UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of January, 2002
Knightsbridge Tankers Limited
---------------------------------------------------------------
(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road,
Hamilton HM 08, Bermuda
---------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F _______
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-_______
KNIGHTSBRIDGE TANKERS LIMITED
THIRD QUARTER 2001
REPORT TO SHAREHOLDERS
2
Bermuda, November 15, 2001
To the Shareholders of Knightsbridge Tankers Limited:
Enclosed is our report for the third quarter of 2001. The report
contains selected unaudited financial information accompanied by
a Management's Discussion and Analysis of Financial Condition and
Results of Operations for the period ended September 30, 2001.
On February 27, 1997, the Company's ship owning subsidiaries
purchased five very large crude carriers ("VLCC's") from their
previous owners and delivered them to Shell International
Petroleum Company Limited ("Shell International"), as charterer,
under separate "hell and high water" bareboat charters. Under
those charters, the Company's ship owning subsidiaries receive
the greater of a Base Rate of hire in the amount of $22,069 per
day per VLCC or a spot market related rate. After inclusion of a
component for operating expenses of $10,500 per day, the spot
market related rate must exceed $32,569 per day for the Company's
subsidiaries to receive any Additional Hire over the Base Rate.
Based upon the determination by the London Tanker Brokers Panel
the spot market related rate, after inclusion of the component
for operating expenses, totaled $25,163 per day for the period
July 1 through September 30, 2001. (The corresponding spot market
related rate for the period July 1 through September 30, 2000,
was determined to be $59,096).
Accordingly, on October 15, 2001, Shell International paid to the
Company's vessel owning subsidiaries charter hire at the Base
Rate in the aggregate amount of $10,151,740 for the period July 1
through September 30, 2001. (For the period July 1 through
September 30, 2000, Shell International paid charter hire at the
Base Rate of $10,151,740 plus Additional Hire of $12,202,420).
On October 15, 2001, the Board of Directors of the Company
declared a distribution to shareholders of record as of October
25, 2001, payable on or about November 8, 2001, in the amount of
$0.45 per share for the period July 1 through September 30, 2001.
(For the period July 1 through September 30, 2000, the
distribution was $1.17 per share.)
The Company has agreed to provide information to shareholders
that are United States income tax payers by February 15, 2002, so
that they may make the appropriate tax reporting and elections
with the United States tax authorities with respect to the
Company's status as a "Passive Foreign Investment Company". Under
present United States tax rules, the amount of income reported by
a shareholder is based on the Company's income on an annual
basis. Therefore, the Company will provide information enabling
shareholders to determine the tax consequences of their
3
investment in the Company, including the treatment of
distributions received from the Company, for the entire year
ending December 31, 2001.
Please visit our website at www.knightsbridgetankers.com. We are
pleased to answer any inquiries that shareholders may have. Our
investor relations contacts are: Ola Lorentzon in Oslo, Norway
(Tel: 47 23 11 40 00, Fax: 47 23 11 40 44) and Kate Blankenship
in Hamilton, Bermuda (Tel: 441 295-0182, Fax: 441 295-3494). The
NASDAQ National Market symbol for the Company's Common Shares is
"VLCCF".
Very truly yours,
Ola Lorentzon
Chairman and Chief Executive Officer
4
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Knightsbridge Tankers Limited (the "Company") was incorporated in
Bermuda on September 18, 1996. In February 1997, the Company
offered and sold to the public 16,100,000 common shares at an
initial offering price of $20 per share. Simultaneously, the
Company sold 1,000,000 common shares at a price of $20 per share
to ICB International Limited, an indirect wholly-owned subsidiary
of ICB Shipping Aktiebolag (publ) ("ICB"), a Swedish publicly
traded ship owning and operating company. The Company used the
proceeds of these offerings, together with advances under a
$145.6 million credit facility from an international syndicate of
lenders, primarily to fund the purchase by the Company's
subsidiaries of five recently constructed very large crude
carrier oil tankers ("VLCC's"). Upon their purchase from their
previous owners, the VLCC's were delivered on February 27, 1997,
to Shell International Petroleum Company Limited ("Shell
International"), a company of the Royal Dutch/Shell Group of
Companies, under separate "hell and high water" bareboat
charters. The term of these charters is a minimum of seven years,
with an option for Shell International to extend the period for
each VLCC for an additional seven-year term, to a maximum of 14
years per VLCC. Under the charters, Shell pays the greater of a
Base Rate of hire of $22,069 per day or a spot market related
rate, determined quarterly by the London Tankers Brokers Panel.
