6-K 1 kn01655002ai6.txt 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