GENERAL MARITIME CORP/ - 10-K Annual Report

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

FORM 10-K

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

For the fiscal year ended December 31, 2002

/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the transition period from ______ to _____

Commission file number 001-16531

GENERAL MARITIME CORPORATION
(Exact name 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 area code: (212) 763-5600

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

Common Stock, par value $.01 per share

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

None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

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

The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant as of March 25, 2003 was approximately $341.6
million, based on the closing price of $9.24 per share.

The number of shares outstanding of the Registrant's common stock as of
March 25, 2003 was 36,964,770 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for the Annual Meeting of Shareholders to be held on May
22, 2003 (Part III)

PART I

ITEM 1. BUSINESS

OVERVIEW

We provide international seaborne crude oil transportation services within
the Atlantic basin. As of March 1, 2003 we had a fleet of 28 tankers, consisting
of 23 Aframax and 5 Suezmax tankers. As discussed in more detail below, in
January of 2003 we agreed to acquire an additional 19 tankers by April 30, 2003.
After giving effect to this proposed acquisition, we would have a fleet of 47
tankers, consisting of 28 Aframax and 19 Suezmax tankers, making us the second
largest mid-sized tanker operator in the world. Our combined fleet would have a
total of 5.6 million dwt, with an average age as of December 31, 2002 of 11.1
years.

During the fiscal year ended December 31, 2002, our fleet generated net
voyage revenues and Adjusted EBITDA(1) of $145.6 million and $78.4 million,
respectively. During the fiscal year ended December 31, 2001, our fleet
generated net voyage revenues and Adjusted EBITDA of $165.0 million and $113.3
million, respectively. The 14 tankers whose results are included in our fiscal
year 2000 financial statements generated $108.0 million in net voyage revenues
and $79.4 million in Adjusted EBITDA during the fiscal year ended December 31,
2000.

We presently have one of the largest mid-sized tanker fleets in the world,
with a total cargo carrying capacity of 3.0 million dwt. With the majority of
our tankers currently operating in the Atlantic basin, we have one of the
largest fleets in this region, which includes ports in the Caribbean, South and
Central America, the United States, Western Africa and the North Sea.
Transportation of crude oil to the U.S. Gulf Coast and other refining centers in
the United States requires tanker owners and operators to meet more stringent
environmental regulations than in other regions of the world. We have focused
our operations in the Atlantic basin because we believe that these stringent
operating and safety standards act as a barrier to entry for potential
competitors. We have established a niche in the region due to our high-quality
tankers, of which 71.4% are either double-hulled or double-sided, our commitment
to safety and many years of experience in the industry. We estimate that for the
year ended December 31, 2002, our tankers transported more than 225.0 million
barrels of crude oil to the United States, accounting for approximately 6.8% of
all U.S. crude oil imports. Although the majority of our tankers operate in the
Atlantic basin, we also currently operate tankers in the Black Sea and in other
regions, which we believe enables us both to take advantage of market
opportunities and to position our tankers in anticipation of drydockings. Our
customers include most of the major international oil companies such as
ChevronTexaco Corporation, CITGO Petroleum Corp., Shell Oil Company, BPAmoco,
Exxon Mobil Corporation, ConocoPhillips and Sun International Ltd.

As of December 31, 2002, the average age of our 23 Aframax tankers was 12.3
years, and the average age of our 5 Suezmax tankers was 12.2 years.

- --------
(1) Adjusted EBITDA represents net voyage revenues less direct vessel expenses
and general and administrative expenses excluding other expenses. Adjusted
EBITDA is included because it is used by certain investors to measure a
company's financial performance. Adjusted EBITDA is not an item recognized
by Generally Accepted Accounting Principles, or GAAP, and should not be
considered as an alternative to net income or any other indicator of a
company's performance required by GAAP. The definition of Adjusted EBITDA
used here may not be comparable to that used by other companies. Please see
Item 6 of this annual report for a reconciliation of Adjusted EBITDA to net
income.

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Our net voyage revenues have grown from $12.0 million in 1997 to $145.6
million in 2002. We have also grown our fleet of tankers from 6 in 1997 to 28
tankers in 2002. We consummated our initial public offering in June 2001.

In January of 2003 we agreed to acquire 19 modern, high-quality tankers
consisting of 5 Aframax and 14 Suezmax tankers from affiliates of Metrostar
Management Corporation, a company based in Athens, Greece, for an aggregate
purchase price of $525.0 million. We anticipate that we will have acquired all
of the tankers by April 30, 2003, as their existing voyages terminate and we
integrate each tanker into our fleet operations. Our acquisition of each tanker
is subject to customary conditions of delivery, including our right to reject a
tanker after inspection. We intend to finance these acquisitions with the net
proceeds of our $250 million senior notes offering that was completed on March
20, 2003, together with senior secured bank borrowings. Unless otherwise
indicated, when we discuss our current fleet in this report, we mean our fleet
of 28 tankers before acquiring the Metrostar vessels, and all of our discussion
of our vessels relate to that current fleet.

Assuming we acquire all 19 tankers, our fleet will be composed of 47
tankers, consisting of 28 Aframax and 19 Suezmax tankers, making us the second
largest mid-sized tanker operator in the world. As of December 31, 2002, these
19 tankers had an average age of 9.8 years and would have provided us with an
additional 2.7 million dwt of carrying capacity. Following the acquisition, our
combined fleet will have a total of 5.6 million dwt, only 23% of which will be
single-hull compared to a worldwide average of 42% single-hull tankers. The
addition of these 19 tankers will also reduce the combined average age of our
fleet as of December 31, 2002 from 12.3 years to 11.1 years. As of December 31,
2002, only 14.9%, or 7 of the tankers in our combined fleet, were older than 15
years of age. Many of the tankers we expect to acquire are "sister ships" that
will provide us with operational and scheduling flexibility, as well as
economies of scale in their operation and maintenance.

We believe that the acquisition of the 19 modern, high-quality tankers from
Metrostar is consistent with our business strategy and will provide us with
significant economies of scale that we believe will reduce daily overhead vessel
costs per tanker. These 19 tankers should provide us with attractive chartering
opportunities while giving us the ability to diversify our customer base and
deploy additional tankers in the Atlantic basin as well as in other regions,
such as the Mediterranean Sea and Black Sea.

OUR COMPETITIVE STRENGTHS

We pursue an intensively customer, and service, focused strategy. Our
strategy is based on what we believe are our key competitive strengths:

- HIGH-QUALITY TANKERS. We operate a fleet of high-quality, mid-sized
tankers. We place great emphasis on ship maintenance and retaining
qualified crew members to operate our tankers. We believe that this
makes it more likely for us to obtain repeat business from customers
and to operate our tankers with greater fuel efficiency and lower
maintenance and operating costs. As of December 31, 2002, only 17.4%,
or 4 of our 23 Aframax tankers, and none of our 5 Suezmax tankers,
were older than 15 years of age. By contrast, 33.2% of the world's
Aframax fleet and 21.7% of the world's Suezmax fleet were older than
15 years of age as of that date. 71.4% of our tankers are either
double-hulled or double-sided. Because of increasingly stringent
operating and safety standards, the age and quality of our fleet have
given us a high level of acceptance by tanker charterers.

- FLEXIBLE, HOMOGENEOUS FLEET. We believe that Aframax and Suezmax
tankers, which make up our entire fleet, are among the most versatile
tankers in the world fleet due to their ability to service virtually
all ports and routes used for crude oil transportation. Additionally,
the

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majority of our tankers have one or two substantially identical
"sister ships" in our fleet which we often use interchangeably. These
sister ships enhance the revenue generating potential of our fleet by
providing operational and scheduling flexibility. The uniform nature
of many ships in the fleet also provides us with cost efficiencies in
maintaining, supplying and crewing our tankers. Finally, Aframax and
Suezmax tanker charter rates have historically been less volatile than
charter rates for VLCCs.

- STRONG CUSTOMER RELATIONSHIPS. We have strong relationships with our
customers, which include most major international oil companies, such
as ChevronTexaco Corporation, CITGO Petroleum Corp., Shell Oil
Company, BPAmoco, Exxon Mobil Corporation, ConocoPhillips and Sun
International Ltd. We believe our strong relationships stem from our
reputation for dependability and for delivering high-quality oil
transportation services. We have consistently maintained our customer
relationships since our inception. During the last few years, our
customer base has expanded due to the growth of our fleet, our
increase in the use of spot market voyage charters and by
opportunistically deploying our tankers into regions outside the
Atlantic basin.

- EXPERIENCED MANAGEMENT TEAM. Our founder, Peter C. Georgiopoulos, and
our other senior executive officers and key employees have on average
more than 20 years of experience in the shipping industry. Our
management team has expertise in all of the commercial, technical and
management areas of our business, promoting a focused marketing
effort, tight quality and cost controls and effective operations and
safety monitoring.

- IN-HOUSE VESSEL MANAGEMENT SERVICES. Unlike many other vessel owning
companies, we provide virtually all of the vessel management services
required to operate our fleet through our wholly-owned subsidiaries.
These services include operational support, tanker maintenance and
technical support, crewing, shipyard supervision, insurance and
financial management services. By performing these services in-house,
we believe that we are able to ensure quality as well as achieve
greater cost efficiencies and economies of scale.

