HAMILTON, Bermuda, Aug 14, 2002 /PRNewswire-FirstCall via COMTEX/ -- Sea Containers Ltd. (NYSE: SCRA and SCRB) (http://www.seacontainers.com ) passenger and freight transport operator, marine container lessor and leisure industry investor, today announced its results for the quarter and six months ended June 30, 2002. For the quarter, net earnings were $16 million ($0.79 per common share) on revenue of $410 million compared with net earnings of $6.2 million ($0.33 per common share) on revenue of $326 million in the year earlier period. Earnings before interest, depreciation and amortization (EBITDA) were $83.6 million compared with $72.4 million a year earlier. For the six months, net earnings were $10.0 million ($0.52 per common share) on revenue of $682 million, compared with net earnings of $7.1 million ($0.38 per common share) on revenue of $618 million in the year earlier period. EBITDA was $125.2 million compared with $129.5 million a year earlier. The year earlier period included $20.2 million gain on port sales.
During the second quarter of 2002 Sea Containers increased its shareholding in Silja Oyj Abp, the leading Baltic ferry operator, to more than 50% which has necessitated the consolidation of Silja's assets and liabilities with Sea Containers other assets and liabilities at June 30, 2002. Sea Containers currently owns about 93% of Silja and its tender offer to acquire the remainder of the shares expires on August 26, 2002. Any shares not tendered by that date will be compulsorily acquired as permitted by Finnish law. Sea Containers has consolidated 50% of Silja's profit for the month of April, 2002 and 100% for the months of May and June. Sea Containers has not currently guaranteed any of Silja's debt. Silja's operating profits for the second quarter of 2002 were $18.4 million compared with $7.8 million for the same period in 2001. For the six months ended June 30, 2002, Silja's operating profits were $20.4 million compared with $1.9 million in the year earlier period.
Sea Containers does not consolidate 50% owned companies. Its largest such investment is in GE SeaCo SRL, a container leasing joint venture with GE Capital Corporation. GE SeaCo had assets of $519 million and liabilities of $386 million at June 30, 2002. Its total net earnings for the quarter and six months ended June 30, 2002 were $7 million and $13.3 million respectively, compared with $5.1 million and $9.7 million in the year earlier periods. Sea Containers has taken to its profit and loss account only 50% of these earnings. Sea Containers has guaranteed $93.5 million of GE SeaCo's debt at June 30, 2002.
The company's largest division, passenger and freight transport, had operating profits in the second quarter of $35.3 million, up 59% from $22.2 million in the prior year period. Excluding non-recurring items, all three divisions made gains: Silja, GNER and other ferry businesses. Effective March, 2002 GNER resumed track access payments to Railtrack, the infrastructure provider, and Railtrack resumed penalty payments for its failure to meet performance requirements. A major track subsidence in Scotland has resulted in exceptional penalty payments. The subsidence problem will not be fully rectified until mid-2003. Traffic volumes have improved on English Channel ferry routes now that the foot and mouth disease problem has been resolved. Isle of Man ferry traffic is now back to normal for the same reason. Higher earnings on Isle of Man routes have offset weakness in the Belfast-Troon route which is being impacted by no-frills airline competition. New York City ferry services are profitable, as is the company's joint venture in the Adriatic.
Operating profits of leisure investments were down from $20.8 million in the second quarter of 2001 to $17.9 million in the second quarter of 2002 due to lingering effects of September 11th. Orient-Express Hotels has forecasted that its earnings in the second half of the year will be greater than in the second half of 2001 which was impacted by September 11th and net earnings for the year 2002 will be higher than those of 2001. Sea Containers sold 301,800 Class A shares of Orient-Express Hotels in the second quarter of 2002 at an average price of about $20 per share. It stopped sales when the stock market generally weakened later in the quarter.
Mr. James B. Sherwood, President, said that shareholders have asked about the company's plan to sell and spin off its 60% shareholding in Orient-Express Hotels. He made the following points:
1. No decision will be taken regarding a spin-off until year end as such spin-off requires the consent of the company's banks and they will not consider the matter until the year's results are known.
2. Any shares received in a spin-off would be taxable to U.S. tax paying recipients because Sea Containers does not own 80% of the voting power in Orient-Express Hotels which is a requirement of the IRS for a tax free spin-off.
3. The company wishes to sell Orient-Express Hotels shares to retire public debt falling due in 2003. It has so far sold 1 million shares, leaving 18.4 million shares available for sale or spin-off. Because of uncertain market conditions it is impossible to quantify now how many shares will be spun-off, if any.
