##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT
 PURSUANT TO SECTION 13 OR
    15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-32343
  Arlington Tankers
    Ltd.
 (Exact name of Registrant as
    specified in its charter)
  Bermuda
 (Jurisdiction of incorporation
    or organization)
  First Floor, The Hayward Building
 22 Bermudiana Road
 Hamilton HM 11, Bermuda
 (Address of principal executive
    offices)
  Registrants telephone number, including area code:
 (441) 292-4456
  Securities registered pursuant to Section 12(b) of the
    Act.
  Name of Each ExchangeTitle of Each Class

on Which RegisteredCommon Shares, par value $0.01 per share


New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act.
    None (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
   Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE




---



##### 





TABLE OF
    CONTENTS
   
 PART IITEM 1. BUSINESS


2Overview


2Strategy


4Competitive Strengths


4Our Fleet


5Charter Arrangements


6Ship Management Agreements


13Risk of Loss and Insurance


14Inspection by a Classification Society


14Tanker Industry Overview


15Environmental Regulation


16Executive Officers Of The Registrant


21ITEM 1A. RISK FACTORS


21Company Specific Risk Factors


21Industry Specific Risk Factors


28Risks Related To Our Common Shares


32ITEM 1B. UNRESOLVED STAFF COMMENTS


32ITEM 2. PROPERTIES


32ITEM 3. LEGAL PROCEEDINGS


32ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
    SECURITY HOLDERS


32PART IIITEM 5. MARKET FOR REGISTRANTS COMMON
    EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF
    EQUITY SECURITIES


33Market Price of Arlington Tankers Common
    Shares and Related Shareholder Matters


33Dividends


33ITEM 6. SELECTED FINANCIAL DATA


35ITEM 7. MANAGEMENTS DISCUSSION AND
    ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


36ITEM 7A. QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK


48ITEM 8. FINANCIAL STATEMENTS AND
    SUPPLEMENTARY DATA


49Index to Consolidated Financial Statements


49ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
    ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


71ITEM 9A. CONTROLS AND PROCEDURES


71Conclusion Regarding the Effectiveness of
    Disclosure Controls and Procedures


71Managements Report on Internal Controls
    Over Financial ReportingChanges in Internal Controls over Financial
    Reporting


72Report of Independent Registered Public Accounting Firm on
    Internal Controls over Financial ReportingITEM 9B. OTHER INFORMATION


72PART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
    THE REGISTRANT


72ITEM 11. EXECUTIVE COMPENSATION


72ITEM 12. SECURITY OWNERSHIP OF CERTAIN
    BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
    MATTERS


72ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS, AND DIRECTOR INDEPENDENCE


73ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
    SERVICES


73PART IVITEM 15. EXHIBITS AND FINANCIAL
    STATEMENT SCHEDULES


73EXHIBIT INDEX


75EX-12.1 Computation of Ratio of Earnings to Fixed ChargesEX-21.1 SubsidiariesEX-23.1 Consent of Moore Stephens P.C.EX-23.2 Consent of KPMG LLPEX-31.1 Section 302 Certification of CEO & CFOEX-32.1 Section 906 Certification of CEO & CFO      Form 10-K,




---



##### Table of Contents



PART I  Cautionary
    Statement Regarding Forward Looking Statements
  Form 10-K
  
    future operating or financial results;
    future payments of quarterly dividends and the availability of
    cash for payment of quarterly dividends;
    statements about future, pending or recent acquisitions,
    business strategy, areas of possible expansion, and expected
    capital spending or operating expenses;
    statements about tanker market trends, including charter rates
    and factors affecting vessel supply and demand;
    expectations about future revenues from sub-charters;
    expectations about the availability of vessels to purchase, the
    time which it may take to construct new vessels, or
    vessels useful lives; and
    our ability to repay our secured credit facility at maturity, to
    obtain additional financing and to obtain replacement charters
    for our Vessels.    ITEM 1.
    BUSINESS Overview     2




---



##### Table of Contents



Stena
    Victory Stena Vision
  Stena Victory Stena Vision Stena
    Victory Stena
    Vision Stena Vision
  Stena Victory Stena Vision
 3




---



##### Table of Contents



Strategy    
    Acquire high quality tankers.  Our two V-MAX
    tankers were built in 2001 and our six other tankers entered
    service during 2004 and 2005. All of our tankers have double
    hulls and have been designed to provide more efficient
    transportation of oil and oil products compared to other
    standard ship designs. We will consider acquiring additional
    tankers in the future. Any such acquisition will require
    additional financing and the consent of our lender under our
    current secured credit facility.
    Time charter our tankers to experienced
    charterers.  We time charter our tankers to
    subsidiaries of Stena and Concordia. Stena and Concordia have
    agreed to guarantee their respective subsidiaries
    obligations under the Charters. Stena operates a fleet of oil
    tankers. Stenas current customers for its fleet of owned
    and chartered-in tankers include major oil companies such as
    ChevronTexaco Corporation, the Royal Dutch/Shell Group of
    Companies, ConocoPhillips and BP plc. The two V-MAX tankers in
    our fleet are chartered by Concordia one of these V-MAX tankers
    is currently sub-chartered to Sun International and the other is
    currently sub-chartered to Eiger Shipping.
    Charter our tankers under long term fixed rate
    charters.Our existing Charters are designed to
    generate stable and generally predictable cash flow and reduce
    our exposure to the volatility in tanker spot rates. Some of our
    charters provide for an opportunity to earn Additional Hire
    during favorable market conditions. The Basic Hire payable to us
    under our Charters will increase annually by an amount equal to
    the annual increase in the fees payable by us under the ship
    management agreements.
    Arrange for ship management contracts with an experienced
    ship manager.   We have entered into ship
    management contracts with Northern Marine for each of our
    Vessels. Under these agreements, Northern Marine has assumed all
    responsibilities for the technical management of the Vessels,
    including crewing, maintenance, repair, drydocking and insurance
    for a fixed daily fee per Vessel which increases 5% annually. In
    addition, Northern Marine has agreed to indemnify us for our
    loss of Basic Hire and direct costs in the event, for
    circumstances specified under the Charters, the Vessel is
    off-hire or receiving reduced hire for more than five days
    during any twelve-month period, net of amounts received from
    off-hire insurance. These arrangements are designed to provide
    stable and generally predictable operating costs for our fleet. Competitive
    Strengths    
    one of the youngest fleets of tankers in the world;
    diversified exposure to three sub-segments of the tanker market;
    two unique V-MAX tankers;
    vessels managed by Northern Marine, which we believe is one of
    the industrys most qualified vessel managers; 4




---



##### Table of Contents




    fixed rate time charters intended to provide stable and
    generally predictable cash flow, reducing our exposure to
    volatility in tanker spot rates, and, in six of our charters,
    profit sharing agreements which provide the opportunity to earn
    Additional Hire revenues; and
    fixed operating costs under our ship management agreements. Our
    Fleet  Stena Concept Stena Contest
  Initial Charter

Latest CharterVessel Type

Year Built


Dwt


Date Acquired

Expiration Date(1)

Expiration Date(1)V-MAXStena Victory


2001



314,000


November 10, 2004

November 9, 2009

November 9, 2012Stena Vision


2001



314,000


November 10, 2004

November 9, 2009

November 9, 2012PanamaxStena Companion


2004



72,000


November 10, 2004

November 9, 2008

November 9, 2011Stena Compatriot


2004



72,000


November 10, 2004

November 9, 2010

November 9, 2013ProductStena Concord


2004



47,400


November 10, 2004

November 9, 2008

November 9, 2011Stena Consul


2004



47,400


November 10, 2004

November 9, 2010

November 9, 2013Stena Concept


2005



47,400


January 5, 2006

January 4, 2009

July 4, 2011Stena Contest


2005



47,400


January 5, 2006

January 4, 2009

July 4, 2011     (1)
    
    Each of the charters contains renewal options described in
    greater detail below.         5




---



##### Table of Contents



Our
    Charters  The following summary of the material terms of the Charters
    does not purport to be complete and is subject to, and qualified
    in its entirety by reference to, all the provisions of the
    Charters. Because the following is only a summary, it does not
    contain all information that you may find useful. For more
    complete information, you should read the entire Time Charter
    Party for each Vessel incorporated by reference as an exhibit to
    this Annual Report on
    Form 10-K.
  General
  Stena Consul Stena Compatriot Stena Companion
  vessel-by-vessel 30-month
    V-MAX
      Stena
    Victory Stena Vision Stena Vision
  Stena Victory Stena Vision Stena
    Victory
 6




