OMI Corporation (NYSE: OMM): Highlights -- Fourth quarter Net
Income was $112,641,000 or $1.53 basic and diluted Earnings Per
Share ("EPS"). -- Fourth quarter Net Income, excluding special
items of $56,952,000 (Gain on Disposal of Vessels of $55,091,000
and Gain on Extinguishment of Notes of $1,861,000), was $55,689,000
(see Exhibit 1 for the Reconciliation of Net Income before Special
Items) or $0.76 basic and diluted EPS. -- In November, we sold two
1998 built Suezmax vessels, one of which has been entered by the
new owner in our Suezmax pool (the Gemini Pool, described below).
-- We entered into long-term time charter contracts (three in the
first quarter of 2006) for eight product carriers, five of which
have profit sharing, which will increase fixed rate revenue by
approximately $155 million (not including profit sharing) over the
next three years. -- In February 2006, the board of directors (the
"Board") increased the quarterly dividend by 25% from $0.08 per
share to $0.10 per share. -- During the fourth quarter, 7,291,100
shares of stock were purchased and retired at an average price of
$17.96 per share or $130.9 million in aggregate, and the board
authorization from 2005 has been substantially fulfilled. -- In
February 2006, the Board authorized another $70 million for the
repurchase of its common stock. OMI Corporation (NYSE: OMM), a
major international tanker owner and operator today reported Net
Income of $112,641,000 or $1.53 basic (Weighted Average Shares
Outstanding of 73,531,000) and diluted EPS (which included Net Gain
on the Disposal of Vessels of $55,091,000 and the Gain on
Extinguishment of Notes of $1,861,000, aggregating $56,952,000 or
$0.77 basic and diluted EPS) for the quarter ended December 31,
2005 compared to Net Income of $108,510,000 or $1.21 basic and
diluted EPS for the quarter ended December 31, 2004, (which
included Net Gain on Disposal of Vessels of $2,426,000 or $0.03
basic and diluted EPS). For the year ended December 31, 2005, Net
Income was $275,169,000 or $3.39 basic (Weighted Average Shares
Outstanding of 81,112,000) and diluted EPS (which included Gain on
the Disposal of Vessels of $57,965,000 and the Gain on
Extinguishment of Notes of $4,672,000, aggregating $62,637,000 or
$0.77 basic and diluted EPS) for the year ended December 31, 2005,
compared to Net Income of $245,695,000 or $2.87 basic and $2.86
diluted EPS for the year ended December 31, 2004, (which included
Net Gain on Disposal of Vessels of $1,726,000 offset by a Loss on
Investment of $3,098,000, aggregating a $1,372,000 loss or $0.02
basic and diluted EPS). Revenue of $189,247,000 for the fourth
quarter ended December 31, 2005 decreased $18,651,000 or 9%
compared to revenue of $207,898,000 for the fourth quarter ended
December 31, 2004. Revenue of $652,367,000 for the year ended
December 31, 2005 increased $87,693,000 or 16% compared to revenue
of $564,674,000 for the year ended December 31, 2004. Decreases in
revenue for the fourth quarter of 2005 compared to the fourth
quarter of 2004 were primary the result of higher rates for Suezmax
vessels in the fourth quarter of 2004, coupled with reduced revenue
for the two Suezmax vessels sold in the fourth quarter of 2005.
Revenue increased during the year ended 2005 over the year ended
2004 primarily because of the increase in the number of vessels
operated in 2005, which increased the number of revenue days (see
Time Charter Equivalent ("TCE") Revenue section). Craig H.
Stevenson, Jr., Chairman and Chief Executive Officer commented that
"we are pleased to report our third consecutive year of record
earnings. While tanker rates declined during 2005 from the
exceptional levels of 2004, they remained very strong and have
continued that strength into 2006. We have utilized the strength of
those markets to further secure profitability by time chartering
additional vessels for two and three year periods." RECENT
ACTIVITIES AND FOURTH QUARTER HIGHLIGHTS Disposition of Vessels: --
In November 2005, we sold two 1998-built Suezmaxes, the PECOS and
the SABINE, for a gain aggregating $55.1 million which was recorded
in the fourth quarter of 2005. The SABINE was later renamed the
NORDIC SATURN by its new owner and entered into OMI's Gemini pool
for Suezmax vessels. Vessel Spot Performance: -0- *T Daily TCE Rate
Daily TCE Rate
------------------------------------------------------- For the
Quarters For the Years Ended Ended December 31, Percent December
31, Percent Vessels on Spot 2005 2004 Change 2005 2004 Change
----------------------------------------------------------------------
Suezmax Vessels $56,555 $ 90,062 -37% $ 48,060 $63,703 -25%
----------------------------------------------------------------------
Product Carriers $29,233 $ 31,330 -7% $ 26,974 $31,330 -14%
----------------------------------------------------------------------
*T -- In the fourth quarter of 2005, the TCE average rate for OMI's
Suezmax fleet of $56,555 per day was approximately 80% higher than
the third quarter average rate of $31,419 per day and 37% less than
the fourth quarter of 2004 average rate of $90,062 per day (see
Market Overview section). -- In the fourth quarter of 2005, the TCE
average rate for OMI's product carrier fleet of $29,233 per day was
approximately 26% higher than the third quarter average rate of
$23,241 per day and 7% less than the fourth quarter of 2004 average
rate of $31,330 per day. We had five product carriers operating in
the spot market at the end of the fourth quarter of 2005 (eight
during the quarter) compared to the fourth quarter of 2004 when six
product carriers began operating in the spot market. Recent
Contracts for Long-Term Time Charters: -- In February 2006, OMI
entered into three year time charters for two handysize product
carriers, the KANSAS and the REPUBLICAN, scheduled to be delivered
in 2006. The time charters are expected to begin in the second
quarter. The vessels are both chartered at a fixed rate plus a 50%
profit sharing arrangement above the fixed rate, and will add
approximately $43.3 million (not including profit sharing) to the
Company's contracted time charter revenue over the three years. --
In January 2006, OMI entered into a three-year time charter for a
handymax product carrier, the PLATTE, currently under construction
and scheduled to be delivered in the second quarter of 2006. The
vessel will be chartered at a fixed rate, and will add
approximately $23.6 million to the Company's contracted time
charter revenue over the three-year period following delivery of
the vessel. -- In December 2005, OMI entered into time charters for