Our high-quality fleet has resulted in an average of 97.3% capacity
utilization for the period from the acquisition of our first tanker in May 1997
through December 2002.

While we strive to maintain our strengths, we operate in a highly
competitive industry which is subject to downturns in regional and global
economies as well as changes in regulations which could adversely affect us and
our industry.

BUSINESS STRATEGY

Our strategy is to employ our existing competitive strengths to continue to
enhance our 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 and maintenance costs. At the same
time, our fleet has an excellent safety and environmental record that
we maintain through acquisitions of high-quality tankers and regular
maintenance and inspection of our fleet. We maintain operating
standards for all of our tankers that emphasize operational safety,
quality maintenance, continuous training of our officers and crews and
compliance with U.S. and international environmental and safety
regulations. Our in-house safety staff oversees many of these
services. We believe the age and quality of the tankers in our fleet,
coupled with our excellent safety and environmental record, position
us favorably within the sector with our customers and for future
business opportunities.

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- BALANCING TANKER DEPLOYMENT TO MAXIMIZE FLEET UTILIZATION AND CASH
FLOWS. We actively manage the deployment of our fleet between time
charters and spot market voyage charters. Our tanker deployment
strategy is designed to provide greater cash flow stability through
the use of time charters for part of our fleet, while maintaining the
flexibility to benefit from improvements in market rates by deploying
the balance of our tankers in the spot market. Our goal is to be the
first choice of our clients for crude oil transportation services. We
constantly monitor the market and seek to anticipate our clients'
crude oil transportation needs and to respond quickly when we
recognize attractive chartering opportunities.

- GROWING OUR FLEET AND MAINTAINING A PRUDENT CAPITAL STRUCTURE. We are
an industry consolidator focused on opportunistically acquiring
high-quality, second-hand, mid-sized tankers. During the past six
years, we have grown our fleet from 6 tankers to 28 tankers and expect
to grow to 47 tankers by April 30, 2003. We are continuously and
actively monitoring the market in an effort to take advantage of
expansion and growth opportunities. At the same time, we are committed
to maintaining prudent financial policies aimed at preserving
financial stability and increasing long-term cash flow. During the
year ended December 31, 2002, our net debt to net book capitalization
ratio has declined from 39.4% to 36.5%. After giving effect to the
$525.0 million acquisition of the 19 tankers from Metrostar and the
financing thereof, our net debt to net book capitalization ratio as of
December 31, 2002 would have been 63.0%. We expect the acquisition of
the Metrostar tankers to increase our cash flow generation which will
enable us to reduce this ratio towards our historical levels.

OUR FLEET

OUR EXISTING 28 TANKERS

As of March 1, 2003, we had a fleet of 28 tankers consisting of 23 Aframax
tankers and 5 Suezmax tankers. The following chart provides information
regarding our 28 tankers.

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DH = Double-hull tanker; DS = Double-sided tanker; SH = Single-hull tanker,
TC = Time Chartered
*As of March 1, 2002
** Oil/Bulk/Ore carrier (O/B/O)
1-Collateral for $300 million credit facility
2-Collateral for $165 million credit facility
3-Time charter expiration plus or minus 15 days
4-Time charter expiration plus or minus 30 days
5-Each tanker with the same letter is a "sister ship" of each other tanker with
the same letter

We acquired 29 of our vessels as well as its two management company
subsidiaries in a series of recapitalization transactions outlined below. The
recapitalization transactions consisted of the following:

- - Our acquisition, as of June 12, 2001, of seven limited partnerships owning
14 vessels, in exchange for shares of our common stock.

- - Our acquisition, as of June 15, 2001, of five special purpose entities,
each owning one vessel, in exchange for shares of our common stock.

- - Our acquisition, in June and July 2001, of seven vessels which were owned
and commercially operated by unaffiliated parties, in exchange for cash.

- - Our acquisition, in August 2001, of three vessels which were owned and
commercially operated by unaffiliated parties, in exchange for cash and
shares of our common stock.

- - Our acquisition, as of June 12, 2001, of all the issued and outstanding
shares of common stock of two vessel management companies. One of these
companies was acquired in exchange for cash and the other in exchange for
shares of our common stock.

Our predecessor entities began operations in 1997 and their fleet had grown
to 14 tankers by the time of our initial public offering on June 12, 2001. All
of our historical financial and operating information from before the initial
public offering reflects only those original 14 tankers. In connection with the
initial public offering, we acquired 15 additional tankers. Of those, 5 were
acquired simultaneously with the closing of the offering and the remaining 10
were acquired in the 10 weeks following the offering and successfully integrated
into our fleet. During October 2002, we sold our oldest tanker, Stavanger
Prince, for scrap. At the time of the offering, we also acquired United Overseas
Tankers Ltd., located in Piraeus, Greece which conducts our technical management
operations such as vessel crewing and maintenance. We recently completed an
internal corporate reorganization that both reduced the number of our
subsidiaries and the number of jurisdictions in which they are organized.

FLEET DEPLOYMENT

We strive to optimize the financial performance of our fleet by deploying
our vessels on time charters and in the spot market. We believe that our fleet
deployment strategy provides us with the ability to benefit from increases in
tanker rates while at the same time maintaining a measure of stability through
cycles in the industry. The following table details the percentage of our fleet
operating on time charters and in the spot market during the past three years.

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Tankers operating on time charters may be chartered for several months or
years whereas tankers operating in the spot market typically are chartered for a
single voyage which may last up to several weeks. Tankers operating in the spot
market may generate increased profit margins during improvements in tanker
rates, while tankers operating on time charters generally provide more
predictable cash flows. Accordingly, we actively monitor macroeconomic trends
and governmental rules and regulations that may affect tanker rates in an
attempt to optimize the deployment of our fleet. As of March 1, 2003, we had 6
tankers on time charter contracts expiring on dates between May 2003 and March
2004,

CLASSIFICATION AND INSPECTION

All of our tankers have been certified as being "in-class" by Det Norske
Veritas, the American Bureau of Shipping or Nippon Kaiji Kyokai. Each of these
classification societies is a member of the International Association of
Classification Societies. Every commercial vessel's hull and machinery is
evaluated by a classification society authorized by its country of registry. The
classification society certifies that the vessel has been built and maintained
in accordance with the rules of the classification society and complies with
applicable rules and regulations of the vessel's country of registry and the
international conventions of which that country is a member. Each vessel is
inspected by a surveyor of the classification society in three surveys of
varying frequency and thoroughness: every year for the annual survey, every two
to three years for the intermediate survey and every four to five years for
special surveys. Vessels may be required, as part of the intermediate survey
process, to be drydocked every 24 to 30 months for inspection of the underwater
portions of the vessel and for necessary repair stemming from the inspection.
Special surveys always require drydocking.

In addition to the classification inspections, many of our customers
regularly inspect our tankers as a precondition to chartering them for voyages.
We believe that our well-maintained, high-quality tankers provide us with a
competitive advantage in the current environment of increasing regulation and
customer emphasis on quality.

We have implemented the International Safety Management Code, which was
promulgated by the IMO to establish pollution prevention requirements applicable
to tankers. Prior to July 1, 1998, we obtained documents of compliance for our
offices and safety management certificates for all of our tankers for which the
certificates are required by the IMO.

OPERATIONS AND SHIP MANAGEMENT

We employ experienced management in all functions critical to our
operations, aiming to provide a focused marketing effort, tight quality and cost
controls and effective operations and safety monitoring. Unlike many other
vessel owning companies, we provide virtually all of our own vessel management
services through our wholly owned subsidiaries. These services include
operational support, tanker maintenance and technical support, crewing, shipyard
supervision, insurance and financial management services. By providing these
services in-house, we believe that we are able to achieve greater cost savings
through economies of scale.

Our crews inspect our tankers and perform ordinary course maintenance, both
at sea and in port. We regularly inspect our tankers. We examine each tanker and
make specific notations and recommendations for improvements to the overall
condition of the tanker, maintenance of the tanker and safety and welfare of the
crew. We have an in-house safety staff to oversee these functions and retain
Admiral Robert North (ret.), formerly of the U.S. Coast Guard, as a safety
consultant. Our safety staff provides the following services:

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- supervision of routine maintenance and repair of the tanker required
to keep each tanker in good and efficient condition, including the
preparation of comprehensive drydocking specifications and the
supervision of each drydocking;

- oversight of compliance with applicable regulations, including
licensing and certification requirements, and the required inspections
of each tanker to ensure that it meets the standards set forth by
classification societies and applicable legal jurisdictions as well as
our internal corporate requirements and the standards required by our
customers;

- engagement and provision of qualified crews (masters, officers, cadets
and ratings) and attendance to all matters regarding discipline, wages
and labor relations;

- arrangements to supply the necessary stores and equipment for each
tanker; and

- continual monitoring of fleet performance and the initiation of
necessary remedial actions to ensure that financial and operating
targets are met.

Our chartering staff, located in New York City, monitors fleet operations,
tanker positions and spot market voyage charter rates worldwide. We believe that
monitoring this information is critical to making informed bids on competitive
brokered charters.

