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 March , 2002
Frontline Ltd.
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(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, 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 February 25, 2002.
Attached as Exhibit 2 is a copy of an announcement of the Company, dated March
5, 2002.
Exhibit 1
FRONTLINE LTD.
INTERIM REPORT OCTOBER - DECEMBER 2001
FOURTH QUARTER AND FINANCIAL YEAR 2001 RESULTS
Frontline reports earnings before interest, tax, depreciation, and amortisation
including earnings from associated companies (EBITDA) of $69.5 million and net
income of $43.7 million for the fourth quarter of 2001. Basic earnings per share
for the quarter were $0.57 and cashflow per share for the quarter was $0.99. The
average daily time charter equivalents ("TCEs") earned by VLCCs, Suezmax
tankers, and Suezmax OBO carriers were $19,900, $20,600 and $20,300,
respectively, down from $30,800, $23,100 and $23,000, respectively in the
immediately preceeding quarter.
Net interest expense for the quarter was $18.1 million (2000 - $25.0 million).
This compares with $19.7 million the third quarter of 2001. The decrease
primarily reflects lower interest rates in the fourth quarter. Other financial
items for the quarter were positive $5.9 million of which $1.8 million is
attributable to the market value adjustment on interest rate swaps and $4.4
million the Equity Swap Line discussed below. In the fourth quarter of 2001 the
Yen weakened significantly against the US Dollar, resulting in an unrealised
foreign currency exchange gain of $19.0 million primarily relating to the
revaluation of Yen debt in certain subsidiaries. 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 February 25, 2002, the Board declared a dividend of $0.20 per share for the
fourth quarter. The record date for the dividend is March 13, 2002, and ex
dividend date is March 8, 2002. The dividend is to be paid on or about March 20,
2002.
For the year ended December 31, 2001, the Company has EBITDA of $528.8 million
and net income of $382.7 million. This net income includes $32.3 million
relating to the cumulative effect of the change in the accounting policy for
drydockings that was implemented in the third quarter of 2001. These results
compare with EBITDA of $481.8 million and net income of $313.9 million for the
year ended December 31, 2000. The average daily time charter equivalents
("TCEs") earned by VLCCs, Suezmax tankers, and Suezmax OBO carriers for the year
2001 were $40,800, $30,700 and $28,900, respectively.
Net interest expense for 2001 was $78.8 million (2000 - $89.3 million). This
decrease reflects the benefit of lower interest expense on debt as interest
rates fell during 2001 and increased interest income arising from higher average
cash balances. Other financial items for 2001 were negative $5.7 million which
is attributable to the market value adjustment on interest rate swaps following
the adoption of FAS 133 on January 1, 2001. This is partly offset by the effect
of the Equity Swap Line mentioned above. For the full year 2001 there is an
unrealised foreign currency gain of $28.3 million due to the Yen depreciation
discussed above. 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. Earnings per share for the year 2001 year were $4.99
(2000 - $4.28) and cashflow per share was $6.58 (2000 - $5.53).
THE MARKET
After a strong period through the year 2000 and early 2001, tanker rates started
to decline towards the end of April 2001. With the exception of an upturn in
September and October, the market in second half of 2001 was relatively weak and
the year ended with VLCC rates below $20,000 per day compared to rates of above
$60,000 at the start of the year. Suezmax rates followed approximately the same
trend but did better overall in relative terms in the latter part of the year.
The declining rates are explained by a general economic slowdown in the world
economy. Lower oil consumption led OPEC producers to cut production quotas with
the aim of maintaining crude oil prices. Quota cuts, a large part of which are
absorbed by Middle East OPEC producers, resulted in lower demand for
transportation, especially out of the Middle East Gulf, which disfavoured the
VLCCs. As a result of the weak tanker market development, removal from the fleet
of old tonnage accelerated in autumn 2001 and a total of 40 UL/VLCCs and 31
Suezmaxes were reported scrapped, sold for conversion or lost in the year. This
trend continues in early 2002 and to date, eleven UL/VLCCs and four Suezmaxes
have been removed from the fleet. Ordering of newbuildings has come to a halt
but the order books still record more than 80 VLCCs and more than 60 Suezmaxes,
mainly for delivery in the period to early 2004.
CORPORATE AND OTHER MATTERS
In the fourth quarter of 2001, the Company sold and leased back three of its
VLCCs, Front Chief, Front Crown and Front Commander. This transaction generated
net cash of $124 million for the Company. The leases of the vessels are being
accounted for as capital leases with the vessels and the corresponding lease
obligations being recognised on the Company's balance sheet. The gain on the
sale of the vessels of approximately $7.4 million is being amortised over the
period of the leases. Bank financing of $112 million was repaid in connection
with the sale of these vessels. Also in the fourth quarter the Company repaid
$26 million due on its commercial paper programme.
