UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2002

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Commission File Number 001-14135
  OMI CORPORATION
  (Exact name of Registrant as specified in its charter)

|Marshall Islands                |  | 52-2098714         
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

Registrants
Address:
One Station Place 
Stamford, Connecticut 06902

Registrants telephone number including area code: (203) 602-6700 
Securities registered pursuant to Section 12(b) of the Act:

|Common Stock, par value $.50 per share |  | New York Stock Exchange             
|-------------------------------------- |  | ------------------------------------
|Title of Class                         |  | Name of Exchange on which Registered
|                                       |  |                                     

Securities registered pursuant to Section 12(g) of the Act: None

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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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

|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 |       
|--- | ------ |  | -- | ------
|    | ______ |  |    | ______

Aggregate market value of Registrants voting stock, held by non-affiliates, based on the closing price on the New York Stock Exchange as of the close of business on June 28,
2002:

$277,450,879

Number of shares of the Registrants Common Stock outstanding as of March 25, 2003: 76,843,163 The following document is hereby incorporated by reference into Part III of this Form 10-K:

(1) Portions of the OMI Corporation 2003 Proxy
      Statement to be filed with the Securities and Exchange Commission.

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|INDEX    
|---------
|         
|         
|         
|PART I   
|         
|Items    
|         
|1. and 2.
|3.       
|4.       
|         
|PART II  
|5.       
|         
|6.       
|7.       
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         
|7A.      
|8.       
|9.       
|         
|         
|PART III 
|10.      
|11.      
|12.      
|13.      
|14.      
|         
|PART IV  
|15.      
|         
|         

i

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PART I

Items 1 and 2.BUSINESS AND PROPERTIES

General

OMI Corporation (OMI, the Company or we), incorporated under the laws of the Republic of the Marshall Islands on January 9, 1998, is
located at One Station Place, Stamford, Connecticut. The telephone number is (203) 602-6700.

Prior to June 17, 1998, we were a subsidiary of OMI Corp., a Delaware corporation (Old OMI) and held the international assets of Old OMI. Old OMI acquired Marine
Transport Lines, Inc. (MTL), a privately owned company specializing in marine and transportation services, principally to the energy and chemical industries. In connection with the acquisition of MTL, Old OMI spun off to its
shareholders the Company. Subject to certain exceptions, the spin off was tax free to Old OMI, its shareholders and the Company. The Company retained the OMI name and Old OMI changed its name to Marine Transport Corporation
(MTC). The previous management of Old OMI became the management of the Company and the previous management of MTL became the management of MTC. For a more complete description of the transaction, the conditions and certain
other items shareholders are referred to the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission on May 15, 1998 (registration statement number 333-52771).

Forward-Looking Statements

Certain statements contained in this report (including information incorporated by reference) are forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided for under these sections. Our forward-looking statements include, without limitation:

- estimates of future earnings and cash flows and the sensitivity of earnings and cash flows to charter rates;
- estimates of when new vessels will be delivered by shipyards to the Company and when they may be chartered by customers;
- estimates of when vessels may be contracted for sale and delivered to buyers;
- estimates of when laws, regulations or commercial decisions may remove older vessels from markets or enhance the value or earnings of double hulled vessels;
- statements as to the projected development of the Companys strategy and how it may act to implement its strategy;
- estimates of future costs and other liabilities for certain environmental matters and investigations and the expectations concerning insurance coverage therefor;
- estimates relating to expectations in world economic activity, growth in the demand for crude oil and petroleum products and their affect upon tanker markets;
- estimates of the number of drydockings of vessels, their costs and the number of related offhire days;
- estimates of capital requirements and the sources of the funding;
- statements regarding financial hedges and their affects.

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

1

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financing. More detailed information regarding these factors is included in Items 1, 2, 3 and 7, and elsewhere throughout this report, as well as in other filings with the Securities and Exchange Commission. Given these
uincertainties, readers are cautioned not to place under reliance on our forward-looking statements.

All subsequent written and oral forward-loooking 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.

Development of OMIs Business

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 which as of March 28, 2003 numbered 38 vessels. Beginning in 1998 we embarked on a fleet renewal program that resulted in a significant reduction in the age of our
fleet and in a concentration of our vessels 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 24 product carriers and 14 crude oil tankers, including eight Suezmax tankers. Our 24 product carriers are smaller vessels (from approximately 29,900 to
approximately 47,000 dwt each). At year end 2002 the average age of our product carriers was 4.9 years, compared to an industry average of 12.3 years. Our eight Suezmax tankers are larger vessels (approximately 160,000 dwt each) and at year end 2002
the Suezmax tankers had an average age of 2.2 years, compared to an industry average of 9.6 years. The remainder of our fleet consists of six vessels including one ULCC (approximately 322,000 dwt), three Panamax tankers (approximately 66,000 dwt
each) and two handysize tankers (approximately 36,000 dwt each). During the next six months, we will take delivery of two new Panamax product carriers. In 2004, we will take delivery of three handysize ice class product carriers. We recently agreed
to sell our two oldest product carriers and they are scheduled to be delivered to the buyers during the second quarter. The time charter-in on one product carrier expires in 2003. Assuming no other acquisitions or dispositions, once we take delivery
of the additional five vessels, 29 of our 40 vessels will be double-hulled.

We have developed a basic strategy, which includes:

Balanced chartering in spot and long-term markets

We actively manage the balance between our spot and long-term time chartering to maintain cash flow stability without surrendering our ability to participate in strong spot markets. Our
longer-term goal is to cover our fixed charges (general and administrative costs and interest expense) with revenue from our long-term charters. If attractive rates are available, we plan to keep most of our product carriers on long-term charters
for the foreseeable future. Currently, 17 product carriers and two crude oil tankers are performing long-term time charters with original terms of two to five years. In addition, in 2003, we will take delivery of two Panamax product carriers which
have been time chartered to a major oil company for five year terms and in 2004 three of the handysize newbuildings will commence five year time charters to a major oil company. The majority of our tonnage, including all of our Suezmaxes, however,
continues to operate in the spot market, giving us the ability to take advantage of the variability of spot rates. In addition, five of our product carriers on time charter have profit sharing participations, allowing the Company to further benefit
from increased rates in strong markets. The three product carriers being delivered in 2004 have been time chartered with the same profit sharing arrangement.

OMI began increasing the number of its product carriers on time charters during the strong rate market of mid 2000 and continued to do so thereafter as part of its strategy. The following chart
reflects OMIs contracted time charter revenue (TC revenue) through 2006. TC revenue below does not include profit sharing in the future periods for the eight vessels eligible for profit sharing under their time charter agreements
(with the exception of profit sharing earned and recorded for prior periods) and it assumes no extensions of current time charters but it does include OMIs projected requirements relating to drydock.

2

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The following reflects our contracted TC revenue through 2006.

| | 
| | 

| | (In millions)         | 2000 |      | 2001 |   | 2002 |  | 2003 |      | 2004 |   | 2005  |  | 2006  | 
| | --------------------- | ---- | ---- | ---- | - | ---- |  | ---- | ---- | ---- | - | ----- |  | ----- | 
| |                       |      |      |      |   |      |  |      |      |      |   |       |  |       | 
| | TC Revenue            | $    | 16.3 |      | $ | 43.5 |  | $    | 90.4 |      | $ | 101.7 |  | $99.0 | 
| | Number of Vessels (a) |      | 5    |      |   | 14   |  |      | 17   |      |   | 20(b) |  | 14(c) | 

| |    
| | ---
| | (a)
| | (b)
| | (c)
| | (d)
| | (e)

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 offhire
relating to drydock. We intend to time charter the nine vessels, which have time charters that expire beginning in 2004 at opportunistic times when attractive rates are available.

Concentration in two vessel categories

The large scale of our product carrier and Suezmax fleets relative to many of our competitors enables us to realize economies of scale and increase vessel utilization. Large and concentrated
fleets create economies of scale by more efficiently spreading the overhead costs, including costs associated with vetting and complying with environmental and other regulations. By gaining expertise in operating, supplying and maintaining selected
vessel types, our crews and management also gain greater efficiency and effectiveness. We have chosen to concentrate in Suezmax tankers due to their size advantage over aframax tankers and greater geographic flexibility relative to VLCCs and
to invest in product tankers because of our observation that product producing refineries are not generally located near the areas of greatest demand. We expect to increase our concentration in Suezmax tankers and product carriers, including through
selective acquisitions and dispositions of our older vessels as market conditions warrant.

Continued acquisition of modern vessels

We have focused on acquiring modern, double hull ships, as we believe younger vessels have significant competitive advantages. In addition to our fleet renewal program, we will continue our
strategy of selectively and opportunistically expanding our fleet. Most of our product carrier acquisitions have been made when long-term charters have been concluded. We expect to continue this strategy, as it grows our fleet with less risk.

3

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The Companys existing fleet and newbuildings on order as of March 28, 2003 are shown on the following table:

|                                 |  |                |  | Year     |  |           |  | Charter    |  |        
|-------------------------------- |  | -------------- |  | -------- |  | --------- |  | ---------- |  | -------
|Name of Vessel                   |  | Type of Vessel |  | Built(1) |  | Dwt       |  | Expiration |  | Hull(2)
|                                 |  |                |  |          |  |           |  |            |  |        
|CRUDE  OIL FLEET:                |  |                |  |          |  |           |  |            |  |        
|                                 |  |                |  |          |  |           |  |            |  |        
|SETTEBELLO                       |  | ULCC           |  | 1986     |  | 322,466   |  | SPOT       |  | SH     
|SOMJIN                           |  | Suezmax        |  | 2001     |  | 160,183   |  | SPOT       |  | DH     
|DELAWARE                         |  | Suezmax        |  | 2002     |  | 159,452   |  | SPOT       |  | DH     
|DAKOTA                           |  | Suezmax        |  | 2002     |  | 159,435   |  | SPOT       |  | DH     
|SACRAMENTO                       |  | Suezmax        |  | 1998     |  | 157,411   |  | SPOT       |  | DH     
|PECOS                            |  | Suezmax        |  | 1998     |  | 157,406   |  | SPOT       |  | DH     
|SABINE                           |  | Suezmax        |  | 1998     |  | 157,332   |  | SPOT       |  | DH     
|OLIVER JACOB(3)                  |  | Suezmax        |  | 1999     |  | 157,327   |  | SPOT       |  | DH     
|MAX JACOB(3)                     |  | Suezmax        |  | 2000     |  | 157,327   |  | SPOT       |  | DH     
|ELBE(4)                          |  | Panamax        |  | 1984     |  | 66,800    |  | SPOT       |  | SH     
|NILE(4)                          |  | Panamax        |  | 1981     |  | 65,755    |  | SPOT       |  | SH     
|VOLGA(4)                         |  | Panamax        |  | 1981     |  | 65,689    |  | SPOT       |  | SH     
|TANDJUNG AYU                     |  | Handysize      |  | 1993     |  | 36,362    |  | 5/2005     |  | DS     
|BANDAR AYU                       |  | Handysize      |  | 1993     |  | 36,345    |  | 7/2005     |  | DS     
|                                 |  |                |  |          |  |           |  |            |  |        
|                                 |  |                |  |          |  | 1,859,290 |  |            |  |        
|                                 |  |                |  |          |  |           |  |            |  |        
|CLEAN  FLEET:                    |  |                |  |          |  |           |  |            |  |        
|                                 |  |                |  |          |  |           |  |            |  |        
|NECHES                           |  | Handymax       |  | 2000     |  | 47,052    |  | 9/2004     |  | DH     
|SAN JACINTO                      |  | Handymax       |  | 2002     |  | 47,038    |  | 3/2005     |  | DH     
|GUADALUPE                        |  | Handymax       |  | 2000     |  | 47,037    |  | 11/2004    |  | DH     
|AMAZON                           |  | Handymax       |  | 2002     |  | 47,037    |  | 1/2005     |  | DH     
|MOSELLE                          |  | Handymax       |  | 2003     |  | 47,037    |  | 2/2006     |  | DH     
|ROSETTA                          |  | Handymax       |  | 2003     |  | 47,015    |  | 3/2006     |  | DH     
|JAG PRATAP(5)                    |  | Handymax       |  | 1995     |  | 45,693    |  | 10/2003    |  | DH     
|ORONTES                          |  | Handysize      |  | 2002     |  | 37,383    |  | 3/2005     |  | DH     
|OHIO                             |  | Handysize      |  | 2001     |  | 37,278    |  | 12/2004    |  | DH     
|ASHLEY                           |  | Handysize      |  | 2001     |  | 37,270    |  | 11/2004    |  | DH     
|MARNE                            |  | Handysize      |  | 2001     |  | 37,230    |  | 9/2004     |  | DH     
|TRINITY                          |  | Handysize      |  | 2000     |  | 35,834    |  | 10/2006    |  | DH     
|MADISON                          |  | Handysize      |  | 2000     |  | 35,828    |  | 9/2006     |  | DH     
|RHONE                            |  | Handysize      |  | 2000     |  | 35,775    |  | 4/2004     |  | DH     
|CHARENTE                         |  | Handysize      |  | 2001     |  | 35,751    |  | 9/2004     |  | DH     
|ISERE                            |  | Handysize      |  | 1999     |  | 35,438    |  | 9/2004     |  | DH     
|SEINE                            |  | Handysize      |  | 1999     |  | 35,407    |  | 7/2004     |  | DH     
|SHANNON                          |  | Handysize      |  | 1991     |  | 29,999    |  | SPOT       |  | SH     
|RACER                            |  | Handysize      |  | 1989     |  | 29,998    |  | SPOT       |  | SH     
|RAIN                             |  | Handysize      |  | 1990     |  | 29,998    |  | SPOT       |  | SH     
|SEVERN                           |  | Handysize      |  | 1988     |  | 29,998    |  | SPOT       |  | SH     
|ALMA                             |  | Handysize      |  | 1988     |  | 29,996    |  | 6/2003     |  | SH     
|PAULINA(6)                       |  | Handysize      |  | 1984     |  | 29,992    |  | SPOT       |  | SH     
|PATRICIA(6)                      |  | Handysize      |  | 1984     |  | 29,974    |  | SPOT       |  | SH     
|                                 |  |                |  |          |  |           |  |            |  |        
|                                 |  |                |  |          |  | 901,058   |  |            |  |        
|                                 |  |                |  |          |  |           |  |            |  |        
|Total Current Fleet (38 Vessels) |  |                |  |          |  | 2,760,348 |  |            |  |        
|                                 |  |                |  |          |  |           |  |            |  |        

4

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|                            |  |                |  | Date to be |  |           |  | Charter    |  |        
|--------------------------- |  | -------------- |  | ---------- |  | --------- |  | ---------- |  | -------
|Name of Vessel              |  | Type of Vessel |  | Delivered  |  | Dwt       |  | Expiration |  | Hull(2)
|                            |  |                |  |            |  |           |  |            |  |        
|VESSELS ON ORDER            |  |                |  |            |  |           |  |            |  |        
|                            |  |                |  |            |  |           |  |            |  |        
|OTTAWA                      |  | Panamax        |  | 4/2003     |  | 70,100    |  | 4/2008     |  | DH     
|TAMAR                       |  | Panamax        |  | 5/2003     |  | 70,100    |  | 5/2008     |  | DH     
|LOIRE                       |  | Handysize      |  | 4/2004     |  | 37,000    |  | 4/2009     |  | DH     
|GARONNE                     |  | Handysize      |  | 7/2004     |  | 37,000    |  | 7/2009     |  | DH     
|TO BE NAMED                 |  | Handysize      |  | 10/2004    |  | 37,000    |  | 10/2009    |  | DH     
|                            |  |                |  |            |  |           |  |            |  |        
|                            |  |                |  |            |  | 251,200   |  |            |  |        
|                            |  |                |  |            |  |           |  |            |  |        
|Total with Vessels On Order |  |                |  |            |  | 3,011,548 |  |            |  |        
|                            |  |                |  |            |  |           |  |            |  |        

|   
|---
|(1)
|   
|(2)
|   
|(3)
|   
|(4)
|   
|(5)
|   
|(6)

A brief description of the functions of the various types and sizes of vessels owned or operated by the Company and others is set forth below:

Product carriernormally carries refined petroleum products such as gasoline, heating oil, aviation fuel, naphtha and kerosene.

Crude oil tankernormally carries crude oil and dirty products.

Handysizea ship of 25,000 to 40,000 dwt.

Handymaxa ship of 40,000 to 50,000 dwt.

Panamaxa ship of 50,000 to 80,000 dwt.

Aframaxa tanker of 80,000 to 120,000 dwt.

Suezmaxa tanker of 120,000 to 200,000 dwt.

VLCCa very large crude oil tanker, of 200,000-300,000 dwt.

ULCCan ultra large crude oil tanker, of more than 300,000 dwt.

All of OMIs Suezmaxes currently operate in the spot market. They principally trade from West Africa to the U.S. Atlantic coast and from the North Sea to the U.S. Atlantic coast. There is
a growing use of the vessels in other trades, such as from the Black Sea into Mediterranean ports. Seventeen of the Companys 24 product tankers and two handysize crude oil carriers are time chartered and operate where the charterers determine.
The remaining product carrier fleet operates worldwide. The handysize product carriers are well suited to trade in the U.S. eastern seaboard due to vessel cargo size and dimensions. However, all but one of the spot market product tankers were built
prior to 1992, are single hull and do not have full segregated ballast, thereby placing them at a competitive disadvantage with numerous vessels built in the latter half of the 1990s. Two of the single hull vessels are under contract to be
sold, with deliveries expected in April and May 2003. The other single hull product carriers do not fit in with our long term strategy and in the future, if opportunities present themselves at what we regard as advantageous prices, we will sell
them. The same is true of the Companys ULCC.

The three vessel Panamax fleet continued to operate profitably in 2002. The vessels are old (two are 22 years old and the third is 19 years old). While the Company considers them to be good
sales candidates, the cash flow from the vessels has not been adequately reflected in the sales value.

Since May of 1998 Alliance Chartering LLC, a limited liability company which is jointly owned with Frontline Ltd., a major international shipping company has handled the chartering of
OMIs and Frontline Ltd.s Suezmaxes. Alliances current fleet stands at 43 vessels.

5

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Nature of Business

OMI is primarily engaged in the business of owning and operating tankers in international markets. There are two aspects to vessel operation: (i) technical operation, which involves
maintaining, crewing and insuring the vessel, and (ii) commercial operation, which involves arranging the business of the vessel. OMI is the commercial operator of all its Suezmaxes (which are marketed by Alliance Chartering LLC), its ultra large
crude carrier and its handysize product carriers which operate in the spot market. The commercial operations of the vessels on time charter, including the Panamax tankers are handled by the respective charterers. A subsidiary, OMI Marine Services
LLC, is the technical operator of all of the Companys owned vessels. It subcontracts a substantial amount of its management work, including all crewing to an unaffiliated company in India and administrative work, including obtaining insurance
with respect to the vessels, to OMI.

OMIs vessels are available for charter on a voyage, time or bareboat basis. 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. A single voyage (generally two to ten weeks) charter
is often referred to as a spot market charter. Vessels in the spot market may also spend time idle or laid up as they await business. A voyage charter involving more than one voyage with the same charterer is commonly known
as a consecutive voyage charter.

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. In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and voyage costs such as fuel and port charges are paid by the
charterer.

Under a bareboat charter, the charterer takes possession of the vessel in return for a specified amount payable to the owner of the vessel. The bareboat charterer must provide its own crew, pay
all operating and voyage expenses and is responsible for the operation and management of the vessel.

Voyage, time and bareboat charters are available for varying periods, ranging from a single trip to a long-term arrangement approximating the useful life of the ship, to commercial firms (such
as oil companies) and governmental agencies (both foreign and domestic) on a worldwide basis. In general, a long-term charter affords the vessel owner greater assurance that it will be able to cover its costs, including depreciation, interest, and
operating costs. Operating the vessel in the spot market affords the owner greater speculative opportunity, which may result in high rates when ships are in high demand or low rates (possibly insufficient to cover costs) when ship availability
exceeds demand. Ship charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand, and many other factors beyond the control of OMI.

Customers

For the year ended December 31, 2002 voyage revenues include revenue from two major customers (10% or more of voyage revenues) aggregating $34,045,000 or 17 percent of Consolidated Revenue from
Chartering and Shipping S.A. (a subsidiary of TotalFinaElf) and $28,082,000 or 14 percent from El Paso Marine Company. Substantially all of these revenues are from time charters.

Regulations

The Company is required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to its vessels. The kinds of permits, licenses
and certificates required depend upon such factors as the country of registry, the commodity transported, the waters in which the vessel operates, the nationality of the vessels crew, the age of the vessel and the status of the Company as
owner or charterer. The Company believes that it has or can readily obtain all permits, licenses and certificates necessary to permit its vessels to operate.

OMIs operations are also affected by U.S. federal, state and foreign environmental protection laws and regulations, particularly the U.S. Port and Tanker Safety Act, the Act to Prevent
Pollution from Ships, various volatile organic compound emission requirements, the BCH (Bulk Chemical) Code for chemical carriers, the IMO/USCG pollution regulations and various SOLAS (Safety of Life at Sea) amendments. Compliance with such laws and
regulations entails additional expense, including vessel modifications and changes in operating procedures.

6

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The Oil Pollution Act of 1990 (OPA 90) affects all vessel owners shipping oil or hazardous material to, from, or within the U.S. The law phases out the use of tankers having single
hulls, effectively imposes on vessel owners and operators unlimited liability in the event of a catastrophic oil spill and establishes the Oil Spill Liability Trust fund. OPA 90 requires that tankers over 5,000 gross tons calling at U.S. ports have
double hulls if contracted after June 30, 1990, or delivered after January 1, 1994. Furthermore, it calls for the elimination of all single hull vessels by the year 2010 on a phase-out schedule that is based on size and age, unless the tankers are
retrofitted with double hulls. The law permits existing single hull tankers to operate until the year 2015 if they discharge at deep water ports, such as the Louisiana Offshore Oil Port (LOOP), or lighter more than 60 miles
offshore. The International Maritime Organization (IMO) has adopted regulations that require tankers of 5,000 dwt and over, contracted after July 6, 1993, to have double hull, mid-deck or equivalent design. The regulations
also require the phase out of non-double hull tankers by 2017 or when a vessel reaches 25 year of age, whichever is the earlier date, with most of the non double hulled tonnage phased out by 2007. Existing single hull tankers will be phased out
unless they are retrofitted with double hull, mid-deck or equivalent design or undergo an extensive condition assessment scheme no later than 30 years after delivery. Another IMO regulation mandates that existing single hull crude oil tankers larger
than 20,000 dwt and product tankers over 30,000 dwt without segregated ballast tanks (SBT) must convert to SBT operations using at least 30% of their wing tanks, or cargo tank bottom area, for this purpose by the age of 25 or
be hydrostatically-balance loaded in the wing tanks to provide equivalent oil outflow abatement in the event of casualty. The U.S. has not adopted these IMO regulations, as the IMO regulations recognize, in addition to double hull, other designs as
well as contain different phase out dates for existing single hull tankers which are in conflict with provisions of OPA 90. As a result, some vessels which are eligible to trade internationally will be unable to carry cargo to or from the United
States, except to LOOP or if lightered, and some vessels which may trade in the U.S. will be unable to trade elsewhere.

Following the sinking in late 2002 of the PRESTIGE, a 26 year old single hulled tanker, off the coast of Spain, various European governments have initiated actions designed to accelerate the
phase out of single hulled vessels and have banned single hull tankers from carrying heavy fuel, tar, asphaltic bitumen and heavy crude oil through their waters. A recent post-PRESTIGE European Union proposal would accelerate the phase out of single
hull tankers prior to the timetables set by IMO as follows: (1) Category 1 ships which are single hull crude oil tankers above 20,000 dwt and product carriers above 30,000 dwt, which do not have segregated ballast tanks, which are 23 years old or by
2005, whichever comes first; (2) Category 2 ships, which are similar to Category 1 ships, but which have segregated ballast tanks, which are 28 years old or by 2010, whichever comes first; and (3) Category 3 ships which are smaller than Category 1
or 2 ships, which are 28 years old or by 2015, whichever comes first. Even without further actions by governments, we believe that many customers will avoid single hulled vessels to the extent double hulled vessels are available, thereby continually
widening the gap in earnings ability and vessel values which exists between the vessels and economically will accelerate the phase out of single hulled vessels. Even though our single hull vessels may be adversely affected, we believe the benefits
to the double hull portion of our fleet from stricter regulation and customer requirements more than offset any detriments to our single hulled vessels.

The Company believes that these laws and regulations benefit owners such as the Company which have modern fleets, by eliminating older vessels as competitors through accelerated scrapping of
tankers, thereby reducing the supply of vessels that would otherwise exist.

In the U.S., liability for an oil spill is governed not only by OPA 90, but also by the laws, rules and regulations established by every coastal and inland waterway state. Federal law does not
preempt such state laws and provides that claims made by state governments and other affected parties are not subject to limitation of liability if the oil spill results from gross negligence, willful misconduct or violation of any federal operating
or safety standard. One result of OPA 90 has been a greater prominence for independent owners with a reputation for high quality of technical management and well maintained physical assets. Another effect of the law has been to increase the relative
costs for liability insurance for vessel owners trading to the U.S. While OMI maintains insurance at levels it believes prudent, claims from a catastrophic spill could exceed the insurance coverage available, in which event there could be a material
adverse effect on OMI.

We believe that compliance with applicable environmental and pollution laws and regulations has not had and is not expected to have a material adverse effect upon its competitive position;
however the financial position, value

7

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and useful life of some of its vessels and results of operations may be affected as a result of OPA 90 and other environmental laws and regulations.

Competition

The Company competes with a large number of tanker owners fleets. The international fleets include vessels owned by independent operators and major oil companies; in addition, many
international fleets are government owned. Some of the Companys competitors have greater financial resources than the Company.

Competition in the ocean shipping industry varies primarily according to the nature of the contractual relationship as well as with respect to the kind of commodity being shipped. Competition
in virtually all bulk trades, including crude oil and petroleum products is intense.

