** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

** **

**FORM 10-K**

** **

**ý****Annual Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934**

** **

**For the fiscal year ended December 31, 2004**

** **

**o****Transition Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

**for the transition period from                to               **

** **

**Commission file number 001-16531**

 

**GENERAL MARITIME CORPORATION**(Exactname of registrant as specified in its charter)

 
| **Republic of the Marshall  Islands**        | ** ** | **06-159-7083**     |
|----------------------------------------------|------------|---------------------|
| (State or other jurisdiction of              |       | (I.R.S. Employer    |
| incorporation or organization)               |       | Identification No.) |
| ** **                                   | ** ** | ** **          |
| **35 West 56th Street, New York,  New York** | ** ** | **10019**           |
| (Address of principal executive office)      |       | (Zip Code)          |

 

Registrant’s telephone number, including areacode:**(212) 763-5600**

** **

Securitiesof the Registrant registered pursuant to Section 12(b) of the Act:

**Common Stock, par value $.01 per share**

 

Securitiesof the Registrant registered pursuant to Section 12(g) of the Act:

**None**

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports) and (2) has been subject to such filingrequirements for the past 90 days. 

Yes ý No o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein and will not be contained, to the bestof the registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. 

 

Indicate by check markwhether registrant is an accelerated filer (as defined in Rule 12b-2 of theAct).

Yes ý No o

 

Theaggregate market value of the voting stock of the registrant held bynon-affiliates of the registrant as of June 30, 2004 was approximately $742.2million, based on the closing price of $27.44 per share.

 

Thenumber of shares outstanding of the registrant’s common stock as of March 1,2005 was 37,896,245 shares.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Proxy Statement for the2005 Annual Meeting of Stockholders, to be filed with the Securities andExchange Commission not later than 120 days after December 31, 2004, isincorporated by reference in Part III herein.

 

 

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**PART I**

** **

**ITEM1.  BUSINESS**

 

**OVERVIEW**

** **

We are a leading provider of international seaborne crude oiltransportation services.  Our currentfleet consists of 47 wholly owned tankers, consisting of 26 Aframax and 17Suezmax tankers and four newbuilding Suezmax contracts, making us the secondlargest mid-sized tanker operator in the world. Our current 43 tanker fleet has a total of 5.2 million dwt, only12% of which is single-hulled.  Theaverage age of the tankers in our current fleet as of December 31, 2004was 11.9 years and only eight of the tankers in our current fleet wereolder than 15 years of age at that time. Many of the tankers in our fleetare “sister ships”, which provide us with operational and schedulingflexibility, as well as economies of scale in their operation and maintenance. 

 

With the majority of our tankers currently operating in the Atlanticbasin, we have one of the largest fleets in this region, which includes portsin the Caribbean, South and Central America, the United States, Western Africa,the Mediterranean, Europe and the North Sea. Transportation of crude oil to theU.S. Gulf Coast and other refining centers in the United States requires vesselowners and operators to meet more stringent environmental regulations than inother regions of the world.  We havefocused our operations in the Atlantic basin because we believe that thesestringent operating and safety standards give us a potential competitiveadvantage.  We have established a nichein the region due to our high quality tankers, of which 88% are eitherdouble-hulled or double-sided, our commitment to safety and our many years ofexperience in the industry.  Although themajority of our tankers operate in the Atlantic basin, we also currentlyoperate tankers in the Black Sea, the Far East and in other regions, which webelieve enables us both to take advantage of market opportunities and toposition our tankers in anticipation of drydockings.  Our customers include most of the majorinternational oil companies such as Amerada Hess, BP, ChevronTexacoCorporation, CITGO Petroleum Corp., ConocoPhillips, ExxonMobil Corporation,Petrobras, Shell Oil Company and Sun International Ltd. 

 

We actively manage the deployment of our tankers between spot marketvoyage charters, which generally last from several days to several weeks, andtime charters, which can last up to several years.  We continuously and actively monitor marketconditions in an effort to take advantage of changes in charter rates and tomaximize our long-term cash flow by changing this chartering deploymentprofile.  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 tankers in the spotmarket.  

 

Our net voyage revenues, which are voyage revenues minus voyageexpenses, have grown from $12.0 million in 1997 to $583.3 million in 2004. Netvoyage revenues increased by $246.7 million, or 73.3%, to $583.3 million forthe year ended December 31, 2004 compared to $336.6 million for the year endedDecember 31, 2003.  We have also grownour fleet of tankers from six as of December 31, 1997 to 28 as of December 31,2002, to our current fleet of 43 tankers. We consummated our initial public offering in June 2001. 

 

**AVAILABLE INFORMATION**

** **

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 450 Fifth Street,NW, Washington, DC 20549. The public may obtain information on the operation ofthe Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SECmaintains an Internet website that contains reports, proxy and informationstatements, and other information regarding issuers, including us, that fileelectronically with the SEC. The public can obtain any documents that we filewith the SEC at www.sec.gov. 

 

In addition, our companywebsite can be found on the Internet at www.generalmaritimecorp.com.  The website contains information about us andour operations.  Copies of each of ourfilings with the SEC on Form 10-K, Form 10-Q and Form 8-K, and all amendmentsto those reports, can be viewed and downloaded free of charge as

 

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soon as reasonablypracticable after the reports and amendments are electronically filed with orfurnished to the SEC. To view the reports, access www.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 Department at the following address:

 

Corporate InvestorRelations

General MaritimeCorporation

35 W. 56th Street 

New York, NY 10019

 

**BUSINESSSTRATEGY**

** **

Our strategy is to employ our existing competitive strengths to enhanceour position within the industry and maximize long-term cash flow.  Our strategic initiatives include:  

 

•              *Managing Environmentally Safe, Yet Cost Efficient Operations.*  We aggressively manage our operating andmaintenance costs.  At the same time, ourfleet has an excellent safety and environmental record that we maintain throughacquisitions of high-quality tankers and regular maintenance and inspection ofour fleet. We maintain operating standards for all of our tankers thatemphasize operational safety, quality maintenance, continuous training of ourofficers and crews and compliance with U.S. and international environmental andsafety regulations.  Our in-house safetystaff oversees many of these services. We believe the age and quality of the tankers in our fleet, coupled withour excellent safety and environmental record, position us favorably within thesector with our customers and for future business opportunities.

 

•              *Balancing Tanker Deployment to Maximize Fleet Utilization and CashFlows*.  We actively manage thedeployment of our fleet between time charters and spot market voyagecharters.  Our tanker deployment strategyis designed 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 tankers inthe spot market.  Our goal is to be thefirst choice of our customers for crude oil 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 Our Fleet and Maintaining a Prudent Capital Structure*.  We are an industry consolidator focused onopportunistically acquiring high-quality, second-hand, mid-sized vessels.  During the past seven years we have grown ourfleet from 6 tankers to our current fleet of 43 tankers plus four newbuildingcontracts.  We are continuously andactively monitoring the market in an effort to take advantage of expansion andgrowth opportunities.  At the same time,we are committed to maintaining prudent financial policies aimed at preservingfinancial stability and increasing long-term cash flow.  During the year ended December 31, 2002,our debt to capitalization ratio declined from 40.6% to 36.8%.  As of March 31, 2003, after giving effect tothe $525.0 million acquisition costs of the 19 tankers from MetrostarManagement Corporation and the financing of those tankers, our debt tocapitalization ratio would have been 59.9% and as of December 31, 2003 therewas a reduction to 53.5%.  During 2004, ayear in which we used $168.5 million in investing activities, we reduced ourdebt to capitalization ratio to 35.3% as of December 31, 2004 from 53.5% as ofDecember 31, 2003.  As of December 31,2004 we have the ability to draw down an additional $529.8 million ($565.0million is available for asset purchases) on our revolving creditfacility.  

 

**OURFLEET**

** **

Ourcurrent fleet consists of 43 tankers and is comprised of 26 Aframax tankers and17 Suezmax tankers. The following chart provides information regarding our 43tankers. 

 

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| ** **            | ** ** | ** **   | ** ** | **YEAR**  | ** ** | **YEAR**     | ** ** | ** ** | ** ** | **DEADWEIGHT** | ** ** | **EMPLOYMENT** | ** ** | ** **       | ** ** | **SISTER**   | ** ** |
|-----------------------|------------|--------------|------------|-----------|------------|--------------|------------|------------|------------|----------------|------------|----------------|------------|------------------|------------|--------------|------------|
| ** **            | ** ** | **YARD**     | ** ** | **BUILT** | ** ** | **ACQUIRED** | ** ** | **TYPE**   | ** ** | **TONS**       | ** ** | **STATUS**     | ** ** | **FLAG**         | ** ** | **SHIPS(2)** | ** ** |
| OUR CURRENT FLEET (1) |       |         |       |      |       |         |       |       |       |           |       |           |       |             |       |         |       |
| AFRAMAX TANKERS       |       |         |       |      |       |         |       |       |       |           |       |           |       |             |       |         |       |
| Genmar Strength       |       | Sumitomo     |       | 2003      |       | 2004         |       | DH         |       | 105,674        |       | Spot           |       | Liberia          |       | G            |       |
| Genmar Defiance       |       | Sumitomo     |       | 2002      |       | 2004         |       | DH         |       | 105,538        |       | Spot           |       | Liberia          |       | G            |       |
| Genmar Ajax           |       | Samsung      |       | 1996      |       | 1998         |       | DH         |       | 96,183         |       | Spot           |       | Liberia          |       | A            |       |
| Genmar Agamemnon      |       | Samsung      |       | 1995      |       | 1998         |       | DH         |       | 96,214         |       | Spot           |       | Liberia          |       | A            |       |
| Genmar Minotaur       |       | Samsung      |       | 1995      |       | 1998         |       | DH         |       | 96,226         |       | Spot           |       | Liberia          |       | A            |       |
| Genmar Revenge        |       | Samsung      |       | 1994      |       | 2004         |       | DH         |       | 96,755         |       | Spot           |       | Liberia          |       |         |       |
| Genmar Alexandra      |       | S. Kurushima |       | 1992      |       | 2001         |       | DH         |       | 102,262        |       | Spot           |       | Marshall Islands |       | B            |       |
| Genmar Champ *        |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 100,001        |       | TC             |       | Liberia          |       | C            |       |
| Genmar Constantine    |       | S. Kurushima |       | 1992      |       | 1998         |       | DH         |       | 102,335        |       | TC             |       | Liberia          |       | B            |       |
| Genmar Hector *       |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 96,027         |       | TC             |       | Marshall Islands |       | C            |       |
| Genmar Pericles *     |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 100,001        |       | TC             |       | Marshall Islands |       | C            |       |
| Genmar Spirit *       |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 96,027         |       | TC             |       | Liberia          |       | C            |       |
| Genmar Star *         |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 100,001        |       | TC             |       | Liberia          |       | C            |       |
| Genmar Trust *        |       | Hyundai      |       | 1992      |       | 2001         |       | DH         |       | 96,027         |       | TC             |       | Liberia          |       | C            |       |
| Genmar Challenger *   |       | Hyundai      |       | 1991      |       | 2001         |       | DH         |       | 96,027         |       | TC             |       | Liberia          |       | C            |       |
| Genmar Endurance *    |       | Hyundai      |       | 1991      |       | 2001         |       | DH         |       | 100,001        |       | TC             |       | Liberia          |       | C            |       |
| Genmar Leonidas       |       | Koyo         |       | 1991      |       | 2001         |       | DS         |       | 97,002         |       | Spot           |       | Marshall Islands |       | D            |       |
| Genmar Princess       |       | Sumitomo     |       | 1991      |       | 2003         |       | DH         |       | 96,648         |       | TC             |       | Liberia          |       | F            |       |
| Genmar Progress       |       | Sumitomo     |       | 1991      |       | 2003         |       | DH         |       | 96,765         |       | Spot           |       | Liberia          |       | F            |       |
| Genmar Trader *       |       | Hyundai      |       | 1991      |       | 2001         |       | DH         |       | 100,001        |       | TC             |       | Liberia          |       | C            |       |
| Genmar Gabriel        |       | Koyo         |       | 1990      |       | 1999         |       | DS         |       | 94,993         |       | Spot           |       | Marshall Islands |       | D            |       |
| Genmar Nestor         |       | Imabari      |       | 1990      |       | 2001         |       | DS         |       | 97,112         |       | Spot           |       | Marshall Islands |       | D            |       |
| Genmar Commander      |       | Sumitomo     |       | 1989      |       | 1997         |       | SH         |       | 96,758         |       | Spot           |       | Liberia          |       | D            |       |
| Genmar George         |       | Koyo         |       | 1989      |       | 1997         |       | DS         |       | 94,955         |       | Spot           |       | Liberia          |       | D            |       |
| Genmar Boss           |       | Kawasaki     |       | 1985      |       | 1997         |       | DS         |       | 89,601         |       | Spot           |       | Marshall Islands |       | E            |       |
| Genmar Sun            |       | Kawasaki     |       | 1985      |       | 1997         |       | DS         |       | 89,696         |       | Spot           |       | Marshall Islands |       | E            |       |
|                  |       |         |       |      |       |         |       | TOTAL      |       | 2,538,830      |       |           |       |             |       |         |       |
|                  |       |         |       |      |       |         |       |       |       |           |       |           |       |             |       |         |       |
| SUEZMAX TANKERS       |       |         |       |      |       |         |       |       |       |           |       |           |       |             |       |         |       |
| Genmar Orion          |       | Samsung      |       | 2002      |       | 2003         |       | DH         |       | 159,992        |       | Spot           |       | Marshall Islands |       |         |       |
| Genmar Argus          |       | Hyundai      |       | 2000      |       | 2003         |       | DH         |       | 164,097        |       | Spot           |       | Marshall Islands |       | K            |       |
| Genmar Spyridon       |       | Hyundai      |       | 2000      |       | 2003         |       | DH         |       | 153,972        |       | Spot           |       | Marshall Islands |       | K            |       |
| Genmar Hope           |       | Daewoo       |       | 1999      |       | 2003         |       | DH         |       | 153,919        |       | Spot           |       | Marshall Islands |       | J            |       |
| Genmar Horn           |       | Daewoo       |       | 1999      |       | 2003         |       | DH         |       | 159,475        |       | Spot           |       | Marshall Islands |       | J            |       |
| Genmar Phoenix        |       | Halla        |       | 1999      |       | 2003         |       | DH         |       | 149,999        |       | Spot           |       | Marshall Islands |       |         |       |
| Genmar Conqueror      |       | Solisnor     |       | 1993      |       | 2004         |       | DS         |       | 159,878        |       | Spot           |       | Liberia          |       | L            |       |
| Genmar Honour         |       | Solisnor     |       | 1992      |       | 2004         |       | DS         |       | 159,719        |       | Spot           |       | Liberia          |       | L            |       |
| Genmar Gulf           |       | Daewoo       |       | 1991      |       | 2003         |       | DH         |       | 149,803        |       | Spot           |       | Marshall Islands |       |         |       |
| Genmar Spartiate      |       | Ishikawajima |       | 1991      |       | 2000         |       | SH         |       | 155,150        |       | Spot           |       | Marshall Islands |       | H            |       |
| Genmar Zoe            |       | Ishikawajima |       | 1991      |       | 2000         |       | SH         |       | 152,402        |       | Spot           |       | Marshall Islands |       | H            |       |
| Genmar Alta           |       | Mitsubishi   |       | 1990      |       | 1997         |       | SH         |       | 146,251        |       | Spot           |       | Liberia          |       |         |       |
| Genmar Macedon        |       | Ishikawajima |       | 1990      |       | 2000         |       | SH         |       | 149,950        |       | Spot           |       | Marshall Islands |       | H            |       |
| Genmar Ariston        |       | Daewoo       |       | 1989      |       | 2003         |       | DS         |       | 149,999        |       | Spot           |       | Marshall Islands |       | I            |       |
| Genmar Kestrel        |       | Daewoo       |       | 1989      |       | 2003         |       | DS         |       | 152,470        |       | Spot           |       | Marshall Islands |       | I            |       |
| Genmar Prometheus     |       | Daewoo       |       | 1988      |       | 2003         |       | DS         |       | 149,999        |       | Spot           |       | Marshall Islands |       | I            |       |
| Genmar Sky            |       | Daewoo       |       | 1988      |       | 2003         |       | DS         |       | 151,803        |       | Spot           |       | Marshall Islands |       | I            |       |
|                  |       |         |       |      |       |         |       | TOTAL      |       | 2,618,878      |       |           |       |             |       |         |       |
|                  |       |         |       |      |       | FLEET        |       | TOTAL      |       | 5,157,708      |       |           |       |             |       |         |       |

 

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DH= Double-hull tanker; DS = Double-sided tanker; SH = Single-hull tanker, TC =Time Chartered

*              Oil/Bulk/Ore carrier (O/B/O)

 

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(1)           Each vesselis collateral for our $825 million credit facility.

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

 

Our predecessor entitiesbegan operations in 1997 and their fleet had grown to 14 tankers by the time ofour initial public offering on June 12, 2001. All of our historical financialand operating information from before the initial public offering reflects onlythose original 14 tankers. In connection with the initial public offering, weacquired 15 additional tankers. Of those, five were acquired simultaneouslywith the closing of the offering and the remaining ten were acquired in the tenweeks following the offering and successfully integrated into our fleet. At thetime of the offering, we also acquired General Maritime Management (Hellas)Ltd. (formerly United Overseas Tankers Ltd.), located in Piraeus, Greece, whichconducts our technical management operations such as officer staffing andmaintenance for most of our tankers. During March 2003 and May 2003, we acquired 19 tankers from MetrostarManagement Corporation, an unaffiliated entity, consisting of 14 Suezmax andfive Aframax tankers for an aggregate purchase price in cash of $525million.  The acquisitions were financedthrough the use of cash and borrowings under our then existing revolving creditfacilities together with the incurrence of additional debt.  During April 2004 and July 2004, we acquirednine vessels, consisting of three Aframax tankers, two Suezmax tankers and fourSuezmax newbuilding contracts, and a technical management company from SoponataSA, an unaffiliated entity, for an aggregate purchase price of $248.1 millionin cash.  The four newbuilding Suezmaxtankers are scheduled for delivery two in 2006, one in 2007 and one in2008.  The acquisitions were financedthrough the use of cash and borrowings under our revolving credit facilities.

 

DuringNovember 2002, we sold our oldest tanker, *Stavanger Prince*,for scrap. During March 2003 and December 2003 we sold the *Kentucky*and the *West**Virginia*,respectively.  During November 2003,December 2003 and February 2004, we sold three double-bottomed 1986-builtAframax tankers that we acquired during 2003. During August 2004 and October 2004, we sold four single-hull Suezmaxtankers.  As of December 31, 2004, we own26 Aframax tankers, 17 Suezmax tankers and four Suezmax newbuilding contracts.

 

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

 

**FLEETDEPLOYMENT**

** **

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,**              | ** ** |
| ** **                    | ** ** | **2004**                      | ** ** | **2003** | ** ** | **2002** | ** ** |
| Percent in Time  Charter Days |       | 28.2                          | %          | 19.7 | % | 14.9 | % |
| Percent in Spot  Days         |       | 71.8                          | %          | 80.3 | % | 85.1 | % |
| Total Vessel  Operating Days  |       | 15,482                        |       | 14,267 |   | 10,010 |   |

 

Tankersoperating on time charters may be chartered for several months or years whereastankers operating in the spot market typically are chartered for a singlevoyage that may last up to several weeks. Tankers operating in the spot marketmay generate increased profit margins during improvements in tanker rates,while tankers 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 an attemptto optimize the deployment

 

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ofour fleet. Our current fleet has 11 tankers on time charter contracts expiringon dates between May 2005 and February 2006. 

 

**CLASSIFICATIONAND INSPECTION**

** **

Allof our tankers have been certified as being “in-class” by Det Norske Veritas,the American Bureau of Shipping or Lloyd’s Registry. Each of theseclassification societies is a member of the International Association ofClassification Societies. Every commercial vessel’s hull and machinery isevaluated by a classification society authorized by its country of registry.The classification society certifies that the vessel has been built andmaintained in accordance with the rules of the classification society and complieswith applicable rules and regulations of the vessel’s country of registry andthe international conventions of which that country is a member. Each vessel isinspected by a surveyor of the classification society in three surveys ofvarying frequency and thoroughness: every year for the annual survey, every twoto three years for the intermediate survey and every four to five years forspecial surveys. Special surveys always require drydocking.  Vessels that are 15 years old or older arerequired, as part of the intermediate survey process, to be drydocked every 24to 30 months for inspection of the underwater portions of the vessel and fornecessary repairs stemming from the inspection. 

 

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

 

We have implemented theInternational Safety Management Code, which was promulgated by theInternational Maritime Organization, or IMO (the United Nations agency formaritime safety and the prevention of marine pollution by ships), to establishpollution prevention requirements applicable to tankers. Prior to July 1, 1998,we obtained documents of compliance for our offices and safety managementcertificates for all of our tankers for which the certificates are required bythe IMO.

 

**OPERATIONSAND 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 owned subsidiaries, General Maritime Management LLC,General Maritime Management (Portugal) Lda, General Maritime Management (UK)LLC and General Maritime Management (Hellas) Ltd. (formerly United OverseasTankers Ltd.), we currently provide the commercial and technical managementnecessary for the operations of most of our vessels, which include shipmaintenance, officer staffing, technical support, shipyard supervision, andrisk management services through our wholly owned subsidiaries.

 

Ourcrews inspect our tankers and perform ordinary course maintenance, both at seaand in port. We regularly inspect our tankers. We examine each tanker and makespecific notations and recommendations for improvements to the overallcondition of the tanker, maintenance of the tanker 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, GeneralMaritime Management (Portugal) Lda and General Maritime Management (Hellas)Ltd. (formerly United Overseas Tankers Ltd.):

 

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

 

•              oversight ofcompliance with applicable regulations, including licensing and certificationrequirements, and the required inspections of each tanker to ensure that itmeets the standards set

 

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forthby classification societies and applicable legal jurisdictions as well as ourinternal corporate requirements 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 tanker; and

 

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

 

Ourchartering staff, which is currently located in New York City and in London,monitors fleet operations, tanker positions and spot market voyage charterrates worldwide. We believe that monitoring this information is critical tomaking informed bids on competitive brokered charters.

 

**CREWINGAND EMPLOYEES**

** **

Asof December 31, 2004, we employed approximately 136 office personnel.Approximately 50 of these employees manage the commercial operations of ourbusiness, of which 47 employees are located in New York City and threeemployees are located in London, England. The other 86 employees are located in Piraeus, Greece and Lisbon,Portugal and manage the technical operations of our business. Our 58 employeeslocated in Greece are subject to Greece’s national employment collectivebargaining agreement which covers terms and conditions of theiremployment.  Our 28 employees located inLisbon, Portugal are subject to a local company employment collectivebargaining agreement which covers the main terms and conditions of theiremployment.

 

Asof December 31, 2004, we employed approximately 310 seaborne personnel to crewour fleet of 43 tankers, consisting of captains, chief engineers, chiefofficers and first engineers. The balance of each vessel’s crew is staffed byemployees of a third party with whom we contract for crew management services.We believe that we could obtain a replacement provider for these services, orcould provide these services internally, without any adverse impact on ouroperations.  

 

Weplace great emphasis on attracting qualified crew members for employment on ourtankers. Recruiting qualified senior officers has become an increasinglydifficult task for tanker operators. We pay competitive salaries and providecompetitive benefits to our personnel. We believe that the well-maintainedquarters and equipment on our tankers help to attract and retain motivated andqualified seamen and officers. Our crew management services contractors havecollective bargaining agreements that cover all the junior officers and seamenwhom they provide to us.

 

**CUSTOMERS**

** **

Ourcustomers include most oil companies, as well as oil producers, oil traders,tanker owners and others.  During theyear ended December 31, 2004, Sun International Ltd. accounted forapproximately 15.4% of our voyage revenues. During the years ended December 31, 2003 and 2002, no single customeraccounted for more than 10% of our voyage revenues.  

 

**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 thetankers we own, also operate their own tankers 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, tankerlocation, the size, age, condition and acceptability of the tanker, and thequality and reputation of the tanker’s operator.

 

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Wecompete principally with other Aframax and Suezmax owners. However, competitionin the Aframax and Suezmax markets is also affected by the availability ofalternative size tankers. Panamax size tankers can compete for some of the samecharters for which we compete. Because ULCCs and VLCCs cannot enter the portswe serve due to their large size, they rarely compete directly with our tankersfor specific charters. 

 

Othersignificant operators of multiple Aframax and Suezmax tankers in the Atlanticbasin include Frontline, Ltd., Malaysian International Shipping CorporationBerhad, OMI Corporation, Overseas Shipholding Group, Inc., Teekay ShippingCorporation and Tsakos Energy Navigation. There are also numerous, smallertanker operators in the Atlantic basin. 

 

**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 ownersand operators imposing potentially unlimited liability upon owners, operatorsand bareboat charterers for oil pollution incidents in the 200-mile UnitedStates exclusive economic zone. We believe that our current insurance coverageis adequate to protect us against the principal accident-related risks that weface in the conduct 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 tankers 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 14protection 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. 

 

Ourhull and machinery insurance covers risks of actual or constructive loss fromcollision, fire, grounding and engine breakdown. Our war risk insurance coversrisks of confiscation, seizure, capture, vandalism, sabotage and otherwar-related risks. Our loss-of-hire insurance covers loss of revenue for up to90 days resulting from tanker off hire for each of our tankers, with a 14 daydeductible.

 

**ENVIRONMENTAL AND OTHERREGULATION**

** **

Governmentregulation significantly affects the ownership and operation of our tankers.They are subject to international conventions, national, state and local lawsand regulations in force in the countries in which our tankers may operate orare registered. We cannot predict the ultimate cost of complying with theserequirements, or the impact of these requirements on the resale value or usefullives of our tankers. 

 

Variousgovernmental and quasi-governmental agencies require us to obtain permits,licenses and certificates for the operation of our tankers. 

 

Webelieve that the heightened level of environmental and quality concerns amonginsurance underwriters, regulators and charterers is leading to greaterinspection and safety requirements on all tankers and may accelerate thescrapping of older tankers throughout the industry. Increasing environmentalconcerns have created a demand for tankers that conform to the stricterenvironmental standards. We maintain operating standards for all of our tankersthat emphasize operational safety, quality maintenance, continuous training ofour officers and crews and compliance

 

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withU.S. and international regulations.  **We believe that the operation ofour tankers are in substantial compliance with applicable environmental lawsand regulations; however, because such laws and regulations are frequentlychanged and may impose increasingly stricter requirements, we cannot predictthe ultimate cost of complying with these requirements, or the impact of theserequirements on the resale value or useful lives of our tanker****s.**

** **

Ourtankers are subject to both scheduled and unscheduled inspections by a varietyof governmental and private entities, each of which may have uniquerequirements. These entities include the local port authorities (U.S. CoastGuard, harbor master or equivalent), classification societies, flag stateadministration (country of registry) and charterers, particularly terminaloperators and oil companies. Failure to maintain necessary permits or approvalscould require us to incur substantial costs or temporarily suspend operation ofone or more of our tankers. 

 

**INTERNATIONALMARITIME ORGANIZATION**

** **

**In 1992, the****IMO******adopted regulations which set forthpollution prevention requirements applicable to tankers. These regulations,which have been implemented in many jurisdictions in which our tankers operate,provide, in part, that:

 

•              25-year oldtankers 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-year oldtankers must be of double-hull construction or mid-deck design withdouble-sided construction; and

 

•              all tankerswill 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:

 

•              is thesubject of a contract for a major conversion or original construction on orafter July 6, 1993;

 

•              commences amajor conversion or has its keel laid on or after January 6, 1994; or

 

•              completes amajor conversion or is a newbuilding delivered on or after July 6, 1996.

 

Our tankers are also subject to regulatoryrequirements, including the phase-out of single-hull tankers, imposed by theIMO. Effective September 2002, the IMO accelerated its existing timetablefor the phase-out of single-hull oil tankers. These regulations require thephase-out of most single-hull oil tankers by 2015 or earlier, depending on theage of the tanker and whether it has segregated ballast tanks. After 2007, themaximum permissible age for single-hull tankers will be 26 years. Our fivesingle-hull tankers were built in 1989 or later. Under current regulations,retrofitting will enable a vessel to operate until the earlier of 25 yearsof age and the anniversary date of its delivery in 2017. However, as a resultof the oil spill in November 2002 relatingto the loss of the *M.T. Prestige*,which was owned by a company not affiliated with us, in December 2003 theMarine Environmental Protection Committee of the IMO adopted a proposedamendment to the International Convention for the Prevention of Pollution fromShips to accelerate the phase-out of certain single-hull tankers from 2015 to2010 unless the flag state extends the date to 2015. This proposed amendmentwill come into effect in April 2005 unless objected to by a sufficientnumber of member states.  The

 

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proposed amendment will shorten the useful lives of oursingle-hull tankers and, starting in 2010, will adversely affect our ability togenerate income from them by limiting the ports to which they may trade.  Due to this amendment, during the fourthquarter of 2003, we recorded an $18.8 million impairment on five of the ninesingle-hull tankers we owned at that time and shortened the useful lives of allnine of the single-hull tankers for financial reporting purposes.  This change in estimate resulted in anincrease in annual depreciation expense of approximately $8.5 million through2009 on the Company’s nine single-hull vessels owned as of December 31,2003.  During 2004, the Company sold fourof these single-hull vessels.  Thischange in estimate resulted in an increase in annual depreciation expense ofapproximately $4.7 million through 2009 on the Company’s five remainingsingle-hull vessels owned as of December 31, 2004. 

 

**In September 1997, the IMO adopted Annex VI to theInternational Convention for the Prevention of Pollution from Ships to addressair pollution from ships.  Annex VI wasratified in May 2004, and will become effective May 19, 2005.  Annex VI, when it becomes effective, will setlimits on sulfur oxide and nitrogen oxide emissions from ship exhausts andprohibit deliberate 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 are currentlyformulating a plan to comply with the Annex VI regulations once they come intoeffect. Compliance with these regulations could require us to install emissioncontrol systems on some or all of our tankers and could have an adversefinancial impact on the operation of our vessels.**

** **

Therequirements contained in the International Safety Management Code, or ISMCode, promulgated by the IMO, also affect our operations. The ISM Code requiresthe party with operational control of a vessel to develop an extensive safetymanagement system that includes, among other things, the adoption of a safetyand environmental protection policy setting forth instructions and proceduresfor operating its vessels safely and describing procedures for responding toemergencies. We intend to rely upon the safety management system that we andour third party technical managers have developed. 

