Nordic American Tankers Limited
Annual Report 1999

Plain-text annual report

1999 Annual Report to Shareholders NORDIC AMERICAN TANKER SHIPPING LIMITED 1999 ANNUAL REPORT TO SHAREHOLDERS Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders BUSINESS General Nordic American Tanker Shipping Limited (the "Company") was incorporated on June 12, 1995, under the laws of the Islands of Bermuda ("Bermuda") for the purpose of acquiring, disposing, owning, leasing, and chartering three double hull Suezmax oil tankers (the "Vessels") and engaging in activities necessary, suitable or convenient to accomplish, or in connection with or incidental to, the foregoing. The principal executive offices of the Company are located at: Cedar House, 41 Cedar Avenue, Hamilton HM EX, Bermuda, telephone number (441) 295-2244. In September 1995, the Company offered and sold to the public 11,731,613 warrants (“Warrants”) at the initial public offering price of $5.00 per Warrant. The exercise price of a Warrant was $10.21. Prior to September 30, 1997 (the “Exercise Date”), the Company did not have any operations other than certain limited operations related to the acquisition of the Vessels, of which all three were delivered in the last half of 1997. The Company now owns three modern double hull 150,000 dead-weight tonne (“dwt”) Suezmax tankers (the “Vessels”). The Vessels were built at Samsung Heavy Industries Co. Ltd. in South Korea (the “Builder”).. On September 30, 1997, all of the outstanding Warrants of the Company were exercised at an exercise price of $10.21 per Warrant. The Company received a total of $119,779,768.73 by issuing a total of 11,731,613 new Common Shares (the “Shares”). At that time there was a total of 11,813,850 Shares in issue. Expenses in the total amount of approximately $337,000 related to the exercise of the Warrants were deducted from the proceeds of the exercise. On October 6, 1997, the Company paid to the Charterer for payment to the Builder a total of $119,490,000 for final payment of the three Vessels. On November 30, 1998, the Company’s shareholders approved a proposal to allow the Company to borrow money for the purpose of repurchasing its Shares. On December 28, 1998, the Company purchased 2,107,244 Shares through a “Dutch Auction” self-tender offer at a price of $12.50 per Share. In addition, the Company paid $715,000 in transaction costs. After the repurchase, a total of 9,706,606 Shares are in issue, down from 11,813,850 Shares. Pursuant to an agreement (the "Management Agreement") between the Company and its Manager, Ugland Nordic Shipping ASA (the “Manager”), the Manager provides certain management, administrative and advisory services to the Company. Vessels owned by the Company Each Vessel acquired by the Company is a 1997 built, 151,459 dwt double hull Suezmax oil tanker. The purchase price of each Vessel was approximately $56.9 million (the "Original Contract Price”). The Vessels were delivered between August and December 1997 and have been designed according to the specifications set forth in the shipbuilding contracts between the Builder and the Company (the "Shipbuilding Contracts"). Each Vessel is registered on Isle of Man and flies the British flag. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Chartering Operations Commenced on September 30, 1997 By their terms, each Vessel is chartered to BP Shipping Ltd. (the “Charterer”), pursuant to separate "hell and high water" bareboat charters (the "Charters). The initial term of these charters is from September 30, 1997 and will end approximately seven years after the such date, subject to extension at the option of the Charterer for up to seven successive one-year periods. Under each Charter, the Charterer is required to provide the Company with at least twelve months' prior notice of each such extension. The Company’s dividend policy is to pay dividends to the holders of the Company's Shares in amounts substantially equal to the amounts received by it under the Charters, less expenses. In 1999, a portion of these dividends was considered return of capital for United States federal income tax purposes. The