Knightsbridge Tankers Ltd. Announces Third Quarter Earnings
Knightsbridge Tankers Limited Interim Report September 2004 Third
Quarter and Nine Month Results HAMILTON, Bermuda, Nov. 2
/PRNewswire-FirstCall/ -- Knightsbridge Tankers Limited (the
"Company") reports net income of $17.8 million and earnings per
share of $1.04 for the third quarter of 2004. In March 2004, the
Company's long-term bareboat charters with Shell International
expired and the vessels commenced trading under new employment
regimes. Three of the vessels have been contracted under
medium-term time charters, of which two include market related
profit sharing arrangements, and two vessels are operating in the
spot market. The average daily time charter equivalents ("TCEs")
earned by the Company's five VLCCs was $53,800 compared with
$50,800 in the immediately preceding quarter. Net interest expense
for the quarter was $1.8 million compared with $2.3 million for the
quarter ended September 30, 2003. In August 2004 the interest rate
swap, which fixed 91% of the outstanding debt, matured. At
September 30, 2004, 100% of bank debt is floating rate debt. The
net decrease in cash and cash equivalents in the quarter was $1.9
million. The decrease had resulted from cash generated from
operating activities of $13.1 million, cash provided for
compensation on redelivery in the amount of $0.7 million and net
cash of $2.9 million used to repay the Company's loan facility less
dividend payments of $12.8 million. As of October 28, 2004, the
Company has an average cash breakeven rate for its vessels of
$15,411 per vessel per day. For the nine months ended September 30,
2004 the Company reports net income of $55.9 million and earnings
per share of $3.27. The average daily TCE's for the nine months
ended September 30, 2004 was $68,700. Net interest expense for the
period was $6.4 million (2003 comparable nine months: $6.7
million). On November 2, 2004, the Board declared a dividend of
$1.00 per share. The record date for the dividend is November 15,
2004, ex dividend date is November 11, 2004 and the dividend will
be paid on or about November 29, 2004. The timing and amount of
future distributions will be dependent upon the Company's earnings,
financial condition, cash requirements and availability and other
factors. THE MARKET The strong VLCC market that we experienced in
the second quarter of 2004 continued into the third quarter at even
higher levels. Except for a brief, weak period in the beginning of
September, the market from the Middle East to the Far East stayed
above Worldscale (WS) 100 for the whole quarter. The average WS
rate Arabian Gulf to East was about 119 versus 110 in the second
quarter. This equates to a daily timecharter equivalent of about
USD 67,000 per day. The continued strong market was a result of the
high world oil demand especially into China, and improving world
economic activity in general. All the additional demand was met by
increased production in the Middle East, resulting in increased ton
miles. According to IEA, the average OPEC oil production, including
Iraq, in the third quarter of 2004 was approximately 29.3 million
barrels per day (b/d), an increase from the first quarter when they
produced about 28.1 million b/d. During the quarter OPEC continued
their policy of 'producing what is needed to supply the market',
but despite this oil prices continued to climb to record levels.
IEA estimates that world oil demand averaged 82.0 million b/d in
the third quarter, an increase of approximately 3.5 percent from
the third quarter of 2003. IEA further predicts that the average
demand for 2005 will be 83.9 million b/d. Many oil analysts are
still concerned that demand might end up being higher than
production capacity this coming winter. The world VLCC fleet
totalled 441 vessels at the end of the third quarter 2004, an
increase of 5 vessels or 1.4 percent over the quarter. One VLCC was
scrapped in the period and 6 were delivered. The total order book
is now at 88 vessels up from 85 after the second quarter. This
represents approximately 20 percent of the current VLCC fleet. A
total of 9 VLCC's were ordered during the quarter. The tanker
market looks healthy for the remainder of the year. The freight
futures market seems to be very optimistic, and at the moment it is
possible to sell freight futures for the rest of the year at a
level that equates to approximately US$148,000 per day on VLCC, and
US$75,000 per day for next year. FORWARD LOOKING STATEMENTS Matters
discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995
provides safe harbor protections for forward-looking statements in
order to encourage companies to provide prospective information
about their business. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and other statements, which
