Edgar Filing: TOP TANKERS INC.

d827773_6-k.htm

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of November 2007

Commission File Number

TOP TANKERS INC.

(Translation of registrant’s name into English)

1 VAS. SOFIAS & MEG.

ALEXANDROU STREET

151 24, MAROUSSI

ATHENS, GREECE

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [ X ] Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)7: ___

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [ X ]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): ________.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached to this report on Form 6-K as Exhibit 1 are the third quarter financial results for the fiscal year 2007 and management’s discussion and analysis of financial position and performance operating and financial review and prospects for the third quarter of fiscal year 2007. The information contained in this filing is hereby incorporated by reference in the Company's registration statement filed on Form F-3 on August 1, 2005 (File No. 333-127086).

Exhibit 1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND PERFORMANCE OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following is a discussion of our financial condition and results of operations for the third quarters of 2007 and 2006 and the 9 month periods ended September 30, 2007 and 2006. You should read this section together with the condensed financial information for the periods mentioned above.

We are a provider of international seaborne transportation services, carrying refined petroleum products and crude oil. As of September 30, 2007, our fleet size was 20 vessels (including 11 vessels sold and leased back), consisting of 8 double-hull Handymax tankers and 12 double-hull Suezmax tankers, with a total cargo carrying capacity of approximately 2.2 million dwt as compared to 27 vessels or 2.6 million dwt on September 30, 2006.

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 voyage charters, we pay voyage expenses such as port, canal and fuel costs. A time charter is generally a contract to charter a vessel for a fixed period of time at a specified daily rate. Under time charters, the charterer pays voyage expenses such as port, canal and fuel costs. Under both types of charters, we pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, as well as for commissions on gross charter rates. We are also responsible for the vessel's intermediate and special survey costs.

Vessels operating on time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in vessel rates although we are exposed to the risk of declining vessel rates, which may have a materially adverse impact on our financial performance. We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters, but only expect to enter into additional time charters if we can obtain contract terms that satisfy our charter rate return criteria.

Operating Results

For discussion and analysis purposes only, we evaluate performance using time charter equivalent, or TCE¹, revenues. TCE 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 a charterer under a time charter, as well as commissions. We believe that presenting voyage revenues net of voyage expenses neutralizes the variability created by unique costs associated with particular voyages or the deployment of vessels on the spot market and presents a more accurate representation of the revenues generated by our vessels.

¹ Consistent with general practice in the tanker shipping industry, 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, as well as third party charter commissions.

We calculate daily TCE rates by dividing TCE revenues by voyage days for the relevant time period. TCE revenues include demurrage revenue, which represents fees charged to charterers associated with our spot market voyages when the charterer exceeds the agreed upon time required to load or discharge a cargo. We calculate daily direct vessel operating expenses and daily general and administrative expenses for the relevant period by dividing the relevant total expense category by the aggregate number of calendar days that we owned each tanker for the period.

The following table reflects calculation of the TCE (all amounts are expressed in thousands of U.S. dollars, except for Average Daily Time Charter Equivalent amounts and Total Voyage Days):

	Three months ended September 30,						Nine months ended September 30,
	2006			2007			2006			2007
Dollars in thousands
Voyage revenues	$	70,646		$	51,193		$	242,249		$	200,470
Less Voyage expenses		(12,314	)		(14,841	)		(42,374	)		(44,485	)
Time charter equivalent revenue	$	58,332		$	36,352		$	199,875		$	155,985
Total voyage days		2,067			1,618			6,538			5,562
Average Daily Time Charter Equivalent	$	28,221		$	22,467		$	30,571		$	28,045

We depreciate our tankers on a straight-line basis over their estimated useful lives determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less the estimated residual value.

We have historically accounted for drydocking costs that qualified as “Planned Major Maintenance Activities” (“PMMA”) using the deferral method. Beginning with the fourth quarter of 2007 we intend to change our accounting policy for PMMA from the deferral method, under which we amortized drydocking costs over the estimated period of benefit between drydockings, to the direct expense method, under which we will expense all drydocking costs as incurred. We believe the direct expense method is preferable as it eliminates the significant amount of time and subjectivity involved to determine which costs and activities related to drydocking qualify as PMMA under the deferral method. We will reflect this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. The new accounting principle will be presented retrospectively to all periods presented in future earnings releases and filings. When the accounting principle is retrospectively applied, net income for the year ended December 31, 2006 and the nine month period ended September 30, 2007 will decrease by approximately $26.1 million and $0.07 million, or $0.86 per share and $0.01 per share, respectively.

During the first nine months of 2006, we sold and leased back 4 double-hull Handymax, 4 double-hull Suezmax and 5 double-hull Suezmax tankers for a period of 5 years, 5 years and 7 years, respectively.

The charter back agreements are accounted for as operating leases and the gains on each sale were deferred and are being amortized to income over the lease periods; lease payments relating to the bareboat charters of the vessels are separately reflected as charter hire expense in the consolidated statements of income. According to the terms of the 2006 sale and leaseback transactions, 10% of the gross aggregate sales price, $55.0 million, has been withheld by the purchaser and will be paid to us not later than three months after the end of bareboat charter period or upon the resale of the vessels by the purchaser, if earlier. Following the re-acquisition of the four vessels discussed below, 10% of the unpaid sales price related to these four vessels of $20.6 million, was used to partially finance the re-acquisition. Consequently the amount that is currently withheld by the purchaser is $ 34.4 million. We recognized this receivable from the purchaser at a discounted amount upon the sale of the vessels, classified as a non-current asset, and will accrete the balance of the receivable to the full $34.4 million, through deferred gain on sale and leaseback of vessels over the period of the bareboat charter or upon the resale of the vessels by the purchaser, if earlier. The purpose of the 10% purchase price hold-back, is to serve as security for the due and punctual performance and observance of all the terms and conditions from our behalf under the vessel charter back agreements.

The purpose of the sale and leaseback transactions that were completed in 2006 was to take advantage of the high asset price environment prevailing in the market at the time while maintaining commercial and operational control of the vessels for a period of five to seven years. The majority of the net proceeds of the transaction, after debt repayment, were distributed as a special dividend of $7.50 per share to the Company’s shareholders.

Fleet Profile

As of September 30, 2007, the Company’s fleet size was 20 vessels, or 2.2 million dwt (including 11 vessels sold and leased back for a period of 5 to 7 years) as compared to 27 vessels, or 2.6 million dwt on September 30, 2006.

In April 2007, the Company sold the Suezmax tanker M/T Errorless for $52.5 million, resulting in a gain of approximately $2.0 million, which was recognized in the second quarter of 2007. The vessel was delivered to its new owners on April 30, 2007.

In April and July 2007, the Handymax tankers M/T Invincible, M/T Victorious and M/T Restless, which we were leasing under the 2005 sales and leaseback transaction, were sold by their owners to third parties. Following these sales, we terminated our bareboat agreements for these vessels. The termination of the bareboat charters became effective upon the vessels’ delivery to their new owners, on July 11, 2007, August 27, 2007 and September 17, 2007, respectively. The unamortized deferred gain as of that date of $8.0 million was recorded in full in the third quarter of 2007.