CREWING AND EMPLOYEES

As of December 31, 2002, we employed approximately 67 office personnel.
Approximately 34 of these employees are located in New York City and manage the
commercial operations of our business. The other 33 employees are located in
Piraeus, Greece and manage the technical operations of our business. Our 33
employees located in Greece are subject to Greece's national employment
collective bargaining agreement which covers terms and conditions of their
employment.

As of December 31, 2002, we employed approximately 80 seaborne personnel to
crew our fleet of 28 tankers, consisting of captains, chief engineers, chief
officers and first engineers. The balance of each crew is staffed by employees
of a third party to whom we contract for crew management services. We believe
that we could obtain a replacement provider for these services, or could provide
these services internally, without any adverse impact on our operations.

We place great emphasis on attracting qualified crew members for employment
on our tankers. Recruiting qualified senior officers has become an increasingly
difficult task for tanker operators. We pay competitive salaries and provide
competitive benefits to our personnel. We believe that the well-maintained
quarters and equipment on our tankers help to attract and retain motivated and
qualified seamen and officers. Our crew management services contractors have
collective bargaining agreements that cover all the junior officers and seamen
whom they provide to us.

CUSTOMERS

Our customers include most oil companies, oil traders, tanker owners and
others, although during the year ended December 31, 2002, no single customer
accounted for more than 10% of our voyage revenues. During 2001, Skaugen
PetroTrans, Inc., accounted for 12.6% of our voyage revenues.

COMPETITION

International seaborne transportation of crude oil and other petroleum
products is provided by two main types of operators: fleets owned by independent
companies and fleets operated by oil companies (both private and state-owned).
Many oil companies and other oil trading companies, the

7

primary charterers of the tankers we own, also operate their own tankers and
transport oil for themselves and third party charterers in direct competition
with independent owners and operators. Competition for charters is intense and
is based upon price, tanker location, the size, age, condition and acceptability
of the tanker, and the quality and reputation of the tanker's operator.

We compete principally with other Aframax and Suezmax owners. However,
competition in the Aframax and Suezmax markets is also affected by the
availability of alternative size tankers. Panamax size tankers and oil/bulk/ore
carriers (which carry oil or dry bulk cargo) can compete for many of the same
charters for which we compete. Because ULCCs and VLCCs cannot enter the ports we
serve due to their large size, they rarely compete directly with our tankers for
specific charters.

Other significant operators of multiple Aframax and Suezmax tankers in the
Atlantic basin include American Eagle Tankers, Inc. Limited, OMI Corporation,
Overseas Shipholding Group, Inc. and Teekay Shipping Corporation. There are also
numerous, smaller tanker operators in the Atlantic basin.

INSURANCE

The operation of any ocean-going vessel carries an inherent risk of
catastrophic marine disasters and property losses caused by adverse weather
conditions, mechanical failures, human error, war, terrorism and other
circumstances or events. In addition, the transportation of crude oil is subject
to the risk of spills, and business interruptions due to political circumstances
in foreign countries, hostilities, labor strikes and boycotts. OPA has made
liability insurance more expensive for ship owners and operators imposing
potentially unlimited liability upon owners, operators and bareboat charterers
for oil pollution incidents in the 200-mile United States exclusive economic
zone. We believe that our current insurance coverage is adequate to protect us
against the principal accident-related risks that we face in the conduct of our
business.

Our protection and indemnity insurance, or P&I insurance, covers
third-party liabilities and other related expenses from, among other things,
injury or death of crew, passengers and other third parties, claims arising from
collisions, damage to cargo and other third-party property and pollution arising
from oil or other substances. Our current P&I insurance coverage for pollution
is the maximum commercially available amount of $1.0 billion per tanker per
incident and is provided by mutual protection and indemnity associations. Each
of the tankers currently in our fleet is entered in a protection and indemnity
association which is a member of the International Group of Protection and
Indemnity Mutual Assurance Associations. The 14 protection and indemnity
associations that comprise the International Group insure approximately 90% of
the world's commercial tonnage and have entered into a pooling agreement to
reinsure each association's liabilities. Each protection and indemnity
association has capped its exposure to this pooling agreement at $4.3 billion.
As a member of protection and indemnity associations, which are in turn members
of the International Group, we are subject to calls payable to the associations
based on its claim records as well as the claim records of all other members of
the individual associations and members of the pool of protection and indemnity
associations comprising the International Group.

Our hull and machinery insurance covers risks of actual or constructive
loss from collision, fire, grounding and engine breakdown. Our war risk
insurance covers risks of confiscation, seizure, capture, vandalism, sabotage
and other war-related risks. Our loss-of-hire insurance covers loss of revenue
for up to 90 days resulting from tanker off hire for all of our tankers.

ENVIRONMENTAL AND OTHER REGULATION

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

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

We believe that the heightened level of environmental and quality concerns
among insurance underwriters, regulators and charterers is leading to greater
inspection and safety requirements on all tankers and may accelerate the
scrapping of older tankers throughout the industry. Increasing environmental
concerns have created a demand for tankers that conform to the stricter
environmental standards. We maintain operating standards for all of our tankers
that emphasize operational safety, quality maintenance, continuous training of
our officers and crews and compliance with U.S. and international regulations.

Our tankers are subject to both scheduled and unscheduled inspections by a
variety of governmental and private entities, each of which may have unique
requirements. These entities include the local port authorities (U.S. Coast
Guard, harbor master or equivalent), classification societies, flag state
administration (country of registry) and charterers, particularly terminal
operators and oil companies. Failure to maintain necessary permits or approvals
could require us to incur substantial costs or temporarily suspend operation of
one or more of our tankers.

INTERNATIONAL MARITIME ORGANIZATION

The IMO has adopted regulations which set forth pollution 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 old tankers must be of double-hull construction or of a
mid-deck design with double-sided construction, unless:

(1) 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

(2) 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);

- 30-year old tankers must be of double-hull construction or mid-deck
design with double-sided construction; and

- all tankers will be subject to enhanced inspections.

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

- 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.

As of December 31, 2002, we owned 8 single-hull tankers. Under the current
regulations, these tankers will be able to operate for various periods for up to
eight years before being required to be scrapped or retrofitted to conform to
international environmental standards. Although 2 of these tankers

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are 15 years of age or older, the oldest was only 23 years old and, therefore,
the IMO requirements currently in effect regarding 25- and 30-year old tankers
will not begin to affect our fleet until 2005. Compliance with the new
regulations regarding inspections of all tankers, however, could adversely
affect our operations.

The IMO has approved an accelerated time-table for the phase-out of
single-hull oil tankers. The new regulations which took effect in September
2002, require the phase-out of most single-hull oil tankers by 2015 or earlier,
depending on the age of the tanker and whether it has segregated ballast tanks.
Under the new regulations, the maximum permissible age for single-hull tankers
after 2007 will be 26 years, as opposed to 30 years under current regulations.
The 8 single-hull tankers in our fleet, two of which are currently held for sale
during 2003, will be phased-out by 2007 under the new regulations. The remaining
6 single-hull tankers would be phased out by 2015 unless retrofitted with a
second hull. Also, more stringent maritime safety rules are also more likely to
be imposed worldwide as a result of the oil spill in November 2002 relating to
the loss of the M.T. PRESTIGE. The M.T. PRESTIGE was a 26-year old single-hull
tanker owned by a company not affiliated with us. The M.T. PRESTIGE disaster
could lead to proposals to accelerate the phasing out of single-hull tankers.

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

The ISM Code requires that vessel operators obtain a safety management
certificate for each vessel they operate. This certificate evidences compliance
by a vessel's management with code requirements for a safety management system.
No vessel can obtain a certificate unless its manager has been awarded a
document of compliance, issued by each flag state, under the ISM Code. We have
obtained documents of compliance for our offices and safety management
certificates for all of our tankers for which the certificates are required by
the IMO. We are required to renew these documents of compliance and safety
management certificates annually.

Noncompliance with the ISM Code and other IMO regulations may subject the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available insurance coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. The U.S. Coast Guard and European
Union authorities have indicated that vessels not in compliance with the ISM
Code by the applicable deadlines will be prohibited from trading in U.S. and
European Union ports, as the case may be.

The IMO has negotiated international conventions that impose liability for
oil pollution in international waters and a signatory's territorial waters.
Additional or new conventions, laws and regulations may be adopted which could
limit our ability to do business and which could have a material adverse effect
on our business and results of operations.

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

OPA established an extensive regulatory and liability regime for
environmental protection and cleanup of oil spills. OPA affects all owners and
operators whose vessels trade with the United States or its territories or
possessions, or whose vessels operate in the waters of the United States, which
include the U.S. territorial sea and the 200 nautical mile exclusive economic
zone around the United States. The Comprehensive Environmental Response,
Compensation and Liability Act, or CERCLA, applies to the

10

discharge of hazardous substances (other than oil) whether on land or at sea.
Both OPA and CERCLA impact our operations.

Under OPA, vessel owners, operators and bareboat charterers are
"responsible parties" who are jointly, severally and strictly liable (unless the
spill results solely from the act or omission of a third party, an act of God or
an act of war) for all containment and clean-up costs and other damages arising
from oil spills from their vessels. These other damages are defined broadly to
include:

- natural resource damages and related assessment costs;

- real and personal property damages;

- 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.

OPA limits the liability of responsible parties to the greater of $1,200
per gross ton or $10 million per tanker that is over 3,000 gross tons (subject
to possible adjustment for inflation). The act specifically permits individual
states to impose their own liability regimes with regard to oil pollution
incidents occurring within their boundaries, and some states have enacted
legislation providing for unlimited liability for discharge of pollutants within
their waters. In some cases, states which have enacted this type of legislation
have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. CERCLA, which applies to owners and operators
of vessels, contains a similar liability regime and provides for cleanup,
removal and natural resource damages. Liability under CERCLA is limited to the
greater of $300 per gross ton or $5 million.

These limits of liability do not apply, however, where the incident is
caused by violation of applicable U.S. federal safety, construction or operating
regulations, or by the responsible party's gross negligence or willful
misconduct. These limits do not apply if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the
substance removal activities. OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law. We believe that we are
in substantial compliance with OPA, CERCLA and all applicable state regulations
in the ports where our tankers call.

OPA requires owners and operators of vessels to establish and maintain with
the U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their potential strict liability under the act. The U.S. Coast Guard
has enacted regulations requiring evidence of financial responsibility in the
amount of $1,500 per gross ton for tankers, coupling the OPA limitation on
liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. Under the regulations, evidence of financial responsibility may be
demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA
regulations, an owner or operator of more than one tanker is required to
demonstrate evidence of financial responsibility for the entire fleet in an
amount equal only to the financial responsibility requirement of the tanker
having the greatest maximum strict liability under OPA and CERCLA. We have
provided requisite guarantees and received certificates of financial
responsibility from the U.S. Coast Guard for each of our tankers required to
have one.

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We insure each of our tankers with pollution liability insurance in the
maximum commercially available amount of $1.0 billion. A catastrophic spill
could exceed the insurance coverage available, in which event there could be a
material adverse effect on our business.

Under OPA, with certain limited exceptions, all newly-built or converted
vessels operating in U.S. waters must be built with double-hulls, and existing
vessels that do not comply with the double-hull requirement will be prohibited
from trading in U.S. waters over a 20-year period (1995-2015) based on size, age
and place of discharge, unless retrofitted with double-hulls. Notwithstanding
the prohibition to trade schedule, the act currently permits existing
single-hull and double-sided tankers to operate until the year 2015 if their
operations within U.S. waters are limited to discharging at the Louisiana
Offshore Oil Port or off-loading by lightering within authorized lightering
zones more than 60 miles off-shore. Lightering is the process by which vessels
at sea off-load their cargo to smaller vessels for ultimate delivery to the
discharge port. The prohibition to trade schedule for our 8 single-hull and 6
double-sided tankers is as follows:

(1) Currently held for sale and to be sold during 2003

Of the 19 tankers we agreed to acquire from Metrostar, 9 are double-hull
tankers, 4 are double-sided tankers, 3 are double-bottomed tankers and 3 are
single-hull tankers. These tankers are currently eligible to trade in U.S waters
until the year set forth below at which time they will be subject to the same
restrictions described above.

Owners or operators of tankers operating in the waters of the United States
must file vessel response plans with the U.S. Coast Guard, and their tankers are
required to operate in compliance with their U.S. Coast Guard approved plans.
These response plans must, among other things:

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- 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.

We have obtained vessel response plans approved by the U.S. Coast Guard for
our tankers operating in the waters of the United States. In addition, the U.S.
Coast Guard has announced it intends to propose similar regulations requiring
certain vessels to prepare response plans for the release of hazardous
substances.

OTHER REGULATION

Although the United States is not a party to these conventions, many
countries have ratified and follow the liability plan adopted by the IMO and set
out in the International Convention on Civil Liability for Oil Pollution Damage
of 1969 and the Convention for the Establishment of an International Fund for
Oil Pollution of 1971. Under these conventions and depending on whether the
country in which the damage results is a party to the 1992 Protocol to the
International Convention on Civil Liability for Oil Pollution Damage, a vessel's
registered owner is strictly liable for pollution damage caused in the
territorial waters of a contracting state by discharge of persistent oil,
subject to certain complete defenses. Under an amendment that will come into
effect on November 1, 2003, for vessels of 5,000 to 140,000 gross tons (a unit
of measurement for the total enclosed spaces within a vessel), liability will be
limited to approximately $6.1 million plus $858 for each additional gross ton
over 5,000. For vessels of over 140,000 gross tons, liability will be limited to
approximately $122.1 million. The current maximum amount under the 1992 protocol
is approximately $81.2 million. As the convention calculates liability in terms
of Special Drawing Rights, or SDRs, a unit of account pegged to a basket of
currencies, these figures are based on a conversion rate on January 13, 2003 of
1 SDR= $1.36025. The right to limit liability is forfeited under the
International Convention on Civil Liability for Oil Pollution Damage where the
spill is caused by the owner's actual fault and under the 1992 Protocol where
the spill is caused by the owner's intentional or reckless conduct. Vessels
trading to states which are parties to these conventions must provide evidence
of insurance covering the liability of the owner. In jurisdictions where the
International Convention on Civil Liability for Oil Pollution Damage has not
been adopted, various legislative schemes or common law govern, and liability is
imposed either on the basis of fault or in a manner similar to that convention.
We believe that our P&I insurance covers the liability under the plan adopted by
the IMO.

The European Union is considering legislation that would: (1) ban
manifestly sub-standard ships (defined as those over 15 years old that have been
detained by port authorities at least twice in the past six months) from
European waters and create an obligation of port states to inspect ships posing
a high risk to maritime safety or the marine environment; (2) provide the
European Commission with greater authority and control over classification
societies, including the ability to seek to suspend or revoke the authority of
negligent societies; and (3) accelerate the phasing in of double-hull tankers on
the same schedule as that required under OPA. The European Union adopted a
legislative resolution confirming an accelerated phase-out schedule for
single-hull tankers in line with the schedule adopted by the IMO. Italy
announced a ban of single-hull crude oil tankers over 5,000 dwt from most
Italian ports, effective April 2001. 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.

In addition, most U.S. states that border a navigable waterway have enacted
environmental pollution laws that impose strict liability on a person for
removal costs and damages resulting from a

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discharge of oil or a release of a hazardous substance. These laws may be more
stringent than U.S. federal law.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

The following risk factors and other information included in this report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks occur, our business, financial
condition, operating results and cash flows could be materially adversely
affected and the trading price of our common stock could decline.

THE INDENTURE FOR THE NOTES AND OUR CREDIT FACILITIES IMPOSE SIGNIFICANT
OPERATING AND FINANCIAL RESTRICTIONS THAT MAY LIMIT OUR ABILITY TO OPERATE OUR
BUSINESS.

Our existing credit facilities and indenture for our senior notes that we
issued when we completed our private debt placement on March 20, 2003, impose
significant operating and financial restrictions on us. These restrictions limit
our ability to, among other things:

- incur additional debt;

- pay dividends or make other restricted payments;

- create or permit certain liens;

- sell tankers or other assets;

- create or permit restrictions on the ability of our restricted
subsidiaries to pay dividends or make other distributions to us;

- engage in transactions with affiliates; and

- consolidate or merge with or into other companies or sell all or
substantially all of our assets.

These restrictions could limit our ability to finance our future operations
or capital needs, make acquisitions or pursue available business opportunities.

In addition, our credit facilities require us to maintain specified
financial ratios and satisfy financial covenants. We may be required to take
action to reduce our debt or to act in a manner contrary to our business
objectives to meet these ratios and satisfy these covenants. Events beyond our
control, including changes in the economic and business conditions in the
markets in which we operate, may affect our ability to comply with these
covenants. We cannot assure you that we will meet these ratios or satisfy these
covenants or that our lenders will waive any failure to do so. A breach of any
of the covenants in, or our inability to maintain the required financial ratios
under, our credit facilities would prevent us from borrowing additional money
under the facilities and could result in a default under them. If a default
occurs under our credit facilities, the lenders could elect to declare that
debt, together with accrued interest and other fees, to be immediately due and
payable and proceed against the collateral securing that debt, which constitutes
all or substantially all of our assets. Moreover, if the lenders under a credit
facility or other agreement in default were to accelerate the debt outstanding
under that facility, it could result in a default under our other debt
obligations.

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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.

We are a holding company, and our subsidiaries conduct all of our
operations and own all of our operating assets. We have no significant assets
other than the equity interests of our subsidiaries. As a result, our ability to
make required payments on our senior notes depends on the performance of our
subsidiaries and their ability to distribute funds to us. The ability of our
subsidiaries to make distributions to us may be restricted by, among other
things, restrictions under our debt facilities, applicable corporate and limited
liability company laws of the jurisdictions of their incorporation or
organization and other laws and regulations. If we are unable to obtain funds
from our subsidiaries, we will not be able to make payment on our credit
facilities or pay interest or principal on our senior notes unless we obtain
funds from other sources. We cannot assure you that we will be able to obtain
the necessary funds from other sources.

AN INCREASE IN THE SUPPLY OF TANKER CAPACITY WITHOUT AN INCREASE IN DEMAND FOR
TANKER CAPACITY COULD CAUSE CHARTER RATES TO DECLINE, WHICH COULD MATERIALLY AND
ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.

Historically, the tanker industry has been cyclical. The profitability of
companies and asset values in the industry have fluctuated based on changes in
the supply of, and demand for, tanker capacity. The supply of tankers generally
increases with deliveries of new tankers and decreases with the scrapping of
older tankers, conversion of tankers to other uses, such as floating production
and storage facilities, and loss of tonnage as a result of casualties. If the
number of new ships delivered exceeds the number of tankers being scrapped and
lost, tanker capacity will increase. If the supply of tanker capacity increases
and the demand for tanker capacity does not increase correspondingly, the
charter rates paid for our tankers could materially decline.

A DECLINE IN DEMAND FOR CRUDE OIL OR A SHIFT IN OIL TRANSPORT PATTERNS COULD
MATERIALLY AND ADVERSELY AFFECT OUR REVENUES.

The demand for tanker capacity to transport crude oil depends upon world
and regional oil markets. A number of factors influence these markets,
including:

- global and regional economic conditions;

- increases and decreases in production of and demand for crude oil;

- developments in international trade; and

- changes in seaborne and other transportation patterns.

Historically, the crude oil markets have been volatile as a result of the
many conditions and events that can affect the price, demand, production and
transport of oil, as well as competition from alternative energy sources.
Decreased demand for oil transportation may have a material adverse effect on
our revenues, cash flows and profitability.

A DECLINE IN CHARTER RATES OR AN INCREASE IN COSTS COULD MATERIALLY AND
ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.

Our revenues depend on the rates that charterers pay for transportation of
crude oil by Aframax and Suezmax tankers. Because many of the factors
influencing the supply of and demand for tanker capacity are unpredictable, the
nature, timing and degree of changes in charter rates are unpredictable. For

15

the year ended December 31, 2002, the average daily rate in the spot market for
our Aframax tankers was $13,318 and the average daily rate in the spot market
for our Suezmax tankers was $15,410. In 2001, the average daily rate in the spot
market for our Aframax tankers was $20,118 and the average daily rate in the
spot market for our Suezmax tankers was $27,032. In 2000, the average daily rate
in the spot market for our Aframax tankers was $27,531 and the average daily
rate in the spot market for Suezmax tankers was $35,751. If charter rates fall,
our revenues, cash flows and profitability could be materially and adversely
affected.

Our vessel operating expenses depend on a variety of factors 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 shipping industry. Some of these costs, primarily insurance and enhanced
security measures implemented after September 11, 2001, are increasing. The
terrorist attack on the VLCC LIMBURG in Yemen during October 2002 has resulted
in even more emphasis on security and pressure on insurance rates. We expect
these to increase direct vessel operating expenses for 2003. If costs continue
to rise, that could materially and adversely affect our cash flows and
profitability.

THE MARKET FOR CRUDE OIL TRANSPORTATION SERVICES IS HIGHLY COMPETITIVE AND WE
MAY NOT BE ABLE TO EFFECTIVELY COMPETE.

Our tankers are employed in a highly competitive market. Our competitors
include the owners of other Aframax and Suezmax tankers and, to a lesser degree,
owners of other size tankers. Both groups include independent oil tanker
companies as well as oil companies. We do not control a sufficiently large share
of the market to influence the market price charged for crude oil transportation
services.

Our market share may decrease in the future. We may not be able to compete
profitably as we expand our business into new geographic regions or provide new
services. New markets may require different skills, knowledge or strategies than
we use in our current markets, and the competitors in those new markets may have
greater financial strength and capital resources than we do.

FLUCTUATIONS IN THE MARKET VALUE OF OUR FLEET MAY ADVERSELY AFFECT OUR
LIQUIDITY, RESULT IN BREACHES UNDER OUR FINANCING ARRANGEMENTS AND SALES OF OUR
TANKERS AT A LOSS.

The market value of tankers fluctuates depending upon general economic and
market conditions affecting the tanker industry, the number of tankers in the
world fleet, the price of constructing new tankers, or new buildings, types and
sizes of tankers, and the cost of other modes of transportation. The market
value of our fleet may decline as a result of a downswing in the historically
cyclical shipping industry or as a result of the aging of our fleet. Declining
tanker values could affect our ability to raise cash by limiting our ability to
refinance tankers and thereby adversely impact our liquidity. In addition,
declining tanker values could result in a breach of loan covenants, which could
give rise to events of default under our credit facilities. Due to the
cyclicality of the tanker market, the market value of one or more of our tankers
may at various times be lower than their book value, and sales of those tankers
during those times would result in losses. If we determine at any time that a
tanker's future limited useful life and earnings require us to impair its value
on our financial statements, that could result in a charge against our earnings
and the reduction of our shareholder's equity. If for any reason we sell tankers
at a time when tanker prices have fallen, the sale may be at less than the
tanker's carrying amount on our financial statements, with the result that we
would also incur a loss and a reduction in earnings.

COMPLIANCE WITH SAFETY, ENVIRONMENTAL AND OTHER GOVERNMENTAL REQUIREMENTS MAY
ADVERSELY AFFECT OUR OPERATIONS.

16

The shipping industry in general, our business and the operation of our
tankers in particular, are affected by a variety of governmental regulations in
the form of numerous international conventions, national, state and local laws
and national and international regulations in force in the jurisdictions in
which such tankers operate, as well as in the country or countries in which such
tankers are registered. These regulations include:

- OPA, which imposes strict liability for the discharge of oil into the
200-mile United States exclusive economic zone, the obligation to
obtain certificates of financial responsibility for vessels trading in
United States waters and the requirement that newly constructed
tankers that trade in United States waters be constructed with
double-hulls;

- the International Convention on Civil Liability for Oil Pollution
Damage of 1969 entered into by many countries (other than the United
States) relating to strict liability for pollution damage caused by
the discharge of oil;

- the IMO International Convention for the Prevention of Pollution from
Ships with respect to strict technical and operational requirements
for tankers;

- the IMO International Convention for the Safety of Life at Sea of
1974, or SOLAS, with respect to crew and passenger safety; and

- the International Convention on Load Lines of 1966 with respect to the
safeguarding of life and property through limitations on load
capability for vessels on international voyages.

More stringent maritime safety rules are also more likely to be imposed
worldwide as a result of the recent oil spill in November 2002 relating to the
loss of the M.T. PRESTIGE, a 26-year old single-hull tanker owned by a company
not affiliated with us. Additional laws and regulations may also be adopted that
could limit our ability to do business or increase the cost of our doing
business and that could have a material adverse effect on our operations. In
addition, we are required by various governmental and quasi-governmental
agencies to obtain certain permits, licenses and certificates with respect to
our operations. In the event of war or national emergency, our tankers may be
subject to requisition by the government of the flag flown by the tanker without
any guarantee of compensation for lost profits. We believe our tankers are
maintained in good condition in compliance with present regulatory requirements,
are operated in compliance with applicable safety/environmental laws and
regulations and are insured against usual risks for such amounts as our
management deems appropriate. The tankers' operating certificates and licenses
are renewed periodically during each tanker's required annual survey. However,
government regulation of tankers, particularly in the areas of safety and
environmental impact may change in the future and require us to incur
significant capital expenditure on our ships to keep them in compliance.

SHIPPING IS AN INHERENTLY RISKY BUSINESS AND OUR INSURANCE MAY NOT BE ADEQUATE.

Our tankers and their cargoes are at risk of being damaged or lost because
of events such as marine disasters, bad weather, mechanical failures, human
error, war, terrorism, piracy and other circumstances or events. In addition,
transporting crude oil creates a risk of business interruptions due to political
circumstances in foreign countries, hostilities, labor strikes and boycotts. For
instance, in Venezuela, an oil industry strike has lessened the flow of oil to
the United States and, therefore, the demand for tankers on that route. Any of
these events may result in loss of revenues, increased costs and decreased cash
flows. In addition, following the terrorist attack in New York City on September
11, 2001, and the military response of the United States, the likelihood of
future acts of terrorism may increase, and our tankers may face higher risks of
attack. Future hostilities or other political instability, as shown by the

17

attack on the LIMBURG in Yemen in October 2002, could affect our trade patterns
and adversely affect our operations and our revenues, cash flows and
profitability.

We carry insurance to protect against most of the accident-related risks
involved in the conduct of our business. We currently maintain the maximum
commercially available amount of $1.0 billion in coverage for each of our
tankers for liability for spillage or leakage of oil or pollution. We also carry
insurance covering lost revenue resulting from tanker off hire for all of our
tankers. Nonetheless, risks may arise against which we are not adequately
insured. For example, a catastrophic spill could exceed our insurance coverage
and have a material adverse effect on our financial condition. In addition, we
may not be able to procure adequate insurance coverage at commercially
reasonable rates in the future and we cannot guarantee that any particular claim
will be paid. In the past, new and stricter environmental regulations have led
to higher costs for insurance covering environmental damage or pollution, and
new regulations could lead to similar increases or even make this type of
insurance unavailable. Furthermore, even if insurance coverage is adequate to
cover our losses, we may not be able to timely obtain a replacement ship in the
event of a loss. We may also be subject to calls, or premiums, in amounts based
not only on our own claim records but also the claim records of all other
members of the protection and indemnity associations through which we receive
indemnity insurance coverage for tort liability. Our payment of these calls
could result in significant expenses to us which, could reduce our cash flows
and place strains on our liquidity and capital resources.