are other than statements of historical facts. Knightsbridge
desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including
this cautionary statement in connection with this safe harbor
legislation. The words "believe," "except," "anticipate,"
"intends," "estimate," "forecast," "project," "plan," "potential,"
"will," "may," "should," "expect" "pending and similar expressions
identify forward-looking statements. The forward-looking statements
in this document are based upon various assumptions, many of which
are based, in turn, upon further assumptions, including without
limitation, our management's examination of historical operating
trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions were
reasonable when made, because these assumptions are inherently
subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond our control, we
cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections. In addition to these
important factors, 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
and currencies, general market conditions, including fluctuations
in charterhire rates and vessel values, changes in demand in the
tanker market, as a result of changes in OPEC's petroleum
production levels and world wide oil consumption and storage,
changes in Knightsbridge's operating expenses, including bunker
prices, drydocking and insurance costs, the market for
Knightsbridge's vessels, availability of financing and refinancing,
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 Knightsbridge
with the Securities and Exchange Commission. November 2, 2004 The
Board of Directors Knightsbridge Tankers Limited Hamilton, Bermuda
Questions should be directed to: Contact: Ola Lorentzon + 46 703
998886 Inger M. Klemp + 47 23 11 40 76 KNIGHTSBRIDGE TANKERS
LIMITED THIRD QUARTER REPORT (UNAUDITED) 2003 2004 INCOME STATEMENT
2004 2003 2003 Jul-Sept Jul-Sept (in thousands of Jan- Jan- Jan-Dec
$) Sept Sept (audited) 10,152 28,481 Total operating 93,132 52,620
75,246 revenues Operating expenses - 3,733 Voyage expenses 10,089 -
- - 2,989 Ship operating 6,756 - - expenses 219 266 Administrative
894 645 864 expenses 4,398 4,290 Depreciation 12,915 13,195 17,593
4,617 11,278 Total operating 30,654 13,840 18,457 expenses Other
income/(expenses) 9 126 Interest income 263 29 55 (2,255) (1,949)
Interest expense (6,742) (6,704) (9,332) (106) 2,401 Other
financial (76) (316) (50) items (2,352) 578 Net other (6,555)
(6,991) (9,327) income/(expenses) 3,183 17,781 Net income (loss)
55,923 31,789 47,462 17,100 17,100 Average number of 17,100 17,100
17,100 ordinary shares outstanding $ 0.19 1.04 Earnings per $ 3.27
$1.86 $2.78 Share ($) BALANCE SHEET 2004 2003 2003 (in thousands of
$) Sept 30 Sept 30 Dec 31 (audited) ASSETS Short term Cash and cash
equivalents 36,124 6,286 6,312 Other current assets 12,497 10,222
22,665 Long term Vessels and equipment, net 305,803 - - Vessels
under capital lease, net - 323,806 319,408 Deferred charges and
other long-term assets 408 151 58 Total assets 354,832 340,465
348,443 LIABILITIES AND STOCKHOLDERS' EQUITY Short term Short term
interest bearing debt 11,200 - 125,397 Other current liabilities
4,378 2,209 7,519 Long term Long term interest bearing debt 123,200
125,397 - Other long term liabilities - 7,745 - Stockholders'
equity 216,054 205,114 215,527 Total liabilities and stockholders'
equity 354,832 340,465 348,443 2003 2004 STATEMENT OF 2004 2003
2003 Jul- Sept Jul-Sept CASHFLOWS Jan-Sept Jan-Sept Jan-Dec (in
thousands of $) (audited) OPERATING ACTIVITIES 3,184 17,781 Net
income (loss) 55,923 31,789 47,462 Adjustments to reconcile net
income to net cash provided by operating activities 4,491 4,310
Depreciation and 13,009 13,473 17,593 amortisation - (2,477)
Adjustment of - - - financial derivatives to market value - - Other
- - 372 9,335 (6,504) Change in operating 12,336 (43) (12,487)
assets and liabilities 17,010 13,110 Net cash provided by 81,268
45,219 52,940 operating activities INVESTING ACTIVITIES - 690
Compensation on 690 - - vessel redelivery - 690 Net cash provided
by 690 - - investing activities FINANCING ACTIVITIES - - Proceeds
from 140,000 - - long-term debt, net of fees paid - (2,894)
Repayments of (131,441) - - long-term debt (11,115) (12,825)
Dividends paid (60,705) (39,159) (46,854) (11,115) (15,719) Net
cash used in (52,146) (39,159) (46,854) financing activities 5,895
(1,919) Net 29,812 6,060 6,086 increase/(decrease) in cash and cash
equivalents 391 38,043 Cash and cash 6,312 226 226 equivalents at
start of period 6,286 36,124 Cash and cash 36,124 6,286 6,312
equivalents at end of period DATASOURCE: Knightsbridge Tankers
Limited CONTACT: Ola Lorentzon, +46-703-998886, or Inger M. Klemp,
+47-23-11-40-76, both of Knightsbridge Tankers Limited
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