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 September , 2003
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Knightsbridge Tankers Limited
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(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda
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(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
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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
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-
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Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 1, is a copy of the Second Quarter 2003 Report to
Shareholders of Knightsbridge Tankers Ltd. (the "Company") dated August 22,
2003.
KNIGHTSBRIDGE TANKERS LIMITED
SECOND QUARTER 2003
REPORT TO SHAREHOLDERS
KNIGHTSBRIDGE
TANKERS LIMITED
Bermuda, August 22, 2003
To the Shareholders of Knightsbridge Tankers Limited:
Enclosed is our report for the second quarter of 2003. 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 June 30, 2003.
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 totaled $53,186 per day for the period April 1 through June 30,
2003. (The corresponding spot market related rate for the period April 1 through
June 30, 2002 was determined to be $13,057).
Accordingly, on July 15, 2003, Shell International paid to the Company's vessel
owning subsidiaries charter hire at the Base Rate of $10,041,395 plus Additional
Hire of $9,380,735 for the period April 1 through June 30, 2003. (For the period
April 1 through June 30, 2002, Shell International paid charter hire at the Base
Rate of $10,041,395).
On July 15, 2003, the Board of Directors of the Company declared a distribution
to shareholders of record as of July 25, 2003, payable on or about August 8,
2003, in the amount of $0.65 per share for the period April 1 through June 30,
2003. (For the period April 1 through June 30, 2002, the distribution was $0.45
per share.)
The Company has agreed to provide information to shareholders that are United
States income tax payers by February 15, 2004, 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, by
February 15, 2004, the Company will provide information enabling shareholders to
determine the tax consequences of their investment in the Company, including the
treatment of distributions received from the Company, for the entire year ending
December 31, 2003.
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
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. The initial term expires in February 2004.
The Company has received notice that Shell International has chosen not to renew
the charters for the vessels for an additional seven year term. Accordingly, the
charters will expire by their terms on or about February 27, 2004, subject to
the right of Shell International to extend the charters by up to 90 days by
notice no later than November 27, 2003.
Under the current 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 - Six Months Ended June 30, 2003
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Revenues
The Company's revenues consisted of charter hire of $42.5 million for the six
months ending June 30, 2003 compared with $20.0 million for the first six months
of 2002. This increase is due to the fact that additional hire in the amount of
$22.5 million was paid in the first six months of 2003 while no additional was
paid in the first six months of 2002.
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.
Interest income and expense
Interest income of $19,555 was earned during the first six months of 2003
compared with $16,745 in the comparable period of 2003, an increase due to
increased cash balances during the first six months of 2003.
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
approximately 7.14 %, which resulted in interest expenses of $4.4 million for
the first six months of 2003.
On January 1, 2001 the Company adopted SFAS No. 133, "Accounting for Derivatives
and Hedging Activities", which requires that all derivative instruments be
recorded on the balance sheet at their fair value. As the interest rate swap is
designated as part of a hedge transaction, changes in the fair value are
recorded each period in other comprehensive income. At June 30, 2003 the
interest rate swap had a negative value of $9.4 million. 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 June 30, 2003 was $211.4 million
compared to $208.6 million at December 31, 2002. The increase was due to net
income of $28.6 million for the period January 1 through June, 2003 less
distributions to shareholders during the first half of 2003 of $28.0 million and
the recording of the $2.2 million movement in the fair value of the swap in
other comprehensive income/loss.
The Company's long-term debt as of June 30, 2003 and 2002, consists of $125.4
million borrowed under its credit facility. The balance of the credit facility
matures in August 2004. 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, following expiration or termination of the charters with
Shell International, are not expected to be significantly affected by movements
in currency exchange rates.
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED BALANCE SHEETS
(in U.S. Dollars)
ASSETS
Current assets June 30, 2003 Dec 31, 2002
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(Unaudited)
Cash 391,307 226,215
Charter hire receivable 19,422,130 10,151,740
Prepaid expenses 114,377 16,384
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Total current assets 19,927,814 10,394,339
Vessels under capital lease, net 328,204,622 337,001,052
Capitalized financing fees and expenses, net 243,566 429,338
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TOTAL ASSETS 348,376,002 347,824,729
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
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Accrued expenses and other current liabilities 2,187,572 2,197,824
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Total current liabilities 2,187,572 2,197,824
Credit facility 125,397,399 125,397,399
Interest rate swap agreement at fair value 9,392,379 11,590,392
Shareholders' equity
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Common shares, par value $0.01 per share:
Authorized and outstanding 17,100,000 171,000 171,000
Contributed capital surplus account 220,058,506 220,058,506
Retained earnings 561,525 -
Accumulated other comprehensive income (9,392,379) (11,590,392)
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Total shareholders' equity 211,398,652 208,639,114
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 348,376,002 347,824,729
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KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to June 30, 2003 to June 30, 2002
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Charter hire revenue 42,467,980 19,972,445
Operating expenses:
Depreciation of vessels under capital leases 8,796,430 8,796,430
Management fee 375,000 375,000
Administration expenses 51,272 27,220
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9,222,702 9,198,650
Net operating income 33,245,278 10,773,795
Interest income 19,555 16,745
Interest expense (4,448,742) (4,409,977)
Other financial costs (210,566) (210,430)
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(4,639,753) (4,603,662)
Net income 28,605,525 6,170,133
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KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to June 30, 2003 to June 30, 2002
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Net income 28,605,525 6,170,133
Other comprehensive loss
Gain/(loss) on derivative cash flow hedging
instrument 2,198,013 (556,014)
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Comprehensive income 30,803,538 5,614,119
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KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to June 30, 2003 to June 30, 2002
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Cash flows from operating activities
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Net income 28,605,525 6,170,133
Items to reconcile net income to net cash
provided by operating activities:
Depreciation 8,796,430 8,796,430
Amortization of capitalized fees and expenses 185,772 185,772
Changes in operating assets and liabilities:
Charter hire receivable and prepaid expenses (9,368,383) 420,232
Accrued expenses and other current liabilities (10,252) (19,894)
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Net cash provided by operating activities 28,209,092 15,552,673
Cash flows from financing activities
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Distribution to shareholders (28,044,000) (15,561,000)
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Net cash used in financing activities (28,044,000) (15,561,000)
Net increase (decrease) in cash and cash
equivalents 165,092 (8,327)
Cash and cash equivalents at beginning of period 226,215 278,268
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Cash and cash equivalents at end of period 391,307 269,941
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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, 2001 171,000 238,458,720 - (9,552,504) 229,077,216
Net income - - 12,550,786 - 12,550,786
Other comprehensive
loss (2,037,888) (2,037,888)
Distribution
to shareholders - (18,400,214) (12,550,786) - (30,951,000)
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Balance at
December 31, 2002 171,000 220,058,506 - (11,590,392) 208,639,114
Net income - - 28,605,525 - 28,605,525
Other comprehensive
gain 2,198,013 2,198,013
Distribution
to shareholders - - (28,044,000) - (28,044,000)
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Balance at
June 30, 2003 171,000 220,058,506 561,525 (9,392,379) 211,398,652
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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
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(Registrant)
Date September 9, 2003 By /s/ Kate Blankenship
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Kate Blankenship
Secretary
01655.0002 #427325