OMI CORP, S-3/A, 1996-11-04

OMI CORP
S-3/A, 1996-11-04
DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT

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As filed with the Securities and Exchange Commission on November 4, 1996

Registration No. 333-12805
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------

PRE-EFFECTIVE AMENDMENT NO. 2
TO

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
OMI Corp.
(Exact name of registrant as specified in its charter)

Delaware 13-2625280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
----------
90 Park Avenue
New York, New York 10016
(212) 986-1960
----------
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
----------
FREDRIC S. LONDON, ESQ.
Senior Vice President and General Counsel
90 Park Avenue
New York, New York 10016
(212) 986-1960
----------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------
Copies to:

ROBERT L. CLARE, III, ESQ. ALAN DEAN, ESQ.
White & Case Davis Polk & Wardwell
1155 Avenue of the Americas 450 Lexington Avenue
New York, New York 10036 New York, New York 10017
(212) 819-8200 (212) 450-4000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
----------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

----------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

================================================================================

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.

SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1996

[LOGO] 12,000,000 Shares
OMI Corp.
Common Stock
(par value $0.50 per share)

----------

Of the 12,000,000 shares of Common Stock offered, 9,600,000 shares are
being offered hereby in the United States and 2,400,000 shares are being offered
in a concurrent international offering outside of the United States. The initial
public offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting."

The last reported sale price of the Common Stock, which is listed under the
symbol "OMM," on the New York Stock Exchange on October 31, 1996 was $7 per
share. See "Price Range of Common Stock."

See "Risk Factors" on page 9 for certain considerations relevant to an
investment in the Common Stock.

----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

----------

Initial Public Underwriting Proceeds to
Offering Price Discount(1) Company(2)
-------------- ----------- ----------

Per Share ...... $ $ $
Total(3) ....... $ $ $

- ----------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $_____ payable by the Company.
(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 1,440,000 shares at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to an additional 360,000 shares
as part of the concurrent international offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to the Company will be $____, $____, and $____,
respectively. See "Underwriting."

----------

The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about November __, 1996 against payment therefor in immediately available
funds.

Goldman, Sachs & Co.
Smith Barney Inc.
Furman Selz

----------

The date of this Prospectus is November , 1996.

<PAGE>

[ART]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE>

AVAILABLE INFORMATION

OMI Corp., a Delaware corporation ("OMI" or the "Company"), has filed with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (the "Registration Statement", which term shall encompass
all amendments thereto) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of its common stock, par value
$0.50 per share (the "Common Stock"), offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete; with respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. Items of information omitted from this Prospectus but contained
in the Registration Statement, including reports, proxy and information
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following
regional offices of the Commission: 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. The Commission also maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.

OMI complies with the informational requirements of the Exchange Act of
1934, as amended (the "Exchange Act") and, in accordance therewith, files
reports, proxies, information statements and other information with the
Commission. All such information may be inspected and copied at the public
reference facilities maintained by the Commission at the locations referred to
above. OMI's Common Stock is listed on the New York Stock Exchange (the "NYSE")
and copies of such material will also be available for inspection at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

OMI's Annual Report on Form 10-K for the year ended December 31, 1995 (the
"Form 10-K"), OMI's Quarterly Reports on Form 10-Q (the "Form 10-Qs") for the
quarters ended March 31, 1996 and June 30, 1996 and OMI's Current Report on Form
8-K dated June 12, 1996, each of which was filed by OMI with the Commission
under the Exchange Act, are incorporated herein by reference. OMI will provide
without charge to each person to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of the Form 10-K (other than
exhibits thereto which are not specifically incorporated by reference therein),
each of the Form 10-Qs and the Form 8-K. Written requests for such copies should
be directed to OMI Corp., 90 Park Avenue, New York, New York 10016, Attention:
Secretary, (212) 986-1960.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
such documents.

Any statement contained in the documents incorporated by reference shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained or subsequently
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. Unless the context otherwise requires, all
references to the Company in this Prospectus shall include OMI Corp. and its
subsidiaries. References to "Common Stock" mean the common stock of OMI, par
value $0.50 per share. CERTAIN SHIPPING INDUSTRY TERMS USED IN THIS PROSPECTUS
ARE DEFINED IN THE GLOSSARY TO THIS PROSPECTUS. Unless otherwise indicated,
information in this Prospectus assumes that the over-allotment options granted
to the Underwriters by the Company have not been exercised. Certain statistical
and graphical information contained in this Prospectus is drawn or calculated
from Fearnleys A.S. database and other sources. While the Company has no reason
to believe that such information is inaccurate in any material respect, readers
of this Prospectus are advised that some information in such databases is based
on estimates or subjective judgments. See "Business."

The Company

General

OMI is one of the world's premier shipowners and is recognized as an
industry leader for the quality of its fleet and operations. Its Suezmax tanker
fleet is one of the largest independent fleets in the world and its Handysize
product carrier fleet is one of the largest in the world. The Company provides
seaborne transportation services for crude oil, petroleum products and dry bulk
products (primarily iron ore, coal and grain). Its customers include major
independent and state-owned oil companies, major oil traders, government
entities and various other entities. Its vessels, operating procedures and
office management have been audited and approved by numerous customers, and the
Company has received certification by Det Norske Veritas, one of the world's
leading vessel classification societies.

Industry

While freight rates have improved over the last year, the Company believes
that more upside potential exists in the current tanker business cycle.
International demand for oil tanker tonnage has been increasing more quickly
than available supply. From 1990 to 1995, ton-mile demand in the tanker market
increased at a compound annual growth rate of 3.6% while the tanker supply has
grown at 1.2%. Since year end 1993, tanker supply has shrunk due to (i)
increased scrapping as a result of fleet aging and increasingly stringent
environmental regulations (as of June 30, 1996, approximately 34.3% of the
world's tanker supply was built in or prior to 1976), and (ii) diminished
newbuilding orders (newbuilding orders for delivery over the next few years
equal a relatively low 6.3% of the current worldwide fleet). Additionally, the
ability to accelerate the rate of tanker newbuilding is believed to be inhibited
by limited shipyard capacity due to construction commitments for other types of
vessels. This relative decrease in ship supply, coupled with the strength of the
world economy, the resultant growth in demand for oil and the continued focus of
governments and charterers on high-quality modern tonnage should lead to a
significantly stronger freight rate environment in the future.

Business Strategy

The Company has developed strategies designed to capitalize on its
strengths, the compelling supply and demand dynamics in the international tanker
market and the competitive advantages of operating large and concentrated
fleets. The Company has been implementing several key strategic initiatives,
including (i) refocusing its operations from the U.S. flag domestic market to
the international tanker market; (ii) developing large and concentrated fleets
of Suezmax tankers and product carriers; (iii) reducing vessel operating and
corporate overhead costs by streamlining the U.S. flag fleet; (iv) operating
high quality tonnage; and (v) managing spot versus time charter mix. Management
believes that the ongoing execution and implementation of these strategies will
drive future performance. A summary of these strategic initiatives is set forth
below.

Focus on the International Tanker Market

The Company is focused on strengthening its presence in the international
tanker market and has been substantially de-emphasizing its U.S. flag fleet.
Since 1993, OMI has significantly reconfigured its fleet in an effort to build
its international fleet and dispose of assets which no longer fit its strategic
mix. While the U.S. flag fleet has recently regained profitability, the Company
believes that opportunities for future growth are better in the international
arena. Accordingly, unless the Company perceives exceptional opportunities,
future vessel newbuildings and acquisitions will be made in the international
fleet and the U.S. domestic fleet can be expected to decline in size.

4
<PAGE>

Large and Concentrated Fleet of Suezmax Tankers and Product Carriers

The Company believes that a large and concentrated fleet creates several
strategic advantages. First, the fleet will be more attractive to large
customers by providing better scheduling opportunities through substitution,
thus creating the potential to increase vessel utilization. Second, large and
concentrated fleets create economies of scale to efficiently spread the overhead
costs associated with environmental regulations and inspections. Third,
operating expertise and efficiency are enhanced by concentration in certain
vessel classes. Fourth, the Company believes that large customers will prefer to
deal with a limited number of large shipping companies with fleets that they
have pre-vetted for quality, rather than smaller shipping companies
characteristic of the fragmented international tanker market.

The Company believes that Suezmax tankers and product carriers are the two
classes of vessel best suited to implementing its strategy. The combination of
these two vessel classes increases the Company's ability to participate in
expected improvements in the international tanker market with its Suezmax
tankers while reducing its downside risk through the more stable cash flows
provided by product carriers. The Company also believes that Suezmax tankers
provide nearly the upside potential of VLCCs with less of the downside risk,
primarily because Suezmaxes have greater geographic flexibility than VLCCs.
Product carriers have historically provided the Company with relatively more
stable cash flows even in weak markets.

Reducing Vessel Operating and Corporate Overhead Costs

The Company has taken steps to reduce vessel operating and corporate
overhead costs and expects to increase the efficiency of its administrative and
vessel operations. As the focus of the fleet has changed from domestic to
international the Company has positioned itself to reduce corporate overhead
costs, its use of third-party vendors, and occupancy costs. The Company believes
that developing a more homogeneous fleet will lead to economies in purchasing
for vessel consumables and maintenance through more efficient operations and
maintenance programs.

Operating High Quality Tonnage

Managing Spot Versus Time Charter Mix

The Company seeks to maximize upside potential and minimize downside risk
by managing the mix of its vessels in the spot market and on time charter. In a
favorable rate environment, management seeks to time charter at least 50-60% of
its Suezmax tankers and product carriers. At present, management believes that
the most advantageous opportunities for Suezmax tankers lie in the spot market.

The Company began operations in 1960. From 1969 to 1984, the Company, a
Delaware corporation, was a subsidiary of Ogden Corporation, a U.S. public
company. The Company's principal office is located at 90 Park Avenue, New York,
New York 10016. The telephone number is (212) 986-1960.

Recent Developments

On July 12, 1996, OMI completed a cash tender offer for the purchase at par
of its 10 1/4% Senior Notes due November 2003 ("Senior Notes"). Of the $136.9
million aggregate amount of Senior Notes outstanding, $130.1 million was
tendered and $6.8 million remain outstanding. An extraordinary charge (net of
the tax benefit) of approximately $3 million or $0.10 per share will be recorded
in the third quarter for the extinguishment of debt.

In August 1996, OMI received $30 million in cash for the sale of three
chemical carrier vessels to Hvide Marine Incorporated ("Hvide") and Hvide
assumed $34.7 million of debt of OMI which had been secured by mortgages on two
of the vessels sold.

On September 30, 1996, the Company's 83% owned subsidiary, OMI Petrolink
Corp., sold three supply boats to Trico Marine Services for $11.6 million in
cash.

The Company is negotiating a sale-leaseback of the OMI Columbia, the
Company's largest domestic vessel, which is currently operating under a time
charter with a major oil company expiring December 31, 2002. No commitment yet
exists for this transaction and there can be no assurance that a transaction
will be consummated. Most of the proceeds of any such transaction will be used
to reduce debt.

5
<PAGE>

Legislation has been enacted which permits the Company to sell or reflag
the U.S. flag dry bulk carrier Platte, which is currently in lay-up.

The Company has entered into a letter of intent with a shipyard for the
construction of two Suezmax tankers with options for two more. The obligations
of the Company and the shipbuilder to proceed with construction are dependent
upon the successful completion of the Offerings. See "Use of Proceeds."

The Company has discussed with its joint venture partners terminating the
Mosaic Alliance Corp. and Wilomi, Inc. joint ventures. The various parties have
agreed to winding-up in principle. However, in each case there currently is no
agreement as to the method of dissolution.

The Company has entered into a contract to sell its laid-up U.S. flag
product carrier Ranger to foreign interests. The sale is contingent upon
approval being granted by the U.S. Maritime Administration.

On October 28, 1996, a vessel owned by the United States government and
managed under contract by OMI Ship Management, Inc. ("Ship Management"), a
subsidiary of the Company, leaked approximately 8,400 gallons of fuel oil into
San Francisco bay while the vessel was in drydock and under the control of a
local shipyard in San Francisco. Ship Management's personnel have been assisting
the Coast Guard in the clean-up. Under the terms of the management agreement
between the U.S. government and Ship Management, the U.S. government is
obligated to pay the costs of any clean-up and related damages unless Ship
Management has been grossly negligent or has violated any law or regulation. The
Company's preliminary investigation indicates that Ship Management was not at
fault. However, there can be no assurance with respect to the liability, if any,
that Ship Management may have for the spill and associated clean-up expenses.

For the third quarter period ended September 30, 1996, the Company had
revenues of $58.6 million and operating income of $6.2 million. In comparison,
for the third quarter period ended September 30, 1995 the Company had revenues
of $64.6 million and incurred operating losses of $3.1 million.

The Offerings

The 9,600,000 shares of Common Stock initially being offered in the United
States (the "U.S. Offering") and the 2,400,000 shares of Common Stock
concurrently being offered outside the United States (the "International
Offering") are collectively referred to as the "Offerings."

Common Stock offered: (1)
U.S. Offering 9,600,000 shares
International Offering 2,400,000 shares
----------
Total 12,000,000 shares
==========
Total Common Stock to be
outstanding after the
Offerings(1)(2) 43,150,515 shares
New York Stock Exchange Symbol OMM
Use of proceeds The net proceeds of the
Offerings will be used to
reduce amounts outstanding
under the Company's credit
facilities and for vessel
newbuildings and acquisitions.
See "Use of Proceeds."

(1) Assumes the Underwriters' over-allotment option is not exercised. If such
over-allotment is exercised, up to an additional 1,800,000 shares will be
issued and sold by the Company. See "Underwriting."

(2) See "Capitalization." Excludes 1,778,448 shares reserved for issuance under
the Company's stock option plans, of which 1,203,923 shares will be
issuable upon the exercise of stock options that will be outstanding at the
closing of the Offerings.

Risk Factors

See "Risk Factors" beginning on page 9 for certain considerations relevant
to an investment in the Common Stock.

6
<PAGE>

Summary Consolidated Financial and Other Data

Set forth below are selected consolidated financial and other data of the
Company for the five years ended December 31, 1995 and the unaudited financial
and other data for the six months ended June 30, 1995 and June 30, 1996, which
have been derived from the Company's consolidated financial statements. In the
opinion of management, the unaudited consolidated financial statements reflect
all adjustments (comprising only normal recurring accruals) necessary for a fair
presentation of financial position at June 30, 1995 and June 30, 1996 and
results of operations and cash flows for the six months ended June 30, 1995 and
June 30, 1996. The results of operations for the six months ended June 30, 1996
are not necessarily indicative of the results of operations that may be expected
for the entire year 1996. The data below should be read in conjunction with the
consolidated financial statements and the notes thereto for the three years
ended December 31, 1995, the report of Deloitte & Touche LLP, independent
auditors, with respect to the financial statements and "Management's Discussion
and Analysis of Results of Operations and Financial Condition" that appear
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
For the
Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------------------ --------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data: (dollars, shares outstanding and dwt in thousands, except per share data)
Total revenues .........................$284,758 $265,529 $270,479 $266,796 $239,880 $119,153 $123,120
Net voyage revenues .................... 107,926 66,357 56,058 44,217 24,397 14,235 29,631
Operating expenses:
Vessel and voyage ..................... 172,876 193,487 209,722 217,140 208,192 102,034 89,863
Depreciation and amortization ......... 34,688 35,483 35,441 37,770 34,734 17,192 16,247
Operating lease ....................... 6,449 6,473 6,666 6,400 4,938 2,963 755
Provision for losses:
Impaired value of vessels ............ -- -- -- 14,798 8,707 -- --
Lease obligation ..................... -- -- -- 19,800 6,687 -- --
General and administrative ............ 16,032 17,891 16,748 18,972 15,303 7,713 7,329
-------- -------- -------- --------- --------- -------- --------
Total operating expenses ............... 230,045 253,334 268,577 314,880 278,561 129,902 114,194
-------- -------- -------- --------- --------- -------- --------
Operating income (loss) ................ 54,713 12,195 1,902 (48,084) (38,681) (10,749) 8,926
Gain (loss) on disposal of assets-net .. 105 (1,146) 4,401 10,222 5,647 6,235 3,601
Provision for writedown of investments . -- (16,183) (1,625) (1,250) -- -- --
Interest expense ....................... 29,527 23,983 21,788 28,808 26,708 13,672 14,049
Interest income ........................ 2,505 2,000 1,738 2,843 2,076 968 906
-------- -------- -------- --------- --------- -------- --------
Income (loss) before income taxes and
equity in operations of joint ventures. 27,224 (27,361) (16,021) (65,572) (56,397) (16,216) (153)
Provision (benefit) for income taxes ... 9,607 (6,878) (1,730) (22,305) (18,973) (5,195) (367)
Equity in operations of joint ventures . 12,259 9,059 5,544 5,402 5,528 4,599 1,066
-------- -------- -------- --------- --------- -------- --------
Net income (loss) (1) ..................$ 29,876 $(11,424) $ (8,747)$ (37,865)$ (31,896) $ (6,422) $ 1,280
======== ======== ======== ========= ========= ======== ========
Net income (loss) per common share .....$ 0.94 $ (0.36) $ (0.29)$ (1.24)$ (1.04) $ (0.21) $ 0.04
======== ======== ======== ========= ========= ======== ========
Supplementary net income (loss)
per common share(2) ................... -- -- -- -- $ (0.71) -- $ 0.09
======== ======== ======== ========= ========= ======== ========
Weighted average shares outstanding .... 31,934 31,654 30,590 30,417 30,745 30,510 31,351
======== ======== ======== ========= ========= ======== ========
Cash dividends declared per common
share .................................$ 0.14 $ 0.14 -- -- -- -- --
======== ======== ======== ========= ========= ======== ========
Other Data:
Cash flows provided (used) by:
Operating activities ...................$ 55,727 $ 11,986 $ 31,415 $ 1,647 $(4,817) $(7,291) $(13,190)
Investing activities ................... (10,090) (13,624) (20,601) 9,739 (9,743) 11,630 18,646
Financing activities ................... (40,883) (7,670) 17,657 (24,910) 15,332 (6,806) (20,760)
Cash dividends received from joint
ventures .............................. 5,880 -- 11,823 2,477 539 -- 368
EBITDA (3) ............................. 97,214 49,434 50,255 28,556 14,291 7,530 26,354
Cash earnings (4) ...................... 61,807 25,451 16,644 (2,729) (12,956) (6,142) 11,937
Capital expenditures:
Vessel purchases ...................... -- 15,466 28,374 12,614 27,618 9,623 9,300
Routine fleet expenditures ............ 10,770 7,158 8,174 2,704 10,522 5,696 1,220
Balance Sheet Data (at end of period):
Cash and cash equivalents ..............$ 26,158 $ 16,850 $ 45,321 $ 31,797 $ 32,569 $ 29,330 $ 17,265
Vessels and other property-net ......... 499,010 458,564 453,683 400,998 368,441 389,697 355,417
Investments in, and advances to, joint
ventures .............................. 74,894 78,492 77,802 81,868 84,915 83,536 84,891
Total assets ........................... 678,618 644,443 671,516 605,132 565,486 577,791 537,990
Total debt (5) ......................... 274,816 276,755 297,627 272,139 283,866 264,070 284,230
Total stockholders' equity ............. 229,551 218,391 220,026 179,676 145,195 169,536 147,139
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
For the
Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------------------ --------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fleet Operating Data (at end of period):
International Fleet: (6)
Number of wholly owned vessels ........... 14 14 17 17 17 16 17
Number of vessels owned by joint
ventures ................................ 8 11 11 10 10 10 8
Number of vessels chartered-in ........... 4 3 5 5 4 6 4
Total number of vessels .................. 26 28 33 32 31 32 29
Dwt of wholly owned vessels .............. 920 927 1,504 1,504 1,377 1,432 1,176
Dwt of vessels owned by joint ventures ... 769 1,158 1,189 1,194 1,194 1,194 1,084
Dwt of chartered-in vessels .............. 305 268 361 462 406 406 406
Total dwt of vessels owned (7) ........... 1,689 2,085 2,693 2,698 2,571 2,626 2,260
Average age of fleet (7) ................. 9.0 9.3 11.2 12.0 12.8 12.9 13.3
Number of vessels with over one year
remaining on time charters .............. 8 8 8 6 7 3 4
Number of vessels on order (end
of period) .............................. 4 2 1 1 1 1 1
U.S. Fleet: (8,9)
Total number of vessels owned ............ 15 15 14 11 11 11 6
Total dwt of vessels owned ............... 714 714 674 559 559 559 318
Average age of fleet ..................... 14.9 15.9 15.7 15.0 16.0 16.0 17.9
Number of vessels with over one year
remaining on time charters .............. 4 4 3 3 5 3 1
</TABLE>

- ----------
(1) The Company's results of operations for the four years ended December 31,
1995 and for the six months ended June 30, 1995 and June 30, 1996 were
adversely affected by economic weakness in several regions throughout the
world, including, in particular, the United States, Western Europe and
Japan, and by the oversupply of vessels relative to demand. See "Risk
Factors."
(2) Supplementary net income (loss) per common share has been calculated
assuming that $75 million of proceeds from the sale of 9,375,000 shares of
Common Stock had been used to acquire at par $75 million of Senior Notes as
of January 1, 1995 resulting in a decrease in interest expense, net of
write-off of deferred financing costs and income taxes, of $3.6 million and
$2.5 million for the year ended December 31, 1995 and the six months ended
June 30, 1996, respectively.
(3) EBITDA is defined as income before interest expense, income taxes,
depreciation and amortization, gain (loss) on disposal of assets-net,
provisions for losses, provision for writedown of investments, other-net,
equity in operations of joint ventures, plus dividends received from joint
ventures. EBITDA is not required by generally accepted accounting
principles and should not be considered as an alternative to net income or
any other measure of performance required by generally accepted accounting
principles or as an indicator of the Company's operating performance.
(4) Cash earnings represents income (loss) before income taxes and equity in
operations of joint ventures, before depreciation and amortization, gain
(loss) on disposal of assets-net, provisions for losses, provision for
writedown of investments and other-net. Cash earnings is included because
it is used by certain investors to measure a company's financial
performance as compared to other companies in the shipping industry. Cash
earnings is not required by generally accepted accounting principles and
should not be considered as an alternative to net income or any other
measure of performance required by generally accepted accounting principles
or as an indicator of the Company's operating performance.
(5) On July 12, 1996, OMI completed a cash tender offer for the purchase at par
of its Senior Notes. Of the $136.9 million aggregate amount of Senior Notes
outstanding, $130.1 million was tendered and $6.8 million remain
outstanding. An extraordinary loss (net of the tax benefit) of
approximately $3 million or $0.10 per share was recorded in the third
quarter for the extinguishment of debt.
(6) As of June 30, 1996, included one vessel which was purchased in July 1996.
(7) Calculations include vessels owned by joint ventures, but do not include
vessels chartered-in.
(8) As of June 30, 1996, the U.S. fleet excluded three vessels which were sold
in August 1996.
(9) Amounts include two vessels on long-term lease until they were purchased in
June 1995 and February 1996.

8
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Common Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" for a description of other
factors affecting the business of the Company generally.

This Prospectus contains forward looking statements within the meaning of
Section 27A of the Securities Act relating to prospects and performance of the
Company and the international tanker market, particularly in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--The International Tanker Market." Prospective investors are cautioned
that any such forward looking statements are not guarantees of future
performance and involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated depending on, among other things,
the overall level of economic activity in the Company's major markets and the
other factors described below.

Net Losses for the Past Two Fiscal Years

The Company incurred operating losses of $48.1 million and $38.7 million
for the years ended December 31, 1994 and 1995, respectively, and net losses
of $37.9 million and $31.9 million for the years ended December 31, 1994 and
1995, respectively. Although the Company had an operating income of $8.9 million
and a net income of $1.3 million for the six months ended June 30, 1996, there
can be no assurance that the Company's operating results will continue to be
positive in the future. See "Selected Consolidated Financial and Other Data" and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."

Refinancing Risk

The Company is required to repay its Credit Agreement with Den Norske Bank
ASA and Nederlandse Scheepshypotheekbank N.V. (the "Credit Agreement") in full
within 120 days after the closing of the Offerings. As of September 30, 1996,
the Company had $160.9 million outstanding under the Credit Agreement. After
giving effect to the proposed reduction of up to $75 million in borrowings under
the Credit Agreement using the proceeds of the Offerings, the Company will not
be able to satisfy its repayment obligations under the Credit Agreement using
available cash and will be required to refinance the borrowings that remain
outstanding or to sell assets to meet its obligations. There can be no assurance
that the Company will have the ability to borrow the amounts required under
attractive terms or at all. Failure to obtain any necessary refinancing would
result in a default under the provisions of the Credit Agreement.

Fleet Concentration in Crude and Petroleum Product Carriers; Highly Cyclical
Nature of the Tanker Industry

Approximately 90% of the Company's operating fleet (on a dwt basis)
consists of crude oil and refined oil product carriers. As a result, the
Company's business is more sensitive to changes in factors affecting the
petroleum business and the transportation of crude oil and refined oil products
than other commodities. The tanker industry is highly cyclical, experiencing
volatility in profitability and asset values resulting from changes in the
supply of and demand for tanker capacity due to the many conditions and events
that affect the price, production and transport of oil, as well as competition
from alternative energy sources. Because of the many factors influencing the
supply of and demand for vessel capacity, the nature, timing and degree of
changes in tanker industry conditions are also unpredictable. Any decrease in
global or regional shipments of crude oil or products could have a material
adverse effect on the Company. See "Business--The International Tanker
Market-Supply" and "--Demand."

Dependence on Spot Voyages

The Company is currently heavily dependent upon spot voyages. As at
September 1, 1996, approximately 62% of the Company's operating fleet (measured
in dwt) was in the spot market. See "Business--The Company's Fleet." Although
some element of dependence on the spot charter market is

<PAGE>

typical in all segments of the liquid and dry bulk industry, the spot charter
market is highly competitive and spot charter rates are subject to significant
fluctuations. There can be no assurance that spot charters will be available at
rates that will be sufficient to enable the Company's vessels to be operated
profitably. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and "Business--The International Tanker Market."

Access to Capital

The Company intends to continue to acquire newbuildings and secondhand
vessels when market conditions are advantageous. See "Business--Business
Strategy." Such vessel acquisitions will require significant amounts of
additional capital. While the Company believes that the strengthening of its
balance sheet through the Offerings will make it possible for the Company to
borrow sufficient capital to fund its proposed vessel acquisition program, there
can be no assurance that the Company will have the ability to borrow the amounts
it requires on attractive terms or at all. If financing were not to be
available, the Company could be forced to curtail its vessel acquisition
program. See "Business--Business Strategy."

Substantial Leverage

The shipping industry is capital intensive, traditionally using substantial
amounts of indebtedness to finance vessel acquisitions, capital expenditures and
working capital needs. Lenders to the Company typically impose financial and
other covenants that restrict the operating flexibility of the Company. For
example, the Company's credit agreements impose operating and financial
restrictions on the Company which affect, and in many respects significantly
limit or prohibit, the ability of the Company to, among other things, incur
additional indebtedness, create liens, sell capital stock of subsidiaries, make
capital expenditures, acquire vessels or pay dividends. The Company's credit
agreements also bear interest at variable rates causing the Company to be
sensitive to changes in prevailing interest rates. See "Description of Certain
Indebtedness."

The degree to which the Company is leveraged could have important
consequences to common stockholders, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital expenditures
and vessel acquisitions may be impaired; (ii) a substantial portion of the
Company's cash flow from operations may have to be dedicated to the payment of
the principal of and interest on its indebtedness; (iii) the Company's leverage
may make it more vulnerable to economic downturns and may limit its ability to
withstand competitive pressures and (iv) increased interest expense from rising
interest rates could have a material adverse effect on the Company.

Environmental Regulation

The Company's operations are affected by international, national and local
environmental protection laws, regulations, treaties and conventions in force in
the countries in which the Company's vessels operate as well as the countries of
their registration. Compliance with such laws and regulations entails additional
expense, including vessel modifications and changes in operating procedures. The
Company believes that compliance has not had and is not expected to have a
material adverse effect upon its competitive position; however, the Company's
financial position, value and useful life of its vessels and results of
operations may be affected by environmental laws and regulations currently in
effect or which may be adopted. In particular, the profitability of the
Company's Handysize vessels could be adversely affected by the capital costs and
reduction of capacity resulting from compliance with certain proposed
regulations requiring structural or operating protective measures or the need to
trade exclusively in foreign markets should the Company choose not to comply. In
addition, all vessel owners shipping oil or hazardous materials to, from or
within the United States are subject to regulations effectively imposing
unlimited liability in the event of a catastrophic oil spill resulting from
gross negligence, wilful misconduct or violation of any federal operating or
safety standard. While the Company maintains insurance at levels it believes
prudent, the claim from a catastrophic spill could exceed the insurance coverage
available and therefore have a material adverse effect on the Company. See
"Business--Environmental Regulations."

Factors Affecting Implementation of Strategy

The Company's business strategy depends on adjustments in its vessel asset
mix through newbuildings, the purchase and use of secondhand vessels and the
disposition of vessels that no longer fit

<PAGE>

its desired asset mix. See "Business--Business Strategy." Although the Company
seeks to purchase and sell at optimal times to implement its strategy, there can
be no assurance that it will correctly gauge the markets. In addition, the
following factors may affect the Company's ability to implement its strategy.

Newbuildings

The Company has entered into a letter of intent with a shipyard for the
construction of two Suezmaxes with options for two more. See "Recent
Developments." There can be no assurance that such letter of intent will lead to
finalized contracts or that, once executed, any such contract will be fully
performed by all parties involved. In addition, the Company is obligated under
the terms of the Credit Agreement to obtain the consent of its creditors before
undertaking any newbuilding program. In the event that the Company does not
enter into newbuilding contracts as contemplated by current negotiations, there
can be no assurance that alternate shipyards will have the capacity to undertake
newbuildings or be willing to do so at a desirable price. If the Company does
enter into a contract for a newbuilding, it is typically required to expend
substantial sums in the form of progress payments during the construction of the
vessel. The Company does not, however, derive any revenue from vessels under
construction until after delivery. Moreover, if the shipyard were unable to
complete the contract or if the Company were unable to obtain financing required
to complete payments on any of its newbuilding orders, the Company could
effectively forfeit all or a portion of the progress payments previously made
with respect to such contract. There can be no assurance that market conditions
will justify such expenditures or enable the Company to operate its vessels
profitably.

Operation of Secondhand and Older Vessels

The Company's domestic fleet includes five tankers over 15 years of age and
its international fleet includes seven tankers over 15 years of age, all of
which were acquired secondhand. The economic lives of properly maintained
tankers are estimated by the Company to be approximately 20-25 years. A majority
of the Company's Suezmax tankers are older than 20 years and it is expected that
they will have to be replaced within 3 to 5 years in order to maintain fleet
size. See "Business--The Company's Fleet." In general, expenditures necessary
for maintaining a vessel in good operating condition increase with age. Costs
associated with changing technology, cargo insurance rates and environmental and
other regulatory compliance requirements typically increase with a vessel's age.
See "Business--Environmental Regulation" and "--The International Tanker
Market--Supply--Aging." While the Company inspects any secondhand vessel prior
to purchase, such an inspection would normally not provide the Company with as
much knowledge as to the condition of the vessel as the Company would possess if
the vessel had been built for the Company and operated by it during the life of
the vessel. There is no assurance that market conditions will justify such
expenditures or enable the Company to operate its vessels profitably during the
remainder of their economic lives.

Disposition of Certain Vessels

The Company intends to dispose of vessels which do not fit its desired
asset mix as long as it perceives advantageous opportunities to do so. Due to
the limited number of buyers of U.S. flag vessels, the Company is frequently
required to reflag its U.S. flag vessels or to sell them into the international
market. Such reflagging or foreign sale requires governmental approvals. There
can be no assurance that any efforts by the Company to reflag or sell its U.S.
vessels will be successful.

Market Value of Vessels

The market value of tankers can be expected to fluctuate, depending upon
general economic and market conditions affecting the tanker industry and
competition from other shipping companies, types and sizes of vessels, and other
modes of transportation. See "Business--The International Tanker Market."
Declining vessel values could affect the Company's ability to raise cash and
thereby adversely impact the Company's liquidity. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources." In addition, declining vessel values could result in a
breach of certain loan covenants, which could give rise to events of default
under the relevant financing

<PAGE>

agreements. There can be no assurance that the market value of the Company's
fleet will not further decline. See "Business--The International Tanker
Market--Supply" and "Business--The International Tanker Market--Demand."

Seasonal Variations in Operating Results

The Company operates its tankers in markets that have historically
exhibited seasonal variations in demand and, therefore, spot rates. Tanker
markets are typically stronger in the winter months as a result of increased oil
consumption in the northern hemisphere. In addition, unpredictable weather
patterns in the winter months tend to disrupt vessel scheduling. The oil price
volatility resulting from these factors has historically led to increased oil
trading activities. As a result, the Company's revenues have historically been
weaker during its second quarter and such variations are likely to continue into
the future. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition."

Competition

The Company obtains employment for its vessels in a highly competitive
market. Competition arises primarily from other tanker owners (including major
oil companies as well as independent companies). The Company's market share is
insufficient to enforce any degree of pricing discipline in the markets in which
the Company competes. See "Business--Competition" and "--Business Strategy."

Permits

The Company is required by various governmental and quasi-governmental
agencies to obtain certain permits, licenses and certificates with respect to
its vessels. The kinds of permits, licenses and certificates required depends
upon such factors as the country of registry, the commodity transported, the
waters in which the vessel operates, the nationality of the vessel's crew, the
age of the vessel and the status of the Company as owner or charterer. The
Company believes that it has or can readily obtain all permits, licenses and
certificates currently required to permit its vessels to operate. Additional
laws and regulations, environmental or otherwise, may be adopted which could
limit the ability of the Company to do business or increase the cost of its
doing business and which may have a material adverse effect on the operations of
the Company. See "Business--International Tanker Market--Supply," "--Aging" and
"--Regulation."

Restrictions on Foreign Ownership

U.S. law requires that, to be eligible for U.S. coastwise trade, a
corporation owning a vessel must be at least 75% U.S. owned. In order to assure
compliance with this citizenship requirement, the Board of Directors has adopted
a requirement that 90% of the outstanding shares of common stock of the Company
be held by U.S. citizens. Therefore, if the percentage of outstanding shares of
common stock of the Company held by non-U.S. citizens reaches 10%, holders will
have no right to sell additional shares to non-U.S. citizens. Any purported
transfer of shares in violation of these provisions will be ineffective to
transfer the shares or any voting, dividend or other rights in respect thereof.
The minimum percentage which must be held by U.S. citizens will be reduced to
77% following completion of the Offerings. See "Description of Capital
Stock--Qualifications for Ownership and Transfer of Shares."

Risk of Loss and 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, piracy, labor
stoppages, business interruptions due to political action and other
circumstances or events. Furthermore, the carriage of crude oil and other liquid
cargo is subject to the risk of spills. Any such event may result in significant
liability in excess of insurance coverage, loss of revenues or increased costs.

The Company believes that its current insurance coverage is adequate.
However, there can be no assurance that all risks are adequately insured
against, that any particular claim will be paid or that the Company will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. In particular, stricter environmental regulations have resulted in
increased costs, and may result in further increased costs for, or the lack of
availability of, insurance against the risks of pollution.

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of Common Stock offered
hereby are estimated to be approximately $96 million (before deduction of the
underwriting discount and estimated expenses of the Offerings) ($110.4 million
if the Underwriters' over-allotment option is exercised in full). The Company
expects to use up to $75 million to reduce the $136 million outstanding under
the Credit Agreement, which initially bears interest at a rate of LIBOR + 1-3/4%
and matures January 1998. The Credit Agreement was used to fund the purchase of
substantially all of its Senior Notes, finance the purchase of a vessel and
refinance secured indebtedness on two vessels and certain other existing
indebtedness.

The Company also plans to use approximately $21 million of the net proceeds
of the Offerings to partially finance the purchase price of new Suezmax tankers.
The Company has entered into a letter of intent with a shipyard for the
construction of two Suezmax tankers with options for two more. Each Suezmax
tanker will cost between $50 and $55 million. The obligations of the Company and
the shipbuilder to proceed with construction are dependent upon the successful
completion of the Offerings. The Company expects to finance the balance of the
purchase price through new borrowings, none of which has yet been obtained.
Finally, the Company may also use a portion of the net proceeds to acquire
quality secondhand tonnage for its international fleet.

Pursuant to the Credit Agreement, the Company is obligated to repay indebtedness
outstanding thereunder within 120 days of the receipt of proceeds of the
Offerings. After giving effect to the proposed reduction in borrowings under the
Credit Agreement using the proceeds of the Offerings, the Company will be
required to refinance the balance then outstanding under the Credit Agreement.
Failure to obtain such refinancing would result in a default under the
provisions of the Credit Agreement. See "Risk Factors--Refinancing Risk."

<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is listed and traded on the New York Stock
Exchange under the symbol "OMM." The following table sets forth, for the periods
indicated, the price range of high and low sales prices for the Common Stock as
reported on the New York Stock Exchange.

Common Stock
--------------------
High Low
------ ------
1994
First Quarter (from March 2, 1994) ............ $8 $6 1/4
Second Quarter ................................ 7 1/8 6
Third Quarter ................................. 6 7/8 5 1/4
Fourth Quarter ................................ 6 3/4 5 7/8

1995
First Quarter ................................. 6 1/2 5
Second Quarter ................................ 7 5 1/4
Third Quarter ................................. 8 3/4 6 5/8
Fourth Quarter ................................ 7 5 3/8

1996
First Quarter ................................. 8 1/8 5 5/8
Second Quarter ................................ 8 7/8 7 1/2
Third Quarter ................................. 8 3/4 6 7/8
Fourth Quarter (through October 31, 1996) ..... 7 3/4 6 3/8

On October 31, 1996 the last reported sale price of the Common Stock was
$7 per share.

DIVIDEND POLICY

The Company's current policy is not to pay dividends, but to retain cash
for use in its business. Any determination to pay dividends in the future will
be at the discretion of 66-2/3% of the Company's Board of Directors and will be
dependent upon OMI's results of operations, financial condition, capital
expenditures, working capital requirements, any contractual restrictions and
other factors deemed relevant by the Board of Directors. Currently, the payment
of dividends is prohibited by the terms of the Credit Agreement.

DILUTION

The Company's net tangible book value at June 30, 1996 was $133.6 million
or $4.29 per share of Common Stock. Without taking into account any changes in
net tangible book value after June 30, 1996, other than to give effect to the
sale by the Company of 12,000,000 shares of Common Stock offered pursuant to the
Offerings (at an assumed initial public offering price of $8.00 per share), the
Company's pro forma net tangible book value at June 30, 1996 would have been
$229.6 million, or $5.32 per share of Common Stock. This represents an immediate
increase in net tangible book value of $1.03 per share to existing shareholders
and an immediate dilution in net tangible book value of $2.68 per share to new
investors purchasing shares in the Offerings. The following table illustrates
the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share(1) ................... $8.00
Net tangible book value per share before the Offerings(2) ............ $4.29
Increase per share in net tangible book value attributable
to new investors .................................................... 1.03
-----
Pro forma net tangible book value per share
after the Offerings ................................................. 5.32
-----
Dilution to new investors(3) ......................................... $2.68
=====
</TABLE>

- ---------------

(1) Before deducting underwriting discount and estimated expenses of the
Offerings.

(2) Net tangible book value per share is determined by dividing the net
tangible book value of the Company (tangible assets less liabilities) by
the number of shares of Common Stock outstanding as of June 30, 1996.

(3) Dilution is determined by subtracting pro forma net tangible book value per
share after the Offerings from the amount of cash paid by a new investor
for a share of Common Stock.

<PAGE>

The foregoing table assumes no exercise of outstanding stock options after
June 30, 1996. At June 30, 1996, 1,239,000 shares of Common Stock were subject
to outstanding options, at a weighted average exercise price of $6.14 per share.
To the extent these options are exercised there will be further dilution to new
investors. See Note 7 of Consolidated Financial Statements.

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1996, (i) on an actual basis, (ii) pro forma to give effect to the Credit
Agreement, the related refinancing and the sale of three vessels to Hvide and
related transactions and (iii) pro forma as adjusted to give effect to the sale
of the 12,000,000 shares of Common Stock offered by the Company and the
application by the Company of the net proceeds therefrom (before deduction of
the underwriting discount and estimated expenses of the Offerings). This table
should be read in conjunction with the consolidated financial statements of the
Company and the related notes thereto set forth elsewhere in this Prospectus.
See also "Use of Proceeds" and "Management's Discussion and Analysis of Results
of Operations and Financial Condition."

June 30, 1996
----------------------------------------------------
(unaudited)
(dollars in thousands)
Pro Forma
Actual Adjustments(1) Pro Forma As Adjusted(2)
-------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Cash and cash equivalents ............................ $ 17,265 $ 11,000 $ 28,265 $ 38,265
-------- -------- -------- --------
Construction in progress--newbuildings
program(3) ......................................... -- -- -- 11,000
======== ======== ======== ========
Short-term debt (including current maturities):
Notes payable to bank .............................. 20,000 (20,000) -- --
Credit agreement ................................... -- 15,000 15,000 15,000
Other current obligations .......................... 10,306 (7,538) 2,768 2,768
-------- -------- -------- --------
Total short-term debt ................................ 30,306 (12,538) 17,768 17,768
-------- -------- -------- --------
Long-term debt:
Senior notes ....................................... 135,952 (129,125) 6,827 6,827
Credit agreement ................................... -- 145,923 145,923 70,923
Other long-term debt ............................... 117,972 (27,553) 90,419 90,419
-------- -------- -------- --------
Total long-term debt ................................. 253,924 (10,755) 243,169 168,169
-------- -------- -------- --------
Total debt ........................................... 284,230 (23,293) 260,937 185,937
-------- -------- -------- --------
Stockholders' equity:
Common stock, $0.50 par value; 80,000,000
shares authorized; 31,150,515 issued and
outstanding; 43,150,515 issued and
outstanding, as adjusted ......................... 15,575 15,575 21,575
Capital surplus .................................... 132,130 132,130 222,130
Retained deficit ................................... (3,985) (3,985) (3,985)
Cumulative translation adjustment .................. 4,912 4,912 4,912
Unearned compensation-restricted stock ............. (1,182) (1,182) (1,182)
Unrealized loss on securities-net of
deferred income taxes ............................ (91) (91) (91)
Treasury stock ..................................... (220) (220) (220)
-------- -------- --------
Total stockholders' equity ....................... 147,139 147,139 243,139
-------- -------- --------
Total capitalization ........................... $431,369 $408,076 $429,076
======== ======== ========
</TABLE>

- ------------

(1) The adjustments give effect to the discharge of debt on two vessels which
were sold on August 14, 1996 to Hvide, the cash tender offer for the
purchase of Senior Notes and borrowings under the Credit Agreement as if
they had occurred on June 30, 1996.

(2) The Pro Forma As Adjusted amounts give effect to the Offerings and the
application of the net proceeds thereof as if it had occurred on June 30,
1996.

(3) Does not give effect to additional borrowings which will be required in
order to finance the balance of the purchase price for anticipated
construction costs.

<PAGE>

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

For the
Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------------------ ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
Income Statement Data: (dollars, shares outstanding and dwt in thousands, except per share data)

<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues ........................... $284,758 $265,529 $270,479 $266,796 $239,880 $119,153 $123,120
Net voyage revenues ...................... 107,926 66,357 56,058 44,217 24,397 14,235 29,631
Operating expenses:
Vessel and voyage ....................... 172,876 193,487 209,722 217,140 208,192 102,034 89,863
Depreciation and amortization ........... 34,688 35,483 35,441 37,770 34,734 17,192 16,247
Operating lease ......................... 6,449 6,473 6,666 6,400 4,938 2,963 755
Provision for losses:
Impaired value of vessels ............. -- -- -- 14,798 8,707 -- --
Lease obligation ...................... -- -- -- 19,800 6,687 -- --
General and administrative .............. 16,032 17,891 16,748 18,972 15,303 7,713 7,329
-------- -------- -------- -------- -------- -------- --------
Total operating expenses ................. 230,045 253,334 268,577 314,880 278,561 129,902 114,194
-------- -------- -------- -------- -------- -------- --------
Operating income (loss) .................. 54,713 12,195 1,902 (48,084) (38,681) (10,749) 8,926
Gain (loss) on disposal of assets-net .... 105 (1,146) 4,401 10,222 5,647 6,235 3,601
Provision for writedown of investments ... -- (16,183) (1,625) (1,250) -- -- --
Interest expense ......................... 29,527 23,983 21,788 28,808 26,708 13,672 14,049
Interest income .......................... 2,505 2,000 1,738 2,843 2,076 968 906
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes and
equity in operations of joint ventures .. 27,224 (27,361) (16,021) (65,572) (56,397) (16,216) (153)
Provision (benefit) for income taxes ..... 9,607 (6,878) (1,730) (22,305) (18,973) (5,195) (367)
Equity in operations of joint ventures ... 12,259 9,059 5,544 5,402 5,528 4,599 1,066
-------- -------- -------- -------- -------- -------- --------
Net income (loss) (1) .................... $ 29,876 $ (11,424) $ (8,747) $ (37,865) $(31,896) $ (6,422) $ 1,280
======== ========= ======== ========= ======== ======== ========
Net income (loss) per common share ....... $ 0.94 $ (0.36) $ (0.29) $ (1.24) $ (1.04) $ (0.21) $ 0.04
======== ========= ======== ========= ======== ======== ========
Supplementary net income (loss)
per common share (2) -- -- -- -- $ (0.71) -- $ 0.09
======== ========= ======== ========= ======== ======== ========
Weighted average shares outstanding ...... 31,934 31,654 30,590 30,417 30,745 30,510 31,351
======== ========= ======== ========= ======== ======== ========
Cash dividends declared per common
share ................................... $ 0.14 $ 0.14 -- -- -- -- --
======== ========= ======== ========= ======== ======== ========
Other Data:
Cash flows provided (used) by:
Operating activities ..................... $ 55,727 $ 11,986 $ 31,415 $ 1,647 $ (4,817) $ (7,291) $(13,190)
Investing activities ..................... (10,090) (13,624) (20,601) 9,739 (9,743) 11,630 18,646
Financing activities ..................... (40,883) (7,670) 17,657 (24,910) 15,332 (6,806) (20,760)
Cash dividends received from joint
ventures ................................ 5,880 -- 11,823 2,477 539 -- 368
EBITDA (3) ............................... 97,214 49,434 50,255 28,556 14,291 7,530 26,354
Cash earnings (4) ........................ 61,807 25,451 16,644 (2,729) (12,956) (6,142) 11,937
Capital expenditures:
Vessel purchases ........................ -- 15,466 28,374 12,614 27,618 9,623 9,300
Routine fleet expenditures .............. 10,770 7,158 8,174 2,704 10,522 5,696 1,220
Balance Sheet Data (at end of period):
Cash and cash equivalents ................ $ 26,158 $ 16,850 $ 45,321 $ 31,797 $ 32,569 $ 29,330 $ 17,265
Vessels and other property-net ........... 499,010 458,564 453,683 400,998 368,441 389,697 355,417
Investments in, and advances to, joint
ventures ................................ 74,894 78,492 77,802 81,868 84,915 83,536 84,891
Total assets ............................. 678,618 644,443 671,516 605,132 565,486 577,791 537,990
Total debt (5) ........................... 274,816 276,755 297,627 272,139 283,866 264,070 284,230
Total stockholders' equity ............... 229,551 218,391 220,026 179,676 145,195 169,536 147,139
</TABLE>

<PAGE>

For the
Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fleet Operating Data (at end of period):
International Fleet: (6)
Number of wholly owned vessels ........... 14 14 17 17 17 16 17
Number of vessels owned by joint
ventures ................................ 8 11 11 10 10 10 8
Number of vessels chartered-in ........... 4 3 5 5 4 6 4
Total number of vessels .................. 26 28 33 32 31 32 29
Dwt of wholly owned vessels .............. 920 927 1,504 1,504 1,377 1,432 1,176
Dwt of vessels owned by joint ventures ... 769 1,158 1,189 1,194 1,194 1,194 1,084
Dwt of chartered-in vessels .............. 305 268 361 462 406 406 406
Total dwt of vessels owned (7) ........... 1,689 2,085 2,693 2,698 2,571 2,626 2,260
Average age of fleet (7) ................. 9.0 9.3 11.2 12.0 12.8 12.9 13.3
Number of vessels with over one year
remaining on time charters .............. 8 8 8 6 7 3 4
Number of vessels on order (end
of period) .............................. 4 2 1 1 1 1 1
U.S. Fleet: (8,9)
Total number of vessels owned ............ 15 15 14 11 11 11 6
Total dwt of vessels owned ............... 714 714 674 559 559 559 318
Average age of fleet ..................... 14.9 15.9 15.7 15.0 16.0 16.0 17.9
Number of vessels with over one year
remaining on time charters ............. 4 4 3 3 5 3 1
</TABLE>

- -----------

(1) The Company's results of operations for the four years ended December 31,
1995 and for the six months ended June 30, 1995 and June 30, 1996 were
adversely affected by economic weakness in several regions throughout the
world, including, in particular, the United States, Western Europe and
Japan, and by the oversupply of vessels relative to demand. See "Risk
Factors."

(2) Supplementary net income (loss) per common share has been calculated
assuming that $75 million of proceeds from the sale of 9,375,000 shares of
Common Stock had been used to acquire at par $75 million of Senior Notes
as of January 1, 1995 resulting in a decrease in interest expense, net of
write-off of deferred financing costs and income taxes, of $3.6 million
and $2.5 million for the year ended December 31, 1995 and the six months
ended June 30, 1996, respectively.

(3) EBITDA is defined as income before interest expense, income taxes,
depreciation and amortization, gain (loss) on disposal of assets-net,
provisions for losses, provision for writedown of investments, other-net,
equity in operations of joint ventures, plus dividends received from joint
ventures. EBITDA is not required by generally accepted accounting
principles and should not be considered as an alternative to net income or
any other measure of performance required by generally accepted accounting
principles or as an indicator of the Company's operating performance.

(4) Cash earnings represents income (loss) before income taxes and equity in
operations of joint ventures before depreciation and amortization, gain
(loss) on disposal of assets-net, provisions for losses, provision for
writedown of investments and other-net. Cash earnings is included because
it is used by certain investors to measure a company's financial
performance as compared to other companies in the shipping industry. Cash
earnings is not required by generally accepted accounting principles and
should not be considered as an alternative to net income or any other
measure of performance required by generally accepted accounting
principles or as an indicator of the Company's operating performance.

(5) On July 12, 1996, OMI completed a cash tender offer for the purchase at
par of its Senior Notes. Of the $136.9 million aggregate amount of Senior
Notes outstanding, $130.1 million was tendered and $6.8 million remain
outstanding. An extraordinary loss (net of the tax benefit) of
approximately $3 million or $0.10 per share was recorded in the third
quarter for the extinguishment of debt.

(6) As of June 30, 1996, included one vessel which was purchased in July 1996.

(7) Calculations include vessels owned by joint ventures, but do not include
vessels chartered-in.

(8) As of June 30, 1996, the U.S. fleet excluded three vessels which were sold
in August 1996.

(9) Amounts include two vessels on long-term lease until they were purchased in
June 1995 and February 1996.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

The following presentation of management's discussion and analysis of OMI's
financial condition and results of operations should be read in conjunction with
the consolidated financial statements, accompanying notes thereto and other
financial information appearing elsewhere in this Prospectus and in the
Company's Form 10-K and Form 10-Qs, incorporated herein by reference. The
following presentation contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" and elsewhere in this
Prospectus.

General

Overview

The Company is the second largest, measured by dwt, publicly traded bulk
shipping company headquartered in the United States, and provides seaborne
transportation services for crude oil, petroleum products and dry bulk products
(primarily iron ore, coal and grain) in the tanker and dry bulk markets. The
charter rates that the Company is able to obtain for its vessels are determined
in a highly competitive market. Historically, the industry has been cyclical,
experiencing significant swings in profitability and asset values resulting from
changes in the supply of and demand for vessels. The Company's future operating
results will be subject to a number of uncertainties, many of which reflect the
cyclical nature of the industry.

Beginning in the late 1980's, new tonnage was delivered into an improving
tanker market. At the same time, a strong tanker market discouraged scrapping of
older vessels. In 1992, as a result of the increased supply of new tonnage in
the tanker market combined with a global recession, tanker rates declined.
Beginning in mid-1995, rates in the tanker market have been improving as a
result of increased demand due to higher economic growth and low oil
inventories. Management believes rates will continue to improve into 1997,
although there is no assurance this will occur.

Over the past several years the Company has developed a strategy designed
to capitalize on the strengths of OMI, the compelling industry dynamics in the
international tanker market and the competitive advantages of operating large
and concentrated fleets. The Company has been implementing several key strategic
initiatives, including (i) refocusing its operations from the U.S. flag domestic
market to the international tanker market; (ii) developing large and
concentrated fleets of Suezmax tankers and product carriers; (iii) reducing
vessel operating and corporate overhead costs by streamlining the U.S. fleet;
(iv) continuing its commitment to the highest quality fleet and management; and
(v) managing the spot versus time charter mix of its vessels.

Results in past years have suffered primarily as a result of the decline in
net voyage revenues earned by the U.S. flag fleet, impairment charges for
vessels and the weak international rate environments for tankers. The main
factor keeping the Company from profitable operations was a decline in net
voyage revenues, which equals voyage revenues minus vessel and voyage expenses.
The reduction in net voyage revenues is primarily attributable to U.S. flag
operations. Since 1994, U.S. flag operations have generated insufficient voyage
revenue to cover its operating costs and contribute to debt service. In 1994,
losses were compounded by provisions for losses for the impairment of vessel
values and the impairment reserve of the lease obligation. The Company has sold
U.S. flag assets which were not profitable and applied the proceeds to the
repayment of debt. Consequently, the Company will not continue to incur losses
from the operation of these vessels. Interest expense has also been a
significant factor in the Company's losses. Management intends to reduce
interest expense in the future through application of a portion of the proceeds
of the public offering to lessen debt and through the sale of assets which are
not strategic to the Company's operations.

Specifically, U.S. results were adversely affected by the lay up status
of the OMI Columbia and unprofitable operations of the OMI Hudson and the OMI
Dynachem. After being in lay up for a significant amount of time from 1993-1995,
the OMI Columbia, OMI's largest domestic vessel, began operating under a
long-term charter which expires in December 2002. In August 1996, the OMI Hudson
and OMI

<PAGE>

Dynachem were disposed of in a transaction with Hvide. The Company has evaluated
whether it would be benefited by reflagging its operating U.S. flag vessels and
has concluded that it would not be. Existing time charters which require U.S.
flag registry, difficulties of obtaining the requisite U.S. Maritime
Administration approvals and the advanced age of the vessels make them more
valuable in U.S. flag than in foreign flag.

