Being Filed Pursuant to Rule 901 (d) of Regulation S-T





FORM 10-Q


SECURITIES AND EXCHANGE COMMISSION





WASHINGTON, D.C. 20549





(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF THE SECURITIES AND EXCHANGE ACT OF 1934.





For the quarterly period ended September 30, 2003





OR


( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF THE SECURITIES AND EXCHANGE ACT OF 1934.


For the period from_______________________   to _______________________




Commission File Number


001-14135








OMI CORPORATION


(Exact name of registrant as specified in its charter)




**Marshall Islands**
**52-2098714**(State or other jurisdiction  incorporation or organization)
(I.R.S. Employer  Identification No.)**One Station Place, Stamford, CT**
**06902**(Address of principal executive offices)
(Zip Code)










Registrant's telephone number, including area code (203) 602-6700





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.




YES X  NO__




Indicate  by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).




YES X  NO__





Indicate
    the number of shares outstanding of each of the issuer's classes of common
    stock, as of November
    10, 2003 :





Common Stock, par value $0.50 per share 79,813,312 shares


















OMI CORPORATION AND SUBSIDIARIES


INDEX








PART I:
FINANCIAL INFORMATION
PageItem 1.
Financial StatementsCondensed Consolidated Statements ofIncome (unaudited) for the three and nine months ended September 30, 2003 and 2002
3Condensed Consolidated Balance Sheets-September 30, 2003 (unaudited) and December 31, 2002
4Condensed Consolidated Statement of Changes in Stockholders' Equity (unaudited) for the nine months ended September 30, 2003
5Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2003 and 2002
6Notes to Condensed Consolidated Financial Statements (unaudited)
7Item 2.
Management's Discussion and Analysis of**Financial Condition and Results of Operations******
16Item 3.
Quantitative and Qualitative Disclosures about Market Risks
43Item 4.
Controls and Procedures
44PART II:
OTHER INFORMATION
46SIGNATURES

47














2







PART I:  FINANCIAL INFORMATION





Item 1.  Financial Statements








OMI CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(IN THOUSANDS, EXCEPT PER SHARE DATA)


(UNAUDITED)








FOR THE THREE MONTHS ENDED SEPTEMBER 30,
FOR THE NINE MONTHS ENDEDSEPTEMBER 30,2003


2002


2003


2002Revenues:Voyage revenue

$
37,842

$
22,182

$
146,526

$
71,116Time charter revenue


34,354


24,481


87,264


68,033Subtotal


72,196


46,663


233,790


139,149Voyage expense


12,368


8,698


36,102


24,810Time charter equivalent revenue


59,828


37,965


197,688


114,339Other revenue


8


45


125


94Time
    charter equivalent and other revenues


59,836


38,010


197,813


114,433Operating Expenses:Vessel


14,345


11,104


42,424


38,335Charter hire


5,335


4,288


16,373


12,210Depreciation and amortization


13,524


11,074


37,958


31,714General and administrative


3,387


3,701


11,914


10,280Loss on writedown/disposal of assets


7,558





10,773


289Total operating expenses


44,149


30,167


119,442


92,828Operating Income


15,687


7,843


78,371


21,605Other (Expense) Income:Gain (loss) on disposal of investments-net


618


3⁄4


618


(547
)Interest expense


(5,613
)

(6,417
)

(17,315
)

(18,150
)Interest income


80


129


266


549Net Other Expense


(4,915
)

(6,288
)

(16,431
)

(18,148
)Income before Income Taxes


10,772


1,555


61,940


3,457Benefit for Income Taxes


3⁄4


1,099


3⁄4


1,406Net Income

$
10,772

$
2,654

$
61,940

$
4,863Basic Earnings Per Share

$
0.14

$
0.04

$
0.80

$
0.07Diluted Earnings Per Share

$
0.14

$
0.04

$
0.80

$
0.07Weighted Average Shares Outstanding:Basic


78,151


70,279


77,283


70,269Diluted


78,445


70,475


77,778


70,475








See notes to condensed consolidated financial statements.








3













OMI CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(IN THOUSANDS)





**SEPTEMBER 30,**


**DECEMBER 31**,2003


2002(UNAUDITED)ASSETSCurrent Assets:Cash, including cash equivalents:2003-$17,642; 2002-$38,883

$
20,884


$
40,890Receivables:Traffic receivables, net of allowance for doubtful accounts of $1,980 in 2003 and $1,255 in 2002

18,277



15,968Other


3,230



3,380Other prepaid expenses and current assets


10,535



8,580Vessels held for sale


15,360



3⁄4Total Current Assets


68,286



68,818Vessels and other property, at cost


1,167,480



974,685Construction in progress


20,037



37,857Total vessels and other property


1,187,517



1,012,542Less accumulated depreciation


135,855



109,732Vessels and other property-net


1,051,662



902,810Drydock costs-net of amortization


3,057



6,740Other assets and deferred charges


13,395



11,253Total Assets

$
1,136,400


$
989,621LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
10,406


$
12,144Accrued liabilities:Deferred charter hire revenue


6,308



3,984Voyage and vessel


6,434



3,090Interest


2,596



3,501Other


7,149



3,859Deferred gain on sale of vessels


1,557



1,557Current portion of long-term debt


21,369



32,602Total Current Liabilities


55,819



60,737Long-term debt


553,655



477,959Other liabilities


3,865



6,459Deferred gain on sale of vessels


5,476



6,644Stockholders equity


517,585



437,822Total Liabilities & Stockholders Equity

$
1,136,400


$
989,621











See
    notes to condensed consolidated financial statements.








4









OMI CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY


FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003


(IN THOUSANDS)


(UNAUDITED)





Unearned
  Accumulated
  TotalCompensation
  Other Com-
  Stock-CommonStock
  Capital
  Retained
  Restricted
  prehensive
  holders
  ComprehensiveShares
Amount
Surplus
Earnings
Stock
Loss
Equity
IncomeBalance at January 1, 2003


76,779

$
38,390

$
321,447

$
87,932

$
(3,658
)
$
(6,289
)
$
437,822Comprehensive income:Net income











61,940








61,940

$
61,940Derivative gains

















2,594


2,594


2,594Comprehensive income






















$
64,534Issuance of common stock


2,000


1,000


10,989











11,989Exercise of stock options


536


268


2,164











2,432Issuance of restricted 
       stock awards


498


249


3,159





(3,408
)




3⁄4Amortization of restricted 
       stock














808





808Balance at September 30, 2003


79,813

$
39,907

$
337,759

$
149,872

$
(6,258
)
$
(3,695
)
$
517,585











See
    notes to condensed consolidated financial statements.











5












OMI CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(IN THOUSANDS)


(UNAUDITED)





FOR THE NINE MONTHS ENDED SEPTEMBER 30,2003
2002CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES :Net income

$
61,940

$
4,863Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of vessels and other property


37,958


31,714Loss
    on writedown/disposal of assets


10,773


289(Gain) loss on disposal of investments


(618
)

547Amortization of deferred gain on sale of vessels


(1,168
)

(914
)Amortization of debt issue costs


1,430


1,839Amortization of restricted stock awards


808


774Deferred income taxes


3⁄4


(1,406
)Changes in assets and liabilities:(Increase) decrease in receivables and other current assets


(4,336
)

3,698Increase (decrease) in accounts payable and accrued liabilities


6,369


(4,829
)Decrease in other assets and deferred charges


27


862Decrease in other liabilities


3⁄4


(853
)Other


(5
)

102Net cash provided by operating activities


113,178


36,686CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:Additions to vessels and other property


(205,274
)

(162,534
)Proceeds from disposition of vessels


9,555


58,009Payments for drydocking


(1,350
)

(3,985
)Proceeds from disposition of joint venture


686


3⁄4Proceeds from notes receivable


37


6,737Proceeds from investments


3⁄4


6,129Escrow of funds


750


11,750Net cash used by investing activities


(195,596
)

(83,894
)CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:Proceeds from debt refinanced


3⁄4


65,000Payments on debt refinanced


3⁄4


(49,410
)Proceeds from issuance of debt


172,274


102,929Payments on debt


(107,811
)

(56,262
)Payments for debt issue costs


(4,472
)

(1,429
)Proceeds from issuance of common stock


2,421


3⁄4Net cash provided by financing activities


62,412


60,828Net (decrease) increase in cash and cash equivalents


(20,006
)

13,620Cash and cash equivalents at beginning of year


40,890


17,730Cash and cash equivalents at end of period

$
20,884

$
31,350





See
    notes to condensed consolidated financial statements.







6






OMI CORPORATION AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





Note 1 - Basis of Presentation and Principles of Consolidation





OMI Corporation ("OMI" or the "Company"), is a bulk shipping company incorporated January 9, 1998 in the Republic of the Marshall Islands. OMI is a leading seaborne transporter of crude oil and refined petroleum products operating in the international shipping markets. The unaudited condensed consolidated interim financial statements of OMI are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the Securities and Exchange Commissions instructions to Form 10-Q. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. The condensed consolidated financial state





 ments should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. The results of operations for the nine months ended September 30, 2003, are not necessarily indicative of the results for the entire fiscal year ending December 31, 2003.




The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.





Reclassifications  Certain reclassifications have been made to the prior year financial statements to conform to the 2003 presentation. These reclassifications had no effect on previously reported net income.





Newly Issued Accounting Standards The Financial Accounting Standards Board "FASB" recently issued Statements of Financial Accounting Standards ("SFAS"), which are summarized as follows:





SFAS
    150, "Accounting for Certain Financial Instruments with Characteristics of
    both Liabilities and Equity" was issued in May 2003. SFAS 150 establishes
    standards for how an issuer classifies and measures certain financial instruments
    with characteristics of both liabilities and equity and is effective for
    financial instruments entered into or modified after May 31, 2003 and
    for all such instruments on July 1, 2003. The provisions of SFAS 150, which
    the Company adopted in 2003, did
    not have an effect on the Companys financial statements.





SFAS
    149, " Amendment
    of Statement 133 on Derivative Instruments and Hedging Activities "was
    issued in April 2003. SFAS 149 amends SFAS 133, "Accounting for Derivative
    Instruments and Hedging Activities," to
    provide clarification on the meaning of an underlying, the characteristics
    of a derivative that contains financing components and the meaning of an
    initial net investment that is smaller than would be required for other types
    of contracts that would be expected to have a similar r

 esponse to changes in market factors. SFAS 149 will be applied prospectively
    and is effective for contracts entered into or modified after June 30, 2003. The
 provisions of SFAS 149, adopted by the Company effective July 1, 2003, did
 not have an effect on the Companys financial statements.




7









Note 1 - Basis of Presentation and Principles of Consolidation (continued)





SFAS 148, "Accounting for Stock-Based Compensation  Transition and Disclosure" was issued in December 2002. SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition to SFAS 123s fair value method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure provisions of SFAS 123 and APB Opinion 28, "Interim Financial Reporting," to require disclosure in the summary of significant accounting policies of the effects of an entitys accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. While SFAS 148 does not amend SFAS 123 to require companies to account for





 employee stock options using the fair value method, the disclosure provisions of SFAS 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of SFAS 123 or the intrinsic value method of APB Opinion 25. As allowed by SFAS 123, the Company has elected to continue to utilize the accounting method prescribed by APB Opinion 25 and has adopted the disclosure requirements of SFAS 123 for stock options existing prior to January 1, 2003. The Company has also elected the prospective method for recognizing fair value on stock options granted after January 1, 2003. The disclosure provisions under SFAS 148, effective for fiscal years ending after December 15, 2002, have been adopted by the Company, with the appropriate disclosures under "Stock-Based Compensation."