In May 2007, we re-acquired four Suezmax tankers previously sold under the sale and leasedback transaction, to which we will refer as the Repurchased Vessels, and terminated their respective operating leases. The four Suezmax tankers are Limitless (DWT 136,055 built 1993), Endless (DWT 135,915 built 1992), Noiseless (DWT 149,554 built 1992) and Stainless (DWT 149,599 built 1992). The re-acquisition price was $208.0 million and was financed by secured bank debt of $147.5 million, the early redemption of the seller’s credit of $20.6 million and with existing cash balances. The purpose of the repurchase was to improve the daily breakeven rates of our Suezmax fleet and to increase our owned fleet from five to nine vessels.

In July 2007, the Company entered into agreements to acquire three drybulk vessels from unrelated third parties as follows: (i) a 2002 built super Handymax, or Supramax, vessel of 51,200 dwt, built in China, which will be chartered back to the sellers for a period of 18 months at a daily net rate of $25,650 on a bareboat basis; (ii) a 1995 built panamax vessel of 73,506 dwt, built in South Korea, which will be time-chartered for a period of 24-26 months at a daily net rate of $29,700; and (iii) a 2000 built Handymax vessel of 45,526 dwt, built in Philippines, which will be time-chartered for a period of 14-16 months at a daily net rate of $22,000. The vessels are scheduled to be delivered between November 2007 and January 2008. The aggregate purchase price of the vessels is $148.1 million, of which we paid a total deposit of $14.7 million. We intend to finance the acquisition through new secured loan facilities, working capital, and the proceeds from future capital raisings. On November 12, 2007, the panamax vessel discussed above was delivered to the Company.

In August 2007, we entered into agreements to acquire another three drybulk vessels from unrelated third parties as follows: (i) one 2001 built panamax vessel of 75,928 dwt, built in Japan, (ii) one 2000 built panamax vessel of 75,933 dwt, built in Japan and (iii) one 2000 built panamax vessel of 75,681 dwt, built in Japan. The vessels are scheduled to be delivered between November 2007 and March 2008 and to enter into spot market trading. The aggregate purchase price of the vessels is $222.0 million, of which we paid a total deposit of $22.2 million. We intend to finance the acquisition through new secured loan facilities, working capital, and the proceeds from future capital raisings.

The following key indicators serve to highlight changes in the financial performance of the Company’s fleet during the third quarters of 2006 and 2007 and the nine month periods ended September 30, 2006 and 2007:

	Suezmax Fleet
	Three Months Ended September 30,									Nine Months Ended September 30,
(In U.S. Dollars unless otherwise stated)	2006			2007			Change			2006			2007			Change
Total available ship days		1,196			1,104			-7.7	%		3,549			3,396			-4.3	%
Total operating days		854			856			0.2	%		2,858			2,956			3.4	%
Utilization		71.4	%		77.5	%		8.6	%		80.5	%		87.0	%		8.1	%
TCE per ship per day under spot voyage charter		39,378			17,983			-54.3	%		48,258			34,585			-28.3	%
TCE per ship per day under time charter		38,387			35,263			-8.1	%		36,634			35,405			-3.4	%
Average TCE		38,998			25,815			-33.8	%		43,731			34,894			-20.2	%
Other vessel operating expenses per ship per day		7,637			9,417			23.3	%		7,569			8,663	*		14.4	%

	Handymax Fleet
	Three Months Ended September 30,									Nine Months Ended September 30,
(In U.S. Dollars unless otherwise stated)	2006			2007			Change			2006			2007			Change
Total available ship days		1,288			883			-31.4	%		3,822			2,874			-24.8	%
Total operating days		1,213			762			-37.2	%		3,680			2,606			-29.2	%
Utilization		94.2	%		86.3	%		-8.4	%		96.3	%		90.7	%		-5.8	%
TCE per ship per day under spot voyage charter		-			-			-			-			-			-
TCE per ship per day under time charter		20,633			18,706			-9.3	%		20,351			20,276			-0.4	%
Average TCE		20,633			18,706			-9.3	%		20,351			20,276			-0.4	%
Other vessel operating expenses per ship per day		6,290			7,524			19.6	%		5,840			6,733			15.3	%

	Total Fleet
	Three Months Ended September 30,									Nine Months Ended September 30,
(In U.S. Dollars unless otherwise stated)	2006			2007			Change			2006			2007			Change
Total available ship days		2,484			1,987			-20.0	%		7,371			6,270			-14.9	%
Total operating days		2,067			1,618			-21.7	%		6,538			5,562			-14.9	%
Utilization		83.2	%		81.4	%		-2.1	%		88.7	%		88.7	%		0.0	%
TCE per ship per day under spot voyage charter		39,378			17,983			-54.3	%		48,258			34,585			-28.3	%
TCE per ship per day under time charter		24,412			24,292			-0.5	%		24,132			24,803			2.8	%
Average TCE		28,221			22,467			-20.4	%		30,571			28,045			-8.3	%
Other vessel operating expenses per ship per day		6,939			8,587			23.8	%		6,673			7,782	*		16.6	%
General and administrative expenses per ship per day**		2,390			2,839			18.8	%		2,459			2,620			6.5	%

* The daily Other vessel operating expenses for the Suezmax Fleet and Total Fleet include approximately $124 and $67, respectively for the ballast tank cleaning process of the M/T Faultless, that are not expected to be covered by the insurance underwriters.

** The daily General and Administrative expenses include approximately $705 and $249 for the three-month period and $834 and $201 for the nine-month period ended September 30, 2006 and 2007, respectively, of non-cash restricted stock expense, general compensation provision, specific legal fees and depreciation for other fixed assets.

Fleet Deployment:

During the first nine months of 2007, the Company had approximately 67% of the fleet’s operating days on long-term employment contracts. As of September 30, 2007, ten of the Company’s 20 tankers were on time charter contracts with an average term of over three years with all but four of the time charters including profit sharing agreements.

The Company has secured approximately 63% of the estimated operating days for its tanker and dry bulk fleet for 2008 under time charter contracts.

Suezmax Fleet:

During the third quarter of 2007, seven of the Company’s Suezmax tankers operated in the spot market, earning on average $17,983 per vessel per day on a time charter equivalent (TCE) basis.

During the third quarter of 2007, five of the Company’s Suezmax tankers operated under time charter contracts, earning on average $35,263 per vessel per day on a time charter equivalent (TCE) basis.

Handymax Fleet:

All of the Company’s Handymax tankers operate under long term employment agreements that provide for a base rate and additional profit-sharing.

During the third quarter of 2007, including the profit-sharing allocated to the Company the Handymax fleet earned on average $18,706 per vessel per day on a time charter equivalent (TCE) basis.