 

TheISM Code requires that vessel operators obtain a safety management certificatefor each vessel they operate. This certificate evidences compliance by avessel’s management with code requirements for a safety management system. Novessel can obtain a certificate unless its manager has been awarded a documentof compliance, issued by each flag state, under the ISM Code. We have obtaineddocuments of compliance for our offices and safety management certificates forall of our tankers for which the certificates are required by the IMO. We arerequired to 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. 

 

Although the UnitedStates is not a party to these conventions, many countries have ratified andfollow the liability plan adopted by the IMO and set out in the InternationalConvention on Civil Liability for Oil Pollution Damage of **1969. Under this convention** and depending on whether the country inwhich the damage results is a party to the 1992 Protocol to the InternationalConvention on Civil Liability for Oil Pollution Damage, a vessel’s registeredowner is strictly liable for pollution damage caused in the territorial watersof a contracting state by discharge of persistent oil, subject to certaincomplete defenses. Under an amendment **to the 1992 Protocol that became effective onNovember **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 **$****6.85 million plus $958** for each additional gross ton over5,000. For vessels of over 140,000 gross tons, liability will be limited toapproximately $**136.3**** **million.  As the convention calculates liability interms of a basket ofcurrencies, these figures are based on **currency exchange rates**

** **

**10**

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** **

**onFebruary 17, 2005.** The right to limit liability isforfeited under the International Convention on Civil Liability for OilPollution Damage where the spill is caused by the owner’s actual fault andunder the 1992 Protocol where the spill is caused by the owner’s intentional orreckless conduct. Vessels trading to states **that******are parties to these conventions mustprovide evidence of insurance covering the liability of the owner. Injurisdictions where the International Convention on Civil Liability for OilPollution Damage has not been adopted, various legislative schemes or commonlaw govern, and liability is imposed either on the basis of fault or in amanner similar to that convention. We believe that our P&I insurance **will cover******the liability under the plan adopted bythe IMO.

 

**U.S.OIL POLLUTION ACT OF 1990 AND COMPREHENSIVE ENVIRONMENTAL RESPONSE,COMPENSATION AND LIABILITY ACT**

** **

OPAestablished an extensive regulatory and liability regime for environmentalprotection and cleanup of oil spills. OPA affects all owners and operatorswhose vessels trade with the United States or its territories or possessions,or whose vessels operate in the waters of the United States, which include theU.S. territorial sea and the 200 nautical mile exclusive economic zone aroundthe United States. The Comprehensive Environmental Response, Compensation andLiability Act, or CERCLA, applies to the discharge of hazardous substances(other than oil) whether on land or at sea. Both OPA and CERCLA impact ouroperations.

 

UnderOPA, vessel owners, operators and bareboat charterers are “responsible parties”who 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.

 

OPAlimits the liability of responsible parties to the greater of $1,200 per grosston or $10 million per tanker that is over 3,000 gross tons (subject topossible adjustment for inflation). The act specifically permits individualstates to impose their own liability regimes with regard to oil pollution incidentsoccurring within their boundaries, and some states have enacted legislationproviding for unlimited liability for discharge of pollutants within theirwaters. In some cases, states which have enacted this type of legislation havenot yet issued implementing regulations defining tanker owners’responsibilities under these laws. CERCLA, which applies to owners andoperators of vessels, contains a similar liability regime and provides forcleanup, removal and natural resource damages. Liability under CERCLA islimited to the greater of $300 per gross ton or $5 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 tankers 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 OPA limitation onliability of $1,200 per gross ton with the CERCLA liability limit of $300 pergross ton. Under the regulations, evidence of financial responsibility may bedemonstrated by insurance, surety bond, self-insurance or guaranty. Under OPAregulations, an owner or operator of more than one tanker is required

 

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todemonstrate evidence of financial responsibility for the entire fleet in anamount equal only to the financial responsibility requirement of the tankerhaving the greatest maximum strict liability under OPA and CERCLA. We haveprovided such evidence and received certificates of financial responsibilityfrom the U.S. Coast Guard for each of our tankers required to have one. 

 

Weinsure each of our tankers with pollution liability insurance in the maximumcommercially available amount of $1.0 billion. A catastrophic spill couldexceed the insurance coverage available, in which event there could be amaterial adverse effect 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. Notwithstanding theprohibition to trade schedule, the act currently permits existing single-hulland double-sided tankers to operate until the year 2015 if their operationswithin U.S. waters are limited to discharging at the Louisiana Offshore OilPort or off-loading by lightering within authorized lightering zones more than60 miles off-shore. Lightering is the process by which vessels at sea off-loadtheir cargo to smaller vessels for ultimate delivery to the discharge port. 

 

Applyingthe most stringent of requirements of the IMO or OPA, the prohibition to tradeschedule for our five single-hull and 12 double-sided tankers is currently asfollows: 

 
| **TANKER**           | ** ** | **YEAR** | ** ** |
|----------------------|------------|----------|------------|
| **Aframax  tankers** |       |     |       |
| *Genmar  Commander*  |       | 2010     |       |
| *Genmar  Boss*       |       | 2010     |       |
| *Genmar  Sun*        |       | 2010     |       |
|                 |       |     |       |
| *Genmar  Leonidas*   |       | 2015     |       |
| *Genmar  Gabriel*    |       | 2015     |       |
| *Genmar  Nestor*     |       | 2015     |       |
| *Genmar  George*     |       | 2014     |       |
|                 |       |     |       |
| **Suezmax  tankers** |       |     |       |
| *Genmar  Spartiate*  |       | 2010     |       |
| *Genmar  Zoe*        |       | 2010     |       |
| *Genmar  Macedon*    |       | 2010     |       |
| *Genmar  Alta*       |       | 2010     |       |
|                 |       |     |       |
| *Genmar  Conqueror*  |       | 2015     |       |
| *Genmar  Honour*     |       | 2015     |       |
| *Genmar  Ariston*    |       | 2014     |       |
| *Genmar  Kestrel*    |       | 2014     |       |
| *Genmar  Prometheus* |       | 2013     |       |
| *Genmar  Sky*        |       | 2013     |       |

 

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. Theseresponse 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

 

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

 

Wehave obtained vessel response plans approved by the U.S. Coast Guard for ourtankers 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 hazardous substances.

 

**OTHERREGULATION**

** **

**In July 2003, in response to the *M.T. Prestige* oil spill in November 2002, the EuropeanUnion adopted legislation that prohibits all single-hull tankers from enteringinto its ports or offshore terminals by 2010. The European Union has alsobanned all single-hull tankers carrying heavy grades of oil from entering orleaving its ports or offshore terminals or anchoring in areas under itsjurisdiction. Commencing in 2005, certain single-hull tankers above15 years of age will also be restricted from entering or leaving EuropeanUnion ports or offshore terminals and anchoring in areas under European Unionjurisdiction. The European Union is also** considering legislation that would: (1)ban manifestly sub-standard vessels (defined as those over 15 years old thathave been detained by port authorities at least twice in a six month period)from European waters and create an obligation of port states to inspect vesselsposing a high risk to maritime safety or the marine environment; and (2) providethe European Union with greater authority and control over classificationsocieties, including the ability to seek to suspend or revoke the authority ofnegligent societies. **The sinking of the *M.T.**Prestige* and resulting oil spill in November 2002 has ledto the adoption of other environmental regulations by certain European Unionnations, which could adversely affect the remaining useful lives of all of ourtankers and our ability to generate income from them.**It is impossible to predict what legislation or additional regulations, if any,may be promulgated 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.

 

**Vessel SecurityRegulations**

** **

Since the terrorist attacks of September 11, 2001,there have been a variety of initiatives intended to enhance vesselsecurity.  On November 25, 2002, the U.S.Maritime Transportation Security Act of 2002, or MTSA, came into effect.  To implement certain portions of the MTSA, inJuly 2003, the U.S. Coast Guard issued regulations requiring the implementationof certain security requirements aboard vessels operating in waters subject tothe jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapterof the convention dealing specifically with maritime security.  The new chapter became effective in July 2004and imposes various detailed security obligations on vessels and portauthorities, most of which are contained in the newly created InternationalShip and Port Facilities Security Code, or the ISPS Code.  The ISPS Code is designed to protect portsand international shipping against terrorism. After July 1, 2004, to trade internationally, a vessel must attain anInternational Ship Security Certificate from a recognized security organizationapproved by the vessel’s flag state. Among the various requirements are:

 

•      on-board installation of automatic identificationsystems to provide a means for the automatic transmission of safety-relatedinformation from among similarly equipped ships and shore stations, includinginformation on a ship’s identity, position, course, speed and navigationalstatus;

 

•      on-board installation of ship security alert systems,which do not sound on the vessel but only alerts the authorities on shore;

 

•      the development of vessel security plans;

 

•      ship identification number to be permanently marked ona vessel’s hull;

 

•      a continuous synopsis record kept onboard showing avessel’s history including, name of the ship and of the state whose flag theship is entitled to fly, the date on which the ship was registered with that

 

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state, the ship’sidentification number, the port at which the ship is registered and the name ofthe registered owner(s) and their registered address; and

 

•      compliance with flag state security certificationrequirements.

 

The U.S. Coast Guard regulations, intended to alignwith international maritime security standards, exempt from MTSA vesselsecurity measures non-U.S. vessels that have on board, as of July 1, 2004, avalid ISSC attesting to the vessel’s compliance with SOLAS securityrequirements 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.

 

**ADDITIONALFACTORS THAT MAY AFFECT FUTURE RESULTS**

** **

This annual report onForm 10-K contains forward-looking statements made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based onmanagement’s current expectations and observations.  Included among the factors that, in our view,could cause actual results to differ materially from the forward lookingstatements contained in this annual report on Form 10-K are the following:changes in demand; a material decline or prolonged weakness in rates in thetanker market; changes in production of or demand for oil and petroleumproducts, generally or in particular regions; greater than anticipated levelsof tanker newbuilding orders or lower than anticipated rates of tankerscrapping; changes in rules and regulations applicable to the tanker industry,including, without limitation, legislation adopted by international organizationssuch as the International Maritime Organization and the European Union or byindividual countries; actions taken by regulatory authorities; changes intrading patterns significantly impacting overall tanker tonnage requirements;changes in the typical seasonal variations in tanker charter rates; changes inthe cost of other modes of oil transportation; changes in oil transportationtechnology; increases in costs including without limitation: crew wages,insurance, provisions, repairs and maintenance; changes in general domestic andinternational political conditions; changes in the condition of our vessels orapplicable maintenance or regulatory standards (which may affect, among otherthings, our anticipated drydocking or maintenance and repair costs);****those other risks and uncertainties contained under theheading “ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS”, and other factorslisted from time to time in our filings with the Securities and ExchangeCommission.****

** **

The following riskfactors and other information included in this report should be carefullyconsidered.  The risks and uncertaintiesdescribed below are not the only ones we face. Additional risks and uncertainties not presently known to us or that wecurrently deem immaterial also may impair our business operations.  If any of the following risks occur, ourbusiness, financial condition, operating results and cash flows could bematerially adversely affected and the trading price of our common stock coulddecline.

 

**RISK FACTORS RELATED TO OURBUSINESS & OPERATIONS**

 

**An increase in the supply oftanker capacity without an increase in demand for tanker capacity could causecharter rates to decline, which could materially and adversely affect ourfinancial performance.**

** **

Historically, the tankerindustry has been cyclical.  Theprofitability of companies and asset values in the industry have fluctuatedbased on changes in the supply of, and demand for, tanker capacity.  The supply of tankers generally increaseswith deliveries of new tankers and decreases with the scrapping of oldertankers, conversion of tankers to other uses, such as floating production andstorage facilities, and loss of tonnage as a result of casualties.  If the number of new vessels deliveredexceeds the number of tankers being scrapped and lost, tanker capacity willincrease.  If the supply of tankercapacity increases and the demand for tanker capacity does not increasecorrespondingly, the charter rates paid for our tankers could materiallydecline.

 

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**A decline in charter rates or anincrease in costs could materially and adversely affect our financialperformance.**

 

Our revenues depend onthe rates that charterers pay for transportation of crude oil by Aframax andSuezmax tankers.  Because many of thefactors influencing the supply of and demand for tanker capacity areunpredictable, the nature, timing and degree of changes in charter rates areunpredictable. 

 

For the year endedDecember 31, 2004, the average daily rate in the spot market for our Aframaxtankers was $37,099 and the average daily rate in the spot market for ourSuezmax tankers was $50,331.  For theyear ended December 31, 2003, the average daily rate in the spot market for ourAframax tankers was $21,719 and the average daily rate in the spot market forour Suezmax tankers was $27,569.  Duringthe year ended December 31, 2002, the average daily rate in the spotmarket for our Aframax tankers was $13,318 and the average daily rate in thespot market for our Suezmax tankers was $15,410.  If charter rates fall, our revenues, cashflows and profitability could be materially and adversely affected.  

 

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.  Some of these costs,particularly relating to crew and maintenance costs, are denominated in Euros,which result in higher costs during periods in which the U.S. dollar is weakeragainst the Euro.  Also, costs such asinsurance and enhanced security measures implemented after September 11,2001 are still increasing.  If costscontinue to rise, that could materially and adversely affect our cash flows andprofitability.

 

**Our revenues may be adverselyaffected if we do not successfully employ our tankers.**

 

We seek to deploy ourtankers between spot market voyage charters and time charters in a manner thatmaximizes long-term cash flow. Currently, 11 of our tankers are contractuallycommitted to time charters, with the remaining terms of these charters expiringon dates between May 2005 and February 2006. Although these time charters generally provide reliable revenues, theyalso limit the portion of our fleet available for spot market voyages during anupswing in the tanker industry cycle, when spot market voyages might be moreprofitable.

 

We earned approximately85.1% of our net voyage revenue from spot charters for the year ended December31, 2004.  The spot charter market ishighly competitive, and spot market voyage charter rates may fluctuatedramatically based primarily on the worldwide supply of tankers available inthe market for the transportation of oil and the worldwide demand for thetransportation of oil by tanker.  Factorsaffecting the volatility of spot market voyage charter rates include thequantity of oil produced globally, shifts in locations where oil is produced orconsumed, actions by OPEC, the general level of worldwide economic activity andthe development and use of alternative energy sources.  We cannot assure you that future spot marketvoyage charters will be available at rates that will allow us to operate ourtankers profitably.

 

**A decline in demand for crude oilor a shift in oil transport patterns could materially and adversely affect ourrevenues.**

** **

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

 

•      global andregional economic conditions; 

 

•      increases anddecreases in production of and demand for crude oil; 

 

•      developments ininternational trade;

 

•      changes inseaborne and other transportation patterns;

 

•      environmentalconcerns and regulations; and 

 

•      weather. 

 

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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 oil transportation may have a material adverseeffect on our revenues, cash flows and profitability.

 

**The market for crude oiltransportation services is highly competitive and we may not be able toeffectively compete.**

 

Our tankers are employedin a highly competitive market.  Ourcompetitors include the owners of other Aframax and Suezmax tankers and, to alesser degree, owners of other size tankers. Both groups include independent oil tanker companies as well as oilcompanies.  We do not control asufficiently large share of the market to influence the market price chargedfor crude oil transportation services. 

 

Our market share maydecrease in the future.  We may not beable to compete profitably as we expand our business into new geographicregions or provide new services.  Newmarkets may require different skills, knowledge or strategies than we use inour current markets, and the competitors in those new markets may have greaterfinancial strength and capital resources than we do. 

 

**We may not be able to grow or toeffectively manage our growth.**

 

A principal focus of ourstrategy is to continue to grow by taking advantage of changing marketconditions, which may include expanding our business in the Atlantic basin, theprimary geographic area and market where we operate, by expanding into otherregions, or by increasing the number of tankers in our fleet.  Our future growth will depend upon a numberof factors, some of which we can control and some of which we cannot.  These factors include our ability to: 

 

•              identifybusinesses engaged in managing, operating or owning tankers for acquisitions orjoint ventures; 

 

•              identifytankers and/or shipping companies for acquisitions; 

 

•              integrateany acquired businesses or tankers successfully with our existing operations; 

 

•              hire,train and retain qualified personnel to manage and operate our growing businessand fleet; 

 

•              identifyadditional new markets outside of the Atlantic basin; 

 

•              improveour operating and financial systems and controls; and 

 

•              obtainrequired financing for our existing and new operations. 

 

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

 

**Our operating results mayfluctuate seasonally.**

** **

We operate our tankers inmarkets that have historically exhibited seasonal variations in tanker demandand, as a result, in charter rates.  Tankermarkets are typically stronger in the fall and winter months (the fourth andfirst quarters of the calendar year) in anticipation of increased oilconsumption in the Northern Hemisphere during the winter months.  Unpredictable weather patterns and variationsin oil reserves disrupt vessel scheduling. While this seasonality has not materially affected our operating resultssince 1997, it could materially affect operating results in the future.

 

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**If we lose any of our customersor a significant portion of our revenues, our operating results could bematerially adversely affected.**

 

We derive a significantportion of our voyage revenues from a limited number of customers.  During the year ended December 31, 2004, SunInternational Ltd. accounted for 15.4% of our voyage revenues.  During the years ended December 31, 2003 and2002, no single customer accounted for more than 10% of our voyage revenues.  If we lose a significant customer, or if asignificant customer decreases the amount of business it transacts with us, ourrevenues, cash flows and profitability could be materially and adverselyaffected. 

 

**There may be risks associatedwith the purchase and operation of secondhand tankers.**

** **

Our current businessstrategy includes additional growth through the acquisition of additionalsecondhand tankers.  Although we inspectsecondhand tankers prior to purchase, this does not normally provide us withthe same knowledge about their condition that we would have had if such tankershad been built for and operated exclusively by us.  Therefore, our future operating results couldbe negatively affected if some of the tankers do not perform as we expect.  Also, we do not receive the benefit ofwarranties from the builders if the tankers we buy are older than one year,which is the case for the five tankers acquired in the first half of 2004. 

 

**We may face unexpected repaircosts for our tankers.**

 

Repairs and maintenancecosts are difficult to predict with certainty and may be substantial.  Many of these expenses are not covered by ourinsurance.  Large repair expenses coulddecrease our cash flow and profitability and reduce our liquidity.  

 

**We depend on our key personneland may have difficulty attracting and retaining skilled employees. **

** **

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 dependsparticularly on the continued service of Peter C. Georgiopoulos, our Chairman,President and Chief Executive Officer. 

 

**Shipping is an inherently riskybusiness and our insurance may not be adequate.**

 

Our tankers 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 events may result in loss ofrevenues, increased costs and decreased cash flows.  In addition, following the terrorist attackin New York City on September 11, 2001, and the military response of the UnitedStates, the likelihood of future acts of terrorism may increase, and ourtankers may face higher risks of attack. 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 $1billion in coverage for each of our tankers for liability for spillage orleakage of oil or pollution.  We alsocarry insurance covering lost revenue resulting from tanker off-hire for all ofour tankers.  Nonetheless, risks mayarise against which we are not adequately insured.  For example, a catastrophic spill couldexceed our insurance coverage and have a material adverse effect on ourfinancial condition.  In addition, we maynot be able to procure adequate insurance coverage at commercially reasonablerates in the future and we cannot guarantee that any particular claim will bepaid.  In the past, new and stricterenvironmental regulations have led to higher costs for insurance coveringenvironmental damage or pollution, and new regulations could lead to similarincreases or even make this type of insurance unavailable.  Furthermore, even if insurance coverage isadequate to cover our losses, we may not be able to timely obtain a replacementship in the event of a loss.  We may alsobe subject to calls, or premiums, in amounts based not only on our own claimrecords but also the claim records of all other members of the protection andindemnity associations through which we receive indemnity insurance coverage

 

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for tort liability.  Our payment of these calls could result insignificant expenses to us which could reduce our cash flows and place strainson our liquidity and capital resources. 

 

**The risks associated with oldervessels could adversely affect our operations.**

 

In general, the costs tomaintain a tanker in good operating condition increase as the tanker ages.  As of December 31, 2004, the average age ofthe 43 tankers in our current fleet was 11.9 years.  Due to improvements in engine technology,older vessels typically are less fuel-efficient than more recently constructedvessels.  Cargo insurance rates increasewith the age of a vessel, making older vessels less desirable to charterers.  

 

Governmental regulations,safety or other equipment standards related to the age of tankers may requireexpenditures for alterations or the addition of new equipment to our tankers,and may restrict the type of activities in which our tankers may engage.  We cannot assure you that, as our tankersage, market conditions will justify any required expenditures or enable us tooperate our tankers profitably during the remainder of their useful lives. 

 

**Compliance with safety,environmental and other governmental requirements and related costs may adverselyaffect our operations.**

** **

The shipping industry ingeneral, our business and the operation of our tankers 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: 

 

•              theU.S. Oil Pollution Act of 1990, or OPA, which imposes strict liability for thedischarge of oil into the 200-mile United States exclusive economic zone, theobligation to obtain certificates of financial responsibility for vesselstrading in United States waters and the requirement that newly constructedtankers that trade 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) relating tostrict liability for pollution damage caused by the discharge of oil; 

 

•              theInternational Maritime Organization, or IMO, International Convention for thePrevention of Pollution from Ships with respect to strict technical andoperational requirements for tankers; 

 

•              the IMOInternational Convention for the Safety of Life at Sea of 1974, or SOLAS, withrespect to crew and passenger safety; 

 

•              theInternational Convention on Load Lines of 1966 with respect to the safeguardingof life and property through limitations on load capability for vessels oninternational voyages; and

 

•              theU.S. Marine Transportation Security Act of 2002.

 

More stringent maritimesafety rules are also more 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 a company notaffiliated with us.  Additional laws andregulations may also be adopted that could limit our ability to do business orincrease the cost of our doing business and that could have a material adverseeffect on our operations.  In addition,we are required by various governmental and quasi-governmental agencies toobtain certain permits, licenses and certificates with respect to ouroperations.  In the event of war ornational emergency, our tankers may be subject to requisition by the governmentof the flag flown by the tanker without any guarantee of compensation for lostprofits.  We believe our tankers aremaintained in good condition in compliance with present regulatoryrequirements, are operated in compliance with applicable safety/environmentallaws and regulations and are insured against usual risks for such amounts asour management deems appropriate.  Thetankers’ operating certificates and licenses are renewed periodically duringeach tanker’s required annual survey. However, government regulation of tankers,

 

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particularly in the areasof safety and environmental impact may change in the future and require us toincur significant capital expenditures on our ships to keep them in compliance.

 

**An acceleration of the currentprohibition to trade deadlines for our non-double-hull tankers could adverselyaffect our operations.**

** **

Under OPA, all oil tankersthat do not have double-hulls will not be permitted to come to U.S. ports ortrade in U.S. waters by 2015.  Ourcurrent 43-tanker fleet consists of 26 double-hull tankers, 12 double-sidedtankers and five single-hull tankers. 

 

Our five single-hull and12 double-sided tankers, all of which were built in 1985 or later, arecurrently eligible to trade in U.S. waters until the year of prohibition whenthey would not be eligible to carry oil as cargo within the 200-mile UnitedStates exclusive economic zone, except that they may trade in U.S. waters until2015 if their operations are limited to discharging their cargoes at theLouisiana Offshore Oil Port or off-loading by lightering within authorizedlightering zones more than 60 miles-offshore.

 

Our tankers are alsosubject to regulatory requirements, including the phase-out of single-hulltankers, imposed by the IMO.  Under theIMO’s current regulations, our five single-hulled tankers and our 12double-sided tankers will be able to operate until between 2010 and 2015 beforebeing required to be scrapped or retrofitted to conform to internationalenvironmental standards.  Under currentregulations, retrofitting will enable a vessel to operate until the earlier of25 years of age and the anniversary date of its delivery in 2017.  However, in December 2003 the MarineEnvironmental Protection Committee of the IMO adopted a proposed amendment tothe International Convention for the Prevention of Pollution from Ships toaccelerate the phase-out of certain single-hull tankers from 2015 to 2010unless the flag state extends the date to 2015. This proposed amendment will come into effect in April 2005 unlessobjected to by a sufficient number of member states.  Because of this proposed amendment, webelieve that our single-hull tankers will be precluded from most trading in2010.  

 

In addition, inJuly 2003, in response to the *M.T. Prestige*oil spill in November 2002, the European Union adopted legislation thatprohibits all single-hull tankers from entering into its ports or offshoreterminals by 2010.  The European Unionhas also banned all single-hull tankers carrying heavy grades of oil fromentering or leaving its ports or offshore terminals or anchoring in areas underits jurisdiction.  Commencing in 2005,certain single-hull tankers above 15 years of age will also be restricted fromentering or leaving European Union ports or offshore terminals and anchoring inareas under European Union jurisdiction. The European Union is also considering legislation that would: (1) banmanifestly sub-standard vessels (defined as those over 15 years old that havebeen detained by port authorities at least twice in a six-month period) fromEuropean waters and create an obligation of port states to inspect vesselsposing a high risk to maritime safety or the marine environment; and (2)provide the European Union with greater authority and control overclassification societies, including the ability to seek to suspend or revokethe authority of negligent societies. The sinking of the *M.T. Prestige*and the resulting oil spill in November 2002 has led to the adoption of otherenvironmental regulations by certain European Union nations, which couldadversely affect the remaining useful lives of our non-double hull tankers andour ability to generate income from them. It is impossible to predict what legislation or additional regulations,if any, may be promulgated by the European Union or any other country orauthority.

 

**Our tankers may be requisitionedby governments without adequate compensation.**

 

A government couldrequisition for title or seize our tankers. In the case of a requisition fortitle, a government takes control of a vessel and becomes its owner.  Also, a government could requisition ourtankers for hire.  Under requisition forhire, a government takes control of a vessel and effectively becomes itscharterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency.  Although we, as owner, would be entitled tocompensation in the event of a requisition, the amount and timing of paymentwould be uncertain. 

 

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**Increases in tonnage taxes on ourtankers would increase the costs of our operations.**

 

Our tankers are currentlyregistered under the following flags: the Republic of Liberia and the Republicof the Marshall Islands.  Thesejurisdictions impose taxes based on the tonnage capacity of each of the vesselsregistered under their flag.  The tonnagetaxes imposed by these countries could increase, which would cause the costs ofour operations to increase. 

 

**Arrests of our tankers bymaritime claimants could cause a significant loss of earnings for the relatedoff 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, amaritime lienholder may enforce its lien by “arresting” or “attaching” a vesselthrough foreclosure proceedings.  Thearrest or attachment of one or more of our tankers could result in asignificant loss of earnings 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 asserted against us, any of our subsidiaries orour tankers for liabilities of other vessels that we own. 

 

**Portions of our income may besubject to U.S. tax.**

** **

If we do not qualify foran exemption pursuant to Section 883 of the U.S. Internal Revenue Code of 1986,or the Code, then we will be subject to U.S. federal income tax on our shippingincome that is derived from U.S. sources. If we are subject to such tax, our net income and cash flow would bereduced by the amount of such tax.  

 

We will qualify forexemption under Section 883 if, among other things, our stock is treated asprimarily and regularly traded on an established securities market in theUnited States.  Under the final Section883 regulations, we might not satisfy this publicly-traded requirement in anytaxable year in which 50% or more of our stock is owned at any time during thatyear by persons who actually or constructively own 5% or more of our stock, or5% shareholders. 

 

We believe that based onthe ownership of our stock in 2004, we satisfied the publicly-tradedrequirement under the final Section 883 regulations.  However, we can give no assurance that futurechanges and shifts in the ownership of our stock by 5% shareholders wouldpermit us to qualify for the Section 883 exemption in 2004 or in the future. 

 

If we do not qualify forthe Section 883 exemption, our shipping income derived from U.S. sources, or50% 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.  For the fiscalyear of 2004, the majority our revenues were attributable to transportationbeginning or ending in the United States. If we were subject to this 4% tax on our gross shipping income during2004, such tax would be approximately $14.0 million. 

 

**RISK FACTORS RELATED TO OURFINANCINGS**

** **

**Our 2004 Credit Facility and theindenture for our senior notes impose, and it is possible that any indenturefor additional debt securities we issue will impose, significant operating andfinancial restrictions that may limit our ability to operate our business**.

 

Our 2004 Credit Facilityand the indenture for our senior notes currently impose, and it is possiblethat any indenture for additional debt securities that we issue will impose,significant operating and financial restrictions on us.  These restrictions will limit our ability to,among other things:

 

•      incur additional debt;

 

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•                  pay dividends or make other restrictedpayments;

 

•                  create or permit certain liens;

 

•                  sell tankers or other assets;

 

•                  create or permit restrictions on theability of our restricted subsidiaries to pay dividends or make otherdistributions to us;

 

•                  engage in transactions with affiliates;and

* *

•                  consolidate or merge with or into othercompanies or sell all or substantially all of our assets.

* *

These restrictions could limit our ability to finance our futureoperations or capital needs, make acquisitions or pursue available businessopportunities.  

 

In addition, our 2004 Credit Facility requires us to maintain specifiedfinancial ratios and satisfy financial covenants.  We may be required to take action to reduceour debt or to act in a manner contrary to our business objectives to meetthese ratios and satisfy these covenants. Events beyond our control, including changes in the economic andbusiness conditions in the markets in which we operate, may affect our abilityto comply with these covenants.  We cannotassure you that we will meet these ratios or satisfy these covenants or thatour lenders will waive any failure to do so. A breach of any of the covenants in, or our inability to maintain therequired financial ratios under, our 2004 Credit Facility would prevent us fromborrowing additional money under the facility and could result in a defaultunder them.  If a default occurs underour 2004 Credit Facility, the lenders could elect to declare that debt,together with accrued interest and other fees, to be immediately due andpayable and proceed against the collateral securing that debt, whichconstitutes all or substantially all of our assets.  Moreover, if the lenders under the 2004Credit Facility or other agreement in default were to accelerate the debtoutstanding under that facility, it could result in a default under our otherdebt obligations, including our debt securities.