In
    January 2003, the FASB issued Financial Interpretation No. 46 ("FIN 46"),
    which addresses financial reporting requirements for variable interest entities,
    also referred to as special purpose entities. In general, a variable interest
    entity is a corporation, partnership, trust, or any other legal structure
    used for business purposes that either (1) does not have equity investors
    with voting rights; or (2) has equity investors that do not provide
    sufficient financial resources for the entity to support its activities.
    A variable interest entity often holds financial assets, including loans
    or receivables, real estate or other property and may be essentially passive
    or it may engage in research and development or other activities on behalf
    of another company. FIN 46 requires a

variable interest entity to be consolidated by a company if that company is subject
    to a majority of the risk of loss from the variable interest entitys
    activities or entitled to receive a majority of the entitys residual
    returns or both. FIN 46 also requires disclosures about variable interest
    entities that the company is not required to consolidate but in which it
    has a significant variable interest. The consolidation requirements of FIN
    46 apply immediately to variable interest entities created after January 31,
    2003. The consolidation requirements apply to older entities in the first
    fiscal year or interim period beginning after June 15, 2003. Certain
    of the disclosure requirements apply in all financial statements issued after
    January 31, 2003, regardless of when the variable interest entity was
    established. The adoption of FIN 46 did not have an effect on the Companys
    financial statements.





Stock-Based
    Compensation  The
    Company has elected to adopt SFAS 123, as amended by SFAS 148 to account
    prospectively for stock options issued after December 31, 2002 using the
    fair value method
    as compensation expense. Previous grants of stock options are
    accounted for by using the intrinsic value method in accordance with APB Opinion
    25. Accordingly, when stock options were granted prior to January 1, 2003
    at fair market value, no compensation expense was recognized for stock options
    issued under the Companys stock option plans. The Company records compensation
    expense for other stock-based  compensation awards, such as restricted stock
    awards, over the vesting








8








Note 1  Basis of Presentation and Principles of Consolidation (continued)




periods. The Company has adopted the disclosure provisions of SFAS 123, Accounting for Stock-Based Compensation . Accordingly, the following pro forma disclosures illustrate the effect on net income and earnings per share as if the fair value based method of accounting, as set forth in SFAS 123, had been applied.





FOR THE THREE MONTHS ENDED SEPTEMBER 30,
FOR THE NINE MONTHS ENDED SEPTEMBER 30,(in thousands, except per share data)
2003

2002

2003

2002Net income, as reported

$
10,772

$
2,654

$
61,940

$
4,863Deduct:Stock based compensation expense determined by using the fair value method

23


167


117


489Pro forma net income

$
10,749

$
2,487

$
61,823

$
4,374Basic earnings per common share:Net income per common share, as reported

$
0.14

$
0.04

$
0.80

$
0.07Net income per common share, as pro forma

$
0.14

$
0.04

$
0.80

$
0.06Diluted earnings per common share:Net income per common share, as reported

$
0.14

$
0.04

$
0.80

$
0.07Net income per common share,as pro forma

$
0.14

$
0.04

$
0.79

$
0.06





The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the three and nine month period: no dividend yield; expected volatility of 72.5%; risk-free interest rate of 2.82%; and the weighted average expected lives of options for the three and nine months ended September 30, 2003 was 3.6 years and 3.9 years for the three and nine months ended September 30, 2002. There were no options granted during the nine months ended September 30, 2003 and 30,000 options granted at a grant price of $3.93 during the nine months ended September 30, 2002.




Restricted Stock







In September 2003,  OMI awarded and issued 498,314 shares of restricted stock to employees, executive officers and directors for a total value at the date of grant of approximately $3,408,000. Restrictions lapse for one third of the shares at the end of year three, the next third at the end of year four, and the remaining third of the shares at the end of year five.





As of September 30, 2003, the Company had granted an aggregate of 1,418,314 shares of restricted stock to certain of its employees, executive officers and directors. The market value of restricted stock awarded totaled an aggregate of approximately $8,609,000 on the respective grant dates in July 2001, April 2002 and September 2003,and was recorded as unearned compensation as a separate component of stockholders equity. The Company is amortizing unearned compensation over the vesting periods. During the three months ended September 30, 2003 and 2002, we recognized $289,000 and $260,000, respectively, of compensation expense related to restricted stock. For the nine months ended September 30, 2003 and 2002, we recognized compensation expense related to restricted stock of $808,000
and $774,000, respectively.




9









Note 2  Credit Facilities and Loan Agreements





As of September 30, 2003 the Companys debt and credit arrangements consisted of the following (in thousands):





Loans under bank credit agreements at a margin plus variable rates of the London Interbank Offering Rate ("LIBOR") (1) (2)

$
574,6757.00% Convertible Note due 2004


349Total


575,024Less current portion of long-term debt


21,369Long-term debt

$
553,655





(1) Rates at September 30, 2003 ranged from 2.0625 percent to 3.75 percent (including margins).





(2) As of September 30, 2003, OMI had various interest rate swaps  and Future Rate Agreements ("FRAs") that fix notional amounts aggregating $337,650,000 of variable rate debt ranging from 1.172% to 4.86% (excluding margins) with maturity dates





 ranging from December 2003 to October 2005.





All of our loan agreements contain restrictive covenants as to certain cash, net worth, maintenance of specified financial ratios and collateral values.  They also restrict the Companys
ability to make certain payments, such as dividends and repurchase its stock.  As of September 30, 2003, the Company was in compliance with its covenants.





2003 Financing Transactions





In June 2003, we obtained an eight-year $64,800,000 term loan to partially finance the purchase of two Panamax newbuildings, delivered in April and July of 2003. The loan comprises two tranches; each tranche of $32,400,000 is being repaid in 32 quarterly installments (the first 20 at $870,000 and next 12 at $500,000) plus a balloon of $9,000,000 due with the last installment. At September 30, 2003, the balance of the loan was $63,930,000. The outstanding balance of the loan bears interest at LIBOR plus a margin of 0.90%.





In August 2003, we obtained two eight-year term loans aggregating $68,775,000 (which is the outstanding balance at September 30, 2003) to partially finance two 2000 built double-hull Suezmax tankers, delivered in August 2003. The loans bear interest at LIBOR plus a fixed margin of 1.25%. One loan will be repaid in 16 semi-annual payments of $1,330,000 plus a balloon payment of $13,195,000 upon maturing in August 2011. The other loan requires 32 quarterly payments of $650,000 plus a balloon payment of $13,500,000 when the loan matures in August 2011.





In
    March 2003, we consolidated, amended and restated two loan agreements. The
    modification resulted in a reducing revolving credit facility in the amount
    of $245,000,000 ("$245 Facility"), which matures on March 14, 2010.  The
    loan bears interest at LIBOR plus a fixed margin of 1.625%. This facility
    is now collateralized by 15 vessels after the disposal of three product carriers
    in April, May and November 2003. The $245 Facility was amended after the
    dispositions as follows:




the
    Facility was reduced by approximately $4,620,000, the
    first 20 quarterly reductions became $4,540,000, the
    next 7 quarterly reductions became $3,860,000, and the balloon and final payment is $115,250,000.




10





Note 2  Credit Facilities and Loan Agreements (continued)

As of September 30, 2003, the available debt undrawn under all credit facilities was $78,786,000. During October 2003, the Companys $348 Facility was reduced by $8,040,000 for the sale of one product tanker. Upon the sale of another product tanker (expected in November), the Facility will be reduced by $7,609,000. Currently, approximately $70,746,000 of undrawn debt is available.



Note 3  Financial Instruments



All derivatives are recognized on the Companys balance sheet at their fair values. On the date the derivative contract is entered into the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value" hedge) or (2) a hedge of a forecasted transaction ("cash flow" hedge). The Company does not have foreign-currency cash-flow or fair-value hedges ("foreign currency" hedge) or a hedge of a net investment in a foreign operation.



As of September 30, 2003, the Company had interest rate swaps and Future Rate Agreements ("FRAs") to effectively convert a portion of its debt from a floating to a fixed-rate basis. The swaps and FRAs are designated and qualify as cash flow hedges. These swap contracts and FRAs were effective hedges and therefore no ineffectiveness was recorded in the Condensed Consolidated Statements of Income.



OMI entered into interest rate swap and FRA agreements to manage interest costs and the risk associated with changing LIBOR interest rates. As of September 30, 2003, we had various interest rate swaps/FRAs aggregating $395,490,000 (which includes a notional amount of $57,840,000 on an interest rate swap that commences in 2004) on various debt tranches within a range of 1.172% to 4.86% expiring from December 2003 to October 2008. The Company will pay fixed-rate interest amounts and will receive floating-rate interest amounts based on three month LIBOR settings (for a term equal to the swaps' reset p





 eriods). As of September 30, 2003, the Company has recorded a liability which is included in Other liabilities in the Balance Sheet of $3,695,000 related to the fair market value of these hedges and a corresponding charge to Other comprehensive income.



Note 4  Earnings Per Common Share



The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the foregoing and the exercise of all stock options using the treasury stock method and the conversion of the 7% convertible note due 2004, to the extent dilutive.



The components of the denominator for the calculation of basic and diluted earnings per share and the results of such calculations are as follows:



|                                           |  | FOR THE THREE MONTHS ENDED SEPTEMBER 30, | FOR THE NINE MONTHS ENDED SEPTEMBER 30,
|------------------------------------------ |  | ---------------------------------------- | ---------------------------------------
|                                           |  |                                          |                                        
|(in thousands, except per share amounts)   |  |                                          | 2003                                   
|Basic earnings per share:                  |  |                                          |                                        
|Weighted average common shares outstanding |  |                                          | 78,151                                 
|                                           |  |                                          |                                        











11




Note 4  Earnings Per Common Share (continued)





|                                         |  | FOR THE THREE MONTHS ENDED SEPTEMBER 30, | FOR THE NINE MONTHS ENDED SEPTEMBER 30,
|---------------------------------------- |  | ---------------------------------------- | ---------------------------------------
|                                         |  |                                          |                                        
|(in thousands, except per share amounts) |  | 2003                                     |                                        
|                                         |  |                                          |                                        
|                                         |  |                                          |                                        
|Diluted earnings per share:              |  |                                          |                                        
|Weighted average common shares           |  |                                          |                                        
|outstanding                              |  |                                          | 78,151                                 
|Options                                  |  |                                          | 294                                    
|                                         |  |                                          |                                        
|Weighted average common shares           |  |                                          |                                        
|Outstanding-diluted                      |  |                                          | 78,445                                 
|                                         |  |                                          |                                        
|                                         |  |                                          |                                        
|Basic earnings per share:                |  |                                          |                                        
|Net income                               |  | $                                        | 0.14                                   
|                                         |  |                                          |                                        
|                                         |  |                                          |                                        
|Diluted earnings per share:              |  |                                          |                                        
|Net income                               |  | $                                        | 0.14                                   
|                                         |  |                                          |                                        
|                                         |  |                                          |                                        







The effect of the assumed conversion of the 7% convertible notes due 2004 was not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2003 and 2002 because the average price of OMIs stock was less than the stock conversion price of $7.375.



Note 5  Supplemental Cash Flow Information



During the nine months ended September 30, 2003 and 2002 interest paid totaled approximately $17,113,000 and $19,063,000, respectively.



During August 2003, OMI issued two million shares of OMI common stock at $6.00 per share as partial payment on two 2000 built Suezmax tankers.



During March 2002, OMI issued 11,073 shares at $2.89 to one director in lieu of his annual fee of $32,000.



Note 6  Acquisitions



During 2003, OMI took delivery of four newbuildings and two Suezmax tankers, as follows:





|Vessel  | Delivered    | Type
    of Vessel | Capitalized
  Cost(1) | CharterExpiration
|------- | ------------ | ------------------ | --------------------- | -----------------
|        |              |                    | (in thousands)        |                  
|        |              |                    |                       |                  
|MOSELLE | January 2003 | Handymax           | $30,292               | January 2006     
|ROSETTA | March 2003   | Handymax           | 30,460                | March 2006       
|OTTAWA  | April 2003   | Panamax            | 37,867                | April 2008       
|TAMAR   | July 2003    | Panamax            | 37,824                | July 2008        
|HUDSON  | August 2003  | Suezmax            | 49,226                | SPOT             
|POTOMAC | August 2003  | Suezmax            | 49,202                | SPOT             
|        |              |                    |                       |                  
|Total   |              |                    | $234,871              |                  
|        |              |                    |                       |                  





1. See Note 2 for financing of new vessels.



Note 7  Disposal of Vessels



During September 2003, OMI agreed to sell two single-hull product carriers built in 1989 and 1990 for an aggregate sales price of approximately $16,000,000. One vessel was delivered in October and the







12






Note 7  Disposal of Vessels (continued)



other is scheduled for November 2003. The aggregate loss on disposal of these vessels of $7,558,000 resulting from the writedown to the net realizable values was recognized and recorded to the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2003.



