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 December , 2003
- --------------------------------------------------------------------------------
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-
Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 1, is a copy of the Third Quarter 2003 Report to
Shareholders of Knightsbridge Tankers Ltd. (the "Company") dated November 28,
2003.
KNIGHTSBRIDGE TANKERS LIMITED
THIRD QUARTER 2003
REPORT TO SHAREHOLDERS
KNIGHTSBRIDGE
TANKERS LIMITED
Bermuda, November 28, 2003
To the Shareholders of Knightsbridge Tankers Limited:
Enclosed is our report for the third 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 September 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 $25,063 per day for the period July 1 through September 30,
2003. (The corresponding spot market related rate for the period July 1 through
September 30, 2002 was determined to be $9,093).
Accordingly, on October 15, 2003, Shell International paid to the Company's
vessel owning subsidiaries charter hire at the Base Rate of $10,151,740 July 1
through September 30, 2003. (For the period July 1 through September 30, 2002,
Shell International paid charter hire at the Base Rate of $10,151,740).
On October 15, 2003, the Board of Directors of the Company declared a
distribution to shareholders of record as of October 25, 2003, payable on or
about November 10, 2003, in the amount of $0.45 per share for the period July 1
through September 30, 2003. (For the period July 1 through September 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.
The NASDAQ National Market symbol for the Company's Common Shares is "VLCCF".
Please visit our website at www.knightsbridgetankers.com.
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.
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 - Nine Months Ended September 30, 2003
- ------------------------------------------------------------
Revenues
The Company's revenues consisted of charter hire of $52.6 million for the nine
months ending September 30, 2003 compared with $30.1 million for the first nine
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 nine months of 2003 while no
additional hire was paid in the first nine 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 $29,007 was earned during the first nine months of 2003
compared with $24,925 in the comparable period of 2002, an increase due to
increased cash balances during the first nine months of 2003 and offset by lower
interest rates in 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 $6.7 million for
the first nine 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 September 30, 2003 the
interest rate swap had a negative value of $7.7 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 September 30, 2003 was $205.1
million compared to $208.6 million at December 31, 2002. The decrease was due to
net income of $31.8 million for the period January 1 through September, 2003
less distributions to shareholders during the first nine months of 2003 of $39.1
million and the recording of the $3.8 million movement in the fair value of the
swap in other comprehensive income/loss.
The Company's long-term debt as of September 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 September 30, 2003 Dec 31, 2002
- -------------- --------------- --------------
(Unaudited)
Cash 6,286,025 226,215
Charter hire receivable 10,151,740 10,151,740
Prepaid expenses 70,630 16,384
----------- ------------
Total current assets 16,508,395 10,394,339
Vessels under capital lease, net 323,806,407 337,001,052
Capitalized financing fees
and expenses, net 150,680 429,338
----------- ------------
TOTAL ASSETS 340,465,482 347,824,729
=========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Accrued expenses and other
current liabilities 2,208,953 2,197,824
----------- ------------
Total current liabilities 2,208,953 2,197,824
Credit facility 125,397,399 125,397,399
Interest rate swap agreement
at fair value 7,745,442 11,590,392
Shareholders equity
Common shares, par value $0.01 per share:
Authorized and outstanding 17,100,000 171,000 171,000
Contributed capital surplus account 212,688,130 220,058,506
Retained earnings - -
Accumulated other comprehensive income (7,745,442) (11,590,392)
----------- ------------
Total shareholders equity 205,113,688 208,639,114
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 340,465,482 347,824,729
=========== ===========
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to September 30, to September 30,
2003 2002
Charter hire revenue 52,619,720 30,124,185
Operating expenses:
Depreciation of vessels under capital leases 13,194,645 13,194,645
Management fee 562,500 562,500
Administration expenses 82,667 41,345
----------- ------------
13,839,812 13,798,490
Net operating income 38,779,908 16,325,695
Interest income 29,007 24,925
Interest expense (6,704,195) (6,667,812)
Other financial costs (316,096) (315,953)
(6,991,284) (6,958,840)
----------- ------------
Net income 31,788,624 9,366,855
=========== ===========
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to September 30, to September 30,
2003 2002
----------- ------------
Net income 31,788,624 9,366,855
Other comprehensive loss
Gain/(loss) on derivative
cash flow hedging instrument 3,844,950 (2,735,322)
----------- ------------
Comprehensive income 35,633,574 6,631,533
=========== ===========
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 2003 Jan 1, 2002
to September 30, to September 30,
2003 2002
----------- ------------
Cash flows from operating activities
Net income 31,788,624 9,366,855
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 278,658 278,658
Changes in operating assets and liabilities:
Charter hire receivable and prepaid expenses (54,246) 336,353
Accrued expenses and other current liabilities 11,129 7,162
----------- ------------
Net cash provided by operating activities 45,218,810 23,183,673
Cash flows from financing activities
Distribution to shareholders (39,159,000) (23,256,000)
----------- ------------
Net cash used in financing activities (39,159,000) (23,256,000)
Net increase (decrease) in cash
and cash equivalents 6,059,810 (72,327)
Cash and cash equivalents at
beginning of period 226,215 278,268
----------- ------------
Cash and cash equivalents at end of period 6,286,025 205,941
=========== ===========
KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
(in U.S. Dollars)
Contributed Accumulated
capital Other
Share 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)
- ----------------------------------------------------------------------------------------------------------------
Balance at
December 31, 2002 171,000 220,058,506 - (11,590,392) 208,639,114
Net income - - 31,788,624 - 31,788,624
Other comprehensive
gain 3,844,950 3,844,950
Distribution
to shareholders - (7,370,376) (31,788,624) - (39,159,000)
- ---------------------------------------------------------------------------------------------------------------
Balance at
Sept 30, 2003 171,000 212,688,130 - (7,745,442) 205,113,688
================================================================================================================
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 December 15, 2003 By /s/ Kate Blankenship
----------------- ---------------------
Kate Blankenship
Secretary
01655.0002 #450344