Overseas Shipholding Group Reports Third Quarter and Year-to-Date 2009 Results

Overseas Shipholding Group, Inc. (NYSE: OSG), a market leader in providing energy transportation services, today reported results for the third quarter and nine months ended September 30, 2009.

For the quarter ended September 30, 2009, the Company reported time charter equivalent (TCE¹) revenues of $207.3 million, a 52% decline from $434.7 million in 2008. The decline in TCE revenues was due to lower daily TCE rates earned by all of the Company’s international flag vessel classes, coupled with a 734 day decrease in revenue days. Average daily TCE rates earned by the Company’s international crude oil tankers declined 65% to $21,204 per day and international product carriers declined 34% to $16,242 per day. The decrease in revenue days was predominantly due to the redelivery of a net 13 vessels quarter-over-quarter. Net loss attributable to the Company (Loss²) was $19.6 million, or $0.73 per diluted share, compared with net income attributable to the Company (Earnings²) of $197.8 million, or $6.69 per diluted share, in the same period a year ago. Special Items, which included vessel write-downs, totaled $6.7 million, or $0.25 per diluted share, reduced the Loss in the third quarter of 2009 (see Special Items later in this press release), compared with Special Items that totaled $54.9 million, or $2.22 per diluted share, that increased Earnings in the same period a year ago. Period-over-period diluted EPS reflects the Company’s repurchase of 6% of total shares outstanding since September 30, 2008.

Morten Arntzen, President and CEO, said, "As expected, we faced very tough market conditions during the third quarter. Year-over-year contractions in global oil demand and oil production, notably by Saudi Arabia, were exacerbated by continued poor refining environments. New tanker deliveries year-to-date increased vessel supply, which was partially offset by slippage in the tanker orderbook and by use of tankers for storage of both crude oil and refined petroleum products. These elements combined to drive shipping rates down significantly, at times into negative territory. While our quarterly financial results were disappointing on an absolute basis, our relative commercial performance was positive as we again outperformed average rates in the period. We continue to stay focused on tightening our belts with significant quarter-over-quarter reductions in G&A, charter-hire and vessel expenses.”

Arntzen concluded, “Although the near-term tanker market looks challenging, our diversified portfolio of modern assets, book of term business, fortress balance sheet and conservative financial management ensures that we will weather this storm and be better positioned than our competitors to benefit from a rebound in the tanker markets."

For the nine months ended September 30, 2009, the Company reported TCE revenues of $748.5 million, a 37% decrease from $1.2 billion in 2008. The year-over-year decline in TCE revenues was due to lower TCE rates earned across all international flag vessel classes. Earnings for the first nine months were $93.3 million, or $3.47 per diluted share, compared with Earnings of $397.2 million, or $12.99 per diluted share, a year ago. Earnings in the first nine months of 2009 included Special Items that increased Earnings by $100.5 million, or $3.74 per diluted share, compared with Special Items that totaled $39.5 million, or $1.77 per share, that increased Earnings in the same period a year earlier.

The Company’s U.S. Flag fleet includes four single hull product carriers with limited remaining useful lives (two are to be phased out in 2012 and two in 2013) and one 1977-built double hull tanker with a less efficient gas turbine engine. As a result of negative market factors and current recessionary economic conditions, OSG has put three of its four single hull product carriers in lay up for varying amounts of time in 2009 and has evaluated future employment opportunities for the Overseas Diligence, the above mentioned 1977-built tanker, after it completes its service in lightering, which is expected to occur in the first half of 2010. The Company was recently informed that the time charter for the Overseas Philadelphia, a single hull vessel, will be not be extended beyond its current expiry in January 2010. This vessel is required to be phased out by May 2012 and its next special survey is scheduled to occur in the first half of 2010. Accordingly, the Company recorded a charge of $12.5 million to write-down the carrying amount of the Overseas Diligence and Overseas Philadelphia to their estimated fair values as of September 30, 2009.

Segment Information

TCE revenues in the third quarter of 2009 for the Crude Oil segment were $99.8 million, a decline of $195.3 million, or 66%, from $295.1 million in the same period of 2008. The decrease was principally due to dramatically lower average spot rates earned across all vessel classes. TCE revenues for the Product Carrier segment were $46.0 million, a decline of $34.6 million, or 43%, from $80.6 million in the year earlier period. The decrease was due to lower average spot rates earned by the LR1s and the medium-range (MR) product carriers and a decrease in revenue days attributable to the redelivery of 13 single hull MRs after September 30, 2008. TCE revenue for the U.S. Flag segment were $59.5 million, an increase of $4.9 million, or 9%, from $54.6 million in the same quarter last year. The increase was principally due to higher time charter rates on charter agreements executed in 2006 for three newbuild product carriers that delivered subsequent to June 30, 2008, partially offset by an increase in out-of-service days attributable to the lay up of four U.S. Flag vessels for all or part of the third quarter. For more detail, see Spot and Fixed TCE Rates Achieved and Revenue Days later in the press release.

