UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR
15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the
month of August 2008
Commission
File Number: 001-32199
|
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 office)
|
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Form 20-F
[X] Form 40-F
[ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): ___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)7: ___
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-______________.
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 August 21, 2008, announcing the Company’s second
quarter 2008 financial results.
Exhibit
1
Ship
Finance International Limited (NYSE: SFL) - Earnings Release
Reports
second quarter 2008 results and increased quarterly dividend to $0.58 per
share
Ship
Finance International Limited (“Ship Finance” or the “Company”) announces the
financial results for the quarter ended June 30, 2008.
Highlights
|
·
|
Declared
an increased quarterly cash dividend of $0.58 per share. This includes the
previously announced $0.02 dividend increase relating to the acquisition
of an ultra-deepwater drillship. The Company has now declared stable or
increasing dividends for 18 consecutive
quarters.
|
|
·
|
Reported
net income for the quarter of $71.3 million, or $0.98 per share, including
profit share of $33.1 million, or $0.46 per
share.
|
|
·
|
The
single-hull VLCC Front Sabang commenced its new hire/purchase arrangement
in April and a $10.6 million gain on sales was recognized in the second
quarter.
|
|
·
|
The
first of two 17,000 dwt chemical tanker newbuildings was delivered in
April 2008 and commenced its 10-year bareboat charter to Bryggen Shipping
& Trading AS (“Bryggen”).
|
|
·
|
The
ultra-deepwater drillship West Polaris was delivered in July 2008 and
commenced its 15-year bareboat charter to Seadrill Limited
(“Seadrill”).
|
|
·
|
Announced
the sale of two newbuilding Suezmax tankers for a record $111 million per
vessel. The transaction is expected to generate a book profit of
approximately $68 million, or $34 million per vessel, to be recognized at
delivery of the vessels in 2009.
|
Dividends
and Results for the Quarter ended June 30, 2008
The Board
of Directors has declared an increased quarterly cash dividend of $0.58 per
share. The dividend will be paid on or about September 15, 2008 to shareholders
of record as of September 2, 2008. The ex-dividend date will be August 28,
2008.
The
Company reported total operating revenues of $120.9 million, or $1.66 per share,
in the second quarter. Net operating income for the quarter was $96.8 million,
or $1.33 per share, and net income was $71.3 million, or $0.98 per
share.
As the
majority of the Company’s assets are accounted for as finance leases, a
significant portion of the charter hire is classified as ‘Repayment of
investment in finance leases’ and is deducted from the revenues in the Company’s
Income Statement. For the second quarter, this amounted to $71.1 million or
$0.98 per share, including an extraordinary upfront payment of $21.6 mill.
related to the hire/purchase arrangement for Front Sabang.
The
profit share accumulated in the second quarter was $33.1 million, or $0.46 per
share, compared to $33.7 million, or $0.46 per share, in the first quarter. The
substantial profit share accumulated in the quarter was due to a very strong
spot charter market for crude oil tankers. The market continued to be strong
into the third quarter, but has softened in August.
There was
a $3.2 million, or $0.04 per share, positive adjustment in mark-to-market of
swaps in the second quarter, compared to a $2.2 million, or $0.03 per share,
negative adjustment in the previous quarter.
Liquidity
and Capital Expenditure
As of
June 30, 2008, the Company had $242.1 million in available funds, comprised of
$86.4 million in free cash and cash equivalents and $155.7 million in available
credit lines. The profit share for the year 2008 ($66.8 million accumulated YTD)
is payable in March 2009, and adds to our investment capacity. In addition,
several vessels in our fleet have no or very limited associated
debt.
