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.