-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJ0esWDbjtDpVicmr+97dBSy03dM1BosnP3G5mKa0FLCRFsuKLEgDen99WJ+T5hK /fAKP/WZUG5QldSTRCZGEw== 0000919574-06-001637.txt : 20060313 0000919574-06-001637.hdr.sgml : 20060313 20060313154339 ACCESSION NUMBER: 0000919574-06-001637 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060313 DATE AS OF CHANGE: 20060313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ship Finance International LTD CENTRAL INDEX KEY: 0001289877 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32199 FILM NUMBER: 06682111 BUSINESS ADDRESS: STREET 1: 14 PAR-LA-VILLE ROAD CITY: HAMILTON, HM 08 STATE: D0 ZIP: 00000-0000 BUSINESS PHONE: 441-295-9500 MAIL ADDRESS: STREET 1: 14 PAR-LA-VILLE ROAD CITY: HAMILTON, HM 08 STATE: D0 ZIP: 00000-0000 6-K 1 d651806_6-k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of March 2006 Ship Finance International Limited - -------------------------------------------------------------------------------- (Translation of registrant's name into English) Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda - -------------------------------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F Form 20-F [X] Form 40-F [_] Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [_] No [X] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT Attached as Exhibit 1 is a copy of the press release of Ship Finance International Limited (the "Company") dated February 17, 2006. Ship Finance International Limited Preliminary Fourth Quarter and Financial Year 2005 Results Highlights o Ship Finance reports a net income of $83.1 million and earnings per share of $1.11 for the fourth quarter of 2005. o Ship Finance reports a net income of $209.5 million and earnings per share of $2.84 for the financial year 2005. o Ship Finance announces an ordinary cash dividend of $0.45 per share, and a supplementary extraordinary dividend of $0.05 per share. Ship Finance International Limited ("Ship Finance" or the "Company") reports total operating revenues of $143.2 million, operating income of $107.1 million and net income of $83.1 million for the fourth quarter of 2005. Earnings per share for the quarter were $1.11. Currently, all but seven 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 fourth quarter, operating revenues include $51.8 million of accrued profit share due from Frontline under long term charter agreements. The average daily time charter equivalents ("TCEs") earned by Frontline in the fourth quarter in the spot and time charter period market from the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers were $66,300, $44,900 and $32,900, respectively. As at December 31, 2005, the Company had interest rate swaps with a total notional principal of $568.3 million and an average interest rate of 3.7 percent. In the fourth quarter other financial items include a gain of $2.9 million that is attributable to the mark to market valuations of interest rate swaps compared with a gain of $8.1 million in the third quarter. Ship Finance announces net income of $209.5 million for the year ended December 31, 2005 equivalent to earnings per share of $2.84. Of the total net income, $88.1 million relates to the profit share with Frontline. 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 $58,200, $40,500 and $35,000, respectively. As at December 31, 2005, the Company had total cash and cash equivalents of $34.4 million, of which $1.6 million is restricted. Cash provided by operating activities in the quarter was $37.4 million, net cash provided by investing activities was $24.0 million and net cash used in financing activities was $97.5 million. In November of 2005 the bareboat charterer of the VLCC Navix Astral exercised an option to purchase the vessel for approximately $40.5 million. The vessel was delivered to its new owner in January of 2006, resulting in a loss on sale. At December 31, 2005 a $1.8 million loss on impairment was accrued and applied against the vessel's book value. In January 2006 the Company acquired the VLCC Front Tobago from Frontline for consideration of $40.0 million. Effective January 2006 this vessel has replaced the Navix Astral and will fulfil the remainder of the Navix Astral time charter with Frontline from the delivery of the vessel to its new owner until the charter termination date in January 2014. Corporate and Other Matters On February 17, 2006 the Board declared a dividend of $0.50 per share which represents an ordinary cash dividend of $0.45 per share, and a supplementary extraordinary dividend of $0.05 per share. The record date for the dividend is March 6, 2006, ex dividend date is March 2, 2006 and the dividend will be paid on or about March 20, 2006. In January 2006 Consafe Offshore AB (publ) ("Consafe")and Ship Finance entered into a heads of agreement in which Consafe will sell to Ship Finance the accommodation rig "Safe Concordia" via a limited liability company, for a sum of $185 million. The rig is chartered back to Consafe for 30 years. In addition there is a profit split calculated after operating expenses, overhead expenses and tax, on an annual basis. Consafe has a right to buy back the rig anytime after 10 years until the end of the contract. In the fourth quarter of 2005 the Company bought back and cancelled 1,475,100 of its shares. At December 31, 2005, 73,143,737 ordinary shares were outstanding