**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-K**

 
| **x** | **ANNUAL REPORT PURSUANT TO  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|-----------------------------------------------------------------------------------------------------|

** **

**For the fiscal year ended December 31,2007**

** **
| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(D) OF THE SECURITIES  EXCHANGE ACT OF 1934** |
|-------|----------------------------------------------------------------------------------------------------------|

 

**forthe transition period from                to**

 

**Commissionfile number 001-16531**

 

**GENERALMARITIME CORPORATION**

(Exactname of registrant as specified in its charter)

 

| **Republic  of the Marshall Islands**                            | ** ** | **06-1597083**                         |
|------------------------------------------------------------------|------------|----------------------------------------|
| (State  or other jurisdiction of  incorporation or organization) |       | (I.R.S.  Employer  Identification No.) |
| ** **                                                       | ** ** | ** **                             |
| **299  Park Avenue, New York, New York**                         | ** ** | **10171**                              |
| (Address  of principal executive office)                         |       | (Zip  Code)                            |

 

Registrant’stelephone number, including area code:**(212) 763-5600**

 

Securities of theRegistrant registered pursuant to Section 12(b) of the Act:

 

Titleof Each Class

 

**CommonStock, par value $.01 per share**

 

Nameof Each Exchange on Which Registered

 

**NewYork Stock Exchange**

 

Securities of theRegistrant registered pursuant to Section 12(g) of the Act:

 

**None**

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes  x   No  o

 

Indicate by check mark if the registrant is not requiredto file reports pursuant to Section 13 or 15(d) of the Act.

 

Yes  o   No  x

 

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

 

Yes  x   No  o

 

Indicate by check markif disclosure of delinquent filers pursuant to Item 405 of Regulation S-K isnot contained herein and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.x

 

Indicateby check mark whether registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company (See definitionsof “large accelerated filer,” “accelerated filer,” and “smaller reporting company”in Rule 12b-2 of the Exchange Act). (Check one):

 

LargeAccelerated Filer xAccelerated Filer oNon-Accelerated Filer o SmallerReporting Company o

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).

 

YesoNo x

 

The aggregate marketvalue of the voting stock of the registrant held by non-affiliates of theregistrant as of June 30, 2007 was approximately $881.3 million, based onthe closing price of $26.78 per share.

 

The number of sharesoutstanding of the registrant’s common stock as of February 22, 2008 was31,318,240 shares.

 

DOCUMENTSINCORPORATED BY REFERENCE

 

Proxy Statement for the 2008 Annual Meeting ofStockholders, to be filed with the Securities and Exchange Commission not laterthan 120 days after December 31, 2007, is incorporated by reference in Part IIIherein.

 

 

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**PART I**

 

**ITEM 1. BUSINESS**

 

**OVERVIEW**

 

We are a leading provider of international seabornecrude oil transportation services. Our current fleet consists of 21 wholly ownedvessels, consisting of 10 Aframax and 11 Suezmax vessels.  The 21 vessels that we currently operate havea total of 2.7 million dwt, all of which is double-hulled. Many of thevessels in our fleet are “sister ships”, which provide us with operational andscheduling flexibility, as well as economies of scale in their operation andmaintenance.

 

The majority of our vessels currently operate in theAtlantic, which includes ports in the Caribbean, South and Central America, theUnited States, Western Africa, the Mediterranean, Europe and the North Sea.Transportation of crude oil to the U.S. Gulf Coast and other refining centersin the United States requires vessel owners and operators to meet morestringent environmental regulations than in other regions of the world. We havefocused our operations in the Atlantic because we believe that these stringentoperating and safety standards give us a potential competitive advantage. Wehave established a niche in the region due to our high quality vessels, all ofwhich are double-hulled, our commitment to safety and our many years ofexperience in the industry. Although the majority of our vessels operate in theAtlantic, we also currently operate vessels in the Black Sea and in otherregions, which we believe enables us both to take advantage of marketopportunities and to position our vessels in anticipation of drydockings. Ourcustomers include most of the major international oil companies such as ChevronCorporation, CITGO Petroleum Corp., ConocoPhillips, Exxon Mobil Corporation,Hess Corporation, Lukoil Oil Company, and Sun International Ltd.

 

We actively manage the deployment of our vesselsbetween spot market voyage charters, which generally last from several days toseveral weeks, and time charters, which can last up to several years. Wecontinuously and actively monitor market conditions in an effort to takeadvantage of changes in charter rates and to maximize our long-term cash flowby changing this chartering deployment profile. We design our fleet deploymentto provide greater cash flow stability through the use of time charters forpart of our fleet, while maintaining the flexibility to benefit fromimprovements in market rates by deploying the balance of our vessels in thespot market.

 

Our net voyage revenues,which are voyage revenues minus voyage expenses, have grown from $12.0 millionin 1997 to $216.9 million in 2007. Net voyage revenues decreased by $28.6million, or 11.7%, to $216.9 million for the year ended December 31, 2007compared to $245.6 million for the year ended December 31, 2006 primarilydue to the smaller size of our fleet. Between October 2005 and May 2006,we sold 17 of our non-double hull vessels and nine of our Oil/Bulk/Ore (OBO)vessels, which we considered to be non-core assets, in four separatetransactions.  Between March 2006and February 2008 we took delivery of four newly constructed Suezmaxvessels, giving us a current fleet size of 21 vessels (all of which aredouble-hull).  As a result, we believethat our fleet profile has become more attractive to our customers.  We have also generated additional capitalwhich we have used to repay indebtedness and pay dividends and which we may useto support potential future growth or other transactions that we believe wouldcreate value for our shareholders.

 

**AVAILABLEINFORMATION**

 

We file annual,quarterly, and current reports, proxy statements, and other documents with theSecurities and Exchange Commission, or the SEC, under the Securities ExchangeAct of 1934, or the Exchange Act. The public may read and copy any materialsthat we file with the SEC at the SEC’s Public Reference Room at 100 FStreet, NE, NW, Washington, DC 20549. The public may obtain information on theoperation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.Also, the SEC maintains an Internet website that contains reports, proxy andinformation statements, and other information regarding issuers, including us,that file electronically with the SEC. The public can obtain any documents thatwe file with the SEC at www.sec.gov.

 

In addition, our companywebsite can be found on the Internet at www.generalmaritimecorp.com. Thewebsite contains information about us and our operations. Copies of each of ourfilings with the SEC on Form 10-K, Form 10-Q and Form 8-K, andall amendments to those reports, can be viewed and downloaded free of charge assoon as reasonably practicable after the reports and amendments areelectronically filed with or furnished to the SEC. To view the reports, accesswww.generalmaritimecorp.com, click on Press Releases, and then SEC Filings.

 

Any of the abovedocuments can also be obtained in print by any shareholder upon request to ourInvestor Relations 

 

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Department at the followingaddress:

 

CorporateInvestor RelationsGeneral Maritime Corporation299 Park AvenueNew York, NY 10171

 

**BUSINESS STRATEGY**

 

Our strategy is to employ our existing competitivestrengths to enhance our position within the industry and maximize long-term cashflow. Our strategic initiatives include:

 

·              *Managing Environmentally Safe, Yet Cost Efficient Operations.*We aggressively manage our operating and maintenance costs. At the same time,our fleet has an excellent safety and environmental record that we maintainthrough acquisitions of high-quality vessels and regular maintenance andinspection of our fleet. We maintain operating standards for all of our vesselsthat emphasize operational safety, quality maintenance, continuous training ofour officers and crews and compliance with U.S. and international environmentaland safety regulations. Our in-house safety staff oversees many of theseservices. We believe the age and quality of the vessels in our fleet, coupledwith our excellent safety and environmental record, position us favorablywithin the sector with our customers and for future business opportunities.

 

·              *Balancing Vessel Deployment to Maximize Fleet Utilization and CashFlows*. We actively manage the deployment of our fleet between timecharters and spot market voyage charters. Our vessel deployment strategy isdesigned to provide greater cash flow stability through the use of timecharters for part of our fleet, while maintaining the flexibility to benefitfrom improvements in market rates by deploying the balance of our vessels inthe spot market. Our goal is to be the first choice of our customers for crudeoil transportation services. We constantly monitor the market and seek toanticipate our customers’ crude oil transportation needs and to respond quicklywhen we recognize attractive chartering opportunities.

 

·              *Growing and Managing the Profile of Our Fleet*. We have beenan industry consolidator focused on opportunistically acquiring high-qualitymid-sized vessels or newbuilding contracts for such vessels. We arecontinuously and actively monitoring the market in an effort to take advantageof expansion and growth opportunities. We also evaluate opportunities tomonetize our investment in vessels by selling them when conditions arefavorable to generate return on invested capital, to adjust the profile of ourfleet to fit customer demands such as preference for double-hull vessels and togenerate capital for potential value enhancing investments in the future.Between October 2005 and May 2006, we sold 17 non-double-hull vesselsfor approximately $432 million and nine OBO vessels for approximately $244million.

 

·              *Maintaining a Prudent Capital Structure.* We are committed tomaintaining prudent financial policies aimed at preserving financial stabilityand appropriate leverage and increasing long-term cash flow. As of December 31,2006 our debt to capitalization ratio was 6.1%. As of December 31, 2007,our debt to capitalization ratio increased to 71.2%, which was attributable toour special dividend of $486.5 million paid in March 2007.  As of December 31, 2007 we had theability to draw down an additional $327.5 million on our revolving creditfacility.

 

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**OUR FLEET**

 

Ourcurrent fleet consists of 21 vessels and is comprised of 10 Aframax vessels and11 Suezmax vessels. The following chart provides information regarding our 21vessels.

 
| **Vessel**              | ** ** | **Yard**     | ** ** | **Year Built** | ** ** | **Year Aquired** | ** ** | **DWT**   | ** ** | **Employment Status** | ** ** | **Flag**         | ** ** | **Sister ships (2)** | ** ** |
|-------------------------|------------|--------------|------------|---------------------|------------|-----------------------|------------|-----------|------------|----------------------------|------------|------------------|------------|--------------------------------|------------|
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **OUR  CURRENT FLEET**  |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **AFRAMAX  TANKERS**    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| Genmar Strength  (1)    |       | Sumitomo     |       | 2003                |       | 2004                  |       | 105,674   |       | Spot                       |       | Liberia          |       | A                              |       |
| Genmar Defiance  (1)    |       | Sumitomo     |       | 2002                |       | 2004                  |       | 105,538   |       | TC                         |       | Liberia          |       | A                              |       |
| Genmar Ajax (1)         |       | Samsung      |       | 1996                |       | 1998                  |       | 96,183    |       | TC                         |       | Liberia          |       | B                              |       |
| Genmar Agamemnon (1)    |       | Samsung      |       | 1995                |       | 1998                  |       | 96,214    |       | Spot                       |       | Liberia          |       | B                              |       |
| Genmar Minotaur  (1)    |       | Samsung      |       | 1995                |       | 1998                  |       | 96,226    |       | Spot                       |       | Liberia          |       | B                              |       |
| Genmar Revenge  (1)     |       | Samsung      |       | 1994                |       | 2004                  |       | 96,755    |       | Spot                       |       | Liberia          |       |                           |       |
| Genmar Constantine  (1) |       | S. Kurushima |       | 1992                |       | 1998                  |       | 102,335   |       | Spot                       |       | Liberia          |       | C                              |       |
| Genmar Alexandra (1)    |       | S. Kurushima |       | 1992                |       | 2001                  |       | 102,262   |       | Spot                       |       | Marshall Islands |       | C                              |       |
| Genmar Princess (1)     |       | Sumitomo     |       | 1991                |       | 2003                  |       | 96,648    |       | TC                         |       | Liberia          |       | D                              |       |
| Genmar Progress (1)     |       | Sumitomo     |       | 1991                |       | 2003                  |       | 96,765    |       | Spot                       |       | Liberia          |       | D                              |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       | 994,600   |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **SUEZMAX  TANKERS**    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| Genmar St.  Nikolas (1) |       | TSU          |       | 2008                |       | 2008                  |       | 149,876   |       | TC                         |       | Marshall Islands |       | H                              |       |
| Genmar George T  (1)    |       | TSU          |       | 2007                |       | 2007                  |       | 149,847   |       | TC                         |       | Marshall Islands |       | H                              |       |
| Genmar Kara G (1)       |       | TSU          |       | 2007                |       | 2007                  |       | 150,296   |       | TC                         |       | Liberia          |       | E                              |       |
| Genmar Harriet G  (1)   |       | TSU          |       | 2006                |       | 2006                  |       | 150,205   |       | TC                         |       | Liberia          |       | E                              |       |
| Genmar Orion (1)        |       | Samsung      |       | 2002                |       | 2003                  |       | 159,992   |       | TC                         |       | Marshall Islands |       |                           |       |
| Genmar Argus (1)        |       | Hyundai      |       | 2000                |       | 2003                  |       | 164,097   |       | TC                         |       | Marshall Islands |       | F                              |       |
| Genmar Spyridon  (1)    |       | Hyundai      |       | 2000                |       | 2003                  |       | 153,972   |       | TC                         |       | Marshall Islands |       | F                              |       |
| Genmar Hope (1)         |       | Daewoo       |       | 1999                |       | 2003                  |       | 153,919   |       | TC                         |       | Marshall Islands |       | G                              |       |
| Genmar Horn (1)         |       | Daewoo       |       | 1999                |       | 2003                  |       | 159,475   |       | TC                         |       | Marshall Islands |       | G                              |       |
| Genmar Phoenix  (1)     |       | Halla        |       | 1999                |       | 2003                  |       | 149,999   |       | TC                         |       | Marshall Islands |       |                           |       |
| Genmar Gulf (1)         |       | Daewoo       |       | 1991                |       | 2003                  |       | 149,803   |       | Spot                       |       | Marshall Islands |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       | 1,691,481 |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       | FLEET TOTAL  |       | 2,686,081           |       |                  |       |      |       |                       |       |

 

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TC= Long Term Time Chartered

 

(1)           Each vesselis collateral for our $900 million credit facility.

 

(2)           Each vesselwith the same letter is a “sister ship” of each other vessel with the sameletter.

 

During March 2003and May 2003, we acquired 19 vessels from Metrostar ManagementCorporation, an unaffiliated entity, consisting of 14 Suezmax and five Aframaxvessels for an aggregate purchase price in cash of $525 million. Theacquisitions were financed through the use of cash and borrowings under ourthen existing revolving credit facilities together with the incurrence ofadditional debt. During April 2004 and July 2004, we acquired ninevessels, consisting of three Aframax vessels, two Suezmax vessels and fourSuezmax newbuilding contracts, and a technical management company from SoponataSA, an unaffiliated entity, for an aggregate purchase price of $248.1 millionin cash. These four newbuilding Suezmax vessels were delivered between March 2006and February 2008. The acquisitions were financed through the use of cashand borrowings under our revolving credit facilities.

 

During March 2003and December 2003 we sold the *Kentucky* andthe *West**Virginia*,respectively. During November 2003, December 2003 and February 2004,we sold three double-bottomed 1986-built Aframax vessels that we acquiredduring 

 

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2003. During August 2004and October 2004, we sold four single-hull Suezmax vessels. During 2005,we sold six Aframax and seven Suezmax vessels, all of which were eithersingle-hull or double-sided. During January 2006, we sold one double-sidedAframax vessel and three single-hull Suezmax vessels. Between March 2006and May 2006, we sold nine OBO Aframax vessels.  All of our vessels in our current fleet aredouble-hull, consisting of 10 Aframax vessels and 11 Suezmax vessels.

 

Commercialmanagement for our vessels is provided through our wholly-owned subsidiary,General Maritime Management LLC, and was provided through March 2007 byour indirect wholly-owned subsidiary, General Maritime Management (UK) LLC,which was formed in March 2003.

 

**FLEET DEPLOYMENT**

 

Westrive to optimize the financial performance of our fleet by deploying ourvessels on time charters and in the spot market. We believe that our fleetdeployment strategy provides us with the ability to benefit from increases intanker rates while at the same time maintaining a measure of stability throughcycles in the industry. The following table details the percentage of our fleetoperating on time charters and in the spot market during the past three years.

 
| ** **                    | ** ** | **TIME CHARTER VS.SPOT MIX (as % of operating days)** | ** ** |
|-------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
| ** **                    | ** ** | ** **

**YEAR ENDED DECEMBER 31,**                                        | ** ** |
| ** **                    | ** ** | **2007**                                                                                      | ** ** | **2006** | ** ** | **2005** | ** ** |
| Percent in Time  Charter Days |       | 70.3                                                                                          | %          | 32.3 | % | 28.3 | % |
| Percent in Spot  Days         |       | 29.7                                                                                          | %          | 67.7 | % | 71.7 | % |
| Total Vessel  Operating Days  |       | 6,599                                                                                         |       | 7,121 |   | 14,073 |   |

 

Vesselsoperating on time charters may be chartered for several months or years whereasvessels operating in the spot market typically are chartered for a singlevoyage that may last up to several weeks. Vessels operating in the spot marketmay generate increased profit margins during improvements in tanker rates,while vessels operating on time charters generally provide more predictablecash flows. Accordingly, we actively monitor macroeconomic trends andgovernmental rules and regulations that may affect tanker rates in anattempt to optimize the deployment of our fleet. Our current fleet of 21vessels has 13 vessels on time charter contracts expiring on dates between August 2009and February 2011 shown as follows:

 
| **Vessel**          | ** ** | **Vessel Type** | ** ** | **Expiration Date** | ** ** | **Daily Rate (1)** | ** ** |
|---------------------|------------|----------------------|------------|--------------------------|------------|------------------------------|------------|
| Genmar Ajax         |       | Aframax              |       | November 30, 2009        |       | $                            | 29,500     | (2) |
| Genmar Argus        |       | Suezmax              |       | November 5, 2009         |       | $                            | 38,500     |   |
| Genmar Defiance     |       | Aframax              |       | December 24, 2009        |       | $                            | 29,500     |   |
| Genmar George T.    |       | Suezmax              |       | August 27, 2010          |       | $                            | 39,000     |   |
| Genmar Harriet  G.  |       | Suezmax              |       | June 1, 2010             |       | $                            | 38,000     |   |
| Genmar Hope         |       | Suezmax              |       | August 11, 2009          |       | $                            | 36,500     |   |
| Genmar Horn         |       | Suezmax              |       | November 22, 2009        |       | $                            | 38,500     |   |
| Genmar Kara G.      |       | Suezmax              |       | June 1, 2010             |       | $                            | 38,000     |   |
| Genmar Orion        |       | Suezmax              |       | June 1, 2010             |       | $                            | 38,000     |   |
| Genmar Phoenix      |       | Suezmax              |       | October 31, 2009         |       | $                            | 38,500     |   |
| Genmar Princess     |       | Aframax              |       | October 23, 2009         |       | $                            | 27,750     |   |
| Genmar Spyridon     |       | Suezmax              |       | October 12, 2009         |       | $                            | 38,500     |   |
| Genmar St.  Nikolas |       | Suezmax              |       | February 6, 2011         |       | $                            | 39,000     |   |

 

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(1)           Beforebrokers’ commissions.

 

(2)           Rate isreduced to $25,000 per day on December 1, 2008.

 

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**OPERATIONS AND SHIP MANAGEMENT**

 

Weemploy experienced management in all functions critical to our operations,aiming to provide a focused marketing effort, tight quality and cost controlsand effective operations and safety monitoring. Through our wholly ownedsubsidiaries, General Maritime Management LLC and General Maritime Management(Portugal) Lda, we currently provide the commercial and technical managementnecessary for the operations of most of our vessels, which include shipmaintenance, officer staffing, crewing, technical support, shipyardsupervision, and risk management services through our wholly ownedsubsidiaries.

 

InFebruary 2006, we determined one technical management office outside theU.S. would adequately service our current fleet and as such decided to closeour office in Piraeus, Greece, operated by General Maritime Management (Hellas)Ltd.  This office ceased its technical managementactivities in May 2006 and we anticipate that this office will be closedduring 2008. The cost of closing this office, which we have classified as acomponent of general and administrative expense, is approximately $1.3 million,substantially attributable to employee severance costs.  All of these costs have been paid as of December 31,2006

 

During February 2007,we decided to close General Maritime Management (UK) LLC, which providedcommercial management services for our vessels, due to the higher percentage ofour fleet that is on long-term time charter. This office ceased its commercial management activities by March 31,2007.  The cost of closing this office,which we classified as a component of general and administrative expense in February 2007,was approximately $0.2 million, substantially attributable to employeeseverance costs.  All of these costsresulted in cash expenditures.

 

Ourcrews inspect our vessels and perform ordinary course maintenance, both at seaand in port. We regularly inspect our vessels. We examine each vessel and makespecific notations and recommendations for improvements to the overallcondition of the vessel, maintenance of the vessel and safety and welfare ofthe crew. We have an in-house safety staff to oversee these functions andretain Admiral Robert North (Ret.), formerly of the U.S. Coast Guard, as asafety and security consultant.

 

Thefollowing services are performed by General Maritime Management LLC and GeneralMaritime Management (Portugal) Lda:

 

·              supervisionof routine maintenance and repair of the vessel required to keep each vessel ingood and efficient condition, including the preparation of comprehensivedrydocking specifications and the supervision of each drydocking;

 

·              oversightof maritime and environmental compliance with applicable regulations, includinglicensing and certification requirements, and the required inspections of eachvessel to ensure that it meets the standards set forth by classificationsocieties and applicable legal jurisdictions as well as our internal corporaterequirements and the standards required by our customers;

 

·              engagementand provision of qualified crews (masters, officers, cadets and ratings) andattendance to all matters regarding discipline, wages and labor relations;

 

·              arrangementto supply the necessary stores and equipment for each vessel; and

 

·              continualmonitoring of fleet performance and the initiation of necessary remedialactions to ensure that financial and operating targets are met.

 

Ourchartering staff, which is located in New York City, monitors fleet operations,vessel positions and spot market voyage charter rates worldwide. We believethat monitoring this information is critical to making informed bids oncompetitive brokered charters.

 

**CREWING AND EMPLOYEES**

 

Asof December 31, 2007, we employed approximately 90 office personnel.Approximately 47 of these employees manage the commercial operations of ourbusiness, and are located in New York City. We have 32 employees located inLisbon, Portugal, who manage the technical operations of our business, and aresubject to a local company employment collective bargaining agreement whichcovers the main terms and conditions of their employment.  We have ten employees who 

 

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procurecrews for our vessels, three of which are located in Novorossiysk, Russia andseven of which are located in Mumbai, India. We also have one employee located in Piraeus, Greece who is subject toGreece’s national employment collective bargaining agreement which covers termsand conditions of her employment.

 

Asof December 31, 2007, we employed approximately 483 seaborne personnel tocrew our fleet of 20 vessels and our Suezmax tanker delivered in February 2008,who are  staffed by our offices in India,Russia and Portugal.

 

We place great emphasison attracting qualified crew members for employment on our vessels. Recruitingqualified senior officers has become an increasingly difficult task for vesseloperators. We pay competitive salaries and provide competitive benefits to ourpersonnel. We believe that the well-maintained quarters and equipment on ourvessels help to attract and retain motivated and qualified seamen and officers.Our crew management services contractors have collective bargaining agreementsthat cover all the junior officers and seamen whom they provide to us.

 

**CUSTOMERS**

 

Ourcustomers include most oil companies, as well as oil producers, oil traders,vessel owners and others. During the year ended December 31, 2007, LukoilOil Company accounted for approximately 39.5% of our voyage revenues.  During the years ended December 31, 2006and 2005, no single customer accounted for more than 10% of our voyagerevenues.

 

**COMPETITION**

 

Internationalseaborne transportation of crude oil and other petroleum products is providedby two main types of operators: fleets owned by independent companies andfleets operated by oil companies (both private and state-owned). Many oilcompanies and other oil trading companies, the primary charterers of thevessels we own, also operate their own vessels and transport oil for themselvesand third party charterers in direct competition with independent owners andoperators. Competition for charters is intense and is based upon price, vessellocation, the size, age, condition and acceptability of the vessel, and thequality and reputation of the vessel’s operator.

 

Wecompete principally with other Aframax and Suezmax owners. However, competitionin the Aframax and Suezmax markets is also affected by the availability ofalternative size vessels. Panamax size vessels can compete for some of the samecharters for which we compete. Because Ultra Large Crude Carriers (ULCCs) andVery Large Crude Carriers (VLCCs) cannot enter the ports we serve due to theirlarge size, they rarely compete directly with our vessels for specificcharters.

 

Othersignificant operators of multiple Aframax and Suezmax vessels in the Atlanticbasin include American Eagle Tankers Inc. Limited, Frontline, Ltd., OverseasShipholding Group, Inc., Teekay Shipping Corporation and Tsakos EnergyNavigation. There are also numerous, smaller vessel operators in the Atlanticbasin.

 

**INSURANCE**

 

Theoperation of any ocean-going vessel carries an inherent risk of catastrophicmarine disasters and property losses caused by adverse weather conditions,mechanical failures, human error, war, terrorism and other circumstances orevents. In addition, the transportation of crude oil is subject to the risk ofspills, and business interruptions due to political circumstances in foreigncountries, hostilities, labor strikes and boycotts. The U.S. Oil Pollution Actof 1990, or OPA has made liability insurance more expensive for ship owners andoperators imposing potentially unlimited liability upon owners, operators andbareboat charterers for oil pollution incidents in the territorial waters ofthe United States. We believe that our current insurance coverage is adequateto protect us against the principal accident-related risks that we face in theconduct of our business.

 

Ourprotection and indemnity insurance, or P&I insurance, covers third-partyliabilities and other related expenses from, among other things, injury ordeath of crew, passengers and other third parties, claims arising fromcollisions, damage to cargo and other third-party property and pollutionarising from oil or other substances. Our current P&I insurance coveragefor pollution is the maximum commercially available amount of $1.0 billion pertanker per incident and is provided by mutual protection and indemnityassociations. Each of the vessels currently in our fleet is entered in aprotection and indemnity association which is a member of the InternationalGroup of Protection and Indemnity Mutual Assurance Associations. The 13protection and indemnity associations that comprise the International Groupinsure approximately 90% of the world’s commercial tonnage and have enteredinto a pooling agreement to reinsure each association’s liabilities. Eachprotection and indemnity association has capped its exposure to this poolingagreement at $4.3 billion. As a member of protection and indemnityassociations, which are, in turn, members of the International Group, we aresubject to calls payable to the associations based on its claim records as wellas the claim records of all other members of the individual associations andmembers of the pool of protection and indemnity associations comprising theInternational Group.

 

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Our hull and machineryinsurance covers actual or constructive total loss from covered risks ofcollision, fire, heavy weather, grounding and engine failure or damages fromsame. Our war risk insurance covers risks of confiscation, seizure, capture,vandalism, sabotage and other war-related risks. Our loss-of-hire insurancecovers loss of revenue for up to 90 days resulting from vessel off hire foreach of our vessels, with a 20 day deductible.

 

**ENVIRONMENTAL REGULATIONAND OTHER REGULATIONS**

** **

Governmentregulations and laws significantly affect the ownership and operation of ourtankers.  We are subject to various internationalconventions, laws and regulations in force in the countries in which ourvessels may operate or are registered.

 

Avariety of government, quasi-governmental and private organizations subject ourtankers to both scheduled and unscheduled inspections.  These organizations include the local portauthorities, national authorities, harbor masters or equivalent, classificationsocieties, flag state and charterers, particularly terminal operators and oilcompanies.  Some of these entitiesrequire us to obtain permits, licenses and certificates for the operation ofour tankers.  Our failure to maintainnecessary permits or approvals could require us to incur substantial costs ortemporarily suspend operation of one or more of the vessels in our fleet.

 

We believethat the heightened levels of environmental and quality concerns amonginsurance underwriters, regulators and charterers have led to greaterinspection and safety requirements on all vessels and may accelerate thescrapping of older vessels throughout the industry.  Increasing environmental concerns havecreated a demand for tankers that conform to the stricter environmentalstandards.  We are required to maintainoperating standards for all of our vessels that emphasize operational safety,quality maintenance, continuous training of our officers and crews andcompliance with applicable local, national and international environmental lawsand regulations.  We believe that theoperation of our vessels is in substantial compliance with applicable environmentallaws and regulations and that our vessels have all material permits, licenses,certificates or other authorizations necessary for the conduct of ouroperations; however, because such laws and regulations are frequently changedand may impose increasingly stricter requirements, we cannot predict theultimate cost of complying with these requirements, or the impact of theserequirements on the resale value or useful lives of our tankers.  In addition, a future serious marine incidentthat results in significant oil pollution or otherwise causes significantadverse environmental impact could result in additional legislation orregulation that could negatively affect our profitability.

 

***InternationalMaritime Organization***

** **

TheInternational Maritime Organization, or IMO (the United Nations agency formaritime safety and the prevention of pollution by ships), has adopted theInternational Convention for the Prevention of Marine Pollution from Ships,1973, as modified by the Protocol of 1978 relating thereto, which has beenupdated through various amendments, or the MARPOL Convention. The MARPOLConvention implements environmental standards including oil leakage orspilling, garbage management, as well as the handling and disposal of noxiousliquids, harmful substances in packaged forms, sewage and air emissions. Theseregulations, which have been implemented in many jurisdictions in which ourvessels operate, provide, in part, that:

 

·      25-yearold tankers must be of double hull construction or of a mid-deck design withdouble-sided construction, unless:

 

(1)          they havewing tanks or double-bottom spaces not used for the carriage of oil which coverat least 30% of the length of the cargo tank section of the hull or bottom; or

 

(2)          they arecapable of hydrostatically balanced loading (loading less cargo into a tankerso that in the event of a breach of the hull, water flows into the tanker,displacing oil upwards instead of into the sea);

 

·      30-yearold tankers must be of double hull construction or mid-deck design withdouble-sided construction; and

·      alltankers will be subject to enhanced inspections.

 

Also,under IMO regulations, a tanker must be of double hull construction or amid-deck design with double-sided construction or be of another approved designensuring the same level of protection against oil pollution if the tanker:

 

·      isthe subject of a contract for a major conversion or original construction on orafter July 6, 1993;

·      commencesa major conversion or has its keel laid on or after January 6, 1994; or

·      completesa major conversion or is a newbuilding delivered on or after July 6, 1996.

 

Ourvessels are also subject to regulatory requirements, including the phase-out ofsingle hull tankers, imposed by the IMO. Effective September 2002, the IMOaccelerated its existing timetable for the phase-out of single hull oiltankers. At that time, these regulations required the phase-out of most singlehull oil tankers by 2015 or earlier, depending on the age of the tanker andwhether it has segregated ballast tanks. We do not currently own any singlehull vessels.

 

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Underthe regulations, the flag state may allow for some newer single hull shipsregistered in its country that conform to certain technical specifications tocontinue operating until the 25th anniversary of their delivery. Any portstate, however, may deny entry of those single hull tankers that are allowed tooperate until their 25th anniversary to ports or offshore terminals. Theseregulations have been adopted by over 150 nations, including many of thejurisdictions in which our tankers operate.

 

As aresult of the oil spill in November 2002 relating to the loss of the *MT Prestige*, which was owned by a company not affiliatedwith us, in December 2003, the Marine Environmental Protection Committeeof the IMO, or MEPC, adopted an amendment to the MARPOL Convention, whichbecame effective in April 2005. The amendment revised an existingregulation 13G accelerating the phase-out of single hull oil tankers andadopted a new regulation 13H on the prevention of oil pollution from oiltankers when carrying heavy grade oil. Under the revised regulation, singlehull oil tankers were required to be phased out no later than April 5,2005 or the anniversary of the date of delivery of the ship on the date or inthe year specified in the following table:

 
| **Category  of Oil Tankers**                                                                                                                                                                                                                                                                                                                                                                                             | ** ** | **Date or  Year for Phase Out**                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Category 1  oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy  diesel oil or lubricating oil as cargo, and of 30,000 dwt and above carrying  other oils, which do not comply with the requirements for protectively  located segregated ballast tanks                                                                                                                                              |       |  

 

April 5, 2005 for  ships delivered on April 5, 1982 or earlier; or   2005 for ships delivered after April 5, 1982                                                                                                                                                                                                                                                 |
|  

Category 2  - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy  diesel oil or lubricating oil as cargo, and of 30,000 dwt and above carrying  other oils, which do comply with the protectively located segregated ballast  tank requirements 

 

and 

 

Category 3  - oil tankers of 5,000 dwt and above but less than the tonnage specified for  Category 1 and 2 tankers. |       |  

 

 

April 5, 2005 for  ships delivered on April 5, 1977 or   earlier 

2005 for ships  delivered after April 5, 1977 but before January 1, 1978   2006 for ships delivered in 1978 and 1979  2007 for ships delivered in 1980 and 1981   2008 for ships delivered in 1982   2009 for ships delivered in 1983   2010 for ships delivered in 1984 or later |

 

Under the revised regulations, a flag state maypermit continued operation of certain Category 2 or 3 tankers beyond the phaseout date set forth in the above schedule. Under regulation 13G, the flag state may allow for some newer singlehull oil tankers registered in its country that conform to certain technicalspecifications to continue operating until the earlier of the anniversary ofthe date of delivery of the vessel in 2015 or the 25th anniversary of their delivery.  Under regulation 13G and 13H, asdescribed below, certain Category 2 and 3 tankers fitted with double bottoms ordouble sides may be allowed by the flag state to continue operations untiltheir 25th anniversary of delivery.  Any port state, however, may deny entry ofthose single hull oil tankers that are allowed to operate under any of the flagstate exemptions.

 

In October 2004,the MEPC adopted a unified interpretation of regulation 13G that clarified thedelivery date for converted tankers.  Underthe interpretation, where an oil tanker has undergone a major conversion thathas resulted in the replacement of the fore-body, including the entire cargocarrying section, the major conversion completion date shall be deemed to bethe date of delivery of the ship, provided that:

 

·      theoil tanker conversion was completed before July 6, 1996;

·      theconversion included the replacement of the entire cargo section and fore-bodyand the tanker complies with all the relevant provisions of MARPOL Convention applicableat the date of completion of the major conversion; and

·      theoriginal delivery date of the oil tanker will apply when considering the 15years of age threshold relating to the first technical specifications survey tobe completed in accordance with MARPOL Convention.

 

In December 2003,the MEPC adopted a new regulation 13H on the prevention of oil pollution fromoil tankers when carrying heavy grade oil, or HGO, which includes most of thegrades of marine fuel.  The newregulation bans the carriage of HGO in single hull oil tankers of 5,000 dwt andabove after April 5, 2005, and in single hull oil tankers of 600 dwt andabove but less than 5,000 dwt, no later than the anniversary of their deliveryin 2008.

 

Underregulation 13H, HGO means any of the following:

 

·      crudeoils having a density at 15oC higher than 900 kg/m3;

 

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·      fueloils having either a density at 15oC higher than 900 kg/m3 or akinematic viscosity at 50oC higher than 180 mm2/s; or

·      bitumen,tar and their emulsions.

 

Underthe regulation 13H, the flag state may allow continued operation of oil tankersof 5,000 dwt and above, carrying crude oil with a density at 15oC higher than900 kg/m3 but lower than 945 kg/m3, that conform tocertain technical specifications and, in the opinion of the such flag state,the ship is fit to continue such operation, having regard to the size, age,operational area and structural conditions of the ship and provided that thecontinued operation shall not go beyond the date on which the ship reaches 25years after the date of its delivery. The flag state may also allow continued operation of a single hull oiltanker of 600 dwt and above but less than 5,000 dwt, carrying HGO as cargo, if,in the opinion of the such flag state, the ship is fit to continue suchoperation, having regard to the size, age, operational area and structuralconditions of the ship, provided that the operation shall not go beyond thedate on which the ship reaches 25 years after the date of its delivery.

 

Theflag state may also exempt an oil tanker of 600 dwt and above carrying HGO ascargo if the ship is either engaged in voyages exclusively within an area underthe its jurisdiction, or is engaged in voyages exclusively within an area underthe jurisdiction of another party, provided the party within whose jurisdictionthe ship will be operating agrees.  Thesame applies to vessels operating as floating storage units of HGO.

 

Anyport state, however, can deny entry of single hull tankers carrying HGO whichhave been allowed to continue operation under the exemptions mentioned above,into the ports or offshore terminals under its jurisdiction, or denyship-to-ship transfer of HGO in areas under its jurisdiction except when thisis necessary for the purpose of securing the safety of a ship or saving life atsea.

 

RevisedAnnex I to the MARPOL Convention entered into force in January 2007.  Revised Annex I incorporates various amendmentsadopted since the MARPOL Convention entered into force in 1983, including theamendments to regulation 13G (regulation 20 in the revised Annex) andregulation 13H (regulation 21 in the revised Annex).  Revised Annex I also imposes constructionrequirements for oil tankers delivered on or after January 1, 2010.  A further amendment to revised Annex Iincludes an amendment to the definition of heavy grade oil that will broadenthe scope of regulation 21.  On August 1,2007, regulation 12A (an amendment to Annex I) came into force requiring oilfuel tanks to be located inside the double hull in all ships with an aggregateoil fuel capacity of 600 m3 and above, which are delivered on or after August 1,2010 including ships for which the building contract is entered into on orafter August 1, 2007 or, in the absence of a contract, which keel is laidon or after February 1, 2008.

 

*AirEmissions*

 

In September 1997,the IMO adopted Annex VI to the International Convention for the Prevention ofPollution from Ships to address air pollution from ships. Annex VI was ratifiedin May 2004, and became effective May 19, 2005. Annex VI sets limitson sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibitsdeliberate emissions of ozone depleting substances, such aschlorofluorocarbons. Annex VI also includes a global cap on the sulfur contentof fuel oil and allows for special areas to be established with more stringentcontrols on sulfur emissions. We believe that all our vessels are currentlycompliant in all material respects with these regulations. Additional or newconventions, laws and regulations may be adopted that could adversely affectour business, cash flows, results of operations and financial condition.

 

In February 2007,the United States proposed a series of amendments to Annex VI regardingparticulate matter, NOx and SOx emission standards.  The proposed emission program would reduceair pollution from ships by establishing a new tier of performance-basedstandards for diesel engines on all vessels and stringent emission requirementsfor ships that operate in coastal areas with air-quality problems.  On June 28, 2007, the World ShippingCouncil announced its support for these amendments.  If these amendments are implemented, we mayincur costs to comply with the proposed standards.

 

*SafetyRequirements*

 

TheIMO has also adopted the International Convention for the Safety of Life atSea, or SOLAS Convention, and the International Convention on Load Lines, 1966,or LL Convention, which impose a variety of standards to regulate design andoperational features of ships. SOLAS Convention and LL Convention standards arerevised periodically. We believe that all our vessels are in substantialcompliance with SOLAS Convention and LL Convention standards.

 

UnderChapter IX of SOLAS, the requirements contained in the International SafetyManagement Code for the Safe Operation of Ships and for Pollution Prevention,or ISM Code, promulgated by the IMO, also affect our operations. The ISM Coderequires the party with operational control of a vessel to develop an extensivesafety management system that includes, among other things, the adoption of asafety and environmental protection policy setting forth instructions andprocedures for operating its vessels safely and describing procedures forresponding to emergencies. We intend to rely upon the safety management systemthat we have developed.

 

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TheISM Code requires that vessel operators obtain a safety management certificatefor each vessel they operate. This certificate evidences compliance by a vessel’smanagement with code requirements for a safety management system. No vessel canobtain a certificate unless its manager has been awarded a document ofcompliance, issued by each flag state, under the ISM Code. We have obtaineddocuments of compliance for our offices and safety management certificates forall of our vessels for which the certificates are required by the IMO. Asrequired, we renew these documents of compliance and safety managementcertificates annually.