Employees and Labor Relations

On December 31, 2002, the Company and its subsidiaries had 48 office employees.

The Company primarily uses hiring agents to crew its vessels. Although agents sign labor contracts with labor organizations in various foreign countries that represent seagoing personnel from
these countries, the Company is not a party to these contracts.

The Company considers its relationship with its employees, including its seagoing crews, to be good.

Value of Assets and Cash Requirements

Although the replacement costs of comparable new vessels may be above the book value of OMIs fleet, the market value of OMIs fleet may be below book value when market conditions are
weak and exceed book value when markets are strong. In common with other shipowners, OMI continually considers asset redeployment which at times includes the sale of vessels at less than their book value.

OMIs results of operations and cash flow may be significantly affected by future charter markets.

Item 3.LEGAL PROCEEDINGS

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 19, 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.

Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders of the Company during the fourth quarter of 2002.

8

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EXECUTIVE OFFICERS OF THE COMPANY

Set forth below is certain information with respect to the Companys executive officers as of March 28, 2003.

|                       |  |     |  |                                     |  | Year      | 
|---------------------- |  | --- |  | ----------------------------------- |  | --------- | 
|                       |  |     |  |                                     |  | Appointed | 
|Name                   |  | Age |  | Position                            |  | to Office | 
|                       |  |     |  |                                     |  |           | 
|Craig H. Stevenson, Jr |  | 49  |  | Chief Executive Officer             |  | 1998      | 
|                       |  |     |  |                                     |  |           | 
|Robert Bugbee          |  | 42  |  | President and                       |  | 1998      | 
|                       |  |     |  | Chief Operating Officer             |  |           | 
|Kathleen C. Haines     |  | 48  |  | Senior Vice President, Chief        |  | 1998      | 
|                       |  |     |  | Financial Officer and Treasurer     |  |           | 
|Henry Blaustein        |  | 60  |  | Senior Vice President, OMI Marine   |  | 1998      | 
|                       |  |     |  | Services LLC                        |  |           | 
|Fredric S. London      |  | 55  |  | Senior Vice President, General      |  | 1998      | 
|                       |  |     |  | Counsel and Secretary               |  |           | 
|Stavros Skopelitis     |  | 56  |  | Vice President                      |  | 1998      | 
|                       |  |     |  |                                     |  |           | 
|Mark A. Lowe           |  | 62  |  | Vice PresidentLegal Administration |  | 2002      | 

There is no family relationship by blood, marriage or adoption (not more remote than first cousin) between any of the above individuals and any other executive officer or any OMI
director.

The term of office of each officer is until the first meeting of directors after the annual stockholders meeting next succeeding his election and until his respective successor is chosen
and qualified.

There are no arrangements or understandings between any of the above officers and any other person pursuant to which any of the above was elected as an officer.

The following descriptions of occupations or positions that the executive officers of the Company have held during the last five years:

Craig H. Stevenson, Jr.was appointed President and Chief Executive Officer of the Company in 1998. He was President until January 2002 when Mr. Bugbee
was promoted from Executive Vice President to President of the Company. Mr. Stevenson had been Chief Executive Officer of Old OMI since January 1997 and President of Old OMI since November 1995.

Robert Bugbeewas elected President in January 2002. He was previously elected Chief Operating Officer in March 2000 and Executive Vice President of the
Company in January 2001. He had been Senior Vice President of the Company from June 1998 and of Old OMI from August 1995. Mr. Bugbee joined Old OMI in February 1995.

Henry Blausteinwas elected Senior Vice President of OMI Marine Services LLC in 1998. He had been Senior Vice President/Technical of Old OMI since July
1997. Prior thereto he was an independent consultant.

Kathleen C. Haineswas elected Senior Vice President in January 2001 and Chief Financial Officer in August 2000. She was elected Vice President and
Controller of the Company in 1998. She had been Vice President of Old OMI since January 1994.

Fredric S. Londonwas elected Senior Vice President, Secretary and General Counsel of the Company in 1998. He had been Senior Vice President, Secretary
and General Counsel of Old OMI since December 1991.

Stavros Skopelitiswas elected Vice President and Economist of the Company in 1998. He had been Vice President and Economist of Old OMI since May 1996.
He was elected Assistant Vice President and Economist of Old OMI in January 1994.

Mark A. Lowewas elected Vice PresidentLegal Administration in January 2002. He had been Vice President and General Counsel of OSG Ship Management,
Inc. and its predecessor Maritime Overseas Corporation since July 1997. Prior thereto, he was Vice President and Associate General Counsel of Maritime Overseas Corporation since 1970.

9

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PART II

Item 5.MARKET FOR OMI CORPORATIONS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Common Stock

Old OMI listed for trading on the New York Stock Exchange all of its common stock on March 13, 1992 (NYSE-OMM) and the Company acceded to that listing on June 18, 1998. As of March 25, 2003 the
number of holders of OMI common stock was approximately 3,048. The high and low sale prices of the common stock, as reported by the New York Stock Exchange, were as follows:

|2002 Quarter |  | 1st |      | 2nd |   | 3rd  |  | 4th |     
|------------ |  | --- | ---- | --- | - | ---- |  | --- | ----
|             |  |     |      |     |   |      |  |     |     
|High         |  | $   | 4.14 |     | $ | 5.05 |  | $   | 4.11
|Low          |  | $   | 2.82 |     | $ | 3.58 |  | $   | 3.00
|             |  |     |      |     |   |      |  |     |     
|2001 Quarter |  | 1st |      | 2nd |   | 3rd  |  | 4th |     
|             |  |     |      |     |   |      |  |     |     
|High         |  | $   | 7.76 |     | $ | 8.41 |  | $   | 5.85
|Low          |  | $   | 5.38 |     | $ | 5.58 |  | $   | 3.85

Payment of Dividends to Stockholders

The Board has not declared dividends to this date. OMIs current policy is not to pay dividends, but to retain cash for use in its business. Any determination to pay dividends by OMI in
the future will be at the discretion of the Board of Directors and will depend upon OMIs results of operations, financial condition, capital restrictions, covenants and other factors deemed relevant by the Board of Directors. Payment of
dividends is limited by the terms of certain agreements to which OMI and its subsidiaries are party. (See Note 5 to Consolidated Financial Statements.)

10

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|Item 6.SELECTED FINANCIAL DATA                                                       |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|------------------------------------------------------------------------------------ |  | -------------------------------- | -------------------------------- | ------- | ------------------------------------- | ------- | ------- | ------- | ------- | ---- | ------- | ------- | ------ | ------- | ------- | -------- | - | ------ | --------- | ------- | - | 
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|OMI CORPORATION AND SUBSIDIARIES                                                    
|                                                                                     |  | For the Years Ended December 31, |                                 
|                                                                                     |  |                                  |                                 
|                                                                                     |  | 2002                             |                                  | 2001    |                                       | 2000    |         | 1999    |         | 1998 |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |        
|                                                                                     |  |                                  |                                  |         | (In thousands, except per share data) |         |         |         |         |     
|Income Statement Data:                                                               |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |  
|Revenues                                                                             |  | $                                |                                  | 199,052 |                                       | $       |         | 209,936 |         | $    |         | 187,044 |        | $       |         | 115,992  |   | $      |           | 149,228 |  
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |         
|Operating expenses:                                                                  |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Voyage                                                                               |  |                                  |                                  | 35,457  |                                       |         |         | 31,730  |         |      |         | 25,919  |        |         |         | 25,513   |   |        |           | 37,517  |  
|Vessel                                                                               |  |                                  |                                  | 51,478  |                                       |         |         | 42,344  |         |      |         | 29,297  |        |         |         | 38,892   |   |        |           | 39,207  |  
|Charter hire                                                                         |  |                                  |                                  | 16,654  |                                       |         |         | 8,416   |         |      |         | 16,184  |        |         |         | 15,234   |   |        |           | 25,529  |  
|Depreciation and amortization                                                        |  |                                  |                                  | 43,583  |                                       |         |         | 32,688  |         |      |         | 18,323  |        |         |         | 26,272   |   |        |           | 29,958  |  
|General and administrative                                                           |  |                                  |                                  | 12,689  |                                       |         |         | 12,420  |         |      |         | 11,269  |        |         |         | 10,486   |   |        |           | 10,773  |  
|Provision for loss on lease obligation                                               |  |                                  |                                  |        |                                       |         |         |        |         |      |         |        |        |         |         | 6,229    |   |        |           |        |  
|Loss (gain) on disposal/write down of                                                |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|assetsnet                                                                           |  | 289                              |                                  | (19,516 | )                                     | 10,814  |         | 48,692  |         |      |         | (6,485  | )     
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |        
|Total operating expenses                                                             |  | 160,150                          |                                  | 108,082 |                                       | 111,806 |         | 171,318 |         |      |         | 136,499 |       
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |        
|Operating income (loss)                                                              |  |                                  |                                  | 38,902  |                                       |         | 101,854 |         |         |      | 75,238  |         |        | (55,326 | )       |          |   | 12,729 |          
|Loss on disposal/write down of investments                                           |  |                                  |                                  | (675    | )                                     |         |         | (1,617  | )       |      |         | (2,971  | )      |         |         | (7,771   | ) |        |           |        |  
|Interest expense                                                                     |  |                                  |                                  | 24,845  |                                       |         |         | 20,921  |         |      |         | 27,260  |        |         |         | 17,945   |   |        |           | 11,118  |  
|(Benefit) provision for income taxes                                                 |  |                                  |                                  | (1,406  | )                                     |         |         |        |         |      |         |        |        |         |         | 475      |   |        |           | (37,158 | )
|Equity (loss) in operations of joint ventures                                        |  |                                  |                                  |        |                                       |         |         | 222     |         |      |         | 3,227   |        |         |         | (510     | ) |        |           | 3,684   |  
|Income (loss) before extraordinary loss and                                          |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|cumulative effect of change in accounting                                            |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|principle                                                                            |  |                                  |                                  | 15,469  |                                       |         |         | 82,344  |         |      |         | 53,085  |        |         | (81,781 | )        |   |        | 42,917    |        
|Extraordinary loss                                                                   |  |                                  |                                  |        |                                       |         |         |        |         |      |         |        |        |         |         | (1,253   | ) |        |           |        |  
|Cumulative effect of change in accounting                                            |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|principles                                                                           |  |                                  |                                  |        |                                       |         |         |        |         |      |         |        |        |         |         | 2,729    |   |        |           |        |  
|Net income (loss)                                                                    |  | $                                |                                  | 15,469  |                                       | $       |         | 82,344  |         | $    |         | 53,085  |        | $       | (80,305 | )        | $ |        | 42,917    |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |  
|Basic Earnings (Loss) Per Common Share:                                              |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Income (loss) before extraordinary loss and                                          |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|cumulative effect of change in accounting                                            |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|principle                                                                            |  | $                                |                                  | 0.22    |                                       | $       |         | 1.22    |         | $    |         | 0.94    |        | $       |         | (1.94    | ) | $      |           | 1.01    |  
|Net income (loss)                                                                    |  | $                                |                                  | 0.22    |                                       | $       |         | 1.22    |         | $    |         | 0.94    |        | $       |         | (1.90    | ) | $      |           | 1.01    |  
|Diluted Earnings (Loss) Per Common Share:                                            |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Income (loss) before extraordinary loss and                                          |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|cumulative effect of change in accounting                                            |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|principle                                                                            |  | $                                |                                  | 0.22    |                                       | $       |         | 1.21    |         | $    |         | 0.93    |        | $       |         | (1.94    | ) | $      |           | 1.00    |  
|Net income (loss)                                                                    |  | $                                |                                  | 0.22    |                                       | $       |         | 1.21    |         | $    |         | 0.93    |        | $       |         | (1.90    | ) | $      |           | 1.00    |  
|Weighted average shares outstanding:                                                 |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Basic                                                                                |  |                                  |                                  | 70,628  |                                       |         |         | 67,518  |         |      |         | 56,657  |        |         |         | 42,250   |   |        |           | 42,671  |  
|Diluted                                                                              |  |                                  |                                  | 70,832  |                                       |         |         | 67,892  |         |      |         | 56,940  |        |         |         | 42,250   |   |        |           | 42,860  |  
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |  
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Balance Sheet Data:                                                                  |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Cash and cash equivalents                                                            |  | $                                |                                  | 40,890  |                                       | $       |         | 17,730  |         | $    |         | 35,328  |        | $       |         | 7,381    |   | $      |           | 22,698  |  
|Assets to be disposed of                                                             |  |                                  |                                  |        |                                       |         |         |        |         |      |         |        |        |         |         | 90,996   |   |        |           |        |  
|Vessels and other propertynet                                                       |  |                                  | 864,953                          |         |                                       | 705,030 |         |         | 484,510 |      |         | 291,416 |        |         |         | 393,862  |  
|Construction in progress (new
       buildings)                                      |  |                                  |                                  | 37,857  |                                       |         |         | 84,736  |         |      |         | 2,905   |        |         |         | 25,340   |   |        |           | 34,733  |  
|Total assets                                                                         |  |                                  | 989,621                          |         |                                       | 875,627 |         |         | 591,504 |      |         | 472,415 |        |         | 530,127 |         
|Long-term debt                                                                       |  |                                  | 477,959                          |         |                                       | 392,316 |         |         | 275,986 |      |         | 212,913 |        |         | 225,653 |         
|Total stockholders equity                                                           |  |                                  | 437,822                          |         |                                       | 401,816 |         |         | 254,703 |      |         | 171,766 |        |         | 245,183 |         
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |         
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|Other Data:                                                                          |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|TCE revenue (1)                                                                      |  | $                                | 163,468                          |         | $                                     | 177,733 |         | $       | 161,125 |      |         | $       | 90,479 |         | $       | 111,711  |  
|                                                                                     | 
|(1) Time charter equivalent (TCE) revenue is voyage revenues less voyage expenses. |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |        
|                                                                                     |  |                                  | For the Years Ended December 31, |        
|                                                                                     |  |                                  |                                  |        
|                                                                                     |  |                                  | 2002                             |         |                                       | 2001    |         |         | 2000    |      |         | 1999    |        | 1998    |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |        
|Voyage revenues                                                                      |  | $                                | 198,925                          |         |                                       | $       | 209,463 |         |         | $    | 187,044 |         |        | $       | 115,992 |          | $ |        | *149,228* |        
|Voyage expenses                                                                      |  |                                  | 35,457                           |         |                                       | 31,730  |         |         | 25,919  |      |         | 25,513  |        |         |         | *37,517* |  
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |        
|TCE revenue                                                                          |  | $                                | 163,468                          |         |                                       | $       | 177,733 |         |         | $    | 161,125 |         |        | $       | 90,479  |          | $ |        | 111,711   |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |        
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|                                                                                     |  |                                  |                                  |         |                                       |         |         |         |         |      |         |         |        |         |         |          |   |        |           |         |   | 
|11                                                                                   | 

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Item 7.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 consolidated financial statements, accompanying notes thereto and other financial information appearing elsewhere in this Form 10-K.

The information in this Management Discussion and Analysis and elsewhere in this document contains certain forward-looking statements, which reflect the current view of the Company with respect
to future events and financial performance. Wherever used, the words believes, estimates, expects, plan anticipates and similar expressions identify forward-looking statements. Any such
forward-looking statements are subject to risks and uncertainties that could cause the actual results of the Companys results of operations to differ materially from historical results or current expectations. The Company does not publicly
update its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

General

Consolidated Results

OMIs net income was $15.5 million or $0.22 basic and diluted earnings per share (EPS) for the year ended December 31, 2002 compared to net income of $82.3 million or $1.22
basic and $1.21 diluted EPS for the year ended December 31, 2001.

Consistent with industry practice, we use time charter equivalent (TCE) revenue (voyage revenues less voyage expenses) or TCE rate calculations 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 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.

The Company earned TCE revenues of $163.5 million for the year ended December 31, 2002. TCE revenue comprises time charter revenue (TC revenue) and voyage revenue less voyage
expenses from vessels operating in the spot market. TC revenue is revenue earned by vessels under contract for a specific period in time with duration usually greater than one year. For the year ended December 31, 2002, 55 percent or $90.4 million
of TCE revenue was generated by time charters ($78.5 million by the Clean Fleet and $11.9 million by the Crude Oil Fleet) and $73.1 million was generated by voyage charters ($18.5 million by the Clean Fleet; $54.6 million by the Crude Oil
Fleet).

Our business strategy blends 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, ultra large crude carrier (ULCC) and from profit sharing arrangements for five of the product carriers on time charter. Currently, 19 vessels of our 38 vessels operate on time charters. However, the majority
of our tonnage, including all of our Suezmaxes, operates in the spot market, giving us the ability to take advantage of increases in rates while protecting our downside. Five long-term contracts have profit sharing arrangements (long-term contracts
that have a floor rate and profit sharing without a cap). In 2004, three product carrier newbuildings will commence five-year time charters with profit sharing arrangements upon delivery. These profit sharing arrangements enable us to take advantage
of upturns in the markets. The contracted time charter revenue scheduled below does not include any profit sharing in the future periods for the vessels eligible for profit sharing; however, profit sharing of $4.4 million earned by the five vessels
for the year ended December 31, 2002 is included. Projected requirements for off hire relating to drydock are included. The following reflects our contracted TC revenue through 2006.

12

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|(In millions)         | 2000  | 2001  | 2002  | 2003   | 2004  | 2005  | 2006 
|--------------------- | ----- | ----- | ----- | ------ | ----- | ----- | -----
|                      |       |       |       |        |       |       |      
|TC Revenue            | $16.3 | $43.5 | $90.4 | $101.7 | $99.0 | $52.4 | $33.3
|Number of Vessels (a) | 5     | 14    | 17    | 20(b)  | 14(c) | 9(d)  | 5(e) 

|   
|---
|(a)
|(b)
|(c)
|(d)
|(e)

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 offhire
relating to drydock. We intend to time charter the nine vessels, that expire beginning in 2004 at opportunistic times when attractive rates are available.

OMIs Fleet

OMIs fleet currently comprises 38 vessels (including two product carriers delivered in January and March 2003) aggregating approximately 2.8 million dwt, consisting of Suezmaxes,
Panamaxes (carrying crude oil), handysize and handymax product carriers and a ULCC as follows:

|                                                                                                                                              |  | Number     |  |                 | 
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | --------------- | 
|                                                                                                                                              |  | of Vessels |  | dwt             | 
|                                                                                                                                              |  |            |  |                 | 
|Crude Oil Fleet:                                                                                                                              |  |            |  |                 | 
|                                                                                                                                              |  |            |  |                 | 
|1998-2002 built Suezmax vessels                                                                                                               |  | 6          |  | 157,000-160,000 | 
|1999-2000 Suezmax vessels chartered-in                                                                                                        |  | 2          |  | 157,000         | 
|1993 built crude tankers                                                                                                                      |  | 2          |  | 36,000          | 
|1980s built Panamax vessels                                                                                                                  |  | 3          |  | 66,000          | 
|1986 built ULCC                                                                                                                               |  | 1          |  | 322,000         | 
|                                                                                                                                              |  |            |  |                 | 
|Total Crude Oil Fleet                                                                                                                         |  | 14         |  |                 | 
|                                                                                                                                              |  |            |  |                 | 
|Product Carrier (Clean) Fleet:                                                                                                              |  |            |  |                 | 
|                                                                                                                                              |  |            |  |                 | 
|2000-2003 built handymax product                                                                                                              |  | 6          |  | 47,000          | 
|1995 built handymax product chartered-in                                                                                                      |  | 1          |  | 45,000          | 
|1999-2002 built handysize product                                                                                                             |  | 10         |  | 35,000-37,000   | 
|1984-1991 built handysize product (1)                                                                                                         |  | 7          |  | 29,000-30,000   | 
|                                                                                                                                              |  |            |  |                 | 
|Total Product Carrier Fleet                                                                                                                   |  | 24         |  |                 | 
|                                                                                                                                              |  |            |  |                 | 
|                                                                                                                                              |  |            |  |                 | 
|(1) During March 2003, we agreed
        to sell two single-hull product carriers with expected delivery dates
        of April and May 2003. | 
|                                                                                                                                              |  |            |  |                 | 



13

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Our Company objective is to operate a high quality, well-maintained, modern fleet of vessels concentrated in the crude oil and product carrier markets. 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.
- An increasing number of countries are excluding 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.
- Maintaining a modern fleet is central to our strategy of seeking long-term charters to provide cash flow stability.

In recent years while seeking to modernize and increase the size of our fleet, in addition to ordering vessels directly from the shipyard, we took opportunities to purchase rights from other
shipowners to obtain vessels upon delivery from shipyards. By doing so, we obtained earlier access to the vessels than we would have if we ordered them from the shipyards, and increased the size of our fleet without increasing the supply of
tonnage.

OMI has the following double hulled vessels under construction (after the delivery of two handymax product carriers in January and March 2003):

|                  |  |                |  | Date To Be |  |         |  | Charter    | 
|----------------- |  | -------------- |  | ---------- |  | ------- |  | ---------- | 
|Name of Vessel    |  | Type of Vessel |  | Delivered  |  | Dwt     |  | Expiration | 
|                  |  |                |  |            |  |         |  |            | 
|OTTAWA            |  | Panamax        |  | 4/2003     |  | 70,100  |  | 4/2008     | 
|TAMAR             |  | Panamax        |  | 7/2003     |  | 70,100  |  | 7/2008     | 
|LOIRE(1)          |  | Handysize      |  | 4/2004     |  | 37,000  |  | 4/2009     | 
|GARONNE(1)        |  | Handysize      |  | 7/2004     |  | 37,000  |  | 7/2009     | 
|TO BE NAMED(1)(2) |  | Handysize      |  | 10/2004    |  | 37,000  |  | 10/2009    | 
|                  |  |                |  |            |  |         |  |            | 
|                  |  |                |  |            |  | 251,200 |  |            | 
|                  |  |                |  |            |  |         |  |            | 

|   
|---
|(1)
|   
|(2)

2002 ACTIVITIES

During 2002, the Company completed the following transactions:

- During September and October 2002, we took delivery of two Suezmax newbuildings.
- During October 2002, we chartered-in a handymax product carrier for one year.
- In June 2002, we exercised our option to reacquire the COLUMBIA and simultaneously sold the vessel to an unrelated party for $50.0 million. The vessel, renamed OLIVER JACOB, has been time chartered back for a period of
eight years (excluding options) and has been accounted for as an operating lease. The gain on the sale of approximately $4.7 million is being amortized over the charter period.
- In June 2002, we agreed to time charter two Panamax vessels to a major oil company for a period of five years from their delivery dates in 2003.
- In April 2002, we sold a 1988 built product carrier for $9.1 million and paid down related debt of $6.0 million.
- In January and March 2002, we took delivery of three 2002 built product carriers (two 47,000 dwt and one 37,000 dwt). Each vessel began a three year time charter upon delivery.

14

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Comparative 2002 versus 2001 Vessel Activities

We have increased the size of our fleet from 22 vessels at the beginning of 2001 to 36 vessels at the end of 2002. There were 21 acquisitions (including vessels chartered-in), which make up
more than 50 percent of the current fleet, and seven dispositions.

The net increase in operating days for the fleet was 2,912 of which 2,631 was an increase in operating days for the Clean Fleet and 281 for the Crude Oil Fleet for the year ended December 31,
2002 compared to the same period in 2001.

|                |  | DATE       |  |           |  | CHARTER
|--------------- |  | ---------- |  | --------- |  | -------
|ACQUIRED        |  | DELIVERED  |  | TYPE      |  | TYPE   
|                |  |            |  |           |  |        
|SOMJIN          |  | JAN. 2001  |  | Suezmax   |  | SPOT   
|RACER           |  | FEB. 2001  |  | Handysize |  | SPOT   
|RAIN            |  | MAR. 2001  |  | Handysize |  | SPOT   
|RADIANCE        |  | MAR. 2001  |  | Handysize |  | SPOT   
|RHONE           |  | APR. 2001  |  | Handysize |  | T/C    
|BANDAR AYU(1)   |  | JUN. 2001  |  | Handysize |  | T/C    
|TANDJUNG AYU(1) |  | JUN. 2001  |  | Handysize |  | T/C    
|MARNE           |  | SEPT. 2001 |  | Handysize |  | T/C    
|MADISON         |  | SEPT. 2001 |  | Handysize |  | T/C    
|CHARENTE        |  | SEPT. 2001 |  | Handysize |  | T/C    
|TRINITY         |  | OCT. 2001  |  | Handysize |  | T/C    
|ASHLEY          |  | NOV. 2001  |  | Handysize |  | T/C    
|OHIO            |  | DEC. 2001  |  | Handysize |  | T/C    
|MAX JACOB(2)    |  | DEC. 2001  |  | Suezmax   |  | SPOT   
|AMAZON          |  | JAN. 2002  |  | Handymax  |  | T/C    
|SAN JACINTO     |  | MAR. 2002  |  | Handymax  |  | T/C    
|ORONTES         |  | MAR. 2002  |  | Handysize |  | T/C    
|OLIVER JACOB(3) |  | JUN. 2002  |  | Suezmax   |  | SPOT   
|DAKOTA          |  | SEPT. 2002 |  | Suezmax   |  | SPOT   
|DELAWARE        |  | OCT. 2002  |  | Suezmax   |  | SPOT   
|JAG PRATAP(4)   |  | OCT. 2002  |  | Handymax  |  | T/C    
|DISPOSALS       |  | DATE       |  | TYPE      |  |        
|                |  |            |  |           |  |        
|HARRIET(5)      |  | JAN. 2001  |  | Suezmax   |  |        
|ALTA(5)         |  | MAR. 2001  |  | Suezmax   |  |        
|RADIANCE        |  | MAY 2001   |  | Handysize |  |        
|LOIRE           |  | JUN. 2001  |  | Suezmax   |  |        
|SOYANG(2)       |  | DEC. 2001  |  | Suezmax   |  |        
|LIMAR           |  | APR. 2002  |  | Handysize |  |        
|COLUMBIA(3)     |  | JUN. 2002  |  | Suezmax   |  |        

|   
|---
|(1)
|(2)
|(3)
|(4)
|(5)

15

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Market Overview

Suezmax Tanker Overview

After a difficult tanker market in the first three quarters of 2002, TCEs for crude carriers recovered sharply and average Suezmax tanker TCEs in the fourth quarter were more than double those
of the preceding quarter and 50% higher than the same quarter a year ago. Freight rates in the crude tanker market have remained strong thus far in 2003. The crude tanker market improvement has been the result of higher world oil demand due to some
improvement in world economic activity, colder than normal weather this winter at a time of very low oil inventory levels, problems in Japans nuclear power plants and a substantial increase in ton miles resulting from the substitution of
long-haul Middle East OPEC production for loss of short-haul Venezuela oil production due to a general strike. In addition, the tanker fleet increased by a relatively small amount of tonnage in 2002 at a time when the sinking of the old aframax
tanker PRESTIGE off Spain last October has resulted in increased demand for modern tonnage.