Operating results improved in 1996 for OMI's 83 percent owned subsidiary,
OMI Petrolink Corporation ("Petrolink"), a major provider of lightering services
to tankers importing crude oil into the Gulf of Mexico. In 1995, increased
competition in the lightering business caused a decrease in both volume and
rates which resulted in operating losses. The Company reduced the number of
vessels it charters from six to three, renegotiated the rates paid for the ships
it charters-in and increased utilization of its supply boats, resulting in a
profit for the six months ended June 30, 1996. On September 30, 1996, Petrolink
sold three supply boats to Trico Marine Services for $11.6 million in cash.

As part of its effort to return itself to profitability, management has
developed a program to be implemented over time to reduce its overhead and
vessel operating costs. In 1994, management instituted a voluntary separation
program which reduced staff personnel and associated benefits; management has
reduced or eliminated annual increases in compensation and benefit programs and
has required employee contributions to pension and health programs. The Company
anticipates there will be ongoing efforts to reduce administrative costs through
staff reductions and less dependency on vendors. The Company has recently
negotiated a multi-year insurance program for general insurance, which will
lessen future increases.

Vessel operating costs are primarily composed of wages, insurance and
vessel stores. Insurance premiums for vessels were recently fixed for three
years which will lessen increases in future payments. The Company has negotiated
a contract with its union personnel which reduces the rate of wage escalation
from 1996 through 1999. The Company is currently evaluating programs to reduce
vessel stores and inventory expense. Operating costs are affected by the
vessels' trading patterns. The Company believes its actions have reduced the
rate of escalation in its operating costs.

The Company operates its tankers in markets that have historically
exhibited seasonal variations in demand. Typically, rates in the tanker market
increase in the third and fourth quarters due to increases in demand for oil.
The Company's revenues have historically been weaker during its second quarter.

Results of Operations

Results of operations of OMI include operating activities of the Company's
domestic and foreign vessels. The discussion that follows explains the Company's
operating results in terms of net voyage revenue, because fluctuations in voyage
revenues and expenses occur based on the nature of a charter. The Company's
vessels currently operate, or have operated in prior years, on time, bareboat or
voyage ("spot") charters. Each type of charter denotes a method by which
revenues are recorded and expenses are allocated. Under a time charter, revenue
is measured based on a daily or monthly rate and the charterer assumes certain
operating expenses, such as fuel and port charges. Under a bareboat charter, the
charterer assumes all operating expenses. The revenue rate is likely to be lower
than a time charter since the costs are assumed by the charterer. Under a voyage
charter, revenue is calculated based on the amount of cargo carried, most
expenses are for the shipowner's account and the length of the charter is one
voyage. Revenue may be higher in the spot market as the owner is responsible for
most of the costs of the voyage. Other factors affecting net voyage revenue for
voyage charters are waiting time between cargoes, port costs, fuel price and
consumption.

Vessel expenses included in net voyage revenue discussed above include
operating expenses such as crew payroll/benefits/travel, stores expense,
maintenance and repair expense, drydock expense, insurance expense and
miscellaneous vessel expenses. These expenses are a function of the fleet size,
utilization levels for certain expenses and requirements under laws, by
charterers and Company standards. Insurance expense varies with the overall
insurance market conditions as well as the insured's loss record, level of
insurance and desired coverage.

Six Months Ended June 30, 1996 versus June 30, 1995

Voyage Revenues less Vessel and Voyage Expenses. Net voyage revenues of
$29.6 million for the six months ended June 30, 1996 increased $15.4 million or
108 percent as compared to net voyage

<PAGE>

revenues of $14.2 million for the six months ended June 30, 1995. The net
increase was primarily attributable to the U.S. flag fleet, which accounted for
$12.6 million of the increase. Net increases in 1996 domestic operations
primarily resulted from the following: (i) the OMI Columbia operated on a time
charter in 1996 at higher rates with no offhire days compared to 71 idle days in
the first six months of 1995, (ii) two vessels, the Patriot and the Courier, are
currently operating on time charters with the U.S. Military Sealift Command
("MSC"); in 1995 these vessels were offhire an aggregate of 107 days while in
drydock in preparation for these long-term charters, (iii) the OMI Star was
purchased in June 1995, thus eliminating expenses of chartering-in this ship,
(iv) the Platte earned more revenue in 1996 due to 42 more operating days in
1996 compared to 1995 (however, the vessel has still incurred losses in 1996)
and (v) results of operations of Petrolink improved in 1996. Increases in
domestic operations were offset in part by decreases in net voyage revenue which
had been contributed by two dry bulk carriers that were sold in the first
quarter of 1996.

Net increases of $2.8 million in 1996 foreign net voyage revenues resulted
from improved international market conditions primarily in the crude oil market.
Increases in revenue were offset, however, by increases in fuel expenses as
compared to the first half of 1995. Other increases in foreign net voyage
revenue were from revenue generated from a product carrier acquired in November
1995. Increases in foreign net voyage revenue were offset in part by decreases
in net voyage revenue resulting from the sale of a vessel in June 1995.

Other Income. Other income consists primarily of management fees and
dividend income earned on investments. During the six months ended June 30,
1996, other income increased $742,000 or 26 percent to $3.6 million from $2.9
million for the same period in 1995. The increase in 1996 was primarily from
fees received from the U.S. Government for the management of ten vessels in 1996
versus six vessels in 1995. Increases were offset in part by decreases in
management fees from two joint ventures, one of which is currently being managed
by OMI's joint venture partner and the other of which is being managed by a
contracted technical manager.

Other Operating Expenses. The Company's operating expenses, other than
vessel and voyage expenses and provision for losses, consist of depreciation and
amortization, operating lease expense and general and administrative expenses.
For the six months ended June 30,1996, these expenses decreased an aggregate of
$3.5 million or 13 percent. The primary reason for the decrease was the
reduction of operating lease expense of $2.2 million after the purchase of the
OMI Hudson from its lessor in February 1996. Depreciation expense declined by
$945,000 as a result of the disposal of two dry bulk carriers in 1996, the
disposal of a vessel in June 1995 and the writedown of the carrying value of two
vessels in December 1995 to recognize impairment losses. The decreases in
depreciation expense were offset, in part, by depreciation on two vessels
acquired in 1995 and depreciation on the OMI Hudson. Decreases in general and
administrative expenses of $384,000 include a decline in employee salaries and
benefits of approximately $568,000 for a charge for employees electing to
terminate their employment under a voluntary severance program in the first
quarter of 1995. Such decreases were offset in part by increases in professional
fees for legal and consulting services.

Other Income (Expense). Other income (expense) consists of gain on disposal
of assets-net, provision for writedown of investments, interest expense,
interest income, minority interest in (income) loss of subsidiary and other-net.
The net decrease of $3.6 million or 66 percent in net other expense for the six
months ended June 30, 1996 compared to the same period in 1995 was primarily due
to the decrease in gain on disposal of assets. In 1995, 2,503,389 shares of
Noble Drilling Corporation ("Noble") stock were sold for a gain of $7.8 million
which was offset by the loss on sale of a foreign vessel in June 1995 of $1.4
million. A gain of $3.7 million was recorded in 1996 for the sale of a vessel in
June. Interest expense increased $377,000 or three percent due to interest
related to drawdowns on lines of credit aggregating $23 million during the six
months ended June 30, 1996. An additional increase in net other expense was due
to an increase in minority interest in Petrolink, corresponding to the improved
operating results for that company in 1996.

Benefit for Income Taxes. The benefit for income taxes of $367,000 and $5.2
million for the six months ended June 30, 1996 and 1995, respectively, varied
from statutory rates primarily because deferred taxes are not recorded for
equity in operations of joint ventures, net of dividends declared, other

<PAGE>

than Amazon Transport, Inc. ("Amazon") and White Sea Holdings, Ltd. ("White
Sea") as management considers such earnings to be invested for an indefinite
period.

Equity in Operations of Joint Ventures. Equity in operations of joint
ventures of $1.1 million decreased $3.5 million for the six months ended June
30, 1996 from $4.6 million for the same period in 1995. The net decreases were
primarily attributable to three joint ventures. One 49.9 percent joint venture,
Geraldton Navigation Company Inc. ("Geraldton") sold a vessel in the first half
of 1995. OMI's portion of the gain was $990,000. Amazon, a 49 percent owned
joint venture, operates one vessel which was offhire due to drydocking an
aggregate of 87 days during the six months ended June 30, 1996. In June of 1996,
OMI recorded a loss of $867,000 related to the sale of a vessel by Mosaic
Alliance Corporation ("Mosaic"), a 49.9 percent owned joint venture.

Year Ended December 31, 1995 versus December 31, 1994

Voyage Revenues less Vessel and Voyage Expenses. Net voyage revenues of
$24.4 million for the year ended December 31, 1995 decreased $19.8 million or 45
percent as compared to the year ended December 31, 1994. The net decrease was
primarily attributable to the U.S. flag fleet, which accounted for $13.2 million
of the decline. The net decline in the foreign fleet was $6.6 million.

The reasons for the decline in the performance of the U.S. fleet varied:
(i) Petrolink earned approximately $4.7 million less net voyage revenue in 1995
as compared to 1994 due to depressed conditions and increased competition in the
lightering market in the Gulf of Mexico; (ii) three vessels which had
contributed $2 million in net voyage revenue in 1994 were sold to another U.S.
shipowner in 1994; (iii) drydock expenses were greater than anticipated for four
vessels; (iv) the U.S. Government program ("PL480") under which the U.S.
Government sells or donates grain for export to developing countries was
curtailed; and (v) business opportunities for the OMI Columbia were limited and
unprofitable.

Net voyage revenues for three domestic dry bulk carriers were down
approximately $2.3 million due to the decline in the PL480 program. As the U.S.
dry bulk market declined, the foreign dry bulk market rose creating an
opportunity to sell the vessels in the foreign market. Consequently, the OMI
Missouri was contracted for sale in the fourth quarter of 1995 and the Company
agreed to swap its sister ship, the OMI Sacramento, in January 1996. Both
vessels were delivered in the first quarter of 1996. The third dry bulk carrier,
the Platte, was offhire 114 days in 1994 and 60 days in 1995.

In 1995, seven of the Company's vessels were authorized to share the
benefits of four Operating-Differential Subsidy ("ODS") contracts with the
Marine Subsidy Board of the U.S. Department of Transportation to provide subsidy
for a portion of the difference in the costs of operating a U.S. flag vessel
versus a foreign vessel in foreign trades. Effective July 1, 1995, tanker and
bulker subsidy rates increased from three to twelve percent per vessel over 1994
rates. In 1994, four product carriers operated in foreign markets and received
benefits of ODS. Two of these vessels continued to receive ODS in 1995 and also
achieved slightly better earnings due to improved trading patterns. The other
two product carriers began time charters in April 1995 to MSC and were not
eligible for subsidy after that date. Prior to the commencement of the charters
with MSC, these vessels were in drydock undergoing upgrades for an aggregate of
107 days. When the charters with MSC expired in October 1995, they were replaced
with new charters. The new charters are for a 17 month period and options to
extend the charters for two 17 month periods. The OMI Missouri and OMI
Sacramento were also included in the ODS pool in 1995. The seventh vessel
included in the pool is the OMI Columbia, which was added to the contract in
August 1995, but has not received any subsidy.

The OMI Columbia incurred a significant number of offhire days between 1992
and 1995 after the expiration of a long-term time charter in 1992. In 1994, the
OMI Columbia operated on four consecutive voyage charters in the Alaskan North
Slope ("ANS") trade. In late 1994 and early 1995, the vessel carried dry cargo
under PL480 programs at rates significantly lower than rates that would normally
be earned in the ANS crude oil trade. During the third quarter of 1995, the OMI
Columbia operated under a voyage charter carrying crude oil. The vessel
subsequently went to the yard for drydock and repairs prior to commencing a time
charter. In the latter part of 1995, legislation to eliminate restrictions on
the export of ANS crude oil provided that exports are carried on U.S. flag
vessels, was enacted and export became lawful in late spring of 1996 at which
time the vessel commenced its current employment.

<PAGE>

In 1995, the Company's wholly owned foreign fleet consisted of six crude
oil tankers, ten product carriers and one liquid petroleum gas carrier. The
crude oil sector was primarily responsible for the decrease of $6.6 million in
net voyage revenues between 1994 and 1995. While the average freight rates
increased in the crude markets in 1995, the rates did not exceed the time
charter rates three of the vessels had been earning in 1994. The Company also
incurred significant costs to maintain its crude carriers and meet its
customers' requirements which reduced net voyage revenues. Certain vessels in
the crude oil fleet were offhire for drydocking an aggregate 220 days in 1995 as
compared to an aggregate 43 daysin 1994.

Decreases in net voyage revenue for both the domestic and foreign fleets
were offset in part by increases from revenue generated by seven vessels, five
of which incurred offhire in 1994 for drydocking and earned higher average rates
in 1995 and two vessels which were sold, having incurred operating losses in
1994.

In September 1995, OMI exchanged a crude oil carrier and a product carrier
built in 1982 and 1987, respectively, for two 30,000 dwt product carriers built
in 1990 and 1991. A third product carrier was purchased in November 1995 for $18
million. These transactions were in line with OMI's marketing strategy to expand
its position in small product carriers, while exchanging its older vessels for
younger ones.

Provision for Losses. OMI periodically reviews the book value of its
vessels and its ability to recover the remaining book value of the vessels using
estimated undiscounted cash flows over the remaining life of each vessel. During
its 1995 review, the Company determined that the carrying value of two of its
domestic product carriers operating in the foreign spot market exceeded their
forecasted estimated undiscounted future net cash flows from operations.
Impairment losses of $8.7 million measured by the excess of the vessels'
carrying values over their estimated fair values, based on appraised values from
a ship broker, were recognized as a separate component of operating expenses in
the Consolidated Statements of Operations.

In anticipation of the sale of the OMI Hudson to Hvide, OMI entered into an
agreement with the owner/lessor of the OMI Hudson to terminate the lease and
purchase the vessel. In February 1996, OMI paid cash of $22 million and issued a
$3 million, seven percent convertible note to terminate the lease. The net loss
on the termination of the lease of $6.7 million was reported as a separate item
on the Company's 1995 Consolidated Statements of Operations.

Other Income. During the year ended December 31, 1995, other income
increased $1.9 million or 34 percent as compared to the year ended December 31,
1994. The increase in 1995 was primarily due to an increase in fees received for
the management of vessels for the Ready Reserve Fleet due to the activation of
vessels, as opposed to idle status fees in 1994. Another increase was the
receipt of a rebate of fees related to previous years' technical management of
certain vessels. Increases were offset by a decline in dividends received in
1995 on investments and the absence of management fees from a company for which
OMI provided services until December 31, 1994.

Other Operating Expenses. For the year ended December 31, 1995, other
operating expenses decreased an aggregate of $8.2 million or 13 percent. The
primary reason for the decrease was a reduction in depreciation expense of $3
million, resulting principally from the sale of three domestic vessels during
the third quarter of 1994 and the sale of another vessel in June 1995. The
decrease in operating lease expense of $1.5 million was attributed to the
impairment loss of $19.8 million on an operating lease obligation recorded in
December 1994. Decreases in general and administrative expenses of $3.7 million
or 19 percent include a decline in employee benefits compared to 1994, primarily
due to ESOP expense, decreases in professional fees and minor reductions in
various other expense categories compared to 1994.

Other Income (Expense). The net decrease of $228,000 in Net other expense
for the year ended December 31, 1995 compared to the same period in 1994 was
primarily due to an increase of $5 million due to the gain on sales of Noble
stock in 1995, the decrease in interest expense of $2.1 million in connection
with the repayment of outstanding debt, an increase in Other-net of $1.2 million
due to an increase in the net gain on repurchases of Senior Notes in 1995
compared to the net gain on repurchases of Senior Notes in 1994 offset by losses
incurred on early termination of other debt, and a net decrease in the provi-

22
<PAGE>

sion for writedown of investments of $1.3 million, which was a nonrecurring
charge for thesettlement of a joint venture investment recorded in 1994. These
decreases in Net other expense were offset by decreases in Gain on disposal of
assets-net due primarily to the loss on the sale of a foreign vessel of $1.4
million in June 1995, the loss on sale of a domestic vessel of $1.9 million in
December 1995 and the $7.2 million gain on sale of three domestic vessels in
July 1994.

Benefit for Income Taxes. The benefit for income taxes of $19 million for
the year ended December 31, 1995 varied from statutory rates primarily because
deferred income taxes are not recorded for equity in operations of joint
ventures, net of dividends declared, other than Amazon and White Sea, as
management considers such earnings to be indefinitely invested. The Company
plans to carryback its current net operating loss to prior years for a refund of
previously paid federal income taxes.

Equity in Operations of Joint Ventures. Equity in operations of joint
ventures increased $126,000, from $5.4 million as of December 31, 1994, to $5.5
million as of December 31, 1995. The net increases were primarily attributable
to two joint ventures. One 49.9 percent joint venture sold a vessel in the first
half of 1995; OMI's portion of the gain was $990,000. Another 49.9 percent joint
venture operates three of its four vessels in marketing pools which were more
profitable in 1995 in comparison to 1994 and the fourth vessel operated in the
spot market in 1995 at a better average rate than 1994. Increases were offset in
part by decreases in the earnings of two 49 percent owned joint ventures. One
joint venture earned less on one of its vessels than its 1994 time charter. The
same vessel was offhire 34 days due to drydocking. The vessel in the other joint
venture earned less revenue and incurred higher technical expenses in 1995.

Year Ended December 31, 1994 versus December 31, 1993

Voyage Revenues less Vessel and Voyage Expenses. Net voyage revenue of
$44.2 million for the year ended December 31, 1994 decreased $11.8 million or 21
percent compared to the year ended December 31, 1993. The decrease was primarily
attributable to the U.S. flag fleet, which accounted for $14.4 million of the
net decline in revenues. This decline was offset by $2.5 million in net
increases earned by the foreign fleet. Decreases in domestic net voyage revenue
included less revenue earned by three dry bulk carriers, which had been
operating under PL480 programs but had substantially less cargo available in
1994 compared to the tonnage available in 1993. Three vessels built in 1969 were
sold in July 1994, resulting in 213 less operating days as compared to 1993.
Decreases were offset by a modest improvement in the earnings of the OMI
Columbia in 1994 as compared to 1993, when the vessel was laid-up for 288 days.

Increases in foreign net voyage revenues were primarily the result of the
purchase of two crude oil tankers in December 1993. These vessels were on
bareboat charters generating a steady inflow of revenues from the time they were
purchased until the charters terminated in July and August 1994, at which time
the vessels entered the spot market. Additional increases in net voyage revenues
resulted from three profitable time charters, one of which continued from 1993
at a higher rate in 1994; the other two were for vessels previously in the spot
market.

Other Income. During the year ended December 31, 1994, other income
increased $740,000 or 16 percent as compared to 1993. The increase in 1994
consists of dividend income received from a five percent owned investment in a
company, insurance premiums collected from affiliates and increased fees to
manage vessels in the Ready Reserve Fleet.

Other Operating Expenses. For the year ended December 31, 1994, other
operating expenses increased $4.3 million or seven percent. Depreciation expense
increased seven percent due to the shortening of the lives of six domestic
vessels and the purchase of four vessels, offset by the sale of three vessels
sold in July 1994. General and administrative expenses increased 13 percent,
primarily due to costs associated with closing an office overseas and severance
agreements. Other operating loss in 1994 includes impairment losses of $14.8
million on a chemical/product carrier and $19.8 million on the lease obligation
of the OMI Hudson.

Other Income (Expense). The decrease in net other expense of $435,000 or
two percent for the year ended December 31, 1994 over the same period in 1993 is
due to the sale of three domestic vessels in July 1994 for a net gain of $7.2
million, compared with gains from the sales of workboats and marketable
securities in 1993. Interest expense increased in 1994 by $7 million due to
interest expense relating to the
23

<PAGE>

Senior Notes, of which $160.7 million were outstanding at December 31, 1994.
Interest income increased $1.1 million because of interest earned on invested
proceeds of the Senior Notes.

Benefit for Income Taxes. The benefit for income taxes of $22.3 million for
the year ended December 31, 1994 varied from statutory rates primarily because
deferred income taxes are not recorded for the equity in operations of joint
ventures other than for Amazon and White Sea.

In 1993, Congress passed the Omnibus Budget Reconciliation Act of 1993 (the
"Act") which increased OMI's corporate tax rate from 34 percent to 35 percent. A
retroactive provision of $3 million for deferred income taxes was made in 1993
to comply with the provisions of the Act.

Liquidity and Capital Resources

Cash Flows

Cash and cash equivalents of $17.3 million decreased $15.3 million or 47
percent at June 30, 1996 from the balance of $32.6 million at December 31, 1995.
The Company's working capital of $(12.9) million at June 30, 1996 decreased
$10.2 million from $(2.7) million at December 31, 1995. The primary reasons for
the decline in working capital were the purchase of the OMI Hudson, the
repurchase of $14.1 million of Senior Notes in the first quarter and prepayment
of outstanding debt of $7.5 million for a vessel delivered in an exchange
transaction.

For the six months ended June 30, 1996, net cash used by operating
activities was $13.2 million which was an increase of $5.9 million compared to
net cash used by operating activities of $7.3 million for the six months ended
June 30, 1995. The primary cause of the increase in cash used was the payment of
$22 million as part of the $25 million lease termination fee for the OMI Hudson.

A component of cash used by operating activities is cash used for advances
to joint ventures. Such advances, which can be large, support operating
activities that occur in the normal course of business. These advances are
repaid periodically. The Company has received dividends aggregating $368,000 in
the first six months of 1996, $539,000 in 1995, $2.5 million in 1994 and $11.8
million in 1993 from certain joint ventures. Most joint venture earnings are
considered to be invested for an indefinite period and are not available for
distribution, and there is no certainty that the joint ventures, the earnings of
which are not considered to be indefinitely invested, will have sufficient
earnings to pay dividends in the future. Therefore, the Company cannot rely on
dividends or loans from its joint ventures to improve its liquidity.
The Company operates in a capital-intensive industry and augments cash
generated by operating activities with debt in order to purchase ships. For the
six months ended June 30, 1996, sources of liquidity, other than from operating
activities, were primarily proceeds of $29.6 million from the sale of two
vessels and proceeds of $23 million drawn on three lines of credit. The primary
uses of cash, other than for operating activities, during the six months ended
June 30, 1996 were for payments of $44.3 million on long-term debt (which
includes $13.1 million for repurchases of Senior Notes and $20.5 million in debt
prepayments for vessels disposed of), the purchase of the OMI Hudson for cash of
$9.3 million (for which Hvide also assumed $19.8 million in related debt) and
other capital expenditures for improvements on vessels aggregating $1.2 million.

Financing Facilities

In July 1996, OMI repurchased $130.1 million aggregate principal amount of
its Senior Notes in a cash tender offer as part of a plan to refinance portions
of the Company's long term indebtedness in order to reduce its interest expense
and to eliminate the restrictive covenants in the Senior Notes. As a result of
the tender offer, only $6.8 million principal amount of the Senior Notes remains
outstanding. An extraordinary charge (net of the tax benefit) of approximately
$3 million or $0.10 per share will be recorded in the third quarter for the
extinguishment of debt.

To fund the purchase of its Senior Notes, finance the purchase of a vessel
and refinance secured indebtedness on two vessels and certain other
indebtedness, the Company signed the $167.8 million Credit Agreement with DnB
and NedShip as co-arrangers. The Credit Agreement requires two repayments of
$7.5 million of principal in January 1997 and July 1997, with the balance of the
principal due in January 1998. As of September 15, 1996, the Company had $160.9
million outstanding under the Credit Agreement. The Credit Agreement bears
interest at a rate of LIBOR plus 1 3/4% until December 31, 1996,

<PAGE>

when the rate increases to LIBOR plus 2 1/2% unless OMI has made aggregate
principal repayments of at least $67.5 million on or before such date.

The Credit Agreement is secured by first priority mortgages and assignment
of earnings on 12 vessels, second priority mortgages on six other vessels and a
first priority pledge of the Company's equity ownership interests in Petrolink,
Amazon, Wilomi and White Sea. Further, OMI's equity ownership interests in
Mosaic and Geraldton may not be pledged to secure other borrowings. The Credit
Agreement imposes operating and financial restrictions on the Company which
affect, and in many respects significantly limit or prohibit, the ability of the
Company to, among other things, incur additional indebtedness, create liens,
sell capital stock of subsidiaries or certain other assets, make certain
investments, engage in mergers and acquisitions, make certain capital
expenditures or pay dividends.

The Company is required to repay its Credit Agreement in full within 120
days after the closing of the Offerings. After giving effect to the proposed
reduction in borrowings under the Credit Agreement using the proceeds of the
Offerings, the Company will still be unable to satisfy its repayment obligations
under the Credit Agreement using its available cash, and will be required to
refinance the borrowings that remain outstanding or to sell assets to meet its
obligations. In addition, the Company also expects its vessel acquisition
program to require significant amounts of additional capital. The Company has
undertaken discussions with its lead lenders to refinance the Credit Agreement
on more favorable terms and to fund the Company's proposed vessel acquisition
program. While no binding commitments exist, discussions with two leading
finance banks have indicated that they will support the Company in the
refinancing of its existing credit facilities and the financing of a new
construction program. The banks have also indicated that the Company's debt
reduction program through the sale of assets and reduction of operating costs
will result in more favorable credit terms. While the Company believes that the
strengthening of its balance sheet through the Offerings will make it possible
for the Company to borrow sufficient capital to refinance the Credit Agreement
and fund its proposed vessel acquisition program, there can be no assurance that
the Company will have the ability to borrow the amounts it requires on
attractive terms or at all.

In addition to the Credit Agreement, the Company also has a revolving
credit/term loan agreement providing for up to $37 million in borrowings, under
which $35 million was outstanding at June 30, 1996.

In August 1996, OMI received approximately $30 million in cash for the sale
of the three chemical carrier vessels and its interest in Ocean Specialty
Tankers Corporation ("OSTC") to Hvide. Of the cash proceeds, $12.8 million was
placed in an escrow account for use in acquiring another vessel. Hvide also
assumed $34.7 million of debt, which had been secured by mortgages on two of the
vessels. Approximately $8 million of the cash received was used to repay a
portion of the Credit Agreement described above.

The Company believes that the actions it has taken in the last 12 months to
improve its liquidity and financial position will, along with the consummation
of the Offerings, give the Company greater financial flexibility and permit it
to borrow sufficient additional capital to refinance the Credit Agreement, fund
its vessel acquisition program and finance its other cash needs.

If additional financing were not to be available, the Company could be
forced to renegotiate the terms of the Credit Agreement and to curtail its
vessel acquisition program.

Commitments

OMI and a joint venture partner have committed to construct a Suezmax
vessel being built in the People's Republic of China for a cost of approximately
$56 million. The vessel is scheduled to be delivered in 1996. OMI holds a 49%
equity interest in the joint venture entity.

OMI acts as a co-guarantor for a portion of the debt incurred by joint
ventures with affiliates of two of its joint venture partners. The portion of
debt guaranteed by the partners was approximately $86.6 million at June 30,
1996, with OMI's share of such guarantees being approximately $42.6 million.

The Company and its joint venture partners have committed to fund any
working capital deficiencies that may be incurred by their joint venture
investments. At June 30, 1996, no such deficiencies have occurred which have
required funding.

<PAGE>

construction are dependent upon the successful completion of the Offerings. Each
new Suezmax tanker will cost between $50 and $55 million.

Effects of Inflation

The Company does not consider inflation to be a significant risk to the
cost of doing business in the current or foreseeable future. Inflation has a
moderate impact on operating expenses, drydocking expenses and corporate
overhead.