---



##### Table of Contents



Stena Vision Stena Vision
  Stena Victory Stena Vision
    Basic
    Hire Under Our Charters
   7




---



##### Table of Contents



Stena Vision Stena Victory
  Period

Basic Hire


Base Operating Costs


Operating MarginNov. 11, 2007  Nov. 10, 2008

$
36,882


$
8,682


$
28,200Nov. 11, 2008  Nov. 10, 2009


37,316



9,116



28,200Nov. 11, 2009  Nov. 10, 2010 (Option Year 1)(1)


37,772



9,572



28,200Nov. 11, 2010  Nov. 10, 2011 (Option Year 2)


38,251



10,051



28,200Nov. 11, 2011  Nov. 10, 2012 (Option Year 3)


38,753



10,553



28,200     (1)
    
    The Charterers have the option to extend the Charters on a
    vessel-by-vessel
    basis for 3 additional 1 year terms. There can be no
    assurance that the Charterer will exercise any option.  Stena Companion Stena Concord
  Stena Companion


Stena ConcordBase Operating


Operating





Base Operating


OperatingPeriod

Basic Hire


Costs


Margin


Basic Hire


Costs


MarginNov. 11, 2007  Nov. 10, 2008

$
18,306


$
6,656


$
11,650


$
16,335


$
6,135


$
10,200Nov. 11, 2008  Nov. 10, 2009 (Option Year 1)(1)


18,639



6,989



11,650



16,642



6,442



10,200Nov. 11, 2009  Nov. 10, 2010 (Option Year 2)


18,989



7,339



11,650



16,964



6,764



10,200Nov. 11, 2010  Nov. 10, 2011 (Option Year 3)


19,356



7,706



11,650



17,303



7,103



10,200     (1)
    
    The Charterers have the option to extend the Charters on a
    vessel-by-vessel
    basis for 3 additional 1 year terms. There can be no
    assurance that the Charterer will exercise any option.  Stena Compatriot Stena Consul,
  Stena ConsulStena Compatriot





BaseBase Operating


Operating





Operating


OperatingPeriod

Basic Hire


Costs


Margin


Basic Hire


Costs


MarginNov. 11, 2007  Nov. 10, 2008

$
18,306


$
6,656


$
11,650


$
16,335


$
6,135


$
10,200Nov. 11, 2008  Nov. 10, 2009


18,639



6,989



11,650



16,642



6,442



10,200Nov. 11, 2009  Nov. 10, 2010


18,989



7,339



11,650



16,964



6,764



10,200Nov. 11, 2010  Nov. 10, 2011 (Option Year 1)(1)


19,356



7,706



11,650



17,303



7,103



10,200Nov. 11, 2011  Nov. 10, 2012 (Option Year 2)


19,741



8,091



11,650



17,658



7,458



10,200Nov. 11, 2012  Nov. 10, 2013 (Option Year 3)


20,145



8,495



11,650



18,031



7,831



10,200     (1)
    
    The Charterers have the option to extend the Charters on a
    vessel-by-vessel
    basis for 3 additional 1 year terms. There can be no
    assurance that the Charterer will exercise any option. 8




---



##### Table of Contents



Stena Concept Stena Contest.
  Base OperatingPeriod

Basic Hire


Costs


Operating MarginJan. 5, 2007  Jan 4, 2008

$
20,043


$
5,843


$
14,200Jan. 5, 2008  Jan. 4, 2009


20,335



6,135



14,200Jan. 5, 2009  Jan. 4, 2010 (Option Period 1)(1)


17,942



6,442



11,500Jan. 5, 2010  Jan. 4, 2011 (Option Year 1)


18,264



6,764



11,500Jan. 5, 2011  July 4, 2011 (Option Period 1)


18,603



7,103



11,500July 5, 2011  July 4, 2012 (Option Period
    2)(2)


21,158



7,458



13,700July 5, 2012   July 4, 2013 (Option Period
    3)


21,531



7,831



13,700     (1)
    
    At the end of the initial fixed charter period expiring on
    January 4, 2009, either we or the Charterers may extend the
    Charters on a
    vessel-by-vessel
    basis for an additional
    30-month
    period expiring on July 4, 2011. If the Charterer extends
    the Charter for this
    30-month
    period, we would be eligible to earn Additional Hire in addition
    to Basic Hire. If we extend the Charter for this
    30-month
    period, we would not be eligible to earn Additional Hire during
    this period. There can be no assurance that the Charterer will
    exercise any option.(2)
    
    This period is the first for which the Charterer has the option
    to extend the Charters if the Charterer exercises the option
    described in Footnote 1 above. We would not be eligible to earn
    Additional Hire over the term of such extension. There can be no
    assurance that the Charterer will exercise any option.  Additional
    Hire Under Our Charters
      
    a weighted average of the time charter hire per day received by
    the Charterer for any periods during the calculation period,
    determined as described below, that the Initial Vessel is
    sub-chartered by the Charterer under a time charter, less ship
    broker commissions paid by the Charterer in an amount not to
    exceed 2.5% of such time charter hire and commercial management
    fees paid by the Charterer in an amount not to exceed 1.25% of
    such time charter hire; and
    the time charter equivalent hire for any periods during the
    calculation period that the Vessel is not sub-chartered by the
    Charterer under a time charter.      Stena
    Victory Stena Vision
 9




---



##### Table of Contents



Stena Vision
  Stena Victory Stena Vision Stena
    Victory Stena
    Vision Stena Vision
  Stena Victory Stena Vision
    
    multiplying the Average Spot Rate expressed in Worldscale Points
    by the applicable Worldscale flat rate and multiplying that
    product by the cargo size for each vessel type to calculate
    freight income;
    subtracting voyage costs consisting of brokerage commissions of
    2.5% and commercial management fees of 1.25%, bunker costs and
    port charges to calculate voyage income; and
    dividing voyage income by voyage duration, including time in
    port, to calculate the Daily Value.     10




---



##### Table of Contents



Product tankers:
    
    Rotterdam to New York with 37,000 tons clean (40% weight)
    Curacao to New York with 38,000 tons clean (60% weight)Panamax tankers:
    
    Curacao to New York with 50,000 tons dirty (50% weight) Augusta
    to Houston with 50,000 tons dirty (50% weight)V-MAX tankers:
    
    West-Africa to LOOP with 260,000 tons of crude (50% weight)
    Middle East Gulf to LOOP with 265,000 tons of crude (50% weight)    
    Calculation of freight income.  The freight
    income for each Notional Route is calculated by multiplying the
    Average Spot Rate for such route, as supplied by the Brokers
    Panel, by the Worldscale flat rate for such route as set forth
    in the New Worldwide Tanker Nominal Freight Scale issued by the
    Worldscale Association and current for the relevant period and
    then multiplying such product by the cargo size for such route.
    Calculation of voyage income.  The voyage
    income for each Notional Route is calculated by deducting from
    the freight income for such route ship broker commissions equal
    to 2.5% of the freight income, commercial management fees equal
    to 1.25% of the freight income, the port charges and bunker
    costs (equal to the bunkers used multiplied by the bunkers
    prices) specified below for each Vessel. Bunkers used are
    determined based on speed, distance and consumption of bunkers
    at sea and in port.
    Calculation of voyage duration.  The voyage
    duration for each Notional Route is calculated using the
    distance, speed and time in port specified below for each Vessel.
    Data used in calculations.  The following data
    is used by the Charterer in the above calculations:   Bunkers in
    portFor Product tankers: 40 tons per voyage all-inclusive loading
    and discharging ports.For Panamax tankers: 65 tons per port call all-inclusive loading
    and discharging ports.For V-MAX tankers: loading 12 tons per day; idling 3 tons per
    day; discharging 145 tons per day. Bunker
    pricesFor Product tankers and Panamax tankers:  the mean of
    the average prices during the quarter for Marine Fuel Oil grade
    IFO 380 CST prevailing at Houston, New York and Curacao as
    published by Platts Bunkerwire, or similar publication, plus
    barge delivery charges in amount equal to the average barge
    delivery charges in the applicable port over the prior
    twelve-month period. 11




