Overseas Shipholding Group, Inc. Reports Third Quarter Earnings.Business Editors
NEW YORK--(BUSINESS WIRE)--Nov. 13, 2001
Overseas Shipholding Group Overseas Shipholding Group, Inc. (OSG) is the second largest oil tanker company in the world.
OSG has offices in Athens, London, Manila, Newcastle, New York and Singapore with more than 3200 sea and shore-based employees. , Inc. reported net income for the quarter ended September September: see month. 30, 2001 of $11.2 million, or $.33 per share, compared with net income of $26.8 million, or $.79 per share, in the third quarter of 2000.
Results for the third quarter of 2001 include a $2.7 million, or $.08 per share, after-tax af·ter-tax also af·ter·tax
Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain on securities transactions compared with $1.3 million, or $.04 per share, in the third quarter of last year. The third quarter year-to-year reduction in net income reflects a sharp decline in time charter equivalent rates for the Company's foreign flag VLCCs and 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.
Net income for the first nine months of 2001 totaled a record $94.2 million, or $2.76 per share, versus net income of $42.8 million, or $1.26 per share, for the corresponding period of 2000, reflecting the strong tanker markets that prevailed in the first half of this year. Results for the first nine months of 2001 include an after-tax gain on securities transactions of $14.4 million, or $.42 per share, offset by an after-tax restructuring charge restructuring charge
The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $6.0 million, or $.18 per share, to cover costs associated with the reduction of staff at the New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of headquarters and the transfer of ship management and administrative functions to our subsidiary in Newcastle Newcastle, city, Australia
Newcastle, city (1991 pop. 262,331), New South Wales, SE Australia, on the Pacific Ocean. It is the center of one of the country's largest coal-mining areas and is a large port. Coal, wool, iron and steel, and wheat are exported. , U.K. Results for the first nine months of 2000 included an after-tax gain on securities transactions of $3.0 million, or $.09 per share, and $4.2 million, or $.12 per share, arising from a change from completed 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. method to percentage completion method of accounting for voyage revenues.
Set forth below are the time charter equivalent rates and other operating statistics for the Company's principal foreign flag tanker segments for the three month and nine month periods:
Third Quarter Percent 2001 2000 Change ---- ---- -------- VLCCs TCE per revenue generating ship-day (spot) $ 29,074 $ 53,689 -45.8% TCE per revenue generating ship-day (combined spot and long-term charters) $ 29,726 $ 49,336 -39.7% Revenue generating ship-days(a) 961 764 AFRAMAXES TCE per revenue generating ship-day (spot) $ 21,918 $ 33,276 -34.1% Revenue generating ship-days 1,030 858 PRODUCT CARRIERS TCE per revenue generating ship-day (spot) $ 17,116 $ 17,894 -4.3% Revenue generating ship-days 657 823 First Nine Months Percent 2001 2000 Change ---- ---- ------- VLCCs TCE per revenue generating ship-day (spot) $ 45,865 $ 39,237 +16.9% TCE per revenue generating ship-day (combined spot and long-term charters) $ 43,138 $ 38,433 +12.2% Revenue generating ship-days(a) 2,548 2,014 AFRAMAXES TCE per revenue generating ship-day (spot) $ 34,833 $ 24,224 +43.8% Revenue generating ship-days 2,900 2,482 PRODUCT CARRIERS TCE per revenue generating ship-day (spot) $ 23,689 $ 14,525 +63.1% Revenue generating ship-days 2,079 2,459 (a) Includes days on long-term charter of 183 in the third quarter of 2001, 184 in the third quarter of 2000, 543 in the first nine months of 2001 and 548 in the first nine months of 2000.
"Despite current weakness in the world tanker markets, OSG's operating results continue to reflect the positive effects of superior asset utilization afforded through the Company's strategic commercial alliances, and significant benefits achieved through our cost reduction program," said Morton Morton, village (1990 pop. 13,799), Tazewell co., central Ill., in a grain-farming and livestock area; inc. 1877. Food is canned, and tractor parts, washing machines, and pottery are manufactured. P. Hyman Hyman is the surname of:
OSG Open Science Grid
OSG Office of the Secretary-General (United Nations)
OSG Open Systems Group
OSG Office of the Surgeon General (HHS - PHS) . In addition, Mr. Hyman said "Since 1998 we have removed over $40 million per year from the cost structure of the Company; as a result of changes already in place, we expect to reduce overhead and operating costs operating costs npl → gastos mpl operacionales by an additional $20 million per year commencing in 2002. During this period, we have renewed and modernized mod·ern·ize
v. mo·dern·ized, mo·dern·iz·ing, mo·dern·iz·es
To make modern in appearance, style, or character; update.
To accept or adopt modern ways, ideas, or style. our fleet with the result that OSG has one of the most modern and efficient fleets in the industry."