Additional Detail on Quarterly Results

Total operating expenses before Special Items further described below, declined 15%, or $45.8 million, to $265.7 million compared with $311.5 million in the corresponding quarter in 2008. Period-over-period changes included:

• Vessel expenses decreased to $66.7 million, or 16%, from $79.4 million principally due to the timing of delivery of stores and spares, reductions in repairs, a reduction in costs related to a fixed rate technical management agreement with DHT Maritime, Inc. (that was renegotiated in early 2009), the redelivery of 13 older product carriers, and reduced levels of expenses for U.S. Flag vessels in lay up during the third quarter;
• Charter hire expenses were $93.5 million, a 19% decrease from $115.3 million, principally due to lower profit share due to owners;
• Depreciation and amortization was $41.0 million, a 12% decline from $46.4 million, principally due to two U.S. Flag vessels being classified as held for sale (for which depreciation ceased) and the redelivery of 13 single hull MR product carriers subsequent to September 30, 2008; and
• G&A expenses decreased 13% to $28.3 million from $32.4 million. Lower G&A was due to Companywide cost control efforts that included reductions in compensation and benefits paid to shoreside staff and lower consulting, legal, travel and entertainment and other discretionary expenditures. In addition, the Company incurred $1.7 million of expenses associated with the expected tender offer for OSG America L.P. in the current quarter.

Special Items

Other items that increased reported results in the third quarter of 2009 aggregated $6.7 million, or $0.25 per share, and included:

• $13.3 million gain on vessel sale, or $0.50 per diluted share, resulting principally from the termination of a time charter-in contract due to the vessel owner’s breach of the underlying charter party agreement. OSG redelivered the VLCC four years earlier than planned and reversed the unamortized balance of the deferred gain that arose from the 2006 sale leaseback transaction;
• $12.5 million, or $0.36 per diluted share, associated with the write-down of two U.S. Flag tankers, the Overseas Philadelphia and Overseas Diligence;
• $5.1 million, or $0.19 per diluted share, benefit related to the reversal of previously recorded shipyard contract termination charges;
• $1.7 million, or $0.05 per diluted share, related to costs associated with OSG’s expected tender offer for OSG America L.P.; and
• $0.7 million, or $0.03 per diluted share, related to a negative change in the mark-to-market balance of unrealized freight derivative positions.

For a detailed schedule of these special items in the current, year-to-date and corresponding historical periods, see “Reconciling Information,” which is posted in Webcasts and Presentations in the Investor Relations section of www.osg.com.

Liquidity and Other Key Metrics

Liquidity and Credit Metrics as of September 30, 2009 were:

• Cash and short-term investment balances (which consist of time deposits with maturities greater than 90 days) were $633 million, up from $571 million in June 2009;
• Total debt was $1.6 billion, up from $1.4 billion as of December 31, 2008 due to borrowings under the company’s new CEXIM credit facility, discussed further below;
• Availability under the Company’s secured and unsecured credit facilities totaled $1.2 billion, up from $1.1 billion in June 2009;
• Net debt was $918.7 million at September 30, 2009;
• Liquidity³, including undrawn bank facilities, was approximately $1.9 billion and liquidity-adjusted debt to capital⁴ was 32.1%, a decrease from 35.5% as of December 31, 2008, adjusted to reflect the reclassification of the noncontrolling interest to equity in accordance with accounting guidance that became effective in 2009;
• Total equity was $1.9 billion;
• Construction contract commitments were $495 million, a decrease of $140 million from June 2009 levels; and
• Principal repayment obligations are less than $38 million per annum through 2011.

Fixed Revenue - Aggregate future revenues associated with noncancelable time charters as of September 30, 2009, totaled $859.6 million, down from $1.1 billion at September 30, 2008. Fixed revenue for the balance of 2009 totaled $79.7 million and includes $75.9 million of time charter revenues and $3.9 million from time charters entered into by certain of the Company’s commercial pools. The Company’s level of fixed revenue, expected cash generated from operations and current debt capacity well exceed its lease, debt, capital and other operating commitments for the remainder of 2009 and for 2010.

Quarterly Dividend Announced - On September 16, 2009, the Board declared a quarterly dividend of $0.4375 per share to stockholders of record on November 9, 2009, payable on November 24, 2009.

Quarterly Events and Other Activities

New Credit Facility - During the quarter, OSG entered into a $389 million, 12-year secured facility with The Export-Import Bank of China, borrowings under which three VLCC and two Aframax crude oil tankers constructed in China are financed. During September, the Company borrowed $299 million on the facility.