daily charterhire rate payable under each Charter is comprised of two components: (i) a fixed minimum rate of charterhire of $13,500 per Vessel per day (the "Base Rate"), paid quarterly in advance, and (ii) additional charterhire (which will be determined and paid quarterly in arrears and may equal zero) which would equal the excess, if any, of a weighted average of the daily time charter rates for two round-trip trade routes traditionally served by Suezmax tankers (Bonny, Nigeria to/from the Louisiana Offshore Oil Port, and Hound Point, U.K. to/from Philadelphia, Pennsylvania (the "Reference Ports")), over the sum of (A) an agreed amount of $8,500 representing daily operating costs and (B) the Base Rate ("Additional Hire"). The amount of Additional Hire, if any, will be determined by the London Tanker Brokers Panel or another panel of ship brokers mutually acceptable to the Charterer and the Company (the "Brokers Panel"). In 1999, the Company did not receive Additional Hire for any of the 4 quarter periods. Pursuant to the terms of the Charters, the Charterer's obligation to pay charterhire is absolute, regardless whether there is loss or damage to a Vessel of any kind or whether such Vessel or any part thereof is rendered unfit for use or is requisitioned for hire or for title, and regardless of any other reason whatsoever. The Charterer is also obligated to indemnify and hold the Company harmless from all liabilities arising from the operation, design and construction of the Vessels prior to and during the term of the Charters, including environmental liabilities, other than liabilities arising out of the gross negligence or willful misconduct of the Company. The obligations of the Charterer are guaranteed by BP Amoco p.l.c., the successor company to the merger between Amoco Corp and The British Petroleum Company p.l.c. The Charters will end approximately seven years after September 30, 1997, unless extended as noted above. At least six months prior to the end of the term (including any extension thereof) of a Charter, the holders of the Shares will be entitled to vote on a proposal to sell the related Vessels and to distribute the net proceeds of such sale to the holders of the Shares to the extent permitted under Bermuda law. The Board of Directors of the Company (the "Board") will make a recommendation as to that proposal, which recommendation may favor such sale or an alternative plan, such as the operation, rechartering or other disposition of the Vessels. The proposal to sell the Vessels and distribute the resulting net proceeds shall be adopted if approved by the holders of a majority of the Common Shares voting at the meeting called for such purpose. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Nature of Trading Market The primary trading market for the Shares is the American Stock Exchange (the "AMEX"), on which the Shares are listed under the symbol NAT. The secondary trading market for the Shares is the Oslo Stock Exchange (the "OSE") also with the symbol NAT. The high and low bid prices for the Shares by quarter, in 1998 and 1999 are as follows: For the quarter ended: March 31, 1998 June 30, 1998 September 30, 1998 December 31, 1998 March 31, 1999 June 30, 1999 September 30, 1999 December 31, 1999 AMEX Low $14 7/8 $14 3/4 $11 3/4 $10 3/4 $10 1/8 $10 7/8 $11 1/4 $10 1/8 AMEX High $16 1/2 $16 1/4 $15 1/2 $13 1/2 $11 5/8 $11 3/4 $12 3/4 $12 OSE Low OSE High NOK 110.00 NOK 115.00 NOK 125.00 NOK 95.00 NOK NA NOK NA NOK 95.00 NOK 94.00 NOK 120.00 NOK 129.00 NOK 125.00 NOK 99.00 NOK NA NOK NA NOK 95.00 NOK 95.00 These bid quotations represent interdealer quotations, without retail mark-ups, mark-downs or commissions, and do not necessarily represent actual transactions. On December 31, 1999, the closing price of the Shares as quoted on the AMEX was $10 5/8 and as quoted on the OSE was NOK 94.00. On such date, there were 9,706,606 Shares issued and outstanding. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders SELECTED FINANCIAL INFORMATION The following Balance Sheet as of December 31, 1999 and Income Statement for the period January 1, 1999 through December 31, 1999, have been derived from the Financial Statements of the Company which are included herein and which have been audited by Deloitte & Touche, independent auditors, whose report thereon is also included herein. The Balance Sheet information provided below should be read in conjunction with the accompanying Financial Statements and the related notes thereto, and the discussion under Management's Discussion and Analysis of Financial Condition and Results of Operations herein. BALANCE SHEET INFORMATION DECEMBER 31, 1999 Cash and cash on deposit Prepaid Finance Expenses Prepaid Insurance Vessels $ 2,507,017 72,395 70,833 155,406,085 Total Assets $ 158,056,330 ASSETS: LIABILITIES: Accrued interest on Bank Loan 77,333 Bank Loan 30,000,000 SHAREHOLDERS’ EQUITY: 9,706,606 common shares, par value $0.01 per share, outstanding, 50 million authorized $ 97,066 Other Shareholders Equity $ 127,881,931 Total Liabilities and Equity $ 158,056,330 Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders INCOME STATEMENT INFORMATION JANUARY 1, 1999 THROUGH DECEMBER 31, 1999 Revenue (184,781) Ship brokers commission (314,004) Management fee & Misch. administration cost Directors Insurance (97,500) Depreciation (6,831,039) Net operating income Net financial items 7,355,176 (1,580,500) $ 14,782,500 NET PROFIT FOR THE YEAR $ 5,774,676 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The Company owns three modern double hull 151,459 dead weight tonne Suezmax tankers (the Vessels), which were delivered in the last half of 1997. The Vessels were built at Samsung Heavy Industries Ltd. in South Korea. The Charterer has agreed to charter each Vessel for a period of seven years from September 30, 1997. Each Charter is subject to extension at the option of the Charterer for up to seven successive one-year periods. During the term of each Charter (including any extension thereof) the Charterer is obligated to pay (i) the Base Rate, which is charterhire at a fixed minimum daily rate of $13,500 per Vessel per day (time charter equivalent of $22,000 per day), payable quarterly in advance and (ii) Additional Hire, to the extent spot charter rates exceed certain levels, payable quarterly in arrears, from January 1998. The amount of Additional Hire for each quarter, if any, will be determined by the Brokers Panel. In January 2000, the Brokers Panel in London determined that there would be no Additional Hire for the period October 1 to December 31, 1999. The total charterhire for 1999 was thus $14,782,500. Charterhire (time charter equivalent) in each quarter of 1999 was $22,000 per day per Vessel, respectively. On January 3, 2000, the Company received $3,685,500 in Base Hire from the Charterer for the period from January 1 up to March 31, 2000. Results of Operations The Company’s revenues from the charterhire for the period January 1 to December 31, 1999 derived from Base Hire of $14,782,500 ($13,500 per day per Vessel). Net costs during the period from January 1 to December 31, 1999, were $7,427,324 of which twelve months depreciation of the Vessels constitutes $6,831,039. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Liquidity and Capital Resources Total assets of the Company at December 31, 1999 were $158,056,330 compared to $166,045,090 at December 31, 1998. Cash held at December 31, 1999 was $2,507,017. Dividend payment Total dividend paid out in 1999 was $13,103,918 or $1.35 per Share. The dividend payments in 1999 have been as follows: 1st quarter 2nd quarter 3rd quarter 4th quarter $0.32 per share $0.32 per share $0.35 per share $0.36 per share NAT has declared a dividend of $0.34 for the first quarter of 2000. The dividend of $0.34 will be paid to Shareholders in February 2000. The Company is incorporated in Bermuda. Under current Bermuda law, the Company is not subject to tax on income or capital gains, and no Bermuda withholding tax will be imposed upon payments of dividends by the Company to its shareholders. No Bermuda tax is imposed on holders with respect to the sale or exchange of Shares. Furthermore, the Company has received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts any legislation imposing any tax computed on profits or income, including any dividend or capital gains withholding tax, or computed on any capital asset, appreciation, or any tax in the nature of an estate, duty or inheritance tax, then the imposition of any such tax shall not be applicable. The assurance further provides that such taxes, and any tax in the nature of estate duty or inheritance tax, shall not be applicable to the Company or any of its operations, nor to the shares, debentures or other obligations of the Company, until March 2016. Repurchase of Common Stock On December 28, 1998, the Company repurchased 2,107,244 Shares through a “Dutch Auction” self-tender offer at a price of $12.50 per Share. After the repurchase, a total of 9,706,606 Shares are in issue, down from 11,813,850 Shares. Payment for the repurchased Shares was made at the end of December 1998. In 1998 the Company made a drawn down of a Loan of $30,0 million with Den norske Bank ASA, Oslo, Norway (DnB) to finance the repurchase of Shares. The total purchase price of the Shares including the costs associated with the transaction was $ 27.1 million. On May 12, 1999 the General Shareholders Meeting approved the remaining proceeds being utilized to increase the quarterly dividens. An important objective of the repurchase of Shares was to increase the Company’s cash distribution to shareholders while the Vessels are on charter to the Charterer. While the Vessels Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders are on charter, the minimum cash distribution per Share has increased by $0.15, from $1.20 to $1.35 per year, an increase of 12.5%. The Company has entered into an interest swap agreement with DnB, making the Company paying a fixed interest on the Loan of 5.80 % p.a. including the margin of 0.525 % for the next 5 years. The swap agreement terminates on the final repayment date of the Loan, i.e. the fourth quarter of the year 2004. DIRECTORS AND OFFICERS Directors and Senior Management of the Company and the Manager Pursuant to the Management Agreement, the Manager provides management, administrative and advisory services to the Company with respect to the Vessels. Set forth below are the names and positions of the directors and executive officers of the Company and the Manager. Directors of the Company are elected annually, and each director elected holds office until a successor is elected. Officers of both the Company and the Manager are elected from time to time by vote of the respective board of directors and hold office until a successor is elected. The Company Name Age Position Herbjørn Hansson John D. Campbell Niels Erik Feilberg Tharald Brøvig Hon. Sir David Gibbons George C. Lodge Axel Stove Lorentzen Andreas Ove Ugland 52 57 38 57 72 72 47 45 Director and President Director and Secretary * Vice President and Treasurer Director Director Director Director Director * John D. Campbell resigned as Director and Secretary of the Company at the General Shareholders Meeting on May 12, 1999. In the same meeting Peter Bubenzer of Appleby, Spurling & Kempe, Bermuda was appointed new Secretary of the Company The Manager Name Age Position Arve Andersson Tharald Brøvig Niels Erik Feilberg Herbjørn Hansson Njål Hansson Ulf G. Ryder 45 57 38 52 57 48 Director Director Chief Financial Officer Director; President and Chief Executive Officer Director Director Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Christian Rytter Jr Andreas Ove Ugland 44 45 Director Director, Chairman Certain biographical information with respect to each director and executive officer of the Company and the Manager is set forth below. Herbjørn Hansson has been President and Chief Executive Officer of the Company and of the Manager since July 1995 and September 1993, respectively, and has served as a director of the Manager since its organization in June 1989 and as a director of the Company since July 1995. Mr. Hansson formerly served as the Chairman of the Board of the Manager from June 1989 to September 1993. Mr. Hansson has been involved in various aspects of the shipping industry and international finance