During the second quarter 2003, OMI sold two 1984 built single-hull product carriers for an aggregate sales price of approximately $9,555,000, one of which was delivered in April 2003, and the other was delivered in May 2003. For the nine months ended September 30, 2003, a loss on disposalof $3,215,000 was recorded to the Condensed Consolidated Statements of Income resulting from sale of these vessels.



During October 2003, OMI agreed to sell a 1989 built single hull product carrier. The vessel is scheduled for delivery in November 2003 and will result in a loss of approximately $3,500,000, which will be recognized in the fourth quarter.



Note 8  Financial Information Relating to Segments



The Company organizes its business principally into two operating segments. These segments and their respective operations are as follows:

Crude Oil Tanker Fleet - includes vessels that normally carry crude oil and "dirty" products. The current fleet includes four sizes of vessels; Suezmax, ULCC, Panamax and handysize.



Product Carrier Fleet - includes vessels that normally carry refined petroleum products such as gasoline, naphtha and kerosene. This fleet includes three sizes of vessels, Panamax, handymax and handysize vessels.



The following is a summary of the operations by major operating segments for the three and nine months ended September 30, 2003 and September 30, 2002:





|                                                            | FOR THE THREE MONTHS ENDED SEPTEMBER 30, | FOR THE NINE MONTHS ENDED SEPTEMBER 30,
|----------------------------------------------------------- | ---------------------------------------- | ---------------------------------------
|                                                            |                                          |                                        
|(in thousands)                                              | 2003                                     | 2002                                   
|Total Revenues:                                             |                                          |                                        
|Crude Oil Tanker Fleet                                      | $                                        | 34,915                                 
|Product Carrier Fleet                                       | 37,281                                   | 27,499                                 
|                                                            |                                          |                                        
|Subtotal                                                    | 72,196                                   | 46,663                                 
|Other                                                       | 8                                        | 45                                     
|                                                            |                                          |                                        
|Total                                                       | $                                        | 72,204                                 
|                                                            |                                          |                                        
|Time Charter Equivalent Revenues:(1)                        |                                          |                                        
|Crude Oil Tanker Fleet                                      | $                                        | 24,443                                 
|Product Carrier Fleet                                       | 35,385                                   | 25,533                                 
|                                                            |                                          |                                        
|Total                                                       | $                                        | 59,828                                 
|                                                            |                                          |                                        
|Income (loss) before income taxes:                          |                                          |                                        
|Crude Oil Tanker Fleet                                      | $                                        | 5,213                                  
|Product Carrier Fleet (2)                                   | 7,596                                    | 8,528                                  
|General and administrative expense
not allocated to vessels | (2,133)                                  | (2,755)                                
|
|Other (3)                                                   | 96                                       | (733)                                  
|                                                            |                                          |                                        
|Total                                                       | $                                        | 10,772                                 
|                                                            |                                          |                                        











13




Note 8  Financial Information Relating to Segments (continued)





1. The Company uses time charter equivalent revenue, which is (i) voyage revenue less voyage expenses and (ii) time charter ("TC") revenue, as a measure of analyzing fluctuations in voyage revenue between financial periods and as a method of equating revenue generated from a voyage charter to time charter.






The following is a reconciliation of TCE revenue for the three months ended September 30, 2003:





(in thousands)


Crude Oil Fleet


Product Carriers


ConsolidatedVoyage and TC Revenues

$
34,915

$
37,281

$
72,196Voyage Expenses


10,472


1,896


12,368TCE Revenue

$
24,443

$
$35,385

$
59,828





The following is a reconciliation of TCE revenue for the three months ended September 30, 2002:





(in thousands)


Crude Oil Fleet


Product Carriers


ConsolidatedVoyage and TC Revenues

$
19,164

$
27,499

$
46,663Voyage Expenses


6,732


1,966


8,698TCE Revenue

$
12,432

$
25,533

$
37,965





The following is a reconciliation of TCE revenue for the nine months ended September 30, 2003:





(in thousands)


Crude Oil Fleet


Product Carriers


ConsolidatedVoyage and TC Revenues

$
*130,931*

$
*102,859*

$
233,790Voyage Expenses


28,980


7,122


36,102TCE Revenue

$
101,951

$
95,737

$
197,688





The following is a reconciliation of TCE revenue for the nine months ended September 30, 2002:





(in thousands)


Crude Oil Fleet


Product Carriers


ConsolidatedVoyage and TC Revenues

$
60,756

$
78,393

$
139,149Voyage Expenses


18,946


5,864


24,810TCE Revenue

$
41,810

$
72,529

$
114,339





2.   Operating
    income includes Loss on writedown/disposal of assets-net of $7,558,000 for
    the three months and $10,773,000 for the nine months ended September 30,
    2003 and $289,000 for the nine months ended September 30, 2002.

3.   Other income includes a gain on the settlement of an investment of $618,000 for the three and nine months ended September 30, 2003, and a $547,000 loss on disposal of investments for the nine months ended September 30, 2002.

During the three and nine months ended September 30, 2003 and 2002, mortgage debt of OMI and its related interest expense have been allocated to the above segments based upon the relative value of the vessels collateralizing the debt.








14







Note 9  Other Commitments and Contingencies





Contracts to Purchase Vessels





OMI
    has commitments to purchase six ice class 1A product carriers which are under
    construction, five of which begin five year time charters upon delivery.
    The product carriers are expected to be delivered in March, April, August
    and November 2004 and June and August 2005. The remaining construction and
    delivery payments are approximately $11,294,000 in the fourth quarter of
    2003, approximately $90,087,000 in 2004 and approximately $48,493,000 in
    2005. We anticipate that bank financing will provide most of the amounts
to be paid.





During October 2003, OMI negotiated one year extensions on time charters at fixed rates for two product carriers (which are currently receiving base rate plus profit sharing). The charters will now expire in April and July 2005.





Other





The Company is continuing to cooperate with an investigation by the U.S. Attorneys office in Newark, New Jersey of an allegation that crew members of one or more of the Companys vessels had by-passed systems designed to prevent impermissible discharge of certain wastes into the water and had presented false statements to the government, and otherwise had obstructed the governments investigation. As well as being violations of the MARPOL (Maritime Pollution) Convention and U.S. law, the activities under investigation violate Company policies and directives. The Company is continuing its review of those policies and has been implementing additional safeguards. The Company received a subpoena requesting information with respect to other vessels in its fleet and the Company





 has been providing the information requested. On May 10, 2002 a former master and former chief engineer of one of the Companys vessels entered guilty pleas in U.S. District Court in Newark, New Jersey, to violations of U.S. law involving false statements to the U.S. Coast Guard during a vessels port call in New Jersey on September 10, 2001. At this time, the Company cannot predict the scope or duration or estimate the cost of this investigation or its outcome. Accordingly, the Company cannot predict whether any penalties or fines will be imposed or their materiality. The Company expects that a substantial portion of the costs relating to this incident will be covered by insurers, who have been duly notified.





OMI and certain subsidiaries are defendants in various actions arising from shipping operations. Such actions are covered by insurance or, in the opinion of management, are of such nature that the ultimate liability, if any, would not have a material adverse effect on the consolidated financial statements.





15







Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION





The following presentation of managements discussion and analysis of OMI Corporations ("OMI" or the "Company") financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes appearing elsewhere in this Form 10-Q.





GENERAL







We provide seaborne transportation services for crude oil and petroleum products in the international shipping markets. Our customers include major independent and state-owned oil companies, major oil traders, government entities and various other entities.




We own or charter-in a fleet of 36 vessels (see Fleet section). We are focused on maintaining a high quality fleet that is concentrated primarily into two vessel types, Suezmax tankers, which generally carry crude oil from areas of oil production to refinery areas, and product carriers, which generally carry refined petroleum products (such as gasoline and aviation fuel) from refineries to distribution areas. Our fleet comprises 20 product carriers and 16 crude oil tankers, including ten Suezmax tankers. Currently, 28 of our 36 vessels are double-hulled.




MARKET OVERVIEW





Suezmax Tanker Overview





The
    strong tanker market in the first half of 2003 softened early in the summer
    as is typical, but recovered toward the end of August and the average
    time charter equivalent ("TCE") revenue for Suezmax tankers in
    the West Africa to U.S. trade in the third quarter of 2003 was below the
    preceding quarter
    but
    above
    the
    TCE
    prevailing
    in the
    same period a year ago. It should be noted that the average TCE for Suezmax
    tankers in the West Africa to U.S. trade in the three quarters of 2003 was
    the second highest for comparable periods since 1990. This was the result
    of several factors which more than offset an increase in the world tanker
    fleet  higher
    world oil demand due to improving world economic activity, substitution of
    oil for gas in the U.S. due to the tight natural gas market, higher oil consumption by Japanese utilities caused by problems with their nuclear power plants, and more long-haul Middle East OPEC oil replacing the loss of Iraqi oil production through a pipeline to the Mediterranean and the persistent shortfall of oil production in Venezuela, at a time of low oil inventory levels.








16














Note: As at 9/30/03


Source: Clarkson Research Studies, London. PIRA Energy Group





Total
    commercial crude oil and petroleum products inventories in the United States,
    Western Europe and Japan at the end of the third quarter 2003 were approximately
    36 million barrels, or 1.7% below the year earlier level, and 2.8% below
    the
    average of the last five years. Crude oil inventories were approximately
    25 million barrels, or 3.7%, above last years level but 1.1% below
    the average of the last five years. Petroleum product inventories were approximately
    61 million
    barrels,
    or 4.2% below
    last years level and 3.6% below the average of the last five years.
    All of the petroleum product inventory reduction is in the United States
    and Western Europe. Oil inventories are expected to decrease in the last
    quarter
    of 2003, and by year-end be below last years levels. The expected low
    oil inventory levels at a tim




 e of increasing oil demand would provide support for the tanker market during
    the upcoming winter months.




The
    average OPEC oil production in the third quarter 2003 totaled approximately
    27.0 million barrels per day ("b/d"), up by approximately 1.1 million b/d
    compared to the same period last year, with all of the gain in the long-haul
    Middle
    East.
    Recently,
    OPEC decided to cut its oil production quotas by approximately 0.9 million
    b/d beginning November 1, 2003, and to meet again on December 4, 2003 to
    evaluate
    the oil
    market situation. As a result, OPEC oil production in the fourth quarter
    2003 is expected to total about 27 million b/d, the same as in the preceding
    quarter and about 0.4 million b/d higher than the same quarter last year.




The world tanker fleet totaled 288.8 million dwt at the end of the third quarter 2003, up by 9.2 million dwt or 3.3% from the year-end 2002 level. The tanker orderbook totaled about 76.2 million dwt, or 26.4% of the existing fleet at the end of September 2003. Approximately 8.0 million dwt are for delivery in the balance of 2003, 26.4 million dwt in 2004, 29.8 million dwt in 2005 and most of the balance in 2006. The tanker orderbook includes 83 Suezmaxes of about 13.0 million dwt or 34.9% of the existing internationally trading Suezmax tanker fleet.