In October 2001, the Company took delivery of a newbuilding Suezmax, Front
Symphony. This vessel has been financed by traditional bank financing. During
the period the Company further secured committed financing for six of the eight
remaining VLCCs to be delivered under its newbuilding programme. The two vessels
outstanding are due for delivery late this year and during the summer of 2003.
In the fourth quarter of 2001, seven companies, each either a joint venture by,
or a subsidiary of, Golden Ocean Group Limited, itself a non-recourse subsidiary
of Frontline, were transferred to the direct ownership of Frontline Ltd. These
companies own a total of six VLCCs and one option to acquire a VLCC. The sales
price for the transfers was determined using fair values, including independent
broker valuations.
At December 31, 2001, 76,407,566 ordinary shares were outstanding and the
weighted average number of shares outstanding for the quarter was 76,407,566 (as
at December 31, 2000, 78,068,811 and for the quarter then ended - 79,218,871).
During 2001, the Company has bought back and cancelled 2,207,300 of its own
shares and has issued 546,055 shares in connection with the exercise of employee
share options and the conversion of warrants. In September 2001, the Company
established a Stock Indexed Total Return Swap Programme (or Equity Swap Line)
with The Bank of Nova Scotia Group ("Scotia") and Scotia had by year-end
acquired 2,100,000 Frontline shares.
OUTLOOK
With no signs of an immediate recovery in the global economy, the expectations
for the tanker market's performance in the first half of 2002 are necessarily
low. As a consequence, we believe active scrapping of older tonnage will
continue. The older vessels do not cover their operating costs at current rates
and, as modern tonnage has become more available, older tonnage suffers extended
waiting periods before getting employment, which further reduces income.
Continued scrapping of older tonnage is a prerequisite for balance of supply
since the newbuilding delivery program for 2002 comprises 40 VLCCs and 24
Suezmaxes, mainly with delivery scheduled for the second half of the year.
Leading economic indicators point towards a recovery in the second half of the
year and as a consequence oil consumption is expected to increase. The current
low OPEC production is probably not sustainable and call on OPEC oil is likely
to increase in the second half of the year.
Overall, the Board is cautiously optimistic and expects an improved tanker
market in the second half of the year. The Board also wants to remind
shareholders that, due to an extensive savings program, which has been in place
for several years now and due to low interest rates, the break-even rates for
Frontline's fleet are low. Profit and loss breakeven for our VLCCs is currently
about $21,100 per day and for the Suezmaxes is $13,400 per day.
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.
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.
February 25, 2002
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
Questions should be directed to:
Contact: Tor Olav Tr0im: 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
FRONTLINE GROUP UNAUDITED FOURTH QUARTER REPORT
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2000 2001 INCOME STATEMENT 2001 2000
Oct-Dec Oct-Dec (in thousands of $) Jan-Dec Jan-Dec
(audited)
--------------- ------------ --------------------------------------------------------------- ------------ ------------
249,473 109,593 Net operating revenues 647,345 599,944
697 781 Gain (loss) from sale of assets 35,620 1,160
25,413 31,841 Ship operating expenses 121,452 88,455
9,332 10,343 Charterhire expenses 41,858 34,351
2,624 5,053 Administrative expenses 13,176 9,326
212,801 63,137 Operating income before depreciation and amortisation 506,479 468,972
29,807 32,461 Depreciation and amortisation 121,725 92,880
182,994 30,676 Operating income after depreciation and amortisation 384,754 376,092
3,134 2,838 Interest income 12,953 6,858
(28,158) (20,919) Interest expense (91,800) (96,174)
8,882 6,363 Share of results from associated companies 22,317 12,817
(320) 5,911 Other financial items (5,707) 248
14,712 18,989 Foreign currency exchange gain (loss) 28,318 14,563
181,244 43,861 Income before taxes 350,832 313,908
41 188 Taxes 444 41
- - Cumulative effect of change in accounting principle 32,339 -
181,203 43,687 Net income 382,728 313,867
Earnings Per Share Amounts ($)
$2.29 $0.57 EPS before cumulative effect of change in accounting principle $4.57 $4.28
- - Cumulative effect of change in accounting principle $0.42 -
$2.29 $0.57 EPS $4.99 $4.28
--------------- ------------ --------------------------------------------------------------- ------------ ------------
--------------- ------------ --------------------------------------------------------------- ------------ ------------
Income on timecharter basis ($ per day per ship)*
67,900 19,900 VLCC 40,800 46,300