---



##### Table of Contents



For V-MAX tankers:  the mean of the average prices
    during the quarter for Marine Fuel Oil grade IFO 380 CST
    prevailing at Curacao and Fujairah as published by Platts
    Bunkerwire, or similar publication, plus barge delivery charges
    in amount equal to the average barge delivery charges in the
    applicable port over the prior twelve-month period. Port
    chargesThe port charges for loading and discharging ports on each
    Notional Route are equal to the published tariffs and exchange
    rates in effect on the last calendar day of the quarter and
    include all vessel costs for port calls. Time in
    portFor Product tankers and Panamax
    tankers:  5.5 days, which are split 2 days
    loading, 2 days discharging and the balance of the time
    idling.   For V-MAX tankers:  7.5 days, which are split
    3 days loading, 3 days discharging and the balance of
    the time idling. DistanceThe distance for each Notional Route is determined according to
    the World-Wide Marine Distance Tables published by
    Veson Nautical Distance Tables. Speed and
    consumption at seaFor Product tankers: 14 knots at 36 tons per day in laden
    condition and 14 knots at 35 tons per day in ballast condition
    less a steaming allowance of 7.5 percent applied to the
    speeds to allow for weather and navigation.   For Panamax tankers: 14 knots at 41.5 tons per day in laden
    condition and 14 knots at 39.5 tons per day in ballast condition
    less a steaming allowance of 7.5 percent applied to the
    speeds to allow for weather and navigation. Fuel consumption for
    cargo heating to be actual figures of fuel consumed but not to
    exceed 8 tons per day.   For V-MAX tankers: 16.9 knots at 127 tons per day in laden
    condition and 17.7 knots at 127 tons per day in ballast
    condition less a steaming allowance of 7.5 percent applied
    to the speeds to allow for weather and navigation.   12




---



##### Table of Contents



Our Ship
    Management Agreements  The following summary of the material terms of the ship
    management agreements does not purport to be complete and is
    subject to, and qualified in its entirety by reference to, all
    the provisions of the ship management agreements. Because the
    following is only a summary, it does not contain all information
    that you may find useful. For more complete information, you
    should read the entire Ship Management Agreement for each Vessel
    incorporated by reference as an exhibit to this Annual Report on
    Form 10-K.
             13




---



##### Table of Contents



Risk of
    Loss and Insurance       Inspection
    by a Classification Society   14




---



##### Table of Contents



Tanker
    Industry Overview  Overview
    Tanker
    Types
    
    ULCCs  tankers over 320,000 dwt;
    VLCCs  tankers from 200,000 to 320,000 dwt;
    Suezmax tankers  tankers from 120,000 to 200,000 dwt;
    Aframax/LR2 tankers  uncoated/coated tankers from
    80,000 to 120,000 dwt;
    Panamax/LR1 tankers  uncoated/coated tankers from
    60,000 to 80,000 dwt;
    Handy product tankers/MR tankers  normally coated
    tankers from 30,000 to 60,000 dwt; and
    Small tankers  normally coated tankers up to 20,000
    dwt.    Industry
    Conditions
  lay-up,
  Tanker
    Demand
  ton-miles
 15




---



##### Table of Contents



Seasonality
    Tanker
    Supply
    Tanker
    Scrapping
    Tanker
    Values
   Environmental
    Regulation       16




---



##### Table of Contents



International
    Maritime Organization
    
    tankers between 25 and 30 years old must be of double hull
    construction or of a mid-deck design with double sided
    construction, unless:
    they have wing tanks or double-bottom spaces not used for the
    carriage of oil, which cover at least 30% of the length of the
    cargo tank section of the hull or bottom; or
    they are capable of hydrostatically balanced loading (loading
    less cargo into a tanker so that in the event of a breach of the
    hull, water flows into the tanker, displacing oil upwards
    instead of into the sea);
    tankers 30 years old or older must be of double hull
    construction or mid-deck design with double sided
    construction; and
    all tankers are subject to enhanced inspections.    
    is the subject of a contract for a major conversion or original
    construction on or after July 6, 1993;
    commences a major conversion or has its keel laid on or after
    January 6, 1994; or
    completes a major conversion or is a newbuilding delivered on or
    after July 6, 1996.       17




---



##### Table of Contents



U.S.
    Oil Pollution Act of 1990 and Comprehensive Environmental
    Response, Compensation, and Liability Act
    clean-up
  
    natural resource damages and related assessment costs;
    real and personal property damages; 18




---



##### Table of Contents




    net loss of taxes, royalties, rents, profits or earnings
    capacity;
    net cost of public services necessitated by a spill response,
    such as protection from fire, safety or health hazards; and
    loss of subsistence use of natural resources.              
    address a worst case scenario and identify and
    ensure, through contract or other approved means, the
    availability of necessary private response resources to respond
    to a worst case discharge;
    describe crew training and drills; and
    identify a qualified individual with full authority to implement
    removal actions.   19




---



##### Table of Contents



European
    Union Tanker Restrictions
  m.t. Prestige
  Vessel
    Security Regulations
    
    on-board installation of automatic identification systems, or
    AIS, to provide a means for the automatic transmission of
    safety-related information from among similarly equipped ships
    and shore stations, including information on a ships
    identity, position, course, speed and navigational status;
    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 on a
    vessels hull;
    a continuous synopsis record kept onboard showing a
    vessels history including, name of the ship and of the
    state whose flag the ship is entitled to fly, the date on which
    the ship was registered with that state, the ships
    identification number, the port at which the ship is registered
    and the name of the registered owners and their registered
    addresses; and
    compliance with flag state security certification requirements.  non-U.S. tankers
 20




---



##### Table of Contents



Employees
   Executive
    Officer of the Registrant    Edward Terino e-commerce
  www.arlingtontankers.com. Form 10-K. Form 10-K, Form 10-Q Form 8-K, 441-292-4456.
  ITEM 1A.
    RISK
    FACTORS  The following important factors, among others, could cause
    actual results to differ materially from those contained in
    forward-looking statements made in this report or presented
    elsewhere by management from time to time.
 Company
    Specific Risk Factors  We
    cannot assure you that we will pay any dividends
     21




---



##### Table of Contents



We are
    highly dependent on the Charterers and their guarantors, Stena
    and Concordia
    If we
    cannot refinance our secured credit facility, or in the event of
    a default under the facility, we may have to sell our Vessels,
    which may leave no additional funds for distributions to
    shareholders
   22




---



##### Table of Contents



We may
    not be able to re-charter our Vessels profitably after their
    Charters expire, unless they are extended at the option of the
    Charterers
             23




---



##### Table of Contents



Concordia
    and Stenas ownership interest in our company can have
    significant influence over the Company, including the outcome of
    shareholder votes and our ability to conduct future business or
    modify existing agreements with Stena or Concordia
  2 3
  
    prior to the date of the transaction that resulted in the
    shareholder becoming an interested shareholder, our board of
    directors approved either the business combination or the
    transaction that resulted in the shareholder becoming an
    interested shareholder; or
    upon consummation of the transaction that resulted in the
    shareholder becoming an interested shareholder, the interested
    shareholder owned at least 85% of our issued and outstanding
    voting shares at the time the transaction commenced.    We are
    leveraged and subject to restrictions in our financing
    agreements that impose constraints on our operating and
    financing flexibility
      We are
    a holding company, and we depend on the ability of our
    subsidiaries to distribute funds to us in order to satisfy our
    financial and other obligations
   24




---



##### Table of Contents



U.S.
    tax authorities could treat us as a passive foreign
    investment company, which could have adverse U.S. federal
    income tax consequences to U.S. shareholders
        step-up
  Our
    operating income could fail to qualify for an exemption from
    U.S. federal income taxation, which would reduce our cash
    flow
   25




---



##### Table of Contents



U.S.
    investors who own our common shares may have more difficulty in
    protecting their interests than U.S. investors who own shares of
    a Delaware corporation
    Interested Directors.
  
    the material facts as to such interested directors
    relationship or interests were disclosed or were known to the
    Board of Directors and the board had in good faith authorized
    the transaction by the affirmative vote of a majority of the
    disinterested directors;
    such material facts were disclosed or were known to the
    stockholders entitled to vote on such transaction and the
    transaction was specifically approved in good faith by vote of
    the majority of shares entitled to vote thereon; or
    the transaction was fair as to the corporation as of the time it
    was authorized, approved or ratified.    Shareholders Suits.
   26