The
Company’s capital commitments relating to newbuildings and acquisitions are
estimated as follows:
|
Period:
|
2H-2008
|
2009
|
2010
|
Total
|
||||||
|
Gross
investment
|
$1,048
mill.
|
$313
mill.
|
$111
mill.
|
$1,472
mill.
|
||||||
|
Committed
financing
|
$(830)
mill.
|
$(145)
mill.
|
-
|
$(975)
mill.
|
||||||
|
Contracted
sale of vessels*
|
-
|
$(217)
mill.
|
-
|
$(217)
mill.
|
||||||
|
Net
investment
|
$218
mill.
|
$(49)
mill.
|
$111
mill.
|
$280
mill.
|
||||||
* net of
commissions
The
delivery dates for vessels under construction may be adjusted, which may impact
the timing of our investments. The capital commitments are net of any seller’s
credits, and include the drillship delivered in July 2008 and also the two
newbuilding Suezmax vessels recently announced sold. In certain projects, such
as the five container vessels to be delivered in 2010, 20% of the contract price
has been paid in as equity, and a significant portion of the remaining capital
commitment is expected to be funded by bank financing.
Business
Update
As of
June 30, 2008 and including recently announced transactions, the gross
fixed-rate charter backlog is in excess of $6.5 billion, with average remaining
charter term of 10.2 years, or 13.4 years if weighted by charter revenue. Some
of our charters have purchase options, which, if exercised, will reduce the
fixed charter backlog and average remaining charter term.
As of
June 30, 2008, 31 of our crude oil tankers and eight of our oil/bulk/ore (“OBO”)
vessels operate on long term contracts to subsidiaries of Frontline Ltd.
(“Frontline”). In addition to the fixed base charter rate, Ship Finance is also
entitled to receive 20% of the time charter equivalent (“TCE”) earnings for
these vessels in excess of a base charter rate. The average vessel earnings have
consistently been above the base charter rates since the Company’s inception in
2003, and the profit share accumulated in the second quarter was $33.1
million.
The
average daily TCEs earned by Frontline in the second quarter in the spot and
time charter period market from the Company’s VLCCs, Suezmax tankers and OBOs
were approximately $83,700, $76,300 and $44,100, respectively. These numbers
exclude off-hire days and the corresponding average daily TCEs in the first
quarter of 2008 were approximately $82,100, $58,700 and $43,200,
respectively.
In March
2008, the Company agreed to acquire two 17,000 dwt chemical tanker newbuildings
from Bryggen based on a total purchase price of $60 million. The first vessel,
Maria Victoria V, was
delivered in April 2008, and the second vessel is expected to be delivered in
the third quarter of 2008. Both vessels will be employed on 10-year bareboat
charters to Bryggen, with sub-charters to Sinochem.
In May
2008, the Company agreed to acquire the newbuilding ultra-deepwater drillship
West Polaris, from a
subsidiary of Seadrill. The vessel was delivered to Ship Finance in early July
2008 for an approximate project cost of $850 million, and immediately commenced
its 15-year bareboat charter to Seadrill. West Polaris will initially be
employed on a four year sub-charter to a subsidiary of Exxon Mobil Corporation.
Net of interest expense and debt repayment, the average annual net cash
contribution the first five years will be approximately $23 million, or $0.32
per share.
In July
2008, Ship Finance announced the sale of two newbuilding Suezmax vessels at
record high levels. The gross sales price was agreed at a $111 million per
vessel, and net of construction costs and broker commissions we expect to
recognize a book profit of approximately $68 million, or $0.93 per share in
total. The vessels are currently under construction in China, and are scheduled
to be delivered to the new owner in 2009, immediately after delivery from the
shipyard.
Corporate
and Other Matters
At the
end of the second quarter 2008, $449 million of the 8.5% Senior Notes due 2013
were outstanding. Of this, $148 million were controlled through Bond Swap
Agreements at quarter end. As a result, the financing cost on the
Senior Notes held under Bond Swap Agreements is effectively reduced to LIBOR
plus a margin.
The
Company also controls approximately 692,000 of its own shares through Total
Return Swaps (“TRS”). Total Return Swaps are used to preserve the Company’s
capacity for new asset acquisitions, while achieving the economic effect of
repurchasing shares. The average cost basis for the shares is $25.66 per
share.