Note: As at 12/31/02Source: Clarkson Research Studies, London. PIRA Energy Group

The average OPEC crude oil production in the fourth quarter 2002 totaled about 26.6 million barrels per day (b/d), down by 0.3 million b/d compared to the same period last year, as
a result of the substantial reduction of oil production in Venezuela due to a workers strike. At the same time, the average crude oil output by the long-haul Middle East OPEC producers totaled 18.9 million b/d, up by 0.6 million b/d compared
to the same time a year ago. This was due to Middle East OPEC members effort to produce more oil to replace the lost Venezuelan oil, alleviate the related effect of reduced Venezuelan production on oil prices and prevent consuming countries
from releasing strategic oil stocks. The long-haul OPEC countries have indicated that they will continue to produce more oil in the foreseeable future, affecting positively the demand for tankers, as oil production in Venezuela is recovering slowly
to its previous level of about 3.1 million b/d. Crude oil production in the United States of America totaled about 5.9 million b/d in 2002 and is expected to remain at about the same level in 2003.

World oil demand in 2002, for the third year in a row, increased marginally year-on-year due to slow world economic growth. World oil demand is expected to increase by about 1.6 million b/d, or
by 2.0% in 2003, mainly reflecting expected improvement in world economic activity and substitution of distillates for natural gas in North America due to the tight natural gas market.

16

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At the end of February 2003, estimated commercial crude oil inventories in the three major consuming areas (the United States, Western Europe and Japan) were about 100 million barrels or 12.8%
below year ago levels, and were at their lowest level in at least the last ten years with the entire decrease in the Atlantic Basin.



The world tanker fleet totaled 279.8 million dwt at the end of 2002, up by 3.1 million dwt or 1.1% from the year-end 2001 level. The tanker orderbook totaled 61.2 million dwt, or 21.9% of the
existing fleet at the end of 2002. Approximately 32.1 million dwt are for delivery in 2003, 22.4 million dwt in 2004 and most of the balance in 2005. The tanker orderbook includes 53 Suezmaxes of about 8.3 million dwt or 23.4% of the existing
internationally trading Suezmax tanker fleet.

At the end of 2002 approximately 55.6 million dwt or 19.9% of the total tanker fleet was 20 or more years old, including 26.5 million dwt or 9.5% of the fleet which was 25 or more years old.
Furthermore, 26 Suezmaxes were 20 or more years old, including 17 which were 25 or more years old.

As a result of the low tanker freight environment through early October 2002, tanker sales for scrap and for Floating Production Storage Offloading conversion for the year were relatively high
reaching about 20.6 million dwt. High freight rates thus far in 2003 have reduced sales of tankers for scrap and FPSO conversion to about 2.2 million dwt, including three Suezmaxes and three VLCCs. However, 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 recent sinking off Spain of the 26 year old Aframax tanker PRESTIGE and the extensive pollution of a substantial portion of the Spanish coast, the Commission of the European
Communities (the Commission) has urged its member states to ban from European ports single-hull tankers carrying heavy fuel oil, heavy crude oil, bitumen and tar. Furthermore, the Commission has proposed measures which would accelerate
the phase-out of single-hull tankers, prior to the timetable set forth in the April 2001 IMO regulation. At the end of 2002, there were 114.6 million dwt single hull tankers or 41% of the total tanker fleet, which would be affected if the proposed
accelerated phase-out measures are adopted. Finally, the commission has proposed 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. The Commission has urged its member states to approve these measures by the end of March 2003 and adopt them early in the
summer this year.

17

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Product Tanker Overview

The product tanker market weakness which began more than a year ago continued through October 2002, when TCEs for handysize product tankers in the Caribbean fell to the lowest level in the last
three years. This was due to slow world economic growth resulting in fewer cargo movements. TCEs for product tankers increased in the last two months of 2002 and thus far in 2003 mainly due to colder than normal winter and increased movements of
heating oil as well as the need to replace short-haul product imports to the United States with long-haul imports due to political problems in Venezuela.

The world product tanker fleet totaled about 48.9 million dwt at the end of 2002, up by about 1.2% from year-end 2001 level. The product tanker orderbook totals about 17.4 million dwt, or about
35.6% of the existing product tanker fleet at the end of 2002. Approximately 7.5 million dwt are for delivery in 2003, 7.6 million dwt in 2004 and most of the balance in 2005. At the end of 2002, 11.5 million dwt or 23.5% of the existing fleet is 20
or more years old. It is likely that the product tanker fleet will grow substantially, given the high orderbook for delivery in the next two years, unless scrappings accelerate.

At the end of February 2003, total estimated commercial inventories for all oil products in the United States, Western Europe and Japan were 97 million barrels or 6.9% lower than the same time
a year ago, with distillates down by 10.2% and gasoline down by 6.3%. This has been the result of the cold winter in the Northern Hemisphere, high refinery maintenance in the United States in the first quarter 2003 and very tight North American
natural gas markets which have resulted in substitution of distillates for natural gas.



With low gasoline stocks in the Atlantic Basin and seasonal gasoline demand gains as the driving season approaches, the gasoline market is expected to support the product tanker market in the
foreseeable future. In the longer term, improvement in world economic activity, the shortage of refinery capacity in North America, Western Europe and Asia and expansion of refinery capacity in the Middle East and Latin America should increase
demand for product tankers.

The tanker market is expected to be good for shipowners in the short term as a result of higher oil production by the long haul Middle East OPEC producers to offset the loss of short-haul
Venezuelan oil production, low crude oil and petroleum products inventories, and from uncertainty in the oil markets due to increased political instability in the Middle East. For the balance of 2003, given the high tanker orderbook for delivery
this year, the level of tanker rates will depend on the level of world economic activity and oil demand growth as well as tanker scrappings.

18

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Critical Accounting Estimates

The policies discussed below are considered by management to be critical to understanding OMIs financial statements and accompanying notes prepared in accordance with accounting
principles generally accepted in the United States of America (U.S. GAAP). The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements. Our
significant accounting policies are disclosed in Note 1 to our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that
are inherently uncertain. Our most critical accounting estimates include: revenue/expense recognition for voyage charters, vessel impairments, depreciation expense, drydock amortization, and carrying value of investments. Below, we discuss these
estimates further, as well as the estimates and judgments involved. We also have other policies that we consider to be key accounting policies, such as our policy for revenue recognition for profit sharing for time charters; however, this policy
does not meet the definition of critical accounting estimates because it does not generally require us to make estimates or judgments that are difficult or subjective. The following policies are determined by management and have been reviewed by
OMIs Audit Committee.

Revenue Recognition

Revenue generated by voyage charters net of voyage expenses for the year ended December 31, 2002, was 45% of our consolidated TCE revenues. When spot rates are higher, which they have been
historically, more than 50% of consolidated TCE revenues may be generated by voyage charters. 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. Voyage expenses, such as fuel and port charges, are recognized ratably over the duration of the
voyage. OMI recognizes voyage revenues and voyage expenses on the percentage of completion method of accounting. The percentage of completion method is the most prevalent method of accounting for voyage revenues and expenses. Estimated losses under
a voyage charter are provided for in full at the time such losses become evident. Vessels in the spot market may also spend time idle or laid up as they await business.

Revenue recognition for voyage charters may be calculated on either a load-to-load basis or on a discharge-to-discharge basis. As of January 1999, OMIs accounting policy for recognition
of voyage freight for vessels operating on voyage charters is on the discharge-to-discharge basis. Under this method, voyage revenue is recognized evenly over the period from the departure of a vessel from its prior discharge port to departure from
the next discharge port. Management believes that the discharge-to-discharge method is preferable because it eliminates the uncertainty associated with the location of the next load port. The method is the predominant one used by shipowners.

Management uses judgment to estimate the number of days to the vessels next discharge port to compute the amount of revenue and expense to recognize for voyages in progress at the end of each
month using the percentage of completion method on a discharge-to-discharge basis. Management uses assumptions to determine these estimates that are supported by historical trends, more specifically about the operating capacity of the vessel (speed
and fuel consumption) and about the trading route and port. Actual results could differ from accruals that are included in the consolidated balance sheets as Traffic receivables, Prepaid expenses and other current assets and Accrued voyage and
vessel liabilities, and as, Revenues and Voyage expense categories included in the consolidated statements of income that are estimates in a period.

Vessel Impairments and Depreciation Expense

Vessels and construction in progress (CIP) payments are recorded at cost. Expenditures for maintenance, repairs and minor renewals are expensed. Major replacements and renewals are
capitalized. At December 31, 2002, the Companys carrying amount of vessels and CIP was $901.6 million. The carrying values of the Companys vessels and CIPs may not represent their fair market value at any point in time since the market
prices tend to fluctuate with changes in charter rates and the cost of newbuildings. Management reviews vessels for impairment annually or when events or circumstances indicate that their value may have declined. In order to evaluate impairment of
the vessels, assumptions about the future condition of the vessel and its operations are made. These assumptions are applied in a model in which we estimate the projected future cash flows associated with the vessel and comparisons to the
vessels

19

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carrying value to determine if a write down to fair value is required. This evaluation process involves subjective assumptions about future events and discount factors to be applied to projected cash flows. Estimated values
can be affected by many factors beyond the companys control such as the overall market and economic trends, government regulation, and other changes. Management believes that the assumptions made to evaluate the vessels impairment are
appropriate and reasonable. However, changes in circumstances or conditions affecting these assumptions could result in impairment charges in future periods that may be material.

Salvage value is based upon a vessels lightweight tonnage (LWT) multiplied by a scrap rate. OMI uses a scrap rate of $175 per LWT to compute each vessels salvage value.
The estimated scrap value is used in the computation of depreciation expense and recoverability of the carrying value of each vessel when evaluating for impairment of vessels. Managements estimates for salvage values may differ from actual
results.

Depreciation for financial reporting purposes is provided on the straight-line method based on the estimated useful lives of the assets up to the assets estimated salvage value. We
estimate the useful lives of the vessels to range from 20 to 25 years. In the shipping industry, use of a 25 year life has become the standard. Managements judgment is required in the determination of the estimated depreciable lives that are
used to calculate the annual depreciation expense and accumulated depreciation. It is anticipated that the Commission will require stricter requirements for single-hull vessels that could result in accelerated depreciation expense for three of
OMIs older vessels. If such proposals were enacted into law in 2003, OMI may be required to record additional expense of approximately $2.4 million (reducing EPS by $0.03) in 2003.

Drydock Amortization

Drydock costs and special surveys are capitalized and are amortized over the period between drydocks and special surveys, which is generally a two to three year period. The drydock amortization
expense was $3.8 million in 2002 and is included in Depreciation and amortization expense.

In 1997, the Company changed its method of accounting for special survey and drydock expenses from the accrual method to the prepaid method. Special survey and drydock expenses had been accrued
and charged to operating expenses over the vessels survey cycle. Under the prepaid method, survey and drydock expenses are capitalized and amortized over two to three year period until the next cycle. Management believes the prepaid method
better matches costs with revenues and minimizes any significant changes in estimates associated with the accrual method, including the disposal of a vessel before a drydock, which has been accrued for, is performed. Management uses judgment when
estimating the period between drydocks or surveys performed, which can result in adjustments to the estimated amortization of drydock expense. If the vessel is disposed of before the next drydock, the remaining balance in prepaid drydock is
written-off to (gain) loss on disposal of vessels in the period when contracted.

Impairment of Investments in Equity Securities

We had investments in equity securities currently in two companies, one of which was publicly traded on a foreign exchange. We reviewed these investments and others previously that have been
disposed of, each quarter to evaluate our ability to recover our investments. We record an impairment charge if the fair value of the investment has declined below our carrying value, and that decline is viewed to be other than temporary.

For publicly traded companies, the fair value of the equity securities is determined by multiplying the number of shares we own by the stock price. For companies that are not publicly traded,
we prepare discounted cash flow analyses to compute an estimate of the fair value of the investment. Since we generally do not have access to internal projections of those companies, we prepare projections based on information that is publicly
available. We use judgment in computing the fair value based on our evaluation of the investee and establishing an appropriate discount rate and terminal value to apply in the calculations. In selecting these and other assumptions, we consider the
investees ability to execute their business plan successfully, including their ability to obtain required funding, general market conditions, and industry considerations specific to their business. It is likely that we could compute a
materially different fair value for an investment if different assumptions were used or if circumstances were to change.

20

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During 2002, as part of the ongoing evaluation of our ability to recover our investments, we calculated the current fair value based on the publicly traded stock price for one company,
considered the other public information available and assessed the business plan of the other investment not publicly traded. We then made an assessment as to whether the decline in the value of these investments was other than temporary. We also
assessed future business prospects for the companies and reviewed information regarding market and industry trends for their businesses. We concluded, based on our assumptions and best judgments an impairment charge was required and we recorded a
loss on such investments of $1.1 million.

Results of Operations

Results of operations include operating activities of our vessels. The following discussion explains our vessel operating results by fleet in terms of TCE revenue, defined previously, less
vessel expenses, charter hire expense and depreciation and amortization expense.

In recent years, OMI has been securing certain vessels on long-term time charter contracts. Currently, 19 of OMIs 38 vessels are performing on time charters greater than one year. This
represents half of the operating days of the fleet. The crude oil fleet, however, operates primarily in the spot market, with the exception of two crude oil carriers acquired in June 2001 with time charters. In the discussion that follows, total
operating days are net of offhire days, which are any days that the vessel is not generating revenue due to drydock, special surveys, repairs and initial positioning of the vessel.

Vessel expenses include operating expenses such as crew wages and other related costs, stores, routine maintenance and repairs, insurance and miscellaneous. These expenses are a function of the
fleet size, utilization levels for certain expenses, requirements under laws, and by charterer and our standards.

Insurance expense varies with overall insurance market conditions as well as the insureds loss record, level of insurance and desired coverage. We locked in rates with modest increases
for most of our hull and machinery coverage (i.e., asset insurance), and protection and indemnity coverage (liability insurance provided by P&I Clubs) with multi-year contracts in 2001, which also cover the new vessels that we have
on order. However, one of OMIs P&I Clubs, which is a mutual indemnity provider, assessed its members additional amounts for several past years due to their current financial needs resulting from the current poor investment markets and an
increased level of claims. Certain other insurances, such as war risk, a portion of which are passed on to charterers, also increased. As a result insurance expense increased in 2002 compared to 2001.

OMIs vessels are technically managed (excluding insurance provided for vessels, which is managed directly by OMI) by a wholly owned subsidiary, OMI Marine Services LLC (OMS),
located at offices in Stamford, Connecticut and Houston, Texas. OMS subcontracts several of the day-to-day operations to OMI Crewing Services Ltd. (OMCI), located in Mumbai, India (not a related party to OMI or any of its subsidiaries).
OMCI is primarily responsible for the crewing, general maintenance and repairs, and the stocking of supplies on vessels.

Under the direction of OMS, OMCI purchases stores and spares for all vessels that they manage (OMCI manages all of OMIs owned vessels with the exception of the two handysize crude oil
tankers). OMS is also responsible for the drydocking of the vessels, including scheduling the drydocks and obtaining bids. OMI is kept apprised of all drydocking schedules and approves all related costs. 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 covered under the process of Advances to Masters (which includes
cash reserve on board, cash for bonded stores and provisions purchases and other items).

For the Year Ended December 31, 2002 Versus December 31, 2001

Results of Operations of Our Vessels

TCE revenue of $163.5 million for the year ended December 31, 2002 decreased by $14.2 million, from $177.7 million in 2001.Vessel expenses and charter hire expenses increased an aggregate of
$17.3 million and depreciation and amortization increased $10.9 million during the year ended December 31, 2002 compared to the year ended 2001.

21

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Decreases in TCE revenue of $14.2 million for the year ended December 31, 2002 compared to the prior year 2001, were attributed primarily to decreases in:

|(a) |  | the Suezmax fleet by $27.9 million and Panamax fleet by $7.9 million resulting from a significant decline in rates during 2002 compared to 2001. Rates began to decline during the second half of 2001 and
continued throughout most of 2002. Toward the end of the fourth quarter of 2002, rates began to improve again. Additionally, although there were eight Suezmax vessels at December 31, 2002 compared to six at December 31, 2001, there were 77 fewer
operating days in 2002 compared to 2001. There were more operating days in aggregate for the vessels sold or redelivered in 2001 than there were in 2002 for the vessels delivered in the second half of the year.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | the product carriers operating in the spot market which declined by $21.5 million because of lower rates earned by the older single hull vessels during 2002 compared to 2001 coupled with 371 fewer
operating days in 2002 (292 fewer days due to the sale of a vessel earlier in 2002, 182 fewer days due to a vessel that went on a time charter in mid-2001, 38 more offhire days for drydock in 2002 offset by 68 days for the vessel chartered-in
October 2002 and 73 days for the second hand vessels delivered during February and March 2001).                                                                                                                            
|(c) |  | the ULCC TCE revenues by $8.4 million because of unemployment of the vessel for a significant portion of the year and a decline in spot rates for most of 2002 compared to 2001. During October 2002, the
vessel began a profitable time charter that currently expires in April 2003.                                                                                                                                                                                                                                                                                                                                                                                             

Decreases in TCE revenue during the year ended December 31, 2002 were partially offset by increases of $46.0 million from product carriers operating on time charters for 2,781 more operating
days in 2002. Three vessels were acquired in 2002 (939 more days in 2002); and there were 1,842 more days in 2002 attributed to seven vessels acquired during 2001 and 183 more days for a vessel previously operating in the spot market in 2001 which
began a time charter mid-year 2001. Additionally, TCE revenue increased by $5.6 million for the two handysize crude oil carriers acquired in June 2001, which operated for 340 more days during 2002.

Vessel expenses and charter hire expense increased $17.4 million for the twelve months ended December 31, 2002. Vessel expenses increased approximately $9.2 million primarily from additional
vessel costs for the vessels acquired and increased charter hire expense of $8.2 million during 2002 compared to 2001 for two vessels chartered-in, one in December 2001, and the other in October 2002. Depreciation and amortization expense increased
$10.9 million for the year ended December 31, 2002 because of the acquisition of vessels and increased amortization for drydock expense for drydocks performed in 2002 and 2001.

Other Operating Expenses

The Companys operating expenses, other than voyage, vessel, charter hire and depreciation and amortization, consist of G&A expenses and loss (gain) on disposal/write down of
assetsnet. For the year ended December 31, 2002, other operating expenses increased by $20.1 million primarily from gains on disposals of $19.5 million in 2001 versus a loss on disposals in 2002 of $0.3 million, in addition to $0.3 million
increase in G & A expense in 2002.

The Loss (gain) on disposal/write down of assetsnet for the year ended December 31, 2002 of $0.3 million was primarily from the sale of a 1988 product carrier in April 2002. The gain on
disposal in 2001 of $19.5 million resulted from the sale of two vessels. The sale of a Suezmax vessel resulted in a gain of $17.4 million while the sale of a product carrier resulted in a gain of $0.6 million. There was also a gain of $1.5 million
from the early termination of two time charters.

Other (Expense) Income

Other (expense) income consists of loss on disposal/write down of investments, interest expense, interest income and othernet. Net other expense increased by $5.1 million from $19.7
million during the year ended December 31, 2001 to $24.8 million for the year ended December 31, 2002.

22

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Loss on disposal/write down of investments of $0.7 million for the year ended December 31, 2002 related primarily to the write down of two investments aggregating approximately $1.1 million
offset partially by the gain from the sale of a marketable security. Loss on disposal/write down of investments was approximately $1.6 million for the year ended December 31, 2001. The 2001 loss relates to the reserve for a loss on investment during
the winding down of a joint venture.

Interest expense of $24.8 million for the year ended December 31, 2002, increased $3.9 million from $20.9 million for the year ended December 31, 2001. The net increase was primarily due to
interest expense on the financing for vessel acquisitions. The average outstanding debt in 2002 was higher than 2001 due to additional borrowings for acquisitions which exceeded repayments from the disposal of vessels.

Interest income of $0.7 million for the year ended December 31, 2002, decreased $1.4 million from $2.1 million for the year ended December 31, 2001 because average cash balances were lower in
2002 compared to 2001, interest rates were lower, and the balances in interest earning long-term notes receivable were less in 2002.

Other-net decreased $0.7 million for the year ended December 31, 2002. The balance in 2001 was primarily the result of insurance settlements of claims on various vessels during the year ended
December 31, 2001.

Income Tax Benefit

The income tax benefit of $1.4 million for the year ended December 31, 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.

OMI is a Marshall Islands Corporation. Pursuant to various tax treaties and the current United States Internal Revenue Code, the Companys international shipping income prospectively is
not subject to federal income taxes in the United States of America.

Equity in Operations of Joint Ventures

Equity in operations of joint ventures decreased by $0.2 million for the year ended December 31, 2002 compared to the year ended December 31, 2001. The reduction was from the winding down of a
joint venture in prior years.

DETAILED OPERATING RESULTS BY MARKET SEGMENTS

The following discussion details the results of our vessels operations by our two segments, the crude oil tanker fleet and product carrier fleet. Vessel Operating Income by segment is defined
as, TCE revenue less vessel expenses, charter hire expense and depreciation and amortization expense.

23

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Crude Oil Tanker Fleet

|BREAKDOWNBYFLEET                                   |                     |         |        |   |        | 
|-------------------------------------------------- | ------------------- | ------- | ------ | - | ------ | 
|                                                   | For the Years Ended |        
|                                                   | December 31,        |        
|                                                   |                     |        
|In thousands, except daily rates & expenses,       | 2002                |         | 2001   |  
|number of vessels and operating days               |                     |         |        |  
|                                                   |                     |         |        |   |        | 
|Suezmaxes:                                         |                     |         |        |   |        | 
|TCE Revenue                                        | $                   | 41,730  |        | $ | 69,628 | 
|                                                   |                     |         |        |   |        | 
|Vessel Expenses                                    |                     | 8,678   |        |   | 10,642 | 
|Charter Hire Expense                               |                     | 15,703  |        |   | 8,416  | 
|Depreciation and Amortization                      | 9,694               |         | 10,972 |  
|                                                   |                     |         |        |  
|Vessel Operating Income                            | $                   | 7,655   |        | $ | 39,598 | 
|                                                   |                     |         |        |   |        | 
|Average daily TCE (Spot)                           | $                   | 17,952  |        | $ | 29,212 | 
|Average daily TCE (Time Charter Out)               |                     |        |        | $ | 17,232 | 
|Average daily operating expense                    | $                   | 4,821   |        | $ | 4,631  | 
|Number of vessels owned-end of period(1)           |                     | 6       |        |   | 4      | 
|Number of vessels chartered-in end of period(2)(3) |                     | 2       |        |   | 2      | 
|Number of operating days (Spot)                    |                     | 2,326   |        |   | 2,169  | 
|Number of operating days (Time Charter Out)        |                     |        |        |   | 234    | 
|ULCC:                                              |                     |         |        |   |        | 
|TCE Revenue                                        | $                   | 328     |        | $ | 8,752  | 
|                                                   |                     |         |        |   |        | 
|Vessel Expenses                                    |                     | 2,141   |        |   | 3,176  | 
|Depreciation and Amortization                      | 2,012               |         | 1,626  |  
|                                                   |                     |         |        |  
|Vessel Operating (Loss) Income                     | $                   | (3,825) |        | $ | 3,950  | 
|                                                   |                     |         |        |   |        | 
|Average daily TCE                                  | $                   | 898     |        | $ | 27,787 | 
|Average daily operating expense                    | $                   | 5,866   |        | $ | 8,701  | 
|Number of vessels owned-end of period              |                     | 1       |        |   | 1      | 
|Number of operating days                           |                     | 365     |        |   | 315    | 
|Panamaxes:                                         |                     |         |        |   |        | 
|TCE Revenue                                        | $                   | 12,509  |        | $ | 20,452 | 
|                                                   |                     |         |        |   |        | 
|Vessel Expenses                                    |                     | 6,515   |        |   | 6,630  | 
|Depreciation and Amortization                      | 5,396               |         | 3,432  |  
|                                                   |                     |         |        |  
|Vessel Operating Income                            | $                   | 598     |        | $ | 10,390 | 
|                                                   |                     |         |        |   |        | 
|Average daily TCE                                  | $                   | 11,835  |        | $ | 21,980 | 
|Average daily operating expense                    | $                   | 5,950   |        | $ | 6,055  | 
|Number of vessels owned-end of period              |                     | 3       |        |   | 3      | 
|Number of operating days                           |                     | 1,057   |        |   | 928    | 
|Handysize Product Carriers on Time Charter:        |                     |         |        |   |        | 
|TCE Revenue                                        | $                   | 11,924  |        | $ | 6,317  | 
|                                                   |                     |         |        |   |        | 
|Vessel Expenses                                    |                     | 2,363   |        |   | 1,136  | 
|Depreciation and Amortization                      | 2,855               |         | 1,534  |  
|                                                   |                     |         |        |  
|Vessel Operating Income                            | $                   | 6,706   |        | $ | 3,647  | 
|                                                   |                     |         |        |   |        | 
|Average daily TCE                                  | $                   | 16,334  |        | $ | 16,179 | 
|Average daily operating expense                    | $                   | 3,237   |        | $ | 2,913  | 
|Number of vessels owned-end of period(4)           |                     | 2       |        |   | 2      | 
|Number of operating days                           |                     | 730     |        |   | 391    | 
|Total Crude Fleet Vessel Operating Income          | $                   | 11,134  |        | $ | 57,585 | 
|                                                   |                     |         |        |   |        | 

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

|   
|---
|(1)
|(2)
|(3)
|(4)

24

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

Suezmaxes:The decrease in Vessel Operating Income of $31.9 million and $27.9 million in TCE revenues for this group was primarily the result of declines
in charter rates for Suezmaxes (see Market Overview) coupled with waiting/slow steaming days and 237 less operating days during 2002 due to the sale of a Suezmax vessel in June 2001 and vessels redelivered in 2001.

