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AMSC - First Quarter 2012 Results

56787 fcras 11/5 2012 13:00


AMSC's operating revenues for Q1 2012 were USD 21.7 million, compared to USD 19.1 million for Q1 2011.

This increase in revenues reflects the operation of the full fleet of ten vessels in 2012 compared to nine vessels in operation in the first quarter of 2011.

EBITDA was USD 20.8 million in Q1 2012 compared to USD 18.5 million in Q1 2011.

EBIT was USD 12.4 million in Q1 2012 compared to USD 9.0 million in Q1 2011.

Net interest expense (interest expense less interest income and capitalized interest) for Q1 2012 was negative USD 16.5 million, compared to negative USD 14.7 million for Q1 2011.

Net Foreign Exchange loss was USD 9.3 million in Q1 2012, compared to a net Foreign Exchange loss of USD 8.7 million in Q1 2011.

The Foreign Exchange gains/losses, resulting from the translation of Norwegian kroner denominated debt and accrued interest into USD, are unrealized and had no cash impact on AMSC.

In addition, in Q1 2012, AMSC had an unrealized gain of USD 5.2 million related to the mark-to-market valuation of its interest rate swap contracts on its vessel financing.

The corresponding Q1 2011 unrealized gain was USD 8.9 million. These unrealized gains had no cash impact on AMSC.

AMSC had a net loss for the first quarter of 2012 of USD 8.2 million versus a net loss of USD 5.5 million in the first quarter of 2011.

American Shipping Company ASA - first quarter results 2012

The decrease in Vessels from December 31, 2011 reflects the Q1 2012 depreciation of the Company's ten product tankers.

Effective as of January 1, 2012, AMSC increased its estimate for the useful lives of its vessels to 30 years.

In previous years, the estimated useful life of vessels was 25 years.

The Company's conclusion to increase the useful life was based on several factors including its experience with vessels operating in the U.S. Jones Act market, reference to comparable companies and its maintenance program and lease contracts with OSG.

The total impact on depreciation of the change in estimate was USD 1.9 million for Q1 2012 and is estimated to be USD 7.7 million for 2012.

Interest bearing debt as of March 31, 2012 was USD 894.8 million, net of USD 10.8 million in capitalized fees versus USD 893.3 million as of December 31, 2011.

This debt relates to the bank financing of the ten vessels, the NOK denominated bond (consisting of principal amount of NOK 700 million plus payment-in-kind interest through March 2012 of NOK 376 million) issued in February 2007 and a subordinated loan from Converto Capital Fund AS.

AMSC was in compliance with all of its debt covenants as of March 31, 2012.

All of AMSC's ten vessels are on medium-term bareboat charters with Overseas Shipholding Group (OSG), providing AMSC with stable cash flows protected from short-term market movements. OSG, in its recent Q1 2012 report, is indicating firming of trading conditions.

The Jones Act products fleet (54 product tankers and ATBs) is fully employed with no vessels in layup.

OSG presently has all of AMSC's vessels on time charter, reporting that fixtures year to date have been renewed at consecutively higher rates.

Our bareboat charter agreements with OSG provide for a profit sharing component. The extent of profit generation is dependent on time charter rates obtained by OSG as well as OSG's ability to operate the vessels in a cost efficient manner.

To date, no profits have been generated under our profit sharing agreement, nor do we expect to receive any profit sharing in the medium term. We continue to believe, however, as does the industry, that markets going forward will improve further over the longer term.

The risks facing AMSC principally relate to the operational and financial performance of OSG as well as overall market risk.
AMSC's activities also expose the Company to a variety of other financial risks, including refinancing, currency, interest rate and liquidity risk.
For further details of AMSC's risks, including our guarantees, refer to the 2011 Annual Report.

Jones Act - The U.S. cabotage law, referred to as Jones Act, requires all commercial vessels operating between U.S. ports to be built, owned, operated and manned by U.S. citizens and to be registered under the U.S. flag.

In 1996 certain amendments were enacted to the U.S. vessel documentations laws, allowing increased non-U.S. participation in the ownership of vessels operating in the Jones Act trade under certain conditions, known as the finance lease exception.

Source: American Shipping Company ASA