17














Note: As of End of September Each Year


Source: PIRA Energy Group





The accelerated phase-out of single-hull tankers due to new European Union regulations is expected to moderate the effect of the relatively large tanker orderbook. At the end of September 2003, approximately 45.4 million dwt or 15.7% of the total tanker fleet was 20 or more years old, including 18.0 million dwt or 6.2% of the fleet which was 25 or more years old. Furthermore, 22 Suezmaxes were 20 or more years old, including 13 which were 25 or more years old.




Tanker sales for scrap and for Floating Storage Offloading conversion continue at a high rate and totaled about 16.1 million dwt through September 2003, or an annual rate of 21.5 million dwt. These scrappings include seven Suezmaxes and 28 VLCCs. Tanker scrappings are likely to be high in the next few years given the age profile of the tanker fleet and stricter regulations.




As a result of the sinking off Spain of the 26 year old Aframax tanker Prestige last fall and the extensive pollution of a substantial portion of the Spanish coast, the Council of Ministries and the European Parliament have adopted the following tanker regulations:


- To ban from European ports single-hull tankers carrying heavy fuel oil, heavy crude oil, bitumen and tar.
- To accelerate the phase-out of single-hull tankers, prior to the timetable set forth in the April 2001 IMO regulation. This means that, single hull tankers without segregated ballast tanks which are 20,000 dwt and over and carry crude oil, fuel oil, heavy diesel oil or lubricating oil as cargo, and 30,000 dwt and over carrying other than the above will be banned from European Union ("EU") ports when they are 23 years old, beginning in 2003, or in 2005 at the latest. Single hull tankers of the size specified above with segregated

18







- Single hull tankers without segregated ballast tanks phase-out date:
- 2003 for tankers delivered in 1980 or earlier
- 2004 for tankers delivered in 1981
- 2005 for tankers delivered in 1982 or later
- Single hull tankers with segregated ballast tanks and tankers 5,000 dwt and over but less than the sizes specified above phase-out date:
- 2003 for tankers delivered in 1975 or earlier
- 2004 for tankers delivered in 1976
- 2005 for tankers delivered in 1977
- 2006 for tankers delivered in 1978 and 1979
- 2007 for tankers delivered in 1980 and 1981
- 2008 for tankers delivered in 1982
- 2009 for tankers delivered in 1983
- 2010 for tankers delivered in 1984 or later
- Tankers with only double sides or double bottoms will be allowed to operate in European ports after 2010 but not beyond the anniversary of the date of delivery of the ship in 2015 or the date on which the vessel reaches 25 years, whichever is the earlier date.
- Finally, the new regulations mandate that all single-hull tankers shall comply with the Condition Assessment Scheme (CAS) from the age of 15 years, beginning in 2005. The CAS will be carried out every two and a half years through stringent inspections specifically developed to detect structural weaknesses of tankers.

These new regulations entered into force on October 21 this year. In addition, the Maritime Environment Protection Committee of IMO is to meet in December 2003 to consider the adoption of these regulations. At the end of September 2003, there were 120 million dwt tankers or 41.6% of the total tanker fleet, which will be affected by these regulations.




Product Tanker Overview





After
    a strong freight rate environment in the product tanker market in the first
    half of 2003, the average TCE for handysize product tankers in the Caribbean
    fell seasonally early in the summer, but recovered toward the end of July
    and in the third quarter 2003 was approximately 45% higher than the same
    period of last year. The improvement was the result of an increasing world
    oil demand
    and
    low oil inventories in the Atlantic basin that resulted in increased long-haul
    voyages of product tankers, notwithstanding a substantial increase of the
    world product tanker fleet.




19















Note: As of End of September Each Year


Source: PIRA Energy Group





The world product tanker fleet totaled about 51.7 million dwt at the end of the third quarter 2003, up by about 5.7% from the year-end 2002 level. The product tanker orderbook for delivery over the next few years totals about 20.6 million dwt, or about 39.8% of the existing product tanker fleet at the end of September 2003. Approximately 2.9 million dwt are for delivery in the balance of 2003, 8.2 million dwt in 2004, 7.2 million dwt in 2005 and the balance in 2006. At the end of September 2003, 11.7 million dwt or 22.6% of the existing fleet was 20 or more years old. It seems that the product tanker fleet will grow substantially, given the high orderbook for delivery in the next few years, unless scrappings accelerate.




In the foreseeable future, higher world oil demand in the winter months, as is usually the case, combined with low commercial oil inventories, political instability in short-haul oil producers Venezuela and Nigeria and stricter tanker regulations in the European Union, which are expected to accelerate the phase out of single hull tankers and bring changes in chartering policies, are expected to support the tanker market. In the longer term, given the high tanker orderbook, tanker rates will depend on the level of world economic activity and oil demand growth as well as the total amount of tanker scrappings.




RECENT ACTIVITIES





Highlighted below are the third quarter and our most recent fourth quarter 2003 activities:





- During October 2003, OMI agreed to sell a 1989 built single hull product carrier. The vessel will be delivered in November 2003 and will result in a loss of approximately $3.5 million, which will be recognized in the fourth quarter.

- During October 2003, OMI negotiated a one year extension on time charters at a fixed rate for two product carriers (which are
20currently receiving base rate plus profit sharing). The charters will now expire in April and July 2005.

- During September and October 2003, OMI exercised options for its fifth and sixth 37,000 dwt 1A ice-class product carriers. Four of the six ships (three with five-year time charters) are scheduled to be delivered in 2004 and the two ships just ordered (both with five-year time charters) are scheduled to be delivered in 2005.
- During September 2003, OMI agreed to sell two single-hull product carriers built in 1989 and 1990. A loss on the writedown of these vessels of $7.6 million ($0.10 loss per share) was recognized during the third quarter.
- During August 2003, OMI purchased two 2000 built double-hull Suezmax tankers for an aggregate of $98.5 million. OMI issued two million shares of OMI common stock at $6.00 per share (valued at $12.0 million) and paid approximately $86.5 million in cash, of which $68.8 million was financed by bank loans.

- During July 2003, we took delivery of a 70,362 deadweight ("dwt") newbuilding, the TAMAR, which began a five-year time charter upon delivery.

OMI's Fleet





OMIs fleet currently comprises 36 vessels aggregating approximately 3.0 million dwt, consisting of ten Suezmaxes (including two chartered-in vessels), three Panamax tankers carrying crude oil, two Panamax product carriers, 18 handysize and handymax product carriers, two handysize crude oil tankers and one ultra large crude carrier ("ULCC").





Number of Vessels


dwtCrude Oil Fleet:1998-2002 built Suezmax vessels(1)


10


1,585,8711986 built ULCC


1


322,4661980s built Panamax vessels


3


198,2441993 built handysize vessels


2


72,707Total


16


2,179,288Product Carrier (Clean) Fleet:1999-2002 built handysize vessels


10


363,1942000-2003 built handymax vessels


6


282,2161988-1991 built handysize vessels


2


59,9952003 built Panamax vessels


2


140,659Total


20


846,064Total Fleet


36


3,025,352





(1) Two Suezmax vessels are chartered-in; one charter expires June 2010 and the other charter expires December 2006.





Our Company objective is to operate a high quality, well-maintained, modern fleet of vessels concentrated in the crude oil and refined product markets. We consider modern vessels to be double-hulled. Large fleets of modern uniform-sized vessels offer many advantages:





- Our customers prefer chartering modern vessels due to their increased sensitivities to environmental risks. Modern vessels are particularly important to customers entering into long-term charters.



21






- An increasing number of countries are banning single hulled vessels from their ports and territorial waters, which increases demand for modern, double hulled vessels.
- A young fleet has lower operating expenses.
- Younger, well maintained fleets generally have higher utilization; i.e. less waiting time between voyages.
- Maintaining a modern fleet is central to our strategy of seeking long-term charters to provide cash flow stability.

OMI has the following vessels under construction:





Name of Vessel
Type of Vessel
Date To Be Delivered
Hull(1)
Dwt
Charter ExpirationVessels Under Construction:LOIRE
Handysize
Mar-04
DH
37,000
Mar-09GARONNE
Handysize
Apr-04
DH
37,000
Apr-09SAONE
Handysize
Aug-04
DH
37,000
Aug-09GANGES
Handysize
Nov-04
DH
37,000
SPOTFOX
Handysize
Jun-05
DH
37,000
Jun-10TO BE NAMED
Handysize
Aug-05
DH
37,000
Aug-10Total Vessels to be Acquired
222,000





(1) DH-double-hulled





Consolidated Results





OMIs net income was $10.8 million or $0.14 basic and diluted earnings per share ("EPS") for the third quarter 2003 compared to net income of $2.7 million or $0.04 basic and diluted EPS for the third quarter of 2002. Net income was $61.9 million or $0.80 basic and diluted EPS for the nine months ended September 30, 2003 compared to net income of $4.9 million or $0.07 basic and diluted EPS for the nine months ended September 30, 2002.





The following table is a reconciliation of Net income to Net income without gain/loss on writedown/disposal of assets and investments for the three and nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002:








22














FOR THE THREE MONTHS ENDED SEPTEMBER 30,
FOR THE NINE MONTHS ENDED SEPTEMBER 30,(In millions, except per share data)

2003
2002
2003
2002Net income

$
10.8

$
2.7

$
61.9

$
4.9Add (Subtract):Loss on writedown/disposal of assets


7.6


3⁄4


10.8


0.3Gain(loss) on disposal of investments


(0.6
)

3⁄4


(0.6
)

0.5Total


7.0


3⁄4


10.2


0.8Net income without gains and losses on dispositions

$
17.8

$
2.7

$
72.1

$
5.7Basic EPS:Net income

$
0.14

$
0.04

$
0.80

$
0.07Net loss on writedown/disposal


0.09


3⁄4


0.13


0.01Basic earnings per share without gain/loss on writedown/disposal

$
0.23

$
0.04

$
0.93

$
0.08





Note:
    Net income without gains and losses on dispositions is presented to provide
    additional information with respect to the Companys ability to
    compare from period to period vessel operating revenues and expenses
    and general and administrative expenses without gains and losses from
    disposals of assets and investments.  While Net income without gains
    and losses on dispositions is frequently used by management as a measure
    of the vessels operating performance in a particular period it
    is not necessarily comparable to other similarly titled captions of other
    companies due to differences in methods of calculations. Net income without
    gains and losses on dispositions should not be considered an alternative
    to net income or other measurements under accounting principles generally
    accepted in the United States of America.





Results of Operations





The following tables summarize OMIs Consolidated Results of Operations (in millions) for the three and nine months ended September 30, 2003 by our two major operating fleets, crude oil and product carrier.





Consolidated Results of Operations





For the three months ended September 30, 2003


Crude Oil Fleet


Product Carrier Fleet


Other (1)


ConsolidatedVoyage and TC revenues

$
34.9

$
37.3


3⁄4

$
72.2Voyage expenses


10.5


1.9


3⁄4


12.4Time charter equivalent revenue


24.4


35.4


3⁄4


59.8Vessel expense


5.7


8.6


3⁄4


14.3Charter hire expense


4.1


1.2


—


5.3Depreciation and amortization


6.7


6.7


0.1


13.5Vessel operating income (loss)


7.9


18.9


(0.1
)

26.7Other operating expenses:General and administrative expenses


3⁄4


0.1


3.3


3.4Loss on writedown of assets


3⁄4


7.6


3⁄4


7.6Operating income (loss)

$
7.9

$
11.2

$
(3.4
)
$
15.7





(1) Other represents unallocated corporate amounts.





23




Consolidated Results of Operations





For the nine months ended September 30, 2003


Crude Oil Fleet


Product Carrier Fleet


Other (1 ***)***


ConsolidatedVoyage and TC revenues

$
130.9

$
102.9


3⁄4

$
233.8Voyage expenses


29.0


7.1


3⁄4


36.1Time charter equivalent revenue


101.9


95.8


3⁄4


197.7Other revenue


3⁄4


3⁄4

$
0.1


0.1Vessel expense


17.0


25.8


(0.4
)

42.4Charter hire expense


12.6


3.7


3⁄4


16.3Depreciation and amortization


18.6


19.1


0.3


38.0Vessel operating income


53.7


47.2


0.2


101.1Other operating expenses:General and administrative expenses


1.5


2.3


8.1


11.9Loss on writedown/disposal of assets


3⁄4


10.8


3⁄4


10.8Operating income (loss)

$
52.2

$
34.1

$
(7.9
)
$
78.4





(1) Other represents unallocated corporate amounts and adjustments relating to vessels that have been sold or redelivered to owners.