In April
2008, the Company filed a Dividend Reinvestment Plan and a Direct Stock Purchase
Plan to facilitate the purchase of shares by individual shareholders who wish to
invest in shares in the Company on a regular basis. Mellon Bank N.A. is the Plan
Administrator.
In August
2008, the Company announced the recruitment of Mr. Peter Lund as commercial
director in Ship Finance. He has a broad international shipping background and
will be based in a newly established office in Singapore. Mr. Lund is expected
to take up his position with Ship Finance in September 2008, and will be awarded
100,000 options for Ship Finance shares to be vested over three
years.
Strategy
and Outlook
Including
recently announced acquisitions, the Company has an operating fleet of 60
vessels and rigs, and has contracted to acquire 11 newbuildings. This excludes
the two Suezmax newbuildings recently announced sold. The strategy of the
Company is to increase its portfolio of assets and to employ its assets on
medium to long-term contracts to support a predictable long-term dividend
capacity.
The
Company will seek to reduce the risks for its shareholders by investing in
different sectors of the shipping and oil service industries and by having a
diversified client base. During the last 18 months, the Company has committed to
new investments of approximately $1.7 billion and these investments have
increased the Company’s fixed charter income and dividend capacity.
The
recent $850 million acquisition of the ultra-deepwater drillship West Polaris in
combination with a $700 million bank financing demonstrates the Company’s
ability to structure accretive transactions in an otherwise challenging
financing environment. The strong fundamentals of the offshore industry combined
with very high charter backlogs makes this a very attractive industry to invest
in.
The
Company sees a large potential in providing flexible solutions to shipping and
offshore companies to optimize their capital structure and create flexibility
for further growth. With the recruitment of a commercial director to be located
in Singapore, we also expect that our business volume in Asia will
increase.
Forward
Looking Statements
This
press release contains forward looking statements. These statements are based
upon various assumptions, many of which are based, in turn, upon further
assumptions, including Ship Finance management's examination of historical
operating trends, data contained in the Company’s records and other data
available from third parties. Although Ship Finance believes that these
assumptions were reasonable when made, because assumptions are inherently
subject to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond its control, Ship Finance cannot give
assurance that it will achieve or accomplish these expectations, beliefs or
intentions.
Important
factors that, in our view, could cause actual results to differ materially from
those discussed in the forward-looking statements include the strength of world
economies, fluctuations in currencies and interest rates, general market
conditions including fluctuations in charter hire rates and vessel values,
changes in demand in the markets in which we operate, changes in demand
resulting from changes in OPEC's petroleum production levels and world wide oil
consumption and storage, developments regarding the technologies relating to oil
exploration, changes in market demand in countries which import commodities and
finished goods and changes in the amount and location of the production of those
commodities and finished goods, increased inspection procedures and more
restrictive import and export controls, changes in our operating expenses,
including bunker prices, drydocking and insurance costs, performance of our
charterers and other counterparties with whom we deal, timely delivery of
vessels under construction within the contracted price, changes in governmental
rules and regulations or actions taken by regulatory authorities, potential
liability from pending or future litigation, general domestic and international
political conditions, potential disruption of shipping routes due to accidents
or political events, and other important factors described from time to time in
the reports filed by the Company with the Securities and Exchange
Commission.
August
21, 2008
The Board
of Directors
Ship
Finance International Limited
Hamilton,
Bermuda
Questions
should be directed to:
Lars
Solbakken: Chief Executive Officer, Ship Finance Management AS
+47
23114006 / +47 91198844
Ole B.