The following table presents the Company’s current fleet list and employment:

	Dwt	Year Built	Charter Type	Expiry	Daily Base Rate	Profit Sharing Above Base Rate (2007)	Daily Charter Hire Expense
12 Suezmax Tankers
Timeless^C	154,970	1991	Spot				$25,000
Flawless^C	154,970	1991	Spot				$25,000
Stopless^C	154,970	1991	Time Charter	Q3/2008	$35,000	50% thereafter	$25,000
Priceless^C	154,970	1991	Spot				$25,000
Faultless^D	154,970	1992	Spot				$23,450
Noiseless^F	149,554	1992	Time Charter	Q2/2010	$36,000 ¹	None
Stainless^F	149,599	1992	Time Charter	Q3/2008^A	$44,500	None
Endless^F	135,915	1992	Time Charter	Q4/2008^E	$36,500	None
Limitless^F	136,055	1993	Spot
Stormless^F	150,038	1993	Time Charter	Q4/2009	$36,900	None
Ellen P^F.	146,286	1996	Spot
Edgeless^F	147,048	1994	Spot


8 Handymax Tankers
Sovereign^B	47,084	1992	Time Charter	Q3/2009	$14,000	50% thereafter	$11,600
Relentless^B	47,084	1992	Time Charter	Q3/2009	$14,000	50% thereafter	$11,500
Vanguard^C	47,084	1992	Time Charter	Q1/2010	$15,250	50% thereafter	$13,200
Spotless^C	47,094	1991	Time Charter	Q1/2010	$15,250	50% thereafter	$13,200
Doubtless^C	47,076	1991	Time Charter	Q1/2010	$15,250	50% thereafter	$13,200
Faithful^C	45,720	1992	Time Charter	Q2/2010	$14,500	100% first $500 + 50% thereafter	$13,200
Dauntless^F	46,168	1999	Time Charter	Q1/2010	$16,250	100% first $1,000 + 50% thereafter
Ioannis P^F.	46,346	2003	Time Charter	Q4/2010	$18,000	100% first $1,000 + 50% thereafter

Total Tanker DWT	2,163,001

A. Charterers have option to extend contract for an additional one-year period

B. Vessels sold and leased back in August and September 2005 for a period of 7 years

C. Vessels sold and leased back in March 2006 for a period of 5 years

D. Vessel sold and leased back in April 2006 for a period of 7 years

E. Charterers have option to extend contract for an additional four-year period

F. Owned vessels

1. Base rate will change to $35,000 in Q2 2008 until expiration.

The following table presents information about the drybulk vessels, which are scheduled to be delivered to us between November 2007 and March 2008:

	Dwt	Year Built	Charter Type	Expiry	Net Daily Base Rate	Profit Sharing Above Base Rate (2007)
Drybulk Vessel #1	51,200	2002	Bareboat Charter	May 1st or June 30th 2009, at charterer's option	$25,650	None
Drybulk Vessel #2	73,506	1995	Time Charter	24-26 months from delivery, at charterer's option	$29,700	None
Drybulk Vessel #3	45,526	2000	Time Charter	14-16 months at charterer's option	$22,000	None
Drybulk Vessel #4	75,928	2001	Spot
Drybulk Vessel #5	75,933	2000	Spot
Drybulk Vessel #6	75,681	2000	Spot
Total Drybulk DWT	397,774

Liquidity and Capital Resources

As of September 30, 2007, TOP Tankers had total indebtedness under senior secured credit facilities of $338.6 million with its lenders, the Royal Bank of Scotland (“RBS”), HSH Nordbank (“HSH”), and DVB Bank (“DVB”) maturing in 2015, 2013 and 2012 respectively.

As of September 30, 2007, the Company has three interest rate swap agreements with RBS for the amounts of $30.1 million, $10.0 million and $10.0 million for a period of four, seven and seven years, respectively. Under these agreements the interest rate is fixed at an effective annual rate of 4.66% (in addition to the applicable margin), 4.23% and 4.11%, respectively. The Company also has one interest rate swap agreement with HSH for the amount of $38.3 million for a period of five years, at a fixed interest rate of 4.80% in addition to the applicable margin. In addition, the Company has two interest rate swap agreements with Deutsche Bank and Egnatia Bank for the amounts of $50.0 million and $10.0 million for a period of seven and seven years, respectively. Under these agreements the interest rate is fixed at an effective annual rate of 4.45% and 4.76%, respectively. The above swaps of $10.0 million, $10.0 million, $50.0 million and $10.0 million, include steepening terms based on the 2 and 10 year swap difference, which is calculated quarterly in arrears. The interest rate for the remaining balance of the loans is LIBOR, plus the margin.

On September 30, 2007, the Company’s ratio of indebtedness to total capital was approximately 60.8%.

In the second and third quarter of 2007, the Company issued 4.3 million shares of common stock, at par value of $ 0.01. The net proceeds to the Company totaled $29.4 million. These securities were sold by the Company's sales agent, Deutsche Bank Securities Inc., through a combination of at-the-market sales and negotiated transactions.

In November 2007, the Company entered into an interest rate derivative product. Under this agreement, the Company has received an upfront payment of $8,500 and will pay five annual interest payments on a notional amount of $85,000. Based on the cumulative performance of a portfolio of systematic foreign exchange trading strategies, the interest payments will have a minimum floor at 0.00% and a cap at 7.50%.

In October 2007, the Company entered into an interest rate swap restructuring. Under this agreement the Company entered into an overlay swap effectively reversing an earlier swap entered into by the Company, and entered into a new swap, in direct continuation. Under the terms of the new swap, the Company will pay an initial fixed interest rate of 4.45% and will receive a fixed interest rate of 5.25% for a notional amount of $50,000 and for a period of six years. The interest rate that the Company will pay thereafter is subject to the difference between the 10-year swap rate and the 2-year swap rate, as well as the level of the six-months USD LIBOR. The interest rate that the Company will pay is capped at 9.00%.

Three months ended September 30, 2007 compared to the three months ended September 30, 2006

VOYAGE REVENUES--Voyage revenues decreased by $19.4 million, or 27.5%, to $51.2 million for the third quarter of 2007 compared to $70.6 million in the respective period in 2006. This is due to the decrease in the average TCE rate by 20.4% or $22,467 from $28,221 for the respective period in 2006 and the decrease in voyage days by 21.7% to 1,618 in the third quarter of 2007 from 2,067 in the respective period of 2006.

VOYAGE EXPENSES--Voyage expenses primarily consist of port charges, including canal dues, bunkers (fuel costs) and commissions that are unique to a particular voyage. These expenses, which are paid by the charterer under a time charter contract, as well as commissions, increased by $2.5 million, or 20.3%, to $14.8 million for the third quarter of 2007 compared to $12.3 million for the respective period in 2006. While the number of spot days was lower by 11.0% to 468 during the third quarter of 2007 from 526 during the third quarter of 2006, voyage expenses of the third quarter of 2007 were also hit by a significant increase in bunker costs and an increase in canal passes.

NET VOYAGE REVENUES--Net voyage revenues, which are voyage revenues minus voyage expenses, decreased by $21.9 million, or 37.6%, to $36.4 million for the third quarter of 2007 compared to $58.3 million the third quarter of the prior year. This is due to the decrease in the average TCE rate by 20.4% or $22,467 from $28,221 for the respective period in 2006 and the decrease in voyage days by 21.7% to 1,618 in the third quarter of 2007 from 2,067 in the respective period of 2006. Additionally, voyage expenses during the third quarter of 2007 were higher due to a significant increase in bunker costs and canal passes.

	Three months ended September 30,
	2006			2007
Dollars in thousands
Voyage revenues	$	70,646		$	51,193
Less Voyage expenses		(12,314	)		(14,841	)

Net voyage revenues	$	58,332		$	36,352

The following provides a further analysis of our net voyage revenues for the third quarter of 2007 as compared to the respective period of the prior year:

Spot Charter Revenues:

·	Our tankers operated an aggregate of 468 days, or 28.9%, in the spot market during the third quarter of 2007, compared to 526 days, or 25.5%, in the spot market during the respective period of the prior year.