three handymax product carriers, each for a two-year period. The
first time charter, on the LAUREN, began at the end of December and
the other two, the JEANETTE and the WABASH (a newbuilding delivered
on January 18, 2006), will begin by March 2006. The vessels are all
chartered at a fixed rate plus a 50% profit sharing arrangement
above the fixed rate, and will add approximately $41.8 million (not
including profit sharing) to the Company's contracted time charter
revenue over the two-year terms. -- In November 2005, OMI entered
into time charters for two handymax product carriers, the HORIZON
and the BRAZOS, each for a three-year period, both of which started
in December. The vessels are both chartered at a fixed rate, and
will add approximately $46.5 million to the Company's contracted
time charter revenue over the three-year terms. Financial: (Note:
For more detailed information refer to the Liquidity and Capital
Expenditures section) -- During the fourth quarter of 2005, we
repurchased an aggregate of $41,494,000 of the 2.875% Convertible
Notes for a net gain on the extinguishment of notes of
approximately $1,861,000. -- On November 17, 2005, the Board of OMI
declared a dividend on its common stock of $0.08 per share and
$5,704,000 was paid on January 11, 2006 to holders of record on
December 30, 2005. On October 12, 2005 the third quarter dividend
in the amount of $6,394,000 was paid. -- On February 16, 2006, the
Board approved an increase in our quarterly dividend from $0.08 per
share to $0.10 per share and declared the $0.10 per share dividend
to shareholders of record on March 22, 2006, which will be paid on
April 12, 2006. -- The following table summarizes share buybacks by
quarter in 2005: -0- *T Number of Purchase Average Price Quarter
Shares Price Per Share
--------------------------------------------------------------
First 311,600 $ 5,653,304 $ 18.14 Second 3,200,900 59,557,933 18.61
Third 4,231,400 73,800,144 17.44 Fourth 7,291,100 130,921,502 17.96
-------------------------------------- 15,035,000 $269,932,883 $
17.95 ====================================== The Company has
substantially completed the previous $70.0 million authority
announced October 31, 2005. In February 2006, the Board authorized
another $70 million for the repurchase of its common stock. OMI
currently has 71,293,791 shares outstanding. *T MARKET OVERVIEW
Suezmax Tanker Overview The tanker market was strong in the fourth
quarter of 2005, and the average spot TCE for Suezmax tankers in
the West Africa to U.S. trade was more than double the preceding
quarterly rate but below the very high rate prevailing in the same
period of last year. In addition, the average Suezmax TCE rate in
2005 was the second highest for this period since at least 1990.
This was the result of continued, although at a slower rate, world
oil demand growth, colder than normal weather in the Northern
Hemisphere and high OPEC oil production, notwithstanding an
increase in the world tanker fleet. Freight rates in the crude oil
tanker market continue at high levels thus far in the first quarter
of 2006. The average OPEC oil production in the fourth quarter of
2005 totaled about 29.8 million barrels per day ("b/d"), about the
same compared to the same period last year. OPEC oil production,
including Iraq, in the first quarter of 2006 is expected to average
29.7 million b/d, about 0.1 million b/d below the preceding quarter
and about 0.3 million b/d higher than the same period a year ago.
World oil demand in the fourth quarter of 2005 was 1.2 million b/d
higher than the preceding quarter, and 0.3 million b/d higher
compared to the same period of last year. World oil demand is
expected to increase further in the foreseeable future due to the
usual seasonal oil demand gains in the winter months and further
improvement of world economic activity. World oil demand in 2005
increased at a slower rate than last year as a result of persistent
high oil prices due to low spare oil production capacity, ongoing
geopolitical risks and hurricane related oil production and
refinery problems in the Gulf of Mexico. Recently, hurricane
activity resulted in shutdowns of most of the U.S. crude oil
production and refinery capacity in the Gulf of Mexico. It is
estimated that about 0.4 million b/d of crude oil production and
about 0.8 million b/d of refinery capacity was out of service at
year-end 2005 and that about 0.3 million b/d of crude oil
production and 0.4 million b/d of refinery capacity will still be
out of service at the end of the first quarter of 2006. The
refinery capacity is expected to be fully restored by the end of
the second quarter 2006, though crude oil production would be fully
restored during the second half of 2006. Total preliminary
commercial crude oil and petroleum products inventories in the
United States, Western Europe and Japan at the end of January 2006
were about 56 million barrels, or 2.6% higher than the year earlier
level, and 3.2% above the average of the last five years. At the
same time, crude oil inventories were 4.1% and petroleum products
inventories were 2.7% higher than the average of the last five
years, respectively. Oil inventories in terms of days forward
consumption throughout 2006 are expected to be higher than the 2005
level, as well as the average of the last five years. The world
tanker fleet totaled 327.0 million dwt at the end of 2005, up by
22.8 million dwt or 7.5% from the year-end 2004 level. The total
tanker fleet includes 42.7 million dwt Suezmaxes, excluding shuttle
and U.S. flag Suezmaxes, up by 7.6% from the year-end 2004 level.
The tanker orderbook totaled about 85.0 million dwt, or 26.0% of
the existing fleet at the end of 2005. Approximately 23.2 million
dwt are for delivery in 2006, 28.7 million dwt in 2007, 23.5
million dwt in 2008 and most of the balance in 2009. The tanker
orderbook includes 65 Suezmaxes of about 10.2 million dwt or 23.9%
of the existing internationally trading Suezmax tanker fleet.
Twenty-one Suezmaxes are for delivery in 2006, 26 in 2007, 15 in
2008 and the balance in 2009. The Suezmax orderbook for delivery in
the next few years represents vessels to replace old tonnage
affected by IMO regulations as well as to satisfy an expected
increase in demand. It should be noted that more trades suitable
for Suezmaxes are developing and that Suezmax tankers are flexible
vessels since they are traded effectively in medium and long haul
trades. At the end of 2005, approximately 29.8 million dwt or 9.1%
of the total tanker fleet was 20 or more years old, including 9.4
million dwt or 2.9% of the fleet that was 25 or more years old.