Hjertaker: Chief Financial Officer, Ship Finance Management AS
+47
23114011 / +47 90141243
SHIP
FINANCE INTERNATIONAL LIMITED
SECOND
QUARTER 2008 REPORT (UNAUDITED)
|
INCOME
STATEMENT
|
Three
months ended
|
Six
months ended
|
Twelve
months
|
|||||||||||||||||
|
(in
thousands of $ except per share and per share data)
|
June
30, 2008
|
June
30, 2007
|
June
30, 2008
|
June
30, 2007
|
Dec
31, 2007
|
|||||||||||||||
|
(audited)
|
||||||||||||||||||||
|
Gross
operating revenue
|
158,832 | 127,033 | 295,124 | 249,499 | 519,458 | |||||||||||||||
|
less
revenues classified as Repayment of investment in finance leases(1)
|
(71,061 | ) | (46,200 | ) | (119,137 | ) | (82,126 | ) | (173,193 | ) | ||||||||||
|
Profit
share contribution
|
33,111 | 15,718 | 66,781 | 15,718 | 52,527 | |||||||||||||||
|
Total
operating revenues
|
120,882 | 96,551 | 242,768 | 183,091 | 398,792 | |||||||||||||||
|
Gain
/ -loss on sale of assets
|
10,586 | 4,332 | 17,377 | 35,096 | 41,669 | |||||||||||||||
|
Vessel
operating expenses
|
(24,672 | ) | (25,494 | ) | (49,990 | ) | (54,826 | ) | (107,161 | ) | ||||||||||
|
Administrative
expenses
|
(2,835 | ) | (1,706 | ) | (5,532 | ) | (3,722 | ) | (7,783 | ) | ||||||||||
|
Depreciation
|
(7,194 | ) | (3,197 | ) | (13,193 | ) | (6,195 | ) | (20,636 | ) | ||||||||||
|
Total
operating expenses
|
(34,701 | ) | (30,397 | ) | (68,715 | ) | (64,743 | ) | (135,580 | ) | ||||||||||
|
Operating
income
|
96,767 | 70,486 | 191,430 | 153,444 | 304,881 | |||||||||||||||
|
Interest
income
|
1,082 | 2,866 | 1,909 | 4,302 | 6,781 | |||||||||||||||
|
Interest
expense
|
(29,871 | ) | (37,125 | ) | (63,341 | ) | (69,187 | ) | (130,401 | ) | ||||||||||
|
Results
in associate
|
233 | 229 | 461 | 463 | 923 | |||||||||||||||
|
Other
financial items
|
(140 | ) | (408 | ) | (390 | ) | (1,160 | ) | (1,902 | ) | ||||||||||
|
Mark
to Market of Derivatives
|
3,214 | 3,442 | 1,036 | 6,983 | (12,557 | ) | ||||||||||||||
|
Foreign
currency exchange gain / loss
|
(4 | ) | 7 | (14 | ) | (67 | ) | (17 | ) | |||||||||||
|
Taxes
|
- | - | - | - | - | |||||||||||||||
|
Net
income
|
71,281 | 39,497 | 131,091 | 94,778 | 167,708 | |||||||||||||||
|
Basic
earnings per share
|
$0.98 | $0.54 | $1.80 | $1.30 | $2.31 | |||||||||||||||
|
Weighted
average number of shares
|
72,743,737 | 72,743,737 | 72,743,737 | 72,743,737 | 72,743,737 | |||||||||||||||
|
Common
shares outstanding
|
72,743,737 | 72,743,737 | 72,743,737 | 72,743,737 | 72,743,737 | |||||||||||||||
|
(1)
|
In
2Q08 an extraordinary charter payment of approx. $21.6 mill. is recorded
as ‘Repayment of investment in finance leases’ in connection with the
hire/purchase arrangement for the single hull VLCC Front Sabang. In 2Q07
an extraordinary charter payment of approx. $12.3 mill. is recorded as
‘Repayment of investment in finance leases’ in connection with the
hire/purchase arrangement for the single hull VLCC Front
Sabang.
