Arlington Tankers Ltd. (NYSE: ATB) announced financial results for the third quarter and the nine months ended September 30, 2007. For the quarter ended September 30, 2007, the Company's total revenues were $17.5m, consisting of $16.5m in basic vessel charter hire and $1.0m in additional charter hire that the Company received under its profit sharing arrangements.
On the basis of the third quarter results, Arlington's Board of Directors has declared a cash dividend of $0.59 per share.
The additional charter hire earned during the third quarter of 2007 was derived from profit sharing arrangements under the time charters of the Company's V-MAX, Panamax and Product vessels. Of the $1.0m in additional charter hire, approximately $600,000 was attributed to contractually guaranteed profit sharing for the two V-MAX vessels, and approximately $400,000 was attributed to additional charter hire from the Company's two Panamax tankers and the Company's two Product tankers that are eligible to earn additional charter hire. For these four vessels, the average time charter equivalent rates under the Company's profit sharing agreements over the preceding twelve months were in excess of contractual minimum levels.
The Company's operating expenses during the third quarter of 2007, including depreciation costs of $3.9m and administrative expenses of $564,000 were $9.4m. The Company's interest expense, net of interest income for the third quarter of 2007, was $3.2m. This expense represents interest under the Company's $229.5m, secured credit facility with The Royal Bank of Scotland plc.
The Company's results of operations were affected by an unrealized loss of approximately $5.0m, representing the change in the fair value of the Company's interest rate swap arrangement related to its secured credit facility with The Royal Bank of Scotland plc. As a result, the Company's net loss for the third quarter of 2007 was $41,000, or less than $0.01 per share. Excluding the effect of this unrealized loss, the Company's net income for the third quarter of 2007 was $4.9m, or $0.32 per share.
All of Arlington's eight vessels are currently trading on time charter contracts to subsidiaries of Stena AB
and Concordia Maritime AB
. The charters have fixed initial terms that expire at various dates, with two vessels expiring in 2008, four vessels expiring in 2009, and two vessels expiring in 2010. All of the charter contracts also include options to extend the terms of the charters.
Each charter contract provides for fixed rate basic charter hire during the operating period. In addition to the fixed rate basic charter hire, the Company's two V-MAX vessels, two Panamax tankers and two of the Company's four Product tankers have the possibility of receiving additional charter hire from the time charterers through profit sharing arrangements related to the performance of the tanker markets on specified geographic routes, or from actual time charter rates. Tanker freight rates are volatile and additional charter hire for the Panamax and Product tankers is not guaranteed. The Company's two V-MAX vessels are receiving additional hire from the time charterers through profit sharing arrangements based on sub-charters with Sun International (RY1B.BE)
and LukOil International Trading
and Supply Company
, or Litasco.
Arlington has paid quarterly cash dividends in amounts substantially equal to the charter hire revenues received, less cash expenses and any cash reserves established by the Company's Board of Directors.
The Company is increasing its estimate of the amount of cash available for dividends for fiscal 2007 to approximately $2.32 per share from the Company's prior estimate of $2.26 per share. The increase in the Company's full year guidance reflects the additional hire revenues received through the third quarter of 2007, as well as, additional hire revenues expected to be earned from the sub-charters of the Company's V-MAX vessels to Sun International and Litasco.
The Company expects to announce its next dividend on January 29, 2008 and to pay that dividend on or about February 12, 2008.