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 November, 2001 Frontline Ltd. (Translation of registrant's name into English) Par-la-Ville Place, 4th Floor, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda (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 November 12, 2001. Attached as Exhibit 2 is a copy of an announcement of the Company, dated November 12, 2001. 2 Exhibit 1 FRONTLINE LTD. INTERIM REPORT JULY - SEPTEMBER 2001 THIRD QUARTER AND NINE MONTH RESULTS Frontline reports earnings before interest, tax, depreciation, and amortisation including earnings from associated companies (EBITDA) of $107.4 million and net income of $39.3 million for the third quarter of 2001. These results include a gain on sale of assets of $18.8 million arising from the sale of the Suezmax tanker Front Archer in July 2001. Basic earnings per share for the quarter were $0.51 compared to $1.23 in the same period in 2000 and cashflow per share for the quarter was $0.92 (2000 - $1.51). The results for the third quarter of 2001 compare with EBITDA and net income of $141.3 million and $97.0 million respectively in the third quarter of 2000, a period when rates in the tanker market were at significantly higher levels. The average daily time charter equivalents ("TCEs") earned by VLCCs, Suezmax tankers, and Suezmax OBO carriers were $30,800, $23,100 and $23,000, respectively, down from $51,400, $36,500 and $33,400, respectively in the immediately preceding quarter. Operating costs for the third quarter of 2001 include a charge of approximately $1.3 million for supplementary calls for P&I insurance and a charge of approximately $2.1 million in connection with the drydocking of four vessels in the quarter. With the exception of these items, total operating costs have been maintained across the fleet at budgeted levels. In the third quarter of 2001, the Company has changed its accounting policy for drydockings. Prior to the third quarter of 2001, provisions for future drydockings have been accrued and charged to expense on a pro-rata basis over the period to the next scheduled drydockings. Effective January 1, 2001 the Company will recognise the cost of a drydocking at the time the drydocking takes place, that is it will apply the "expense as incurred" method. The expense as incurred method is considered by management to be a more reliable method of recognising drydocking costs as it eliminates the uncertainty associated with estimating the cost and timing of future drydockings. The cumulative effect of this change in accounting principle is shown separately in the consolidated statements of operations for the nine months ended September 30, 2001 and resulted in a credit to income of $32.3 million in the first quarter of 2001. The cumulative effect of this change as of January 1, 2001 on the Company's consolidated balance sheet was to reduce total liabilities by $32.3 million. The Company's income statements and balance sheets have also been restated for the first and second quarters of 2001 as a consequence of this change in accounting policy. 3 Net interest expense for the quarter was $19.7 million (2000 - $22.0 million). This compares with $19.4 million the second quarter of 2001. Other financial items for the quarter were $7.5 million of which $7.2 million is attributable to the market value adjustment on interest rate swaps. The strengthening of the Yen against the US Dollar in the third quarter of 2001 has resulted in the Company recording an unrealised foreign currency exchange loss of $9.6 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 $9.3 million. There is a similar foreign currency impact on the share of results from associated companies due to the revaluation of Yen debt within certain of these companies. On 12 November 2001 the Board has declared a dividend of $0.10 per share for third quarter. The record date for the dividend is 22 November 2001, and ex dividend date is 20 November 2001. The dividend is to be paid on or about 5 December 2001. For the first nine months of 2001, the Company had EBITDA of $459.3 million (2000 - $260.1 million) and earned net income of $339.0 million (2000 - $132.7 million). This net income in 2001 includes $32.3 million relating to the cumulative effect of the change in the accounting policy for drydockings as discussed above. Net interest expense for the nine month period was $60.8 million (2000 - $64.3 million). This decrease reflects the benefit of lower interest rates on debt and increased interest income arising from higher average cash balances. Other financial items for the nine months ended September 30, 2001 were $11.6 million which is attributable to the market value adjustment on interest rate swaps. The foreign exchange gain for the nine month period was $9.3 million, reduced from $19.0 million at June 30, 2001 principally due to the strengthening of the yen against the US Dollar. Earnings per share for the 2001 year to date are $4.41 (2000 - $1.86) and cashflow per share was $5.57 (2000 - $2.74). THE MARKET At the start of the third quarter of 2001, charter rates improved from the very low rates experienced towards the end of the second quarter. VLCC rates showed great volatility and varied between below $20,000 per day in August and $50,000 per day in the second half of September. Suezmax rates peaked in July and declined thereafter. After the end of the quarter the market has weakened considerably and both VLCCs and Suezmaxes are currently being fixed at low levels. The rate decline is explained by a general slowdown in the world economy and a decrease in OPEC Middle East production as a consequence of several OPEC quota reductions. The balance between 4 supply and demand is not as bad though as current rate levels seem to indicate but general pessimism has contributed to depressing the market. As a consequence of market development scrapping and conversion of older tonnage has accelerated and so far this year 28 VLCCs/ULCCs and 18 Suezmaxes have been scrapped or converted compared to 23 and 14 respectively delivered. Newbuilding contracting has more or less come to a halt. The order book, though, still stands at 89 VLCCs and 67 Suezmaxes for delivery from now until first half of 2004. 