4. The company wishes to exit the Orient-Express Hotels investment during 2003.
Operating profits from container leasing were $3.8 million compared with $8.6 million in the year earlier period. Mr. Sherwood said that the reduction did not reflect that demand for older containers has increased significantly in the second quarter but it had been necessary to incur substantial positioning and repair expense to bring the units back into service. Repairs are expensed when incurred. Also, the seasonal refrigerated container fleet was returned in the quarter. It is expected to go back on hire late in the year. This fleet is used to move perishables from the southern hemisphere to the northern hemisphere in the November - April northern hemisphere winter. The GE SeaCo owned fleet utilization at July 31, 2002 was 97% while the utilization of older GE Capital and Sea Containers' owned units which are managed by GE SeaCo, called the "pool fleet" was 76%. At January 1, 2002 GE SeaCo fleet utilization was 96% and utilization of the pool fleet was 72%. GE SeaCo has acquired $63 million of new containers in the seven months ended July 31, 2002. Mr. Sherwood said that demand for pool fleet containers continues to be strong. Earlier in the year the demand was principally for 20' and 40' length high cube dry cargo containers but recently demand has increased for 40' standard height dry cargo containers as well. This will necessitate positioning and repairs of this equipment. Mr. Sherwood said that GE SeaCo was now seeking rate increases for the "pool" fleet. Significant savings in storage expense are being made as utilization rises.
Finance costs declined from $35.7 million in the second quarter of 2001 to $31.1 million in the second quarter of 2002.
Mr. Sherwood said that despite considerable effort, GNER's claim against Railtrack in relation to the Hatfield rail disaster and aftermath has not been settled. The parties are still significantly apart. Railtrack's position is that it admits causing the loss of revenue and additional costs incurred by GNER but is seeking to escape liability by whatever legal means are at its disposal. GNER has withheld from track access and other payments the money it believes is owed to it. GNER has claimed it is entitled to full compensation because of "Network Change" as provided in its contract with Railtrack. GNER has taken the matter to arbitration and has won, however, Railtrack has appealed the decision to the Rail Regulator. The Regulator has informed GNER that he will not rule on this matter until late September, 2002.
This news release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding earnings growth, investment plans and similar matters that are not historical facts. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause a difference include, but are not limited to, those mentioned in the news release, unknown effects of terrorist activity and any police or military response on the transport, leasing and leisure markets in which the company operates, varying customer demand and competitive considerations, inability to sustain price increases or to reduce costs, satisfaction of necessary conditions for a spinoff of Orient-Express Hotels shares (including sale of additional shares, compliance with public debt and bank loan requirements and Board approval) and delay or abandonment of that transaction, fluctuations in interest rates, currency values and public securities prices, variable fuel prices, variable container prices and lease and utilization rates, potentially unstable relations with labor unions, uncertainty of negotiating and completing proposed purchase, sale or capital expenditure transactions, inadequate sources of capital and unacceptability of finance terms, global, regional and industry economic conditions, shifting patterns and levels of world trade and tourism, realization of bookings and reservations as actual revenue, seasonality and adverse weather conditions, inability of Railtrack to restore, improve and maintain the U.K. rail infrastructure and uncertainty of claims against Railtrack and insurers, and legislative, regulatory and political developments. Further information regarding these and other factors is included in the filings by the company and Orient-Express Hotels Ltd. with the U.S. Securities and Exchange Commission.
The tender offer referred to in this news release is not directed, published, transmitted or distributed in or to the United States of America, Canada, Japan or Australia, nor to persons or entities in or from those countries. This news release does not constitute an offer of any kind for shares in Silja Oyj Abp.
Sea Containers Ltd. will conduct a conference call today, August 14, 2002 at 10.00 AM (EDT) which is accessible at 212-896-6021. A re-play of the conference call will be available until 5.00 PM (EDT) Friday, August 16 and can be accessed by calling 800-633-8284 (International dial-in #: 402-977-9140) and entering reservation number 20755966. A re-play will also be available on the company's website: http://www.seacontainers.com .
SEA CONTAINERS LTD. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS (UNAUDITED)
Three months ended June 30,
2002 2001
Revenue:
Passenger transport operations $296,091,000 $212,559,000*
Leisure operations 79,094,000 76,697,000
Container operations 27,512,000 33,622,000
Other 7,504,000** 3,564,000
Total revenue $410,201,000 $326,442,000
Earnings/(losses) before finance costs:
Passenger transport operations:
Silja*** $ 18,103,000 $ 10,043,000
Rail 15,787,000 9,449,000
Other operations 1,388,000 2,723,000*
35,278,000 22,215,000
Leisure operations 17,901,000 20,753,000
Container operations:
GE SeaCo 4,636,000 4,316,000
Other (867,000) 4,298,000
3,769,000 8,614,000
Other, including property, publishing
and plantations 2,608,000** 515,000
59,556,000 52,097,000
Corporate costs (3,743,000) (3,234,000)
Net finance costs**** (31,095,000) (35,681,000)
Earnings before minority interests
and income taxes 24,718,000 13,182,000
Minority interests (6,959,000) (5,334,000)
Earnings before income taxes 17,759,000 7,848,000
Provision for income taxes 1,490,000 1,425,000
Net earnings 16,269,000 6,423,000
Preferred share dividends (272,000) (272,000)
Net earnings on class A and class B
common shares $ 15,997,000 $ 6,151,000
Net earnings per class A and class B
common share:
Basic and diluted $ 0.79 $ 0.33
Weighted average number of class A and B
common shares:
Basic 20,192,917 18,529,195
Diluted 20,699,731 19,008,033
* Includes gain of $5,000,000 on sale of port assets.
