Arlington Tankers Announces Unaudited Second Quarter 2008 Results

Company Declares Cash Dividend of $0.56 Per Share

HAMILTON, Bermuda, July 22 /PRNewswire-FirstCall/ -- Arlington Tankers
Ltd. (NYSE: ATB) today announced financial results for the second quarter
ended June 30, 2008. For the quarter ended June 30, 2008, the Company's total
revenues were $17.4 million, consisting of $16.5 million in basic vessel
charter hire and $900,000 in additional charter hire that the Company received
under its profit sharing arrangements.
On the basis of the second quarter results, Arlington's Board of Directors
has declared a cash dividend of $0.56 per share. The dividend is payable on
August 5, 2008 to shareholders of record at the close of business on August 1,
2008.
Second Quarter Results
The additional charter hire earned during the second quarter of 2008 was
derived from profit sharing arrangements under the time charters of the
Company's V-MAX, Panamax and Product tankers. Of the $900,000 in additional
charter hire, $600,000 was attributed to profit sharing for the two V-MAX
vessels. The remaining $300,000 was attributed to additional charter hire
from the Company's two Panamax tankers and the Company's two Product tankers
that are currently eligible to earn additional 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 second quarter of 2008,
including depreciation costs of $3.8 million and administrative expenses of
approximately $834,000 were $9.9 million. The Company's interest expense, net
of interest income for the second quarter of 2008, was $3.3 million. This
expense represents interest under the Company's $229.5 million, secured credit
facility with The Royal Bank of Scotland plc.
The Company's net income for the second quarter of 2008 was increased by
an unrealized gain of approximately $7.3 million, 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 income for the second quarter of 2008 was $11.5 million, or
$0.74 per share. Excluding the effect of the unrealized gain on the interest
rate swap, the Company's net income for the second quarter of 2008 was $4.2
million, or $0.27 per share.
Business Update
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 terms that expire at various dates, with the charters for four vessels
expiring in 2009, the charters for two vessels expiring in 2010 and the
charters for two vessels expiring in 2011. All of the charter contracts also
include options to extend the terms of the charters. During the second
quarter of 2008, the Company announced that Stena had exercised the first of
its three one-year options for the Stena Companion and Stena Concord, and its
30-month options for the Stena Contest and Stena Concept.
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 currently 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. As a result of Stena's exercise of the option to
extend the charters for the Stena Contest and Stena Concept, these vessels
will have the possibility of receiving additional charter hire during the
30-month period from January 5, 2009 through July 4, 2011. 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 and Eiger Shipping, SA, an
affiliate of the shipping branch of LukOil International Trading and Supply
Company.
"We are very pleased with overall results for the second quarter of 2008.
Arlington has consistently delivered on its dividend guidance and our profit
sharing arrangements generated positive cash flows for dividend distribution
for the fifteenth consecutive quarter since we commenced operations in 2004,"
said Edward Terino, Chief Executive Officer, President and Chief Financial
Officer of Arlington.
Dividend Policy
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 estimates the amount of cash available for dividends for
fiscal 2008 to be approximately $2.23 per share. The 2008 full year guidance
does not reflect any future additional hire revenues that the Company may
receive from the profit sharing arrangements for its two Panamax and two
eligible Product tankers in 2008. However, the estimate for 2008 does include
all additional hire revenues earned in the first and second quarters of 2008,
and additional hire expected to be earned during the remainder of 2008 from
the sub-charters of the Company's V-MAX vessels to Sun International and Eiger
Shipping, SA.
The Company's forward-looking guidance for its cash dividends is based on
the basic charter hire for all of the vessels and estimated additional hire
from profit sharing arrangements for the Company's V-MAX vessels while they
are sub-chartered to Sun International and Eiger Shipping, SA. Since
additional hire revenues from profit sharing arrangements for the Company's
two Panamax tankers and the two Product tankers that are currently eligible
for profit sharing are based on spot market rates which are volatile, the
Company does not provide any forward-looking estimate of additional hire
related to these vessels in its guidance.
The Company expects to announce its next dividend on October 21, 2008 and
to pay that dividend on or about November 4, 2008.
Use of Non-GAAP Financial Measures
This press release includes a presentation of a non-GAAP financial measure
of net income excluding the effect of an unrealized gain or loss 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.,
which effectively fixes the interest rate of the Company's debt. The
Company's management believes that this non-GAAP financial measure provides
useful information to investors because it excludes the effects of unrealized
gains and losses, which are non-cash items that may change from quarter to
quarter. Management believes that the unrealized gains and losses 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. are not necessarily
representative of underlying trends in the Company's performance and their
exclusion provides individuals with additional information to compare the
Company's results over multiple periods. The Company uses this non-GAAP
financial measure internally to focus management on period-to-period changes
in the Company's core business.
In accordance with the requirements of Regulation G issued by the
Securities and Exchange Commission, the table below presents the most directly
comparable GAAP financial measure and reconciles the non-GAAP financial
measure described above to GAAP net income.