 

Noncompliancewith the ISM Code and other IMO regulations may subject the shipowner orbareboat charterer to increased liability, may lead to decreases in availableinsurance coverage for affected vessels and may result in the denial of accessto, or detention in, some ports. The U.S. Coast Guard and European Unionauthorities have indicated that vessels not in compliance with the ISM Code bythe applicable deadlines will be prohibited from trading in U.S. and EuropeanUnion ports, as the case may be.

 

TheIMO has negotiated international conventions that impose liability for oilpollution in international waters and a signatory’s territorial waters.Additional or new conventions, laws and regulations may be adopted which couldlimit our ability to do business and which could have a material adverse effecton our business and results of operations.

 

*BallastWater Requirements*

 

The IMOadopted an International Convention for the Control and Management of Ships’Ballast Water and Sediments, or the BWM Convention, in February 2004. TheBWM Convention’s implementing regulations call for a phased introduction ofmandatory ballast water exchange requirements (beginning in 2009), to bereplaced in time with mandatory concentration limits. The BWM Convention willnot enter into force until 12 months after it has been adopted by 30 states,the combined merchant fleets of which represent not less than 35% of the grosstonnage of the world’s merchant shipping.

 

Theflag state, as defined by the United Nations Convention on Law of the Sea, hasoverall responsibility for the implementation and enforcement of internationalmaritime regulations for all ships granted the right to fly its flag. The “ShippingIndustry Guidelines on Flag State Performance” evaluates flag states based onfactors such as sufficiency of infrastructure, ratification of internationalmaritime treaties, implementation and enforcement of international maritimeregulations, supervision of surveys, casualty investigations and participationat IMO meetings.

 

*OilPollution Liability*

 

Althoughthe United States is not a party to these conventions, many countries haveratified and follow the liability plan adopted by the IMO and set out in theInternational Convention on Civil Liability for Oil Pollution Damage of 1969,as amended in 2000, or the CLC. Under this convention and depending on whetherthe country in which the damage results is a party to the 1992 Protocol to theCLC, a vessel’s registered owner is strictly liable for pollution damage causedin the territorial waters of a contracting state by discharge of persistentoil, subject to certain complete defenses. The limits on liability outlined in the 1992 Protocol use theInternational Monetary Fund currency unit of Special Drawing Rights, or SDR.Under an amendment to the 1992 Protocol that became effective on November 1,2003, for vessels of 5,000 to 140,000 gross tons (a unit of measurement for thetotal enclosed spaces within a vessel), liability will be limited toapproximately 4.51 million SDR plus 631 SDR for each additional gross ton over5,000. For vessels of over 140,000 gross tons, liability will be limited to89.77 million SDR.  The exchange ratebetween SDRs and U.S. dollars was 0.632251 SDR per U.S. dollar on January 17,2008. The right to limit liability is forfeited under the InternationalConvention on Civil Liability for Oil Pollution Damage where the spill is causedby the owner’s actual fault and under the 1992 Protocol where the spill iscaused by the owner’s intentional or reckless conduct. Vessels trading tostates that are parties to these conventions must provide evidence of insurancecovering the liability of the owner. In jurisdictions where the InternationalConvention on Civil Liability for Oil Pollution Damage has not been adopted,various legislative schemes or common law govern, and liability is imposedeither on the basis of fault or in a manner similar to that convention. Webelieve that our P&I insurance will cover the liability under the planadopted by the IMO.

 

In2005, the European Union adopted a directive on ship-source pollution, imposingcriminal sanctions for intentional, reckless or negligent pollution dischargesby ships.  The directive could result incriminal liability for pollution from vessels in waters of European countriesthat adopt implementing legislation. Criminal liability for pollution may result in substantial penalties orfines and increased civil liability claims.

 

***UnitedStates Requirements***

 

In1990, the United States Congress enacted OPA to establish an extensiveregulatory and liability regime for environmental protection and cleanup of oilspills. OPA affects all owners and operators whose vessels trade with theUnited States or its territories or possessions, or whose vessels operate inthe waters of the United States, which include the U.S. territorial sea and the200 nautical mile exclusive economic zone around the United States. TheComprehensive Environmental Response, 

 

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Compensationand Liability Act, or CERCLA, imposes liability for cleanup and naturalresource damage from the release of hazardous substances (other than oil)whether on land or at sea. Both OPA and CERCLA impact our operations.

 

UnderOPA, vessel owners, operators and bareboat charterers are responsible partieswho are jointly, severally and strictly liable (unless the spill results solelyfrom the act or omission of a third party, an act of God or an act of war) forall containment and clean-up costs and other damages arising from oil spillsfrom their vessels. These other damages are defined broadly to include:

 

·                  naturalresource damages and related assessment costs;

·                  realand personal property damages;

·                  netloss of taxes, royalties, rents, profits or earnings capacity;

·                  netcost of public services necessitated by a spill response, such as protectionfrom fire, safety or health hazards; and loss of subsistence use of naturalresources.

 

OPApreviously limited the liability of responsible parties to the greater of$1,200 per gross ton or $10.0 million per tanker that is over 3,000 gross tons(subject to possible adjustment for inflation). Amendments to OPA signed intolaw in July 2006 increased these limits on the liability of responsibleparties to the greater of $1,900 per gross ton or $16.0 million per double hulltanker that is over 3,000 gross tons. The act specifically permits individual states to impose their ownliability regimes with regard to oil pollution incidents occurring within theirboundaries, and some states have enacted legislation providing for unlimitedliability for discharge of pollutants within their waters. In some cases,states which have enacted this type of legislation have not yet issuedimplementing regulations defining tanker owners’ responsibilities under theselaws. CERCLA, which applies to owners and operators of vessels, contains asimilar liability regime and provides for cleanup, removal and natural resourcedamages. Liability under CERCLA is limited to the greater of $300 per gross tonor $5.0 million.

 

Theselimits of liability do not apply, however, where the incident is caused byviolation of applicable U.S. federal safety, construction or operatingregulations, or by the responsible party’s gross negligence or willfulmisconduct. These limits do not apply if the responsible party fails or refusesto report the incident or to cooperate and assist in connection with thesubstance removal activities. OPA and CERCLA each preserve the right to recoverdamages under existing law, including maritime tort law. We believe that we arein substantial compliance with OPA, CERCLA and all applicable state regulationsin the ports where our vessels call.

 

OPArequires owners and operators of vessels to establish and maintain with theU.S. Coast Guard evidence of financial responsibility sufficient to meet thelimit of their potential strict liability under the act. The U.S. Coast Guardhas enacted regulations requiring evidence of financial responsibility in theamount of $1,500 per gross ton for tankers, coupling the former OPA limitationon liability of $1,200 per gross ton with the CERCLA liability limit of $300per gross ton. The U.S. Coast Guard has indicated that it expects to adoptregulations requiring evidence of financial responsibility in amounts thatreflect the higher limits of liability imposed by the July 2006 amendmentsto OPA, as described above.  Under the regulations,evidence of financial responsibility may be demonstrated by insurance, suretybond, self-insurance or guaranty. Under OPA regulations, an owner or operatorof more than one tanker is required to demonstrate evidence of financialresponsibility for the entire fleet in an amount equal only to the financialresponsibility requirement of the tanker having the greatest maximum strictliability under OPA and CERCLA. We have provided such evidence and receivedcertificates of financial responsibility from the U.S. Coast Guard for each ofour vessels required to have one.

 

Weinsure each of our vessels with pollution liability insurance in the maximumcommercially available amount of $1.0 billion. A catastrophic spill couldexceed the insurance coverage available, which could have a material adverseeffect on our business.

 

UnderOPA, with certain limited exceptions, all newly-built or converted vesselsoperating in U.S. waters must be built with double hulls, and existing vesselsthat do not comply with the double hull requirement will be prohibited fromtrading in U.S. waters over a 20-year period (1995-2015) based on size, age andplace of discharge, unless retrofitted with double hulls. Our current fleet of21 vessels are all of double hull construction.

 

Ownersor operators of tankers operating in the waters of the United States must filevessel response plans with the U.S. Coast Guard, and their tankers are requiredto operate in compliance with their U.S. Coast Guard approved plans.  These response plans must, among other things:

 

·                  addressa worst case scenario and identify and ensure, through contract or otherapproved means, the availability of necessary private response resources torespond to a worst case discharge;

·                  describecrew training and drills; and

·                  identifya qualified individual with full authority to implement removal actions.

 

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Wehave obtained vessel response plans approved by the U.S. Coast Guard for ourvessels operating in the waters of the United States. In addition, the U.S.Coast Guard has announced it intends to propose similar regulations requiringcertain vessels to prepare response plans for the release of hazardoussubstances.

 

Inaddition, the United States Clean WaterAct prohibits the discharge of oil or hazardous substances in United States navigable waters and imposesstrict liability in the form of penalties for unauthorized discharges.  The Clean Water Act also imposes substantialliability for the costs of removal, remediation and damages and complements theremedies available under OPA and CERCLA, discussed above.  The UnitedStates Environmental Protection Agency, or EPA, has exempted thedischarge of ballast water and other substances incidental to the normal operationof vessels in U.S. ports from CleanWater Act permitting requirements. However, on March 31, 2005, a U.S. District Court ruled that theEPA exceeded its authority in creating an exemption for ballast water.  On September 18, 2006, the court issuedan order invalidating the exemption in EPA’s regulations for all dischargesincidental to the normal operation of a vessel as of September 30, 2008,and directing the EPA to develop a system for regulating all discharges fromvessels by that date.  The EPA filed anotice of appeal of this decision and, if the EPA’s appeals are unsuccessfuland the exemption is repealed, our vessels may be subject to Clean Water Actpermit requirements that could include ballast water treatment obligations thatcould increase the cost of operating in the United States.  For example, this could require theinstallation of equipment on our vessels to treat ballast water before it isdischarged or the implementation of other port facility disposal arrangementsor procedures at potentially substantial cost, and/or otherwise restrict ourvessels from entering U.S. waters.  On June 21, 2007, the EPA providednotice of its intention to develop a permit program for discharge of ballastwater incidental to the normal operations of vessels and solicited comments.

 

***OtherRegulations***

 

In July 2003,in response to the *MT Prestige* oilspill in November 2002, the European Union adopted legislation thatprohibits all single hull tankers from entering into its ports or offshoreterminals by 2010. The European Union has also banned all single hull tankerscarrying heavy grades of oil from entering or leaving its ports or offshoreterminals or anchoring in areas under its jurisdiction. Commencing in 2005,certain single hull tankers above 15 years of age will also be restrictedfrom entering or leaving European Union ports or offshore terminals andanchoring in areas under European Union jurisdiction. The European Union hasalso adopted legislation that would: (1) ban manifestly sub-standardvessels (defined as those over 15 years old that have been detained by portauthorities at least twice in a six month period) from European waters andcreate an obligation of port states to inspect vessels posing a high risk tomaritime safety or the marine environment; and (2) provide the EuropeanUnion with greater authority and control over classification societies,including the ability to seek to suspend or revoke the authority of negligentsocieties. The sinking of the *MT**Prestige* and resulting oil spill in November 2002 hasled to the adoption of other environmental regulations by certain EuropeanUnion nations, which could adversely affect the remaining useful lives of allof our vessels and our ability to generate income from them. It is impossibleto predict what legislation or additional regulations, if any, may bepromulgated by the European Union or any other country or authority.

 

Inaddition, most U.S. states that border a navigable waterway have enactedenvironmental pollution laws that impose strict liability on a person forremoval costs and damages resulting from a discharge of oil or a release of ahazardous substance. These laws may be more stringent than U.S. federal law.

 

TheU.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977and 1990, or the CAA, requires the EPA to promulgate standards applicable toemissions of volatile organic compounds and other air contaminants. Our vesselsare subject to vapor control and recovery requirements for certain cargoes whenloading, unloading, ballasting, cleaning and conducting other operations inregulated port areas.  Our vessels thatoperate in such port areas with restricted cargoes are equipped with vaporrecovery systems that satisfy these requirements.  The CAA also requires states to draft StateImplementation Plans, or SIPs, designed to attain national health-based airquality standards in primarily major metropolitan and/or industrial areas.Several SIPs regulate emissions resulting from vessel loading and unloadingoperations by requiring the installation of vapor control equipment. Asindicated above, our vessels operating in covered port areas are alreadyequipped with vapor recovery systems that satisfy these requirements. Althougha risk exists that new regulations could require significant capitalexpenditures and otherwise increase our costs, based on the regulations thathave been proposed to date, we believe that no material capital expendituresbeyond those currently contemplated and no material increase in costs are likelyto be required.

 

TheU.S. National Invasive Species Act, or NISA, was enacted in 1996 in response togrowing reports of harmful organisms being released into U.S. ports throughballast water taken on by ships in foreign ports.  The United States Coast Guard adoptedregulations under NISA in July 2004 that impose mandatory ballast watermanagement practices for all vessels equipped with ballast water tanks enteringU.S. waters.  These requirements can bemet by performing mid-ocean ballast exchange, by retaining ballast water onboard the ship, or by using environmentally sound alternative ballast watermanagement methods approved by the United States Coast Guard.  (However, mid-ocean ballast exchange ismandatory for 

 

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shipsheading to the Great Lakes or Hudson Bay, or vessels engaged in the foreignexport of Alaskan North Slope crude oil.) Mid-ocean ballast exchange is theprimary method for compliance with the United States Coast Guard regulations, sinceholding ballast water can prevent ships from performing cargo operations uponarrival in the United States, and alternative methods are still underdevelopment. Vessels that are unable to conduct mid-ocean ballast exchange dueto voyage or safety concerns may discharge minimum amounts of ballast water (inareas other than the Great Lakes and the Hudson River), provided that theycomply with recordkeeping requirements and document the reasons they could notfollow the required ballast water management requirements. The United StatesCoast Guard is developing a proposal to establish ballast water dischargestandards, which could set maximum acceptable discharge limits for variousinvasive species, and/or lead to requirements for active treatment of ballastwater.

 

Ouroperations occasionally generate and require the transportation, treatment anddisposal of both hazardous and non-hazardous solid wastes that are subject tothe requirements of the U.S. Resource Conservation and Recovery Act, or RCRA,or comparable state, local or foreign requirements. In addition, from time totime we arrange for the disposal of hazardous waste or hazardous substances atoffsite disposal facilities. If such materials are improperly disposed of bythird parties, we may still be held liable for clean up costs under applicablelaws.

 

Recentscientific studies have suggested that emissions of certain gasses, commonlyreferred to as “greenhouse gasses,” may be contributing to warming of the Earth’satmosphere.  According to the IMO’s studyof greenhouse gasses emissions from the global shipping fleet, greenhouseemissions from ships are predicted to rise by 38% to 72% due to increasedbunker consumption by 2020 if corrective measures are not implemented.  Any passage of climate control legislation orother regulatory initiatives by the IMO or individual countries were we operatethat restrict emissions of greenhouse gases could require us to makesignificant financial expenditures we cannot predict with certainty at thistime.

 

***VesselSecurity Regulations***

 

Sincethe terrorist attacks of September 11, 2001, there have been a variety ofinitiatives intended to enhance vessel security. On November 25, 2002, theU.S. Maritime Transportation Security Act of 2002, or MTSA, came into effect.To implement certain portions of the MTSA, in July 2003, the U.S. CoastGuard issued regulations requiring the implementation of certain securityrequirements aboard vessels operating in waters subject to the jurisdiction ofthe United States. Similarly, in December 2002, amendments to SOLAScreated a new chapter of the convention dealing specifically with maritimesecurity. The new chapter became effective in July 2004 and imposesvarious detailed security obligations on vessels and port authorities, most ofwhich are contained in the International Ship and Port Facilities SecurityCode, or the ISPS Code. The ISPS Code is designed to protect ports andinternational shipping against terrorism. After July 1, 2004, to tradeinternationally, a vessel must attain an International Ship SecurityCertificate from a recognized security organization approved by the vessel’sflag state. Among the various requirements are:

 

·                  on-boardinstallation of automatic identification systems to provide a means for theautomatic transmission of safety-related information from among similarlyequipped ships and shore stations, including information on a ship’s identity,position, course, speed and navigational status;

·                  on-boardinstallation of ship security alert systems, which do not sound on the vesselbut only alerts the authorities on shore;

·                  thedevelopment of vessel security plans;

·                  shipidentification number to be permanently marked on a vessel’s hull;

·                  acontinuous synopsis record kept onboard showing a vessel’s history including,name of the ship and of the state whose flag the ship is entitled to fly, thedate on which the ship was registered with that state, the ship’s identificationnumber, the port at which the ship is registered and the name of the registeredowner(s) and their registered address; and

·                  compliancewith flag state security certification requirements.

 

TheU.S. Coast Guard regulations, intended to align with international maritimesecurity standards, exempt from MTSA vessel security measures non-U.S. vesselsthat have on board, as of July 1, 2004, a valid ISSC attesting to thevessel’s compliance with SOLAS security requirements and the ISPS Code. We haveimplemented the various security measures addressed by MTSA, SOLAS and the ISPSCode, and our fleet is in compliance with applicable security requirements.

 

***Inspection by Classification Societies***

 

Theclassification society certifies that the vessel is “in-class,” signifying thatthe vessel has been built and maintained in accordance with the rules ofthe classification society and complies with applicable rules andregulations of the vessel’s country of registry and the internationalconventions of which that country is a member. In addition, where surveys arerequired by international conventions and corresponding laws and ordinances ofa flag state, the classification society will undertake them on application orby official order, acting on behalf of the authorities concerned.

 

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Theclassification society also undertakes on request other surveys and checks thatare required by regulations and requirements of the flag state. These surveysare subject to agreements made in each individual case and/or to theregulations of the country concerned.

 

Formaintenance of the class, regular and extraordinary surveys of hull, machinery,including the electrical plant, and any special equipment classed are requiredto be performed as follows:

 

·                  *Annual Surveys.* For seagoing ships, annualsurveys are conducted for the hull and the machinery, including the electricalplant and where applicable for special equipment classed, at intervals of12 months from the date of commencement of the class period indicated inthe certificate.

 

·                  *Intermediate Surveys.* Extended annualsurveys are referred to as intermediate surveys and typically are conducted twoand one-half years after commissioning and each class renewal. Intermediate surveysmay be carried out on the occasion of the second or third annual survey.

 

·                  *Class Renewal Surveys.* Class renewalsurveys, also known as special surveys, are carried out for the ship’s hull,machinery, including the electrical plant and for any special equipmentclassed, at the intervals indicated by the character of classification for thehull. At the special survey the vessel is thoroughly examined, includingaudio-gauging to determine the thickness of the steel structures. Should thethickness be found to be less than class requirements, the classificationsociety would prescribe steel renewals. The classification society may grant aone year grace period for completion of the special survey. Substantial amountsof money may have to be spent for steel renewals to pass a special survey ifthe vessel experiences excessive wear and tear. In lieu of the special surveyevery four or five years, depending on whether a grace period was granted, aship owner has the option of arranging with the classification society for thevessel’s hull or machinery to be on a continuous survey cycle, in which everypart of the vessel would be surveyed within a five year cycle. At an owner’sapplication, the surveys required for class renewal may be split according toan agreed schedule to extend over the entire period of class. This process isreferred to as continuous class renewal.

 

Allareas subject to survey as defined by the classification society are requiredto be surveyed at least once per class period, unless shorter intervals betweensurveys are prescribed elsewhere. The period between two subsequent surveys ofeach area must not exceed five years.

 

Mostvessels are also drydocked every 30 to 36 months for inspection of theunderwater parts and for repairs related to inspections. If any defects arefound, the classification surveyor will issue a recommendation which must berectified by the ship owner within prescribed time limits.

 

Most insurance underwriters make it a condition forinsurance coverage that a vessel be certified as “in-class” by a classificationsociety which is a member of the International Association of ClassificationSocieties. All our vessels are certified as being “in-class” by Det NorskeVeritas. All new and secondhand vessels that we purchase must be certifiedprior to their delivery under our standard purchase contracts and memoranda ofagreement. If the vessel is not certified on the scheduled date of closing, wehave no obligation to take delivery of the vessel.

 

Inaddition to the classification inspections, many of our customers regularlyinspect our vessels as a precondition to chartering them for voyages. Webelieve that our well-maintained, high-quality vessels provide us with acompetitive advantage in the current environment of increasing regulation andcustomer emphasis on quality.

 

**ITEM 1A.RISK FACTORS**

 

**ADDITIONAL FACTORS THAT MAY AFFECT FUTURERESULTS**

 

This annual report on Form 10-Kcontains forward-looking statements made pursuant to the safe harbor provisionsof the Private Securities Litigation Reform Act of 1995. These forward-lookingstatements are based on management’s current expectations and observations.Included among the factors that, in our view, could cause actual results todiffer materially from the forward looking statements contained in this annualreport on Form 10-K are the following: (i) loss or reduction inbusiness from our significant customers; (ii) the failure of oursignificant customers to perform their obligations owed to us; (iii) changesin demand; (iv) a material decline or prolonged weakness in rates in thetanker market; (v) changes in production of or demand for oil andpetroleum products, generally or in particular regions; (vi) greater thananticipated levels of tanker newbuilding orders or lower than anticipated ratesof tanker scrapping; (vii) changes in rules and regulationsapplicable to the tanker industry, including, without limitation, legislationadopted by international organizations such as the International MaritimeOrganization and the European Union or by individual countries; (viii) actionstaken by regulatory 

 

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authorities; (ix) changesin trading patterns significantly impacting overall tanker tonnagerequirements; (x) changes in the typical seasonal variations in tankercharter rates; (xi) changes in the cost of other modes of oil transportation;(xii) changes in oil transportation technology; (xii) increases in costsincluding without limitation: crew wages, insurance, provisions, repairs andmaintenance; (xiv) changes in general domestic and international politicalconditions; (xv) changes in the condition of our vessels or applicablemaintenance or regulatory standards (which may affect, among other things, ouranticipated drydocking or maintenance and repair costs);****(xvi)changes in the itineraries of the Company’s vessels; (xvii) adverse changes inforeign currency exchange rates affecting our expenses; and other factorslisted from time to time in our filings with the Securities and ExchangeCommission.

 

Our ability to paydividends in any period will depend upon factors including applicableprovisions of Marshall Islands law and the final determination by the Board ofDirectors each quarter after its review of our financial performance. Thetiming and amount of dividends, if any, could also be affected by factorsaffecting cash flows, results of operations, required capital expenditures, orreserves. As a result, the amount of dividends actually paid may vary from theamounts currently estimated.

 

We face a variety of risks that are substantial and inherent in ourbusiness, including market, financial, operational, legal and regulatoryrisks.  Below, we have described certainimportant risks that could affect our business. These risks and other information included in this report should becarefully considered.  If any of theserisks occur, our business, financial condition, operating results and cashflows could be materially adversely affected and the trading price of ourcommon stock could decline.

 

**RISKFACTORS RELATED TO OUR BUSINESS & OPERATIONS**

 

**The cyclical nature of the tanker industry maylead to volatility in charter rates and vessel values which may adverselyaffect our earnings.**

 

If the tanker market,which has been cyclical, is depressed in the future, our earnings and availablecash flow may decrease. Our ability to employ our vessels profitably willdepend upon, among other things, economic conditions in the tanker market.Fluctuations in charter rates and tanker values result from changes in thesupply and demand for tanker capacity and changes in the supply and demand forpetroleum and petroleum products.

 

The factors affecting thesupply and demand for tankers are outside of our control, and the nature,timing and degree of changes in industry conditions are unpredictable.

 

Thefactors that influence demand for tanker capacity include:

 

·                  demand for and supply of petroleum and petroleumproducts,

 

·                  regional availability of refining capacity,

 

·                  environmental and other regulatory developments,

 

·                  global and regional economic conditions,

 

·                  the distance petroleum and petroleum products are tobe moved by sea, and

 

·                  changes in seaborne and other transportation patterns.

 

Thefactors that influence the supply of tanker capacity include:

 

·                  the number of newbuilding deliveries,

 

·                  the scrapping rate of older vessels,

 

·                  conversion of tankers to other uses,

 

·                  the number of vessels that are out of service, and

 

·                  environmental concerns and regulations.

 

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Historically, the tankermarkets have been volatile as a result of the many conditions and factors thatcan affect the price, supply and demand for tanker capacity. Changes in demandfor transportation of oil over longer distances and supply of tankers to carrythat oil may materially affect our revenues, profitability and cash flows.

 

**Charter rates for vessels are at levels that remainhigh relative to historic levels and may decrease in the future, which mayadversely affect our earnings and ability to pay dividends.**

 

Charter rates in thetanker industry recently have been near historically high levels.  We anticipate that future demand for ourvessels, and in turn our future charter rates, will be affected by the rate ofeconomic growth in the world’s economy as well as seasonal and regional changesin demand and changes in the capacity of the world’s fleet.  If the tanker industry, which has been highlycyclical, is depressed in the future when our charters expire or at a time whenwe may want to sell a vessel, our earnings and available cash flow may beadversely affected. We cannot assure you that we will be able to successfullycharter our vessels in the future or renew our existing charters at ratessufficient to allow us to operate our business profitably, meet our obligationsincluding payment of debt service to our lenders or to pay dividends to ourshareholders. Our ability to renew the charters on our vessels on theexpiration or termination of our current charters, the charter rates payableunder any replacement charters and vessel values will depend upon, among otherthings, economic conditions in the tanker industry at that time, changes in thesupply and demand for vessel capacity and changes in the supply and demand forthe seaborne transportation of crude oil.

 

**An over supply of new vessels mayadversely affect charter rates and vessel values.**

 

If the number of newships delivered exceeds the number of tankers being scrapped and lost, tankercapacity will increase.  In addition,according to Clarkson Research Studies Ltd., the total newbuilding order booksfor Suezmax vessels and Aframax vessels scheduled to enter the fleet through2012 currently equals 40.4% and 41.2%, respectively, of the existing fleets andwe cannot assure you that the order books will not increase further inproportion to the existing fleets.  Ifthe supply of tanker capacity increases and the demand for tanker capacity doesnot increase correspondingly, charter rates could materially decline and thevalue of our vessels could be adversely affected.

 

**Our revenues may be adversely affected if we donot successfully employ our vessels.**

 

We seek to deploy ourvessels between spot market voyage charters and time charters in a manner thatmaximizes long-term cash flow. Currently, 13 of our vessels are contractuallycommitted to time charters, with the remaining terms of these charters expiringon dates between August 2009 and August 2010. Although these timecharters generally provide stable revenues, they also limit the portion of ourfleet available for spot market voyages during an upswing in the tankerindustry cycle, when spot market voyages might be more profitable.

 

We earned approximately27% of our net voyage revenue from spot charters for the year ended December 31,2007.  The spot charter market is highlycompetitive, and spot market voyage charter rates may fluctuate dramaticallybased primarily on the worldwide supply of tankers available in the market forthe transportation of oil and the worldwide demand for the transportation ofoil by tanker. Factors affecting the volatility of spot market voyage charterrates include the quantity of oil produced globally, shifts in locations whereoil is produced or consumed, actions by OPEC, the general level of worldwideeconomic activity and the development and use of alternative energy sources. Wecannot assure you that future spot market voyage charters will be available atrates that will allow us to operate our vessels profitably.

 

**We receive a significant portion of our revenuesfrom a single customer, and any decrease in the amount of business it or anyother significant customer transacts with us could materially and adverselyaffect our cash flows and profitability.**

 

We derive a significant portion of our voyage revenuesfrom time charters by a our single largest customer, Lukoil Oil Company, orLukoil.  During the year ended December 31,2007, Lukoil accounted for 39.5% of our voyage revenues and we expect Lukoil toaccount for a significant portion of our voyage revenues in the future. Nine ofour 13 time charters are with Lukoil. Our revenues other than Lukoil revenues are also derived from a limitednumber of customers.  If Lukoil breachesor teminates these time charters or renegotiates or renews them on terms lessfavorable than those currently in effect, or if any significant customerdecreases the amount of business it transacts with us or if we lose any of ourcustomers or a significant portion of our revenues, our operating results, cashflows and profitability could be materially adversely affected.

 

During the years ended December 31,2006 and 2005 no single customer accounted for more than 10% of our voyage 

 

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revenues.

 

**A declinein demand for crude oil or a shift in oil transport patterns could materiallyand adversely affect our revenues.**

 

The demand for tankercapacity to transport crude oil depends upon world and regional oil markets. Anumber of factors influence these markets, including:

 

·                  global and regional economicconditions;

 

·                  increases and decreases in productionof and demand for crude oil;

 

·                  developments in international trade;

 

·                  changes in seaborne and othertransportation patterns;

 

·                  environmental concerns and regulations;and

 

·                  weather.

 

Historically, the crudeoil markets have been volatile as a result of the many conditions and eventsthat can affect the price, demand, production and transport of oil, includingcompetition from alternative energy sources. Decreased demand for oiltransportation may have a material adverse effect on our revenues, cash flowsand profitability.

 

**Themarket for crude oil transportation services is highly competitive and we maynot be able to effectively compete.**

 

Our vessels are employedin a highly competitive market. Our competitors include the owners of otherAframax and Suezmax tankers and, to a lesser degree, owners of other sizetankers. Both groups include independent oil tanker companies as well as oilcompanies. We do not control a sufficiently large share of the market toinfluence the market price charged for crude oil transportation services.

 

Our market share maydecrease in the future. We may not be able to compete profitably as we expandour business into new geographic regions or provide new services. New marketsmay require different skills, knowledge or strategies than we use in ourcurrent markets, and the competitors in those new markets may have greaterfinancial strength and capital resources than we do.

 

**The market value of our vessels may fluctuatesignificantly, and we may incur losses when we sell vessels following a declinein their market value.**

 

The fair market value of our vessels may increase anddecrease depending on a number of factors including:

 

·                  general economicand market conditions affecting the shipping industry;

 

·                  competition fromother shipping companies;

 

·                  supply anddemand for tankers and the types and sizes of tankers we own;

 

·                  alternativemodes of transportation;

 

·                  cost ofnewbuildings;

 

·                  governmental orother regulations;

 

·                  prevailing levelof charter rates; and

 

·                  technologicaladvances.

 

If the fair market value of our vessels declines belowtheir carrying values and such decline is other than temporary, we may berequired to take an impairment charge or may incur losses if we were to sellone or more of our vessels at such time, which would adversely affect ourbusiness and financial condition as well as our earnings.

 

**We maynot be able to grow or to effectively manage our growth.**

 

A principal focus of ourstrategy is to continue to grow by taking advantage of changing marketconditions, which may 

 

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include expanding ourbusiness in the Atlantic basin, the primary geographic area and market where weoperate, by expanding into other regions, or by increasing the number ofvessels in our fleet. Our future growth will depend upon a number of factors,some of which we can control and some of which we cannot. These factors includeour ability to:

 

·                                          identifybusinesses engaged in managing, operating or owning vessels for acquisitions orjoint ventures;

 

·                                          identifyvessels and/or shipping companies for acquisitions;

 

·                                          integrate anyacquired businesses or vessels successfully with our existing operations;

 

·                                          hire, trainand retain qualified personnel to manage and operate our growing business andfleet;

 

·                                          identifyadditional new markets outside of the Atlantic basin;

 

·                                          improve ouroperating and financial systems and controls; and

 

·                                          obtainrequired financing for our existing and new operations.

 

Our ability to grow is inpart dependent on our ability to expand our fleet through acquisitions ofsuitable double-hull vessels. We may not be able to acquire newbuildings orsecondhand double-hull tankers on favorable terms, which could impede ourgrowth and negatively impact our financial condition and ability to paydividends. We may not be able to contract for newbuildings or locate suitablesecondhand double-hull vessels or negotiate acceptable construction or purchasecontracts with shipyards and owners, or obtain financing for such acquisitionson economically acceptable terms.

 

The failure toeffectively identify, purchase, develop and integrate any vessels or businessescould adversely affect our business, financial condition and results ofoperations.

 

**Ouroperating results may fluctuate seasonally.**

 

We operate our vessels inmarkets that have historically exhibited seasonal variations in tanker demandand, as a result, in charter rates. Tanker markets are typically stronger inthe fall and winter months (the fourth and first quarters of the calendar year)in anticipation of increased oil consumption in the Northern Hemisphere duringthe winter months. Unpredictable weather patterns and variations in oilreserves disrupt vessel scheduling.

 

**Because we generate all of ourrevenues in U.S. Dollars but incur a significant portion of our expenses inother currencies, exchange rate fluctuations could have an adverse impact onour results of operations.**

 

We generate all of ourrevenues in U.S. Dollars but we incur a significant portion of our expenses,particularly crew and maintenance costs, in currencies other than the U.S.Dollar.  This difference could lead tofluctuations in net income due to changes in the value of the U.S. Dollarsrelative to the other currencies, in particular the Euro. A decline in thevalue of the U.S. Dollar could lead to higher expenses payable by us.

 

**There maybe risks associated with the purchase and operation of secondhand vessels.**

 

Our current businessstrategy may include additional growth through the acquisition of additionalsecondhand vessels. Although we inspect secondhand vessels prior to purchase,this does not normally provide us with the same knowledge about their conditionthat we would have had if such vessels had been built for and operatedexclusively by us. Therefore, our future operating results could be negativelyaffected if some of the vessels do not perform as we expect. Also, we do notreceive the benefit of warranties from the builders if the vessels we buy areolder than one year.

 

**Delays or defaults by the shipyards in theconstruction of any new vessels that we may order could increase our expensesand diminish our net income and cash flows.**

** **

Our current businessstrategy may include additional growth through constructing new vessels oracquiring newbuilding contracts.  Anysuch projects would be subject to the risk of delay or defaults by shipyardscaused by, among other things, unforeseen quality or engineering problems, workstoppages, weather interference, unanticipated cost increases, delays inreceipt of necessary equipment, and inability to obtain the requisite permitsor approvals.  In accordance withindustry practice, in the event any such shipyards are unable or unwilling todeliver the vessels ordered, we may not have substantial remedies.  Failure to construct or deliver vessels bythe shipyards or any significant delays could increase our expenses and diminishour net income and cash flows.

 

**An increase in costs couldmaterially and adversely affect our financial performance.**

 

Our vessel operatingexpenses are comprised of a variety of costs including crew costs, provisions,deck and engine stores, lubricating oil, insurance, maintenance and repairs,many of which are beyond our control and affect the entire shippingindustry.  Also, costs such as insuranceand security are still increasing. If costs continue to rise, that couldmaterially and adversely affect our cash flows and profitability.

 

**We mayface unexpected repair costs for our vessels.**

 

Repairs and maintenancecosts are difficult to predict with certainty and may be substantial. Many ofthese expenses are not 

 

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covered by our insurance.Large repair expenses could decrease our cash flow and profitability and reduceour liquidity.

 

**Compliance with safety and other vesselrequirements imposed by classification societies may be very costly and mayadversely affect our business.**

 

The hull and machinery of every commercial tanker mustbe classed by a classification society authorized by its country of registry.The classification society certifies that a tanker is safe and seaworthy inaccordance with the applicable rules and regulations of the country ofregistry of the tanker and the Safety of Life at Sea Convention. All of ourvessels are certified as being “in-class” by Det Norske Veritas. Thisclassification society is a member of the International Association ofClassification Societies.

 

A vessel must undergo annual surveys, intermediatesurveys and special surveys. In lieu of a special survey, a vessel’s machinerymay be on a continuous survey cycle, under which the machinery would besurveyed periodically over a five-year period. Our vessels are on specialsurvey cycles for hull inspection and on special survey or continuous surveycycles for machinery inspection. Every vessel is also required to be drydockedevery two to five years for inspection of the underwater parts of such vessel.

 

If a vessel in our fleet does not maintain its classand/or fails any annual survey, intermediate survey or special survey, it willbe unemployable and unable to trade between ports. This would negatively impactour results of operations.

 

**We dependon our key personnel and may have difficulty attracting and retaining skilledemployees.**

 

The loss of the servicesof any of our key personnel or our inability to successfully attract and retainqualified personnel, including ships’ officers, in the future could have amaterial adverse effect on our business, financial condition and operatingresults. Our future success depends particularly on the continued service ofPeter C. Georgiopoulos, our Chairman, President and Chief Executive Officer.

** **

**We may be unable to attract and retain qualified,skilled employees or crew necessary to operate our business.**

 

Our success depends in large part on our ability to attract and retainhighly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees withspecialized training who can perform physically demanding work.  Competition to attract and retain qualifiedcrew members is intense.  We expect crewcosts to increase in 2008.  If we are notable to increase our rates to compensate for any crew cost increases, ourfinancial condition and results of operations may be adversely affected.  Any inability we experience in the future tohire, train and retain a sufficient number of qualified employees could impairour ability to manage, maintain and grow our business.

 

**Shippingis an inherently risky business and our insurance may not be adequate.**

 

Our vessels and theircargoes are at risk of being damaged or lost because of events such as marinedisasters, bad weather, mechanical failures, human error, war, terrorism,piracy and other circumstances or events. In addition, transporting crude oilcreates a risk of business interruptions due to political circumstances inforeign countries, hostilities, labor strikes and boycotts. Any of these eventsmay result in loss of revenues, increased costs and decreased cash flows.Future hostilities or other political instability could affect our tradepatterns and adversely affect our operations and our revenues, cash flows andprofitability.

 

We carry insurance toprotect against most of the accident-related risks involved in the conduct ofour business. We currently maintain $1 billion in coverage for each of ourvessels for liability for spillage or leakage of oil or pollution. We alsocarry insurance covering lost revenue resulting from vessel off-hire for all ofour vessels. Nonetheless, risks may arise against which we are not adequatelyinsured. For example, a catastrophic spill could exceed our insurance coverageand have a material adverse effect on our financial condition. In addition, wemay not be able to procure adequate insurance coverage at commerciallyreasonable rates in the future and we cannot guarantee that any particularclaim will be paid. In the past, new and stricter environmental regulationshave led to higher costs for insurance covering environmental damage orpollution, and new regulations could lead to similar increases or even makethis type of insurance unavailable. Furthermore, even if insurance coverage is adequate to cover our losses,we may not be able to timely obtain a replacement ship in the event of a loss.We may also be subject to calls, or premiums, in amounts based not only on ourown claim records but also the claim records of all other members of theprotection and indemnity associations through which we receive indemnityinsurance coverage for tort liability. Our payment of these calls could resultin significant expenses to us which could reduce our cash flows and placestrains on our liquidity and capital resources.

 

**The risksassociated with older vessels could adversely affect our operations.**

 

In general, the costs tomaintain a vessel in good operating condition increase as the vessel ages. Asof December 31, 2007, the average age of the 20 vessels in our fleet was9.6 years compared to an average age of 9.6 years as of December 31,2006.  Due to improvements in enginetechnology, older vessels typically are less fuel-efficient than more recentlyconstructed vessels.  Cargo insurancerates increase with the age of a vessel, making older vessels less desirable tocharterers.

 

Governmental regulations,safety or other equipment standards related to the age of tankers may requireexpenditures for 

 

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alterations or theaddition of new equipment to our vessels, and may restrict the type ofactivities in which our vessels may engage. We cannot assure you that, as ourvessels age, market conditions will justify any required expenditures or enableus to operate our vessels profitably during the remainder of their usefullives.

