETS The following are OMI's Condensed Balance Sheets as of June 30, 2005 and December 31, 2004:
CONDENSED BALANCE SHEETS June 30, December 31,
------------------------ 2005 2004
(In thousands) ------------ ------------
Cash and cash equivalents $34,187 $41,805
Other current assets 65,920 87,009
Vessels and other property-net 1,534,047 1,487,598
Construction in progress (newbuildings) 87,516 116,895
Other assets 37,221 37,699
------------ ------------
Total assets $1,758,891 $1,771,006
============ ============
Current portion of long-term debt (1) $32,607 $33,200
Other current liabilities 64,463 56,787
Long-term debt (1) 841,766 907,236
Other liabilities 6,000 6,381
Total stockholders' equity 814,055 767,402
------------ ------------
Total liabilities and stockholders' equity $1,758,891 $1,771,006
============ ============
(1) As of June 30, 2005, the available undrawn balance under credit
facilities was $628,750,000.
CONDENSED CASH FLOWS The following are OMI's Condensed Cash Flows for the six months ended June 30, 2005 and 2004:
CONDENSED CASH FLOWS
--------------------
For The Six Months Ended
June 30,
(In thousands) 2005 2004 Change
--------- --------- ----------
Provided (used) by:
Operating Activities $182,576 $123,742 $58,834
Investing Activities (46,800) (51,481) 4,681
Financing Activities (143,394) 135,152 (278,546)
--------- --------- ----------
Net Decrease (Increase) in Cash and Cash
Equivalents (7,618) 207,413 (215,031)
Cash and Cash Equivalents at the
Beginning of the Year 41,805 48,788 (6,983)
--------- --------- ----------
Cash and Cash Equivalents at the End of
the Period $34,187 $256,201 $(222,014)
========= ========= ==========
RESULTS BY FLEET The following discussion of Vessel 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. (TCE revenue less vessel expenses, charter hire expense and depreciation and amortization) for the crude and clean segments excludes Gain on disposal of vessels and General and administrative expenses. Crude Oil Fleet-Vessel Operating Income increased $5,835,000 and $14,963,000 for the three and six months ended June 30, 2005, respectively, over the comparable periods in 2004. The net increase in Vessel Operating Income during the 2005 periods were primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increases in the Suezmax TCE revenue resulting from increased earnings for the five Suezmax vessels delivered in July and August of 2004. Average TCE rates earned by Suezmax vessels operating in the spot market in both 2005 and 2004 periods were comparable. The following table illustrates the crude oil fleet Vessel Operating Income by vessel type (other than vessels sold), in the crude oil fleet for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004 (Note: Amounts for vessels sold include the settlement of certain revenues and expenses).
BREAKDOWN BY FLEET
-------------------
(In thousands, except daily rates
& expenses and number of vessels)
For The Three For The Six
Months Months
Ended June 30, Ended June 30,
CRUDE FLEET: 2005 2004 2005 2004
-------- -------- --------- ---------
Suezmaxes:
TCE revenue (1), (2)
Suezmaxes-on spot $61,891 $46,082 $154,174 $114,096
Suezmaxes-on time charter
(3) 2,378 - 2,378 -
-------- ------------------ ---------
Total TCE Revenue 64,269 46,082 156,552 114,096
Vessel expenses 8,719 3,962 16,476 7,755
Charter hire expense 11,903 11,882 26,937 27,420
Depreciation and amortization 7,984 4,439 15,955 8,871
-------- -------- --------- ---------
Vessel Operating Income $35,663 $25,799 $97,184 $70,050
======== ======== ========= =========
Handysize Crude Oil Carriers sold
in 2005 (4):
TCE revenue $- $2,987 $941 $5,976
Vessel expenses 95 695 224 1,316
Depreciation and amortization - 714 - 1,428
-------- -------- --------- ---------
Vessel Operating Income (Loss) $(95) $1,578 $717 $3,232
======== ======== ========= =========
Other Crude Carriers Sold in
2004 (5):
TCE revenue $- $4,851 $- $16,145
Vessel expenses 20 2,097 35 4,098
Depreciation and amortization - 418 - 2,426
-------- -------- --------- ---------
Vessel Operating Income (Loss) $(20) $2,336 $(35) $9,621
======== ======== ========= =========
Total Vessel Operating Income $35,548 $29,713 $97,866 $82,903
======== ======== ========= =========
Note: Average daily vessel expenses are computed using the number of
days in the period which OMI owned the vessel.