---



##### Table of Contents



Indemnification of Directors.
      Bermuda
    law and our bye-laws permit our Board of Directors to establish
    preference shares having terms which could reduce or eliminate
    dividends payable to our common shareholders
    Our
    bye-laws restrict shareholders from bringing certain legal
    action against our officers and directors
   27




---



##### Table of Contents



We
    have anti-takeover provisions in our bye-laws that may
    discourage a change of control
    
    a classified Board of Directors with staggered three-year terms,
    elected without cumulative voting;
    directors can only be removed for cause and only with the
    affirmative vote of holders of at least 80% of the common shares
    issued and outstanding;
    advance notice for nominations of directors by shareholders and
    for shareholders to include matters to be considered at annual
    meetings;
    our Board of Directors to determine the powers, preferences and
    rights of our preference shares and to issue the preference
    shares without shareholder approval; and
    a requirement that amalgamations, sales of assets and certain
    other transactions with persons owning 15% or more of our voting
    securities, which we refer to as interested shareholders, be
    approved by holders of at least 66% of our issued and
    outstanding voting shares not owned by the interested
    shareholder, subject to certain exceptions.   Industry
    Specific Risk Factors  The
    highly cyclical nature of the tanker industry may lead to
    volatile changes in charter rates and vessel values which may
    adversely affect our earnings
      Stena Vision
 28




---



##### Table of Contents



Factors
    beyond our control may adversely affect the value of our
    Vessels
    
    demand for oil and oil products, which affect the need for
    tanker capacity;
    global and regional economic and political conditions which
    among other things, could impact the supply of oil as well as
    trading patterns and the demand for various types of vessels;
    changes in the production of crude oil, particularly by OPEC and
    other key producers, which impact the need for tanker capacity;
    developments in international trade;
    changes in seaborne and other transportation patterns, including
    changes in the distances that cargoes are transported;
    environmental concerns and regulations;
    weather; and
    competition from alternative sources of energy.    
    the number of newbuilding deliveries;
    restrictions on vessels from entering into certain trades based
    upon their age, safety or other factors;
    the scrapping rate of older vessels; and
    the number of vessels that are out of service.  An
    over supply of new vessels may adversely affect charter rates
    and vessel values
    Terrorist
    attacks and international hostilities can affect the tanker
    industry, which could adversely affect our
    business
   29




---



##### Table of Contents



The
    value of our Vessels may fluctuate and adversely affect our
    liquidity and may result in breaches under our secured credit
    facility
    We
    operate in the highly competitive international tanker market
    which could affect our position if the Charterers do not renew
    our Charters
    Compliance
    with environmental laws or regulations may adversely affect our
    business
   30




---



##### Table of Contents



The
    shipping industry has inherent operational risks, which may not
    be adequately covered by insurance
      Maritime
    claimants could arrest our tankers, which could interrupt the
    Charterers or our cash flow
    Governments
    could requisition our Vessels during a period of war or
    emergency without adequate compensation
    Rising
    or high oil prices may affect demand for oil, and subsequently
    demand for oil tankers may fall.
   31




---



##### Table of Contents



Risks
    Related To Our Common Shares  If a
    significant number of our common shares are sold in the market,
    the market price of our common shares could significantly
    decline, even if our business is doing well
    lock-up lock-up
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES      ITEM 3.
    LEGAL
    PROCEEDINGS  Form 10-K.
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   32




---



##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES Market
    Price of Arlington Tankers Common Shares and Related
    Shareholder Matters    Fiscal Year Ended December 31, 2007

High


LowFirst Quarter (from January 1 to March 31)

$
24.08


$
22.15Second Quarter (from April 1 to June 30)

$
28.68


$
23.51Third Quarter (from July 1 to September 30)

$
29.52


$
23.04Fourth Quarter (from October 1 to December 31)

$
25.19


$
20.31   Fiscal Year Ended December 31, 2006

High


LowFirst Quarter (from January 1 to March 31)

$
23.61


$
21.61Second Quarter (from April 1 to June 30)

$
23.30


$
20.63Third Quarter (from July 1 to September 30)

$
23.37


$
21.48Fourth Quarter (from October 1 to December 31)

$
24.15


$
22.00    Dividends         33




---



##### Table of Contents



Recent
    Sales of Unregistered Securities; Uses of Proceeds From
    Registered Securities
   34




---



##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Year Ended December 31,2007


2006


2005


2004


2003(In thousands of $, except per share data)Selected statement of operations data:Total operating revenues, net

$
70,198


$
69,435


$
55,455


$
57,958


$
28,838Total operating expenses


(38,086
)


(37,329
)


(28,904
)


(30,672
)


(14,405
)Operating income


32,112



32,106



26,551



27,286



14,433Net income


11,706



21,464



21,913



20,351



5,913Earnings per common share  basic and diluted

$
0.76


$
1.38


$
1.41


$
0.28
(1)


Cash dividend per share earned during the year

$
2.33


$
2.33


$
2.11


$
0.39
(1)


Cash dividend per share declared during the year

$
2.32


$
2.29


$
1.97







Selected balance sheet data (at end of period):Cash and cash equivalents


6,274



3,210



11,839



5,960



1,194Newbuildings


















36,185Vessels, net


329,330



344,973



269,031



281,441



154,465Total assets


349,309



363,409



286,447



292,850



192,416Amount due to Concordia, current


















45,899Long term liabilities


229,500



229,500



137,160



135,000



130,317Combined predecessor equity


















15,710Shareholders equity


106,212



130,620



144,651



154,487



Selected cash flow data:Net cash provided by operating activities


38,679



34,866



35,314



31,820



15,375Net cash (used in) investing activities


500



(102,500
)


(2,500
)


(102,212
)


(36,488
)Net cash provided by (used in) financing activities


(36,115
)


59,005



(26,935
)


75,158



21,717Selected fleet data (end of period):Number of tankers owned


8



8



6



6



2     (1)
    
    The earnings per share and dividend per share earned during the
    year 2004 represent the period from November 10, 2004
    through December 31, 2004. 35




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K. Form 10-K
  
    future operating or financial results;
    future payments of quarterly dividends and the availability of
    cash for payment of quarterly dividends;
    statements about future, pending or recent acquisitions,
    business strategy, areas of possible expansion, and expected
    capital spending or operating expenses;
    statements about tanker market trends, including charter rates
    and factors affecting vessel supply and demand;
    expectations about the availability of vessels to purchase, the
    time which it may take to construct new vessels, or
    vessels useful lives; and
    our ability to repay our secured secured credit facility at
    maturity, to obtain additional financing and to obtain
    replacement charters for our Vessels.    Overview
     36




---



##### Table of Contents



vessel-by-vessel 30-month 30-month
 37




---



##### Table of Contents



Stena Consul Stena Compatriot Stena Concord Stena Companion
    Factors
    Affecting Our Results of Operations and Cash Available for
    Dividends
    
    the Basic Hire paid to us under our Charters;
    the amount of Additional Hire, if any, that we receive under our
    Charters;
    fees under the ship management agreements;
    depreciation;
    administrative and other expenses;
    interest expense, net of the cash benefit from the net gain
    realized from the termination of an interest rate swap;
    any loss of any Vessel;
    required capital expenditures;
    any cash reserves established by our board of directors;
    any change in our dividend policy; and
    increased borrowings or future issuances of securities.   38




---



##### Table of Contents



39




---



##### Table of Contents



Critical
    Accounting Policies And Estimates
    Revenue
    Recognition
    Vessels,
    Depreciation and Impairment
      Results
    of Operations
  Year
    Ended December 31, 2007 Compared To Year Ended
    December 31, 2006
  Total
    operating revenues, net
   40




---



##### Table of Contents



Total
    Vessel operating expenses
    Depreciation
    Administrative
    expenses
  Form S-3
  Other
    expenses, net
      Year
    Ended December 31, 2006 Compared To Year Ended
    December 31, 2005
  Total
    operating revenues, net
   41




---



##### Table of Contents



Total
    Vessel operating expenses
    Depreciation
    Administrative
    expenses
  Form S-3
  Other
    expenses, net
    Liquidity
    and Capital Resources
     42