 

**Compliancewith safety, environmental and other governmental requirements and relatedcosts may adversely affect our operations.**

 

The shipping industry ingeneral, our business and the operation of our vessels in particular, areaffected by a variety of governmental regulations in the form of numerousinternational conventions, national, state and local laws and national andinternational regulations in force in the jurisdictions in which such tankersoperate, as well as in the country or countries in which such tankers areregistered. These regulations include:

 

·                                          the U.S. OilPollution Act of 1990, or OPA, which imposes strict liability for the dischargeof oil into the 200-mile United States exclusive economic zone, the obligationto obtain certificates of financial responsibility for vessels trading inUnited States waters and the requirement that newly constructed tankers thattrade in United States waters be constructed with double-hulls;

 

·                                          theInternational Convention on Civil Liability for Oil Pollution Damage of 1969entered into by many countries (other than the United States) which imposesstrict liability for pollution damage caused by the discharge of oil;

 

·                                          theInternational Convention for the Prevention of Pollution from Ships adopted andimplemented under the auspices of the International Maritime Organization, orIMO, with respect to strict technical and operational requirements for tankers;

 

·                                          the IMOInternational Convention for the Safety of Life at Sea of 1974, or SOLAS, whichimposes crew and passenger safety requirements;

 

·                                          theInternational Ship and Port Facilities Securities Code, or the ISPS Code, whichbecame effective in 2004;

 

·                                          theInternational Convention on Load Lines of 1966 which imposes requirementsrelating to the safeguarding of life and property through limitations on loadcapability for vessels on international voyages; and

 

·                                          the U.S.Maritime Transportation Security Act of 2002 which imposes securityrequirements for tankers entering U.S. ports.

 

More stringent maritimesafety rules are also likely to be imposed worldwide as a result of theoil spill in November 2002 relating to the loss of the *M.T. Prestige*, a 26-year old single-hull tanker owned by acompany not affiliated with us. Additional laws and regulations may also beadopted that could limit our ability to do business or increase the cost of ourdoing business and that could have a material adverse effect on our operations.In addition, we are required by various governmental and quasi-governmentalagencies to obtain certain permits, licenses and certificates with respect toour operations. We believe our vessels are maintained in good condition incompliance with present regulatory requirements, are operated in compliancewith applicable safety/environmental laws and regulations and are insuredagainst usual risks for such amounts as our management deems appropriate. Thevessels’ operating certificates and licenses are renewed periodically duringeach vessel’s required annual survey. However, government regulation oftankers, particularly in the areas of safety and environmental impact maychange in the future and require us to incur significant capital expenditureswith respect to our ships to keep them in compliance.

 

**Increased inspection procedures and tighter importand export controls could increase costs and disrupt our business.**

 

International shipping issubject to various security and customs inspections and related procedures incountries of origin and destination. Inspection procedures can result in theseizure of contents of our vessels, delays in the loading, offloading ordelivery and the levying of customs, duties, fines and other penalties againstus.

 

It is possible thatchanges to inspection procedures could impose additional financial and legalobligations on us. Furthermore, changes to inspection procedures could alsoimpose additional costs and obligations on our customers and may,

 

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in certain cases, renderthe shipment of certain types of cargo impractical. Any such changes ordevelopments may have a material adverse effect on our business, financialcondition, results of operations and our ability to pay dividends.

 

**Ourvessels may be requisitioned by governments without adequate compensation.**

 

A government couldrequisition for title or seize our vessels. In the case of a requisition fortitle, a government takes control of a vessel and becomes its owner. Also, agovernment could requisition our vessels for hire. Under requisition for hire,a government takes control of a vessel and effectively becomes its charterer atdictated charter rates. Generally, requisitions occur during a period of war oremergency. Although we, as owner, would be entitled to compensation in theevent of a requisition, the amount and timing of payment would be uncertain.

 

**Increasesin tonnage taxes on our vessels would increase the costs of our operations.**

 

Our vessels are currentlyregistered under the flags of the Republic of Liberia and the Republic of theMarshall Islands. These jurisdictions impose taxes based on the tonnagecapacity of each of the vessels registered under their flag. The tonnage taxesimposed by these countries could increase, which would cause the costs of ouroperations to increase.

 

**Arrestsof our vessels by maritime claimants could cause a significant loss of earningsfor the related off hire period.**

 

Crew members, suppliersof goods and services to a vessel, shippers of cargo and other parties may beentitled to a maritime lien against a vessel for unsatisfied debts, claims ordamages. In many jurisdictions, a maritime lienholder may enforce its lien by “arresting”or “attaching” a vessel through foreclosure proceedings. The arrest orattachment of one or more of our vessels could result in a significant loss ofearnings for the related off-hire period.

 

In addition, injurisdictions where the “sister ship” theory of liability applies, a claimantmay arrest both the vessel which is subject to the claimant’s maritime lien andany “associated” vessel, which is any vessel owned or controlled by the sameowner. In countries with “sister ship” liability laws, claims might be assertedagainst us, any of our subsidiaries or our vessels for liabilities of othervessels that we own.

 

**Portionsof our income may be subject to U.S. tax.**

 

If we do not qualify foran exemption pursuant to Section 883 of the U.S. Internal Revenue Code of1986, or the Code, then we will be subject to U.S. federal income tax on ourshipping income that is derived from U.S. sources. If we are subject to suchtax, our net income and cash flow would be reduced by the amount of such tax.

 

We will qualify forexemption under Section 883 if, among other things, our stock is treatedas primarily and regularly traded on an established securities market in theUnited States. Under the final Section 883 regulations, we might notsatisfy this publicly-traded requirement in any taxable year in which 50% ormore of our stock is owned for more than half the days in such year by personswho actually or constructively own 5% or more of our stock, or 5% shareholders.

 

We believe that based onthe ownership of our stock in 2007, we satisfied the publicly-tradedrequirement under the final Section 883 regulations. However, we can giveno assurance that future changes and shifts in the ownership of our stock by 5%shareholders would permit us to qualify for the Section 883 exemption inthe future.

 

If we do not qualify forthe Section 883 exemption, our shipping income derived from U.S. sources,or 50% of our gross shipping income attributable to transportation beginning orending in the United States, would be subject to a 4% tax imposed withoutallowance for deductions.

 

**U.S. taxauthorities could treat us as a “passive foreign investment company,” whichcould have adverse U.S. federal income tax consequences to U.S. holders.**

 

Aforeign corporation will be treated as a “passive foreign investment company,”or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of itsgross income for any taxable year consists of certain types of “passive income”or (2) at least 50% of the average value of the corporation’s assets produce orare held for the production of those types of “passive income.” For purposes ofthese tests, “passive income” includes dividends, interest and gains from thesale or exchange of investment property and rents and royalties other thanrents and royalties which are received from unrelated parties in connectionwith the active conduct of a trade or business, as defined in the TreasuryRegulations.  For purposes of thesetests, income derived from the performance of services does not constitute“passive income.” U.S. shareholders of a PFIC are subject to a disadvantageousU.S. federal income tax regime with respect to the income derived by the PFIC,the distributions they receive from the PFIC and the gain, if any, they derivefrom the sale or other disposition of their shares in the PFIC.

 

We donot believe that our existing operations would cause us to be deemed to be aPFIC with respect to any taxable year. In this regard, we treat the gross income we derive or are deemed toderive from our time chartering activities as services income, rather thanrental income.  Accordingly, we believethat (1) our income from our time chartering activities does not constitute“passive income” and (2) the assets that we own and operate in connection withthe production of that income do not constitute passive assets.

 

Thereis, however, no direct legal authority under the PFIC rules addressing ouroperations.  Accordingly, no assurancecan be given that the U.S. Internal Revenue Service, or IRS, or a court of lawwill accept our position, and there is a risk that the IRS or a court of lawcould determine that we are a PFIC. Moreover, no assurance can be given that we would not be a PFIC for anyfuture taxable year if there were to be changes in the nature and extent of ouroperations.

 

If theIRS were to find that we are or have been a PFIC for any taxable year, our U.S.shareholders will face adverse U.S. tax consequences.  Under the PFIC rules, unless a shareholdermakes an election available under the Code (which election could itself haveadverse consequences for such shareholder), such shareholder would be liable topay U.S. federal income tax at the highest applicable income tax rates on ordinaryincome plus interest upon excess distributions and upon any gain from thedisposition of our common stock, as if the excess distribution or gain had beenrecognized ratably over the shareholder's holding period of our common stock.

 

**RISKFACTORS RELATED TO OUR FINANCINGS**

 

**Our 2005Credit Facility imposes, and it is possible that any indenture for debtsecurities we may issue will impose, significant operating and financialrestrictions that may limit our ability to operate our business**.

 

Our 2005 Credit Facilitycurrently imposes, and it is possible that any indenture for debt securitiesthat we may issue will impose, significant operating and financial restrictionson us. These restrictions will limit our ability to, among other things:

 

·                  incur additional debt;

 

·                  pay dividends or make other restricted payments;

 

·                  create or permit certain liens;

 

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·                  sell vessels or other assets;

 

·                  create or permit restrictions on the ability of our subsidiaries to paydividends or make other distributions to us;

 

·                  engage in transactions with affiliates; and

 

·                  consolidate or merge with or into other companies or sell all orsubstantially all of our assets.

 

On February 16,2007, we entered into an agreement to amend our 2005 Credit Facility.  Under this amendment, we are permitted to (1) payquarterly cash dividends with respect to fiscal quarters on or after March 31,2007, limited to $0.50 per share and (2) pay additional dividends,including stock buy-backs, in an aggregate amount not to exceed $50 millionplus 50% of cumulative net excess cash flow after February 16, 2007.  In addition, this amendment permitted us todeclare a one-time special dividend of up to $15 per share (up to an aggregateamount not to exceed $500 million) at any time prior to December 31, 2007.

 

These restrictions couldlimit our ability to finance our future operations or capital needs, makeacquisitions or pursue available business opportunities.

 

In addition, our 2005Credit Facility requires us to maintain specified financial ratios and satisfyfinancial covenants. We may be required to take action to reduce our debt or toact in a manner contrary to our business objectives to meet these ratios andsatisfy these covenants. Events beyond our control, including changes in theeconomic and business conditions in the markets in which we operate, may affectour ability to comply with these covenants. We cannot assure you that we willmeet these ratios or satisfy these covenants or that our lenders will waive anyfailure to do so. A breach of any of the covenants in, or our inability tomaintain the required financial ratios under, our 2005 Credit Facility wouldprevent us from borrowing additional money under the facility and could resultin a default under them. If a default occurs under our 2005 Credit Facility,the lenders could elect to declare that debt, together with accrued interestand other fees, to be immediately due and payable and proceed against thecollateral securing that debt, which constitutes all or substantially all ofour assets. Moreover, if the lenders under the 2005 Credit Facility or otheragreement in default were to accelerate the debt outstanding under thatfacility, it could result in a default under our other debt obligations thatmay exist at such time, including our debt securities.

 

**We have incurred significant indebtedness whichcould affect our ability to finance our operations, pursue desirable businessopportunities or successfully run our business in the future.**

 

We have borrowed approximately $565 million under our2005 credit facility.  Our leverage anddebt service obligations could have significant consequences, including thefollowing:

 

·                  Iffuture cash flows are insufficient, we may need to incur further indebtednessin order to make the capital expenditures and other expenses or investmentsplanned by us. 

 

·                  Ourindebtedness will have the general effect of reducing our flexibility to reactto changing business and economic conditions insofar as they affect ourfinancial condition and, therefore, may pose substantial risk to ourstockholders. 

 

·                  Inthe event that we are liquidated, any of our senior or subordinated creditorsand any senior or subordinated creditors of our subsidiaries will be entitledto payment in full prior to any distributions to the holders of our shares ofcommon stock. 

 

·                  Ourcredit facilities begin to mature in 2012, and our ability to secure additionalfinancing prior to or after that time, if needed, may be substantiallyrestricted by the existing level of our indebtedness and the restrictionscontained in our debt instruments. When our credit facilities mature in 2012,we will be required to dedicate a substantial portion of our cash flow to thepayment of such debt, which will reduce the amount of funds available foroperations, capital expenditures and future business opportunities.

 

The occurrence of any oneof these events could have a material adverse effect on our business, financialcondition, results of operations, prospects and ability to satisfy ourobligations under our 2005 Credit Facility and debt securities.

 

**Fluctuationsin the market value of our fleet may adversely affect our liquidity and may resultin breaches under our financing arrangements and sales of vessels at a loss.**

 

The market value ofvessels fluctuates depending upon general economic and market conditionsaffecting the tanker industry, the number of tankers**inthe world fleet, the price of constructing new tankers, or newbuildings, typesand sizes of tankers,

 

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and the cost of othermodes of transportation. The market value of our fleet may decline as a resultof a downswing in the historically cyclical shipping industry or as a result ofthe aging of our fleet. Declining tanker values could affect our ability toraise cash by limiting our ability to refinance vessels and thereby adverselyimpact our liquidity. In addition, declining vessel values could result in abreach of loan covenants, which could give rise to events of default under our2005 Credit Facility. Due to the cyclical nature of the tanker market, themarket value of one or more of our vessels may at various times be lower thantheir book value, and sales of those vessels during those times would result inlosses. If we determine at any time that a vessel’s future limited useful lifeand earnings require us to impair its value on our financial statements, thatcould result in a charge against our earnings and the reduction of ourshareholders’ equity. If for any reason we sell vessels at a time when vesselprices have fallen, the sale may be at less than the vessel’s carrying amounton our financial statements, with the result that we would also incur a lossand a reduction in earnings.

 

**If wedefault under our 2005 Credit Facility, we could forfeit our rights in certainof our vessels and their charters.**

 

We have pledged our 21vessels as security to the lenders under our 2005 Credit Facility. Defaultunder this loan agreement, if not waived or modified, would permit the lendersto foreclose on the mortgages over the vessels and the related collateral, andwe could lose our rights in the vessels and their charters.

 

When final payment is dueunder our loan agreement, we must repay any borrowings outstanding, includingballoon payments. To the extent that our cash flows are insufficient to repayany of these borrowings, we will need to refinance some or all of our loanagreements or replace them with an alternate credit arrangement. We may not beable to refinance or replace our loan agreements at the time they become due.In addition, the terms of any refinancing or alternate credit arrangement mayrestrict our financial and operating flexibility.

 

**We are aholding company, and we depend on the ability of our subsidiaries to distributefunds to us in order to satisfy our financial and other obligations.**

 

We are a holding company,and our subsidiaries conduct all of our operations and own all of our vessels.We have no significant assets other than the equity interests of oursubsidiaries. As a result, our ability to pay dividends depends on theperformance of our subsidiaries and their ability to distribute funds to us.The ability of our subsidiaries to make distributions to us may be restrictedby, among other things, restrictions under our credit facility, applicablecorporate and limited liability company laws of the jurisdictions of theirincorporation or organization and other laws and regulations. If we are unableto obtain funds from our subsidiaries, we will not be able to pay dividends ormake payment on our credit facility unless we obtain funds from other sources.We cannot assure you that we will be able to obtain the necessary funds fromother sources.

 

**RISKFACTORS RELATED TO OUR COMMON STOCK**

 

**Anti-takeoverprovisions in our financing agreements and organizational documents, as well asour shareholder rights plan, could have the effect of discouraging, delaying orpreventing a merger or acquisition, which could adversely affect the marketprice of our common stock.**

 

Our existing financingagreement imposes restrictions on changes of control of our company and ourship-owning subsidiaries. These include requirements that we obtain the lenders’consent prior to any change of control and that we make an offer to redeemcertain indebtedness before a change of control can take place.

 

Several provisions of ouramended and restated articles of incorporation and our by-laws coulddiscourage, delay or prevent a merger or acquisition that shareholders mayconsider favorable. These provisions include:

 

·                                          authorizingour board of directors to issue “blank check” preferred stock withoutshareholder approval;

 

·                                          providing fora classified board of directors with staggered, three-year terms;

 

·                                          prohibitingus from engaging in a “business combination” with an “interested shareholder”for a period of three years after the date of the transaction in which theperson became an interested shareholder unless certain provisions are met;

 

·                                          prohibitingcumulative voting in the election of directors;

 

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·                                          authorizingthe removal of directors only for cause and only upon the affirmative vote ofthe holders of at least 80% of the outstanding shares of our common stockentitled to vote for the directors;

 

·                                          prohibitingshareholder action by written consent unless the written consent is signed byall shareholders entitled to vote on the action;

 

·                                          limiting thepersons who may call special meetings of shareholders; and

 

·                                          establishingadvance notice requirements for nominations for election to our board ofdirectors or for proposing matters that can be acted on by shareholders atshareholder meetings.

 

In addition to theprovision described above, on December 2, 2005, our board of directorsadopted a shareholder rights plan and declared a dividend distribution of oneRight for each outstanding share of our common stock to shareholders of recordon the close of business on December 7, 2005. Each Right is nominallyexercisable, upon the occurrence of certain events, for one one-hundredth of ashare of Series A Junior Participating Preferred Stock, par value $.01 pershare, at a purchase price of $175.00 per unit, subject to adjustment. TheRights may further discourage a third party from making an unsolicited proposalto acquire us, as exercise of the Rights would cause substantial dilution tosuch third party attempting to acquire us.

 

**We cannotassure you that we will pay any dividends.**

 

On January 26, 2005our board of directors initiated a cash dividend policy. The actual declarationof future cash dividends, and the establishment of record and payment dates, issubject to final determination by our board of directors each quarter after itsreview of our financial performance. Our ability to pay dividends in any periodwill depend upon factors including satisfying the requirements under our 2005Credit Facility and applicable provisions of Marshall Islands law.

 

The timing and amount ofdividends, if any, could be affected by factors affecting cash flows, resultsof operations, required capital expenditures, or reserves. Maintaining thedividend policy will depend on our cash earnings, financial condition and cashrequirements and could be affected by factors, including the loss of a vessel,required capital expenditures, reserves established by the board of directors,increased or unanticipated expenses, additional borrowings or future issuancesof securities, which may be beyond our control. The declaration and payment ofdividends is subject to certain conditions and limitations under our 2005Credit Facility.

 

Under Marshall Islandslaw, a company may not declare or pay dividends if it is currently insolvent orwould thereby be made insolvent. Marshall Islands law also provides that acompany may declare dividends only to the extent of its surplus, or if there isno surplus, out of its net profits for the then current and/or immediatelypreceding fiscal years.

 

Our dividend policy maybe changed at any time, and from time to time, by our board of directors.

 

**Futuresales of our common stock could cause the market price of our common stock todecline.**

 

The market price of ourcommon stock could decline due to sales of a large number of shares in themarket, including sales of shares by our large shareholders, or the perceptionthat these sales could occur. These sales could also make it more difficult orimpossible for us to sell equity securities in the future at a time and pricethat we deem appropriate to raise funds through future offerings of commonstock. We have entered into registration rights agreements with thesecurityholders who received shares in our recapitalization transactions thatentitle them to have an aggregate of 2,192,793 shares registered for sale inthe public market. In addition, those shares became eligible for sale in thepublic markets beginning on June 12, 2002, pursuant to Rule 144 underthe Securities Act. We also registered on Form S-8 an aggregate of4,400,000 shares issuable upon exercise of options we have granted to purchasecommon stock or reserved for issuance under our equity compensation plans.

 

**Ourincorporation under the laws of the Republic of the Marshall Islands may limitthe ability of our shareholders to protect their interests.**

 

Our corporate affairs aregoverned by our amended and restated articles of incorporation and by-laws andby the Republic of the Marshall Islands Business Corporations Act. Theprovisions of the Republic of the Marshall Islands Business Corporations Actresemble provisions of the corporation laws of a number of states in the UnitedStates. However, there have been few judicial cases in the Republic of the MarshallIslands interpreting the Republic of the Marshall Islands Business CorporationsAct. For example, the rights and fiduciary responsibilities of directors underthe laws of the Republic of the

 

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Marshall Islands are notas clearly established as the rights and fiduciary responsibilities ofdirectors under statutes or judicial precedent in existence in certain U.S.jurisdictions. Although the Republic of the Marshall Islands BusinessCorporations Act does specifically incorporate the non-statutory law, orjudicial case law, of the State of Delaware and other states with substantiallysimilar legislative provisions, our public shareholders may have moredifficulty in protecting their interests in the face of actions by management,directors or controlling shareholders than would shareholders of a corporationincorporated in a U.S. jurisdiction.

 

**It maynot be possible for our investors to enforce U.S. judgments against us.**

 

We are incorporated inthe Republic of the Marshall Islands and most of our subsidiaries are organizedin the Republic of Liberia and the Republic of the Marshall Islands.Substantially all of our assets and those of our subsidiaries are locatedoutside the United States. As a result, it may be difficult or impossible forU.S. investors to serve process within the United States upon us or to enforcejudgment upon us for civil liabilities in U.S. courts. In addition, you shouldnot assume that courts in the countries in which we or our subsidiaries areincorporated or where our assets or the assets of our subsidiaries are located (1) wouldenforce judgments of U.S. courts obtained in actions against us or oursubsidiaries based upon the civil liability provisions of applicable U.S.federal and state securities laws or (2) would enforce, in originalactions, liabilities against us or our subsidiaries based upon these laws.

 

**ITEM 1B.UNRESOLVED STAFF COMMENTS**

 

Not applicable.

 

**ITEM 2. PROPERTIES**

 

Welease six properties, all of which house offices used in the administration ofour operations: a property of approximately 24,000 square feet in New York, NewYork, a property of approximately 12,500 square feet in Lisbon, Portugal, aproperty of approximately 2,000 square feet in Piraeus, Greece, a property ofapproximately 2,000 square feet in London, England, a property of approximately3,400 square feet in Mumbai, India and a property of approximately 750 squarefeet in Novorossiysk, Russia. We do not own or lease any production facilities,plants, mines or similar real properties.

 

**ITEM 3. LEGAL PROCEEDINGS**

 

**LEGAL PROCEEDINGS**

 

The Company has been cooperating in a criminalinvestigation being conducted by the U.S. Department of Justice relating to thealleged failure by the *Genmar Ajax*to record certain alleged illegal discharges of oily waste between October 2004and December 2004.  On December 15,2004, following a routine Coast Guard inspection, U.S. Coast Guard officialstook various documents, logs and records from the vessel for further review andanalysis. During 2005, the custodian of records for the *Genmar Ajax* received four subpoenas ducestecum requesting supplemental documentation pertaining to the vessel inconnection with a pending grand jury investigation, all of which have been compliedwith.  The Company has denied anywrongdoing in this matter by it or any of its employees but has been unable tonegotiate an acceptable settlement.  On September 26,2006, the Company received a letter from the U.S. Department of Justice statingthat it may seek an indictment against the Company’s General MaritimeManagement LLC subsidiary in connection with its investigation.  The Company intends to defend any chargesvigorously.  However, there can be noassurance that the Company will be able to obtain a favorable resolution orsatisfactory settlement.

 

This matter has been reported to the Company’sprotection and indemnity insurance underwriters.  Through December 31, 2007, the Company haspaid $420,000 of legal fees incurred by such underwriters and has delivered tosuch underwriters a letter of credit in the amount of $1 million for additionalcosts that may be incurred in connection with this matter. These amounts aresubject to reimbursement by the underwriters to the extent that the proceedingsresult in an outcome covered by insurance.

 

On or about August 29, 2007, an oil sheen wasdiscovered by shipboard personnel of the *GenmarProgress* in Guayanilla Bay, Puerto Rico in the vicinity of thevessel.  The vessel crew took promptaction pursuant to the vessel response plan. Our subsidiary which operates the vessel promptly reported this incidentto the U.S. Coast Guard and has subsequently accepted responsibility for anaccidental discharge of bunker fuel from the vessel.  The Company understands the federal andPuerto Rico authorities are conducting civil and criminal investigations intoan oil pollution incident which occurred during this time period on thesouthwest coast of Puerto Rico including Guayanilla Bay.  The extent to which oil discharged from the *Genmar Progress* is responsible for thisincident is currently the subject of investigation.  The U.S. Coast Guard has designated the *Genmar Progress* as a potential source ofdischarged oil.  Under the Oil PollutionAct of 1990, the source of the discharge is liable, regardless of fault, fordamages and oil spill remediation as a result of the discharge.

 

This matter has been reported to the Company’sprotection and indemnity insurance underwriters, and the Company believes thatany such liabilities will be covered by its insurance, less a deductible.  The Company has not accrued reserves for this

 

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incident other than the deductible because the amountof any additional costs that may be incurred by the Company is not estimable atthis time.

 

The Company been cooperating in these investigationsand has posted a surety bond to cover potential fines or penalties that may beimposed in connection with the matter.

 

The Company has also been cooperating in aninvestigation being conducted by the U.S. Coast Guard and the U.S. Departmentof Justice which we believe relates to possible alleged violations of the Actto Prevent Pollution from Ships (33 USC 1908, et. seq.) occurring on board theGenmar Defiance arising from potential failures by shipboard staff to properlyrecord discharges of bilge waste during the period of November 24, 2007through November 26, 2007.  During aU.S. Coast Guard Port State Control Inspection conducted on or about November 28,2007 at Corpus Christi, Texas, U.S. Coast Guard officials took variousdocuments, logs and equipment from the vessel for further review andanalysis.  A report of their inspectionasserted that unauthorized discharge by-pass piping was identified during theinspection.  The Company has posted abond for potential fines or penalties, which may be sought in connection withthis matter.  Currently, no charges havebeen made and no fines or penalties have been levied against the Company.

 

From time to time in thefuture, we may be subject to legal proceedings and claims in the ordinarycourse of business, principally personal injury and property casualty claims.Those claims, even if lacking merit, could result in the expenditure by us ofsignificant financial and managerial resources.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

 

Nomatter was submitted to a vote of security holders, through the solicitation ofproxies or otherwise, during the fourth quarter of the fiscal year ended December 31,2007.

 

**PART II**

 

**ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

 

**MARKET INFORMATION, HOLDERS AND DIVIDENDS**

 

Ourcommon stock has traded on the New York Stock Exchange under the symbol “GMR”since our initial public offering on June 12, 2001. The following tablesets forth for the periods indicated the high and low trading prices for thecommon stock as of the close of trading as reported on the New York StockExchange:

 
| **FISCAL YEAR ENDED DECEMBER 31, 2007** | ** ** | **HIGH** | ** ** | **LOW** | ** ** |
|------------------------------------------------------------------|------------|----------|------------|---------|------------|
| 1st Quarter                                                      |       | $        | 45.33      |    | $          | 27.73 |   |
| 2nd Quarter                                                      |       | $        | 33.82      |    | $          | 26.40 |   |
| 3rd Quarter                                                      |       | $        | 29.77      |    | $          | 22.24 |   |
| 4th Quarter                                                      |       | $        | 28.87      |    | $          | 22.59 |   |

 
| **FISCAL YEAR ENDED DECEMBER 31, 2006** | ** ** | **HIGH** | ** ** | **LOW** | ** ** |
|------------------------------------------------------------------|------------|----------|------------|---------|------------|
| 1st Quarter                                                      |       | $        | 38.97      |    | $          | 32.81 |   |
| 2nd Quarter                                                      |       | $        | 37.14      |    | $          | 30.34 |   |
| 3rd Quarter                                                      |       | $        | 40.46      |    | $          | 34.02 |   |
| 4th Quarter                                                      |       | $        | 38.07      |    | $          | 34.28 |   |

 

Asof February 19, 2008, there were approximately 148 holders of record ofour common stock.

 

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Weannounced on February 21, 2007 that our Board of Directors changed ourquarterly dividend policy by adopting a fixed target amount of $0.50 per shareper quarter or $2.00 per share each year, starting with the first quarter of2007. We intend to declare dividends in April, July, October and February ofeach year.

 

OnFebruary 21, 2007, we also announced that our Board of Directors declareda special, one-time cash dividend of $15.00 per share. The dividend was paid onor about March 23, 2007 to shareholders of record as of March 9,2007.

 

During the year ended December 31,2007, we repurchased 1,351,600 shares of our common stock for $32.7 million(average per share purchase price of $24.16) pursuant to our share repurchaseprogram described in “Share Repurchase Program” under the heading “LIQUIDITYAND CAPITAL RESOURCES” in ITEM 7.

 

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**ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OTHERDATA**

 

Setforth below are selected historical consolidated and other data of GeneralMaritime Corporation at the dates and for the fiscal years shown.

 
| ** **                                                         | ** ** | **Year Ended December 31,** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                         | ** ** | **2007**                                   | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
| **INCOME  STATEMENT DATA**                                         |       |                                       |       |   |   |   |   |   |   |   |   |
| (Dollars in  thousands, except per share data)                     |       |                                       |       |   |   |   |   |   |   |   |   |
| Voyage revenues                                                    |       | $                                          | 255,015    |   | $ | 325,984 |   | $ | 567,901 |   | $ | 701,291 |   | $ | 454,456 |   |
| Voyage expenses                                                    |       | 38,069                                     |       | 80,400 |   | 137,203 |   | 117,955 |   | 117,810 |   |
| Direct vessel  operating expenses                                  |       | 48,213                                     |       | 47,472 |   | 86,681 |   | 96,818 |   | 91,981 |   |
| Other expense                                                      |       | —                                     |       | 2,430 |   | — |   | — |   | — |   |
| General and  administrative expenses                               |       | 46,920                                     |       | 44,787 |   | 43,989 |   | 31,420 |   | 22,866 |   |
| Loss (gain) on  sale of vessels and equipment                      |       | 417                                        |       | (46,022 | ) | (91,235 | ) | (6,570 | ) | (1,490 | ) |
| Impairment  charge                                                 |       | —                                     |       | — |   | — |   | — |   | 18,803 |   |
| Depreciation and  amortization                                     |       | 49,671                                     |       | 42,395 |   | 97,320 |   | 100,806 |   | 84,925 |   |
| Operating income                                                   |       | 71,725                                     |       | 154,522 |   | 293,943 |   | 360,862 |   | 119,561 |   |
| Net interest  (income) expense                                     |       | 23,059                                     |       | (1,455 | ) | 28,918 |   | 37,852 |   | 35,043 |   |
| Other (income)  expense                                            |       | 4,127                                      |       | (854 | ) | 52,668 |   | 7,901 |   | — |   |
| Net income  (loss)                                                 |       | $                                          | 44,539     |   | $ | 156,831 |   | $ | 212,357 |   | $ | 315,109 |   | $ | 84,518 |   |
| Earnings (loss)  per common share:                                 |       |                                       |       |   |   |   |   |   |   |   |   |
| Basic                                                              |       | $                                          | 1.46       |   | $ | 4.98 |   | $ | 5.71 |   | $ | 8.51 |   | $ | 2.29 |   |
| Diluted                                                            |       | $                                          | 1.43       |   | $ | 4.87 |   | $ | 5.61 |   | $ | 8.33 |   | $ | 2.26 |   |
|                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| Dividends  declared per common share                               |       | $                                          | 17.12      |   | $ | 4.80 |   | $ | 2.86 |   | $ | — |   | $ | — |   |
|                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| Weighted average  basic shares outstanding, thousands:             |       |                                       |       |   |   |   |   |   |   |   |   |
| Basic                                                              |       | 30,403                                     |       | 31,472 |   | 37,164 |   | 37,049 |   | 36,967 |   |
| Diluted                                                            |       | 31,212                                     |       | 32,217 |   | 37,874 |   | 37,814 |   | 37,356 |   |
| **BALANCE SHEET DATA, at end of period******(Dollars in thousands) |       |                                       |       |   |   |   |   |   |   |   |   |
| Cash                                                               |       | $                                          | 44,526     |   | $ | 107,460 |   | $ | 96,976 |   | $ | 46,921 |   | $ | 38,905 |   |
| Current assets,  including cash                                    |       | 82,494                                     |       | 137,865 |   | 471,324 |   | 152,145 |   | 102,473 |   |
| Total assets                                                       |       | 835,035                                    |       | 843,690 |   | 1,146,126 |   | 1,427,261 |   | 1,263,578 |   |
| Current  liabilities, including current portion of long-term debt  |       | 35,502                                     |       | 27,147 |   | 32,906 |   | 84,120 |   | 89,771 |   |
| Current portion  of long-term debt                                 |       | —                                     |       | — |   | — |   | 40,000 |   | 59,553 |   |
| Total long-term  debt, including current portion                   |       | 565,000                                    |       | 50,000 |   | 135,020 |   | 486,597 |   | 655,670 |   |
| Shareholders'  equity                                              |       | 228,657                                    |       | 763,913 |   | 976,125 |   | 890,426 |   | 568,880 |   |
| **OTHER  FINANCIAL DATA**

(Dollars in  thousands)                 |       |                                       |       |   |   |   |   |   |   |   |   |
| Net cash  provided by operating activities                         |       | $                                          | 95,833     |   | $ | 189,717 |   | $ | 249,614 |   | $ | 363,238 |   | $ | 178,112 |   |
| Net cash  provided (used) by investing activities                  |       | (84,516                                    | )          | 285,264 |   | 318,169 |   | (168,477 | ) | (502,919 | ) |
| Net cash (used)  provided by financing activities                  |       | (74,251                                    | )          | (464,497 | ) | (517,728 | ) | (186,745 | ) | 361,031 |   |
| Capital  expenditures                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| Vessel sales  (purchases), gross including deposits                |       | (80,061                                    | )          | 290,299 |   | 324,087 |   | (165,796 | ) | (501,242 | ) |
| Drydocking or  capitalized survey or improvement costs             |       | (11,815                                    | )          | (11,929 | ) | (38,039 | ) | (17,050 | ) | (14,137 | ) |
| Weighted average  long-term debt, including current portion        |       | 414,137                                    |       | 93,085 |   | 410,794 |   | 650,196 |   | 601,086 |   |
|                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| **OTHER  DATA**

(Dollars in  thousands)                           |       |                                       |       |   |   |   |   |   |   |   |   |
| EBITDA (1)                                                         |       | $                                          | 117,269    |   | $ | 197,771 |   | $ | 338,595 |   | $ | 453,767 |   | $ | 204,486 |   |
|                                                               |       |                                       |       |   |   |   |   |   |   |   |   |
| **FLEET  DATA**                                                    |       |                                       |       |   |   |   |   |   |   |   |   |
| Total number of  vessels at end of period                          |       | 20.0                                       |       | 18.0 |   | 30.0 |   | 43.0 |   | 43.0 |   |
| Average number  of vessels (2)                                     |       | 19.3                                       |       | 20.6 |   | 41.9 |   | 44.0 |   | 40.6 |   |
| Total voyage  days for fleet (3)                                   |       | 6,599                                      |       | 7,121 |   | 14,073 |   | 15,482 |   | 14,267 |   |
| Total time  charter days for fleet                                 |       | 4,641                                      |       | 2,300 |   | 3,983 |   | 4,371 |   | 2,804 |   |
| Total spot  market days for fleet                                  |       | 1,958                                      |       | 4,821 |   | 10,090 |   | 11,111 |   | 11,463 |   |
| Total calendar  days for fleet (4)                                 |       | 7,045                                      |       | 7,534 |   | 15,311 |   | 16,123 |   | 14,818 |   |
| Fleet  utilization (5)                                             |       | 93.7                                       | %          | 94.5 | % | 91.9 | % | 96.0 | % | 96.3 | % |
| **AVERAGE  DAILY RESULTS**                                         |       |                                       |       |   |   |   |   |   |   |   |   |
| Time charter  equivalent (6)                                       |       | $                                          | 32,876     |   | $ | 34,487 |   | $ | 30,605 |   | $ | 37,676 |   | $ | 23,596 |   |
| Direct vessel  operating expenses (7)                              |       | 6,844                                      |       | 6,301 |   | 5,661 |   | 6,005 |   | 6,207 |   |
| General and  administrative expenses (8)                           |       | 6,660                                      |       | 5,945 |   | 2,873 |   | 1,949 |   | 1,543 |   |
| Total vessel  operating expenses (9)                               |       | 13,504                                     |       | 12,246 |   | 8,534 |   | 7,954 |   | 7,750 |   |
|                                                                    |            |                                            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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| ** **                       |       | **Year Ended December 31,** |        |
|----------------------------------|------------|-----------------------------|-------------|
| **EBITDA  Reconciliation**       | ** ** | **2007**                    | ** **  | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
| (Dollars in  thousands)          |       |                        |        |   |   |   |   |   |   |   |   |
| **Net  Income**                  | ** ** | **$**                       | **44,539**  | ** ** | **$** | **156,831** | ** ** | **$** | **212,357** | ** ** | **$** | **315,109** | ** ** | **$** | **84,518** | ** ** |
| + Net interest  expense          |       | 23,059                      |        | (1,455 | ) | 28,918 |   | 37,852 |   | 35,043 |   |
| + Depreciation  and amortization |       | 49,671                      |        | 42,395 |   | 97,320 |   | 100,806 |   | 84,925 |   |
| **EBITDA**                       | ** ** | **$**                       | **117,269** | ** ** | **$** | **197,771** | ** ** | **$** | **338,595** | ** ** | **$** | **453,767** | ** ** | **$** | **204,486** | ** ** |

 

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| (1)    | EBITDA  represents net income plus net interest expense and depreciation and  amortization. EBITDA is included because it is used by management and certain  investors as a measure of operating performance. EBITDA is used by analysts  in the shipping industry as a common performance measure to compare results  across peers. Management of the Company uses EBITDA as a performance measure  in consolidating quarterly internal financial statements and is presented for  review at our board meetings. The Company believes that EBITDA is useful to  investors as the shipping industry is capital intensive which often brings  significant cost of financing. EBITDA is not an item recognized by accounting  principles generally accepted in the United States of America (GAAP), and  should not be considered as an alternative to net income, operating income or  any other indicator of a company’s operating performance required by GAAP.  The definition of EBITDA used here may not be comparable to that used by  other companies. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (2)    | Average number of  vessels is the number of vessels that constituted our fleet for the relevant  period, as measured by the sum of the number of days each vessel was  part of our fleet during the period divided by the number of calendar  days in that period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (3)    | Voyage days for  fleet are the total days our vessels were in our possession for the relevant  period net of off hire days associated with major repairs, drydockings or  special or intermediate surveys.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (4)    | Calendar days  are the total days the vessels were in our possession for the relevant period  including off hire days associated with major repairs, drydockings or special  or intermediate surveys.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (5)    | Fleet  utilization is the percentage of time that our vessels were available for  revenue generating voyage days, and is determined by dividing voyage days by  calendar days for the relevant period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (6)    | Time Charter  Equivalent, or TCE, is a measure of the average daily revenue performance of  a vessel on a per voyage basis. Our method of calculating TCE is consistent  with industry standards and is determined by dividing net voyage revenue by  voyage days for the relevant time period. Net voyage revenues are voyage  revenues minus voyage expenses. Voyage expenses primarily consist of port,  canal and fuel costs that are unique to a particular voyage, which would  otherwise be paid by the charterer under a time charter contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (7)    | Daily direct  vessel operating expenses, or DVOE, is calculated by dividing DVOE, which  includes crew costs, provisions, deck and engine stores, lubricating oil,  insurance and maintenance and repairs, by calendar days for the relevant time  period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (8)    | Daily general  and administrative expense is calculated by dividing general and  administrative expenses by calendar days for the relevant time period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (9)    | Total  Vessel Operating Expenses, or TVOE, is a measurement of our total expenses  associated with operating our vessels. Daily TVOE is the sum of daily direct  vessel operating expenses, or DVOE, and daily general and administrative expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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**ITEM 7. MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**General**

 

Thefollowing is a discussion of our financial condition at December 31, 2007and 2006 and our results of operations comparing the years ended December 31,2007 and 2006 and the years ended December 31, 2006 and 2005. You shouldread this section together with the consolidated financial statementsincluding the notes to those financial statements for the years mentionedabove.

 

Weare a leading provider of international seaborne crude oil transportationservices with a large mid-sized vessel fleet. As of December 31, 2007 ourfleet consisted of 20 vessels (10 Aframax and 10 Suezmax vessels) with a totalcargo carrying capacity of 2.5 million deadweight tons.  In addition, we have one Suezmax vessel,which was delivered in February 2008 comprising an additional 0.2 milliondeadweight tons in the aggregate.