(1) Consistent with general practice in the tanker shipping industry,
we use TCE revenue (defined as voyage and time charter revenues
less voyage expenses) as a measure of equating revenue generated
from a voyage charter to revenue generated from a time charter.
TCE revenue, a non-GAAP measure, provides more meaningful
information to us than voyage revenues, the most directly
comparable GAAP measure because it assists us in making operating
decisions about the deployment of our vessels and their
performance. TCE revenues are also widely used by investors and
analysts in the tanker shipping industry for comparing financial
performance between companies and to industry averages. Voyage
expenses comprise all expenses relating to particular voyages,
including bunker fuel expenses, port fees, canal tolls and
brokerage commissions. Under time-charter contracts the charterer
pays the voyage expense, with the exception of commissions,
whereas under voyage charter contracts the shipowner pays the
voyage expenses. TCE revenue and expenses includes revenue and
expense generated by the Gemini pool (a Suezmax pool). The Suezmax
pool began in December 2003 and included our 15 Suezmaxes ( as of
June 2005 there were 13 Suezmaxes, see note (3) below) and two
Suezmaxes owned by another pool member. The Suezmax vessel
chartered-in (CAPE BASTIA) at the end of June 2005 and the Suezmax
vessel from the other pool participant will start operating in the
Gemini pool during the third quarter of 2005.
(2) In July and August 2004, three 2003 built and two 2004 built
Suezmax vessels were acquired.
(3) During May 2005, two Suezmax vessels previously operating in the
spot market (Gemini pool) up to May of 2005, began operating on
seven year time charters with profit sharing.
(4) In January 2005, two handysize crude oil carriers were sold.
(5) During 2004, our ULCC vessel was sold in the fourth quarter and
our three Panamax vessels were disposed of in the second and third
quarters.
The following table illustrates the Average daily TCE, Number of TCE revenue days, Average daily vessel expense and Average number of OMI vessels operating by the crude oil fleet for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004.
For The Three For The Six
Months Months
Ended June 30, Ended June 30,
CRUDE FLEET: 2005 2004 2005 2004
-------- -------- -------- --------
Suezmaxes-on spot:
Average daily TCE $43,543 $43,415 $52,255 $52,984
Number of OMI TCE revenue days 1,239 879 2,588 1,789
Number of pool member TCE revenue
days (1) 182 182 362 364
Suezmaxes-on time charter:
Average daily TCE $29,359 n/a $29,359 n/a
Number of OMI TCE revenue days
(2) 81 n/a 81 n/a
Suezmaxes:
Average daily vessel expense $7,370 $5,442 $7,002 $5,326
Average number of OMI vessels for
the period * (3) 15.1 10.0 15.0 10.0
Handysize Crude Oil Carriers sold
in 2005:
Average daily TCE n/a $16,415 $16,505 $16,417
Number of TCE revenue days n/a 182 57 364
Average number of OMI vessels for
the period n/a 2.0 n/a 2.0
Other Crude Carriers Sold in 2004:
Average daily TCE n/a $17,706 n/a $25,306
Number of TCE revenue days n/a 274 n/a 638
Average number of OMI vessels for
the period n/a 3.3 n/a 3.7
Note: Number of operating or TCE revenue days used to compute Average
daily TCE includes waiting days and is reduced only for the days the
vessels are out of service due to drydock.
