Ship Finance International Ltd.- Interim Report January - March 2006




 Highlights
   -- Ship Finance reports a net income of $33.9 million and earnings
      per share of $0.46 for the first quarter of 2006.
   -- Ship Finance announces an ordinary cash dividend of $0.45 per
      share, and a supplementary extraordinary dividend of $0.05 per
      share.

HAMILTON, Bermuda, May 26, 2006 (PRIMEZONE) -- Ship Finance International Limited ("Ship Finance" or the "Company") reports total operating revenues of $84.1 million, operating income of $52.1 million and net income of $33.9 million for the first quarter of 2006. Earnings per share for the quarter were $0.46. Currently, all but seven of the Company's vessels are trading under long term charters to Frontline Ltd. ("Frontline"). The average daily time charter equivalents ("TCEs") earned by Frontline in the spot and time charter period market from the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers were $68,491, $49,883 and $31,716, respectively. In accordance with accounting principles generally accepted in the United States, no accrual has been made to recognise any amounts receivable under the profit sharing arrangements with Frontline. However, the Company estimates that this would be approximately $29.9 million for the first quarter of 2006 compared with $33.5 million that was estimated for the first quarter of 2005.

As at March 31, 2006, the Company had interest rate swaps with a total notional principal of $535.7 million and an average interest rate of 3.6 percent. In the first quarter of 2006 other financial items include a gain of $8.7 million that is attributable to the mark to market valuations of interest rate swaps resulting from the continued increase in the forward curve for LIBOR in the quarter.

As at March 31, 2006, the Company had total cash and cash equivalents of $99.6 million, of which $11.1 million was restricted. Cash provided by operating activities in the quarter was $127.2 million, net cash provided by investing activities was $26.3 million and net cash used in financing activities was $97.9 million.

Corporate and Other Matters

In January 2006, the VLCC Navix Astral was delivered to its existing bareboat charterer pursuant to a charterer's purchase option that was exercised in November 2005. In January 2006 the Company acquired the Front Tobago from Frontline for $40 million. The Navix Astral has replaced and will fulfil the remainder of the Navix Astral time charter with Frontline.

In February 2006 the Company entered into a total return bond swap line with Fortis Bank. The total return swap is for a term of twelve months and will facilitate the buyback of the Company's 8.5% senior notes in an amount of $50 million. As of today the bank has acquired bonds for $48.6 million with par value $51.5 million.

On March 2006 according to a mutual understanding, a termination contract was entered into between the Company and Consafe Offshore AB (publ) which terminated the Heads of Agreement concerning a sale and lease back deal. The parties agreed to keep a dialog with respect to potential future projects together. As a result of the termination certain financial mechanisms which were set up for the deal were also terminated. This resulted in a small net profit for the terminated transaction.

In April 2006 the Company announced that it had closed the definitive agreement and related financing documents to acquire five newbuilding container vessels from third parties for a sum of approximately $280 million and to place the vessels on long-term charters to Horizon Lines, LLC, a subsidiary of Horizon Lines Inc., which will guarantee the charters. The term of each bareboat charter will be 12 years with a three year renewal option on the part of Horizon Lines which will operate the vessels in its TP1 service from the U.S. West Coast to Guam and Asia. The vessels will fly the United States flag.

In the first quarter of 2006 the Company bought back and cancelled 400,000 of its shares. At March 31, 2006, 72,743,737 ordinary shares were outstanding and the weighted average number of shares outstanding for the quarter then ended was 72,827,070.

On May 26, 2006 the Board declared a dividend of $0.50 per share which represents an ordinary cash dividend of $0.45 per share, and a supplementary extraordinary dividend of $0.05 per share. The record date for the dividend is June 12, 2006, ex dividend date is June 8, 2006 and the dividend will be paid on or about June 26, 2006.

As from May 2, 2006 Mr. Lars Solbakken (49) has been hired as the new CEO of Ship Finance. Mr.Solbakken has extensive experience from the marine sector both from the owners' and financial services' side. With this recruitment, the Board has secured that the Company has a fully dedicated person whose primary focus will be on new projects. A further one or two recruitments are likely in the near future.

The full report is available at: http://hugin.info/134876/R/1052937/174946.pdf



 May 26, 2006
 The Board of Directors Ship Finance International Limited
 Hamilton, Bermuda


            

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