- Ship Finance reports a net income of $65.3 million and earnings per share of $0.87 for the third quarter of 2005.
- Ship Finance announces an ordinary cash dividend of $0.45 per share, and a supplementary extraordinary dividend of $0.05 per share.
Third Quarter and Nine Months Results
Ship Finance International Limited (“Ship Finance” or the “Company”) reports total operating revenues of $118.4 million, operating income of $80.1 million and net income of $65.3 million for the third quarter of 2005. Earnings per share for the quarter were $0.87. Currently, all but eight of the Company’s vessels are trading under long term charters to Frontline Ltd (“Frontline”). Two of these vessels, the Company’s first containerships, are on a medium and short term time charter to unrelated third parties.
In the third quarter, operating revenues include $26.8 million of accrued profit share due from Frontline under long term charter agreements. The Company estimates that an additional $22.2 million in profit share has accumulated, however this cannot yet be accounted for in accordance with U.S. generally accepted accounting principles. The unrecognised income of $22.2 million will be recognised in the fourth quarter provided Ship Finance’s vessels continue to earn in excess of the fixed charter rates received from Frontline. The average daily time charter equivalents (“TCEs”) earned by Frontline in the third quarter in the spot and time charter period market from the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $37,700, $25,400 and $34,700, respectively.
In July 2005, the Company drew the remaining $158.4 million under its $350 million bank debt facility. As at September 30, 2005, the Company had interest rate swaps with a total notional principal of $572.6 million and an average interest rate of 3.7% percent. In the third quarter other financial items include a gain of $8.1 million that is attributable to the mark to market valuations of interest rate swaps compared with a loss of $8.3 million in the second quarter and a gain of $12.1 million in the first quarter.
Ship Finance announces net income of $126.5 million for the nine months ended September 30, 2005 equivalent to earnings per share of $1.69. The average daily time charter equivalents (“TCEs”) earned by Frontline in the spot and time charter period market from the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $56,400, $39,300 and $35,600, respectively.
As at September 30, 2005, the Company had total cash and cash equivalents of $71.8 million, of which $2.9 million is restricted. Cash provided by operating activities in the quarter was $40.5 million, net cash provided by investing activities was $59.6 million and net cash used in financing activities was $81.0 million. In August 2005 the Company sold a Suezmax tanker, Front Hunter, for net proceeds of $71.0 million. A $3.8 million termination payment has been accrued as a result of the termination of the charter. In addition, Frontline will have the right to sell to Ship Finance and charter back its newbuilding VLCC which is due for delivery in July 2006. A gain of approximately $25.8 million was incurred upon the sale of this vessel; however, this gain has been deferred in the financial statements as the termination of the charter with Frontline will give rise to a discounted rate for the new charter established for VLCC newbuilding. When and if the charter commences, this deferred gain will be amortised over the life of the replacement charter, in line with the embedded discount.
The full report is available on the following link: