Nordic American Tankers Ltd. Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on July 31, 2002, reports the quarterly results for Nordic American Tankers Ltd. (NAT) for the period ended June 30, 2002. The Company owns three modern double-hull 150,000 dwt Suezmax tankers, all chartered to BP Shipping Ltd. under long-term time charters with a guaranteed minimum daily rate of $13,500 per vessel. The contracts are guaranteed by BP Amoco Plc.
Key Financial Metrics
| Metric | Q2 2002 | YTD 2002 | Q2 2001 | YTD 2001 |
|---|---|---|---|---|
| Revenue | $3,685,500 | $7,330,500 | $7,258,087 | $18,897,105 |
| Net Profit | $1,399,054 | $2,767,113 | $5,021,417 | $14,463,780 |
| Earnings Per Share | $0.14 | $0.29 | $0.52 | $1.49 |
| Cash Flow Per Share | $0.32 | $0.64 | $0.69 | $1.84 |
| Total Assets | $138,622,306 (as of June 30, 2002) | |||
| Cash on Hand | ||||
| Long-Term Debt | $30,000,000 (Fixed) | |||
| Dividend Declared (Q2) |
Dividend Details: A dividend of $0.34 per share ($3,300,246 total) was declared for Q2 2002 and paid in May 2002. A dividend of $0.33 per share ($3,203,180 total) was declared for Q3 2002 to be paid in August 2002.
Material Changes vs. Prior Period
- Revenue Decline: Q2 2002 revenue ($3.69M) decreased significantly compared to Q2 2001 ($7.26M). This is primarily due to the absence of "Additional Hire" payments in 2002, which were received in 2001 when spot charter rates exceeded contract thresholds.
- Profitability: Net profit for Q2 2002 ($1.40M) was approximately 72% lower than Q2 2001 ($5.02M), reflecting the revenue drop while fixed costs (depreciation of $1.71M and interest expenses) remained stable.
- Asset Base: Total assets decreased from $142.66M at Dec 31, 2001, to $138.62M at June 30, 2002, driven by vessel depreciation.
Outlook, Risks, and Commentary
- Income Stability: Management notes that contracts secure income 365 days a year with no off-hire periods. The base hire rate is fixed, providing predictable cash flow.
- Dividend Policy: The Company intends to pay dividends substantially equal to charter income less fixed administrative and interest expenses.
- Liquidity: Cash on hand was $229,626 as of June 30, 2002. The Company relies on charter payments for liquidity.
- Risks: The primary risk is the lack of "Additional Hire" income if spot market rates do not exceed the contract thresholds. The filing does not provide specific quantitative risk factors beyond the reliance on a single charterer (BP Shipping).
Investor Verification Checklist
- Verify the current status of the BP Shipping charter agreement and any potential for extension options to be exercised.
- Confirm the calculation of "Additional Hire" for future quarters based on current spot market rates.
- Review the Company's ability to service its $30M long-term debt given the reduced cash flow compared to 2001.
- Validate the dividend payout schedule and the sufficiency of cash reserves to meet upcoming obligations.