Charter hire expense increased $7.3 million for the year ended December 31, 2002 related to the sale and leaseback of two vessels, one in December 2001 and one in June 2002. Subsequent to the
sale of vessels, vessel expense and depreciation expense declined in the Suezmax fleet. Depreciation and amortization increased for the two vessels acquired in the second half of 2002.

ULCC:The decrease of $7.8 million in Vessel Operating Income and $8.4 million in TCE revenues resulted from a decline in charter rates coupled with the
unemployment of the ULCC vessel for a significant part of the year.

Panamaxes:The decrease of $9.8 million in Vessel Operating Income and $7.9 million in TCE revenues is attributable to a decline in charter rates coupled
with waiting/slow steaming days. Depreciation and amortization increased for all the vessels drydocked in 2001 and 2002.

Handysize Product Carriers on Time Charter:The increase of $3.1 million in Vessel Operating Income, $5.6 million in TCE revenues $1.2 million in vessel
expenses and $1.3 million in depreciation and amortization was attributable to two handysize crude oil carriers acquired in June 2001 (with 340 more operating days in 2002) that have continued on long-term time charters.

25

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Product Carrier Fleet

|BREAKDOWNBYFLEET                                |  |                     |        |       |   |        | 
|----------------------------------------------- |  | ------------------- | ------ | ----- | - | ------ | 
|                                                |  | For the Years Ended |       
|                                                |  | December 31,        |       
|                                                |  |                     |       
|In thousands, except daily rates & expenses,    |  |                     | 2002   |       |   | 2001   | 
|number of vessels and operating days            |  |                     |        |       |   |        | 
|Products-on-spot:                               |  |                     |        |       |   |        | 
|TCE Revenue                                     |  | $                   | 18,538 |       | $ | 40,018 | 
|                                                |  |                     |        |       |   |        | 
|Vessel Expenses                                 |  |                     | 10,647 |       |   | 11,849 | 
|Charter Hire Expense                            |  |                     | 951    |       |   |       | 
|Depreciation and Amortization                   |  | 6,416               |        | 7,106 |  
|                                                |  |                     |        |       |  
|Vessel Operating Income                         |  | $                   | 524    |       | $ | 21,063 | 
|                                                |  |                     |        |       |   |        | 
|Average daily TCE                               |  | $                   | 8,321  |       | $ | 15,451 | 
|Average daily operating expense                 |  | $                   | 4,701  |       | $ | 4,410  | 
|Number of vessels owned-end of period(1)        |  |                     | 6      |       |   | 7      | 
|Number of vessels chartered-in end of period(2) |  |                     | 1      |       |   |       | 
|Number of operating days                        |  |                     | 2,224  |       |   | 2,595  | 
|                                                |  |                     |        |       |   |        | 
|Products-on time charter:                       |  |                     |        |       |   |        | 
|TCE Revenue                                     |  | $                   | 78,438 |       | $ | 32,468 | 
|                                                |  |                     |        |       |   |        | 
|Vessel Expenses                                 |  |                     | 21,307 |       |   | 9,228  | 
|Depreciation and Amortization                   |  | 16,841              |        | 7,686 |  
|                                                |  |                     |        |       |  
|Vessel Operating Income                         |  | $                   | 40,290 |       | $ | 15,554 | 
|                                                |  |                     |        |       |   |        | 
|Average daily TCE(3)                            |  | $                   | 14,802 |       | $ | 13,806 | 
|Average daily operating expense                 |  | $                   | 4,006  |       | $ | 3,918  | 
|Number of vessels owned-end of period(4)(5)     |  |                     | 15     |       |   | 12     | 
|Number of operating days                        |  |                     | 5,319  |       |   | 2,356  | 
|Total Clean Fleet Vessel Operating Income       |  | $                   | 40,814 |       | $ | 36,617 | 
|                                                |  |                     |        |       |   |        | 

|                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: Average daily operating
          expenses are computed using the number of days in the period which
          OMI owned or bareboat chartered the vessel. Number of operating days
          used to compute Average daily TCE includes waiting days and is reduced
          only for the days the vessels are in drydock.
|(1)                                                                                                                                                                                                                                                                                                                               
|(2)                                                                                                                                                                                                                                                                                                                               
|(3)                                                                                                                                                                                                                                                                                                                               
|(4)                                                                                                                                                                                                                                                                                                                               
|(5)                                                                                                                                                                                                                                                                                                                               

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

Products-on spot:This group had a decrease of $20.5 million in Vessel Operating Income, consisting of a decrease of $21.5 million in TCE revenues and a
$1.2 million decrease in vessel expenses. Decreases in revenues resulted from the sale of one vessel and the decline in spot rates for these single hull vessels in 2002.

Products-on time charter:Vessel Operating Income increased $24.7 million (TCE revenues increased $46.0 million and vessel expenses increased $12.1
million) which was attributable to the acquisition of ten vessels (seven in 2001 and three in 2002), all of which began time charters upon delivery, coupled with increased profit sharing earned in 2002 by five vessels, three of which were acquired
in 2001. Vessel expenses and depreciation expense also increased as a result of the acquisition of vessels.

The five vessels with long-term time charters have flat time charter rates with profit sharing agreements (50% profit sharing above the flat rate). For the year ended December 31, 2002 an
aggregate of $4.4 million in profit sharing was recognized.

26

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Balance Sheet

During the year ended December 31, 2002, OMI sold marketable securities and received net proceeds of approximately $6.1 million. The sales resulted in a net gain of $0.3 million.

At December 31, 2002, Accumulated other comprehensive loss was increased by $2.0 million to reflect the fair value of interest rate swaps and future rate agreements (FRAs) to $6.3
million (see Financing Activities).

During the year ended December 31, 2002, changes in Vessels and other property-net were as follows:

- Vessels and other property increased a net of $192.8 million,
- Construction in progress decreased a net of $46.9 million
- Accumulated depreciation increased a net of $32.9 million from the balances at December 31, 2001. Depreciation and amortization for the year ended December 31, 2002 was $43.6 million (including $3.8 million for
amortization of drydock expense).

During January, March, September and October 2002, OMI took delivery of five vessels, two new handymax product carriers, one handysize product carrier and two Suezmax vessels which resulted in
the following fluctuations.

- Vessels increased an aggregate of $207.5 million for the capitalized costs of the five vessels, $76.3million was reclassified from Construction in progress,
- $131.2 million cash was paid to the respective shipyards in 2002 related to these capitalized costs.
- $113.9 million of the payments were financed during the year ended December 31, 2002 (see Cash Flow section and Financing Activities).

Increases to Vessels and other property were partially offset by the sale of the product carrier in April 2002, decreasing Vessels by $15.9 million and Accumulated depreciation decreased by
$6.9 million. Additionally, a charge was recorded to reflect the loss on disposal of the vessel of $0.3 million.

Other increases, not including vessels delivered in 2002, in Construction in progress of $26.3 million, during the year ended December 31, 2002 related to vessels to be delivered in 2003 and
2004.

In June 2002, the Company exercised its option to reacquire the COLUMBIA (using approximately $29.0 million in cash, $12.0 million of cash in an escrow account and $3.7 million of proceeds from
an associated note receivable) and simultaneously sold the vessel to an unrelated party for $50.0 million. The vessel, renamed OLIVER JACOB, has been time chartered back for a period of eight years (plus two years at either partys option) and
has been accounted for as an operating lease. The gain on the sale of approximately $4.7 million will be amortized over the charter period of eight years. The Company used $20.0 million of the sales proceeds to pay down a line of credit.

During December 2002, we issued 6.5 million shares of common stock pursuant to an equity agreement. Net proceeds received were approximately $21.5 million.

27

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2003 Capital Expenditures

2003 Drydocks

We anticipate drydocking approximately 13 vessels in 2003 for an estimated aggregate cost of $6.9 million and will incur approximately 330 off-hire days. The following is a breakdown of the
drydock cost (in millions) to be amortized over approximately 2.5 years and allocation of offhire days by vessel type and charter type (Spot or TC):

|                             | Number of Days |  | Cost | 
|---------------------------- | -------------- |  | ---- | 
|                             |                |  |      | 
|CLEAN:                       |                |  |      | 
|Handysize-TC                 | 128            |  | $3.0 | 
|Handysize (single hull)-Spot | 22             |  | 0.6  | 
|                             |                |  |      | 
|CRUDE:                       |                |  |      | 
|Handysize-TC                 | 44             |  | 0.9  | 
|Panamax-Spot                 | 22             |  | 0.6  | 
|Suezmax-Spot                 | 60             |  | 0.9  | 
|ULCC-Spot                    | 54             |  | 0.9  | 
|                             |                |  |      | 
|Total                        | 330            |  | $6.9 | 
|                             |                |  |      | 

Capital Expenditure for Newbuildings and 2003
Disposal

OMI currently has commitments to purchase five product carriers (after the delivery of two product carriers in the first quarter 2003) currently under construction, all of which begin time
charters upon delivery. Payments in the first quarter 2003 relating to the two vessels delivered and one construction installment payment were approximately $56.9 million. Construction payments for the remainder of 2003 and 2004 will be $56.2
million and $67.5 million, respectively. As of December 31, 2002, financing of $62.5 million had been arranged for 2003 construction payments.

The two Panamax vessels scheduled to be delivered in 2003 can also carry both clean and crude oil products. They will begin five-year time charters upon delivery.

During March and January 2003, and December 2002, we ordered three 37,000 dwt product carriers to be delivered in April, July and October 2004. The vessels will begin five-year time charters
upon delivery.

When appropriate, we may also look to make other strategic vessel acquisitions. The delivery of vessels on order and potential acquisitions of vessels may be funded by operating cash, issuance
of stock, debt financing, and proceeds from the disposal of vessels.

In March 2003, OMI agreed to sell two of its 1984 built single hull product carriers for an aggregate of approximately $10.0 million. The sale will result in a loss of approximately $3.0
million in the first quarter 2003. Currently, the vessels are scheduled to be delivered in April and May 2003.

For the Year Ended December 31, 2001 Versus December 31, 2000

Results of Operations of Our Vessels

Net income was $82.3 million or $1.22 basic and $1.21 diluted EPS for the year ended December 31, 2001 compared to net income of $53.1 million or $0.94 basic and $0.93 diluted EPS for the year
ended December 31, 2000.

TCE revenues of $177.7 million for the year ended December 31, 2001 increased by $16.6 million from $161.1 million for the year ended December 31, 2000. During the year ended December 31, 2001,
vessel expenses increased $13.0 million and charter hire expense decreased $7.8 million. The net increase in our results in 2001 were primarily due to additional earnings from the acquisition of vessels, which were offset by a decline in earnings in
the Suezmax and Panamax fleets.

The following were changes in the composition of OMIs fleet from January 1, 2000 to December 31, 2001 that are reflected in operating results for the periods reported:

28

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- Sold four handysize product carriers, three in May 2000 and one in August 2000.
- Acquired two Suezmax newbuildings in March and May 2000.
- Acquired a joint venture partners share of a ULCC vessel (previously owned 49 percent) in June 2000.
- Acquired two handymax product carriers in September and November 2000 (originally time chartered until 2002, extended until 2004 during 2001).
- Acquired a Suezmax newbuilding January 2001.
- Redelivered two vessels previously chartered-in during January and March 2001.
- Acquired three secondhand handysize product carriers in February and March 2001.
- Sold one product carrier purchased in March 2001 during May 2001 for a gain of $0.6 million.
- Acquired a 2000 built handysize product carrier in April 2001 (time chartered until April 2004).
- Sold and leased back a Suezmax vessel in June 2001 for a gain of $17.4 million.
- Acquired two handysize crude oil tankers in June 2001 (time chartered until May/July 2005 not including options).
- Acquired three handysize product tankers in September 2001 (two have been time chartered until September 2004 and one until September 2006).
- Acquired three handysize product tankers in October, November and December 2001. Two have been time chartered for three years and one for five years.
- Sold a Suezmax vessel in December 2001, which is being chartered back from the purchaser for a period of five years (not including options) for a gain of approximately $5.0 million. The gain is being amortized over the
five-year term of the charter.

The net increase in TCE revenue, operating expenses and depreciation and amortization for the year ended December 31, 2001 over the comparable period in 2000 was attributable primarily to
increases in the product carrier fleet due to higher daily TCE rates for the vessels in the spot market and the acquisition of nine vessels since September 2000 that operated on time charters. Increases in earnings in the crude oil fleet were due
to: (1) an increase in the average TCE revenue for Panamax vessels (2) earnings in 2001 for three Suezmaxes; two delivered during the second quarter 2000 and one in January 2001 (3) revenue earned by the ULCC purchased by OMI on June 30, 2000 and
(4) increased earnings from two handysize crude oil carriers acquired in June 2001 that are continuing on long-term time charters until mid-2005, not including options.

The net increase in TCE revenue was offset in part by decreases due to a decline in charter rates coupled with increased waiting days for Suezmax and ULCC vessels, 280 fewer operating days due
to the early termination of two vessels chartered-in and redelivered during the first quarter 2001 and an additional 209 offhire days related to drydock in 2001 compared to 2000.

Depreciation and amortization increased $14.4 million due to depreciation not being recorded for the five vessels classified as Vessels to be disposed of in 2000 and the acquisition of sixteen
new vessels since April 2000.

Other Operating Expenses

The Companys operating expenses, other than vessel, voyage and charter hire expenses, depreciation and amortization, consists of G & A expenses and Loss (gain) on disposal/write down
of assets-net. For the year ended December 31, 2001, these expenses decreased by $29.2 million primarily from the decrease in loss (gain) on disposal of assets-net which was a loss of $10.8 million for the year ended 2000 compared to a gain of $19.5
million for the year ended 2001.

General & administrativeG & A increased $1.2 million due to an increase in expenses, as a result of a larger fleet.

29

---

Loss (gain) on disposal/write down of assetsnetThe Loss (gain) on disposal/write down of assetsnet, changed by $30.3 million from a loss of $10.8 million for the year ended
December 31, 2000 to a gain of $19.5 million in 2001. The gain on disposal in 2001 of $19.5 million resulted from the sale of two vessels. The sale of a Suezmax vessel resulted in a gain of $17.4 million while the sale of a product carrier resulted
in a gain of $0.6 million. There was also a gain of $1.5 million from the early termination of two time charters.

The loss on disposal/write down of assets in 2000 of $14.0 million relates to the disposals of four vessels and the write down of two vessels in 2000. Adjustments for three vessels previously
classified as Assets to be disposed of at December 31, 1999 resulted in additional losses on the sale dates aggregating $6.2 million. Two similar vessels net realizable values, which were also classified as Assets to be disposed of at December
31, 1999, were adjusted during the first quarter 2000 by an aggregate of $3.0 million. A vessel sold in May 2000 resulted in a loss on disposal of $4.8 million.

Losses in 2000 were offset in part by the gain recorded of $3.2 million from the early termination of two time charters; one part of this gain was from the accelerated amortization of the
provision for loss on a lease obligation. The gain on early termination of the second charter resulted from accelerated amortization on the deferred gain.

Other (Expense) Income

Other (expense) income consists of loss on disposal/write down of investments, interest expense, interest income and othernet. Net other expense decreased by $5.7 million from $25.4
million during the year ended December 31, 2000 to $19.7 million for the year ended December 31, 2001.

Loss on disposal/write down of investments was approximately $1.6 million for the year ended December 31, 2001. The 2001 loss relates to the reserve for a loss on investment during the winding
down of the IPC joint venture.

The 2000 loss on disposal of investments of approximately $3.0 million resulted from the sale of a joint venture and the write down of a long-term investment.

Interest expense decreased $6.3 million for the year ended December 31, 2001 in comparison to the year ended December 31, 2000. The decrease is due to reduced interest margin, increased
capitalized interest (related to the construction of newbuildings) and reduced LIBOR, offset by financing for vessel acquisitions.

Othernet of $0.7 million primarily represents insurance settlements of claims on various vessels during the year ended December 31, 2001. During the same period in 2000 an aggregate of
approximately $2.0 million for insurance settlements was recorded.

Equity in Operations of Joint Ventures

Equity in operations of joint ventures decreased by $3.0 million for the year ended December 31, 2001 compared to the year ended December 31, 2000. The reduction was from the winding down of
the joint ventures in prior years.

DETAILED OPERATING RESULTS BY MARKET SEGMENTS

The following discussion details the results of our vessels operations by our two segments in terms of Vessel Operating Income, as defined, for the crude oil tanker fleet and product carrier
fleet segments.

Crude Oil Tanker Fleet

At December 31, 2001, we operated 12 crude carriers, including two chartered in Suezmax vessels. In 2001 we (1) took delivery of a Suezmax newbuilding, which began its first voyage in January,
(2) sold a Suezmax vessel in June which we took delivery of in March 2000 and (3) entered into a sale lease back agreement for a Suezmax vessel in December, which was delivered in May 2000.

In 2000, we (1) sold an aframax vessel in March, (2) took delivery of a Suezmax newbuilding, which began its first voyage in early April, (3) took delivery of another new Suezmax vessel in May
which began its first voyage in early June and (4) acquired one ULCC vessel, which was purchased in June from our joint venture partner (the Company previously owned 49 percent).

30

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The following table sets forth comparative operating results for the crude oil fleet for the years ended December 31, 2001 and 2000:

|BREAKDOWNBYFLEET                             |                     |        |       |   |        | 
|-------------------------------------------- | ------------------- | ------ | ----- | - | ------ | 
|                                             | For the Years Ended |       
|                                             | December 31,        |       
|                                             |                     |       
|In thousands, except daily rates & expenses, |                     | 2001   |       |   | 2000   | 
|number of vessels and operating days         |                     |        |       |   |        | 
|                                             |                     |        |       |   |        | 
|Suezmaxes:                                   |                     |        |       |   |        | 
|TCE Revenue                                  | $                   | 69,628 |       | $ | 89,248 | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 10,642 |       |   | 8,295  | 
|Charter Hire Expense                         |                     | 8,416  |       |   | 16,184 | 
|Depreciation and Amortization                | 10,972              |        | 8,626 |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 39,598 |       | $ | 56,143 | 
|                                             |                     |        |       |   |        | 
|Average daily TCE (Spot)                     | $                   | 29,212 |       | $ | 36,648 | 
|Average daily TCE (Time Charter)             | $                   | 17,232 |       | $ | 13,929 | 
|Average daily operating expense              | $                   | 4,631  |       | $ | 4,228  | 
|Number of vessels owned(1)(2)                |                     | 4      |       |   | 5      | 
|Number of vessels chartered-in(3)            |                     | 2      |       |   | 3      | 
|Number of operating days                     |                     | 2,403  |       |   | 2,599  | 
|ULCC:                                        |                     |        |       |   |        | 
|TCE Revenue(4)                               | $                   | 8,752  |       | $ | 7,123  | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 3,176  |       |   | 1,115  | 
|Depreciation and Amortization                | 1,626               |        | 631   |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 3,950  |       | $ | 5,377  | 
|                                             |                     |        |       |   |        | 
|Average daily TCE                            | $                   | 27,787 |       | $ | 38,708 | 
|Average daily operating expense              | $                   | 8,701  |       | $ | 6,027  | 
|Number of vessels owned-end of period        |                     | 1      |       |   | 1      | 
|Number of operating days(5)                  |                     | 315    |       |   | 185    | 
|Panamaxes:                                   |                     |        |       |   |        | 
|TCE Revenue(6)                               | $                   | 20,452 |       | $ | 21,648 | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 6,630  |       |   | 5,598  | 
|Depreciation and Amortization                | 3,432               |        | 808   |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 10,390 |       | $ | 15,242 | 
|                                             |                     |        |       |   |        | 
|Average daily TCE                            | $                   | 21,980 |       | $ | 19,715 | 
|Average daily operating expense              | $                   | 6,055  |       | $ | 5,098  | 
|Number of vessels owned                      |                     | 3      |       |   | 3      | 
|Number of operating days                     |                     | 928    |       |   | 1,098  | 
|Other Crude:                                 |                     |        |       |   |        | 
|TCE Revenue                                  | $                   | 6,317  |       | $ | 989    | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 1,136  |       |   | 124    | 
|Depreciation and Amortization                | 1,534               |        |      |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 3,647  |       | $ | 865    | 
|                                             |                     |        |       |   |        | 
|Average daily TCE                            | $                   | 16,179 |       |   |       | 
|Average daily operating expense              | $                   | 2,913  |       |   |       | 
|Number of vessels owned(7)                   |                     | 2      |       |   |       | 
|Number of operating days                     |                     | 391    |       |   | 81     | 
|Total Crude Fleet Vessel Operating Income    | $                   | 57,585 |       | $ | 77,627 | 
|                                             |                     |        |       |   |        | 

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

|(1) In June 2001, a Suezmax v
     essel was sold. During January 2001, a Suezmax
    newbuilding was delivered.                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------
|(2) During March and May 2000, two newly built Suezmax vessels were delivered and started their first voyage charters in the second quarter.     
|(3) In January and March 2001, OMI redelivered two chartered-in vessels. One vessel was offhire 77 days in drydock in second quarter 2000.       
|(4) The vessel was in drydock for 50 days in 2001.                                                                                               
|(5) On June 30, 2000, OMI acquired a ULCC from its joint venture partner.                                                                        
|(6) During 2001, two Panamax vessels were in drydock for 167 days (82 days in the third quarter and 85 days in the fourth quarter).              
|(7) In June 2001, two handysize crude oil tankers were acquired with time charters. In March 2000, an aframax vessel was delivered to new owners.

31

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Fluctuations in each of the crude oil fleet vessel types were as follows:

Suezmaxes:The decrease in Vessel Operating Income of $16.5 million and $19.6 million in TCE revenues for this group was the largest impact on the crude
fleet. Included in this group is a decrease due to the early termination during the first quarter 2001 of two vessels chartered in. A decrease in revenues and expenses was attributable to the sale of one vessel in June 2001. Other decreases were due
to a decline in charter rates coupled with increased waiting days, offset by the delivery of one vessel in January 2001.

ULCC:The increase of $1.6 million in TCE revenues and increase in operating expenses of $2.0 million resulted from more operating days in 2001 compared
to 2000 (the vessel was acquired June 2000). Additional expenses relating to the vessel drydock and amortization of drydock (included with depreciation and amortization) are reflected in the 2001 expenses.

Panamaxes:The decrease of $1.2 million in TCE revenues is attributable to fewer operating days in 2001 due to an additional 167 off hire days for
drydock in comparison to year-ended 2000.

Other crude:The increase of $5.3 million in TCE revenues, $1.0 million increase in operating expenses and $1.5 million increase in depreciation expense
is from the two 1993 built crude oil carriers that were delivered in June 2001. The increases are net of expenses relating to the 1980s built aframax vessel sold in March 2000.

Product Carrier Fleet

At December 31, 2001, we owned 19 product carriers, seven handysize vessels on the spot market and twelve handymax and handysize vessels on time charter. During 2001, we (1) acquired three
second-hand handysize product carriers in February and March 2001, (2) sold one product carrier in May 2001 that was purchased in March 2001, (3) acquired three handysize product tankers in September 2001, (4) acquired three handysize product
tankers in October, November and December 2001 and (5) reacquired six vessels from the IPC Pool during March and April 2001 into our fleet management.

During 2000, (1) two handymax newbuildings were delivered in September and November and (2) four product carriers were sold, three in May and one in August 2000.

32

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The following table sets forth comparative operating results for the product carrier fleet for the years ended December 31, 2001 and 2000:

|BREAKDOWNBYFLEET                             |                     |        |       |   |        | 
|-------------------------------------------- | ------------------- | ------ | ----- | - | ------ | 
|                                             | For the Years Ended |       
|                                             | December 31,        |       
|                                             |                     |       
|In thousands, except daily rates & expenses, |                     | 2001   |       |   | 2000   | 
|number of vessels and operating days         |                     |        |       |   |        | 
|                                             |                     |        |       |   |        | 
|Products-on Spot:                            |                     |        |       |   |        | 
|TCE Revenue(1)                               | $                   | 40,018 |       | $ | 30,472 | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 11,849 |       |   | 10,636 | 
|Depreciation and Amortization                | 7,106               |        | 5,363 |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 21,063 |       | $ | 14,473 | 
|                                             |                     |        |       |   |        | 
|Average daily TCE                            | $                   | 15,451 |       | $ | 10,889 | 
|Average daily operating expense              | $                   | 4,410  |       | $ | 3,829  | 
|Number of vessels owned(2)(3)                |                     | 7      |       |   | 6      | 
|Number of operating days                     |                     | 2,595  |       |   | 2,778  | 
|                                             |                     |        |       |   |        | 
|Products-on Time Charter:                    |                     |        |       |   |        | 
|TCE Revenue                                  | $                   | 32,468 |       | $ | 11,645 | 
|                                             |                     |        |       |   |        | 
|Vessel Expenses                              |                     | 9,228  |       |   | 3,309  | 
|Depreciation and Amortization                | 7,686               |        | 2,557 |  
|                                             |                     |        |       |  
|Vessel Operating Income                      | $                   | 15,554 |       | $ | 5,779  | 
|                                             |                     |        |       |   |        | 
|Average daily TCE                            | $                   | 13,806 |       | $ | 13,562 | 
|Average daily operating expense              | $                   | 3,918  |       | $ | 3,861  | 
|Number of vessels owned(4)(5)                |                     | 12     |       |   | 4      | 
|Number of operating days                     |                     | 2,356  |       |   | 857    | 
|Total Clean Fleet Vessel Operating Income    | $                   | 36,617 |       | $ | 20,252 | 
|                                             |                     |        |       |   |        | 

|                                                                                                                                                                                                                                                                                                                            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: Average daily operating expenses
          are computed using the number of days in the period which OMI owned
          or bareboat chartered the vessel. Number of operating days used to
          compute Average daily TCE includes waiting days and is reduced only
    for the days the vessels are in drydock.
|(1)                                                                                                                                                                                                                                                                                                                         
|(2)                                                                                                                                                                                                                                                                                                                         
|(3)                                                                                                                                                                                                                                                                                                                         
|(4)                                                                                                                                                                                                                                                                                                                         
|(5)                                                                                                                                                                                                                                                                                                                         

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

Products-on spot:This group had an increase of $9.5 million in TCE revenues and $1.2 million in operating expenses. Increases in revenues associated
with the purchase of vessels in 2001 were offset by decreases from the sale of vessels in 2000. Other increases in revenue were attributable to higher spot market rates, offset by 69 fewer operating days due to drydock.