* includes three vessels charter-in, one was chartered-in beginning in
June 2005 and two vessels were chartered-in during the periods shown
above in 2005 and 2004.
(1) Number of TCE revenue days for the two Suezmaxes owned by another
pool member.
(2) In May 2005, two Suezmax vessels began seven year time charters.
Clean Fleet- Vessel Operating Income increased $12,554,000 and $23,839,000 for the three and six months ended June 30, 2005, respectively, over the comparable periods in 2004. The increases in Vessel Operating Income in the 2005 periods were attributable to seven product carriers acquired in 2004 and three in 2005, in addition to increased profit sharing of $2,345,000 and $4,008,000 for the three and six months ended June 30, 2005, respectively, compared to the same periods in 2004. The increases were offset partially by the decrease in earnings for the two single hull product carriers that were disposed of in 2004. The following table illustrates the product carrier fleet Vessel Operating Income by vessel type (other than vessels sold) for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004 (Note: Amounts for vessels sold include the settlement of certain revenues and expenses).
BREAKDOWN BY FLEET
------------------
(In thousands, except daily rates &
expenses and number of vessels)
For The Three For The Six
Months Months
Ended June 30, Ended June 30,
PRODUCT CARRIER FLEET: 2005 2004 2005 2004
-------- -------- -------- --------
Products-on time and spot charter:
TCE Revenue (1):
Products-on time charter (2) $28,722 $27,091 $53,816 $52,870
Products-on spot (3) 22,182 - 44,642 -
-------- ----------------- --------
Total TCE Revenue 50,904 27,091 98,458 52,870
Vessel expenses 14,414 7,087 27,127 14,028
Depreciation and amortization 8,928 5,793 17,396 11,217
-------- -------- -------- --------
Vessel Operating Income $27,562 $14,211 $53,935 $27,625
======== ======== ======== ========
Products-sold in 2004:
TCE Revenue (1), (4) $56 $2,373 $114 $5,364
Vessel expenses (21) 830 130 1,549
Depreciation and amortization - 669 - 1,360
-------- -------- -------- --------
Vessel Operating Income $77 $874 $(16) $2,455
======== ======== ======== ========
Total Vessel Operating Income $27,639 $15,085 $53,919 $30,080
======== ======== ======== ========
Note: Average daily vessel expenses are computed using the number of
days in the period which OMI owned the vessel.
(1) Consistent with general practice in the tanker shipping industry,
we use TCE revenue (defined as voyage and time charter revenues
less voyage expenses) as a measure of equating revenue generated
from a voyage charter to revenue generated from a time charter.
TCE revenue, a non-GAAP measure, provides more meaningful
information to us than voyage revenues, the most directly
comparable GAAP measure because it assists us in making operating
decisions about the deployment of our vessels and their
performance. TCE revenues are also widely used by investors and
analysts in the tanker shipping industry for comparing financial
performance between companies and to industry averages. Voyage
expenses comprise all expenses relating to particular voyages,
including bunker fuel expenses, port fees, canal tolls and
brokerage commissions. Under time-charter contracts the charterer
pays the voyage expense, with the exception of commissions whereas
under voyage charter contracts the shipowner pays the voyage
expenses.
(2) During the three and six months ended June 30, 2005, OMI
recognized profit sharing revenue of approximately $3,447,000 and
$6,623,000, respectively, compared to $1,102,000 and $2,615,000
for the three and six months ended June 30, 2004, respectively.
During May 2005, a handysize product carrier was acquired.
(3) In January and March 2005, two handymax product carriers were
acquired. In February, April, July, October and December 2004,
four handysize and three handymax product carriers were acquired.
(4) For the three and six months ended June 30, 2004, revenue was
generated by one vessel operating in the spot market and one
vessel on time charter. During August and December 2004, the two
single hull vessels were sold. The 2005 balances reflect the
settlement of demurrage and other vessel expenses relating to the
vessels sold in 2004.