·	The average daily spot rate was $17,983 for the third quarter of 2007 compared to an average daily spot rate of $39,378 for the respective period in 2006.

Net voyage revenues from our vessels’ spot trading decreased by 59.4% to $8.4 million, compared to $20.7 million in 2006. Spot market revenues were 23.2% of net voyage revenues in the third quarter of 2007, compared to 35.5% of net voyage revenue generated in the spot market during the respective period of the prior year.

Time Charter Revenues:

·	Our tankers operated an aggregate of 1,150 days, or 71.1%, on time charter contracts during the third quarter of 2007, compared to 1,541 days, or 74.5%, on time charter contracts during the respective period of the prior year.

·	The average daily time charter rate was $24,292 for the third quarter of 2007 compared to average daily time charter rate of $24,412 for the respective period in the prior year.

Revenues from our time charter contracts decreased by 25.8% for the third quarter of 2007 to $27.9 million, compared to $37.6 million in the respective period of 2006. Time charter revenues were 76.8%, of net voyage revenues in the third quarter of 2007, compared to 64.5% during the respective period of 2006.

CHARTER HIRE EXPENSE--Charter hire expense, which refers to lease payments for the vessels sold and leased back, which are treated as operating leases, decreased by $10.1 million, or 33.9%, to $19.7 million for the third quarter of 2007 compared to $29.8 million for the respective period of the prior year. This decrease is due to the repurchase of the Repurchased Vessels. This transaction took place in May 2007.

AMORTIZATION OF DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS--Amortization of deferred gain on sale and leaseback of vessels increased by $7.2 million, or 300.0%, to $9.6 million for the third quarter of 2007 compared to $2.4 million for the respective period in 2006. This increase is due to the sale of the vessels M/T Invincible, M/T Victorious and M/T Restless by their owners in the third quarter of 2007, which resulted in the termination of the bareboat charters with us and the recognition of their unamortized deferred gain of $8.0 million.

DEPRECIATION AND AMORTIZATION--Depreciation and amortization, which include depreciation of tankers and amortization of dry dockings, increased by $5.1 million, or 50.0%, to $15.3 million for the third quarter of 2007 compared to $10.2 million for the respective period in the prior year. Specifically, vessels depreciation expense increased by 19.1% as a result of the repurchase of the Repurchased Vessels in May 2007. Additionally, amortization of dry dockings increased by 111.8% due to the sale of the vessels M/T Victorious and M/T Restless in the third quarter of 2007 and the corresponding recognition of their unamortized dry docking costs of $ 3.3 million.

	Three months ended September 30,
	2006		2007
Dollars in thousands
Vessels depreciation expense	$	6,817	$	8,065
Amortization of dry dockings		3,389		7,221

	$	10,206	$	15,286

GENERAL AND ADMINISTRATIVE EXPENSES-- General and administrative expenses, which include all of our onshore expenses and sub-managers’ fees, decreased by $0.3 million, or 5.1%, to $5.6 million for the third quarter of 2007 compared to $5.9 million for the respective period in the prior year.

FOREIGN CURRENCY GAINS OR LOSSES--We incurred a $0.06 million foreign currency gain in the third quarter of 2007 compared to a loss of $0.03 million for the respective period in the prior year.

OPERATING LOSS--Operating loss increased by $9.2 million, or 368.0%, to $11.7 million for the third quarter of 2007 compared to an operating loss of $2.5 million for the respective period in 2006. This increase is mainly due to:

1.	The decrease in net voyage revenues by $21.9 million, or 37.6%, to $36.4 million for the third quarter of 2007 compared to $58.3 million the third quarter of the prior year due to the decrease in the average TCE rate by 20.4% or $22,467 from $28,221 for the respective period in 2006.

2.	The decrease in charter hire expense by $10.1 million, or 33.9%, to $19.7 million for the third quarter of 2007 compared to $29.8 million for the respective period of the prior year due to the repurchase of the Repurchased Vessels.

The increase in amortization of deferred gain on sale and leaseback of vessels by $7.2 million, or 300.0%, to $9.6 million for the third quarter of 2007 compared to $2.4 million for the respective period in 2006 due to the sale of the vessels M/T Invincible, M/T Victorious and M/T Restless in the third quarter of 2007 and the recognition of their unamortized deferred gain of $8.0 million

The increase in depreciation expense by 19.1% as a result of the repurchase of the Repurchased Vessels in May 2007 and the increase in amortization of dry dockings by 111.8% due to the sale of the vessels M/T Victorious and M/T Restless in the third quarter of 2007 and the recognition of their unamortized amount of the dry docking costs of $ 3.3 million.

INTEREST AND FINANCE COSTS--Interest and finance costs decreased by $2.5 million, or 25.5%, to $7.3 million for the third quarter of 2007 compared to $9.8 million for the respective period in the prior year. This decrease is mainly due to the early repayment of $117.0 million in secured debt associated with three vessels sold in the fourth quarter of 2006 and one vessel sold during April 2007. The effect of debt repayments on the interest and finance costs was partially set off by the drawdown of $20.0 million during the fourth quarter of 2006 and $157.5 million during the first half of 2007. It should be noted that during the third quarter of 2006 interest and finance costs included $1.2 million related to the write off of financing fees related to the cancellation of the undrawn limit of the revolving credit facility.

INTEREST INCOME--Interest income decreased by $0.3 million, or 30.0%, to $0.7 million for the third quarter of 2007 compared to $1.0 million for the respective period in the prior year due to average lower cash balances.

OTHER NET--We recognized a loss of $0.1 million during the third quarter of 2006.

NET LOSS--Net loss was $18.4 million for the third quarter of 2007 compared to net loss of $11.3 million for the respective period in the prior year.

Nine months ended September 30, 2007 compared to the nine months ended September 30, 2006

VOYAGE REVENUES--Voyage revenues decreased by $41.7 million, or 17.2%, to $200.5 million for the first nine months of 2007 compared to $242.2 million in the respective period in 2006. This is due to the decrease of operating days by 14.9% to 5,562 days in 2007 from 6,538 days in 2006 as a result of the decrease in the average number of vessels by 14.9% to 23.0 during the first nine months of 2007 from 27.0 in the respective period in 2006. Also, during the first nine months of 2007 the average TCE rate was lower by 8.3% or $28,045 from $30,571 for the respective period in 2006.

VOYAGE EXPENSES--Voyage expenses primarily consist of port charges, including canal dues, bunkers (fuel costs) and commissions that are unique to a particular voyage. These expenses, which are paid by the charterer under a time charter contract, as well as commissions, increased by $2.1 million, or 5.0%, to $44.5 million for the first nine months of 2007 compared to $42.4 million for the respective period in 2006. This increase is primarily due to the increase of the spot market days by 5.6% to 1,843 during the first nine months of 2007 from 1,745 days in the respective period in 2006.

NET VOYAGE REVENUES--Net voyage revenues, which are voyage revenues minus voyage expenses, decreased by $43.9 million, or 22.0%, to $156.0 million for the first nine months of 2007 compared to $199.9 million the first nine months of the prior year. This is due to the decrease of operating days by 14.9% to 5,562 days in 2007 from 6,538 days in 2006 as a result of the decrease in the average number of vessels by 14.9% to 23.0 during the first nine months of 2007 from 27.0 in the respective period in 2006. Also, during the first nine months of 2007 the average TCE rate was lower by 8.3% or $28,045 from $30,571 for the respective period in 2006.

