FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2006
NORDIC AMERICAN TANKER SHIPPING LIMITED
(Translation of registrant's name into English)
Reid House
31 Church Street
Hamilton HM FX
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]
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 1 is a copy of the press release issued by
Nordic American Tanker Shipping Limited (the "Company") on May 2, 2006,
announcing its dividend and earnings in respect of the 1st quarter of 2006.
[GRAPHIC OMITTED]
Exhibit 1
Nordic American Tanker Shipping Ltd. (NAT)-(NYSE:NAT) - Announces Dividend and
Earnings in respect of the 1st Quarter of 2006
Hamilton, Bermuda, May 2nd 2006
Nordic American Tanker Shipping Limited (the "Company") today announced its
results for the 1st quarter of 2006. The tanker market was strong during the 1st
quarter of 2006, resulting in solid earnings per share and one of the highest
dividends declared since the listing of the Company's common shares in 1997. The
dividend is expected to be paid on or about May 31st to shareholders of record
as of May 12th. The Company has declared a dividend for 34 consecutive quarters.
The Company's successful growth policy - manifested by the Company's expansion
from three to nine vessels since the autumn of 2004 - has bolstered the
Company's earnings and ability to pay dividends. As a result of the growth of
the Company's fleet in line with its policy, NAT is able to pay a higher
dividend per share and produce higher earnings per share at the same spot rate
level.
Highlights:
------------
o The Board of Directors has declared a dividend of $1.58 per share for
the 1st quarter of 2006 compared to $1.15 per share for the 1st
quarter of 2005. Over the last four quarters including the 1st quarter
of 2006 a total of $4.90 has been paid in dividends which is 13.2% in
relation to the average daily share price over the same period.
o The 1st quarter 2006 net income was $1.07 per share compared to $0.53
per share for the 1st quarter of 2005.
o The spot market during the 1st quarter of 2006 was lower than the 4th
quarter of 2005.
o No vessels were in dry dock during the 1st quarter of 2006.
o On February 27th the Company announced that it had agreed to acquire a
double hull Suezmax vessel of 157,332 dwt. The vessel, Nordic Jupiter,
joined our fleet on April 10th.
o In conjunction with the acquisition of the Nordic Jupiter, the Company
also announced on February 27th that it commenced a public offering.
The offering was closed on March 14th, providing net proceeds to the
Company of $115.2m based on an offering price of $28.50 per share. As
of March 31, 2006, there are 21,029,700 shares issued and outstanding.
Dividends per Share, Earnings per Share and Financials:
------------------------------------------------------
The Board has declared a dividend of $1.58 per share in respect of the 1st
quarter of 2006. This compares to a dividend of $1.15 per share in respect of
the 1st quarter of 2005. The 4th quarter 2005 dividend was $1.88 per share. The
dividend of $1.58 per share will be paid on or about May 31st to shareholders of
record as of May 12th 2006.
For details regarding calculation and payment of dividend, please see (1) at the
end of this release.
Net income was $19.1m for the 1st quarter of 2006 or $1.07 per share (EPS). This
compares to a net income of $7.5m or $0.53 per share for the 1st quarter of
2005. The net income for the 4th quarter of 2005 was $25.1m or $1.51 per share.
The earnings per share for the 1st quarter of 2006 have been impacted by
non-cash charges of $0.16 per share in aggregate due to the allotment of
restricted shares in connection with the recent offering, and grants under the
2004 Stock Option Plan. For details please see (2) at the end of this release.
Operating cash flow(3) was $29.5m in the 1st quarter of 2006 compared to $13.9m
in the 1st quarter of 2005. Operating cash flow for the 4th quarter of 2005 was
$32.8m.
For the 1st quarter of 2006, operating costs of our vessels and general and
administrative costs were according to our expectations. We focus on an
efficient cost structure which we believe is among the lowest in the industry.
We currently estimate that our average cash breakeven for the vessels in our
fleet is approximately $8,500 per day per vessel. The breakeven rate is the
amount of average daily revenues for our vessels which would cover our cash
general and administrative expenses, voyage expenses, if any, vessel operating
expenses, interest expenses and other financial charges.
After Nordic Jupiter joined our fleet April 10th 2006, the net debt of the
Company stood at approximately $83m - an average debt of $9.2m per vessel. Our
strong balance sheet provides room for further expansion of our fleet expected
to take place during 2006. The debt of the company, drawn under the five year
credit facility of $300m falls due in 2010. The credit facility may not be
reduced by the lenders and there is no repayment obligation during the tenure of
the facility during which the Company pays interest only.
No vessels were in dry dock during the 1st quarter of 2006, and there are no
vessels scheduled for dry docking during the 2nd quarter of 2006.
The table below shows the number of vessel revenue days over the last six
quarters for all the vessels, reflecting the growth of the Company.
Period 4q04 1q05 2q05 3q05 4q05 1q06
Revenue days 314 371 549 576 697 720
For further details on our financial results, please see later in this message.
The Fleet
---------
Eight of the Company's nine vessels are now trading in the spot market on spot
related terms, while one vessel remains employed on a long term fixed charter
rate. Our analysis show that over time spot employment generates premium
earnings compared to longer term employment.
Vessel Dwt Employment
Gulf Scandic 151,458 Long term fixed charter
Nordic Hawk 151,458 Spot related terms
Nordic Hunter 151,458 Spot related terms
Nordic Voyager 149,591 Spot
Nordic Fighter 153,181 Spot
Nordic Freedom 159,500 Spot
Nordic Discovery 153,181 Spot
Nordic Saturn 157,332 Spot
Nordic Jupiter 157,332 Spot
Total 1,384,491
The Market
-------------
According to the spot assessment of the Imarex Tanker Index, which gives an
indication of the level of the spot market, Suezmax spot rates were on average
$45,308 per day for the 1st quarter of 2006, compared to $46,947 per day during
the 1st quarter of 2005 and $64,002 per day during the 4th quarter of 2005.
