GENERAL MARITIME CORP/ - 10-K Annual Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2003

o 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 incorporation or organization)		(I.R.S. Employer 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. Yesý No o

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. o

The aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant as of March 8, 2004 was approximately $781.5 million, based on the closing price of $20.69 per share.

The number of shares outstanding of the Registrant’s common stock as of March 8, 2004 was 37,772,645 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for the Annual Meeting of Shareholders to be held on May 20, 2004 (Part III)

PART I

ITEM 1. BUSINESS

OVERVIEW

We are a leading provider of international seaborne crude oil transportation services. Our current fleet, which excludes one double-bottom Aframax tanker which was held for sale as of December 31, 2003, consists of 42 tankers, of which 23 are Aframax tankers and 19 are Suezmax tankers, making us the second largest mid-sized tanker operator in the world. Our current fleet has a total of more than 5.1 million dwt, only 21% of which is single-hulled, compared to a worldwide average as of December 31, 2003 of 33% single-hull tankers. Please refer to the section “INTERNATIONAL MARITIME ORGANIZATION” for information regarding an impairment charge taken on five of our single-hull tankers and a reduction in the useful lives of our nine single-hull tankers. The average age of the tankers in our current fleet as of December 31, 2003 was 11.8 years and only four of the tankers in our current fleet were older than 15 years of age at that time. Many of the tankers in our fleet are “sister ships”, which provide us with operational and scheduling flexibility, as well as economies of scale in their operation and maintenance.

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, the Mediterranean, Europe and the North Sea. Transportation of crude oil to the U.S. Gulf Coast and other refining centers in the United States requires vessel 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 79% are either double-hulled or double-sided, our commitment to safety and many years of experience in the industry. Although the majority of our tankers operate in the Atlantic basin, we also currently operate tankers in the Black Sea, the Far East 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.

We actively manage the deployment of our tankers between spot market voyage charters, which generally last from several days to several weeks, and time charters, which can last up to several years. We continuously and actively monitor market conditions in an effort to take advantage of changes in charter rates and to maximize our long-term cash flow by changing this chartering deployment profile. We design our fleet deployment 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 tankers in the spot market.

Our net voyage revenues, which are voyage revenues minus voyage expenses, have grown from $12.0 million in 1997 to $336.6 million in 2003. Net voyage revenues increased by $191.0 million, or 146%, to $336.6 million for the year ended December 31, 2003 compared to $145.6 million for the year ended December 31, 2002. $111.7 million of this increase is due to the acquisition of 14 Suezmax tankers and five Aframax tankers during 2003. We have also grown our fleet of tankers from six as of December 31, 1997 to 28 as of December 31, 2002, to our current fleet of 42 tankers. We consummated our initial public offering in June 2001.

BUSINESS STRATEGY

Our strategy is to employ our existing competitive strengths 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.

• 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 customers for crude oil transportation services. We constantly monitor the market and seek to anticipate our customers 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 vessels. During the past six years we have grown our fleet from 6 tankers to our current fleet of 42 tankers. 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 debt to capitalization ratio declined from 40.6% to 36.8%. As of March 31, 2003, after giving effect to the $525.0 million acquisition costs of the 19 tankers from Metrostar Management Corporation and the financing of those tankers, our debt to capitalization ratio would have been 59.9% and as of December 31, 2003 there was a reduction to 53.5%. During 2003, we repaid $91.6 million of term indebtedness and $54.1 million on our revolving credit facilities. As of December 31, 2003 we had the ability to draw down an additional $124.5 million on our two revolving credit facilities. We expect the acquisition of these tankers to increase our cash flow generation, which will enable us to further reduce this ratio towards our historical levels.

OUR FLEET

Our current fleet consists of 42 tankers and is comprised of 23 Aframax tankers and 19 Suezmax tankers. The following chart provides information regarding our 42 tankers.

YARD

YEAR
BUILT

YEAR
ACQUIRED

TYPE

DEADWEIGHT
TONS

EMPLOYMENT
STATUS

FLAG

SISTER
SHIPS(4)

OUR CURRENT FLEET

AFRAMAX TANKERS

Genmar Ajax(1)

Samsung

1996

1998

96,183

Spot

Liberia

Genmar Agamemnon(1)

Samsung

1995

1998

96,226

Spot

Liberia

Genmar Minotaur(1)

Samsung

1995

1998

96,226

Spot

Liberia

Genmar Constantine(1)

S. Kurushima

1992

1998

102,335

Liberia

Genmar Alexandra(1)

S. Kurushima

1992

2001

102,262

Marshall Islands

Genmar Champ *(2)

Hyundai

1992

2001

96,027

Liberia

Genmar Hector *(1)

Hyundai

1992

2001

96,027

Marshall Islands

Genmar Pericles *(1)

Hyundai

1992

2001

96,027

Marshall Islands

Genmar Spirit *(2)

Hyundai

1992

2001

96,027

Liberia

Genmar Star *(2)

Hyundai

1992

2001

96,027

Liberia

Genmar Trust *(2)

Hyundai

1992

2001

96,027

Liberia

Genmar Challenger *(2)

Hyundai

1991

2001

96,043

Liberia

Genmar Endurance *(2)

Hyundai

1991

2001

96,043

Liberia

Genmar Trader *(2)

Hyundai

1991

2001

96,043

Malta

Genmar Leonidas(2)

Koyo

1991

2001

97,002

Spot

Marshall Islands

Genmar Gabriel(1)

Koyo

1990

1999

94,993

Spot

Marshall Islands

Genmar Nestor(2)

Imabari

1990

2001

97,112

Spot

Marshall Islands

Genmar George(1)

Koyo