---



##### Table of Contents



Dividend
    Policy
   43




---



##### Table of Contents




    the Basic Hire is paid on all of our Vessels, all of our Vessels
    are on hire for 360 days per fiscal year and the options to
    extend the charters are exercised by the Charterers;
    no Additional Hire is paid on our two Panamax Tankers or our two
    Product Tankers that are eligible to earn Additional Hire;
    the Additional Hire continues to be paid in connection with the
    sub-charter of the Stena Visionto Sun International,
    which is expected to expire within 30 days of July 31,
    2008;
    Additional Hire of approximately $350,000 per Vessel per quarter
    is paid on the V-MAX Vessels in connection with the Eiger
    Shipping sub-charters, assuming that the V-MAX Vessels operate
    for 90 days per quarter (the Eiger Shipping sub-charger for
    the Stena Victorycommenced on October 20, 2007 and
    the Eiger Shippin sub-charter for the Stena Visionis
    expected to commence within 30 days of July 31, 2008);
    the V-MAX Vessels are returned on the notional termination dates
    of the sub-charter within the
    60-day
    delivery window;
    we have no cash expenses or liabilities other than the ship
    management agreements, our current directors fees, the
    current salaries and benefits of our employees, currently
    anticipated administrative and other expenses and interest under
    our secured credit facility;
    we pay no U.S. federal income taxes and minimal
    U.S. and state payroll taxes;
    we have no requirement to fund any required capital expenditures
    with respect to our Vessels; 44




---



##### Table of Contents




    we do not suffer the loss or constructive loss of any of our
    Vessels;
    no material cash reserves or requirements are established by the
    actions of our Board of Directors or management;
    we remain in compliance with our secured credit facility which
    requires, among other things, that the fair market value of our
    Vessels exceeds 140% of our borrowings under the facility (or
    125% if the loan amount at the time of such dividend all of our
    Vessels are on time charter for a remaining period of at least
    12 months) in order to pay dividends; and
    we do not issue any additional common shares or other securities
    or borrow any additional funds.        
    the amount of cash that was available for dividends in the
    fiscal year ended December 31, 2007; and
    based on the assumptions and the other matters in the preceding
    paragraphs, our estimate of the amount of cash likely to be
    available for dividends for each of the 2008, 2009, and 2010
    fiscal years.  2007


2008


2009


2010(In millions of dollars, exceptper share amounts)Basic Hire(1)

$
65.9


$
66.2


$
65.3


$
66.4V-MAX Additional Hire  Sun International
    sub-charter(s)(2)


2.0



.5







V-MAX Additional Hire  Eiger Shipping sub-charters(3)


.3



2.2



2.6



.8Additional Hire  Panamax and Product tankers(4)


2.0











Vessel operating expenses


(20.0
)


(20.3
)


(21.2
)


(22.3
)Cash administrative expenses(5)


(2.2
)


(2.4
)


(2.5
)


(2.5
)Cash interest costs(6)


(12.0
)


(12.3
)


(12.3
)


(12.3
)Cash available for dividends


36.1



33.9



31.8



30.1Estimated dividends per share(7)

$
2.32


$
2.19


$
2.05


$
1.94  45




---



##### Table of Contents



(1)
    
    Basic Hire revenues for 2008, 2009 and 2010 assume that options
    available under the charter contracts are exercised by the
    Charterer. Basic Hire reflected in the above table includes
    $700,000 of revenue in 2008, $28.8 million of revenue in
    2009, and $56.0 million of revenues in 2010 arising from
    such option exercises.(2)
    
    The sub-charter with Sun International for the StenaVictory expired on October 20, 2007. The Additional
    Hire revenue associated with the ongoing sub-charter of the
    StenaVision to Sun International is guaranteed, meaning
    that we will be paid the Additional Hire revenue by Concordia
    whether the V-MAX tanker is in service or not in service, during
    the term of the sub-charter. The sub-charter with Sun
    International for the Stena Visionis due to expire
    within 30 days of July 31, 2008. Our estimate above
    reflects guaranteed V-MAX Additional Hire revenue from Sun
    International sub-charter through July 31, 2008.(3)
    
    Immediately following the expiration of the sub-charter of the
    Stena Victorywith Sun International, that Vessel
    commenced operating under a new sub-charter agreement with Eiger
    Shipping. In addition, immediately following the expiration of
    the sub-charter of the Stena Visionwith Sun
    International, we expect that Vessel to commence operating under
    a new sub-charter agreement with Eiger Shipping. During the term
    of these new sub-charters, we will continue to earn guaranteed
    Basic Hire from Concordia and we will also earn Additional Hire
    under the profit sharing provisions of the Charters. Additional
    Hire for the V-MAX tankers under the new sub-charters will be
    based on a fixed time charter hire payable by Eiger Shipping to
    Concordia under the sub-charters and the Additional Hire is not
    exposed to fluctuations in spot market rates. Additional Hire
    revenues under these sub-charters are not guaranteed, meaning
    that we will earn Additional Hire only if the Vessel is in
    service. The sub-charter for Eiger Shipping related to the
    Stena Victorycommenced on October 20, 2007. Our
    estimated cash available for dividends includes our estimated
    Additional Hire for the Stena Victory, based on the
    October 20, 2007 commencement date. Our estimated cash
    available for dividends includes our estimated Additional Hire
    for the Stena Vision, assuming that the Eiger Shipping
    sub-charter for that Vessel begins on August 1, 2008. While
    the V-MAX Vessels are sub-chartered to Eiger Shipping, the
    profit sharing provisions in the Concordia charters are expected
    to result in Additional Hire revenue of approximately $350,000
    per Vessel per quarter, based on the time charter rates under
    the sub-charters and assuming the Vessels operate 90 days
    per quarter, in addition to the guaranteed Basic Hire.(4)
    
    Reflects Additional Hire revenues actually earned in 2007 by our
    two Panamax tankers and our two Product tankers that are
    eligible to earn Additional Hire. No estimates have been made
    for 2008, 2009 and 2010 as these Additional Hire revenues are
    not determinable due to volatility and unpredictability of
    various factors, including spot market rates which are used to
    compute Additional Hire revenues.(5)
    
    General and administrative expenses for 2008 through 2010 do not
    include any cost for executive bonuses, which are primarily
    performance based.(6)
    
    Cash interest costs reflect the benefit of approximately
    $1.0 million per year from the 2005 termination of an
    interest rate swap. The interest expense for each year will be
    approximately $13.3 million ($229.5 million at
    5.7325%).(7)
    
    Based on 15,500,000 issued and outstanding common shares. 46




---



##### Table of Contents



Our
    Secured Credit Facility
  The following summary of the material terms of our credit
    facility does not purport to be complete and is subject to, and
    qualified in its entirety by reference to, all the provisions of
    our Term Loan Agreement. For more complete information, you
    should read the entire Secured Loan Facility Agreement
    incorporated by reference as an exhibit to this Annual Report on
    Form 10-K.
           47




---



##### Table of Contents



Long Term
    Financial Obligations and Other Commercial Obligations
    Payments Due by PeriodOne Year


2-3


4-5


More ThanCommercial and Contractual Obligations

Total


or Less


Years


Years


5 Years(In thousands of $)Long term debt, including current maturities

$
229,500










$
229,500



Interest payments(1)


40,235



13,375



26,677



183



Ship management obligations(2)


101,527



20,316



43,613



32,472



5,126Total

$
371,262


$
33,691


$
70,290


$
262,155



5,126     (1)
    
    Refers to our expected interest payments over the term of our
    secured credit facility after entering into swap arrangements at
    a fixed rate of 5.7325%.(2)
    
    Refers to our fixed daily operating costs for our Vessels under
    our ship management agreements with Northern Marine, which
    increase 5% annually. These costs are payable by us monthly in
    advance. We have assumed that the Charterers will exercise all
    of their options available under the Charters. ITEM 7A.  QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     48




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  ARLINGTON
    TANKERS LTD.
 Index to
    Consolidated Financial Statements  Report of Independent Registered Public
    Accounting Firm on the Consolidated Financial
    Statements  Moore Stephens PC


50Report of Independent Registered Public
    Accounting Firm on the Consolidated Financial
    Statements  KPMG LLP