OUR OPERATING RESULTS MAY FLUCTUATE SEASONALLY.

We operate our tankers in markets that have historically exhibited seasonal
variations in tanker demand and, as a result, in charter rates. Tanker markets
are typically stronger in the fall and winter months (the fourth and first
quarters of the calendar year) in anticipation of increased oil consumption in
the northern hemisphere during the winter months. Unpredictable weather patterns
and variations in oil reserves disrupt vessel scheduling. While this seasonality
has not materially affected our operating results since 1997, it could
materially affect our operating results in the future.

WE MAY NOT BE ABLE TO GROW OR TO EFFECTIVELY MANAGE OUR GROWTH.

We may not be able to grow or to effectively manage our growth. A principal
focus of our strategy is to continue to grow by taking advantage of changing
market conditions, which may include expanding our business in the Atlantic
basin, the primary geographic area and market where we operate or expanding into
other regions, or by increasing the number of tankers in our fleet. Our future
growth will depend upon a number of factors, some of which we can control and
some of which we cannot. These factors include our ability to:

- identify businesses engaged in managing, operating or owning tankers
for acquisitions or joint ventures;

- identify tankers and/or shipping companies for acquisitions;

- integrate any acquired businesses or tankers successfully with our
existing operations;

- hire, train and retain qualified personnel to manage and operate our
growing business and fleet;

- identify new markets outside of the Atlantic basin;

- improve our operating and financial systems and controls; and

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- obtain required financing for our existing and new operations.

The failure to effectively identify, purchase, develop and integrate any
tankers or businesses could harm our business, financial condition and results
of operations. In January 2003, we agreed to acquire 19 additional tankers. We
may have difficulty integrating these tankers into our existing operations or
employing qualified personnel to manage and operate these tankers.

IF WE DEFAULT UNDER ANY OF OUR LOAN AGREEMENTS, WE COULD FORFEIT OUR RIGHTS IN
OUR TANKERS AND THEIR CHARTERS.

We have pledged all of our vessels and related collateral as security to
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 vessels and the related collateral, and we could lose our
rights in the tankers and their charters.

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

IF WE LOSE ANY OF OUR CUSTOMERS OR A SIGNIFICANT PORTION OF OUR REVENUES, OUR
OPERATING RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED.

We derive a significant portion of our voyage revenues from a limited
number of customers, although during the year ended December 31, 2002, no single
customer accounted for more than 10% of our voyage revenues. During the year
ended December 31, 2001, Skaugen PetroTrans, Inc. accounted for 12.6% of our
voyage revenues. If we lose a significant customer, or if a significant customer
decreases the amount of business it transacts with us, our revenues, cash flows
and profitability could be materially and adversely affected.

AS OUR FLEET AGES, THE RISKS ASSOCIATED WITH OLDER VESSELS COULD ADVERSELY
AFFECT OUR OPERATIONS.

In general, the costs to maintain a tanker in good operating condition
increase as the tanker ages. As of December 31, 2002, the average age of our
28-tanker fleet was 12.3 years. Due to improvements in engine technology, older
tankers typically are less fuel-efficient than more recently constructed
tankers. Cargo insurance rates increase with the age of a tanker, making older
tankers less desirable to charterers.

Governmental regulations, safety or other equipment standards related to
the age of tankers may require expenditures 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 tankers age, market
conditions will justify any required expenditures or enable us to operate our
tankers profitably during the remainder of their useful lives.

OUR INABILITY TO OPERATE TWO OF OUR SINGLE-HULL TANKERS IN U.S. WATERS BEGINNING
IN 2003 AND 2004 AND AN ACCELERATION OF THE CURRENT LATER PROHIBITION TO TRADE
DEADLINES FOR OUR OTHER SINGLE-HULL AND DOUBLE-SIDED TANKERS COULD ADVERSELY
AFFECT OUR OPERATIONS.

Under OPA, all oil tankers that do not have double-hulls will not be
permitted to come to U.S. ports or trade in U.S. waters by 2015. Our 28-tanker
fleet consists of 14 double-hull tankers, 6 double-sided

19

tankers and 8 single-hull tankers. Based on the current prohibition to trade
schedule, two of our Aframax tankers, the KENTUCKY and the WEST VIRGINIA,
currently held for sale, which were built in 1980 and 1981, respectively, will
not be eligible to carry oil as cargo within the 200-mile United States
exclusive economic zone starting in 2003 and 2004, except that they may trade in
U.S. waters until 2015 if their operations are limited to discharging their
cargoes at the Louisiana Offshore Oil Port or off-loading by lightering within
authorized lightering zones more than 60 miles off-shore. Our 6 other
single-hull and 6 double-sided tankers, all of which were built in 1985 or
later, are currently eligible to trade in U.S. waters until the year set forth
below when they would be subject to the same restriction:

Of the 19 tankers we agreed to acquire from Metrostar, 9 are double-hull
tankers, 4 are double-sided tankers, 3 are double-bottomed tankers and 3 are
single-hull tankers. The double-sided tankers, the double-bottomed tankers and
the single-hull tankers are currently eligible to trade in U.S waters until the
year set forth below when they would be subject to the same restrictions
described above.

However, the adoption of proposals to accelerate the prohibition to trade
of all non-double-hull tankers following the M.T. PRESTIGE disaster in November
2002 could adversely affect the remaining useful lives of all of our tankers and
our ability to generate income from them.

OUR REVENUES MAY BE ADVERSELY AFFECTED IF WE DO NOT SUCCESSFULLY EMPLOY OUR
TANKERS.

We seek to deploy our tankers between spot market voyage charters and time
charters in a manner that maximizes long-term cash flow. As of March 1, 2003, 6
of our tankers were contractually committed to time charters, with the remaining
terms of these charters expiring on dates between May 2003 and March 2004.
Although these time charters provide reliable revenues, they also limit the
portion of our fleet available for spot market voyages during an upswing in the
tanker industry cycle, when spot market voyages might be more profitable. In
part, due to our recent agreement to acquire 19 additional tankers with as many
as 3 tankers subject to time charters, 38 of the tankers in our fleet following
the proposed acquisition will be available either for entering into new time
charters or trading in the spot market during 2003.

We earned 80.5% of our net voyage revenue from spot market voyage charters
for the year ended December 31, 2002. The spot market is highly competitive, and
spot market voyage charter rates may fluctuate dramatically based on tanker and
oil supply and demand and other factors. We cannot assure you that future spot
market voyage charters will be available at rates that will allow us to operate
our tankers profitably.

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WE MAY NOT BUY ALL 19 TANKERS FROM METROSTAR.

We have presented combined fleet data in this annual report based on our
agreement to purchase 19 tankers from Metrostar. It is possible, however, that
the seller could breach the agreement, we could reject a vessel after inspection
or the seller and we could not reach satisfactory arrangements with respect to
vessels on time charters. In that case, our combined fleet data presented in
this annual report would have to be adjusted.

WE MAY INCUR UNANTICIPATED CONTINGENT LIABILITIES AS A RESULT OF OUR ACQUISITION
OF THE TANKERS FROM METROSTAR.

Our acquisition of the tankers from Metrostar is expected to include the
direct purchase of most of the tankers and may include the purchase of the
equity of the entities that own some of the tankers in order to allow us to keep
existing time charters in place. We may incur unforeseen environmental, tax,
litigation or other liabilities in connection with our acquisition of the
tankers from Metrostar or we may underestimate the known liabilities. If such
liabilities materialize or are greater than we estimate, they could have a
material adverse effect on us.

WE MAY FACE UNEXPECTED REPAIR COSTS FOR OUR TANKERS.

Repairs and maintenance costs are difficult to predict with certainty and
may be substantial. Many of these expenses are not covered by our insurance.
Large repair expenses could decrease our profits and reduce our liquidity.

ARRESTS OF OUR TANKERS BY MARITIME CLAIMANTS COULD CAUSE A SIGNIFICANT LOSS OF
EARNINGS FOR THE RELATED OFF HIRE PERIOD.

Crew members, suppliers of goods and services to a vessel, shippers of
cargo and other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a maritime
lienholder may enforce its lien by "arresting" or "attaching" a vessel through
foreclosure proceedings. The arrest or attachment of one or more of our tankers
could result in a significant loss of earnings for the related off-hire period.

In addition, in jurisdictions where the "sister ship" theory of liability
applies, a claimant may arrest both the vessel which is subject to the
claimant's maritime lien and any "associated" vessel, which is any vessel owned
or controlled by the same owner. In countries with "sister ship" liability laws,
claims might be asserted against us, any of our subsidiaries or our tankers for
liabilities of other vessels that we own.

