UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August , 2001
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Frontline Ltd.
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(Translation of registrant's name into English)
Mercury House, 101 Front Street, Hamilton, HM 12, Bermuda
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-_______
Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 1 is a copy of the press release of Frontline
Ltd. (the "Company"), dated August 13, 2001.
Attached as Exhibit 2 is a copy of an announcement of the
Company, dated August 14, 2001.
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Exhibit 1
Frontline Ltd. Bermuda
Interim Report April - June 2001
-- Frontline reports second quarter EBITDA of $163.9 million and
net income of $107.7 million.
-- Second quarter earnings per share $1.40, Cashflow per share
$1.80.
-- The Board declares $0.40 per share dividend for second
quarter. Record date is 23 August 2001.
SECOND QUARTER AND SIX MONTH RESULTS
Frontline reports net income of $107.7 million in the second
quarter of 2001. This compares with net income of $34.7 million
in the second quarter of 2000. Earnings before interest, tax,
depreciation, and amortisation (EBITDA) for the quarter,
including earnings from associated companies were $163.9 million,
compared with $77.6 million for the 2000 period. Included in
EBITDA for the second quarter of 2001 is a gain on the sale of
assets of $16.0 million, arising on the sale of two 1993-built
VLCCs. The average daily time charter equivalents ("TCEs") earned
by the VLCCs, Suezmax tankers, and Suezmax OBO carriers were
$51,400, $36,500 and $33,400, respectively, (2000 - $36,100,
$27,700 and $26,800, respectively). Total operating costs and
depreciation expense have increased due to fleet expansion. In
addition, four vessels were drydocked in the second quarter.
Net other expenses for the quarter were $21.2 million (2000 -
$22.3 million), a reduction due to the benefit of lower interest
rates in the 2001 quarter. The strengthening of the Yen against
the US Dollar in the second quarter of 2001 has resulted in the
Company recording an unrealised foreign currency exchange loss of
$3.4 million primarily relating to the revaluation of Yen debt in
certain Golden Ocean subsidiaries. For the 2001 year to date
there is an unrealised foreign currency gain of $19.0 million.
There is a similar foreign currency impact on the share of
results from associated companies.
On 13 August 2001 the Board has declared a dividend of $0.40 per
share for second quarter. The record date for the dividend is 23
August 2001, and ex dividend date is 21 August 2001. The dividend
is to be paid on or about 5 September 2001.
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Basic earnings per share for the quarter were $1.40 (2000 -
$0.49). Cashflow per share for the quarter was $1.80, compared
with $0.78 for the same quarter in 2000.
For the first six months of 2001, the Company earned net income
of $265.5 million (2000 - net income of $35.7 million) and EBITDA
of $356.6 million (2000 - $118.8 million). The average daily TCEs
earned by the VLCCs, Suezmax tankers, and Suezmax OBO carriers
were $56,600, $39,800 and $36,500 respectively.
Net other expenses for the first half of 2001 were $47.6 million
(2000 - $42.5 million). Earnings per share for the 2001 year to
date were $3.45 (2000 - $0.53) and cashflow per share was $4.23
(2000 - $1.13).
THE MARKET
Tanker rates for the second quarter were healthy, albeit on a
falling trend which continued into the third quarter. The rate
decline is mainly explained by a reduced demand growth as a
result of a combination of seasonally lower consumption and a
slowdown in world economy. In addition market psychology,
influenced by OPEC quota cuts and temporary halts to Iraqi
exports, has led weaker tanker owners to accept lower rates than
actually motivated by the supply and demand balance for tankers.
The crude tanker fleet has been level through the first half of
the year and newbuilding deliveries have been matched by
scrapping of older vessels in the first part of the year. 20
VLCCs and 12 Suezmaxes have been delivered and 21VLCCs and 15
Suezmaxes have been scrapped or otherwise removed from trading so
far in 2001.
CORPORATE AND OTHER MATTERS
Frontline's wholly-owned subsidiary, Golden Ocean, agreed in May
2001 to a settlement with certain parties in order to acquire
five VLCCs over which Golden Ocean had purchase options. In May
and June, the Company took delivery of three of these VLCCs. One
of these VLCCs is on time charter to Arcadia until mid 2002 at a
TCE of approximately $40,000 per day. The other two vessels have
been employed in the Tankers International Pool. In mid July the
fourth VLCC was delivered to the Company and is trading under a
market related bareboat charter to Shell.
In April 2001, the previously announced sales of the 1993-built
VLCCs, Front Tarim and Front Tartar were concluded and the
vessels delivered to the buyer.
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In June 2001, the Company announced the acquisition of four new
double-hulled VLCCs from Bergesen D.Y. ASA in a joint venture
together with Overseas Shipholding Group, Inc. and Euronav
Luxembourg S.A. Two of the vessels are newbuildings scheduled for
delivery in February and July 2002. The other two vessels, built
in 2001, were delivered to the joint venture in July 2001 and are
employed in the Tankers International Pool. Frontline, OSG and
Euronav have also entered into an agreement with Bergesen to
acquire a further two 2000 built VLCCs subject to existing
charterers' approval.