Update on Tender Offer for OSG America L.P. - On September 24, 2009, OSG announced an increase in the price it will offer to pay for all of the outstanding publicly held common units of OSG America L.P. (OSG America; NYSE: OSP) to $10.25 in cash per unit. The tender offer is expected to commence the first week of November after all necessary documentation is completed.

Delivery of FSO Vessels Delayed - Delivery to Maersk Oil Qatar AS (MOQ) under service contracts of the FSO Africa and FSO Asia, two ULCCs being converted to Floating Storage and Offloading (FSO) service vessels, has been delayed. The vessels are owned by joint ventures in which OSG and Euronav N.V. (Euronext Brussels: EURN) each has a 50% interest. The joint venture owner of the FSO Asia has notified MOQ that the FSO Asia will begin providing FSO services on November 11, 2009, before the November 19, 2009 cancellation date after which MOQ has the right to terminate both the FSO Asia and the FSO Africa service contracts. The FSO Africa is expected to deliver to MOQ in the first two months of 2010. Under the terms of the service contracts, if the conversion of the FSO Africa is not completed and the FSO Africa does not begin providing FSO services to MOQ by January 19, 2010 (the “Africa Cancellation Date”), MOQ has the right to terminate both the FSO Africa and the FSO Asia service contracts. It is uncertain whether the conversion of the FSO Africa will be completed and the vessel will be able to begin providing FSO services to MOQ by the Africa Cancellation Date. MOQ has notified the joint venture partners that MOQ reserves all of its rights if the FSO Africa does not begin providing services by the Africa Cancellation Date.

Management believes that both the FSO Asia and the FSO Africa are critical to MOQ’s multi-billion dollar expansion on the Al Shaheen field and that MOQ is unlikely to exercise its rights to terminate either or both of the service contracts if the FSO Africa does not begin providing FSO services by the Africa Cancellation Date. However, no assurance can be given that the FSO Africa will begin providing FSO services by the Africa Cancellation Date, or that in any such event, MOQ will not exercise its rights to terminate either or both service contracts or request changes to contract terms.

Crude Oil

• Two bareboat chartered-in Panamaxes redelivered, the Overseas Cleliamar and Overseas Polys, on August 21, 2009 and September 25, 2009, respectively.
• The Ardenne Venture, a time-chartered-in VLCC, redelivered September 8, 2009.
• The time charter-in contract of the Samho Crown was terminated on September 10, 2009.

Products

• During the quarter OSG purchased the Overseas Skopelos, a 50,000 dwt MR product carrier. The high specification IMO III vessel is the Company’s first owned newbuilding MR delivery in five years and marks the beginning of OSG’s strategic MR fleet renewal program allowing the Company to continue to service its customers following the re-delivery of 13 single hull tankers in the last 12 months. The vessel is expected to deliver during the first week of November 2009.
• A single hull MR product carrier, Overseas Jamar, redelivered on August 8, 2009. Five other single hull MR product carriers, the Overseas Athens, Overseas Ermar, Overseas Fulmar, Overseas Allenmar and Overseas Primar, redelivered in July. OSG’s remaining international flag product carrier fleet is now fully double hull.
• The Atlantic Pisces delivered on July 20, 2009. The vessel, a 47,000 dwt MR product carrier, has been time chartered-in for 10 years.

Spot and Fixed TCE Rates Achieved and Revenue Days

The following tables provide a breakdown of TCE rates achieved for the three months ended September 30, 2009 for the International Crude Oil and Product Carrier segments between spot and fixed charter rates and the related revenue days. The Company has entered into FFAs and related bunker swaps as hedges for reducing the volatility of earnings from operating the Company’s VLCCs in the spot market. These derivative instruments seek to create synthetic time charters. The impact of these derivatives, which qualify for hedge accounting treatment, are reported together with time charters entered in the physical market under “Fixed Earnings.” The information in these tables is based in part on information provided by the pools or commercial joint ventures in which the segment’s vessels participate.

Revenue days in the quarter ended September 30, 2009 totaled 9,238 compared with 9,972 in the same period a year earlier. A summary fleet list by vessel class can be found later in this press release.

¹ See Appendix 1 for reconciliation of TCE revenues to shipping revenues and EBITDA to Earnings, which are non-GAAP measures

² Effective January 1, 2009, OSG adopted an accounting standard that changed the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. The new standard required retrospective adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of the new standard will be applied prospectively. The adoption of the new standard did not have a material impact on the Company’s financial statements. References to Results, Earnings or Loss refers to Net Income / (Loss) attributable to Overseas Shipholding Group, Inc.

³ Liquidity is defined as cash plus short-term investments plus Capital Construction Fund plus availability under the Company’s secured and unsecured credit facilities.

⁴ Liquidity-adjusted debt is defined as long-term debt reduced by cash, short-term investments and the Capital Construction Fund.