Arlington Tankers Ltd.
(In thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007

Net income (GAAP) $11,515 $8,534 $9,037 $12,384

Unrealized (gain) on
interest rate swap ($7,284) ($3,408) ($170) ($2,331)

Net income (non-GAAP) $4,231 $5,126 $8,867 $10,053

Basic and diluted net
income per share:
GAAP $0.74 $0.55 $0.58 $0.80
Non-GAAP $0.27 $0.33 $0.57 $0.65

Shares used in per share
calculations:
Basic and diluted 15,500,000 15,500,000 15,500,000 15,500,000

About Arlington Tankers
Arlington Tankers Ltd. is an international, seaborne transporter of crude
oil and petroleum products. Arlington's fleet consists exclusively of eight,
modern double-hulled vessels and is one of the youngest tanker fleets in the
world, with an average vessel age of approximately 4.7 years. The fleet
consists of two V-MAX tankers, which are specially designed very large crude
carriers, two Panamax tankers and four Product tankers. All of the Company's
vessels are employed on long-term time charters. The Company was incorporated
in Bermuda in September 2004. The Company completed its initial public
offering on the New York Stock Exchange on November 10, 2004.
Safe Harbor Statement
This press release contains certain forward-looking statements and
information relating to the Company that are based on beliefs of the Company's
management as well as assumptions made by the Company and information
currently available to the Company, in particular the statements regarding the
Company's expectations as to the declaration, payment and estimated amount of
future dividends, the market rates which pertain to the Company's spot trading
vessels, additional hire that may be earned in the future, and the exercise by
the charterers of options to extend the terms of the charters of certain of
the Company's vessels. When used in this press release, words such as
"believe," "intend," "anticipate," "estimate," "project," "forecast," "plan,"
"potential," "will," "may," "should," and "expect" and similar expressions are
intended to identify forward-looking statements but are not the exclusive
means of identifying such statements. All statements in this document that
are not statements of historical fact are forward-looking statements.
The forward-looking statements contained in this press release reflect the
Company's current views with respect to future events and are subject to
certain risks, uncertainties and assumptions. Many important factors could
cause the Company's actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements, including,
among others: the possibility that the Company may not pay dividends, the
possibility that the Company's strategic alternatives analysis may not result
in the Company entering into a transaction, the possibility that any
transaction entered into may not be consummated, the highly cyclical nature of
the tanker industry, global demand for oil and oil products, the number of
newbuilding deliveries and the scrapping rate of older vessels, terrorist
attacks and international hostilities, and compliance costs with environmental
laws and regulations. These and other risks are described in greater detail
in the "Risk Factors" section of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2008, filed with the United States Securities
and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described in the forward-looking statements included in this press
release. The Company does not intend, and does not assume any obligation, to
update these forward-looking statements.
Contact:

Arlington Tankers Ltd.
Edward Terino, President, Chief Executive Officer and Chief Financial
Officer
203-221-2765

Arlington Tankers Ltd.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)

Three Three Six Six
Months Months Months Months
June 30, June 30, June 30, June 30,
2008 2007 2008 2007

Revenue $17,439 $17,775 $34,996 $35,117

Operating expenses:
Vessel operating expenses 5,179 5,014 10,430 9,965
Depreciation 3,848 3,819 7,610 7,595
Administrative expenses 834 614 1,457 1,142
Total operating expenses 9,861 9,447 19,497 18,702

Operating income 7,578 8,328 15,499 16,416

Other income (expenses):
Interest income 67 213 197 429
Interest expense (3,414) (3,415) (6,829) (6,792)
Unrealized gain on
interest rate swap 7,284 3,408 170 2,331

Other income
(expenses), net 3,937 206 (6,462) (4,032)

Net income $11,515 $8,534 $9,037 $12,384

Net income per share $0.74 $0.55 $0.58 $0.80

Weighted average shares
outstanding 15,500,000 15,500,000 15,500,000 15,500,000

Arlington Tankers Ltd.
Condensed Consolidated Balance Sheets
(In thousands)

June 30, 2008 Dec. 31, 2007
Assets (Unaudited)
Current assets:
Cash and cash equivalents $12,375 $6,274
Short-term investments -- 12,500
Accounts receivable 908 304
Prepaid expenses and accrued income 134 184
Total current assets 13,417 19,262

Vessels, net 321,720 329,330
Deferred debt issuance costs 598 717
Total assets $335,735 $349,309

Liabilities and Shareholders' Equity
Current liabilities:
Accrued expenses $1,063 $451
Unearned revenue -- 5,693
Total current liabilities 1,063 6,144

Interest rate swap agreement at fair value 7,283 7,453
Long term debt 229,500 229,500
Total liabilities 237,846 243,097

Shareholders' equity 97,889 106,212
Total liabilities and
shareholders' equity $335,735 $349,309

SOURCE Arlington Tankers Ltd.

Edward Terino, President, Chief Executive Officer and Chief Financial Officer
of Arlington Tankers Ltd., +1-203-221-2765