Nordic American Tanker Shipping Ltd. (NAT) – (NYSE: NAT) Announces 4th quarter 2004 results.

Hamilton, Bermuda, January 26th 2005.
Nordic American Tanker Shipping Limited (the “Company”) today announced its results for the 4th quarter of 2004.  The tanker market was significantly stronger in the 4th quarter of 2004 than in the preceding quarter as reflected in the Company’s cash flow.
Based upon the results for the 4th quarter of 2004 the Board has declared a first quarter 2005 dividend of $1.62 per share compared to $1.11 in the preceding quarter and $1.15 in the first quarter of 2004.  The dividend will be paid on or about February 24th 2005 to shareholders of record as of February 4th 2005.
The operating cash flow (*) was $19.8m in the 4th quarter 2004 compared to $11.9m for the 3rd quarter 2004. In the year 2004 the total operating cash flow was $57.0m compared to $34.9m in 2003.
The spot market for modern Suezmax tankers in the 4th quarter of 2004 was exceptionally strong.  On average the time charter equivalent (TCE) for our vessels operated on spot market related terms during the quarter was approx. $94,000 per day.  From this high level the spot market has declined, but is still at healthy levels.   

In October, the Company established a credit facility of $300m provided by four leading international shipping banks. The purpose of this facility is to support the expressed growth strategy of the Company.
In November, the Company acquired a fourth suezmax vessel (1997 built) at a cost of $66m. The ship was chartered back to its sellers until the end of January 2005, after which it is expected to be employed in the spot market.
In November, the Company raised $112m (net of issue cost) in a follow-on public offering. The proceeds of the offering was used to finance the vessel that was acquired and to repay all outstanding bank debt. After this equity offering, the Company has 13,067,838 shares issued and outstanding.
The Company now has the responsibility of providing the crew for and of operating and maintaining three of our vessels. These functions have been outsourced under our supervision to first class technical managers. As the Company has assumed responsibility for the operation of the three ships, quality and cost effective operations are the prime focus.              
As the Company has now become an operating company, it is expected to cease being classified as a “Passive Foreign Investment Company” for US Tax purposes. This means that under current law, qualifying dividends, which will be available to our non-corporate US shareholders commencing in 2006, are expected to be taxed at a maximum United States federal income rate of 15%, rather than the current maximum rate of 35%.
In reviewing the Company’s results for the 4th quarter, investors should take into account the Company’s changed structure following its transformation from a passive leasing company into an operating company.
One ship was redelivered from BP in September 2004 and thereafter continued on spot related time charter to BP.  The Company’s results for the 4th quarter were impacted by one-time extra operating costs associated with the expiry of the bareboat charters with BP for two other of the Company’s ships and the continued employment for one of them to BP under a spot related time charter. The transformation process also included the costs of re-chartering one of them to Gulf Navigation as from November 18, 2004. The total non-recurring costs during the 4th quarter are $10.6 m of which $1.4m is a cash item.

In the accounts $9.2m is a non-cash item being linked to a change in the compensation scheme for the manager (Scandic American Shipping Ltd). The original incentive plan adopted several years ago was a revenue based commission structure. The manager has agreed to amend the original system and to eliminate the commission. The original structure has been replaced by a restricted share system in favour of the manager in order to align the interests of the manager and the Company. In connection with the transition to an operating company, the Company adopted a stock incentive plan under which 400,000 shares of the Company was reserved for issuance to directors, officers and certain key employees of the Company and the Manager. The initial exercise price of options which may be issued under the plan will be equal to $38.75 – the issue price in the follow-on offering in November 2004.
For the foreseeable future, the Company’s Board intends to continue its policy of maintaining a low debt to equity ratio and of pursuing a high dividend policy essentially as in the past.
Another important part of our strategic platform is expansion of the fleet of high quality vessels (**).  A clear objective is that all projects that we may implement in the future are designed to be accretive to earnings and dividends per share.
With the spot market related income from three vessels, plus the fixed income from the bareboat chartered vessel, management believes that the Company’s fleet is balanced to maintain a consistent base cash flow while taking advantage of current spot market rates.  Rates may rise from here, they may remain at the same level or they may drop. Our general view is that the tanker market dynamics are favourable.
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(*)     Cash flow from vessel operations is a non-GAAP financial term often used by investors to measure financial performance of shipping companies. Operating cash flow represents income before depreciation and amortization expense.
(**)  On January 21, 2005 the Company announced an agreement to acquire a 153,181 dwt 1998 built vessel, increasing the fleet to five double hull suezmax vessels, of which three are expected to be in the spot market as from February 1st and the last vessel acquired is expected to be in the spot market from end March.
The 4th quarter 2004 results press release (including tables) can be downloaded from the following link:

4th quarter 2004 results