BUSINESS

The Company

Overview

OMI is one of the world's premier shipowners and is recognized as an
industry leader for the quality of its fleet and operations. The Company is the
second largest publicly traded bulk shipping company headquartered in the United
States, measured by dwt. The Company provides seaborne transportation services
for crude oil, petroleum products and dry bulk products (primarily iron ore,
coal and grain). Its customers include major independent and state-owned oil
companies, major oil traders, government entities and various other entities.
Its vessels, operating procedures and office management have been audited and
approved by numerous customers and the Company has received certification by Det
Norske Veritas, one of the world's leading vessel classification societies.

Certain statistical and graphical information contained in this Prospectus
is drawn or calculated from Fearnleys A.S. database and other sources. While the
Company has no reason to believe that such information is inaccurate in any
material respect, readers of this Prospectus are advised that some information
in such databases is based on estimates or subjective judgments.

International Fleet

The Company's international fleet consists of 25 foreign flag vessels
aggregating approximately 2.3 million dwt. The foreign flag fleet includes seven
Suezmax tankers, twelve product carriers, three dry bulk carriers, one ULCC, one
Aframax crude oil tanker and one LPG carrier. The Company also charters in four
crude tankers. An additional Suezmax tanker newbuilding will be delivered in
1996 to a 49% owned joint venture. The Company is focused on building its
leadership position in both Suezmax tankers and product carriers.

The Company's Suezmax tanker fleet is one of the largest independent fleets
in the world. The Suezmax tankers principally trade from West Africa to the U.S.
Atlantic coast and from the North Sea to the U.S. Atlantic coast. The Company
believes that its Suezmax tankers are among some of the better constructed and
maintained vessels in the industry. Since 1993, the Company has invested $19.1
million in its Suezmax fleet for maintenance and capital improvements.

The Company owns eight Handysize product carriers, three Panamax product
carriers and a large crude/product carrier with a total of 537,221 dwt. An
additional 1991-built Handysize product carrier will be delivered to the Company
in 1996. The product carrier fleet operates worldwide, with the majority now
trading in the Caribbean to the U.S. Atlantic coast and the U.S. Gulf. The
Company's Handysize product carrier fleet is one of the largest in the world.
The Handysize vessels are ideally suited to trade in the U.S. eastern seaboard
due to vessel cargo size and dimensions. The Company believes its product
carrier fleet is one of the younger and more efficient in the industry. See
"--The Company's Fleet."

U.S. Flag Fleet

The U.S. flag fleet consists of six vessels aggregating 0.3 million dwt.
One of these vessels, a Suezmax tanker, is on long-term time charter to a major
oil company. In addition, the Company owns four Handysize product carriers built
in the mid-1970's, of which two are on time charter to the Military Sealift
Command, one vessel is on a short-term time charter and one vessel is under
contract to be sold. The Company's dry bulk carrier is laid-up. See "--The
Company's Fleet."

OMI Petrolink

The Company owns 83% of OMI Petrolink Corp. ("Petrolink"), a major provider
of lightering services to tankers importing crude oil into the Gulf of Mexico.
Independent providers of lightering services are play-

26
<PAGE>

ing an increasingly important role in the Gulf oil trade. With the decline in
domestic oil production and the complementary increase in imported oil,
Petrolink's business has grown and in 1995 had revenues of $57.3 million.
Petrolink owns and operates five workboats and one crewboat, some of which also
service the offshore drilling industry when not engaged in lightering service.
Spot rates in the offshore drilling service have increased markedly in 1996,
adding to Petrolink's profitability.

OMI Ship Management

The Company's wholly owned subsidiary, OMI Ship Management, Inc., provides
technical services to the U.S. Maritime Administration for ten vessels in the
U.S. Government's Ready Reserve Fleet Program under multi-year contracts. From
time to time, OMI Ship Management also manages vessel conversion contracts for
various U.S. government agencies.

The International Tanker Market

Overview

International demand for oil tanker tonnage has been increasing more
quickly than available supply. From 1990 to 1995, ton-mile demand in the tanker
market increased at a compound annual growth rate of 3.6% while tanker supply
has grown at 1.2%. Since year end 1993, tanker supply has shrunk due to (i)
increased scrapping as a result of fleet aging and increasingly stringent
environmental regulations (as of June 30, 1996, approximately 34.3% of the
world's tanker supply was built in or prior to 1976), and (ii) diminished
newbuilding orders (newbuilding orders for delivery over the next few years
equal a relatively low 6.3% of the current worldwide fleet). Additionally, the
ability to accelerate the rate of tanker newbuilding is believed to be inhibited
by limited shipyard capacity due to construction commitments for other types of
vessels. This relative decrease in ship supply, coupled with the strength of the
world economy, the resultant growth in demand for oil and the continued focus of
governments and charterers on safe, high-quality modern tonnage should lead to a
significantly stronger freight rate environment in the future.

Background

International seaborne oil and petroleum products transportation services
are provided by two main types of operators: major oil company captive fleets
(both private and state-owned) and independent shipowner fleets. Both types of
operators transport oil under short-term contracts (including single-voyage
"spot charters") and long-term time charters with oil companies, oil traders,
petroleum product producers and government agencies. The oil companies own, or
control through long-term time charters, approximately one-third of the current
world tanker capacity, while independent companies own or control the balance of
the fleet. The oil companies use their fleets not only to transport their own
oil, but also to transport oil for third party charterers in direct competition
with independent owners and operators in the tanker charter market. The seaborne
oil transportation business is fragmented, with no owner owning as much as 3% of
the world tanker fleet tonnage.

A significant and ongoing shift toward quality in vessels and operations
has been taking place in the tanker industry over the past several years as
charterers and regulators increasingly focus on safety and protection of the
environment. The oil transportation industry has historically been subject to
regulation by national authorities and through international conventions;
however, since 1990 there has been an increasing emphasis on environmental
protection through legislation and regulations such as OPA, IMO protocols and
Classification Society procedures, demanding higher-quality tanker construction,
maintenance, repair and operations. In addition, oil companies acting as
charterers, terminal operators, shippers and receivers are becoming increasingly
selective in their acceptance of tankers, inspecting and vetting both vessels
and companies on a periodic basis. Although such changes raise the cost and
potential liabilities of vessel owners and operators, they also raise the
barriers to entry and accentuate the strengths of shipowners with quality fleets
and operations. Management believes that the increasingly stringent regulatory
environment and emphasis on quality relating to environmental protection will
accelerate the obsolescence of older, poor-quality tankers and provide a
competitive advantage to modern and well maintained older tankers with
high-quality management. See "--Regulation," "--Crewing and Staff," "--The
Company's Fleet."

In order to benefit from economies of scale, tanker charterers will
typically charter the largest possible vessel to transport oil or products,
consistent with port and canal dimensional restrictions and optimal

<PAGE>

cargo lot sizes. The tanker fleet is generally divided into the following six
major types of vessels, based on vessel carrying capacity: (i) Ultra Large Crude
Carriers ("ULCCs") of approximately 300,000 dwt or more; (ii) Very Large Crude
Carriers ("VLCCs") of approximately 200,000 to 300,000 dwt; (iii) Suezmax size
range of 120,000 to 160,000 dwt; (iv) Aframax size range of approximately 70,000
to 120,000 dwt; (v) Pan-amax size range of 50,000 to 70,000 dwt; and (vi) small
tankers of less than approximately 50,000 dwt. ULCCs and VLCCs typically
transport crude oil in long-haul trades, such as from the Arabian Gulf to
Rotterdam via the Cape of Good Hope. Aframax size vessels engage in both medium-
and short-haul trades and carry crude oil or petroleum products. Panamax size
tankers and smaller tankers mostly transport petroleum products in short-haul to
medium-haul trades.

Suezmax tankers, the Company's main vessel class size, are capable of
carrying 1.0 million barrel lots of crude oil. Such tankers are flexible and
they engage in long-haul crude oil trades as well as in medium-haul crude oil
trades, such as from West Africa or the North Sea to the U.S. East Coast. Due to
demand for oil and to local port restrictions on vessel size, the United States
is by far the largest Suezmax market. Suezmaxes can load cargo at virtually all
major load areas in the world. VLCCs, though physically capable of loading in
most areas, are generally too large to carry efficiently the cargoes offered.
For example, in West Africa and the North Sea, where oil is sold in million
barrel lots (which normally matches storage capacity), a VLCC requires two such
lots, which would mean multiple charterers or additional stops for loading,
which normally inhibits charterers from utilizing VLCCs in these areas. At
mid-1996, the Suezmax tanker fleet trading in the international markets totaled
232 vessels of approximately 32.5 million dwt, or 12.3% of the world tanker
fleet (excluding 27 vessels aggregating about 3.5 million dwt which were built
specifically for the U.S. and Norwegian Coastal trades and which most likely
will not enter the international tanker trades). A survey of Suezmax tanker
employment at year-end 1995 shows that approximately two-thirds of the Suezmax
tanker fleet (excluding the U.S. and Norwegian Coastal trades) was employed in
the Atlantic/Mediterranean basin. The Company is one of the largest operators of
Suezmax tankers in the Atlantic basin.

Supply

The world supply of tankers is decreasing and the tanker orderbook for
delivery over the next few years is at the lowest level since the late 1980's.
The supply of tankers is reduced by scrapping, aging, and reduction of tonnage
due to regulation, and is increased by new vessel deliveries. Supply is further
affected by the operating efficiency of the existing fleet.

Scrapping. In calendar 1994, tanker supply decreased for the first time
since 1987 as tanker deletions exceeded deliveries by 3.6 million dwt. After a
substantial decrease of the world tanker fleet, down by 31% in the late 1970's
to 1987 period, improved tanker market conditions beginning mid-1986
precipitated substantial vessel contracting activity and reduced scrappings to
very low levels. As a result, the world tanker fleet increased by 36.6 million
dwt, or an annual compounded growth rate of 2.5% in the 1988-93 period. Since
the decline in charter rates in 1992 and the emergence of a more stringent
environmental regime, the scrapping of older tonnage has accelerated. Since
1993, the world tanker supply has experienced a net decrease of 2.3 million dwt
and currently stands at 263.2 million dwt.

<PAGE>

World Tanker Fleet

[The following table was represented as a line graph in the printed material]

Million Dwt

Year Total
End Tankers
--- -------
80 324.7
81 320.2
82 300.9
83 280.3
84 264.5
85 239.3
86 233.0
87 228.9
88 232.1
89 239.4
90 246.4
91 255.5
92 260.5
93 265.5
94 261.9
95 261.4
6/96 263.2

Note: At Period-End
Source: Fearnleys, Oslo.

Aging. The protracted worldwide tanker depression through most of the
1980's left the tanker industry with an aging fleet despite an increased amount
of newbuilding deliveries and the moderate level of scrappings since 1987. At
June 30, 1996, the average age of the world tanker fleet was 13.2 years, and
51.6% and 34.3% of the total tonnage was 15 and 20 years old or older,
respectively. In particular, the average age of the Suezmax tanker fleet was
12.8 years, and 51.1% and 36.6% of the fleet was 15 and 20 years old or older,
respectively.

Suezmax Tanker Fleet Age Distribution

[The following table was represented as a bar graph in the printed material]

AGE DISTRIBUTION OF THE SUEZMAX TANKER FLEET

(Percent as of 6/30/96)

0-4 5-9 10-14 15-19 20+ TOTAL
--- --- ----- ----- --- -----

SUEZMAX (%) 24.9 21.5 2.5 14.5 36.6 100.0

Note: As of June 30, 1996. Excludes vessels built for the U.S. and Norwegian
coastal trades.

Source: Information derived by OMI from data supplied by Lloyd's Shipping Index,
Essex, England and Clarkson Research Studies, London.

<PAGE>

International regulations require that tankers undergo a Special Survey
every five years by an independent Classification Society. Such a survey is
necessary to certify a vessel "in class" in order to continue to trade. Because
the cost to maintain a vessel in good condition increases substantially as the
vessel becomes older, especially in the current environment of increased
government and customer emphasis on safety and quality, and because the cost
usually associated with the fourth or fifth Special Survey could be significant,
owners often decide to scrap a vessel that is 20 to 25 years old. In addition,
regulatory changes will have an important impact on whether or not owners will
scrap vessels before the fifth Special Survey. Currently, there are 59 Suezmax
tankers, or about a quarter of the total which should go through their fourth
Special Survey through 1998. Furthermore, about 48% of the total should go
through their fifth Special Survey through the year 2002.

Five of the Company's Suezmax tankers are due to undergo their fifth
Special Survey in 1999 or 2000; however, the Company has invested substantially
to bring its older foreign flag Suezmax vessels up to a higher standard. Three
of these Suezmaxes have received approval from the Norwegian national oil
company ("Statoil") after completing an extensive inspection and enhancement
process. Statoil approval enables Suezmax vessels to trade in the North Sea and
distinguishes the Company's vessels from a large block of tonnage not maintained
to the same high standard. The Company will need to replace its older Suezmax
tankers at the end of their useful economic lives. As part of its fleet
replacement program, the Company has entered into a letter of intent with a
prominent shipyard to construct new Suezmaxes and continuously seeks to purchase
high quality secondhand Suezmaxes. See "Use of Proceeds."

Regulation. Regulations promulgated under the Oil Pollution Act of 1990
("OPA") and by the International Maritime Organization (the "IMO") will have the
effect of reducing available tonnage by either requiring operators to retire
vessels or reduce their carrying capacity to comply with these environmental
regulations. One IMO regulation, for instance, mandates that after mid-1995
existing single hull crude oil tankers larger than 20,000 dwt and product
carriers over 30,000 dwt without segregated ballast tanks ("SBT") must convert
to SBT operations using at least 30% of their wing tanks, or cargo tank bottom
area, for this purpose or reduce capacity by age 25. The Company believes that
these regulations will reduce the amount of available tonnage. See
"--Environmental Regulation."

New Vessel Deliveries. The tanker orderbook for delivery over the next few
years is at the lowest point in the last decade. In addition, the orderbook of
the Suezmax tanker fleet for international trades totalled 19 vessels of about
2.8 million dwt, or just 8.5% of the existing fleet. Furthermore, the level of
Suezmax newbuilding deliveries has been low in the last few years. It should be
noted that it usually takes about 1.5 years for delivery of a new vessel. This
time frame may increase, however, if shipyards are already committed to other
buildings. Management believes that the current Suezmax fleet, combined with
expected new deliveries over the next few years, will be inadequate to
accommodate oil transportation demand.

30
<PAGE>

[The following table was represented as a line graph in the printed material]

Tanker Newbuilding Deliveries And Deletions
As A Percent Of The Tanker Fleet*

Newbuilding
Deliveries Deletions
Year (% of Fleet) (% of Fleet)
---- ------------ ------------
80 2.15 2.82
81 2.24 3.60
82 1.72 7.37
83 1.53 8.01
84 1.01 6.56
85 1.49 10.25
86 2.60 5.27
87 2.32 3.52
88 3.10 1.40
89 3.81 0.65
90 3.63 0.58
91 4.88 1.18
92 6.27 3.80
93 6.74 4.68
94 3.85 5.01
95 4.13 4.20
6/96 2.66 1.53

* Percent of total tanker fleet at the beginning of the year.
Source: Fearnleys, Oslo

Demand

Management believes that world demand for oil will increase substantially
more in the coming years than in the first half of the 1990's and that new
vessels, providing additional tonnage capable of operating over medium- and
long-haul routes, will be needed to accommodate additional transport
requirements. Among the main oil importers, oil demand rose slightly in the
mature western industrialized economies, and grew substantially in the rapidly
growing economies of Southeast Asia and the Far East.

Oil production in the Middle East has a greater effect on world ton-mile
demand (the product of the volume of oil carried and the distance over which the
oil is transported) than North Sea or Latin America oil production because of
the longer hauling distance between the origin of the oil and a final
destination in the West. As shown by the tables below, the substantial increase
in tanker ton-mile demand in the early 1990's correlates with the significant
increase of Middle East oil production during the same period. In comparison,
when oil production accelerated in the North Sea and Latin America from 1993-95,
tanker ton-mile demand remained relatively flat. Because of expected decreases
in North Sea production, management anticipates that oil production in the
Middle East will, by the end of the 1990's, increase causing ton-mile demand to
also increase. Consequently, management believes that additional tonnage will be
necessary to satisfy this increase in ton-mile demand.

31
<PAGE>

World Oil Demand (Million B/D)

1990-95
1990 1991 1992 1993 1994 1995 CAGR*
---- ---- ---- ---- ---- ---- -----
U.S. ........ 17.0 16.8 17.1 17.2 17.7 17.7 0.8%
W. Europe ... 13.0 13.4 13.6 13.5 13.6 13.8 1.2

Asia (1) .... 7.9 8.4 9.1 9.8 10.5 11.3 7.4
Pacific (2) . 6.1 6.2 6.3 6.3 6.6 6.7 1.9
---- ---- ---- ---- ---- ---- ---
Sub-Total .. 14.0 14.6 15.4 16.1 17.1 18.0 5.2

Other (3) ... 22.6 22.5 21.4 20.6 20.2 20.4 -2.0

World ....... 66.7 67.2 67.5 67.5 68.6 70.0 1.0

----------
Note: Numbers may not add to total due to rounding.

*CAGR = Compounded annual growth rate.

(1) South Asia, Southeast Asia and China.

(2) Australia, New Zealand and Japan.

(3) The decline was a result of the major economic recession in the
former Soviet Union.

Source: PIRA Energy Group, August 1996.

World Oil Supply (Million B/D)

1990-95
1990 1991 1992 1993 1994 1995 CAGR*
---- ---- ---- ---- ---- ---- -----
U.S. .......... 9.1 9.2 9.1 8.9 8.6 8.6 -1.1%
North Sea ..... 3.8 4.0 4.3 4.7 5.6 5.9 9.2
Latin America . 7.7 8.1 8.2 8.4 8.7 9.0 3.2
West Africa ... 3.0 3.2 3.3 3.4 3.4 3.5 3.1
Middle East ... 17.8 17.2 18.5 19.6 19.9 20.1 2.5
Asia/Pacific .. 6.7 6.8 6.9 7.0 7.1 7.3 1.7
Other ......... 19.3 18.5 17.2 16.0 15.6 15.7 -4.0
World ......... 67.3 66.9 67.3 67.8 68.9 70.2 0.9

----------
Note: Chart includes crude oil, condensate, NGLS, synthetics and processing
gains.

Numbers may not add to total due to rounding.

*CAGR = Compounded annual growth rate.

Source: PIRA Energy Group, August 1996.

World Ton-Mile Demand and Average Tanker Tonnage

1990-95
1990 1991 1992 1993 1994 1995 CAGR
---- ---- ---- ---- ---- ---- ----

Ton-Mile Demand
(Billion) 7,821 8,287 8,597 9,162 9,329 9,320 3.6%

Average Tanker
Tonnage (Million) 254.7 262.5 268.5 276.5 274.7 271.2 1.3

Source: Fearnleys, Oslo.

From 1990 through 1995, ton-mile demand in the tanker market increased by a
compound annual growth rate of 3.6%, while tanker capacity (including the annual
average tonnage of combined carriers employed in the tanker market) grew by a
compound annual growth rate of 1.3%. The difference was met by an increase in
fleet utilization. The Company believes, however, that fleet utilization is
close to its peak and that new vessels, providing additional tonnage, will be
necessary to meet the increased tanker ton-mile demand in the future.

32
<PAGE>

Charter Rates

While freight rates have improved over the last year, the Company believes
that more upside potential exists in the current tanker business cycle. The
relative scarcity in ship supply, coupled with the strength of the world
economy, the resulting growth in demand for oil and the continued focus of
governments and charterers on high-quality tonnage should lead to a stronger
freight rate environment over the next several years.

[The following table was represented as a line graph in the printed material]

Tanker Average T/C/E Rates (1)

Year 30,000 dwt(2) 130,000 dwt(3)
Average (Product Carrier) (Suezmax)
------- ------------ -------------
Thousands of USD/day

1980 15.3 7.3
1981 6.6 3.4
1982 6.4 8.1
1983 5.0 7.7
1984 4.3 7.4
1985 6.0 9.0
1986 9.5 13.3
1987 7.7 9.0
1988 9.2 15.2
1989 10.0 15.9
1990 14.3 18.3
1991 12.9 22.4
1992 7.9 9.1
1993 11.8 14.6
1994 12.0 13.2
1995 13.5 16.2
6/96 15.9 19.9

(1) "T/C/E Rate" is the spot market rate adjusted to equate to a time charter
rate measured in dollars per day before deducting brokerage commissions and
excluding off-hire and idle time.
(2) Caribbean/United States Atlantic Coast voyage. For 32,000 dwt beginning in
1995.
(3) Middle East Gulf/West 1980-87 voyage. West Africa/United States Atlantic
Coast for 140,000 dwt in 1988-6/96.

Mid-1970s Built Vessels.
Source: Fearnleys, Oslo

33
<PAGE>

The Product Carrier Market

Overview

The product carrier market has almost doubled in size since the early
1980's. In addition, the product carrier market operates in a more stable rate
environment than the crude oil market and has traditionally provided shipowners
with a relatively more stable stream of revenues. The product carrier market is
a segment of the overall tanker market which facilitates seaborne transportation
of petroleum products such as gasoline, jet fuel, kerosene, naphtha and gas oil.

The product carrier fleet is grouped as follows: Small product carriers of
10,000-25,000 dwt; Handysize of 25,000-35,000 dwt; Handymax of 35,000-50,000
dwt; Panamax of 50,000-70,000 dwt; and the larger product carriers trading in
dedicated routes. The Handysize group, where the Company's product fleet
concentrates, totaled approximately 10.2 million dwt at mid-1996, or 25% of the
total product carrier fleet. The larger sizes include crude/product carriers
which can switch more efficiently between petroleum products and crude oil.

Supply

The supply of product carriers totaled approximately 40.8 million dwt at
mid-1996, of which about 15.5% were crude/product vessels. The average age of
the product carrier fleet was 11.4 years, and less than one-third was 15 years
old or older.

On average, the Company's fleet is younger than the world fleet. The
average age of the Company's product carrier fleet is 9.6 years old, and its
Handysize segment averages 8.3 years old. In comparison, the Handysize segment
of the world product carrier fleet is relatively old, averaging 15.8 years;
about 59% of the Handysize fleet is 15 years old or older and approximately 42%
is 20 years old or older.

Product Carrier Fleet Age Distribution

[The following table was represented as a bar graph in the printed material]

AGE DISTRIBUTION OF HANDYSIZE AND WORLD PRODUCT TANKER FLEET
(PERCENT. AS OF 6/30/96)

0-4 5-9 10-14 15-19 20+ TOTAL
--- --- ----- ----- --- -----
Handysize 8.0 11.6 21.4 17.2 41.9 100.0
World 16.8 25.4 26.7 15.3 15.8 100.0

Note: As of June 30, 1996.
Handysize = 25,000-35,000 dwt.
Source: Jacobs & Partners Ltd., London.

34
<PAGE>

The product carrier orderbook totaled approximately 3.4 million dwt at
mid-1996, or 8.3% of the existing fleet. More than three quarters of the
orderbook was for Handymax vessels, corresponding to 20.7% of the existing
Handymax fleet. In comparison, the orderbook for Handysize vessels was just 4.8%
of the existing Handysize fleet.

Demand

Product carrier ton-mile seaborne trade increased at the compounded rate of
approximately 4.4% per annum during the 1980-1995 period. This has been the
result of increasing world oil consumption and increasing refinery capacity in
oil exporting regions.

World Product Carrier Seaborne Trade

[The following table was represented as a line graph in the printed material]

World Product Carrier Seaborne Trade
Billion Ton-miles

Oil
Year Products
---- --------
80 1,020
81 1,000
82 1,070
83 1,080
84 1,140
85 1,150
86 1,265
87 1,345
88 1,445
89 1,540
90 1,560
91 1,530
92 1,620
93 1,775
94 1,860
95 1,940

Source: Fearnleys, Oslo

Management believes that product carrier ton-mile demand will continue to
increase in the coming years. First World oil demand is expected to increase at
a higher rate compared to the first half of the 1990's. Additionally, North
America and Asia have a shortage of refinery capacity, while Latin America and
the Middle East have a surplus. Finally, refinery capacity is expanding in the
Middle East and Latin America while the shortage of refinery capacity in the
major oil consuming areas is expected to persist.

Other Markets

The Company owns 49.9% of three modern foreign flag dry bulk carriers. The
Company upgraded one of these vessels recently by adding cranes, and is in the
process of upgrading the other two in a similar way. Management believes that
these improvements will enhance employment opportunities for the vessels. OMI
took advantage of a strong dry bulk market and delivered two wholly owned U.S.
flag dry bulk vessels in the foreign market, as well as two foreign flag joint
venture vessels. OMI's dry bulk vessels are currently in a pool that has
contracts which somewhat ameliorate the effects of a soft market for dry bulk
carriers.

The Company also owns six U.S. flag vessels--a Suezmax tanker on long-term
charter to a major oil company, four Handysize product carriers, of which two
are on time charter to the Military Sealift Command, and a dry bulk vessel.
Alaskan oil production and distribution are the most important factors in
determining the level of U.S. domestic tanker demand within the context of the
economic environment. Several additional employment opportunities exist for U.S.
flag tankers through the U.S. Government, which maintains a Strategic Petroleum
Reserve Program and employs vessels in the Military Sealift Command.

35
<PAGE>

Business Strategy

The Company is one of the world's premier shipowners and has developed
strategies designed to capitalize on its strengths, the compelling supply and
demand dynamics in the international tanker market and the competitive
advantages of operating large and concentrated fleets. The Company has been
implementing several key strategic initiatives, including (i) refocusing its
operations from the U.S. flag domestic market to the international tanker
market; (ii) developing large and concentrated fleets of Suezmax tankers and
product carriers; (iii) reducing vessel operating and corporate overhead costs
by streamlining the U.S. flag fleet; (iv) operating high quality tonnage; and
(v) managing spot versus time charter mix. Management believes that the ongoing
execution and implementation of these strategies will drive future performance.
A summary of these strategic initiatives is set forth below.

Focus on the International Tanker Market

The Company is focused on strengthening its presence in the international
tanker market and has been substantially de-emphasizing its U.S. flag fleet.
While the U.S. flag fleet has recently regained profitability, the Company
believes that opportunities for future growth are better in the international
arena. Accordingly, unless the Company perceives exceptional opportunities,
future vessel newbuildings and acquisitions will be made in the international
fleet and the U.S. domestic fleet can be expected to decline in size.

Since 1993, OMI has significantly reconfigured its fleet in an effort to
build its international fleet and dispose of assets which no longer fit its
strategic mix. The Company has reduced its U.S. flag fleet by nine vessels since
1993. Two of its remaining six U.S. flag vessels are currently in lay up and are
awaiting sale. In the foreign flag fleet, the Company is concentrating its fleet
in Suezmax tankers and product carriers. The Company expects to obtain two
Suezmax newbuildings and to acquire options on two additional Suezmax
newbuildings. In the past year the Company has acquired four secondhand
Handysize product carriers (including one 1991-built product carrier expected to
be delivered in the Fourth Quarter 1996) and has disposed of four foreign flag
vessels which no longer fit its strategy.

Large and Concentrated Fleet of Suezmax Tankers and Product Carriers

The Company intends to continue to enlarge the Suezmax and product carrier
fleets, on a selective basis, and is negotiating newbuilding orders for Suezmax
tankers and is seeking strategic purchases of high-quality secondhand vessels.

<PAGE>

Reducing Vessel Operating and Corporate Overhead Costs

The Company has taken steps to reduce vessel operating and corporate
overhead costs and expects to increase the efficiency of its vessel and
administrative operations. As the focus of the fleet has changed from domestic
to international, the Company has positioned itself to reduce corporate
overhead, its use of third party vendors and occupancy costs. The Company
believes that developing a more homogeneous fleet will lead to economies in
purchasing for vessel consumables and maintenance through more efficient
operations and maintenance programs.