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. rates for the Company's foreign flag tankers declined during the third quarter as OPEC OPEC: see Organization of Petroleum Exporting Countries.
in full Organization of the Petroleum Exporting Countries
Multinational organization established in 1960 to coordinate the petroleum production and export policies of its announced a one 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. production cut effective September 1, 2001 and 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. withdrew approximately two million barrels per day from the market for almost one month. Given announced OPEC production cuts to date in 2001 of 3.5 million barrels per day and prospects for a further cut this year, tanker markets are likely to remain under pressure in the coming months.
With the significant decline in tanker rates during the third quarter, VLCC VLCC
very large crude (oil) carrier scrappings and other deletions from the fleet this year-to-date Year-to-date (YTD)
The period beginning at the start of the calendar year up to the current date. have already reached 31 vessels, exceeding the total of 25 vessels deleted Deleted
A security that is no longer included on a specified market. Sometimes referred to as "delisted".
Reasons for delisting include violating regulations, failing to meet financial specifications set out by the stock exchange and going bankrupt. in all of 2000. In light of new International Maritime Organization International Maritime Organization (IMO), specialized agency of the United Nations established in 1948, with headquarters in London and 158 member nations. IMO is one of the smallest of the UN agencies. regulations and weakness in the major world economies, it is likely that scrapping of older, single-hulled 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. will accelerate, benefiting OSG and other owners of modern, double-hulled vessels.
The size of the world tanker fleet declined by 0.7 million deadweight tons ("mdwt") in the third quarter to 272.4 mdwt as scrap sales of 2.6 mdwt exceeded newbuilding deliveries of 1.9 mdwt. During the third quarter, the VLCC orderbook increased by 0.9 mdwt to 27.7 mdwt, or 21.5% of the existing VLCC fleet for delivery over the next three years; this percentage is roughly comparable to the portion of the fleet that will be 25 years of age or older by the end of this period. The Aframax orderbook has continued to rise, reaching 13.3 mdwt, or 25.3% of the existing Aframax fleet, compared with 23% at the end of June June: see month. .
OSG took delivery of a VLCC newbuilding during the third quarter and an Aframax newbuilding early in the fourth quarter. In addition, a joint venture in which the Company holds an equal one-third interest with each of Frontline front·line also front line
1. A front or boundary, especially one between military, political, or ideological positions.
2. Basketball See frontcourt.
3. Football The linemen of a team. Ltd. and Euronav Luxembourg S Luxembourg, province, Belgium
Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. .A. took delivery of two 2001-built VLCCs and one 2000-built VLCC. This joint venture will take delivery of two additional VLCC 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. in February February: see month. and July July: see month. 2002. The three joint venture partners are founding members of the Tankers International LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control ("Tankers") pool, the world's largest commercial operator of modern VLCCs.
Since OSG began its current $800 million, 21 vessel fleet renewal program in 1998, the Company has taken delivery of six wholly-owned newbuildings (three VLCCs and three Aframaxes) and a total of seven jointly-owned vessels -- six modern VLCCs and a modern Aframax tanker. All 13 of these vessels, together with eight remaining newbuildings (including two vessels to be jointly-owned) are, or will upon delivery be, employed in either the Tankers VLCC pool or OSG's Aframax pool with PDV PDV Petroleos de Venezuela (Oil company)
PDV Productschap Diervoeder (Product Board Animal Feed, Netherlands)
PDV Prune Dwarf Virus
PDV Portal-Drained Viscera Marina Marina
“a piece of virtue.” [Br. Lit.: Pericles]
See : Virtuousness , the marine transportation subsidiary of the Venezuelan state oil company. OSG will take delivery of its remaining newbuildings 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 the following schedule:
NEWBUILDING PROGRAM Delivery Schedule 2002 2003 2004 #/Date #/Date #/Date ------ ------ ------ VLCCs 2 - Q1 1 - Q1 1 - Q1(a) 1 - Q3(a) Aframaxes 1 - Q1 1 - Q4 1 - Q1 ------------------------------ TOTAL 5 2 1 (a) Jointly-owned with others. Of the total $800 million cost of OSG's vessel modernization program, $580 million has been satisfied to date. The remaining investment of approximately $180 million in connection with the wholly-owned vessel portion of its fleet renewal program will be incurred as follows (in millions of dollars) and is expected to be funded primarily out of operating cash flow: CAPTIAL COMMITMENTS FOR NEWBUILDINGS (Wholly-owned) Q4 2001 2002 2003 ------- ---- ---- $ 34 $ 75 $71
The additional $40 million of required capital attributable to the joint venture vessels being delivered in 2002 will be substantially financed by the joint ventures.
After satisfying almost 75% of the cost of our fleet renewal program, OSG's adjusted debt to capital ratio is 42.3%, well below industry norms, providing the Company with the financial strength to take advantage of market opportunities as they arise.