	Nine months ended September 30,
	2006			2007
Dollars in thousands
Voyage revenues	$	242,249		$	200,470
Less Voyage expenses		(42,374	)		(44,485	)
Net voyage revenues	$	199,875		$	155,985

The following provides a further analysis of our net voyage revenues for the first nine months of 2007 as compared to the respective period of the prior year:

Spot Charter Revenues:

·	Our tankers operated an aggregate of 1,843 days, or 33.1%, in the spot market during the first nine months of 2007, compared to 1,745 days, or 26.7%, in the spot market during the respective period of the prior year.

·	The average daily spot rate was $34,585 for the first nine months of 2007 compared to an average daily spot rate of $48,258 for the respective period in 2006.

Net voyage revenues from our vessels’ spot trading decreased by 24.3% for the first nine months of 2007 to $63.7 million, compared to $84.2 million in the respective period of 2006. Spot market revenues were 40.9% of net voyage revenue in the first nine months of 2007, compared to 42.1% of net voyage revenue generated in the spot market during the respective period of the prior year.

Time Charter Revenues:

·	Our tankers operated an aggregate of 3,719 days, or 66.9%, on time charter contracts during the first nine months of 2007, compared to 4,793 days, or 73.3%, on time charter contracts during the prior year.

·	The average daily time charter rate was $24,803 for the first nine months of 2007 compared to average daily time charter rate of $24,132 for the respective period in the prior year.

Net voyage revenues from our time charter contracts decreased by 20.3% for the first nine months of 2007 to $92.2 million, compared to $115.7 million in the respective period of 2006. Time charter revenues were 59.1%, of net voyage revenues in the first nine months of 2007, compared to 57.9% during the respective period of 2006.

CHARTER HIRE EXPENSE--Charter hire expense, which refers to lease payments for the vessels sold and leased back, which are treated as operating leases, increased by $9.6 million, or 14.4%, to $76.1 million for the first nine months of 2007 compared to $66.5 million for the respective period of the prior year. This increase is due to the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006, partially set off by repurchase of the Repurchased Vessels in May 2007.

AMORTIZATION OF DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS--Amortization of deferred gain on sale and leaseback of vessels increased by $8.6 million, or 150.9%, to $14.3 million for the first nine months of 2007 compared to $5.7 million for the respective period in 2006. This increase is due to the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006 and due to the sale of the vessels M/T Invincible, M/T Victorious and M/T Restless by their owners in the third quarter of 2007, which resulted in the termination of the bareboat charters with us and the recognition of their unamortized deferred gain of $8.0 million.

OTHER VESSEL OPERATING EXPENSES--Other vessel operating expenses, which include crew costs, insurance, repairs and maintenance, spares, consumable stores and taxes decreased by $0.4 million, or 0.8%, to $48.8 million for the first nine months of 2007 compared to $49.2 million for the respective period of the prior year. Despite the decrease in the average number of vessels by 14.9% to 23.0 during the first nine months of 2007 from 27.0 in the respective period in 2006, other vessel operating expenses were at similar levels due to extraordinary repairs of approximately $1.2 million as well as repairs and maintenance expenses of approximately $2.6 million incurred in the first nine months of 2007 during the dry-docking of seven vessels. During the first nine months of 2006, no expenses had been incurred related to extraordinary repairs and maintenance expenses related to the dry-docking of six vessels, amounted to approximately $1.3 million.

DEPRECIATION AND AMORTIZATION--Depreciation and amortization, which include depreciation of tankers and amortization of dry dockings, decreased by $3.5 million, or 9.3%, to $34.1 million for the first nine months of 2007 compared to $37.6 million for the respective period in the prior year. Specifically, vessels depreciation expense decreased by 35.2% as a result of the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006, the sale of three vessels in the fourth quarter of 2006 and one vessel in April 2007 and partially set off by repurchase of the Repurchased Vessels in May 2007. Additionally, amortization of dry dockings increased by 77.9% due to the sale of the vessels M/T Victorious and M/T Restless in the third quarter of 2007 and the corresponding recognition of their unamortized dry docking costs of $ 3.3 million.

	Nine months ended September 30,
	2006		2007
Dollars in thousands
Vessels depreciation expense	$	29,049	$	18,794
Amortization of dry dockings		8,602		15,265
	$	37,651	$	34,059

GENERAL AND ADMINISTRATIVE EXPENSES-- General and administrative expenses, which include all of our onshore expenses and sub-managers’ fees, decreased by $1.7 million, or 9.4%, to $16.4 million for the first nine months of 2007 compared to $18.1 million for the respective period in the prior year. This decrease is mainly due to the bonus compensation provision of $2.5 million recorded in the first quarter of 2006. No similar bonus provision was made in the first nine months of 2007.

FOREIGN CURRENCY GAINS OR LOSSES--We incurred a $0.03 million foreign currency gain in the first nine months of 2007 compared to a loss of $0.3 million for the respective period in the prior year.

GAIN ON SALE OF VESSEL--We incurred a gain of $2.0 million from the sale of M/T Errorless on April 30, 2007.

OPERATING INCOME / (LOSS)--Operating income decreased by $36.9 million, or 109.2%, to an operating loss of ($3.1) million for the first nine months of 2007 compared to an operating income of $33.8 million for the respective period in 2006. This decrease is mainly due to:

The decrease in net voyage revenues by $43.9 million, or 22.0%, to $156.0 million for the first nine months of 2007 compared to $199.9 million the first nine months of the prior year due to the decrease of operating days by 14.9% to 5,562 days in 2007 from 6,538 days in 2006 as a result of the decrease in the average number of vessels by 14.9% to 23.0 during the first nine months of 2007 from 27.0 in the respective period in 2006. Also, during the first nine months of 2007 the average TCE rate was lower by 8.3% or $28,045 from $30,571 for the respective period in 2006.

The increase in charter hire expense by $9.6 million, or 14.4%, to $76.1 million for the first nine months of 2007 compared to $66.5 million for the respective period of the prior year due to the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006, partially set off by repurchase of the Repurchased Vessels in May 2007.

The increase in amortization of deferred gain on sale and leaseback of vessels by $8.6 million, or 150.9%, to $14.3 million for the first nine months of 2007 compared to $5.7 million for the respective period in 2006 due to the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006 and due to the sale of the vessels M/T Invincible, M/T Victorious and M/T Restless in the third quarter of 2007 and the recognition of their unamortized deferred gain of $8.0 million.

The decrease in depreciation and amortization by $3.5 million, or 9.3%, to $34.1 million for the first nine months of 2007 compared to $37.6 million for the respective period in the prior year. Specifically, vessels depreciation expense decreased by 35.2% as a result of the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006, the sale of three vessels in the fourth quarter of 2006 and one vessel in April 2007 and partially set off by repurchase of the Repurchased Vessels in May 2007. Additionally, amortization of dry dockings increased by 77.9% due to the sale of the vessels M/T Victorious and M/T Restless in the third quarter of 2007 and the recognition of their unamortized amount of the dry docking costs of $ 3.3 million.