Operating High Quality Tonnage

Management believes the Company has developed a reputation for its high
quality management and fleet. With the increasing emphasis of regulatory bodies
and major customers on safety and environmental protection, the Company believes
its focus on safety and quality represents a competitive advantage in the
marketplace in terms of vessel utilization. The Company places a high priority
on maintaining its vessels to ensure broad acceptance and satisfaction of major
worldwide shippers. Expanding the market of worldwide shippers for the Company
enhances vessel utilization. By employing experienced and competent crews who
are capable of performing disciplined technical tasks and upgrading tasks during
voyages, the Company seeks to enhance a vessel's condition, but also minimize
the duration and costs of drydockings.

Managing Spot Versus Time Charter Mix

<PAGE>

The Company's Fleet

The following table sets forth certain information as of September 1, 1996
with respect to the Company's vessels, 23 of which are wholly owned by the
Company, eight of which are jointly owned and four of which are chartered-in
crude tankers. The vessels which are not operated by a joint venture partner or
by an independent manager or operator are operated by the Company.

<TABLE>
<CAPTION>
Foreign Flag Vessels: Year Metric Charter
Name of Vessel Type of Vessel Built(1) Tonnage Expiration(2)
- -------------- -------------- -------- ------- -------------
<S> <C> <C> <C> <C>
Settebello (3) Crude Oil Tanker (ULCC) 1986 322,446 Spot
White Sea (4) Crude Oil Tanker (Suezmax) 1975 155,702 Spot
Cairo Sea Crude Oil Tanker (Suezmax) 1975 154,719 Spot
Trinidad Sea Crude Oil Tanker (Suezmax) 1974 154,605 Spot
Wilomi Alta (4) Crude Oil Tanker (Suezmax) 1990 146,251 Spot
Czantoria Crude Oil Tanker (Suezmax) 1975 146,104 Spot
Sokolica Crude Oil Tanker (Suezmax) 1975 145,649 10/97
Wilomi Tanana (4) Crude Oil Tanker (Suezmax) 1992 141,720 (7)
Colorado Crude Oil Tanker (Aframax) 1980 86,648 05/97
Wilomi Yukon(4) Product Carrier (Aframax) 1992 99,008 10/96
Elbe Product Carrier (Panamax) 1984 66,800 11/96
Nile Product Carrier (Panamax) 1981 65,755 03/98
Volga Product Carrier (Panamax) 1981 65,689 03/98
Limar Product Carrier (Handysize) 1988 29,999 Spot
Trent Product Carrier (Handysize) 1991 29,998 Spot
Danube Product Carrier (Handysize) 1990 29,998 Spot
Tiber Product Carrier (Handysize) 1989 29,998 11/96
Pagoda Product Carrier (Handysize) 1988 29,996 Spot
Alma Product Carrier (Handysize) 1988 29,994 03/98
Paulina Product Carrier (Handysize) 1984 29,993 Spot
Patricia Product Carrier (Handysize) 1984 29,993 04/97
Maritime Mosaic (5) Dry Bulk Carrier 1993 73,657 Spot
Maritime OMI (5) Dry Bulk Carrier 1994 72,800 Spot
Maritime Nancy (5) Dry Bulk Carrier 1990 72,136 12/96
General LPG Carrier 1975 49,880 03/97
Total Foreign Owned Fleet: 25 Vessels 2,259,538
---------
Chartered-in Crude Tankers:(6) 4 Vessels 406,181
---------
Total Foreign Flag Operating Fleet: 29 Vessels 2,665,719

<CAPTION>
U.S. Flag Vessels: Year Metric Charter
Name of Vessel Type of Vessel Built(1) Tonnage Expiration(2)
- -------------- -------------- -------- ------- -------------
<S> <C> <C> <C> <C>
OMI Columbia (8) Crude Oil Tanker (Suezmax) 1974 138,698 12/02
Patriot Product Carrier (Handymax) 1976 35,662 03/97
Ranger Product Carrier (Handymax) 1976 35,662 laid-up(9)
Courier Product Carrier (Handymax) 1977 35,662 03/97
Rover Product Carrier (Handymax) 1977 35,662 12/96
Platte Dry Bulk Carrier 1982 37,060 laid-up(9)
---------
Total U.S. Flag Operating Fleet: 6 Vessels 318,406
---------
Total OMI Fleet: 35 Vessels 2,984,125
=========
</TABLE>
- ----------
(1) Weighted average age of the Company's owned fleet (including jointly owned)
at September 1 was 13.5 years.
(2) Expiration dates do not reflect charterers' options for extensions or
cancellations or other contingencies.
(3) Joint ownership with Bergesen d.y. A/S, Norway.
(4) Joint ownership with an affiliate of Anders Wilhelmsen & Co., Norway.
(5) Joint ownership with an affiliate of International Maritime Carriers
Limited ("IMC"), Hong Kong and, chartered into pools operated by IMC.
(6) Time chartered-in under charters expiring in 1996 through 1998.
(7) The vessel is contracted on a time charter basis, wherein the charterer
pays a daily rate based on prevailing spot market rates and also pays for
fuel and port costs. The charter continues until either party gives an
appropriate notice to the other of termination.
(8) Rebuilt in 1983 under the United States Wrecked Vessels Act, 46 U.S.C. 14.
(9) These vessels are being marketed for sale.

<PAGE>

The Company has a contract to acquire one 1991 built product carrier of
29,999 dwt which is expected to be delivered before year end.

All but one of the Company's ten crude oil tankers are single hull. Ten of
the Company's 16 product carriers (and the one being acquired) do not have
segregated ballast, which is not required of product carriers of less than
30,000 dwt. See "Business--The International Tanker Market--Regulation." Until
such time as the Company perceives that it is more advantageous to dispose of a
vessel than operate it, the Company will continue to operate such vessels.

The Company has agreed to joint ownership of an additional Suezmax tanker
to be delivered in 1996 from a shipyard in China, to be jointly owned with an
affiliate of Anders Wilhelmsen & Co. of Norway.

Joint Ventures

In recent years the Company has enhanced its presence in the international
market by the formation of corporate joint ventures with major overseas
shipowners involving less than 50% ownership by the Company. Such joint venture
arrangements allow OMI to expand its access to market information and equity
capital, share risk, benefit from others' operating expertise and realize tax
efficient growth strategies. Today, the Company's joint ventures operate a
modern fleet of tanker and dry bulk vessels that participates in markets
worldwide. All of the Company's foreign joint ownership arrangements involve
beneficial ownership by the Company of 49% to 49.9% of the subject vessel.

The Company's investments in joint ventures are accounted for by the equity
method. Summarized combined financial information pertaining to all affiliated
companies accounted for by the equity method is as follows:

Summary of Financial Information of Joint Ventures

<TABLE>
<CAPTION>
For the
Six Months
Ended
For the Years Ended December 31, June 30,
---------------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total revenues .............. $108,856 $107,994 $118,769 $120,707 $123,256 $ 62,579 $ 57,205
Operating expenses:
Vessel and voyage .......... 77,233 78,544 83,004 83,880 84,945 44,394 42,993
Depreciation and
amortization .............. 8,559 10,239 12,971 12,670 11,728 5,874 5,665
General and administrative . 4,570 6,414 5,384 5,496 3,095 1,518 1,369
-------- -------- -------- -------- -------- -------- --------
Total operating expenses .... 90,362 95,197 101,359 102,046 99,768 51,786 50,027
-------- -------- -------- -------- -------- -------- --------
Operating income ............ 18,494 12,797 17,410 18,661 23,488 10,793 7,178
Other income-net (1) ........ 13,158 12,154 1,974 5,217 4,178 2,928 504
Interest expense, gross ..... 6,297 7,546 8,511 12,102 12,064 6,270 5,213
-------- -------- -------- -------- -------- -------- --------
Net income .................. $ 25,353 $ 17,405 $ 10,869 $ 11,741 $ 15,587 $ 7,439 $ 2,478
======== ======== ======== ======== ======== ======== ========

Balance Sheet Data (at end
of period):
Cash and cash equivalents ... $ 17,250 $ 24,885 $ 23,812 $ 26,816 $ 35,848 $ 31,027 $ 35,616
Vessels and other property,
net ........................ 192,985 256,808 283,792 303,876 286,250 286,377 258,871
Total assets ................ 240,060 338,341 351,117 377,717 348,918 351,725 340,834
Total debt .................. 77,030 143,903 172,419 188,475 158,023 165,236 148,737
Total shareholders' and
partners' equity ........... 144,104 154,651 161,299 164,425 170,526 165,931 170,548
</TABLE>

- ----------
(1) Other income-net includes gain (loss) on disposal of assets and interest
income.

Amazon Transport, Inc.

In December 1988, Bergesen d.y. A/S ("Bergesen") acquired from the Company
a 51% interest in Amazon, owner of the 322,446 dwt Settebello, one of the
youngest ULCCs in the world fleet. Bergesen is a Norwegian shipping enterprise,
controlling one of the world's largest fleets of VLCCs and ULCCs, in addition to
the largest fleet of LPG carriers.

39
<PAGE>

Mosaic Alliance Corp.

The formation of Mosaic in 1989 renewed a long-standing relationship between
International Maritime Carriers Limited ("IMC") and the Company. This fleet
comprises two dry bulkers, the Maritime Nancy and the Maritime Mosaic. The
Company and IMC have discussed terminating Mosaic and have agreed to winding-up
in principle. There is currently no agreement as to method of dissolution.

Affiliates of each of the partners also own one dry bulk carrier, the
Maritime OMI, through the joint venture Geraldton.

Wilomi, Inc.

The Company's joint venture Wilomi, with affiliates of Anders Wilhelmsen &
Co., began in 1986 and involved chartered-in vessels with purchase options. It
thereafter entered into contracts for the construction of six vessels. Out of
these six newbuildings, a Suezmax tanker and two large product carriers were
sold shortly after their deliveries at significant gains.

Currently, Wilomi owns one 146,251 dwt Suezmax tanker, the Wilomi Alta, which
was delivered in 1990, the double hull Suezmax Wilomi Tanana, which was
delivered in March 1992, and one 99,008 dwt crude oil/petroleum product carrier,
the double hull Wilomi Yukon, which was delivered in 1992. The joint venture
expects to take delivery of an additional Suezmax tanker in November 1996 which
is currently under construction in the Peoples Republic of China. The partners
have discussed terminating Wilomi and have agreed to winding-up in principle.
There is currently no agreement as to method of dissolution.

In December 1992, White Sea, another joint venture owned by other
affiliates of Anders Wilhelmsen & Co. and OMI, acquired the White Sea, a 155,702
dwt Suezmax tanker built in 1975.

Classification and Inspection

The hull and machinery of each of the Company's vessels, including the
Joint Ventures' vessels, have been certified as being "in class" by its
respective classification societies: American Bureau of Shipping, Lloyds
Register, DNV or Nippon Kaiji Kyokai. A classification society is an independent
body which certifies that a vessel has been built and maintained in accordance
with the rules of the society and is in compliance with applicable rules and
regulations of the country of registry and the international conventions of
which that country is a member.

Each of the Company's vessels is inspected by a surveyor from its
respective classification society every year ("Annual Survey"), every two to
three years ("Intermediate Survey") and every four to five years ("Special
Survey"). Most vessels are also required, as part of the Intermediate Survey
process, to be drydocked every 30 to 36 months for inspection of the underwater
parts of the vessel and for necessary repairs related to such inspection.

In addition, many of the Company's customers, including the major oil
companies, regularly inspect the Company's vessels as a precondition to
chartering them for voyages. Management believes that the Company's
well-maintained, high-quality tonnage should provide it with a competitive
advantage in the current environment of increasing regulation and customer
emphasis on quality of service. The Company has developed an internal vetting
team to prepare vessels for and respond promptly following oil company vettings
in order to obtain and maintain vetting approvals.

One of the Company's customers, Statoil, requires vessels older than ten
years to undergo a classification society controlled Condition Assessment
Program (CAP) survey and requisite repair, a voluntary but rigorous close-up
inspection of the vessels' structural condition. In addition, Statoil inspectors
conduct a further condition and operating performance inspection before
approving vessels for Statoil service. By gaining Statoil approval the Company's
ships receive greater acceptance from a wide range of charterers and are
distinguished from tonnage not kept to the same standard. One of the Company's
older Suezmax tankers has received Statoil approval and two have successfully
undergone the CAP survey with Statoil approval expected this year.

<PAGE>

Commercial and Technical Management

The Company provides commercial and technical management to its
subsidiaries and the joint ventures. Commercial management involves marketing.
Technical management involves operations, maintenance, crewing, storage and
insurance. The Company also provides financial, accounting and corporate
services to support commercial and technical management.

Many of the persons involved in commercial and technical management have
extensive seagoing experience as licensed officers and have served as masters,
chief mates or chief engineers. The Company believes that the knowledge and
experience of its personnel leads to expeditious understanding of both vessel
and charterer concerns, efficient and safe operations, and responsive solutions
to problems when they arise. The Company believes that it has a highly skilled
and motivated group of women and men who are responsible for the reputation the
Company enjoys.

The technical management of a few of the Joint Venture vessels is handled
by the Company's Joint Venture partners. The Company expects to be managing
directly all of its wholly owned vessels (except the LPG carrier) within the
next several months.

Environmental Regulation

The international and U.S. tanker markets are affected by numerous
international, national and local environmental protection laws, regulations,
treaties and conventions in force in the countries in which the Company's
vessels operate as well as the countries of their registration, in particular
the United States Port and Tanker Safety Act, the Act to Prevent Pollution from
Ships, OPA, various volatile organic compound emission requirements, codes for
chemical carriers, the IMO/USCG pollution regulations and the International
Convention for the Safety of Life at Sea and amendments thereto.

OPA affects all vessel owners shipping oil or hazardous materials to, from,
or within the United States. The law phases out the use of tankers having single
hulls, and effectively imposes on vessel owners unlimited liability in the event
of a catastrophic oil spill resulting from gross negligence, wilful misconduct
or violation of any federal operating or safety standard. The IMO also has
adopted regulations which phase out the use, and reduce the capacity, of
virtually all single-hull tankers.

Liability for an oil spill in the United States is governed not only by
OPA, but also by the laws, rules and regulations established by every coastal
and inland waterway state. Federal law does not preempt these state laws.
Another effect of OPA has been to increase liability insurance costs for vessel
owners trading in the United States. While the Company maintains insurance at
levels it believes prudent, the claim from a catastrophic spill could exceed the
insurance coverage available, in which event there could be a material adverse
effect on the Company. In addition, liability for oil spills is also governed by
international laws and conventions.

The Company believes that compliance with applicable environmental and
pollution laws and regulations has not had and is not expected to have a
material adverse effect upon its competitive position; however, the Company's
financial position, value and useful life of its vessels and results of
operations may be affected as a result of OPA and other environmental laws, and
regulations currently in effect, or which may be adopted which can have the
effect of reducing the world tanker supply, restricting the markets in which
such tankers trade or increasing the costs of operating such vessels. In
particular, the USCG is currently considering a proposed regulation, which if
adopted as proposed, may require structural or operating changes, which may
significantly reduce cargo carrying capacity, to many currently existing
Handysize tankers, including those belonging to the Company, which change must
be completed within three years of publication of a final rule or which may
prohibit the Company from trading to the United States.

Safety and Emergency Response Preparedness

Recent events in the international maritime community have resulted in the
realization that there is a need for more effective safety management. Events
outside of the maritime industry have also focused

<PAGE>

attention on corporate responsibility for controlling safety and operating
vessels. In response to the growing concern for improved safety in the maritime
industry, the International Maritime Organization, through its international
mandate at the SOLAS Conference in 1994, formalized a requirement for shipping
companies to develop and implement safety management systems for both shore
based and ship board applications. The regulations to develop such a system are
embodied in the International Safety Management Code ("ISM"), an international
convention. The ISO9000 Series quality standard ("ISO") has become the most
universally recognized benchmark for designing company specific quality systems.
The integration of safety and quality into management systems has become the
goal of most modern shipping companies, and the requirement of most commercial
and regulatory customers.

The ISM Code contains specific requirements for the Company to adopt a
management system with the objective of ensuring safety at sea, the prevention
of human injury and loss of life, and the avoidance of damage to property and,
in particular, the marine environment. ISO is a series of process oriented
quality procedures which ensure that a consistent performance standard is
achieved.

Det Norske Veritas ("DNV"), a major international classification society,
has developed safety and environmental class rules ("SEP"), which incorporate
all of the elements of the ISM Code and all of the elements of ISO. The
Company's shore-based management has been certified by DNV to be in compliance
with SEP. The Company expects that by the end of 1996 approximately two-thirds
of its vessels will have been certified by DNV to be in compliance with SEP and
the remaining vessels will be so certified in 1997. The Company believes that
all of its vessels are operated in compliance with all applicable laws and
regulations in all material respects.

The Company provides training programs for all personnel, both vessel and
shoreside, to emphasize safety and efficiency. Training focuses on exceeding
required job qualifications and addressing regulatory requirements.

The Company recognizes that the effectiveness of its Emergency Response is
linked to the effectiveness of its internal and external Response Team. Training
includes live exercises as well as tabletop simulations to meet the Company's
needs and regulatory requirements. Response Team members, various agencies,
contractors, and other groups listed in the Company response plan as spill
response resources are required to participate in spill simulations. Meetings
are held with various agencies, contractors, and other groups to ensure they
meet Company requirements and they are invited to participate during Company
training and drills to ensure a unified approach when responding to a real
incident.

Crewing and Staff

The Company's foreign flag fleet is manned by approximately 800 personnel.
The Company's U.S. flag fleet of six vessels employs approximately 280 licensed
and unlicensed personnel, with crews being recruited through domestic unions.

An additional 10 U.S. flag vessels are managed on a contract basis by the
Company for the U.S. Maritime Administration, but are normally maintained in an
inactive status. When these ships are activated, they are crewed through the
same unions by the Company.

Competition

Seaborne transportation services are provided mainly by independent
ship-owned fleets and proprietary fleets of commodity producers. Competition for
tonnage can be intense and depends on price, location, size, age, condition and
acceptability of vessel and operators to the charterers. The Company believes
that no ocean shipping entity exerts substantial influence in the international
shipping markets, although the possibility exists for an owner or pool of owners
with a substantial number of vessels suitable for a particular market to have an
effect upon rates in that market.

The Company believes that the cost of compliance with OPA and other
environmental and safety laws creates certain economies of scale that benefit
shipowners with larger fleets.

<PAGE>

Risk of Loss and Insurance

The business of the Company is affected by a number of risks, including the
mechanical failure of its vessels, collisions, property loss to the vessels,
cargo loss or damage, business interruption due to political circumstances in
foreign countries, hostilities and labor strikes. In addition, the operation of
any ocean-going vessel is subject to the inherent possibility of a catastrophic
marine disaster, including oil spills and other environmental mishaps, as well
as other liabilities arising from owning and operating vessels in international
trade. OPA, by imposing virtually unlimited liability upon owners, operators and
certain charterers for certain oil pollution accidents in the United States, has
made liability insurance more expensive for shipowners and operators and has
also caused insurers to consider reducing available liability coverage.

The Company maintains marine hull and machinery and war risks insurance,
which includes the risk of actual or constructive total loss, and protection and
indemnity insurance with mutual assurance associations. The Company does not
generally carry insurance covering the loss of revenue resulting from vessel
off-hire time. The Company believes that its current insurance coverage is
adequate to protect against most of the accident-related risks involved in the
conduct of its business and that it maintains appropriate levels of pollution
insurance coverage. Currently, the Company maintains the standard $500 million
pollution coverage for all its vessels plus an additional $200 million in excess
of the standard pollution coverage for its tankers. There can be no assurance,
however, that all risks are adequately insured against, that any particular
claim will be paid or that the Company will be able to procure adequate
insurance coverage at commercially reasonable rates in the future.

Legal Proceedings

The Company is party, as plaintiff or defendant, to a variety of lawsuits
for damages arising principally from personal injury and property casualty
claims. Most claims are covered by insurance, subject to customary deductibles.
Management believes that such claims will not have a material adverse effect on
the financial position and the results of operations or liquidity of the
Company.

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MANAGEMENT

Set forth below is certain information with respect to the Company's
executive officers and directors as of September 1, 1996.

Name Age Position
- ---- --- --------
Jack Goldstein 57 Chief Executive Officer, Chairman of the
Board and Director

Craig H. Stevenson, Jr. 42 President, Chief Operating Officer
and Director

Vincent J. de Sostoa 52 Senior Vice President, Treasurer and
Chief Financial Officer

Fredric S. London 49 Senior Vice President, Secretary and
General Counsel

Richard Halluska 49 Senior Vice President

Robert Bugbee 36 Senior Vice President

Kathleen C. Haines 41 Vice President/Controller

William A.G. Hogg 58 Vice President

Anthony Naccarato 50 Vice President

William Osmer 42 Vice President

Kenneth Rogers 41 Vice President

Thomas M. Scott 40 Vice President

Stavros Skopelitis 49 Vice President

Livio M. Borghese 57 Director

Constantine G. Caras 58 Director

Steven D. Jellinek 56 Director

Michael Klebanoff 76 Director

Emanuel L. Rouvelas 51 Director

Marianne K. Smythe 53 Director

Jack Goldstein was appointed President and Chief Executive Officer of the
Company in April 1986. Prior thereto, Mr. Goldstein was Vice President of
Overseas Shipholding Group, Inc. He became Chairman of the Board of Directors in
October 1995, at which time he ceased to be President. Mr. Goldstein has
announced that he will retire as Chief Executive Officer effective at the end of
1996. Mr. Goldstein will continue to serve as Chairman of the Board and will
head a new committee of the Board that will provide guidance and support in
dealing with long-term strategic policies and plans. Mr. Goldstein is also a
director of IMC (Holdings) Ltd., a joint venture partner of the Company.

Craig H. Stevenson, Jr. was appointed President in November 1995, retaining
his position of Chief Operating Officer. Mr. Stevenson has been elected Chief
Executive Officer effective January 1, 1997. He was elected Executive Vice
President and Chief Operating Officer in November 1994 and Senior Vice
President/Chartering of the Company in August 1993. For five years prior
thereto, he was President of Ocean Specialty Tankers Corp., a marketing manager
for several of the Company's chemical tankers.

Vincent de Sostoa was elected Chief Financial Officer in January 1994. He
was elected Senior Vice President/Finance of the Company in January 1989.

Fredric S. London was elected Senior Vice President of the Company in
December 1991. He was elected Vice President of the Company in December 1988.

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<PAGE>

Richard Halluska was elected Senior Vice President in August 1995. He had
been elected Vice President of the Company in July 1993. He was elected
Assistant Vice President of the Company in December 1989.

Robert Bugbee was elected Senior Vice President in August 1995. He joined
the Company in February 1995. Prior thereto, he was Head of Business Development
at Gotaas-Larsen Shipping Corporation.

Kathleen C. Haines was elected Vice President and Controller of the Company
in January 1994. She was elected Assistant Vice President and Controller in
December 1992. Prior thereto, she was Assistant Controller.

William A.G. Hogg was elected Vice President of the Company in January
1994. He was elected Assistant Vice President of the Company in June 1987.

Anthony Naccarato was elected Vice President of Human
Resources/Administration in October, 1993. He was elected Vice President/Labor
Relations of the Company in June 1987.

William Osmer was elected Vice President of the Company in January 1994. He
was elected Assistant Vice President of the Company in December 1986.

Kenneth Rogers was elected Vice President of the Company in January 1994.
He was elected Assistant Vice President of the Company in December 1990.

Thomas M. Scott was elected Vice President of the Company in February 1995.
He was Ship Manager starting in September 1991 and was elected Assistant Vice
President/Operations in 1993. Prior thereto he was Port Captain for
International Maritime Carriers for one year and prior thereto Marine
Superintendent for Marine Transport Lines.

Stavros Skopelitis was elected Vice President and Economist of the Company
in May 1996. He was elected assistant Vice President and Economist in January
1994. Prior thereto he was the Company Economist, since 1987.

Livio M. Borghese is presently Chairman of Curtis Industries, Inc. From
October 1988 to December 1989, Mr. Borghese served as Chairman, International
Investment Banking of Prudential-Bache Capital Funding and from 1990 to 1992,
Mr. Borghese was Chairman of Borghese Triguboff Investment Corporation. For more
than five years prior thereto, Mr. Borghese was a Senior Managing Director and
member of the Executive Committee of Bear, Stearns & Co., Inc.

Constantine G. Caras is a private investor. From 1990 until the second
quarter of 1996, Mr. Caras was Executive Vice President and a director of Ogden
Corporation.

Steven D. Jellinek has been Chairman of Jellinek, Schwartz & Connolly,
Inc., a firm specializing in legislative and regulatory policy, strategic
analysis and research management in the areas of environment, energy and health
since 1984.

Michael Klebanoff is a private investor. He was President of the Company
from 1969 to 1983 and was Chairman of the Board of OMI from 1983 until November
1995.

Emanuel L. Rouvelas has been a Partner in the law firm of Preston Gates
Ellis & Rouvelas Meeds since 1974.

Marianne K. Smythe was a Director of the Division of Investment Management
with the U.S. Securities and Exchange Commission from 1991 to 1993. Since 1993,
Ms. Smythe has been a Partner in the law firm of Wilmer, Cutler & Pickering.

DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a summary of certain indebtedness of the Company. The
summary is qualified in its entirety by reference to the full text of the
documents which govern the transaction so summarized.

On July 9, 1996, the Company entered into the Credit Agreement with DnB and
NedShip (together, the "Co-Arrangers") to fund the purchase of its Senior Notes,
to finance the purchase of a vessel and to

45
<PAGE>

refinance secured indebtedness on two vessels and certain other existing
indebtedness. As of September 15, 1996, $160.9 million of the loan provided by
the Credit Agreement was outstanding.

The Credit Agreement matures in January 1998. The repayment obligation
under the Credit Agreement amortizes in 2 equal semi-annual installments of $7.5
million, due in January and July 1997, with the remaining balance payable in
full at maturity. The Company is obligated to prepay the entire outstanding
balance of the loan 120 days following the closing date of an equity offering.
Further, proceeds from the sale of any vessels 100% owned by the Company, net of
any prior indebtedness secured by such vessels and of any taxes, must be used to
repay amounts outstanding under the Credit Agreement in inverse order of
maturity. However, with respect to proceeds from a sale of the OMI Columbia, the
Company is permitted to retain up to $10 million for general working capital
purposes, so long as a minimum of $40 million of the proceeds are used to repay
amounts outstanding under the Credit Agreement.

Interest on amounts outstanding under the Credit Agreement is LIBOR +
1 3/4% per annum and will increase on December 31, 1996 to LIBOR + 2 1/2% per
annum unless the Company has made aggregate principal repayments of at least
$67.5 million on or before such date.

The Company's obligations under the Credit Agreement are secured by a first
priority mortgage together with a first priority assignment of earnings and
insurance on 12 vessels (OMI Columbia, Colorado, Ranger, Paulina, Rover, Alma,
Danube, Trinidad Sea, Trent, Czantoria, General and Elbe), a second priority
mortgage on another 6 vessels (Courier, Pagoda, Patriot, Limar, Patricia and
Cairo Sea) (the mortgaged vessels, collectively, the "Vessels") and a first
priority pledge of the Company's equity ownership interests in four companies:
Petrolink, Amazon Transport, Inc., Wilomi, Inc. and White Sea Holdings Ltd.
Further, the Company's equity ownership interests in Mosaic Alliance Corp.
("Mosaic") and Geraldton Navigation Co. Inc. (collectively, the "Joint Venture
Interests") are subject to a negative pledge and there is a pledge of shares of
the single purpose and Joint Venture Interest owning subsidiaries.