 

**We could incur a substantial amount of debt, which could materially andadversely affect our financial condition, results of operations and businessprospects and prevent us from fulfilling our obligations under our debtsecurities.**

** **

Our 2004 Credit Facility and the indenture for our Senior Notes permitus to incur additional debt, subject to some limitations.  If we incur additional debt, our increasedleverage could:

 

•                  make it more difficult for us to satisfyour obligations under debt securities or other indebtedness and, if we fail tocomply with the requirements of the indebtedness, could result in an event ofdefault;

 

•                  require us to dedicate a substantialportion of our cash flow from operations to required payments on indebtedness,thereby reducing the availability of cash flow for working capital, capitalexpenditures and other general business activities; 

 

•                  limit our ability to obtain additionalfinancing in the future for working capital, capital expenditures,acquisitions, if any, and other general corporate activities; 

 

•                  limit our flexibility in planning for, orreacting to, changes in our business and the industry in which we operate ordetract from our ability to successfully withstand a downturn in our businessor the economy generally; and

 

•                  place us at a competitive disadvantageagainst other less leveraged competitors. 

 

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The occurrence of any one of these events could have a material adverseeffect on our business, financial condition, resultsof operations, prospects and ability to satisfy our obligations under our 2004Credit Facility and debt securities.

 

**Fluctuations in the market value of our fleet may adversely affect ourliquidity and may result in breaches under our financing arrangements and salesof tankers at a loss.**

** **

The market value of tankers fluctuates depending upon general economic andmarket conditions affecting the tanker industry, the number of tankers**in the world fleet, the price of constructing new tankers,or newbuildings, types and sizes of tankers, and the cost of other modes oftransportation.  The market value of ourfleet may decline as a result of a downswing in the historically cyclicalshipping industry or as a result of the aging of our fleet.  Declining tanker values could affect ourability to raise cash by limiting our ability to refinance vessels and therebyadversely impact our liquidity.  Inaddition, declining vessel values could result in a breach of loan covenants,which could give rise to events of default under our 2004 credit facility.  Due to the cyclical nature of the tankermarket, the market value of one or more of our tankers may at various times belower than their book value, and sales of those tankers during those timeswould result in losses.  If we determineat any time that a tanker’s future limited useful life and earnings require usto impair its value on our financial statements, that could result in a chargeagainst our earnings and the reduction of our shareholders’ equity. Pleaserefer to the section “INTERNATIONAL MARITIME ORGANIZATION” for a discussion ofan impairment charge taken in 2003 on five of our single-hull tankers and areduction in the useful lives of our nine single-hull tankers that we owned atthat time.  If for any reason we selltankers at a time when tanker prices have fallen, the sale may be at less thanthe tanker’s carrying amount on our financial statements, with the result thatwe would also incur a loss and a reduction in earnings.

 

**If we default under any of our loan agreements, we could forfeit ourrights in our tankers and their charters.**

 

We have pledged all of our tankers and related collateral as securityto the lenders under our loan agreements. Default under any of these loan agreements, if not waived or modified,would permit the lenders to foreclose on the mortgages over the tankers and therelated collateral, and we could lose our rights in the tankers and theircharters. 

 

When final payments are due under our loan agreements, we must repayany borrowings outstanding, including balloon payments.  To the extent that our cash flows areinsufficient to repay any of these borrowings, we will need to refinance someor all of our loan agreements or replace them with an alternate creditarrangement.  We may not be able torefinance or replace our loan agreements at the time they become due.  In addition, the terms of any refinancing oralternate credit arrangement may restrict our financial and operatingflexibility.

** **

**We are a holding company, and we depend on the ability of oursubsidiaries to distribute funds to us in order to satisfy our financial andother obligations.**

** **

We are a holding company, and our subsidiaries conduct all of ouroperations and own all of our tankers. We have no significant assets other than the equity interests of oursubsidiaries.  As a result, our abilityto pay dividends and make required payments on our debt securities depends onthe performance of our subsidiaries and their ability to distribute funds tous.  The ability of our subsidiaries tomake distributions to us may be restricted by, among other things, restrictionsunder our debt facility, applicable corporate and limited liability companylaws of the jurisdictions of their incorporation or organization and other lawsand regulations.  If we are unable toobtain funds from our subsidiaries, we will not be able to pay dividends or payinterest or principal on the notes or make payment on our credit facilityunless we obtain funds from other sources. We cannot assure you that we will be able to obtain the necessary fundsfrom other sources.

 

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**RISK FACTORS RELATED TO OUR COMMON STOCK**

 

**Anti-takeover provisions in our financing agreements and organizationaldocuments could have the effect of discouraging, delaying or preventing amerger or acquisition, which could adversely affect the market price of ourcommon stock.**

 

Several of our existing financing agreements impose restrictions onchanges of control of our company and our ship-owning subsidiaries.  These include requirements that we obtain thelenders’ consent prior to any change of control and that we make an offer toredeem certain indebtedness before a change of control can take place. 

 

Several provisions of our amended and restated articles ofincorporation and our by-laws could discourage, delay or prevent a merger oracquisition that shareholders may consider favorable.  These provisions include: 

 

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

 

•                                          providingfor a 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; 

 

•                                          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; 

 

•                                          limitingthe persons 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. 

 

**We cannot assure you that we will pay any dividends.**

** **

On January 26, 2005 our board of directors initiated a cash dividendpolicy.  The actual declaration of futurecash dividends, and the establishment of record and payment dates, is subjectto final determination by our board of directors each quarter after its reviewof our financial performance.  Ourability to pay dividends in any period will depend upon factors including theconsent of the lenders under our 2004 Credit Facility, limitations under theindenture for our Senior Notes, and applicable provisions of Marshall Islandslaw.

 

The timing and amount of dividends, if any, could be affected byfactors affecting cash flows, results of operations, required capitalexpenditures, or reserves.  Maintainingthe dividend policy will depend on our cash earnings, financial condition andcash requirements and could be affected by factors, including the loss of avessel, required capital expenditures, reserves established by the board ofdirectors, increased or unanticipated expenses, additional borrowings or futureissuances of securities, which may be beyond our control.

 

To declare and pay dividends, we will require an amendment or waiver ofour 2004 Credit Facility.  Also, ourSenior Notes allow dividends and other “restricted payments” only if we are notin default under the indenture, we are able to incur additional indebtednessunder the indenture, and the aggregate amount of all such restricted paymentsdoes not exceed a formula, the principal components of which are the sum of (i)50% of our consolidated net income for the period from January 1, 2003 throughthe end of the most recent fiscal quarter ending prior to the date of therestricted payment, (ii) the aggregate net cash proceeds received by us fromthe sale of capital stock or other capital contributions, and (iii) $25million.  We expect to consider optionsto redeem, amend or defease the outstanding Senior Notes, if necessary, beforethe indenture interferes with our ability to pay dividends in the future.

 

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Under Marshall Islands law, a company may not declare or pay dividendsif it is currently insolvent or would 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 immediately preceding fiscal years.

 

Our dividend policy may be changed at any time, and from time to timeby our board of directors.

 

**Future sales of our common stock could cause the market price of ourcommon stock to decline.**

 

The market price of our common stock could decline due to sales of alarge number of shares in the market, including sales of shares by our largeshareholders, or the perception that these sales could occur.  These sales could also make it more difficultor impossible for us to sell equity securities in the future at a time andprice that we deem appropriate to raise funds through future offerings ofcommon stock.  We have entered intoregistration rights agreements with the securityholders who received shares inour recapitalization transactions that entitle them to have an aggregate of29,000,000 shares registered for sale in the public market.  In addition, those shares became eligible forsale in the public markets beginning on June 12, 2002, pursuant to Rule 144under the Securities Act.  We alsoregistered on Form S-8 an aggregate of 2,900,000 shares issuable upon exerciseof options we have granted to purchase common stock or reserved for issuanceunder our equity compensation plans. 

 

**Our incorporation under the laws of the Republic of the MarshallIslands may limit the ability of our shareholders to protect their interests.**

 

Our corporate affairs are governed by our amended and restated articlesof incorporation and by-laws and by the Republic of the Marshall IslandsBusiness 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 judicialcases in the Republic of the Marshall Islands interpreting the Republic of theMarshall Islands Business Corporations Act. For example, the rights and fiduciary responsibilities of directorsunder the laws of the Republic of the Marshall Islands are not as clearlyestablished as the rights and fiduciary responsibilities of directors understatutes or judicial precedent in existence in certain U.S. jurisdictions.  Although the Republic of the Marshall IslandsBusiness Corporations Act does specifically incorporate the non-statutory law,or judicial case law, of the State of Delaware and other states withsubstantially similar legislative provisions, our public shareholders may havemore difficulty in protecting their interests in the face of actions bymanagement, directors or controlling shareholders than would shareholders of acorporation incorporated in a U.S. jurisdiction. 

 

**It may not be possible for our investors to enforce U.S. judgmentsagainst us.**

 

We are incorporated in the Republic of the Marshall Islands and most ofour subsidiaries are organized in the Republic of Liberia and the Republic ofthe Marshall Islands.  Substantially allof our assets and those of our subsidiaries are located outside the UnitedStates.  As a result, it may be difficultor impossible for U.S. investors to serve process within the United States uponus or to enforce judgment upon us for civil liabilities in U.S. courts. Inaddition, you should not assume that courts in the countries in which we or oursubsidiaries are incorporated or where our assets or the assets of oursubsidiaries are located (1) would enforce judgments of U.S. courts obtained inactions against us or our subsidiaries based upon the civil liabilityprovisions of applicable U.S. federal and state securities laws or (2) wouldenforce, in original actions, liabilities against us or our subsidiaries basedupon these laws.

 

**ITEM 2.****  PROPERTIES**

** **

Welease five properties, all of which house offices used in the administration ofour operations: two properties of approximately 11,000 square feet and 24,000square feet in New York, New York, a property of approximately 12,000 squarefeet in Lisbon, Portugal, a property of approximately 11,100 square feet inPiraeus, Greece, and a property of approximately 2,000 square feet in London,England. We do not own or lease any production facilities, plants, mines orsimilar real properties.  

 

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**ITEM 3.****  LEGAL PROCEEDINGS**

** **

**LEGALPROCEEDINGS**

** **

We are not aware of any material pendinglegal proceedings, other than ordinary routine litigation incidental to ourbusiness, to which we or our subsidiaries are a party or of which our propertyis the subject. From time to time in the future, we may be subject to legalproceedings and claims in the ordinary course of business, principally personalinjury and property casualty claims. Those claims, even if lacking merit, couldresult in the expenditure by us of significant financial and managerialresources.

 

We are cooperating in an investigation beingconducted by the Office of the U.S. Attorney, District of Delaware with respectto alleged false or inaccurate entries in the vessel’s log books concerning apossible violation of the MARPOL protocol, which could possibly be a violationof U.S. law, during prior voyage(s) of the Genmar Ajax.  On December 15, 2004, following a routineCoast Guard inspection, U.S. Coast Guard officials took various documents, logsand records from the vessel for further review and analysis.  On or about January 18, 2005, the custodianof records for the Genmar Ajax received a subpoena duces tecum requestingsupplemental documentation pertaining to the vessel in connection with apending grand jury investigation.  It isour understanding that various vessel personnel have been interviewed in thismatter and their testimony has been presented to the grand jury.  We believe that the investigation may relateto a possible discharge of waste oil in international waters in excess ofpermissible legal limits by a member of the vessel’s engine room staff. Failureby the vessel personnel to fully comply with all applicable regulations and treatiesis stictly prohibited by our policies and operating procedures.  We do not believe that this matter will have amaterial effect on the Company.

 

On February 4, 2005, the *Genmar Kestrel*was involved in a collision with the Singapore-flag tanker *Trijata*,which necessitated the trans-shipment of the *GenmarKestrel’s* cargo and drydocking the vessel for repairs.  The incident resulted in the leakage of someoil to the sea.  Due to a combination ofprompt clean up efforts, a light viscosity cargo onboard at the time ofcollision and favorable weather conditions, we believe that the incidentresulted in minimal environmental damage and expect that substantially all ofthe liabilities associated with the incident will be covered by insurance.

 

**ITEM 4.****  SUBMISSION OF MATTERS TO A VOTEOF SECURITY HOLDERS**

 

Nomatter was submitted to a vote of security holders, through the solicitation ofproxies or otherwise, during the fourth quarter of the fiscal year endedDecember 31, 2004.

 

**PART II**

** **

**ITEM 5.****  MARKET FOR REGISTRANT’S COMMONEQUITY AND RELATED STOCKHOLDER MATTERS**

** **

**MARKETINFORMATION, 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 table setsforth for the periods indicated the high and low prices for the common stock asof the close of trading as reported on the New York Stock Exchange:

 
| **FISCAL YEAR ENDED DECEMBER 31,  2004** | ** ** | **HIGH** | ** ** | **LOW** | ** ** |
|------------------------------------------|------------|----------|------------|---------|------------|
| 1st Quarter                              |       | $        | 25.55      |    | $          | 17.61 |   |
| 2nd Quarter                              |       | $        | 27.58      |    | $          | 18.51 |   |
| 3rd Quarter                              |       | $        | 35.53      |    | $          | 24.61 |   |
| 4th Quarter                              |       | $        | 49.21      |    | $          | 33.86 |   |

 

Asof December 31, 2004, there were approximately 33 holders of record of ourcommon stock. 

 

We have never declared or paid any cash dividends on our capital stock.On January 26, 2005 our board of directors initiated a cash dividendpolicy.  Under the policy, we plan todeclare quarterly dividends to shareholders in

 

25

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April, July, October and February of each year based on our EBITDAafter interest expense and reserves, as established by the board ofdirectors.  We expect to declare ourinitial quarterly dividend following the announcement of its first quarter 2005results during the fourth week of April 2005. Our 2004 Credit Facility andindenture for our Senior Notes impose limitations or prohibitions on thepayment of dividends without the lenders’ consent or in conjunction with asubsidiary’s failure to comply with various financial covenants.  We expect to consider options to redeem,amend or defease the outstanding Senior Notes, if necessary, before theindenture interferes with our ability to pay dividends in the future.

 

**We did notrepurchase any of our outstanding equity securities during the year endedDecember 31, 2004.**

 

26

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**ITEM 6.****  SELECTED CONSOLIDATED FINANCIALAND OTHER DATA**

 

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,** | ** **  |
|-------------------------------------------------------------------|------------|-----------------------------|-------------|
| ** **                                                        | ** ** | **2004**                    | ** **  | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** | **2000** | ** ** |
| **INCOME STATEMENT DATA**                                         |       |                        |        |   |   |   |   |   |   |   |   |
| (Dollars in thousands, except per share  data)                    |       |                        |        |   |   |   |   |   |   |   |   |
| Voyage revenues                                                   |       | $                           | 701,291     |   | $ | 454,456 |   | $ | 226,357 |   | $ | 217,128 |   | $ | 132,012 |   |
| Voyage expenses                                                   |       | 117,955                     |        | 117,810 |   | 80,790 |   | 52,099 |   | 23,996 |   |
| Direct vessel operating expenses                                  |       | 96,818                      |        | 91,981 |   | 55,241 |   | 42,140 |   | 23,857 |   |
| General and administrative expenses                               |       | 31,420                      |        | 22,866 |   | 12,026 |   | 9,550 |   | 4,792 |   |
| Other                                                             |       | —                      |        | — |   | — |   | — |   | 5,272 |   |
| Gain on sale of vessels                                           |       | (6,570                      | )           | (1,490 | ) | (266 | ) | — |   | — |   |
| Impairment charge                                                 |       | —                      |        | 18,803 |   | 13,366 |   | — |   | — |   |
| Depreciation and amortization                                     |       | 100,806                     |        | 84,925 |   | 60,431 |   | 42,820 |   | 24,808 |   |
| Operating income                                                  |       | 360,862                     |        | 119,561 |   | 4,769 |   | 70,519 |   | 49,287 |   |
| Net interest expense                                              |       | 37,852                      |        | 35,043 |   | 14,511 |   | 16,292 |   | 19,005 |   |
| Other expense                                                     |       | 7,901                       |        | — |   | — |   | 3,006 |   | — |   |
| Net income (loss)                                                 |       | $                           | 315,109     |   | $ | 84,518 |   | $ | (9,742 | ) | $ | 51,221 |   | $ | 30,282 |   |
| Earnings (loss) per common share:                                 |       |                        |        |   |   |   |   |   |   |   |   |
| Basic                                                             |       | $                           | 8.51        |   | $ | 2.29 |   | $ | (0.26 | ) | $ | 1.70 |   | $ | 1.60 |   |
| Diluted                                                           |       | $                           | 8.33        |   | $ | 2.26 |   | $ | (0.26 | ) | $ | 1.70 |   | $ | 1.60 |   |
|                                                              |       |                        |        |   |   |   |   |   |   |   |   |
| Weighted average basic shares outstanding,  thousands:            |       |                        |        |   |   |   |   |   |   |   |   |
| Basic                                                             |       | 37,049                      |        | 36,967 |   | 36,981 |   | 30,145 |   | 18,877 |   |
| Diluted                                                           |       | 37,814                      |        | 37,356 |   | 36,981 |   | 30,145 |   | 18,877 |   |
| **BALANCE SHEET DATA, at end of period**                          |       |                        |        |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                            |       |                        |        |   |   |   |   |   |   |   |   |
| Cash                                                              |       | $                           | 46,921      |   | $ | 38,905 |   | $ | 2,681 |   | $ | 17,186 |   | $ | 23,523 |   |
| Current assets, including cash                                    |       | 152,145                     |        | 102,473 |   | 43,841 |   | 45,827 |   | 37,930 |   |
| Total assets                                                      |       | 1,427,261                   |        | 1,263,578 |   | 782,277 |   | 850,521 |   | 438,922 |   |
| Current liabilities, including current  portion of long-term debt |       | 84,120                      |        | 89,771 |   | 77,519 |   | 83,970 |   | 41,880 |   |
| Current portion of long-term debt                                 |       | 40,000                      |        | 59,553 |   | 62,003 |   | 73,000 |   | 33,050 |   |
| Total long-term debt, including current  portion                  |       | 486,597                     |        | 655,670 |   | 280,011 |   | 339,600 |   | 241,785 |   |
| Shareholders’ equity                                         |       | 890,426                     |        | 568,880 |   | 481,636 |   | 495,690 |   | 186,910 |   |
| **OTHER FINANCIAL DATA**                                          |       |                        |        |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                            |       |                        |        |   |   |   |   |   |   |   |   |
| EBITDA (1)                                                        |       | $                           | 453,767     |   | $ | 204,486 |   | $ | 65,200 |   | $ | 110,333 |   | $ | 74,095 |   |
| Net cash provided by operating activities                         |       | 363,238                     |        | 178,112 |   | 43,637 |   | 83,442 |   | 47,720 |   |
| Net cash provided (used) by investing  activities                 |       | (168,477                    | )           | (502,919 | ) | 2,034 |   | (261,803 | ) | (85,865 | ) |
| Net cash provided (used) by financing  activities                 |       | (186,745                    | )           | 361,031 |   | (60,176 | ) | 172,024 |   | 54,826 |   |
| Capital expenditures                                              |       |                        |        |   |   |   |   |   |   |   |   |
| Vessel sales (purchases), gross including  deposits               |       | (165,796                    | )           | (501,242 | ) | 2,251 |   | (256,135 | ) | (85,500 | ) |
| Drydocking or capitalized survey or  improvement costs            |       | (17,050                     | )           | (14,137 | ) | (13,546 | ) | (3,321 | ) | (3,168 | ) |
| Weighted average long-term debt, including  current portion       |       | 650,196                     |        | 601,086 |   | 313,537 |   | 283,255 |   | 233,010 |   |
| **FLEET DATA**                                                    |       |                        |        |   |   |   |   |   |   |   |   |
| Total number of vessels at end of period                          |       | 43.0                        |        | 43.0 |   | 28.0 |   | 29.0 |   | 14.0 |   |
| Average number of vessels (2)                                     |       | 44.0                        |        | 40.6 |   | 28.9 |   | 21.0 |   | 12.6 |   |
| Total voyage days for fleet (3)                                   |       | 15,482                      |        | 14,267 |   | 10,010 |   | 7,374 |   | 4,474 |   |
| Total time charter days for fleet                                 |       | 4,372                       |        | 2,804 |   | 1,490 |   | 1,991 |   | 2,174 |   |
| Total spot market days for fleet                                  |       | 11,111                      |        | 11,463 |   | 8,520 |   | 5,383 |   | 2,300 |   |
| Total calendar days for fleet (4)                                 |       | 16,123                      |        | 14,818 |   | 10,536 |   | 7,664 |   | 4,599 |   |
| Fleet utilization (5)                                             |       | 96.0                        | %           | 96.3 | % | 95.0 | % | 96.2 | % | 97.3 | % |
| **AVERAGE DAILY RESULTS**                                         |       |                        |        |   |   |   |   |   |   |   |   |
| Time charter equivalent (6)                                       |       | $                           | 37,676      |   | $ | 23,596 |   | $ | 14,542 |   | $ | 22,380 |   | $ | 24,143 |   |
| Direct vessel operating expenses (7)                              |       | 6,005                       |        | 6,207 |   | 5,243 |   | 5,499 |   | 5,187 |   |
| General and administrative expenses (8)                           |       | 1,949                       |        | 1,543 |   | 1,136 |   | 1,246 |   | 1,042 |   |
| Total vessel operating expenses (9)                               |       | 7,954                       |        | 7,750 |   | 6,379 |   | 6,745 |   | 6,229 |   |
| EBITDA                                                            |       | 28,144                      |        | 13,800 |   | 7,437 |   | 14,788 |   | 17,257 |   |
| **EBITDA Reconciliation**                                         |       |                        |        |   |   |   |   |   |   |   |   |
| **(Dollars in thousands)**                                        |       |                        |        |   |   |   |   |   |   |   |   |
| **Net Income**                                                    | ** ** | **$**                       | **315,109** | ** ** | **$** | **84,518** | ** ** | **$** | **(9,742** | **)** | **$** | **51,221** | ** ** | **$** | **30,282** | ** ** |
| + Interest expense                                                |       | 37,852                      |        | 35,043 |   | 14,511 |   | 16,292 |   | 19,005 |   |
| + Depreciation and amortization                                   |       | 100,806                     |        | 84,925 |   | 60,431 |   | 42,820 |   | 24,808 |   |
| **EBITDA**                                                        | ** ** | **$**                       | **453,767** | ** ** | **$** | **204,486** | ** ** | **$** | **65,200** | ** ** | **$** | **110,333** | ** ** | **$** | **74,095** | ** ** |

 

27

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----

(1) EBITDArepresents net income plus net interest expense and depreciation and amortization.  EBITDA is included because it is used bymanagement and certain investors as a measure of operating performance.  EBITDA is used by analysts in the shippingindustry as a common performance measure to compare results across peers.  Management of the Company uses EBITDA as aperformance measure in consolidating monthly internal financial statements andis presented for review at our board meetings. The Company believes that EBITDA is useful to investors as the shippingindustry is capital intensive which often brings significant cost offinancing.  EBITDA is not an itemrecognized by GAAP, and should not be considered as an alternative to netincome, operating income or any other indicator of a company’s operatingperformance required by GAAP. The definition of EBITDA used here may not becomparable to that used by other companies.

 

(2) Averagenumber of vessels is the number of vessels that constituted our fleet for therelevant period, as measured by the sum of the number of days each vessel waspart of our fleet during the period divided by the number of calendar days inthat period.

 

(3) Voyagedays for fleet are the total days our vessels were in our possession for therelevant period net of off hire days associated with major repairs, drydockingsor special or intermediate surveys.

 

(4) Calendardays are the total days the vessels were in our possession for the relevantperiod including off hire days associated with major repairs, drydockings orspecial or intermediate surveys.

 

(5) Fleet utilizationis the percentage of time that our vessels were available for revenuegenerating voyage days, and is determined by dividing voyage days by calendardays for the relevant period.

 

(6) TimeCharter Equivalent, or TCE, is a measure of the average daily revenueperformance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards andis determined by dividing net voyage revenue by voyage days for the relevanttime period.  Net voyage revenues arevoyage revenues minus voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that areunique to a particular voyage, which would otherwise be paid by the chartererunder a time charter contract.

 

(7) Dailydirect 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 timeperiod.

 

(8) Dailygeneral and administrative expense is calculated by dividing general andadministrative expenses by calendar days for the relevant time period.

 

(9) Total Vessel Operating Expenses, or TVOE, isa measurement of our total expenses associated with operating our vessels.  Daily TVOE is the sum of daily direct vesseloperating expenses, or DVOE, and daily general and administrative expenses. 

 

28

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**ITEM 7.****MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS**

 

**General**

 

Thefollowing is a discussion of our financial condition at December 31, 2004 and2003 and our results of operations comparing the years ended December 31, 2004and 2003 and the years ended December 31, 2003 and 2002. You should read thissection together with the consolidated financial statements including the notesto those financial statements for the years mentioned above.

 

Weare a leading provider of international seaborne crude oil transportationservices with one of the largest mid-sized tanker fleets in the world. As ofDecember 31, 2004 our fleet consisted of 43 tankers (26 Aframax and 17 Suezmaxtankers) with a total cargo carrying capacity of 5.2 million deadweighttons.  In addition, we have four Suezmax tankersscheduled to be delivered between 2006 and early 2008 comprising an additional0.6 million deadweight tons.

 

**Spotand 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 to captureincreased 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 tankersdeployed on time charters, but only expect to enter into additional timecharters if we can obtain contract terms that satisfy our criteria.

 

**NetVoyage 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 time charter.We believe that presenting voyage revenues, net of voyage expenses, neutralizesthe variability created by unique costs associated with particular voyages orthe deployment of tankers on time charter or on the spot market and presents amore accurate representation of the revenues generated by our tankers.

 

Ourvoyage revenues and voyage expenses are recognized ratably over the duration ofthe voyages and the lives of the charters, while direct vessel expenses arerecognized when incurred. We recognize the revenues of time charters thatcontain rate escalation schedules at the average rate during the life of thecontract. We calculate time charter equivalent, or TCE, rates by dividing netvoyage revenue by voyage days for the relevant time period. We also generatedemurrage revenue, which represents fees charged to charterers associated withour spot market voyages when the charterer exceeds the agreed upon timerequired to load or discharge a cargo. We allocate corporate income andexpenses, which include general and administrative and net interest expense, totankers on a pro rata basis based on the number of months that we owned atanker. We calculate daily direct vessel operating expenses and daily generaland administrative expenses for the relevant period by dividing the totalexpenses by the aggregate number of calendar days that we owned each tanker forthe period.

 

29

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**ResultsOf Operations**

** **

Marginanalysis for the indicated items as a percentage of net voyage revenues for theyears ended December 31, 2004, 2003 and 2002 are set forth in the table below.

 

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

 
| ** **                           | ** ** | **YEAR ENDED DECEMBER 31,** | ** ** |
|--------------------------------------|------------|-----------------------------|------------|
| ** **                           | ** ** | **2004**                    | ** ** | **2003** | ** ** | **2002** | ** ** |
| INCOME STATEMENT DATA                |       |                        |       |   |   |   |   |
|                                 |       |                        |       |   |   |   |   |
| Net voyage revenues(1)               |       | 100                         | %          | 100 | % | 100 | % |
| Direct vessel expenses               |       | 16.6                        |       | 27.3 |   | 37.9 |   |
| General and administrative           |       | 5.4                         |       | 6.8 |   | 8.3 |   |
| Impairment (gain on sale) of vessels |       | (1.2                        | )          | 5.2 |   | 9.0 |   |
| Depreciation and amortization        |       | 17.3                        |       | 25.2 |   | 41.5 |   |
| Operating income                     |       | 61.9                        |       | 35.5 |   | 3.3 |   |
| Net interest expense                 |       | 6.5                         |       | 10.4 |   | 10.0 |   |
| Other expense                        |       | 1.4                         |       | — |   | — |   |
| Net income (loss)                    |       | 54.0                        |       | 25.1 |   | (6.7 | ) |

 

----

(1)                                  Net voyagerevenues are voyage revenues minus voyage expenses. Voyage expenses primarilyconsist of port, canal and fuel costs that are unique to a particular voyage,which would otherwise be paid by a charterer under a time charter.

 
| ** **          | ** ** | **YEAR ENDED DECEMBER 31,** | ** ** |
|---------------------|------------|-----------------------------|------------|
| ** **          | ** ** | **2004**                    | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **          | ** ** | **(dollars in thousands)**  | ** ** |
| Voyage revenues     |       | $                           | 701,291    |   | $ | 454,456 |   | $ | 226,357 |   |
| Voyage expenses     |       | (117,955                    | )          | (117,810 | ) | (80,790 | ) |
| NET VOYAGE REVENUES |       | $                           | 583,336    |   | $ | 336,646 |   | $ | 145,567 |   |

 

**YEARENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003**

** **

VOYAGEREVENUES-****Voyage revenues increased by $246.8million, or 54.3%, to $701.3 million for the year ended December 31, 2004compared to $454.5 million for the prior year. This increase is due to the stronger spot market for Suezmax and Aframaxtankers during the year ended December 31, 2004 compared to the prior yearas well as an 8.4% increase in the average size of our fleet and the greaterproportion of our fleet during 2004 that is comprised of Suezmax tankers, whichusually generate more voyage revenue than Aframax tankers.  The average size of our fleet increased to44.0 (25.0 Aframax, 19.0 Suezmax) tankers during the year ended December 31,2004 compared to 40.6 tankers (25.4 Aframax, 15.2 Suezmax) during the prioryear.  While one of our strategicinitiatives is to grow by acquisition, there can be no assurance that we willgrow our fleet in 2005.

 

VOYAGE EXPENSES-****Voyageexpenses were relatively unchanged, at $118.0 million for the year endedDecember 31, 2004 compared to $117.8 million for the prior year.  Substantially all of our voyage expensesrelate to spot charter voyages, under which the vessel owner is responsible forvoyage expenses such as fuel and port costs. During the year ended December 31, 2004, the number of days ourvessels operated under spot charters decreased by 352, or 3.1%, to 11,111 days(4,738 days Aframax, 6,373 days Suezmax) from 11,463 days (6,514 days Aframax,4,949 days Suezmax) during the prior year. Voyage expenses for the year ended December 31, 2004 did not decrease inproportion to the decrease in number of spot days due to the increasedproportion during 2004 of the number of spot days being attributable to Suezmaxvessels.  Suezmax vessels generally earnhigher daily voyage

 

30

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revenue than doAframax vessels but also incur higher voyage expenses particularly with respectto fuel consumption.