INTEREST AND FINANCE COSTS--Interest and finance costs decreased by $13.3 million, or 55.2%, to $10.8 million for the first nine months of 2007 compared to $24.1 million for the respective period in the prior year. This decrease is mainly due to the early repayment of $322.2 million in secured debt associated with thirteen vessels sold and leased back in March and April 2006, three vessels sold in the fourth quarter of 2006 and one vessel sold during April 2007. The effect of debt repayments on the interest and finance costs was partially set off by the drawdown of $20.0 million during the fourth quarter of 2006 and $157.5 million during the first six months of 2007. It should be noted that during the first nine months of 2006 interest and finance costs included $3.8 million related to the write off of financing fees related to the thirteen vessels sold and leased back and the cancellation of the undrawn limit of the revolving credit facility.

INTEREST INCOME--Interest income increased by $0.2 million, or 9.5%, to $2.3 million for the first nine months of 2007 compared to $2.1 million for the respective period in the prior year. This increase is due to the increase in cash and cash equivalents, associated mainly with the proceeds from the sale of vessels in 2006.

OTHER NET--We recognized a profit of $0.1 million during the nine months of 2006.

NET INCOME / (LOSS)--Net loss was ($11.6) million for the first nine months of 2007 compared to net income of $11.9 million for the respective period in the prior year.

Liquidity and Capital Resources

Cash flows provided by operating activities decreased 87.0% for the nine months ended September 30, 2007 to $5.8 million compared to $44.7 million for the same period in 2006. This decrease was attributed to a decrease in net income of $23.5 million down to a net loss of ($11.6) million for the nine months ended September 30, 2007 from $11.9 million for the respective period in 2006. The decrease in net income was attributed to the decrease in net voyage revenues by $43.9 million, or 22.0%, to $156.0 million for the first nine months of 2007 compared to $199.9 million the first nine months of the prior year due to the decrease of operating days by 14.9% to 5,562 days in 2007 from 6,538 days in 2006 as a result of the decrease in the average number of vessels by 14.9% to 23.0 during the first nine months of 2007 from 27.0 in the respective period in 2006. Also, during the first nine months of 2007 the average TCE rate was lower by 8.3% or $28,045 from $30,571 for the respective period in 2006. Additionally, the 13 sale and leaseback transactions concluded in 2006, resulted in the increase of charter hire expense by $9.6 million, or 14.4%, to $76.1 million for the first nine months of 2007 compared to $66.5 million for the respective period of the prior year due to the 3 sale and leaseback transactions for a total of 13 vessels which were concluded in mid March (8 vessels) and April (5 vessels) 2006, partially set off by repurchase of the Repurchased Vessels in May 2007. This increase was partly set off by the increase in the amortization of the deferred gain on sale and leaseback of vessels and the decrease in the depreciation and amortization.

Net cash flows used in investing activities for the nine months ended September 30, 2007 amounted to $165.9 million, due to the repurchase of four Suezmax tankers that were sold in 2006 in a sale-and-lease-back transaction for $187.4 million (total consideration of $208.0 million less $20.6 million seller’s credit), advances for vessels acquisitions / under construction of $53.0 million (payment of first installment for two out of six new-buildings ordered by the Company in 2006 of $14.2 million, payment of deposit for the acquisition of six drybulk vessels of $36.9 million and capitalized interest and expenses of $1.9 million). These two cash outflows were partially set off by proceeds of $ 52.0 million from the sale of M/T Errorless. For the same period of 2006, the Company had net cash inflows of $437.3 million mainly as a result of the proceeds of $474.6 million from the 13 sale and leaseback transactions.

For the nine months ended September 30, 2007, the Company had net cash inflows from financing activities of $146.0 million as a result of the drawdown of $10.0 million from the existing revolving credit facility, to partially finance the installment for the 2 new-buildings, and a drawdown of $147.5 million from a new credit facility to partially finance the repurchase of four Suezmax tankers. Additionally, the Company made total loan repayments of $38.9 million. During the same period the Company issued 4,307,621 new shares that were sold at the market, under its shelf registration, for total net proceeds of $29.4 million. For the same period of 2006, the Company had net cash outflows of $460.9 million mainly as a result of total loan repayments of $270.3 million and the pay out of a special dividend of $ 217.5 million. During the same period the Company issued 3,907,365 new shares that were sold at the market, under its shelf registration, for total net proceeds of $26.9 million.

At September 30, 2007, the Company had a revolving credit facility outstanding of $93.0 million and loans outstanding of $245.6 million:

a) Revolving Credit Facility: In January 2007, $10.0 million was drawn down from the revolving credit facility to partially finance the construction of two new-buildings. The outstanding amount will be fully repaid in 2015. As of September 30, 2007, the undrawn amount amounted to $65.0 million. The revolving credit facility bears interest at LIBOR plus a margin (as of September 30, 2007 the margin was 0.85%).

b) Loans: The loans of $245.6 million include two credit facilities as follows:

$105.5 million outstanding as at September 30, 2007, was drawn down in 2005 and originally amounted to $154.0 million. It was obtained to partially finance the acquisitions of the vessels Stormless, Ellen P., Errorless and Edgeless. In April 2007, following the sale of M/T Errorless $22.0 million was prepaid ($5.5 million against Tranche A and $16.5 million as a full prepayment of Tranche B). As a result of the prepayment, Tranche A is payable in 27 consecutive quarterly installments of $2.6 million, starting on June 13, 2007 plus a balloon payment of $40.3 million payable together with the final installment. The loan bears interest at LIBOR plus a margin (as of September 30, 2007 the margin was 0.8%).

II.

$140.1 million outstanding as at September 30, 2007, was drawn down in 2007 and originally amounted to $147.5 million in order to partially finance the repurchase of the vessels Limitless, Endless, Noiseless and Stainless. The facility has a term of five years and will be repaid in twenty quarterly installments starting August 31, 2007, as follows: i) eight installments of $7.4 million; ii) eight installments of $5.0 million; iii) three installments of $4.5 million; and iv) a balloon payment of $34.5 million. The credit facility was subject to a 1% arrangement fee paid on drawdown. The credit facility bears interest at LIBOR plus a margin (as of September 30, 2007 the margin was 1.25%).

TOP TANKERS INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 2006 AND SEPTEMBER 30, 2007 (UNAUDITED)

(Expressed in thousands of U.S. Dollars - except share and per share data)


	December 31,			September 30,
	2006			2007

ASSETS

CURRENT ASSETS:

Cash and cash equivalents		29,992			15,834
Accounts receivable trade, net of provision of $283 and $724 as of December 31, 2006 and September 30, 2007, respectively		27,187			15,820
Insurance claims		247			554
Inventories (Note 4)		6,460			7,628
Advances to various creditors		3,707			403
Prepayments and other		5,206			4,530

Total current assets		72,799			44,769

FIXED ASSETS:

Advances for vessels acquisitions / under construction (Note 5)		28,683			81,701
Vessels, net (Note 6)		306,418			409,261
Other fixed assets, net (Note 3)		3,195			5,227
Total fixed assets		338,296			496,189

OTHER NON CURRENT ASSETS:

Deferred charges, net (Note 7)		31,850			36,731
Long-term receivables (Note 11)		29,790			21,954
Restricted cash (Notes 8 and 11)		50,000			25,000

Total assets		522,735			624,643

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt (Note 8)		16,588			40,190

Accounts payable		14,991			14,992
Accrued liabilities (Note 9)		7,354			10,088
Unearned revenue		1,676			4,050

Total current liabilities		40,609			69,320

INTEREST RATE SWAPS (Note 8)		3,384			2,520

LONG-TERM DEBT, net of current portion (Note 8)		201,464			294,941

DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS (Note 11)		79,423			41,628

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value; 20,000,000 shares authorized; none issued		-			-
Common stock, $0.01 par value; 100,000,000 shares authorized; 32,429,105 and 37,375,726 shares issued and outstanding at December 31, 2006 and September 30, 2007 (Note 12)		324			371
Additional paid-in capital (Note 12)		116,755			146,724
Accumulated other comprehensive loss (Note 13)		(6	)		(6	)
Retained earnings		80,782			69,145

Total stockholders' equity		197,855			216,234

Total liabilities and stockholders' equity		522,735			624,643


The accompanying notes are an integral part of these consolidated condensed financial statements.