Products-on time charter:The increase of $20.8 million in TCE revenues and $5.9 million in operating expenses were attributable to the purchase of seven
vessels in 2001 and two vessels in 2000.

Liquidity and Capital Resources

Cash Flows

Cash and cash equivalents of $40.9 million at December 31, 2002 increased $23.2 million from cash and cash equivalents of $17.7 million at December 31, 2001. The Companys working capital
increased by $13.5 million between December 31, 2002 and December 31, 2001, and was $8.1 million at December 31, 2002. At December 31, 2002, we had 15 time charters under which we receive one months advance charter hire at the start of each
month, which

33

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increased the working capital at the beginning of January 2003. At December 31, 2002, current assets increased $4.1 million and current liabilities decreased $9.5 million. Cash increased primarily because of proceeds from
the issuance of debt and the sale of two vessels and marketable securities, which exceeded the payments to acquire vessels. Increases in current assets were offset partially by decreases in Current restricted cash, primarily from the return of
escrow ($12.0 million) as a result of the purchase of the COLUMBIA in June 2002. Current liabilities decreased primarily from the decrease in the current portion of long-term debt. The current portion of debt was reduced by $7.6 million, to $32.6
million at December 31, 2002, upon the refinancing of debt in March 2003 (see Financing Activities). Net cash provided by operating activities decreased $67.5 million to $54.0 million for the year ended December 31, 2002 compared to net cash
provided by operating activities of $121.5 million for the year ended December 31, 2001 (see Results of Operations).

During the year ended December 31, 2002, we took various steps to improve our liquidity, and as a result ended the year with a cash balance of $40.9 million. In addition, at December 31, 2002,
the Company had $22.7 million available under lines of credit and our net debt (which is total debt less cash and cash equivalents) to net capitalization (which is total debt plus stockholders equity less cash and cash equivalents) ratio was
52 percent. The Companys management believes that cash flow from operations, along with available borrowing capacity under its credit facilities, will be sufficient to meet its capital requirements.

Cash used by investing activities was $128.8 million for the year ended December 31, 2002, compared to cash used by investing activities of $249.4 million for the year ended December 31, 2001.
During 2002, $206.8 million was used for additions to vessels as follows:

- $131.2 million was used for the purchase of three product carriers and two Suezmax vessels,
- $44.9 million for the purchase of the COLUMBIA,
- $26.3 million was used to paid for vessels under construction, and
- $4.4 million was used for capital expenditures for improvements to existing vessels and capitalized interest

Cash was used during the year ended December 31, 2001 primarily for additions to vessels of $364.0 million as follows:

- $309.4 million in cash used to purchase thirteen vessels,
- $19.2 million for two new Suezmax newbuilding contracts,
- $30.9 million installment payments for seven vessels under construction, and
- $4.5 million for capital expenditures for improvements to existing vessels and capitalized interest

During the year ended December 31, 2002, we sold and leased back a Suezmax vessel, sold a product carrier (proceeds from dispositions aggregated $58.0 million), secured additional lines of
credit, and reduced amortization on existing lines giving us flexibility to withstand weak tanker markets and improve liquidity. Proceeds of $130.9 million received for the disposal of vessels during the year ended December 31, 2001, were for two
Suezmax vessels sold in June and December 2001 and a product carrier sold in May 2001.

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Adjusted EBITDA

Adjusted EBITDA is presented to provide additional information with respect to the Companys ability to satisfy debt service, capital expenditure and working capital requirements. While
adjusted EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of
calculations. Adjusted EBITDA should not be considered an alternative to net income or other measurements under generally accepted accounting principles. Adjusted EBITDA of $82.8 million for the year ended December 31, 2002 was $32.2 million less
than the $115.0 million for the year ended December 31, 2001. The decrease in 2002 was due to the decline in tanker rates, but primarily due to the decreased rates earned by the Suezmax fleet in 2002 compared to 2001. The following table is a
reconciliation of Net Income to Adjusted EBITDA.

RECONCILIATION OFNETINCOME TOADJUSTEDEBITDA

For the Years Ended __________________ December 31,

|In millions                                         | 2001 |      | 2000 |     
|--------------------------------------------------- | ---- | ---- | ---- | ----
|                                                    |      |      |      |     
|Net Income                                          | $    | 15.5 |      | $   
|Add: Depreciation and amortization                  |      | 43.6 |      |     
|Add/Subtract: Loss (gain) on disposal of assetsnet |      | 0.3  |      |     
|Add: Interest expense                               |      | 24.8 |      |     
|Subtract: Interest income                           |      | (0.7 | )    |     
|Add: Loss on disposal of investments                |      | 0.7  |      |     
|Subtract: Othernet                                 |      |     |      |     
|Subtract: Benefit for income taxes                  |      | (1.4 | )    |     
|Subtract: Equity in operations of joint ventures    |     |      |      | (0.2
|                                                    |      |      |      |     
|Adjusted EBITDA                                     | $    | 82.8 |      | $   
|                                                    |      |      |      |     



Financing Activities

Cash provided by financing activities was $98.0 million for the year ended December 31, 2002, compared to cash provided by financing activities of $110.2 million for the year ended December 31,
2001. During the year ended December 31, 2002, there was $121.9 million in principal payments ($46.5 million were scheduled payments, $49.4 million 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 a credit facility upon the sale of the COLUMBIA), and there was $199.9 million in proceeds from the issuance of debt, including proceeds of $65.0 million from debt refinanced, ($123.9 million
for the purchase of five vessels and construction in progress payments and $76.0 million was drawn down on the $78.0 million credit facility).

During the year ended December 31, 2001 we paid debt of $149.4 million; $43.5 million in scheduled principal payments and $105.9 million in unscheduled payments ($71.5 million was paid upon the
disposal of vessels, $30.0 million for the additional pay down on loans and $4.4 million of OMIs senior unsecured Notes that were repurchased in August 2001) and $265.4 million was received in proceeds from the issuance of debt for the
purchases of vessels, construction payments and refinancing of one facility.

At December 31, 2002, OMI had $510.6 million in debt outstanding. The following paragraphs describe the Companys debt facilities:

On March 14, 2003, the Company consolidated, amended and restated two loan agreements (the $310 Facility and $78 Facilitysee below for description of these facilities). 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 refinancing results in several benefits for the Company: removal of certain restrictive covenants,
reduction of margin, additional liquidity and extending the facility for an additional five years. The loan bears interest at LIBOR plus a fixed margin of 1.625% reduced from a weighted average margin of 2.40%. This facility is secured by 18 vessels
and has a balloon of $111.0 million in 2010 to be paid with the final quarterly payment. The loan initially provides additional liquidity of $16.0 million and will provide additional liquidity of $19.0 million over the next two years and extends the
balloon payment from 2005 to 2010. The $310 Facility and $78 Facility had scheduled balloon payments of $91.7 million in

35

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2005 and $43.7 million in 2007 respectively. The availability under the $245 Facility reduces by $5.0 million for the first 20 quarters and then by $4.25 million for the next eight quarters. Upon the delivery of the two
product carriers in the second quarter 2003, the facility will be reduced by $6.9 million. As of March 28, 2003, $222.3 million was drawn.

Reducing Revolving Facilities

On July 27, 2001, OMI entered into a six year $348.0 million reducing revolving credit facility (the $348 Facility). The $348 Facility has been and will be used to provide up to 65
percent financing of pre-delivery installments and final payments at delivery for eleven newbuilding vessels, with deliveries scheduled through July 2003, acquisition financing and refinancing of four secondhand vessels purchased in the first half
of 2001 and for general corporate purposes up to the available amount. This loan includes interest rate margins based on a pricing ratio grid (currently 2.125% over LIBOR, reducing to 2.00% at March 31, 2003). The availability of the facility
reduces quarterly based on a 17-year amortization schedule from delivery of the vessels until September 2003, and thereafter $6.5 million per quarter until July 27, 2007 at which time the outstanding balance is due. At December 31, 2002, the Company
had drawn $221.3 million, with $0.1 million available at December 31, 2002. The remainder of the Facility becomes available when construction and delivery payments are made. In February 2003, OMI drew an additional $4.7 million for the delivery of a
newbuilding and as of March 28, 2003 had $22.4 million available to draw.

On March 27, 2002, the Company entered into a $78.0 million reducing revolving credit facility (the $78 Facility) secured by first mortgages on two vessels and second mortgages on
16 vessels. As of December 31, 2002, the line had been reduced to $70.7 million and the Company had $22.6 million available under the line. On March 14, 2003, this facility was rolled into the amended and restated $245 facility described
above.

Term Loans

The Company had a term loan agreement, secured by 16 vessels, in the original amount of $310.0 million (the $310 Facility), which had a balance of $164.3 million at December 31,
2002. In March 2002, this Facility was amended to reduce the then three remaining 2002 quarterly payments from $10.0 million to $6.3 million and increase the balloon payment by $11.3 million. In April 2002, the 15 remaining quarterly payments
(including the three in 2002) were reduced to $6.1 million as a result of the sale of a vessel. The balloon payment due at maturity in October 2005 was $91.7 million. At December 31, 2002, the Companys interest rate margin was 2.25% over
LIBOR. On March 14, 2003, the $310 Facility was amended and restated (see above).

In September 2001, the
Company obtained an eight-year $40.0 million term loan to partially finance the
purchase of two product carrier newbuildings, one of which was delivered on September
10,  2001 and the other on October 12, 2001. The loan is split into two $20.0
million tranches. At December 31, 2002, the balance of the loan was $36.4 million.
The loan for each tranche is being repaid in 32 consecutive quarterly installments,
the first
20 in the amount of $0.45 million each and the next 12 in the amount of $0.35
million each, with a balloon payment in the amount of $6.8 million due and payable
together with the last installment. The outstanding balance of the loan bears
interest
at LIBOR plus an applicable margin based on OMIs ratio of consolidated
funded debt to consolidated adjusted EBITDA, as defined, on a trailing four quarter
basis.
At December 31, 2002, the Companys interest rate margin was 2.0% over LIBOR.

In November 2001, the
Company obtained a seven-year $44.0 million term loan to partially finance the
purchase of two product carrier newbuildings, one of which was delivered on December
17,  2001 and the other of which was delivered on March 26, 2002. The loan is
split into two $22.0 million tranches. At December 31, 2002, the balance of the
loan was $39.5 million. Each tranche is being repaid in 28 quarterly installments
(the first 12
at $0.65 million and next 16 at $0.35 million) plus a balloon of $8.2 million
due with the last installment. The outstanding balance of the loan bears interest
at LIBOR plus an applicable margin. During the first three years of this loan
the margin  is 1.00 percent as long as the secured vessels remain on time charter.
During the remaining four years, the margin will be based on OMIs ratio
of consolidated funded debt to consolidated adjusted EBITDA, as defined, on a
trailing
four
quarter
basis.

Restrictive Covenants

All loan agreements contain restrictive covenants as to cash and working capital, net worth, maintenance of specified financial ratios and collateral values. They restrict the Companys
ability to make certain payments, such as dividends

36

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and repurchase of its stock. Pursuant to the loan agreements liens against specific assets were granted and other liens against those assets were prohibited. As of December 31, 2002, the Company was in compliance with its
covenants.

Interest Rates

The variable interest rates (including margins) at December 31, 2002 were 3.25% to 4.8125 %. The margins ranged from 1.00%-2.75%

Risk Management

Interest-Rate Swaps

As of December 31, 2002, we had eight interest rate swaps aggregating $267.6 million. All eight swaps have been designated and qualify as cash flow hedges. The swaps fix the interest rate
before margins on various debt tranches within a range of 2.07% to 4.86% from October 2001 to October 2005. 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). At December 31, 2002, we recorded a liability of $6.2 million and a charge correspondingly to Accumulated other comprehensive loss related to the fair market value of these swaps.

Future Rate Agreements

In February 2002, OMI entered into five FRAs, for an aggregate notional value of $95.3 million. The FRAs fixed the interest rate before margins on various debt tranches within a range of 2.355%
to 2.50% and expired in December 2002. In October 2002, OMI entered into four more FRAs for an aggregate notional value of $91.0 million. The FRAs fixed the interest rate before margins on various debt tranches within a range of 1.72% to 1.86%
beginning May 2003 and expire in December 2003. At December 31, 2002, we recorded a liability of $0.1 million and a charge correspondingly to Accumulated other comprehensive loss related to the fair market value for these hedges.

Other Commitments

In March 2003, OMI agreed to sell two of its 1984 built single hull product carriers for an aggregate of approximately $9.6 million. The sale will result in a loss of approximately $3.0 million
in the first quarter of 2003. Currently, the vessels are scheduled to be delivered in April and May 2003.

The following table lists contractual obligations by required payment periods:

|in millions             |  | Payments Due By Period
|----------------------- |  | ----------------------
|                       
|                        |  |                       
|Contractual             |  |                       
|Obligations             |  | Total                 
|                       
|Long Term(1)            |  | $510.6                
|Operating Leases(2)     |  | 111.8                 
|Purchase Obligations(3) |  | 180.5                 

|   
|---
|(1)
|(2)
|(3)

Restricted Stock

In April 2002, OMI awarded and issued 20,000 shares of restricted stock to a new director for a total value at the date of grant of approximately $0.1 million. Restrictions lapse for 25 percent
of the shares at the end of year three, the next 25 percent at the end of year five, and the remaining 50 percent of the shares at the end of year six in accordance

37

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with directors years of service at his retirement date (if the director remains with the Company for at least five years from the date of grant).

On July 2, 2001, OMI awarded 900,000 shares of restricted stock to executive officers and directors for a total value at the date of grant of $5.1 million. Of the 900,000 shares, restrictions
lapse for 25 percent at the end of year three, the next 25 percent at the end of year five, and the remaining 50 percent of the shares at varying years in accordance with years of service at an individuals retirement date (if the executive
officer or director remains with the Company for at least five years from the date of grant). Upon the issuance of the restricted stock, unearned compensation equivalent to the market value at the date of grant was charged to Stockholders
Equity and compensation expense is being amortized to expense over the appropriate restriction period.

Other Matters

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.

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, which are summarized as follows:

SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets was issued in October 2001. SFAS 144 replaces FASB Statement 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be
eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of SFAS 144 are effective for financial statements issued for interim periods and fiscal years beginning after December 15, 2001 and are to be applied
prospectively. The Company did not have discontinued operations as of December 31, 2002 and the adoption of this statement had no impact on the financial statements.

SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections was issued in April 2002. The Statement updates, clarifies
and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishment of debt

38

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to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. Statement 64 amended
Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has
been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback
transactions. This Statement also makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practices. This Statement is effective for fiscal years
beginning after May 15, 2002. Since this new Statement was issued to clarify and simplify existing pronouncements there is no effect on the Companys financial statements.

SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities was issued in June 2002. SFAS 146 addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires
recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to when the entity commits to an exit plan under EITF Issue No. 94-3. The Company is required to adopt SFAS 146 for exit or
disposal activities that are initiated after December 31, 2002.

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. The disclosure provisions of SFAS 148, effective for fiscal years ending after December 15, 2002, have been adopted by the
Company.

In November 2002, the FASB issued Financial Interpretation 45 (FIN 45), which elaborates on the existing disclosure requirements for most guarantees, including loan guarantees.
It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its
interim and annual financial statements. FIN 45 does not apply to certain guarantee contracts, such as those issued by insurance companies or for a lessees residual value guarantee embedded in a capital lease. The provisions related to
recognizing a liability at inception of the guarantee for the fair value of the guarantors obligations would not apply to product warranties or to guarantees accounted for as derivatives. The initial recognition and initial measurement
provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless of the guarantors fiscal year-end. The disclosure requirements in FIN 45 are effective for financial statements of interim or annual
periods ending after December 15, 2002. The adoption of FIN 45 did not have an effect on the Companys financial position or results of operations.

In January 2003, the FASB issued 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

39

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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.

Item 7A.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 December 31, 2002 and December 31, 2001. 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, and at December 31, 2001, the floating rate debt was $431.0 million ($175.0 million of which was fixed
with interest-rate swaps) of the $432.6 million total debt. Based on the floating rate debt at December 31, 2002, a one-percentage point increase in the floating interest rate would increase interest expense by $3.9 million per year.

The fixed rate debt on the balance sheet and the fair market value were $1.0 million as of December 31, 2002, and $1.6 million as of December 31, 2001. 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.

During 2002, we entered into six more interest rate swaps for an aggregate notional amount of $152.6 million. In each of these swaps, we will pay a fixed rate interest and receive floating rate
interest. These transactions have been designated as cash flow hedges. As of December 31, 2002, the Company has recorded a liability of $6.2 million related to the fair market value of all eight hedges and a charge correspondingly to Other
comprehensive income. The following table summarizes the swaps (in thousands):

|         |  |           |           | Fixed    | 
|-------- |  | --------- | --------- | -------- | 
|Notional |  | Start     | Maturity  | Interest | 
|Amount   |  | Date      | Date      | Rate     | 
|         |  |           |           |          | 
|$40,000  |  | Oct. 2001 | Oct. 2004 | 4.77%    | 
|75,000   |  | Oct. 2001 | Oct. 2005 | 4.86%    | 
|20,000   |  | Dec. 2002 | Jun. 2004 | 2.12%    | 
|37,000   |  | Feb. 2003 | Jun. 2004 | 2.16%    | 
|24,000   |  | Mar. 2003 | Jun. 2004 | 2.17%    | 
|20,000   |  | Mar. 2003 | Jun. 2004 | 2.07%    | 
|17,000   |  | Jun. 2003 | Jun. 2004 | 2.16%    | 
|34,600   |  | Apr. 2003 | Jun. 2004 | 2.08%    | 

40

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In February 2002, OMI entered into five FRAs for an aggregate notional value of $95.3 million. The FRAs fixed the interest rate before margins on various debt tranches within a range of 2.355%
to 2.50% and expired in December 2002. In October 2002, OMI entered into four more FRAs for an aggregate notional value of $91.0 million, which have been designated as cash flow hedges. The FRAs fixed the interest rate before margins on various debt
tranches within a range of 1.72% to 1.86% beginning May 2003 and expire in December 2003. The Company has recorded a liability of $0.1 million related to the fair market value of these hedges and a charge correspondingly to Other comprehensive
income. The following table summarizes the FRAs (in thousands):

|        |  |           |           | Fixed    | 
|------- |  | --------- | --------- | -------- | 
|        |  | Start     | Maturity  | Interest | 
|Amount  |  | Date      | Date      | Rate     | 
|        |  |           |           |          | 
|$13,000 |  | May 2003  | Dec. 2003 | 1.72%    | 
|15,000  |  | July 2003 | Dec. 2003 | 1.79%    | 
|31,000  |  | July 2003 | Dec. 2003 | 1.79%    | 
|32,000  |  | July 2003 | Dec. 2003 | 1.86%    | 

41

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Item 8:FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

|                                                                                     | Page | 
|------------------------------------------------------------------------------------ | ---- | 
|                                                                                     |      | 
|OMI Corporation and Subsidiaries:                                                    |      | 
|Consolidated Statements of Income for the three years ended December 31, 2002        | 43   | 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                         | 44   | 
|Consolidated Statements of Cash Flows for the three years ended December 31, 2002    | 46   | 
|Consolidated Statements of Changes in Stockholders Equity for the three years ended |      | 
|December 31, 2002                                                                    | 47   | 
|Notes to Consolidated Financial Statements                                           | 48   | 
|Independent Auditors Report                                                         | 68   | 
|Quarterly Results of Operations (unaudited)                                          | 69   | 

42

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|OMI CORPORATION AND SUBSIDIARIES                                     
|---------------------------------------------------------------------
|                                                                     
|CONSOLIDATED STATEMENTS OF INCOME                                    
|(In thousands, except per share data)                                
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|REVENUES                                                             
|                                                                     
|OPERATINGEXPENSES:                                                   
|Voyage                                                               
|Vessel                                                               
|Charter hire                                                         
|Depreciation and amortization                                        
|General and administrative                                           
|Loss (gain) on disposal/writedown of assets-net (Notes 9 and 11)     
|                                                                     
|Total operating expenses                                             
|                                                                     
|OPERATINGINCOME                                                      
|                                                                     
|OTHER(EXPENSE) INCOME:                                               
|Loss on disposal/write down of investments (Notes 4 and 6)           
|Interest expense                                                     
|Interest income                                                      
|Othernet                                                            
|                                                                     
|Net other expense                                                    
|                                                                     
|Income before income taxes and equity in operations of joint ventures
|Benefit for income taxes                                             
|                                                                     
|Income before equity in operations of joint ventures                 
|Equity in operations of joint ventures (Note 4)                      
|                                                                     
|NETINCOME                                                            
|                                                                     
|BASICEARNINGSPERCOMMONSHARE(Note 2):                                 
|Net income per common share                                          
|                                                                     
|DILUTED
   EARNINGSPERCOMMONSHARE(Note 2):                           
|Net income per common share                                          
|                                                                     
|WEIGHTEDAVERAGESHARESOUTSTANDING:                                    
|Basic                                                                
|Diluted                                                              

See notes to consolidated financial statements.

43

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|OMI CORPORATION AND SUBSIDIARIES                                              |              |         |         |         |         | 
|----------------------------------------------------------------------------- | ------------ | ------- | ------- | ------- | ------- | 
|CONSOLIDATED BALANCE SHEETS                                                   |              |         |         |         |         | 
|(In thousands)                                                                |              |         |         |         |         | 
|ASSETS                                                                        |              |         |         |         |         | 
|                                                                              | December 31, |        
|                                                                              |              |        
|                                                                              | 2002         |         | 2001    |        
|                                                                              |              |         |         |        
|CURRENTASSETS:                                                                |              |         |         |        
|Cash, including cash equivalents:                                             |              |         |         |        
|2002-$38,883, 2001-$15,168                                                    | $            | 40,890  |         | $       | 17,730  | 
|Marketable securities                                                         |              |        |         |         | 6,218   | 
|Receivables:                                                                  |              |         |         |         |         | 
|Traffic receivables, net of allowance for doubtful accounts of $1,255 in 2002 |              |         |         |         |         | 
|and $1,622 in 2001                                                            |              | 15,968  |         |         | 14,052  | 
|Other                                                                         |              | 3,380   |         |         | 1,549   | 
|Current notes receivable                                                      |              | 37      |         |         | 6,775   | 
|Current restricted cash (Note 7)                                              |              | 1,000   |         |         | 13,120  | 
|Prepaid expenses and other current assets                                     | 7,543        |         | 5,316   |        
|                                                                              |              |         |         |        
|Total current assets                                                          | 68,818       |         | 64,760  |        
|                                                                              |              |         |         |        
|VESSELS, CONSTRUCTION INPROGRESS ANDOTHERPROPERTY                             |              |         |         |         |         | 
|Vessels                                                                       |              | 972,003 |         |         | 779,259 | 
|Construction in progress (Note 17)                                            |              | 37,857  |         |         | 84,736  | 
|Other property                                                                | 2,682        |         | 2,636   |        
|                                                                              |              |         |         |        
|Total vessels, construction in progress and other property                    | 1,012,542    |         |         | 866,631 |        
|Less accumulated depreciation                                                 | 109,732      |         | 76,865  |        
|                                                                              |              |         |         |        
|Vessels, construction in progress and other property-net                      | 902,810      |         | 789,766 |        
|                                                                              |              |         |         |        
|DRYDOCKCOSTS                                                                  |              | 6,740   |         |         | 5,743   | 
|NON-CURRENTRESTRICTEDCASH(Note 7)                                             |              | 3,000   |         |         | 4,000   | 
|OTHERASSETS ANDDEFERREDCHARGES                                                | 8,253        |         | 11,358  |        
|                                                                              |              |         |         |        
|TOTAL                                                                         | $            | 989,621 |         | $       | 875,627 | 
|                                                                              |              |         |         |         |        

See notes to consolidated financial statements.

44

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|OMI CORPORATION AND SUBSIDIARIES                      
|------------------------------------------------------
|                                                      
|CONSOLIDATED BALANCE SHEETS                           
|(In thousands, except per share data)                 
|                                                      
|LIABILITIES
    AND STOCKHOLDERS EQUITY              
|                                                      
|                                                      
|                                                      
|                                                      
|CURRENTLIABILITIES:                                   
|Accounts payable                                      
|                                                      
|Accrued liabilities:                                  
|Deferred charter
       hire revenue                  
|Voyage and vessel                                     
|Interest                                              
|Other                                                 
|Deferred gain on sale of vessels (Note 7)             
|Current portion of long-term debt (Note 5)            
|                                                      
|Total current liabilities                             
|                                                      
|OTHERLIABILITIES                                      
|                                                      
|LONG-TERMDEBT(Note 5)                                 
|                                                      
|DEFERREDGAIN ONSALE OFVESSELS(Note 7)                 
|                                                      
|DEFERREDINCOMETAXES                                   
|                                                      
|COMMITMENTS ANDCONTINGENCIES(Note 17)                 
|STOCKHOLDERS EQUITY:                                 
|Common stock, $0.50 par value; 150,000 shares         
|authorized; shares issued and outstanding: 2002-76,779
|2001-70,248 (Notes 3, 10, 14 and 16)                  
|Capital surplus (Notes 3, 10, 14 and 16)              
|Unearned compensation-restricted stock                
|Retained earnings                                     
|Accumulated other comprehensive loss                  
|                                                      
|Total stockholders equity                            
|                                                      
|TOTAL                                                 
|                                                      

See notes to consolidated financial statements.