 

NETVOYAGE REVENUES-****Net voyage revenues, which arevoyage revenues minus voyage expenses, increased by $246.7 million, or 73.3%,to $583.3 million for the year ended December 31, 2004 compared to $336.6million for the prior year.  Thisincrease is due to the stronger spot market for Suezmax and Aframax tankersduring the year ended December 31, 2004 compared to the prior year as wellas an 8.4% increase in the average size of our fleet and the greater proportionof our fleet during 2004 that is comprised of Suezmax tankers, which usuallygenerate more voyage revenue than Aframax tankers.  Our average TCE rates improved 59.7% to$37,676 during the year ended December 31, 2004 compared to $23,596 during the yearended December 31, 2003.  The averagesize of our fleet increased 8.4% to 44.0 tankers (25.0 Aframax, 19.0 Suezmax)for the year ended December 31, 2004 compared to 40.6 tankers (25.4 Aframax,15.2 Suezmax) for the prior year.

 

31

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Thefollowing is additional data pertaining to net voyage revenues:

 
| ** **                             | ** ** | **Year ended December 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|----------------------------------------|------------|-----------------------------|------------|--------------|------------|----------------|------------|
| ** **                             | ** ** | **2004**                    | ** ** | **2003**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| ** **                             |       |                        |       |         |       |           |       |   |   |
| **Net voyage revenue (in thousands):** |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 82,894     |         | $          | 52,012         |       | $ | 30,882 |   | 59.4 | % |
| Suezmax                                |       | 3,902                       |       | 6,731        |       | (2,829         | )          | -42.0 | % |
| Total                                  |       | 86,796                      |       | 58,743       |       | 28,053         |       | 47.8 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 175,791                     |       | 141,475      |       | 34,316         |       | 24.3 | % |
| Suezmax                                |       | 320,749                     |       | 136,428      |       | 184,321        |       | 135.1 | % |
| Total                                  |       | 496,540                     |       | 277,903      |       | 218,637        |       | 78.7 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| TOTAL NET VOYAGE REVENUE               |       | $                           | 583,336    |         | $          | 336,646        |       | $ | 246,690 |   | 73.3 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| **Vessel operating days:**             |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 4,182                       |       | 2,457        |       | 1,725          |       | 70.2 | % |
| Suezmax                                |       | 189                         |       | 347          |       | (158           | )          | -45.5 | % |
| Total                                  |       | 4,371                       |       | 2,804        |       | 1,567          |       | 55.9 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 4,738                       |       | 6,514        |       | (1,776         | )          | -27.3 | % |
| Suezmax                                |       | 6,373                       |       | 4,949        |       | 1,424          |       | 28.8 | % |
| Total                                  |       | 11,111                      |       | 11,463       |       | (352           | )          | -3.1 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| TOTAL VESSEL OPERATING DAYS            |       | 15,482                      |       | 14,267       |       | 1,215          |       | 8.5 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| AVERAGE NUMBER OF VESSELS              |       | 44.0                        |       | 40.6         |       | 3.4            |       | 8.4 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| **Time Charter Equivalent (TCE):**     |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 19,822     |         | $          | 21,172         |       | $ | (1,350 | ) | -6.4 | % |
| Suezmax                                |       | $                           | 20,646     |         | $          | 19,402         |       | $ | 1,244 |   | 6.4 | % |
| Combined                               |       | $                           | 19,857     |         | $          | 20,953         |       | $ | (1,095 | ) | -5.2 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 37,099     |         | $          | 21,719         |       | $ | 15,381 |   | 70.8 | % |
| Suezmax                                |       | $                           | 50,331     |         | $          | 27,569         |       | $ | 22,763 |   | 82.6 | % |
| Combined                               |       | $                           | 44,689     |         | $          | 24,243         |       | $ | 20,446 |   | 84.3 | % |
|                                   |       |                        |       |         |       |           |       |   |   |   |   |   |
| TOTAL TCE                              |       | $                           | 37,676     |         | $          | 23,596         |       | $ | 14,080 |   | 59.7 | % |

 

32

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Thefollowing table summarizes the portion of our fleet on time charter as of March9, 2005: 

 
| **Vessel**         | ** ** | **Vessel Type** | ** ** | **Expiration Date** | ** ** | **Average Daily Rate (1)** | ** ** |
|--------------------|------------|-----------------|------------|---------------------|------------|----------------------------|------------|
| Genmar Pericles    |       | Aframax         |       | October 3,  2005    |       | $                          | 19,700     |   |
| Genmar Trust       |       | Aframax         |       | October 15,  2005   |       | $                          | 19,700     |   |
| Genmar Spirit      |       | Aframax         |       | November 5,  2005   |       | $                          | 19,700     |   |
| Genmar Hector      |       | Aframax         |       | October 31,  2005   |       | $                          | 19,700     |   |
| Genmar Challenger  |       | Aframax         |       | December 6,  2005   |       | $                          | 19,700     |   |
| Genmar Trader      |       | Aframax         |       | December 16,  2005  |       | $                          | 19,700     |   |
| Genmar Champ       |       | Aframax         |       | January 10,  2006   |       | $                          | 19,700     |   |
| Genmar Star        |       | Aframax         |       | January 25,  2006   |       | $                          | 19,700     |   |
| Genmar Endurance   |       | Aframax         |       | February 13,  2006  |       | $                          | 19,700     |   |
| Genmar Princess    |       | Aframax         |       | May 9, 2005         |       | $                          | 25,000     |   |
| Genmar Constantine |       | Aframax         |       | July 9, 2005        |       | $                          | 28,355     |   |

 

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(1) Beforebrokers’ commissions.

 

DIRECTVESSEL EXPENSES-****Direct vessel expenses, whichinclude crew costs, provisions, deck and engine stores, lubricating oil,insurance, maintenance and repairs increased by $4.8 million, or 5.3%, to $96.8million for the year ended December 31, 2004 compared to $92.0 million for theprior year. This increase is primarily due to the growth of our fleet, whichincreased 8.4% during the year ended December 31, 2004 compared to the prioryear.  This increase is offset by adecrease in maintenance and repairs during the year ended December 31, 2004 onour Suezmax vessels as compared to the prior year as well as the timing ofcertain purchases, maintenance and repair costs.  In addition, during the year ended December31, 2004, the Company sold four Suezmax vessels which had higher historicoperating costs than the other vessels in our fleet.  On a daily basis, direct vessel expenses pervessel decreased by $202, or 3.3%, to $6,005 ($5,676 Aframax, $6,438 Suezmax)for the year ended December 31, 2004 compared to $6,207 ($5,679 Aframax, $7,081Suezmax) for the prior year, primarily as the result of a decrease inmaintenance and repairs on our Suezmax vessels. Although daily direct vessel operating expenses have decreased during2004 compared to 2003, there can be no assurance that daily direct vesseloperating expenses will not increase during 2005.

 

GENERALAND ADMINISTRATIVE EXPENSES-****General andadministrative expenses increased by $8.5 million, or 37.4%, to $31.4 millionfor the year ended December 31, 2004 compared to $22.9 million for the prioryear.  The primary components of thisincrease are: (a) $2.4 million of lease payments and expenses associated withour lease of an aircraft which the Company entered into during February 2004;(b) $1.7 million of office related expenses of General Maritime Management(Portugal) Lda which we acquired during April 2004; (c)  a $1.7 million increase in payroll expenses(salaries, benefits, incentive bonus and amortization of restricted stockawards) in our offices in New York and Greece in connection with the operationof a larger fleet during the year ended December 31, 2004 compared to theprior year; and (d) a $1.4 million increase in professional fees during theyear ended December 31, 2004 compared to the prior year primarily due toincreases in accounting fees associated with compliance with Section 404 of theSarbanes-Oxley Act of 2002.  General and administrative expenses as a percentage of netvoyage revenues decreased to 5.4% for the year ended December 31, 2004 from6.8% for the prior year.  Dailygeneral and administrative expenses per vessel increased $406, or 26.3%, to$1,949 for the year ended December 31, 2004 compared to $1,543 for the prioryear.  

 

Weanticipate that certain general and administrative expenses will increaseduring 2005.  During 2005 as compared toprior years, a greater portion of the bonus of our Chief Executive Officer andother senior officers will be comprised of restricted stock awards, rather thancash.  During February 2005, restrictedstock awards were granted. The non-cash amortization associated with this grant  will beapproximately $4.0 million during 2005. In addition, cash expenses are expected to increase during 2005 comparedto 2004 as a result of the relocation of our headquarters in New York to alarger office space to accommodate the Company’s continued growth as well asGeneral Maritime Management (Portugal) Lda being operated for a full year.** **

 

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DEPRECIATIONAND AMORTIZATION-Depreciation and amortization, which include depreciation oftankers as well as amortization of drydocking, special survey and loan fees,increased by $15.9 million, or 18.7%, to $100.8 million for the year endedDecember 31, 2004 compared to $84.9 million for the prior year. This increaseis primarily due to the growth in the average number of tankers in our fleet,which increased 8.4% during the year ended December 31, 2004 compared to theprior year as well as an increase in drydock amortization described in moredetail below.

 

Amortizationof drydocking increased by $4.7 million, or 66.6%, to $11.8 million for theyear ended December 31, 2004 compared to $7.1 million for the prior year. Thisincrease includes amortization associated with $17.1 million of capitalizedexpenditures relating to our tankers for the year ended December 31, 2004 aswell as a full year of amortization associated with $14.1 million ofcapitalized drydocking for the prior year. We anticipate that the amortization associated with drydocking ourvessels will increase in the future, as vessels we acquired during 2001, 2003and 2004 are drydocked for the first time.**** 

 

Amortizationof deferred financing costs decreased by $0.3 million, or 9.4%, to $3.2 millionfor the year ended December 31, 2004 compared to $3.5 million for the prioryear. This decrease is the result of amortization during the second half of2004 associated with deferred financing costs paid on the 2004 Credit Facilitywhich was lower than the amortization on the deferred loan costs associatedwith the three credit facilities which were refinanced.  At the time of the refinancing, theunamortized deferred financing costs associated with the three refinancedcredit facilities were written off. 

 

GAINON SALE OF VESSELS- During July 2004, we agreed to sell four of oursingle-hull Suezmax vessels in order to reduce the number of single-hullvessels in the Company’s fleet.  Thesevessels were sold during August and October 2004 for aggregate net proceeds of approximately$84.2 million, resulting in a gain on sale of vessels of $6.6 million.  

 

IMPAIRMENTCHARGE/ GAIN ON SALE OF VESSELS-  During 2003, we sold two vessels heldfor sale as of December 31, 2002, resulting in an aggregate gain on sale ofvessels of $2.7 million.  Also during2003, three double-bottom Aframax vessels acquired in 2003 were sold for anaggregate loss on sale of vessels of $1.2 million.  Of these three vessels, two were delivered totheir new owners in 2003 and one was delivered to its new owner in February 2004.

 

TheCompany had no impairment charges relating to any of the vessels in its fleetduring the year ended December 31, 2004.

 

InDecember 2003, the IMO adopted a proposed amendment to the InternationalConvention for the Prevention of Pollution from Ships to accelerate thephase-out of certain single-hull tankers from 2015 to 2010 unless the flagstate extends the date to 2015. Management determined that the useful lives of its nine single-hulltankers would end in 2010, which is four to six years earlier than the 25-yearuseful lives the vessels had previously been ascribed.  Because of the reduction in the useful livesof these single-hull tankers and the consequent reduction in projected cashflows, it was determined that an aggregate impairment charge of $18.8 millionwas required on five tankers, which represented the amount by which thecarrying value of these tankers exceeded their fair value as determined by anindependent third party appraiser.  

 

NETINTEREST EXPENSE-Net interest expense increased by $2.8 million, or 8.0%, to$37.8 million for the year ended December 31, 2004 compared to $35.0 millionfor the prior year. This increase is primarily the result of an 8.2% increasein our weighted average outstanding debt of $650.2 million for the year endedDecember 31, 2004 compared to $601.1 million for the year ended December 31,2003.  

 

OTHER EXPENSE- On July 1, 2004, we entered into an $825million credit facility, refinancing our First, Second and Third CreditFacilities.  Upon consummation of thisrefinancing, unamortized deferred financing costs associated with the First,Second and Third Credit Facilities aggregating $7.9 million was written off asa non-cash charge in July 2004.  

 

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NETINCOME-Net income was $315.1 million for the year ended December 31, 2004compared to net income of $84.5 million for the prior year. 

 

**YEARENDED DECEMBER 31, 2003 COMPARED TO THE YEAR ENDED DECEMBER 31, 2002**

** **

VOYAGEREVENUES-****Voyage revenues increased by $228.1million, or 100%, to $454.5 million for the year ended December 31, 2003compared to $226.4 million for the prior year. $153.6 million of this increaseis due to the acquisition of 14 Suezmax tankers and five Aframax tankers during2003.  In addition, voyage revenuesincreased by $74.5 million on the 28 tankers which were part of our fleet priorto January 1, 2003 to $300.9 million for the year ended December 31, 2003compared to $226.4 million during the prior year, primarily as a result ofbetter freight rates.  The average sizeof our fleet increased 40.6% to 40.6 (25.4 Aframax, 15.2 Suezmax) tankersduring the year ended December 31, 2003 compared to 28.9 tankers (23.9 Aframax,5.0 Suezmax) during the prior year.

 

VOYAGEEXPENSES-****Voyage expenses increased $37.0million, or 45.8%, to $117.8 million for the year ended December 31, 2003compared to $80.8 million for the prior year. $41.9 million of this increase isdue to the acquisition of 14 Suezmax tankers and five Aframax tankers during2003.  In addition, voyage expensesdecreased by $4.9 million on the tankers which were part of our fleet prior toJanuary 1, 2003 to $75.9 million for the year ended December 31, 2003 comparedto $80.8 million during the prior year, due primarily to a 534 day increase inthe number of days these vessels were on time charter during 2003 as comparedto 2002.  Overall, the number of daysthat all of our tankers were under time charter contracts increased to 2,804days for the year ended December 31, 2003 compared to 1,490 days for the prioryear.  The number of days that ourtankers, including those acquired during 2003, operated in the spot marketincreased to 11,463 for the year ended December 31, 2003 compared to 8,520 daysfor the prior year. Typically, tankers operating on the spot market incurhigher voyage expenses than those operating on time charter contract, as theowner, not the charterer, is responsible for voyage expenses.

 

NETVOYAGE REVENUES-****Net voyage revenues, which arevoyage revenues minus voyage expenses, increased by $191.0 million, or 131%, to$336.6 million for the year ended December 31, 2003 compared to $145.6 millionfor the prior year.  $111.7 million ofthis increase is due to the acquisition of 14 Suezmax tankers and five Aframaxtankers during 2003.  In addition, netvoyage revenues increased by $79.3 million on the tankers which were part ofour fleet prior to January 1, 2003 to $224.9 million for the year endedDecember 31, 2003 compared to $145.6 million during the prior year, primarilyas a result of better freight rates.  Ouraverage TCE rates improved 62.3% to $23,596 during the year ended December 31,2003 compared to $14,542 during the year ended December 31, 2002.  The average size of our fleet increased 40.6%to 40.6 tankers (25.4 Aframax, 15.2 Suezmax) for the year ended December 31,2003 compared to 28.9 tankers (23.9 Aframax, 5.0 Suezmax) for the prior year.

** **

Thefollowing is additional data pertaining to net voyage revenues:

 

35

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| ** **                             | ** ** | **Year ended December 31,** | ** ** | **Increase** | ** ** | ** **     | ** ** |
|----------------------------------------|------------|-----------------------------|------------|--------------|------------|----------------|------------|
| ** **                             | ** ** | **2003**                    | ** ** | **2002**     | ** ** | **(Decrease)** | ** ** | **% Change** | ** ** |
| ** **                             |       |                        |       |         |       |           |       |   |   |
| **Net voyage revenue (in thousands):** |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 52,012     |         | $          | 28,335         |       | $ | 23,677 |   | 83.6 | % |
| Suezmax                                |       | 6,731                       |       | —       |       | 6,731          |       | N/M |   |
| Total                                  |       | 58,743                      |       | 28,335       |       | 30,408         |       | 107.3 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 141,475                     |       | 89,524       |       | 51,951         |       | 58.0 | % |
| Suezmax                                |       | 136,428                     |       | 27,708       |       | 108,720        |       | 392.4 | % |
| Total                                  |       | 277,903                     |       | 117,232      |       | 160,671        |       | 137.1 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| TOTAL NET VOYAGE REVENUE               |       | $                           | 336,646    |         | $          | 145,567        |       | $ | 191,079 |   | 131.3 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| **Vessel operating days:**             |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 2,457                       |       | 1,490        |       | 967            |       | 64.9 | % |
| Suezmax                                |       | 347                         |       | —       |       | 347            |       | N/M |   |
| Total                                  |       | 2,804                       |       | 1,490        |       | 1,314          |       | 88.2 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | 6,514                       |       | 6,722        |       | (208           | )          | -3.1 | % |
| Suezmax                                |       | 4,949                       |       | 1,798        |       | 3,151          |       | 175.3 | % |
| Total                                  |       | 11,463                      |       | 8,520        |       | 2,943          |       | 34.5 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| TOTAL VESSEL OPERATING DAYS            |       | 14,267                      |       | 10,010       |       | 4,257          |       | 42.5 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| AVERAGE NUMBER OF VESSELS              |       | 40.6                        |       | 28.9         |       | 11.7           |       | 40.6 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| **Time Charter Equivalent (TCE):**     |       |                        |       |         |       |           |       |   |   |
| Time charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 21,172     |         | $          | 19,017         |       | $ | 2,155 |   | 11.3 | % |
| Suezmax                                |       | $                           | 19,402     |         | N/M        |           | N/M        |   | N/M |   |
| Combined                               |       | $                           | 20,953     |         | $          | 19,017         |       | $ | 1,936 |   | 10.2 | % |
|                                   |       |                        |       |         |       |           |       |   |   |
| Spot charter:                          |       |                        |       |         |       |           |       |   |   |
| Aframax                                |       | $                           | 21,719     |         | $          | 13,318         |       | $ | 8,401 |   | 63.1 | % |
| Suezmax                                |       | $                           | 27,569     |         | $          | 15,410         |       | $ | 12,159 |   | 78.9 | % |
| Combined                               |       | $                           | 24,243     |         | $          | 13,760         |       | $ | 10,483 |   | 76.2 | % |
|                                   |       |                        |       |         |       |           |       |   |   |   |   |   |
| TOTAL TCE                              |       | $                           | 23,596     |         | $          | 14,542         |       | $ | 9,054 |   | 62.3 | % |

** **

DIRECTVESSEL EXPENSES-****Direct vessel expenses, whichinclude crew costs, provisions, deck and engine stores, lubricating oil,insurance, maintenance and repairs increased by $36.8 million, or 66.5%, to$92.0 million for the year ended December 31, 2003 compared to $55.2 millionfor the prior year. This increase is primarily due to the growth of our fleet,which increased 40.6% for the same periods, as well as increases in maintenanceand repairs, crew costs and insurance. The increase in maintenance and repairs is attributable to major repairsmade on four tankers during 2003 as well as an increase in the value of theEuro against the U.S. dollar which made Euro-denominated expenditures in 2003more costly.  The increase in crew costsis attributable to Euro denominated crew and officer wages.  The increase in insurance costs is due toincreases in hull and machinery and protection and indemnity which we believeare industry wide.  In addition, aportion of this 40.6% increase in the size of our fleet relates to theacquisition of Suezmax vessels which, although generally generating higher TCErates, are more costly to operate than Aframax vessels.  On a daily basis, direct vessel expenses pervessel increased by $964, or 18.4%, to

 

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$6,207($5,679 Aframax, $7,081 Suezmax) for the year ended December 31, 2003 comparedto $5,243 ($5,090 Aframax, $5,973 Suezmax) for the prior year, primarily as theresult of an increase in maintenance and repairs, crew costs and insurancecosts as well as the increase in the percentage of our fleet that consists ofSuezmax vessels.  

 

GENERALAND ADMINISTRATIVE EXPENSES-****General andadministrative expenses increased by $10.9 million, or 90.1%, to $22.9 millionfor the year ended December 31, 2003 compared to $12.0 million for the prioryear.  This increase is primarilyattributable to the growth of our fleet during 2003.  In connection with the 40.6% increase in thesize of our fleet in 2003, there was a $6.7 million increase in payrollexpenses (salaries, benefits and incentive bonus), a $1.8 million increase incosts at General Maritime Management (Hellas) Ltd. (formerly United OverseasTankers Ltd.) (much of which costs are denominated in Euros), a $1.0 millionincrease in general and administrative expenses of our vessel owningsubsidiaries, and $0.5 million in costs at an office we opened in the UnitedKingdom in connection with the growth of our fleet during 2003.  General and administrative expenses as apercentage of net voyage revenues decreased to 6.8% for the year ended December31, 2003 from 8.3% for the prior year. Daily general and administrative expenses per vessel increased $407, or35.8%, to $1,543 for the year ended December 31, 2003 compared to $1,136 forthe prior year.

** **

IMPAIRMENTCHARGE/ GAIN ON SALE OF VESSELS-  During 2003, we sold two vessels heldfor sale as of December 31, 2002, resulting in an aggregate gain on sale ofvessels of $2.7 million.  Also during2003, three double-bottom Aframax vessels acquired in 2003 were sold for anaggregate loss on sale of vessels of $1.2 million.  Of these three vessels, two were delivered totheir new owners in 2003 and one was delivered to its new owner in February2004.

 

InDecember 2003, the IMO adopted a proposed amendment to the InternationalConvention for the Prevention of Pollution from Ships to accelerate thephase-out of certain single-hull tankers from 2015 to 2010 unless the flagstate extends the date to 2015. Management determined that the useful lives of its nine single-hulltankers would end in 2010, which is four to six years earlier than the 25-yearuseful lives the vessels had previously been ascribed.  Because of the reduction in the useful livesof these single-hull tankers and the consequent reduction in projected cashflows, it was determined that an aggregate impairment charge of $18.8 millionwas required on five tankers, which represented the amount by which thecarrying value of these tankers  exceededtheir fair value as determined by an independent third party appraiser.  

 

DEPRECIATIONAND AMORTIZATION-Depreciation and amortization, which include depreciation oftankers as well as amortization of drydocking, special survey and loan fees,increased by $24.5 million, or 40.5%, to $84.9 million for the year endedDecember 31, 2003 compared to $60.4 million for the prior year. This increaseis primarily due to the growth in the average number of tankers in our fleet,which increased 40.6% during the year ended December 31, 2003 compared to theprior year.

 

Amortizationof drydocking increased by $2.8 million, or 62.9%, to $7.1 million for the yearended December 31, 2003 compared to $4.3 million for the prior year. Thisincrease includes amortization associated with $14.1 million of capitalizedexpenditures relating to our tankers for the year ended December 31, 2003 aswell as a full year of amortization associated with $13.5 million ofcapitalized drydocking for the prior year. 

 

Amortizationof deferred financing costs increased by $2.0 million, or 132%, to $3.5 millionfor the year ended December 31, 2003 compared to $1.5 million for the prioryear. This increase includes amortization associated with $14.6 million ofdeferred financing costs capitalized during 2003. 

 

NETINTEREST EXPENSE-Net interest expense increased by $20.5 million, or 141%, to$35.0 million for the year ended December 31, 2003 compared to $14.5 millionfor the prior year. $19.6 million of this increase in net interest expenseduring the year ended December 31, 2003 compared to the year ended December 31,2002 is due to the $250 million of Senior Notes we issued in March 2003 inconnection with the acquisition of 19 vessels, which have a 10% coupon which issignificantly higher than the interest rates on the remainder of our long-termdebt.  The remainder of this increase isthe result of a 30.9% increase in our weighted average outstanding debt(excluding the Senior Notes) of $411.1 million for the year ended December 31,2003 compared to $314.0 million for the year ended December 31, 2002.  

 

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NETINCOME-Net income was $84.5 million for the year ended December 31, 2003compared to net loss of ($9.7) million for the prior year.

 

**LIQUIDITYAND CAPITAL RESOURCES**

** **

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

** **

Since our formation, our principal sources offunds have been equity financings, issuance of long-term debt securities,operating cash flows and long-term bank borrowings. Our principal use of fundshas been capital expenditures to establish and grow our fleet, maintain thequality of our tankers, comply with international shipping standards andenvironmental laws and regulations, fund working capital requirements and makeprincipal repayments on outstanding loan facilities. 

 

Our practice has been to acquire tankers using a combination of fundsreceived from equity investors, bank debt secured by mortgages on our tankersand shares of the common stock of our shipowning subsidiaries, and long-termdebt securities.  Since our payment of dividendsis expected to decrease our available cash, while we expect to use ouroperating cash flows and borrowings to fund acquisitions, if any, on ashort-term basis, we also intend to review debt and equity financingalternatives to fund such acquisitions. Our business is capital intensive and its future success will depend onour ability to maintain a high-quality fleet through the acquisition of newertankers and the selective sale of older tankers. These acquisitions will beprincipally subject to management’s expectation of future market conditions aswell as our ability to acquire tankers on favorable terms.

 

We expect torely on operating cash flows as well as long-term borrowings and future equityofferings to implement our growth plan and our dividend policy.  We believe that our current cash balance aswell as operating cash flows and available borrowings under our creditfacilities will be sufficient to meet our liquidity needs for the next year. 

 

Our operation of ocean-going tankers carriesan inherent risk of catastrophic marine disasters and property losses caused byadverse severe weather conditions, mechanical failures, human error, war,terrorism and other circumstances or events. In addition, the transportation ofcrude oil is subject to business interruptions due to political circumstances,hostilities among nations, labor strikes and boycotts. Our current insurancecoverage includes (1) protection and indemnity insurance coverage for tortliability, which is provided by mutual protection and indemnity associations,(2) hull and machinery insurance for actual or constructive loss fromcollision, fire, grounding and engine breakdown, (3) war risk insurance forconfiscation, seizure, capture, vandalism, sabotage and other war-related risksand (4) loss of hire insurance for loss of revenue for up to 90 days resultingfrom a tanker being off hire for all of our tankers.

 

**Dividend Policy**

** **

On January 26, 2005 we announced that our board of directors hasinitiated a cash dividend policy. Under the policy, we plan to declarequarterly dividends to shareholders in April, July, October and February ofeach year based on our EBITDA after interest expense and reserves, asestablished by the board of directors. These reserves, which the board of directors expects to review on atleast an annual basis, will take into account normal maintenance and drydockingof existing vessels as well as capital expenditures for vessel acquisitions toensure the indefinite renewal of our fleet. We expect that our estimated maintenance and renewal capital expenditurereserve will be $100 million in 2005. Our board of directors expects to review these reserves from time totime and at least annually, taking into account the remaining useful life andasset value of the fleet, among other factors. We expect to declare our initial quarterly dividend following theannouncement of its first quarter 2005 results during the fourth week of April2005. 

 

Theindenture of our Senior Notes generally allows us to pay dividends and other “restrictedpayments” up to an amount equal to 50% of the cumulative net income earnedsince the first quarter of 2003 plus an additional $25 million.  We are currently exploring various optionsfor ensuring our ability to pay dividends as defined by the new

 

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dividend policy, andwill review available equity and debt financing alternatives from time to time.Any dividends paid will be subject to the consent of our lenders under our 2004Credit Facility and applicable provisions of Marshall Islands law. 

 

**Debt Financings**

** **

**2004 Credit Facility**

 

On July 1, 2004, we closed on an $825million senior secured bank financing facility, or the 2004 Credit Facility,consisting of a term loan of $225 million and a revolving loan of $600million.  The term loan has a five yearmaturity at a rate of LIBOR plus 1.0% and amortizes on a quarterly basis with19 payments of $10 million and one payment of $35 million.  The revolving loan component, which does notamortize, has a five year maturity at a rate of LIBOR plus 1.0% on the usedportion and a 0.5% commitment fee on the unused portion.  As of December 31, 2004, the 2004 Credit Facilityis secured by all of the ships in the Company’s 43 vessel fleet.

 

Concurrent with the closing of the 2004 CreditFacility, pursuant to which we borrowed $225 million under the term loan and$290 million under the revolving credit facility, we retired our existingFirst, Second and Third Credit Facilities, described below, in a series oftransactions we refer to as the 2004 Refinancings.  At the time of the 2004 Refinancings, the2004 Credit Facility was secured by the 42 vessels which collateralized theFirst, Second and Third Credit Facilities and the five vessels which weacquired in April 2004 and July 2004.  Inaddition, each of our subsidiaries which has anownership interest in any tanker vessel that is secured by the 2004 CreditFacility has provided unconditional guaranties of all amounts owing under the2004 Credit Facility.  Deferred financingcosts incurred relating to the 2004 Credit Facility aggregated $6.9 million.

 

Upon consummating the 2004 Refinancings, unamortized deferred financingcosts associated with the First, Second and Third Credit Facilities aggregating$7.9 million were written off as a non-cash charge in July 2004.  This non-cash charge is classified as otherexpense on the statement of operations.

 

During August and October 2004, we sold four vessels (*Genmar Harriet, Genmar Centaur, Genmar Traveller and GenmarTransporter)* that were part of the collateral of the 2004 CreditFacility.  Pursuant to an amendment tothe 2004 Credit Facility, we are permitted, until August 2005 to substitute ascollateral future vessel acquisitions with a fair value equivalent to thevessels sold.  Had this amendment notbeen agreed to, we would, upon the sale of the four vessels in August andOctober 2004, have had to repay approximately $13.1 million associated with the$225 million term loan and the $600 million revolving credit facility wouldhave been permanently reduced by approximately $35.2 million.  In accordance with the amendment to the 2004Credit Facility, we placed approximately $13.1 million in escrow which will bereturned to us if collateral is substituted as described above.  This amount of cash held in escrow isclassified as other assets on our balance sheet.  If such collateral is not fully provided, onAugust 31, 2005, the remaining amount held in the escrow account will be usedto repay a portion of the term loan. With respect to the revolving credit facility, approximately $35.2million is currently not available to be drawn until such substitute collateralis provided.  To the extent substitutecollateral is not provided by August 31, 2005, the revolving credit facilitywill be permanently reduced.

 

The 2004 Credit Facility is secured by all of the ships in our current43 vessel fleet and $13.1 million cash held in escrow.

 

**First, Second and Third Credit Facilities — Refinanced by the 2004Credit Facility**

 

The First Credit Facility was comprised of a $200 million term loan anda $100 million revolving loan.  The FirstCredit Facility was to mature on June 15, 2006. The First Credit Facility bore interest at LIBOR plus 1.5%.  We were obligated to pay a fee of 0.625% perannum on the unused portion of the revolving loan on a quarterly basis.  Due to the sale of three of the Aframaxtankers securing the First Credit Facility, the revolving loan facility wasreduced to $96.5 million.

