Business Context and Reporting Period
Company: Nordic American Tanker Shipping Limited (NYSE: NAT)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Month of August 2009 (Press Release dated August 14, 2009)
Business Overview: The Company operates a fleet of 14 Suezmax tankers with two newbuildings scheduled for delivery in the following year. The filing primarily addresses the cancellation of the 2004 Stock Incentive Plan.
Key Financial Metrics
This filing does not provide comprehensive financial statements (revenue, profit, cash flow, or debt levels). Specific financial data related to the stock option cancellation includes:
- Cash Outlay: $2.3 million total cash payment to settle cancelled options.
- Liquidity Status: The cash outlay is covered by cash on hand.
- Share Price: $30.70 per share (closing price on August 13, 2009).
- Compensation per Option: $7.23.
- Expected P&L Charge: Approximately $450,000 to be recognized in the third quarter of 2009.
Material Changes
The primary material event is the complete cancellation of 400,000 stock options reserved under the 2004 Stock Incentive Plan. This includes:
- 320,000 options previously granted to directors, the Chairman/CEO, and employees.
- 80,000 options reserved for future issuance to employees.
- 80,000 options reserved for future issuance to employees of the Manager.
Following this action, no stock options remain reserved for issuance under the plan. The filing text does not provide comparative financial data versus prior periods.
Guidance, Outlook, and Management Commentary
Management Commentary: Chairman and CEO Herbjorn Hansson stated that the cancellation was appropriate given the Company's evolution from a three-ship operator to a fleet of 14 Suezmax tankers plus newbuildings. He intends to use the net after-tax proceeds from the cancellation of his personal 100,000 options to purchase Company shares in the open market.
Risks and Contingencies: The filing includes a standard cautionary statement regarding forward-looking statements. Key risk factors identified include:
- Fluctuations in charter rates and vessel values.
- Changes in global oil consumption, OPEC production levels, and world economies.
- Operating expense volatility (bunker prices, drydocking, insurance).
- Availability of financing and refinancing.
- Regulatory changes, political conditions, and potential shipping route disruptions.
Investor Verification Checklist
- Verify the impact of the $450,000 Q3 2009 charge on the Company's net income in the upcoming quarterly report.
- Confirm the Company's current cash balance to ensure the $2.3 million outlay does not impact liquidity for upcoming newbuilding deliveries.
- Monitor the open market share purchases by the CEO as pledged in the press release.
- Review the status of the two newbuildings scheduled for delivery in the following year.