		Three Months Ended Sep. 30, 2009						Three Months Ended Sep. 30, 2008
		Spot Earnings		Fixed Earnings		Total		Spot Earnings		Fixed Earnings		Total
Business Unit – Crude Oil
VLCC1
Average TCE Rate		$22,977		$38,920				$113,358		$77,945
Number of Revenue Days		436		890		1,326		1,035		435		1,470
Suezmax
Average TCE Rate		$14,000		$ —				$55,716		$ —
Number of Revenue Days		206		—		206		199		—		199
Aframax
Average TCE Rate		$9,266		$30,972				$52,803		$31,962
Number of Revenue Days		920		313		1,233		845		383		1,228
Aframax – Lightering
Average TCE Rate		$17,844		$ —				$29,598		$ —
Number of Revenue Days		890		—		890		649		—		649
Panamax2
Average TCE Rate		$14,298		$24,940				$39,225		$26,554
Number of Revenue Days		592		368		960		659		460		1,119
Other Crude Oil Revenue Days		92		—		92		180		—		180
Total Crude Oil Revenue Days		3,136		1,571		4,707		3,567		1,278		4,845
Business Unit – Refined Petroleum Products
Aframax (LR2)
Average TCE Rate		$ —		$17,046				$ —		$ —
Number of Revenue Days		—		92		92		—		—		—
Panamax (LR1)
Average TCE Rate		$14,813		$ —				$40,507		$18,566
Number of Revenue Days		364		—		364		184		184		368
Handysize (MR)
Average TCE Rate		$11,766		$22,333				$31,412		$20,250
Number of Revenue Days		1,279		1,095		2,374		1,023		1,900		2,923
Total Refined Pet. Products Rev. Days		1,643		1,187		2,830		1,207		2,084		3,291
Business Unit – U.S. Flag
Number of Revenue Days		691		918		1,609		718		964		1,682
Other – Number of Revenue Days		—		92		92		—		154		154
TOTAL REVENUE DAYS		5,470		3,768		9,238		5,492		4,480		9,972

¹Excludes ULCCs. The revenue days for the ULCCs are included in Other Crude Oil.

²Includes one vessel performing a bareboat charter-out during the three months ended September 30, 2009 and 2008.

Consolidated Statements of Operations
($ in thousands, except per share amounts)		Three Months Ended						Nine Months Ended
		Sep. 30, 2009			Sep. 30, 2008			Sep. 30, 2009			Sep. 30, 2008
Shipping Revenues:
Pool revenues		$78,352			$277,782			$320,195			$727,246
Time and bareboat charter revenues		79,289			92,702			250,632			275,563
Voyage charter revenues		85,935			102,188			280,209			308,763
		243,576			472,672			851,036			1,311,572
Operating Expenses:
Voyage expenses		36,278			37,938			102,564			114,890
Vessel expenses		66,673			79,395			210,151			230,049
Charter hire expenses		93,505			115,271			309,442			309,310
Depreciation and amortization		40,977			46,436			129,748			141,342
General and administrative		28,313			32,430			84,720			104,224
Severance and relocation costs		-			-			2,317			-
Shipyard contract termination costs		(5,141	)		-			27,074			-
Gain on disposal of vessels, net of impairment		(830	)		(31,517	)		(128,125	)		(55,208	)
Total Operating Expenses		259,775			279,953			737,891			844,607
Income / (Loss) from Vessel Operations		(16,199	)		192,719			113,145			466,965
Equity in income of affiliated companies		2,480			3,574			6,068			8,951
Operating Income / (Loss)		(13,719	)		196,293			119,213			475,916
Other income / (expense)		873			10,491			1,354			(32,944	)
		(12,846	)		206,784			120,567			442,972
Interest expense		10,933			12,295			33,208			47,849
Income / (Loss) before Federal Income Taxes		(23,779	)		194,489			87,359			395,123
Credit for federal income taxes		1,850			1,071			6,153			1,842
Net Income / (Loss)		(21,929	)		195,560			93,512			396,965
Less: Net (Income) / Loss Attributable to the Noncontrolling Interest		2,305			2,280			(180	)		245
Net Income / (Loss) Attributable to Overseas Shipholding Group, Inc.		$(19,624	)		$197,840			$93,332			$397,210
Weighted Average Number of Common Shares Outstanding:
Basic		26,864,527			29,353,025			26,863,817			30,358,628
Diluted		26,864,527			29,572,378			26,871,110			31,572,611
Per Share Amounts:
Basic net income / (loss) attributable to Overseas Shipholding Group, Inc.		$(.73	)		$6.74			$3.47			$13.08
Diluted net income / (loss) attributable to Overseas Shipholding Group, Inc.		$(.73	)		$6.69			$3.47			$12.99
Cash dividends declared		$0.44			$0.44			$1.75			$1.50

TCE Revenue by Segment

The following table reflects TCE revenues generated by the Company’s three reportable segments for the three and nine months ended September 30, 2009 and 2008 and excludes the Company’s proportionate share of TCE revenues of affiliated companies. See Appendix 1 for reconciliations of time charter equivalent revenues to shipping revenues.