since the early 1970s, including serving as Chief Economist of Intertanko, the International Association of Independant Tanker Owners ,from 1975-1980. He was an executive officer of the Anders Jahre/Kosmos Group from 1980 to 1989, serving as Chief Financial Officer from 1983 to 1988. John D. Campbell was the Secretary of the Company and a director of the Company from July 1995 to May 1999. Mr. Campbell has been a Senior Partner of the law firm of Appleby, Spurling & Kempe, Bermuda counsel to the Company, since December 1987. Niels Erik Feilberg has been Vice President and Treasurer of the Company since July 1995 and is Chief Financial Officer of the Manager, which he has been with since 1994. He was working in the Treasury Department of Anders Jahre/Kosmos Group from 1987 and in the same area in the Skaugen Group from 1989 to the end of 1993. Tharald Brøvig has been a director of the Company since July 1995 and has been a director of the Manager since its organization in June 1989. Sir David Gibbons has been a director of the Company since September 1995. Sir David served as the Prime Minister of Bermuda from August 1977 to January 1982. Sir David has served as Chairman of The Bank of N.T. Butterfield and Son Limited since 1986 and as Chief Executive Officer of Edmund Gibbons Ltd. since 1954. George C. Lodge has been a director of the Company since September 1995. Professor Lodge has been a member of the Harvard Business School faculty since 1963. He was named associate professor of business administration at Harvard in 1968 and received tenure in 1972. Axel Stove Lorentzen has been a director of the Company since September 1995. Mr. Stove Lorentzen has also served as a director and Chairman of the Manager since May 1991 and September 1993 to June 1996, respectively, a director and Chairman of Lorentzen & Stemoco A/S since January 1981 and November 1994, respectively, and as a director of Skipskredittforeningen AS from March 1988 to May 1996. Mr. Stove Lorentzen formerly served as a director of Grand Hotel A/S from May 1986 to October 1993 and a director of Belships Company Ltd. Ships A/S from February 1984 to June 1993. Njål Hansson has been a director of the Manager since its organization in June 1989. Mr. Hansson is a private investor and owns the company Siv.ing, Njål Hansson A/S is a company engaged in the importing and distribution of consumer electronics in Norway. Mr. Hansson is the brother of Herbjøn Hansson. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Arve Andersson has been a director of the Manager since June 1996. Mr Andersson has been a director of Andreas Ugland & Sons AS and is now a senior partner in Markus & Co. A.S. Andreas Ove Ugland has been a director of the Company since February 1997. Mr. Ugland has also served as director and Chairman of: Ugland International Holding Plc, a shipping/transport company listed on the London Stock Exchange, Andreas Ugland & Sons AS, Grimstad, Norway, Høegh Ugland Autoliners AS, Oslo and Buld Associates Inc., Bermuda. Mr. Ugland has had his whole career in shipping in the Ugland family owned shipping group. Ulf G. Ryder has been a Director of the Manager since June 1999. Mr. Ryder is Managing Director of Stena Bulk AB of Gothenburg, Sweden. Christian Rytter Jr has been a director of the Manager since May 1996. Mr. Rytter is Managing Director of L.Giil-Johannessen AS and is also Chairman of Seabulk a.s. COMPENSATION OF DIRECTORS AND OFFICERS Pursuant to the Management Agreement, the Manager will pay from the Management Fee the annual directors' fees of the Company, currently estimated at an aggregate amount of $52,000 per annum hence from the inception of the Company through December 31, 1999 the Directors of the Company have not been paid by the Company any amount for services rendered by them to the Company in all capacities. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS The Manager owns 2,144,971 (22,10%) Shares in the Company as of the date hereof and is party to the Management Agreement with the Company, pursuant to which the Manager is entitled to a management fee of $250,000 per annum. ADDITIONAL INFORMATION The Company will file with the Securities and Exchange Commission an Annual Report on Form 20-F. A copy of such report is available without cost to each shareholder. BP Amoco p.l.c, the successor company to the merger between Amoco Corp and The British Petroleum Company p.l.c., files annual reports on Form 20-F (File No. 005-42076) and periodic reports on Form 6-K with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. NORDIC AMERICAN TANKER SHIPPING LIMITED Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders Nats1999 Nordic American Tanker Shipping Ltd. NORDIC AMERICAN TANKER SHIPPING LIMITED 1999 Annual Report to Shareholders TABLE OF CONTENTS. ______________________________________________________________________________ INDEPENDENT AUDITORS’ REPORT FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH DECEMBER 31, 1999: Balance Sheets Statement of Operations Statements of Cash Flows Notes to Financial Statements Page 1 2 3 4 5-6 Nordic American Tanker Shipping Ltd. BALANCE SHEET AT DECEMBER 31. (all figures are in $) 1999 Annual Report to Shareholders ASSETS Curent assets Bank deposits Prepaid finance costs Prepaid insurance Total current assets Long term assets Vessels Total long-term assets TOTAL ASSETS Note 1 Note 5 1999 1998 3,637,758 2,507,017 72,395 86,875 70,833 83,333 3,807,966 2,650,245 Note 3 155,406,085 162,237,124 162,237,124 155,406,085 158,056,330 166,045,090 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities 1999 1998 Accounts payable Accrued interest on Bank loan Total Current Liabilities Note 5 0 675,384 77,333 43,781 719,165 77,333 Long-term liabilities Mortagage Loan Total Long-term liabilities Note 5 30,000,000 30,000,000 30,000,000 30,000,000 Shareholders Equity Share Capital Other Shareholders Equity Total Shareholders Equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY Note 6 Note 6 97,066 97,066 127,881,931 135,228,859 135,325,925 127,978,997 158,056,330 166,045,090 Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders PROFIT AND LOSS ACCOUNT (all figures are in $) Operating revenues Ship brokers commission Administrative expenses Depreciation Net operating income Interest income Interest expense Other finance charges Net financial income 1999 1998 16,006,199 14,782,500 (184,781) (184,781) (411,504) (412,779) (6,831,039) (6,831,039) 8,577,600 7,355,176 214,532 105,999 (43,781) (1,767,449) (27,583) (10,306) 51,912 (1,580,500) Note 2,4 Note 3 Note 5 Note 5 NET PROFIT BEFORE TAX 5,774,676 8,629,512 Tax expense 0 0 NET PROFIT FOR THE YEAR 5,774,676 8,629,512 Earnings per share (EPS) 0.59 0.73 Nordic American Tanker Shipping Ltd. STATEMENT OF CASH FLOW (all figures are in $) 1999 Annual Report to Shareholders CASH FLOW FROM OPERATING ACTIVITIES 8,629,512 Net profit (loss) Depreciation 6,831,039 Increase (decrease) in receivables and payables (614,852) (2,682,212) 5,774,676 6,831,039 1999 1998 Net cash used in operating activities 11,990,863 12,778,339 CASH FLOW FROM INVESTING ACTIVITIES Investment in Vessels 0 0 Cash flow used in investing activities 0 0 CASH FLOW FROM FINANCING ACTIVITIES (36,676) Additional warrant issue costs (15,712,421) Dividends paid Bank Loan 30,000,000 Repurchase of Common Stock 0 (27,055,933) (17,686) (13,103,918) 0 Cash flow provided by financing activities (13,121,604) (12,805,030) NET (DECREASE) INCREASE IN CASH (1,130,741) (26,691) BEGINNING CASH AND CASH EQUIVALENT 3,637,758 3,664,449 END CASH AND CASH EQUIVALENT 2,507,017 3,637,758 Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders NORDIC AMERICAN TANKER SHIPPING LIMITED NOTES TO FINANCIAL STATEMENTS PERIOD JANUARY 1, 1999 THROUGH DECEMBER 31, 1999 ____________________________________________________ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash on Deposit - Cash and cash on deposit consists of all cash and demand deposits with a maturity of three months or less. Income and Expenses - The Company accounts for all income and expenses using the accrual method of accounting. Income taxes - The Company is not subject to taxation in the United States of America. 