 

**Spot and Time Charter Deployment**

 

Weactively manage the deployment of our fleet between spot market voyagecharters, which generally last from several days to several weeks, and timecharters, which can last up to several years. A spot market voyage charter isgenerally a contract to carry a specific cargo from a load port to a dischargeport for an agreed upon total amount. Under spot market voyage charters, we payvoyage expenses such as port, canal and fuel costs. A time charter is generallya contract to charter a vessel for a fixed period of time at a set daily rate.Under time charters, the charterer pays voyage expenses such as port, canal andfuel costs.

 

Vesselsoperating on time charters provide more predictable cash flows, but can yieldlower profit margins than vessels operating in the spot market during periodscharacterized by favorable market conditions. Vessels operating in the spotmarket generate revenues that are less predictable but may enable us tocapture increased profit margins during periods of improvements in tanker ratesalthough we are exposed to the risk of declining tanker rates. We areconstantly evaluating opportunities to increase the number of our vesselsdeployed on time charters, but only expect to enter into additional timecharters if we can obtain contract terms that satisfy our criteria.

 

**Net Voyage Revenues as Performance Measure**

 

Fordiscussion and analysis purposes only, we evaluate performance using net voyagerevenues. Net voyage revenues are voyage revenues minus voyage expenses. Voyageexpenses primarily consist of port, canal and fuel costs that are unique to aparticular voyage, which would otherwise be paid by a charterer under a timecharter. We believe that presenting voyage revenues, net of voyage expenses,neutralizes the variability created by unique costs associated with particularvoyages or the deployment of vessels on time charter or on the spot market andpresents a more accurate representation of the revenues generated by ourvessels.

 

Ourvoyage revenues are recognized ratably over the duration of the spot market voyagesand the lives of the charters, while direct vessel expenses are recognized whenincurred. We recognize the revenues of time charters that contain rateescalation schedules at the average rate during the life of the contract. Wecalculate time charter equivalent, or TCE, rates by dividing net voyage revenueby voyage days for the relevant time period. We also generate demurragerevenue, which represents fees charged to charterers associated with our spotmarket voyages when the charterer exceeds the agreed upon time required to loador discharge a cargo. We calculate daily direct vessel operating expenses anddaily general and administrative expenses for the relevant period by dividingthe total expenses by the aggregate number of calendar days that we owned eachvessel for the period.

 

**RESULTS OF OPERATIONS**

 

Marginanalysis for the indicated items as a percentage of net voyage revenues for theyears ended December 31, 2007, 2006 and 2005 are set forth in the tablebelow.

 

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**INCOME STATEMENT MARGIN ANALYSIS(% OF NET VOYAGE REVENUES)**

 
| ** **                                    | ** ** | **YEAR ENDED DECEMBER 31,** | ** ** |
|-----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                   | ** ** | **2006** | ** ** | **2005** | ** ** |
| **INCOME  STATEMENT DATA**                    |       |                                       |       |   |   |   |   |
|                                          |       |                                       |       |   |   |   |   |
| **Net  voyage revenues (1)**                  |       | 100.0                                      | %          | 100.0 | % | 100.0 | % |
| Direct vessel  expenses                       |       | 22.2                                       | %          | 19.3 | % | 20.1 | % |
| Other expense                                 |       | 0.0                                        | %          | 1.0 | % | 0.0 | % |
| General and  administrative expenses          |       | 21.6                                       | %          | 18.2 | % | 10.2 | % |
| Depreciation and  amortization                |       | 22.9                                       | %          | 17.3 | % | 22.6 | % |
| Loss (gain) on  sale of vessels and equipment |       | 0.2                                        | %          | -18.7 | % | -21.2 | % |
| Operating income                              |       | 33.1                                       | %          | 62.9 | % | 68.2 | % |
| Net interest  expense (income)                |       | 10.6                                       | %          | -0.6 | % | 6.7 | % |
| Other expense  (income)                       |       | 1.9                                        | %          | -0.3 | % | 12.2 | % |
| Net income                                    |       | 20.6                                       | %          | 63.8 | % | 49.3 | % |

 

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**(1)  INCOME STATEMENT DATA**

 
| ** **                                     | ** ** | **YEAR  ENDED DECEMBER 31,** |       |
|------------------------------------------------|------------|------------------------------|------------|
| **(Dollars  in thousands, except share data)** | ** ** | **2007**                     | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                           |       |                         |       |   |   |   |   |
| Voyage revenues                                |       | $                            | 255,015    |   | $ | 325,984 |   | $ | 567,901 |   |
| Voyage expenses                                |       | (38,069                      | )          | (80,400 | ) | (137,203 | ) |
| Net voyage  revenues                           |       | $                            | 216,946    |   | $ | 245,584 |   | $ | 430,698 |   |

 

**YEAR ENDED DECEMBER 31, 2007 COMPARED TO THEYEAR ENDED DECEMBER 31, 2006**

 

VOYAGEREVENUES-****Voyage revenues decreased by $71.0million, or 21.8%, to $255.0 million for the year ended December 31, 2007compared to $326.0 million for the prior year. This decrease reflects a 7.3% decrease in vessel operating days as wellas a decrease in the proportion of our vessel operating days relating to spotcharters; spot charter rates are generally higher than time charter rates toallow the vessel owner to recoup voyage expenses which are paid for by thecharterer under time charters.

 

VOYAGEEXPENSES-****Voyage expenses decreased $42.3million, or 52.7%, to $38.1 million for the year ended December 31, 2007compared to $80.4 million for the prior year. This decrease in voyage expensesis primarily due to a decrease in the number of days our vessels operated underspot charters. Substantially all of our voyage expenses relate to spot chartervoyages, under which the vessel owner is responsible for voyage expenses suchas fuel and port costs.  During the yearended December 31, 2007, the number of days our vessels operated underspot charters decreased by 2,863, or 59.4%, to 1,958 days (1,386 days Aframax,572 days Suezmax) from 4,821 days (2,467 days Aframax, 2,354 days Suezmax)during the prior year.  Although port costs,which can vary depending on the geographic regions in which the vessels operateand their trading patterns, decreased by 51% during 2007 to $9.9 million from$20.2 million during the prior year, port costs per spot charter day increasedby approximately 20% associated with the increase in 2007 in the proportion ofsuch spot days associated with Aframax tankers. Aframax spot market voyages are generally of shorter durations thanSuezmax spot market voyages, resulting in more port calls during the year andconsequently higher port costs.  Fuelcosts decreased by approximately 59% during 2007 to $23.9 million from $58.9million during the prior year. Although fuel prices were higher in 2007 ascompared to 2006, fuel cost per spot days remained relatively unchanged.  This is due to the increase in 2007 in theproportion of spot market voyage days associated with Aframax tankers, whichconsume significantly less fuel than do Suezmax vessels.

 

NETVOYAGE REVENUES-****Net voyage revenues, which arevoyage revenues minus voyage expenses, decreased by $28.7 million, or 11.7%, to$216.9 million for the year ended December 31, 2007 compared to $245.6million for the prior year. Of this total decrease, approximately $18 millionis attributable to the decrease in the average size of our fleet whichdecreased 6.3% to 19.3 vessels (10.0 Aframax, 9.3 Suezmax) for the year ended December 31,2007 compared to 20.6 vessels (12.7 Aframax, 7.9 Suezmax) for the prior year.Approximately $11 million of the decrease in net voyage revenue is associatedwith weaker overall daily rates for Suezmax and Aframax vessels during the yearended December 31, 2007 compared to the

 

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prioryear. Our average TCE rates decreased 4.7% to $32,876 during the year ended December 31,2007 compared to $34,487 during the year ended December 31, 2006.

 

Thefollowing is additional data pertaining to net voyage revenues:

 
| ** **                                                 | ** ** | **Year ended December 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|------------------------------------------------------------|------------|--------------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                                                 | ** ** | **2007**                                   | ** ** | **2006**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| ** **                                                 | ** ** | ** **                                 | ** ** | ** **   | ** ** | ** **     | ** ** | ** ** | ** ** |
| **Net voyage revenue (in thousands):** | ** ** | ** **                                 | ** ** | ** **   | ** ** | ** **     | ** ** | ** ** | ** ** |
| Time charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | $                                          | 55,496     |         | $          | 46,327         |       | $ | 9,169 |   | 19.8 | % |
| Suezmax                                                    |       | 102,023                                    |       | 13,929       |       | 88,094         |       | 632.5 | % |
| Total                                                      |       | 157,519                                    |       | 60,256       |       | 97,263         |       | 161.4 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |
| Spot charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | 42,453                                     |       | 78,791       |       | (36,338        | )          | -46.1 | % |
| Suezmax                                                    |       | 16,974                                     |       | 106,537      |       | (89,563        | )          | -84.1 | % |
| Total                                                      |       | 59,427                                     |       | 185,328      |       | (125,901       | )          | -67.9 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |
| TOTAL NET VOYAGE  REVENUE                                  |       | $                                          | 216,946    |         | $          | 245,584        |       | $ | (28,638 | ) | -11.7 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |
| **Vessel  operating days:**                                |       |                                       |       |         |       |           |       |   |   |
| Time charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | 1,894                                      |       | 1,935        |       | (41            | )          | -2.1 | % |
| Suezmax                                                    |       | 2,747                                      |       | 365          |       | 2,382          |       | 652.6 | % |
| Total                                                      |       | 4,641                                      |       | 2,300        |       | 2,341          |       | 101.8 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |
| Spot charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | 1,386                                      |       | 2,467        |       | (1,081         | )          | -43.8 | % |
| Suezmax                                                    |       | 572                                        |       | 2,354        |       | (1,782         | )          | -75.7 | % |
| Total                                                      |       | 1,958                                      |       | 4,821        |       | (2,863         | )          | -59.4 | % |
| TOTAL VESSEL  OPERATING DAYS                               |       | 6,599                                      |       | 7,121        |       | (522           | )          | -7.3 | % |
| AVERAGE NUMBER  OF VESSELS                                 |       | 19.3                                       |       | 20.6         |       | (1.3           | )          | -6.3 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |
| **Time  Charter Equivalent (TCE):**                        |       |                                       |       |         |       |           |       |   |   |
| Time charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | $                                          | 29,301     |         | $          | 23,941         |       | $ | 5,359 |   | 22.4 | % |
| Suezmax                                                    |       | $                                          | 37,140     |         | $          | 38,163         |       | $ | (1,023 | ) | -2.7 | % |
| Combined                                                   |       | $                                          | 33,941     |         | $          | 26,198         |       | $ | 7,742 |   | 29.6 | % |
|                                                       |       |                                       |       |         |       |           |       |   |   |   |   |   |
| Spot charter:                                              |       |                                       |       |         |       |           |       |   |   |
| Aframax                                                    |       | $                                          | 30,630     |         | $          | 31,938         |       | $ | (1,308 | ) | -4.1 | % |
| Suezmax                                                    |       | $                                          | 29,674     |         | $          | 45,258         |       | $ | (15,584 | ) | -34.4 | % |
| Combined                                                   |       | $                                          | 30,351     |         | $          | 38,442         |       | $ | (8,091 | ) | -21.0 | % |
| TOTAL TCE                                                  |       | $                                          | 32,876     |         | $          | 34,487         |       | $ | (1,611 | ) | -4.7 | % |

 

Asof December 31, 2007, 12 of our vessels are on time charters expiringbetween August 2009 and August 2010.

 

DIRECT VESSEL EXPENSES-****Direct vessel expenses, which include crew costs,provisions, deck and engine stores, lubricating oil, insurance, maintenance andrepairs increased by $0.7 million, or 1.6%, to $48.2 million for the year endedDecember 31, 2007 compared to $47.5 million for the prior year. Thisincrease is primarily due to higher daily direct vessel expenses per vesselwhich increased by $543, or 8.6%, to $6,844 ($6,965 Aframax, $6,713 Suezmax)for the year ended December 31, 2007 compared to $6,301 ($6,051 Aframax,$6,705 Suezmax) for the prior year. This increase is partially 

 

33

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offset by a 6.3% decreasein the size of our fleet during 2007 as compared to 2006.  This increase in daily cost during the yearended December 31, 2007 as compared to the prior year is primarilyattributable to certain expenses reflecting expensing of insurance claimdeductibles, increased insurance premiums associated with the increased valueof our fleet, higher crewing costs associated with bringing the technicalmanagement of two of our Aframax vessels in-house, higher maintenance andrepairs associated with three Aframax tankers, and higher costs of lubricatingoils associated with higher pricing in the areas where our vessels under timecharters trade  during the year ended December 31,2007 as compared to the prior year.

 

We anticipate that directvessel expenses will increase during 2008 as compared to 2007 due to theincrease in the average size of our fleet during 2008 as compared to 2007 andhigher expected daily direct vessel expenses. We expect daily direct vessel operating expenses to increase during 2008due to higher crew and lubricating oils costs.

 

OTHER EXPENSE—Otherexpense for the year ended December 31, 2006 is comprised of a $2.4million settlement of a claim by a subsidiary of the Exxon Mobil Corporationarising from the February 4, 2005 collision of the *GenmarKestrel*.

 

GENERALAND ADMINISTRATIVE EXPENSES—General and administrative expenses increased by$2.1 million, or 4.8%, to $46.9 million for the year ended December 31,2007 compared to $44.8 million for the prior year. Significant factorscontributing to this increase for the year ended December 31, 2007compared to the prior year are:

 

(a) A $2.0 millionincrease in financial advisory fees during the year ended December 31,2007 compared to the prior year associated with financial advisory servicesreceived pursuant to our determination to pay a special dividend.

 

** **(b) A$0.9 million increase in severance costs for the year ended December 31,2007 compared to the prior year.

 

  (c) A$0.9 million increase in restricted stock amortization during the year ended December 31,2007 as compared to the prior year associated with amortization of restrictedshares granted during 2007 as well as a full year amortization on restrictedstock awards granted in December 2006, partially offset by lowerrestricted stock amortization associated with restricted shares granted priorto December 2006.

 

(d) A $1.1 millionnet decrease in costs associated with operating our foreign offices in Greeceand Portugal during the year ended December 31, 2007 compared to the prioryear period.  This net decrease includes a $2.7 million decrease inoperating our office in Greece during the year ended December 31, 2007 ascompared to the prior year.  This office ceased vessel operations during May 2006,and during the year ended December 31, 2006, we incurred the cost ofoperating this office as well as severance costs relating to the closing of thisoffice, compared to significantly lower costs incurred during the year ended December 31,2007.  This decrease is partially offset by a $1.6 million increase incosts of operating our office in Portugal during the year ended December 31,2007 as compared to the prior year, associated with increased staffing levelsand infrastructure in that office.

 

 (e) A $0.4million decrease during the year ended December 31, 2007 as compared tothe prior year relating to the costs of operating our foreign office in Londonassociated with that office ceasing commercial operations activity during March 2007.

 

Generaland administrative expenses as a percentage of net voyage revenues increased to21.6% for the year ended December 31, 2007 from 18.2% for the prior year.Daily general and administrative expenses per vessel increased $715, or 12.0%,to $6,660 for the year ended December 31, 2007 compared to $5,945 for theprior year.

 

For2008, we have budgeted estimated general and administrative expenses to beapproximately $42.8 million.

 

DEPRECIATION ANDAMORTIZATION—Depreciation and amortization, which include depreciation ofvessels as well as amortization of drydocking and special surveys, increased by$7.3 million, or 17.2%, to $49.7 million for the year ended December 31,2007 compared to $42.4 million for the prior year. Vessel depreciationincreased by $3.4 million to $37.3 million during year ended December 31,2007 compared to $33.9 million during the prior year period.  This increaseis due to more depreciation during 2007 relating to the additions to our fleetof the*Harriet G* in March 2006,the*Kara G* in January 2007and the*George T*  in August 2007.

 

Amortization ofdrydocking increased by $4.0 million, or 65.6%, to $10.1 million for the year ended December 31, 2007compared to $6.1 million for the prior year. Drydocks are typically amortizedover periods from 30 months to 60 months. This increase reflects amortization during 2007 of a portion of the$11.8 million of drydock costs capitalized during the year

 

34

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ended December 31,2007 and amortization for the full year of the $11.9 million of drydock costscapitalized during the year ended December 31, 2006, as well as accelerationof amortization of two drydocks that had been rescheduled to earlier dates.

 

LOSS(GAIN) ON SALE OF VESSELS AND EQUIPMENT— During the year ended December 31,2007, we incurred a $0.4 million loss associated with the disposal of certainvessel equipment.  During 2006, we sold 13 vessels for aggregate netproceeds of $340.9 million, for a net gain on sale of vessels of $46.0 million.

 

INTERESTINCOME—Interest income decreased by $3.1 million, or 55.8%, to $2.5 millionduring the year ended December 31, 2007 compared to $5.6 million duringthe prior year.  This decrease is theresult of lower average cash balances during 2007 compared to 2006.

 

INTEREST EXPENSE—Interestexpense increased by $21.3 million, or 513%, to $25.5 million for the year ended December 31, 2007compared to $4.2 million for the prior year. This increase is attributable tothe increase in outstanding borrowings under our 2005 Credit Facility during2007.  During the year ended December 31,2007, our weighted average outstanding debt increased by 345% to $414.1 millioncompared to $93.1 during the prior year.

 

During March 2007 wepaid a $15.00 per share dividend on our common stock through borrowings underour 2005 Credit Facility which increased our outstanding borrowings under our2005 Credit Facility to $565 million as of December 30, 2007 compared to$50 million outstanding as of December 31, 2006.  We expect ourlong-term debt during 2008 to approximate the debt level at December 31,2007.  Because this amount is greaterthan our weighted average debt for the year ended December 31, 2007,  we expect our interest expense to be higherduring 2008 as compared to 2007.

 

OTHER INCOME (EXPENSE)—Other expense for the year ended December 31, 2007 was $4.1 million ofwhich the main components were an aggregate realized loss on our freightderivatives of $2.0 million and an unrealized loss on our freight derivativesof $2.3 million.  Other income for the year ended December 31, 2006was $0.9 million and consisted primarily of a $0.6 million gain on Euros heldby the Company and an unrealized gain on our freight derivative of $2.2 millionoffset by a realized loss on our freight derivative of $2.1 million.

 

NETINCOME—Net income was $44.5 million for the year ended December 31, 2007compared to net income of $156.8 million for the prior year.

 

**YEAR ENDED DECEMBER 31, 2006 COMPARED TO THEYEAR ENDED DECEMBER 31, 2005**

 

VOYAGEREVENUES-****Voyage revenues decreased by $241.9million, or 42.6%, to $326.0 million for the year ended December 31, 2006compared to $567.9 million for the prior year.  This decrease is primarily due to a 49.4% decrease in the number ofvessel operating days to 7,121 days in 2006 from 14,073 days in the prior year,which is primarily attributable to a decrease in the size of our fleet. Theaverage size of our fleet decreased to 20.6 (12.7 Aframax, 7.9 Suezmax) vesselsduring the year ended December 31, 2006 compared to 41.9 vessels (25.5Aframax, 16.4 Suezmax) during the prior year. This decrease is partially offsetby stronger spot and time charter rates during 2006 as compared to the prioryear.  This overall decrease isconsistent with our strategy to selectively sell older vessels when and ifappropriate opportunities are identified in order to adjust our fleetcharacteristics and profile to suit customer preferences and to monetizeinvestments in vessels to generate capital for potential future growth.

 

VOYAGEEXPENSES-****Voyage expenses decreased $56.8million, or 41.4%, to $80.4 million for the year ended December 31, 2006compared to $137.2 million for the prior year. Substantially all of our voyageexpenses relate to spot charter voyages, under which the vessel owner isresponsible for voyage expenses such as fuel and port costs. This decrease invoyage expenses is primarily due to a decrease in the number of days ourvessels operated under spot charters. During the year ended December 31,2006, the number of days our vessels operated under spot charters decreased by5,269, or 52.2%, to 4,821 days (2,467 days Aframax, 2,354 days Suezmax) from10,090 days (4,529 days Aframax, 5,561 days Suezmax) during the prior year.This decrease was partially offset by fuel costs which were 38% higher per spotvessel day during the year ended December 31, 2006 compared to the prioryear period. Fuel cost decreased by $30.6 million, or 34.2%, to $58.9 millionduring the year ended December 31, 2006 compared to $89.5 million duringthe prior year. Port costs, which can vary depending on the geographic regionsin which the vessels operate and their trading patterns, decreased by $25.9million, or 56.2%, to $20.2 million during the year ended December 31,2006 compared to $46.2 million during the prior year. Included in these portcosts are Suez Canal transit costs of approximately $0.8 million during theyear ended December 31, 2006 compared to $7.8 million during the prioryear.

 

35

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NETVOYAGE REVENUES-****Net voyage revenues, which arevoyage revenues minus voyage expenses, decreased by $185.1 million, or 43.0%,to $245.6 million for the year ended December 31, 2006 compared to $430.7million for the prior year. Of this total decrease, approximately $213 millionis attributable to the decrease in the average size of our fleet whichdecreased 50.8% to 20.6 vessels (12.7 Aframax, 7.9 Suezmax) for the year ended December 31,2006 compared to 41.9 vessels (25.5 Aframax, 16.4 Suezmax) for the prior year.This decrease is partially offset by approximately $ 28 million of additionalnet voyage revenue associated with stronger daily rates for time charters andspot charters for Suezmax and Aframax vessels during the year ended December 31,2006 compared to the prior year. Our average TCE rates increased 12.7% to$34,487 during the year ended December 31, 2006 compared to $30,605 duringthe year ended December 31, 2005.

 

Thefollowing is additional data pertaining to net voyage revenues:

 
| ** **                              | ** ** | **Year ended December 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|-----------------------------------------|------------|--------------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                              | ** ** | **2006**                                   | ** ** | **2005**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| **Net  voyage revenue (in thousands):** |       |                                       |       |         |       |           |       |   |   |
| Time charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | $                                          | 46,327     |         | $          | 83,658         |       | $ | (37,331 | ) | -44.6 | % |
| Suezmax                                 |       | 13,929                                     |       | 1,469        |       | 12,460         |       | 848.2 | % |
| Total                                   |       | 60,256                                     |       | 85,127       |       | (24,871        | )          | -29.2 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| Spot charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | 78,791                                     |       | 125,146      |       | (46,355        | )          | -37.0 | % |
| Suezmax                                 |       | 106,537                                    |       | 220,425      |       | (113,888       | )          | -51.7 | % |
| Total                                   |       | 185,328                                    |       | 345,571      |       | (160,243       | )          | -46.4 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| TOTAL NET VOYAGE  REVENUE               |       | $                                          | 245,584    |         | $          | 430,698        |       | $ | (185,114 | ) | -43.0 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| **Vessel  operating days:**             |       |                                       |       |         |       |           |       |   |   |
|                                    |       |                                       |       |         |       |           |       |   |   |
| Time charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | 1,935                                      |       | 3,936        |       | (2,001         | )          | -50.8 | % |
| Suezmax                                 |       | 365                                        |       | 47           |       | 318            |       | 676.6 | % |
| Total                                   |       | 2,300                                      |       | 3,983        |       | (1,683         | )          | -42.3 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| Spot charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | 2,467                                      |       | 4,529        |       | (2,062         | )          | -45.5 | % |
| Suezmax                                 |       | 2,354                                      |       | 5,561        |       | (3,207         | )          | -57.7 | % |
| Total                                   |       | 4,821                                      |       | 10,090       |       | (5,269         | )          | -52.2 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| TOTAL VESSEL  OPERATING DAYS            |       | 7,121                                      |       | 14,073       |       | (6,952         | )          | -49.4 | % |
| AVERAGE NUMBER  OF VESSELS              |       | 20.6                                       |       | 41.9         |       | (21.3          | )          | -50.8 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| **Time  Charter Equivalent(TCE):**      |       |                                       |       |         |       |           |       |   |   |
| Time charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | $                                          | 23,941     |         | $          | 21,255         |       | $ | 2,686 |   | 12.6 | % |
| Suezmax                                 |       | $                                          | 38,163     |         | $          | 31,260         |       | $ | 6,903 |   | 22.1 | % |
| Combined                                |       | $                                          | 26,198     |         | $          | 21,373         |       | $ | 4,825 |   | 22.6 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| Spot charter:                           |       |                                       |       |         |       |           |       |   |   |
| Aframax                                 |       | $                                          | 31,938     |         | $          | 27,632         |       | $ | 4,306 |   | 15.6 | % |
| Suezmax                                 |       | $                                          | 45,258     |         | $          | 39,638         |       | $ | 5,620 |   | 14.2 | % |
| Combined                                |       | $                                          | 38,442     |         | $          | 34,249         |       | $ | 4,193 |   | 12.2 | % |
|                                    |       |                                       |       |         |       |           |       |   |   |
| TOTAL TCE                               |       | $                                          | 34,487     |         | $          | 30,605         |       | $ | 3,882 |   | 12.7 | % |

 

DIRECT VESSEL EXPENSES-****Direct vessel expenses, which include crew costs, provisions,deck and engine stores, lubricating oil, insurance, maintenance and repairsdecreased by $39.2 million, or 45.2%, to $47.5 million for the year ended 

 

36

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December 31, 2006compared to $86.7 million for the prior year. This decrease is primarily due toa 50.8% decrease in the size of our fleet during the year ended December 31,2006 as compared to the prior year. This decrease is partially offset by higherdaily direct vessel expenses per vessel which increased by $640, or 11.3%, to$6,301 ($6,048 Aframax, $6,710 Suezmax) for the year ended December 31,2006 compared to $5,661 ($5,493 Aframax, $5,922 Suezmax) for the prior year.This increase in daily direct vessel expenses is primarily attributed to highercrew costs associated with enhanced crew training, changes in crew complementsand repatriating crews of vessels that we sold during 2006; higher costs oflubricating oils and higher insurance costs.

 

OTHER EXPENSE—Otherexpense for the year ended December 31, 2006 is comprised of a $2.4million settlement of a claim by a subsidiary of the Exxon Mobil Corporationarising from the February 4, 2005 collision of the *GenmarKestrel*.

 

GENERALAND ADMINISTRATIVE EXPENSES—General and administrative expenses increased by$0.8 million, or 1.8%, to $44.8 million for the year ended December 31,2006 compared to $44.0 million for the prior year. The primary components ofthis increase for the year ended December 31, 2006 compared to the prioryear are:

 

(a) a$4.0 million increase in compensation to our U.S.-based personnel, principallyconsisting of a $3.2 million non-cash increase in restricted stockamortization, which included higher amortization in 2006 as compared to 2005 ofrestricted stock grants made in April 2005, December 2005, May 2006,October 2006 and December 2006; and a $0.7 million increase insalaries and bonuses during 2006 as compared to 2005.

 

(b) a$0.7 million increase in 2006 as compared to 2005 relating to operating ourforeign subsidiary in Portugal, which increase is primarily attributable togreater headcount in 2006 associated with the transfer to Portugal of thetechnical management of vessels that our office in Greece had handled through May 2006;

 

(c) a$2.0 million decrease in 2006 as compared to 2005 relating to our decision toclose our foreign subsidiary in Greece, which ceased technical management ofvessels in May 2006 and is currently being wound down.

 

(d) a$1.0 million decrease  in 2006 ascompared to 2005 relating to professional fees incurred during 2005 such asstrategic advisory services associated with an unsolicited acquisition proposaland senior executive employment agreements that did not recur in 2006 as wellas lower costs in 2006 as compared to 2005 relating to Sarbanes-Oxley 404compliance; and

 

(e) a$0.8 million decrease in 2006 as compared to 2005 relating to our lease of anaircraft.

 

Generaland administrative expenses as a percentage of net voyage revenues increased to18.2% for the year ended December 31, 2006 from 10.2% for the prior year.Daily general and administrative expenses per vessel increased $3,072, or 107%,to $5,945 for the year ended December 31, 2006 compared to $2,873 for theprior year.

 

DEPRECIATIONAND AMORTIZATION—Depreciation and amortization, which include depreciation ofvessels as well as amortization of drydocking, special survey and loan fees,decreased by $54.9 million, or 56.4%, to $42.4 million for the year ended December 31,2006 compared to $97.3 million for the prior year. This decrease is primarilydue to the 50.8% reduction in the size of our fleet during 2006, whichdecreased vessel depreciation by $41.7 million, or 55.2%, to $33.9 millionduring the year ended December 31, 2006 compared to $75.6 million duringthe prior year.

 

Amortizationof drydocking decreased by $11.9 million, or 66.1%, to $6.1 million for the year ended December 31, 2006compared to $18.0 million for the prior year. This decrease is primarilyattributable to the 50.8% reduction in the size of our fleet during 2006.

 

GAINON SALE OF VESSELS—During 2005, we agreed to sell 17 vessels comprised of : (a) ourfour single-hull Suezmax vessels, (b) our six double-sided Suezmaxvessels, (c) our one single-hull Aframax vessel and (d) our sixdouble-sided Aframax vessels in order to transform our fleet toexclusively double-hull vessels. Through December 31, 2005, 13 of thesevessels were delivered to their new owners for aggregate net proceeds of $334.7million, for a net gain on sale of vessels of $91.2 million.

 

During2006, we sold the four remaining vessels described above as well as our nineAframax OBO vessels, which we decided to sell to reduce the average age of ourfleet.  These 13 vessels were deliveredto their new owners for aggregate net proceeds of $340.9 million, for a netgain on sale of vessels of $46.0 million.

 

37

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INTERESTINCOME—Interest income increased by $2.1 million, or 61.4%, to $5.6 millionduring the year ended December 31, 2006 compared to $3.5 million duringthe prior year.  This increase is theresult of higher average cash balances and higher interest rates on depositsearned during 2006 compared to 2005.

 

INTERESTEXPENSE—Interest expense decreased by $28.2 million, or  87.0%, to $4.2 million for the year ended December 31,2006 compared to $32.4 million for the prior year. $24.7 million of thisdecrease resulted from a decrease in interest expense relating to our SeniorNotes, substantially all of which we retired in December 2005.  An additional $3.1 million  decrease pertains to lower interest expenseon our revolving credit facilities due to lower average borrowing levels during2006 as compared to 2005, partially offset by higher floating borrowing ratesduring 2006 compared to 2005.  During theyear ended December 31, 2006, our weighted average indebtedness on ourcredit facilities decreased by 48.6% to $93.1 million from $181.0 millionduring the prior year.

 

OTHER INCOME (EXPENSE)—During 2005, Other income(expense) consisted primarily of a $45.8 million loss relating to ourrepurchase of $250.0 million of our Senior Notes, which includes a $5.7 millionwrite-off of deferred financing costs. Also, in October 2005, we enteredinto an $800 million credit facility, refinancing our $825 million creditfacility, at which time we wrote off as a non-cash charge $5.0 millionassociated with the unamortized deferred financing costs associated with the$825 million credit facility.

 

NETINCOME—Net income was $156.8 million for the year ended December 31, 2006compared to net income of $212.4 million for the prior year.

 

**Effects of Inflation**

 

The Company does notconsider inflation to be a significant risk to the cost of doing business inthe current or foreseeable future. Inflation has a moderate impact on operatingexpenses, drydocking expenses and corporate overhead.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

**Sources and Uses of Funds; Cash Management**

 

Sinceour formation, our principal sources of funds have been equity financings,issuance of long-term debt securities, operating cash flows, long-term bankborrowings and opportunistic sales of our older vessels. Our principal use offunds has been capital expenditures to establish and grow our fleet, maintainthe quality of our vessels, comply with international shipping standards andenvironmental laws and regulations, fund working capital requirements andrepayments on outstanding loan facilities. Beginning in 2005, we also adoptedpolicies to use funds to pay dividends and, from time to time, to repurchase ourcommon stock. See below for descriptions of our Dividend Policy and our ShareRepurchase Program.

 

Our practice has been toacquire vessels or newbuilding contracts using a combination of funds receivedfrom equity investors, bank debt secured by mortgages on our vessels and sharesof the common stock of our shipowning subsidiaries, and long-term debtsecurities. Because our payment of dividends is expected to decrease ouravailable cash, while we expect to use our operating cash flows and borrowings tofund acquisitions, if any, on a short-term basis, we also intend to review debtand equity financing alternatives to fund such acquisitions. Our business iscapital intensive and its future success will depend on our ability to maintaina high-quality fleet through the acquisition of newer vessels and the selectivesale of older vessels. These acquisitions will be principally subject tomanagement’s expectation of future market conditions as well as our ability toacquire vessels on favorable terms.

 

We expect to rely onoperating cash flows as well as long-term borrowings and future equityofferings to implement our growth plan, dividend policy, and share repurchase.We believe that our current cash balance as well as operating cash flows andavailable borrowings under our credit facilities will be sufficient to meet ourliquidity needs for the next year.

 

Our operation ofocean-going vessels carries an inherent risk of catastrophic marine disastersand property losses caused by adverse severe weather conditions, mechanicalfailures, human error, war, terrorism and other circumstances or events. Inaddition, the transportation of crude oil is subject to business interruptionsdue to political circumstances, hostilities among nations, labor strikes andboycotts. Our current insurance coverage includes (1) protection andindemnity insurance coverage for tort liability, which is provided by mutualprotection and indemnity associations, (2) hull and machinery insurancefor actual or constructive loss from collision, fire, grounding and enginebreakdown, (3) war risk insurance for confiscation, seizure, capture,vandalism, sabotage and other war-related risks and (4) loss of hireinsurance for loss of revenue for up to 90 days resulting from a vessel beingoff hire for all of our vessels.

 

38

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**Dividend Policy**

 

On February 21, 2007, we announced that our Board ofDirectors declared a special, one-time cash dividend of $15.00 per share. Thedividend was paid on March 23, 2007 to shareholders of record as of March 9,2007. We funded substantially the entire amount of the special dividend paymentthrough new borrowings under our 2005 Credit Facility. Inclusive of thisspecial dividend, our history of dividend payments is as follows:

 
| **Quarter ended**  | ** ** | **Paid date**      | ** ** | **Amount**    | ** ** |
|-------------------------|------------|-------------------------|------------|---------------|------------|
| ** **              | ** ** | ** **              | ** ** | **(million)** | ** ** |
| March 31, 2005     |       | June 13,  2005     |       | $             | 68.4       |   |
| June 30, 2005      |       | September 7,  2005 |       | $             | 32.5       |   |
| September 30, 2005 |       | December 13,  2005 |       | $             | 9.5        |   |
| December 31, 2005  |       | March 17,  2006    |       | $             | 68.0       |   |
| March 31, 2006     |       | June 5,  2006      |       | $             | 47.7       |   |
| June 30, 2006      |       | September 8,  2006 |       | $             | 21.7       |   |
| September 30, 2006 |       | December 14,  2006 |       | $             | 23.0       |   |
| December 31, 2006  |       | March 23,  2007    |       | $             | 506.8      |   |
| March 31, 2007     |       | May 31,  2007      |       | $             | 16.4       |   |
| June 30, 2007      |       | August 31,  2007   |       | $             | 16.4       |   |
| September 30, 2007 |       | November 30,  2007 |       | $             | 15.9       |   |

 

We also announced on February 21, 2007 that our Board ofDirectors changed our quarterly dividend policy by adopting a fixed targetamount of $0.50 per share per quarter or $2.00 per share each year, startingwith the first quarter of 2007. We intend to declare dividends in April, July, October andFebruary of each year. On October 31, 2007, our Board of Directorsdeclared a $0.50 per share dividend that was paid on November 30, 2007.

 

The declaration of dividends and their amount, if any, will dependupon the results of the Company and the determination of our Board ofDirectors. Any dividends paid will be subject to the terms and conditions ofour 2005 Credit Facility and applicable provisions of Marshall Islands law.

 

**ShareRepurchase Program**

 

In October 2005 and February 2006,the Company’s Board of Directors approved repurchases by the Company of itscommon stock under a share repurchase program for up to an aggregate total of$400 million, of which $123.5 million was available as of December 31,2007. The Board will periodically review the program. Share repurchases will bemade from time to time for cash in open market transactions at prevailingmarket prices or in privately negotiated transactions. The timing and amount ofpurchases under the program will be determined by management based upon marketconditions and other factors. Purchases may be made pursuant to a programadopted under Rule 10b5-1 under the Securities Exchange Act. The programdoes not require the Company to purchase any specific number or amount ofshares and may be suspended or reinstated at any time in the Company’sdiscretion and without notice. Repurchases will be subject to the terms of our2005 Credit Facility, which are described in further detail below.

 

Through December 31,2007, the Company has acquired 8,117,513 shares of its common stock for $276.5million using borrowings under its credit facility and funds from operations.All of these shares have been retired.

 

39

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| ** **                              | ** ** | ** **            | ** ** | ** **          | ** ** | ** **                           | ** ** | **Maximum Dollar**               | ** **  |
|-----------------------------------------|------------|-----------------------|------------|---------------------|------------|--------------------------------------|------------|---------------------------------------|-------------|
| ** **                              | ** ** | ** **            | ** ** | ** **          | ** ** | **Total Dollar**                | ** ** | **Amount that May**         | ** **  |
| ** **                              | ** ** | **Total Number** | ** ** | **Average**         | ** ** | **Amount as Part of** | ** ** | **Yet Be Purchased**        | ** **  |
| ** **                              | ** ** | **of Shares**    | ** ** | **Price Paid** | ** ** | **Publicly Announced**          | ** ** | **Under the Plans or** | ** **  |
| **Period**                              | ** ** | **Purchased**         | ** ** | **Per Share**  | ** ** | **Plans or Programs**      | ** ** | **Programs**                          | ** **  |
| Jan. 1,  2007 - Jan. 31, 2007 |       | —                |       | $                   | —     |                                 | $          | —                                |        | $ | 156,155,360 |   |
| Feb. 1,  2007 - Feb. 28, 2007 |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| Mar. 1,  2007 - Mar. 31, 2007 |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| Apr. 1,  2007- Apr. 30, 2007  |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| May 1,  2007- May 31, 2007    |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| Jun. 1,  2007- Jun. 30, 2007  |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| Jul. 1,  2007- Jul. 31, 2007  |       | —                |       | $                   | —     |                                 | $          | —                                |        | 156,155,360 |   |
| Aug. 1,  2007- Aug. 31, 2007  |       | 1,015,100             |       | $                   | 23.96      |                                 | $          | 24,326,571                            |        | 131,828,789 |   |
| Sept. 1, 2007-  Sept. 30, 2007          |       | 162,300               |       | $                   | 24.99      |                                 | 4,055,627  |                                  | 127,773,162 |   |
| Oct. 1,  2007- Oct. 31, 2007  |       | —                |       | $                   | —     |                                 | —     |                                  | 127,773,162 |   |
| Nov. 1,  2007- Nov. 30, 2007  |       | —                |       | $                   | —     |                                 | —     |                                  | 127,773,162 |   |
| Dec. 1,  2007- Dec. 31, 2007  |       | 174,200               |       | $                   | 24.54      |                                 | 4,275,233  |                                  | 123,497,929 |   |
| Total                                   |       | 1,351,600             |       | $                   | 24.16      |                                 | $          | 32,657,431                            |        | $ | 123,497,929 |   |

 

Information regardingsecurities authorized for issuance under equity compensation plans and aperformance graph relating to our common stock is set forth in the 2007 ProxyStatement and is incorporated by reference herein.

 

**Debt Financings**

 

**2005 Credit Facility**

 

On October 26, 2005, we entered into an $800 millionrevolving credit facility (the “2005 Credit Facility”) with a syndicate ofcommercial lenders.  As of December 31,2007 and 2006, $565 million and $50 million, respectively, of the facility wereoutstanding.

 

On February 16, 2007, we entered into an agreement to amendthe 2005 Credit Facility. The 2005 Credit Facility, as amended, increased thetotal commitment of the lenders by $100 million from $800 million to $900million.