Time Charter Equivalent Revenue ("TCE")





Consistent
    with industry practice, we use TCE
revenue which comprises time charter revenue ("TC revenue") and voyage revenue less voyage expenses from vessels operating in the spot market as a measure of analyzing fluctuations between financial periods and as a method of equating revenue generated from a voyage charter to time charter revenue. TCE revenue also serves as an industry standard for measuring revenue and comparing results between geographical regions and among competitors.




A time charter involves the placing of a vessel at the charterers disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate. Under a voyage charter, the owner of a vessel agrees to provide the vessel for the transport of specific goods between specific ports in return for the payment of an agreed upon freight per ton of cargo or, alternatively, for a specified total amount. All operating costs are for the owners account .





Our business strategy is to blend long-term contract revenue at attractive rates with the ability to capture earnings upswings in rising spot markets with the Suezmax tanker fleet, certain of our product carriers, Panamaxes, ULCC and from profit sharing arrangements (five of the product carriers on time charter). Currently 21 of our 36 vessels operate on time charters. However, the majority of our tonnage (approximately 71 percent), including all of our Suezmaxes, operates in the spot market, giving us the ability to gain additional benefits in strong markets. All of our contracts that have profit sharing arrangements have a floor rate and profit sharing without a cap. In 2004 and 2005, an aggregate of five vessels with profit sharing arrangements will be delivered.




The following chart illustrates OMIs strategic mix of vessels operating on long-term time charters and in the spot market by dwt:






24













The Company earned TCE revenue of $59.8 million for the three months and $197.7 million for the nine months ended September 30, 2003. During the third quarter 2003, 57 percent or $34.3 million of OMIs TCE revenue was earned by vessels operating on long-term time charters and 44 percent or $87.1 million of OMIs TCE revenue was earned by long-term time charters for the nine months ended September 30, 2003. The TC revenue earned was $9.8 million and $19.2 million higher in the three and nine month periods ended September 30, 2003, respectively, compared to the respective 2002 periods; however, the percent of TC revenue to total TCE revenue declined in 2003 from 64 percent for the third quarter 2002 and 59 percent for the nine months ended September 30, 2002 because the spot
market was stronger in 2003.





The following table compares TC revenue earned for the three and nine months ended September 30, 2003 to the three and nine months ended September 30, 2002 in thousands of dollars and as a percent of Total TCE revenue in each of the 2003 and 2002 periods:





For The Three Months Ended September 30,

For The Nine Months Ended September 30,TC Revenue


2003


2002


Net Change


2003


2002


NetChangeCrude Oil Fleet

$
2,962

$
2,987

$
(25
)
$
8,840

$
8,817

$
23Product Carrier Fleet


31,342


21,470


9,872


78,305


59,163


19,142Total

$
34,304

$
24,457

$
9,847

$
87,145

$
67,980

$
19,165% Of TC Revenue To Total TCE Revenue


57
%

64
%




44
%

59
%





During the three and nine months ended September 30, 2003, TCE rates for OMIs Suezmax fleet and product carrier fleet showed significant improvement over the comparable three and nine month periods of 2002. There was an increase of 89 percent or $12.0 million in TCE revenue earned










25












in the spot market during the three months and 139 percent or $64.2 million during the nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002. Improvements in the crude tanker fleet operating in the spot market were from higher spot rates beginning in late 2002 to 2003 resulting from several factors, including higher world oil demand due to improvement in world economic activity, substitution of oil for gas in the U.S., higher oil consumption by Japanese utilities and more long-haul Middle East OPEC oil replacing the loss of Iraqi oil described in detail in the Market Overview section.





The following tables illustrate in thousands of dollars the increase in spot revenue earned during each of the periods in 2003.





**TCE Spot Revenue for**
For The Three Months Ended September 30,

For The Nine Months Ended September 30,Operating Fleet
2003
2002
NetChange
2003
2002
Net ChangeCrude Oil Fleet
$21,511
$9,455
$12,056
$93,094
$32,993
$60,101Product Carrier Fleet
4,031
4,063
(32)
17,478
13,366
4,112Total
$25,542
$13,518
$12,024
$110,572
$46,359
$64,213% increase in spot revenue in 2003


89%


139%





The following table reflects the improvement in average daily TCE rates earned in the spot market for our Suezmaxes and product carriers during the third quarter and year to date ("YTD") 2003 periods as compared to the same 2002 periods:





Major Vessel Categories on Spot

3rd 
  QTR. 2003
3rd 
  QTR. 2002
% Change
YTD 2003
YTD 2002
% ChangeSuezmax Tankers

$
19,145

$
12,539


53%

$
33,424

$
15,043


122
%Product Carriers

$
10,920

$
8,101


35%

$
12,689

$
8,218


62
%





Contracted time charter revenue has increased approximately $60.0 million since the second quarter 2003 primarily as a result of new vessels ordered resulting in two new five year time charters and extensions on current time charters for two product carriers to 2005.





The following chart reflects our contracted time charter revenue through 2007; (we have secured time charter revenue through 2010). The schedule below does not include any estimates for profit sharing in the future periods; however, profit sharing of $8.4 million earned by five vessels for the nine months ended September 30, 2003 and $4.4 million for profit sharing earned by five vessels is included for 2002 Actual. Projected requirements for off hire relating to drydock are included.






26














2000
2001
2002(In millions)

Actual
Actual
Actual
2003
2004
2005
2006
2007TC Revenue

$16.3
$43.5
$90.4
$115.2
$109.0
$60.7
$43.4
$33.8Number of Vessels (a)

5
14
17
21 (b)
16 (c)
11 (d)
7 (e)
7(f)


(a) Number of vessels at the end of each year.

(b) During 2003, four newbuildings began time charters.

(c) 24 vessels operate on time charters during 2004 (including three vessels that will begin time charters upon delivery); assuming no extensions , 8 vessels complete time charter contracts during the year.

(d) 18 vessels operate on time charters during 2005; assuming no extensions, 7 vessels complete time charters.

(e) 11 vessels operate on time charters during 2006; assuming no extensions, 4 vessels complete time charters.

(f) Two of the vessels will complete their time charters in 2008, three in 2009 and two in 2010.




Note : TC
    revenue is the amount contracted to date in the table above and does not
    include projections other than for expected delivery dates of newbuildings
    and off-hire relating to drydock. We intend to time charter the vessels which
    have time charters expiring 2004-2007 at opportunistic times.





Vessel Expense and Charter Hire Expense





Vessel expenses increased $3.2 million for the three months and $4.1 million for the nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002. Charter hire expense increased $1.0 million for the three months and $4.2 million for the nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002. Vessel expenses fluctuated marginally during the three month periods in 2003 compared to 2002 because of timing of expenses charged for stores and maintenance and repairs. Net increases in vessel expenses over the three and nine months ended September 30, 2003 were in line with managements expectations which accounted for increases in expenses for the acquisition of vessels and increase in 2003 expenses for vess





 els which had lower 2002 expenses for newbuildings delivered. The increase in charter hire expense during the three and nine month periods in 2003 resulted from a product carrier chartered-in during October 2002, in addition to increased charter hire expense for the vessel chartered-in during June 2002 after it was sold and leased back.










27



















Under the direction of OMS, OMCI purchases stores and spares for OMIs owned vessels. OMS is also responsible for the drydocking of the vessels. OMCI also provides crew management services for a set management fee per vessel. OMI advances funds to OMCI for expenditures including crew wages, benefits, training, crew travel and airfare, salary, office and other expense of the technical staff of OMCI, allotments, union payments, and other expenditures.





Depreciation and Amortization Expense







Depreciation and amortization expense increased $2.5 million for the three months and $6.2 million for the nine months ended September 30, 2003 compared to three and nine months ended September 30, 2002 because of the acquisition of vessels (offset by disposition of two vessels in the first half of 2003) and amortization for drydock expense for drydocks performed in 2002 and 2003.




SEGMENT INFORMATION-DETAILED OPERATING RESULTS


Comparative Three And Nine Months Ended September 30, 2003 Versus The Three And Nine Months Ended September 30, 2002 Results





TCE revenue of $59.8 million increased $21.9 million for the three months ended September 30, 2003 from $37.9 million earned for the three months ended September 30, 2002. Increases in TCE revenue during the third quarter of 2003 compared to the third quarter of 2002 were attributed primarily to the improvement in spot rates in 2003, in addition to increases resulting from more operating days for six vessels acquired in 2003, five vessels acquired during 2002 and one vessel chartered-in during 2002. The total fleet net increase in operating or TCE revenue earning days was 495 days (252 days for the Clean Fleet and 243 days for the Crude Oil Fleet), 679 additional operating days for vessels acquired offset by





28


184 days for two vessels sold in the first half of 2003 compared to the number of operating days in the third quarter 2002.





TCE revenue of $197.7 million increased $83.4 million for the nine months ended September 30, 2003 from $114.3 million earned for the nine months ended September 30, 2002. The total fleet net increase in operating or TCE revenue earning days was 1,436 days (832 days for the Clean Fleet and 604 days for the Crude Oil Fleet), 1,670 for vessels acquired offset by 234 days for vessels sold during the nine months ended September 30, 2003 compared to the same period in 2002.





More (Less) Operating Days in 2003YTD


QuarterCrude:Suezmax


604


243Product Carriers**:**On TC


972


436On Spot


(140
)

(184
)Subtotal


832


252Total


1,436


495





Crude Oil Tankers Results Of Operations








Vessel Operating income, which is TCE revenue less Vessel expenses, Charter hire expense and Depreciation and amortization, increased $9.1 million for the three months and $52.7 million for the nine months ended September 30, 2003. The net increase in Vessel Operating Income during 2003 was primarily attributable to an increase in the Suezmax, Panamax and ULCC TCE revenue resulting from improved spot rates in addition to increased earnings for the four Suezmaxes delivered, two in August 2003 and two in September and October 2002.





29




BREAKDOWN BY FLEET:


In thousands, except daily rates & expenses, number of vessels and operating days





CRUDE FLEET:

For The Three
Months Ended
September 30,
For The Nine
Months Ended
September 30,2003
2002
2003
2002Suezmaxes:TCE revenue

$
15,584

$
6,972

$
73,967

$
24,642Vessel expenses


2,920


1,849


8,729


6,365Charter hire expense


4,072


4,288


13,023


12,210Depreciation and amortization


4,081


2,341


10,651


6,604Vessel Operating Income (Loss)

$
4,511

$
(1,506
)
$
41,564

$
(537
)Average daily TCE (Spot)

$
19,145

$
12,539

$
33,424

$
15,043Average daily vessel expense(3)

$
4,628

$
4,559

$
5,084

$
4,868Average number of vessels for the period * (1), (2)


8.9


6.2


8.3


6.1Number of TCE revenue days (Spot)


815


556


2,229


1,638ULCC:TCE revenue

$
2,039

$
(129
)
$
4,089

$
(582
)Vessel expenses


535


434


1,348


1,617Depreciation and amortization


506


507


1,512


1,506Vessel Operating Income (Loss)

$
998

$
(1,070
)
$
1,229

$
(3,705
)Average daily TCE

$
22,168

$
(1,397
)
$
14,978

$
(2,131
)Average daily vessel expense(3 )

$
5,815

$
4,717

$
4,938

$
5,923Average number of vessels for the period


1


1


1


1Number of TCE revenue days


92


92


273


273Panamaxes:TCE revenue

$
3,888

$
2,612

$
15,038

$
8,933Vessel expenses


1,654


1,395


5,148


5,017Depreciation and amortization


1,442


1,505


4,310


3,934Vessel Operating Income (Loss)

$
792

$
(288
)
$
5,580

$
(18
)Average daily TCE

$
14,347

$
9,855

$
19,071

$
11,438Average daily vessel expense (3)

$
5,993

$
5,054

$
6,286

$
6,126Average number of vessels for the period


3


3


3


3Number of TCE revenue days


271


265


788


781Handysize Crude Oil Carriers-on time charter :TCE revenue

$
2,962

$
2,987

$
8,840

$
8,817Vessel expenses


630


559


1,708


1,754Depreciation and amortization


714


714


2,142


2,141Vessel Operating Income

$
1,618

$
1,714

$
4,990

$
4,922Average daily TCE

$
16,097

$
16,231

$
16,177

$
16,148Average daily vessel expense(3)

$
3,424

$
3,038

$
3,128

$
3,212Average number of vessels for the period


2


2


2


2Number of TCE revenue days


184


184


546


546Total Vessel Operating Income (Loss)

$
7,919

$
(1,150
)
$
53,363

$
662





Note: Average daily vessel expenses are computed using the number
  of days in the period which OMI owned or chartered the vessel. Number of operating
  or TCE revenue days used to compute Average daily TCE includes waiting days
  and is reduced only for the days the vessels are in drydock.