51Consolidated Balance Sheets as of
    December 31, 2007 and 2006


52Consolidated Statements of Operations and
    Comprehensive Income for the years ended December 31, 2007,
    2006 and 2005


53Consolidated Statements of Changes in Combined
    Predecessor Equity and Shareholders Equity for the years
    ended December 31, 2007, 2006 and 2005


54Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006 and 2005


55Notes to the Consolidated Financial Statements


56  49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   50




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               51




---



##### Table of Contents



ARLINGTON
    TANKERS LTD.
  Consolidated Balance Sheets as of
 December 31, 2007 and 2006
  December 31,


December 31,2007


2006(In thousands of $, except share and per share amounts)ASSETSCurrent assetsCash and cash equivalents

$
6,274


$
3,210Short-term investments


12,500



13,000Prepaid expenses and accrued income


184



208Other receivables


304



979Total current assets


19,262



17,397Vessels, net


329,330



344,973Deferred debt issuance cost


717



955Interest rate swap agreement at fair value






84Total assets

$
349,309


$
363,409LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccrued expenses

$
451


$
1,028Unearned charter revenue


5,693



2,261Total current liabilities


6,144



3,289Long term liabilitiesInterest rate swap agreement at fair value


7,453



Long term debt


229,500



229,500Total liabilities


243,097



232,789Shareholders equityCommon shares, par value $0.01 per share, 60,000,000 shares
    authorized and 15,500,000 issued and outstanding


155



155Preference shares, par value $0.01 per share,
    4,000,000 shares authorized, none issued or outstanding






Additional paid-in capital


106,734



125,590Retained earnings (accumulated deficit)


(677
)


4,875Total shareholders equity


106,212



130,620Total liabilities and shareholders equity

$
349,309


$
363,409    52




---



##### Table of Contents



ARLINGTON
    TANKERS LTD.
  Consolidated Statements of Operations and
    Comprehensive Income for the years ended
 December 31, 2007, 2006 and 2005
  Year Ended December 31,2007


2006


2005(In thousands of $, except shareand per share amounts)Operating revenuesCharter revenues

$
70,199


$
69,435


$
55,455Operating expensesVessel operating expenses, other


19,956



18,592



13,999Depreciation


15,642



16,058



12,411Administrative expenses


2,488



2,679



2,494Total operating expenses


38,086



37,329



28,904Operating income


32,113



32,106



26,551Other income (expenses)Interest income


828



734



233Interest (expense), other


(13,696
)


(13,620
)


(6,766
)Unrealized gain (loss) on interest rate swap


(7,538
)


2,244



(2,160
)Net gain on termination of interest rate swap and debt facility










4,055Other income (expenses), net


(20,406
)


(10,642
)


(4,638
)Net income

$
11,707


$
21,464


$
21,913Other comprehensive (loss) incomeNet unrealized gain (loss) on derivative instrument during the
    year










(1,214
)Total other comprehensive (loss) income










(1,214
)Comprehensive income

$
11,707


$
21,464


$
20,699Earnings per common share  basic and diluted

$
0.76


$
1.38


$
1.41Weighted average number of shares outstanding  basic
    and diluted


15,500,000



15,500,000



15,500,000    53




---



##### Table of Contents



ARLINGTON
    TANKERS LTD.
  Consolidated Statements of Shareholders
    Equity
 for the years ended December 31, 2007, 2006 and 2005
  Year Ended December 31,2007


2006


2005(In thousands of $)SHAREHOLDERS EQUITY COMMON SHARESBalance at the beginning of the year

$
155


$
155


$
155Shares issued










Repurchase of founder shares










Balance at the end of the year


155



155



155ADDITIONAL PAID-IN CAPITALBalance at the beginning of the year


125,590



138,038



148,828Dividend paid in excess of retained earnings


(18,856
)


(12,448
)


(10,790
)Balance at the end of the year


106,734



125,590



138,038ACCUMULATED OTHER COMPREHENSIVE INCOMEBalance at the beginning of the year










1,214Reclassification to earnings










(4,076
)Current period net changes in hedging transactions










2,862Other comprehensive income/(loss)










(1,214
)Balance at the end of the year










RETAINED EARNINGS (ACCUMULATED DEFICIT)Balance at the beginning of the year


4,875



6,458



4,290Net income for 2007, 2006 and 2005


11,707



21,464



21,913Dividends paid


(17,259
)


(23,047
)


(19,745
)Balance at the end of the year


(677
)


4,875



6,458Total shareholders equity

$
106,212


$
130,620


$
144,651    54




---



##### Table of Contents



ARLINGTON
    TANKERS LTD.
  Consolidated Statements of Cash Flows for the
    years ended
 December 31, 2007, 2006 and 2005
  Year Ended December 31,2007


2006


2005(In thousands of $)Operating activitiesNet income

$
11,707


$
21,464


$
21,913Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation


15,642



16,058



12,411Realized gain from the termination of interest rate swap










(4,800
)Unrealized (gain)/loss on interest rate swap


7,538



(2,244
)


2,160Amortization of debt issuance costs


238



238



128Write-off of debt issuance costs










665Changes in operating assets and liabilities:Prepaid expenses and accrued income


24



75



1,063Other receivables


675



622



501Accrued expenses and other current liabilities


(577
)


(1,371
)


1,076Unearned revenue


3,432



24



197Net cash provided by operating activities


38,679



34,866



35,314Investing activitiesCapital expenditure on vessels






(92,000
)


Sale of short-term investments


43,900



23,900



Purchase of short-term investments


(43,400
)


(34,400
)


(2,500
)Net cash provided by (used in) investing activities


500



(102,500
)


(2,500
)Financing activitiesProceeds from long term debt






94,500



135,000Repayment of long term debt










(135,000
)Dividend payments from retained earnings


(18,856
)


(23,047
)


(19,745
)Dividend payments from paid in capital


(17,259
)


(12,448
)


(10,790
)Proceeds from interest rate swap










4,800Increase in debt issuance costs










(1,200
)Net cash provided by (used in) financing activities


(36,115
)


59,005



(26,935
)Net increase/(decrease) in cash


3,064



(8,629
)


5,879Cash and cash equivalents at beginning of year


3,210



11,839



5,960Cash and cash equivalents at end of year

$
6,274


$
3,210


$
11,839Supplemental Cash Flow Information Interest paid

$
13,411


$
13,190


$
6,735    55




---



##### Table of Contents



ARLINGTON
    TANKERS LTD.
  Notes
    to the Consolidated Financial Statements
 December 31,
    2007, 2006 and 2005
  1.
    GENERAL      Stena Concept Stena Contest
 56




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  vessel-by-vessel 30-month 30-month
  Stena Consul Stena Compatriot Stena Concord Stena Companion
       57




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
    Charter RenewalInitial Charter

Options ExpirationVessel Type

Year Built

Dwt

Date Acquired

Expiration Date

Date(1)V-MAXStena Victory

2001

314,000

November 10, 2004

November 9, 2009


November 9, 2012Stena Vision

2001

314,000

November 10, 2004

November 9, 2009


November 9, 2012PanamaxStena Companion

2004

72,000

November 10, 2004

November 9, 2008


November 9, 2011Stena Compatriot

2004

72,000

November 10, 2004

November 9, 2010


November 9, 2013ProductStena Concord

2004

47,400

November 10, 2004

November 9, 2008


November 9, 2011Stena Consul

2004

47,400

November 10, 2004

November 9, 2010


November 9, 2013Stena Concept

2005

47,400

January 5, 2006

January 4, 2009


July 4, 2011Stena Contest

2005

47,400

January 5, 2006

January 4, 2009


July 4, 2011     (1)
    
    Each of the charters contains renewal options described in
    greater detail below.       58




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  Stena Vision Stena
    Victory
  Period

Basic Hire


Base Operating Costs


Operating MarginNov. 11, 2007  Nov. 10, 2008

$
36,882


$
8,682


$
28,200Nov. 11, 2008  Nov. 10, 2009


37,316



9,116



28,200Nov. 11, 2009  Nov. 10, 2010 
    (Option Year 1)


37,772



9,572



28,200Nov. 11, 2010  Nov. 10, 2011 
    (Option Year 2)


38,251



10,051



28,200Nov. 11, 2011  Nov. 10, 2012 
    (Option Year 3)