 

Pursuant to this amendment, we are permitted to (1) payquarterly cash dividends with respect to fiscal quarters on or after March 31,2007, limited to $0.50 per share and (2) pay additional dividends,including stock buy-backs, in an aggregate amount not to exceed $50 millionplus 50% of cumulative net excess cash flow after February 16, 2007. Inaddition, the amendment permitted us to declare a one-time special dividend ofup to $15 per share (up to an aggregate amount not to exceed $500 million) atany time prior to December 31, 2007.

 

Under the 2005 Credit Facility, as amended, for any time on orafter April 1, 2007 the leverage ratio covenant was eliminated and theminimum cash balance covenant was reduced such that we are not permitted to reducethe sum of (A) our unrestricted cash and cash equivalents plus (B) thelesser of (1) the total available unutilized commitment and (2) $25million, to less than $50 million. In addition, the Company agreed to a newcovenant whereby we will not permit our net debt to EBITDA ratio to be greaterthan 5.5:1.00 on the last day of any fiscal quarter at any time from April 1,2007.

 

As of December 31,2007, we are in compliance, in all material respects, with all of the financialcovenants under our 2005 Credit Facility, as amended.

 

The 2005 Credit Facility, as amended, provides a four yearnonamortizing revolving loan with semiannual reductions of $50.1 millionbeginning October 26, 2009 and a bullet reduction of $599.6 million at theend of year seven. Up to $50 million of the 2005 Credit Facility is availablefor the issuance of standby letters of credit to support obligations of theCompany and its subsidiaries that are reasonably acceptable to the issuinglenders under the facility. As of December 31, 2007, we have outstandingletters of credit aggregating $7.5 million which expire between March 2008and December 2008, leaving $42.5 million available to be issued.  In addition, at December 31, 2007, weare permitted to borrow an additional $3267.5 million under our 2005 creditfacility.

 

40

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The 2005 Credit Facility carries an interest rate of LIBOR plus 75basis points (or, depending on our long term foreign issuer credit rating andleverage ratio, 100 basis points) on the outstanding portion and a commitmentfee of 26.25 basis points on the unused portion. The facility is collateralizedby 20 of our double-hull vessels and our one newbuilding Suezmax contract, withcarrying values as of December 31, 2007 of $684.0 million and $30.3million, respectively, as well as our equity interests in our subsidiaries thatown these assets, insurance proceeds of the collateralized vessels, and certaindeposit accounts related to the vessels. Each subsidiary of the Company with anownership interest in these vessels or which has otherwise guaranteed ourSenior Notes also provides an unconditional guaranty of amounts owing under the2005 Credit Facility.

 

Our ability to borrow amounts under the 2005 Credit Facility issubject to satisfaction of certain customary conditions precedent andcompliance with terms and conditions contained in the credit documents. Thesecovenants include, among other things, customary restrictions on our ability toincur indebtedness or grant liens, pay dividends or make stock repurchases(except as otherwise permitted as described above), engage in businesses otherthan those engaged in on the effective date of the credit facility and similaror related businesses, enter into transactions with affiliates, amend ourgoverning documents or documents related to our Senior Notes, and merge,consolidate, or dispose of assets. We are also required to comply with variousongoing financial covenants, including with respect to our minimum cash balancecollateral maintenance, and net debt to EBITDA ratio. If we do not comply withthe various financial and other covenants and requirements of the 2005 CreditFacility, the lenders may, subject to various customary cure rights, requirethe immediate payment of all amounts outstanding under the facility.

 

Interest rates during theyear ended December 31, 2007 ranged from 5.13% to 6.50% on the 2005 CreditFacility.

 

Based on borrowings as ofDecember 31, 2007, none of the $565 million outstanding under the 2005Credit Facility is due until 2012.

 

**InterestRate Swap Agreements**

 

In August and October 2001,we entered into interest rate swap agreements with foreign banks to manageinterest costs and the risk associated with changing interest rates. At theirinception, these swaps had notional principal amounts equal to 50% of our termloans outstanding at that time. The notional principal amounts amortize at thesame rate as the term loans. The interest rate swap agreement entered intoduring August 2001 hedged debt outstanding at that time, to a fixed rateof 6.25%. This swap agreement terminated on June 15, 2006. The interestrate swap agreement entered into during October 2001 hedged debtoutstanding at that time, to a fixed rate of 5.485%. This swap agreementterminated on June 27, 2006. As of July 1, 2005, we stoppeddesignating our interest rate swaps as a hedge. The differential to be paid or received for these swap agreements wasrecognized as an adjustment to interest expense as incurred through September 30,2005.

 

Effective September 21,2007, we entered into an interest rate swap agreement with Citigroup to manageinterest costs and the risk associated with changing interest rates. Thenotional principal amount of the swap is $100 million and has a fixed interest rateon the notional amount of 4.748% through October 1, 2010, when it expires.The ineffective portion of the hedge of $0.1 million for the year ended December 31,2007 is recorded as a component of Other expense on the statement ofoperations. 

 

TheCompany would have paid approximately $2.5 million to settle its outstandingswap agreement based upon its aggregate fair value as of December 31,2007. This fair value is based upon estimates received from financialinstitutions.

 

**Cash and Working Capital**

 

Cashdecreased to $44.5 million as of December 31, 2007 compared to $107.5million as of December 31, 2006. Working capital is current assets minuscurrent liabilities, including the current portion of long-term debt. Workingcapital was $47.0 million as of December 31, 2007 compared to $110.7million as of December 31, 2006. The current portion of long-term debtincluded in our current liabilities was $0 as of December 31, 2007 and2006.

 

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**Cash Flows from Operating Activities**

 

Net cash provided byoperating activities decreased 49.5% to $95.8 million for the year ended December 31,2007, compared to $189.7 million for the prior year. This decrease is primarilyattributable to net income of $44.5 million for the year ended December 31,2007 compared to net income of $156.8 million for the prior year as well as anincrease in prepaid expenses and other current and noncurrent assets of $10.9million during the year ended December 31, 2007 compared to a decrease of$15.0 million during the prior year. These decreases are partially offset by$0.4 million loss on sale of vessels and equipment during the year ended December 31,2007 compared to gains on sale of vessels and equipment of $46.0 million duringthe prior year.

 

Net cash provided byoperating activities decreased 24.0% to $189.7 million for the year ended December 31,2006, compared to $249.6 million for the prior year. This decrease is primarilyattributable to net income of $156.8 million for the year ended December 31,2006 compared to net income of $212.4 million for the prior year.

 

**CashFlows from Investing Activities**

 

Net cash used byinvesting activities was $84.5 million for the year ended December 31,2007 compared to net cash provided by investing activities of $285.3 millionfor the prior year. During the year ended December 31, 2007, we paid $80.1million on three Suezmax contruction contracts (including capitalized interestof $2.4 million) and paid $4.4 million for other fixed assets. During the yearended December 31, 2006, we received $340.9 million from the sale of 13vessels, paid $50.6 million on our four Suezmax contruction contracts(including capitalized interest of $3.6 million) and paid $5.0 million forother fixed assets.

 

Net cash provided byinvesting activities was $285.3 million for the year ended December 31,2006 compared to $318.2 million for the prior year. During the year ended December 31,2006, we received $340.9 million from the sale of 13 vessels, paid $50.6million on our four Suezmax contruction contracts (including capitalizedinterest of $3.6 million) and paid $5.0 million for other fixed assets. Duringthe year ended December 31, 2005, we received $334.7 million from the saleof 13 vessels and paid $10.6 million of costs on our four Suezmax newbuildingcontracts (including capitalized interest of $3.5 million).

 

**CashFlows from Financing Activities**

 

Net cash used byfinancing activities was $74.3 million for the year ended December 31,2007 compared to $464.5 million for the prior year. The change in cash providedby financing activities relates primarily to the following:

 

·                  Duringthe year ended December 31, 2007, we made net borrowings of $515.0 millionof revolving debt associated with our 2005 Credit Facility; during the yearended December 31, 2006, we made net repayments of $85.0 million ofrevolving debt associated with our 2005 Credit Facility.

 

·                  Duringthe year ended December 31, 2007, we paid $32.7 million to acquire1,351,600 shares of our common stock which we retired; during the year ended December 31,2006, we paid $219.1 million to acquire 6,088,113 shares of our common stockwhich we retired.

 

·                  Duringthe years ended December 31, 2007 and 2006, we paid $555.5 million and$160.4 million of dividends to shareholders, respectively.

 

Net cash used byfinancing activities was $464.5 million for the year ended December 31,2006 compared to $517.7 million for the prior year. The change in cash providedby financing activities relates primarily to the following:

 

·                  Netproceeds from the issuance of long-term debt during the year ended December 31,2005, net of issuance costs of $5.3 million, were $157.5 million relating tothe initial borrowings under our 2005 Credit Facility. We had no such issuancesduring 2006.

 

·                  Duringthe year ended December 31, 2005, we retired our 2004 Credit Facility andrepaid the $175.0 million outstanding on that facility at the time of itsretirement. Additionally, during the year ended December 31, 2005, weretired $249,980,000 par value of our Senior Notes for $286.9 million. Duringthe year ended December 31, 2006, we retired the remaining $20,000 parvalue of Senior Notes.

 

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·                  Principalrepayments of long-term debt were $30.0 million for the year ended December 31,2005 associated with permanent principal repayments under our 2005 CreditFacility. There were no principal repayments of long-term debt required to bemade during 2006.

 

·                  Duringthe year ended December 31, 2006, we made a net repayment of $85.0 millionof revolving debt associated with our 2005 Credit Facility; during the yearended December 31, 2005, we repaid $62.8 million of revolving debtassociated with our 2005 and 2004 Credit Facilities.

 

·                  Duringthe year ended December 31, 2005, we used $13.1 million of funds held inescrow to retire a portion of the 2004 Credit Facility at the time that creditfacility was refinanced by the 2005 Credit Facility.

 

·                  Duringthe year ended December 31, 2006, we paid $219.1 million to acquire6,088,113 shares of our common stock which we retired; during the year ended December 31,2005, we paid $24.8 million to acquire 677,800 shares of our common stock whichwe retired.

 

·                  Duringthe years ended December 31, 2006 and 2005, we paid $160.4 million and$110.4 million of dividends to shareholders, respectively.

 

**CapitalExpenditures for Drydockings and Vessel Acquisitions**

 

**Drydocking**

 

In addition to vesselacquisition and acquisition of new building contracts, other major capitalexpenditures include funding our drydock program of regularly scheduledin-water survey or drydocking necessary to preserve the quality of our vesselsas well as to comply with international shipping standards and environmentallaws and regulations. Management anticipates that vessels which are youngerthan 15 years are required to undergo in-water surveys 2.5 years after adrydock and that vessels are to be drydocked every five years, while vessels 15years or older are to be drydocked every 2.5 years in which case the additionaldrydocks take the place of these in-water surveys. During the year ended December 31,2007, we paid $11.8 million of drydock related costs. For the year ending December 31,2008, we anticipate that we will capitalize costs associated with drydocks ontwo vessels. We estimate that the expenditures to complete drydocks during 2008will aggregate approximately $7 million to $9 million. The ability to meet thisdrydock schedule will depend on our ability to generate sufficient cash flowsfrom operations, utilize our revolving credit facilities or secure additionalfinancing.

 

**CapitalImprovements**

 

During the year ended December 31,2007, we capitalized $4.5 million relating to capital projects includingenvironmental compliance equipment upgrades, satisfying requirements of oilmajors and vessel upgrades. For the year ending December 31, 2008, we havebudgeted approximately $3.5 million for such projects.

 

**VesselAcquisitions**

 

InJuly 2004, we acquired four Suezmax newbuilding contracts. The purchaseprice of these contracts aggregate $67.2 million which was paid to the sellerof those contracts. Also in July 2004, $8.8 million was paid to theshipyard as an installment on the construction of the vessels associated withthese contracts. Three of these Suezmaxvessels were delivered to us during March 2006, January 2007 and August 2007.As of December 31, 2007, we were required to pay an additional aggregateamount of $33.4 million upon the completion of construction of the oneremaining Suezmax vessel. The delivery of the vessel occurred in February 2008.Additionally in February 2008, we paid the aggregate amount of $33.4million due upon completion.

 

**OFF-BALANCE SHEETARRANGEMENTS**

 

As of December 31,2007, we did not have any significant off-balance-sheet arrangements, asdefined in Item 303(a)(4) of SEC Regulation S-K.

 

**OtherCommitments**

 

InFebruary 2004, the Company entered into an operating lease for anaircraft. The lease has a term of five years and requires 

 

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monthlypayments by the Company of $125,000.

 

InDecember 2004, the Company entered into a 15-year lease for office spacein New York, New York. The monthly rental is as follows: Free rent from December 1,2004 to September 30, 2005, $109,724 per month from October 1, 2005to September 30, 2010, $118,868 per month from October 1, 2010 to September 30,2015, and $128,011 per month from October 1, 2015 to September 30,2020. The monthly straight-line rental expense from December 1, 2004 to September 30,2020 is $104,603.

 

The following is a tabular summary of our futurecontractual obligations for the categories set forth below (dollars inmillions):

 

**TABULAR DISCLOSURE OF CONTRACTUALOBLIGATIONS AND COMMERCIAL COMMITMENTS**

 
| ** **                            | ** ** | **Total** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **Thereafter** | ** ** |
|---------------------------------------|------------|-----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|
| 2005 Credit  Facility (1)             |       | $         | 722.6      |     | $          | 32.6     |       | $        | 32.6       |     | $          | 32.6     |       | $              | 32.6       |   | $ | 592.2 |   | $ | — |   |
| Newbuilding  installments             |       | 33.4      |       | 33.4     |       | —   |       | —   |       | —   |       | —   |       | —         |       |
| Aircraft lease                        |       | 1.6       |       | 1.5      |       | 0.1      |       | —   |       | —   |       | —   |       | —         |       |
| Senior officer  employment agreements |       | 2.8       |       | 2.1      |       | 0.7      |       | —   |       | —   |       | —   |       | —         |       |
| Office leases                         |       | 18.7      |       | 1.7      |       | 1.3      |       | 1.3      |       | 1.4      |       | 1.4      |       | 11.6           |       |
| Total  commitments                    |       | $         | 779.1      |     | $          | 71.3     |       | $        | 34.7       |     | $          | 33.9     |       | $              | 34.0       |   | $ | 593.6 |   | $ | 11.6 |   |

 

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(1)                                  Futureinterest payments on our 2005 Credit Facility are based on our currentoutstanding balance using a current borrowing rate of 5.625%. The amount alsoincludes a 0.2625% commitment fee we are required to pay on the unused portionof this credit facility.

 

**OtherDerivative Financial Instruments**

 

***FreightDerivatives***

 

As part of our businessstrategy, we have and may from time to time enter into freight derivativecontracts to hedge and manage market risks relating to the deployment of ourexisting fleet of vessels. Generally, these freight derivative contracts arefutures contracts that would bind us and each counterparty in the arrangementto buy or sell a specified notional amount of tonnage “forward” at an agreedtime and price and for a particular route. These contracts generally settlebased on the monthly Baltic Tanker Index (“BITR”), which is a worldscale index,and a may also include a specified bunker price index. The BITR averages ratesreceived in the spot market by cargo type, crude oil and refined petroleumproducts, and by trade route. The duration of a contract can be one month,quarterly or up to three years with open positions settling on a monthly basis.Although freight derivatives can be entered into for a variety of purposes, includingfor hedging, as an option, for trading or for arbitrage, our objective has beento hedge and manage market risks as part of our commercial management. Tothe extent that we enter into freight derivatives, we may reduce ourexposure to any declines in our results from operations due to weak marketconditions or downturns, but may also limit our ability to benefiteconomically during periods of strong demand in the market.

 

During November 2007,the Company entered into three freight derivative contracts which expire on December 31,2008. The Company took short positions on two of these contracts for a VLCCtanker route for 45,000 metric tons and a long position for 30,000 metric tonsof a Suezmax tanker route. The Company considers all of these contracts to bespeculative. At December 31, 2007, these freight derivatives had anaggregate notional value of $13.9 million, which is an aggregate of both longand short positions. The net fair value of $0.7 million at December 31,2007 of these freight derivatives was settled as of December 31, 2007 bythe clearinghouse of these agreements whereby deposits the Company had with theclearinghouse have been reduced by a like amount, resulting in a realized lossof $0.7 million for the year ended December 31, 2007. The fair value ofthese open contracts is based on the estimated net amount that the Companywould pay to terminate the agreements at the reporting date.

 

During May 2006, theCompany entered into a freight derivative contract with the intention of fixingthe equivalent of one Suezmax vessel to a time charter equivalent rate of$35,500 per day for a three year period beginning on July 1, 2006. Thiscontract net settles each month with the Company receiving $35,500 per day andpaying a floating amount based on the monthly BITR and a specified bunker priceindex. As of December 31, 2007 and 2006, the fair market value of thefreight derivative, which was determined based on the aggregate discounted cashflows using estimated future rates obtained from brokers, resulted in an asset(liability) to the Company of $(0.1) million and $2.2 million, respectively. TheCompany

 

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recorded an unrealizedgain (loss) of $($2.3) million and $2.2 million for the years ended December 31,2007 and 2006, respectively, which is reflected on the Company’s statement ofoperations as Other income (expense). The Company has recorded an aggregaterealized loss of $(1,247) and $2,073 for the years ended December 31, 2007and 2006, respectively, which is classified as Other income (expense) on thestatement of operations.

 

***CurrencyForward Contract***

 

OnJuly 19, 2005, the Company entered into a forward contract toacquire 5 million Euros on January 17, 2006 for $6.0 million. Changes in thefair value of this forward contract subsequent the date on which the Companyentered into the contract (at which time the fair value was $0) was recorded asOther income (expense) on the Company’s statement of operations. The Companyentered into this contract to guard against weakening in the dollar against theEuro. As of December 31, 2005, the Company has recorded a liability of$0.1 million related to the fair market value of this derivative financialinstrument. The Company has recorded an aggregate net unrealized gain (loss) of$0.1 million and $(0.1) million, for the years ended December 31, 2006 and2005, which is classified as Other income (expense) on the statement ofoperations.

 

On October 29, 2007,the Company entered into two call options to purchase at $1.45 per Euro onemillion Euros on January 16, 2008 and one million Euros on April 16,2008. The Company paid an aggregate of $39,000 for these options. As of December 31,2007, the fair value of these options based on the exchange rate on that dateresulted in an asset of $21,000 which is recorded as Derivative asset on theCompany’s balance sheet. The related unrealized gain for the year ended December 31,2007 of $21,000 is classified as Other income (expense) on the statement ofoperations.

 

**Critical Accounting Policies**

 

Thediscussion and analysis of our financial condition and results of operations isbased upon our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United Statesof America, or GAAP. The preparation of those financial statements requires usto make estimates and judgments that affect the reported amount of assets andliabilities, revenues and expenses and related disclosure of contingent assetsand liabilities at the date of our financial statements. Actual resultsmay differ from these estimates under different assumptions or conditions.

 

Criticalaccounting policies are those that reflect significant judgments oruncertainties, and potentially result in materially different results underdifferent assumptions and conditions. We have described below what we believeare our most critical accounting policies.

 

REVENUE RECOGNITION. Revenue is generally recorded when services are rendered, the Company has a signed charter agreement or other evidence of an arrangement, pricing is fixed or determinable and collection is reasonably assured. Our revenues are earned under time charters or spot market voyage contracts. Revenue from time charters is earned and recognized on a daily basis. Certain time charters contain provisions which provide for adjustments to time charter rates based on agreed-upon market rates. Revenue for spot market voyage contracts is recognized based upon the percentage of voyage completion. The percentage of voyage completion is based on the number of spot market voyage days worked at the balance sheet date divided by the total number of days expected on the voyage.

 

ALLOWANCEFOR DOUBTFUL ACCOUNTS. We do not provide any reserve for doubtful accountsassociated with our voyage revenues because we believe that our customers areof high creditworthiness and there are no serious issues concerningcollectibility. We have had an excellent collection record during the pastseven years. To the extent that some voyage revenues become uncollectible, theamounts of these revenues would be expensed at that time. We provide a reservefor our demurrage revenues based upon our historical record of collecting theseamounts. As of December 31, 2007, we provided a reserve of approximately11% for these claims, which we believe is adequate in light of our collectionhistory. We periodically review the adequacy of this reserve so that itproperly reflects our collection history. To the extent that our collectionexperience warrants a greater reserve we will incur an expense as to increasethis amount in that period.

 

In addition, certain of our time chartercontracts contain speed and fuel consumption provisions. We have a reserve forpotential claims, which is based on the amount of cumulative time charterrevenue recognized under these contracts which we estimate may need to berepaid to the charterer due to failure to meet these speed and fuel consumptionprovisions.

 

DEPRECIATION ANDAMORTIZATION. We record the value of our vessels at their cost (which includesacquisition costs directly attributable to the vessel and expenditures made toprepare the vessel for its initial voyage) less accumulated depreciation. Wedepreciate our double-hull tankers on a straight-line basis over theirestimated useful lives, estimated to be

 

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25 years from date ofinitial delivery from the shipyard. We believe that a 25-year depreciable lifefor double-hull and double-sided vessels is consistent with that of other shipowners and with its economic useful life. Depreciation is based on cost lessthe estimated residual scrap value. We estimate our residual scrap value perlightweight ton to be $175. An increase in the useful life of the vessel wouldhave the effect of decreasing the annual depreciation charge and extending itinto later periods. An increase in the residual scrap value (as was done in2004) would decrease the amount of the annual depreciation charge. A decreasein the useful life of the vessel would have the effect of increasing the annualdepreciation charge. A decrease in the residual scrap value would increase theamount of the annual depreciation charge.

 

REPLACEMENTS,RENEWALS AND BETTERMENTS. We capitalize and depreciate the costs of significantreplacements, renewals and betterments to our vessels over the shorter of thevessel’s remaining useful life or the life of the renewal or betterment. Theamount capitalized is based on our judgment as to expenditures that extend avessel’s useful life or increase the operational efficiency of a vessel. Webelieve that these criteria are consistent with GAAP and that our policy ofcapitalization reflects the economics and market values of our vessels. Coststhat are not depreciated are written off as a component of direct vesseloperating expense during the period incurred. Expenditures for routinemaintenance and repairs are expensed as incurred. If the amount of theexpenditures we capitalize for replacements, renewals and betterments to ourvessels were reduced, we would recognize the amount of the difference as anexpense.

 

DEFERREDDRYDOCK COSTS. Our vessels are required to be drydocked approximately every 30to 60 months for major repairs and maintenance that cannot be performed whilethe vessels are operating. We capitalize the costs associated with the drydocksas they occur and amortize these costs on a straight line basis over the periodbetween drydocks. We believe that these criteria are consistent with GAAP guidelinesand industry practice, and that our policy of capitalization reflects theeconomics and market values of the vessels.

 

IMPAIRMENTOF LONG-LIVED ASSETS. We evaluate the carrying amounts and periods over whichlong-lived assets are depreciated to determine if events have occurred whichwould require modification to their carrying values or useful lives. Inevaluating useful lives and carrying values of long-lived assets, we reviewcertain indicators of potential impairment, such as undiscounted projectedoperating cash flows, vessel sales and purchases, business plans and overallmarket conditions. We determine undiscounted projected net operating cash flowsfor each vessel and compare it to the vessel carrying value. In the event thatimpairment occurred, we would determine the fair value of the related asset andwe record a charge to operations calculated by comparing the asset’s carryingvalue to the estimated fair value. Various factors including future charterrates and vessel operating costs are included in this analysis.

 

**Recent Accounting Pronouncements**

 

In September 2006, theFASB issued SFAS No. 157,*Fair ValueMeasurements*. This Statement defines fair value, establishes aframework for measuring fair value and enhances disclosures about fair valuemeasurements. In February 2008, the FASB issued FASB Staff Position (“FSP”)157-1, *Application of FASB StatementNo. 157 to FASB Statement No. 13 and Other Accounting PronouncementsThat Address Fair Value Measurements for Purposes of Lease Classification orMeasurement under Statement 13* and FSP 157-2, *Effective Date of FASB Statement No. 157*.FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions fromits scope. FSP 157-2, *Effective Date of FASBStatement No. 157* delays the effective date of SFASNo. 157 for all nonfinancial assets and liabilities except those that arerecognized or disclosed at fair value in the financial statements on at leastan annual basis, until January 1, 2009 for calendar year end entities. Wedo not believe that the adoption of SFAS 157 on January 1, 2008 will havea material impact on our consolidated financial statements.

 

In February 2007,the FASB issued SFAS No. 159, The Fair Value Option for Financial Assetsand Financial Liabilities (“SFAS No. 159”). Under this statement, theCompany may elect to report financial instruments and certain other items atfair value on a contract-by-contract basis with changes in value reported inearnings. This election is irrevocable. SFAS 159 is effective for the Companycommencing in 2008. Early adoption within 120 days of the beginning of theCompany’s 2007 fiscal year is permissible, provided the Company has adoptedSFAS No. 157. The Company has no plans to apply SFAS No. 159.

 

In December2007, the FASB issued SFAS No. 141 (Revised 2007), “BusinessCombinations” (SFAS No. 141R). SFAS No. 141R willsignificantly change the accounting for business combinations. UnderSFAS No. 141R, an acquiring entity will be required to recognize allthe assets acquired and liabilities assumed in a transaction at theacquisition-date fair value with limited exceptions. SFAS No. 141Ralso includes a substantial number of new disclosure requirements and appliesprospectively to business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or afterDecember 15, 2008. As the provisions of SFAS No. 141R areapplied prospectively, the impact to the Company cannot be determined until thetransactions occur. 

 

In December2007, the FASB issued SFAS No. 160, “Noncontrolling Interests inConsolidated Financial Statements — An Amendment of ARB No. 51”(SFAS No. 160). SFAS No. 160 establishes new accounting andreporting standards for the noncontrolling interest in a subsidiary and for thedeconsolidation of a subsidiary. This accounting standard is effective forfiscal years, and interim periods within those fiscal years, beginning on orafter December 15, 2008. The Company will adopt SFAS No. 160 asof January 1, 2009. The Company expects that the adoption ofSFAS No. 160 will not have a material impact on its financialposition, results of operations and cash flows. 

 

**RelatedParty Transactions**

 

Through April 2005,we leased office space of approximately 11,000 square feet for our principalexecutive offices in New York, New York in a building leased by GenMar RealtyLLC, a company wholly owned by Peter C. Georgiopoulos, our Chairman, Presidentand Chief Executive Officer. There was no lease agreement between us and GenMarRealty LLC. The Company paid an occupancy fee on a month to month basis in theamount of $55,000 for use of that space. For the years ended December 31,2007, 2006 and 2005 the Company’s occupancy fees were $0, $0 and $220,respectively. In April 2005,

 

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we moved our executiveoffices, and ceased using that space and paid that fee at the end of thatmonth.

 

During the fourth quarter of 2000, we lent $485,467 toPeter C. Georgiopoulos. This loan does not bear interest and is due and payableon demand. The full amount of this loan was outstanding as of December 31,2007.

 

Duringthe years ended December 31, 2007, 2006 and 2005, the Company incurredfees for legal services aggregating $46,000, $150,000 and $284,000, respectively,to the father of Peter C. Georgiopoulos, of which $0 and $18,000 wasoutstanding as of December 31, 2007 and 2006, respectively.

 

In January 2006, theCompany repurchased 4,176,756 shares of our common stock from OCM PrincipalOpportunities Fund, L.P. (“OCM”) in a privately negotiated transaction at$37.00 per share for a total purchase price of $154.5 million. Stephen A.Kaplan, a member of our board of directors, serves as a principal and portfoliomanager of Oaktree Capital Management LLC, which is the general partner of OCM.

 

Genco Shipping &Trading Limited (“Genco”), an owner and operator of dry bulk vessels, hasincurred travel related expenditures for use of the Company aircraft and othermiscellaneous expenditures during the years ended December 31, 2007 and2006, totaling $0.3 million respectively, of which $66,000 and $0 wasoutstanding as of December 31, 2007 and 2006, respectively. Peter C.Georgiopoulos and Stephen A. Kaplan are directors of Genco.

 

During the years ended December 31,2007 and 2006, Genco made available one of its employees who performed internalaudit services for the Company for which the Company was invoiced $167,000 and $52,000based on actual time spent by the employee, of which $61,000 and $25,000 wasoutstanding as of December 31, 2007 and 2006, respectively.

 

During the years ended December 31,2007, 2006 and 2005, Aegean Marine Petroleum Network, Inc. (“Aegean”) suppliedbunkers and lubricating oils to our vessels aggregating $1.2 million, $1.7million and $5.9 million, respectively. The balance of $33,000 and $0 wasoutstanding as of December 31, 2007 and 2006. During the year ended December 31,2007, Aegean incurred travel related expenditure for use of the companyaircraft totaling $98,000. During July 2006, an investment vehiclecontrolled by Peter C. Georgiopoulos and John Tavlarios, a member of our boardof directors and one of our executive officers, made an investment in andpurchased shares of Aegean from Aegean’s principal shareholder. During December 2006,Aegean completed its initial public offering. At that time, Peter Georgiopoulosbecame chairman of the board of Aegean and John Tavlarios and John Hatab, amember of the Company’s board of directors, joined the board of directors ofAegean.

 

Pursuant to the Company’srevised aircraft use policy, the following authorized executives may, subjectto approval from the Company’s Chairman/ Chief Executive Officer, charter theCompany’s aircraft from an authorized third-party charterer for use onnon-business flights: the Chief Executive Officer, the President of GeneralMaritime Management LLC, the Chief Financial Officer and the ChiefAdministrative Officer. The chartering fee to be paid by the authorizedexecutive will be the greater of: (i) the incremental cost to the Companyof the use of the aircraft and (ii) the applicable Standard Industry FareLevel for the flight under Internal Revenue Service regulations, in each caseas determined by the Company. The amount of use of the aircraft for thesepurposes will be monitored from time to time by the Audit Committee. During theyear ended December 31, 2007, Peter C. Georgiopoulos chartered the Company’saircraft from the third-party charterer on four occasions and incurred charterfees totaling $113,000 directly to the third-party charterer. During the yearended December 31, 2006, Peter C. Georgiopoulos chartered the Company’saircraft from the third-party charterer on six occasions and incurred charterfees totaling $101,000 directly to the third-party charterer. During the yearended December 31, 2006, John Tavlarios chartered the Company’s aircraftfrom the third-party charterer on one occasion and incurred charter feestotaling $7,000 directly to the third-party charterer. No charter fees wereincurred by John Tavlarios during the year ended December 31, 2007.

 

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSUREOF MARKET RISK**

 

**INTEREST RATE RISK**

 

We are exposed to variousmarket risks, including changes in interest rates. The exposure to interestrate risk relates primarily to our debt. At December 31, 2007, we had $565million of floating rate debt with a margin over LIBOR of 0.75% compared to December 31,2006 when we had $50 million of floating rate debt with a margin over LIBOR of0.75%. As of December 31, 2007, the Company is party to an interest rateswap which effectively fixes LIBOR on $100 million of its outstanding floatingrate debt to a fixed rate of 4.748%. A one percent increase in LIBOR wouldincrease interest expense on the portion

 

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of our $465 millionoutstanding floating rate indebtedness, which is not economically hedged, byapproximately $4.7 million per year from December 31, 2007.

 

**FOREIGN EXCHANGE RATE RISK**

 

Theinternational tanker industry’s functional currency is the U.S. Dollar.Virtually all of the Company’s revenues and most of its operating costs are inU.S. Dollars. The Company incurs certain operating expenses, drydocking,and overhead costs in foreign currencies, the most significant of which is theEuro, as well as British Pounds, Japanese Yen, Singapore Dollars, AustralianDollars and Norwegian Kroners. During the year ended December 31, 2007,approximately 11% of the Company’s direct vessel operating expenses weredenominated in these currencies. The potential additional expense from a 10%adverse change in quoted foreign currency exchange rates, as it relates to allof these currencies, would be approximately $0.5 million for the year ended December 31,2007.

 

On July 19, 2005,the Company entered into a forward contract to acquire 5 million Euros on January 17,2006 for $6.0 million. The Company entered into this contract to guard againstweakening in the dollar against the Euro. The Company has recorded an aggregatenet unrealized gain of $0.1 million for the year ended December 31, 2006,which is classified as Other income on the statement of operations. As of December 31,2007, the Company was party to two call options to purchase at $1.45 per Euroone million Euros on January 16, 2008 and one million Euros on April 16,2008.

 

**CHARTER RATE RISK**

 

As part of our businessstrategy, we have and may from time to time enter into freight derivativecontracts to hedge and manage market risks relating to the deployment of ourexisting fleet of vessels. Generally, these freight derivative contracts arefutures contracts that would bind us and each counterparty in the arrangementto buy or sell a specified notional amount of tonnage “forward” at an agreedtime and price and for a particular route. Our objective would be to hedge andmanage market risks as part of our commercial management. During May 2006,the Company entered into a freight derivative contract with the intention offixing the equivalent of one Suezmax vessel to a time charter equivalent rateof $35,500 per day for a three year period beginning on July 1, 2006. Thiscontract net settles each month with the Company receiving $35,500 per day andpaying a floating amount based on the monthly BITR and a specified bunker priceindex. The aggregate notional value of this contract is $19.4 million as of December 31,2007. As of December 31, 2007 and 2006, the fair market value of thefreight derivative contract resulted in an asset (liability) to the Company of$(0.1) million and $2.2 million, respectively, and a net unrealized andrealized gain (loss) of (3.5) million $0.1 million for the years ended December 31,2007 and 2006, respectively, which is reflected on our statement of operationsas Other income (expense). A 10% increase in the forward BITR from the December 31,2007 levels would result in additional payments to the counterparty of $3.8million over the period from January 1, 2008 to June 30, 2009. A 10%decrease in the specified bunker price forward index from the December 31,2007 level would result in additional payments to the counterparty of $1.4million over the period from January 1, 2008 to June 30, 2009.

 

DuringNovember 2007, the Company entered into three freight derivative contractswhich expire on December 31, 2008.  TheCompany took short positions on two of these contracts for a VLCC tanker routefor 45,000 metric tons and a long position for 30,000 metric tons of a Suezmaxtanker route.  The Company considers allof these contracts to be speculative.  AtDecember 31, 2007, these freight derivatives had an aggregate notional value of$13.9 million, which is an aggregate of both long and short positions. The netfair value of $0.7 million at December 31, 2007 of these freight derivativeswas settled as of December 31, 2007 by the clearinghouse of these agreementswhereby deposits the Company had with the clearinghouse have been reduced by alike amount, resulting in a realized loss of $0.7 million for the year endedDecember 31, 2007.  The fair value ofthese open contracts is based on the estimated net amount that the Companywould pay to terminate the agreements at the reporting date.   

A 10% increase in theforward BITR from the December 31, 2007 levels on the short positions on thecontracts for the VLCC tanker route for 45,000 metric tons would result inadditional payments to the counterparty of approximately $1.0 million over theperiod from January 1, 2008 to December 31, 2008.  A 10% decrease in the forward BITR from theDecember 31, 2007 levels on the long position on the contract for the Suezmaxtanker route for 30,000 metric tons would result in a reduction of payments receivedfrom the counterparty of approximately $0.7 million over the period fromJanuary 1, 2008 to December 31, 2008.

 

48

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**Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARYDATA**

 

**GENERAL MARITIME CORPORATION**

 

**INDEX TO CONSOLIDATED FINANCIALSTATEMENTS**

 
| CONSOLIDATED FINANCIAL STATEMENTS AS OF  DECEMBER 31, 2007 AND 2006 AND FOR THE YEARS ENDED |
|--------------------------------------------------------------------------------------------------|
| DECEMBER 31,  2007, 2006 AND 2005.                                                          |
|                                                                                             |
| Report  of Independent Registered Public Accounting Firm                                         |
|                                                                                             |
| Consolidated  Balance Sheets                                                                     |
|                                                                                             |
| Consolidated  Statements of Operations                                                           |
|                                                                                             |
| Consolidated  Statements of Shareholders’ Equity and Comprehensive Income                   |
|                                                                                             |
| Consolidated  Statements of Cash Flows                                                           |
|                                                                                             |
| Notes to  Consolidated Financial Statements                                                      |

 

49

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REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

General Maritime Corporation

New York, New York

 

We have audited the accompanying consolidated balance sheets of GeneralMaritime Corporation and subsidiaries (the “Company”) as of December 31,2007 and 2006, and the related consolidated statements of operations,stockholders’ equity and comprehensive income, and cash flows for each of thethree years in the period ended December 31, 2007.  These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

We conducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States).  Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements.  An audit also includes assessing theaccounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation.  We believe that our audits provide areasonable basis for our opinion.

 

In our opinion, such consolidated financial statements present fairly,in all material respects, the financial position of General MaritimeCorporation and subsidiaries at December 31, 2007 and 2006, and theresults of their operations and their cash flows for each of the three years inthe period ended December 31, 2007, in conformity with accountingprinciples generally accepted in the United States of America.

 

We have also audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States), the Company’s internalcontrol over financial reporting as of December 31, 2007, based on thecriteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our reportdated February 29, 2008 expressed an unqualified opinion on the Company’sinternal control over financial reporting.

 
| /s/ DELOITTE & TOUCHE LLP |
|------------------------------------|
|                               |
| New York, New York                 |
| February 29, 2008             |

 

50

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**GENERALMARITIME CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**DECEMBER31, 2007 AND 2006**

**(Dollarsin thousands except per share data)**

 
| ** **                                                                                                                                                                                           | ** ** | **DECEMBER 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                           | ** ** | **2007**              | ** ** | **2006** | ** ** |
|                                                                                                                                                                                                 |       |                  |       |   |   |
| ASSETS                                                                                                                                                                                               |       |                  |       |   |   |
| CURRENT ASSETS:                                                                                                                                                                                      |       |                  |       |   |   |
| Cash                                                                                                                                                                                                 |       | $                     | 44,526     |   | $ | 107,460 |   |
| Due from  charterers, net                                                                                                                                                                            |       | 10,562                |       | 13,288 |   |
| Prepaid expenses  and other current assets                                                                                                                                                           |       | 27,385                |       | 17,117 |   |
| Derivative asset                                                                                                                                                                                     |       | 21                    |       | — |   |
| Total current  assets                                                                                                                                                                                |       | 82,494                |       | 137,865 |   |
|                                                                                                                                                                                                 |       |                  |       |   |   |
| NONCURRENT  ASSETS:                                                                                                                                                                                  |       |                  |       |   |   |
| Vessels, net of  accumulated depreciation of $189,989 and $152,840, respectively                                                                                                                     |       | 684,019               |       | 592,686 |   |
| Vessel  construction in progress                                                                                                                                                                     |       | 30,329                |       | 77,416 |   |
| Other fixed  assets, net                                                                                                                                                                             |       | 10,084                |       | 8,257 |   |
| Deferred drydock  costs, net                                                                                                                                                                         |       | 20,209                |       | 18,572 |   |
| Deferred  financing costs, net                                                                                                                                                                       |       | 4,724                 |       | 4,469 |   |
| Derivative asset                                                                                                                                                                                     |       | 246                   |       | 2,180 |   |
| Other assets                                                                                                                                                                                         |       | 1,685                 |       | 1,000 |   |
| Goodwill                                                                                                                                                                                             |       | 1,245                 |       | 1,245 |   |
| Total noncurrent  assets                                                                                                                                                                             |       | 752,541               |       | 705,825 |   |
| TOTAL ASSETS                                                                                                                                                                                         |       | $                     | 835,035    |   | $ | 843,690 |   |
|                                                                                                                                                                                                 |       |                  |       |   |   |
| LIABILITIES AND  SHAREHOLDERS’ EQUITY                                                                                                                                                           |       |                  |       |   |   |
| CURRENT  LIABILITIES:                                                                                                                                                                                |       |                  |       |   |   |
| Accounts payable  and accrued expenses                                                                                                                                                               |       | $                     | 24,381     |   | $ | 18,698 |   |
| Deferred voyage  revenue                                                                                                                                                                             |       | 10,282                |       | 8,449 |   |
| Derivative  liability                                                                                                                                                                                |       | 839                   |       | — |   |
| Total current  liabilities                                                                                                                                                                           |       | 35,502                |       | 27,147 |   |
| NONCURRENT  LIABILITIES:                                                                                                                                                                             |       |                  |       |   |   |
| Long-term debt                                                                                                                                                                                       |       | 565,000               |       | 50,000 |   |
| Other noncurrent  liabilities                                                                                                                                                                        |       | 3,932                 |       | 2,630 |   |
| Derivative  liability                                                                                                                                                                                |       | 1,944                 |       | — |   |
| Total noncurrent  liabilities                                                                                                                                                                        |       | 570,876               |       | 52,630 |   |
| TOTAL  LIABILITIES                                                                                                                                                                                   |       | 606,378               |       | 79,777 |   |
| COMMITMENTS AND  CONTINGENCIES                                                                                                                                                                       |       |                  |       |   |   |
| SHAREHOLDERS’  EQUITY:                                                                                                                                                                          |       |                  |       |   |   |
| Common stock,  $0.01 par value per share; authorized 75,000,000 shares; issued and  outstanding 32,029,540 and 32,739,107 shares at December 31, 2007 and December 31,  2006, respectively |       | 321                   |       | 328 |   |
| Paid-in capital                                                                                                                                                                                      |       | 230,748               |       | 438,801 |   |
| Retained  earnings                                                                                                                                                                                   |       | —                |       | 324,784 |   |
| Accumulated  other comprehensive loss                                                                                                                                                                |       | (2,412                | )          | — |   |
| Total  shareholders’ equity                                                                                                                                                                     |       | 228,657               |       | 763,913 |   |
| TOTAL  LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                     |       | $                     | 835,035    |   | $ | 843,690 |   |

 

See notes to consolidatedfinancial statements.