30







* includes two vessels chartered-in during the periods shown.





(1)  In August 2003, two 2000 built Suezmax vessels acquired. In September and October 2002, two Suezmax newbuildings were delivered.


(2)  In June 2002, a Suezmax vessel previously chartered-in was purchased, and sold in a sale leaseback transaction. The vessel was chartered-in as an operating lease.


(3)  Vessel expenses fluctuate based on the timing of Stores and Maintenance and repair ("M & R") expenses when comparing quarters and nine month periods. Vessel expenses for the newer vessels increased in 2003 as a result of low M & R costs for their first year.





Fluctuations in each of the crude oil tanker groups were as follows:





Suezmaxes: The increase in Vessel Operating Income of $6.0 million and $42.1 million for the three and nine months ended September 30, 2003 over the comparable periods in 2002 was attributable to the increases in TCE revenues of $8.6 million for the three months and $49.3 million for the nine months ended September 30, 2003. Increases in TCE revenue in this group was primarily the result of significant improvement in charter rates for our vessels which operate in the spot market (see Market Overview) coupled with 243 more operating days in the third quarter and 604 more for the nine month period in 2003, ex





 cluding offhire for drydocking, compared to the same 2002 periods resulting from revenue earned by two Suezmax newbuildings delivered in the last half of 2002 and two vessels acquired in August 2003.





Charter hire expense decreased $0.2 million for the three months and increased $0.8 million for the nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002.  The nine month 2003 increase was primarily related to the sale and leaseback of one vessel that began a new lease in June 2002. Depreciation and amortization expense increased $1.7 million and $4.0 million for the three and nine months ending September 30, 2003, respectively, compared to the same periods in 2002, resulting from depreciation for the two vessels acquired in the second half of 2002 and





two vessels in August 2003, in addition to additional amortization of drydock expense.





ULCC: The increase of $2.1 million for the three months and $4.9 million for the nine months ending September 30, 2003 in Vessel operating income compared to the same 2002 periods was primarily attributed to increases in TCE revenues resulting from revenue earned from a short-term time charter that terminated in May 2003 and began operating in the spot market after that and averaged $22,168 per day in the third quarter 2003 and $14,978 per day for the nine months ended September 30, 2003 compared to losses during the three and nine months ended September 30, 2002 due to the significant amount of days the vessel was unemployed.





Decreases in vessel expense during the nine month 2003 period compared to the same 2002 period was attributed to more routine maintenance performed on the vessel during its periods of unemployment in 2002 compared to 2003. Other fluctuations in vessel expenses from period to period are attributed to timing of various stores and maintenance and repair expenses.





Panamaxes: The increase in Vessel Operating Income of $1.1 million for the three months and $5.6 million for the nine months ending September 30, 2003 compared to the same 2002 periods was the result of increases in TCE revenues which was due to a significant improvement in charter rates for both periods in 2003 compared to the same periods in 2002.


31






Fluctuations in vessel expenses from period to period are attributable to timing of various stores and maintenance and repair expenses.





Handysize Crude Oil Carriers on Time Charter: There were small fluctuations for the three and nine months ending September 30, 2003 in Vessel Operating Income compared to the same 2002 periods. There were no material fluctuations in revenue and only timing differences between comparable 2003 and 2002 periods for various stores and maintenance and repair expenses.





Product Carriers Results Of Operations





Vessel Operating Income increased $6.0 million for the three months and $15.6 million for the nine months ended September 30, 2003 over the comparable three and nine months ended September 30, 2002. The increase in Vessel Operating Income for the 2003 third quarter and nine month period was attributable to the increases for both vessels operating in the spot market and for the product carriers operating on time charters (including the increase in profit sharing earned by five vessels in both 2003 periods over the 2002 periods).





BREAKDOWN BY FLEET:


In thousands, except daily rates & expenses, number of vessels and operating days





CLEAN FLEET:

For The Three
Months Ended
September 30,
For The Nine
Months Ended
September 30,2003


2002


2003


2002Products on spot:TCE revenue

$
4,031

$
4,063

$
17,478

$
13,366Vessel expenses


1,313


2,206


6,101


7,941Charter hire expenses








1,242


Depreciation and amortization


1,164


1,603


3,918


4,726Vessel Operating Income

$
1,554

$
254

$
6,217

$
699Average daily TCE

$
10,920

$
8,101

$
12,689

$
8,218Average daily vessel expense(1)

$
3,568

$
3,996

$
4,584

$
4,641Average number of vessels for the period(2), (3) *


4.0


6.0


4.9


6.3Number of TCE revenue days


368


501


1,378


1,625Products on time charters:TCE Revenue(4)

$
31,342

$
21,470

$
78,305

$
59,163Vessel expenses


7,369


4,681


19,673


15,778Charter hire expense


1,264





2,516


Depreciation and amortization


5,521


4,309


15,137


12,532Vessel Operating Income

$
17,188

$
12,480

$
40,979

$
30,853Average dailyTCE

$
17,451

$
15,558

$
16,000

$
15,016Average daily vessel expense(1)

$
4,274

$
3,392

$
4,157

$
4,004Average number of vessels for the period(5)*


18.7


15.0


17.3


14.4Number of TCE revenue days


1,805


1,380


4,894


3,941Total Vessel Operating Income

$
18,742

$
12,734

$
47,196

$
31,552





Note: Average daily vessel expenses are computed using the number of days in the period which OMI owned or chartered the vessel. Number of operating or TCE revenue days used to compute Average daily TCE includes waiting days and is reduced only for the days the vessels are in drydock.

32







* includes one vessel chartered -in vessel. The vessel operated in the spot market from October 2002 (delivery date) until March 2003 and then went on time charter.





(1)Vessel expenses fluctuate based on the timing of Stores and M & R expenses when comparing quarters and nine month periods. Vessel expenses for the newer vessels increased in 2003 as a result of low M & R costs for their first year.


(2) In the second quarter of 2003, two vessels were sold. In the second quarter of 2002, one vessel was sold.


(3) A vessel was chartered-in during October 2002 for a one year period.


(4) During the third quarter 2003, OMI recognized profit sharing of approximately $5.6 million compared to $2.2 million for the third quarter 2002. During the nine months ended September 30, 2003, OMI recognized profit sharing of approximately $8.4 million compared to $4.4 million for the same period in 2002.


(5) In January and March of 2003, two handymax product carriers were acquired. In April and July of 2003, two Panamax product carriers were acquired. In January and March 2002, two handymax product carriers and one handysize product carrier were acquired.







Fluctuations in each of the product carrier groups were as follows:





Productson spot: This group had an increase in Vessel Operating Income of $1.3 million for the three months and $5.5 million for the nine months ended September 30, 2003 compared to the same periods in 2002. Although the average daily rates increased in both 2003 periods compared to the 2002 periods because of increase in spot rates, TCE revenue declined in the third quarter 2003 (184 less operating days during the third quarter 2003) as a result of the sale of two vessels in the second quarter 2003. TCE revenue increased $4.1 million for the nine months ended September 30, 2003 because of higher rates earned by our vessels, in addition to revenue e





 arned during the first 94 days of 2003 by a vessel chartered-in during October 2002, which was offset by 234 less operating days in the 2003 period.





Additionally, vessel expenses were lower in the 2003 periods resulting primarily from fewer operating days. Vessel expenses and depreciation expense decreased primarily as a result of the sale of two product carriers in April and May 2003. Charter hire expense increased in the first half of 2003 for the chartered-in product carrier, which began in October 2002 and operated in the spot market until April 2003.





Productson time charter: Vessel Operating Income increased $4.7 million for the three months and $10.1 million for the nine months ended September 30, 2003 compared to the same periods in 2002. Increases in Vessel Operating Income were attributable to increases in TCE revenue of $9.9 million for the three months and $19.1 million for the nine months ended September 30, 2003 compared to the same periods of 2002. The increase in TCE revenue resulted primarily from 436 more operating days in the third quarter of 2003 and 972 more operating days for the nine months ended September 30, 2003 and more profit sharing in both 2003 periods compared to the 200





 2 periods. Increased operating days were attributed to the delivery of four newbuildings in January, March, April and July 2003, more operating days from the three newbuildings delivered January and March 2002 and additional days from the chartered in product carrier that began a time charter in April 2003. Vessel expenses and depreciation expense were higher in the 2003 periods compared to the 2002 periods because of the acquisition of six additional vessels in 2002 and 2003.







Five vessels with long-term time charters have base time charter rates with profit sharing agreements (50% profit sharing above the base rate). Profit sharing recognized for the five vessels was $3.4 million higher for the three months and $4.0 million higher for the nine months


33






ended September 30, 2003 compared to the same periods in 2002 reflecting better rates in the marketplace.





In accordance with SEC Staff Accounting Bulletin No. 101 Revenue Recognition in Financial Statements, we recognize the profit sharing or contingent revenue only after meeting a threshold, which is the minimum yearly charter hire. The Company receives preliminary profit sharing after six months. This distribution is recorded in deferred revenue until the threshold is reached.





Other Operating Expenses





The Companys operating expenses, other than vessel, voyage, charter hire expenses and depreciation and amortization, are general and administrative ("G&A") expenses and loss on writedown/disposal of assets. G & A expense decreased $0.3 million and Loss on writedown/disposal of assets increased $7.6 million for the three months ended September 30, 2003. G & A expense increased $1.6 million and Loss on writedown/disposal of assets increased $10.5 million for the nine months ended September 30, 2003.The increases were primarily attributable to the following:





General and administrative G & A increased for the nine months ended September 30, 2003 compared to the 2002 comparable period because of additional expenses as a result of owning a larger fleet in 2003. We also expected G & A expense to be higher in 2003 because of the additional expense related to implementing the requirements to be compliant with the Sarbanes-Oxley Act of 2002.





Loss
    on writedown/disposal of assets For
    the three and nine months ended September 30, 2003 loss on writedown/disposal
    of assets increased $7.6 million and $10.5 million, respectively, compared
    to the 2002 comparable periods. The third quarter 2003 loss of $7.6 million
    resulted from the writedown to the net realizable value of two product carriers
    built in 1989 and 1991, one of which was delivered in October and the other
    scheduled to be delivered in November 2003 under agreements reached prior
    to September 30, 2003. The loss for the nine months ended September 30, 2003
    also includes the loss
    on the
    disposal
    of
    two vessels
    in the second quarter 2003.





For the nine months ended September 30, 2002, loss on writedown/disposal of assets included a net loss of $0.3 million primarily from the sale of a 1988 product carrier in April 2002.