2. RELATED PARTY TRANSACTION The Company has entered into a management agreement with Ugland Nordic Shipping ASA (UNS) under which UNS will provide certain administrative, management and advisory services to the Company for an amount of $250,000 per year. In additon, a fee of $1.85 million was in 1995 was paid by the Company to UNS on the date of the issuance of the warrants in consideration for certain of UNS’ previous activities on behalf of the Company prior to the consummation of the offering. This fee was included as part of the offering costs in 1995. 3. DEPRECIATION Deprecitation is calculated on a straight-line basis over the estimated lifetime of 25 years. The basis for the depreciation is the actual cost price of the vessels in 1997, i.e $ 170,775,970 in total for the three vessels. All vessels $ 170,775,970 Total cost price in 1997 Accumulated depreciation per January 1, 1999 $ 8,538,846 Depreciation January 1 through December 31, 1999 $ 6,831,039 $ 155,406,085 Book value per December 31, 1999 British Harrier $ 56,926,900 Total cost price in 1997 Accumulated depreciation per January 1, 1999 $ 2,846,345 Depreciation January 1 through December 31, 1999 $ 2,277,076 $ 51,803,479 Book value per December 31, 1999 British Hawk $ 56,926,900 Total cost price in 1997 Accumulated depreciation per January 1, 1999 $ 2,846,345 Depreciation January 1 through December 31, 1999 $ 2,277,076 $ 51,803,479 Book value per December 31, 1999 Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders British Hunter $ 56,922,170 Total cost price in 1997 Accumulated depreciation per January 1, 1999 $ 2,846,156 Depreciation January 1 through December 31, 1999 $ 2,276,887 $ 51,799,127 Book value per December 31, 1999 4. ADMINISTRATIVE EXPENSES Management fee, Ugland Nordic Shipping ASA Directors and officers insurance Other fees and expenses, mostly related to Repurchasing of Shares Total administrative expenses $ 250,000 $ 97,500 $ 64,004 $ 411,504 5. MORTGAGE LOAN, ACCRUED INTEREST, PREPAID FINANCE COSTS The Company has drawn upon a Loan of $ 30 mill with Den norske Bank, Oslo (DnB) to finance the repurchase of shares. The Company has entered into an interest swap agreement with DnB, enabling the Company to pay a fixed interest on the loan of 5.80 % p.a. including the margin of 0.525 % for the next 5 years. The swap agreement terminates on the final repayment date of the Loan, i.e. the 4th quarter of year 2004. The Company pays an annual agency fee of $10,000 to DnB in connection with the $30,0 mill. Loan. Accrued interest at December 31, 1999 $30 mill, LIBOR 5,80 % for 16 days, $77,333. Prepaid finance costs In connection with the draw down of the Mortgage Loan in 1998 of $30 mill, the Company paid $86,875 in an arrangement fee and commitment fee. The fees will be amortized over the term of the Loan, i.e. with 1/6 every year from January 1, 1999. Nordic American Tanker Shipping Ltd. 1999 Annual Report to Shareholders 6. STATEMENT OF SHAREHOLDERS EQUITY YEAR ENDED DECEMBER 31, 1999, 1998 AND 1997 Common Stock Class B Stock Issued Shares Amount Issued Shares Amount Other Equity BALANCE DECEMBER 31, 1996 Repurchase of B Stock Exercise of Warrants to Common Stock Common Stock issue cost Transfer from other equity 1) BALANCE DECEMBER 31, 1997 Repurchase of Common Stock Repurchase cost Additional Warrant exercise cost Transfer from other equity 1) BALANCE DECEMBER 31, 1998 Additional costs, Repurchase of Shares Transfer from other equity 1) BALANCE DECEMBER 31, 1999 82 237 822 11 731 613 117 316 12 000 -12 000 12 000 -12 000 11 813 850 -2 107 244 118 138 -21 072 9 706 606 97 066 9 706 606 97 066 0 0 0 0 0 0 51 586 857 119 662 453 -336 907 -1 529 048 169 383 355 -26 319 478 -715 383 -36 676 -7 082 959 135 228 859 -17 686 -7 329 242 127 881 931 1) This is part of the amount that the Company paid out of equity for dividends. As the Company distributes all available cash, its distributions may exceed its net profit. The Company has also paid additional capital transaction costs related to the warrant exercise and repurchase of shares in 1997,1998 and 1999. * * * * * * Nats1999 Nordic American Tanker Shipping Ltd. 

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