The following table illustrates the Average daily TCE , Number of TCE revenue days, Average daily vessel expense and Average number of vessels operating in the product carrier fleet for the three and six months ended June 30, 2005 compared to the three and six months ended June 30, 2004.
For The Three For The Six
Months Months
Ended June 30, Ended June 30,
PRODUCT CARRIER FLEET: 2005 2004 2005 2004
-------- -------- -------- --------
Products-on time charter:
Average daily TCE $16,895 $15,051 $16,625 $15,228
Number of TCE revenue days 1,700 1,800 3,237 3,472
Products-on spot:
Average daily TCE $28,731 n/a $27,885 n/a
Number of TCE revenue days 774 n/a 1,605 n/a
Products-on time and spot charter:
Average daily vessel expense $5,750 $3,935 $5,567 $4,039
Average number of vessels
for the period (1) 27.5 19.8 26.9 19.1
Products-sold in 2004:
Average daily TCE n/a $13,037 n/a $14,735
Number of TCE revenue days n/a 182 n/a 364
Average daily vessel expense n/a $4,560 n/a $4,255
Average number of vessels
for the period n/a 2.0 n/a 2.0
Note: Number of operating or TCE revenue days used to compute Average
daily TCE includes waiting days and is reduced only for the days the
vessels are out of service due to drydock.
FLEET REPORT Our fleet is concentrated primarily into two vessel types, Suezmax tankers, 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. Our fleet currently comprises 45 vessels aggregating approximately 3.8 million dwt consisting of 16 Suezmaxes, 27 handysize and handymax product carriers and two Panamax product carriers. Currently, three of the Suezmax tankers are chartered-in: the OLIVER JACOB Jacob (jā`kəb), in the Bible, ancestor of the Hebrews, the younger of Isaac and Rebecca's twin sons; the older was Esau. In exchange for a bowl of lentil soup, Jacob obtained Esau's birthright and, with his mother's help, received the blessing , whose charter expires June 2010, the MAX JACOB Max Jacob (July 12, 1876 – March 5, 1944) was a French poet, painter, writer, and critic. Biography Born in Quimper, Brittany, France, he enrolled in the Paris Colonial School, which he left in 1897 for an artistic career. , whose charter expires December 2006 and the CAPE CAPE, English law. A judicial writ touching a plea of lands and tenements. The writs which bear this name are of two kinds, namely, cape magnum, or grand, cape, and cape parvum, or petit cape. BASTIA Bastia (bästē`ä), city (1990 pop. 38,728), Haute-Corse dept., NE Corsica, France, on the Tyrrhenian Sea. It is the island's largest city and chief commercial center. , whose charter expires June 2012. We have a commitment to charter-in another vessel beginning in September 2005 for a seven year period. The following table of OMI's Fleet includes, wholly owned vessels, chartered-in vessels and vessels to be acquired:
Type of Year Charter
Name of Vessel Vessel Built Dwt Expiration
-------------------------- --------- -------- ---------- ----------
CRUDE OIL FLEET:
----------------
Wholly-Owned:
-------------
ARLENE Suezmax 2003 165,293 SPOT
INGEBORG Suezmax 2003 165,293 SPOT
SOMJIN Suezmax 2001 160,183 SPOT
HUDSON Suezmax 2000 159,999 SPOT
POTOMAC Suezmax 2000 159,999 SPOT
DELAWARE Suezmax 2002 159,452 SPOT
DAKOTA Suezmax 2002 159,435 SPOT
ADAIR Suezmax 2003 159,199 SPOT
ANGELICA Suezmax 2004 159,106 SPOT
JANET Suezmax 2004 159,100 SPOT
SACRAMENTO Suezmax 1998 157,411 May-12(P)
PECOS Suezmax 1998 157,406 SPOT
SABINE Suezmax 1998 157,332 May-12(P)
----------
2,079,208
----------
Chartered-In:
-------------
CAPE BASTIA Suezmax 2005 159,156 SPOT
OLIVER JACOB Suezmax 1999 157,327 SPOT
MAX JACOB Suezmax 2000 157,327 SPOT
----------
473,810
----------
----------