 

The Second Credit Facility consisted of a $115 million term loan and a$50 million revolving loan.  The SecondCredit Facility was to mature on June 27, 2006. The Second Credit Facility bore interest at LIBOR plus

 

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1.5%.  We were obligated to pay afee of 0.625% per annum on the unused portion of the revolving loan on aquarterly basis. 

 

On March 11, 2003 in connection with the Metrostar acquisition, weentered into commitments for $450 million in credit facilities.  These credit facilities were comprised of afirst priority $350 million amortizing term loan, which we refer to as theThird Credit Facility, and a second priority $100,000 non-amortizing term loan,which we refer to as the second priority term loan.  Pursuant to the issuance of the Senior Notesdescribed below, the Third Credit Facility was reduced to $275 million and thesecond priority term loan was eliminated. The Third Credit Facility was to mature on March 10, 2008 and bore interestat LIBOR plus 1.625%. 

 

**Interest Rate Swap Agreements**

 

In August and October 2001, we entered into interest rate swapagreements with foreign banks to manage interest costs and the risk associatedwith changing interest rates.  At theirinception, these swaps had notional principal amounts equal to 50% of ouroutstanding term loans under its First and Second Credit Facilities.  The notional principal amounts amortize atthe same rate as the term loans.  Theinterest rate swap agreement entered into during August 2001 hedged the FirstCredit Facility, described above, to a fixed rate of 6.25%.  This swap agreement terminates on June 15,2006. The interest rate swap agreement entered into during October 2001 hedgedthe Second Credit Facility, described above, to a fixed rate of 5.485%.  This swap agreement terminates on June 27,2006.  The differential to be paid orreceived for these swap agreements is recognized as an adjustment to interestexpense as incurred.  As of December 31,2004, the outstanding notional principal amounts on the swap agreements enteredinto during August 2001 and October 2001 are $27.0 million and $18.5 million,respectively.  We have determined thatthese interest rate swap agreements, which effectively hedged our First andSecond Credit Facilities continue to effectively hedgeour 2004 Credit Facility.  

 

**Senior Notes**

 

On March 20, 2003, we issued $250 million of 10% Senior Notes which aredue March 15, 2013.  Interest is paid onthe Senior Notes each March 15 and September 15.  The Senior Notes are general unsecured, seniorobligations.  The proceeds of the SeniorNotes, prior to payment of fees and expenses, were $246.2 million.  The Senior Notes contain incurrence covenantswhich, among other things, restrict our future ability to incur futureindebtedness and liens, to apply the proceeds of asset sales freely, to mergeor undergo other changes of control and to pay dividends.  As of December 31, 2004, the discount on theSenior Notes is $3.4 million.  Thisdiscount is being amortized as interest expense over the term of the seniornotes using the effective interest method. The Senior Notes are guaranteed by all of our present subsidiaries andfuture “restricted” subsidiaries (all of which are 100% owned by us).  These guarantees are full and unconditionaland joint and several with us, General Maritime Corporation, the parentcompany.  We, as the parent company, haveno independent assets or operations. Additionally, certain defaults on other debt instruments, such asfailure to pay interest or principal when due, are deemed to be a default underthe Senior Notes agreement.

 

In addition, the provisions of the Senior Notesrequire that the proceeds from vessel sales, net of required debt payments madeon senior indebtedness, be used to acquire additional assets within one yearfrom the dates of sale.  If such assetsare not acquired, any excess proceeds, after reduction of the indebtednessunder the 2004 Credit Facility, are to be used to repurchase Senior Notes.  As of December 31, 2004, such excess netproceeds pertaining to the four vessels sold during August and October 2004aggregate $35.9 million, which, if not used to acquire additional assetsthrough August 2005, will be used to repurchase Senior Notes.

 

In accordance with the terms of our Senior Notes, we cannot makecumulative “restricted payments” in excess of the sum of (1) 50% of net incomeearned subsequent to December 31, 2002, (2) cash proceeds from common stockissued subsequent to December 31, 2002 and (3) $25 million.  “Restricted payments” principally includedividends, purchases of the our own common stock, andrepayments of debt subordinate to the senior notes prior to their maturity.

 

40

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The terms and conditions of the 2004 Credit Facility require compliancewith certain restrictive covenants, which we feel are consistent with loanfacilities incurred by other shipping companies.  Under the 2004 Credit Facility, we arerequired to maintain certain ratios such as: vessel market values to totaloutstanding loans and undrawn revolving credit facilities, EBITDA to netinterest expense and to maintain minimum levels of working capital.  In addition, the 2004 Credit Facilityrestricts the payment of dividends and repurchase of common shares to anaggregate of $1.0 million per year.

 

As of December 31, 2004, we are in compliance with all of the financialcovenants under our 2004 Credit Facility and our Senior Notes.

 

The total outstanding amounts as of December31, 2004 associated with our 2004 Credit Facility and Senior Notes as well astheir maturity dates are as follows:

 

**TOTAL OUTSTANDING DEBT (DOLLARS IN THOUSANDS)AND MATURITY DATE**

 

| ** **           | ** ** | **OUTSTANDING  DEBT** | ** ** | **MATURITY  DATE** | ** **     |
|----------------------|------------|-----------------------|------------|--------------------|----------------|
| Total long-term debt |       |                  |       |               |           |
| 2004 Credit Facility |       | $                     | 240,000    |               | June 2009 |   |
| Senior Notes         |       | 250,000               |       | March 2013    |           |
|                      |            |                       |            |                    |                |  |

 

**Cash and Working Capital**

 

Cash increased to $46.9 million as ofDecember 31, 2004 compared to $38.9 million as of December 31,2003.  Working capital is current assetsminus current liabilities, including the current portion of long-term debt.Working capital was $68.0 million as of December 31, 2004, compared to$12.7 million as of December 31, 2003. The current portion of long-termdebt included in our current liabilities was $40.0 million as ofDecember 31, 2004 and $59.6 million as of December 31, 2003.

 

**CashFlows from Operating Activities**

 

Net cash provided by operating activitiesincreased 104% to $363.2 million for the year ended December 31, 2004, comparedto $178.1 million for the prior year. This increase is primarily attributableto net income of $315.1 million, depreciation and amortization of $100.8million for the year ended December 31, 2004 compared to net income of $84.5million, depreciation and amortization of $84.9 million and a non-cashimpairment charge of $18.8 million for the prior year.

 

Net cash provided by operating activitiesincreased 308% to $178.1 million for the year ended December 31, 2003, comparedto $43.6 million for the prior year. This increase is primarily attributable tonet income of $84.5 million and depreciation and amortization of $84.9 millionand a non-cash impairment charge of $18.8 million for the year ended December31, 2003 compared to net loss of $9.7 million, depreciation and amortization of$60.4 million and a non-cash impairment charge of $13.4 million for the prioryear.

 

**Cash Flows from Investing Activities**

 

Net cash used in investing activities was$168.5 million for the year ended December 31, 2004 compared to $502.9million for the prior year.  During theyear ended December 31, 2004, we paid $180.6 million to the seller forfive tankers, and paid $76.0 million for four Suezmax newbuilding contracts (ofwhich $67.2 million was paid to the seller of those contracts and $8.8 millionof installment payments were made to the shipyards).  During the year ended December 31, 2004, wereceived $94.6 million of proceeds from the sale of one Aframax tanker and fourSuezmax tankers.  During the year endedDecember 31, 2003, we expended $528.5 million for the purchase of 19tankers and we received $27.3 million of proceeds from the sale of four Aframaxtankers.

 

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Netcash used by investing activities was $502.9 million for the year endedDecember 31, 2003 compared to net cash provided by investing activities of $2.0million for the year ended December 31, 2002. During the year ended December31, 2003, we expended $528.5 million for the purchase of 19 tankers andreceived $27.3 million from the sale of four Aframaxtankers.  During the year ended December31, 2002, we received $2.3 million from the sale of one Aframaxtanker.

 

**CashFlows from Financing Activities**

** **

Netcash used by financing activities was $186.7 million for the year endedDecember 31, 2004 compared to net cash provided by financing activities of$361.0 million for the prior year period. The change in cash provided by financing activities relates to thefollowing:

 

•                  Net proceedsfrom the issuance of long-term debt during the year ended December 31, 2004,net of issuance costs of $7.2 million, were $507.8 million relating the initialborrowings under our 2004 Credit Facility. Net proceeds from issuance of long-term debt during the year endedDecember 31, 2003 net of issuance costs of $14.6 was $506.6 million, which wascomprised of $246.2 million of proceeds from our Senior Notes offering and$275.0 million from our Third Credit Facility.

 

•                  During the yearended December 31, 2004, we retired our First, Second and Third CreditFacilities, and repaid the $448.3 million outstanding on those creditfacilities at the time of their retirement.

 

•                  Principalrepayments of long-term debt were $59.0 million for the year ended December 31,2004 associated with permanent principal repayments under our First, Second,Third and 2004 Credit Facilities. Principal repayments of long-term debt were $91.6 million for the yearended December 31, 2003 associated with permanent principal repaymentsunder our First, Second and Third Credit Facilities.

 

•                  During the yearended December 31, 2004, we repaid $177.0 million of revolving debtassociated with our First, Second and 2004 Credit Facilities; during the yearended December 31, 2003, we repaid $54.1 million of revolving debtassociated with our First and Second Credit Facilities.

 

•                  During the yearended December 31, 2004, we sold three Suezmaxvessels which would have required a $13.1 million repayment of the term loan portionof our 2004 Credit Facility.  Pursuant toan amendment to the 2004 Credit Facility, we have until August 2005 to providesubstitute collateral to the 2004 Credit Facility.  This $13.1 million was placed an escrowaccount with the lender pending our providing substitute collateral.

 

Netcash provided by financing activities was $361.0 million for the year endedDecember 31, 2003 compared to net cash used by financing activities of $60.2million for the year ended December 31, 2002. The change in cash provided byfinancing activities relates to the following:

 

**•****                 **Net proceedsfrom borrowing under long-term debt during the year ended December 31, 2003aggregated $521.2 million consisting of $246.2 million of proceeds from theissuance of Senior Notes and $275.0 million of borrowings under our ThirdCredit Facility.  

 

•                  Principalrepayments of long-term debt during the year ended December 31, 2003 aggregated$145.7 million, which consisted of $91.6 million of principal repayments underour First, Second and Third Credit Facilities and $54.1 million of net paymentsmade under our revolving credit facilities. During the year ended December 31, 2002, principal repayments oflong-term debt aggregated $59.6 million, which consisted of $74.6 million ofscheduled principal repayments under our First and Second Credit Facilities and$15.0 million of net borrowings made under our revolving credit facilities.

 

•                  During theyears ended December 31, 2003 and 2002, payments for deferred financing costsaggregated $14.6 million and $0.1 million, respectively.

 

42

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***CapitalExpenditures for Drydockings and Vessel Acquisitions***

 

**Drydocking**

 

Inaddition to tanker acquisition, other major capital expenditures includefunding our maintenance program of regularly scheduled in-water survey or drydocking necessary to preserve the quality of our tankersas well as to comply with international shipping standards and environmentallaws and regulations. Management anticipates that tankers which are youngerthan 15 years are required to undergo in-water surveys 2.5 years after a drydock and that tankers are to be drydockedevery five years, while tankers 15 years or older are to be drydockedevery 2.5 years in which case the additional drydockstake the place of these in-water surveys. During 2005, we anticipate that we will capitalize costs associated withdrydocks or significant in-water surveys onapproximately 18 tankers and that the expenditures to perform these drydocks will aggregate approximately $30 million.  The ability to meet this maintenanceschedule will depend on our ability to generate sufficient cash flows fromoperations, utilize our revolving credit facilities or to secure additionalfinancing.

 

**VesselAcquisitions**

 

In July 2004, we acquired four Suezmax  newbuildingcontracts.  The purchase price of thesecontracts aggregate $67.2 million which was paid to the seller of thosecontracts.  Also in July 2004, $8.8million was paid to the shipyard as an installment on the construction of thevessels associated with these contracts. As of December 31, 2004, we are required to pay an additional aggregateamount of $152.8 million through the completion of construction of these four Suezmax tankers delivery of which is expected to occurbetween March 2006 and January 2008.  Theinstallments that comprise this $152.8 million are payable as follows: $6.5million in 2005, $71.3 million in 2006, $42.4 million in 2007, and $32.6million in 2008.

 

***OtherCommitments***

 

In February 2004, the Company entered intoan operating lease for an aircraft.  Thelease has a term of five years and requires monthly payments by the Company of$125,000.

 

In December 2004, the Company entered into a15-year lease for office space in New York, New York.  The monthly rental is as follows: Free rentfrom December 1, 2004 to September 30, 2005, $109,724 per month from October 1,2005 to September 30, 2010, $118,868 per month from October 1, 2010 toSeptember 30, 2015, and $128,011 per month from October 1, 2015 to September30, 2020. The monthly straight-line rental expense from December 1, 2004 toSeptember 30, 2020 is $112,611. 

 

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

 
| ** **                | ** ** | **Total** | ** ** | **2005** | ** ** | **2006** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **Thereafter** | ** ** |
|---------------------------|------------|-----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|
| Debt payments             |       | $         | 490.0      |     | $          | 40.0     |       | $        | 40.0       |     | $          | 40.0     |       | $              | 40.0       |   | $ | 80.0 |   | $ | 250.0 |   |
| Newbuilding  installments |       | 152.8     |       | 6.5      |       | 71.3     |       | 42.4     |       | 32.6     |       | 0.0      |       | 0.0            |       |
| Aircraft lease            |       | 6.1       |       | 1.5      |       | 1.5      |       | 1.5      |       | 1.5      |       | 0.1      |       | 0.0            |       |
| New York office  lease    |       | 21.3      |       | 0.3      |       | 1.3      |       | 1.3      |       | 1.3      |       | 1.3      |       | 15.8           |       |
| Total  commitments        |       | $         | 670.2      |     | $          | 48.3     |       | $        | 114.1      |     | $          | 85.2     |       | $              | 75.4       |   | $ | 81.4 |   | $ | 265.8 |   |

 

***OtherDerivative Financial Instruments***

*** ***

As part of our businessstrategy, we may enter into arrangements commonly known as forward freightagreements, or FFAs, to hedge and manage market risksrelating to the deployment of our existing fleet of vessels.  The FFAs beingconsidered by the company are future contracts, or commitments to perform inthe future a shipping service between ship owners, charters and traders.  Generally, these FFAswould bind us and each counterparty in the arrangementto buy or sell a specified tonnage freighting commitment “forward” at an agreedtime and price and for a particular route. Although FFAs can be entered into for avariety of purposes, including for hedging, as an option, for trading or forarbitrage, if we decided to enter into FFAs, ourobjective would be to hedge and manage market risks as part of our commercialmanagement. It is not currently our intention to enter into FFAsto generate a stream of income independent of the revenues we derive from theoperation of our fleet of vessels.  If wedetermine to enter

 

43

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intoFFAs, we may reduce our exposure to any declines inour results from operations due to weak market conditions or downturns, but mayalso limit our ability to benefit economically during periods of strong demandin the market.  We have not entered intoany FFA contracts as of December 31, 2004.

 

**Critical Accounting Policies**

** **

The discussion and analysis of our financialcondition and results of operations is based upon our consolidated financialstatements, which have been prepared in accordance with accounting principlesgenerally accepted in the United States, or GAAP. Thepreparation of those financial statements requires us to make estimates andjudgments that affect the reported amount of assets and liabilities, revenuesand expenses and related disclosure of contingent assets and liabilities at thedate of our financial statements. Actual results may differ from theseestimates under different assumptions or conditions.

 

Critical accounting policies are those thatreflect significant judgments or uncertainties, and potentially result inmaterially different results under different assumptions and conditions. Wehave described below what we believe are our most critical accounting policies.Except for a change in the estimated useful lives of our single-hull tankerseffective October 1, 2003 and the increase in residual scrap values of ourtankers effective January 1, 2004, we believe that there has been nochange in or additions to our critical accounting policies since December 2001.

 

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 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 voyage contracts is recognized based upon the percentage of voyage completion. The percentage of voyage completion is based on the number of 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 concerning collectibility. We have had an excellent collection recordduring the past four years ended December 31, 2004. To the extent thatsome voyage revenues become uncollectible, the amounts of these revenues wouldbe expensed at that time. We provide a reserve for our demurrage revenues basedupon our historical record of collecting these amounts. As of December 31,2004, we provided a reserve of approximately 14% for these claims, which webelieve is adequate in light of our collection history. We periodically reviewthe adequacy of this reserve so that it properly reflects our collectionhistory. To the extent that our collection experience warrants a greaterreserve we will incur an expense as to increase this amount in that period.

 

DEPRECIATIONAND AMORTIZATION. We record the value of our tankers attheir cost (which includes acquisition costs directly attributable to thetanker and expenditures made to prepare the tanker for its initial voyage) lessaccumulated depreciation. We depreciate our non-single-hull tankers on astraight-line basis over their estimated useful lives, estimated to be 25 yearsfrom date of initial delivery from the shipyard. The useful lives of oursingle-hull tankers range from 19 to 21 years from the date of delivery, as weconsider 2010 to coincide with the end of their useful lives.  We believe that a 25-year depreciable lifefor double-hull and double-sided tankers is consistent with that of other shipowners. Depreciation is based on cost less the estimated residual scrap value.Until December 31, 2003, we estimated residual scrap value as thelightweight tonnage of each tanker multiplied by $125 scrap value per ton.  Effective January 1, 2004, we changedour estimate of residual scrap value per lightweight ton to be $175, which we believebetter approximates the historical average price of scrap steel. An increase inthe useful life of the tanker would have the effect of decreasing the annualdepreciation charge and extending it into later periods. An increase in theresidual scrap value (as was done in 2004) would decrease the amount of theannual depreciation charge. A decrease in the useful life of the tanker wouldhave the effect of increasing the annual depreciation charge. A decrease in theresidual scrap value would increase the amount of the annual depreciationcharge.

 

REPLACEMENTS, RENEWALS AND BETTERMENTS. Wecapitalize and depreciate the costs of significant replacements, renewals andbetterments to our tankers over the shorter of the tanker’s remaining usefullife or the life

 

44

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of the renewalor betterment. The amount capitalized is based on our judgment as toexpenditures that extend a tanker’s useful life or increase the operationalefficiency of a tanker. We believe that these criteria are consistent with GAAP and that our policy of capitalization reflects theeconomics and market values of our tankers. Costs that are not depreciated arewritten off as a component of direct vessel operating expense during the periodincurred. Expenditures for routine maintenance and repairs are expensed asincurred. If the amount of the expenditures we capitalize for replacements,renewals and betterments to our tankers were reduced, we would recognize theamount of the difference as an expense.

 

DEFERRED DRYDOCKCOSTS. Our tankers are required to be drydockedapproximately every 30 to 60 months for major repairs and maintenance thatcannot be performed while the tankers are operating. We capitalize the costsassociated with the drydocks as they occur andamortize these costs on a straight line basis over the period between drydocks. Costs capitalized as part of the drydock include actual costs incurred at the drydock yard; cost of fuel consumed between the tanker’slast discharge port prior to the drydock and the timethe tanker leaves the drydock yard; cost of hiringriding crews to effect repairs on a ship and parts used in making such repairsthat are reasonably made in anticipation of reducing the duration or cost ofthe drydock; cost of travel, lodging and subsistenceof our personnel sent to the drydock site tosupervise; and the cost of hiring a third party to oversee a drydock. We believe that these criteria are consistent withGAAP guidelines and industry practice, and that ourpolicy of capitalization reflects the economics and market values of thetankers.

 

IMPAIRMENT OF LONG-LIVED ASSETS. We evaluatethe carrying amounts and periods over which long-lived assets are depreciatedto determine if events have occurred which would require modification to theircarrying values or useful lives. In evaluating useful lives and carrying valuesof long-lived assets, we review certain indicators of potential impairment,such as undiscounted projected operating cash flows, tanker sales andpurchases, business plans and overall market conditions. We determineundiscounted projected net operating cash flows for each tanker and compare itto the tanker carrying value. In the event that impairment occurred, we woulddetermine the fair value of the related asset and we record a charge to operationscalculated by comparing the asset’s carrying value to the estimated fair value.We estimate fair value primarily through the use of third party valuationsperformed on an individual tanker basis.

 

**RecentAccounting Pronouncements**

** **

On January 17, 2003, the FinancialAccounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of VariableInterest Entities” (“FIN 46”). Such Interpretation addresses the consolidationof variable interest entities (“VIEs”), includingspecial purpose entities (“SPEs”), that are notcontrolled through voting interests or in which the equity investors do notbear the residual economic risks and rewards. The provisions of FIN 46 wereeffective immediately for transactions entered into by the Company subsequentto January 31, 2003 and became effective for all other transactions as ofJuly 1, 2003. However, in October 2003, the FASBpermitted companies to defer the July 1, 2003 effective date toDecember 31, 2003, in whole or in part. On December 24, 2003, the FASB issued a complete replacement of FIN 46 (“FIN 46R”),which clarified certain complexities of FIN 46 and generally requires adoptionno later than December 31, 2003 for entities that were considered SPEs under previous guidance, andno later than March 31, 2004 for all other entities. The Company adoptedFIN 46R in its entirety as of December 31, 2003 even though adoption fornon-SPEs was not required until March 31,2004.  The adoption of FIN46R did nothave a material impact on the Company’s financial statements.

 

In December 2004, the FASB issued SFAS No. 123R thatwill require compensation costs related to share-based payment transactions tobe recognized in the financial statements. With limited exceptions, the amountof compensation cost will be measured based on the grant-date fair value of theequity or liability instruments issued. In addition, liability awards will be remeasuredeach reporting period. Compensation cost will be recognized over the periodthat an employee provides service in exchange for the award SFAS123R replaces SFAS No. 123, “Accounting forStock-Based Compensation”, and supersedes APB 25. This Statement will beeffective as of the beginning of the first interim or annual reporting periodthat begins after June 15, 2005.

 

Entitiesthat used the fair-value-based method for either recognition or disclosureunder SFAS No. 123 will apply this revised Statementusing a modified version of prospective application. Under this transitionmethod, for

 

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the portion ofoutstanding awards for which the requisite service has not yet been rendered,compensation cost is recognized on or after required effective date based onthe grant-date fair value of those awards calculated under SFASNo. 123 for either recognition or pro forma disclosures. For periods before therequired effective date, those entities may elect to apply a modified versionof the retrospective application under which financial statements for periodsare adjusted on a basis consistent with the pro forma disclosures required forthose periods by SFAS No. 123.  The Company is currently evaluating theimpact of adopting SFAS No. 123R.

 

**ITEM 7A.****QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK**

** **

**INTERESTRATE RISK**

** **

We are exposed to various market risks, includingchanges in interest rates. The exposure to interest rate risk relates primarilyto our debt. At December 31, 2004, we had $240.0 million of floating ratedebt with a margin over LIBOR of 1.0% compared to December 31, 2003 whenwe had $409.3 million of floating rate debt with a margins over LIBOR rangingfrom 1.5% to 1.625%. We use interest rate swaps to manage the impact ofinterest rate changes on earnings and cash flows. The differential to be paidor received under these swap agreements is accrued as interest rates change andis recognized as an adjustment to interest expense. As of December 31, 2004 and2003, we were party to interest rate swap agreements having aggregate notionalamounts of $45.5 million and $71.5 million, respectively, which effectivelyfixed LIBOR on a like amount of principal at rates ranging from 3.985% to4.75%. If we terminate these swap agreements prior to their maturity, we may berequired to pay or receive an amount upon termination based on the prevailinginterest rate, time to maturity and outstanding notional principal amount atthe time of termination. As of December 31, 2004 the fair value of theseswaps was a net liability to us of $0.6 million. A one percent increase in LIBORwould increase interest expense on the portion of our $194.5 millionoutstanding floating rate indebtedness that is not hedged by approximately $1.9million per year from December 31, 2004.

 

**FOREIGNEXCHANGE RATE RISK**

** **

The international tanker industry’s functionalcurrency is the U.S. Dollar. Virtually all of the Company’s revenues and mostof its operating costs are in U.S. Dollars. The Company incurs certainoperating expenses, drydocking, and overhead costs inforeign currencies, the most significant of which is the Euro, as well asBritish Pounds, Japanese Yen, Singapore Dollars, Australian Dollars andNorwegian Kroners. During the year endedDecember 31, 2004, at least 14% of the Company’s direct vessel operatingexpenses and general and administrative expenses were denominated in thesecurrencies.  The potential additionalexpense from a 10% adverse change in quoted foreign currency exchange rates, asit relates to all of these currencies, would be approximately $1.8 million forthe year ended December 31, 2004.

 

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**Item 8.****  FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA**

** **

**GENERAL MARITIME CORPORATION**

** **

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

 
| CONSOLIDATED  FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004 AND 2003 AND FOR THE YEARS ENDED  DECEMBER 31, 2004, 2003 AND 2002. |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                           |   |
| Report  of Independent Registered Public Accounting Firm                                                                       |   |
|                                                                                                                           |   |
| Consolidated Balance Sheets                                                                                                    |   |
|                                                                                                                           |   |
| Consolidated  Statements of Operations                                                                                         |   |
|                                                                                                                           |   |
| Consolidated Statements of  Shareholders’ Equity                                                                          |   |
|                                                                                                                           |   |
| Consolidated  Statements of Cash Flows                                                                                         |   |
|                                                                                                                           |   |
| Notes to  Consolidated Financial Statements                                                                                    |   |

 

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

 

To the Board of Directors and Stockholders ofGeneral Maritime Corporation New York, New York

 

We have audited the accompanying consolidatedbalance sheets of General Maritime Corporation and subsidiaries (the “Company”)as of December 31, 2004 and 2003, and the related consolidated statements ofoperations, shareholders’ equity, and cash flows for each of the three years inthe period ended December 31, 2004.  These financial statements are theresponsibility of the Company’s management.  Our responsibility is toexpress an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates).  Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement.  An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financialstatements.  An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation.  We believe that our audits provide areasonable basis for our opinion.

 

In our opinion, such consolidated financialstatements present fairly, in all material respects, the financial position ofGeneral Maritime Corporation and subsidiaries at December 31, 2004 and 2003,and the results of their operations and their cash flows for each of the threeyears in the period ended December 31, 2004, in conformity with accountingprinciples generally accepted in the United States of America.

 

We have also audited, in accordance with thestandards of the Public Company Accounting Oversight Board (United States), theeffectiveness of the Company’s internal control over financial reporting as ofDecember 31, 2004, based on the criteria established in *Internal Control—Integrated Framework*issued by the Committee of Sponsoring Organizations of the TreadwayCommission and our report dated March 14, 2005 expressed an unqualified opinionon management’s assessment of the effectiveness of the Company’s internalcontrol over financial reporting and an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.

 
| /s/ Deloitte & Touche  LLP |   |
|-------------------------------------|--------|
|                                |
| March 14, 2005                      |
| New York, New York                  |

 

 

F-2

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**GENERAL MARITIME CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**DECEMBER 31, 2004 AND 2003**

**(Dollars in thousands except per share data)**

 
| ** **                                                                                                                                                                                 | ** ** | **DECEMBER 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------|------------|
| ** **                                                                                                                                                                                 | ** ** | **2004**         | ** ** | **2003** | ** ** |
|                                                                                                                                                                                       |       |             |       |   |   |
| ASSETS                                                                                                                                                                                     |       |             |       |   |   |
| CURRENT ASSETS:                                                                                                                                                                            |       |             |       |   |   |
| Cash                                                                                                                                                                                       |       | $                | 46,921     |   | $ | 38,905 |   |
| Due from charterers, net                                                                                                                                                                   |       | 73,883           |       | 36,209 |   |
| Vessel held for  sale                                                                                                                                                                      |       | —           |       | 10,388 |   |
| Prepaid expenses  and other current assets                                                                                                                                                 |       | 31,341           |       | 16,971 |   |
| Total current  assets                                                                                                                                                                      |       | 152,145          |       | 102,473 |   |
| NONCURRENT  ASSETS:                                                                                                                                                                        |       |             |       |   |   |
| Vessels, net of  accumulated depreciation of $280,215 and $217,228, respectively                                                                                                           |       | 1,139,594        |       | 1,114,978 |   |
| Vessel  construction in progress                                                                                                                                                           |       | 77,909           |       | — |   |
| Other fixed  assets, net                                                                                                                                                                   |       | 3,849            |       | 2,069 |   |
| Deferred drydock costs, net                                                                                                                                                                |       | 23,101           |       | 22,620 |   |
| Deferred  financing costs, net                                                                                                                                                             |       | 11,860           |       | 15,685 |   |
| Other assets                                                                                                                                                                               |       | 13,050           |       | — |   |
| Goodwill                                                                                                                                                                                   |       | 5,753            |       | 5,753 |   |
| Total noncurrent assets                                                                                                                                                                    |       | 1,275,116        |       | 1,161,105 |   |
| TOTAL ASSETS                                                                                                                                                                               |       | $                | 1,427,261  |   | $ | 1,263,578 |   |
|                                                                                                                                                                                       |       |             |       |   |   |
| LIABILITIES AND  SHAREHOLDERS’ EQUITY                                                                                                                                                 |       |             |       |   |   |
| CURRENT  LIABILITIES:                                                                                                                                                                      |       |             |       |   |   |
| Accounts payable  and accrued expenses                                                                                                                                                     |       | $                | 36,799     |   | $ | 22,418 |   |
| Accrued interest                                                                                                                                                                           |       | 7,321            |       | 7,800 |   |
| Current portion  of long-term debt                                                                                                                                                         |       | 40,000           |       | 59,553 |   |
| Total current  liabilities                                                                                                                                                                 |       | 84,120           |       | 89,771 |   |
| NONCURRENT  LIABILITIES:                                                                                                                                                                   |       |             |       |   |   |
| Deferred voyage  revenue                                                                                                                                                                   |       | 5,558            |       | 6,330 |   |
| Long-term debt                                                                                                                                                                             |       | 446,597          |       | 596,117 |   |
| Derivative  liability for cash flow hedge                                                                                                                                                  |       | 560              |       | 2,480 |   |
| Total noncurrent liabilities                                                                                                                                                               |       | 452,715          |       | 604,927 |   |
| TOTAL  LIABILITIES                                                                                                                                                                         |       | 536,835          |       | 694,698 |   |
| COMMITMENTS AND  CONTINGENCIES                                                                                                                                                             |       |             |       |   |   |
| SHAREHOLDERS’  EQUITY:                                                                                                                                                                |       |             |       |   |   |
| Common stock,  $0.01 par value per share; authorized 75,000,000 shares; issued and  outstanding 37,895,870 and 37,614,145 shares at December 31, 2004 and December  31, 2003, respectively |       | 379              |       | 376 |   |
| Paid-in capital                                                                                                                                                                            |       | 424,021          |       | 421,189 |   |
| Restricted stock                                                                                                                                                                           |       | (3,646           | )          | (5,313 | ) |
| Retained  earnings                                                                                                                                                                         |       | 470,217          |       | 155,108 |   |
| Accumulated  other comprehensive loss                                                                                                                                                      |       | (545             | )          | (2,480 | ) |
| Total  shareholders’ equity                                                                                                                                                           |       | 890,426          |       | 568,880 |   |
| TOTAL  LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                           |       | $                | 1,427,261  |   | $ | 1,263,578 |   |

 

Seenotes to consolidated financial statements.