TOP TANKERS INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2007 (UNAUDITED)

(Expressed in thousands of U.S. Dollars - except share and per share data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2007			2006			2007

REVENUES:

Voyage revenues		70,646			51,193			242,249			200,470

EXPENSES:

Voyage expenses (Note 15)		12,314			14,841			42,374			44,485
Charter hire expense (Note 11)		29,847			19,727			66,454			76,083
Amortization of deferred gain on sale and leaseback of vessels (Note 11)		(2,433	)		(9,609	)		(5,677	)		(14,250	)
Other vessel operating expenses (Note 15)		17,235			17,062			49,184			48,792
Depreciation (Note 6)		6,817			8,065			29,049			18,794
Amortization of dry-docking costs (Note 7)		3,389			7,221			8,602			15,265
Sub-Manager fees		687			386			2,083			1,522
Other general and administrative expenses		5,249			5,255			16,045			14,903
Foreign currency losses, net		26			(59	)		290			(27	)
Gain on sale of vessel (Note 6)		-			-			-			(1,961	)

Operating income (loss)		(2,485	)		(11,696	)		33,845			(3,136	)

OTHER INCOME (EXPENSES):

Interest and finance costs (Notes 8 and 17)		(9,801	)		(7,349	)		(24,089	)		(10,834	)
Interest income		989			681			2,119			2,347
Other, net		(97	)		(9	)		54			(14	)

Total other income (expenses), net		(8,909	)		(6,677	)		(21,916	)		(8,501	)

Net Income (loss)		(11,394	)		(18,373	)		11,929			(11,637	)

Earnings (loss) per share, basic and diluted (Note 14)		(0.35	)		(0.50	)		0.37			(0.34	)

Weighted average common shares outstanding, basic		32,163,137			36,668,436			29,964,597			33,841,655

Weighted average common shares outstanding, diluted		32,163,137			36,668,436			29,996,339			33,841,655

The accompanying notes are an integral part of these consolidated condensed financial statements.

TOP TANKERS INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2007

(Expressed in thousands of U.S. Dollars - except share and per share data)


											Accumulated
				Common Stock				Additional			Other
	Comprehensive Income			# of Shares		Par Value		Paid-in Capital			Comprehensive Income (loss)			Retained Earnings			Total

BALANCE, December 31, 2005					28,080,640		280		297,716			98			71,564			369,658

Net income		14,099			-		-		-			-			14,099			14,099
Restatement adjustments		(2,170	)		-		-		-			-			(2,170	)		(2,170	)
Dividends paid (US dollars 0.21 per share)		-			-		-		-			-			(5,923	)		(5,923	)
Dividends paid (US dollars 5.00 per share)		-			-		-		(141,028	)		-			-			(141,028	)
Dividends paid (US dollars 2.50 per share)		-			-		-		(70,515	)		-			-			(70,515	)
Issuance of restricted shares, net of forfeitures		-			442,400		5		3,422			-			-			3,427
Issuance of common stock		-			3,907,365		39		26,877			-			-			26,916
Other comprehensive income
- Reclassification of gains to earnings due to discontinuance of cash flow hedges		(98	)		-		-		-			(98	)		-			(98	)

Comprehensive income		11,831

BALANCE, September 30, 2006					32,430,405		324		116,472			-			77,570			194,366


										Accumulated
				Common Stock				Additional		Other
	Comprehensive Income			# of Shares		Par Value		Paid-in Capital		Comprehensive Income (loss)			Retained Earnings			Total

BALANCE, December 31, 2006					32,429,105		324		116,755		(6	)		80,782			197,855

Net loss		(11,637	)		-		-		-		-			(11,637	)		(11,637	)
Issuance of restricted shares, net of forfeitures		-			639,000		4		612		-			-			616
Issuance of common stock		-			4,307,621		43		29,357		-			-			29,400

Comprehensive loss		(11,637	)

BALANCE, September 30, 2007					37,375,726		371		146,724		(6	)		69,145			216,234


The accompanying notes are an integral part of these consolidated condensed financial statements.

TOP TANKERS INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2007 (UNAUDITED)

(Expressed in thousands of U.S. Dollars)



	2006			2007


Cash Flows from (used in) Operating Activities:

Net income (loss)		11,929			(11,637	)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		29,269			19,244
Amortization of dry-docking costs		8,602			15,265
Amortization of deferred financing costs		4,271			515
Stock-based compensation expense		3,427			616
Change in fair value of interest rate swaps		2,996			(864	)
Amortization of deferred gain on sale and leaseback of vessels		(5,677	)		(14,250	)
Loss on sale of other fixed assets		-			69
Gain on sale of vessel		-			(1,961	)
Payments for dry-docking		(21,188	)		(20,146	)
(Increase) Decrease in:
Accounts receivable		15,398			11,367
Insurance claims		47			(307	)
Inventories		(1,065	)		(1,168	)
Advances to creditors		(4,609	)		3,304
Prepayments and other		(3,931	)		676
Increase (Decrease) in:
Accounts payable		281			1
Accrued liabilities		4,683			2,734
Unearned revenue		271			2,374

Net Cash from Operating Activities		44,704			5,832

Cash Flows from (used in) Investing Activities:

Advances for vessels acquisitions / under construction		-			(53,018	)
Vessel acquisitions and improvements		(18	)		(187,360	)
Increase in restricted cash		(36,500	)		-
Decrease in restricted cash		-			25,000
Net proceeds from sale of vessels		474,616			51,975
Net proceeds from sale of other fixed assets		-			72
Acquisition of other fixed assets		(759	)		(2,623	)

Net Cash from (used in) Investing Activities		437,339			(165,954	)

Cash Flows from (used in) Financing Activities:

Proceeds from long-term debt		-			157,500
Principal payments of long-term debt		(14,869	)		(16,907	)
Repayment of long-term debt		(255,399	)		(22,000	)
Issuance of common stock		26,916			29,400
Payment of financing costs		(63	)		(2,029	)
Dividends paid		(217,466	)		-

Net Cash from (used in) Financing Activities		(460,881	)		145,964

Net increase (decrease) in cash and cash equivalents		21,162			(14,158	)

Cash and cash equivalents at beginning of period		17,462			29,992

Cash and cash equivalents at end of period		38,624			15,834

SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid		15,975			9,428


The accompanying notes are an integral part of these consolidated condensed financial statements.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in thousands of United States Dollars - except share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information:

The accompanying consolidated condensed financial statements include the accounts of TOP Tankers Inc. (formerly Ocean Holdings Inc.) (“TOP”) and its wholly owned subsidiaries (collectively the “Company”) and have been prepared in accordance with U.S generally accepted accounting principles (“U.S GAAP”) for interim financial information. They also have been prepared in accordance with rules and regulations of the Securities and Exchange Commission and should be read in conjunction with the Company’s Annual Report on Form 20-F for the year ended December 31, 2006.