 

51

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**GENERALMARITIME CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**FOR THEYEARS ENDED DECEMBER 31, 2007, 2006 AND 2005**

**(Dollarsin thousands except per share data)**

 
| ** **                                    | ** ** | **2007**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| VOYAGE REVENUES:                              |       |       |       |       |       |       |       |
| Voyage revenues                               |       | $          | 255,015    |       | $          | 325,984    |       | $ | 567,901 |   |
| OPERATING  EXPENSES:                          |       |       |       |       |       |       |       |
| Voyage expenses                               |       | 38,069     |       | 80,400     |       | 137,203    |       |
| Direct vessel  expenses                       |       | 48,213     |       | 47,472     |       | 86,681     |       |
| Other expense                                 |       | —     |       | 2,430      |       | —     |       |
| General and  administrative                   |       | 46,920     |       | 44,787     |       | 43,989     |       |
| Depreciation and  amortization                |       | 49,671     |       | 42,395     |       | 97,320     |       |
| Loss (gain) on  sale of vessels and equipment |       | 417        |       | (46,022    | )          | (91,235    | )          |
| Total operating  expenses                     |       | 183,290    |       | 171,462    |       | 273,958    |       |
| OPERATING INCOME                              |       | 71,725     |       | 154,522    |       | 293,943    |       |
| OTHER INCOME  (EXPENSE):                      |       |       |       |       |       |       |       |
| Interest income                               |       | 2,482      |       | 5,620      |       | 3,482      |       |
| Interest expense                              |       | (25,541    | )          | (4,165     | )          | (32,400    | )          |
| Other income  (expense)                       |       | (4,127     | )          | 854        |       | (52,668    | )          |
| Net other income  (expense)                   |       | (27,186    | )          | 2,309      |       | (81,586    | )          |
| Net income                                    |       | $          | 44,539     |       | $          | 156,831    |       | $ | 212,357 |   |
|                                          |       |       |       |       |       |       |       |
| Earnings per  common share:                   |       |       |       |       |       |       |       |
| Basic                                         |       | $          | 1.46       |       | $          | 4.98       |       | $ | 5.71 |   |
|                                          |       |       |       |       |       |       |       |
| Diluted                                       |       | $          | 1.43       |       | $          | 4.87       |       | $ | 5.61 |   |
|                                          |       |       |       |       |       |       |       |
| Weighted average  shares outstanding- basic   |       | 30,402,810 |       | 31,471,809 |       | 37,164,321 |       |
|                                          |       |       |       |       |       |       |       |
| Weighted average  shares outstanding- diluted |       | 31,212,732 |       | 32,217,428 |       | 37,874,378 |       |

 

See notes to consolidatedfinancial statements.

 

52

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**GENERALMARITIME CORPORATION**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ANDCOMPREHENSIVE INCOME**

**FOR THEYEARS ENDED DECEMBER 31, 2007, 2006 AND 2005**

**(Dollarsin thousands except per share data)**

 
| ** **                                                          | ** ** | ** ** | ** ** | ** **  | ** ** | ** **   | ** ** | **Accumulated**   | ** ** | ** **        | ** ** | ** ** | ** ** |
|---------------------------------------------------------------------|------------|------------|------------|-------------|------------|--------------|------------|-------------------|------------|-------------------|------------|------------|------------|
| ** **                                                          | ** ** | ** ** | ** ** | ** **  | ** ** | ** **   | ** ** | **Other**         | ** ** | ** **        | ** ** | ** ** | ** ** |
| ** **                                                          | ** ** | **Common** | ** ** | **Paid-in** | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | **Comprehensive** | ** ** | ** ** | ** ** |
| ** **                                                          | ** ** | **Stock**  | ** ** | **Capital** | ** ** | **Earnings** | ** ** | **(Loss)**        | ** ** | **Income**        | ** ** | **Total**  | ** ** |
| Balance as of  January 1, 2005                                 |       | $          | 379        |        | $          | 420,375      |       | $                 | 470,217    |              | $          | (545       | )          |   |   | $ | 890,426 |   |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Comprehensive  income:                                              |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Net income                                                          |       |       |       |        |       | $            | 212,357    |              |       |              | $          | 212,357    |       | 212,357 |   |
| Unrealized  derivative gains on cash flow hedge                     |       |       |       |        |       |         |       | 545               |       | 545               |       | 545        |       |
| Comprehensive  income                                               |       |       |       |        |       |         |       |              |       | $                 | 212,902    |       |       |   |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Cash dividends  paid                                                |       |       |       |        |       | (110,404     | )          |              |       |              |       | (110,404   | )          |
| Exercise of  stock options                                          |       | 1          |       | 1,503       |       |         |       |              |       |              |       | 1,504      |       |
| Issuance of  1,079,600 shares of restricted stock                   |       | 7          |       | (7          | )          |         |       |              |       |              |       | —     |       |
| Acquisition and  retirement of 677,800 shares of common stock       |       | (7         | )          |        |       | (24,764      | )          |              |       |              |       | (24,771    | )          |
| Restricted stock  amortization                                      |       |       |       | 6,468       |       |         |       |              |       |              |       | 6,468      |       |
| Balance as of  December 31, 2005                               |       | 380        |       | 428,339     |       | 547,406      |       | —            |       |              |       | 976,125    |       |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Net income                                                          |       |       |       |        |       | 156,831      |       |              |       | $                 | 156,831    |       | 156,831    |   |
| Exercise of  stock options                                          |       | 5          |       | 759         |       |         |       |              |       |              |       | 764        |       |
| Issuance of  296,700 shares of restricted stock, net of forfeitures |       | 3          |       | (3          | )          |         |       |              |       |              |       | —     |       |
| Acquisition and  retirement of 6,088,113 shares of common stock     |       | (60        | )          |        |       | (219,013     | )          |              |       |              |       | (219,073   | )          |
| Cash dividends  paid                                                |       |       |       |        |       | (160,440     | )          |              |       |              |       | (160,440   | )          |
| Restricted stock  amortization, net of forfeitures                  |       |       |       | 9,706       |       |         |       |              |       |              |       | 9,706      |       |
| Balance at December 31,  2006                                  |       | 328        |       | 438,801     |       | 324,784      |       | —            |       |              |       | 763,913    |       |
| Comprehensive  income:                                              |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Net income                                                          |       |       |       |        |       | 44,539       |       |              |       | $                 | 44,539     |       | 44,539     |   |
| Unrealized  derivative loss on cash flow hedge                      |       |       |       |        |       |         |       | (2,412            | )          | (2,412            | )          | (2,412     | )          |
| Comprehensive  income                                               |       |       |       |        |       |         |       |              |       | $                 | 42,127     |       |       |   |
| Exercise of  stock options                                          |       |       |       | 123         |       |         |       |              |       |              |       | 123        |       |
| Issuance of  473,712 shares of restricted stock, net of forfeitures |       | 5          |       | (5          | )          |         |       |              |       |              |       | —     |       |
| Acquisition and  retirement of 1,351,600 shares of common stock     |       | (13        | )          | (32,644     | )          |         |       |              |       |              |       | (32,657    | )          |
| Cash dividends  paid                                                |       |       |       | (190,800    | )          | (364,703     | )          |              |       |              |       | (555,503   | )          |
| Restricted stock  issued in lieu of cash dividend                   |       | 1          |       | 4,619       |       | (4,620       | )          |              |       |              |       | —     |       |
| Restricted stock  amortization, net of forfeitures                  |       |       |       | 10,654      |       |         |       |              |       |              |       | 10,654     |       |
| Balance at  December 31, 2007                                  |       | $          | 321        |        | $          | 230,748      |       | $                 | —     |              | $          | (2,412     | )          |   |   | $ | 228,657 |   |

 

See notes to consolidatedfinancial statements.

 

53

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**GENERALMARITIME CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THEYEARS ENDED DECEMBER 31, 2007, 2006 AND 2005**

**(Dollarsin thousands)**

 
| ** **                                                                         | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
|                                                                               |       |     |       |     |       |     |       |
| CASH FLOWS  PROVIDED BY OPERATING ACTIVITIES:                                      |       |     |       |     |       |     |       |
| Net income                                                                         |       | $        | 44,539     |     | $          | 156,831  |       | $ | 212,357 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |     |       |     |       |     |       |
| Loss (gain) on  sale of vessels and equipment                                      |       | 417      |       | (46,022  | )          | (91,235  | )          |
| Depreciation and  amortization                                                     |       | 49,671   |       | 42,395   |       | 97,320   |       |
| Write-off of  deferred financing costs of refinanced credit facilities             |       | —   |       | —   |       | 5,660    |       |
| Loss on  retirement of Senior Notes                                                |       | —   |       | —   |       | 45,778   |       |
| Amortization of  discount on Senior Notes                                          |       | —   |       | —   |       | 243      |       |
| Amortization of  deferred financing costs                                          |       | 959      |       | —   |       | —   |       |
| Restricted stock  compensation expense                                             |       | 10,654   |       | 9,706    |       | 6,468    |       |
| Net unrealized  loss on derivative financial instruments                           |       | 2,284    |       |     |       |     |       |
| Changes in  assets and liabilities:                                                |       |     |       |     |       |     |       |
| Decrease in due  from charterers                                                   |       | 2,726    |       | 33,993   |       | 26,602   |       |
| (Increase)  decrease in prepaid expenses and other current and noncurrent assets   |       | (10,953  | )          | 14,954   |       | (2,811   | )          |
| Increase (decrease)  in other current and noncurrent liabilities                   |       | 5,518    |       | (16,520  | )          | (2,034   | )          |
| Decrease in  accrued interest                                                      |       | —   |       | —   |       | (7,277   | )          |
| Increase  (decrease) in deferred voyage revenue                                    |       | 1,833    |       | 6,309    |       | (3,418   | )          |
| Deferred drydock  costs incurred                                                   |       | (11,815  | )          | (11,929  | )          | (38,039  | )          |
| Net cash  provided by operating activities                                         |       | 95,833   |       | 189,717  |       | 249,614  |       |
|                                                                               |       |     |       |     |       |     |       |
| CASH FLOWS  (USED) PROVIDED BY INVESTING ACTIVITIES:                               |       |     |       |     |       |     |       |
| Payments for  vessel construction in progress                                      |       | (80,061  | )          | (50,602  | )          | (10,576  | )          |
| Purchase of  other fixed assets                                                    |       | (4,455   | )          | (5,035   | )          | (5,918   | )          |
| Proceeds from  sale of vessels                                                     |       | —   |       | 340,901  |       | 334,663  |       |
| Net cash (used)  provided by investing activites                                   |       | (84,516  | )          | 285,264  |       | 318,169  |       |
|                                                                               |       |     |       |     |       |     |       |
| CASH FLOWS USED  BY FINANCING ACTIVITIES:                                          |       |     |       |     |       |     |       |
| Long-term debt  borrowings                                                         |       | —   |       | —   |       | 162,788  |       |
| Payments to  retire Senior Notes                                                   |       | —   |       | (20      | )          | (286,851 | )          |
| Payments to  retire credit facilities                                              |       | —   |       | —   |       | (175,000 | )          |
| Principal  payments on long - term debt                                            |       | —   |       | —   |       | (30,000  | )          |
| Borrowings on  revolving credit facilitities                                       |       | 570,000  |       | 175,000  |       | —   |       |
| Repayments on  revolving credit facilities                                         |       | (55,000  | )          | (260,000 | )          | (62,788  | )          |
| Deferred  financing costs paid                                                     |       | (1,214   | )          | (728     | )          | (5,256   | )          |
| Cash released  from (placed in) escrow with lender                                 |       | —   |       | —   |       | 13,050   |       |
| Payments to acquire  and retire common stock                                       |       | (32,657  | )          | (219,073 | )          | (24,771  | )          |
| Proceeds from  exercise of stock options                                           |       | 123      |       | 764      |       | 1,504    |       |
| Cash dividends  paid                                                               |       | (555,503 | )          | (160,440 | )          | (110,404 | )          |
| Net cash used by  financing activities                                             |       | (74,251  | )          | (464,497 | )          | (517,728 | )          |
| Net (decrease) increase  in cash                                                   |       | (62,934  | )          | 10,484   |       | 50,055   |       |
| Cash, beginning  of the year                                                       |       | 107,460  |       | 96,976   |       | 46,921   |       |
| Cash, end of  year                                                                 |       | $        | 44,526     |     | $          | 107,460  |       | $ | 96,976 |   |
|                                                                               |       |     |       |     |       |     |       |
| Supplemental  disclosure of cash flow information:                                 |       |     |       |     |       |     |       |
| Cash paid during  the year for interest (net of amount capitalized)                |       | $        | 24,296     |     | $          | 4,168    |       | $ | 39,677 |   |
| Transfer from  Vessel construction in progress to Vessel                           |       | $        | 127,885    |     | $          | 61,671   |       | $ | — |   |
| Restricted stock  granted to employees (net of forfeitures)                        |       | $        | 12,142     |     | $          | 10,383   |       | $ | 48,338 |   |
| Restricted stock  granted in lieu of cash dividends                                |       | $        | 4,620      |     | $          | —   |       | $ | — |   |

 

See notes to consolidatedfinancial statements.

 

54

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**GENERAL MARITIME CORPORATION**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS**

**YEARS ENDED DECEMBER 31, 2007,2006 AND 2005**

**(DOLLARS IN THOUSANDS, EXCEPT PERSHARE, PER DAY AND PER TON DATA)**

 

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

NATUREOF BUSINESS.  General MaritimeCorporation (the “Company”) through its subsidiaries provides internationaltransportation services of seaborne crude oil. The Company’s fleet is comprisedof both Aframax and Suezmax vessels. The Company operates its business in onebusiness segment, which is the transportation of international seaborne crudeoil.

 

TheCompany’s vessels are primarily available for charter on a spot voyage or timecharter basis. Under a spot voyage charter, which generally lasts between twoto ten weeks, the owner of a vessel agrees to provide the vessel for thetransport of specific goods between specific ports in return for the payment ofan agreed upon freight per ton of cargo or, alternatively, for a specifiedtotal amount. All operating and specified voyage costs are paid by the owner ofthe vessel.

 

Atime charter involves placing a vessel at the charterer’s disposal for a setperiod of time during which the charterer may use the vessel in return for thepayment by the charterer of a specified daily or monthly hire rate. In timecharters, operating costs such as for crews, maintenance and insurance aretypically paid by the owner of the vessel and specified voyage costs such asfuel, canal and port charges are paid by the charterer.

 

BASISOF PRESENTATION.  The financialstatements of the Company have been prepared on the accrual basis ofaccounting. A summary of the significant accounting policies followed in thepreparation of the accompanying financial statements, which conform toaccounting principles generally accepted in the United States of America, ispresented below.

 

BUSINESS GEOGRAPHICS. Non-U.S. operations accounted for 100% of revenues and net income.Vessels regularly move between countries in international waters, over hundredsof trade routes. It is therefore impractical to assign revenues or earningsfrom the transportation of international seaborne crude oil products bygeographical area.

 

SEGMENTREPORTING.  Each of the Company’s vesselsserve the same type of customer, have similar operations and maintenancerequirements, operate in the same regulatory environment, and are subject tosimilar economic characteristics. Based on this, the Company has determinedthat it operates in one reportable segment, the transportation of crude oilwith its fleet of midsize vessels.

 

PRINCIPLESOF CONSOLIDATION.  The accompanyingconsolidated financial statements include the accounts of General MaritimeCorporation and its wholly owned subsidiaries. All intercompany accounts andtransactions have been eliminated on consolidation.

 

REVENUEAND EXPENSE RECOGNITION.  Revenue andexpense recognition policies for spot market voyage and time charter agreementsare as follows:

 

SPOT MARKET VOYAGE CHARTERS.  Spot market voyage revenues are recognized ona pro rata basis based on the relative transit time in each period. Estimatedlosses on voyages are provided for in full at the time such losses becomeevident. A voyage is deemed to commence upon the completion of discharge of thevessel’s previous cargo and is deemed to end upon the completion of dischargeof the current cargo. Voyage expenses primarily include only those specificcosts which are borne by the Company in connection with voyage charters whichwould otherwise have been borne by the charterer under time charter agreements.These expenses principally consist of fuel, canal and port charges. Demurrageincome represents payments by the charterer to the vessel owner when loadingand discharging time exceed the stipulated time in the spot market voyagecharter. Demurrage income is measured in accordance with the provisions of therespective charter agreements and the circumstances under which demurrageclaims arise and is recognized on a pro rata basis over the length of thevoyage to which it pertains. At December 31, 2007 and 2006, the Companyhas a reserve of approximately $424 and $1,333, respectively, against its duefrom charterers balance associated with demurrage revenues.

 

TIME CHARTERS. Revenue from time charters is recognized on a straight line basis as theaverage revenue over

 

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the term of the respective time charteragreement. Direct vessel expenses are recognized when incurred. Time charteragreements require that the vessels meet specified speed and bunker consumptionstandards.  During the year ended December 31,2006, all asserted performance claims were settled and paid for during 2006 for$11,750.  The the Company has determinedthat there are no unasserted claims on any of its time charters since thattime; accordingly, there is no reserve as of December 31, 2007 and 2006.

 

VESSELS,NET.  Vessels, net is stated at cost lessaccumulated depreciation. Included in vessel costs are acquisition costsdirectly attributable to the vessel and expenditures made to prepare the vesselfor its initial voyage. Vessels are depreciated on a straight-line basis overtheir estimated useful lives, determined to be 25 years from date of initialdelivery from the shipyard for non-single-hull vessels.   In addition, the Company estimates residualvalue of its vessels to be $175/LWT.

 

Depreciationis based on cost less the estimated residual scrap value. The costs ofsignificant replacements, renewals and betterments are capitalized anddepreciated over the shorter of the vessel’s remaining useful life or the lifeof the renewal or betterment. Undepreciated cost of any asset component beingreplaced is written off as a component of direct vessel operating expense.Expenditures for routine maintenance and repairs are expensed as incurred.

 

CONSTRUCTION IN PROGRESS. Construction in progress represents the cost of acquiring contracts tobuild vessels, installments paid to shipyards, certain other payments made tothird parties and interest costs incurred during the construction of vessels(until the vessel is substantially complete and ready for its intended use).During the years ended December 31, 2007, 2006 and 2005, the Companycapitalized $2,385, $3,571 and $3,475, respectively, of interest expense.

 

OTHERFIXED ASSETS, NET.  Other fixed assets,net is stated at cost less accumulated depreciation. Depreciation is computedusing the straight-line method over the following estimated useful lives:

 
| **DESCRIPTION**               | ** ** | **USEFUL LIVES** |
|-------------------------------|------------|-----------------------|
| Furniture and fixtures        |       | 10 years              |
| Vessel and computer equipment |       | 5 years               |

 

IMPAIRMENT OF LONG-LIVEDASSETS.  The Company follows Statement ofFinancial Accounting Standards (“SFAS”) No. 144, *Accountingfor the Impairment or Disposal of Long-Lived Assets*, which requiresimpairment losses to be recorded on long-lived assets used in operations whenindicators of impairment are present and the undiscounted cash flows estimatedto be generated by those assets are less than the asset’s carrying amount. Inthe evaluation of the fair value and future benefits of long-lived assets, theCompany performs an analysis of the anticipated undiscounted future net cashflows of the related long-lived assets. If the carrying value of the relatedasset exceeds the undiscounted cash flows, the carrying value is reduced to itsfair value. Various factors including future charter rates and vessel operatingcosts are included in this analysis.

 

DEFERREDDRYDOCK COSTS, NET.  Approximately every30 to 60 months the Company’s vessels are required to be drydocked for major repairsand maintenance, which cannot be performed while the vessels are operating. TheCompany capitalizes costs associated with the drydocks as they occur andamortizes these costs on a straight line basis over the period betweendrydocks. Amortization of drydock costs is included in depreciation andamortization in the statement of operations. For the years ended December 31,2007, 2006 and 2005, amortization was $10,178, $6,145 and $17,957,respectively. Accumulated amortization as of December 31, 2007 and 2006was $11,596 and $7,191, respectively.

 

DEFERREDFINANCING COSTS, NET.  Deferred financingcosts include fees, commissions and legal expenses associated with securingloan facilities. These costs are amortized on a straight-line basis over thelife of the related debt, which is included in interest expense. Amortizationwas $959, $722 and $1,968 for the years ended December 31, 2007, 2006 and2005, respectively. Accumulated amortization as of December 31, 2007 and2006 was $1,783 and $824 respectively.

 

GOODWILL.  The Company follows the provisions for SFAS No. 142“Goodwill and Other Intangible Assets.” This statement requires that goodwill and intangible assets withindefinite lives no longer be amortized, but instead be tested for impairmentat least annually and written down with a charge to operations when thecarrying amount exceeds the estimated fair value. Prior to the adoption of SFASNo. 142, the Company amortized goodwill. During 2005, in connection withthe reclassification of 26 vessels to vessels held for sale, $4,508

 

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ofthe goodwill associated with certain of these vessels was reclassified toVessels held for sale leaving a balance at December 31, 2007 and 2006 of$1,245. The Company determined that there was no impairment of goodwill as ofthe transition date and during the years ended December 31, 2007, 2006 and2005.

 

##### INCOME TAXES.  The Company isincorporated in the Republic of the Marshall Islands. Pursuant to the incometax laws of the Marshall Islands, the Company is not subject to MarshallIslands income tax. Additionally, pursuant to the U.S. Internal Revenue Code,the Company is exempt from U.S. income tax on its income attributable to theoperation of vessels in international commerce. Pursuant to various taxtreaties, the Company’s shipping operations are not subject to foreign incometaxes. Therefore, no provision for income taxes is required. The Companyadopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48,“Accounting for Uncertainty in Income Taxes” (FIN 48) effective January 1,2007.  Only tax positions that meet themore likely than not recognition threshold at the effective date may berecognized upon adoption of FIN 48.  TheCompany qualifies for an exemption pursuant to Section 883 of the U.S.Internal Revenue Code of 1986, or the Code, from U.S. federal income tax onshipping income that is derived from U.S. sources. The Company is similarlyexempt from state and local income taxation. This Interpretation does not have a material effect on the Company’sconsolidated financial statements.

#####  

DEFERREDVOYAGE REVENUE.  Deferred voyage revenueprimarily relates to cash received from charterers prior to it being earned.These amounts are recognized as income when earned in the appropriate futureperiods.

 

COMPREHENSIVEINCOME.  The Company follows Statement ofFinancial Accounting Standards No. 130 “Reporting Comprehensive Income”,which establishes standards for reporting and displaying comprehensive incomeand its components in financial statements. Comprehensive income is comprisedof net income and unrealized gains and losses related to our interest rate swap.

 

STOCK BASED COMPENSATION*. *Effective January 1,2006, the Company adopted Statement of Financial Standards (“SFAS”) No. 123R,*Share-Based Payments*using a modifiedversion of prospective application (See Note 17 for impact of adoptingSFAS 123R.) Accordingly, prior period amounts have not been restated.Pursuant to the adoption of SFAS 123R, unamortized restricted stock is nowclassified as a component of Paid-in capital in Shareholders’ equity. Prior toadoption of SFAS 123R, the Company followed the provisions of AccountingPrinciples Board Opinion (“APB”) No. 25, *Accountingfor Stock Issued to Employees* to account for its stock option plan.The Company provided pro forma disclosure of net income and earnings per shareas if the accounting provision of SFAS No. 123, *Accountingfor Stock-Based Compensation* had been adopted. The following tabledetails the effect on net income and earnings per share had compensationexpense for stock options been recorded for the year ended December 31,2005 based on the methods recommended by Statement of Financial Standards (“SFAS”)No. 123, *Accounting for Stock-Based Compensation*:

 
| ** **                                                    | ** ** | **2005** | ** ** |
|---------------------------------------------------------------|------------|----------|------------|
| Net Income:                                                   |       |     |       |
|                                                          |       |     |       |
| As reported                                                   |       | $        | 212,357    |   |
| Stock based  compensation expense using the fair value method |       | 309      |       |
| Pro forma                                                     |       | $        | 212,048    |   |
| Earnings per  common share (as reported):                     |       |     |       |
| Basic                                                         |       | $        | 5.71       |   |
| Diluted                                                       |       | $        | 5.61       |   |
| Earnings per  common share (pro forma):                       |       |     |       |
| Basic                                                         |       | $        | 5.71       |   |
| Diluted                                                       |       | $        | 5.60       |   |

 

ACCOUNTINGESTIMATES.  The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Significant estimates include vessel and drydock

 

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valuationsand the valuation of amounts due from charterers.  Actual resultscould differ from those estimates.

 

EARNINGSPER SHARE.  Basic earnings per share arecomputed by dividing net income by the weighted average number of common sharesoutstanding during the year. Diluted earnings per share reflects the potentialdilution that could occur if securities or other contracts to issue commonstock were exercised.

 

FAIRVALUE OF FINANCIAL INSTRUMENTS.  Theestimated fair values of the Company’s financial instruments approximate theirindividual carrying amounts as of December 31, 2007 and 2006 due to theirshort-term maturity or the variable-rate nature of the respective borrowings.

 

DERIVATIVE FINANCIALINSTRUMENTS.  In addition to interest rate swaps describedbelow, the Company has been party to other derivative financial instruments toguard against the risks of (a) a weakening U.S. Dollar that would makefuture Euro-based expenditure more costly, (b) rising fuel costs whichwould increase future voyage expenses, (c) declines in future spot marketrates which would reduce revenues on future voyages of vessels trading on thespot market and (d) rising interest rates which would increase interestexpense on the Company’s outstanding borrowings. Except for its interest rateswap, described below, the Company’s derivative financial instruments do notqualify for hedge accounting for accounting purposes, although the Companyconsiders certain of these derivative financial instruments to be economichedges against these risks. The Company records the fair value of itsderivative financial instruments on its balance sheet as a Derivativeliabilities or assets, as applicable. Changes in fair value in the derivativefinancial instruments that do not qualify for hedge accounting, as well aspayments made to, or received from counterparties, to periodically settle thederivative transactions, are recorded as Other income (expense) on thestatement of operations as applicable.

 

INTEREST RATE RISKMANAGEMENT.  The Company is exposed tothe impact of interest rate changes.  The Company’s objective is tomanage the impact of interest rate changes on its earnings and cash flow inrelation to outstanding borrowings.  These borrowings are subject toa variable borrowing rate. The Company uses a forward starting pay-fixedreceive-variable interest rate swap to manage future interest costs and therisk associated with changing interest rate obligations.  These swapsare designated as cash flow hedges of future variable rate interest paymentsand are tested for effectiveness on a quarterly basis.

 

The differential to bepaid or received for the effectively hedged portion of any swap agreement isrecognized as an adjustment to interest expense asincurred.  Additionally, the changes in value for the portion of theswaps that are effectively hedging future interest payments are reflected as acomponent of OCI.

 

For the portion of theforward interest rate swaps that are not effectively hedged, the change in thevalue and the rate differential to be paid or received is recognized as incomeor (expense) from derivative instruments and is listed as a component of other(expense) income until such time the Company has obligations against which theswap is designated and is an effective hedge.

 

As of December 31, 2007, the Company is party topay-fixed interest rate swap agreements that expire in 2010 which effectivelyconvert floating rate obligations to fixed rate instruments.  During the years ended December 31,2007, 2006 and 2005, the Company recognized a credit (charge) to othercomprehensive loss (OCI) of $(2,412), $0 and $545, respectively.  The aggregate liability in connection with aportion of the Company’s interest rate swaps as of December 31, 2007 and2006 was $2,461 and $0, respectively, and is presented as Derivative liabilityon the balance sheet.

 

CONCENTRATIONOF CREDIT RISK.  Financial instrumentsthat potentially subject the Company to concentrations of credit risk areamounts due from charterers. With respect to accounts receivable, the Companylimits its credit risk by performing ongoing credit evaluations and, whendeemed necessary, requiring letters of credit, guarantees or collateral. TheCompany earned 39.5% of its revenues from one customer during the year ended December 31,2007.  Management does not believesignificant risk exists in connection with the Company’s concentrations ofcredit at December 31, 2007.

 

FOREIGN EXCHANGE GAINSAND LOSSES.  Gains and losses ontransactions denominated in foreign currencies are recorded within theconsolidated statement of operations as components of general andadministrative expenses or other income (expense) depending on the nature ofthe transactions to which they relate. During the years ended December 31, 2007, 2006 and 2005,  transactions denominated in foreigncurrencies  resulted in increases(decreases) in general and administrative expenses of $114, $79 and $(69),respectively, and increases in other income (expense) of $198, $628 and $(206),respectively.

 

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RECENT ACCOUNTINGPRONOUNCEMENTS.  In September 2006, theFASB issued SFAS No. 157, *Fair Value Measurements*.This Statement defines fair value, establishes a framework for measuring fairvalue and enhances disclosures about fair value measurements. In February 2008,the FASB issued FASB Staff Position (“FSP”) 157-1, *Applicationof FASB Statement No. 157 to FASB Statement No. 13 and Other AccountingPronouncements That Address Fair Value Measurements for Purposes of LeaseClassification or Measurement under Statement 13* and FSP 157-2, *Effective Date of FASB Statement No. 157*. FSP 157-1 amendsSFAS No. 157 to remove certain leasing transactions from its scope. FSP 157-2, *Effective Date of FASB Statement No. 157* delays theeffective date of SFAS No. 157 for all nonfinancial assets and liabilitiesexcept those that are recognized or disclosed at fair value in the financialstatements on at least an annual basis, until January 1, 2009 for calendar yearend entities. The Company does not believe that the adoption of SFAS 157 willhave a material impact on its consolidated financial statements.

 

In February 2007,the FASB issued SFAS No. 159, The Fair Value Option for Financial Assetsand Financial Liabilities (“SFAS No. 159”). Under this statement, the Companymay elect to report financial instruments and certain other items at fair valueon a contract-by-contract basis with changes in value reported in earnings.This election is irrevocable. SFAS 159 is effective for the Company commencingin 2008.  The Company has no plans toapply SFAS No. 159.

 

In December 2007, theFASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (SFAS No.141R). SFAS No. 141R will significantly change the accounting for businesscombinations. Under SFAS No. 141R, an acquiring entity will be required torecognize all the assets acquired and liabilities assumed in a transaction atthe acquisition-date fair value with limited exceptions. SFAS No. 141R alsoincludes a substantial number of new disclosure requirements and appliesprospectively to business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or afterDecember 15, 2008. As the provisions of SFAS No. 141R are appliedprospectively, the impact to the Company cannot be determined until thetransactions occur. 

 

In December 2007, theFASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated FinancialStatements — An Amendment of ARB No. 51” (SFAS No. 160). SFAS No. 160establishes new accounting and reporting standards for the noncontrollinginterest in a subsidiary and for the deconsolidation of a subsidiary. Thisaccounting standard is effective for fiscal years, and interim periods withinthose fiscal years, beginning on or after December 15, 2008. The Company willadopt SFAS No. 160 as of January 1, 2009. The Company expects that the adoptionof SFAS No. 160 will not have a material impact on its financial position,results of operations and cash flows. 

 

**2. CASHFLOW INFORMATION**

 

The Company excluded fromnon-cash investing activities in the Consolidated Statement of Cash Flows itemsincluded in accounts payable and accrued expenses for the purchase of Vessels,Vessel construction in progress and Other fixed assets of approximately $63$422 and $982, respectively, for the year ended December 31, 2007.

 

**3. VESSEL ACQUISITIONS/DELIVERIES**

 

In March 2004, theCompany agreed to acquire three Aframax vessels, two Suezmax vessels, fournewbuilding Suezmax contracts and a technical management company from anunaffiliated entity for cash. The three Aframax vessels, two Suezmax vesselsand the technical management company were acquired between April and June 2004.The four newbuilding Suezmax contracts were acquired in July 2004. Thepurchase price of these assets was approximately $248,100, which were financedthrough cash on hand and borrowings under the Company’s then existing revolvingcredit facilities. This $248,100 purchase price was allocated as follows:  $180,599 for the five vessels, $67,242 forthe four newbuilding Suezmax contracts and $266 for the technical managementcompany the net assets of which are comprised of $107 of cash, other currentassets of $738, noncurrent assets of $82 and current liabilities of $661. Inaddition, $8,777 was paid to the shipyard as an installment on the constructionprice of the four newbuilding contracts.

 

During the year ended December 31,2006, the Company took delivery of one newly-constructed Suezmax tanker.  Capitalized costs of this vessel over itsconstruction period, inclusive of capitalized interest, were $61,671.

 

During the year ended December 31,2007, the Company took delivery of two newly-constructed Suezmax tankers.  Capitalized costs of these vessels over theirconstruction period, inclusive of capitalized interest, were $127,885.

 

These three vessels arepart of the 20 vessels that collateralize the Company’s 2005 Credit Facility(see Note 9).

 

Theremaining installments on the one newbuilding Suezmax contract to be paid bythe Company subsequent to December 31, 2007 aggregates $33,406, which ispayable in 2008.

 

**4. EARNINGS PER COMMON SHARE**

 

Thecomputation of basic earnings per share is based on the weighted average numberof common shares outstanding during the year. The computation of dilutedearnings per share assumes the exercise of all dilutive stock options using thetreasury stock method and the lapsing of restrictions on unvested restrictedstock awards, for which the assumed proceeds upon lapsing the restrictions aredeemed to be the amount of compensation cost attributable to future servicesand not yet recognized using the treasury stock method, to the extent dilutive.For the years ended December 31, 2007, 2006 and 2005, all stock optionswere considered to be dilutive.

 

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Thecomponents of the denominator for the calculation of basic earnings per shareand diluted earnings per share are as follows:

 
| ** **                                           | ** ** | **Year ended December 31,** | ** ** |
|------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                           | ** ** | **2007**                                   | ** ** | **2006** | ** ** | **2005** | ** ** |
| Common shares  outstanding, basic:                   |       |                                       |       |   |   |   |   |
| Weighted average  common shares outstanding, basic   |       | 30,402,810                                 |       | 31,471,809 |   | 37,164,321 |   |
|                                                 |       |                                       |       |   |   |   |   |
| Common shares  outstanding, diluted:                 |       |                                       |       |   |   |   |   |
| Weighted average  common shares outstanding, basic   |       | 30,402,810                                 |       | 31,471,809 |   | 37,164,321 |   |
| Stock options                                        |       | 4,339                                      |       | 44,616 |   | 58,306 |   |
| Restricted stock  awards                             |       | 805,583                                    |       | 701,003 |   | 651,751 |   |
| Weighted average  common shares outstanding, diluted |       | 31,212,732                                 |       | 32,217,428 |   | 37,874,378 |   |

 

During January 2008,the Company repurchased and retired 711,300 shares of its common stock for$16,379.

 

**5. SALE OF VESSELS AND OFFICE CLOSINGS**

 

**Sale of Vessels**

 

During2005, the Company agreed to sell its four single-hull Suezmax vessels, its sixdouble-sided Suezmax vessels, its one single-hull Aframax vessel and its sixdouble-sided Aframax vessels in order to transform the Company’s fleet toexclusively double-hull vessels. In addition, as of December 31, 2005, theCompany reclassified its nine Aframax OBO vessels from Vessels to Vessels heldfor sale. The Company decided to sell these vessels to reduce the average ageof its fleet. Through December 31, 2005, 13 of these vessels weredelivered to their new owners for aggregate net proceeds of $334,663, and a netgain on sale of vessels of $91,235. The aggregate book value of remaining threesingle-hull Suezmax vessels, one double-sided Aframax vessel and nine AframaxOBO vessels of $294,527 were carried as Vessels held for sale on the Company’sbalance sheet as of December 31, 2005. The three single-hull Suezmaxvessels and one double-sided Aframax vessel were delivered to their new ownersin January 2006.

 

Duringthe year ended December 31, 2006, the Company delivered to their newowners all of the vessels held for sale as of December 31, 2005 foraggregate net proceeds of $340,901, and a net gain on sale of vessels of$46,022.

 

**OfficeClosings**

 

On February 10,2006, the Company signed agreements to sell nine OBO Aframax vessels. Inconnection with that decision, the Company determined one technical managementoffice outside the U.S. would adequately service its current fleet and as suchdecided to cease its technical management operations at its office in Piraeus,Greece, operated by General Maritime Management (Hellas) Ltd.

 

This office ceased itsvessel operations during May 2006. The Company incurred approximately $1,300 of costs in connection withits closure during the year ended December 31, 2006, which has beenclassified as a component of general and administrative expense on the Company’sstatement of operations.  All of thesecosts have been paid as of December 31, 2006.

 

During February 2007,the Company decided to close its office in London, England, operated by GeneralMaritime Management (UK) LLC, which provides commercial management services forthe Company’s vessels, due to a large increase in the percentage of the fleetthat is on long-term time charter. This office ceased its commercial managementactivities during March 2007. The cost of closing this office, which wasclassified as a component of general and administrative expense, wasapproximately $160, and was substantially attributable to employee severancecosts which were paid during March 2007. The Company expects to close thisoffice during 2008.

 

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**6. PREPAID EXPENSES AND OTHER CURRENT ASSETS**

 

Prepaidexpenses and other current assets consist of the following:

 
| ** **                        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| Bunkers and  lubricants inventory |       | $                     | 6,148      |                  | $          | 5,287 |   |
| Insurance claims  receivable      |       | 11,234                |       | 7,186                 |       |
| Other                             |       | 10,003                |       | 4,644                 |       |
| Total                             |       | $                     | 27,385     |                  | $          | 17,117 |   |

 

Insuranceclaims receivable consist substantially of payments made by the Company forrepairs of vessels that the Company expects to recover from insurance.