 

F-3

----

 

**GENERALMARITIME CORPORATION**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**FORTHE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002**

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

 
| ** **                                    | ** ** | **2004**   | ** ** | **2003**   | ** ** | **2002**   | ** ** |
|-----------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| VOYAGE REVENUES:                              |       |       |       |       |       |       |       |
| Voyage revenues                               |       | $          | 701,291    |       | $          | 454,456    |       | $ | 226,357 |   |
| OPERATING  EXPENSES:                          |       |       |       |       |       |       |       |
| Voyage expenses                               |       | 117,955    |       | 117,810    |       | 80,790     |       |
| Direct vessel  expenses                       |       | 96,818     |       | 91,981     |       | 55,241     |       |
| General and  administrative                   |       | 31,420     |       | 22,866     |       | 12,026     |       |
| Depreciation and  amortization                |       | 100,806    |       | 84,925     |       | 60,431     |       |
| Gain on sale of  vessels                      |       | (6,570     | )          | (1,490     | )          | (266       | )          |
| Impairment  charge                            |       | —     |       | 18,803     |       | 13,366     |       |
| Total operating  expenses                     |       | 340,429    |       | 334,895    |       | 221,588    |       |
| OPERATING INCOME                              |       | 360,862    |       | 119,561    |       | 4,769      |       |
| OTHER EXPENSE:                                |       |       |       |       |       |       |       |
| Interest income                               |       | 979        |       | 462        |       | 236        |       |
| Interest expense                              |       | (38,831    | )          | (35,505    | )          | (14,747    | )          |
| Other expense                                 |       | (7,901     | )          | —     |       | —     |       |
| Net other  expense                            |       | (45,753    | )          | (35,043    | )          | (14,511    | )          |
| Net income  (loss)                            |       | $          | 315,109    |       | $          | 84,518     |       | $ | (9,742 | ) |
|                                          |       |       |       |       |       |       |       |
| Earnings (loss)  per common share:            |       |       |       |       |       |       |       |
| Basic                                         |       | $          | 8.51       |       | $          | 2.29       |       | $ | (0.26 | ) |
| Diluted                                       |       | $          | 8.33       |       | $          | 2.26       |       | $ | (0.26 | ) |
|                                          |       |       |       |       |       |       |       |
| Weighted average  shares outstanding- basic   |       | 37,049,266 |       | 36,967,174 |       | 36,980,600 |       |
|                                          |       |       |       |       |       |       |       |
| Weighted average  shares outstanding- diluted |       | 37,813,929 |       | 37,355,764 |       | 36,980,600 |       |

 

See notes to consolidatedfinancial statements.

 

F-4

----

 

**GENERAL MARITIME CORPORATION**

**CONSOLIDATED STATEMENTS OF****SHAREHOLDERS’ EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002**

**(Dollars in thousands except per share data)**

** **
| ** **                                       | ** ** | ** ** | ** ** | ** **  | ** ** | ** **     | ** ** | ** **   | ** ** | **Accumulated  Other** | ** ** | **Comprehensive** | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|------------|------------|-------------|------------|----------------|------------|--------------|------------|------------------------|------------|-------------------|------------|------------|------------|
| ** **                                       | ** ** | **Common** | ** ** | **Paid-in** | ** ** | **Restricted** | ** ** | **Retained** | ** ** | **Comprehensive**      | ** ** | **Income**        | ** ** | ** ** | ** ** |
| ** **                                       | ** ** | **Stock**  | ** ** | **Capital** | ** ** | **Stock**      | ** ** | **Earnings** | ** ** | **Income  (Loss)**     | ** ** | **(Loss)**        | ** ** | **Total**  | ** ** |
| Balance as of  January 1, 2002                   |       | $          | 370        |        | $          | 416,095        |       |         |       | $                      | 80,332     |              | $          | (1,107     | )          |   |   | $ | 495,690 |   |
| Net Loss                                         |       |       |       |        |       |           |       | (9,742       | )          |                   |       | $                 | (9,742     | )          | (9,742     | ) |
| Unrealized  derivative losses on cash flow hedge |       |       |       |        |       |           |       |         |       | (3,263                 | )          | (3,263            | )          | (3,263     | )          |
|                                             |       |       |       |        |       |           |       |         |       |                   |       | $                 | (13,005    | )          |       |   |
| Issuance of  625,000 shares of restricted stock  |       | 6          |       | 3,788       |       | $              | (3,794     | )            |       |                   |       |              |       |       | —     |   |
| Restricted stock  amortization                   |       |       |       |        |       | 52             |       |         |       |                   |       |              |       | 52         |       |
| Purchase price  adjustment                       |       |       |       | (634        | )          |           |       |         |       |                   |       |              |       | (634       | )          |
| Common stock  issuance costs                     |       |       |       | (467        | )          |           |       |         |       |                   |       |              |       | (467       | )          |
| Balance as of  December 31, 2002                 |       | 376        |       | 418,782     |       | (3,742         | )          | 70,590       |       | (4,370                 | )          |              |       | 481,636    |       |
| Net Income                                       |       |       |       |        |       |           |       | 84,518       |       |                   |       | $                 | 84,518     |       | 84,518     |   |
| Unrealized  derivative gains on cash flow hedge  |       |       |       |        |       |           |       |         |       | 1,890                  |       | 1,890             |       | 1,890      |       |
|                                             |       |       |       |        |       |           |       |         |       |                   |       | $                 | 86,408     |       |       |   |
| Issuance of  155,000 shares of restricted stock  |       |       |       | 2,260       |       | (2,260         | )          |         |       |                   |       |              |       | —     |       |
| Restricted stock  amortization                   |       |       |       |        |       | 689            |       |         |       |                   |       |              |       | 689        |       |
| Exercise of stock  options                       |       | —     |       | 147         |       |           |       |         |       |                   |       |              |       | 147        |       |
| Balance as of  December 31, 2003                 |       | 376        |       | 421,189     |       | (5,313         | )          | 155,108      |       | (2,480                 | )          |              |       | 568,880    |       |
| Net Income                                       |       |       |       |        |       |           |       | 315,109      |       |                   |       | $                 | 315,109    |       | 315,109    |   |
| Unrealized  derivative gains on cash flow hedge  |       |       |       |        |       |           |       |         |       | 1,935                  |       | 1,935             |       | 1,935      |       |
|                                             |       |       |       |        |       |           |       |         |       |                   |       | $                 | 317,044    |       |       |   |
| Restricted stock  amortization                   |       |       |       |        |       | 1,667          |       |         |       |                   |       |              |       | 1,667      |       |
|                                             |       |       |       |        |       |           |       |         |       |                   |       |              |       |       |       |
| Exercise of stock  options                       |       | 3          |       | 2,832       |       |           |       |         |       |                   |       |              |       | 2,835      |       |
|                                             |       |       |       |        |       |           |       |         |       |                   |       |              |       |       |       |
| Balance as of  December 31, 2004                 |       | $          | 379        |        | $          | 424,021        |       | $            | (3,646     | )                      | $          | 470,217           |       | $          | (545       | ) |   |   | $ | 890,426 |   |

 

Seenotes to consolidated financial statements.

 

F-5

----

 

**GENERAL MARITIME CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002**

**(Dollars in thousands)**

 
| ** **                                                                                | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
|                                                                                      |       |     |       |     |       |     |       |
| CASH FLOWS  PROVIDED BY OPERATING ACTIVITIES:                                             |       |     |       |     |       |     |       |
| Net income  (loss)                                                                        |       | $        | 315,109    |     | $          | 84,518   |       | $ | (9,742 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by operating activities: |       |     |       |     |       |     |       |
| Gain on sale of  vessels                                                                  |       | (6,570   | )          | (1,490   | )          | (266     | )          |
| Impairment  charge                                                                        |       | —   |       | 18,803   |       | 13,366   |       |
| Depreciation and  amortization                                                            |       | 100,806  |       | 84,925   |       | 60,431   |       |
| Other non-cash  expense                                                                   |       | 7,901    |       | —   |       | —   |       |
| Amortization of  discount on senior notes                                                 |       | 254      |       | 185      |       | —   |       |
| Restricted stock  compensation expense                                                    |       | 1,667    |       | 689      |       | 52       |       |
| Changes in  assets and liabilities:                                                       |       |     |       |     |       |     |       |
| Increase in due  from charterers                                                          |       | (37,674  | )          | (10,850  | )          | (5,645   | )          |
| Increase in  prepaid expenses and other current assets                                    |       | (13,502  | )          | (4,819   | )          | (3,433   | )          |
| Increase in accounts  payable and accrued expenses                                        |       | 13,548   |       | 7,261    |       | 4,660    |       |
| (Decrease)  increase in accrued interest                                                  |       | (479     | )          | 7,441    |       | (61      | )          |
| (Decrease)  increase in deferred voyage revenue                                           |       | (772     | )          | 5,586    |       | (2,179   | )          |
| Deferred drydock costs incurred                                                           |       | (17,050  | )          | (14,137  | )          | (13,546  | )          |
| Net cash  provided by operating activities                                                |       | 363,238  |       | 178,112  |       | 43,637   |       |
|                                                                                      |       |     |       |     |       |     |       |
| CASH FLOWS  (USED) PROVIDED BY INVESTING ACTIVITIES:                                      |       |     |       |     |       |     |       |
| Purchase of  vessels                                                                      |       | (182,457 | )          | (528,519 | )          | —   |       |
| Payments for  vessel construction in progress                                             |       | (77,909  | )          | —   |       | —   |       |
| Purchase of  other fixed assets                                                           |       | (2,544   | )          | (1,677   | )          | (217     | )          |
| Proceeds from  sale of vessels                                                            |       | 94,570   |       | 27,277   |       | 2,251    |       |
| Acquisition of  business net of cash received                                             |       | (137     | )          | —   |       | —   |       |
| Net cash (used)  provided by investing activites                                          |       | (168,477 | )          | (502,919 | )          | 2,034    |       |
|                                                                                      |       |     |       |     |       |     |       |
| CASH FLOWS  (USED) PROVIDED BY FINANCING ACTIVITIES:                                      |       |     |       |     |       |     |       |
| Proceeds from  senior notes offering                                                      |       | —   |       | 246,158  |       | —   |       |
| Long-term debt  borrowings                                                                |       | 515,000  |       | 275,000  |       | —   |       |
| Payments to  retire long-term debt                                                        |       | (448,305 | )          | —   |       | —   |       |
| Principal  payments on long - term debt                                                   |       | (59,022  | )          | (91,584  | )          | (74,589  | )          |
| Net (payments)  borrowings on revolving credit facilitities                               |       | (177,000 | )          | (54,100  | )          | 15,000   |       |
| Deferred  financing costs paid                                                            |       | (7,203   | )          | (14,590  | )          | (120     | )          |
| Proceeds from  exercise of stock options                                                  |       | 2,835    |       | 147      |       | —   |       |
| Cash placed in  escrow with lender                                                        |       | (13,050  | )          | —   |       | —   |       |
| Common stock  issuance costs                                                              |       | —   |       | —   |       | (467     | )          |
|                                                                                      |       |     |       |     |       |     |       |
| Net cash (used)  provided by financing activities                                         |       | (186,745 | )          | 361,031  |       | (60,176  | )          |
|                                                                                      |       |     |       |     |       |     |       |
| Net increase  (decrease) in cash                                                          |       | 8,016    |       | 36,224   |       | (14,505  | )          |
| Cash, beginning  of the year                                                              |       | 38,905   |       | 2,681    |       | 17,186   |       |
| Cash, end of  year                                                                        |       | $        | 46,921     |     | $          | 38,905   |       | $ | 2,681 |   |
|                                                                                      |       |     |       |     |       |     |       |
| Supplemental  disclosure of cash flow information:                                        |       |     |       |     |       |     |       |
| Cash paid during  the year for interest (net of amount capitalized)                       |       | $        | 39,310     |     | $          | 28,064   |       | $ | 14,808 |   |

 

Seenotes to consolidated financial statements.

 

F-6

----

 

**GENERAL MARITIME CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002**

**(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)**

** **

**1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

** **

NATUREOF BUSINESS. General Maritime Corporation (the “Company”) through its subsidiariesprovides international transportation services of seaborne crude oil. TheCompany’s fleet is comprised of both Aframax and Suezmax tankers. 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’sdisposal for a set period of time during which the charterermay use the vessel in return for the payment by the chartererof a specified daily or monthly hire rate. In time charters, operating costssuch as for crews, maintenance and insurance are typically paid by the owner ofthe vessel and specified voyage costs such as fuel and port charges are paid bythe charterer.

 

BASISOF PRESENTATION. The financial statements of the Company have been prepared on theaccrual basis of accounting. A summary of the significant accounting policiesfollowed in the preparation of the accompanying financial statements, whichconform to accounting principles generally accepted in the United States ofAmerica, is presented below.

 

Certainreclassifications have been made to the Company’s prior year financialstatements to conform to 2004 presentation.

 

BUSINESS GEOGRAPHICS.  Non-U.S. operationsaccounted for 100% of revenues and net income. Vessels regularly move betweencountries in international waters, over hundreds of trade routes. It istherefore impractical to assign revenues or earnings from the transportation ofinternational seaborne crude oil products by geographical area.

 

SEGMENTREPORTING. The Company has determined that it operates in one reportable segment,the transportation of crude oil with its fleet of midsize tankers. 

 

PRINCIPLESOF CONSOLIDATION. The accompanying consolidated financial statements include the accountsof General Maritime Corporation and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminatedon consolidation.

 

REVENUEAND EXPENSE RECOGNITION. Revenue and expense recognition policies for voyage and time charteragreements are as follows:

 

VOYAGE CHARTERS.  Voyage revenues and voyage expenses arerecognized on a pro rata basis based on the relative transit time in eachperiod. Estimated losses on voyages are provided for in full at the time suchlosses become evident. A voyage is deemed to commence upon the completion ofdischarge of the vessel’s previous cargo and is deemed to end upon thecompletion of discharge of the current cargo. Voyage expenses primarily includeonly those specific costs which are borne by the Company in connection withvoyage charters which would otherwise have been borne by the charterer under time charter agreements.

 

F-7

----

 

Theseexpenses principally consist of fuel and port charges. Demurrage incomerepresents payments by the charterer to the vesselowner when loading and discharging time exceed the stipulated time in thevoyage charter. Demurrage income is measured in accordance with the provisionsof the respective charter agreements and the circumstances under whichdemurrage claims arise and is recognized on a pro rata basis over the length ofthe voyage to which it pertains. At December 31, 2004 and 2003, the Company hasa reserve of approximately $2,320 and $1,143, respectively, against its duefrom charterers balance associated with demurragerevenues.

 

TIME CHARTERS.  Revenue from time charters arerecognized on a straight line basis as the average revenue over the term of therespective time charter agreement. Direct vessel expenses are recognized whenincurred. As of December 31, 2004 and 2003, the Company has a reserve of $2,386and $0, respectively, against its due from charterersbalance associated with estimated performance claims against the Company’s timecharters.

 

VESSELS, NET.  Vessels, net isstated at cost less accumulated depreciation. Included in vessel costs areacquisition costs directly attributable to the vessel and expenditures made toprepare the vessel for its initial voyage. Vessels are depreciated on astraight-line basis over their estimated useful lives, determined to be 25years from date of initial delivery from the shipyard for non-single-hullvessels. During the fourth quarter of 2003, management determined thatsingle-hull vessels can only trade until 2010, when regulatory restrictionsrequire their phase out unless certain conditions are met, resulting in a reductionof the estimated useful lives of single-hull vessels to 19 to 21 years from thedate of initial delivery from the shipyard. This change in estimate resulted in an increase in annual depreciation expenseof approximately $8,500, or $0.23 per share, through 2009 on the Company’s ninesingle-hull vessels owned as of December 31, 2003.  During 2004, the Company sold four of thesesingle-hull vessels.  The change inestimate resulted in an increase in annual depreciation expense ofapproximately $4,700, or $0.13 per share, through 2009 on the Company’s fiveremaining single-hull vessels owned as of December 31, 2004. 

 

Effective January 1, 2004, the Company increasedresidual scrap value of its tankers from one hundred twenty-five dollars($0.125) per light weight ton to one hundred seventy-five dollars ($0.175) perlight weight ton, which the Company believes better approximates the historicalaverage price of scrap steel.  The impactof this change is to reduce depreciation expense by approximately $3,600, or$0.10 per share, per year subsequent to December 31, 2003.

 

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 ofany asset component being replaced is written off as a component of directvessel operating expense. Expenditures for routine maintenance and repairs areexpensed 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 intendeduse).  During the year ended December 31,2004, the Company capitalized $1,270 of interest expense.

 

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

 
| **DESCRIPTION**                          | ** ** | **USEFUL LIVES** | ** ** |
|------------------------------------------|------------|------------------|------------|
| Furniture,  fixtures and other equipment |       | 10 years         |       |
| Vessel equipment                         |       | 5 years          |       |
| Computer equipment                       |       | 4 years          |       |

 

IMPAIRMENT OF LONG-LIVEDASSETS.  The Companyfollows Statement of Financial Accounting Standards (“SFAS”)No. 144, *Accounting for the Impairment or Disposal ofLong-Lived Assets*, which requires impairment losses to be recordedon long-lived assets used in operations when indicators of impairment arepresent and the undiscounted cash flows estimated to be generated by thoseassets are less than the asset’s carrying amount.  In the evaluation of the fair value andfuture benefits of long-lived assets, the Company performs an analysis of the

 

F-8

----

 

anticipatedundiscounted future net cash flows of the related long-lived assets.  If the carrying value of the related assetexceeds the undiscounted cash flows, the carrying value is reduced to its fairvalue. Various factors including future charter rates and vessel operatingcosts are included in this analysis.

 

During the year endedDecember 31, 2004, no impairment charges were recorded,based on the analysis described above. During the year ended December 31, 2003, an impairment charge of $18,803was recorded on five of the Company’s single-hull vessels (see Note 4).  During the year ended December 31, 2002, animpairment charge of $13,366 was recorded on three of the Company’s single-hullvessels which were disposed of during the years ended December 31, 2003 and2002 (see Note 4).

 

DEFERREDDRYDOCK COSTS, NET.  Approximately every 30 to 60 months theCompany’s vessels are required to be drydocked formajor repairs and maintenance, which cannot be performed while the vessels areoperating. The Company capitalizes costs associated with the drydocks as they occur and amortizes these costs on astraight line basis over the period between drydocks.Amortization of drydock costs is included indepreciation and amortization in the statement of operations. For the yearsended December 31, 2004, 2003 and 2002, amortization was $11,783, $7,072 and$4,340, respectively. Accumulated amortization as of December 31, 2004 and 2003was $15,878 and $13,348, respectively.

 

DEFERREDFINANCING COSTS, NET. Deferred financing costs include fees, commissions and legal expensesassociated with securing loan facilities. These costs are amortized over thelife of the related debt, which is included in depreciation and amortization.Amortization was $3,142, $3,468 and $1,492 for the years ended December 31,2004, 2003 and 2002, respectively. Accumulated amortization as of December 31,2004 and 2003 was $2,070 and $4,934, respectively.

 

OTHER ASSETS.  Other assets represents cash placed inescrow, in lieu of being used to repay a portion of the Company’s outstandingterm loan as required by an amendment to the 2004 Credit Facility, relating tothe sale during August and October 2004 of four single-hull Suezmaxvessels.  See Note 8 for furtherdiscussion.

 

GOODWILL.  As of January 1, 2002, the Company adoptedthe provisions for SFAS No. 142 “Goodwill and OtherIntangible Assets.”  This statementrequires that goodwill and intangible assets with indefinite lives no longer beamortized, but instead be tested for impairment at least annually and writtendown with a charge to operations when the carrying amount exceeds the estimatedfair value.  Prior to the adoption of SFAS No. 142, the Company amortized goodwill.  The amount of such unamortized goodwill was$5,753 as of January 1, 2002 related to the Company’s acquisition in June 2001of a technical management company.  Inaccordance with SFAS No. 142 the Company discontinuedthe amortization of goodwill effective January 1, 2002.  The Company determined that there was noimpairment of goodwill as of the transition date and during the years endedDecember 31, 2004, 2003 and 2002.

 

INCOMETAXES.  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 forincome taxes is required.

 

DEFERREDVOYAGE REVENUE. Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts arerecognized as income in the appropriate future periods.

 

COMPREHENSIVEINCOME. The Company follows Statement of Financial Accounting Standards No. 130“Reporting Comprehensive Income”, which establishes standards for reporting anddisplaying comprehensive income and its components in financial statements.Comprehensive income is comprised of net income less chargesrelated to the adoption and implementation of SFASNo. 133.

 

STOCK BASED COMPENSATION*.*  The Company followsthe provisions of Accounting Principles Board Opinion (“APB”) No. 25, *Accounting for Stock Issued to Employees* to account for itsstock option plan. The Company

 

F-9

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providespro forma disclosure of net income and earnings per share as if the accountingprovision of SFAS No. 123, *Accountingfor Stock-Based Compensation* had been adopted.  Options granted are exercisable at pricesequal to the fair market value of such stock on the dates the options weregranted.  The fair values of the optionswere determined on the date of grant using a Black-Scholesoption pricing model. These options were valued based on the following assumptions:an estimated life of five years for all options granted, volatility of 53%,47%, 63% and 54% for options granted during 2004, 2003, 2002 and 2001,respectively, risk free interest rate of 3.85%, 3.5%, 4.0% and 5.5% for optionsgranted during 2004, 2003, 2002 and 2001, respectively, and no dividend yieldfor any options granted. The fair value of the 860,000 options to purchasecommon stock granted on June 12, 2001 is $8.50 per share. The fair valueof the 143,500 options to purchase common stock granted on November 26,2002 is $3.42 per share.  The fair valueof the 50,000, 12,500 and 29,000 options to purchase common stock granted onMay 5, 2003, June 5, 2003 and November 12, 2003 is $3.95 per share,$4.52 per share, and $6.61 per share, respectively.  The fair value of the 20,000 options topurchase common stock granted on May 20, 2004 is $11.22 per share.

 

Had compensation cost forthe Company’s stock option plans been determined based on the fair value at thegrant dates for awards under those plans consistent with the methodsrecommended by SFAS No. 123, the Company’s net income(loss) and net income (loss) per share for the years ended December 31, 2004,2003 and 2002, would have been stated at the pro forma amounts indicated below:

 
| ** **                                                              | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|-------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net Income  (Loss):                                                     |       |     |       |     |       |     |       |
|                                                                    |       |     |       |     |       |     |       |
| As reported                                                             |       | $        | 315,109    |     | $          | 84,518   |       | $ | (9,742 | ) |
| Stock based  compensation expense (benefit) using the fair value method |       | 458      |       | 201      |       | (1,005   | )          |
| Pro forma                                                               |       | $        | 314,651    |     | $          | 84,317   |       | $ | (8,737 | ) |
|                                                                    |       |     |       |     |       |     |       |
| Earnings (loss)  per common share (as reported):                        |       |     |       |     |       |     |       |
|                                                                    |       |     |       |     |       |     |       |
| Basic                                                                   |       | $        | 8.51       |     | $          | 2.29     |       | $ | (0.26 | ) |
| Diluted                                                                 |       | $        | 8.33       |     | $          | 2.26     |       | $ | (0.26 | ) |
|                                                                    |       |     |       |     |       |     |       |
| Earnings (loss)  per common share (pro forma):                          |       |     |       |     |       |     |       |
|                                                                    |       |     |       |     |       |     |       |
| Basic                                                                   |       | $        | 8.49       |     | $          | 2.28     |       | $ | (0.24 | ) |
| Diluted                                                                 |       | $        | 8.32       |     | $          | 2.26     |       | $ | (0.24 | ) |

 

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.Actual results could differ from those estimates.

 

EARNINGSPER SHARE. Basic earnings/(loss) per share are computed bydividing net income/(loss) by the weighted average number of common sharesoutstanding during the year. Diluted income/(loss) pershare reflects the potential dilution that could occur if securities or othercontracts to issue common stock were exercised.

 

FAIRVALUE OF FINANCIAL INSTRUMENTS. The estimated fair values of the Company’s financial instruments otherthan its Senior Notes approximate their individual carrying amounts as ofDecember 31, 2004 and 2003 due to their short-term maturity or thevariable-rate nature of the respective borrowings.  The estimated fair value ofthe Company’s Senior Notes are based on quoted market prices.

 

DERIVATIVEFINANCIAL INSTRUMENTS.  Tomanage its exposure to fluctuating interest rates, the Company uses interestrate swap agreements. Interest rate differentials to be paid or received underthese agreements are

 

F-10

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accrued andrecognized as an adjustment of interest expense related to the designated debt.The fair values of interest rate swap agreements and changes in fair value arerecognized in the financial statements as noncurrentassets or liabilities.

 

Amountsreceivable or payable arising at the settlement of interest rate swaps aredeferred and amortized as an adjustment to interest expense over the period ofinterest rate exposure provided the designated liability continues to exist.

 

INTEREST RATE RISK MANAGEMENT.  The Company is exposed to the impact ofinterest rate changes. The Company’s objective is to manage the impact ofinterest rate changes on earnings and cash flows of its borrowings. The Companyuses interest rate swaps to manage net exposure to interest rate changes relatedto its borrowings and to lower its overall borrowing costs. Significantinterest rate risk management instruments held by the Company during the yearsended December 31, 2004, 2003 and 2002 included pay-fixed swaps. As of December31, 2004, the Company is party to pay-fixed interest rate swap agreements thatexpire in 2006 which effectively convert floating rate obligations to fixedrate instruments.  During the years endedDecember 31, 2004, 2003 and 2002, the Company recognized a credit/(charge) to other comprehensive loss (OCI)of $1,935, $1,890 and $(3,263), respectively. The aggregate liability in connection with a portion of the Company’scash flow hedges as of December 31, 2004 and 2003 was $560 and $2,480,respectively, and is presented as Derivative liability for cash flow hedge onthe balance sheet.

 

CONCENTRATIONOF CREDIT RISK. Financial instruments that potentially subject the Company toconcentrations of credit risk are trade receivables. With respect to accountsreceivable, the Company limits its credit risk by performing ongoing creditevaluations and, when deemed necessary, requiring letters ofcredit, guarantees or collateral. Management does not believesignificant risk exists in connection with the Company’s concentrations ofcredit at December 31, 2004.

 

RECENT ACCOUNTING PRONOUNCEMENTS.  On January 17, 2003, the FinancialAccounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of VariableInterest Entities” (“FIN 46”). Such Interpretation addresses the consolidationof variable interest entities (“VIEs”), includingspecial purpose entities (“SPEs”), that are notcontrolled through voting interests or in which the equity investors do notbear the residual economic risks and rewards. The provisions of FIN 46 wereeffective immediately for transactions entered into by the Company subsequentto January 31, 2003 and became effective for all other transactions as ofJuly 1, 2003. However, in October 2003, the FASBpermitted companies to defer the July 1, 2003 effective date toDecember 31, 2003, in whole or in part. On December 24, 2003, the FASB issued a complete replacement of FIN 46 (“FIN 46R”),which clarified certain complexities of FIN 46 and generally requires adoptionno later than December 31, 2003 for entities that were considered SPEs under previous guidance, andno later than March 31, 2004 for all other entities. The Company adoptedFIN 46R in its entirety as of December 31, 2003 even though adoption fornon-SPEs was not required until March 31, 2004.  The adoption of FIN46R did not have amaterial impact on the Company’s financial statements.

 

In December 2004, the FASB issued SFAS No. 123R thatwill require compensation costs related to share-based payment transactions tobe recognized in the financial statements. With limited exceptions, the amountof compensation cost will be measured based on the grant-date fair value of theequity or liability instruments issued. In addition, liability awards will be remeasuredeach reporting period.  Compensation costwill be recognized over the period that an employee provides service inexchange for the award.  SFAS 123R replaces SFAS No. 123,“Accounting for Stock-Based Compensation”, and supersedes APB 25. ThisStatement will be effective as of the beginning of the first interim or annualreporting period that begins after June 15, 2005.

 

Entitiesthat used the fair-value-based method for either recognition or disclosureunder SFAS No. 123 will apply this revised Statementusing a modified version of prospective application. Under this transitionmethod, for the portion of outstanding awards for which the requisite servicehas not yet been rendered, compensation cost is recognized on or after requiredeffective date based on the grant-date fair value of those awards calculatedunder SFAS No. 123 for either recognition or proforma disclosures. For periods before the required effective date, thoseentities may elect to apply a modified version of the retrospective applicationunder which financial statements for

 

F-11

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periods areadjusted on a basis consistent with the pro forma disclosures required forthose periods by SFAS No. 123.  The Company is currently evaluating theimpact of adopting SFAS No. 123R.

 

**2.  ACQUISITIONS**

** **

Duringthe period from March 2003 to May 2003, the Company acquired 19 tankersfrom an unaffiliated entity consisting of 14 Suezmaxtankers and five Aframax tankers.  The aggregate purchase price of these vesselswas $525,000, which was financed through the use of cash and borrowings underthe Company’s existing revolving credit facilities together with the incurrenceof additional debt described in Note 8.