		Three Months Ended Sep. 30,								Nine Months Ended Sep. 30,
				% of				% of				% of				% of
($ in thousands)		2009		Total		2008		Total		2009		Total		2008		Total
International Flag
Crude Tankers		$99,805		48.1		$295,099		67.9		$387,936		51.8		$798,908		66.8
Product Carriers		45,966		22.2		80,589		18.5		180,732		24.2		218,593		18.3
Other		1,978		1.0		4,458		1.0		5,869		0.8		20,124		1.7
U.S.		59,549		28.7		54,588		12.6		173,935		23.2		159,057		13.2
Total TCE Revenues		$207,298		100.0		$434,734		100.0		$748,472		100.0		$1,196,682		100.0

Income from Vessel Operations by Segment

The following table reflects income from vessel operations for the three and nine months ended September 30, 2009 and 2008 accounted for by each reportable segment. Income from vessel operations is before general and administrative expenses, severance and relocation costs, shipyard contract termination costs and gain/(loss) on disposal of vessels.

		Three Months Ended Sep. 30,								Nine Months Ended Sep. 30,
				% of				% of				% of				% of
($ in thousands)		2009		Total		2008		Total		2009		Total		2008		Total
International Flag
Crude Tankers		$5,309		86.4		$164,718		85.1		$74,259		74.9		$436,567		84.6
Product Carriers		(5,207)		(84.8)		20,816		10.7		6,007		6.1		52,164		10.1
Other		(266)		(4.3)		918		0.5		(639)		(0.6)		5,381		1.0
U.S.		6,307		102.7		7,180		3.7		19,504		19.6		21,869		4.3
Total Income from Vessel Operations		$6,143		100.0		$193,632		100.0		$99,131		100.0		$515,981		100.0

Reconciliation of income from vessel operations of the segments to income / (loss) before federal income taxes, including net income attributable to noncontrolling interest, as reported in the consolidated statements of operations follow:

		Three Months Ended Sep. 30,						Nine Months Ended Sep. 30,
($ in thousands)		2009			2008			2009			2008
Total income from vessel operations of all segments		$6,143			$193,632			$99,131			$515,981
General and administrative expenses		(28,313	)		(32,430	)		(84,720	)		(104,224	)
Severance and relocation costs		-			-			(2,317	)		-
Shipyard contract termination costs		5,141			-			(27,074	)		-
Gain on disposal of vessels		830			31,517			128,125			55,208
Consolidated income / (loss) from vessel operations		(16,199	)		192,719			113,145			466,965
Equity in income of affiliated companies		2,480			3,574			6,068			8,951
Other income/ (expense)		873			10,491			1,354			(32,944	)
Interest expense		(10,933	)		(12,295	)		(33,208	)		(47,849	)
Income / (loss) before federal income taxes		($23,779	)		$194,489			$87,359			$395,123

Consolidated Balance Sheets
		Sep. 30,		Dec. 31,
($ in thousands)		2009		2008
ASSETS
Current Assets:
Cash and cash equivalents		$583,170		$343,609
Short-term investments		50,000		-
Voyage receivables		143,081		219,500
Other receivables, including federal income taxes recoverable		66,364		64,773
Inventories, prepaid expenses and other current assets		82,890		50,407
Total Current Assets		925,505		678,289
Capital Construction Fund		40,679		48,681
Restricted cash		7,945		-
Vessels and other property, less accumulated depreciation		2,738,320		2,683,147
Vessels under capital leases, less accumulated amortization		-		1,101
Vessels held for sale		-		53,975
Deferred drydock expenditures, net		63,386		79,837
Total Vessels, Deferred Drydock and Other Property		2,801,706		2,818,060
Investments in affiliated companies		155,345		98,620
Intangible assets, less accumulated amortization		100,962		106,585
Goodwill		9,589		9,589
Other assets		45,362		130,237
Total Assets		$4,087,093		$3,890,061
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities		$158,885		$167,615
Current installments of long-term debt		33,155		26,231
Current obligations under capital leases		-		1,092
Total Current Liabilities		192,040		194,938
Long-term debt		1,592,598		1,396,135
Deferred gain on sale and leaseback of vessels		93,152		143,948
Deferred federal income taxes and other liabilities		264,188		330,407
Equity
Overseas Shipholding Group, Inc. stockholders’ equity		1,851,049		1,722,867
Noncontrolling interest		94,066		101,766
Total Equity		1,945,115		1,824,633
Total Liabilities and Equity		$4,087,093		$3,890,061