and the weighted average number of shares outstanding for the quarter and year then ended was 74,560,108 and 73,904,465 respectively. In the current quarter the Company has continued the repurchase and has so far bought back another 400,000 shares. Total outstanding shares are thereby currently 72,743,737. In the fourth quarter the Company repurchased $1.0 million of its 8.5% Notes bringing the total amount repurchased to date in 2005 to $73.2 million. The outstanding amount of these Notes is currently $457.1 million. Market The generally positive trend of the VLCC market witnessed at the end of the third quarter of the year continued with strength well into the fourth quarter. After a brief decline in late September, October started off with steady rates around World Scale ("WS") 100 for the benchmark route from the MEG to Japan. From late October until the middle of November, the rates rose dramatically, peaking at WS 226 in the middle of November, the highest rate of the year. Following the peak, the market softened seeing a steady decline until the middle of December, when the decline in rates became steeper towards the traditionally quieter Christmas season. Fixtures were done around WS 120 levels at quarter end, demonstrating the high volatility experienced during the period. The average WS rate from the MEG to Japan in the fourth quarter was about WS 156, compared to WS 83 in the third quarter of 2005. This equates to a TCE of approximately $94,000 per day. The Suezmax market was also strong throughout the quarter, with an average of WS 226. This equates to approximately $70,000 per day. The tanker market experienced upwards pressure due to disruptions on the supply side, as tonnage was delayed in the US Gulf, Iraq and the Turkish Straits. The International Energy Agency (IEA) reported in February an average OPEC Oil production, including Iraq, of approximately 29.4 million barrels per day during the fourth quarter of 2005, a 0.06 million barrels per day or 0.2 percent decrease from the third quarter. OPEC decided at its meeting held 31 January to maintain current production levels. IEA estimates world oil demand averaged 84.1 million barrels per day in the fourth quarter, a 1.3 percent increase from the third quarter in 2005. IEA further predicts that the average demand for 2006 in total will be 85.1 million barrels per day, or a 2.1 percent growth from 2005, hence showing a firm belief in continued demand growth. The world trading VLCC fleet totalled 472 vessels at the end of the fourth quarter of 2005, an increase of 2.6 percent over the quarter. No VLCCs were scrapped in the period and 12 were delivered. The total order book is at 92 vessels at the end of the fourth quarter, down from 98 vessels after the third quarter of 2005. This represents 19.5 percent of the current VLCC fleet. A total of six VLCCs were ordered during the quarter. The world Suezmax fleet totalled 334 vessels at the end of the quarter, up from 330 vessels after the third quarter of 2005, a 1.2 percent fleet growth over the quarter. No Suezmaxes were scrapped during the quarter and four were delivered. The total order book at the end of the quarter is 64, unchanged from the end of the third quarter. This represents 19.2 percent of the Suezmax fleet. Four Suezmaxes were ordered during the period. The tanker market looks healthy for next year. The freight futures market seems to be optimistic, and at the moment it is possible to sell freight futures for the year 2006 at a level that equates to TCEs for VLCCs at approximately $52,000 per day and $40,000 per day for Suezmax. Strategy In order to broaden the asset portfolio and thereby reduce the risk the Board has considered investments in non tanker assets. The offshore market is currently showing interesting opportunities. The underlying fundamentals are strong, the assets generate high cashflow, and the competion with other financiers are somewhat reduced compared to normal commodity shipping markets. As of today's date the Company has $30 million in cash and approximately $120 million in additional debt capacity linked to unencumbered assets. In early March the Company will receive its profit share for 2005 from Frontline in the amount of $88 million. Until attractive investments can be found, the Board will continue to consider buy back of stock and bonds as an attractive alternative to improve the short and medium term return to shareholders. The Board is somewhat disappointed with the liquidity in the trading of the SFL share. As a result of this the Board is considering listing of the SFL shares at an additional exchange as well as more marketing of the Company in order to stimulate analytical coverage. Outlook The Company has managed to grow its annual revenue base by 18 percent in 2005. The Board is optimistic that it will be able to continue to grow in the coming year. Unencumbered assets and the profit share to be received in a few weeks time secures a sound fundament for future growth. The strong start of the year in the tanker market also increases the likelihood of a sizeable profit share also for 2006. Based on this the Board is optimistic with respect to the future for the Company, and believes that it will be able to provide a good long term return to shareholders. 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. 