Furthermore, nine Suezmaxes were 20 or more years old, including
two which were 25 or more years old. Tanker sales for scrap and for
Floating Production Storage Offloading ("FPSO") conversion totaled
about 6.7 million dwt in 2005, including six Suezmaxes and six Very
Large Crude Carriers ("VLCC"). The EU adopted tanker regulations
which commenced on October 21, 2003. In response to the EU
regulations, the IMO 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 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. However, it allows flag
states to permit single-hull tankers with segregated ballast (SBT)
and smaller tankers to operate beyond 2010, but the tanker must not
be in operation beyond the date of delivery in 2015 or the date in
which the tanker becomes 25 years old, whichever is earlier,
subject to satisfactory results from CAS. 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 old after the date of delivery. At
the end of 2005, there were about 97.1 million dwt of tankers or
29.7% 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 throughout 2005
and, in the fourth quarter, the average spot TCE for handysize
product tankers in the Caribbean was higher than the preceding
quarter rate but below the very high rate prevailing in the same
period of last year. In addition, the average rate in 2005 was the
second highest level since at least 1990. The product tanker market
strength was the result of continuous growth in the demand for oil,
shortage of refinery capacity in consuming areas and the
substantial loss of U.S. refinery capacity in the Gulf of Mexico
due to hurricane activity recently, notwithstanding an increase of
the world product tanker fleet. Freight rates in the product tanker
market continued strong thus far in the first quarter of 2006. The
world product tanker fleet, (which ranges from small 10,000 dwt
product carriers to larger than 100,000 dwt for coated Aframax
tankers) totaled about 75.0 million dwt at the end of 2005, up by
about 12.3% from the year-end 2004 level. The total product tanker
fleet includes about 42.1 million dwt handysize and handymax
product tankers, up by 9.0% from year-end 2004 level. The product
tanker orderbook for delivery over the next few years totaled about
28.5 million dwt, or about 38.0% of the existing product tanker
fleet at the end of 2005. Approximately 10.1 million dwt are for
delivery in 2006, 10.3 million dwt in 2007, 7.3 million dwt in 2008
and the balance in 2009. At the end of 2005, approximately 12.7
million dwt or 17.0% of the existing fleet were 20 or more years
old. The orderbook for handysize and handymax product tankers at
the end of 2005 totaled about 12.7 million dwt or 30.2% of the
existing handysize and handymax product tanker fleet. Approximately
4.2 million dwt are for delivery in 2006, 4.9 million dwt in 2007,
3.1 million dwt in 2008 and the balance in 2009. Total preliminary
commercial inventories of oil products in the United States,
Western Europe and Japan at the end of January 2006 were 25 million
barrels or 1.8% higher than the same time a year ago, and 2.7%
above the average of the last five years. At the same time,
inventories of middle distillates, the seasonal product, in these
areas were 3.7% higher than last year and 5.0% above the last five
years average. Commercial middle distillates in the United States
at the end of January 2006 were approximately 11.8% higher than the
same time a year ago, and 9.2% above the average of the last five
years. The tanker market is expected to benefit in the foreseeable
future as a result of improving world economic activity, seasonally
higher world oil demand in the winter months, shortage of refinery
capacity in the United States, Western Europe and Asia, the loss of
U.S. oil production and refinery capacity due to hurricane activity
in the Gulf of Mexico recently, and possible disruptions due to
political instability in short-haul oil producers Venezuela and
Nigeria. FLEET REPORT Our fleet is concentrated 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.
At December 31, 2005, our fleet comprised 45 vessels. Four of the
Suezmax tankers are chartered-in: the OLIVER JACOB, whose charter
expires June 2010; the MAX JACOB, whose charter expires December
2006; the CAPE BASTIA, whose charter expires June 2012; and the
CAPE BONNY, whose charter expires September 2012 (See Exhibit 2 for
OMI's Fleet by vessel). The following table of OMI's fleet includes
wholly owned and chartered-in vessels as of December 31, 2005 as
well as revenue days for those vessels for the quarter ended
December 31, 2005 (Note: Revenue days exclude the days our owned
vessels are in drydock and the days our chartered-in vessels are
off-hire): -0- *T Number of Number of Number of Number of Number of
Vessels Revenue Vessels Revenue Total Number Revenue Owned Days
Chartered-In Days of Vessels Days
-------------------------------------------------------------
Suezmaxes - Spot (a) 9 859 4 362 13 1,221 Suezmaxes - TC 2 195 n/a
n/a 2 195 Product Carriers - Spot (b) 5 731 n/a n/a 5 731 Product
Carriers - TC (b) 25 2,005 n/a n/a 25 2,005
------------------------------------------------------------- (a)
Excludes five pool participant vessels that operate in the Gemini
Suezmax Pool. (b) In December 2005, three vessels on spot commenced
time charters. *T FINANCIAL INFORMATION The following table
summarizes OMI Corporation's results of operations for the quarter
and year ended December 31, 2005 compared to the quarter and year
ended December 31, 2004. -0- *T RESULTS OF OPERATIONS
--------------------- (In Thousands, Except Per Share Data) For the
Quarters Ended For the Years Ended December 31, December 31, 2005
2004 2005 2004 ---------- ------------ --------- --------- Voyage
and Time Charter Revenue $ 188,754 $ 207,584 $650,848 $563,749
Voyage Expense 40,480 26,617 136,743 80,183 ---------- ------------
--------- --------- Time Charter Equivalent Revenue 148,274 180,967
514,105 483,566 Other Revenue 493 314 1,519 925 Vessel Expenses and
Charter Hire Expense 53,983 38,734 161,897 122,797 Depreciation and
Amortization 17,177 16,459 68,399 56,172 General and Administrative
Expenses 10,563 10,059 31,683 24,867 Gain on Disposal of Vessels -
Net (1) (55,091) (2,426) (57,965) (1,726) ---------- ------------
--------- --------- Operating income 122,135 118,455 311,610
282,381 ---------- ------------ --------- --------- Loss on
Investment (2) - - - (3,098) Gain on Extinguishment of Notes 1,861
- 4,672 - Interest Expense (11,853) (10,206) (43,739) (34,460)
Interest Income 440 261 1,225 872 Other Income (3) 58 - 1,401 -
---------- ------------ --------- --------- Net Income $ 112,641 $
108,510 $275,169 $245,695 ========== ============ =========
========= Basic Earnings Per Share $ 1.53 $ 1.21 $ 3.39 $ 2.87
Diluted Earnings Per Share $ 1.53 $ 1.21 $ 3.39 $ 2.86 Weighted
Average Shares Outstanding - Basic 73,531 89,684 81,112 85,712
Weighted Average Shares Outstanding - Diluted 73,588 89,815 81,177
85,839 (1) The Gain on Disposal of Vessels-Net of $55,091,000 for
the fourth quarter of 2005 resulted from the disposal of two
Suezmax vessels built in 1998. The Gain on Disposal of Vessels-Net
for the year ended December 31, 2005 of $57,965,000 resulted from
the disposal of four vessels, two in the fourth quarter and two
non-double-hull handysize crude oil tankers in the first quarter.