Consolidated Statements of Cash Flows
($ in thousands)		Nine Months Ended Sep. 30,
		2009		2008
Cash Flows from Operating Activities:
Net income		$93,512		$396,965
Items included in net income not affecting cash flows:
Depreciation and amortization		129,748		141,342
Amortization of deferred gain on sale and leasebacks		(34,336)		(36,350)
Deferred compensation relating to restricted stock and stock option grants		9,969		9,204
Provision / (credit) for deferred federal income taxes		(7,000)		(1,809)
Unrealized (gains)/losses on forward freight agreements and bunker swaps		(1,200)		6,152
Undistributed earnings of affiliated companies		8,894		(3,195)
Other – net		7,273		9,602
Items included in net income related to investing and financing activities:
Loss on sale or write-down of securities		3,290		193
Gain on disposal of vessels		(128,125)		(55,208)
Payments for drydocking		(24,590)		(40,732)
Distributions from subsidiaries to noncontrolling interest owners		(7,880)		(7,033)
Changes in operating assets and liabilities		148,633		(122,801)
Net cash provided by operating activities		198,188		296,330
Cash Flows from Investing Activities:
Short-term investments		(50,000)		—
Purchases of marketable securities		—		(15,112)
Sale of marketable securities		159		5,327
Expenditures for vessels		(362,548)		(458,181)
Withdrawals from Capital Construction Fund		8,265		82,385
Proceeds from disposal of vessels		301,182		272,241
Expenditures for other property		(3,093)		(9,197)
Distributions from affiliated companies – net		8,822		14,196
Shipyard contract termination payments		(20,476)		—
Other – net		2,120		112
Net cash used in investing activities		(115,569)		(108,229)
Cash Flows from Financing Activities:
Increase in restricted cash		(7,945)		—
Purchases of treasury stock		(1,013)		(199,918)
Issuance of debt, net of issuance costs		299,156		110,812
Payments on debt and obligations under capital leases		(96,870)		(226,219)
Cash dividends paid		(35,338)		(32,493)
Issuance of common stock upon exercise of stock options		334		513
Other – net		(1,382)		(540)
Net cash provided by / (used in) in financing activities		156,942		(347,845)
Net increase/(decrease) in cash and cash equivalents		239,561		(159,744)
Cash and cash equivalents at beginning of year		343,609		502,420
Cash and cash equivalents at end of period		$583,170		$342,676

Fleet Information

As of September 30, 2009, OSG’s owned, operated and newbuild fleet totaled 128 International Flag and U.S. Flag vessels compared with 156 at September 30, 2008. Fifty-six percent, or 72 vessels, were owned as of September 30, 2009, with the remaining vessels bareboat or time chartered-in. Adjusted for OSG’s participation interest in joint ventures and chartered-in vessels, the fleet totaled 121.3 vessels. OSG’s newbuild program totaled 26 vessels (16 owned and 10 chartered-in) across its crude oil, product and U.S. Flag lines of business. A detailed fleet list and updates on vessels under construction can be found in the Fleet section on www.osg.com.

Fleet Detail
Vessel Type		Vessels Owned				Vessels Chartered-in				Total at Sep. 30, 2009
Operating Fleet		Number		Weighted by Ownership		Number		Weighted by Ownership		Total Vessels		Vessels Weighted by Ownership			Total Dwt
VLCC (including ULCC)		8		8.0		7		5.9		15		13.9			4,735,659
Suezmax		-		-		2		2.0		2		2.0			317,000
Aframax		6		6.0		8		6.4		14		12.4			1,571,060
Panamax		9		9.0		-		-		9		9.0			626,834
Lightering		2		2.0		4		3.0		6		5.0			536,645
International Flag Crude Tanker		25		25.0		21		17.3		46		42.3			7,787,198
Aframax (LR2)		-		-		1		1.0		1		1.0			104,024
Panamax (LR1)		2		2.0		2		2.0		4		4.0			297,374
Handysize1 (MR)		10		10.0		15		15.0		25		25.0			1,179,583
International Flag Product Carrier		12		12.0		18		18.0		30		30.0			1,580,981
Car Carrier		1		1.0		-		-		1		1.0			16,101
Total Int’l Flag Operating Fleet		38		38.0		39		35.3		77		73.3			9,384,280
Handysize		4		4.0		7		7.0		11		11.0			515,025
ATB		7		7.0		-		-		7		7.0			204,150
Lightering		3		3.0		-		-		3		3.0			115,708
Total U.S. Flag Operating Fleet2		14		14.0		7		7.0		21		21.0			834,883
LNG Fleet		4		2.0		-		-		4		2.0			864,800 cbm
TOTAL OPERATING FLEET		56		54.0		46		42.3		102		96.3			10,219,163 864,800 cbm
Newbuild/Conversion Fleet
International Flag
VLCC		3		3.0		-		-		3			3.0		893,000
FSO		2		1.0		-		-		2			1.0		883,548
Panamax (LR1)		4		4.0		-		-		4			4.0		294,000
Handysize (MR)		5		5.0		4		4.0		9			9.0		445,350
Chemical Tanker		-		-		1		1.0		1			1.0		19,900
U.S. Flag
Product Carrier		-		-		5		5.0		5			5.0		234,075
Lightering ATB		2		2.0		-		-		2			2.0		91,112
TOTAL NEWBUILD FLEET		16		15.0		10		10.0		26			25.0		2,860,985
TOTAL OPERATING & NEWBUILD FLEET		72		69.0		56		52.3		128			121.3		13,080,148 864,800 cbm