The security enumerated above is subject to the condition that, if the fair
market value of the Vessels, net of any pre-existing first priority
mortgage-secured indebtedness, plus the value of the pledged Joint Venture
Interests (based on the fair market value of the vessels owned by such
companies), is less than 130% of the amounts outstanding under the Credit
Agreement, the Company shall provide additional collateral acceptable to the
Co-Arrangers, or, alternatively, the Company shall repay the obligations under
the Credit Agreement in inverse order of maturity so that the minimum collateral
maintenance percentage is restored. The fair market value of the Vessels is to
be determined twice yearly at a minimum (and at any other time at the discretion
of DnB) based on the average of two charter free valuations from independent
ship brokers selected by the Company and approved by DnB.

The Credit Agreement contains usual and customary events of default,
including among others, a cross-default to other financial obligations of the
Company, its wholly owned subsidiaries and joint venture companies.

The Credit Agreement contains numerous restrictive covenants that limit the
discretion of the Company's management with respect to certain business and
financial matters. The covenants in the Credit Agreement include, but are not
limited to, the following: The Company is required to maintain a minimum
consolidated free cash amount, a minimum consolidated fixed charge coverage
ratio and a maximum consolidated debt to equity ratio. The Company also is
required to maintain each Vessel's ranking with such Vessel's classification
society and insure each Vessel adequately (which includes in the case of oil
tankers, additional perils--pollution coverage and in the case of the OMI
Columbia, off-hire insurance). Without the prior written consent of the
Co-Arrangers, the Company may not (subject to certain significant exceptions):
incur additional indebtedness, create liens, prepay certain pre-existing
indebtedness, make or commit to make new investments in additional vessels,
change the commercial or management arrangements of certain vessels, sell
certain assets or pay dividends. There are also restrictions on the Company's
ability to consolidate or merge with other entities. In addition, all borrowers
and guarantors under the Credit Agreement (other than the Company) are required
to remain wholly owned subsidiaries of the Company.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's certificate of
incorporation, as amended (the "Certificate of Incorporation"), and by-laws, as
amended (the "By-Laws"). These statements do not purport to be complete, or to
give full effect to the provisions of statutory or common law, and are subject
to, and are qualified in their entirety by reference to, the terms of the
Certificate of Incorporation and the By-Laws.

Common Stock

General

The Certificate of Incorporation authorizes the issuance of a total of
80,000,000 shares of Common Stock. At September 18, 1996, 31,144,685 shares of
Common Stock were outstanding. The Company stock certificates (otherwise
identical) are identified as "Domestic Share Certificates" (certificates
representing shares issued to U.S. citizens) and "Foreign Share Certificates"
(certificates representing shares issued to non-U.S. citizens). Except as stated
below under "Qualifications for Ownership and Transfer of Shares," the rights of
the holders of Domestic Share Certificates and Foreign Share Certificates are
identical in all respects.

Each holder of Common Stock is entitled to one vote for each share
registered in such holder's name on the books of the Company on all matters
submitted to a vote of stockholders. Except as otherwise provided by law, the
holders of Common Stock entitled to exercise more than 50% of the voting rights
in an election of directors can elect 100% of the directors to be elected if
they choose to do so. In such event, the holders of the remaining Common Stock
voting for the election of directors will not be able to elect any persons to
the Board of Directors. Holders of Common Stock have no preemptive,
subscription, redemption or conversion rights. Subject to the prior rights of
holders of the Preferred Stock, the holders of the Common Stock are entitled to
receive, in the event of liquidation, dissolution or winding up of the Company,
pro rata, all assets remaining after payment of all obligations, and are
entitled to receive such dividends as may be declared by the Board of Directors
out of funds legally available therefor.

Qualifications for Ownership and Transfer of Shares

The Shipping Act, 1916 and the Merchant Marine Act of 1936 require that at
least 75% of the stock of a corporation operating any vessel in the U.S.
coastwise trade be owned by United States Citizens (as defined below). In order
to assure compliance with this citizenship requirement, the Certificate of
Incorporation authorizes, and the Board of Directors has adopted, a By-Law
authorizing the Board to determine a minimum percentage of outstanding shares of
capital stock of the Company that must be held by United States Citizens. In
September, 1996, the Board raised the minimum percentage from 77% to 90% in
order to ensure the Company's ability to deliver shares to non-U.S. Citizens in
connection with the International Offering. The minimum percentage which must be
held by U.S. Citizens will be reduced to 77% following completion of the
Offerings. At September 18, 1996, holdings by non-U.S. Citizens prior to such
date aggregated only approximately 6% of the outstanding common stock of the
Company.

The Board has also adopted procedures for establishing the citizenship of
the Company's stockholders. Any purported transfer of shares represented by a
Domestic Share Certificate to a non-United States Citizen that would cause the
level of ownership by United States Citizens to drop below the minimum will not
be recorded on the registration books of the Company and will be ineffective to
transfer the shares or any voting or other rights in respect thereof and the
Company may regard the certificate, whether or not validly issued, as having
been invalidly issued. The By-Laws authorize the Company to make all
determinations with respect to validity of any transfer under these provisions
and any such decision by the Company is final and binding.

The Company believes that because of its dual stock certificate provisions
and other restrictions contained in its By-Laws, it is in compliance with
applicable shipping law citizenship requirements and that it meets applicable
certification requirements as to the citizenship of its stockholders.

As used herein, United States Citizen means (i) any individual who is a
citizen of the United States by birth, naturalization or as otherwise authorized
by law; (ii) any corporation if (A) it is organized under the

47
<PAGE>

laws of the United States or of a state, territory, district or possession
thereof, (B) at least 75% of its stock is beneficially owned by United States
Citizens, (C) its president or chief executive officer, chairman of the board of
directors and all officers authorized to act in the absence or disability of
such persons are United States Citizens and (D) more than 50% of the number of
its directors necessary to constitute a quorum are United States Citizens; (iii)
any partnership if (A) it is organized under the laws of the United States or of
a state, territory, district of possession thereof, (B) all its general partners
are United States Citizens and (C) at least a 75% interest in the partnership is
beneficially owned by United States Citizens; (iv) any association or limited
liability company if (A) it is organized under the laws of the United States or
of a state, territory, district or possession thereof, (B) its president or
other chief executive officer (or equivalent position), chairman of the board of
directors (or equivalent committee or body) and any persons authorized to act in
the absence or disability of such persons are United States Citizens, (C) at
least 75% of the voting power is beneficially owned by United States Citizens,
(D) more than 50% of that number of its directors (or equivalent persons)
necessary to constitute a quorum are United States Citizens and (E) each member
is a United States Citizen; (v) any joint venture (if not an association,
corporation or partnership) if (A) it is organized under the laws of the United
States or of a state, territory, district or possession thereof and (B) all
co-venturers are United States Citizens; and (vi) any trust if (A) it is
domiciled in and existing under the laws of the United States or of a state,
territory, district or possession thereof, (B) the trustee is a United States
Citizen and (C) each beneficiary is a United States Citizen.

Special Charter and By-Law Provisions

The Certificate of Incorporation provides for three classes of directors
having staggered terms. The term of office of each class is three years. The
Certificate of Incorporation also provides that directors may be removed only
for cause and only by the affirmative vote of the holders of not less than 80%
of the voting stock of the Company.

The Certificate of Incorporation requires a vote of the holders of not less
than 80% of the voting stock of the Company to approve a merger or
consolidation, or a sale, lease, exchange, transfer or other disposition of all
or any substantial part of the Company's assets to certain other persons,
entities and groups, and their affiliates and associates, holding directly or
indirectly more than 10% of the Company's voting stock, unless (1) such merger,
consolidation, disposition or other transaction was approved by at least
66 2/3% of the members of the Board of Directors who are "Continuing Directors"
(as defined in the Certificate of Incorporation) or (2) in the case of a merger,
consolidation, or sale of assets, the cash or the fair market value or other
consideration to be received by the Company's common stockholders is at least
equal to the highest price paid by such 10% holder for its shares of the
Company, and certain other conditions are met.

Under the Certificate of Incorporation, holders of stock of the Company may
act only at a meeting of shareholders duly called and held, and may not act by
written consent. In addition, the By-Laws may not be modified, amended or
repealed by the shareholders.

The foregoing provisions of the Certificate of Incorporation cannot be
changed except by the affirmative vote of 80% of the outstanding shares entitled
to vote.

The foregoing provisions of the Certificate of Incorporation could render
more difficult or discourage a tender offer, merger or proxy contest for control
of the Company and could have the effect of making it more difficult to remove
incumbent management in such situations.

The By-Laws also require the approval of at least 66 2/3% of the members of
the Board of Directors to take certain actions, including the following:

1. Declare, pay or set aside monies for the payment of any dividends,
or make any distributions to shareholders of the Company, or repurchase any
shares of the Company's capital stock, or permit the Company's shareholders
to purchase assets of the Company for cash at less than fair market value;

2. Purchase any vessel, or charter-in any vessel for more than two
years;

3. Sell, mortgage or encumber any vessel, or charter-out any vessel
for more than five years;

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<PAGE>

4. Incur any indebtedness for money borrowed in excess of $3 million
or incur any contingent obligations in excess of $3 million;

5. Adopt or modify any pension, profit sharing, stock purchase or
other employee benefit plan, except for benefits granted to union employees
under collective bargaining agreements;

6. Hire anyone at a salary in excess of, or increase the salary of any
employee above, $100,000 per year or pay any employee in any year a bonus
in excess of 40% of such employee's base salary;

7. Incur or commit to incur any capital expenditure in excess of book
depreciation for the year incurred or committed;

8. Elect a president or any other person performing functions normally
assigned to the chief executive officer of a company;

9. Enter into any transaction outside the ordinary course of the
Company's business conducted on December 31, 1983; or

10. Amend, modify or repeal any of the By-Laws.

Delaware General Corporation Law Section 203

The Company is subject to Section 203 of the Delaware General Corporation
Law ("DGCL"), an anti-takeover law which restricts certain "business
combinations" (as defined in the DGCL) between the Company and an "interested
stockholder" (in general, a stockholder owning 15% or more of the Company's
outstanding voting stock) or its affiliates or associates for a period of three
years following the date on which the stockholder becomes an interested
stockholder. The restrictions do not apply if (i) prior to an interested
stockholder becoming such, the Board of Directors approves either the business
combination or the transaction in which the stockholder becomes an interested
stockholder, (ii) upon consummation of the transaction in which any person
becomes an interested stockholder, such interested stockholder owns at least 85%
of the voting stock of the Company outstanding at the time the transaction
commences (excluding shares owned by certain employee stock ownership plans and
persons who are both directors and officers of the Company) or (iii) on or
subsequent to the date an interested stockholder becomes such, the business
combination is both approved by the Board of Directors and authorized at an
annual or special meeting of the Company's stockholders, not by written consent,
by the affirmative vote of at least 66 2/3% of the outstanding voting stock not
owned by the interested stockholder.

Registrar and Transfer Agent

The Transfer Agent and Registrar of the Common Stock is The Chase Manhattan
Bank.

Preferred Stock

OMI's Board of Directors may, without further action by OMI's stockholders,
from time to time, direct the issuance of shares of Preferred Stock in series
and may, at the time of issuance, determine the rights, preference, and
limitations of each such series. Satisfaction of any dividend preferences of
outstanding shares of Preferred Stock would reduce the amount of funds available
for the payment of dividends on shares of Common Stock. Holders of shares of
Preferred Stock may be entitled to receive a preference payment in the event of
any liquidation, dissolution or winding-up of OMI before any payment is made to
the holders of shares of Common Stock. Under certain circumstances, the issuance
of shares of Preferred Stock may render more difficult or tend to discourage a
merger, tender offer, proxy contest, the assumption of control by a holder of a
large block of OMI's securities or the removal of incumbent management. The
Board of Directors of OMI, without stockholder approval, may issue shares of
Preferred Stock with voting and conversion rights which could adversely affect
the holders of shares of Common Stock. Upon completion of the Offerings, there
will be no shares of Preferred Stock outstanding, and OMI has no current
intention to issue any shares of Preferred Stock.

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<PAGE>

VALIDITY OF COMMON STOCK

The validity of the Common Stock offered hereby will be passed upon for the
Company by White & Case, New York, New York and for the Underwriters by Davis
Polk & Wardwell, New York, New York.

EXPERTS

The consolidated financial statements of OMI and its subsidiaries as of
December 31, 1994 and 1995 and for each of the three years in the period ended
December 31, 1995, included or incorporated by reference in this Prospectus,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing or incorporated by reference in this Prospectus and are
included in reliance upon such report of such firm given upon their authority as
experts in accounting and auditing.

The consolidated financial statements of Wilomi and subsidiaries and the
financial statements of Amazon each as of December 31, 1994 and 1995 and for
each of the three years in the period ended December 31, 1995, incorporated by
reference in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference in
this Prospectus and are included in reliance upon such reports of such firm
given upon their authority as experts in accounting and auditing.

<PAGE>

GLOSSARY

The following is a set of definitions for shipping terms that are used
throughout this Prospectus:

Aframax: a vessel of approximately 70,000-120,000 dwt.

Annual Survey: the inspection of a vessel by a classification society
surveyor that takes place every year.

b/d: barrels per day.

CDS: a construction-differential subsidy provided by the U.S. Government
intended to equalize the cost of construction of a vessel in the United States
with that of foreign shipyards.

Charter: the hire of a ship for a specified period of time or to carry a
cargo for a fixed fee from a loading port to a discharging port. The contract
for a charter is called a charter-party. The Company views a charter which
covers less than one year as a short-term charter; one which covers a period of
one to three years as a medium-term charter; and a charter which lasts more than
three years as a long-term charter.

Chartered-ln: a charter for use by the Company.

Crude Oil Tanker: a tanker vessel designed to carry crude oil or other
dirty products.

Deadweight: the total weight of cargo, fuel, water, stores, and crew, and
their effects, that a ship can carry.

DNV: Det Norske Veritas, the Norwegian classification society.

Double-Bottom: hull construction technique by which a vessel has an inner
and outer bottom separated by void space.

Double-Hull: hull construction technique by which vessel has inner and
outer side and bottom separated by void space.

Double-Side: hull construction technique by which a vessel has an inner and
outer side separated by void space.

Dry Bulk Carrier: a single-deck ocean-going vessel designed to carry dry
bulk commodities such as grain, coal and ore.

Drydock: the removal of a vessel from the water for inspection and/or
repair of underwater parts.

dwt: deadweight ton. A unit of a vessel's capacity, for cargo, fuel oil,
stores and crew, measured in metric tonnes of 1,000 kg. A vessel's dwt or total
deadweight is the total weight the vessel can carry when loaded to a particular
load line.

Handymax: a vessel of approximately 35,000-50,000 dwt.

Handysize: a vessel of approximately 25,000-35,000 dwt.

IMO: International Maritime Organization, a United Nations agency that
issues international trade standards for shipping.

Intermediate Survey: the inspection of a vessel by a classification society
surveyor which takes place two to three years before and after each Special
Survey for such vessel.

Laid-up: storage of a vessel.

Lightering: the process of discharging a vessel's cargo onto smaller
vessels.

Lightweight: the weight of the vessel with no fuel, water, passengers,
crew, baggage, mail, stores or cargo aboard.

A-1
<PAGE>

LPG: liquified petroleum gas.

LPG Carrier: a vessel designed to carry various petroleum gas products in
liquid form.

Master: chief officer of a vessel licensed by the country in which the
vessel is registered.

Newbuilding: a new vessel.

ODS: an operating differential subsidy provided by the U.S. Government
intended to equalize the cost of operation of a U.S. flag vessel to that of a
foreign-flag vessel.

Off-Hire Day: each day on which a vessel under charter is not earning
revenue.

OPA: the United States Oil Pollution Act of 1990.

Operating fleet: vessels either owned or chartered-in by the Company or the
Joint Ventures.

Panamax Carrier: a vessel of approximately 50,000 to 70,000 dwt, of maximum
length, breadth and draught capable of passing through the Panama Canal.

Product Carrier: a tanker vessel designed to carry a small number of
segregated liquid bulk commodities, such as refined petroleum products,
vegetable oils, caustic soda and molasses.

Protection and Indemnity Insurance: insurance obtained through a mutual
association formed by shipowners to provide protection from financial loss to
one member by contribution towards that loss by all members.

SEP Management Program: DNV's Safety and Environmental Protection
management program.

Special Survey: the inspection of a vessel by a classification society
surveyor which takes place every four to five years.

Spot market: the market for immediate chartering of a vessel.

Suezmax: a tanker of approximately 120,000--160,000 dwt, of maximum length,
breadth and draught capable of passing fully loaded through the Suez Canal and
capable of carrying 1 million barrels of oil.

Tanker: a vessel designed to carry liquid bulk commodities, such as crude
oil, refined petroleum products and chemicals, vegetable oils and molasses.

T/C/E Rate: a spot market rate adjusted to equate to a time charter rate
measured in dollars per day, before deducting brokerage commissions and
excluding off-hire and idle time.

Time Charter: rental of a vessel for a specified period of time. Owner
provides the vessel with crew, stores and provision, ready in all aspects to
load cargo and proceed on a voyage. Charterer provides fuel and pays canal and
port charges.

Ton-mile: tonnes carried by a vessel multiplied by the distance traveled.

Tonne: a metric ton--1,000 kilograms or 2,204.6 pounds.

ULCC: ultra large crude carrier. An ocean-going tanker vessel of more than
300,000 dwt, designed to carry crude oil cargo.

VLCC: very large crude carrier. An ocean-going tanker vessel of between
200,000 and 300,000 dwt, designed to carry crude oil cargo.

Voyage Charter: rental of a vessel for a specified voyage in which all
costs are for the owner's account.

Workboat/supply boat: a vessel designed to support lightering operations or
offshore drilling or oil production operations.

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<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report ...................................... F-2

Consolidated Statements of Operations for the fiscal years ended
December 31, 1993, 1994 and 1995 and (unaudited) the six months
ended June 30, 1995 and 1996 ..................................... F-3

Consolidated Balance Sheets at December 31, 1994 and 1995
and June 30, 1996 ................................................ F-4

Consolidated Statements of Cash Flows for the fiscal years ended
December 31, 1993, 1994 and 1995, and (unaudited) the six months
ended June 30, 1995 and 1996 ..................................... F-6

Consolidated Statements of Changes in Stockholders' Equity for the
fiscal years ended December 31, 1993, 1994 and 1995 and
(unaudited) the six months ended June 30, 1996 ................... F-7

Notes to Consolidated Financial Statements for the three years
ended December 31, 1995 and (unaudited) the six months ended
June 30, 1995 and 1996 ........................................... F-8

F-1

<PAGE>

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of OMI Corp.:

We have audited the accompanying consolidated balance sheets of OMI Corp.
and its subsidiaries as of December 31, 1994 and 1995 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
1994 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, New York

February 28, 1996
(March 20, 1996 as to Note 10)

F-2

OMI CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<CAPTION>
For the Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES:
Voyage revenues (Note 2) ....................... $ 265,780 $ 261,357 $ 232,589 $ 116,269 $ 119,494
Other income (Note 2) .......................... 4,699 5,439 7,291 2,884 3,626
--------- --------- --------- --------- ---------
Total revenues ............................... 270,479 266,796 239,880 119,153 123,120
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Vessel and voyage .............................. 209,722 217,140 208,192 102,034 89,863
Depreciation and amortization .................. 35,441 37,770 34,734 17,192 16,247
Operating lease ................................ 6,666 6,400 4,938 2,963 755
Provision for losses (Note 10):
Impaired value of vessels ..................... -- 14,798 8,707 -- --
Lease obligation .............................. -- 19,800 6,687 -- --
General and administrative ..................... 16,748 18,972 15,303 7,713 7,329
--------- --------- --------- --------- ---------
Total operating expenses ..................... 268,577 314,880 278,561 129,902 114,194
--------- --------- --------- --------- ---------

OPERATING INCOME (LOSS) ......................... 1,902 (48,084) (38,681) (10,749) 8,926
--------- --------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Gain on disposal of assets-net (Note 11) ....... 4,401 10,222 5,647 6,235 3,601
Provision for writedown of investments
(Notes 1, 2) .................................. (1,625) (1,250) -- -- --
Interest expense ............................... (21,788) (28,808) (26,708) (13,672) (14,049)
Interest income ................................ 1,738 2,843 2,076 968 906
Minority interest in (income) loss
of subsidiary ................................. (649) (304) 229 119 (93)
Other-net ...................................... -- (191) 1,040 883 556
--------- --------- --------- --------- ---------
Net other expense ............................ (17,923) (17,488) (17,716) (5,467) (9,079)
--------- --------- --------- --------- ---------
Loss before income taxes and equity
in operations of joint ventures ................ (16,021) (65,572) (56,397) (16,216) (153)
Benefit for income taxes (Note 5) ............... 1,730 22,305 18,973 5,195 367
--------- --------- --------- --------- ---------
(Loss) income before equity in operations
of joint ventures .............................. (14,291) (43,267) (37,424) (11,021) 214
Equity in operations of joint ventures
(Note 2) ....................................... 5,544 5,402 5,528 4,599 1,066
--------- --------- --------- --------- ---------
NET (LOSS) INCOME ............................... $ (8,747) $ (37,865) $ (31,896) $ (6,422) $ 1,280
========= ========= ========= ========= =========
NET (LOSS) INCOME PER COMMON SHARE
(NOTE 1) ....................................... $ (0.29) $ (1.24) $ (1.04) $ (0.21) $ 0.04
========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING ....................... 30,590 30,417 30,745 30,510 31,351
========= ========= ========= ========= =========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

OMI CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)

ASSETS

<TABLE>
<CAPTION>
December 31,
------------------- June 30,
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents of:
1994-$19,734; 1995-$26,008;
1996-$3,545 (Notes 1, 4) ............................ $ 31,797 $ 32,569 $ 17,265
Marketable securities (Notes 1, 4) ................... 14,415 -- --
Advances to masters .................................. 635 2,033 2,519
Receivables:
Traffic ............................................. 16,364 12,016 9,721
Other ............................................... 9,442 9,333 12,109
Income tax refund receivable (Note 5) ................ -- 5,651 5,651
Prepaid expenses and other current assets ............ 8,726 5,937 4,385
Vessel held for sale (Note 11) ....................... -- 14,668 --
-------- -------- --------
Total current assets ............................... 81,379 82,207 51,650
-------- -------- --------

CAPITAL CONSTRUCTION AND OTHER RESTRICTED FUNDS
(Notes 1, 3, 4) ...................................... 12,961 9,765 9,857
VESSELS AND OTHER PROPERTY (Note 1):
Vessels (Notes 3, 11) ................................ 686,763 637,741 625,474
Other property ....................................... 8,636 8,394 8,424
-------- -------- --------
Total vessels and other property .................... 695,399 646,135 633,898
Less accumulated depreciation ........................ 294,401 277,694 278,481
-------- -------- --------
Vessels and other property-net ...................... 400,998 368,441 355,417
-------- -------- --------
INVESTMENTS IN, AND ADVANCES TO JOINT VENTURES (Note 2) 81,868 84,915 84,891
CASH HELD IN ESCROW (Note 11) ......................... -- -- 14,919
LONG-TERM SECURITIES (Notes 1, 4) ..................... 3,075 591 694
OTHER ASSETS AND DEFERRED CHARGES ..................... 24,851 19,567 20,562
-------- -------- --------
TOTAL ................................................. $605,132 $565,486 $537,990
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

OMI CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share amount)

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
December 31,
------------------- June 30,
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks (Note 3) ...................... $ -- $ -- $ 20,000
Accounts payable ..................................... 6,842 5,187 4,872
Accrued liabilities:
Voyage and vessel ................................... 22,075 24,548 23,730
Interest ............................................ 4,563 4,375 3,660
Lease termination costs (Note 10) ................... -- 22,000 --
Other ............................................... 5,838 4,169 1,979
Current portion of long-term debt (Notes 3, 4) ....... 18,900 24,582 10,306
--------- --------- ---------
Total current liabilities .......................... 58,218 84,861 64,547
--------- --------- ---------
ADVANCE TIME CHARTER REVENUES AND OTHER
LIABILITIES (Note 10) ................................ 31,509 10,470 7,261
LONG-TERM DEBT (Notes 3, 4) ........................... 253,239 259,284 253,924
DEFERRED INCOME TAXES (Note 5) ........................ 79,448 63,082 62,651
MINORITY INTEREST IN SUBSIDIARY ....................... 3,042 2,594 2,468

COMMITMENTS AND CONTINGENCIES (Note 13)

STOCKHOLDERS' EQUITY:
Common stock, $0.50 par value; 80,000,000 shares
authorized; shares issued and outstanding:
1994--30,672,268; 1995--31,041,119; 1996--31,150,515
(Note 7) ............................................ 15,336 15,521 15,575
Capital surplus (Note 2) ............................. 129,919 131,622 132,130
Retained earnings (deficit) (Note 3) ................. 26,631 (5,265) (3,985)
Cumulative translation adjustment (Note 1) ........... 4,912 4,912 4,912
Unearned compensation-employee stock ownership trust
(Note 6) ............................................ (663) -- --
Unearned compensation-restricted stock (Note 7) ...... (941) (1,404) (1,182)
Unrealized gain (loss) on securities-net of deferred
income taxes of 1994--$3,060, 1995--$16, 1996--$(49)
(Notes 1,4) ......................................... 5,684 29 (91)
Treasury stock (Note 2) .............................. (1,202) (220) (220)
--------- --------- ---------
Total stockholders' equity ......................... 179,676 145,195 147,139
--------- --------- ---------
TOTAL ................................................ $ 605,132 $ 565,486 $ 537,990
========= ========= =========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

OMI CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
For the Six Months
For the Years Ended December 31, Ended June 30,
------------------------------------ ----------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net (loss) income ........................................ $ (8,747) $ (37,865) $ (31,896) $ (6,422) $ 1,280
Adjustments to reconcile net (loss) income to net
cash (used) provided by operating activities:
Decrease in deferred income taxes ...................... (4,720) (22,387) (13,322) (5,195) (317)
Depreciation and amortization .......................... 35,441 37,770 34,734 17,192 16,247
Amortization of unearned compensation .................. 456 1,630 943 388 222
Gain on disposal of assets--net ........................ (4,401) (10,222) (5,696) (6,322) (3,510)
Provision for losses on vessels/lease .................. -- 34,598 15,394 -- --
Provision for writedown of investments ................. 1,625 1,250 -- -- --
Other--net ............................................. -- (554) (1,040) (883) (556)
Equity in operations of joint ventures under
(over) dividends received ............................. 6,279 (4,410) (4,989) (3,399) (698)
Changes in assets and liabilities:
Decrease (increase) in receivables and other
current assets ........................................ 8,302 (5,499) 191 (4,637) 586
(Decrease) increase in accounts payable and
accrued liabilities ................................... (448) 4,391 (274) (396) (26,802)
Advances (from) to joint ventures--net ................. (6,657) 196 2,578 2,585 722
(Increase) decrease in other assets and
deferred charges ...................................... (1,700) 3,037 4,055 935 (77)
Increase (decrease) in advance time charter
revenues and other liabilities ........................ 5,382 (981) (6,216) (2,144) (293)
Other assets and liabilities--net ...................... 603 693 721 1,007 6
--------- --------- --------- --------- ---------
Net cash provided (used) by
operating activities ................................. 31,415 1,647 (4,817) (7,291) (13,190)
--------- --------- --------- --------- ---------
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:
Proceeds from disposition of vessels and
other property .......................................... 12,178 23,703 8,775 13,535 29,622
Proceeds (payments) for sale/purchase
of securities ........................................... 6,927 3,749 15,076 8,938 (104)
Additions to vessels and other property .................. (36,548) (15,318) (38,140) (15,319) (10,520)
Withdrawals from Capital Construction and
other restricted funds .................................. 916 -- 5,200 4,700 --
Proceeds and interest received and reinvested
in Capital Construction and other
restricted funds ........................................ (650) (1,033) (654) (224) (352)
Investments in joint ventures ............................ (3,724) (2,847) -- -- --
Other .................................................... 300 1,485 -- -- --
--------- --------- --------- --------- ---------
Net cash (used) provided by investing
activities ........................................... (20,601) 9,739 (9,743) 11,630 18,646
--------- --------- --------- --------- ---------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
(Payments) proceeds on notes payable
to bank--net ............................................ (13,500) -- -- -- 20,000
Proceeds from issuance of long-term debt ................. 177,000 12,050 44,600 9,257 3,000
Payments on long-term debt ............................... (142,628) (36,447) (30,543) (16,200) (44,301)
Payments for debt issue costs ............................ (1,292) (776) -- -- --
Proceeds from issuance of common stock ................... 217 263 1,275 137 541
Dividends paid ........................................... (2,140) -- -- -- --
--------- --------- --------- --------- ---------
Net cash provided (used) by financing
activities ........................................... 17,657 (24,910) 15,332 (6,806) (20,760)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS .............................................. 28,471 (13,524) 772 (2,467) (15,304)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD ................................................ 16,850 45,321 31,797 31,797 32,569
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................ $ 45,321 $ 31,797 $ 32,569 $ 29,330 $ 17,265
========= ========= ========= ========= =========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>
<TABLE>