Other (Expense) Income





Other (expense) income consists of Gain (loss) on disposal of investments-net, interest expense and interest income. Net other expense decreased by $1.4 million from $6.3 million during the three months ended September 30, 2002 to $4.9 million for the three months ended September 30, 2003. Net other expense decreased by $1.7 million from $18.1 million during the nine months ended September 30, 2002 to $16.4 million for the nine months ended September 30, 2003.





During the three and nine months ended September 2003 a gain on disposal of investments of $0.6 million was recorded. The gain relates primarily to the final settlement of accounts for an investment that was dissolved in prior years.





During the nine months ended September 30, 2002, we recorded a net loss on the disposal of investments aggregating approximately $0.9 million in both periods. The loss was offset in part by a net gain on the


34






disposal of marketable securities of $0.3 million for the nine months ended September 30, 2002.





Interest expense during the three months ended September 30, 2003 decreased $0.8 million compared to the three months ended September 30, 2002 and decreased $0.8 million during the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. The decrease was primarily a result of lower average interest rates in both 2003 periods compared to the 2002 periods. Decreased interest rates resulted from declines in interest rate margins resulting from negotiations with banks in 2003, lower LIBOR rate (London Interbank Offering Rate) and interest on debt fixed by interest rate swaps. Interest expense was less in 2003 despite the increase in the average outstanding debt for the third quarter 2003 of $77.1 million from the th





 ird quarter 2002 average debt balance of $465.8 million and increase of $56.1 million for the nine months ended September 30, 2003 from the 2002 nine month average debt balance of $465.4 million. Debt increased in 2003 due to additional borrowings for acquisitions above that of the repayments from the disposal of vessels.





The following table is a breakdown of Interest expense for the three and nine months ended September 30, 2003 and 2002:





For The Three Months Ended September 30,
For The NineMonths EndedSeptember 30,In millions


2003


2002


2003


2002Interest before swap interest,capitalized interest &amortization of debt issue costs

$
4.0

$
5.9

$
13.2

$
15.8Impact of swaps


1.4


1.2


3.6


3.3Capitalized interest


(0.2
)

(0.9
)

(0.9
)

(2.5
)Amortization of debt issue cost


0.4


0.2


1.4


1.6Interest expense

$
5.6

$
6.4

$
17.3

$
18.2





Interest income decreased during the three months and nine months ended September 30, 2003 compared to the three and nine months ended September 30, 2002. The decrease was primarily due to lower average rates on cash equivalents and lower Notes receivable balances in 2003.





Income Tax Benefit





The income tax benefit of $1.1 million for the three months and $1.4 million for the nine months ended September 30, 2002, represents a reversal of an accrual for taxes provided for at the time of the spin-off in 1998. All tax years through the time of the spin-off of the Company in 1998 have been closed.





Balance Sheet







During the period ended September 30, 2003, changes in Vessels and other property-net were as follows:





·  Vessels and other property increased a net of $192.8 million; $234.8 million was from the reclassification from construction in progress as vessels were delivered and the final payment for the delivery of four newbuildings and the acquisition of two 2000 built Suezmax vessels. Other increases of $0.2 million were for capital expenditures for vessels owned (see Investing Activities). The increase was offset by a decrease of $27.1


35






million for two product carriers reclassed at their net realizable values to Vessels held for sale and $15.1 million for the disposal of the two product carriers earlier in 2003.





·  Construction in progress decreased a net of $17.8 million; $37.8 million was from the reclassification of construction payments for four vessels upon delivery, to Vessels. The decrease was offset by increases of $20.0 million primary for construction installment payments and capitalized interest on five vessels under construction during the nine months ended September 30, 2003.





·  Accumulated depreciation increased a net of $26.1 million from the balance at December 31, 2002. Depreciation and amortization for the nine months ended September 30, 2003 was $38.0 million (including $3.5 million for amortization of drydock expense). Accumulated depreciation was reduced by $4.7 million for the vessels reclassed to Vessels held for sale at September 30, 2003 and $3.5 million for the disposal of the two product carriers in 2003.





Vessels held for sale of $15.4 million at September 30, 2003 increased as a result of the reclassification of the two product carriers based on a sales agreement to dispose of the vessels during the fourth quarter. A loss relating to this transaction of $7.6 million was recorded to the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2003.












Liquidity and Capital Resources





Cash Flows





Cash and cash equivalents of $20.9 million at September 30, 2003 decreased $20.0 million from cash and cash equivalents of $40.9 million at December 31, 2002. The Companys working capital increased by $4.4 million between September 30, 2003 and December 31, 2002 to $12.5 million at September 30, 2003. Current assets decreased a net of $0.5 million resulting primarily from the decrease in Cash and cash equivalents of $20.0 million, which was offset in part by increases in Vessels held for sale of $15.4 million (see Balance Sheet section), Traffic receivables of $2.3 million and Other prepaid expenses and current assets of $2.0 million at September 30, 2003. Current liabilities decreased a net of $4.9 million at September 30, 2003, primar





 ily because of the reduction in current portion of long-term debt of $11.2 million discussed above in the Balance Sheet section offset by increases in accrued liabilities as a result of timing of expenses relating to year end compared to the interim period of September 30, 2003.





As of September 30, 2003, the available debt undrawn under all credit facilities was $78.8 million. Currently, approximately $70.7 million of undrawn debt is available. The Companys debt to total capitalization (total debt plus stockholders equity) at September 30, 2003 was 53 percent and net debt to total capitalization was 52 percent (net debt is total debt less cash and cash equivalents and net capitalization is total debt plus


36






stockholders equity less cash and cash equivalents). The Company's management believes that cash flow from operations, along with available borrowing capacity under its credit facilities, will be sufficient to meet capital requirements.








The following were the net changes in Operating, Investing and Financing Activities for the periods presented:





For The Nine MonthsEnded September 30,Condensed Cash Flows


2003


2002


Change(in millions)(Unaudited)Provided (used) by:Operating Activities

$
113.2

$
36.7

$
76.5Investing Activities


(195.6
)

(83.9
)

(111.7
)Financing Activities


62.4


60.8


1.6Net (Decrease) Increase in Cash and Cash Equivalents


(20.0
)

13.6


(33.6
)Cash and Cash Equivalents at the Beginning of the Year


40.9


17.7


23.2Cash and Cash Equivalents at the End of the Period

$
20.9

$
31.3

$
(10.4
)





Operating Activities





Net cash provided by operating activities increased $76.5 million to $113.2 million for the nine months ended September 30, 2003 compared to net cash provided by operating activities of $36.7 million for the nine months ended September 30, 2002 (see Results of Operations and Segment Information sections).








Investing Activities





Cash used by investing activities was $195.6 million for the nine months ended September 30, 2003, compared to cash used by investing activities of $83.9 million for the nine months ended September 30, 2002. During 2003, $205.3 million was used for the additions to vessels (see Balance Sheet section):


·  $41.6 million was used for the purchase of two product carriers delivered during the first quarter,


·  $56.5 million was used for the purchase of two Panamax vessels in April and July 2003,


·  $86.5 million used for the purchase of two Suezmax tankers in August 2003,


·  $19.0 million was paid for vessels under construction, and


·  $1.7 million was used for capital expenditures for improvements to existing vessels and capitalized interest





Cash was used during the nine months ended September 30, 2002 primarily for additions to vessels of $162.5 million:


·  $97.9 million was used for the purchase of three product carriers and one Suezmax vessel,


·  $44.9 million was used to purchase a vessel previously chartered-in, the COLUMBIA,


·  $15.8 million installment payments for vessels under construction, and




37






·  $3.9 million for capital expenditures for improvements to existing vessels and capitalized interest





During the nine months ended September 30, 2003, we sold two product carriers from which we received proceeds from dispositions aggregating approximately $9.6 million. During the nine months ended September 30, 2002, we received proceeds of approximately $58.0 million as a result of the sale and lease back a Suezmax vessel (the COLUMBIA) and the sale of a product carrier.







Financing Activities





Cash provided by financing activities was $62.4 million for the nine months ended September 30, 2003, compared to cash provided by financing activities of $60.8 million for the nine months ended September 30, 2002. During the nine months ended September 30, 2003, there was $107.8 million in principal payments ($14.2 million were scheduled payments, $93.6 million were unscheduled prepayments on the revolving lines of credit) and there was $172.3 million in proceeds from the issuance of debt for the purchase of five vessels and construction in progress payments.





During the nine months ended September 30, 2002, there was $56.3 million in principal payments ($30.4 million for scheduled payments, $25.9 million were unscheduled prepayments on a revolving line of credit). Payments on debt refinanced of $49.4 million were for two vessels that were refinanced under a new credit facility in March 2002, $6.0 million for a vessel sold in April 2002, and $20.0 million paid down on the liquidity facility. There was $102.9 million in proceeds from the issuance of debt for the purchase of four vessels and construction in progress payments and $65.0 million was drawn down on the new credit facility for the refinancing of two vessels.





All of our loan agreements contain restrictive covenants as to certain cash, net worth, maintenance of specified financial ratios and collateral values.  They also restrict the Companys
ability to make certain payments, such as dividends and repurchase its stock.  As of September 30, 2003, the Company was in compliance with its covenants.










2003 Financing Transactions


At
      September 30, 2003, OMI had $575.0 million in debt outstanding. The following
      describes changes to the Companys debt facilities during the nine
      months ended September 30, 2003:


In June 2003, we obtained an eight-year $64.8 million term loan to partially finance the purchase of two Panamax newbuildings, delivered in April and July of 2003. The loan comprises two tranches; each tranche of $32.4 million is being repaid in 32 quarterly installments (the first 20 at $0.87 million and next 12 at $0.5 million) plus a balloon of $9.0 million due with the last installment. At September 30, 2003, the balance of the loan was $63.9 million. The outstanding balance of the loan bears interest at LIBOR plus a margin of 0.90%.





In August 2003, we obtained two eight-year term loans aggregating $68.8 million (which is the outstanding balance at September 30, 2003) to partially finance two 2000 built double-hull Suezmax tankers, delivered in August 2003. The loans bear interest at LIBOR plus a fixed margin of 1.25%. One loan will be repaid in 16 semi-annual payments of $1.33 million plus a balloon payment of $13.2 million upon maturing in August 2011. The


38






other loan requires 32 quarterly payments of $0.65 million plus a balloon payment of $13.5 million when the loan matures in August 2011.





In
    March 2003, we consolidated, amended and restated two loan agreements. The
    modification resulted in a reducing revolving credit facility in the amount
    of $245.0 million ("$245 Facility"), which matures on March 14, 2010.  The
    loan bears interest at LIBOR plus a fixed margin of 1.625%. This facility
    is now collateralized by 15 vessels after the disposal of three product carriers
    in April, May and November 2003. The $245 Facility was amended after the
    dispositions as follows:





·  the
    Facility was reduced by approximately $4.62 million,


·  the
    first 20 quarterly reductions became $4.54 million,


·  the
    next 7 quarterly reductions became $3.86 million, and


·  the balloon and final payment is $115.3 million.





As of September 30, 2003, the available debt undrawn under all credit facilities was $78.8 million. During October 2003, the Companys $348 Facility was reduced by $8.0 million for the sale of one product tanker. Upon the sale of another product tanker (expected in November), the Facility will be reduced by $7.6 million. Currently, approximately $70.7 million of undrawn debt is available.





Financial Instruments





As of September 30, 2003, the Company had interest rate swaps and FRAs to effectively convert a portion of its debt from a floating to a fixed-rate basis. The swaps and FRAs are designated as cash flow hedges. These swap contracts and FRAs were effective hedges and therefore no ineffectiveness was recorded in the Condensed Consolidated Statements of Income.









Outlook





The EPS of $0.80 basic and diluted ($0.93 basic EPS before the loss on writedown/disposal of assets) during the nine months ended September 30, 2003 was significantly more than the earnings for the 12-months EPS for 2002 of $0.22. The tanker rate environment was stronger than a typical third quarter, and our earnings were higher compared to the third quarter 2002 (See Market Overview for factors effecting continued improvement in the marketplace for 2003).