¹Includes two owned U.S. Flag product carriers that trade internationally with associated revenue included in the Product Carrier segment

²Overseas New Orleans and OSG 214 were in lay up as of September 30, 2009

Average Age of International Operating Fleet

The table below reflects the average age of the Company’s owned International Flag fleet compared with the world fleet.

		Average Age of		Average Age of		Average Age of
		OSG’s Owned Fleet		OSG’s Owned Fleet		World Fleet
Vessel Class		at 9/30/09		at 9/30/08		at 10/1/09*
VLCC (including ULCC)		8.8 years		7.7 years		8.0 years
Aframax		7.7 years		9.3 years		7.6 years
Panamax**		6.2 years		5.0 years		7.3 years
Handysize		7.1 years		6.1 years		8.2 years

*Source: Clarkson database as of October 1, 2009.

**Includes Panamax tankers that trade crude oil and refined petroleum products.

Off Hire and Scheduled Drydock

In addition to regular inspections by OSG personnel, all vessels are subject to periodic drydock, special survey and other scheduled maintenance. The table below sets forth actual days off hire for the third quarter of 2009 and anticipated days off hire for the above-mentioned events by class for the fourth quarter of 2009.

				Projected
		Actual Days		Days Off
		Off Hire		Hire
		Q309		Q409
Trade – Crude Oil
VLCC (including ULCC)		12		39
Suezmax		-		4
Aframax		65		65
Panamax		7		5
Trade – Refined Petroleum Products
Aframax (LR2)		-		-
Panamax (LR1)		4		10
Handysize (MR)		39		79
Trade – U.S. Flag
Product Carrier		4		57
ATB		31		48
Other		4		3
Total		166		310

Third quarter 2009 excludes 284 days associated with four U.S. Flag vessels in lay up: the OSG 214, Overseas Galena Bay, Overseas Puget Sound and Overseas New Orleans. Projected off hire days exclude 344 days (Q409) associated with U.S. Flag vessels expected to be in lay up.

Appendix 1 – Reconciliation to Non-GAAP Financial Information

TCE Reconciliation

Reconciliation of time charter equivalent revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:

		Three Months Ended Sep. 30,				Nine Months Ended Sep. 30,
($ in thousands)		2009		2008		2009		2008
Time charter equivalent revenues		$207,298		$434,734		$748,472		$1,196,682
Add: Voyage Expenses		36,278		37,938		102,564		114,890
Shipping revenues		$243,576		$472,672		$851,036		$1,311,572

Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.

EBITDA Reconciliation

The following table shows reconciliations of net income / (loss) attributable to the Company as reflected in the consolidated statements of operations, to EBITDA:

		Three Months Ended Sep. 30,				Nine Months Ended Sep. 30,
($ in thousands)		2009		2008		2009		2008
Net income / (loss) attributable to OSG		($19,624)		$197,840		$93,332		$397,210
Credit for income taxes		(1,850)		(1,071)		(6,153)		(1,842)
Interest expense		10,933		12,295		33,208		47,849
Depreciation and amortization		40,977		46,436		129,748		141,342
EBITDA		$30,436		$255,500		$250,135		$584,559

EBITDA represents operating earnings excluding net income attributable to the noncontrolling interest, which is before interest expense and income taxes, plus other income and depreciation and amortization expense. EBITDA is presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA should not be considered a substitute for net income/(loss) attributable to the Company or cash flow from operating activities prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. While EBITDA is frequently used as a measure of operating results and performance, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.