OUR TANKERS MAY BE REQUISITIONED BY GOVERNMENTS WITHOUT ADEQUATE COMPENSATION.

A government could requisition for title or seize our tankers. Under
requisition for title, a government takes control of a vessel and becomes its
owner. Also, a government could requisition our tankers for hire. Under
requisition for hire, a government takes control of a vessel and effectively
becomes its charterer at dictated charter rates. Generally, requisitions occur
during a period of war or emergency. Although we as owner would be entitled to
compensation in the event of a requisition, the amount and timing of payment
would be uncertain.

WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY ATTRACTING AND RETAINING
SKILLED EMPLOYEES.

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The loss of the services of any of our key personnel or our inability to
successfully attract and retain qualified personnel, including ships' officers,
in the future could have a material adverse effect on our business, financial
condition and operating results. Our future success depends particularly on the
continued service of Peter C. Georgiopoulos, our Chairman, President and Chief
Executive Officer.

PORTIONS OF OUR INCOME MAY BE SUBJECT TO U.S. TAX.

If we do not qualify for an 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 shipping income that is derived from U.S. sources. If
we are subject to such tax, our net income and cash flow would be reduced by the
amount of such tax.

We will qualify for exemption under Section 883 if, among other things, our
stock is treated as primarily and regularly traded on an established securities
market in the United States. Under the currently proposed Section 883
regulations, we might not satisfy this publicly-traded requirement for any
taxable year in which 50% or more of our stock is owned at any time during that
year by persons who actually or constructively own 5% or more of our stock, or
5% shareholders.

We believe that based on the ownership of our stock in 2002, we satisfied
the publicly-traded requirement under the currently proposed Section 883
regulations. However, we can give no assurance that future changes and shifts in
the ownership of our stock by 5% shareholders would not preclude us from
qualifying for the Section 883 exemption in 2003 or in the future. Furthermore,
the proposed Section 883 regulations are not yet in effect and the final
regulations, when adopted, could differ from the proposed regulations.

If we do not qualify for the Section 883 exemption, our shipping income
derived from U.S. sources, or 50% of our gross shipping income attributable to
transportation beginning or ending in the United States, would be subject to a
4% tax imposed without allowance for deductions. For fiscal year 2002, the vast
majority of our revenues were attributable to transportation beginning or ending
in the United States. If we had been subject to this 4% tax on our gross
shipping income during 2002, the tax would have been approximately U.S. $4.5
million.

INCREASES IN TONNAGE TAXES ON OUR TANKERS WOULD INCREASE THE COSTS OF OUR
OPERATIONS.

Our tankers are currently registered under the following flags: Liberia,
Malta, and the Republic of the Marshall Islands. These jurisdictions impose
taxes based on the tonnage capacity of each of the vessels registered under
their flag. The tonnage taxes imposed by these countries could increase, which
would cause the costs of our operations would increase.

OUR INCORPORATION UNDER THE LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS MAY
LIMIT THE ABILITY OF OUR SHAREHOLDERS TO PROTECT THEIR INTERESTS.

Our corporate affairs are governed by our Articles of Incorporation and
Bylaws and by the Marshall Islands Business Corporations Act. The provisions of
the Marshall Islands Business Corporations Act resemble provisions of the
corporation laws of a number of states in the United States. However, there have
been few judicial cases in the Republic of the Marshall Islands interpreting the
Marshall Islands Business Corporations Act. For example, the rights and
fiduciary responsibilities of directors under the laws of the Republic of the
Marshall Islands are not as clearly established as the rights and fiduciary
responsibilities of directors under statutes or judicial precedent in existence
in certain U.S. jurisdictions. Although the Marshall Islands Business
Corporations Act does specifically incorporate the non-statutory law, or
judicial case law, of the State of Delaware and other states with substantially
similar

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legislative provisions, our public shareholders may have more difficulty in
protecting their interests in the face of actions by management, directors or
controlling shareholders than would shareholders of a corporation incorporated
in a U.S. jurisdiction.

IT MAY NOT BE POSSIBLE FOR OUR INVESTORS TO ENFORCE U.S. JUDGMENTS AGAINST US.

We are incorporated in the Republic of the Marshall Islands and most of our
subsidiaries are organized in the Republic of Liberia and the Marshall Islands.
Substantially all of our assets and those of our subsidiaries are located
outside the United States. As a result, it may be difficult or impossible for
U.S. investors to serve process within the United States upon us or to enforce
judgment upon us for civil liabilities in U.S. courts. In addition, you should
not assume that courts in the countries in which we or our subsidiaries are
incorporated or where our or the assets of our subsidiaries are located (i)
would enforce judgments of U.S. courts obtained in actions against us or our
subsidiaries based upon the civil liability provisions of applicable U.S.
federal and state securities laws or (ii) would enforce, in original actions,
liabilities against us or our subsidiaries based upon these laws.

ANTI-TAKEOVER PROVISIONS IN OUR FINANCING AGREEMENTS AND OUR ORGANIZATIONAL
DOCUMENTS COULD HAVE THE EFFECT OF DISCOURAGING, DELAYING OR PREVENTING A MERGER
OR ACQUISITION, WHICH COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.

Several of our existing financing agreements impose restrictions on changes
of control of our company and our ship-owning subsidiaries. These include
requirements that we obtain the lenders' consent prior to any change of control
and that we make an offer to redeem certain indebtedness before a change of
control can take place.

Several provisions of our amended and restated articles of incorporation
and our bylaws could discourage, delay or prevent a merger or acquisition that.
shareholders may consider favorable. These provisions include:

- authorizing our board of directors to issue "blank check" preferred
stock without shareholder approval;

- providing for a classified board of directors with staggered,
three-year terms;

- prohibiting us from engaging in a "business combination" with an
"interested shareholder" for a period of three years after the date of
the transaction in which the person became an interested shareholder
unless certain provisions are met;

- prohibiting cumulative voting in the election of directors;

- authorizing the removal of directors only for cause and only upon the
affirmative vote of the holders of at least 80% of the outstanding
shares of our common stock entitled to vote for the directors;

- prohibiting shareholder action by written consent unless the written
consent is signed by all shareholders entitled to vote on the action;

- limiting the persons who may call special meetings of shareholders;
and

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- establishing advance notice requirements for nominations for election
to our board of directors or for proposing matters that can be acted
on by shareholders at shareholder meetings.

OUR COMMON STOCK PRICE MAY BE HIGHLY VOLATILE AND AN INVESTMENT IN OUR COMMON
STOCK COULD DECLINE IN VALUE.

The market price of our common stock may fluctuate significantly in
response to many factors, many of which are beyond our control. Investors in our
common stock may not be able to resell their shares at or above their purchase
price due to those factors, which include the risks and uncertainties set forth
in this report. In the past, following periods of volatility in the market price
of a particular company's securities, securities class action litigation has
often been brought against the company. We may become involved in this type of
litigation in the future. Litigation of this type could be extremely expensive
and divert management's attention and resources from running our company.

FUTURE SALES OF OUR COMMON STOCK COULD CAUSE THE MARKET PRICE OF OUR COMMON
STOCK TO DECLINE.

The market price of our common stock could decline due to sales of a large
number of shares in the market, including sales of shares by our large
shareholders, or the perception that these sales could occur. These sales could
also make it more difficult or impossible for us to sell equity securities in
the future at a time and price that we deem appropriate to raise funds through
future offerings of common stock. We have entered into registration rights
agreements with the securityholders who received shares in our recapitalization
transactions that entitle them to have an aggregate of 29,000,000 shares
registered for sale in the public market. In addition, those shares became
eligible for sale in the public market beginning on June 12, 2002, pursuant to
Rule 144 under the Securities Act. We also registered on Form S-8 an aggregate
of 2,900,000 shares issuable upon exercise of options we have granted to
purchase common stock or reserved for issuance under our equity compensation
plans.

ITEM 2. PROPERTIES

We lease two properties, both of which house offices used in the
administration of our operations: a property of approximately 11,000 square feet
in New York, New York and a property of approximately 7,400 square feet in
Piraeus, Greece. We do not own or lease any production facilities, plants, mines
or similar real properties.

ITEM 3. LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

Except as set forth below, we are not aware of any material pending legal
proceedings, other than ordinary routine litigation incidental to our business,
to which we or our subsidiaries is a party or of which our property is the
subject. In the future, we may be subject to legal proceedings and claims in the
ordinary course of business, principally personal injury and property casualty
claims. Those claims, even if lacking merit, could result in the expenditure by
us of significant financial and managerial resources.