 

**7. OTHER FIXED ASSETS**

 

Otherfixed assets consist of the following:

 
| ** **                         | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                         | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| Other fixed  assets:               |       |                  |       |                  |       |
|                               |       |                  |       |                  |       |
| Furniture,  fixtures and equipment |       | $                     | 4,246      |                  | $          | 4,115 |   |
| Vessel equipment                   |       | 8,750                 |       | 4,976                 |       |
| Computer  equipment                |       | 1,186                 |       | 1,153                 |       |
| Total cost                         |       | 14,182                |       | 10,244                |       |
|                               |       |                  |       |                  |       |
| Less:  accumulated depreciation    |       | 4,098                 |       | 1,987                 |       |
| Total                              |       | $                     | 10,084     |                  | $          | 8,257 |   |

 

**8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES**

 

Accountspayable and accrued expenses consist of the following:

 
| ** **              | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **              | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| Accounts payable        |       | $                     | 9,575      |                  | $          | 4,384 |   |
| Accrued  operating      |       | 8,650                 |       | 8,885                 |       |
| Accrued  administrative |       | 6,156                 |       | 5,429                 |       |
| Total                   |       | $                     | 24,381     |                  | $          | 18,698 |   |

 

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**9. LONG-TERM DEBT**

 

Long-termdebt consists of the following:

 
| ** **                               | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **2007**              | ** ** | **2006**              | ** ** |
| 2005 Credit  Facility                    |       | $                     | 565,000    |                  | $          | 50,000 |   |
|                                     |       |                  |       |                  |       |
| Total                                    |       | $                     | 565,000    |                  | $          | 50,000 |   |
|                                     |       |                  |       |                  |       |
| Less: Current  portion of long-term debt |       | —                |       | —                |       |
| Long-term debt                           |       | $                     | 565,000    |                  | $          | 50,000 |   |

 

**2005Credit Facility**

 

On October 26, 2005,the Company entered into an $800,000 revolving credit facility (the “2005Credit Facility”) with a syndicate of commercial lenders. The 2005 CreditFacility was used to refinance its then existing term borrowings (the “2005Refinancing”). Pursuant to the 2005 Refinancing, the Company repaid $175,000 ofterm borrowings then outstanding primarily by making an initial drawdown of$162,788 and using $13,050 cash held in escrow.

 

Upon consummating the 2005Refinancing, unamortized deferred financing costs associated with the thenoutstanding term borrowings aggregating $5,660 were written off as a non-cashcharge in October 2005. This non-cash charge is classified as Other income(expense) on the statement of operations. In connection with the 2005Refinancing, the Company incurred deferred financing costs of $4,565.

 

On February 16,2007, the Company entered into an agreement to amend the 2005 Credit Facility.The 2005 Credit Facility, as amended, increased the total commitment of thelenders by $100,000 from $800,000 to $900,000.

 

Pursuant to thisamendment, the Company is permitted to (1) pay quarterly cash dividendswith respect to fiscal quarters on or after March 31, 2007, limited to$0.50 per share and (2) pay additional dividends, including stockbuy-backs, in an aggregate amount not to exceed $50,000 plus 50% of cumulativenet excess cash flow after February 16, 2007. In addition, the amendmentpermitted the Company to declare a one-time special dividend of up to $15 pershare (up to an aggregate amount not to exceed $500,000) at any time prior to December 31,2007.

 

Under the 2005 CreditFacility, as amended, for any time on or after April 1, 2007 the leverageratio covenant was eliminated and the minimum cash balance covenant was reducedsuch that the Company is not permitted to reduce the sum of (A) unrestrictedcash and cash equivalents plus (B) the lesser of (1) the totalavailable unutilized commitment and (2) $25,000, to be less than $50,000.In addition, the Company agreed to a new covenant whereby it will not permitits net debt to EBITDA ratio to be greater than 5.5:1.00 on the last day of anyfiscal quarter at any time beginning April 1, 2007.

 

As of December 31,2007, the Company is in compliance, in all material respects, with all of thefinancial covenants under its 2005 Credit Facility, as amended.

 

The 2005 Credit Facility,as amended, provides a four year nonamortizing revolving loan with semiannualreductions of $50,063 beginning October 26, 2009 and a bullet reduction of$599,625 at the end of year seven. Up to $50,000 of the 2005 Credit Facility isavailable for the issuance of standby letters of credit to support obligationsof the Company and its subsidiaries that are reasonably acceptable to theissuing lenders under the facility. As of December 31, 2007, the Companyhas outstanding letters of credit aggregating $7,508 which expire between March 2008and December 2008, leaving $42,492 available to be issued.

 

The 2005 Credit Facilitycarries an interest rate of LIBOR plus 75 basis points (or, depending on theCompany’s long term foreign issuer credit rating and leverage ratio, 100 basispoints) on the outstanding portion and a commitment fee of 26.25 basis pointson the unused portion. As of December 31, 2007 and 2006, $565,000 and$50,000, respectively, of the facility is outstanding. The facility iscollateralized by 20 of the Company’s double-hull vessels and its onenewbuilding Suezmax contract, with carrying values as of December 31, 2007of $684,019 and $30,329, respectively, as well as the Company’s

 

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equity interests in itssubsidiaries that own these assets, insurance proceeds of the collateralizedvessels, and certain deposit accounts related to the vessels. Each subsidiaryof the Company with an ownership interest in these vessels or which hasotherwise guaranteed the Company’s Senior Notes also provides an unconditionalguaranty of amounts owing under the 2005 Credit Facility.

 

The Company’s ability toborrow amounts under the 2005 Credit Facility is subject to satisfaction ofcertain customary conditions precedent, and compliance with terms andconditions contained in the credit documents. These covenants include, amongother things, customary restrictions on the Company’s ability to incurindebtedness or grant liens, pay dividends or make stock repurchases (except asotherwise permitted as described above), engage in businesses other than thoseengaged in on the effective date of the credit facility and similar or relatedbusinesses, enter into transactions with affiliates, amend its governingdocuments or documents related to its Senior Notes, and merge, consolidate, ordispose of assets. The Company is also required to comply with various ongoingfinancial covenants, including with respect to the Company’s minimum cashbalance, collateral maintenance, and net debt to EBITDA ratio. If the Companydoes not comply with the various financial and other covenants and requirementsof the 2005 Credit Facility, the lenders may, subject to various customary curerights, require the immediate payment of all amounts outstanding under thefacility.

 

During the years ended December 31,2007 and 2006, the Company paid dividends of $555,503 and $160,440,respectively.  Included in the dividendspaid during the year months ended December 31, 2007 is a special dividendof $15 per share of $486,491 which was permitted under the February 2007amendment to the 2005 Credit Facility.

 

Interest rates during theyear ended December 31, 2007 ranged from 5.13% to 6.50% on the 2005 CreditFacility.

 

Based on borrowings as ofDecember 31, 2007, none of the $565,000 outstanding under the 2005 CreditFacility is due until 2012.

 

**Interest Rate Swap Agreements**

 

In August and October 2001,the Company entered into interest rate swap agreements with foreign banks tomanage interest costs and the risk associated with changing interest rates. Attheir inception, these swaps had notional principal amounts equal to 50% theCompany’s outstanding term loans under then existing credit facilities. Thenotional principal amounts amortize at the same rate as the term loans. Theinterest rate swap agreement entered into during August 2001 hedged one ofthese credit facilities, to a fixed rate of 6.25%. This swap agreementterminated on June 15, 2006. The interest rate swap agreement entered intoduring October 2001 hedged another of these credit facilities to a fixedrate of 5.485%. This swap agreement terminated on June 27, 2006. Thedifferential to be paid or received for these swap agreements was recognized asan adjustment to interest expense as incurred through June 30, 2005. The Company has determinedthat, through June 30, 2005, these interest rate swap agreements, whicheffectively hedged the Company’s then existing credit facilities continued toeffectively hedge, but not perfectly, the Company’s 2004 Credit Facility. As ofJuly 1, 2005, the Company stopped designating its interest rate swaps as ahedge.

 

Effective September 21,2007, the Company entered into an interest rate swap agreement with Citigroupto manage interest costs and the risk associated with changing interest rates.The notional principal amount of the swap is $100,000 and has a fixed interestrate on the notional amount of 4.748% through October 1, 2010, when itexpires.  The ineffective portion of thehedge of $50 for the year ended December 31, 2007 is recorded as acomponent of Other expense on the statement of operations. 

 

The changes in thenotional principal amounts of the swaps during the years ended December 31,2007, 2006 and 2005 are as 

follows:

 
| ** **                                    | ** ** | **December 31,** | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                    | ** ** | **2007**              | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| Notional  principal amount, beginning of year |       | $                     | —     |                  | $          | 19,500                |       | $ | 45,500 |   |
| Additions                                     |       | 100,000               |       | —                |       | —                |       |
| Amortization of  swaps                        |       | —                |       | (19,500               | )          | (26,000               | )          |
| Notional  principal amount, end of the year   |       | $                     | 100,000    |                  | $          | —                |       | $ | 19,500 |   |

 

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Interestexpense pertaining to interest rate swaps for the years ended December 31,2007, 2006 and 2005 was $(122), $0 and $338, respectively.

 

TheCompany would have paid approximately $2,461 to settle its outstanding swapagreement based upon its aggregate fair value as of December 31, 2007.This fair value is based upon estimates received from financial institutions.

 

**Senior Notes**

 

On March 20, 2003, the Company issued $250,000 of10% Senior Notes which were due March 15, 2013 (the “Senior Notes”).Interest was paid on the Senior Notes each March 15 and September 15.The Senior Notes were general unsecured, senior obligations of the Company. Theproceeds of the Senior Notes, prior to payment of fees and expenses, were$246,158. The Senior Notes contained incurrence covenants which, among otherthings, restricted the Company’s future ability to incur future indebtednessand liens, to apply the proceeds of asset sales freely, and to merge or undergoother changes of control and to pay dividends. The Senior Notes were guaranteedby all of the Company’s present subsidiaries and future “restricted”subsidiaries (all of which are 100% owned by the Company). These guaranteeswere full and unconditional and joint and several with the parent companyGeneral Maritime Corporation. The parent company, General Maritime Corporation,has no independent assets or operations. Additionally, certain defaults onother debt instruments, such as failure to pay interest or principal when due,were deemed to be a default under the Senior Notes agreement.

 

Between September 23, 2005 and culminating on December 30,2005 with a cash tender offer, the Company purchased and retired $249,980 parvalue of its Senior Notes for cash payments aggregating $286,851. Pursuant tothese purchases, the Company recorded a loss of $40,753, which represents theamount by which the cash paid exceeds the carrying value of the Senior Notes aswell as associated brokerage and legal fees. In addition, the Company wrote offthe unamortized deferred financing costs associated with the Senior Notes of$5,025 as a non-cash charge. Both the loss on retirement and the write-off ofthe unamortized deferred financing costs are classified as Other income(expense) on the statement of operations.

 

In January 2006,pursuant to the completion of the cash tender offer, the second supplementalindenture entered into in connection with the Senior Notes (the “SecondSupplemental Indenture”) became operative. The Second Supplemental Indentureamended the indenture under which the Senior Notes were issued (the “Indenture”),to eliminate substantially all of the restrictive covenants and certain defaultprovisions in the Indenture (the “Amendments”). The Amendments were bindingupon holders of the remaining Senior Notes who did not tender their SeniorNotes pursuant to the cash tender offer even though such holders have notconsented to the Amendments.

 

In May 2006, theCompany purchased and retired the remaining $20 par value of its Senior Notes,leaving none outstanding as of December 31, 2006.

 

Interest expense underall of the Company’s credit facilities, Senior Notes and interest rate swapsaggregated $25,540,  $4,166 and $32,400for the years ended December 31, 2007, 2006 and 2005, respectively.

 

**10. DERIVATIVE FINANCIAL INSTRUMENTS**

 

Inaddition to interest rate swap agreements (see Note 9), the Company is party tothe following derivative financial instruments:

 

*Foreign currency*.  On July 19, 2005, the Company enteredinto a forward contract to acquire 5 million Euros on January 17,2006 for $6,033. Changes in the fair value of this forward contract subsequentthe date on which the Company entered into the contract (at which time the fairvalue was $0) was recorded as Other income (expense) on the Company’s statementof operations. The Company entered into this contract to guard againstweakening in the dollar against the Euro. As of December 31, 2005, theCompany has recorded a liability of $126 related to the fair market value of thisderivative financial instrument. The Company has recorded an aggregate netunrealized gain (loss) of $126 and $(126), for the years ended December 31,2006 and 2005, which is classified as Other income (expense) on the statementof operations.

 

On October 29, 2007,the Company entered into two call options to purchase at $1.45 per Euro onemillion Euros on January 16, 2008 and one million Euros on April 16,2008.  The Company paid an aggregate of$39 for these options.  As of December 31,2007, the fair value of these options based on the exchange rate on that dateresulted in an asset of $21 which is recorded as Derivative asset on theCompany’s balance sheet.  The relatedunrealized gain for the year ended December 31, 2007 of $21 is classifiedas Other income (expense) on the statement of operations.

 

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*Fuel. *During the year ended December 31,2005, the Company entered into a “costless collar” to obtain a quantity of fuelbetween $220/metric ton (“MT”) and $300/MT. The Company used this derivative asan economic hedge to the Company, but did not designated this derivative as ahedge for accounting purposes. As such, changes in the fair value of thederivative were recorded to the Company’s statement of income each reportingperiod. Under this agreement, the Company had a right to receive (call option)the amount by which the bunker price on a specified index exceeds $300/MT andan obligation to pay (put option) the amount by which $220/MT exceeds the bunkerprice on a specified index. The term was for a notional 1,000 MT of bunkers permonth for each month in the period between October 1, 2005 and March 31,2006. As of December 31, 2005, the Company recorded an asset of $12related to the fair market value of this economic hedge. The Company hasrecorded an aggregate net unrealized (loss) gain of $(12) and $12,respectively, for the years ended December 31, 2006 and 2005, which isclassified as Other income (expense) on the statement of operations.  In addition, the Company paid $2 to thecounterparty to settle this contract during the year ended December 31,2006, which is classified as Other income (expense) on the statement ofoperations.

 

*Freightrates. *During theyears ended December 31, 2006 and 2005, the Company has taken net shortpositions in freight derivative contracts, which reduce a portion of theCompany’s exposure to the spot charter market by creating synthetic timecharters. These freight derivative contracts involve contracts to provide a fixednumber of theoretical voyages at fixed rates. These contracts net settle each month with the Company receiving a fixedamount per day and paying a floating amount based on the monthly Baltic TankerIndex (“BITR”), which is a worldscale index, and, under certain contracts, aspecified bunker price index.  Theduration of a contract can be one month, quarterly or up to three years withopen positions settling on a monthly basis. The BITR averages rates received inthe spot market by cargo type, crude oil and refined petroleum products, and bytrade route.  The Company uses freightderivative contracts as economic hedges, but has not designated them as hedgesfor accounting purposes. As such, changes in the fair value of these contractsare recorded to the Company’s statement of operations as Other income (expense)in each reporting period.

 

During September andOctober 2005, the Company entered into four freight derivative contractswhich expired in December 2005. These freight forward contracts involved contractsto provide a fixed number of theoretical voyages at fixed rates and settledbased on the monthly BITR. The Company had taken short positions in thesecontracts, which reduced a portion of the Company’s exposure to the spotcharter market by creating synthetic time charters. At December 31, 2005,these contracts had no aggregate notional value, because they expired on December 31,2005. The notional amount is based on a computation of the quantity of cargo(or freight) the contract specifies, the contract rate (based on a certaintrade route) and a flat rate determined by the market on an annual basis. Eachcontract is marked to market for the specified cargo and trade route. The fairvalue of forward freight agreements is the estimated amount that the Companywould receive or pay to terminate the agreements at the reporting date. As of December 31,2005, the Company has recorded a liability of $294 related to the fair marketvalue of these economic hedges. The Company has recorded the aggregate net realizedand unrealized loss of $849, for the year ended December 31, 2005, whichis classified as Other income (expense) on the statement of operations.

 

During November 2007,the Company entered into three freight derivative contracts which expire on December 31,2008.  The Company took short positionson two of these contracts for a VLCC tanker route for 45,000 metric tons and along position for 30,000 metric tons of a Suezmax tanker route.  The Company considers all of these contractsto be speculative.  At December 31,2007, these freight derivatives had an aggregate notional value of $13,864,which is an aggregate of both long and short positions. The net fair value of$737 at December 31, 2007 of these freight derivatives was settled as of December 31,2007 by the clearinghouse of these agreements whereby deposits the Company hadwith the clearinghouse have been reduced by a like amount, resulting in arealized loss of $737 for the year ended December 31, 2007.  The fair value of these open contracts isbased on the estimated net amount that the Company would pay to terminate theagreements at the reporting date.

 

During May 2006, theCompany entered into a freight derivative contract with the intention of fixingthe equivalent of one Suezmax vessel to a time charter equivalent rate of$35,500 per day for a three year period beginning on July 1, 2006.  This contract net settles each month with theCompany receiving $35,500 per day and paying a floating amount based on themonthly BITR and a specified bunker price index.  As of December 31, 2007 and 2006, thefair market value of the freight derivative, which was determined based on theaggregate discounted cash flows using estimated future rates obtained frombrokers, resulted in an asset (liability) to the Company of $(76) and $2,180,respectively.  The Company recorded anunrealized gain (loss) of $($2,256) and $2,180 for the years ended December 31,2007 and 2006, respectively, which is reflected on the Company’s statement ofoperations as Other income (expense). The Company has recorded an aggregate realized loss of $1,247  and $2,073 for the years ended December 31,2007 and 2006, respectively, which is classified as Other income (expense) onthe statement of operations.

 

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A summary of derivativeassets and liabilities on the Company’s balance sheets is as follows:

 
| ** **            | ** ** | **December 31, 2007** | ** ** | **December 31, 2006** | ** ** |
|-----------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **            | ** ** | **Interest  Rate Swap**    | ** ** | **Freight  Derivative**         | ** ** | **Currency  Options** | ** ** | **Total** | ** ** | **Freight  Derivative** | ** ** | **Total** | ** ** |
|                  |       |                            |       |                            |       |   |   |   |   |   |   |   |   |
| Current asset         |       | $                               | —     |                            | $          | — |   | $ | 21 |   | $ | 21 |   | $ | — |   | $ | — |   |
| Noncurrent asset      |       | —                          |       | 246                             |       | — |   | 246 |   | 2,180 |   | 2,180 |   |
| Current  liability    |       | (517                            | )          | (322                            | )          | — |   | (839 | ) | — |   | — |   |
| Noncurrent  liability |       | (1,944                          | )          | —                          |       | — |   | (1,944 | ) | — |   | — |   |
|                  |       |                            |       |                            |       |   |   |   |   |   |   |   |   |
|                  |       | $                               | (2,461     | )                               | $          | (76 | ) | $ | 21 |   | $ | (2,516 | ) | $ | 2,180 |   | $ | 2,180 |   |

 

**11. FAIRVALUE OF FINANCIAL INSTRUMENTS**

 

Theestimated fair values of the Company’s financial instruments are as follows:

 
| ** **                                     | ** ** | **December 31, 2007** | ** ** | **December 31, 2006** | ** ** |
|------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                     | ** ** | **Carrying  Value**             | ** ** | **Fair  Value**                 | ** ** | **Carrying  Value** | ** ** | **Fair  Value** | ** ** |
| Cash                                           |       | $                               | 44,526     |                            | $          | 44,526 |   | $ | 107,460 |   | $ | 107,460 |   |
| Floating rate  debt                            |       | 565,000                         |       | 565,000                         |       | 50,000 |   | 50,000 |   |
| Derivative  financial instruments (See Note 9) |       | (2,516                          | )          | (2,516                          | )          | 2,180 |   | 2,180 |   |
|                                                |            |                                 |            |                                 |            |  |  |  |  |  |  |  |  |

 

Thefair value of term loans and revolving credit facilities is estimated based oncurrent rates offered to the Company for similar debt of the same remainingmaturities. The carrying value approximates the fair market value for thevariable rate loans. The fair value of interest rate swaps (used for purposesother than trading) is the estimated amount the Company would pay to terminateswap agreements at the reporting date, taking into account current interestrates and the current credit-worthiness of the swap counter-parties.  The fair value of the freight derivative wasdetermined based on the aggregate discounted cash flows using estimated futurerates obtained from brokers. The fair fair value of the currency options isbased on the exchange rates at the end of the year.

 

**12. REVENUE FROM TIME CHARTERS**

 

Totalrevenue earned on time charters for the years ended December 31, 2007,2006 and 2005 was $161,542, $60,613 and $86,225, respectively. Future minimumrental receipts, based on vessels committed to non-cancelable time chartercontracts, as of December 31, 2007 will be $157,336,  $130,240 and $15,296 during 2008, 2009 and2010, respectively.

 

**13. LEASE PAYMENTS**

 

InFebruary 2004, the Company entered into an operating lease for anaircraft. The lease has a term of five years and requires monthly payments bythe Company of $125.  During the yearsended December 31, 2007, 2006 and 2005, the Company recorded $980, $876and $1,500 of net expense associated with this lease.

 

InDecember 2004, the Company entered into a 15-year lease for office spacein New York, New York. The monthly rental is as follows: Free rent from December 1,2004 to September 30, 2005, $110 per month from October 1, 2005 to September 30,2010, $119 per month from October 1, 2010 to September 30, 2015, and$128 per month from October 1, 2015 to September 30, 2020. Themonthly straight-line rental expense from December 1, 2004 to September 30,2020 is $105.  During the years ended December 31,2007, 2006 and 2005, the Company recorded $1,255, $1,255 and $1,138 of expenseassociated with this lease.

 

Futureminimum rental payments on the above leases for the next five years are asfollows: 2008- $2,817, 2009-$1,442, 2010- $1,344, 2011-$1,426, 2012- $1,426thereafter - $11,603.

 

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** **

**14. SIGNIFICANT CUSTOMERS**

 

Forthe year ended December 31, 2007, the Company earned $100,725 from onecustomer which represented 39.5% of voyage revenues.  For the years ended December 31, 2006and 2005, the Company did not earn 10% or more of its voyage revenues from anysingle customer.

 

**15. RELATED PARTY TRANSACTIONS**

 

Thefollowing are related party transactions not disclosed elsewhere in thesefinancial statements:

 

ThroughApril 2005, the Company rented office space as its principal executiveoffices in a building leased by GenMar Realty LLC, a company wholly owned byPeter C. Georgiopoulos, the Chairman and Chief Executive Officer of theCompany. There was no lease agreement between the Company and GenMar RealtyLLC. The Company paid an occupancy fee on a month to month basis in the amountof $55. For the years ended December 31, 2007, 2006 and 2005 the Company’soccupancy fees were $0, $0 and $220, respectively.

 

Duringthe fourth quarter of 2000, the Company loaned $486 to Peter C. Georgiopoulos.This loan does not bear interest and is due and payable on demand. The fullamount of this loan was outstanding as of December 31, 2007.

 

Duringthe years ended December 31, 2007, 2006 and 2005, the Company incurredfees for legal services aggregating $46, $150 and $284, respectively, to thefather of Peter C. Georgiopoulos, of which none and $18 was outstanding as of December 31,2007 and 2006, respectively.

 

In January 2006, theCompany repurchased 4,176,756 shares of our common stock from OCM PrincipalOpportunities Fund, L.P. (“OCM”) in a privately negotiated transaction at$37.00 per share for a total purchase price of $154,540. Stephen A. Kaplan, amember of the Company’s board of directors, serves as a principal and portfoliomanager of Oaktree Capital Management LLC, which is the general partner of OCM.

 

Genco Shipping &Trading Limited (“Genco”), an owner and operator of dry bulk vessels, hasincurred travel related expenditures for use of the Company aircraft and othermiscellaneous expenditures during the years ended December 31, 2007 and2006, totaling $248 and $257, respectively, of which $66 and none wasoutstanding as of December 31, 2007 and 2006, respectively.  Peter C. Georgiopoulos and Stephen A. Kaplanare directors of Genco. At December 31, 2006, none of this balance wasoutstanding.

 

During the years ended December 31,2007 and 2006, Genco made available one of its employees who performed internalaudit services for the Company for which the Company was invoiced $167 and $52based on actual time spent by the employee, of which $61 and $25 remainsoutstanding as of December 31, 2007 and December 31, 2006,respectively.

 

During the years ended December 31,2007, 2006 and 2005, Aegean Marine Petroleum Network, Inc. (“Aegean”)  supplied bunkers and lubricating oils to theCompany’s vessels aggregating $1,190, $1,682 and $5,945, respectively,. Thebalance of  $33 and $0 were outstandingas of December 31, 2007 and 2006 respectively. During the year ended December 31,2007, Aegean has incurred travel related expenditure for use of the Companyaircraft totaling $98. During July 2006, an investment vehicle controlledby Peter Georgiopoulos and John Tavlarios, a member of the Company’s board ofdirectors and the chief executive officer of General Maritime Management LLC (“GMM”),made an investment in and purchased shares of Aegean from Aegean’s principalshareholder.  During December 2006,Aegean completed its initial public offering. At that time, Peter Georgiopoulos became chairman of the board of Aegeanand John Tavlarios and John Hatab, a member of the Company’s board ofdirectors, joined the board of directors of Aegean.

 

Pursuant to the Company’srevised aircraft use policy, the following authorized executives may, subjectto approval from the Company’s Chairman/ Chief Executive Officer, charter theCompany’s aircraft from an authorized third-party charterer for use onnon-business flights: the Chief Executive Officer, the President of GeneralMaritime Management LLC, the Chief Financial Officer and the ChiefAdministrative Officer. The chartering fee to be paid by the authorizedexecutive will be the greater of: (i) the incremental cost to the Companyof the use of the aircraft and (ii) the applicable Standard Industry FareLevel for the flight under Internal Revenue Service regulations, in each caseas determined by the Company. The amount of use of the aircraft for thesepurposes will be monitored from time to time by the Audit Committee. During theyear ended December 31, 2007, Peter C. Georgiopoulos chartered the Company’saircraft from the third-party charterer on four occasions and incurred charterfees totaling $113 payable directly to the third-party charterer hired by theCompany to manage the chartering of the aircraft. During the year ended December 31,2006, Peter C. Georgiopoulos chartered the

 

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Company’s aircraft fromthe third-party charterer on six occasions and incurred charter fees totaling$101 directly to the third-party charterer. During the year ended December 31,2006, John Tavlarios chartered the Company’s aircraft from the third-partycharterer on one occasion and incurred charter fees totaling $7 directly to thethird-party charterer. It was no charter fees incurred for John Tavlariosduring the year ended December 31, 2007.

 

**16. SAVINGS PLAN**

 

InNovember 2001, the Company established a 401(k) Plan (the “Plan”)which is available to full-time employees who meet the Plan’s eligibilityrequirements. This Plan is a defined contribution plan, which permits employeesto make contributions up to 25 percent of their annual salaries with theCompany matching up to the first six percent. The matching contribution vestsimmediately. During 2007, 2006 and 2005, the Company’s matching contribution tothe Plan was $320, $347 and $354, respectively.

 

**17.STOCK-BASED COMPENSATION**

 

***2001 Stock Incentive Plan***

*** ***

OnJune 10, 2001, the Company adopted the General Maritime Corporation 2001Stock Incentive Plan. The aggregate number of shares of common stock availablefor award under the 2001 Stock Incentive Plan was increased from 2,900,000shares to 4,400,000 shares pursuant to an amendment and restatement of the planas of May 26, 2005. Under this plan the Company’s compensation committee,another designated committee of the board of directors or the board ofdirectors, may grant a variety of stock based incentive awards toemployees, directors and consultants whom the compensation committee (or othercommittee or the board of directors) believes are key to the Company’s success.The compensation committee may award incentive stock options, nonqualifiedstock options, stock appreciation rights, dividend equivalent rights,restricted stock, unrestricted stock and performance shares.

 

Sinceinception of the 2001 Stock Incentive Plan, the Company has issued stockoptions and restricted stock, which issuances are summarized below. Upon thegranting of stock options and restricted stock, the Company allocates newshares from its reserve of authorized shares to employees subject to themaximum shares permitted by the 2001 Stock Incentive Plan, as amended.

 

TheCompany’s policy for attributing the value of graded-vesting stock options andrestricted stock awards is to use an accelerated multiple-option approach.

 

***Stock Options***

*** ***

During2001, 2002 and 2003, the Company granted to its officers and employees optionsto purchase 860,000, 143,500 and 89,000 shares of common stock, respectively.The exercise prices for these stock options granted in 2001 and 2002 are $18.00per share and $6.06 per share, respectively. The exercise prices for stockoptions granted in 2003 ranged from $8.73 per share to $14.58 per share. Theseoptions generally vest over a four year period.

 

During2002, 590,000 stock options granted in 2001 were surrendered. During 2003,50,000 stock options granted during 2002 were forfeited.

 

On May 20, 2004, theCompany granted options to purchase an aggregate of 20,000 shares of commonstock to certain members of the Company’s board of directors at an exerciseprice of $22.57 (the closing price on the date of grant). These options vest infour equal installments on each of the first four anniversaries of the date ofgrant.

 

Until December 31,2005, the Company followed the provisions of APB 25 to account for its stockoption plan. The Company provided pro forma disclosure of net income andearnings per share as if the accounting provision of SFAS No. 123 had beenadopted. Options granted are exercisable at prices equal to the fair marketvalue of such stock on the dates the options were granted, so the intrinsicvalue is $0. The fair values of the options were determined on the date ofgrant using a Black-Scholes option pricing model. Estimated life of optionsgranted was estimated using the historical exercise behavior of employees.Expected volatility was based on historical volatility as calculated usingvarious data points during the period between the Company’s initial publicoffering date and the date of grant. Risk free interest is based on the U.S.Treasury yield curve in effect at the time of grant. These options were valuedbased on the following assumptions: an estimated life of five years for alloptions granted, volatility of 53%, 47%, 63% and 54% for options granted during2004, 2003, 2002 and 2001, respectively, risk free interest rate of 3.85%,3.5%, 4.0% and 5.5% for options granted during 2004,

 

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2003, 2002 and 2001,respectively, and no dividend yield for any options granted because, as of thegrant dates, the Company had not paid any dividends. The fair value of the860,000 options to purchase common stock granted on June 12, 2001 was$8.50 per share.

 

The fair value of the143,500 options to purchase common stock granted on November 26, 2002 was$3.42 per share. The fair value of the 50,000, 12,500 and 29,000 options topurchase common stock granted on May 5, 2003, June 5, 2003 and November 12,2003 was $3.95 per share, $4.52 per share, and $6.61 per share, respectively.The fair value of the 20,000 options to purchase common stock granted on May 20,2004 was $11.22 per share.

 

EffectiveJanuary 1, 2006, the Company adopted Statement of Financial Standards (“SFAS”)No. 123R, *Share-Based Payments*using amodified version of prospective application. Accordingly, prior period amountshave not been restated.

 

Underthis transition method, for the portion of outstanding awards for which therequisite service has not yet been rendered, compensation cost of $113 will berecognized subsequent to the effective date based on the grant-date fair valueof those awards calculated under SFAS No. 123. During the years ended December 31,2007 and 2006, the adoption of FAS 123R resulted in incremental stock-basedcompensation expense of $28 and $81, respectively, which reduced net income forby this amount and reduced basic earnings per share by nil and $0.01,respectively.

 

Asof December 31, 2007, there was $5 of total unrecognized compensation costrelated to nonvested stock option awards. That cost is expected to berecognized with a credit to paid-in capital over a weighted average periodof  0.3 years.

 

The following tablesummarizes all stock option activity through December 31, 2007:

 
| ** **                           | ** ** | ** **         | ** ** | **Weighted** | ** ** | ** **          | ** ** |
|--------------------------------------|------------|--------------------|------------|--------------|------------|---------------------|------------|
| ** **                           | ** ** | ** **         | ** ** | **Average**  | ** ** | **Weighted**        | ** ** |
| ** **                           | ** ** | **Number of** | ** ** | **Exercise** | ** ** | **Average**         | ** ** |
| ** **                           | ** ** | **Options**        | ** ** | **Price**    | ** ** | **Fair Value** | ** ** |
|                                 |       |               |       |         |       |                |       |
| Outstanding,  January 1, 2005   |       | 213,025            |       | $            | 13.68      |                | $          | 6.13 |   |
| Granted                              |       | —             |       |         |       |                |       |
| Exercised                            |       | (106,825           | )          | $            | 14.12      |                | $          | 6.84 |   |
| Forfeited                            |       | (18,800            | )          | $            | 9.05       |                | $          | 4.99 |   |
| Outstanding,  December 31, 2005 |       | 87,400             |       | $            | 13.76      |                | $          | 6.78 |   |
| Granted                              |       | —             |       |         |       |                |       |
| Exercised                            |       | (60,900            | )          | $            | 12.50      |                | $          | 6.12 |   |
| Forfeited                            |       | (8,750             | )          | $            | 17.55      |                | $          | 8.57 |   |
| Outstanding,  December 31, 2006 |       | 17,750             |       | $            | 16.21      |                | $          | 7.87 |   |
| Granted                              |       | —             |       |         |       |                |       |
| Exercised                            |       | (8,375             | )          | $            | 15.30      |                | $          | 7.28 |   |
| Forfeited                            |       | (2,000             | )          | $            | 6.06       |                | $          | 3.43 |   |
| Outstanding,  December 31, 2007 |       | 7,375              |       | $            | 20.00      |                | $          | 9.74 |   |
|                                      |            |                    |            |              |            |                     |            |  |  |  |  |

 

69

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A summary of the activity for nonvested stock optionawards during the year ended of December 31, 2007 is as follows:

 
| ** **                                         | ** ** | ** **         | ** ** | **Weighted**            | ** ** | **Weighted**        | ** ** |
|----------------------------------------------------|------------|--------------------|------------|-------------------------|------------|---------------------|------------|
| ** **                                         | ** ** | **Number of** | ** ** | **Average**             | ** ** | **Average**         | ** ** |
| ** **                                         | ** ** | **Options**        | ** ** | **Exercise Price** | ** ** | **Fair Value** | ** ** |
|                                               |       |               |       |                    |       |                |       |
| Outstanding and  nonvested, January 1, 2007   |       | 13,375             |       | $                       | 18.42      |                | $          | 8.90 |   |
| Granted                                            |       | —             |       | —                  |       | —              |       |
| Vested                                             |       | (9,625             | )          | $                       | 16.80      |                | $          | 8.00 |   |
| Forfeited                                          |       | —             |       | $                       | —     |                | $          | — |   |
| Outstanding and  nonvested, December 31, 2007 |       | 3,750              |       | $                       | 22.57      |                | $          | 11.22 |   |

 

The following tablesummarizes certain information about stock options outstanding as of December 31,2007 (all of which are expected to vest):

 
| ** **              | ** ** | **Options Outstanding, December 31, 2007** | ** ** | **Options Exercisable,** | ** ** |
|-------------------------|------------|----------------------------------------------------------------|------------|-------------------------------|------------|
| ** **              | ** ** | ** **                                                     | ** ** | ** **                    | ** ** | **Weighted** | ** ** | **December 31, 2007** | ** ** |
| ** **              | ** ** | ** **                                                     | ** ** | ** **                    | ** ** | **Average** | ** ** | ** ** | ** ** | **Weighted** | ** ** |
| ** **              | ** ** | ** **                                                     | ** ** | **Weighted**                  | ** ** | **Remaining** | ** ** | ** ** | ** ** | **Average** | ** ** |
| ** **              | ** ** | **Number of**                                             | ** ** | **Average**                   | ** ** | **Contractual** | ** ** | **Number of** | ** ** | **Exercise** | ** ** |
| **Exercise Price** | ** ** | **Options**                                                    | ** ** | **Exercise Price**       | ** ** | **Life** | ** ** | **Options** | ** ** | **Price** | ** ** |
|                    |       |                                                           |       |                          |       |   |   |   |   |   |   |
| $                  | 14.58      |                                                           | 2,375      |                          | $          | 14.58 |   | 5.8 |   | 2,375 |   | $ | 14.58 |   |
| $                  | 22.57      |                                                           | 5,000      |                          | $          | 22.57 |   | 6.4 |   | 1,250 |   | $ | 22.57 |   |
|                    |       | 7,375                                                          |       | $                             | 20.00      |   | 6.2 |   | 3,625 |   | $ | 17.34 |   |

 

*RestrictedStock*

 

During 2002 and 2003, theCompany granted 625,000 and 155,000 restricted shares, respectively, to certainofficers and employees of the Company. The restrictions on the shares grantedin 2002 lapse seven years after the grant date; the restrictions on the sharesgranted in 2003 lapse 25% on each anniversary date from the date of grant andbecome fully vested after four years. The foregoing grants are subject toaccelerated vesting under certain circumstances set forth in the relevant grantagreement.

 

OnFebruary 9, 2005, the Company made grants of restricted common stock inthe amount of 304,500 shares to certain officers and employees of the Company.Of this total, 150,000, 10,000 and 10,000 restricted shares were granted to thechief executive officer (“CEO”), chief financial officer and chiefadministrative officer, respectively, of the Company and 50,000 restrictedshares were granted to the CEO of GMM. The remaining 84,500 restricted shareswere granted to other officers and employees of the Company and GMM. Therestrictions on the 150,000 shares granted to the CEO of the Company will lapseon November 16, 2014. The restrictions on the remaining 154,500 shareswill lapse as to 20% of these shares on November 16, 2005 and as to 20% ofthese shares on November 16 of each of the four years thereafter, and willbecome fully vested on November 16, 2009. The foregoing grants are subjectto accelerated vesting upon certain circumstances set forth in the relevantgrant agreement.

 

On April 6, 2005,the Company granted to the CEO 350,000 shares of restricted common stock, withrestrictions on all such shares to lapse on December 31, 2014. Theforegoing grants are subject to accelerated vesting upon certain circumstancesset forth in the relevant grant agreement.

 

On May 26, 2005, theCompany granted a total of 4,800 shares of restricted common stock to four ofthe Company’s independent Directors. Restrictions on the restricted stocklapsed in May 2006. The foregoing grants were subject to acceleratedvesting upon certain circumstances set forth in the relevant grant agreement.

 

70

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OnDecember 21, 2005, the Company made grants of restricted common stock inthe amount of 437,500 shares to certain officers and employees of the Company.Of this total, 250,000, 18,000 and 15,000 restricted shares were granted to theCEO, chief financial officer and chief administrative officer, respectively, ofthe Company and 50,000 restricted shares were granted to the president of GMM.The remaining 104,500 restricted shares were granted to other officers andemployees of the Company and GMM. The restrictions on the 250,000 sharesgranted to the CEO of the Company will lapse on November 15, 2015. Therestrictions on 93,000 shares (including shares granted to individuals namedabove, exclusive of the CEO) will lapse as to 20% of these shares on November 15,2006 and as to 20% of these shares on November 15 of each of the fouryears thereafter, and will become fully vested on November 15, 2010. Therestrictions on the remaining 94,500 shares will lapse as to 25% of theseshares on November 15, 2006 and as to 25% of these shares on November 15of each of the three years thereafter, and will become fully vested on November 15,2009. The foregoing grants are subject to accelerated vesting upon certaincircumstances set forth in the relevant grant agreement.

 

On May 18, 2006, theCompany granted a total of 9,600 shares of restricted common stock to four ofthe Company’s independent Directors. Restrictions on the restricted stocklapsed on May 16, 2007. The foregoing grants were subject to acceleratedvesting upon certain circumstances set forth in the relevant grant agreement.