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. Three of these vessels were delivered to the Company in the second quarter of 2001 and the fourth was delivered in mid July. One of these VLCCs is on time charter to Arcadia until mid 2002 at a TCE of approximately $40,000 per day and one is trading under a market related bareboat charter to Shell. The other two vessels have been employed in the Tankers International Pool. In the third quarter of 2001, the Company took delivery of three new double-hulled VLCCs from Bergesen D.Y. ASA in a joint venture together with Overseas Shipholding Group, Inc. and Euronav Luxembourg S.A. These vessels are employed in the Tankers International Pool. The joint venture with OSG and Euronav has also acquired two newbuilding contracts for double-hulled VLCCs from Bergesen, with delivery scheduled for February and July 2002. In August 2001, the Company took delivery of a newbuilding Suezmax, Front Melody and in early October took delivery of her sister ship, Front Symphony. These vessels acquired by the Company, together with the three vessels acquired through the joint venture with Euronav and OSG, have been financed by traditional bank financing. In July 2001, the Company sold the Suezmax tanker, Front Archer and the 1974-built VLCC Mosocean that was purchased as a result of the acquisition of Mosvold Shipping Limited in the second quarter of 2001. During the third quarter of 2001 the Company issued a total of 15,000 shares in connection with the exercise of employee share options and bought back and cancelled a total of 520,000 of its own shares. In September 2001, the Company announced that it has established a Stock Indexed Total Return Swap Programme (or Equity Swap Line) with The Bank of Nova Scotia Group ("Scotia"). The Programme secures that Scotia may acquire up to 3,500,000 5 Frontline shares over the next 12 months. Since the shares are owned by Scotia the shares will not be subject to immediate cancellation, which has been the case for regular buy backs carried out by the Company. At September 30, 2001, the Company has acquired a total amount of 3,927,145 of its shares and 301,400 shares had been acquired by Scotia within the current Board authorization to buy back up to 7,500,000 shares. At September 30, 2001, 76,407,566 shares were outstanding and the weighted average number of shares outstanding for the quarter was 76,489,577 (as at September 30, 2000, 78,537,524 and for the quarter then ended - 78,804,371). OUTLOOK The downturn in the global economy this year will be negative for oil consumption resulting in slow or marginal growth. In addition, Middle East OPEC's market share may decline. This will negatively affect the tanker market. We expect that this will result in increased scrapping of old tonnage, which may balance or exceed expected newbuilding deliveries. Scrapping alone, however, will not be sufficient to create an improved rate environment but will create room for higher rates as demand picks up. Generally global oil stocks are tight so there is little risk of stock draw reducing tanker demand further. The recent weakening of the oil price should over time stimulate demand for oil relative to other energy sources. This is likely to make a positive contribution to the freight market. Part of this effect was experienced after the fall in oil price in 1997-98. The Board expects that tanker rates will be lower than what we have been used to until oil demand growth starts to increase, but expects periods of good rates due to seasonal demand swings in the winter. The lower freight rates have resulted in decreasing second-hand values. The Board sees opportunities for acquisitions or corporate transaction in a changing market. It is, however, a concern for the Board that the Frontline share price currently is trading at 44 per cent of book value. This limits the opportunity for expansion but makes an extension of the current buyback program very interesting. The current cash position of US$ 117 million gives the company good financial flexibility. The Board is currently considering actions, which will boost the cash position further. Frontline has today a profit and loss breakeven rate of US$ 21,400 for VLCCs and US$ 15,700 for Suezmaxes. Based on the current age composition of the fleet the Board is confident that the rates in the coming periods will exceed these levels even in a negative economic development scenario. 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 6 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. 