Normally, in a falling market, as in the 1st quarter of 2006, our spot vessels
produce on average better results than the Imarex Index. In a rising market the
Imarex Index will normally outperform our spot results from our vessels.
While short term spot rates are notoriously difficult to predict, a normal
seasonal downward trend has been observed during April, however, with very high
volatility in rates.
The World's Suezmax fleet stood at 332 vessels at the end of the 1st quarter
2006, compared with 324 vessels at the end of the 4th quarter of 2005. There
were sixty-two (62) Suezmax vessels on order at the end of the 1st quarter of
2006 (Source: Fearnresearch). At the same time seventy-three (73) were single
hull which are expected to be mandatorily phased out by 2010.
On the demand side, the macro-economic developments of the Far East and in the
United States, show a positive direction.
According to the International Energy Agency (IEA), world oil demand is expected
to increase by 1.8% in 2006 compared to 1.3% in 2005. Global oil demand averaged
85.2 million barrels per day during the 1st quarter of 2006, a 1.2% increase
from the previous quarter, and a 0.8% increase from the 1st quarter of 2005.
On the supply side, the deliveries of tankers over the next 24 - 36 months from
the shipyards can be estimated with a high degree of certainty - as the
shipyards more or less are expected to operate at full capacity with their
present order books.
While we expect that short term rates may continue to vary significantly and be
volatile, the supply and demand tanker fundamentals are in the Company's view
positive.
Going Forward
-------------
The Company will continue to base operations on its unique operating model. The
main objective of the Company is to provide for value creation via a
transparent, predictable and simple strategic platform. The Company wishes to
maintain a high exposure to the spot market because our analysis shows that the
spot market over time can be expected to produce higher revenues on average than
the time charter sector. However, a certain amount of term charter coverage is
also being contemplated from time to time.
The full dividend payout policy will continue. The present balance sheet of the
Company gives room for further expansion of the fleet. A growth strategy is an
inherent part of the Company's operating model. This strategy will continue.
*****
------------------------
(1) If we declare a dividend in respect of a quarter in which an equity issuance
has taken place - as in the 1st quarter of 2006 - the policy is that we
calculate the dividend per share as our net operating cash flow(4) for the
quarter divided by the weighted average number of shares over that quarter. The
dividend paid is the calculated dividend per share multiplied by the number of
shares outstanding at the end of the quarter.
(2) Earnings per share (EPS) for the 1st quarter 2006 were impacted by a
non-cash charge of $2.5m or $0.14 per share which is related to the 87,704
restricted shares that were allocated in connection with the share offering that
was closed March 14th. EPS were also impacted by a non-cash general and
administrative charge of $0.4m ($0.02 per share) associated with the 2004 Stock
Option Plan. At the end of the 1st quarter 2006, the exercise price for these
options, exceeded the Company's share price on the NYSE.
(3) Operating cash flow is a non-GAAP financial term often used by investors to
measure financial performance of shipping companies. Operating cash flow
represents income from vessel operations before depreciation and non-cash
administrative charges. Please see page 6 for a reconciliation of this non-GAAP
measure as used in this release to the most directly comparable GAAP financial
measure.
(4) Net operating cash flow represents net income plus depreciation and non-cash
administrative charges. In view of the Company's policy of maintaining a certain
level of debt on its balance sheet, the Company is calculating its dividend on
the basis of net operating cash flow.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are other than statements of historical facts.
The Company desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor legislation. The words
"believe," "anticipate," "intend," "estimate," "forecast," "project," "plan,"
"potential," "will," "may," "should," "expect," "pending" and similar
expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, our management's examination of historical
operating trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, we cannot assure you that we will achieve or accomplish
these expectations, beliefs or projections. We undertake no obligation to update
any forward-looking statement, whether as a result of new information, future
events or otherwise.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
fluctuations in charter rates and vessel values, changes in demand in the tanker
market, as a result of changes in OPEC's petroleum production levels and world
wide oil consumption and storage, changes in our operating expenses, including
bunker prices, drydocking and insurance costs, the market for our vessels,
availability of financing and refinancing, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or
political events, vessels breakdowns and instances of off-hires and other
important factors described from time to time in the reports filed by the
Company with the Securities and Exchange Commission, including the prospectus
and related prospectus supplement, our Annual Report on Form 20-F, and our
reports on Form 6-K.
Contacts:
Scandic American Shipping Ltd
Manager for:
Nordic American Tanker Shipping Ltd.
P.O Box 56, 3201 Sandefjord, Norway
Tel: + 47 33 42 73 00 E-mail: nat@scandicamerican.com
Web-site: www.nat.bm
Rolf Amundsen
Chief Financial Officer
Nordic American Tanker Shipping Ltd.
Tel: +1 800 601 9079 or + 47 908 26 906
Herbjorn Hansson
Chairman & CEO
Nordic American Tanker Shipping Ltd.
Tel: +1 866 805 9504 or + 47 901 46 291
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 authorized.
NORDIC AMERICAN TANKER SHIPPING LIMITED
(registrant)
Dated: May 2, 2006 By: /s/ Herbjorn Hansson
---------------------------
Herbjorn Hansson
Chairman, Chief Executive Officer
and President