The Gain on Disposal of Vessels-Net of $2,426,000 for the fourth
quarter of 2004 resulted primarily from the disposal of two single
hull vessels, our Ultra Large Crude Carrier ("ULCC") vessel and a
product carrier. The Gain on Disposal of Vessels-Net for the year
ended December 31, 2004 of $1,726,000 resulted from the two vessels
disposed of in the fourth quarter, in addition to the disposal of
three single hull Panamax vessels and the disposal of another
single-hull product carrier. (2) The 2004 Loss on Investment of
$3,098,000 resulted from expenses related to the terminated Stelmar
transaction. (3) Other Income includes realized and unrealized
gains on freight forward agreements aggregating $58,000 and
$1,401,000 for the quarter and year ended December 31, 2005,
respectively. *T Time Charter Equivalent Revenue OMI operates
vessels on both voyage (or "spot") charters and on time charters
("TC"). In both 2005 and 2004, the majority of our tonnage
(primarily our Suezmax vessels) operated in the spot market, giving
us the ability to benefit from the strong spot market. As of
December 31, 2005, 62% of our vessels by dwt (18 vessels) operated
in the spot market and 27 of our 45 vessels operated under time
charters (see Fleet Report). Eleven vessels were under profit
sharing arrangements (see Contracted Time Charter Revenue section).
Assuming no new charters or charter extensions by the end of 2006,
we will have approximately 63% of our dwt (21 vessels) operating in
the spot market and 29 of our 50 vessels will be operating under
time charters (13 with profit sharing), without considering
renewals for three time charters expiring during the year, two of
which will have profit sharing. Our time charters with profit
sharing arrangements have a floor rate. If earnings exceed that
rate, we share in the profit above that rate equally. This enables
us to benefit from strong tanker markets while protecting our
downside. Revenue generated by time charters gives the Company the
ability to cover certain fixed charges (vessel expenses for vessels
on time charter, consolidated general and administrative expenses
and interest expense). TCE revenue comprises revenue from vessels
operating on time charters and voyage revenue less voyage expenses
from vessels operating in the spot market. TCE revenue is used to
measure and analyze fluctuations between financial periods and as a
method of equating TCE revenue generated from a voyage charter to
time charter revenue. TCE revenue is earned by vessels under
contract for a specific period of time with duration usually
greater than one year. 2005 Quarter vs. 2004 Quarter The Company
earned TCE revenue of $148,274,000 for the quarter ended December
31, 2005 and $180,967,000 for the quarter ended December 31, 2004,
a decrease of $32,693,000 or 18%. During the quarter ended December
31, 2005, 74% or $110,399,000 of our TCE revenue was earned by
vessels operating in the spot market and 26% or $37,875,000 of our
TCE revenue was earned by vessels operating on TC. The following
table illustrates the TCE revenue fluctuation for the quarter ended
December 31, 2005 compared to the quarter ended December 31, 2004:
-0- *T TCE Revenue Increase For the Quarters Increase (Decrease)
Ended December 31, Increase (Decrease) Operating 2005 2004
(Decrease) TCE Rate Days
------------------------------------------------- (In Thousands)
Vessels on Time Charters: ----------------------- Product Carrier
Fleet $ 32,077 $ 27,622 $ 4,455 -9% 118 Crude Oil Fleet 5,798 2,981
2,817 n/a (a) 11 --------------------------- ---------- Total $
37,875 $ 30,603 $ 7,272 129 =========================== ==========
Vessels on Spot: ----------------------- Crude Oil Fleet $ 89,056
$142,412 $(53,356) -37%(b) (13) Product Carrier Fleet 21,343 7,952
13,391 -7% 448 --------------------------- ---------- Total
$110,399 $150,364 $(39,965) 435 ===========================
========== Total $148,274 $180,967 $(32,693) 564
=========================== ========== (a) TCE rates for Suezmax
vessels on time charter was $29,795 per day for 195 days in 2005
compared to the handysize crude oil carrier rate of $16,200 per day
for 184 days in 2004. (b) Suezmax rate fluctuation only. The
average TCE rate for ULCC sold in the 2004 quarter was $45,538 per
day for 25 days. *T TCE revenue of $110,399,000 earned by vessels
operating in the spot market during the fourth quarter of 2005
decreased a net of $39,965,000 compared to TCE revenue of
$150,364,000 earned by vessels operating in the spot market during
the fourth quarter of 2004. The net decrease in TCE revenue
resulted primarily from the crude oil fleet, which decreased
$53,356,000 primarily because of lower rates for Suezmax vessels
operating in the spot market (see Market Overview section for
explanations for the rate fluctuations during the 2005 and 2004
periods) and a decrease in TCE revenue for vessels sold in 2004
(three Panamax vessels and one ULCC). Decreases in the crude oil
fleet were offset by an increase of $13,391,000 earned by the
product carrier fleet charters, which resulted from 448 more
operating days in the 2005 period, 77% of which was from seven
vessels acquired in 2004 and 2005, and the balance due to vessels
with expiring time charters that began operating in the spot
market. TCE revenue of $37,875,000 earned by vessels on time
charter during the fourth quarter of 2005 increased $7,272,000
compared to TCE revenue of $30,603,000 earned by vessels on time
charter during the fourth quarter of 2004. Increases in the product
carrier fleet of $4,455,000 were primarily from revenue earned by
three vessels acquired (two vessels delivered in 2005 and one in
2004) increasing operating days, in addition to new or renewed time
charter contracts at higher rates. Increases in the crude oil fleet
were $2,817,000 primarily from revenue earned by two Suezmax
vessels that began time charters in May 2005. 2005 Year vs. 2004
Year The Company earned TCE revenue of $514,105,000 for the year
ended December 31, 2005 and $483,566,000 for the year ended
December 31, 2004. During the year ended December 31, 2005, 73
percent or $376,545,000 of our TCE revenue was earned by vessels
operating in the spot market and 27 percent or $137,560,000 of our
TCE revenue was earned by vessels operating on TC. TCE revenue
increased $30,539,000 or 6% for the year ended December 31, 2005
compared to the year ended December 31, 2004. The following table
illustrates the TCE revenue fluctuation for the year ended December
31, 2005 compared to the year ended December 31, 2004: -0- *T TCE
Revenue Increase For the Years Increase (Decrease) Ended December
31, Increase (Decrease) Operating 2005 2004 (Decrease) TCE Rate
Days ------------------------------------------------- (In
Thousands) Vessels on Time Charters: -----------------------
Product Carrier Fleet $122,959 $118,646 $ 4,313 -8% (128) Crude Oil
Fleet 14,601 11,924 2,677 n/a (a) (215) -------- -------- ---------
--------- Total $137,560 $130,570 $ 6,990 (343) ======== ========
========= ========= Vessels on Spot: ----------------------- Crude
Oil Fleet $291,854 $340,433 $(48,579) -27% (b) 281 Product Carrier
Fleet 84,691 12,563 72,128 -14% 2,924 -------- -------- ---------
--------- Total $376,545 $352,996 $ 23,549 3,205 ======== ========
========= ========= Total $514,105 $483,566 $ 30,539 2,862 ========
======== ========= ========= (a) TCE rates for Suezmax vessels on
time charter was $29,721 per day for 460 days in 2005 compared to
the handysize crude oil carrier rate of $16,290 per day for 675
days in 2004. (b) Suezmax rate fluctuation only. The average TCE
rate for other crude oil vessels sold in the 2004 was $27,128 per
day for 782 days. *T TCE revenue of $376,545,000 earned by vessels
operating in the spot market during the year ended December 31,
2005 increased $23,549,000 compared to TCE revenue of $352,996,000
earned by vessels operating in the spot market during the year
ended December 31, 2004. The increase in TCE revenue resulted from
an additional $72,128,000 earned by the product carrier fleet
offset by a decrease of $48,579,000 earned by the crude oil fleet.