45

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OMI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

|                                                                | For the Years Ended December 31, |          
|--------------------------------------------------------------- | -------------------------------- | ---------
|                                                                |                                  |          
|                                                                | 2002                             |          
|                                                                |                                  |          
|CASHFLOWSPROVIDED(USED)BYOPERATINGACTIVITIES:                   |                                  |          
|Net income                                                      | $                                | 15,469   
|Adjustments to reconcile net income to net cash provided        |                                  |          
|by operating activities:                                        |                                  |          
|Depreciation and amortization                                   |                                  | 43,583   
|Loss (gain) on disposal/write down of assetsnet                |                                  | 289      
|Loss on disposal/write down of investments                      |                                  | 675      
|Amortization of deferred gain on sale of vessels                |                                  | (1,303)  
|Amortization of debt issue costs                                |                                  | 2,367    
|Amortization of restricted stock awards                         |                                  | 1,033    
|Provision for loss on lease obligationnet of amortization      |                                  |         
|Amortization of deferred compensation                           |                                  |         
|Deferred income taxes                                           |                                  | (1,406)  
|(Equity) loss in operations of joint venturesnet of            |                                  |          
|dividends received                                              |                                  |         
|Changes in assets and liabilities:                              |                                  |          
|(Increase) decrease in receivables and other current assets     |                                  | (4,814)  
|(Decrease) increase in accounts payable and accrued liabilities |                                  | (1,865)  
|Decrease (increase) in other assets and deferred charges        |                                  | 869      
|(Decrease) increase in other liabilities                        |                                  | (1,050)  
|Other                                                           | 115                              |          
|                                                                |                                  |          
|Net cash provided by operating activities                       | 53,962                           |          
|                                                                |                                  |          
|CASHFLOWS(USED)
PROVIDED BYINVESTINGACTIVITIES:                 |                                  |          
|Proceeds from disposition of vessels and other property         |                                  | 58,009   
|Additions to vessels and other property                         |                                  | (206,757)
|Payments for drydocking                                         |                                  | (5,086)  
|Proceeds from dispositions of joint ventures                    |                                  | 106      
|Proceeds (payments) for investments                             |                                  | 6,129    
|Payment for the purchase of a joint venture interest            |                                  |         
|Escrow of funds                                                 |                                  | 12,000   
|Proceeds from notes receivable                                  | 6,774                            |          
|                                                                |                                  |          
|Net cash used by investing activities                           | (128,825)                        |          
|                                                                |                                  |          
|CASHFLOWSPROVIDED(USED)BYFINANCINGACTIVITIES:                   |                                  |          
|Payments on debt refinanced                                     |                                  | (49,410) 
|Proceeds from debt refinanced                                   |                                  | 65,000   
|Proceeds from issuance of debt                                  |                                  | 134,929  
|Payments on debt                                                |                                  | (72,513) 
|Proceeds from issuance of common stock                          |                                  | 21,483   
|Payments for debt issue costs                                   | (1,466)                          |          
|                                                                |                                  |          
|Net cash provided by financing activities                       | 98,023                           |          
|                                                                |                                  |          
|NETINCREASE(DECREASE)INCASH ANDCASHEQUIVALENTS                  |                                  | 23,160   
|CASH ANDCASHEQUIVALENTS ATBEGINNING OFYEAR                      | 17,730                           |          
|                                                                |                                  |          
|CASH ANDCASHEQUIVALENTS ATEND OFYEAR                            | $                                | 40,890   
|                                                                |                                  |          

See notes to consolidated financial statements.

46

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OMI CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

For The Three Years Ended December 31, 2002
(In thousands)

|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|-------------------------------- | ------------ |  | ------- | ------- | --------- | ------------ | -------- | -------- | ------- | -------- | ---------------------- | ----------- | ----- | ------- | - | -------
|                                 |              |  |         |         |           |              |          |          |         |          |                        | Accumulated |       |         |   |        
|                                 |              |  |         |         |           |              |          | Unearned |         |          | Other
         Compre- | Total       |       | Compre- |  
|                                 | Common Stock |  |         |         | Retained  | Compensation |          | Deferred | hensive | Stock-   |                        | hensive     |      
|                                 |              |  | Capital |         | (Deficit) | Restricted   | Treasury | Compen-  | (Loss)  | holders |                        | Income      |      
|                                 | Shares       |  | Amount  |         | Surplus   |              | Earnings | Stock    | Stock   | sation   | Income                 | Equity      |       | (Loss)  |  
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |  
|Balance at January 1, 2000       | 49,394       |  | $       | 24,697  |           | $            | 218,869  |          | $       | (62,966) |                        |             | $     | (8,834) |   |        
|Comprehensive income:            |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Net income                       |              |  |         |         |           |              |          |          |         | 53,085   |                        |             |       |         |   |        
|Unrealized loss on securities    |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Comprehensive income             |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Issuance of common stock         | 11,710       |  |         | 5,855   |           |              | 20,984   |          |         |          |                        |             |       |         |   |        
|Exercise of stock options        | 320          |  |         | 160     |           |              | 1,268    |          |         |          |                        |             |       |         |   |        
|Issuance of stock options        |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|(Note 14)                        |              |  |         |         |           |              | 2,324    |          |         |          |                        |             |       |         | $ | (1,313)
|Amortization of deferred         |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|compensation (Note 14)           |              |  |         |         |           |              |          |          |         |          | 832                    |             | 832   |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Balance at December 31, 2000     | 61,424       |  |         | 30,712  |           |              | 243,445  |          |         | (9,881)  |                        |            |       | (8,834) |   | (481)  
|Comprehensive income:            |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Net income                       |              |  |         |         |           |              |          |          |         | 82,344   |                        |             |       |         |   |        
|Unrealized gain on securities    |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Derivative losses                |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Comprehensive income             |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Amortization of deferred         |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|compensation                     |              |  |         |         |           |              | (481)    |          |         |          |                        |             |       |         |   |        
|Exercise of stock options        |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|(Note 14)                        | 122          |  |         | 61      |           |              | 401      |          |         |          |                        |             |       |         |   |        
|Issuance of common stock         |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|(Note 3)                         | 9,830        |  |         | 4,915   |           |              | 62,901   |          |         |          |                        |             |       |         |   |        
|Issuance of restricted stock     |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|awards (Note 16)                 | 900          |  |         | 450     |           |              | 4,671    |          |         |          | $                      | (5,121)     |       |         |   |        
|Retirement of treasury stock     |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|(Note 16)                        | (2,028)      |  |         | (1,014) |           |              | (7,820)  |          |         |          |                        |             |       | 8,834   |   |        
|Amortization of restricted stock |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|awards (Note 16)                 |              |  |         |         |           |              |          | 510      |         |          |                        |             | 510   |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Balance at December 31, 2001     | 70,248       |  |         | 35,124  |           |              | 303,117  |          |         | 72,463   |                        | (4,611)     |       |        |   |        
|Comprehensive income:            |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Net income                       |              |  |         |         |           |              |          |          |         | 15,469   |                        |             |       |         |   |        
|Unrealized gain on securities    |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Reclassification adjustment for  |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|gains realized in net income     |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Derivative losses                |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Comprehensive income             |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Issuance of common stock         |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|(Notes 3, 16)                    | 6,511        |  |         | 3,256   |           |              | 18,260   |          |         |          |                        |             |       |         |   |        
|Issuance of restricted stock     | 20           |  |         | 10      |           |              | 70       |          |         |          |                        | (80)        |       |         |   |        
|Amortization of restricted stock |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|awards                           |              |  |         |         |           |              |          | 1,033    |         |          |                        |             | 1,033 |         |   |        
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        
|Balance at December 31, 2002     | 76,779       |  | $       | 38,390  |           | $            | 321,447  |          | $       | 87,932   | $                      | (3,658)     | $     | -      |   | $      
|                                 |              |  |         |         |           |              |          |          |         |          |                        |             |       |         |   |        

See notes to consolidated financial statements.

47

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS

For the Three Years Ended December 31, 2002(All tabular amounts are in thousands)

Note 1Summary of Significant Accounting Policies

Business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 Company is a successor to Universal Bulk Carriers, Inc. (UBC). UBC was a
wholly-owned subsidiary of OMI Corp. (Old OMI) until June 17, 1998 at which date the Company was separated from Old OMI (renamed Marine Transport Corporation MTC) through a tax-free distribution (Distribution) to
Old OMI shareholders of one share of UBC common stock for each share of Old OMI common stock. The Company trades under the symbol OMM on the New York Stock Exchange.

ReclassificationsCertain reclassifications have been made to the 2001 and 2000 financial statements to conform to the 2002 presentation.

Principles of ConsolidationThe consolidated financial statements include all subsidiaries which are more than 50 percent owned by OMI. All
significant intercompany accounts and transactions have been eliminated in consolidation.

Investments in joint ventures, in which the Company has the ability to exercise significant influence, but does not control, (generally a 20 to 50 percent ownership interest) are accounted for
by using the equity method of accounting. All other investments are accounted for at cost.

Accounting EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.

Operating Revenues and Voyage ExpensesUnder a voyage charter, the revenues and voyage expenses, which are specific costs associated with the voyage
such as fuel and port charges, are recognized ratably over the duration of the voyage (the percentage of completion method of accounting). Estimated losses under a voyage charter are provided for in full at the time such losses become
evident.

Under a time charter, the revenues are recognized ratably over the charter. When the time charter contains a profit sharing agreement, such additional revenue is only recognized after meeting a
threshold, which is the minimum yearly charter hire.

OMIs accounting policy for recognition of voyage freight for vessels operating on voyage charters is on the discharge-to-discharge basis. Under this method, voyage revenue is recognized
evenly over the period from the departure of a vessel from its original discharge port to departure from the next discharge port. Management believes that the discharge-to-discharge method is preferable because it eliminates the uncertainty
associated with the location of the next load port. The method is the predominant one used by shipowners.

Cash EquivalentsCash equivalents represent liquid investments, which mature within 90 days of their purchase. The carrying amount approximates fair
value.

Restricted CashRestricted cash is held in escrow accounts pursuant to escrow agreements and is related to sale/leaseback transactions. The escrow
accounts are collateral for the Companys obligations under certain operating lease arrangements (see Note 7).

Marketable SecuritiesMarketable securities are investments classified as available-for-sale and are recorded at fair value. The fair value is
determined by reference to quoted market prices. These investments totaled $0 at December 31, 2002 and $6,218,000 at December 31, 2001. Net unrealized gains and losses on these investments are credited or charged to Other comprehensive income and
Stockholders Equity. The accumulated unrealized gain at December 31, 2002 and 2001 totaled $0 and $394,000, respectively.

48

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued) (All tabular amounts are in thousands)

Note 1Summary of Significant Accounting Policies (continued)

Vessels, Construction in Progress and Other PropertyVessels and other property are recorded at cost. Depreciation for financial reporting purposes
is provided on the straight-line method based on the estimated useful lives of the assets up to the assets estimated salvage value. The useful lives of the vessels range from 20 to 25 years. Salvage value is based upon a vessels
lightweight tonnage multiplied by a scrap rate.

Interest costs incurred during the construction of vessels (until the vessel is substantially complete and ready for its intended use) are capitalized. The amount of interest capitalized was
$3,114,000 in 2002, $4,052,000 in 2001 and $946,000 in 2000.

Other property and leasehold improvements are amortized on the straight-line method over the shorter of the terms of the lease or estimated useful lives of the assets, which range from three to
eight years.

Expenditures for maintenance, repairs and minor renewals are expensed. Major replacements and renewals are capitalized. In the event that facts and circumstances indicate that the carrying
amount of a vessel may be impaired, an evaluation of recoverability is performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the vessel are compared to the vessels carrying value to determine if
a write down to fair value is required.

DrydockDrydock costs and special surveys are capitalized and are amortized over the period between drydocks and special surveys, which is generally
a two to three year period. The drydock amortization expense was $3,845,000 in 2002, $1,171,000 in 2001 and $305,000 in 2000 and is included in Depreciation and amortization expense.

GoodwillDuring 2000, the unamortized goodwill balance of $1,794,000 was charged to loss on disposal of assets (see Note 11) as a result of the sale
of the remaining vessel which had been acquired in a previous business combination.

Deferred Finance ChargesDeferred finance charges, included in Other assets and deferred charges, were $7,416,000 at December 31, 2002 and
$8,316,000 at December 31, 2001. The charges are amortized over the life of the related debt, and the amount of the expense was $2,367,000 in 2002, $1,618,000 in 2001 and $1,454,000 in 2000.

Earnings Per Common ShareThe Company has adopted Statement of Financial Accounting Standards (SFAS) 128 Earnings Per Share.
SFAS 128 specifies the computation, presentation, and disclosure requirements for earnings per share (EPS). Basic EPS excludes the dilutive effect of stock options. It is based upon the weighted average number of common shares
outstanding during the period.

Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Federal Income TaxesThe Company is a Marshall Islands Corporation. Pursuant to various tax treaties and the current United States Internal Revenue
Code, the Company does not believe its operations prospectively will be subject to income taxes in the United States of America. A benefit for income taxes of $1,406,000 was recorded during the year ended December 31, 2002 which 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.

Stock-Based CompensationThe Company grants options to certain employees and directors to acquire a fixed number of shares with an exercise price
not less than the fair market value of the Companys common stock on the date of grant. The Company also makes restricted stock grants to employees and directors, which are valued based on the market price of OMIs common stock at the
measurement dates, the restrictions on which expire in part three years from grant, five years from grant and at retirement. Unearned compensation arising from the restricted stock grants is shown as a reduction in Stockholders equity in the
consolidated balance sheets and is amortized to expense over the restrictive periods.

49

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued) (All tabular amounts are in thousands)

Note 1Summary of Significant Accounting Policies (continued)

The Company has elected to account for stock-based compensation using the intrinsic value method as prescribed by Accounting Principles Board (APB) Opinion 25 and related
interpretations. Accordingly, no compensation cost, other than for restricted stock mentioned above, was recognized for these plans for the three years ended December 31, 2002, with the exception of certain 2000 grants, which had met the criteria of
compensatory stock options and were fully vested as of December 31, 2002.

The following table illustrates the effect on net income and earnings per share if the fair value method had been applied to all outstanding and unvested awards in each of the three years ended
December 31, 2002.

|                                                     |  | For the Years Ended December 31, |       
|---------------------------------------------------- |  | -------------------------------- | ------
|                                                     |  |                                  |       
|                                                     |  | 2002                             |       
|                                                     |  |                                  |       
|Net income, as reported                              |  | $                                | 15,469
|                                                     |  |                                  |       
|Deduct:                                              |  |                                  |       
|Stock based compensation expense determined by using |  |                                  |       
|the fair value method                                |  | 476                              |       
|                                                     |  |                                  |       
|Pro forma net income                                 |  | $                                | 14,993
|                                                     |  |                                  |       
|                                                     |  |                                  |       
|Basic earnings per common share:                     |  |                                  |       
|Net income per common share, as reported             |  | $                                | 0.22  
|                                                     |  |                                  |       
|Net income per common share, as pro forma            |  | $                                | 0.21  
|                                                     |  |                                  |       
|                                                     |  |                                  |       
|Diluted earnings per common share:                   |  |                                  |       
|Net income per common share, as reported             |  | $                                | 0.22  
|                                                     |  |                                  |       
|Net income per common share, as pro forma            |  | $                                | 0.21  
|                                                     |  |                                  |       

The following table is a summary of the average fair values of options granted during 2002, 2001 and 2000 on the date of grant using the Black-Scholes option pricing model with the assumptions
used for the expected volatility, risk free interest rate and dividend yield rate.

|                                           | For the Years Ended December 31, |     
|------------------------------------------ | -------------------------------- | ----
|                                           |                                  |     
|                                           | 2002                             |     
|                                           |                                  |     
|Average fair value of options granted      | $                                | 3.93
|Expected volatility                        | 73                               | %   
|Risk free interest rate                    | 2.71                             | %   
|Dividend yield rate                        |                                  | n/a 
|Weighted average expected lives of options |                                  | 3.70

Derivatives and Hedging ActivitiesThe Financial Accounting Standards Board (FASB ) issued SFAS 133 as amended, Accounting for
Derivative Instruments and Hedging Activities, which is effective for fiscal years beginning after June 15, 2000. The Company adopted SFAS 133 effective January 1, 2001.

All derivatives are recognized on the Companys balance sheet at their fair value. 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 or a hedge of a net investment in a foreign operation.

50

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued) (All tabular amounts are in thousands)

Note 1Summary of Significant Accounting Policies (continued)

The Company is exposed to market risk, such as changes in interest rates. To manage the volatility relating to this exposure, the Company selectively enters into derivative transactions
pursuant to the Companys policies for hedging practices. Designation is performed on a specific exposure basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding
changes in the fair value or cash flows of the underlying exposures being hedged. The Company does not hold or issue derivative financial instruments for trading purposes.

As of December 31, 2002 and 2001, the Company had interest rate swaps and Future Rate Agreements (FRAs) to effectively convert a portion of its debt from a floating to a fixed-rate
basis. The swaps and FRAs are designated and qualify as cash flow hedges. These swap contracts and FRAs were effective hedges and therefore no ineffectiveness was recorded in the Consolidated Statements of Income.

Newly Issued Accounting StandardsThe FASB recently issued statements, which are summarized as follows:

SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets was issued in October 2001. SFAS 144 replaces FASB Statement 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be
eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of SFAS 144 are effective for financial statements issued for interim periods and fiscal years beginning after December 15, 2001 and are to be applied
prospectively.

The Company did not have discontinued operations as of December 31, 2002 and the adoption of this statement had no impact on the financial statements.

SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections was issued in April 2002. The Statement updates, clarifies
and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax
effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. Statement 64 amended Statement 4, and is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish
accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. SFAS 145 amends Statement 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This Statement also makes technical corrections to existing pronouncements. While those corrections
are not substantive in nature, in some instances, they may change accounting practices. This Statement is effective for fiscal years beginning after May 15, 2002. Since this new Statement was issued to clarify and simplify existing pronouncements
there is no effect on the Companys financial statements.

SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities was issued in June 2002. SFAS 146 addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires
recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to when the entity commits to an exit plan under EITF Issue No. 94-3. The Company is required to adopt SFAS 146 for exit or
disposal activities that are initiated after December 31, 2002.

51

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands)

Note 1Summary of Significant Accounting Policies (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. The disclosure provisions of 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, above.

In November 2002, the FASB issued Financial Interpretation No. 45 (FIN 45), which elaborates on the existing disclosure requirements for most guarantees, including loan guarantees.
It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its
interim and annual financial statements. FIN 45 does not apply to certain guarantee contracts, such as those issued by insurance companies or for a lessees residual value guarantee embedded in a capital lease. The provisions related to
recognizing a liability at inception of the guarantee for the fair value of the guarantors obligations would not apply to product warranties or to guarantees accounted for as derivatives. The initial recognition and initial measurement
provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless of the guarantors fiscal year-end. The disclosure requirements in FIN 45 are effective for financial statements of interim or annual
periods ending after December 15, 2002. The adoption of FIN 45 did not have an effect on the Companys financial position or results of operations.

In January 2003, the FASB issued 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.

Segment ReportingThe Company accounts for its segments in accordance with SFAS 131, Disclosure About Segments of an Enterprise and Related
Information. SFAS 131 requires that a public company report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the Companys methods of internal reporting and management
structure, the Company has two reportable segments, the Crude Oil Fleet and the Product Carrier Fleet.

52

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands)

Note 2Earnings Per Common Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share assumes the
foregoing and the exercise of all stock options (see Note 14) using the treasury stock method and the conversion of the 7% convertible note due 2004, to the extent dilutive (see Note 5).

The components of the denominator for the calculation of basic earnings per share and diluted earnings per share is as follows:

|                                           | For the Years Ended December 31, |     
|------------------------------------------ | -------------------------------- | ----
|                                           |                                  |     
|                                           | 2002                             |     
|                                           |                                  |     
|Basic earnings per share:                  |                                  |     
|Weighted average common shares outstanding | 70,628                           |     
|                                           |                                  |     
|Diluted earnings per share:                |                                  |     
|Weighted average common shares outstanding | 70,628                           |     
|Options                                    | 204                              |     
|                                           |                                  |     
|Weighted average common shares-diluted     | 70,832                           |     
|                                           |                                  |     
|Basic earnings per common share:           |                                  |     
|Net income per common share                | $                                | 0.22
|                                           |                                  |     
|Diluted earnings per common share:         |                                  |     
|Net income per common share                | $                                | 0.22
|                                           |                                  |     

The effect of the assumed conversion of the 7% convertible note due 2004 was not included in the computation of diluted earnings per share in 2002, 2001 and 2000 because the average price of
OMIs stock was less than the stock conversion price of $7.375.

Note 3Supplemental Cash Flow Information

During the years ended December 31, 2002, 2001 and 2000, interest paid totaled $24,472,000, $20,386,000 and $26,460,000, respectively.

During 2001, OMI issued in aggregate 5,775,000 shares of common stock between $6.00 and $8.00 per share for a total value of $41,300,000 as partial payment for the acquisitions of six vessels,
and 4,049,000 shares of common stock were issued at $7.00 per share for a total value of $28,343,000 for two vessels that were under construction at December 31, 2001.

OMI issued 11,073 shares at $2.89 to one director in lieu of his annual fee of $32,000 in 2002, a total of 6,154 shares at $6.50 to two directors and 26,667 shares at $2.25 to three directors
in 2001 and 2000, respectively, in lieu of their annual fees of $20,000 for each director.

During February 2000, OMI issued 599,998 shares at $2.50 per share for a total value of $1,500,000 as partial payment for the acquisition of a Suezmax newbuilding, which was acquired in March
2000.

53

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands)

Note 4Investments in Joint Ventures

The operating results of the joint ventures have been included in the accompanying consolidated financial statements on the basis of ownership as follows:

|                                                 | Percent of
|------------------------------------------------ | ----------
|                                                 | Ownership 
|                                                 |           
|Alliance Chartering LLC (Alliance)             | 50.0(1)   
|Amazon Transport Inc. (Amazon)                | 49.0(2)   
|Geraldton Navigation Company Inc. (Geraldton) | 49.9(3)   
|International Product Carriers Limited (IPC)   | 50.0(4)   

|   
|---
|(1)
|(2)
|(3)
|(4)

AllianceDuring the year ended December 31, 2002, OMIs Suezmax fleet was chartered out on the spot market by Alliance, a joint venture OMI
operates in conjunction with Frontline Ltd. During 2001 and 2000, all of OMIs Suezmax vessels, with the exception of one vessel on time charter, were chartered out in the spot market by Alliance. There was no initial investment required for
this joint venture to operate.

AmazonOn June 30, 2000, OMI purchased its partners interest in Amazon, a company previously 49 percent owned. The acquisition was based on a
nominal ship value for the Companys ultra large crude carrier (ULCC) of $30,000,000. OMI paid the purchase price partially with $7,900,000 in cash and by issuing 1,500,000 shares of its common stock to its partner at a price of
$5.125.

GeraldtonDuring 2000, OMI sold its 49.9 percent investment in Geraldton to its partner. At December 31, 1999, OMI wrote down its investment in
Geraldton to its net realizable value. An adjustment for an additional loss of $536,000 was recorded in the first quarter of 2000 relating to the disposal of this venture.

IPCIn 2001, the Company had six vessels chartered to IPC and recorded aggregate revenues of $7,626,000 (4% of total revenues). In 2000, the Company
had ten vessels (four of which were sold during the year) chartered to IPC and recorded aggregate revenues of $30,643,000 (16% of total revenues). These amounts were included in the revenue of the Company since the operations of IPC were not
consolidated. The revenues received by IPC were from numerous customers into a pool, which was divided among the vessels in the pool. During the first quarter 2001, OMIs partner, Osprey Maritime Limited, following a change in control, sold all
of its product tankers (including three to OMI, see Note 10) and the parties agreed to disband IPC. As a result of IPC being dissolved, OMI wrote down its investment by $1,617,000 in 2001.