 

In March 2004, theCompany agreed to acquire three Aframax vessels, two Suezmax vessels, four newbuilding  Suezmax contracts anda technical management company from an unaffiliated entity for cash.  The three Aframax vessels, two Suezmaxvessels and the technical management company were acquired betweenApril and June 2004. The four newbuilding  Suezmax contracts were acquired in July 2004.  The purchase price of these assets wasapproximately $248,100, which were financed through cash on hand and borrowingsunder the Company’s then existing revolving credit facilities. This $248,100purchase price was allocated as follows: $180,599 for the five vessels, $67,242 for the four newbuilding Suezmaxcontracts and $266 for the technical management company the net assets of whichare comprised of $107 of cash, other current assets of $738, noncurrentassets of $82 and current liabilities of $661. In addition, $8,777 was paid to the shipyard as an installment on theconstruction price of the four newbuilding contracts.

 

Theremaining installments on the four newbuilding  Suezmax contracts to be paid by the Company aggregate$152,853 and are payable as follows: $6,514 in 2005, $71,310 in 2006, $42,444in 2007 and $32,585 in 2008.  

 

**3.  EARNINGS (LOSS) PER COMMON SHARE**

** **

Thecomputation of basic earnings (loss) per share is based on the weighted averagenumber of common shares outstanding during the year. The computation of dilutedearnings (loss) per share assumes the exercise of all dilutive stock options(see Note 15) using the treasury stock method and the granting of unvestedrestricted stock awards (see Note 16), for which the assumed proceeds upongrant are deemed to be the amount of compensation cost attributable to futureservices and not yet recognized using the treasury stock method, to the extentdilutive. For the year ended December 31, 2004, all stock options wereconsidered to be dilutive.  For the yearsended December 31, 2003 and 2002, 267,000 and 270,000 stock options,respectively, were excluded from the computation of diluted earnings per commonshare as they were anti-dilutive.

 

Thecomponents of the denominator for the calculation of basicearnings per share and diluted earnings per share is as follows:

 
| ** **                                           | ** ** | **Year ended December 31,** | ** ** |
|------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                           | ** ** | **2004**                    | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                                 |       |                        |       |   |   |   |   |
| Common shares  outstanding, basic:                   |       |                        |       |   |   |   |   |
| Weighted average  common shares outstanding, basic   |       | 37,049,266                  |       | 36,967,174 |   | 36,980,600 |   |
|                                                 |       |                        |       |   |   |   |   |
| Common shares  outstanding, diluted:                 |       |                        |       |   |   |   |   |
| Weighted average  common shares outstanding, basic   |       | 37,049,266                  |       | 36,967,174 |   | 36,980,600 |   |
| Stock options                                        |       | 111,572                     |       | 52,176 |   | — |   |
| Restricted stock  awards                             |       | 653,091                     |       | 336,414 |   | — |   |
|                                                 |       |                        |       |   |   |   |   |
| Weighted average  common shares outstanding, diluted |       | 37,813,929                  |       | 37,355,764 |   | 36,980,600 |   |

 

F-12

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**4.  IMPAIRMENT CHARGE/ GAIN ON SALE OF VESSELS**

 

DuringSeptember 2002, the Company decided to retire a 1979-built single-hull Aframax tanker through its sale for scrap. This decisionwas based on management’s assessment of estimated charter rates for the vesseland the estimated daily operating costs as well as the cost of this vessel’snext drydocking which was scheduled for April2003.  An impairment charge of $4,520 wasrecognized during the year ended December 31, 2002, which was the amount bywhich the vessel’s carrying value exceeded the estimated net proceeds to bereceived upon disposal.  When the vesselwas sold in November 2002, a $266 gain was recognized for the amount by whichnet proceeds received upon sale of the vessel exceeded the vessel’s thencarrying value.  

 

DuringDecember 2002, the Company decided to sell a 1980-built single-hull Aframax tanker and a 1981-built single-hull Aframax tanker. This decision was based on management’sassessment of the projected cost associated with the vessels’ next drydockings which were scheduled to occur during 2003 andthe estimated operating revenues for the vessels over their remaining operatinglives. An impairment charge of $8,846 was recorded during the year endedDecember 31, 2002 that represents the difference between the vessels’ bookvalues and the estimated proceeds from their anticipated sale. These vesselswere written down to their estimated net selling price of $2,000 per vessel,and were reclassified on the December 31, 2002 balance sheet from vessels tovessels held for sale.

 

During2003, the vessels held for sale as of December 31, 2002 were sold, resulting inan aggregate gain on sale of vessels of $2,664. Also during 2003, three double-bottom Aframaxvessels acquired in 2003 were sold, in order to reduce the age profile of theCompany’s fleet, for an aggregate loss on sale of vessels of $1,174.  Of these three vessels, two were delivered totheir new owners in 2003 and one was delivered to its new owner in February2004.

 

In December 2003, theInternational Maritime Organization adopted a proposed amendment to theInternational Convention for the Prevention of Pollution from Ships toaccelerate the phase-out of certain single-hull tankers from 2015 to 2010,unless the flag state extends the date to 2015. Management determined that the useful lives of its nine single-hulltankers would end in 2010, which is four to six years earlier than the 25-yearuseful lives the vessels had previously been ascribed.  Because of the reduction in the useful livesof these single-hull tankers, an impairment evaluation was performed inaccordance with the guidelines of SFAS No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets”.  The completion of the Company’s evaluationindicated that the carrying value of five of its nine single-hull tankers exceededthe expected undiscounted future cash flows attributable to these assets,resulting in an impairment.  The total impairment charge recognized duringthe fourth quarter of 2003 was $18,803. In accordance with the Company’s policy, the impairment loss wasdetermined to be equal to the amount by which the carrying value of these fivetankers exceeded their estimated fair value. Fair values were determined using fair valuations performed by thirdparties.

 

Inaddition to the impairment charge taken on five single-hull tankers, effectiveOctober 1, 2003, the estimated useful lives of the nine single-hull tankerswere reduced to useful lives ranging from 19 to 21 years.  This change in estimate resulted in an increasein annual depreciation expense of approximately $8,500 through 2009 on theCompany’s nine single-hull vessels owned as of December 31, 2003.  During 2004, the Company sold four of thesesingle-hull vessels.  This change inestimate resulted in an increase in annual depreciation expense of approximately$4,700 through 2009 on the Company’s five remaining single-hull vessels ownedas of December 31, 2004.

 

DuringJuly 2004, the Company agreed to sell four of its single-hull Suezmax vessels in order to reduce the number ofsingle-hull vessels in the Company’s fleet. These vessels were sold during August and October 2004 for aggregate netproceeds of approximately $84,182, for a gain on sale of vessels of $6,570.

 

F-13

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

 

Prepaidexpenses and other current assets consist of the following:

 
| ** **                        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                        | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| Bunkers and  lubricants inventory |       | $                | 16,734     |             | $          | 14,198 |   |
| Insurance claims  receivable      |       | 7,108            |       | 530              |       |
| Other                             |       | 7,499            |       | 2,243            |       |
| Total                             |       | $                | 31,341     |             | $          | 16,971 |   |
|                                   |            |                  |            |                  |            |  |  |  |

 

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

 

**6.  OTHER FIXED ASSETS**

 

Otherfixed assets consist of the following:

 

| ** **                         | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------|------------|------------------|------------|------------------|------------|
| ** **                         | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| Other fixed  assets:               |       |             |       |             |       |
| Furniture,  fixtures and equipment |       | $                | 1,050      |             | $          | 948 |   |
| Vessel equipment                   |       | 2,881            |       | 1,786            |       |
| Computer  equipment                |       | 978              |       | 705              |       |
| Total cost                         |       | 4,909            |       | 3,439            |       |
|                               |       |             |       |             |       |
| Less:  accumulated depreciation    |       | 1,060            |       | 1,370            |       |
| Total                              |       | $                | 3,849      |             | $          | 2,069 |   |

 

**7.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES**

** **

Accountspayable and accrued expenses consist of the following:

 
| ** **              | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------|------------|------------------|------------|------------------|------------|
| ** **              | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| Accounts payable        |       | $                | 14,839     |             | $          | 13,357 |   |
| Accrued  operating      |       | 17,763           |       | 8,506            |       |
| Accrued  administrative |       | 4,197            |       | 555              |       |
| Total                   |       | $                | 36,799     |             | $          | 22,418 |   |

 

F-14

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**8.  LONG-TERM DEBT**

 

Long-termdebt consists of the following:

 
| ** **                               | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|------------------|------------|------------------|------------|
| ** **                               | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| First Credit  Facility                   |       |             |       |             |       |
| Term Loan                                |       | $                | —     |             | $          | 86,866 |   |
| Revolving Credit  Facility               |       | —           |       | 13,000           |       |
| Second Credit  Facility                  |       |             |       |             |       |
| Term Loan                                |       | —           |       | 53,000           |       |
| Revolving Credit  Facility               |       | —           |       | 9,000            |       |
| Third Credit  Facility                   |       | —           |       | 247,461          |       |
| 2004 Credit Facility                     |       |             |       |             |       |
| Term Loan                                |       | 205,000          |       | —           |       |
| Revolving Credit  Facility               |       | 35,000           |       | —           |       |
| Senior Notes,  net of discount           |       | 246,597          |       | 246,343          |       |
| Total                                    |       | $                | 486,597    |             | $          | 655,670 |   |
|                                     |       |             |       |             |       |   |   |
| Less: Current  portion of long-term debt |       | 40,000           |       | 59,553           |       |
| Long-term debt                           |       | $                | 446,597    |             | $          | 596,117 |   |
|                                          |            |                  |            |                  |            |  |  |  |  |

 

**2004Credit Facility**

 

On July 1, 2004, theCompany closed on an $825,000 senior secured bank financing facility (“2004Credit Facility”) consisting of a term loan of $225,000 and a revolving loan of$600,000.  The term loan has a five yearmaturity at a rate of LIBOR plus 1.0% and amortizes on a quarterly basis with19 payments of $10,000 and one payment of $35,000. The revolving loancomponent, which does not amortize, has a five year maturity at a rate of LIBORplus 1.0% on the used portion and a 0.5% commitment fee on the unused portion.

 

Concurrent with the closing of the 2004 Credit Facility,pursuant to which the Company borrowed $225,000 under the term loan and$290,000 under the revolving credit facility, the Company retired its existingFirst, Second and Third Credit Facilities described below (the“Refinancing”).  At the time of theRefinancing, the 2004 Credit Facility was secured by the 42 vessels whichcollateralized the First, Second and Third Credit Facilities and the five vesselsdescribed in Note 2 which were acquired during 2004.  In addition, each of our subsidiaries which has an ownership interest in any tanker vessel that issecured by the 2004 Credit Facility has provided unconditional guaranties ofall amounts owing under the 2004 Credit Facility.  Deferred financing costs incurred relating tothe 2004 Credit Facility aggregated $6,905.

 

Upon consummating the Refinancing, unamortized deferredfinancing costs associated with the First, Second and Third Credit Facilitiesaggregating $7,886 was written off as a non-cash charge in July 2004.  This non-cash charge is classified as Other expense on the statement of operations.

 

As of December 31, 2004, the Company had $205,000outstanding on the term loan and $35,000 outstanding on the revolvingloan.  The 2004 Credit Facility issecured by all of the ships in the Company’s 43 vessel fleet, which includesfive vessels acquired in 2004 described in Note 2 with a carrying value atDecember 31, 2004 of $1,139,594 and $13,050 cash held in escrow.

 

As described in Note 4, in August and October 2004, theCompany sold four single-hull Suezmax vessels.  Pursuant to an amendment to the 2004 CreditFacility, the Company is permitted, until August 2005 to substitute ascollateral future vessel acquisitions with a fair value equivalent to thevessels sold.  Had this amendment notbeen agreed to, the Company would, upon the sale of these four vessels, havehad to repay $13,050 associated with the $225,000 term loan and the $600,000revolving credit facility would have been permanently reduced by $35,194.  In accordance with the

 

F-15

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amendment to the 2004 Credit Facility, the Company placed$13,050 in escrow which will be returned to the Company if collateral issubstituted as described above. This amount of cash held in escrow isclassified as Other assets on the Company’s balancesheet.  If such collateral is not fullyprovided, on August 31, 2005, the remaining amount held in the escrow accountwill be used to repay a portion of the term loan.  With respect to the revolving creditfacility, $35,194 is currently not available to be drawn until such substitutecollateral is provided.  To the extentsubstitute collateral is not provided by August 31, 2005, the revolving creditfacility will be permanently reduced.

 

The terms and conditions of the 2004 Credit Facilityrequire compliance with certain restrictive covenants, which the Company feelsare consistent with loan facilities incurred by other shipping companies. Underthe credit facility, the Company is required to maintain certain ratios suchas: vessel market values to total outstanding loans and undrawnrevolving credit facilities, EBITDA to net interestexpense and to maintain minimum levels of working capital.  In addition, the 2004 Credit Facilityrestricts the payment of dividends and repurchase of common shares to anaggregate of $1,000 per year.  

 

**First, Second and Third Credit Facilities- Refinanced by the 2004Credit Facility**

 

The First Credit Facility was comprised of a $200,000term loan and a $100,000 revolving loan. The First Credit Facility was tomature on June 15, 2006. The term loan was repayable in quarterlyinstallments. The principal of the revolving loan was to be payable atmaturity. The First Credit Facility bore interest at LIBOR plus 1.5%. TheCompany was obligated to pay a fee of 0.625% per annum on the unused portion ofthe revolving loan on a quarterly basis. Due to the sale of three of the Aframax tankers securing the First Credit Facility, therevolving loan facility was reduced to $96,519. As of June 30, 2004, the Company had $69,493 outstanding on theterm loan and $50,000 outstanding on the revolving loan.  All of these outstanding balances were repaidduring the Refinancing on July 1, 2004. The Company’s obligations under the First Credit Facility were securedby 17 vessels.

 

The Second CreditFacility consisted of a $115,000 term loan and a$50,000 revolving loan. The Second Credit Facility was to mature on June 27,2006. The term loan was repayable in quarterly installments. The principal ofthe revolving loan was to be payable at maturity.  The Second Credit Facility bore interest atLIBOR plus 1.5%. The Company was obligated to pay a fee of 0.625% per annum onthe unused portion of the revolving loan on a quarterly basis. As ofJune 30, 2004, the Company had $45,000 outstanding on the term loan and$50,000 outstanding on the revolving loan. All of these outstanding balances were repaid during the Refinancing onJuly 1, 2004.  The Company’s obligationsunder the Second Credit Facility agreements were secured by nine vessels.

 

On March 11, 2003 in connection with the 19 vesselsacquired by the Company as discussed in Note 2, the Company entered intocommitments for $450,000 in credit facilities. These credit facilities were comprised of a first priority $350,000amortizing term loan (the “Third Credit Facility”) and a second priority$100,000 non-amortizing term loan (the “Second Priority Term Loan”).  Pursuant to the issuance of the Senior Notesdescribed below, the Third Credit Facility was reduced to $275,000 (suchreduction from $350,000 is treated as a prepayment of the first sixinstallments due under this facility) and the Second Priority Term Loan was eliminated.  The Third Credit Facility was to mature onMarch 10, 2008, was to be repayable in 19 quarterly installments and boreinterest at LIBOR plus 1.625%.  As ofJune 30, 2004, the Company had outstanding $233,812 on the Third CreditFacility.  This outstanding balance wasrepaid during the Refinancing on July 1, 2004. The Company’s obligations under the Third Credit Facility were securedby 16 vessels.

 

Interestrates during the year ended December 31, 2004 ranged from 2.38% to 3.00% on theFirst, Second, Third and 2004 Credit Facilities.

 

**Interest Rate Swap Agreements**

 

In August and October 2001, the Company enteredinto interest rate swap agreements with foreign banks to manage interest costsand the risk associated with changing interest rates.  At their inception, these swaps had notionalprincipal amounts equal to 50% the Company’s outstanding term loans under itsFirst and Second Credit Facilities.  Thenotional principal amounts amortize at the same rate as the term loans.  The interest rate swap agreement entered intoduring August 2001 hedges the First Credit Facility, described above, to afixed rate of 6.25%.  This swap agreementterminates on June 15, 2006.  Theinterest rate swap agreement entered into during October 2001 hedges theSecond Credit Facility, described above, to a fixed rate of 5.485%.  This swap agreement terminates onJune 27, 2006.  The differential tobe paid or received for these swap agreements is recognized as an adjustment tointerest expense as incurred.  As of

 

F-16

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December 31, 2004, the outstanding notional principalamount on the swap agreements entered into during August 2001 andOctober 2001 are $27,000 and $18,500, respectively.  The changes in the notional principal amountsof the swaps during the years ended December 31, 2004 and 2003 are as follows:

 
| ** **                                    | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------|------------|------------------|------------|------------------|------------|
| ** **                                    | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| Notional principal amount, beginning of  year |       | $                | 71,500     |             | $          | 102,750 |   |
| Amortization of swaps                         |       | (26,000          | )          | (31,250          | )          |
| Notional principal amount, end of the year    |       | $                | 45,500     |             | $          | 71,500 |   |
|                                               |            |                  |            |                  |            |  |  |  |

 

The Company has determined that these interest rate swapagreements, which effectively hedged the Company’s First and Second CreditFacilities continues to effectively hedge, but not perfectly, the Company’s2004 Credit Facility.  During the yearended December 31, 2004, a $15 loss was recorded as other expense relating tothe ineffective portion of these hedges.

 

Interestexpense pertaining to interest rate swaps for the years ended December 31,2004, 2003 and 2002 was $1,873, $2,919 and $3,223, respectively.

 

TheCompany would have paid approximately $560 and $2,480 to settle all outstandingswap agreements based upon their aggregate fair values as of December 31, 2004and 2003, respectively. This fair value is based upon estimates received fromfinancial institutions.

 

**Senior Notes**

 

On March 20, 2003,the Company issued $250,000 of 10% Senior Notes which are due March 15,2013.  Interest is paid on the SeniorNotes each March 15 and September 15. The Senior Notes are general unsecured, senior obligations of theCompany.  The proceeds of the SeniorNotes, prior to payment of fees and expenses, were $246,158.  The Senior Notes contain incurrence covenantswhich, among other things, restrict the Company’s future ability to incurfuture indebtedness and liens, to apply the proceeds of asset sales freely, tomerge or undergo other changes of control and to pay dividends, and requiredthe Company to apply a portion of its cash flow during 2003 to the reduction ofits debt under our First, Second and Third facilities.  As of December 31, 2004, the discount onthe Senior Notes is $3,403.  Thisdiscount is being amortized as interest expense over the term of the Senior Notesusing the effective interest method.  TheSenior Notes are guaranteed by all of the Company’s present subsidiaries andfuture “restricted” subsidiaries (all of which are 100% owned by theCompany).  These guarantees are full andunconditional and joint and several with the parent company General MaritimeCorporation.  The parent company, GeneralMaritime Corporation, has no independent assets or operations.  Additionally, certain defaults on other debtinstruments, such as failure to pay interest or principal when due, are deemedto be a default under the Senior Notes agreement.

 

In addition, theprovisions of the Senior Notes require that the proceeds from vessel sales, netof required debt payments made on senior indebtedness, be used to acquireadditional assets within one year from the dates of sale.  If such assets are not acquired, any excessproceeds, after reduction of the indebtedness under the 2004 Credit Facility,are to be used to repurchase Senior Notes. As of December 31, 2004, such excess net proceeds pertaining to the fourvessels sold during August and October 2004 aggregate $35,938, which, if notused to acquire additional assets through August 2005, will be used torepurchase Senior Notes.

 

In accordance with the terms of its Senior Notes, theCompany cannot make cumulative “restricted payments” in excess of the sum of(1) 50% of net income earned subsequent to December 31, 2002, (2) cashproceeds from common stock issued subsequent to December 31, 2002, and (3)$25,000.  “Restricted payments”principally include dividends, purchases of the Company’s common stock, andrepayments of debt subordinate to the Senior Notes prior to their maturity.

 

As of December 31, 2004, the Company is in compliancewith all of the financial covenants under its 2004 Credit Facility and itsSenior Notes.

 

F-17

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Based on borrowings as ofDecember 31, 2004, aggregate maturities under the Senior Notes and the 2004Credit Facility are as follows:

 
| **PERIOD ENDING DECEMBER 31,** | ** ** | **2004 Credit  Facility** | ** **  | **Senior  Notes** | ** ** | **TOTAL**   | ** ** |
|--------------------------------|------------|---------------------------|-------------|-------------------|------------|-------------|------------|
| 2005                           |       | $                         | 40,000      |              | $          | —      | ** ** | **$** | **40,000** | ** ** |
| 2006                           |       | 40,000                    |        | —            | ** ** | **40,000**  | ** ** |
| 2007                           |       | 40,000                    |        | —            | ** ** | **40,000**  | ** ** |
| 2008                           |       | 40,000                    |        | —            | ** ** | **40,000**  | ** ** |
| 2009                           |       | 80,000                    | ** **  | ** **        | ** ** | **80,000**  | ** ** |
| Thereafter                     |       | —                    |        | 250,000           | ** ** | **250,000** | ** ** |
|                           |       |                      |        |              |       |        |       |
| ** **                     | ** ** | **$**                     | **240,000** | ** **        | **$**      | **250,000** | ** ** | **$** | **490,000** | ** ** |
|                                |            |                           |             |                   |            |             |            |  |  |  |  |  |

 

Interestexpense under all of the Company’s credit facilities, Senior Notes and interestrate swaps aggregated  $38,831, $35,505and $14,747 for the years ended December 31, 2004, 2003 and 2002, respectively.

 

**9.FAIR VALUE OF FINANCIAL INSTRUMENTS**

 

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

 
| ** **                                | ** ** | **December 31, 2004** | ** ** | **December 31, 2003** | ** ** |
|-------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                | ** ** | **Carrying**          | ** ** | **Fair**              | ** ** | **Carrying** | ** ** | **Fair** | ** ** |
| ** **                                | ** ** | **Value**             | ** ** | **Value**             | ** ** | **Value** | ** ** | **Value** | ** ** |
| Cash                                      |       | $                     | 46,921     |                  | $          | 46,921 |   | $ | 38,905 |   | $ | 38,905 |   |
| Floating rate debt                        |       | 240,000               |       | 240,000               |       | 409,327 |   | 409,327 |   |
| Senior Notes                              |       | 246,597               |       | 288,750               |       | 246,343 |   | 282,500 |   |
| Cash flow hedges - net liability position |       | 560                   |       | 560                   |       | 2,480 |   | 2,480 |   |
|                                           |            |                       |            |                       |            |  |  |  |  |  |  |  |  |

 

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 Senior Notes has beendetermined based quoted market prices as of December 31, 2004 and 2003.

 

**10.REVENUE FROM TIME CHARTERS**

 

Totalrevenue earned on time charters for the years ended December 31, 2004, 2003 and2002 was $87,944, $58,743 and $28,293, respectively. Future minimum timecharter revenue, based on vessels committed to non-cancelable time chartercontracts as of December 31, 2004 will be $66,931 during 2005 and $1,501 during2006.

 

**11.  LEASE PAYMENTS**

** **

InFebruary 2004, the Company entered into an operating lease for anaircraft.  The lease has a term of fiveyears and requires monthly payments by the Company of $125.

 

InDecember 2004, the Company entered into a 15-year lease for office space in NewYork, New York.  The monthly rental is asfollows: Free rent from December 1, 2004 to September 30, 2005, $110 per monthfrom October 1, 2005 to September 30, 2010, $119 per month from October 1, 2010to September 30, 2015, and $128 per month

 

F-18

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fromOctober 1, 2015 to September 30, 2020. The monthly straight-line rental expensefrom December 1, 2004 to September 30, 2020 is $113. 

 

Futureminimum rental payments on the above leases for the next five years are asfollows: 2005- $1,829, 2006- $2,817, 2007- $2,817, 2008- $2,817, 2009-$1,442,thereafter- $15,800.

 

**12.  SIGNIFICANT CUSTOMERS**

** **

Forthe year ended December 31, 2004, the Company earned $108,034 from one customerwhich represented 15.4% of voyage revenues. For the years ended December 31, 2003 and 2002, the Company did not earn10% or more of its voyage revenues from any single customer. 

 

**13.  RELATED PARTY TRANSACTIONS**

** **

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

 

TheCompany rents office space as its principal executive offices in a buildingcurrently leased by GenMar Realty LLC, a company wholly owned by Peter C.Georgiopoulos, the Chairman and Chief Executive Officer of the Company. Thereis no lease agreement between the Company and GenMar Realty LLC. The Companycurrently pays an occupancy fee on a month to month basis in the amount of$55.  For the years ended December 31,2004, 2003 and 2002, the Company’s occupancy fees were $660 in each year.

 

During2000, the Company loaned $486 to Mr. Peter C. Georgiopoulos.  This loan is included in prepaid expenses andother current assets.  This loan does notbear interest and is due and payable on demand. The full amount of this loan was outstanding as of December 31, 2004.

 

Duringthe years ended December 31, 2004 and 2003, the Company incurred legal services(primarily in connection with vessel acquisitions in 2003 and 2004 as well asflag changes of certain vessels in 2004) aggregating $284 and $249,respectively, from the father of Mr. Peter Georgiopoulos. All of the amountsdue to the father of Mr. Georgiopoulos have been paid as of December 31,2004.  

 

InJuly 2004, the Company paid $200 of professional fees associated with its 2004acquisitions described in Note 2 to American Marine Advisors, Inc., a companywhich has a senior vice president that is also a member of the Company’s boardof directors.

 

**14.  SAVINGS PLAN**

 

InNovember 2001, the Company established a 401(k) Plan (the “Plan”) which isavailable to full-time employees who meet the Plan’s eligibility requirements.This Plan is a defined contribution plan, which permits employees to makecontributions up to 15 percent of their annual salaries with the Companymatching up to the first three percent until April 2003 and six percentthereafter. The matching contribution vests over a four year period,retroactive to date of hire. During 2004, 2003 and 2002, the Company’s matchingcontribution to the Plan was $272, $178 and $90, respectively.

 

**15.  STOCK OPTION PLAN**

 

OnJune 10, 2001, the Company adopted the General Maritime Corporation 2001 StockIncentive Plan. Under this plan the Company’s compensation committee, anotherdesignated committee of the board of directors or the board of directors, maygrant a variety of stock based incentive awards to employees, directors andconsultants whom the compensation committee (or other committee or the board ofdirectors) believes are key to the Company’s success. The compensationcommittee may award incentive stock options, nonqualified stock options, stockappreciation rights, dividend equivalent rights, restricted stock, unrestrictedstock and performance shares.

 

F-19

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Theaggregate number of shares of common stock available for award under the 2001Stock Incentive Plan is 2,900,000 shares. On June 12, 2001, the Company grantedincentive stock options and nonqualified stock options to purchase 860,000shares of common stock at an exercise price of $18.00 per share (the initialpublic offering price) under the provisions of the 2001 Stock Incentive Plan.These options expire in 10 years. Options to purchase 110,000 shares of commonstock vested immediately on June 12, 2001, the date of the grant. 25% of theremaining 750,000 options will vest on each of the first four anniversaries ofthe grant date. All options granted under this plan will vest upon a change ofcontrol, as defined. These options will be incentive stock options to theextent allowable under the Internal Revenue Code.  During 2003, 32,000 of these options wereforfeited.

 

OnNovember 26, 2002, the Company’s chief executive officer and chief operatingofficer surrendered to the Company outstanding options to purchase an aggregateof 590,000 shares of common stock. Also on November 26, 2002, options topurchase 143,500 were granted to other employees at an exercise price of $6.06(the closing price on the date of grant). These options will generally vest infour equal installments on each of the first four anniversaries of the date ofgrant.  During 2003, 24,375 of theseoptions were exercised and 5,250 of these options were forfeited.

 

On May 5, 2003, the Company granted options to purchase 50,000 sharesof common stock to the Company’s chief financial officer at an exercise priceof $8.73 (the closing price on the date of grant). These options were scheduledto vest in four equal installments on each of the first four anniversaries ofthe date of grant.  During 2003, all ofthese options were forfeited.

 

On June 5, 2003, the Company granted options to purchase an aggregateof 12,500 shares of common stock to five outside directors of the Company at anexercise price of $9.98 (the closing price on the date of grant). These optionswill vest in four equal installments on each of the first four anniversaries ofthe date of grant.

 

On November 12, 2003, the Company granted options to purchase anaggregate of 29,000 shares of common stock to certain employees of the Companyat an exercise price of $14.58 (the closing price on the date of grant). Theseoptions will vest in four equal installments on each of the first four anniversariesof the date of grant.

 

On May 20, 2004, the Company granted options to purchase an aggregateof 20,000 shares of common stock to certain members of the Company’s board ofdirectors at an exercise price of $22.57 (the closing price on the date of grant).  These options will vest in four equalinstallments on each of the first four anniversaries of the date of grant.

 

The Company follows the provisions of APB 25  to account for its stock option plan. TheCompany provides pro forma disclosure of net income and earnings per share asif the accounting provision of SFAS No. 123 had been adopted.  Options granted are exercisable at pricesequal to the fair market value of such stock on the dates the options weregranted.  The fair values of the optionswere determined on the date of grant using a Black-Scholes option pricingmodel. These options were valued based on the following assumptions: anestimated life of five years for all options granted, volatility of 53%, 47%,63% and 54% for options granted during 2004, 2003, 2002 and 2001, respectively,risk free interest rate of 3.85%, 3.5%, 4.0% and 5.5% for options grantedduring 2004, 2003, 2002 and 2001, respectively, and no dividend yield for anyoptions granted. The fair value of the 860,000 options to purchase common stockgranted on June 12, 2001 is $8.50 per share. The fair value of the 143,500options to purchase common stock granted on November 26, 2002 is $3.42 pershare.  The fair value of the 50,000,12,500 and 29,000 options to purchase common stock granted on May 5, 2003,June 5, 2003 and November 12, 2003 is $3.95 per share, $4.52 pershare, and $6.61 per share, respectively. The fair value of the 20,000 options to purchase common stock granted onMay 20, 2004 is $11.22 per share.