In April 2001, the Company made an offer for the outstanding
shares of Mosvold Shipping Ltd. ("Mosvold") and by the end of May
2001 had acquired over 97 per cent of Mosvold. On July 25, 2001
Frontline announced its intention to exercise its right of
compulsory acquisition of the remaining outstanding shares in
Mosvold. Mosvold has three VLCC newbuilding contracts with
deliveries scheduled for November 2001, August 2002 and July
2003. In addition, Mosvold had two 1974-built VLCCs, one of
which was subsequently sold in July 2001.
During the second quarter of 2001 the Company issued a total of
293,361 shares in connection with the exercise of warrants and
employee share options. The remaining warrants were due to
elapse on 11 May 2001. The Company acquired 20,650,619 warrants
in the final days, while 1,101,721 warrants expired. The Company
has currently no warrants outstanding. The Company also bought
back and cancelled a total of 300,000 of its own shares, pursuant
to a current Board authority to acquire up to 7,500,000 shares.
At June 30, 2001, 76,912,566 shares were outstanding and the
weighted average number of shares outstanding for the quarter was
76,943,910 (as at June 30, 2000, 78,769,360 and for the quarter
then ended - 71,434,745).
On August 3, 2001, the Company delisted its American Depositary
Receipts ("ADRs") from the Nasdaq National Market and ADRs
transmitted to the Company's Exchange Agent by that date were
converted to ordinary shares. On August 6, 2001 the Company's
ordinary shares were listed and began trading on the New York
Stock Exchange. Holders of ADRs that were not converted by August
3, 2001 are directed to contact the Bank of New York, Depositary
of the ADR Program, if they wish to convert their ADRs to
ordinary shares that can be traded on the New York Stock
Exchange.
Frontline's subsidiary, ICB Shipping AB, has received a negative
judgement in an ongoing Swedish legal case. The judgement, which
is SEK 92 million (approximately $8.2 million), is related to the
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tax treatment of certain transactions carried through by ICB in
1990. The former Board of ICB has earlier stated with support by
legal opinions, that there is no basis for this tax claim.
Frontline will on this basis vigorously fight the case and has
decided to appeal it. No accounting set off for the case will be
made before the result of the appeal becomes clear.
OUTLOOK
The Board expects the current lower rates will continue at least
through August but that the tanker market will strengthen
considerably in the autumn and winter. OPEC has advised that it
will consider further quota reductions in September. In second
half of 2000 OPEC produced on average 28.8 million barrels per
day. If the quota reduction becomes effective in September and
lasts through the year the average production for second half
2001 will be approximately 26.5 million barrels. The worldwide
storage as of 30 June was estimated to be only 127 million
barrels higher than a year ago. Based on these numbers it is
likely that the OPEC production will have to be increased again
in the latter part of the year. We believe that the balance
between supply and demand in the tanker market requires only a
relatively modest increase in transportation requirements to
create room for a substantial increase in tanker rates.
The Company is likely to continue its buyback of shares under its
current authorisation. In addition to the buyback the Board will
seek to establish dividend payment on a regular basis. Through a
high regular payout ratio the Board expects to broaden the
investment communities' interest in cyclical shipping shares.
The Company expects that net income before currency effects and
sales profit will decline in third quarter due to lower rates
earned by both VLCCs and Suezmaxes. Third quarter results will
include the gain on the sale of the vessel Front Archer.
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements. These
statements are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including Frontline
management's examination of historical operating trends. Although
Frontline believes that these assumptions were reasonable when
made, because assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible
to predict and are beyond its control, Frontline cannot give
assurance that it will achieve or accomplish these expectations,
beliefs or intentions.
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Important factors that, in the Company's view, could cause actual
results to differ materially from those discussed in this press
release include the strength of world economies and currencies,
general market conditions, including fluctuations in charterhire
rates and vessel values, changes in demand in the tanker market,
as a result of changes in OPEC's petroleum production levels and
world wide oil consumption and storage, changes in the Company's
operating expenses, including bunker prices, drydocking and
insurance costs, changes in governmental rules and regulations or
actions taken by regulatory authorities, potential liability from
pending or future litigation, general domestic and international
political conditions, potential disruption of shipping routes due
to accidents or political events, and other important factors
described from time to time in the reports filed by the Company
with the United States Securities and Exchange Commission.
August 13, 2001
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
Questions should be directed to:
Kate Blankenship, CAO, Frontline Ltd.