We time chartered one of our tankers, the GENMAR HARRIET, to an affiliate
of OMI Corporation in September 1997, for a period of approximately four years.
Under the charter, we had the right to cancel the balance of the charter at any
time after its second anniversary date upon 90 days' written notice with a
payment of $1.0 million to the charterer, which payment has been made by us. On
October 2, 2000, we gave notice to the charterer that this option was being
exercised. Subsequently, it was calculated that redelivery was to take place on
February 2, 2001. In January 2001, the charterer indicated that it was not

24

possible to complete a laden voyage by such date. The charterer asserted that
the tanker would not have to be redelivered until February 24, 2001, which would
permit it time to conduct an additional voyage. The charterer demanded
arbitration and, under protest, redelivered the tanker to us on January 14,
2001, and demanded damages in the amount of approximately $1.9 million,
exclusive of interest and costs, as a result of its inability to commence and
complete another voyage. Our position was that pursuant to the terms of the
charter and the existing law, the charterer was not entitled to commence another
voyage if the tanker could not reasonably be redelivered prior to the redelivery
date. We counterclaimed that the charterer's anticipatory breach of the charter
has damaged us. The parties presented their claims before a sole arbitrator in
2001. We have settled the arbitration subsequent to December 31, 2002, by making
a payment to the charter in the approximate amount of $400,000 which was
adequately accrued for on our December 31, 2002 balance sheet.

On March 14, 2001, the GENMAR HECTOR experienced severe weather while
unloading at the BPAmoco Co. terminal in Texas City, Texas. As a result of heavy
winds, the tanker became separated from the terminal. The terminal's loading
arms were damaged and there was a discharge of approximately 200 to 300 barrels
of oil. The U.S. Coast Guard has determined that this oil originated from the
terminal and that BPAmoco is the responsible party for the discharge under OPA,
although BPAmoco retains a right of contribution against the tanker. On March
16, 2001, BPAmoco Corporation, BPAmoco Oil Co. and Amoco Oil Company filed a
lawsuit in the United States District Court for the Southern District of Texas,
Galveston Division, against the GENMAR HECTOR IN REM, seeking damages in the
amount of $1.5 million. The protection and indemnity association for this
tanker, which provides insurance coverage for such incidents, issued a letter to
BPAmoco Co., et al. guaranteeing the payment of up to $1.5 million for any
damages for which this tanker may be found liable in order to prevent the arrest
of the tanker. On July 31, 2001, the plaintiffs filed an amended complaint which
added as defendants United Overseas Tankers Ltd., (a subsidiary of ours) and us.
On or about August 3, 2001, Valero Refining Company-Texas and Valero Marketing &
Supply Co., co-lessors with BPAmoco of the BPAmoco terminal and the voyage
charterer of the tanker, intervened in the above-referenced lawsuit, asserting
claims against the tanker, Genmar Hector Ltd., United Overseas Tankers Ltd., us
and BPAmoco in the aggregate amount of approximately $3.2 million. On or about
September 28, 2001, BPAmoco filed a second amended complaint, increasing the
aggregate amount of its claims against the defendants, including us, from $1.5
million to approximately $3.2 million. BPAmoco asserted that such increase is
due to subsequent demurrage claims made against BPAmoco by other vessels whose
voyages were delayed or otherwise affected by the incident. We believe that the
claims asserted by BPAmoco are generally the same as those asserted by Valero
Refining Company-Texas and Valero Marketing & Supply Co. and that, as a result,
the aggregate amount of such claims taken together will be approximately $3.2
million. A counterclaim has been filed on behalf of us and the other defendants
against the BPAmoco and Valero plaintiffs for approximately $25,000. On October
30, 2001, these two civil actions were consolidated and on December 26, 2001, a
complaint for damages in an unspecified amount due to personal injuries from the
inhalation of oil fumes was filed by certain individuals against our tanker,
BPAmoco, United Overseas Tankers Ltd., and General Maritime Corporation. These
personal injury plaintiffs filed an amended complaint on January 24, 2002,
adding another individual as a plaintiff and asserting a claim against United
Overseas Tankers Ltd. and General Maritime Corporation for punitive damages. We
believe that the claim for punitive damages is without merit. On February 27,
2002, Southern States Offshore, Inc. filed an independent suit against BPAmoco,
us, United Overseas Tankers Ltd. and Valero seeking damages sustained by the M/V
SABINE SEAL, which is owned and operated by Southern States Offshore and was
located adjacent to the BPAmoco dock on the day of the spill, and for
maintenance and cure paid to the individual personal injury claimants who were
members of the crew of the SABINE SEAL. The amount of the claim is estimated to
be approximately $100,000. This action has now been consolidated with the other
claims. With the possible exception of the claim for punitive damages, all of
the claims asserted against us appear to be covered by insurance. The parties
have now agreed to a settlement in principle which would involve a payment by us
that is wholly covered by insurance. Accordingly, we believe that

25

this incident will have no material effect on our operating results.

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

No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION, HOLDERS AND DIVIDENDS

Our common 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
sets forth for the periods indicated the high and low prices for the common
stock as of the close of trading as reported on the New York Stock Exchange:

As of December 31, 2002, there were approximately 250 holders of our
common stock.

We have never declared or paid any cash dividends on our capital stock.
General Maritime currently intends to retain all available earnings for use in
its business and does not anticipate paying any cash dividends in the
foreseeable future. The credit facilities and indenture for our senior notes
impose limitations or prohibitions on the payment of dividends without the
lenders' consent or in conjunction with a subsidiary's failure to comply with
various financial covenants.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

Set forth below are selected historical consolidated and other data of
General Maritime Corporation at the dates and for the fiscal years shown.

** During 1998 our vessels operated 143 days on bareboat contracts which are
included in time charter days

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(1) Adjusted EBITDA represents net voyage revenues less direct vessel
expenses and general and administrative expenses excluding non-cash or
one-time charges as well as other income or expenses. Adjusted EBITDA
is included because it is used by certain investors to measure a
company's financial performance. Adjusted EBITDA is not an item
recognized by GAAP, and should not be considered as an alternative to
net income or any other indicator of a company's performance required
by GAAP. The definition of Adjusted EBITDA used here may not be
comparable to that used by other companies.
(2) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of
days each vessel was a part of our fleet during the period divided by
the number of calendar days in that period.
(3) Voyage days for fleet are the total days the vessels were in our
possession for the relevant period net of off hire days associated with
major repairs, drydocks or special or intermediate surveys.
(4) Calendar days are the total days the vessels were in our possession for
the relevant period including off hire days associated with major
repairs, drydockings or special or intermediate surveys.
(5) Fleet utilization is the percentage of time that our vessels were
available for revenue generating voyage days, and is determined by
dividing voyage days by fleet calendar days for the relevant period.
(6) Time charter equivalent, or TCE, is a measure of the average daily
revenue performance of a vessel on a per voyage basis. Our method of
calculating TCE is consistent with industry standards and is determined
by dividing net voyage revenue by voyage days for the relevant time
period. Net voyage revenues are voyage revenues minus voyage expenses.
Voyage expenses primarily consist of port, canal and fuel costs that
are unique to a particular voyage, which would otherwise be paid by the
charterer under a time charter contract.
(7) Daily direct vessel operating expenses is calculated by dividing DVOE,
which includes crew costs, provisions, deck and engine stores,
lubricating oil, insurance, maintenance and repairs, by fleet calendar
days for the relevant time period.
(8) Daily general and administrative expense is calculated by dividing
general and administrative expenses, adjusted to exclude non-recurring
organizational, legal, other one-time fees and non-cash expenses, by
fleet calendar days for the relevant time period.
(9) Total vessel operating expenses, or TVOE, is a measurement of our total
expenses associated with operating our vessels. Daily TVOE is the sum
of daily direct vessel operating expenses, or daily DVOE, and daily
general and administrative expenses, or G&A, adjusted to exclude
certain expenses. Our method of calculating daily DVOE is dividing
DVOE, which include crew costs, provisions, deck and engine stores,
lubricating oil, insurance, maintenance and repairs, by fleet calendar
days for the relevant time period. Our method of calculating daily G&A
is dividing general and administrative expenses adjusted to exclude
non-recurring organizational, legal, other one-time fees and non-cash
expenses, by fleet calendar days for the relevant time period.

(10) Adjusted EBITDA per vessel is Adjusted EBITDA divided by fleet calendar
days for the relevant time period.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

The following is a discussion of our financial condition and results of
operations for the years ended December 31, 2002 and 2001 and for the years
ended December 31, 2001and 2000. You should consider the foregoing when
reviewing the consolidated financial statements and this discussion. You should
read this section together with the consolidated financial statements including
the notes to those financial statements for the years mentioned above.

We are a leading provider of international seaborne crude oil transportation
services with one of the largest mid-sized tanker fleets in the world. As of
December 31, 2002 our fleet consisted of 28 tankers, 23 Aframax and 5 Suezmax
tankers, with a total cargo carrying capacity of 3.0 million deadweight tons.

On January 29, 2003 the Company agreed to acquire 19 tankers consisting of 5
Aframax and 14 Suezmax tankers from Metrostar Management Corporation, a
world-class quality operator of tankers based in Athens, Greece for $525.0
million. The acquisition of the tankers is expected to conclude by April 30,
2003 during which time the tankers will be integrated into General Maritime's
fleet operations as they complete their existing voyages. On a combined basis,
the Company's new fleet will be composed of 47 tankers including 28 Aframax and
19 Suezmax tankers with a total cargo carrying capacity of 5.6 million
deadweight tons.

We actively manage the deployment of our fleet between spot market voyage
charters, which generally last from several days to several weeks, and time
charters, which can last up to several years. A spot market voyage charter is
generally a contract to carry a specific cargo from a load port to a discharge
port for an agreed upon total amount. Under spot market v