38,753



10,553



28,200   Stena Companion Stena
    Concord
  Stena


Stena








StenaStena


Companion


Companion





Stena Concord


ConcordCompanion


Base Operating


Operating


Stena Concord


Base Operating


OperatingPeriod

Basic Hire


Costs


Margin


Basic Hire


Costs


MarginNov. 11, 2007  Nov. 10, 2008

$
18,306


$
6,656


$
11,650


$
16,335


$
6,135


$
10,200Nov. 11, 2008  Nov. 10, 2009 (Option Year 1)


18,639



6,989



11,650



16,642



6,442



10,200Nov. 11, 2009  Nov. 10, 2010 (Option Year 2)


18,989



7,339



11,650



16,964



6,764



10,200Nov. 11, 2010  Nov. 10, 2011 (Option Year 3)


19,356



7,706



11,650



17,303



7,103



10,200   Stena Compatriot Stena Consul,
  Stena





Stena ConsulStena


Stena


Compatriot





Base


Stena ConsulCompatriot


Compatriot


Operating


Stena Consul


Operating


OperatingPeriod

Basic Hire


Base Operating Costs


Margin


Basic Hire


Costs


MarginNov. 11, 2007  Nov. 10, 2008

$
18,306


$
6,656


$
11,650


$
16,335


$
6,135


$
10,200Nov. 11, 2008  Nov. 10, 2009


18,639



6,989



11,650



16,642



6,442



10,200Nov. 11, 2009  Nov. 10, 2010


18,989



7,339



11,650



16,964



6,764



10,200Nov. 11, 2010  Nov. 10, 2011 (Option Year 1)


19,356



7,706



11,650



17,303



7,103



10,200Nov. 11, 2011  Nov. 10, 2012 (Option Year 2)


19,741



8,091



11,650



17,658



7,458



10,200Nov. 11, 2012  Nov. 10, 2013 (Option Year 3)


20,145



8,495



11,650



18,031



7,831



10,200  59




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  Stena Concept Stena
    Contest.
  Base OperatingPeriod

Basic Hire


Costs


Operating MarginJan. 5, 2007  Jan 4, 2008

$
20,043


$
5,843


$
14,200Jan. 5, 2008  Jan. 4, 2009


20,335



6,135



14,200Jan. 5, 2009  Jan. 4, 2010 (Option Year 1)


17,942



6,442



11,500Jan. 5, 2010  Jan. 4, 2011 (Option Year 2)


18,264



6,764



11,500Jan. 5, 2011  July 4, 2011 (Option Period 3 (Six
    Months))


18,603



7,103



11,500July 5, 2011  July 4, 2012 (Option Year 4)


21,158



7,458



13,700July 5, 2012  July 4, 2013 (Option Year 5)


21,531



7,831



13,700       
    a weighted average of the time charter hire per day received by
    the Charterer for any periods during the calculation period,
    determined as described below, that the Initial Vessel is
    sub-chartered by the Charterer under a time charter, less ship
    broker commissions paid by the Charterer in an amount not to
    exceed 2.5% of such time charter hire and commercial management
    fees paid by the Charterer in an amount not to exceed 1.25% of
    such time charter hire; and
    the time charter equivalent hire for any periods during the
    calculation period that the Vessel is not sub-chartered by the
    Charterer under a time charter.    Stena
    Victory Stena Vision Stena Vision
  Stena Victory Stena Vision Stena Victory Stena Vision
 60




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  Stena Vision
  Stena Victory Stena Vision V-MAX V-MAX
        30-month
 61




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
        2.
    ACCOUNTING
    POLICIES  Basis of
    accounting
    Revenue
    recognition
    Comprehensive
    income
    Commissions
    Cash and
    cash equivalents and short-term investments
  short-term
 62




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
    Foreign
    currency
      Income
    taxes
    Vessels,
    net
      Impairment
    of long-lived assets
    Deferred
    debt issuance cost
  non-amortizing
  Drydocking
    provisions
   63




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
    Receivables
    Estimates
    and concentrations
      Fair
    value of financial instruments
    Earnings
    per share
    Distributions
    to shareholders (Dividend)
    3.
    RECENTLY
    ISSUED ACCOUNTING STANDARDS   64




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
        4.
    CHARTER
    REVENUES  Stena Victory Stena Vision Stena Victory Stena Vision
  Minimum FutureYear

Charter Revenue(In thousands of $)2008

$
70,0432009


68,8182010


68,0622011


59,7472012


38,1422013


11,987  65




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  5.
    OTHER
    RECEIVABLES  December 31,


December 31,2007


2006(In thousands of $)Additional hire revenue due from Stena/Concordia

$
304


$
979$
304


$
979     6.
    VESSELS,
    NET  December 31,


December 31,2007


2006(In thousands of $)VesselsCost

$
402,426


$
402,426Accumulated depreciation


(73,096
)


(57,453
)Net book value at end of period


329,330



344,973Spare parts






Vessels, net

$
329,330


$
344,973     7.
    DEFERRED
    DEBT ISSUANCE COST    December 31,


December 31,2007


2006(In thousands of $)Debt arrangement fees

$
1,200


$
1,200Accumulated amortization


(483
)


(245
)Deferred debt issuance cost

$
717


$
955   8.
    DEBT  December 31,


December 31,2007


2006(In thousands of $)Secured credit facility

$
229,500


$
229,500Total debt

$
229,500


$
229,500    66




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
      9.
    FINANCIAL
    INSTRUMENTS  Derivative
    instruments and hedging activities
      3-month
   67




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
    Twelve Months Ended


Twelve Months EndedDecember 31, 2007


December 31, 2006($ in thousands)Interest related to floating rate debt facility

$
14,194


$
13,457Interest (benefit) related to swap agreement


(782
)


(267
)Total interest incurred under debt facility and interest rate
    swap

$
13,412


$
13,190       10.
    SHARE
    CAPITAL      11.
    COMMITMENTS
    AND CONTINGENCIES  December 31,


December 31,2007


2006(In thousands of $)Ship mortgages

$
229,500


$
229,500    68




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
    Minimum FutureVessel OperatingYear

Expenses(In thousand of $)2008

$
20,3162009


21,2752010


22,3392011


20,0932012


12,3782013


5,126         12.
    RELATED
    PARTY TRANSACTIONS     69




---



##### Table of Contents



ARLINGTON TANKERS LTD.
  Notes to the Consolidated Financial Statements 
    (Continued)
  13.
    SUBSEQUENT
    EVENTS    NOTE 14.
    QUARTERLY
    FINANCIAL DATA (Unaudited)    Quarterly Financial DataMarch 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007(Unaudited)($ In thousands, except per share data)Revenues

$
17,343


$
17,775


$
17,512


$
17,569Operating expenses


(9,256
)


(9,447
)


(9,362
)


(10,022
)Other income (expense), net


(4,238
)


206



(8,191
)


(8,183
)Net income


3,849



8,534



(41
)


(636
)EPS basic and diluted

$
0.25


$
0.55


$
(0.00
)

$
(0.04
)Dividend declared per share

$
0.58


$
0.59


$
0.59


$
0.56     Quarterly Financial DataMarch 31,


June 30,


Sept. 30,


Dec. 31,2006


2006


2006


2006(Unaudited)($ In thousands, except per share data)Revenues

$
17,244


$
17,259


$
17,600


$
17,332Operating expenses


(9,440
)


(9,206
)


(9,197
)


(9,485
)Other income (expense), net


1,025



(330
)


(8,366
)


(2,972
)Net income


8,829



7,723



37



4,875EPS basic and diluted

$
0.57


$
0.50


$
0.00


$
0.31Dividend declared per share

$
0.57


$
0.58


$
0.60


$
0.57    70




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  (a)
    Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures  Rules 13a-15(e) 15d-15(e)
  (b)
    Managements
    Report on Internal Control Over Financial Reporting  Internal Control 
    Integrated Framework Rule 13a-15(f) 15d-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the company;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    companys assets that could have a material effect on the
    financial statements.   71




---



##### Table of Contents



(c)
    Changes
    in Internal Control Over Financial Reporting    ITEM 9B.
    OTHER
    INFORMATION   PART III  Form 10-K
  ITEM 10.DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Directors
    and Executive Officers
  Form 10-K.
  Code of
    Ethics
  www.arlingtontankers.com
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Regulation S-K Form 10-K
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED SHAREHOLDER MATTERS  Form 10-K
 72