Appendix 2 – Capital Expenditures

The following table presents information with respect to OSG’s capital expenditures for the three and nine months ended September 30, 2009 and 2008:

		Three Months Ended Sep. 30,				Nine Months Ended Sep. 30,
($ in thousands)		2009		2008		2009		2008
Expenditures for vessels		$180,939		$205,921		$362,548		$458,181
Investments in and advances to affiliated companies		37,363		30		84,422		5,764
Payments for drydockings		10,415		13,119		24,590		40,732
		$228,717		$219,070		$471,560		$504,677

Appendix 3 – Fourth Quarter 2009 TCE Rates

The Company has achieved the following average estimated TCE rates for the fourth quarter of 2009 for the percentage of days booked for vessels operating through October 23, 2009. The information is based in part on data provided by the pools or commercial joint ventures in which the vessels participate. All numbers provided are estimates and may be adjusted for a number of reasons, including the timing of any vessel acquisitions or disposals and the timing and length of drydocks and repairs. In addition, information presented for VLCCs as fixed includes management’s expectations with respect to the synthetic time charters entered into by the Company.

				Fourth Quarter Revenue Days
		Average TCE		Fixed as of		Open as of				% Days
Vessel Class and Charter Type		Rate		10/23/09		10/23/09		Total		Booked
Business Unit – Crude Oil
VLCC – Spot		$20,000		251		172		423		59%
VLCC – Fixed		$42,000		539		371		910		59%
Suezmax – Spot		$20,000		72		114		186		39%
Aframax – Spot		$10,000		333		563		896		37%
Aframax – Fixed		$21,000		176		—		176		100%
Aframax Lightering		$22,500		215		592		808		27%
Panamax – Spot		$15,500		86		370		456		19%
Panamax – Time		$24,000		367		—		367		100%
Business Unit – Refined Petroleum Products
Panamax (LR1) – Spot		$15,000		72		296		368		20%
Handysize (MR) – Spot		$11,500		445		847		1,292		34%
Handysize (MR)– Time		$21,000		1,078		—		1,078		100%
Business Unit – U.S. Flag
Product Carrier – Time		$44,500		736		—		736		100%
ATB – Spot		$35,000		110		213		323		34%
ATB – Time		$32,000		153		—		153		100%

Appendix 4 – 2010 Fixed TCE Rates

The following table shows average estimated TCE rates and associated days booked for 2010 as of October 23, 2009.

		Fixed Rates and Revenue Days as of 10/23/09
		Q1 2010		Q2 2010		Q3 2010		Q4 2010
Business Unit – Crude Oil
Aframax
Average TCE Rate		$22,000		$22,000		$22,000		$ —
Number of Revenue Days		135		107		74		—
Panamax1
Average TCE Rate		$19,500		$18,500		$18,000		$18,500
Number of Revenue Days		357		328		276		227
Business Unit – Refined Petroleum Products
Handysize
Average TCE Rate		$21,000		$21,000		$21,000		$21,000
Number of Revenue Days		1,036		801		736		720
Business Unit – U.S. Flag
Product Carrier
Average TCE Rate		$47,000		$50,000		$50,500		$50,500
Number of Revenue Days		628		726		828		828
ATB
Average TCE Rate		$34,000		$34,000		$34,000		$ —
Number of Revenue Days		90		91		46		—

¹Includes one vessel on bareboat charter.

Conference Call Information

OSG has scheduled a conference call for today at 11:00 a.m. ET. Call-in information is (877) 941-8416 (domestic) and (480) 629-9808 (international). The conference call and supporting presentation can also be accessed by webcast, which will be available at www.osg.com in the Investor Relations Webcasts and Presentations section. Additionally, a replay of the call will be available by telephone until November 9, 2009; the number for the replay is (800) 406-7325 (domestic) and (303) 590-3030 (international). The passcode for the replay is 4170656.

About OSG

Overseas Shipholding Group, Inc. (NYSE: OSG), a Dow Jones Transportation Index company, is one of the largest publicly traded tanker companies in the world. As a market leader in global energy transportation services for crude oil, petroleum products and gas in the U.S. and International Flag markets, OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in New York City, NY. More information is available at www.osg.com.

Forward-Looking Statements

This release contains forward-looking statements regarding the Company's prospects, including the outlook for tanker and articulated tug barge markets, changing oil trading patterns, anticipated levels of newbuilding and scrapping, prospects for certain strategic alliances and investments, OSG’s intention to tender for the outstanding common units of OSG America L.P., estimated TCE rates achieved for the fourth quarter of 2009 and estimated TCE rates for 2010, projected scheduled drydock and off hire days for the fourth quarter of 2009, projected locked-in charter revenue and locked-in time charter days, expected cash generated from operations for the balance of 2009 and 2010, timely delivery of newbuildings in accordance with contractual terms, prospects of the FSO Africa being delivered prior to the FSO Africa Cancellation Date and of MOQ exercising its right to terminate the service contracts if there is a late delivery, prospects of OSG’s strategy of being a market leader in the segments in which it competes and the forecast of world economic activity and oil demand. These statements are based on certain assumptions made by OSG management based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Forward-looking statements are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of OSG, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements are described in the Company’s Annual Report for 2008 on Form 10-K and those risks discussed in the other reports OSG files with the Securities and Exchange Commission.