After taking into account a component for operating costs of
$10,500 per day, Shell International pays the higher rate if the
award exceeds $32,569 per day.
Results of Operations - Nine Months Ended September 30, 2001
Revenues
The Company's revenues consisted of charter hire of $51.0 million
for the nine months ending September 30, 2001 compared with $45.2
million for the first nine months of 2000. This increase is
principally due to the payment of a total amount of $20.9 million
additional hire in the first nine months of 2001 compared with
$15.0 million in the first nine months of 2000.
Operating Expenses
The Company's operating expenses consist of (i) fees due to the
Company's manager, ICB Shipping (Bermuda) Ltd (the "Manager"),
(ii) depreciation of the vessels and (iii) administration
expenses consisting of payments of insurance premiums for
directors and officers liability insurance. There can be no
assurance, however, that the Company will not have other expenses
or contingent liabilities for which reserves will be required.
5
Interest income and expense
Interest income of $194,174 was earned during the nine months
ended September 30, 2001 compared with $105,997 in the comparable
period of 2000, an increase due to the increased cash balances
arising from the increased charter hire received in the first
half of 2001.
The Company's borrowings under its primary credit facility have
been effectively converted to a fixed rate pursuant to a swap
arrangement to which the Company is a party. Interest on the
primary credit facility has effectively been fixed at 7.14 %,
which resulted in interest expenses of $4,475,356 for the nine
months ended September 30, 2001.
On January 1, 2001 the Company adopted SFAS No. 133, "Accounting
for Derivatives and Hedging Activities". SFAS No. 133 requires
that all derivative instruments be recorded on the balance sheet
at their fair value. Changes in the fair value of each derivative
is recorded each period in current earnings or other
comprehensive income, depending on whether the derivative is
designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Upon the adoption of SFAS No. 133 the
Company recorded the fair value of its interest rate swap which
is designated as a hedge against interest paid on the Company's
debt. The amount recorded as a liability was $3,496,905 and an
equal charge was made to other comprehensive income, which is a
component of shareholders' equity. At September 30, 2001 the
interest rate swap had a negative value of $10,738,768. A
separate statement for consolidated comprehensive income is
included in the enclosed financial statements.
Liquidity and Capital Resources
Total shareholders' equity of the Company at September 30, 2001
was $232.0 million compared to $277.2 million at December 31,
2000. The decrease was due to net income of $30.4 million for the
period January 1 through September 30, 2001 less distribution to
shareholders for the first nine months of 2001 in the aggregate
amount of $64.8 million and the recording of the fair value of
the swap in other comprehensive loss.
The Company's long-term debt as of September 30, 2001 and 2000,
consists of $125.4 million borrowed under its credit facility.
The balance of the credit facility matures seven years and six
months from February 27, 1997. Interest on this balance is
payable quarterly in arrears.
Currency Exchange Rates
The international shipping industry's functional currency is the
United States Dollar and virtually all of the Company's operating
revenues and expenses are expected to be denominated in United
States Dollar. Accordingly, the company's operating results,
6
following expiration or termination of the charters with Shell
International, are not expected to be significantly affected by
movements in currency exchange rates.