---



##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Form 10-K
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K
 PART IV  ITEM 15.EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES
  Financial Statements.
    Financial Statement Schedules.
    List of Exhibits.
  Form 10-K
 73




---



##### Table of Contents



SIGNATURES      By:
    /s/  Edward
    Terino   Title:
    President, Chief Executive Officer, and     Signature

Capacity

Date/s/  Edward
    TerinoEdward
    Terino

President, Chief Executive Officer, and Chief Financial Officer
    (Principal Executive, Accounting and Financial Officer)

March 14, 2007/s/  Michael
    K. DraytonMichael
    K. Drayton

Director and Chairman of the Board

March 14, 2007/s/  Dr. E.
    Grant GibbonsDr. E.
    Grant Gibbons

Director

March 14, 2007/s/  Stephen
    O. JaegerStephen
    O. Jaeger

Director and Deputy Chairman

March 14, 2007  74




---



##### Table of Contents



EXHIBIT INDEX  ExhibitNumber

Description of Exhibit3.1(1)

Memorandum of Association3.2(1)

Bye-laws4.1(1)

Form of Common Share Certificate4.2(1)

Registration Rights Agreement10.1(1)

US $135,000,000 Secured Loan Facility Agreement10.2.1(1)

Memorandum of Agreement for sale of Stena Companion10.2.2(1)

Memorandum of Agreement for sale of Stena Compatriot10.2.3(1)

Memorandum of Agreement for sale of Stena Concord10.2.4(1)

Memorandum of Agreement for sale of Stena Consul10.2.5(1)

Memorandum of Agreement for sale of Stena Victory10.2.6(1)

Memorandum of Agreement for sale of Stena Vision10.2.7(5)

Memorandum of Agreement for sale of Stena Concept10.2.8(5)

Memorandum of Agreement for sale of Stena Contest10.3.1(1)

Time Charter Party for Stena Companion10.3.2(2)

Amendment No. 1 to Time Charter Party for Stena
    Companion10.3.3(5)

Amendment No. 2 to Time Charter Party for Stena
    Companion10.3.4(1)

Time Charter Party for Stena Compatriot10.3.5(2)

Amendment No. 1 to Time Charter Party for Stena
    Compatriot10.3.6(6)

Amendment No. 2 to Time Charter Party for Stena
    Compatriot10.3.7(1)

Time Charter Party for Stena Concord10.3.8(2)

Amendment No. 1 to Time Charter Party for Stena
    Concord10.3.9(6)

Amendment No. 2 to Time Charter Party for Stena
    Concord10.3.10(1)

Time Charter Party for Stena Consul10.3.11(2)

Amendment No. 1 to Time Charter Party for Stena
    Consul10.3.12(6)

Amendment No. 2 to Time Charter Party for Stena
    Consul10.3.13(1)

Time Charter Party for Stena Victory10.3.14(2)

Amendment No. 1 to Time Charter Party for Stena
    Victory10.3.15(1)

Time Charter Party for Stena Vision10.3.16(2)

Amendment No. 1 to Time Charter Party for Stena
    Vision10.4.1(1)

Ship Management Agreement for Stena Companion10.4.2(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Companion10.4.3(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Companion10.4.4(1)

Ship Management Agreement for Stena Compatriot10.4.5(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Compatriot10.4.6(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Compatriot10.4.7(1)

Ship Management Agreement for Stena Concord10.4.8(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Concord10.4.9(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Concord10.4.10(1)

Ship Management Agreement for Stena Consul10.4.11(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Consul10.4.12(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Consul10.4.13(1)

Ship Management Agreement for Stena Victory 75




---



##### Table of Contents



ExhibitNumber

Description of Exhibit10.4.14(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Victory10.4.15(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Victory10.4.16(1)

Ship Management Agreement for Stena Vision10.4.17(2)

Amendment No. 1 to Ship Management Agreement for Stena
    Vision10.4.18(6)

Amendment No. 2 to Ship Management Agreement for Stena
    Vision10.4.19(6)

Ship Management Agreement for Stena Concept10.4.20(6)

Ship Management Agreement for Stena Contest10.5.1(1)

Stena Guaranty of Time Charter for Stena Companion10.5.2(1)

Stena Guaranty of Time Charter for Stena Compatriot10.5.3(1)

Stena Guaranty of Time Charter for Stena Concord10.5.4(1)

Stena Guaranty of Time Charter for Stena Consul10.5.5(6)

Stena Guaranty of Time Charter for Stena Concept10.5.6(6)

Stena Guaranty of Time Charter for Stena Contest10.5.7(1)

Concordia Guaranty of Time Charter for Stena Victory10.5.8(1)

Concordia Guaranty of Time Charter for Stena Vision10.6.1(1)

Stena Standby Charter Agreement for Stena Victory10.6.2(1)

Stena Standby Charter Agreement for Stena Vision10.7.1(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Companion10.7.2(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Compatriot10.7.3(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Concord10.7.4(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Consul10.7.5(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Victory10.7.6(1)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Vision10.7.8(6)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Concept10.7.9(6)

Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Contest10.8.1(1)

Arlington Guaranty of Time Charter for Stena Companion10.8.2(1)

Arlington Guaranty of Time Charter for Stena Compatriot10.8.3(1)

Arlington Guaranty of Time Charter for Stena Concord10.8.4(1)

Arlington Guaranty of Time Charter for Stena Consul10.8.5(1)

Arlington Guaranty of Time Charter for Stena Victory10.8.6(1)

Arlington Guaranty of Time Charter for Stena Vision10.8.7(6)

Arlington Guaranty of Time Charter for Stena Concept10.8.8(6)

Arlington Guaranty of Time Charter for Stena Contest10.9.1(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Companion10.9.2(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Compatriot10.9.3(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Concord10.9.4(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Consul10.9.5(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Victory10.9.6(1)

Arlington Guaranty of Ship Management Agreement for Stena
    Vision10.9.7(6)

Arlington Guaranty of Ship Management Agreement for Stena
    Concept10.9.8(6)

Arlington Guaranty of Ship Management Agreement for Stena
    Contest10.10.1(5)

Loan Agreement, dated 12 December 2005, between Arlington
    Tankers Ltd. and The Royal Bank of Scotland plc.10.11(3)

Letter Agreement, dated July 1, 2005, between Arlington
    Tankers Ltd. and Tara Railton 76




---



##### Table of Contents



ExhibitNumber

Description of Exhibit10.12*(4)

Change in Control Agreement between Arlington Tankers Ltd. and
    Edward Terino, dated October 24, 200510.13*(7)

Arlington Tankers Ltd. 2007 Bonus Plan12.1

Statement re: Computation of Ratio of Earnings to Fixed Charges.14.1(8)

Code of Ethics21.1

Subsidiaries23.1

Consent of Moore Stephens P.C. (Independent Registered Public
    Accounting Firm).23.2

Consent of KPMG LLP (Independent Registered Public Accounting
    Firm).31.1

Certification of President, Chief Executive Officer, and Chief
    Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)32.1

Certification of President, Chief Executive Officer and Chief
    Financial Officer pursuant to 18 U.S.C. 1350     (1)
    
    Incorporated herein by reference from the Registrants
    Registration Statement on
    Form F-1,
    filed on October 21, 2004 (File
    No. 333-119869).(2)
    
    Incorporated herein by reference from the Registrants
    Annual Report on
    Form 20-F,
    filed on June 6, 2005 (File
    No. 001-32343).(3)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K,
    filed on July 8, 2005 (File
    No. 001-32343).(4)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K,
    filed on October 27, 2005 (File
    No. 001-32343).(5)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K,
    filed on December 16, 2005 (File
    No. 001-32343).(6)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K,
    filed on January 11, 2006 (File
    No. 001-32343).(7)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K,
    filed on April 26, 2007 and Registrants Current
    Report on
    Form 8-K,
    filed on August 22, 2007 (File
    No. 001-32343).(8)
    
    Incorporated herein by reference from the Registrants
    Annual Report on
    Form 10-K,
    filed on March 16, 2007 (File
    No. 001-32343).*
    
    Management contracts and compensatory plan or arrangements
    required to be filed as an exhibit pursuant to Item 15(b)
    of
    Form 10-K. 77