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. November 12, 2001 The Board of Directors Frontline Ltd. Hamilton, Bermuda Questions should be directed to: Contact: Tor Olav Troim: Director and Vice-President, Frontline Ltd +47 23 11 40 00 Ola Lorentzon, Managing Director, Frontline Management AS +47 23 11 40 00 Tom E. Jebsen: Chief Financial Officer, Frontline Management AS +47 23 11 40 00 Kate Blankenship: Chief Accounting Officer, Frontline Ltd + 1 441 295-6935 7 FRONTLINE GROUP UNAUDITED THIRD QUARTER REPORT 2000 2001 INCOME STATEMENT 2001 2000 2000 Jul-Sep Jul-Sep (in thousands of $) Jan-Sep Jan-Sep Jan-Dec (audited) 174,156 132,406 Net operating revenues 537,752 352,252 599,944 - 18,822 Gain (loss) from sale of assets 34,839 463 1,160 23,025 32,240 Ship operating expenses 89,611 63,042 88,455 8,385 10,460 Charterhire expenses 31,516 25,019 34,351 3,275 1,767 Administrative expenses 8,126 8,483 9,326 139,471 106,761 Operating income before depreciation and amortisation 443,338 256,171 468,972 22,343 31,118 Depreciation and amortisation 89,264 63,073 92,880 117,128 75,643 Operating income after depreciation and amortisation 354,074 193,098 376,092 2,223 2,234 Interest income 10,115 3,724 6,858 (24,181) (21,942) Interest expense (70,881) (68,016) (96,174) 1,868 684 Share of results from associated companies 15,953 3,935 12,817 253 (7,455) Other financial items (11,618) 72 248 (308) (9,638) Foreign currency exchange gain (loss) 9,328 (149) 14,563 96,983 39,526 Income before taxes and minority interest 306,971 132,664 313,908 - (31) Minority interest 14 - - - 271 Taxes 256 - 41 - - Cumulative effect of change in accounting principle 32,339 - - 96,983 39,286 Net income 339,040 132,664 313,867 Earnings Per Share Amounts ($) $1.23 $0.51 EPS before cumulative effect of change in accounting principle $3.99 $1.86 $4.28 - - Cumulative effect of change in accounting principle $0.42 - - $1.23 $0.51 EPS $4.41 $1.86 $4.28 Income on timecharter basis ($ per day per ship)* 52,000 30,800 VLCC 47,600 37,700 46,300 8 41,100 23,100 Suezmax 34,100 30,200 35,500 41,200 23,000 Suezmax OBO 31,900 29,000 33,300 * Basis = Calendar days minus off-hire. Figures after deduction of broker commission 9 BALANCE SHEET 2001 2000 2000 (in thousands of $) Sep 30 Sep 30 Dec 31 (audited) ASSETS Short term Cash and cash equivalents 117,351 136,807 116,094 Marketable securities 323 23,888 3,713 Other current assets 96,556 113,704 172,842 Long term Newbuildings and vessel purchase options 100,968 - 36,326 Vessel and equipment, net 2,502,755 1,778,857 2,363,308 Investment in associated companies 98,565 8,651 27,361 Goodwill 14,224 11,782 14,385 Deferred charges and other long-term assets 16,867 18,366 46,959 Total assets 2,947,609 2,092,055 2,780,988 LIABILITIES AND STOCKHOLDERS' EQUITY Short term Short term interest bearing debt 223,930 140,614 212,767 Other current liabilities 70,488 52,728 77,624 Long term Long term interest bearing debt 1,331,107 1,023,271 1,331,372 Other long term liabilities 103,994 18,449 123,665 Minority interest 6,070 4,372 6,070 Stockholders' equity 1,212,020 852,621 1,029,490 Total liabilities and stockholders' equity 2,947,609 2,092,055 2,780,988 UNAUDITED THIRD QUARTER SUPPLEMENTARY INFORMATION SELECTED FINANCIAL DATA (in thousands of $) Frontline Golden Jan-Sep Ocean 2001 Jan-Sep 2001 Net operating revenues 473,502 64,154 Operating income before depreciation and amortisation 395,983 53,260 Depreciation and amortisation 74,300 16,036 Operating income after depreciation and amortisation 321,683 37,224 Interest income 11,582 1,770 Interest expense (58,517) (15,603) Share of results from associated companies 7,549 8,405 Other financial items (11,618) - Foreign currency exchange gain (loss) (846) 10,174 Net income before taxes, minority interest and cumulative effect of change in accounting principle 269,833 41,970 Total current assets 201,841 12,209 Vessels and equipment (including newbuildings, 10 options and vessels under capital lease) 2,157,201 452,608 Total assets 2,487,320 524,460 Total current liabilities 254,087 40,330 Total long-term liabilities 1,071,450 408,251 Stockholders' equity 1,161,782 75,877 Total liabilities and stockholders' equity 2,487,320 524,460 11 Exhibit 2 Presentation of third quarter 2001 results On Wednesday 14 November 2001, Frontline will present the results for third quarter 2001 as follows: 1. Presentation A presentation will take place in Oslo at Stranden 21 (DnB building) in the Auditorium at second floor at 08:30 A.M. If you wish to attend please confirm to: Mrs Bente Thommessen or Mrs Elisabeth Roer at +47 23 11 40 00. 2. Teleconference and webcast A conference call will be held at 04:00 P.M. CET (Norwegian time). Wednesday morning, the presentation will be available for download at http://www.frontline.bm - click "Investor Relations" - "Presentations" - "Presentation of 3rd Quarter 2001". To listen you may do one of the following: A. Webcast Go to "Investor relations" and click on the link "Conference Call Q3". To listen to the conference call from the web, you need to have installed Windows Media Player or Real Player, and you need to have a sound card on your computer. B. Teleconference Call at +47-23 00 04 00, or free of charge from Norway at 80080119, 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 ask questions will be given at the beginning of the call. If you are not able to participate at the time of the call, you can listen to a replay of the conference call directly from www.frontline.bm (investor relations) or a playback: dial +47-22331113 account no: 1114 followed by # (pound-sign) press 1 conference no: 114 followed by # (pound-sign) press 1 to play Kind regards Inger M. Klemp 12 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. ----------------------------- (Registrant) Date November 13, 2001 By /s/ Kate Blankenship ----------------- ----------------------------- Kate Blankenship Secretary 13 02089009.AH0