Total Crude Oil Fleet 2,553,018
----------
CLEAN FLEET:
------------
OTTAWA Panamax 2003 70,297 Apr-08
TAMAR Panamax 2003 70,362 Jul-08
NECHES Handymax 2000 47,052 Oct-07
SAN JACINTO Handymax 2002 47,038 Apr-08
MOSELLE Handymax 2003 47,037 Feb-09
GUADALUPE Handymax 2000 47,037 Apr-08
AMAZON Handymax 2002 47,037 Apr-08
ROSETTA Handymax 2003 47,015 Mar-09
BRAZOS Handymax 2005 46,889 SPOT
LAUREN Handymax 2005 46,955 SPOT
JEANETTE Handymax 2004 46,955 SPOT
HORIZON Handymax 2004 46,955 SPOT
ORONTES Handysize 2002 37,383 May-10
OHIO Handysize 2001 37,278 May-10
GARONNE Handysize 2004 37,278 Apr-09(P)
GANGES Handysize 2004 37,178 SPOT
RUBY Handysize 2004 37,384 SPOT
ASHLEY Handysize 2001 37,270 SPOT
MARNE Handysize 2001 37,230 SPOT
LOIRE Handysize 2004 37,106 Feb-09(P)
FOX Handysize 2005 37,006 Jun-10(P)
TEVERE Handysize 2005 37,000 Jul-10(P)
SAONE Handysize 2004 36,986 Jul-09(P)
TRINITY Handysize 2000 35,834 Mar-10
MADISON Handysize 2000 35,828 Mar-10
RHONE Handysize 2000 35,775 May-07(P)
CHARENTE Handysize 2001 35,751 Sep-06(P)
ISERE Handysize 1999 35,438 Sep-06(P)
SEINE Handysize 1999 35,407 Aug-08
----------
Total Clean Fleet 1,233,761
----------
Total Current Fleet 3,786,779
----------
Note: Vessels owned and chartered-in are all double hull.
(P) Time charters with profit sharing.
The following six product carriers are to be delivered (not including the TEVERE delivered in July) and one Suezmax vessel to be chartered-in:
Vessels to be Acquired:
Date To
Type of Be Charter
Name of Vessel Vessel Delivered Dwt Expiration
---------------------------- --------- --------- ---------- ----------
Vessels Under Construction:
THAMES Handysize Jul-05 47,000 SPOT
WABASH Handymax Jan-06 47,000 SPOT
KANSAS Handymax Mar-06 47,000 SPOT
RHINE Handysize Mar-06 37,000 SPOT
REPUBLICAN Handymax Apr-06 47,000 SPOT
PLATTE Handymax May-06 47,000 SPOT
----------
Total Vessels Under Construction 272,000
----------
Vessels to be Chartered-In:
CAPE BONNY Suezmax Sep-05 160,000 SPOT
----------
Total Vessels to be Chartered-In 160,000
----------
Total Fleet with Vessels to be Acquired 4,218,779
==========
Note: Vessels to be acquired are double hull.
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, and Section 21E of the Securities Exchange Act of 1934, as amended, and are 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," "plan" "anticipates" and similar expressions identify forward-looking statements. Our forward-looking statements sometimes include, without limitation: 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 new vessels will be delivered by shipyards to the Company and when they may be chartered by customers; estimates of when vessels may be contracted for sale and delivered to buyers; estimates of when laws, regulations or commercial decisions may remove older vessels from markets or enhance the value or earnings of double hulled vessels; statements as to the projected development of the Company's strategy and how it may act to implement its strategy; estimates of future costs and other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. for certain environmental matters and investigations and the expectations concerning insurance coverage therefore; 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 the number of drydockings of vessels, their costs and the number of related offhire days; 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, 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by those forward-looking statements. Such risks include, but are not limited to, 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 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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