** Includes gain of $2,225,000 on the sale by SCL of shares in its
subsidiary Orient-Express Hotels Ltd.
*** Includes 50% of Silja for 2001 and April 2002 but 100% from
May 1, 2002 when a majority shareholding was acquired and the
company was consolidated.
**** Includes SCL's share of interest charged in the GE SeaCo operations
of $1,127,000 (2001 - $1,745,000). SCL's share of Silja's interest
prior to consolidation of $967,000 (2001 - $2,855,000) is also
included.
SEA CONTAINERS LTD. AND SUBSIDIARIES
SUMMARY OF OPERATING RESULTS (UNAUDITED)
Six months ended June 30,
2002 2001
Revenue:
Passenger transport operations $472,213,000 $408,717,000*
Leisure operations 132,764,000 134,608,000
Container operations 60,835,000 68,567,000
Other 16,066,000** 5,758,000
Total revenue $681,878,000 $617,650,000
Earnings/(losses) before finance costs:
Passenger transport operations:
Silja *** $ 20,080,000 $ 9,928,000
Rail 24,890,000 18,709,000
Other operations (3,615,000) 9,881,000*
41,355,000 38,518,000
Leisure operations 23,236,000 31,430,000
Container operations:
GE SeaCo 8,852,000 8,556,000
Other 3,113,000 10,916,000
11,965,000 19,472,000
Other, including property, publishing
and plantations 6,830,000** (126,000)
83,386,000 89,294,000
Corporate costs (7,248,000) (6,605,000)
Net finance costs**** (61,731,000) (71,079,000)
Earnings before minority interests
and income taxes 14,407,000 11,610,000
Minority interests (7,131,000) (7,144,000)
Earnings before income taxes 7,276,000 4,466,000
Benefit from income taxes (3,283,000) (3,135,000)
Net earnings 10,559,000 7,601,000
Preferred share dividends (544,000) (544,000)
Net earnings on class A and class B
common shares $ 10,015,000 $ 7,057,000
Net earnings per class A and class B
common share:
Basic and diluted $ 0.52 $ 0.38
Weighted average number of class A and B
common shares:
Basic 19,367,727 18,528,819
Diluted 19,871,642 19,009,218
* Includes gains of $20,167,000 on sale of port assets.
** Includes gain of $6,318,000 on the sale by SCL of shares in its
subsidiary Orient-Express Hotels Ltd.
*** Includes 50% of Silja for 2001 and the four months to April 2002 but
100% from May 1, 2002 when a majority share holding was acquired and
the company was consolidated.
**** Includes SCL's share of interest charged in the GE SeaCo operations
of $2,185,000 (2001 - $3,726,000). SCL's share of Silja's interest
prior to consolidation of $3,202,000 (2001 - $6,033,000) is also
included.
SEA CONTAINERS LTD. AND SUBSIDIARIES
CONSOLIDATED AND CONDENSED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2002 2001
Containers and Ships, net
book value $1,662,680,000 $ 959,070,000
Real estate and other fixed assets,
net book value 871,195,000 744,726,000
Assets under capital leases, net
book value 27,496,000 25,078,000
Cash 153,063,000 216,936,000
Receivables 307,591,000 233,474,000
Inventories 66,163,000 54,277,000
Investments 143,991,000 273,681,000
Other assets 180,334,000 145,204,000
$3,412,513,000 $2,652,446,000
Liabilities with respect to Containers
and Ships $ 979,462,000 $ 671,540,000
Bank loans with respect to real estate
and other fixed assets 638,643,000 433,575,000
Obligations under capital leases 27,239,000 26,685,000
Other liabilities 686,495,000 485,738,000
Senior notes 423,150,000 423,294,000
Senior subordinated debentures 98,383,000 118,709,000
Redeemable preferred shares 15,000,000 15,000,000
Shareholders' equity 935,402,000 869,166,000
Class B common shares with voting
rights owned by subsidiaries (391,261,000) (391,261,000)
$3,412,513,000 $2,652,446,000
SOURCE Sea Containers Ltd.
CONTACT: William W. Galvin for Sea Containers Ltd., +1-203-618-9800, or Patricia Harper of Sea Containers America Inc, +1-212-302-5066
URL: http://www.seacontainers.com