SFL – Second Quarter 2012 Results

Ship Finance International Limited (NYSE: SFL) – Earnings Release

Reports preliminary 2Q 2012 results and quarterly dividend of $0.39 per share

Hamilton, Bermuda, August 28, 2012. Ship Finance International Limited (“Ship Finance” or the “Company”) today announced its preliminary financial results for the quarter ended June 30, 2012.



  • The Board of Directors has declared a quarterly dividend of $0.39 per share.
  • $16.3 million, or $0.21 per share, accumulated in cash sweep from Frontline.
  • Fleet renewal continues with seven drybulk newbuildings delivered over the last year and six older OBOs and VLCCs sold.
  • Selected key financial data for the quarter compared to the previous quarter:
  Three Months Ended
  Jun 30, 2012 Mar 31, 2012
Charter revenues(1) $185m $186m
EBITDA(2) $151m $154m
Net income $61m $39m
Earnings per share $0.77 $0.49
Dividend  per share $0.39 $0.39

Dividends and Results for the Quarter Ended June 30, 2012

The Board of Directors has declared a quarterly cash dividend of $0.39 per share, and Ship Finance has now paid dividends for 34 consecutive quarters. The dividend will be paid on or about September 28, 2012 to shareholders of record as of September 14, 2012. The ex-dividend date will be September 12, 2012.

The Company reported total U.S. GAAP operating revenues on a consolidated basis of $83.6 million, or $1.06 per share, in the second quarter of 2012. This number excludes $14.8 million of revenues classified as ‘repayment of investments in finance lease’, and also excludes $88.0 million of charter revenues earned by assets classified as ‘investment in associate’. 

The cash sweep agreement with Frontline had a positive effect of $16.3 million, or $0.21 per share in the second quarter. The cash sweep for the full year 2012 is payable in March 2013, and a total of $29.9 million has accumulated in the first two quarters.

There was a $0.6 million, or $0.01 per share, accrual to the 25% profit share for revenues in excess of the original base rates in the quarter. Following Frontline’s $50 million prepayment of profit share in 2011, another $48 million of profit share will need to accumulate before profit share revenues are recognized in the consolidated accounts.

The Company recorded a $21.7 million book gain relating to the termination of the Horizon Lines charters in the second quarter. The gain includes $16 million relating to second-lien notes received, $1.7 million relating to warrants received and $4.0 million in fuel and inventory. At the end of the quarter, the book value of the warrants was reduced by $0.5 million to $1.2 million through an asset impairment charge.

Reported net operating income pursuant to U.S. GAAP for the quarter was $66.4 million, or $0.84 per share, and reported net income was $61.2 million, or $0.77 per share.

Ole B. Hjertaker, Chief Executive Officer in Ship Finance Management AS said in a comment: “We continue to deliver positive results and have paid quarterly cash dividends since our operations began in 2004. Our fleet renewal is progressing well and we have sold six older OBOs and VLCCs over the last year and at the same time taken delivery of seven newbuilding drybulk vessels. We still have another six newbuildings to be delivered in 2012-2013, but very low remaining net capital expenditures after financing.

Mr Hjertaker continued: “The spot market is challenging in many segments and few shipping companies have access to capital for new investments right now. Concurrently, we have seen both secondhand and newbuilding prices fall sharply over the last 12 months, to levels not seen for a decade. While we have been cautious and not made new investments for some time, the current market environment could prove to be an interesting time to invest selectively in modern assets with the aim to build our long-term distribution capacity.”

The full report can be found in the link below.

August 28, 2012

The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda

Questions should be directed to:

Investor and Analyst Contact:

Harald Gurvin, Chief Financial Officer, Ship Finance Management AS
+47 23114009

Magnus T. Valeberg, Senior Vice President, Ship Finance Management AS
+47 23114012

Media Contact:

Ole B. Hjertaker, Chief Executive Officer, Ship Finance Management AS
+47 23114011


1. Charter revenues includes total charter hire from all vessels and rigs, including assets in 100% owned subsidiaries classified as ‘Investment in associates’ and cash sweep income.

2. EBITDA is a non- GAAP measure and includes assets in 100% owned subsidiaries classified as ‘Investment in associates’. For more details please see Appendix 1: Reconciliation of Net Income to EBITDA.

Forward Looking Statements

This press release contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Ship Finance management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although Ship Finance believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Ship Finance cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which we operate, changes in demand resulting from changes in OPEC’s petroleum production levels and worldwide oil consumption and storage, developments regarding the technologies relating to oil exploration, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, increased inspection procedures and more restrictive import and export controls, changes in our operating expenses, including bunker prices, drydocking and insurance costs, performance of our charterers and other counterparties with whom we deal, timely delivery of vessels under construction within the contracted price, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.

Second Quarter 2012 Results