Increases in TCE revenue of $72,128,000 earned by the vessels in
the product carrier fleet operating on spot charters was primarily
the result of more operating days in 2005, 72% of which was from
seven vessels acquired in 2004 and 2005; the balance was primarily
due to vessels with expiring time charters that began operating in
the spot market. Decreases in TCE Revenue earned by vessels in the
crude oil fleet operating on spot charters resulted primarily from
decrease in the Suezmax fleet TCE revenue from lower average TCE
rates during the year ended December 31, 2005, which averaged
approximately 17% less per day, in addition to the decrease in spot
revenue from two vessels that began time charters in the second
quarter of 2005 and decrease in TCE revenue for four vessels sold
in 2004 (three Panamax vessels and one ULCC). TCE revenue of
$137,560,000 earned by vessels on time charter during the year
ended 2005 increased $6,990,000 compared to TCE revenue of
$130,570,000 earned by vessels on time charter during the year
ended 2004. Increases in the product carrier fleet were $4,313,000
primarily the result of revenue earned by five vessels acquired
(three vessels delivered in 2005 and two in 2004) increasing
operating days, in addition to new or renewed time charter
contracts at higher rates and higher profit sharing during 2005.
Increases in the crude oil fleet were $2,677,000 earned by two
Suezmax vessels that began time charters in May 2005 offset by
decreases in TCE revenue for the two crude oil carriers sold in
January 2005. Note: For detailed information of fluctuations by
vessel type, see Breakdown by Fleet sections. Operating Expenses
Vessel expenses and charter hire expense increased $15,249,000 for
the quarter and $39,100,000 for the year ended December 31, 2005
compared to the quarter and year ended December 31, 2004. Vessel
expenses increased $4,857,000 and $26,315,000 for the quarter and
year ended December 31, 2005, respectively, compared to the same
2004 periods, for vessels acquired (five vessels during 2005 and 12
vessels during 2004), increases in crew expense and supplies for
the fleet. Charter hire expense increased $10,392,000 and
$12,785,000 for the quarter and year ended December 31, 2005,
respectively, compared to the same periods in 2004, primarily as a
result of two additional vessels chartered-in during June and
September 2005 for a seven year period. Increases in charter hire
expense for the Gemini Pool resulted from three vessels that were
added to the pool in July, November and December 2005 (see Note
below for discussion of Gemini Pool), which were offset by
decreases in charter hire expense resulting from lower rates earned
during the quarter and year ended 2005 compared to the same periods
in 2004. Increases in depreciation expense of $718,000 and
$12,227,000 for the quarter and year ended December 31, 2005,
respectively, compared to the same periods in 2004 resulted from
the acquisition of 17 vessels in 2004 and 2005, which were offset
in part by reductions to depreciation expense relating to the six
vessels disposed of in 2004, two in January 2005 and two in
November 2005. General and administrative expenses increased
$504,000 and $6,816,000 for the quarter and year ended December 31,
2005, respectively, compared to the same periods in 2004 primarily
as a result of increased compensation and employee benefits
expense, including non-cash expense from amortization of restricted
stock awards, increases in personnel due to a larger fleet,
expenses for the London office and other additional corporate
requirements. Note: Gemini Tankers ("Gemini") is a wholly owned
subsidiary of OMI, which began operating in December 2003. Gemini
is a pool for double hull Suezmax vessels. As of December 31, 2005,
there were 17 Suezmax vessels (12 from OMI and five from other
participants) operating in the pool. The earnings of the pool are
allocated to the pool members using an agreed upon 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
$42,297,000 at December 31, 2005 increased $492,000 from
$41,805,000 at December 31, 2004. Net cash provided by operating
activities of $303,464,000 for the year ended December 31, 2005
increased $30,243,000 compared to $273,221,000 for the year ended
December 31, 2004. During the year ended December 31, 2005, we made
cash payments for capital expenditures (including final payments
for five vessel acquisitions, capital improvements and construction
contracts) aggregating $148,597,000, and we received proceeds from
the sale of four vessels of $176,351,000. We funded all our capital
expenditures with operating cash flow and bank financing. For the
year ended December 31, 2005, we repurchased 15,035,000 shares of
OMI common stock for an aggregate of $269,933,000. Although our
average debt outstanding in 2005 increased 29% over 2004, we
reduced debt by a net of $44,569,000 as of December 31, 2005
compared to December 31, 2004. The reduction of debt includes the
repurchase of our 2.875% Convertible Notes with a face value of
$105,244,000 at a cost of $97,330,000. Our debt to total
capitalization (debt and stockholders' equity) at December 31, 2005
was 54 percent and net debt (total debt less cash and cash
equivalents) to total net capitalization (total capitalization less
cash and cash equivalents) was 53 percent. In January 2006, we drew
down $20,000,000 under one of our lines of credit, which was used
for the final payment on the WABASH. As of February 17, 2006, we
have approximately $493,805,000 in available liquidity (including
cash and undrawn lines of credit). We expect to use cash from
operations or undrawn balances available to us through our
revolving credit facilities, and to have no committed bank debt to
finance capital expenditures, repurchase common stock under future
authorized programs and repay debt at opportunistic times. See the
below section, Capital Expenditures for Vessels under Construction
and Drydock, for additional cash flow requirements in 2006 relating
to capital expenditures for vessels to be delivered in 2006 and
expected cash estimated to be used for drydocking. Capital
Expenditures for Vessels under Construction Contracts and Drydock
Vessels under Construction Contracts At December 31, 2005, we had
commitments to take delivery of five product carriers, four
handymax and one handysize, which are scheduled to be delivered in
2006 (one was delivered January 18, 2006, two more are expected to
be delivered in the first quarter and two in the second quarter).