7
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED BALANCE SHEETS
(in U.S. Dollars)
ASSETS
Current assets Sept 30, 2001 Dec 31, 2000
(Unaudited)
Cash 242,876 247,370
Charter hire receivable 10,151,740 31,116,700
Prepaid expenses 41,048 16,573
----------- -----------
Total current assets 10,435,664 31,380,643
Vessels under capital lease, net 358,992,127 372,186,772
Capitalized financing fees and expenses, net 893,768 1,172,426
----------- -----------
TOTAL ASSETS 370,321,559 404,739,841
=========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Accrued expenses and other current liabilities 2,151,105 2,124,154
----------- -----------
Total current liabilities 2,151,105 2,124,154
Credit facility 125,397,399 125,397,399
Other liabilities 10,738,768 -
Shareholders equity
Common shares, par value $0.01 per share:
Authorized and outstanding 17,100,000 171,000 171,000
Contributed capital surplus account 242,602,055 273,809,543
Retained earnings - 3,237,745
Accumulated other comprehensive income (10,738,768) -
----------- -----------
Total shareholders equity 232,034,287 277,218,288
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 370,321,559 404,739,841
=========== ===========
8
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2001 Jan 1,2000
to Sept 30, 2001 to Sept 30, 2000
Charter hire revenue 51,018,735 45,219,275
Operating expenses:
Depreciation of vessels under capital leases 13,194,645 13,194,645
Management fee 562,500 562,500
Administration expenses 38,095 44,458
---------- ----------
13,795,240 13,801,603
Net operating income 37,223,495 31,417,672
Interest income 194,174 105,997
Interest expense (6,737,732) (6,687,604)
Other financial costs (316,170) (358,165)
-----------
-----------
(6,859,728) (6,939,772)
Net income 30,363,767 24,477,900
=========== ===========
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2001
-Sept 30, 2001
Net income 30,363,767
Other comprehensive loss
Loss on derivative cash flow hedging instrument (10,738,768)
------------
Comprehensive income 19,624,999
============
9
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2001 Jan 1, 2000
to Sept 30, 2001 to Sept 30, 2000
Cash flows from operating activities
Net income 30,363,767 24,477,900
Items to reconcile net income to net cash
provided by operating activities:
Depreciation 13,194,645 13,194,645
Amortization of capitalized fees and expenses 278,657 278,657
Changes in operating assets and liabilities:
Charter hire receivable and prepaid expenses 20,940,486 (10,524,665)
Accrued expenses and other current liabilities 26,951 (76,295)
----------- -----------
Net cash provided by operating activities 64,804,506 27,350,242
Cash flows from financing activities
Repayments of loan - (1,681,538)
Distribution to shareholders (64,809,000) (25,479,032)
------------ ------------
Net cash used in financing activities (64,809,000) (27,160,570)
Net increase (decrease) in cash and
cash equivalents (4,494) 189,672
Cash and cash equivalents at
beginning of period 247,370 70,695
----------- -----------
Cash and cash equivalents at end of period 242,876 260,367
=========== ===========
10
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
(in U.S. Dollars)
Accumulated
Contributed Other
Share capital surplus Retained Comprehensive
capital account earnings Income Total
------- --------------- -------- ------------- -----
Balance at
December 31, 1999 171,000 273,809,543 - - 273,980,543
Net income - - 48,723,745 - 48,723,745
Distribution
to shareholders - -(45,486,000) - (45,486,000)
- -----------------------------------------------------------------------------
Balance at
December 31, 2000 171,000 273,809,543 3,237,745 - 277,218,288
Net income - - 30,363,767 - 30,363,767
Other comprehensive
loss (10,738,768) (10,738,768)
Distribution
to shareholders - (31,207,488)(33,601,512) - (64,809,000)
- ------------------------------------------------------------------------------
Balance at
Sept 30, 2001 171,000 242,602,055 -(10,738,768) 232,034,287
==============================================================================
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorised.
Knightsbridge Tankers Limited
--------------------------------
(Registrant)
Date January 4, 2002 By /s/ Kate Blankenship
---------------- ----------------------------
Kate Blankenship
Secretary
12
01655002.AI6