OMI CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For The Years Ended December 31, 1993, 1994, 1995
and (Unaudited) the Six Months Ended June 30, 1996

(in thousands)

<CAPTION>
Unearned Unearned
Compen- Compen-
Common Stock Retained Cumulative sation sation
------------------- Capital Earnings Translation From Restricted
Shares Amount Surplus (Deficit) Adjustment ESOP Stock
------ --------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 .......... 30,568 $ 15,284 $ 128,705 $ 73,243 $ 4,912 $ (2,520) $ (1,152)
Net loss ............................ (8,747)
Exercise of stock options ........... 47 23 195
Amortization of unearned compensation 361 95
Unrealized gain on securities .......
Purchase of treasury stock ..........
------ --------- --------- --------- --------- --------- ---------
Balance at December 31, 1993 ........ 30,615 15,307 128,900 64,496 4,912 (2,159) (1,057)
Net loss ............................ (37,865)
Exercise of stock options ........... 52 26 237
Issuance of restricted stock awards . 15 8 86 (94)
Forfeiture of restricted stock awards (10) (5) (71) 76
Amortization of unearned compensation 1,496 134
Net change in valuation account .....
Purchase of treasury stock ..........
Sale of treasury stock .............. 767
------ --------- --------- --------- --------- --------- ---------
Balance at December 31, 1994 ........ 30,672 15,336 129,919 26,631 4,912 (663) (941)
Net loss ............................ (31,896)
Issuance of restricted stock awards . 110 55 688 (743)
Exercise of stock options ........... 259 130 1,145
Amortization of unearned compensation 663 280
Net change in valuation account .....
Sale of securities ..................
Sale of treasury stock .............. (130)
------ --------- --------- --------- --------- --------- ---------
Balance at December 31, 1995 ........ 31,041 15,521 131,622 (5,265) 4,912 -- (1,404)
Net income .......................... 1,280
Exercise of stock options and
stock appreciation rights .......... 109 54 508
Amortization of unearned compensation 222
Net change in valuation account .....
------ --------- --------- --------- --------- --------- ---------
Balance at June 30, 1996 ............ 31,150 $ 15,575 $ 132,130 $ (3,985) $ 4,912 $ -- $ (1,182)
====== ========= ========= ========= ========= ========= =========
</TABLE>

Unrealized
Gain Total
(Loss) on Stock-
Securities- Treasury holders'
Net Stock Equity
--------- ------ ---------
Balance at January 1, 1993 .......... $ (81) $ 218,391
Net loss ............................ (8,747)
Exercise of stock options ........... 218
Amortization of unearned compensation 456
Unrealized gain on securities ....... $ 9,709 9,709
Purchase of treasury stock .......... (1) (1)
--------- ------ ---------
Balance at December 31, 1993 ........ 9,709 (82) 220,026
Net loss ............................ (37,865)
Exercise of stock options ........... 263
Issuance of restricted stock awards . --
Forfeiture of restricted stock awards --
Amortization of unearned compensation 1,630
Net change in valuation account ..... (4,025) (4,025)
Purchase of treasury stock .......... (2,431) (2,431)
Sale of treasury stock .............. 1,311 2,078
--------- ------ ---------
Balance at December 31, 1994 ........ 5,684 (1,202) 179,676
Net loss ............................ (31,896)
Issuance of restricted stock awards . --
Exercise of stock options ........... 1,275
Amortization of unearned compensation 943
Net change in valuation account ..... 1,139 1,139
Sale of securities .................. (6,794) (6,794)
Sale of treasury stock .............. 982 852
--------- ------ ---------
Balance at December 31, 1995 ........ 29 (220) 145,195
Net income .......................... 1,280
Exercise of stock options and
stock appreciation rights .......... 562
Amortization of unearned compensation 222
Net change in valuation account ..... (120) (120)
--------- ------ ---------
Balance at June 30, 1996 ............ $ (91) $ (220) $ 147,139
--------- ------ ---------

See notes to consolidated financial statements.

F-7
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1995 and
(Unaudited) the Six Months Ended June 30, 1995 and 1996
(All tabular amounts are in thousands)

Note 1--Summary of Significant Accounting Policies

Business--OMI Corp. ("OMI or the Company") is a bulk shipping company which
operates in both international and domestic shipping markets.

Principles of Consolidation--The consolidated financial statements include
all domestic and foreign subsidiaries which are more than 50 percent owned by
OMI. All significant intercompany accounts and transactions have been eliminated
in consolidation.

Investments in joint ventures, in which the Company's interest is 50
percent or less and where it is deemed that the Company's ownership gives it
significant influence over operating and financial policies, are accounted for
by the equity method.

Unaudited Financial Statements--In the opinion of management, the unaudited
consolidated financial statements reflect the adjustments (comprising only
normal recurring accruals) necessary for a fair presentation of financial
position at June 30, 1996 and results of operations and cash flows for the six
months ended June 30, 1995 and 1996.

Accounting Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Operating Revenues and Expenses--Voyage revenues and expenses are
recognized on the percentage of completion method of accounting based on voyage
costs incurred to date as compared to estimated total voyage costs. Estimated
losses on voyages are provided for in full at the time such losses become
evident.

Special survey and drydock expenses are accrued and charged to operating
expenses over the survey cycle, which is generally a two to three year period.
The accruals of such expenses are based on management's best estimates of future
cost and the expected length of the survey cycle. However, the ultimate
liability may be more or less than such estimates.

Investments in Securities--Investments in marketable securities have been
classified by management as available-for-sale and are carried at fair value.
Net unrealized gains or losses are reported as a separate component of
stockholders' equity. Adjustments are made to net income for any impairment in
value that is deemed to be other than temporary. Realized gains and losses on
the sales of securities are recognized in net income on the specific
identification basis.

Capital Construction and Other Restricted Funds--The Capital Construction
Fund ("CCF") is restricted to provide for replacement vessels, additional
vessels or reconstruction of vessels built in the United States. The other
restricted funds are to be used to pay certain of the Company's debt. These
funds can be used at the discretion of the Company upon receipt of written
approval from the Maritime Administration.

Vessels and Other Property--Vessels and other property are recorded at
cost. Depreciation for financial reporting purposes is provided principally on
the straight-line method based on the estimated useful lives of the assets up to
the assets' estimated salvage value. The useful lives of the vessels range from
20 to 30 years. Salvage value is based upon a vessel's lightweight tonnage
multiplied by a scrap rate.

Expenditures for maintenance, repairs and minor renewals are expensed.
Major replacements and renewals are capitalized.

F-8
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 1--Summary of Significant Accounting Policies--(Continued)

In the event that facts and circumstances indicate that the carrying amount
of a vessel may be impaired, an evaluation of recoverability is performed. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the vessel are compared to the vessel's carrying value to determine if a
writedown to fair value or discounted cash flow is required (see Note 10).

Leasehold improvements are amortized on the straight-line method over the
terms of the leases or the estimated useful lives of the improvements as
appropriate.

Goodwill--Goodwill, included in Other Assets and Deferred Charges,
recognized in business combinations accounted for as purchases, of $17,868,000
before accumulated amortization of $3,260,000 and $3,961,000 at December 31,
1994 and 1995, respectively, and $4,312,000 at June 30, 1996 is being amortized
over 25 years. The carrying value of goodwill is reviewed periodically based on
the estimated future undiscounted cash flows of the entity acquired over the
remaining amortization period.

Net Income (Loss) per Common Share--Net income (loss) per common share is
determined by dividing net income (loss) by the weighted average number of
common shares outstanding during the period. Shares issuable upon the exercise
of stock options (see Note 7) have not been included in the computation where
their effect would be anti-dilutive.

Federal Income Taxes--OMI files a consolidated Federal income tax return
which includes all its domestic subsidiary companies. Deferred income taxes are
determined on the asset and liability method in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (see Note
5).

Cash Flows--Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair value.

During the years ended December 31, 1993, 1994 and 1995, interest paid
totaled approximately $20,647,000, $29,447,000 and $24,688,000, respectively.
During the six months ended June 30, 1996, interest paid was $14,764,000. For
the year ended December 31, 1993, income taxes paid were approximately
$6,413,000. There were no income taxes paid during 1994, 1995 and the six months
ended June 30, 1996.

Reclassifications--Certain reclassifications have been made to the 1993 and
1994 financial statements to conform to the 1995 presentation.

Newly Issued Accounting Standards--Effective January 1, 1995, the Company
adopted Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS 121 establishes accounting standards for recording the
impairment of long-lived assets, certain identifiable intangibles, goodwill and
assets to be disposed of. The adoption of this Statement did not have a
significant effect on the Company's consolidated financial position or results
of operations.

Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), "Accounting for Awards of Stock-Based
Compensation to Employees." SFAS 123 requires expanded disclosures of
stock-based compensation arrangements with employees and encourages (but does
not require) compensation cost to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion No. 25 "Accounting for Stock Issued to Employees" which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock based compensation awards to employees and will disclose the required pro
forma effect on net income and earnings per share.

F-9
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 2--Investments in Joint Ventures

The operating results of the joint ventures have been included in the
accompanying consolidated financial statements on the basis of ownership as
follows:

Percent of
Ownership
---------
Amazon Transport, Inc. ("Amazon") ........................ 49.0
Aurora Management Ltd. ("Aurora") ........................ 49.9(1)
Aurora Tankers Ltd. ...................................... 49.9(2)
Aurora Tankers Pte. Ltd. ................................. 49.9(2)
Aurora Tankers (UK) Ltd. ................................. 49.9(2)
Ecomarine USA ............................................ 49.0(3)
Gainwell Investments Ltd. ................................ 25.0
Geraldton Navigation Company Inc. ("Geraldton") .......... 49.9
Grandteam Ship Management Ltd. ........................... 50.0
Greeley Management Ltd. ("Greeley") ...................... 49.9(1)
K/S Palawan Princess ..................................... 25.0(4)
Mosaic Alliance Corporation ("Mosaic") ................... 49.9
Mundogas Orinoco Ltd. .................................... 50.0(5)
Ocean Specialty Tankers Corp. ("OSTC") ................... 50.0(6)
Vanomi Management, Inc. .................................. 50.0
White Sea Holdings Ltd. ("White Sea") .................... 49.0
Wilomi, Inc. ("Wilomi") .................................. 49.0

- ----------
(1) Joint ventures terminated July 1, 1993.
(2) Joint ventures terminated December 31, 1994.
(3) Joint venture interest was sold August 1996.
(4) The joint venture sold its primary asset in January 1994.
(5) OMI sold its investment in Mundogas Orinoco Ltd. in 1993.
(6) Joint venture interest was sold August 14, 1996.

OMI has entered into management service agreements with certain of its
joint ventures, wherein the Company acts as technical and/or commercial manager
for certain of the ventures' vessels. Management fees relating to services
rendered to joint ventures aggregated $699,000, $820,000 and $759,000 for the
years ended December 31, 1993, 1994 and 1995, respectively. Management fees for
the six months ended June 30, 1996 aggregated $243,000.

In 1995, Mosaic purchased $2,000,000 of OMI's 10.25 percent Senior Notes
("Notes") at a cost of $1,736,000. The Company's portion of such Notes was
considered a retirement of debt. On July 12, 1996, the Company repurchased these
Notes at par (see Note 3).

In 1994, Mosaic owned 893,800 shares of OMI common stock acquired on the
open market at an aggregate cost of $4,595,000 and also sold 600,000 of these
shares in 1994. The remaining 293,800 shares were sold in 1995. OMI's equity in
these shares was accounted for as treasury stock. OMI's share of the gains
(losses) on the sale of the stock of $767,000 in 1994 and $(130,000) in 1995 was
recorded in capital surplus.

F-10
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 2--Investments in Joint Ventures--(Continued)

Summarized combined financial information pertaining to all affiliated
companies accounted for by the equity method is as follows:

For the
Six Months
For the Years Ended Ended
December 31, June 30,
---------------------------- ---------
1993 1994 1995 1996
---- ---- ---- ----
Results of operations:
Revenues ............................ $118,769 $120,707 $123,256 $ 57,205
Operating income .................... 17,410 18,661 23,488 7,178
Gain (loss) on disposal of assets-net -- 2,976 1,791 (961)
Net income .......................... 10,869 11,741 15,587 2,478

December 31, June 30,
------------------ ---------
1994 1995 1996
---- ---- ----
Net Assets:
Current assets ......................... $ 64,236 $ 54,958 $ 69,203
Vessels and other property-net ......... 303,876 286,250 258,871
Other assets ........................... 9,605 7,710 12,760
-------- -------- --------
Total assets ............................ 377,717 348,918 340,834
-------- -------- --------
Less:
Current liabilities .................... 39,414 34,594 38,586
Long-term debt ......................... 171,045 142,380 130,066
Other liabilities ...................... 2,833 1,418 1,634
-------- -------- --------
Total liabilities ....................... 213,292 178,392 170,286
-------- -------- --------
Shareholders' and partners' equity ...... $164,425 $170,526 $170,548
======== ======== ========

During 1993, 1994, 1995, and for the six months ended June 30, 1996, OMI
chartered three vessels to OSTC for $24,434,000, $26,564,000, $26,099,000, and
$12,385,000, respectively. These amounts are included in revenues of OMI as the
operations of OSTC are not consolidated.

During 1994, OMI wrote down its investment in Aurora Tankers Ltd. by
$1,250,000 to recognize the estimated loss on exiting the joint venture. The
Company also wrote off its investment in Ecomarine USA of $1,625,000 in 1993.

In 1993, dividends of $4,410,000 and $258,000 were received from Amazon and
Aurora, respectively. In 1994, OMI received distributions of $2,450,000 from
Amazon and of $27,000 from Greeley and in 1995, OMI received dividends of
$539,000 from White Sea. During the six months ended June 30, 1996, OMI received
a dividend of $368,000 from White Sea.

Certain of the loan agreements to which the Company's joint ventures are
party contain restrictive covenants requiring minimum levels of cash or cash
equivalents, working capital and net worth, maintenance of specified financial
ratios and collateral values, and restrict the ability of the joint ventures to
pay dividends to the Company. These loan agreements also contain various
provisions restricting the right of the joint ventures to make certain
investments, to place additional liens on their property, to incur additional
long-term debt, to make certain payments (including in certain instances,
dividends), to merge or to undergo a similar corporate reorganization, and to
enter into transactions with affiliated companies.

F-11
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 3--Long-Term Debt and Credit Arrangements

Long-term debt consists of the following:

<TABLE>
<CAPTION>
December 31,
------------------- June 30,
1994 1995 1996
---- ---- ----
<C> <C> <C> <C>
10.25% unsecured Senior Notes due 2003(1, 2) ........... $160,650 $150,002 $135,952
Bonds, mortgage notes and loans under bank credit
agreements secured by vessels:
Bonds payable at 5.35% to 10.1% in varying
installments to 2006 ................................ 20,013 17,488 34,650
Mortgage notes at variable rates above the London
Interbank Offering Rate ("LIBOR") in varying
installments to 2006(3) ............................. 83,852 81,780 55,628
Loans under bank credit agreements at variable rates
above LIBOR(2) ...................................... -- 32,000 35,000
7% convertible note due 02/29/04 ....................... -- -- 3,000
Unsecured notes payable to an affiliate at 5.0% due 1996 7,624 2,596 --
-------- -------- --------
Total .................................................. 272,139 283,866 264,230
Less current portion of long-term debt ................. 18,900 24,582 10,306
-------- -------- --------
Long-term debt ......................................... $253,239 $259,284 $253,924
======== ======== ========
</TABLE>

- ----------
(1) On July 12, 1996, OMI completed its cash tender offer for the purchase at
par of its outstanding Notes (see below).
(2) $998,000 of the Senior Notes representing Mosaic's purchase of such Notes
were retired in 1995 (see Note 2).
(3) Rates at June 30, 1996 ranged from 6.4667 percent to 7.0625 percent.

Aggregate maturities during the next five years from December 31, 1995 are
$24,582,000, $15,965,000, $18,083,000, $12,942,000 and $8,004,000.

In 1994, 1995 and January 1996 OMI repurchased $9,350,000, $9,650,000 and
$14,050,000 of the 10.25 percent unsecured Senior Notes ("Notes") due 2003 for
net gains of $753,000, $1,040,000, and $556,000, respectively. These gains are
included in Other-net in the accompanying consolidated statements of operations.

On July 12, 1996, OMI completed its cash tender offer for the purchase at
par of its outstanding Notes. Of the $136,950,000 outstanding aggregate amount
of Notes, $130,123,000 was tendered for payment pursuant to the offer and
$6,827,000 remain outstanding. An extraordinary loss (net of the tax benefit) of
approximately $3,000,000 or $.10 per share was recorded in the third quarter for
the extinguishment of debt. The purchase of the Notes in connection with the
cash tender offer was financed by a new credit agreement described below.

To fund the purchase of its Notes, finance the purchase of a vessel and
refinance secured indebtedness on two vessels and certain other indebtedness, in
July 1996 the Company signed a $167,750,000 Credit Agreement ("Credit
Agreement") with two foreign banks as co-arrangers. This agreement, which
matures in 18 months, requires two equal semi-annual installments of $7,500,000
at a rate of LIBOR plus 1.75 percent until December 31, 1996 when the rate
increases to LIBOR plus 2.50 percent unless OMI has made aggregate principal
repayments of at least $67,500,000 on or before such date. The Company repaid
$6,827,000 (equal to the amount of Notes not tendered) of such outstanding
principal amounts on July 18, 1996. The Credit Agreement matures in January 1998
when the remaining balance is due.

F-12
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Agreement imposes operating and financial restrictions on the Company which
affect, and in many respects significantly limit or prohibit, the ability of the
Company to, among other things, incur additional indebtedness, create liens,
sell capital stock of subsidiaries or certain other assets, make certain
investments, engage in mergers and acquisitions, make certain capital
expenditures or pay dividends. The New Credit Agreement calls for a commitment
fee of .75 percent per annum payable monthly on the total credit.

Aggregate maturities of long-term debt following the purchase of the Notes,
borrowing under the New Credit Agreement (net of the repayment of $6,827,000),
and the discharge of $34,650,000 of mortgage debt in August 1996 (see Note 11)
are: $2,416,000, $22,592,000, $198,258,000, $4,658,000 and $5,010,000 for the
periods ending December 31, 1996, 1997, 1998, 1999 and 2000, respectively.

At June 30, 1996, the Company had two $10,000,000 line of credit facilities
at variable rates above LIBOR, which in conjunction with the negotiation of the
agreement described above, were terminated. The Company also had a revolving
credit/term loan agreement providing for a credit facility of up to $37,000,000
secured by three vessels under which $35,000,000 was outstanding at June 30,
1996.

Bonds of a domestic subsidiary of OMI in the amounts of $17,488,000 at
December 31, 1995 and $34,650,000 at June 30, 1996 were collateralized by
mortgages on vessels. OMI was discharged from its obligation for these bonds in
connection with the sale of two vessels in August 1996 (see Note 11).

At June 30, 1996, vessels with a net book value of $221,000,000,
investments of $9,857,000 (included in Capital Construction and other restricted
funds in the accompanying consolidated balance sheet), and shares of a joint
venture with an aggregate carrying value of $6,975,000 had been pledged as
collateral on loans under bank credit agreements and on long-term debt issues.
At August 31, 1996, vessels with a net book value of $277,677,000 and shares of
a subsidiary and three joint ventures with an aggregate carrying value of
$48,311,000 have been pledged as collateral on long-term debt issues.

Certain of the loan agreements of the Company's subsidiaries contain
restrictive covenants requiring minimum levels of cash or cash equivalents,
working capital and net worth, maintenance of specified financial ratios and
collateral values, and restrict the ability of the Company's subsidiaries to pay
dividends to the Company. These loan agreements also contain various provisions
restricting the right of OMI and/or its subsidiaries to make certain
investments, to place additional liens on the property of certain of OMI's
subsidiaries, to incur additional long-term debt, to make certain payments, to
merge or to undergo a similar corporate reorganization, and to enter into
transactions with affiliated companies. As dividend payments were limited by the
terms of the Senior Note Indenture to 50 percent of net income earned subsequent
to issuance of the Notes, the Company was unable to pay cash dividends at
December 31, 1995.

OMI has entered into interest rate swap agreements to manage interest costs
and the risk associated with changing interest rates. At December 31, 1995 and
June 30, 1996, the Company had outstanding three interest rate swap agreements
with commercial banks. These agreements effectively change the Company's
interest rate exposure on floating rate loans to fixed rates ranging from 6.98
percent to 8.475 percent. The differential to be paid or received is recognized
as an adjustment to interest expense over the lives of the agreements. The swap
agreements have various maturity dates from February 1999 to June 1999. The
changes in the notional principal amounts are as follows:

December 31,
----------------------- June 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Notional principal amount, beginning of period ...... $ 69,650 $ 38,350 $ 32,700
Reductions of notional amounts ...................... (6,300) (3,150) --
Maturity/termination of swaps ....................... (25,000) (35,200) --
New swap agreements ................................. -- 32,700 --
-------- -------- --------
Notional principal amount, end of period ............ $ 38,350 $ 32,700 $ 32,700
======== ======== ========
</TABLE>

F-13
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Interest expense pertaining to interest rate swaps for the three years
ended December 31, 1993, 1994 and 1995 was $2,914,000, $2,100,000 and $786,000,
respectively. Interest expense pertaining to interest rate swaps for the six
months ended June 30, 1996 was $400,000.

The Company is exposed to credit loss in the event of non-performance by
other parties to the interest rate swap agreements. However, OMI does not
anticipate non-performance by the counter-parties. The Company has granted the
counter-party to two swap agreements a second priority mortgage on one of its
vessels as security.

Note 4--Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1994 1995 June 30, 1996
------------------ ------------------ -------------------
Carrying Fair Carrying Fair Carrying Fair
Value Value Value Value Value Value
-------- ----- -------- ----- -------- -----

<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents ................ $ 31,797 $ 31,797 $ 32,569 $ 32,569 $ 17,265 $ 17,265
Marketable securities .................... 14,415 14,415
Capital Construction Funds ............... 12,961 12,961 9,765 9,765 9,857 9,857
Long-term securities ..................... 3,075 3,075 591 591 694 694
Total debt ............................... 272,139 255,547 283,866 281,866 264,230 259,672
Unrecognized financial instruments:
Interest rate swaps in a net
payable position ....................... 631 2,686 1,464
</TABLE>

The fair value of the Company's Notes, included in long-term debt, is
determined by using the quoted market price at the end of the reporting period.
The fair value of other long-term debt is estimated based on the current rates
offered to the Company for similar debt of the same remaining maturities. The
fair value of interest rate swaps (used for purposes other than trading) is the
estimated amount the Company would receive or pay to terminate swap agreements
at the reporting date, taking into account current interest rates and the
current credit-worthiness of the swap counter-parties.

Securities available-for-sale included in marketable securities, Capital
Construction Funds, and long-term securities consist of the following
components:

<TABLE>
<CAPTION>
December 31,
---------------------------------------------
1994 1995 June 30, 1996
--------------------- --------------------- ----------------------
Carrying Unrealized Carrying Unrealized Carrying Unrealized
Value Gain Value Gain (Loss) Value Gain (Loss)
-------- ---------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current:
2,503,389 common shares of Noble
Drilling Corporation ..................... $ 14,394 $ 9,840
Miscellaneous Securities .................. 21
Long-term
125,000 common shares of SEACOR
Holdings, Inc. ........................... 2,484 609
12,500 B Capital shares of Sundal Collier
& Co, a.s. ............................... 591 $ 591 $ 694
Capital Construction Funds:
Cash equivalents .......................... 933 135 92
U.S. Treasury Notes ....................... 4,128 (468) 2,965 $ (140)
Preferred stocks .......................... 7,000 (1,237) 3,150 $ 45
Time deposit .............................. 900 6,480 6,800
------- ----- ------
Total ...................................... 8,744 45 (140)
Deferred income taxes ...................... (3,060) (16) 49
------- ----- ------
Unrealized gain (loss) on securities--net .. $ 5,684 $ 29 $ (91)
======= ===== ======
</TABLE>

F-14
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 5--Income Taxes

A summary of the components of the benefit for income taxes is as follows:

For the Years Ended December 31,
--------------------------------------
1993 1994 1995
-------- -------- --------
Current (provision) benefit ........ $ (2,990) $ (82) $ 5,651
Deferred tax benefit ............... 4,720 22,387 13,322
-------- -------- --------
Benefit for income taxes ........... $ 1,730 $ 22,305 $ 18,973
======== ======== ========

The 1995 current federal tax benefit includes estimated income taxes
recoverable due to the carryback of the 1995 current taxable loss.

The benefit for income taxes varies from the statutory rates due to the
following:

For the Years Ended December 31,
-------------------------------------
1993 1994 1995
-------- -------- --------

Tax benefit at statutory rate .......... $ 3,341 $ 20,953 $ 17,884
Equity in earnings of joint ventures
(other than Amazon/White Sea) net of
dividends declared .................... 1,314 1,866 1,876
Effect of change in Federal tax rate ... (3,044) -- --
Increase in valuation allowance ........ -- -- (525)
Other .................................. 119 (514) (262)
-------- -------- --------
Benefit for income taxes ............... $ 1,730 $ 22,305 $ 18,973
======== ======== ========

On August 2, 1993, Congress passed the Omnibus Budget Reconciliation Act of
1993 (the "Act"). The major component of the Act affecting OMI was the
retroactive increase in the marginal corporate tax rate from 34 percent to 35
percent, increasing 1993 deferred income taxes by $3,044,000 to comply with the
provisions of the Act.