These consolidated condensed financial statements have been prepared on the same basis as the financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2006 and, in the opinion of the management, reflect all adjustments (consisting solely of adjustments of a normal recurring nature) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The operating results for the nine-month period ended September 30, 2007 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2007.

As of September 30, 2007, the Company operated twenty vessels, of which nine were owned and eleven were leased pursuant to sales and leaseback arrangements discussed in Note 11. As of September 30, 2007, ten of the vessels were operating under long-term time charters, seven vessels were operating under voyage charters and three of the vessels were undergoing their scheduled dry-docking.

2. Recently Issued Accounting Pronouncements:

FASB Interpretation No. 48: In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income Taxes”, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. In 2007, the adoption of FIN 48 did not have a material impact on the financial position, results of operations or cash flows of the Company.

2. Recently Issued Accounting Pronouncements – (continued):

FSP No. AUG AIR-1: In September 2006, the FASB Staff issued FSP No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities,” (“FSP No. AUG AIR-1”). FSP No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods, if no liability is required to be recorded for an asset retirement obligation based on a legal obligation for which the event obligating the entity has occurred. FSP No. AUG AIR-1 also requires disclosures regarding the method of accounting for planned major maintenance activities and the effects of implementing the FSP. The guidance in FSP No. AUG AIR-1 is effective for the Company as of January 1, 2007.

The Company has historically accounted for drydocking costs that qualified as “Planned Major Maintenance Activities” (“PMMA”) using the deferral method. Beginning with the fourth quarter of 2007 the Company intends to change its accounting policy for PMMA from the deferral method, under which the Company amortized drydocking costs over the estimated period of benefit between drydockings, to the direct expense method, under which the Company will expense all drydocking costs as incurred. The Company believes that the direct expense method is preferable as it eliminates the significant amount of time and subjectivity involved to determine which costs and activities related to drydocking qualify as PMMA under the deferral method. The Company will reflect this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. The new accounting principle will be presented retrospectively to all periods presented in future earnings releases and filings. When the accounting principle is retrospectively applied, net income for the year ended December 31, 2006 and the nine month period ended September 30, 2007 will decrease by approximately $26.1 million and $0.07 million, or $0.86 per share and $0.01 per share, respectively.

FASB Statement No. 157: In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS 157”). SFAS 157 addresses standardizing the measurement of fair value for companies that are required to use a fair value measure of recognition for recognition or disclosure purposes. The FASB defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date”. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact, if any, of SFAS 157 on its financial position, results of operations and cash flows.

FASB Statement No. 159: In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Earlier adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements”. The Company is currently evaluating the impact of SFAS 159, but does not expect the adoption of SFAS 159 to have a material impact on its financial consolidated position, results of operations or cash flows.

3.	Transactions with Related Parties:

(a)

Pyramis Technical Co. S.A.: On July 9, 2004, the Company entered into an agreement to lease office space in Athens, Greece from Pyramis Technical Co. SA, which is wholly owned by the father of the Company’s Chief Executive Officer. The agreement was for duration of six years beginning July 2004 with a lessee’s option for an extension of four years. The monthly rental was Euro 39,000 and effective January 1, 2006 was adjusted for inflation to Euro 40,365. Other general and administrative expenses for the three months and the nine months ended September 30, 2006 include $ 154 and $ 450 of rentals paid to Pyramis Technical Co. S.A. In January 2006 the Company entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The change in office location, due to necessary refurbishments, took place in October 2006; therefore, the Company paid to Pyramis Technical Co. S.A the October rent plus four rentals as termination compensation. In April and August 2006, the Company entered into an agreement with Pyramis Technical Co. S.A. for the renovation of the new premises. The total contracted cost totalled Euro 2,499,360, of which Euro 2,615,436 (including the applicable VAT) or $3,418 was paid up to September 30, 2007. The amount of $3,614 related to renovation works, discussed above, is included in Other fixed assets, net, in the accompanying September 30, 2007 consolidated condensed balance sheet and is depreciated over the lease period, which is 12 years.

4. Inventories:

Inventories at December 31, 2006 and at September 30, 2007 are as follows:

	December 31, 2006		September 30, 2007
Bunkers		4,624		5,569
Lubricants		1,319		1,675
Consumable stores		517		384
		6,460		7,628

5. Advances for Vessels Acquisitions / under Construction:

In October 2006, the Company entered into an agreement for the construction of six handymax Product / Chemical tankers. The total contract price is $ 285,380 and is payable in five installments as follows: 15% is payable upon arrangement of the Refund Guarantee, 15% is payable upon commencement of steel cutting, 20% is payable upon keel laying, 20% is payable upon launching and 30% upon delivery of the vessel. The vessels’ construction will be partially financed from long-term bank financing discussed in Note 8. The first installment for four of the six vessels of $ 28,638 was paid in December 2006. In January 2007, the first installment for the remaining two vessels of $ 14,169 was paid and is also included in Advances for vessels acquisitions / under construction, in the accompanying consolidated condensed balance sheets. The vessels are expected to be delivered during the first six months of 2009.

During July 2007, the Company entered into agreements to acquire three drybulk vessels from unrelated third parties as follows: i) one 2002 built super handymax, or supramax, vessel of 51,200 dwt, built in China. The vessel will be chartered back to the sellers for a period of 18 months at a daily net rate of $25,650 on a bareboat basis; ii) one 1995 built panamax vessel of 73,506 dwt, built in South Korea. The vessel will be time-chartered for a period of 24-26 months at a daily net rate of $29,700; and iii) one 2000 built handymax vessel of 45,526 dwt, built in Philippines. The vessel will be time-chartered for a period of 14-16 months at a daily net rate of $22,000. The vessels are scheduled to be delivered to the Company between November 2007 and January 2008. The aggregate purchase price of the vessels is $148,075, of which the Company paid in July 2007 a deposit totalling in aggregate $ 14,698.

During August 2007, the Company entered into agreements to acquire three drybulk vessels from unrelated third parties as follows: i) one 2001 built panamax vessel of 75,928 dwt, built in Japan, ii) one 2000 built panamax vessel of 75,933 dwt, built in Japan and iii) one 2000 built panamax vessel of 75,681 dwt, built in Japan. The vessels are scheduled to be delivered to the Company between November 2007 and March 2008 and to enter into spot market trading. The aggregate purchase price of the vessels is $ 222,000, of which the Company paid in August 2007 a deposit totalling in aggregate $ 22,200.

The Advances for vessels acquisitions / under construction as of December 31, 2006 and September 30, 2007 are analyzed as follows:

	Construction installments		Acquisitions		Capitalized interest		Capitalized costs		Total
Balance, January 1, 2007		28,638		-		34		11		28,683
- Additions		14,169		36,898		1,733		218		53,018
Balance, September 30, 2007		42,807