|
SHIP
FINANCE INTERNATIONAL LIMITED
SECOND
QUARTER 2008 REPORT (UNAUDITED)
|
BALANCE
SHEET
|
June,
30
|
June,
30
|
Dec
31, 2007
|
|||||||||
|
(in
thousands of $)
|
2008
|
2007
|
(audited)
|
|||||||||
|
ASSETS
|
||||||||||||
|
Short
term
|
||||||||||||
|
Cash
and cash equivalents
|
86,422 | 99,116 | 78,255 | |||||||||
|
Restricted
cash
|
34,927 | 11,707 | 26,983 | |||||||||
|
Amount
due from related parties
|
60,736 | 14,021 | 42,014 | |||||||||
|
Other
current assets
|
202,106 | 183,331 | 186,343 | |||||||||
|
Long
term
|
||||||||||||
|
Newbuildings
|
47,681 | 259 | 46,259 | |||||||||
|
Vessels
and equipment, net
|
571,562 | 366,399 | 583,244 | |||||||||
|
Investment
in finance leases
|
1,990,050 | 2,061,048 | 1,963,470 | |||||||||
|
Investment
in associate
|
4,993 | 4,069 | 4,530 | |||||||||
|
Deferred
charges
|
16,454 | 16,995 | 16,922 | |||||||||
|
Other
long-term assets
|
4,028 | 27,993 | 2,008 | |||||||||
|
Total
assets
|
3,018,959 | 2,784,938 | 2,950,028 | |||||||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||
|
Short
term
|
||||||||||||
|
Short
term and current portion of long term interest bearing
debt
|
163,759 | 182,969 | 179,428 | |||||||||
|
Other
current liabilities
|
42,811 | 20,246 | 42,804 | |||||||||
|
Amount
due to related parties
|
6,485 | 42,118 | 5,693 | |||||||||
|
Long
term
|
||||||||||||
|
Long
term interest bearing debt
|
2,098,165 | 1,903,591 | 2,090,566 | |||||||||
|
Other
long term liabilities
|
35,087 | 1,227 | 17,060 | |||||||||
|
Stockholders’
equity (1)
|
672,652 | 634,787 | 614,477 | |||||||||
|
Total
liabilities and stockholders’ equity
|
3,018,959 | 2,784,938 | 2,950,028 | |||||||||
|
(1)
|
As
of June 30, 2008 Stockholders’ equity excludes $221.9 million of deferred
equity which is being recognized over time. In connection with the initial
and subsequent acquisitions of vessels from Frontline, Ship Finance has
accounted for the difference between the historical cost of the vessels
and the net investment in the lease as a deferred equity contribution.
This deferred equity contribution is shown as a reduction in the net
investment in finance leases in the balance sheet. This results from the
related party nature of both the transfer of the vessel and the subsequent
charter. This deferred equity is amortized to Stockholders’ equity in line
with the charter payments received from
Frontline.
|
SHIP
FINANCE INTERNATIONAL LIMITED
SECOND
QUARTER 2008 REPORT (UNAUDITED)
|
STATEMENT
OF CASHFLOWS
|
Three
months ended
|
Six
months ended
|
Full
year
|
|||||||||||||||||
|
(in
thousands of $)
|
June
30, 2008
|
June
30, 2007
|
June
30, 2008
|
June
30, 2007
|
2007
|
|||||||||||||||
|
(audited)
|
||||||||||||||||||||
|
OPERATING
ACTIVITIES
|
||||||||||||||||||||
|
Net
income
|
71,281 | 39,497 | 131,091 | 94,778 | 167,708 | |||||||||||||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||||||
|
Depreciation
and amortisation
|
7,716 | 4,186 | 14,664 | 7,953 | 23,554 | |||||||||||||||
|
Adjustment
of financial derivatives to market value
|
(3,214 | ) | (3,442 | ) | (1,036 | ) | (6,983 | ) | 12,557 | |||||||||||
|
Gain
on sale of assets