 

On October 23, 2006,the Company granted 2,400 shares of restricted common stock to one of theCompany’s independent Directors.  Restrictionson the restricted stock lapsed on May 16, 2007. The foregoing grants weresubject to accelerated vesting upon certain circumstances set forth in therelevant grant agreement.

 

On December 18,2006, the Company made grants of restricted common stock in the amount of308,000 shares to certain officers and employees of the Company.  Of this total, 150,000, 20,000 and 10,000restricted shares were granted to the CEO, chief financial officer and chiefadministrative officer, respectively, of the Company and 30,000 restrictedshares were granted to the president of GMM. The remaining 98,000 restricted shares were granted to other officersand employees of the Company and GMM. The restrictions on the 150,000 shares grantedto the CEO of the Company will lapse on November 15, 2016. Therestrictions on 70,000 shares (including shares granted to individuals namedabove, exclusive of the CEO) will lapse as to 20% of these shares on November 15,2007 and as to 20% of these shares on November 15 of each of the fouryears thereafter, and will become fully vested on November 15, 2011. Therestrictions on the remaining 88,000 shares will lapse as to 25% of theseshares on November 15, 2007 and as to 25% of these shares on November 15of each of the three years thereafter, and will become fully vested on November 15,2010. The foregoing grants are subject to accelerated vesting upon certaincircumstances set forth in the relevant grant agreements. Because this April 2,2007 grant was made pursuant to a modification in which there was noincremental compensation cost as calculated under the provisions of SFAS No. 123R,this grant resulted in no additional future compensation cost associated withamortization of restricted stock awards.

 

On April 2, 2007,the Company granted 159,946 shares of restricted common stock to holders of the308,000 restricted shares granted on December 18, 2006. This grant wasmade to these holders in lieu of the Company paying in cash the $15 per sharespecial dividend applicable to such shares. This dividend was paid to all othershareholders during March 2007. The restrictions on these shares lapsed onthe same schedule as the December 18, 2006 grant. The foregoing grants aresubject to accelerated vesting upon certain circumstances set forth in therelevant grant agreements. Because this April 2, 2007 grant was madepursuant to a modification in which there was no incremental compensation costas calculated under the provisions of SFAS No. 123R, this grant resultedin no additional future compensation cost associated with amortization ofrestricted stock awards.

 

On June 29, 2007,the Company granted a total of 16,250 shares of restricted common stock to theCompany’s five independent Directors. Restrictions on the restricted stock willlapse, if at all, on June 29, 2008 or the date of the Company’s 2008Annual Meeting of Shareholders, whichever occurs first. The foregoing grantsare subject to accelerated vesting upon certain circumstances set forth in therelevant grant agreement.

 

OnDecember 21, 2007, the Company made grants of restricted common stock inthe amount of 462,000 shares to certain officers and employees of theCompany.  Of this total, 240,000, 30,000and 15,000 restricted shares were granted to the CEO, chief financial officerand chief administrative officer, respectively, of the Company and 48,000restricted shares were granted to the president of GMM.  The remaining 129,000 restricted shares weregranted to other officers and employees of the Company and GMM. Therestrictions on the 240,000 shares granted to the CEO of the Company will lapseon November 15, 2017. The restrictions on 116,000 shares (including sharesgranted to individuals named above, exclusive of the CEO) will lapse as to 20%of these shares on November 15, 2008 and as to 20% of these shares on November 15of each of the four years thereafter, and will become fully vested on November 15,2012. The restrictions on the remaining 106,000 shares will lapse as to 25% ofthese shares on November 15, 2008 and as to 25% of these shares on November 15of each of

 

71

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thethree years thereafter, and will become fully vested on November 15, 2011.The foregoing grants are subject to accelerated vesting upon certaincircumstances set forth in the relevant grant agreements.

 

Theweighted average grant-date fair value of restricted stock granted during theyears ended December 31, 2007 and 2006 is $26.47 per share and $35.53 pershare, respectively.

 

A summary of the activityfor restricted stock awards during the year ended of December 31, 2007 isas follows:

 
| ** **                                         | ** ** | ** **         | ** ** | **Weighted**        | ** ** |
|----------------------------------------------------|------------|--------------------|------------|---------------------|------------|
| ** **                                         | ** ** | **Number of** | ** ** | **Average**         | ** ** |
| ** **                                         | ** ** | **Shares**         | ** ** | **Fair Value** | ** ** |
| ** **                                         | ** ** | ** **         | ** ** | ** **          | ** ** |
| Outstanding and  nonvested, January 1, 2007   |       | 1,944,325          |       | $                   | 30.12      |   |
|                                               |       |               |       |                |       |
| Granted                                            |       | 638,196            |       | $                   | 26.47      |   |
| Vested                                             |       | (169,769           | )          | $                   | 32.63      |   |
| Forfeited                                          |       | (4,538             | )          | $                   | 35.07      |   |
|                                               |       |               |       |                |       |
| Outstanding and  nonvested, December 31, 2007 |       | 2,408,214          |       | $                   | 28.96      |   |

 

Thefollowing table summarizes the amortization, which will be included in generaland administrative expenses, of all of the Company’s restricted stock grants asof December 31, 2007:

 
| ** **                       | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **Thereafter** | ** ** | **TOTAL** | ** ** |
|----------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|
| **Restricted  Stock Grant Date** |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |
|                             |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |
| November 26,  2002          |       | $        | 541        |     | $          | 495      |       | $        | —     |     | $          | —         |       | $         | —     |   | $ | — |   | $ | 1,036 |   |
| February 9,  2005           |       | 1,306    |       | 972      |       | 738      |       | 738      |       | 738      |       | 1,384          |       | 5,876     |       |
| April 5,  2005              |       | 1,754    |       | 1,749    |       | 1,749    |       | 1,749    |       | 1,753    |       | 3,497          |       | 12,251    |       |
| December 21,  2005          |       | 1,936    |       | 1,446    |       | 1,101    |       | 973      |       | 976      |       | 2,798          |       | 9,230     |       |
| December 18,  2006          |       | 1,982    |       | 1,344    |       | 923      |       | 628      |       | 541      |       | 2,090          |       | 7,508     |       |
| June 29,  2007              |       | 146      |       | —   |       | —   |       | —   |       | —   |       | —         |       | 146       |       |
| December 21,  2007          |       | 3,416    |       | 2,091    |       | 1,451    |       | 1,027    |       | 729      |       | 3,024          |       | 11,738    |       |
|                             |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |
| Total by year                    |       | $        | 11,081     |     | $          | 8,097    |       | $        | 5,962      |     | $          | 5,115          |       | $         | 4,737      |   | $ | 12,793 |   | $ | 47,785 |   |

 

Asof December 31, 2007 and 2006, there was $47,785 and $46,270,respectively, of total unrecognized compensation cost related to nonvestedrestricted stock awards. As of December 31, 2007, this cost is expected tobe recognized with a credit to paid-in capital over a weighted average periodof 3.8 years.

 

Totalcompensation cost recognized in income relating to amortization of restrictedstock awards for the years ended December 31, 2007, 2006 and 2005 was$10,627, $9,625 and $6,448, respectively.

 

**18. STOCK REPURCHASE PROGRAM**

 

In October 2005, theCompany’s Board of Directors approved a share repurchase program for up to atotal of $200,000 of the Company’s common stock. In February 2006, theCompany’s Board approved an additional $200,000 for repurchases of the Company’scommon stock under the share repurchase program.  The Board will periodically review theprogram. Share repurchases will be made from time to time for cash in openmarket transactions at prevailing market prices or in privately negotiatedtransactions. The timing and amount of purchases under the program will bedetermined by management based upon market conditions and other factors.Purchases may be made pursuant to a program adopted under Rule 10b5-1under the Securities Exchange Act. The program does not require the Company topurchase any specific number or amount of shares and may be suspended orreinstated at any time in the Company’s discretion and without notice.Repurchases will be subject to restrictions under our 2005 Credit Facility.

 

Through December 31,2007, the Company repurchased and retired 8,117,513 shares of its common stockfor $276,502.  As of December 31,2007, the Company is permitted under the program to acquire additional sharesof its common stock for up to $123,498.

 

72

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**19. LEGAL PROCEEDINGS**

 

Fromtime to time the Company has been, and expects to continue to be, subject tolegal proceedings and claims in the ordinary course of its business,principally personal injury and property casualty claims. Such claims, even iflacking merit, could result in the expenditure of significant financial andmanagerial resources. The Company is not aware of any legal proceedings orclaims that it believes will have, individually or in the aggregate, a materialadverse effect on the Company or on its financial condition or results ofoperations.

 

The Company has beencooperating in a criminal investigation being conducted by the U.S. Departmentof Justice relating to the alleged failure by the *Genmar Ajax*to record certain alleged illegal discharges of oily waste between October 2004and December 2004.  On December 15,2004, following a routine Coast Guard inspection, U.S. Coast Guard officialstook various documents, logs and records from the vessel for further review andanalysis. During 2005, the custodian of records for the *Genmar Ajax*received four subpoenas duces tecum requesting supplemental documentationpertaining to the vessel in connection with a pending grand jury investigation,all of which have been complied with. The Company has denied any wrongdoing in this matter by it or any of itsemployees but have been unable to negotiate an acceptable settlement.  On September 26, 2006, the Companyreceived a letter from the U.S. Department of Justice stating that it may seekan indictment against the Company’s General Maritime Management LLC subsidiaryin connection with its investigation. The Company intends to defend any charges vigorously. However, there canbe no assurance that the Company will be able to obtain a favorable resolutionor satisfactory settlement.

 

This matter has beenreported to the Company’s protection and indemnity insurance underwriters.  Through December 31, 2007, the Company haspaid $420 of legal fees incurred by such underwriters and has delivered to suchunderwriters a letter of credit in the amount of $1,000 for additional coststhat may be incurred in connection with this matter. These amounts are subjectto reimbursement by the underwriters to the extent that the proceedings resultin an outcome covered by insurance.

 

On or about August 29,2007, an oil sheen was discovered by shipboard personnel of the*Genmar Progress* in Guayanilla Bay, PuertoRico in the vicinity of the vessel. The vessel crew took prompt action pursuantto the vessel response plan. The Company’s subsidiary which operates the vesselpromptly reported this incident to the U.S. Coast Guard and has subsequentlyaccepted responsibility for an accidental discharge of bunker fuel from thevessel. The Company understands the federal and Puerto Rico authorities areconducting civil and criminal investigations into an oil pollution incidentwhich occurred during this time period on the southwest coast of Puerto Ricoincluding Guayanilla Bay. The extent to which oil discharged from the*Genmar Progress* is responsible for thisincident is currently the subject of investigation. The U.S. Coast Guard hasdesignated the*Genmar Progress* asa potential source of discharged oil. Under the Oil Pollution Act of 1990, thesource of the discharge is liable, regardless of fault, for damages and oilspill remediation as a result of the discharge.

 

This matter has beenreported to the Company’s protection and indemnity insurance underwriters, andthe Company believes that any such liabilities will be covered by itsinsurance, less a deductible. The Company has not accrued reserves for thisincident other than the deductible because the amount of any additional coststhat may be incurred by the Company is not estimable at this time.

 

The Company beencooperating in these investigations and has posted a surety bond to coverpotential fines or penalties that may be imposed in connection with the matter.

 

The Company has also beencooperating in an investigation being conducted by the U.S. Coast Guard and theU.S. Department of Justice which the Company believes relates to possiblealleged violations of the Act to Prevent Pollution from Ships (33 USC 1908, et.seq.) occurring on board the Genmar Defiance arising from potential failures byshipboard staff to properly record discharges of bilge waste during the periodof November 24, 2007 through November 26, 2007. During a U.S. Coast Guard Port State Control Inspection conducted on orabout November 28, 2007 at Corpus Christi, Texas, U.S. Coast Guard officialstook various documents, logs and equipment from the vessel for further reviewand analysis.  A report of theirinspection asserted that unauthorized discharge by-pass piping was identifiedduring the inspection.  The Company hasposted a bond for potential fines or penalties, which may be sought inconnection with this matter.  Currently,no charges have been made and no fines or penalties have been levied againstthe Company.

 

**20. UNAUDITED QUARTERLY RESULTSOF OPERATIONS**

 

In the opinion of theCompany’s management, all adjustments, consisting of normal recurring accrualsconsidered necessary for a fair presentation, have been included in a quarterlybasis.

 
| ** **                  | ** ** | **2007 Quarter ended** | ** ** | **2006 Quarter ended** | ** ** |
|-----------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                  | ** ** | **March 31**                | ** ** | **June 30**                 | ** ** | **Sept 30** | ** ** | **Dec 31** | ** ** | **March 31** | ** ** | **June 30** | ** ** | **Sept 30** | ** ** | **Dec 31** | ** ** |
|                        |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage revenues             |       | $                                | 68,223     |                             | $          | 62,740 |   | $ | 56,115 |   | $ | 64,879 |   | $ | 105,756 |   | $ | 75,959 |   | $ | 77,648 |   | $ | 66,621 |   |
| Operating income            |       | 19,936                           |       | 20,510                           |       | 13,756 |   | 17,523 |   | 84,829 |   | 26,214 |   | 23,639 |   | 19,840 |   |
| Net Income                  |       | 16,665                           |       | 11,780                           |       | 10,932 |   | 5,162 |   | 84,357 |   | 26,071 |   | 23,995 |   | 22,408 |   |
|                        |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per                |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Share:               |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                       |       | $                                | 0.54       |                             | $          | 0.38 |   | $ | 0.36 |   | $ | 0.17 |   | $ | 2.58 |   | $ | 0.83 |   | $ | 0.78 |   | $ | 0.73 |   |
| Diluted                     |       | $                                | 0.53       |                             | $          | 0.37 |   | $ | 0.35 |   | $ | 0.17 |   | $ | 2.52 |   | $ | 0.81 |   | $ | 0.76 |   | $ | 0.71 |   |
|                        |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average            |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                      |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding:(in  thousands) |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                       |       | 30,794                           |       | 30,802                           |       | 30,316 |   | 29,709 |   | 32,756 |   | 31,522 |   | 30,927 |   | 30,710 |   |
| Diluted                     |       | 31,612                           |       | 31,628                           |       | 31,107 |   | 30,444 |   | 33,444 |   | 32,209 |   | 31,749 |   | 31,492 |   |

 

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**21. SUBSEQUENT EVENTS**

 

During January 2008,the Company repurchased and retired 711,300 shares of its common stock for $16,379.

 

Effective January 31,2008, the Company entered into an interest rate swap agreement to manageinterest costs and the risk associated with changing interest rates. Thenotional principal amount of the swap is $100,000 and has a fixed interest rateon the notional amount of 3.515% through September 30, 2012, when itexpires.  Effective February 5,2008, the Company entered into another interest rate swap agreement to manageinterest costs and the risk associated with changing interest rates.  The notional principal amount of the swap is$75,000 and has a fixed interest rate on the notional amount of 3.39% through September 30,2012, when it expires. 

 

During February 2008,the Company took delivery of one newly-constructed Suezmax tanker.  Capitalized costs of this vessel over itsconstruction period, inclusive of capitalized interest, were approximately$63,400. This vessel is one of the vessels collateralizing the Company’s 2005Credit Facility (see Note 9).

 

On February 25,2008, the Company’s board of directors announced that the Company will bepaying a quarterly dividend of $0.50 per share on or about March 28, 2008to the shareholders of record as of March 14, 2008. The aggregate amountof the dividend is expected to be approximately $15,660, which we anticipatewill be funded from cash on hand at the time payment is to be made.

 

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| **ITEM 9.** | ** ** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND FINANCIAL DISCLOSURE** |
|-------------|------------|-------------------------------------------------------------------------------------------|

** **

No changes were made to, nor was there anydisagreement with the Company’s independent auditors regarding, the Company’saccounting or financial disclosure.

 
| **ITEM 9A.** | ** ** | **CONTROLS AND PROCEDURES** |
|--------------|------------|-----------------------------|

 

**EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.**

 

In accordance withExchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under thesupervision and with the participation of management, including our principalexecutive officer and principal financial officer, of the effectiveness of ourdisclosure controls and procedures as of the end of the period covered by thisreport. Based on that evaluation, our principal executive officer and principalfinancial officer concluded that our disclosure controls and procedures wereeffective as of December 31, 2007 to provide assurance that informationrequired to be disclosed in our reports filed or submitted under the ExchangeAct is recorded, processed, summarized and reported within the time periodsspecified in the Securities and Exchange Commission’s rules and forms and suchinformation is accumulated and communicated to our management, including ourprincipal executive officer and principal financial officer, as appropriate toallow timely decisions regarding disclosure.

 

There has been no changein our internal controls over financial reporting that occurred during thethree months ended December 31, 2007 that has materially affected, or isreasonably likely to materially affect, our internal controls over financialreporting.

 

**INTERNALCONTROL OVER FINANCIAL REPORTING**

 

**MANAGEMENTREPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

 

Ourmanagement is responsible for establishing and maintaining adequate internalcontrol over financial reporting. General Maritime Corporation’s internalcontrol over financial reporting is designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generallyaccepted accounting principles.

 

Ourinternal control over financial reporting includes those policies andprocedures that:

 

·                  Pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of General MaritimeCorporation;

 

·                  Providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that our receipts and expenditures are being madeonly in accordance with authorizations of General Maritime Corporation’smanagement and directors; and

 

·                  Providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effecton the financial statements.

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree or compliancewith the policies or procedures may deteriorate.

 

Managementassessed the effectiveness of General Maritime Corporation’s internal controlover financial reporting as of December 31, 2007. In making thisassessment, management used the criteria set forth by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) in InternalControl-Integrated Framework. Based on our assessment and those criteria,management believes that General Maritime Corporation maintained effectiveinternal control over financial reporting as of December 31, 2007.

 

##### General Maritime Corporation’s independent registered public accountingfirm has audited and issued their report on General Maritime Corporation’sinternal control over financial reporting, which appears below.

 

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REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To theBoard of Directors and Stockholders ofGeneral Maritime CorporationNew York, New York

 

Wehave audited the internal control over financial reporting of and subsidiaries(the “Company”) as of December 31, 2007, based on criteria established in *Internal Control — Integrated Framework*issuedby the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internalcontrol over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying *Management Report on Internal Control Over Financial*Reporting.Our responsibility is to express an opinion on the Company’s internal controlover financial reporting based on our audit.

 

Weconducted our audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States).  Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in allmaterial respects.  Our audit included obtaining an understanding of internalcontrol over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances.  We believethat our audit provides a reasonable basis for our opinion.

 

Acompany’s internal control over financial reporting is a process designed by,or under the supervision of, the company’s principal executive and principalfinancial officers, or persons performing similar functions, and effected bythe company’s board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerally accepted accounting principles.  A company’s internal controlover financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directorsof the company; and (3) provide reasonable assurance regarding preventionor timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

 

Becauseof the inherent limitations of internal control over financial reporting,including the possibility of collusion or improper management override ofcontrols, material misstatements due to error or fraud may not be prevented ordetected on a timely basis.  Also, projections of any evaluation of theeffectiveness of the internal control over financial reporting to futureperiods are subject to the risk that the controls may become inadequate becauseof changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

 

In ouropinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2007, based on thecriteria established in *Internal Control —Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission.

 

Wehave also audited, in accordance with the standards of the Public CompanyAccounting Oversight Board (United States), the consolidated financialstatements as of and for the year ended December 31, 2007 of the Companyand our report dated February 29, 2008 expressed an unqualified opinion onthose financial statements.

 

* *
| */s/ DELOITTE & TOUCHE LLP* |
|--------------------------------------|
|                                 |
| New  York, NY                        |
| February 29,  2008              |

 

76

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**CHANGES IN INTERNAL CONTROLS**

 

Therehave been no changes in our internal controls over financial reporting thatoccurred during our most recent fiscal quarter (the fourth fiscal quarter) thathave materially affected, or are reasonably likely to materially affect, ourinternal controls over financial reporting.

 

**ITEM 9B. OTHER INFORMATION**

 

None.

 

**PART III**

 

**ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT**

 

Information regardingGeneral Maritime’s directors and executive officers is set forth in GeneralMaritime’s Proxy Statement for its 2008 Annual Meeting of Shareholders to befiled with the Securities and Exchange Commission not later than 120 days afterDecember 31, 2007 (the “2008 Proxy Statement”) and is incorporated byreference herein. Information relating to our Code of Conduct and Ethics and tocompliance with Section 16(a) of the 1934 Act is set forth in our2008 Proxy Statement relating and is incorporated by reference herein.

 

We intend to satisfy thedisclosure requirements under Item 5.05 of Form 8-K regarding amendmentto, or waiver from, a provision of the Code of Ethics for Chief Executive andSenior Financial Officers by posting such information on our website,www.generalmaritimecorp.com.

 

Pursuant to Section 303A.12(a) ofthe New York Stock Exchange Listed Company Manual, the Company submitted theAnnual CEO Certification to the New York Stock Exchange during 2007.

 

**ITEM 11. EXECUTIVE COMPENSATION**

 

Informationregarding compensation of General Maritime’s executive officers and informationwith respect to Compensation Committee Interlocks and Insider Participation incompensation decisions is set forth in the 2008 Proxy Statement and isincorporated by reference herein.

 

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT**

 

Informationregarding the beneficial ownership of shares of General Maritime’s common stockby certain persons is set forth in the 2008 Proxy Statement and is incorporatedby reference herein.

 

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

 

Informationregarding certain transactions of General Maritime is set forth in the 2008Proxy Statement and is incorporated by reference herein.

 

**ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

Informationregarding our accountant fees and services is set forth in the 2008 ProxyStatement and is incorporated by reference herein.

 

77

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**ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESAND REPORTS ON FORM 8-K**

 

(a)                                  Thefollowing documents are filed as a part of this report:

 
| 1.    |   | The financial statements listed in the “Index to  Consolidated Financial Statements.”                                                                                                                                                                                           |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.    |   | Exhibits:                                                                                                                                                                                                                                                                                 |
| 3.1   |   | Amended and Restated Articles of Incorporation of  General Maritime Ship Holdings Ltd.(1)                                                                                                                                                                                                 |
| 3.2   |   | Articles of Amendment to Amended and Restated  Articles of Incorporation, changing name from General Maritime Ship Holdings  Ltd. to General Maritime Corporation.(1)                                                                                                                     |
| 3.3   |   | Amended and Restated By-Laws of General Maritime  Ship Holdings Ltd.(1)                                                                                                                                                                                                                   |
| 3.4   |   | Amendment to By-Laws of General Maritime  Corporation.(2)                                                                                                                                                                                                                                 |
| 3.5   |   | Amendment to By-Laws of General Maritime  Corporation. (22)                                                                                                                                                                                                                               |
| 3.6   |   | Certificate of Designation of Series A Junior  Participating Preferred Stock.(2)                                                                                                                                                                                                     |
| 4.1   |   | Form of Common Stock Certificate of General  Maritime Corporation.(3)                                                                                                                                                                                                                |
| 4.2   |   | Form of Registration Rights Agreement.(4)                                                                                                                                                                                                                                            |
| 4.3   |   | Form of 10% Senior Global Notes Due 2013,  issued pursuant to Rule 144A and Regulation S.(5)                                                                                                                                                                                    |
| 4.4   |   | Form of Indenture relating to 10% Senior Notes,  due 2013.(5)                                                                                                                                                                                                                        |
| 4.5   |   | First Supplemental Indenture, dated December 29,  2005, by and among General Maritime Corporation, certain subsidiaries of  General Maritime Corporation and LaSalle Bank National Association, as  trustee.(6)                                                                      |
| 4.6   |   | Second Supplemental Indenture, dated December 30,  2005, by and among General Maritime Corporation, certain subsidiaries of  General Maritime Corporation and LaSalle Bank National Association, as  trustee.(6)                                                                     |
| 4.7   |   | Amended and Restated Rights Agreement, dated as of August 31,  2006, between General Maritime Corporation and Mellon Investor Services LLC,  as Rights Agent, together with Exhibits A, B and C attached thereto.(7)                                                                 |
| 10.1  |   | Credit Agreement, dated, July 1, 2004, among  General Maritime Corporation, the Lenders party thereto from time to time and  Nordea Bank Finland PLC, New York Branch, as Administrative Agent and  Collateral Agent under the Security Documents.(8)                                |
| 10.2  |   | First Amendment to Credit Agreement, dated August 31,  2004, among General Maritime Corporation, the Lenders party from time to time  to the Credit Agreement and Nordea Bank Finland PLC, New York Branch, as Sole  Lead Arranger, Sole Bookrunner and Administrative Agent.(8)     |
| 10.3  |   | Second Amendment to the Credit Agreement, dated March 25,  2005, among General Maritime Corporation, the Lenders party from time to time  to the Credit Agreement and Nordea Bank Finland PLC, New York Branch, as Sole  Lead Arranger, Sole Bookrunner and Administrative Agent.(9) |
| 10.4  |   | Subsidiaries Guaranty, dated July 1, 2004,  among the Guarantors set forth on the signature page thereto and Nordea  Bank Finland PLC, New York Branch, as Administrative Agent.(8)                                                                                             |
| 10.5  |   | Pledge and Security Agreement, dated July 1,  2004, among the Pledgors set forth on the signature page thereto and  Nordea Bank Finland PLC, New York Branch, as Administrative Agent, Pledgee  and Deposit Account Bank.(8)                                                    |
| 10.6  |   | Cash Collateral Account Agreement, dated August 31,  2004, among General Maritime Corporation, as Assignor and Nordea Bank Finland  PLC, New York Branch, as Deposit Account Bank and Collateral Agent.(8)                                                                           |
| 10.7  |   | Form of First Preferred Ship Mortgage on  Marshall Islands Flag Vessel, related to Credit Agreement, dated July 1,  2004.(8)                                                                                                                                                    |
| 10.8  |   | Form of First Preferred Ship Mortgage on  Liberian Flag Vessel, related to Credit Agreement, dated July 1,  2004.(8)                                                                                                                                                            |
| 10.9  |   | Form of First Preferred Ship Mortgage on Malta  Flag Vessel, related to Credit Agreement, dated July 1, 2004.(8)                                                                                                                                                                |
| 10.10 |   | Amended and Restated 2001 Stock Incentive Plan,  effective March 30, 2006.(10)                                                                                                                                                                                                       |
| 10.11 |   | Amendment to Amended and Restated 2001 Stock  Incentive Plan dated as of December 18, 2006.(20)                                                                                                                                                                                      |
| 10.12 |   | Form of Outside Director Stock Option Grant  Certificate.(1)                                                                                                                                                                                                                         |
| 10.13 |   | Form of Incentive Stock Option Grant  Certificate.(3)                                                                                                                                                                                                                                |
| 10.14 |   | Restricted Stock Grant Agreement dated November 26,  2002 between General Maritime Corporation and Peter C. Georgiopoulos.(11)                                                                                                                                                       |
| 10.15 |   | Restricted Stock Grant Agreement dated November 26,  2002 between General Maritime Corporation and John P. Tavlarios.(11)                                                                                                                                                            |

 

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| 10.16 |   | Incentive Stock Option Agreement dated November 26,  2002 between General Maritime Corporation and John C. Georgiopoulos.(11)                                                                                  |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.17 |   | Restricted Stock Grant Agreement dated November 12,  2003 between General Maritime Corporation and Peter C. Georgiopoulos.(11)                                                                                 |
| 10.18 |   | Restricted Stock Grant Agreement dated November 12,  2003 between General Maritime Corporation and John P. Tavlarios.(11)                                                                                      |
| 10.19 |   | Restricted Stock Grant Agreement dated November 12,  2003 between General Maritime Corporation and John C. Georgiopoulos.(11)                                                                                  |
| 10.20 |   | Stock Option Agreement for Non-Employee Directors  dated May 20, 2004 between General Maritime Corporation and Andrew M. L.  Cazalet.(11)                                                                      |
| 10.21 |   | Stock Option Agreement for Non-Employee Directors  dated May 20, 2004 between General Maritime Corporation and William J.  Crabtree.(11)                                                                       |
| 10.22 |   | Stock Option Agreement for Non-Employee Directors  dated May 20, 2004 between General Maritime Corporation and Rex W.  Harrington.(11)                                                                         |
| 10.23 |   | Stock Option Agreement for Non-Employee Directors  dated May 20, 2004 between General Maritime Corporation and Peter S.  Shaerf.(11)                                                                           |
| 10.24 |   | Agreement of Lease between Fisher-Park Lane Owner  LLC, and General Maritime Corporation dated as of November 30, 2004.  (11)                                                                                  |
| 10.25 |   | Restricted Stock Grant Agreement dated February 9,  2005 between General Maritime Corporation and Peter C. Georgiopoulos.(12)                                                                                  |
| 10.26 |   | Form of Restricted Stock Grant Agreement dated February 9,  2005 between General Maritime Corporation and certain senior executive  officers.(12)                                                         |
| 10.27 |   | Employment Agreement dated April 5, 2005,  between General Maritime Corporation and Peter C. Georgiopoulos.(13)                                                                                                |
| 10.28 |   | Restricted Stock Grant Agreement dated April 6,  2005, between General Maritime Corporation and Peter C. Georgiopoulos.(13)                                                                                    |
| 10.29 |   | Employment Agreement dated April 22, 2005,  between General Maritime Corporation and John P. Tavlarios.(14)                                                                                                    |
| 10.30 |   | Employment Agreement dated April 22, 2005,  between General Maritime Corporation and Jeffrey D. Pribor.(14)                                                                                                    |
| 10.31 |   | Employment Agreement dated April 22, 2005,  between General Maritime Corporation and John C. Georgiopoulos.(14)                                                                                                |
| 10.32 |   | General Maritime Corporation Change of Control  Severance Program for U.S. Employees.(14)                                                                                                                           |
| 10.33 |   | Credit Agreement dated October 26, 2005, among  General Maritime Corporation, Nordea Bank Finland plc, New York Branch, DnB  NOR Bank AG, New York Branch, and HSH Nordbank ASA.(15)                           |
| 10.34 |   | First Amendment to Credit Agreement dated June 28,  2006 among General Maritime Corporation, Nordea Bank Finland plc, New York  Branch, DnB NOR Bank AG, New York Branch, and HSH Nordbank ASA.(16)            |
| 10.35 |   | Second Amendment to Credit Agreement dated as of February 16,  2007, among General Maritime Corporation, Nordea Bank Finland plc, New York  Branch, Dnb NOR Bank AG, New York Branch and HSH Nordbank ASA.(20) |
| 10.36 |   | Agreement and General Release dated November 22,  2005, between John M. Ramistella and General Maritime Management LLC.(17)                                                                                    |
| 10.37 |   | Restricted Stock Grant Agreement dated December 21,  2005 between General Maritime Corporation and Peter C. Georgiopoulos.(18)                                                                                 |
| 10.38 |   | Form of Restricted Stock Grant Agreement dated December 21,  2005 between General Maritime Corporation and certain senior executive  officers.(18)                                                        |
| 10.39 |   | Restricted Stock Grant Agreement dated May 18,  2006 between General Maritime Corporation and John O. Hatab. (20)                                                                                              |
| 10.40 |   | Restricted Stock Grant Agreement dated May 18,  2006 between General Maritime Corporation and Rex W. Harrington. (20)                                                                                          |
| 10.41 |   | Restricted Stock Grant Agreement dated May 18,  2006 between General Maritime Corporation and William J. Crabtree. (20)                                                                                        |
| 10.42 |   | Restricted Stock Grant Agreement dated May 18,  2006 between General Maritime Corporation and Peter S. Shaerf. (20)                                                                                            |
| 10.43 |   | Restricted Stock Grant Agreement dated October 23,  2006 between General Maritime Corporation and Stephen A. Kaplan. (20)                                                                                      |

 

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| 10.44 |   | Restricted Stock Grant Agreement dated December 18,  2006 between General Maritime Corporation and John P. Tavlarios. (20)                                         |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.45 |   | Restricted Stock Grant Agreement dated December 18,  2006 between General Maritime Corporation and Jeffrey D. Pribor. (20)                                         |
| 10.46 |   | Restricted Stock Grant Agreement dated December 18,  2006 between General Maritime Corporation and John C. Georgiopoulos. (20)                                     |
| 10.47 |   | Restricted Stock Grant Agreement dated December 18,  2006 between General Maritime Corporation and Peter C. Georgiopoulos. (20)                                    |
| 10.48 |   | Form of Restricted Stock Grant Agreement dated December 18,  2006. (20)                                                                                       |
| 10.49 |   | Form of Restricted Stock Grant Agreement dated December 18,  2006. (20)                                                                                       |
| 10.50 |   | Share Repurchase Agreement between the Company and  OCM Capital Opportunities Fund, L.P. dated January 4, 2006.(19)                                                |
| 10.51 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and Peter C. Georgiopoulos. (*)                                         |
| 10.52 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and John P. Tavlarios. (*)                                              |
| 10.53 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and Jeffrey D. Pribor. (*)                                              |
| 10.54 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and John C. Georgiopoulos. (*)                                          |
| 10.55 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and Peter S. Bell. (*)                                                  |
| 10.56 |   | Restricted Stock Grant Agreement dated April 2,  2007 between General Maritime Corporation and Milton H. Gonzales, Jr.  (*)                                   |
| 10.57 |   | Restricted Stock Grant Agreement dated June 29,  2007 between General Maritime Corporation and John O. Hatab. (21)                                                 |
| 10.58 |   | Restricted Stock Grant Agreement dated June 29,  2007 between General Maritime Corporation and Rex W. Harrington. (21)                                             |
| 10.59 |   | Restricted Stock Grant Agreement dated June 29,  2007 between General Maritime Corporation and William J. Crabtree. (21)                                           |
| 10.60 |   | Restricted Stock Grant Agreement dated June 29,  2007 between General Maritime Corporation and Peter S. Shaerf. (21)                                               |
| 10.61 |   | Restricted Stock Grant Agreement dated June 29,  2007 between General Maritime Corporation and Stephen A. Kaplan. (21)                                             |
| 10.62 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and Peter C. Georgiopoulos. (*)                                     |
| 10.63 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and John P. Tavlarios. (*)                                          |
| 10.64 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and Jeffrey D. Pribor. (*)                                          |
| 10.65 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and John C. Georgiopoulos. (*)                                      |
| 10.66 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and Peter S. Bell. (*)                                              |
| 10.67 |   | Restricted Stock Grant Agreement dated December 21,  2007 between General Maritime Corporation and Milton H. Gonzales, Jr.  (*)                               |
| 21.1  |   | Subsidiaries of General Maritime Corporation.(*)                                                                                                                        |
| 23.1  |   | Consent of Independent Registered Public Accounting  Firm.(*)                                                                                                           |
| 31.1  |   | Certification of Chief Executive Officer pursuant to  Rule 13(a)—14(a) and 15(d)—14(a) of the Securities Exchange  Act of 1934, as amended.(*) |
| 31.2  |   | Certification of Chief Financial Officer pursuant to  Rule 13(a)—14(a) and 15(d)—14(a) of the Securities Exchange  Act of 1934, as amended.(*) |
| 32.1  |   | Certification of Chief Executive Officer pursuant to  18 U.S.C. Section 1350.(*)                                                                                   |
| 32.2  |   | Certification of Chief Financial Officer pursuant to  18 U.S.C. Section 1350.(*)                                                                                   |

 

----

(*)                                 Filedherewith.

 

(1)                                  Incorporatedby reference to Amendment No. 5 to General Maritime’s RegistrationStatement on Form S-1, filed 

 

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with the Securities andExchange Commission on June 12, 2001.

 
| (2)  |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on December 7, 2005.                                       |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)  |   | Incorporated  by reference to Amendment No. 4 to General Maritime’s Registration  Statement on Form S-1, filed with the Securities and Exchange Commission  on June 6, 2001. |
| (4)  |   | Incorporated  by reference to Amendment No. 3 to General Maritime’s Registration  Statement on Form S-1, filed with the Securities and Exchange Commission  on May 25, 2001. |
| (5)  |   | Incorporated  by reference to General Maritime’s Form S-4 filed with the Securities  and Exchange Commission on June 20, 2003.                                                    |
| (6)  |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on December 30, 2005.                                      |
| (7)  |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on September 7, 2006.                                      |
| (8)  |   | Incorporated  by reference to General Maritime’s Quarterly Report on Form 10-Q filed  with the Securities and Exchange Commission on November 9, 2004.                            |
| (9)  |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on March 29, 2005.                                         |
| (10) |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on March 30, 2006.                                         |
| (11) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with  the Securities and Exchange Commission on March 16, 2005.                                 |
| (12) |   | Incorporated  by reference to General Maritime’s Quarterly Report on Form 10-Q filed  with the Securities and Exchange Commission on May 10, 2005.                                |
| (13) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with  the Securities and Exchange Commission on April 7, 2005.                                  |
| (14) |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on April 26, 2005.                                         |
| (15) |   | Incorporated  by reference to General Maritime’s Quarterly Report on Form 10-Q filed  with the Securities and Exchange Commission on November 9, 2005.                            |
| (16) |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on June 30, 2006.                                          |
| (17) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with  the Securities and Exchange Commission on November 29, 2005.                              |
| (18) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with  the Securities and Exchange Commission on March 14, 2006.                                 |
| (19) |   | Incorporated  by reference to General Maritime’s Quarterly Report on Form 10-Q filed  with the Securities and Exchange Commission on May 9, 2006.                                 |
| (20) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with  the Securities and Exchange Commission on March 1, 2007.                                  |
| (21) |   | Incorporated  by reference to General Maritime’s Report on Form 10-Q filed with the  Securities and Exchange Commission on August 9, 2007.                                        |
| (22) |   | Incorporated  by reference to General Maritime’s Report on Form 8-K filed with the  Securities and Exchange Commission on April 24, 2007.                                         |

 

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SIGNATURES

 

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

 

 
|        |   | GENERAL MARITIME CORPORATION |
|--------|--------|------------------------------|
|   |   |                         |
|   |   | By:                          |   | /s/ PETER C. GEORGIOPOULOS |
|   |   |                         |   | Name: Peter C. Georgiopoulos |
|   |   |                         |   | Title: Chairman and Chief Executive Officer |

 

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed by the following persons onbehalf of the registrant and in the capacity and on February 29, 2008.

 

 
| **SIGNATURE**               | ** ** | **TITLE**                                         |
|-----------------------------|------------|---------------------------------------------------|
| ** **                  | ** ** | ** **                                        |
| /s/ PETER C.  GEORGIOPOULOS |       | CHAIRMAN, CHIEF  EXECUTIVE OFFICER, PRESIDENT AND |
| Peter C. Georgiopoulos      |       | DIRECTOR (PRINCIPAL EXECUTIVE OFFICER)            |
|                        |       |                                              |
|                        |       |                                              |
| /s/ JEFFREY D.  PRIBOR      |       | VICE PRESIDENT  AND CHIEF FINANCIAL OFFICER       |
| Jeffrey D. Pribor           |       | (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)      |
|                        |       |                                              |
|                        |       |                                              |
| /s/ JOHN P.  TAVLARIOS      |       | DIRECTOR                                          |
| John P. Tavlarios           |       |                                              |
|                        |       |                                              |
|                        |       |                                              |
| /s/ WILLIAM J.  CRABTREE    |       | DIRECTOR                                          |
| William J. Crabtree         |       |                                              |
|                        |       |                                              |
|                        |       |                                              |
| /s/ REX W. HARRINGTON       |       | DIRECTOR                                          |
| Rex W. Harrington           |       |                                              |
|                        |       |                                              |
|                        |       |                                              |
| /s/ JOHN O.  HATAB          |       | DIRECTOR                                          |
| John O. Hatab               |       |                                              |
|                        |       |                                              |
|                        |       |                                              |
| /s/ PETER S.  SHAERF        |       | DIRECTOR                                          |
| Peter S. Shaerf             |       |                                              |

 

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