The following chart summarizes the Company's current international and domestic fleets, weighted to reflect percentage ownership:
Vessel Type Vessels Dwt ----------- ------- --- Foreign Flag VLCC 11.3 3,340,500 Suezmax 1 145,150 Aframax 11.5 1,134,250 Product Carrier (65,000 dwt) 4 256,650 Product Carrier (39,000 dwt) 4 157,050 Capesize Bulk Carrier 2 314,800 Foreign Flag Vessels 33.8 5,348,400 U.S. Flag Tanker 4 392,350 Product Carrier 2 85,650 Bulk Carrier 3 171,550 Car Carrier 1 15,900 U.S. Flag Vessels 10 665,450 Foreign and U.S. Flag Vessels 43.8 6,013,850 Foreign Flag Newbuildings VLCC 3.7 1,124,350(a) Aframax 3 332,750 Total Vessels, including Newbuildings 50.5 7,470,950 (a) Includes 2 VLCC newbuildings that have not yet been delivered to a joint venture in which OSG has a one-third interest. Summary Consolidated Statements of Income Three Months Ended Nine Months Ended September 30 September 30 ------------------ ----------------- ($000) 2001 2000 2001 2000 Net Shipping Revenues- Time charter equivalent basis $ 78,356 $ 104,808 $ 311,683 $ 245,092 Running Expenses (including charter hire and depreciation) 51,485 49,831 152,061 141,210 General & Administrative(a) 9,589 8,575 28,681 26,456 Restructuring Charge 382 -- 9,196 -- Total Shipping Expenses 61,456 58,406 189,938 167,666 Income from Vessel Operations (100% owned) 16,900 46,402 121,745 77,426 Equity in Results of Joint Ventures 3,556 2,196 13,198 2,813 Operating Income 20,456 48,598 134,943 80,239 Gain on Vessel Sales -- -- 436 -- Other Income(b) 7,697 4,544 40,263 12,929 Income before Interest, Taxes, Extraordinary Gain & Cumulative Effect of Accounting Change 28,153 53,142 175,642 93,168 Interest Expense 11,041 12,827 33,106 35,316 Income before Taxes, Extraordinary Gain & Cumulative Effect of Accounting Change 17,112 40,315 142,536 57,852 Provision for Federal Income Taxes 5,950 13,550 48,300 19,820 Income before Extraordinary Gain & Cumulative Effect of Accounting Change 11,162 26,765 94,236 38,032 Extraordinary Gain on Early Extinguishment of Debt -- -- -- 573 Cumulative Effect of Accounting Change -- -- -- 4,152 Net Income $ 11,162 $ 26,765 $ 94,236 $ 42,757 Basic Net Income Per Share $ .33 $ .79 $ 2.76 $ 1.26 Diluted Net Income Per Share $ .32 $ .78 $ 2.72 $ 1.25 Weighted Average Number of Shares (Basic) 34,245,000 33,941,000 34,139,000 33,833,000 Weighted Average Number of Shares (Diluted) 34,742,000 34,492,000 34,708,000 34,275,000 Summary Consolidated Balance Sheets ($000) September 30, 2001 December 31, 2000 ------------------- ----------------- Current Assets $ 131,393 $ 137,035 Capital Construction Fund 222,385 213,440 Vessels, including Capital Leases 1,323,109 1,293,958 Investments in Joint Ventures 137,615 84,742 Other Assets 91,264 94,738 Total Assets $ 1,905,766 $ 1,823,913 Current Liabilities $ 78,562 $ 48,828 Long-term Debt and Capital Leases 816,892 836,497 Deferred Gain 45,247 55,578 Other Liabilities 163,931 132,843 Shareholders' Equity 801,134 750,167 $ 1,905,766 $ 1,823,913 (a) The increase in general and administrative expenses in the 2001 periods, compared with the comparable 2000 periods, is principally attributable to costs incurred in the Company's Newcastle office in preparation for the transfer of ship management and administrative functions to that office. The transfer, which will be substantially completed by year-end 2001, will enable the Company to significantly reduce the New York office administrative expenses. (b) After-tax gains from sales of marketable securities, including related foreign currency exchange gains and losses, were $2,718,000 ($.08 per share) for the three months ended September 30, 2001 and $1,290,000 ($.04 per share) for the three months ended September 30, 2000, $14,409,000 ($.42 per share) for the nine months ended September 30, 2001 and $2,957,000 ($.09 per share) for the nine months ended September 30, 2000.
The Company plans to host a conference call at 2 PM Eastern Time on Tuesday, November 13, 2001 to discuss results for the quarter. All shareholders and other interested parties are invited to dial into the call, which may be accessed by calling (888) 497-4617 within 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. , and (212) 748-2731 for international calls. A recording of the call will be available for one week at (800) 633-8284, if dialed from within the U.S., and at (858) 812-6440 for international calls; the reservation number is 19927717.
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. regarding the Company's prospects, including the outlook for tanker markets, the Company's fleet renewal program, prospects for certain strategic alliances, anticipated levels of scrapping of older tonnage, and the forecast of world oil demand. Factors, risks and uncertainties that could cause actual results to differ from expectations reflected in these forward-looking statements are described in the Company's 2000 Annual Report on Form 10-K Form 10-K
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information.
See 10-K. .