Summarized combined financial information pertaining to all affiliated companies accounted for by the equity method is as follows:

|                        |  | For the Years Ended |       
|----------------------- |  | ------------------- | ------
|                        |  | December 31,        |       
|                        |  |                     |       
|                        |  | 2001                |       
|                        |  |                     |       
|Results of operations:  |  |                     |       
|Revenues                |  | $                   | 43,425
|Operating (loss) income |  |                     | (131) 
|Net income              |  |                     |      

54

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands)

|Note 4Investments in Joint Ventures (continued)                                                                   |  |                     |              |       |        |         | 
|------------------------------------------------------------------------------------------------------------------ |  | ------------------- | ------------ | ----- | ------ | ------- | 
|                                                                                                                   |  |                     |              |       |        |         | 
|                                                                                                                   |  |                     | December 31, |      
|                                                                                                                   |  |                     |              |      
|                                                                                                                   |  |                     | 2001         |      
|                                                                                                                   |  |                     |              |      
|Net Assets:                                                                                                        |  |                     |              |      
|Currents assets                                                                                                    |  |                     |              |       | $      | 5,157   | 
|Vessels and other property-net                                                                                     |  |                     |              |       |        | 2       | 
|Other assets                                                                                                       |  |                     |              |       | 231    |        
|                                                                                                                   |  |                     |              |       |        |        
|Total assets                                                                                                       |  |                     |              |       | 5,390  |        
|                                                                                                                   |  |                     |              |       |        |        
|Less:                                                                                                              |  |                     |              |       |        |         | 
|Current liabilities                                                                                                |  |                     |              |       | 1,824  |        
|                                                                                                                   |  |                     |              |       |        |        
|Total liabilities                                                                                                  |  |                     |              |       | 1,824  |        
|                                                                                                                   |  |                     |              |       |        |        
|Shareholders and partners equity                                                                                 |  |                     |              |       | $      | 3,566   | 
|                                                                                                                   |  |                     |              |       |        |         | 
|                                                                                                                   |  |                     |              |       |        |         | 
|Dividends received from joint ventures were as follows:                                                            |  |                     |              |       |        |         | 
|                                                                                                                   |  | For the Years Ended |             
|                                                                                                                   |  | December 31,        |             
|                                                                                                                   |  |                     |             
|                                                                                                                   |  |                     | 2001         |       | 2000   |        
|                                                                                                                   |  |                     |              |       |        |        
|OMI-Heidmar(1)                                                                                                     |  | $                   | 2,494        |       | $      |        | 
|Geraldton                                                                                                          |  |                    |              | 1,209 |       
|                                                                                                                   |  |                     |              |       |       
|Total                                                                                                              |  | $                   | 2,494        |       | $      | 1,209   | 
|                                                                                                                   |  |                     |              |       |        |        
|                                                                                                                   |  |                     |              |       |        |         | 
|(1) The Company sold its interest to its partner in 1999. Dividends represent the settlement of the joint venture. |  |                     |              |       |        |         | 
|                                                                                                                   |  |                     |              |       |        |         | 
|                                                                                                                   |  |                     |              |       |        |         | 
|Note 5Long-Term Debt and Credit Arrangements                                                                      |  |                     |              |       |        |         | 
|                                                                                                                   |  |                     |              |       |        |         | 
|Long-term debt consists of the following:                                                                          |  |                     |              |       |        |         | 
|                                                                                                                   |  | December 31,        |             
|                                                                                                                   |  |                     |             
|                                                                                                                   |  | 2002                |              | 2001  |       
|                                                                                                                   |  |                     |              |       |       
|Term loans under bank credit agreements at a margin plus variable rates                                            |  |                     |              |       |        |         | 
|above the London Interbank Offering Rate (LIBOR)(1), (2)                                                         |  | $                   | 240,140      |       | $      | 311,534 | 
|Reducing revolving facilities at a margin plus variable rates above LIBOR(1)(2)                                    |  |                     | 269,410      |       |        | 119,391 | 
|7.00% Convertible Note due 2004 (convertible at $7.375 per share)                                                  |  |                     | 1,011        |       | 1,629  |        
|                                                                                                                   |  |                     |              |       |       
|Total                                                                                                              |  |                     | 510,561      |       |        | 432,554 | 
|                                                                                                                   |  |                     |              |       |        |         | 
|Less current portion of long-term debt:                                                                            |  |                     |              |       |        |         | 
|Scheduled amortization payments of debt                                                                            |  |                     | 32,602       |       | 40,238 |        
|                                                                                                                   |  |                     |              |       |       
|Long-term debt                                                                                                     |  | $                   | 477,959      |       | $      | 392,316 | 
|                                                                                                                   |  |                     |              |       |        |         | 

|   
|---
|(1)
|(2)

On March 14, 2003, the Company consolidated, amended and restated two loan agreements (the $310 Facility and $78 Facilitysee below for description of these facilities). 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 secured by 18 vessels and
has a balloon of

55

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands)

Note 5Long-Term Debt and Credit Arrangements (continued)

$111,000,000 in 2010 to be paid with the final quarterly payment. The availability under the $245 Facility reduces by $5,000,000 for the first 20 quarters and then by $4,250,000 for the next eight quarters. Upon the
disposal of the two product carriers (see Note 17) in the second quarter 2003, the facility will be reduced by approximately $6,900,000. At March 28, 2003, $222,328,000 was drawn. The consolidated financial statements gives effect for the March 14,
2003 agreement.

Reducing Revolving Facilities

On July 27, 2001, OMI entered into a six year $348,000,000 reducing revolving credit facility (the $348 Facility). The $348 Facility has been and will be used to provide up to 65
percent financing of pre-delivery installments and final payments at delivery for eleven newbuilding vessels, with deliveries scheduled through July 2003, acquisition financing and refinancing of four secondhand vessels purchased in the first half
of 2001 and for general corporate purposes up to the available amount. This loan includes interest rate margins based on a pricing ratio grid (currently 2.125% over LIBOR, reducing to 2.00% at March 31, 2003). The availability of the facility
reduces quarterly based on a 17-year amortization schedule from delivery of the vessels until September 2003, and thereafter $6,539,000 per quarter until July 27, 2007 at which time the outstanding balance is due. At December 31, 2002, the Company
had drawn $221,320,000 with $92,000 available. The remainder of the Facility becomes available when construction and delivery payments are made (see Note 17). As of March 28, 2003, OMI had $22,799,000 available.

On March 27, 2002, the Company entered into a $78,000,000 (the $78 Facility) reducing revolving credit facility secured by first mortgages on two vessels and second mortgages on 16
vessels. As of December 31, 2002, the line had been reduced to $70,678,000 and the Company had $22,588,000 available under the line. On March 14, 2003, this facility was rolled into the amended and restated $245 Facility described above.

Term Loans

The Company had a term loan agreement, secured by 16 vessels, in the original amount of $310,000,000 (the $310 Facility), which had a balance of $164,290,000 at December 31, 2002.
In March 2002, this Facility was amended to reduce the then three remaining 2002 quarterly payments from $10,000,000 to $6,250,000 and increase the balloon payment by $11,250,000. In April 2002, the 15 remaining quarterly payments (including the
three in 2002) were reduced to $6,051,000 as a result of the sale of a vessel. The balloon payment due at maturity in October 2005 was $91,683,000. At December 31, 2002, the Companys interest rate margin was 2.25% over LIBOR. On March 14,
2003, the $310 Facility was amended and restated in the $245 Facility (see above).

In September 2001, the Company obtained an eight-year $40,000,000 term loan to partially finance the purchase of two product carrier newbuildings, one of which was delivered on September 10,
2001 and the other on October 12, 2001. The loan is split into two $20,000,000 tranches. At December 31, 2002, the balance of the loan was $36,400,000. The loan for each tranche is being repaid in 32 consecutive quarterly installments, the first 20
in the amount of $450,000 each and the next 12 in the amount of $350,000 each, with a balloon payment in the amount of $6,800,000 due and payable together with the last installment. The outstanding balance of the loan bears interest at LIBOR plus an
applicable margin based on OMIs ratio of consolidated funded debt to consolidated adjusted EBITDA, as defined, on a trailing four quarter basis. At December 31, 2002, the Companys interest rate margin was 2.0% over LIBOR.

In November 2001, the Company obtained a seven-year $44,000,000 term loan to partially finance the purchase of two product carrier newbuildings, one of which was delivered on December 17, 2001
and the other of which was delivered on March 26, 2002. The loan is split into two $22,000,000 tranches. At December 31, 2002, the balance of the loan was $39,450,000. Each tranche is being repaid in 28 quarterly installments (the first 12 at
$650,000 and next 16 at $375,000) plus a balloon of $8,200,000 due with the last installment. The outstanding balance of the loan bears interest at LIBOR plus an applicable margin. During the first three years of this loan the margin is 1.00
percent

56

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS(Continued)

(All tabular amounts are in thousands)

Note 5Long-Term
        Debt and Credit Arrangements (continued)

as long as the secured vessels remain on time charter.
    During the remaining four years, the margin will be based on OMIs ratio
    of consolidated funded debt to consolidated adjusted EBITDA, as defined,
    on a trailing four quarter basis.

Restrictive Covenants

All loan agreements
    contain restrictive covenants as to cash or working capital, net worth, maintenance
    of specified financial ratios and collateral values. They restrict the Companys
    ability to make certain payments, such as dividends and repurchase of its
    stock. Pursuant to the loan agreements liens against specific assets were
    granted and other liens against those assets were prohibited. As of December
    31, 2002, the Company was in compliance with its covenants.

Maturities

Aggregate maturities
    of debt during the next five years from December 31, 2002, after the refinancing
    described above, are $32,602,000 in 2003, $29,101,000 in 2004, $43,157,000
    in 2005, $46,552,000 in 2006 and $170,175,000 in 2007.

Interest-Rate Swaps

OMI entered into
    interest-rate swap agreements to manage interest costs and the risk associated
    with changing LIBOR interest rates. As of December 31, 2002, we had eight
    interest rate swaps aggregating $267,600,000. All eight swaps have been designated
    and qualify as cash flow hedges. The swaps fix the interest rate before margins
    on various debt tranches within a range of 2.07% to 4.86% from October 2001
    to October 2005. 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). These transactions have
    been designated as cash flow hedges. As of December 31, 2002 the Company
    has recorded a liability of $6,175,000 related to the fair market value of
    these hedges and a charge correspondingly to Other comprehensive income.

The changes in the notional amounts were as follows:

|                                                         | December
          31, |        
|-------------------------------------------------------- | ---------------------- | -------
|                                                         |                        |        
|                                                         | 2002                   |        
|                                                         |                        |        
|Notional principal amount, beginning of the
        year | $                      | 175,000
|Increase of notional amounts                             |                        | 152,600
|Reductions of notional amounts                           | (60,000)               |        
|                                                         |                        |        
|Notional principal amount, end of the year               | $                      | 267,600
|                                                         |                        |        



The Company had one
    interest-rate swap agreement with a commercial bank at January 1, 2000 which
    matured in June 2000. The agreement effectively changed the Companys
    interest-rate exposure on floating rate loans to a fixed rate of 6.98 %.
    The differential paid/received was recognized as an adjustment to interest
    expense over the life of the agreement.

Interest expense
    pertaining to interest-rate swaps for the years ended December 31, 2002,
    2001, and 2000 was $4,128,000, $945,000 and $32,000, respectively. The amount
    that is expected to be reclassified from Other comprehensive income to the
    Consolidated Statement of Operations within the next twelve months has been
    estimated to be approximately $3,291,000.

Future Rate Agreements

In February 2002,
    OMI entered into five FRAs for an aggregate notional value of $95,289,000.
    The FRAs fixed the interest rate before margins on various debt tranches
    within a range of 2.355% to 2.50% and expired in December 2002. In October
    2002, OMI entered into four more FRAs of the $348 Facility, for an aggregate
    notional value of

57

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
      
  (All tabular amounts are in thousands)

Note 5Long-Term
        Debt and Credit Arrangements (continued)

$91,000,000, which have been designated and qualify
    as cash flow hedges. The FRAs fixed the interest rate before margins on various
    debt tranches within a range of 1.72% to 1.86% beginning May 2003 and expire
    in December 2003. The Company has recorded a liability of $114,000 related
    to the fair market value of these hedges and a charge correspondingly to
    Other comprehensive income. Interest expense pertaining to FRAs recorded
    to the Consolidated Statement of Operations for the year ended December 31,
    2002 was $130,000. The following table summarizes the FRAs:

The changes in the notional amounts were as follows:

|                                                         | December
          31, |        
|-------------------------------------------------------- | ---------------------- | -------
|                                                         |                        |        
|                                                         | 2002                   |        
|                                                         |                        |        
|Notional principal amount, beginning of the
        year | $                      |       
|Increase of notional amounts                             |                        | 186,289
|Reductions of notional amounts                           | (95,289)               |        
|                                                         |                        |        
|Notional principal amount, end of the year               | $                      | 91,000 
|                                                         |                        |        

Note 6Fair
        Value of Financial Instruments

The estimated fair values of the Companys
    financial instruments are as follows:

|                                                         | December
          31, |        
|-------------------------------------------------------- | ---------------------- | -------
|                                                         |                        |        
|                                                         | 2002                   |        
|                                                         |                        |        
|                                                         | Carrying               |        
|                                                         | Value                  |        
|                                                         |                        |        
|Cash and cash equivalents                                | $                      | 40,890 
|Notes receivable                                         |                        | 37     
|Investments (net of unrealized loss on securities)       |                        |       
|Marketable securities (net of unrealized gain
        on |                        |        
|securities)                                              |                        |       
|Liability for interest-rate swaps and FRAs               |                        | 6,289  
|Total debt                                               |                        | 510,561

The fair value of
    long-term debt is estimated based on current rates offered to the Company
    for similar debt of the same remaining maturities. The carrying value approximates
    the fair market value for the variable rate loans. The fair value of interest-rate
    swaps (used for purposes other than trading) is the estimated amount the
    Company would pay to terminate swap agreements at the reporting date, taking
    into account current interest rates and the current credit-worthiness of
    the swap counter-parties.

During the year ended
    December 31, 2002, OMI sold marketable securities and received net proceeds
    of approximately $6,129,000. The sale resulted in a net gain of $303,000.

During 2000, OMI
    recorded a loss on the write down of its investments of $2,435,000. At December
    31, 2001, OMIs investment (net of unrealized loss on securities) in
    two investments was $673,000. The unrealized loss of these securities, which
    is charged to Other comprehensive income and Stockholders Equity was
    $132,000 for the year-ended December 31, 2001. During the year ended December
    31, 2002, OMI wrote off $1,062,000 in the Consolidated Statements of Income,
    representing the remaining investment in both marketable securities and the
    reversal of the associated unrealized loss previously recorded.

58

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
      (All tabular amounts are in thousands)

Note 7Operating
        Lease Expense

Total rental expense
    was $16,517,000, $9,192,000 and $16,929,000 for the years ended December
    31, 2002, 2001 and 2000, respectively. Leases are for vessels and office
    space.

The future minimum
    rental payments required by year, under operating leases subsequent to December
    31, 2002, are as follows:

|2003       |  | $      | 23,080  | 
|---------- |  | ------ | ------- | 
|2004       |  |        | 19,153  | 
|2005       |  |        | 19,102  | 
|2006       |  |        | 18,661  | 
|2007       |  |        | 9,191   | 
|Thereafter |  | 22,631 |        
|           |  |        |        
|Total      |  | $      | 111,818 | 
|           |  |        |         | 

During October 2002, OMI chartered-in a handymax
    product carrier, the JAG PRATAP, for a one year period.

In June 2002, the
    Company exercised its option to reacquire the COLUMBIA (using approximately
    $29,000,000 in cash, $12,000,000 of cash in an escrow account and $3,700,000
    from an associated note receivable) and simultaneously sold the vessel to
    an unrelated party for $50,000,000. The vessel, renamed OLIVER JACOB, has
    been time chartered back for a period of eight years and has been accounted
    for as an operating lease. The gain on the sale of approximately $4,700,000
    is being amortized over the charter period (see Note 10). The COLUMBIA, originally
    purchased as a newbuilding by OMI in January 1999, was sold in a sale leaseback
    transaction in June 1999. The lease was also accounted for as an operating
    lease.

During December 2001,
    OMI sold a vessel, the SOYANG, which is being chartered back from the purchaser
    for a period of five years, not including options. The resulting lease is
    being accounted for as an operating lease. The gain on the sale of approximately
    $4,900,000 is being amortized over the five years (see Note 10). As part
    of the charter hire agreement, the Company deposited $5,000,000 in escrow
    ($1,000,000 in Current restricted cash and $4,000,000 in Non-current restricted
    cash), which is being repaid ratably over the charter period. As of December
    31, 2002, the balance in escrow was $4,000,000.

Note 8Time
        Charter Revenue

Time charters to
    third parties of the Companys owned vessels are accounted for as operating
    leases. Minimum future revenues (not including profit sharing or charterers options)
    to be received subsequent to December 31, 2002 on these time charters are
    as follows:

|2003       |  | $      | 101,741 | 
|---------- |  | ------ | ------- | 
|2004       |  |        | 99,031  | 
|2005       |  |        | 52,405  | 
|2006       |  |        | 33,262  | 
|2007       |  |        | 23,750  | 
|Thereafter |  | 26,093 |        
|           |  |        |        
|Total      |  | $      | 336,282 | 
|           |  |        |         | 

59

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
      (All tabular amounts are in thousands)

Note 9Early
        Termination of Operating Lease Obligations

During October 2000,
    the owner of the HARRIET and the ALTA, which were Suezmax tankers time chartered
    to OMI, gave notice of early termination as permitted under the charters;
    one vessel was redelivered in January 2001 and the other vessel was redelivered
    to the owner in March 2001. As provided in the charter hire agreements, the
    early termination of these charters resulted in certain accounting adjustments
    reflected in the fourth quarter 2000 and first quarter 2001 results. Gains
    recognized over the remaining lease period upon notice of early termination
    of $3,237,000 for the year ended December 31, 2000 and $1,440,000 for the
    year ended December 31, 2001, were due to the accelerated amortization of
    the deferred gain on the sale/leaseback of one vessel, which was previously
    owned by OMI, and acceleration of the provision for loss on lease obligation
    that was being amortized over the original lease term for the other vessel.

Note 10Acquisitions
        of Vessels

The following table summarizes the acquisitions
    of vessels during the years ended December 31, 2002 and 2001:

|             |  |           |  | Date           |  | Capitalized        |        
|------------ |  | --------- |  | -------------- |  | ------------------ | -------
|Vessel       |  | Type      |  | Acquired       |  | Cost
          (1) |        
|             |  |           |  |                |  |                    |        
|2002:        |  |           |  |                |  |                    |        
|             |  |           |  |                |  |                    |        
|AMAZON       |  | Handymax  |  | January 2002   |  | $                  | 29,896 
|SAN JACINTO  |  | Handymax  |  | March 2002     |  |                    | 29,854 
|ORONTES      |  | Handysize |  | March 2002     |  |                    | 30,396 
|DAKOTA       |  | Suezmax   |  | September 2002 |  |                    | 58,491 
|DELAWARE     |  | Suezmax   |  | October 2002   |  | 58,814             |        
|             |  |           |  |                |  |                    |        
|Total        |  |           |  |                |  | $                  | 207,451
|             |  |           |  |                |  |                    |        
|             |  |           |  |                |  |                    |        
|2001:        |  |           |  |                |  |                    |        
|             |  |           |  |                |  |                    |        
|SOMJIN       |  | Suezmax   |  | January 2001   |  | $                  | 61,511 
|RACER        |  | Handysize |  | February 2001  |  |                    | 13,238 
|RADIANCE     |  | Handysize |  | March 2001     |  |                    | 13,952 
|RAIN         |  | Handysize |  | March 2001     |  |                    | 14,026 
|RHONE        |  | Handysize |  | April 2001     |  |                    | 29,041 
|BANDAR AYU   |  | Handysize |  | June 2001      |  |                    | 21,827 
|TANDJUNG AYU |  | Handysize |  | June 2001      |  |                    | 21,818 
|CHARENTE     |  | Handysize |  | September 2001 |  |                    | 32,111 
|MADISON      |  | Handysize |  | September 2001 |  |                    | 30,019 
|MARNE        |  | Handysize |  | September 2001 |  |                    | 30,919 
|TRINITY      |  | Handysize |  | October 2001   |  |                    | 29,815 
|ASHLEY       |  | Handysize |  | November 2001  |  |                    | 30,703 
|OHIO         |  | Handysize |  | December 2001  |  | 30,104             |        
|             |  |           |  |                |  |                    |        
|Total        |  |           |  |                |  | $                  | 359,084
|             |  |           |  |                |  |                    |        

(1) Capitalized costs include capitalized interest.

60

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL
      STATEMENTS(Continued)
  (All tabular amounts are in thousands)

Note 11Disposal
        Of Vessels

During April 2002, OMI sold a 1988 built product
    carrier for $9,100,000 and recognized a loss on sale of $302,000.

During December 2001
    and June 2002, OMI sold two vessels, the SOYANG and the COLUMBIA, respectively,
    and subsequently chartered both vessels back from the purchasers (see Note
    7). Both transactions are accounted for as operating leases and the resulting
    gain on the sale of these vessels aggregating approximately $9,600,000 is
    being amortized (net of charter hire expense) over the respective lease periods.

In May 2001, OMI
    sold one of the 1990 built product carriers purchased in March 2001 for $14,800,000
    and recognized a gain on the sale of $635,000.

In June 2001, the
    Company sold a 2000 built Suezmax tanker for $64,000,000 and recognized a
    gain of $17,441,000 from the sale of the vessel.

In March, May and
    August 2000, four product carriers and one aframax vessel were sold. Three
    of the product carriers and the aframax vessel were written down to their
    estimated net realizable values in the year ended December 31, 1999. Adjustments
    to the loss on disposal of assets were recorded at the sale dates.

Loss (gain) on disposal/writedown of assets-net
    consists of the following:

|                                                                    | For
          the Years Ended December 31, |    
|------------------------------------------------------------------- | ------------------------------------------ | ---
|                                                                    |                                            |    
|                                                                    | 2002                                       |    
|                                                                    |                                            |    
|Loss (gain) on disposed of assets                                   | $                                          | 289
|Gain on early termination of lease obligations
        (see Note 9) |                                            |   
|Loss on write down of vessels                                       |                                           |    
|                                                                    |                                            |    
|Total                                                               | $                                          | 289
|                                                                    |                                            |    

During March 2000,
    we wrote down two vessels which were classified as Assets to be disposed
    of at year end 1999 to reflect values of similar vessels contracted for sale
    during March 2000. A charge of $3,000,000 was recorded to Loss on disposal/write
    down of assets during the first quarter 2000.

As a result of the
    current market condition, the Company re-evaluated the carrying value of
    its remaining vessels against the projected undiscounted cash flows as required,
    under the provisions of SFAS 144 and concluded that no write downs were necessary
    as of December 31, 2002.

Note 12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 Fleetincludes
    vessels that normally carry crude oil and dirty products. The
    current fleet includes four sizes of vessels; Suezmax, ULCC, Panamax and
    handysize. In 2000, the fleet included one aframax, which was sold in March
    2000.

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

61

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
  (All tabular amounts are in thousands)

Note 12Disposal
        Of Vessels (continued)

The following is
    a summary of the operations by major operating segments for the three years
    ended December 31, 2002:

|                                                                    | For
          the Years Ended December 31, |        
|------------------------------------------------------------------- | ------------------------------------------ | -------
|                                                                    |                                            |        
|                                                                    | 2002                                       |        
|                                                                    |                                            |        
|Revenues:                                                           |                                            |        
|Crude Oil Fleet                                                     | $                                          | 93,319 
|Product Carrier Fleet                                               |                                            | 105,606
|Other                                                               | 127                                        |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 199,052
|                                                                    |                                            |        
|Time Charter Equivalent Revenues:(1)                                |                                            |        
|Crude Oil Fleet                                                     | $                                          | 66,491 
|Product Carrier Fleet                                               |                                            | 96,977 
|Other                                                               |                                           |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 163,468
|                                                                    |                                            |        
|Operating Income:                                                   |                                            |        
|Crude Oil Fleet(2)                                                  | $                                          | 9,725  
|Product Carrier Fleet(2)                                            | 37,764                                     |        
|                                                                    |                                            |        
|                                                                    |                                            | 47,489 
|General and administrative
        expense not allocated to vessels |                                            | (8,716)
|Other                                                               | 129                                        |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 38,902 
|                                                                    |                                            |        
|Identifiable Assets:                                                |                                            |        
|Crude Oil Fleet                                                     | $                                          | 416,829
|Product Carrier Fleet                                               | 522,795                                    |        
|                                                                    |                                            |        
|                                                                    |                                            | 939,624
|Investments in, and advances
        to joint ventures              |                                            | 138    
|Cash and cash equivalents                                           |                                            | 40,890 
|Other                                                               | 8,969                                      |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 989,621
|                                                                    |                                            |        
|Capital Expenditures:                                               |                                            |        
|Crude Oil Fleet(3)                                                  | $                                          | 112,530
|Product Carrier Fleet(4)                                            |                                            | 94,086 
|Other                                                               | 141                                        |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 206,757
|                                                                    |                                            |        
|Depreciation and Amortization:                                      |                                            |        
|Crude Oil Fleet                                                     | $                                          | 19,956 
|Product Carrier Fleet                                               |                                            | 23,258 
|Other                                                               | 369                                        |        
|                                                                    |                                            |        
|Total                                                               | $                                          | 43,583 
|                                                                    |                                            |        

62

---

OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL
      STATEMENTS

(All tabular amounts are in thousands)

Note 12Financial
        Information Relating to Segments (continued)

|                      | For
          the Years Ended December 31, |       
|--------------------- | ------------------------------------------ | ------
|                      |                                            |       
|                      | 2002                                       |       
|                      |                                            |       
|Interest Expense:     |                                            |       
|Crude Oil Fleet       | $                                          | 8,355 
|Product Carrier fleet | 13,246                                     |       
|                      |                                            |       
|                      |                                            | 21,601
|Other                 | 3,244                                      |       
|                      |                                            |       
|Total                 | $                                          | 24,845
|                      |                                            |       

|(1) | The Company uses time charter
          equivalent revenue, which is voyage revenue less voyage expenses, as
          a measure of analyzing fluctuationsin voyage revenue between financial
          periods and as a method of equating revenue generated from a voyage
          charter to time charter.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Operating income includes loss
          (gain) on disposal/write down of assets-net (see below).                                                                                                                                                                                                             

|                                                              | For
            the Years Ended December 31, |    
|------------------------------------------------------------- | -------------------------------------------- | ---
|                                                              |                                              |    
|                                                              | 2002                                         |    
|                                                              |                                              |    
|Loss (gain) on disposal/write down of
            assets-net: |                                              |    
|Crude Oil Fleet                                               | $                                            |   
|Product Carrier Fleet                                         | 289                                          |    
|                                                              |                                              |    
|Total                                                         | $                                            | 289
|                                                              |                                              |    

|(3) | Includes progress payments
          and capitalized interest aggregating $2,081,000 in 2002, $49,849,000
          in 2001 and $0 in 2000 for newbuildings.          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Includes progress payments
          and capitalized interest aggregating $27,317,000 in 2002, $31,982,000
          in 2001 and, $2,905,000 in 2000 for newbuildings.

For the year ended
    December 31, 2002 voyage revenues include revenue from two major customers
    (10% or more of voyage revenues) aggregating $34,045,000 or 17 percent of
    Consolidated Revenue from Chartering and Shipping S.A. (a subsidiary of TotalFinaElf)
    and $28,082,000 or 14 percent from El Paso Marine Company. For the year ended
    December 31, 2000 voyage revenues include revenue from two major customers
    other than from joint venture pools, (see Note 4) aggregating $43,960,000
    or 12 percent of consolidated revenue from each Sun International Limited
    and Star Tankers Inc. There were no charterers that were considered to be
    major customers in 2001.