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 the Company's view, could cause actual results to differ materially from those discussed in this press release include the strength of world economies and currencies, general market conditions including fluctuations in charter hire 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 the Company's operating expenses including bunker prices, dry-docking and insurance costs, 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 United States Securities and Exchange Commission. February 17, 2006 The Board of Directors Ship Finance International Limited Hamilton, Bermuda Questions should be directed to: Tor Olav Troim: Director, Ship Finance International Limited +44 7734 976 575 Oscar Spieler: Chief Executive Officer, Frontline Management AS +47 23 11 40 79 Tom Jebsen, Chief Financial Officer, Ship Finance International Limited +47 23 11 40 21 SHIP FINANCE INTERNATIONAL LIMITED FOURTH QUARTER REPORT (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------- 2004 2005 INCOME STATEMENT 2005 2004 Oct - Dec Oct - Dec (in thousands of $ except Jan-Dec Jan-Dec per share data) (audited) - -------------------------------------------------------------------------------------------------------------- 151,482 143,159 Total operating revenues 437,510 492,069 - 1,875 Loss on sale of assets 654 - 212 601 Voyage expenses 3,600 9,978 24,509 27,511 Ship operating expenses 110,241 96,505 983 824 Administrative expenses 2,446 3,812 5,139 5,225 Depreciation 19,907 34,617 30,843 34,161 Total operating expenses 136,194 144,912 120,369 107,123 Operating income (loss) 300,662 347,157 374 1,010 Interest income 3,343 2,567 (22,796) (27,694) Interest expense (111,935) (95,933) 5,267 2,666 Other financial items 17,528 8,780 45 (32) Foreign currency exchange gain (loss) (52) 88 103,529 83,073 Net income (loss) 209,546 262,659 $1.38 $1.11 Basic earnings per share amounts ($) $2.84 $3.52 - --------------------------------------------------------------------------------------------------------------
2005 2004 BALANCE SHEET Dec 31 Dec 31 (in thousands of $) (audited) - ------------------------------------------------------------------------------- ASSETS Short term Cash, restricted cash and cash equivalents 34,432 34,572 Amount due from parent - 4,864 Other current assets 197,188 192,421 Long term Newbuildings and vessel purchase options - 8,370 Vessels and equipment, net 315,220 236,305 Investment in finance leases 1,818,344 1,641,644 Deferred charges and other long-term assets 37,409 34,761 Total assets 2,402,593 2,152,937 LIABILITIES AND STOCKHOLDERS' EQUITY Short term Short term and current portion of long term interest bearing debt 122,519 91,308 Amount due to parent 4,880 - Other current liabilities 16,001 8,958 Long term Long term interest bearing debt 1,671,138 1,387,586 Other long term liabilities 26,533 4,103 Stockholders' equity 561,522 660,982 Total liabilities and stockholders' equity 2,402,593 2,152,937 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2004 2005 STATEMENT OF CASHFLOWS 2005 2004 Oct - Dec Oct - Dec (in thousands of $) Jan-Dec Jan-Dec (audited) - -------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES 103,529 83,073 Net income (loss) 209,546 262,659 Adjustments to reconcile net income to net cash provided by operating activities 6,046 5,916 Depreciation and amortisation 36,431 44,102 Unrealised foreign currency exchange (gain) - (164) loss (5,314) (2,861) Adjustment of financial derivatives to market (14,732) (9,289) value - 1,895 Loss on sale of assets 654 - 187 Other (4,708) (1,146) (82,677) (50,803) Change in operating assets and liabilities 53,643 (117,634) 21,584 37,407 Net cash provided by operating activities 280,834 178,528 INVESTING ACTIVITIES 18,966 21,736 Repayment of investments in finance leases 94,777 61,990 423 1,289 Net maturities (placement) of restricted cash 3,804 560,121 - - Sale of investment in finance lease 229,800 - 21 Acquisition of subsidiaries, net of cash (518,182) (536,793) - acquired - - Purchase of option - (8,370) - - Investment in newbuilding - - - - Short-term loan advances to parent company - (55,254) - 994 Purchase of vessels (79,772) - - - Repayments from parent company - 55,254 Net cash provided by (used in) investing 19,389 24,040 activities (269,573) 76,948 FINANCING ACTIVITIES - - Proceeds from share issue - 24,696 (14,713) (27,210) Repurchase of shares (33,083) (14,713) - - Proceeds from long-term debt 1,571,429 1,017,100 - (26) Debt fees paid (7,346) (15,760) (22,825) (31,630) Repayment of long-term debt (1,253,503) (1,099,707) (33,986) (36,663) Cash dividends paid (148,864) (78,902) (3,625) (2005) Deemed dividends paid (136,230) (58,997) (75,149) (97,534) Net cash provided by (used in) financing (7,597) (226,283) activities (34,176) (36,087) Net increase in cash and cash equivalents 3,664 29,193 63,369 68,944 Cash and cash equivalents at start of period 29,193 - 29,193 32,857 Cash and cash equivalents at end of period 32,857 29,193 - --------------------------------------------------------------------------------------------------------------------
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised. Ship Finance International Limited. (Registrant) Date March 6, 2006 By /s/ Tom E. Jebsen -------------------- Tom E. Jebsen Chief Financial Officer 23153 0001 651806 -----END PRIVACY-ENHANCED MESSAGE-----