 

F-20

----

 

Thefollowing table summarizes stock option activity since the inception of optiongrants by the Company:

 
| ** **                     | ** ** | **Number of  Options** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Fair Value** | ** ** |
|--------------------------------|------------|------------------------|------------|----------------------------------------|------------|-----------------------------------|------------|
|                           |       |                   |       |                                   |       |                              |       |
| Outstanding, January 1, 2001   |       | —                 |       | $                                      | —     |                              | $          | — |   |
|                           |       |                   |       |                                   |       |                              |       |
| Granted                        |       | 860,000                |       | $                                      | 18.00      |                              | $          | 8.50 |   |
| Exercised                      |       | —                 |       | —                                 |       | —                            |       |
| Forfeited                      |       | —                 |       | —                                 |       | —                            |       |
|                           |       |                   |       |                                   |       |                              |       |
| Outstanding, December 31, 2001 |       | 860,000                |       | $                                      | 18.00      |                              | $          | 8.50 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Granted                        |       | 143,500                |       | $                                      | 6.06       |                              | $          | 3.42 |   |
| Exercised                      |       | —                 |       |                                   |       |                              |       |
| Forfeited                      |       | (590,000               | )          | $                                      | 18.00      |                              | $          | 8.50 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Outstanding, December 31, 2002 |       | 413,500                |       | $                                      | 13.86      |                              | $          | 6.74 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Granted                        |       | 91,500                 |       | $                                      | 10.35      |                              | $          | 4.87 |   |
| Exercised                      |       | (24,375                | )          | $                                      | 6.06       |                              | $          | 3.42 |   |
| Forfeited                      |       | (87,250                | )          | $                                      | 12.82      |                              | $          | 4.66 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Outstanding, December 31, 2003 |       | 393,375                |       | $                                      | 13.75      |                              | $          | 6.97 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Granted                        |       | 20,000                 |       | $                                      | 22.57      |                              | $          | 11.22 |   |
| Exercised                      |       | (186,850               | )          | $                                      | 15.15      |                              | $          | 7.23 |   |
| Forfeited                      |       | (13,500                | )          | $                                      | 16.86      |                              | $          | 7.82 |   |
|                           |       |                   |       |                                   |       |                              |       |   |   |
| Outstanding, December 31, 2004 |       | 213,025                |       | $                                      | 13.68      |                              | $          | 7.13 |   |

 

Thefollowing table summarizes certain information about stock options outstandingas of December 31, 2004:

 
| ** **                  | ** ** | **Options Outstanding, December 31, 2004** | ** ** | **Options Exercisable,  December 31, 2004** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|---------------------------------------------|------------|
| **Range of Exercise Price** | ** ** | **Number of  Options**                     | ** ** | **Weighted  Average  Exercise Price**       | ** ** | **Weighed  Average  Remaining  Contractual  Life** | ** ** | **Number of  Options** | ** ** | **Weighted  Average  Exercise  Price** | ** ** |
|                        |       |                                       |       |                                        |       |   |   |   |   |   |   |
| $                           | 6.06       |                                       |       | 70,875                                      |       | $ | 6.06 |   | 7.9 |   | 1,750 |   | $ | 6.06 |   |
| $                           | 9.98       |  - $ 14.58                       |       | 32,250                                      |       | $ | 12.89 |   | 8.7 |   | 4,500 |   | $ | 12.02 |   |
| $                           | 18.00      |  - $22.57                             |       | 109,900                                     |       | $ | 18.83 |   | 6.9 |   | 44,100 |   | $ | 18.00 |   |
|                        |       |                                       |       |                                        |       |   |   |   |   |   |   |
|                        |       | 213,025                                    |       | $                                           | 13.68      |   | 7.5 |   | 50,350 |   | $ | 17.05 |   |

 

**16.  RESTRICTED STOCK AWARDS**

** **

OnNovember 26, 2002, the Company made grants of restricted common stock in theamount of 500,000 shares to its Chief Executive Officer, and 125,000 shares toits President and Chief Operating Officer. The restrictions on these shareswill lapse seven years from the date of grant (or earlier upon the death,disability, dismissal without cause or resignation for good reason of therecipient or upon a change of control of the Company). Upon grant of the

 

F-21

----

 

restrictedstock, an amount of unearned compensation equivalent to the market value at thedate of grant was charged to Shareholders’ Equity.  This charge is being amortized to general andadministrative expenses at a rate of $541 per annum (pro rata for the remainderof 2002).

 

OnNovember 12, 2003, the Company made grants of restricted common stock in theamount of 155,000 shares to certain officers and employees of the Company.  Of this total, 75,000 restricted shares weregranted to the chief executive officer of the Company and 30,000 restrictedshares were granted to the president of General Maritime Management LLC(“GMM”), a wholly-owned subsidiary of the Company.  The remaining 50,000 restricted shares weregranted to other officers and employees of the Company and GMM.  The restrictions on these shares lapse 20% oneach anniversary date from the date of grant and become fully vested after fiveyears.  Upon grant of the restrictedstock, an amount of unearned compensation equivalent to the market value at thedate of grant was charged to Shareholders’ Equity.  Amortization of this charge, which isincluded in general and administrative expenses, was $1,126 and $147 in 2004and 2003, respectively, and will be $568, $300 and $119 in 2005, 2006 and 2007,respectively. 

 

**17.  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.

 

**18.SUBSEQUENT EVENTS**

** **

OnJanuary 26, 2005 the Company announced that its board of directors hasinitiated a cash dividend policy. Under the policy, the Company plans todeclare quarterly dividends to shareholders in April, July, October andFebruary of each year based on its EBITDA after interest expense and reserves,as established by the board of directors. The Company expects to declare its initial quarterly dividend followingthe announcement of its first quarter 2005 results during the fourth week of April2005. 

 

Theindenture of the Company’s Senior Notes generally allows the Company to paydividends and other “restricted payments” up to an amount equal to 50% of thecumulative net income earned since the first quarter of 2003 plus an additional$25,000.  The Company is currentlyexploring various options for ensuring its ability to pay dividends as definedby the new dividend policy, and will review available equity and debt financingalternatives from time to time. Any dividends paid will be subject to theconsent of the Company’s lenders under its 2004 Credit Facility and applicableprovisions of Marshall Islands law. 

 

OnFebruary 9, 2005, the Company made grants of restricted common stock in theamount of 304,500 shares to certain officers and employees of the Company.  Of this total, 150,000, 10,000 and 10,000restricted shares were granted to the chief executive officer, chief financialofficer and chief administrative officer, respectively, of the Company and50,000 restricted shares were granted to the president of GMM.  The remaining 84,500 restricted shares weregranted to other officers and employees of the Company and GMM.  The restrictions on the 150,000 sharesgranted to the Chief Executive Officer of the Company will lapse on November16, 2014.  The restrictions on theremaining 154,500 shares will lapse as to 20% of these shares on November 16,2005 and as to 20% of these shares on November 16 of each of the four yearsthereafter, and will become fully vested on November 16, 2009.  Upon grant of the restricted stock, an amountof unearned compensation equivalent to the market value at the date of grant,or $14,631, will be charged to Shareholders’ Equity.  Amortization of this charge, which will be includedin general and administrative expenses, will be $3,995, $2,716, $1,913, $1,398,and $1,010 in 2005, 2006, 2007, 2008 and 2009, respectively. Amortizationsubsequent to 2009 will be $3,599. 

 

On February 4, 2005, one of the Company’s Suezmax vessels, the *Genmar Kestrel*, was involved in a collision with theSingapore-flag tanker which necessitated the trans-shipment of the *Genmar Kestrel’s* cargo and drydocking the

 

F-22

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vessel for repairs.  The incidentresulted in the leakage of some oil to the sea. Due to a combination of prompt clean up efforts, a light cargo onboardat the time of collision and favorable weather conditions, the Company believesthat the incident resulted in minimal environmental damage and expects thatsubstantially all of the liabilities associated with the incident will becovered by insurance.

 

F-23

----

 

**ITEM8. SUPPLEMENTARY DATA**

 

**Quarterly Results of Operations (Unaudited)**

**(In thousands, except per share amounts)**

 
| ** **                           | ** ** | **2004 Quarter Ended** | ** ** | **2003 Quarter Ended** | ** ** |
|--------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                           | ** ** | **March 31**           | ** ** | **June 30**            | ** ** | **Sept. 30** | ** ** | **Dec. 31** | ** ** | **March 31** | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31** | ** ** |
|                                 |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage revenues                      |       | $                      | 171,588    |                   | $          | 140,229 |   | $ | 156,261 |   | $ | 233,213 |   | $ | 91,493 |   | $ | 126,248 |   | $ | 109,848 |   | $ | 126,867 |   |
| Operating income                     |       | 87,981                 |       | 51,461                 |       | 72,260 |   | 149,160 |   | 38,283 |   | 46,136 |   | 17,583 |   | 17,559 |   |
| Net Income                           |       | 78,274                 |       | 41,685                 |       | 54,622 |   | 140,528 |   | 34,379 |   | 35,735 |   | 7,049 |   | 7,355 |   |
|                                 |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (Loss) Per Common Share:    |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                |       | $                      | 2.12       |                   | $          | 1.13 |   | $ | 1.47 |   | $ | 3.79 |   | $ | 0.93 |   | $ | 0.97 |   | $ | 0.19 |   | $ | 0.20 |   |
| Diluted                              |       | $                      | 2.08       |                   | $          | 1.10 |   | $ | 1.44 |   | $ | 3.70 |   | $ | 0.92 |   | $ | 0.96 |   | $ | 0.19 |   | $ | 0.20 |   |
|                                 |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding: |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                |       | 36,991                 |       | 37,032                 |       | 37,051 |   | 37,121 |   | 36,965 |   | 36,965 |   | 36,965 |   | 36,974 |   |
| Diluted                              |       | 37,672                 |       | 37,779                 |       | 37,875 |   | 37,942 |   | 37,216 |   | 37,265 |   | 37,381 |   | 37,467 |   |

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

 

Nochanges were made to, nor was there any disagreement with the Company’sindependent auditors regarding, the Company’s accounting or financialdisclosure.

 

**ITEM9A.  CONTROLS AND PROCEDURES**

** **

**EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.**

** **

Withinthe 90 days prior to the date of this report, the Company carried out anevaluation, under the supervision and with the participation of the Company’smanagement, including the Company’s Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. Basedupon that evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that the Company’s disclosure controls and procedures are effectivein alerting them timely to material information relating to the Companyrequired to be included in the Company’s periodic SEC filings.            

 

**INTERNAL CONTROL OVER FINANCIAL REPORTING**

** **

**MANAGEMENT REPORT ON INTERNAL CONTROL OVERFINANCIAL 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. 

 

Our internal control overfinancial reporting includes those policies and procedures that: 

 

•                  Pertain to themaintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of General MaritimeCorporation; 

 

47

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•                  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. 

 

Because of its inherentlimitations, internal control over financial reporting may not prevent ordetect misstatements. Also, projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree or compliance with thepolicies or procedures may deteriorate. 

 

Management assessed theeffectiveness of General Maritime Corporation’s internal control over financialreporting as of December 31, 2004. In making this assessment, management usedthe criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (COSO) in Internal Control-Integrated Framework. Based onour assessment and those criteria, management believes that General Maritime Corporationmaintained effective internal control over financial reporting as of December31, 2004.  

 

##### ***General Maritime Corporation’s independent registered publicaccounting firm has audited and issued their report on management’s assessmentof General Maritime Corporation’s internal control over financial reporting,which appears below.***

 

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Board of Directors andStockholders of

General Maritime Corporation

New York, New York

 

We haveaudited management’s assessment, included in the accompanying Management Reporton Internal Control over Financial Reporting, that General Maritime Corporationand subsidiaries (the “Company”) maintained effective internal control overfinancial reporting as of December 31, 2004, based on Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission.  The Company’smanagement is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting.  Ourresponsibility is to express an opinion on management’s assessment and anopinion on the effectiveness of the Company’s internal control over financialreporting based on our audit.

 

We conductedour audit in accordance with the standards of the Public Company AccountingOversight Board (United States).  Thosestandards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting wasmaintained in all material respects.  Ouraudit included obtaining an understanding of internal control over financialreporting, evaluating management’s assessment, testing and evaluating thedesign and operating effectiveness of internal control, and performing suchother procedures as we considered necessary in the circumstances.  We believe that our audit provides areasonable basis for our opinions.

 

A company’sinternal control over financial reporting is a process designed by, or underthe supervision of, the company’s principal executive and principal financialofficers, or persons performing similar functions, and effected by thecompany’s board of directors, management, and other personnel to provide reasonableassurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generallyaccepted accounting principles.  Acompany’s internal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

 

Because of theinherent limitations of internal control over financial reporting, includingthe possibility of collusion or improper management override of controls,material misstatements due to error or fraud may not be prevented or detectedon a timely basis.  Also, projections ofany evaluation of the effectiveness of the internal control over financialreporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

 

In ouropinion, management’s assessment that the Company maintained effective internalcontrol over financial reporting as of December 31, 2004, is fairly stated, inall material respects, based on the criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31, 2004,based on the criteria established in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

We have alsoaudited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the consolidated financial statements as ofand for the year ended December 31, 2004 of the Company and our report datedMarch 14, 2005 expressed an unqualified opinion on those financial statements.

 
| /s/ Deloitte  & Touche LLP |   |
|--------------------------------|--------|
| New York,  New York            |
| March 14,  2005                |

 

**CHANGES IN INTERNAL CONTROLS**

** **

Therehave been no significant changes in our internal controls or in other factorsthat could have significantly affected those controls subsequent to the date ofour most recent evaluation of internal controls.

 

**PART III**

** **

**ITEM10.  DIRECTORS AND EXECUTIVE OFFICERS OFTHE REGISTRANT**

** **

Information regarding General Maritime’sdirectors and executive officers is set forth in General Maritime’s ProxyStatement 

for its 2005Annual Meeting of Shareholders to be filed with the Securities and ExchangeCommission not later than 120 days after December 31, 2004 (the “2005 ProxyStatement”) and is incorporated by reference herein.  Information relating to our Code of Conductand Ethics and to compliance with Section 16(a) of the 1934 Act is set forth inour 2005 Proxy Statement relating and is incorporated by reference herein.

 

We intend to satisfy the disclosure requirements under Item 5.05 ofForm 8-K regarding amendment to, or waiver from, a provision of the Code ofEthics for Chief Executive and Senior Financial Officers by posting suchinformation on our website, www.generalmaritimecorp.com.

 

Pursuant to Section 303A.12(a) of the New York Stock ExchangeListed Company Manual, the Company submitted the Annual CEO Certification tothe New York Stock Exchange during 2004.

 

48

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**ITEM11.  EXECUTIVE COMPENSATION**

** **

Informationregarding compensation of General Maritime’s executive officers andinformation with respect to Compensation Committee Interlocks and InsiderParticipation in compensation decisions isset forth in the 2005 Proxy Statement and is incorporatedby reference herein.  

** **

**ITEM12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

** **

Informationregarding the beneficial ownership of shares of General Maritime’s common stockby certain persons is set forth in the 2005 ProxyStatement and is incorporated by reference herein.  

** **

**ITEM13.  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

** **

Informationregarding certain transactions of General Maritime is set forth in the 2005 ProxyStatement and is incorporated by reference herein.  

** **

**ITEM 14. PRINCIPAL ACCOUNTANT FEES ANDSERVICES**

** **

Information regardingour accountant fees and services is set forth in the 2005 ProxyStatement and is incorporated by reference herein.  

** **

**PART IV**

** **

**ITEM15.  EXHIBITS, FINANCIAL STATEMENTSCHEDULES AND REPORTS ON FORM 8-K**

** **

(a)           The following documents are filed asa part of this report:

 
| 1.     |   | The  financial statements listed in the “Index to Consolidated Financial  Statements.”                                                                                                                                                                                                                             |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.     |   | The  financial statement schedules listed in the “Index to Financial Statement  Schedules.”                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 3.     |   | Exhibits:                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.1    |   | Plan  of Recapitalization.(1)                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.2    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.  (subsequently renamed General Maritime Corporation), Ajax Limited  Partnership, the limited partners of Ajax Limited Partnership, Genmar Ajax  Ltd., Peter C. Georgiopoulos, Genmar Ajax Corporation and GMC Administration  Ltd.(3) |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.3    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings, Ltd.,  Ajax II, L.P., the limited partners of Ajax II, L.P., Ajax II LLC, Peter C.  Georgiopoulos, Genmar Ajax II Corporation and GMC Administration Ltd.(3)                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.4    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.,  Ajax II, L.P., the limited partners of Boss, L.P., Genmar Boss Ltd., Peter C.  Georgiopoulos, Genmar Boss Corporation and GMC Administration Ltd.(3)                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                         |
| 2.5    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.,  General Maritime I, L.P., the limited partners of General Maritime I, L.P.,  General                                                                                                                                                |

 

49

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|   |   | Maritime  I Corporation, Peter C. Georgiopoulos, Genmar Maritime I Corporation and GMC  Administration Ltd., and amendment thereto.(1)                                                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.6    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.,  General Maritime II, L.P., the limited partners of General Maritime II, L.P.,  General Maritime II Corporation, Peter C. Georgiopoulos, Genmar Maritime II  Corporation and GMC Administration Ltd.(3) |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.7    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.,  Harriet, L.P., the limited partners of Harriet, L.P., General Maritime III Corporation,  Peter C. Georgiopoulos, Genmar Harriet Corporation and GMC Administration  Ltd.(3)                            |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.8    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd., and  Pacific Tankship, L.P., the limited partners of Pacific Tankship, L.P.,  Genmar Pacific Ltd., Peter C. Georgiopoulos, Genmar Pacific Corporation and  GMC Administration Ltd.(3)                   |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.9    |   | Contribution  Agreement, dated May 25, 2001, among General Maritime Ship Holdings Ltd.,  Genmar Alexandra, LLC Genmar II, LLC, Equili Company, L.P., Equili Company,  LLC, Equili Company II, L.P. and Equili Company II, LLC.(3)                                                               |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.10   |   | Vessel  Contribution Agreement, dated April 26, 2001, between General Maritime Ship  Holdings Ltd. and Blystad Shipholding Inc., Liberia.(3)                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.11   |   | Memorandum  of Agreement, dated April 26, 2001, between Blystad Shipholding Inc., Liberia  and General Maritime Ship Holdings Ltd.(3)                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.12   |   | Memorandum  of Agreement, dated April 26, 2001, between Blystad Shipholding Inc., Liberia  and General Maritime Ship Holdings Ltd.(3)                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.13   |   | Vessel  Contribution Agreement, dated May 25, 2001, between General Maritime Ship  Holdings Ltd. and KS Stavanger Prince.(3)                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.14   |   | Memorandum  of Agreement, dated May 4, 2001, between KS Stavanger Prince and General  Maritime Ship Holdings Ltd. (3)                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.15   |   | Letter  Agreement, dated May 25, 2001, between General Maritime Ship Holdings, Ltd.  and Peter C. Georgiopoulos relating to the acquisition of the old Maritime  Corporation.(3)                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                            |
| 2.16   |   | Reorganization  Agreement, dated as of September 9, 2002, between General Maritime  Corporation and certain of its then existing subsidiaries relating to the  reorganization of General Maritime Corporation and its various  subsidiaries.(*)                                                 |
|   |   |                                                                                                                                                                                                                                                                                            |
| 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)                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                            |
| 4.1    |   | Form  of Common Stock Certificate of General Maritime Corporation.(2)                                                                                                                                                                                                                           |

 

50

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| 4.2    |   | Form of Registration Rights Agreement.(3)                                                                                                                             |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                  |
| 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)                                                                                                         |
|   |   |                                                                                                                                                                  |
| 10.1   |   | $300,000,000  Credit Agreement dated June 12, 2001 among General Maritime Corporation,  Christiania Bank og KreditKasse ASA, New York Branch and various Lenders.(2)  |
|   |   |                                                                                                                                                                  |
| 10.2   |   | Form  of First Preferred Ship Mortgage on Marshall Islands Flag Vessel, related to  $300,000,000 Credit Agreement.(1)                                                 |
|   |   |                                                                                                                                                                  |
| 10.3   |   | Form  of First Preferred Ship Mortgage on Liberian Flag Vessel, related to  $300,000,000 Credit Agreement.(1)                                                         |
|   |   |                                                                                                                                                                  |
| 10.4   |   | Form  of Deed of Covenants to accompany a First Preferred Statutory Mortgage on  Malta Flag Vessel, related to $300,000,000 Credit Agreement.(1)                      |
|   |   |                                                                                                                                                                  |
| 10.5   |   | Form  of Deed of Covenants to accompany a First Preferred Statutory Mortgage on  Norwegian Flag Vessel, related to $300,000,000 Credit Agreement.(1)                  |
|   |   |                                                                                                                                                                  |
| 10.6   |   | Form  of Insurance Assignment, related to $300,000,000 Credit Agreement.(1)                                                                                           |
|   |   |                                                                                                                                                                  |
| 10.7   |   | Form  of Earnings Assignment, related to $300,000,000 Credit Agreement.(1)                                                                                            |
|   |   |                                                                                                                                                                  |
| 10.8   |   | Form  of Master Vessel and Collateral Trust Agreement, related to $300,000,000  Credit Agreement.(1)                                                                  |
|   |   |                                                                                                                                                                  |
| 10.9   |   | Form  of Subsidiaries Guaranty, related to $300,000,000 Credit Agreement.(1)                                                                                          |
|   |   |                                                                                                                                                                  |
| 10.10  |   | Form  of Pledge and Security Agreement, related to $300,000,000 Credit Agreement.(1)                                                                                  |
|   |   |                                                                                                                                                                  |
| 10.11  |   | $165,000,000 Credit Agreement dated June 27, 2001 among General  Maritime Corporation, Christiania Bank og KreditKasse ASA, New York Branch  and various Lenders. (4) |
|   |   |                                                                                                                                                                  |
| 10.12  |   | Form  of Insurance Assignment, related to $165,000,000 Credit Agreement.(4)                                                                                           |
|   |   |                                                                                                                                                                  |
| 10.13  |   | Form  of Earnings Assignment, related to $165,000,000 Credit Agreement.(4)                                                                                            |
|   |   |                                                                                                                                                                  |
| 10.14  |   | Form  of Subsidiaries Guaranty, related to $165,000,000 Credit Agreement.(4)                                                                                          |
|   |   |                                                                                                                                                                  |
| 10.15  |   | Form  of Pledge and Security Agreement, related to $165,000,000 Credit  Agreement.(4)                                                                                 |
|   |   |                                                                                                                                                                  |
| 10.16  |   | Form  of Master Vessel and Collateral Trust Agreement, related to $165,000,000  Credit Agreement.(4)                                                                  |
|   |   |                                                                                                                                                                  |
| 10.17  |   | Form  of First Preferred Ship Mortgage on Marshall Islands Flag Vessel, related to  $165,000,000 Credit Agreement.(4)                                                 |
|   |   |                                                                                                                                                                  |
| 10.18  |   | Form  of First Preferred Ship Mortgage on Liberian Flag Vessel, related to  $165,000,000 Credit Agreement.(4)                                                         |

 

51

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| 10.19  |   | Form  of Deed of Covenants to accompany a First Preferred Statutory Mortgage on  Malta Flag Vessel, related to $165,000,000 Credit Agreement.(4)                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                             |
| 10.20  |   | Escrow  Agreement dated June 11, 2001 between General Maritime Ship Holdings Ltd.,  the Recipients and Partnerships listed therein and Mellon Investor Services  LLC.(1)                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.21  |   | $450,000,000  Credit Agreement dated March 11, 2003 among General Maritime Corporation,  J.P. Morgan Plc, and Nordea Bank Finland, New York Branch and various  Lenders.(5)                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.22  |   | Form of Insurance Assignment, related to $450,000,000 Credit  Agreement.(5)                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.23  |   | Form of Earnings Assignment, related to $450,000,000 Credit  Agreement.(5)                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.24  |   | 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.(6)                            |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.25  |   | 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.(6) |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.26  |   | 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.(6)                                                                                              |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.27  |   | 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.(6)                                                      |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.28  |   | 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.(6)                                                                       |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.29  |   | Form of First Preferred Ship Mortgage on Marshall Islands Flag  Vessel, related to Credit Agreement, dated July 1, 2004.(6)                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.30  |   | Form of First Preferred Ship Mortgage on Liberian Flag Vessel,  related to Credit Agreement, dated July 1, 2004.(6)                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.31  |   | Form  of First Preferred Ship Mortgage on Malta Flag Vessel, related to Credit  Agreement, dated July 1, 2004.(6)                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.32  |   | Management  Rights Agreement dated June 11, 2001 between General Maritime Corporation and  OCM Principal Opportunities Fund, L.P.(2)                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.33  |   | Employment  Agreement dated June 12, 2001 between General Maritime Ship Holdings Ltd. and  Peter C. Georgiopoulos.(2)                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                             |
| 10.34  |   | Employment  Agreement dated June 12, 2001 between General Maritime Ship Holdings Ltd. and  John P. Tavlarios.(2)                                                                                                                                                                 |

 

52

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| 10.35  |   | Employment  Agreement dated June 12, 2001 between General Maritime Ship Holdings Ltd. and  James C. Christodoulou.(2)         |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                          |
| 10.36  |   | Employment  Agreement dated June 12, 2001 between General Maritime Ship Holdings Ltd. and  John C. Georgiopoulos.(2)          |
|   |   |                                                                                                                          |
| 10.37  |   | Form  of General Maritime 2001 Stock Incentive Plan, as amended and restated,  effective December 12, 2002.(7)                |
|   |   |                                                                                                                          |
| 10.38  |   | Form  of Outside Director Stock Option Grant Certificate.(1)                                                                  |
|   |   |                                                                                                                          |
| 10.39  |   | Incentive  Stock Option Agreement dated June 12, 2001 between General Maritime  Corporation and Peter C. Georgiopoulos.(1)    |
|   |   |                                                                                                                          |
| 10.40  |   | Incentive  Stock Option Agreement dated June 12, 2001 between General Maritime  Corporation and John P. Tavlarios. (1)        |
|   |   |                                                                                                                          |
| 10.41  |   | Incentive  Stock Option Agreement dated June 12, 2001 between General Maritime  Corporation and James C. Christodoulou.(1)    |
|   |   |                                                                                                                          |
| 10.42  |   | Incentive  Stock Option Agreement dated June 12, 2001 between General Maritime  Corporation and John C. Georgiopoulos.(1)     |
|   |   |                                                                                                                          |
| 10.43  |   | Form of Incentive Stock Option Grant Certificate.(2)                                                                          |
|   |   |                                                                                                                          |
| 10.44  |   | Restricted Stock Grant Agreement dated November 26, 2002 between  General Maritime Corporation and Peter C. Georgiopoulos.(*) |
|   |   |                                                                                                                          |
| 10.45  |   | Restricted Stock Grant Agreement dated November 26, 2002 between  General Maritime Corporation and John P. Tavlarios.(*)      |
|   |   |                                                                                                                          |
| 10.46  |   | Incentive Stock Option Agreement dated November 26, 2002 between  General Maritime Corporation and John C. Georgiopoulos.(*)  |
|   |   |                                                                                                                          |
| 10.47  |   | Incentive Stock Option Agreement dated November 26, 2002 between  General Maritime Corporation and James C. Christodoulou.(*) |
|   |   |                                                                                                                          |
| 10.48  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and Peter C. Georgiopoulos.(*) |
|   |   |                                                                                                                          |
| 10.49  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and John P. Tavlarios.(*)      |
|   |   |                                                                                                                          |
| 10.50  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and John C. Georgiopoulos.(*)  |
|   |   |                                                                                                                          |
| 10.51  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and John Mortsakis.(*)         |
|   |   |                                                                                                                          |
| 10.52  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and Mary Pile.(*)              |
|   |   |                                                                                                                          |
| 10.53  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and John M. Ramistella.(*)     |

 

53

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| 10.54  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and Steinar Ropeid.(*)                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                         |
| 10.55  |   | Restricted Stock Grant Agreement dated November 12, 2003 between  General Maritime Corporation and Brian Kerr.(*)                                            |
|   |   |                                                                                                                                                         |
| 10.56  |   | Stock Option Agreement for Non-Employee Directors dated May 20, 2004  between General Maritime Corporation and Andrew M. L. Cazalet.(*)                      |
|   |   |                                                                                                                                                         |
| 10.57  |   | Stock Option Agreement for Non-Employee Directors dated May 20, 2004  between General Maritime Corporation and William J. Crabtree.(*)                       |
|   |   |                                                                                                                                                         |
| 10.58  |   | Stock Option Agreement for Non-Employee Directors dated May 20, 2004  between General Maritime Corporation and Rex W. Harrington.(*)                         |
|   |   |                                                                                                                                                         |
| 10.59  |   | Stock Option Agreement for Non-Employee Directors dated May 20, 2004  between General Maritime Corporation and Peter S. Shaerf.(*)                           |
|   |   |                                                                                                                                                         |
| 10.60  |   | Agreement of Lease between Fisher-Park Lane Owner LLC, and General  Maritime Corporation dated as of November 30, 2004. (*)                                  |
|   |   |                                                                                                                                                         |
| 12.1   |   | Computation of Ratio of Earnings to Fixed Charges.(*)                                                                                                        |
|   |   |                                                                                                                                                         |
| 21.1   |   | Subsidiaries  of General Maritime Corporation.(*)                                                                                                            |
|   |   |                                                                                                                                                         |
| 23.1   |   | Consent  of Independent Auditors.(*)                                                                                                                         |
|   |   |                                                                                                                                                         |
| 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.(*)                                                                             |

 

----

| (*) |   | Filed  herewith.                                                                                                                                                                   |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) |   | Incorporated  by reference to Amendment No. 5 to General Maritime’s Registration Statement  on Form S-1, filed with the Securities and Exchange Commission on June 12,  2001. |
| (2) |   | 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.  |
| (3) |   | 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.  |
| (4) |   | Incorporated  by reference to General Maritime’s Quarterly Report on Form 10-Q, filed with  the Securities and Exchange Commission on August 14, 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 Quarterly Report on Form 10-Q filed with  the Securities and Exchange Commission on November 9, 2004.                        |
| (7) |   | Incorporated  by reference to General Maritime’s Annual Report on Form 10-K filed with the  Securities and Exchange Commission on March 28, 2003.                             |

 

54

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SIGNATURES

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized. 

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

 

Pursuantto the requirements of the Securities Exchange Act of  1934, this report has been signed by thefollowing persons on behalf of the registrant and in the capacity and on March 16,2005.

 
| **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/           | Andrew  Cazalet         |      | DIRECTOR |
|          | Andrew  Cazalet         |      |   |
|          |                    |      |
|          |                    |      |
| /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/           | Stephen  A. Kaplan      |      | DIRECTOR |
|          | Stephen  A. Kaplan      |      |   |
|          |                    |      |
|          |                    |      |
| /s/           | Peter  S. Shaerf        |      | DIRECTOR |
|          | Peter  S. Shaerf        |      |   |

55

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