Note 13Savings
        Plan

The Company has a
    401(k) Plan (the Plan) which is available to full-time
    employees who meet the Plans eligibility requirements. This Plan is
    a defined contribution plan, which permits employees to make contributions
    up to ten percent of their annual salaries with the Company matching up to
    the first six percent in 2002, 2001 and 2000. The Company may elect to make
    additional contributions to the Plan at the discretion of the Companys
    Board of Directors. The Company also has an Executive Savings Plan for certain
    key employees.

The following is
    a summary of Company contributions to these Plans for the three years ended
    December 31, 2002:

|                       | 2002 |     | 2001 |   | 2000 | 
|---------------------- | ---- | --- | ---- | - | ---- | 
|                       |      |     |      |   |      | 
|401 (k) Plan           | $    | 283 |      | $ | 428  | 
|Executive Savings Plan | 189  |     | 97   |   | 183  | 
|                       |      |     |      |   |      | 
|Total                  | $    | 472 |      | $ | 525  | 
|                       |      |     |      |   |      | 

63

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
  (All tabular amounts are in thousands)

Note 14Stock
        Option Plan

The stockholders
    approved the 1998 Stock Option Plan (The Plan) on May 19, 1998.
    The Plan provides for the granting of options to officers, employees, consultants
    and Directors for purchase of the Companys common shares. The total
    number of shares that may be awarded under the Plan are 2,500,000 not including
    the replacement options granted in June 1998 to replace those which were
    previously granted by the Companys former parent.

In 2002, the Company
    granted 30,000 options at $3.93, which is also the weighted average fair
    value for the options granted. In 2001, the Company granted 17,000 options
    at $5.75, which is also the weighted average fair value for the options granted.
    During the year 2000, the Company granted 394,000 options at $1.50; 30,000
    options at $4.630; 400,000 options at $4.938; 750,000 options at $5.125 and
    55,500 options at $5.75. The 2000 options had a weighted average fair value
    of $2.31 when issued.

The following table
    summarizes activity under the stock option plan and the weighted average
    exercise prices for the three years ended December 31, 2002 (in whole numbers,
    not thousands except for Exercise Prices):

|                               | Number of |  | Weighted
          Average |     
|------------------------------ | --------- |  | -------------------------- | ----
|                               | Options   |  | Exercise
          Price   |     
|                               |           |  |                            |     
|Outstanding, January 1, 2000   | 874,910   |  | $                          | 5.20
|Granted                        | 1,629,500 |  |                            | 4.21
|Exercised                      | (320,340) |  |                            | 4.46
|Forfeited                      | (30,000)  |  |                            | 6.67
|Expired                        | (2,668)   |  |                            | 5.20
|                               |           |  |                            |     
|Outstanding, December 31, 2000 | 2,151,402 |  |                            | 4.56
|Granted                        | 17,000    |  |                            | 5.75
|Exercised                      | (122,167) |  |                            | 3.81
|Forfeited                      |          |  |                            |    
|Expired                        |          |  |                            |    
|                               |           |  |                            |     
|Outstanding, December 31, 2001 | 2,046,235 |  |                            | 4.61
|Granted                        | 30,000    |  |                            | 3.93
|Exercised                      |          |  |                            |    
|Forfeited                      |          |  |                            |    
|Expired                        | (30,000)  |  |                            | 5.48
|                               |           |  |                            |     
|Outstanding, December 31, 2002 | 2,046,235 |  |                            | 4.59
|                               |           |  |                            |     

The following table
    summarizes information about stock options outstanding as of December 31,
    2002 (in whole numbers, not thousands except for Exercise Prices):

|                |       |           |   |                          |           | Options
          Outstanding |           | Options
          Exercisable |  
|--------------- | ----- | --------- | - | ------------------------ | --------- | ----------------------------- | --------- | ----------------------------- | -
|                |       |           |   |                          |           |                               |           |                               |  
|                |       |           |   |                          |           | December 31,
          2002   |           | Weighted                      |  
|Range
    of    |       | Number of |   | Average                  |           | Remaining                     |           | Number of                     |  
|Exercise Prices |       | Options   |   | Exercise
          Price |           | Contractual
          Life    |           | Options Exercisable           |  
|                |       |           |   |                          |           |                               |           |                               |  
|$               | 1.50  |           |  |                          | 3.93      |                               | 381,000   |                               | $
|                | 4.015 |           |  |                          | 4.9375    |                               | 470,000   |                               |  
|                | 5.125 |           |  |                          | 5.75      |                               | 1,075,235 |                               |  
|                | 6.42  |           |  |                          | 6.67      |                               | 90,000    |                               |  
|                | 8.95  |           |   |                          |           |                               | 30,000    |                               |  
|                |       |           |   |                          |           |                               |           |                               |  
|                | Total |           |   |                          | 2,046,235 |                               |           | 4.59                          |  
|                |       |           |   |                          |           |                               |           |                               |  

As of December 31,
    2001, there were 1,778,426 options exercisable at a weighted average price
    of $4.40. As of December 31, 2000, there were 1,524,736 options exercisable
    at a weighted average price of $4.17.

64

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
  (All tabular amounts are in thousands)

Note 14Stock
        Option Plan (continued)

Proceeds received from the exercise of the options
    are credited to the capital accounts.

See Note 15 regarding Change in Control.

Compensatory Options

During the year ended
    December 31, 2000, in accordance with APB 25, the Company recorded compensation
    expense of $832,000 relating to stock options, which were accounted for using
    variable plan accounting. There was no compensation expense related to stock
    options for the years ended December 31, 2002 and December 31, 2001. The
    2000 compensation expense was recorded in general and administrative expense
    in the Consolidated Statements of Income.

On June 20, 2000,
    the OMI Corporation 1998 Performance Unit Plan (for years 1998-2002) was
    modified and in lieu of performance units, options were granted pursuant
    to Stock Option Award Agreements. The modifications included the redemption
    of 394,000 performance units relating to 1998 and 1999 deferred units and
    2000 units in exchange for 394,000 stock options granted at $1.50 per share
    and cash bonus for the units at $1.50 per share. The 394,000 options granted
    at $1.50 per share vested on January 1, 2001 and expire January 1, 2006.
    Each grantee may cause the applicable stock options to be exercised prior
    to the vesting date but is not entitled to the proceeds until the vesting
    date. As of June 20, 2000, capital surplus was credited for the difference
    between the stock options granted at $1.50 per share and the market price
    of OMI stock on that date of $4.938 per share, which aggregated $1,354,000.

Performance units
    relating to years 2001 and 2002 aggregating 400,000 units were converted
    to stock options at a grant price of $4.94, which was the market price of
    OMI common stock at the grant date. A cash bonus for the number of units
    times the grant price of $4.94 for 2001 performance units was paid in 2002
    and for the 2002 units, cash was paid in 2002 and the first quarter of 2003.
    Stock options relating to 2001 performance units vest January 1, 2002 and expire January 1, 2007. Stock options
    relating to 2002 performance units vest January 1, 2003 and expire January
    1, 2008. Each grantee may cause the applicable stock options to be exercised
    prior to the vesting date but is not entitled to the proceeds until the vesting
    date.

As of December 31,
    2000, capital surplus was credited $970,000 for adjustments to record 2000
    compensation expense and deferred compensation relating to the above option
    plan at OMIs stock price at December 31, 2000.

As of December 31,
    2001, capital surplus was debited for $481,000 relating to the current years
    adjustment and deferred compensation relating to the above option plan at
    OMIs stock price at December 31, 2001. At December 31, 2001, the balance
    in deferred compensation relating to options was zero, resulting from the
    option prices being below OMIs stock price at that date.

Note 15Employment
        Agreements

OMI has employment
    agreements with all of its executive officers, which provide for an annual
    base salary and a performance incentive bonus. The base salary is the prior
    years base salary plus any raise granted by the OMI Board of Directors
    (Board). Under the contracts, bonuses are paid at the discretion
    of the OMI Board. Each of these agreements also provides that if the executives
    employment (i) is terminated without cause (as defined in his or her employment
    agreement), (ii) the executive voluntarily terminates his or her employment
    within 90 days of a relocation (following a Change in Control) or reduction
    in compensation or responsibilities, or (iii) the executive is disabled (as
    defined in his or her employment agreement), such executive will continue
    to receive base salary and other benefits for a period of two years. For
    five senior executives, following a Change in Control (as defined in his
    or her employment agreement), the executives future bonuses will be
    equal to 150% of the executives annual salary. If an executives
    employment is terminated by the Company (other than for cause or
    becoming disabled) within two years after a Change in Control,
    OMI is required to pay the executive a bonus equal to his or her bonuses
    paid during the previous twelve months preceding the Change in Control (for
    executives other than the five senior

65

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
      
  (All tabular amounts are in thousands)

Note 15Employment
        Agreements (continued)

executives) and 150% of the then effective annual
    salary of the executive for the five senior executives (the termination
    bonus). In addition, in the event of a Change in Control (as defined
    in the employment agreement) and if any such executives employment
    is terminated by OMI without cause (other than for reasons of disability)
    or by the employee as described in clause (ii) above, within two years before
    or after such a Change in Control, OMI will pay such executive an amount
    equal to three times the sum of his then current base salary and his or her
    termination bonus, reduced, in the case of a termination occurring prior
    to such a change in control by any severance theretofore paid to the executive
    under his or her employment agreement.

Note 16Stockholders Equity

Common Stock

During December 2002,
    OMI issued 6,500,000 shares of common stock pursuant to an equity agreement.
    Net proceeds received were approximately $21,483,000 (net of expenses).

Restricted Stock

In April 2002, OMI
    awarded and issued 20,000 shares of restricted stock to a new director for
    a total value at the date of grant of approximately $80,000. On July 2, 2001,
    OMI awarded 900,000 shares of restricted stock to executive officers and
    directors for a total value at the date of grant of $5,121,000. Of the 920,000
    shares, restrictions lapse for 25 percent at the end of year three, the next
    25 percent at the end of year five, and the remaining 50 percent of the shares
    at varying years in accordance with years of service at an individuals
    retirement date (if the executive officer or director remains with the Company
    for at least five years from the date of grant). Upon the issuance of the
    restricted stock, unearned compensation equivalent to the market value at
    the date of grant was charged to Stockholders Equity and subsequently
    amortized to expense over the appropriate restriction period. Compensation
    expense was $1,033,000 and $510,000 for the years-ended December 31, 2002
    and December 31, 2001, respectively.

Treasury Stock

On August 4, 1998,
    the Board of Directors approved a plan to repurchase up to 10 percent of
    the outstanding shares of the Companys common stock. As of December
    31, 2002, 2,076,700 shares have been repurchased.

On March 31, 2001
    the Board of Directors resolved to retire 2,028,000 shares of treasury stock
    aggregating $8,834,000.

Stockholders Rights Plan

On November 19, 1998,
    the Board of Directors approved the adoption of a stockholder rights plan
    in which it declared a dividend distribution of one Right for each outstanding
    share of common stock, $0.50 par value (the Common Stock) of
    the Company, to stockholders of record at the close of business on December
    1, 1998. Subsequent issuances of common stock have been made with Rights
    attached. Each Right entitles the record holder to purchase from the Company
    one hundred-thousandth of a share of the Companys Series A Participating
    Preferred Stock, $1.00 par value at a price of $25.00 (the Purchase
    Price), subject to adjustment in certain circumstances.

Initially, the Rights
    attach to the certificates representing outstanding shares of Common Stock,
    and no Rights Certificates will be distributed. In general the Rights will
    separate from the Common Stock and a Distribution Date will occur
    only if a public announcement has been made that a person or group of affiliated
    or associated persons (an Acquiring Person) has acquired, or
    obtained the right to acquire, beneficial ownership of 15% or more of the
    outstanding shares of Common Stock, or after the commencement of a tender
    offer or exchange offer if, upon consummation thereof, the person or group
    making such offer would be the beneficial owner of 15% or more of the

66

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OMI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS(Continued)
  (All tabular amounts are in thousands)

Note 16Stockholders Equity
        (continued)

outstanding shares of Common Stock. Thereafter,
    under certain circumstances, each Right (other than any Rights that are or
    were beneficially owned by an Acquiring Person, which Rights will be void)
    could become exercisable to purchase at the Purchase Price a number of shares
    of Common Stock (or, in certain circumstances, the common stock of a company
    into which the Company is merged or consolidated or to which the Company
    sells all or substantially all of its assets) having a market value equal
    to two times the Purchase Price.

Dividends

Any determination
    to pay dividends in the future by OMI will be at the discretion of the Board
    of Directors and will be dependent upon its results of operations, financial
    condition, capital restrictions, covenants and other factors deemed relevant
    by the board of directors. Currently, the payment of dividends by OMI is
    restricted by its credit agreements (see Note 5).

Note 17Commitments
        and Contingencies

In March 2003, OMI
    agreed to sell two of its 1984 built single hull product carriers for an
    aggregate of approximately $9,550,000. The sale will result in a loss of
    approximately $3,000,000 in the first quarter 2003. Currently, the vessels
    are scheduled to be delivered in April and May 2003.

In March and January
    2003, and December 2002, OMI contracted to build three 37,000 dwt product
    carriers to be delivered in April, July and October 2004 for approximately
    $84,420,000 ($16,884,000 to be paid in 2003 and $67,536,000 to be paid in
    2004). The vessels will begin five-year time charters upon delivery.

During 2001, OMI
    contracted to build two 47,000 dwt product carriers for approximately $58,730,000.
    One vessel was delivered in February 2003, and the other vessel is scheduled
    for delivery during March 2003. Both vessels begin three-year time charters
    upon delivery and are financed at approximately 65%. At December 31, 2002,
    approximately $41,111,000 is scheduled to be paid to the shipyard upon delivery
    of the vessels in 2003.

During 2001, OMI
    contracted to build two 70,100 dwt product carriers for approximately $73,436,000.
    The vessels are scheduled for delivery in April and July of 2003. Both vessels
    begin five-year time charters upon delivery and are financed at approximately
    65%. Approximately $55,076,000 is scheduled to be paid to the shipyard during
    2003.

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.

67

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INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of OMI
    Corporation:

We have audited the accompanying consolidated balance
    sheets of OMI Corporation and subsidiaries (the Company) as of
    December 31, 2002 and 2001 and the related consolidated statements of income,
    changes in stockholders equity and cash flows for each of the three
    years in the period ended December 31, 2002. These financial statements are
    the responsibility of the Companys management. Our responsibility is
    to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing
    standards generally accepted in the United States of America. Those standards
    require that we plan and perform the audit to obtain reasonable assurance
    about whether the financial statements are free of material misstatement.
    An audit includes examining, on a test basis, evidence supporting the amounts
    and disclosures in the financial statements. An audit also includes assessing
    the accounting principles used and significant estimates made by management,
    as well as evaluating the overall financial statement presentation. We believe
    that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements
    present fairly, in all material respects, the financial position of the Company
    at December 31, 2002 and 2001, and the results of its operations and its
    cash flows for each of the three years in the period ended December 31, 2002
    in conformity with accounting principles generally accepted in the United
    States of America.

DELOITTE & TOUCHE LLP
 New York, New York

February 4, 2003, except for Note 5 and the first
    paragraph of Note 17, as to which the date is March 14, 2003

68

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|Item 8.SUPPLEMENTARY
            DATA                 |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|----------------------------------------------------- | ---------------------------- | ------ | ---------------------------- | - | ------------------ |  | ----------------- | ------ | ------------------ | - | ----------------- |  | ------------------ | ------ | ----------------- | - | ------ |  | - | ------ |  | - | ------ | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|Quarterly Results
          of Operations (Unaudited) |                             
|(In thousands, except
          per share amounts)    |                             
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|                                                      | 2002
          Quarter Ended |        | 2001
          Quarter Ended |  
|                                                      |                              |        |                              |  
|                                                      | March
          31           |        | June
          30            |   | Sept.
          30 |  | Dec.
          31 |        | March
          31 |   | June
          30 |  | Sept.
          30 |        | Dec.
          31 |  
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |  
|Revenues                                              | $                            | 44,346 |                              | $ | 48,189             |  | $                 | 46,708 |                    | $ | 59,809            |  | $                  | 60,045 |                   | $ | 55,835 |  | $ | 45,203 |  | $ | 48,853 | 
|Operating income                                      |                              | 5,268  |                              |   | 8,494              |  |                   | 7,843  |                    |   | 17,297            |  |                    | 33,610 |                   |   | 44,311 |  |   | 12,790 |  |   | 11,143 | 
|Net income(1)                                         | $                            | 377    |                              | $ | 1,832              |  | $                 | 2,654  |                    | $ | 10,606            |  | $                  | 28,378 |                   | $ | 39,645 |  | $ | 7,564  |  | $ | 6,757  | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|Basic Earnings Per Common Share:                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|Net income(2)                                         | $                            | 0.01   |                              | $ | 0.03               |  | $                 | 0.04   |                    | $ | 0.15              |  | $                  | 0.46   |                   | $ | 0.59   |  | $ | 0.11   |  | $ | 0.10   | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |       
|Weighted average number of                            |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|shares of common stock                                |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|outstanding-basic                                     | 70,248                       |        | 70,279                       |   | 70,279             |  | 71,692            |        | 62,182             |   | 67,287            |  | 70,244             |        | 70,248            |  
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |  
|Diluted Earnings Per Common Share:                    |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|Net income(2)                                         | $                            | 0.01   |                              | $ | 0.03               |  | $                 | 0.04   |                    | $ | 0.15              |  | $                  | 0.45   |                   | $ | 0.58   |  | $ | 0.11   |  | $ | 0.10   | 
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |       
|Weighted average number of                            |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|shares of common stock                                |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |   |        |  |   |        |  |   |        | 
|outstanding-diluted                                   | 70,441                       |        | 70,508                       |   | 70,475             |  | 71,891            |        | 62,899             |   | 67,831            |  | 70,504             |        | 79,447            |  
|                                                      |                              |        |                              |   |                    |  |                   |        |                    |   |                   |  |                    |        |                   |  

|(1) | Earnings for the fourth quarter
          ended 2002 increased significantly due to increases in rates earned
          by vessels operating in the spot market
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | and from earnings from two Suezmax
          newbuildings delivered during September and October 2002.                                                         
|(2) | Earnings per share are based
          on stand-alone quarters.                                                                                                

Item 9.CHANGES
        IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

None.

69

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PART III

Item 10.DIRECTORS
        AND EXECUTIVE OFFICERS OF OMI CORPORATION

Pursuant to General
    Instruction G(3) the information regarding directors and the Audit Committee
    called for by this item is hereby incorporated by reference from OMIs
    Proxy Statement to be filed with the Securities and Exchange Commission.
    Certain information relating to Executive Officers of the Company appears
    at the end of Part I of this Form 10-K Annual Report.

Item 11.EXECUTIVE
        COMPENSATION

Pursuant to General
    Instruction G(3) the information called for by this item is hereby incorporated
    by reference from OMIs Proxy Statement to be filed with the Securities
    and Exchange Commission.

Item 12.SECURITY
        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Pursuant to General
    Instruction G(3) the information called for by this item is hereby incorporated
    by reference from OMIs Proxy Statement to be filed with the Securities
    and Exchange Commission.

Item 13.CERTAIN
        RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to General
    Instruction G(3) the information called for by this item is hereby incorporated
    by reference from OMIs Proxy Statement to be filed with the Securities
    and Exchange Commission.

Item 14.CONTROLS
        AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Companys
    Chief Executive and Chief Financial Officer have reviewed and evaluated the
    effectiveness of the Companys disclosure controls and procedures (as
    defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
    (the Exchange Act)), as of a date within ninety days before the
    filing of this annual report. Based on that evaluation, the Chief Executive
    Officer and the Chief Financial Officer have concluded that the Companys
    current disclosure controls and procedures are effective and provide reasonable
    assurance that information required to be disclosed by the Company annual
    report that it files under the Exchange Act is recorded, processed, summarized,
    and reported within the time periods specified in the Securities and Exchange
    Commission rules and forms.

Changes in Internal Controls

There have not been
    any significant changes in the Companys internal controls or in other
    factors that could significantly affect these controls subsequent to the
    date of their evaluation. There were no significant deficiencies or material
    weakness in the internal controls, and therefore no corrective actions were
    taken.

70

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PART IV

Item 15.EXHIBITS,
        FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|(a) | Financial Statements
        and Financial Statement Schedules
|--- | --------------------------------------------------------------
|    | 1.                                                            
|    | 2.                                                            
|    |                                                               
|    | 3.                                                            
|(b) | Reports on Form 8-K:                                          
|    |                                                               

71

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|EXHIBITS
|--------
|        
|Number  
|        
|3(i)    
|        
|3(ii)   
|        
|4.1     
|4.2     
|4.3     
|        
|4.4     
|        
|10.1    
|        
|10.2    
|        
|10.3    
|10.4    
|        
|10.5    
|21      
|99.1    
|        
|        
|        
|        
|        
|99.2    
|        
|        
|        
|        
|        

(1) Denotes compensation plan and /or agreement

72

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SIGNATURES

Pursuant to the requirements
    of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
    has duly caused this report to be signed on its behalf by the undersigned,
    thereunto duly authorized.

| | OMI CORPORATION                                   
| | --------------------------------------------------
| |                                                   
| | By:
          /s/ CRAIGH.
        STEVENSON       
| |                                                   
| | Craig H. Stevenson, Jr.,                          
| | Chairman of the Board of
            Directors and
| | Chief Executive Officer                           
| | March 28, 2003                                    

Pursuant to the requirements
    of the Securities Exchange Act of 1934, this report has been signed below
    by the following persons on behalf of the Registrant and in the capacities
    and on the dates indicated.

|Signature                                  |  | Title                                                   |  | Date          
|------------------------------------------ |  | ------------------------------------------------------- |  | --------------
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ CRAIGH.
        STEVENSON,
        JR. |  | Chief Executive Officer and Director                    |  | March 28, 2003
|                                           |  | (Principal Executive Officer)                           |  |               
|Craig H. Stevenson, Jr.                    |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ ROBERTBUGBEE                           |  | President, Chief Operating Officer
        and Director |  | March 28, 2003
|                                           |  |                                                         |  |               
|Robert Bugbee                              |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ MICHAELKLEBANOFF                       |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|Michael Klebanoff                          |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ JAMESN.
        HOOD                   |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|James N. Hood                              |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ PHILIPJ.
        SHAPIRO               |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|Philip J. Shapiro                          |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ EDWARDSPIEGEL                          |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|Edward Spiegel                             |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ DONALDC.
        TRAUSCHT              |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|Donald C. Trauscht                         |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ JAMESD.
        WOODS                  |  | Director                                                |  | March 28, 2003
|                                           |  |                                                         |  |               
|James D. Woods                             |  |                                                         |  |               
|                                           |  |                                                         |  |               
|                                           |  |                                                         |  |               
|/s/ KATHLEENC.
        HAINES              |  | Senior Vice President, Chief                            |  | March 28, 2003
|                                           |  | Financial Officer, Treasurer and                        |  |               
|Kathleen C. Haines                         |  | Chief Accounting Officer                                |  |               
|                                           |  | (Principal Financial and Accounting
    Officer)        |  |               
|                                           |  |                                                         |  |               

73

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CERTIFICATION
      AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY
      ACT OF 2002

I, Craig H. Stevenson, Jr., certify that:

|1. | I have reviewed this annual report
        on Form 10-K of OMI Corporation;                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge, this annual
        report does not contain any untrue statement of a material fact or omit
        to state a material fact necessary to make the statements made, in light
        of the circumstances under which such statements were made, not misleading
        with respect to the period covered by this annual report;                                                                     
|3. | Based on my knowledge, the financial
        statements, and other financial information included in this annual report,
        fairly present in all material respects the financial condition, results
        of operations and cash flows of the registrant as of, and for, the periods
        presented in this annual report;                                                                                        
|4. | The registrants other certifying
        officer and I are responsible for establishing and maintaining disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-14 and
        15d-14) for the registrant and we have:                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                           
|5. | The registrants
        other certifying officer and I have disclosed, based on our most recent
        evaluation, to the registrants auditors and the audit committee
        of registrants board of directors:                                                                                                                                                                                                        
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                           
|6. | The registrants
        other certifying officer and I have indicated in this annual report whether
        or not there were significant changes in internal controls or in other
        factors that could significantly affect internal controls subsequent
        to the date of our most recent evaluation, including any corrective actions
        with regard to significant deficiencies and material weaknesses.

|Date: March 28, 2003 |  | By: /s/ CRAIGH.
        STEVENSON,
    JR.
|-------------------- |  | ------------------------------------------
|                     |  |                                           
|                     |  |                                           
|                     |  |                                           













74

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CERTIFICATION
      AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY
      ACT OF 2002

I, Kathleen C. Haines, certify that:

|1. | I have reviewed this
        annual report on Form 10-K of OMI Corporation;                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge,
        this annual report does not contain any untrue statement of a material
        fact or omit to state a material fact necessary to make the statements
        made, in light of the circumstances under which such statements were
        made, not misleading with respect to the period covered by this annual
        report;                                                             
|3. | Based on my knowledge,
        the financial statements, and other financial information included in
        this annual report, fairly present in all material respects the financial
        condition, results of operations and cash flows of the registrant as
        of, and for, the periods presented in this annual report;                                                                                        
|4. | The registrants
        other certifying officer and I are responsible for establishing and maintaining
        disclosure controls and procedures (as defined in Exchange Act Rules
        13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                           
|5. | The registrants
        other certifying officer and I have disclosed, based on our most recent
        evaluation, to the registrants auditors and the audit committee
        of registrants board of directors:                                                                                                                                                                                                        
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                           
|6. | The registrants
        other certifying officer and I have indicated in this annual report whether
        or not there were significant changes in internal controls or in other
        factors that could significantly affect internal controls subsequent
        to the date of our most recent evaluation, including any corrective actions
        with regard to significant deficiencies and material weaknesses.

|Date: March 28, 2003 |  | By: /s/ KATHLEENC.
    HAINES
|-------------------- |  | -----------------------------
|                     |  |                              
|                     |  |                              







75

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