OMI Corporation announced a net loss of $7,119,000 for the quarter ended Sept. 30. The net loss for the nine months ended Sept. 30 was $37,555,000 after income from the cumulative effect of change in accounting principle of $2,729,000. Net loss for the nine months ended Sept. 30 includes a $23,574,000 loss on disposal/write down of vessels, $6,229,000 provision for loss on lease obligation and $1,114,000 loss on the disposal/write down of two joint ventures. Net income for the quarter and nine months ended Sept. 30, 1998 was $8,043,000 and $47,582,000, respectively, which includes a gain on the disposal of a vessel of $6,625,000 and a reversal of deferred income taxes in the amount of $38,887,000.
During 1999, OMI changed its method of accounting for freight on voyage charters. The accounting change is effective for the period beginning Jan. 1, 1999, and income of $2,729,000 was recorded for the nine months ended Sept. 30, 1999 as the cumulative effect of change in accounting principle. The change in the company's method of revenue recognition for voyages from the load-to-load basis to discharge-to-discharge basis is a more reliable method in recognizing voyage revenue as it eliminates the uncertainty associated with estimating location of the next load port under the load-to-load basis. Voyage revenue is recognized evenly over the period from the departure of a vessel from its original discharge port to departure at the next discharge port.
OMI has concentrated its fleet in two classes of vessels, Suezmax and product tankers. OMI has been implementing its plan for fleet renewal with the delivery of four new Suezmax vessels since June 1998 and two to be delivered in 2000. During July and September 1999, two 35,000 dwt product carrier newbuildings were
delivered. These product carriers are time chartered for two year periods.
Currently, rates for both classes of vessels are below historical levels, resulting from the imbalance of the supply and demand for crude oil and refined products and various other factors.
Management has addressed current economic issues and continues to attempt to maximize profitability with strategies to increase the fleet utilization levels. The company believes that concentrations in two fleet classes will have certain strategic advantages.
Currently, OMI's fleet comprises 25 vessels (including three chartered-in vessels and two jointly owned vessels).
The fleet currently comprises four wholly-owned Suezmaxes, three chartered-in Suezmaxes, one aframax, three 66,000 dwt. product tankers currently carrying crude oil
, twelve handysize product carriers transporting clean products and the two vessels jointly owned.
Two Suezmaxes (including the newly acquired contract described above) are scheduled to be delivered to the company during the first half of year 2000.