We have taken steps to preserve and increase future earnings: we modified approximately $245 million of existing indebtedness at a decreased margin over LIBOR; the loan increased our liquidity and extended the term to 2010; and we continue to modernize and grow our fleet conservatively. We ordered six new product carriers, five of which are backed by five year time charters. Those charters commence at the delivery







39






of the vessels next year and provide for a profitable base rate as well as profit sharing to allow us to benefit further in strong tanker markets.  With debt to total capitalization at 53% and approximately $90 million in cash and other liquidity, we are in the strongest financial position in our history.





We took delivery of three vessels during the third quarter 2003, the second of two Panamax newbuildings in July (the first was delivered in April) both of which began five-year time charters upon delivery and two 2000 built double-hull Suezmax tankers in August, which increases our exposure to the spot market. As mentioned previously, six newbuildings are scheduled for delivery from shipyards in 2004 and 2005, five of which will begin five year time charters at that time. We also have disposed of single hull product carriers at opportunistic times, two were sold in the first half of 2003, one was disposed of in October and two will be delivered to new owners in November. Our strategy of vessel acquisitions with the proper mix of time and spot charters, in addition to dispositions at
opportunistic times creates a solid basis during weak and strong markets.





Capital Expenditures





2003 Drydocks













Number
of Days


CostClean:Handymax and Handysize-TC


44

$
1.1Crude:Handysize-TC


15


0.5Total


59

$
1.6





Capital Expenditures for Vessel Purchases





OMI has commitments to purchase six handysize ice class 1A product carriers currently under construction with contract costs aggregating $169.6 million. In 2004, we will take delivery of four vessels and in 2005 we will take delivery of the remaining two sister-ships. Five of the vessels will begin five year time charters upon delivery. Construction and delivery payments will aggregate approximate $149.9 million; $11.3 million to be paid in the remaining fourth quarter 2003, $90.1 million to be paid in 2004, which includes the delivery of four vessels, and $48.5 million to be paid in 2005 which includes the delivery of two vessel). Bank financing will provide most of the amounts to be paid.





Other Commitments





In September 2003,  OMI awarded and issued 498,314 shares of restricted stock to employees, executive officers and directors for a total value at the date of grant of approximately $3.4 million, which was recorded to Unearned compensation restricted stock. Restrictions lapse for one third of the shares at the end of year three, the next third at the end of year four, and the remaining third of the shares at the end of year five.




40












The Company is continuing to cooperate with an investigation by the U.S. Attorneys office in Newark, New Jersey of an allegation that crew members of one or more of the Companys vessels had by-passed systems designed to prevent impermissible discharge of certain wastes into the water and had presented false statements to the government, and otherwise had obstructed the governments investigation. As well as being violations of the MARPOL (Maritime Pollution) Convention and U.S. law, the activities under investigation violate Company policies and directives. The Company is continuing its review of those policies and has been implementing additional safeguards. The Company received a subpoena requesting information with respect





 to other vessels in its fleet and the Company has been providing the information requested. On May 10, 2002 a former master and former chief engineer of one of the Companys vessels entered guilty pleas in U.S. District Court in Newark, New Jersey, to violations of U.S. law involving false statements to the U.S. Coast Guard during a vessels port call in New Jersey on September 10, 2001. At this time, the Company cannot predict the scope or duration or estimate the cost of this investigation or its outcome. Accordingly, the Company cannot predict whether any penalties or fines will be imposed or their materiality. The Company expects that a substantial portion of the costs relating to this incident will be covered by insurers, who have been duly notified.





OMI and certain subsidiaries are defendants in various actions arising from shipping operations. Such actions are covered by insurance or, in the opinion of management, are of such nature that the ultimate liability, if any, would not have a material adverse effect on the consolidated financial statements.





Critical Accounting Policies





There have been no significant changes to our critical accounting policies during the nine months ended September 30, 2003 as compared to those we disclosed in Managements Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2002.





Effects of Inflation





The Company does not consider inflation to be a significant risk to the cost of doing business in the current or foreseeable future. Inflation has a moderate impact on operating expenses, drydocking expenses and corporate overhead.





Newly Issued Accounting Standards





The Financial Accounting Standards Board "FASB" recently issued Statements of Financial Accounting Standards ("SFAS"), which are summarized as follows:







SFAS
    150, "Accounting for Certain Financial Instruments with Characteristics of
    both Liabilities and Equity" was issued in May 2003. SFAS 150 establishes
    standards for how an issuer classifies and measures certain financial instruments
    with characteristics of both liabilities and equity and is effective for
    financial instruments entered into or modified after May 31, 2003 and
    for all such instruments on July 1, 2003. The provisions of SFAS 150, which
    the Company adopted in 2003, did
    not have an effect on the Companys financial statements.




41












SFAS
    149, " Amendment
    of Statement 133 on Derivative Instruments and Hedging Activities " was
    issued in April 2003. SFAS 149 amends SFAS 133, "Accounting for Derivative
    Instruments and Hedging Activities," to
    provide clarification on the meaning of an underlying, the characteristics
    of a derivative that contains financing components and the meaning of an
    initial net investment that is smaller than would be required for other types
    of contracts that would be expected to have a similar

response to changes in market factors. SFAS 149 will be applied prospectively
    and is effective for contracts entered into or modified after June 30, 2003. The
    provisions of SFAS 149, adopted by the Company effective July 1, 2003, did
    not have an effect on the Companys financial statements.





SFAS 148, "Accounting for Stock-Based Compensation  Transition and Disclosure" was issued in December 2002. SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition to SFAS 123s fair value method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure provisions of SFAS 123 and APB Opinion 28, "Interim Financial Reporting," to require disclosure in the summary of significant accounting policies of the effects of an entitys accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. While SFAS 148 does not amend SFAS 123 to require companies to account for





 employee stock options using the fair value method, the disclosure provisions of SFAS 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of SFAS 123 or the intrinsic value method of APB Opinion 25. As allowed by SFAS 123, the Company has elected to continue to utilize the accounting method prescribed by APB Opinion 25 and has adopted the disclosure requirements of SFAS 123 for stock options existing prior to January 1, 2003. The Company has also elected the prospective method for recognizing fair value on stock options granted after January 1, 2003. The disclosure provisions under SFAS 148, effective for fiscal years ending after December 15, 2002, have been adopted by the Company, with the appropriate disclosures under "Stock-Based Compensation."





In January 2003, the FASB issued Financial Interpretation No. 46 ("FIN 46"), which addresses financial reporting requirements for variable interest entities, also referred to as special purpose entities. In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (1) does not have equity investors with voting rights; or (2) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property and may be essentially passive or it may engage in research and development or other activities on behalf of another company. FIN 46 requires a





variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. FIN 46 also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The adoption of FIN 46 did not have an effect on the Companys
financial statements.




42















FORWARD LOOKING INFORMATION










Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. Such risks include, but are not limited to, supply of tankers, demand for their use, world economic activity, breakdown of vessels and resultant time out of service as well as repair cost, availability and cost of insurance, governmental regulation, customer preferences and availability and cost of  financing.





All subsequent written and oral forward-looking statements attributable to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements. We disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.





For a more detailed discussion of these factors, see the information under the heading "Business and Properties" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2002. We undertake no obligation to update or revise any forward-looking statements.











Item 3.Quantitative and Qualitative Disclosures about Market Risks





Market Risk





The Company's major market risk exposure is changing interest rates. The majority of OMIs debt was floating rate debt at September 30, 2003 and December 31, 2002. At September 30, 2003, the floating rate debt was





43


$574.7 million ($395.5 million, which includes a notional amount of $57.8 million on an interest rate swap that commences in 2004, of which was fixed with interest-rate swaps) of the $575.0 million total debt, and at December 31, 2002, the floating rate debt was $509.6 million ($115.0 million of which was fixed with interest-rate swaps) of the $510.6 million total debt. Based on the floating rate debt at September 30, 2003, a one-percentage point increase in the floating interest rate would increase interest expense by $2.4 million per year.





The fair market value of the fixed rate debt on the balance sheet was $0.3 million as of September 30, 2003, and $1.0 million as of December 31, 2002, respectively. Based on the fixed rate debt at December 31, 2002, if interest rates were to increase (decrease) by one percent with all other variables remaining constant, the market value of the fixed rate debt would have an immaterial change.





The Company's policy is to manage interest rate risk through the use of interest rate derivatives based upon market conditions. OMI uses interest rate swaps and FRAs to manage the impact of interest rate changes on borrowings under the Company's variable rate credit facilities. The interest rate swaps and FRAs are entered into with a group of financial institutions with investment grade credit ratings, thereby minimizing the risk of credit loss. The Company has entered into certain interest rate derivative transactions with certain financial institutions to manage the impact of interest rate changes on variable rate debt.





The Company has interest rate swaps and FRAs to effectively convert a portion of its debt from a floating to a fixed-rate basis. The swaps/FRAs are designated as cash flow hedges. These swap/FRA contracts were effective hedges and therefore no ineffectiveness was recorded in the Condensed Consolidated Statements of Income. As of September 30, 2003, we had various interest rate swaps/FRAs aggregating $395.5 million (which includes a notional amount of $57.8 million on an interest rate swap that commences in 2004) on various debt tranches within a range of 1.172% to 4.86% expiring from December 2003 to October 2008.  The Company will pay fixed-rate interest payments and will receive floating-rate interest amounts based on three month LIBOR settings (for a term equal to the swaps' reset periods). As of September 30, 2003, the Company has recorded a liability of $3.7 million related to the fair market value of these hedges and a charge correspondingly to Other comprehensive income.








Item 4. Controls and Procedures





a.  Evaluation of disclosure controls and procedures





44






















45












PART II: OTHER INFORMATION





Item 1  Legal Proceedings


None.





Item 2  Changes in Securities


None.





Item 3  Defaults upon Senior Securities


None.





Item 4  Submission of Matters to a Vote of Security Holders


None.





Item 5  Other Information


None.





Item 6  Exhibit and Reports on Form 8-K




a.  Exhibits




31.1 OMI Corporations certification by the


Chief Executive Officer on Form 10-Q


for the period ending September 30, 2003


as adopted pursuant to section 302 of


THE SARBANES-OXLEY ACT OF 2002.






31.2 OMI Corporations certification by the


Chief Financial Officer on Form 10-Q


for the period ending September 30, 2003


as adopted pursuant to section 302 of


THE SARBANES-OXLEY ACT OF 2002.





32.1 OMI Corporations certification by the


Chief Executive Officer on Form 10-Q


for the period ending September 30, 2003


pursuant to 18 U.S.C. Section 1350, as


adopted pursuant to section 906 of


THE SARBANES-OXLEY ACT OF 2002.






32.2 OMI Corporations certification by the


Chief Financial Officer on Form 10-Q


for the period ending September 30, 2003


pursuant to 18 U.S.C. Section 1350, as


adopted pursuant to section 906 of


THE SARBANES-OXLEY ACT OF 2002.




b.  Reports on Form 8-K





On October 22, 2003, OMI filed a Form 8-K announcing OMIs third quarter 2003 earnings.





On October 13, 2003, OMI filed a Form 8-K announcing that OMI has exercised an option to construct a sixth 37,000 dwt ice-class 1A product carrier to be delivered in 2005, has entered into five year time charters for the fifth and sixth product carriers on order and extended two time charters that were to expire in 2004 for another year. On
      September 26, 2003, OMI filed a Form 8-K announcing that OMI has agreed
      to sell two single hull product tankers.




46















SIGNATURES





Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.








OMI CORPORATION





(REGISTRANT)








**Date:**
**November 10, 2003**

**By****:**

/s/ Craig H. Stevenson, Jr.**Craig H. Stevenson, Jr. Chairman of the Board and Chief Executive Officer****Date:**
**November 10, 2003**

**By:**

/s/ Kathleen C. HainesKathleen C. Haines
Senior Vice President,
Chief Financial Officer
and Treasurer













47