|
(10,586 | ) | (4,332 | ) | (17,377 | ) | (35,096 | ) | (41,669 | ) | ||||||||||
|
Result
in associate
|
(233 | ) | (228 | ) | (461 | ) | (463 | ) | (923 | ) | ||||||||||
|
Stock
based compensation
|
328 | 159 | 721 | 311 | 785 | |||||||||||||||
|
Other
|
(894 | ) | 72 | (2,074 | ) | 90 | (51,278 | ) | ||||||||||||
|
Change
in operating assets and liabilities
|
(46,067 | ) | (6,954 | ) | (23,144 | ) | 82,410 | 91,684 | ||||||||||||
|
Net
cash provided by operating activities
|
18,331 | 28,958 | 102,384 | 143,000 | 202,418 | |||||||||||||||
|
INVESTING
ACTIVITIES
|
||||||||||||||||||||
|
Repayment
of investments in finance leases
|
71,062 | 46,200 | 119,137 | 82,126 | 173,193 | |||||||||||||||
|
Net
placement of restricted cash
|
624 | 1,775 | (7,944 | ) | 1,230 | (14,046 | ) | |||||||||||||
|
Proceeds
from sale of vessel/new buildings
|
(26,847 | ) | - | 23,005 | 142,018 | 152,659 | ||||||||||||||
|
Acquisition
of subsidiaries, net of cash acquired
|
- | - | - | - | - | |||||||||||||||
|
Net
investment in newbuildings
|
(483 | ) | (259 | ) | (734 | ) | 7,399 | (47,383 | ) | |||||||||||
|
Purchase
of vessels
|
(30,100 | ) | (247,635 | ) | (134,100 | ) | (430,500 | ) | (644,287 | ) | ||||||||||
|
Investment
in associate companies
|
(2 | ) | (2 | ) | (2 | ) | 92 | 92 | ||||||||||||
|
Purchase
of short term investment
|
- | - | - | 2,996 | 3,000 | |||||||||||||||
|
Other
investments
|
(2,020 | ) | (2,008 | ) | (2,020 | ) | (2,008 | ) | (2,008 | ) | ||||||||||
|
Net
cash (used in) provided by investing activities
|
12,234 | (201,929 | ) | (2,658 | ) | (196,647 | ) | (378,780 | ) | |||||||||||
|
FINANCING
ACTIVITIES
|
||||||||||||||||||||
|
Repurchase
of shares
|
- | - | - | - | - | |||||||||||||||
|
Proceeds
from long-term debt
|
52,500 | 209,162 | 129,500 | 336,350 | 620,225 | |||||||||||||||
|
Expenses
paid in connection with securing finance
|
(606 | ) | (500 | ) | (1,383 | ) | (1,905 | ) | (3,432 | ) | ||||||||||
|
Repayment
of long-term debt
|
(54,673 | ) | (42,638 | ) | (137,570 | ) | (164,989 | ) | (265,430 | ) | ||||||||||
|
Cash
settlement of Equity TRS
|
(1,358 | ) | - | (1,358 | ) | |||||||||||||||
|
Cash
dividends paid
|
(40,737 | ) | (40,001 | ) | (80,745 | ) | (79,283 | ) | (159,335 | ) | ||||||||||
|
Deemed
dividends paid
|
- | (321 | ) | - | (1,979 | ) | (1,983 | ) | ||||||||||||
|
Net
cash provided by (used in) financing activities
|
(44,874 | ) | 125,702 | (91,556 | ) | 88,194 | 190,045 | |||||||||||||
|
Net
(decrease) increase in cash and cash equivalents
|
(14,309 | ) | (47,269 | ) | 8,170 | 34,547 | 13,683 | |||||||||||||
|
Cash
and cash equivalents at start of period
|
100,731 | 146,385 | 78,252 | 64,569 | 64,569 | |||||||||||||||
|
Cash
and cash equivalents at end of period
|
86,422 | 99,116 | 86,422 | 99,116 | 78,252 | |||||||||||||||
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
authorized.
| SHIP FINANCE INTERNATIONAL LIMITED | |||
| (registrant) | |||
|
Dated: August
21, 2008
|
By:
|
/s/ Lars
Solbakken
|
|
|
Name:
|
Lars
Solbakken
|
||
|
Title:
|
Chief
Executive Officer
|
||
|
Ship
Finance Management AS
|
|||
SK 23153 0001
913123