The contract costs for the five vessels aggregated $183,320,000. As
of December 31, 2005, payments of $78,904,000 had been made on
these contracts, $23,807,000 of which was paid during the year
ended December 31, 2005. As of December 31, 2005, future
construction installment and delivery payments (before financing,
if any) are as follows: -0- *T 2006 Payments
----------------------------------------- First Quarter (a) $
67,064 Second Quarter 37,352 ------------ Total Remaining Payments
$ 104,416 ============ (a) On January 18, 2006, the WABASH was
delivered and $20,024,000 was paid upon delivery. Note: See the
Fleet Report section for additional information about the vessels
to be acquired. *T 2006 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 of a drydock during the year. Currently, we anticipate
the drydock of up to ten vessels, (six of which may begin in the
first half of 2006) for an estimated aggregate cost of $5,200,000.
The vessels are expected to incur up to an aggregate of
approximately 216 off-hire days. The following is a breakdown of
the estimated drydocks during the first and second half of 2006 and
the estimated drydock cost (in thousands) with the allocation of
off-hire days by vessel segment and charter type (spot or TC) for
product carriers: -0- *T Number of Number of Days Off- Days Off-
Hire for Hire for Projected Drydock Drydock Total Projected First
Half Projected Second Half Projected Off-Hire Total of 2006 Costs
of 2006 Costs Days Costs
------------------------------------------------------------ Crude
Fleet: Suezmax - Spot 20 $ 350 20 $ 350 40 $ 700 Suezmax - TC 20
350 - - 20 350 - - Clean Fleet: - - Products - TC 88 2,000 44 1,250
132 3,250 Products - Spot - - 24 900 24 900
------------------------------------------------------------ Total
128 $ 2,700 88 $ 2,500 216 $ 5,200
============================================================ *T
Contracted Time Charter Revenue The contracted TC revenue schedule
below does not include any estimates for profit sharing in the
future periods; however, profit sharing for five vessels of
approximately $14.9 million earned during the year ended December
31, 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 year ended December 31,
2005 and current contracted time charter revenue through 2012,
including eight recent contacts for long-term time charters
explained in the Recent Activities and Highlights section of this
press release: -0- *T Actual 2005 2006 2007 2008 2009 2010-2012
---- ---- ---- ---- ---- --------- (In Millions) TC Revenue $139.8
$197.6 $183.9 $134.6 $68.9 $62.8 Number of Vessels (a) 27 29 26 16
10(b) - Vessels with Profit Sharing (a) 11 13 11 9 4 - (a) Number
of vessels at the end of each year assuming no additional
extensions or new charters. (b) The remaining ten charters expire
as follows: eight charters will expire in 2010 and two will expire
in 2012. *T We recognize profit sharing, if any, for each vessel
with a profit sharing provision in the time charter contract when
the minimum threshold is met, which is the minimum charter hire
revenue. Historically, we have recognized profit sharing on or
about the anniversary of each time charter contract. The table
below reflects the number of vessels we expect to record profit
sharing for, by quarter: -0- *T Actual 2005 2006 2007 2008 2009
2010 ---- ---- ---- ---- ---- ---- First Quarter 1 1 3 3 1 0 Second
Quarter 1 5 7 6 6 3 Third Quarter 3 4 2 2 2 1 Fourth Quarter - 1 1
0 0 0 ------------------------------------------------- 5 11 13 11
9 4 ================================================= *T ABOUT OMI
OMI is a leading seaborne transporter of crude oil and refined
petroleum products operating in the international shipping markets.
We believe our modern fleet of 46 vessels (including the WABASH
delivered in January 2006) and approximately 3.7 million dwt is the
youngest large fleet of tankers in the world, with an average age
at year end 2005 of approximately 2.9 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 under the symbol "OMM." Note (1): All averages
referring to vessel age in this release are weighted averages based
on dwt and are calculated as of December 31, 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. EARNINGS CONFERENCE CALL OMI Corporation will
hold an earnings conference call presentation on Tuesday, February
21, 2006 at 10:30AM (Eastern Time). The presentation will be
simultaneously 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 1:30PM on February 21, 2006
at (888) 203-1112 for North America and (719) 457-0820 for
International callers (Pass Code 3898494). OTHER FINANCIAL
INFORMATION CONDENSED BALANCE SHEETS The following are OMI's
Condensed Balance Sheets as of December 31, 2005 and December 31,
2004: -0- *T CONDENSED BALANCE SHEETS -----------------------
December 31, December 31, (In Thousands) 2005 2004 ------------
------------ Cash and Cash Equivalents $ 42,297 $ 41,805 Other
Current Assets 85,539 87,009 Vessels and Other Property - Net
1,488,230 1,487,598 Construction in Progress (Newbuildings) 84,042
116,895 Other Assets 27,935 37,699 ------------ ------------ Total
Assets $ 1,728,043 $ 1,771,006 ============ ============ Current
Portion of Long-Term Debt (1) $ 34,491 $ 33,200 Other Current
Liabilities 73,669 56,787 Long-Term Debt (1) 861,376 907,236 Other
Liabilities 3,571 6,381 Total Stockholders' Equity 754,936 767,402
------------ ------------ Total Liabilities and Stockholders'
Equity $ 1,728,043 $ 1,771,006 ============ ============ (1) As of
December 31, 2005, the available undrawn balance under credit
facilities was $449,200,000. *T CONDENSED CASH FLOWS The following
are OMI's Condensed Cash Flows for the years ended December 31,
2005 and 2004: -0- *T CONDENSED CASH FLOWS -------------------- For
the Years Ended (In Thousands) December 31, 2005 2004 Change
---------- ---------- ---------- Provided (Used) by: Operating
Activities $ 303,464 $ 273,221 $ 30,243 Investing Activities 30,802
(629,086) 659,888 Financing Activities (333,774) 348,882 (682,656)
---------- ---------- ---------- Net Increase (Decrease) in Cash
and Cash Equivalents 492 (6,983) 7,475 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
Year $ 42,297 $ 41,805 $ 492 ========== ========== ========== *T
RESULTS BY FLEET The following discussion of Vessel Operating
Income (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 decreased
$58,914,000 and $67,801,000 for the quarter and year ended December
31, 2005, respectively, compared to the same periods in 2004. The
net decrease in Vessel Operating Income during the 2005 periods
were primarily attributable to decreases in the Suezmax TCE revenue
resulting from lower average TCE rates earned by Suezmax vessels
operating in the spot market (see Market Summary), two vessels