49,500 20,600 Suezmax 30,700 35,500
46,300 20,300 Suezmax OBO 28,900 33,300
--------------- ------------ --------------------------------------------------------------- ------------ ------------
* Basis = Calendar days minus off-hire. Figures after
deduction of broker commission
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BALANCE SHEET 2001 2000
(in thousands of $) Dec 31 Dec 31
(audited)
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ASSETS
Short term
Cash and cash equivalents 186,402 116,094
Marketable securities 1,159 4,045
Other current assets 85,132 172,840
Long term
Newbuildings and vessel purchase options 102,781 36,326
Vessel and equipment, net 2,196,959 2,254,921
Vessels under capital lease 317,208 108,387
Investment in associated companies 109,898 27,361
Goodwill 14,049 14,385
Deferred charges and other long-term assets 14,709 46,628
Total assets 3,028,297 2,780,988
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Short term interest bearing debt 214,005 212,767
Current portion of obligations under
capital leases 17,127 7,888
Other current liabilities 64,855 69,736
Long term
Long term interest bearing debt 1,177,946 1,331,372
Obligations under capital leases 283,663 101,875
Other long term liabilities 11,478 21,790
Minority interest 6,822 6,070
Stockholders' equity 1,252,402 1,029,490
Total liabilities and stockholders' equity 3,028,297 2,780,988
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STATEMENT OF CASHFLOWS 2001 2001
(in thousands of $) Jan-Dec Oct-Dec
----------------------------------------------------- ------------ ------------
OPERATING ACTIVITIES
Net income 382,728 43,687
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortisation 123,958 32,829
Unrealised foreign currency exchange gain (26,631) (16,398)
Gain loss from sale of assets (35,620) (781)
Results from associated companies (22,319) (6,364)
Capitalised interest on loans to joint ventures (1,641) (67)
Change in accounting principle (32,339) 0
Adjustment of financial derivatives to market value 5,405 (6,233)
Other, net (4,279) (1,987)
Change in operating assets and liabilities 88,726 18,878
Net cash provided by operating activities 477,988 63,563
INVESTING ACTIVITIES
Additions to newbuildings, vessels and equipment (387,451) (60,332)
Advances to associated companies, net (59,329) (6,829)
Acquisition of businesses (net of cash acquired) (65,135) (83)
Proceeds from sale of assets 405,183 227,377
Net cash used in investing activities (106,732) 160,133
FINANCING ACTIVITIES
Proceeds from long-term debt, net of fees paid 323,683 28,802
Repayments of long-term debt (462,764) (173,522)
Repayment of capital leases (10,337) (2,287)
Dividends paid (115,206) (7,640)
Repurchase of shares, net (36,326) 0
Net cash used in financing activities (300,950) (154,647)
Net increase (decrease) in cash and
cash equivalents 70,308 69,051
Cash and cash equivalents at start of period 116,094 117,351
Cash and cash equivalents at end of period 186,402 186,402
----------------------------------------------------- ------------ ------------
UNAUDITED FOURTH QUARTER SUPPLEMENTARY INFORMATION
----------------------------------------------------------------- --------------
SELECTED FINANCIAL DATA Frontline Golden Ocean
(in thousands of $) Jan-Dec Jan-Dec
2001 2001
----------------------------------------------------------------- --------------
Net operating revenues 565,117 82,228
Operating income before depreciation
and amortisation 447,895 58,584
Depreciation and amortisation 102,926 20,249
Operating income after depreciation
and amortisation 344,969 38,335
Interest income 14,519 2,097
Interest expense (76,713) (18,751)
Share of results from associated companies 9,715 12,603
Other financial items (5,707) -
Foreign currency exchange gain (loss) 1,687 26,631
Net income before taxes, minority interest
and cumulative effect of change in
accounting principle 288,470 60,915
Total current assets 259,266 17,886
Vessels and equipment (including newbuildings,
options and vessels under capital lease) 2,394,649 234,580
Total assets 2,732,055 283,855
Total current liabilities 226,684 69,303
Total long-term liabilities 1,331,921 143,658
Stockholders' equity 1,166,629 70,894
Total liabilities andstockholders' equity 2,732,055 283,855
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Exhibit 2
FRO - AMENDMENT TO EX DIVIDEND DATE
On February 26, 2002 Frontline announced a cash dividend of $0.20 per share with
ex dividend date March 8, 2002, record date March 13, 2002 and payment date on
or about March 20, 2002.
Two of these dates have been changed to, ex dividend date March 11, 2002, and
payment date on or about March 25, 2002. Record date is unchanged.
Hamilton, Bermuda
March 5, 2001
Contact persons:
Kate Blankenship, +1 441 295 6935
Tom E. Jebsen, +47 23 11 40 00
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 March 11, 2002 By /s/ Kate Blankenship
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Kate Blankenship
Secretary