+1 441 295 6935
Ola Lorentzon, Managing Director, Frontline Management AS
+47 23 11 40 00
Tom E. Jebsen: CFO Frontline Management AS
+47 23 11 40 00
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FRONTLINE GROUP SECOND QUARTER REPORT (UNAUDITED)
2000 20001 INCOME STATEMENT 2001 2000 2000
Apr-June Apr-June (in thousands of $) Jan-Jun Jan-June Jan-Dec
(audited)
108,951 195,206 Net operating revenues 417,298 178,096 599,944
- 16,008 Gain from sale of
assets 16,725 463 1,160
21,245 33,148 Ship operating expenses 59,225 40,017 88,455
8,453 10,508 Charterhire expenses 21,055 16,634 34,351
3,005 5,961 Administrative expenses 9,456 5,208 9,326
76,248 161,597 Operating income before
depreciation and
amortisation 344,287 116,700 468,972
21,041 30,610 Depreciation and
amortisation 59,933 40,730 92,880
55,207 130,987 Operating income after
depreciation and
amortisation 284,354 75,970 376,092
804 3,301 Interest income 7,893 1,501 6,858
(23,131) (24,528) Interest expense (51,297) (43,835) (96,174)
1,374 2,352 Share of results from
associated companies 12,312 2,067 12,817
33 29 Other financial items (4,186) (181) (248)
380 (3,355) Foreign currency exchange
gain (loss) 18,966 159 14,563
34,667 108,786 Income before taxes and
minority interest 268,042 35,681 313,908
- (1,095) Minority interest (2,526) - -
- - Taxes - - 41
34,667 107,691 Net income 265,516 35,681 313,867
$0.49 $1.40 Earnings per Share ($) $3.45 $0.53 $4.28
Income on timecharter
basis ($ per day per
ship)*
36,100 51,400 VLCC 56,600 29,000 46,300
27,700 36,500 Suezmax 39,800 24,300 35,500
26,800 33,400 Suezmax OBO 36,500 22,800 33,300
* Basis = Calendar days minus off-hire. Figures after deduction of broker
commission
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BALANCE SHEET 2001 2000 2000
(in thousands of $) June 30 June 30 Dec 31
(audited)
ASSETS
Short term
Cash and cash equivalents 135,947 106,939 116,094
Marketable securities 947 17,116 4,045
Other current assets 118,956 89,201 172,840
Long term
Newbuildings and vessel purchase
options 105,988 - 36,326
Vessel and equipment, net 2,573,160 1,800,842 2,363,308
Investment in associated companies 39,995 6,783 27,361
Goodwill 11,285 11,857 12,785
Deferred charges and other
long-term assets 40,132 18,819 46,628
Total assets 3,026,410 2,051,557 2,779,387
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Short term interest bearing debt 245,794 131,379 212,767
Other current liabilities 74,280 46,271 77,623
Long term
Long term interest bearing debt 1,395,391 1,091,065 1,331,372
Other long term liabilities 123,429 20,611 123,665
Minority interest 9,748 4,372 4,470
Stockholders' equity 1,177,768 757,859 1,029,490
Total liabilities and
stockholders' equity 3,026,410 2,051,557 2,779,387
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UNAUDITED SIX MONTHS SUPPLEMENTARY INFORMATION
SELECTED FINANCIAL DATA Frontline Golden
(in thousands of $) Ocean
Jan-Jun Jan-Jun
2001 2001
Net operating revenues 373,923 43,375
Operating income before depreciation and amortisation 313,142 31,145
Depreciation and amortisation 49,936 10,691
Operating income after depreciation and amortisation 263,206 20,454
Interest income 9,067 1,245
Interest expense (42,666) (11,050)
Share of results from associated companies 2,229 10,083
Other financial items (4,186) -
Foreign currency exchange gain (loss) (751) 19,717
Income before taxes and minority interest 226,898 40,449
Total current assets 243,786 12,064
Vessels and equipment (including options and
vessels under capital lease) 2,221,573 457,575
Total assets 2,562,700 531,353
Total current liabilities 279,425 44,263
Total liabilities 1,154,239 414,568
Total stockholders' equity 1,119,288 72,522
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Exhibit 2
Frontline Ltd.: Presentation of second quarter 2001 results
Frontline will hold separate presentation and teleconference on
Wednesday 15 August 2001 as follows:
1. Presentation
A presentation will take place in Oslo at Grev Wedels Plass 9
(Fearnley bygget) first floor at 08:30 A.M. If you wish to attend
please confirm to Mrs Bente Thommessen or Mrs Kristin Opdan at
+47 23 11 4000.
2. Teleconference
A conference call will be held at 04:00 P.M. European Standard
Time. The presentation will be available from Wednesday morning
at www.frontline.bm - click "Investor Relations" -
"Presentations" - "Presentation of 2nd Quarter 2001, August 14,
2001".
To listen you may do one of the following:
A. Go back to "Investor relations" and click on the link
"Conference call" OR
B. Call at +47 23 00 04 00 (from Norway you may call free
of charge at 800 801 19), tell the operator you wish to
participate in the Frontline conference call.
There will be a Q&A session after the presentation. Information
on how to question will be given at the beginning of the call.
If you are not able to participate at the time of the call but
wish to listen to a replay, this will be possible either on our
web site or by:
dial +47 22 33 11 13
accountno: 1114 followed by # (pound-sign) press 1
conferenceno: 114 followed by # (pound-sign) press 1 to play
Kind regards
Inger M. Klemp
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorised.
Frontline Ltd.
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(Registrant)
Date August 17, 2001 By /s/ Kate Blankenship
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Kate Blankenship
Secretary
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02089009.AG6