previously operating in the spot market during 2004 began operating
on long-term time charters at lower TCE rates beginning in May
2005, in addition to, less earnings from four vessels disposed of
in 2004 and four vessels in 2005. The following table illustrates
the crude oil fleet Vessel Operating Income by vessel type (other
than vessels sold), Average Daily TCE, Number of TCE Revenue Days,
Average Daily Vessel Expense and Average Number of OMI Vessels
Operated by the crude oil fleet for the quarter and year ended
December 31, 2005 compared to the quarter and year ended December
31, 2004 (Note: Amounts for some vessels sold include the
settlement of certain revenues and expenses, including insurance
claims from prior years): -0- *T BREAKDOWN BY FLEET
------------------ (In Thousands, Except Daily TCE Rates &
Expenses, Number of Vessels and Number of Days) For the For the
Quarters Ended Years Ended December 31, December 31, CRUDE FLEET:
2005 2004 2005 2004 ------------ ----- ---- ---- ---- Suezmaxes -
On Spot and Time Charter: TCE Revenue (1), (2) Suezmaxes - On Spot
* $89,080 $140,758 $291,892 $319,247 Suezmaxes - On Time Charter
(3) 5,798 - 13,660 - -------- --------- -------- --------- Total
TCE Revenue 94,878 140,758 305,552 319,247 Vessel Expenses 7,610
6,140 32,544 18,454 Charter Hire Expense: Pool Charter Hire Expense
21,034 16,736 47,986 42,806 Charter Hire Expense (under Operating
Leases)* 9,314 4,248 24,795 16,690 Depreciation and Amortization
7,075 7,964 30,842 23,393 -------- --------- -------- ---------
Vessel Operating Income $49,845 $105,670 $169,385 $217,904 ========
========= ======== =========
----------------------------------------------------------------------
Suezmaxes - On Spot: Average Daily TCE * $56,555 $ 90,062 $ 48,060
$ 63,703 Number of OMI TCE Revenue Days * 1,221 1,379 5,095 4,324
Number of Pool Member TCE Revenue Days (1) 354 184 978 687
----------------------------------------------------------------------
Suezmaxes - On Time Charter: Average Daily TCE $29,795 n/a $ 29,721
n/a Number of OMI TCE Revenue Days 195 n/a 460 n/a
----------------------------------------------------------------------
Suezmaxes - On Spot and Time Charter: Average Daily Vessel
Expenses(4) $ 7,027 $ 5,134 $ 7,026 $ 5,092 Average Number of
Wholly Owned Vessels 11.8 15.0 14.7 11.9 Average Number of
Chartered-In Vessels 4.0 2.0 3.3 2.0
----------------------------------------------------------------------
Handysize Crude Oil Carriers Sold in 2005: (5) TCE Revenue (1) $ -
$ 2,981 $ 941 $ 11,924 Vessel Expenses (24) 702 201 2,542
Depreciation and Amortization - 714 - 2,857 -------- ---------
-------- --------- Vessel Operating (Loss) Income $ 24 $ 1,565 $
740 $ 6,525 ======== ========= ======== ========= Average Daily TCE
n/a $ 16,202 $ 16,505 $ 16,290 Number of TCE Revenue Days n/a 184
57 732 Average Number of Wholly Owned Vessels n/a 2.0 n/a 2.0
----------------------------------------------------------------------
Other Crude Carriers Sold in 2004: (6) TCE Revenue (1) $ - $ 1,655
$ - $ 21,187 Vessel Expenses 148 255 (133) 5,131 Depreciation and
Amortization - - - 2,426 -------- --------- -------- ---------
Vessel Operating (Loss) Income $ (148) $ 1,400 $ 133 $ 13,630
======== ========= ======== ========= Number of TCE Revenue Days
n/a 25 n/a 782
----------------------------------------------------------------------
Total Vessel Operating Income $49,721 $108,635 $170,258 $238,059
======== ========= ======== ========= 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. Average Daily Vessel Expenses are computed
using the number of days in the period which OMI owned the vessel.
* Includes four vessels chartered-in. Two vessels were chartered-in
beginning in September and June 2005 and two vessels continue
charters from 2004 (originating in 2001 and 2002). (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 included 12 of OMI's Suezmaxes as of December 31,
2005, there were 15 Suezmaxes included earlier in the year (see
Note (3) below) and five Suezmaxes owned by other pool members. (2)
In November 2005, two 1998 built Suezmax vessels were disposed of.
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 2005 began operating on two 7-year time charters with profit
sharing. During November 2005, one of the Suezmax vessels was sold
and a vessel previously operating in the Gemini Pool replaced that
vessel in its time charter contract. (4) Vessel Expenses are only
for the owned vessels (excludes chartered-in vessels). (5) In
January 2005, two handysize crude oil carriers were sold. (6)
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. *T Clean Fleet - Vessel Operating Income increased
$11,221,000 and $46,614,000 for the quarter and year ended December
31, 2005, respectively, over the comparable periods in 2004. The
increases in Vessel Operating Income in the 2005 periods were
primarily attributable to seven product carriers acquired in 2004
and five in 2005, in addition to increases in TCE rates for time
charters in 2005 for new or renewed contract rates and additional
profit sharing recorded at anniversary dates compared to prior year
2004 periods. The increase in Vessel Operating Income was 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), Average Daily TCE, Number of
TCE Revenue Days, Average Daily Vessel Expense and Average Number
of OMI Vessels operated by the product carrier fleet for the
quarter and year ended December 31, 2005 compared to the quarter
and year ended December 31, 2004 (Note: Amounts for certain vessels
sold include the settlement of certain revenues and expenses): -0-
*T BREAKDOWN BY FLEET ------------------ (In Thousands, Except
Daily TCE Rates & Expenses, Number of Vessels and Number of
Days) For the For the Quarters Ended Years Ended December 31,
December 31, PRODUCT CARRIER FLEET: 2005 2004 2005 2004 --------
--------- -------- --------- Products - On Time and Spot Charter:
TCE Revenue: (1) Products - On Time Charter (2) $32,077 $27,635
$122,959 $116,384 Products - On Spot (3) 21,369 6,642 84,589 6,642
-------- -------- --------- --------- Total TCE Revenue 53,446
34,277 207,548 123,026 Vessel Expenses 15,895 11,138 56,628 33,658
Depreciation and Amortization 9,950 7,588 37,024 25,501 --------
-------- --------- --------- Vessel Operating Income $27,601
$15,551 $113,896 $ 63,867 ======== ======== ========= =========
----------------------------------------------------------------------
Products - On Time Charter: Average Daily TCE $ 4 $14,645 $ 17,212
$ 16,004 Number of TCE revenue days 2,005 1,887 7,144 7,272
----------------------------------------------------------------------
Products - On Spot: Average Daily TCE $29,233 $31,330 $ 26,973 $
31,330 Number of TCE Revenue Days 731 212 3,136 212