F-15
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 5--Income Taxes--(Continued)

The components of deferred income taxes relate to the tax effects of
temporary differences as follows:

December 31,
---------------------
1994 1995
-------- --------
Deferred tax liabilities:
Difference between book and tax basis in assets ..... $ 78,848 $ 68,838
Unrealized gain on investments ...................... 3,060 16
Capital Construction fund ........................... 5,134 3,402
Previously excluded foreign income .................. 10,285 8,070
ESOP ................................................ 552 --
Other ............................................... 115 --
-------- --------
Total deferred tax liabilities .................... 97,994 80,326
-------- --------

Deferred tax assets:
Unrealized losses on investments .................... (3,249) (1,673)
Reserve for drydocking .............................. (5,541) (4,907)
Deferred foreign deficits ........................... (993) (839)
Difference between book and tax basis
of investments in Amazon/White Sea ................. (324) (313)
Accrued lease termination costs ..................... (6,930) (8,750)
Other ............................................... (1,509) (1,287)
-------- --------
Total deferred tax assets ......................... (18,546) (17,769)
-------- --------
Subtotal .......................................... 79,448 62,557
Valuation allowance .................................. -- 525
-------- --------
Deferred income taxes ................................ $ 79,448 $ 63,082
======== ========

The Company has not provided deferred income taxes on its equity in the
undistributed earnings of foreign corporate joint ventures accounted for under
the equity method other than those of Amazon and White Sea because these
earnings are considered by management to be invested in the business for an
indefinite period. If the earnings were not considered indefinitely invested,
approximately $13,982,000 of additional deferred tax liabilities would have been
required at December 31, 1995.

Note 6--Employee Stock Ownership Plan

Under the Employee Stock Ownership Plan ("ESOP"), shares were allocated
annually to eligible participants based on a percentage of their annual salaries
up to the extent allowable by the Internal Revenue Code. Unearned
compensation--employee stock ownership trust in the accompanying consolidated
statements of changes in stockholders' equity represents the cost of unallocated
shares held by the ESOP trust. At December 31, 1995, all shares have been
allocated by the trust. In 1996, the Company merged the ESOP and the existing
401(k) Plan (see Note 8).

Note 7--Stock Option and Restricted Stock Plans

On May 23, 1995, the shareholders approved the OMI Corp. 1995 Incentive
Equity Plan ("1995 Plan") to replace the 1990 Equity Incentive Plan ("1990
Plan"). The total number of shares that may be optioned or awarded under the
1995 Plan is 1,000,000 shares of OMI common stock. No further options may be
granted under the 1990 Plan; 432,000 shares are reserved with respect to options
granted under this plan. The Company also has a 1986 Non-Qualified Stock Option
Plan which provided for the granting of up to 500,000 shares. No options may be
granted under this plan after April 3, 1996.

F-16
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 7--Stock Option and Restricted Stock Plans--(Continued)

Under the 1995 Plan, the Company may grant incentive and non-qualified
stock options, stock appreciation rights ("SARs") and restricted shares. SARs
entitle a recipient the alternative of electing to cancel the related stock
option, and to receive instead an amount in cash, stock or a combination of cash
and stock equal to the difference between the option price and the market price
of the Company's stock on the date on which the SARs are exercised. Under all
plans, the option price per share may not be less than the fair market value of
a share at the date of grant.

During 1995, the Company awarded options to acquire an aggregate of 591,000
shares and 110,000 restricted shares all under the 1995 Plan. The options
granted are non-qualified stock options and vest equally over a three year
period from the date of grant. The restrictions on the restricted shares awarded
lapse equally over a five year period. No SARs were issued in 1995.

The 1995 Stock Option Plan for Non-Employee Directors ("Directors' Plan")
also was approved by the shareholders of the Company on May 23, 1995. The total
number of shares of OMI common stock allocated to the Directors' Plan is 300,000
shares. During 1995, the Company awarded options to acquire an aggregate of
150,000 shares under this Plan. Each option will permit the non-employee
director, for a period of up to ten years from the date of grant to purchase
from the Company 30,000 shares. Options become exercisable equally over a three
year period and have a term of ten years. The initial option exercise price is
not less than the fair market value at the date of grant. The option exercise
price with respect to the shares which become exercisable on the second and
third anniversary of the date of grant will increase by 15 percent over the
option exercise price applicable to shares which first became exercisable in the
year immediately preceding each such anniversary date.

Proceeds received from the exercise of the options are credited to the
capital accounts. Compensation expense relating to SARs is recorded with respect
to the rights based upon the quoted market value of the shares and exercise
provisions. Charges (benefits) to net income relating to SARs and/or options for
the years ended December 31, 1993, 1994, 1995 and the six months ended June 30,
1996 were $96,000, $(36,000), $(17,000) and $(32,000), respectively.

F-17
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 7--Stock Option and Restricted Stock Plans--(Continued)

A summary of the changes in shares under option for all plans is as
follows:

Number of
Options Option Price
------- ------------
Outstanding at January 1, 1993 ........ 907 $ 2.8125 to 9.875
Granted .............................. 131 4.50
Exercised ............................ (48) 2.8125 to 5.125
Forfeited ............................ (14) 5.125 to 9.875
-----
Outstanding at December 31, 1993 ...... 976 4.25 to 9.875
Granted .............................. 40 6.25
Exercised ............................ (67) 4.6875 to 5.125
Forfeited ............................ (34) 4.50 to 9.875
-----
Outstanding at December 31, 1994 ...... 915 4.25 to 9.875
Granted .............................. 741 5.38 to 6.690
Exercised ............................ (259) 4.25 to 5.125
Forfeited ............................ (35) 4.50 to 9.875
-----
Outstanding at December 31, 1995 ...... 1,362 4.25 to 9.875
Exercised ............................ (121) 4.50 to 5.125
Forfeited ............................ (2) 9.875
-----
Outstanding at June 30, 1996 .......... 1,239 4.25 to 9.875
=====

Note 8--Retirement Benefits and Deferred Compensation

In June 1993, the Company terminated its non-contributory defined benefit
Pension Plan (the "Pension Plan"), which resulted in a loss of $1,017,000, which
was recognized in 1993. All participants of the Pension Plan were fully vested
as of the termination date. In April 1994, OMI settled the accumulated benefit
obligation through lump-sum payments of $2,950,000 to participants. The net
periodic pension costs in 1993 was $158,000.

The terminated Pension Plan was replaced in 1994 by a 401(k) Plan (the
"Plan") which is available to full-time employees who meet the Plan's
eligibility requirements. This Plan is a defined contribution plan, which
permitted employees to make contributions up to two percent of their annual
salaries in 1994 and 1995, with the Company matching 100 percent of the
employee's contribution. Company contributions were $160,000, $171,000 and
$132,000 in 1994, 1995 and the six months ended June 30, 1996, respectively.
Effective January 1, 1996, employees are permitted to contribute up to 10
percent of their annual salaries, with the Company then matching up to the first
three percent of the employee's contribution. The Company may elect to make
additional contributions to the Plan at the discretion of the Company's Board of
Directors.

In addition, certain domestic subsidiaries make contributions to union
sponsored multi-employer pension plans covering seagoing personnel.
Contributions to these plans amounted to approximately $961,000, $1,020,000 and
$751,000 for 1993, 1994 and 1995, respectively. If these subsidiaries were to
withdraw from the plans or the plans were to terminate, the subsidiaries would
be liable for a portion of any unfunded plan benefits that might exist. The
Company has been advised by the trustees of such plans that it has no withdrawal
liability as of December 31, 1995.

Note 9--Operating Leases

Total rental expense, including contingent rentals, amounted to
$40,350,000, $49,247,000 and $47,840,000 for the years ended December 31, 1993,
1994 and 1995, respectively. Leases are primarily for vessels and office space.
Rental expense for the six months ended June 30, 1996 totaled $17,237,000.

F-18
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 9--Operating Leases--(Continued)

The future minimum rental payments required by year, under operating leases
subsequent to December 31, 1995, are as follows:

1996 ..................................... $21,606
1997 ..................................... 17,346
1998 ..................................... 6,912
1999 ..................................... 657
-------
Total ................................ $46,521
=======

Time charters to third parties of the Company's owned vessels are accounted
for as operating leases. Minimum future revenues by year, to be received
subsequent to December 31, 1995 on these time charters are as follows:

1996 ..................................... $59,658
1997 ..................................... 28,706
1998 ..................................... 3,380
-------
Total ................................ $91,744(1)
=======

- ----------
(1) Minimum future revenues for later years are not included above due to the
charterers' options to continue the leases at such dates.

Note 10--Impairment and Provision for Loss on Lease Obligation

As part of OMI's periodic review in 1995 of the recoverability of its
investment in its vessels the Company determined that the carrying value of two
of its U.S. flag product carriers operating in foreign markets exceeded their
undiscounted forecasted future net cash flows from operations. Similarly, in
1994 the Company determined that the carrying value of one of its
chemical/product carriers engaged in U.S. domestic shipping operations exceeded
the undiscounted forecasted future net cash flows from its operations. These
losses were measured by the excess of the carrying value of the vessels over
their estimated fair values which were based on values provided by ship brokers.
It was determined in both years that impairment losses for these vessels should
be recognized. The carrying values of the vessels were reduced by $14,798,000 in
1994 and $8,707,000 in 1995, and the reductions are reported as separate items
in the accompanying Consolidated Statements of Operations.

Also in 1994, the Company determined that a similar loss should be
recognized for the forecasted loss from operations of the OMI Hudson, a
chemical/product carrier engaged in U.S. domestic shipping operations which was
chartered-in on an operating lease through 2006. The amount of the loss was
estimated based on forecasted undiscounted cash flows, excluding from rent
expense an amount representative of the interest component of the lease
agreement, through the lease expiration date. This loss, estimated as
$19,800,000, was also reported as a separate item in the 1994 Consolidated
Statement of Operations.

In October 1995, the Company entered into an agreement with the
owner/lessor of the OMI Hudson to terminate the operating lease and to purchase,
or to cause the sale of the vessel to a designated purchaser, for approximately
$30,000,000 (see Note 11). The termination of the lease was completed on
February 29, 1996 at which time the Company paid the lessor a $25,000,000
cancellation fee consisting of $22,000,000 cash and a convertible note of
$3,000,000. The loss on the termination of the lease, in the amount of
$6,687,000, was charged to earnings in 1995. On March 20, 1996, the Company
purchased the vessel for $9,300,000 in cash and the assumption of approximately
$20,000,000 of indebtedness secured by the vessel.

F-19
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 11--Disposal of Assets

The Company contracted in 1995 to sell the OMI Hudson along with two other
vessels and its interest in OSTC to Hvide Marine, Inc. ("Hvide"). The sale was
contingent upon Hvide successfully completing an initial public offering of its
common stock, which was accomplished in August 1996. Of the $64,650,000 sale
price, OMI received approximately $30,000,000 in cash of which $12,775,000 was
placed in an escrow account for use in acquiring another vessel, and Hvide
assumed $34,650,000 of debt which had been secured by mortgages on two of the
vessels. Approximately $8,000,000 of the cash received will be used to repay a
portion of the New Credit Agreement described in Note 3.

In March 1996, the Company delivered a vessel to new owners as part of an
exchange transaction. Cash was received and was held in an escrow account until
the delivery of the vessel which completed the exchange transaction on July 17,
1996. The vessel acquired in the transaction was previously owned by a company
49.9 percent owned by OMI.

In September 1995, two vessels with an aggregate book value of $40,781,000
and cash of $1,238,000 were swapped for two product carriers in a like-kind
exchange.

Gain on disposal of assets-net consists of the following:

<TABLE>
<CAPTION>
For the
Six Months
For the Years Ended December 31, Ended
-------------------------------- June 30,
1993 1994 1995 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gain (loss) on sale of marketable securities $ 4,060 $ 2,814 $ 8,586 $ (59)
Amortization of gain on sale/leaseback ..... 334 334 167 --
Gain (loss) on sale of vessels ............. 1,802 7,178 (3,288) 3,510
Net gain (loss) on sale of CCF investments . 77 (78) (467) --
Disposal of joint venture interests ........ (1,554) -- 649 150
Net loss on disposal of other assets ....... (318) (26) -- --
-------- -------- -------- --------
Total .................................... $ 4,401 $ 10,222 $ 5,647 $ 3,601
======== ======== ======== ========
</TABLE>

Loss on sale of vessels in 1995 includes $1,862,000 recorded on a vessel
held for sale which was delivered to the buyer in February 1996.

F-20
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 12--Financial Information Relating to Domestic and Foreign Operations

The Company operates U.S. flag and foreign flag vessels. Income from
operations is the excess of operating revenues over operating expenses including
corporate expenses which are allocated to operations of the vessels.

<TABLE>
<CAPTION>
For the Years Ended December 31, For the Six Months
------------------------------- Ended June 30,
1993 1994 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Domestic .................... $ 199,118 $ 173,378 $ 148,164 $ 68,224
Foreign ..................... 71,361 93,418 91,716 54,896
--------- --------- --------- ---------
Total ..................... $ 270,479 $ 266,796 $ 239,880 $ 123,120
========= ========= ========= =========
Operating (loss) income:
Domestic .................... $ (12,276) $ (63,093) $ (49,113) $ (1,735)
Foreign ..................... 14,178 15,009 10,432 10,661
--------- --------- --------- ---------
Total ..................... $ 1,902 $ (48,084) $ (38,681) $ 8,926
========= ========= ========= =========
Identifiable assets:
Domestic .................... $ 299,860 $ 228,162 $ 187,663 $ 198,559
Foreign ..................... 371,656 376,970 377,823 339,431
--------- --------- --------- ---------
Total ..................... $ 671,516 $ 605,132 $ 565,486 $ 537,990
========= ========= ========= =========
Capital expenditures:
Domestic .................... $ 15,199 $ 2,589 $ 18,493 $ 10,095
Foreign ..................... 21,349 12,729 19,647 425
--------- --------- --------- ---------
Total ..................... $ 36,548 $ 15,318 $ 38,140 $ 10,520
========= ========= ========= =========
Depreciation and amortization:
Domestic .................... $ 20,258 $ 19,953 $ 17,112 $ 7,483
Foreign ..................... 15,183 17,817 17,622 8,764
--------- --------- --------- ---------
Total ..................... $ 35,441 $ 37,770 $ 34,734 $ 16,247
========= ========= ========= =========
</TABLE>

The operating losses pertaining to domestic operations for the years ended
December 31, 1994 and 1995 include the provisions for impairment of vessels and
losses on lease obligation (see Note 10). Domestic revenues in 1995 and for the
six months ended June 30, 1996 include Operating Differential Subsidies of
approximately $9,222,000 and $2,934,000, respectively.

Investments in and net receivables from foreign subsidiaries amounting to
$395,988,000, $292,286,000, $279,446,000 and $231,914,000 at December 31, 1993,
1994, 1995 and June 30, 1996, respectively, have been excluded from domestic
assets as they have been eliminated in consolidation.

Voyage revenues include revenue from major customers of $75,017,000 in 1993
and $40,573,000 in 1994 received by domestic operations under a Federal
Government Program, PL480. There were no charterers that were considered to be
major customers in 1995 or 1996.

Note 13--Commitments and Contingencies

OMI and certain subsidiaries are defendants in various actions arising from
shipping operations. Such actions are covered by insurance or, in the opinion of
management, after review with counsel, are of such nature that the ultimate
liability, if any, would not have a material adverse effect on the consolidated
financial statements.

F-21
<PAGE>

OMI CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All tabular amounts are in thousands)

Note 13--Commitments and Contingencies--(Concluded)

The Company's Separation Allowance Program provides for severance benefits
to all non-union employees other than non-resident aliens, leased employees,
directors who are not employees of the Company or employees with individual
severance plans in the event there is a change of control in OMI and such
employees are thereafter terminated without cause or transferred or their
position is significantly changed. Severance benefits include a lump-sum payment
equal to the employee's average monthly wages immediately prior to the date of
termination times the lesser of 24 or one for each year of full-time employment
by the Company (but not less than six).

The Company has employment agreements with all executive officers. Each of
the employment agreements provide that if the employee is terminated without
cause or voluntarily terminates his employment within 90 days of a relocation or
reduction in compensation or responsibilities, such employee will continue to
receive base salary and other benefits until December 31, 1997 or twelve months
from the date of termination, whichever is later. In addition, if any such
employee is terminated without cause (other than for reasons of disability)
within two years of a Change of Control (as defined in the Company's Separation
Allowance Program), the Company will pay such employee an amount equal to three
times the sum of his then current base salary and the incentive bonus to which
the employee is entitled. The aggregate commitment for future salaries,
excluding bonuses, under these employment agreements is approximately $4,600,000
at December 31, 1995. The maximum contingent liability for salary and incentive
compensation excluding bonuses in the event of a change in control is
approximately $6,900,000 at December 31, 1995.

OMI and a joint venture partner have contracted to construct a vessel which
is being built in the Peoples Republic of China for a cost of approximately
$56,000,000. The vessel is scheduled to be delivered in October 1996.

OMI acts as a guarantor for a portion of the debt incurred by joint
ventures with affiliates of three of its joint venture partners. Such debt was
approximately $90,079,000 at December 31, 1995 with OMI's share of such
guarantees being approximately $44,313,000. At June 30, 1996, such debt was
approximately $86,555,000, with OMI's share of such guarantees being
approximately $42,580,000. OMI was also a guarantor for OSTC's revolving line of
credit of $4,000,000 with a guarantee to OMI from its joint venture partner of
$2,000,000. This guarantee was terminated in August 1996.

The Company and its joint venture partners have committed to fund any
working capital deficiencies which may be incurred by their joint venture
investments. At June 30, 1996, no such deficiencies have been funded.

F-22
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, OMI has
agreed to sell to each of the U.S. Underwriters named below, and each of such
U.S. Underwriters, for whom Goldman, Sachs & Co., Smith Barney Inc. and Furman
Selz LLC are acting as representatives, has severally agreed to purchase from
OMI, the respective number of shares of Common Stock set forth opposite its name
below:

Number of
Shares of
Common
Underwriter Stock
----------- ---------
Goldman, Sachs & Co. ...............................
Smith Barney Inc. ..................................
Furman Selz LLC ....................................

---------
Total .......................................... 9,600,000
=========

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $________ per share. The U.S. Underwriters may allow,
and such dealers may reallow, a concession not in excess of $_________ per share
to certain brokers and dealers. After the shares of Common Stock are released
for sale to the public, the offering price and other selling terms may from time
to time be varied by the representatives.

OMI has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the International Offering
(the "International Underwriters") providing for the concurrent offer and sale
of 2,400,000 shares of Common Stock in an international offering outside the
United States. The offering price and aggregate underwriting discounts and
commissions per share for the two offerings are identical. The closing of the
Offering made hereby is a condition to the closing of the International
Offering, and vice versa. The representatives of the International Underwriters
are Goldman Sachs International, Smith Barney Inc. and Furman Selz LLC.

Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters named herein has agreed or will agree pursuant to the
Agreement Between that, as a part of the distribution of the shares offered
hereby and subject to certain exceptions, it will offer, sell or deliver the
shares offered hereby and other shares of Common Stock, directly or indirectly,
only in the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for the purpose of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree pursuant
to the Agreement Between that, as a part of the distribution of the Shares
offered as a part of the International Offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person whom it believes intends to reoffer, resell or deliver the shares in
the United States or to any U.S. persons, and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The

U-1
<PAGE>

price of any shares so sold shall be the initial public offering price, less an
amount not greater than the selling concession.

OMI has granted the U.S. Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 1,440,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the U.S. Underwriters exercise their over-allotment option, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
9,600,000 shares of Common Stock offered. The U.S. Underwriters may exercise
such option only to cover over-allotments in connection with the sale of the
shares.

OMI, its executive officers, directors and certain employees have agreed
that during the period beginning from the date of this Prospectus and continuing
to and including the date 120 days after the date of the Prospectus, they will
not offer, sell, contract to sell or otherwise dispose of any securities of the
Company (other than pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus) which are substantially similar to the shares of
the Common Stock or which are convertible or exchangeable into securities which
are substantially similar to the shares of the Common Stock without the prior
written consent of Goldman, Sachs & Co., except for the shares of Common Stock
offered in connection with the concurrent U.S. and International Offerings.

The Company's Common Stock is traded on the NYSE under the symbol "OMM."

The representatives of the Underwriters have in the past provided and may
continue to provide investment banking services to OMI.

OMI has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Common Stock, including shares initially sold in the
International Offering, to persons located in the United States.

U-2

<PAGE>
========================================

No person has been authorized to give
any information or to make any
representations other than those
contained in this Prospectus, and, if
given or made, such information or
representations must not be relied upon
as having been authorized. This
Prospectus does not constitute an offer
to sell or the solicitation of an offer
to buy any securities other than the
securities described in this Prospectus
or an offer to sell or the solicitation
of an offer to buy such securities in
any circumstances in which such offer or
solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale
made hereunder shall, under any
circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
hereof or that the information contained
herein is correct as of any time
subsequent to its date.

------------

TABLE OF CONTENTS

Page
----
Available Information ........... 3
Incorporation of Certain
Documents By Reference ......... 3
Prospectus Summary .............. 4
Risk Factors .................... 9
Use of Proceeds ................. 13
Price Range of Common Stock ..... 14
Dividend Policy ................. 14
Dilution ........................ 14
Capitalization .................. 15
Selected Consolidated Financial
and Other Data ................. 16
Management's Discussion and
Analysis of Results of
Operations and Financial
Condition ...................... 18
Business ........................ 26
Management ...................... 44
Description of Certain
Indebtedness ................... 45
Description of Capital Stock .... 47
Validity of Common Stock ........ 50
Experts ......................... 50
Glossary ........................ A-1
Index to Financial Statements ... F-1
Underwriting .................... U-1

========================================
========================================

12,000,000 Shares

OMI Corp.

Common Stock
(par value $0.50 per share)

------------

[LOGO] OMI

------------

Goldman, Sachs & Co.

Smith Barney Inc.

Furman Selz

Representatives of the Underwriters

========================================

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered (other than
underwriting discounts and commissions) which will be paid by OMI. All the
amounts shown are estimates, except for the SEC registration fee and the NASD
filing fee:

SEC registration fee ............................... $38,069
NYSE listing fee ................................... *
NASD filing fee .................................... 11,540
Transfer agent and registrar fees and expenses ..... *
Printing and engraving expenses .................... *
Legal fees and expenses ............................ *
Accounting fees and expenses ....................... *
Blue sky fees and expenses ......................... 5,000
Miscellaneous expenses ............................. *
-------
Total ............................................ $ *
=======

* To be completed by amendment.

Item 15. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law (the "DGCL") permits
OMI to indemnify its directors, employees and agents (each an "Insider") against
liability for each such Insider's acts taken in his or her capacity as an
Insider in a civil action, suit or proceeding if such actions were taken in good
faith and in a manner which the Insider reasonably believed to be in or not
opposed to the best interests of OMI, and in a criminal action, suit or
proceeding, if the Insider had no reasonable cause to believe his or her conduct
was unlawful, including, under certain circumstances, suits by or in the right
of OMI, for any expenses, including attorney's fees, and, for any liabilities
which the Insider may have incurred in consequences of such action, suit or
proceeding under conditions stated in said Section 145. OMI's By-Laws provide
that OMI shall, to the full extent permitted by Section 145 of the DGCL,
indemnify any person made or threatened to be made a party to any action, suit
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or such person's testator or intestate is or
was a director, officer or employee of OMI or serves or served at the request of
OMI any other enterprise as a director, officer or employee.

As permitted by Section 102(b)(7) of the DGCL, OMI's Certificate of
Incorporation provides that a director of OMI will not be personally liable to
OMI or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to OMI or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
a stock repurchase which is illegal under Section 174 of the DGCL, as amended,
or (iv) for any transaction from which the director derived an improper personal
benefit. OMI's Certificate of Incorporation also provides that if the DGCL is
amended after the date of the Certificate, to authorize the further elimination
or limitation of the liability of directors, then the liability of a director of
OMI shall be additionally limited to the fullest extent permitted by the amended
DGCL.

OMI has a directors' and officers' liability insurance policy which affords
officers and directors with insurance coverage for losses arising from claims
based on causally connected errors, statements, acts, omissions, neglects or
breaches of duty or other such matters but not for breaches of fiduciary duty.

The form of U.S. Underwriting Agreement contains provisions by which the
Underwriters agree to indemnify the registrant, each of its directors and each
of the officers of the registrant who signs this registration statement and each
person who controls the registrant within the meaning of the Securities Act with
respect to information furnished by the Underwriters for use in this
registration statement.

II-1
<PAGE>

Item 16. Exhibits.

Exhibit No. Description
- ----------- -----------
1 -- Form of U.S. Underwriting Agreement relating to the Common
Stock.*
4(a) -- Form of Common Stock Certificate (Domestic).**
4(b) -- Form of Common Stock Certificate (Foreign).+
5 -- Opinion of White & Case.*
23(a) -- Consent of Deloitte & Touche LLP.
23(b) -- Consent of White & Case (included in Exhibit 5).
24 -- Power of Attorney of certain officers and directors (included on
signature page).
27 -- Financial Data Schedule.++

- ----------
* To be filed by amendment.
** Previously filed as an exhibit to 1989 Form 10-K Report (No. 2-87930).
+ Previously filed as an exhibit to 1989 Form 10-K Report (No. 2-87930).
++ Previously filed as an exhibit to June 30, 1996 Form 10-Q Report
(No. 2-87930).

Item 17. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933, as amended, shall be deemed to be
part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) For purposes of determining any liability under the Securities Act of
1933, as amended, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 2 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on November 4, 1996.

OMI Corp.

By /s/ *
-------------------------------------
Jack Goldstein
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
/s/ * Director, Chairman of the Board November 4, 1996
------------------------ and Chief Executive Officer
Jack Goldstein (Principal Executive Officer)

/s/ * Director, President and Chief November 4, 1996
------------------------ Operating Officer
Craig H. Stevenson, Jr. (Principal Executive Officer)

/s/ * Senior Vice President Finance November 4, 1996
------------------------ (Principal Financial Officer)
Vincent J. de Sostoa

/s/ * Vice President and Controller November 4, 1996
------------------------ (Principal Accounting Officer)
Kathleen Haines

/s/ * Director November 4, 1996
------------------------
Livio M. Borghese

/s/ * Director November 4, 1996
------------------------
Constantine G. Caras

/s/ * Director November 4, 1996
------------------------
Steven D. Jellinek

/s/ * Director November 4, 1996
------------------------
Michael Klebanoff

/s/ * Director November 4, 1996
------------------------
Emanuel L. Rouvelas

/s/ * Director November 4, 1996
------------------------
Marianne K. Smythe

*By: /s/ Fredric S. London
------------------------
Fredric S. London
Attorney-in-Fact

II-3
<PAGE>

EXHIBIT INDEX

Exhibit No. Description Page
- ----------- ----------- ----
1 -- Form of U.S. Underwriting Agreement relating to
the Common Stock.*
4(a) -- Form of Common Stock Certificate (Domestic).**
4(b) -- Form of Common Stock Certificate (Foreign).+
5 -- Opinion of White & Case.*
23(a) -- Consent of Deloitte & Touche LLP.
23(b) -- Consent of White & Case (included in Exhibit 5).
24 -- Power of Attorney of certain officers and directors
(included on signature page).
27 -- Financial Data Schedule.++

Exhibit 23(a)

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Pre-Effective Amendment No. 2 to
Registration Statement No. 333-12805 of OMI Corp. on Form S-3 of our report
dated February 28, 1996 (March 20, 1996 as to Note 10) included and incorporated
by reference in the Annual Report on Form 10-K for the year ended December 31,
1995, appearing in the Prospectus, which is a part of this Registration
Statement.

We also consent to the use in this Registration Statement of OMI Corp. on
Form S-3 of our reports dated February 28, 1996 relating to the financial
statements of Wilomi, Inc. and subsidiaries and Amazon Transport, Inc.
incorporated by reference in the Prospectus, which is part of this Registration
Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP

New York, New York
November 4, 1996