----------------------------------------------------------------------
Products - On Time and Spot Charter: Average Daily Vessel Expense $
5,759 $ 5,296 $ 5,472 $ 4,503 Average Number of Wholly Owned
Vessels 30.0 23.2 28.4 20.7
----------------------------------------------------------------------
Products - Sold in 2004: TCE Revenue (1), (4) $ - $ 1,297 $ 103 $
8,183 Vessel Expenses 163 530 336 3,368 Depreciation and
Amortization - 101 - 1,633 -------- -------- --------- ---------
Vessel Operating Income $ (163) $ 666 $ (233) $ 3,182 ========
======== ========= ========= Number of TCE Revenue Days n/a 71 n/a
550
----------------------------------------------------------------------
Total Vessel Operating Income $27,438 $16,217 $113,663 $ 67,049
======== ======== ========= ========= 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. 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 year ended December 31, 2005, OMI
recognized profit sharing revenue of approximately $14,922,000,
compared to $10,447,000 for the year ended December 31, 2004. (3)
In January, March, May and July 2005, two handymax and three
handysize product carriers were acquired. In February, April, July,
October and December 2004, four handysize and three handymax
product carriers were acquired. (4) During August and December
2004, the two single hull vessels were sold, one vessel operated on
time charter and the other in the spot market. The 2005 balances
reflect the settlement of demurrage and other vessel expenses
relating to the vessels sold in 2004. *T EXHIBIT 1 RECONCILIATION
OF NET INCOME BEFORE SPECIAL ITEMS The following table is a
reconciliation of Net Income to Net Income without Special Items
for the quarter and year ended December 31, 2005 compared to the
quarter and year ended December 31, 2004: -0- *T For the For the
Quarters Ended Years Ended December 31, December 31, (In Thousands,
Except Per Share Data) 2005 2004 2005 2004 --------- ---------
--------- --------- Net Income $112,641 $108,510 $275,169 $245,695
Add (Subtract) Special Items: Gain on Disposal of Vessels (55,091)
(2,426) (57,965) (1,726) Loss on Investment - - - 3,098 Gain on
Extinguishment of Notes (1,861) - (4,672) - --------- ---------
--------- --------- Net Income without Special Items $ 55,689
$106,084 $212,532 $247,067 ========= ========= ========= =========
Basic EPS: ---------- Basic EPS $ 1.53 $ 1.21 $ 3.39 $ 2.87 Add
(Subtract) Special Items: Gain on Disposal of Vessels (0.75) (0.03)
(0.71) (0.02) Loss on Investment - - - 0.04 Gain on Extinguishment
of Notes (0.02) - (0.06) - --------- --------- --------- ---------
Basic EPS without Special Items $ 0.76 $ 1.18 $ 2.62 $ 2.89
========= ========= ========= ========= Diluted EPS without Special
Items $ 0.76 $ 1.18 $ 2.62 $ 2.88 ========= ========= =========
========= 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. *T
EXHIBIT 2 FLEET REPORT Our fleet currently comprises 46 vessels
(including the WABASH delivered in January 2006) aggregating
approximately 3.7 million dwt consisting of 15 Suezmaxes, 29
handysize and handymax product carriers and two Panamax product
carriers. The following is OMI's current fleet and time charter
positions: -0- *T Name of Vessel Charter Type of Vessel Year 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 May-12(P) 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) ----------
1,764,470 ---------- Chartered-In: (1) ------------------ CAPE
BONNY Suezmax 2005 159,062 SPOT CAPE BASTIA Suezmax 2005 159,156
SPOT OLIVER JACOB Suezmax 1999 157,327 SPOT MAX JACOB Suezmax 2000
157,327 SPOT ---------- 632,872 ---------- Total Crude Oil Fleet
2,397,342 ---------- 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 THAMES Handymax 2005 47,036
Oct-06 ROSETTA Handymax 2003 47,015 Mar-09 WABASH (2) Handymax 2006
46,893 Mar-08(P) BRAZOS Handymax 2005 46,889 Dec-08 LAUREN Handymax
2005 46,955 Dec-07(P) JEANETTE (3) Handymax 2004 46,955 Mar-08(P)
HORIZON Handymax 2004 46,955 Dec-08 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 May-10(P) TEVERE Handysize 2005 36,990
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 1,327,680
---------- Total Current Fleet 3,725,022 ---------- Note: Vessels
owned and chartered-in are all double-hull. (1) The average daily
charter hire expense for the four chartered-in Suezmaxes is
approximately $26,000. (2) During January 2006, the WABASH was
delivered from the shipyard and began operating on a short-term
time charter. The WABASH entered into a two-year time charter
arrangement with profit sharing that will begin by March 2006. (3)
During January 2006, the JEANETTE entered into a two-year time
charter arrangement with profit sharing that will begin by March
2006. (P) Time charters with profit sharing. *T The following four
product carriers are to be delivered in 2006, three of which will
begin a three-year time charter during the second quarter of 2006:
-0- *T VESSELS TO BE ACQUIRED: Type of Date To Be Charter Name of
Vessel Vessel Delivered Dwt Expiration
----------------------------------------------------------------------
Vessels under Construction: RHINE Handysize Feb-06 37,000 SPOT
KANSAS Handymax Mar-06 47,000 May-09(P) REPUBLICAN Handymax Apr-06
47,000 Jun-09(P) PLATTE Handymax May-06 47,000 May-09 ----------
Total Vessels under Construction 178,000 ---------- Total Fleet
with Vessels To Be Acquired 3,903,022 ========== Note: Vessels to
be delivered are double-hull. (P) Time charters with profit
sharing. *T FORWARD-LOOKING INFORMATION This release contains
forward-looking statements 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 is intended to be
covered by the safe harbor provided for under these sections.
Wherever we use the words "believes," "estimates," "expects,"
"plans," "anticipates" and similar expressions identify
forward-looking statements. Our forward-looking statements
sometimes 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 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; estimate of time charter and time charter
equivalent rates being achieved by our vessels, estimates of
capital requirements 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 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 time out of service as well as repair
cost, availability and cost of insurance, governmental regulation,
customer preferences and availability, claims, demurrage, the
affect on rates of future voyages and cost of financing. All
subsequent written and oral forward-looking statements attributable
to persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements. We disclaim 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.
O M I CP (NYSE:OMM)
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O M I CP (NYSE:OMM)
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