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 May , 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
Annexed hereto as Exhibit 1 is the press release relating to its
first quarter results that Frontline Ltd. (Nasdaq NM: FRONY; OSE:
FRO; LSE: FRO) has on May 9, 2001, disseminated publicly and
supplied to the Oslo Stock Exchange.
2
Exhibit 1
FRONTLINE LTD., BERMUDA
INTERIM REPORT JANUARY - MARCH 2001
FIRST QUARTER RESULTS
Frontline reports net income of $161.7 million for the first
quarter of 2001, compared with net income of $1.0 million for the
first quarter of 2000. This result reflects the strong tanker
market that continued from the latter half of 2000 into the early
part of 2001, combined with a full quarter's contribution from
the inclusion of the Golden Ocean fleet. Earnings before
interest, tax, depreciation and amortisation (EBITDA) for the
quarter, including earnings from associated companies were $196.6
million (2000 quarter: $41.1 million). The average daily time
charter equivalents ("TCEs") earned by the VLCCs, Suezmax
tankers, and Suezmax OBO carriers trading in the spot market were
$62,100, $43,000 and $39,400, respectively.
Net interest expense for the quarter was $22.2 million (2000
quarter: $20.0 million), as a result of higher debt balances due
to the increased fleet offset by lower average interest rates and
higher cash balances. The Company recorded an unrealised foreign
currency exchange gain of $22.3 million relating to the
revaluation of Yen debt in certain Golden Ocean subsidiaries. The
Company changed accounting treatment for interest hedging
instruments as from year 2001. This implies that the interest
rate swaps are marked to market at balance sheet date. For the
quarter this lead to a loss of $4.7 million booked under other
financial items.
Earnings per share for the quarter were $2.10, (2000 quarter:
$0.02). The weighted average number of shares outstanding for the
quarter was 77,110,351, and 76,919,205 shares were outstanding at
March 31, 2001 (as at March 31, 2000, shares outstanding were
68,811,860 and the weighted average number of shares outstanding
for the quarter then ended: 63,981,091). Cash flow per share for
the quarter was $2.48, compared with $0.32 for the same quarter
in 2000.
The Board has based on the results achieved in the first quarter
and the Company's strong liquidity position decided to pay a
dividend of USD 1.00 per share. The dividend becomes payable to
shareholders on record as of 21 May, 2001.
3
THE MARKET
After a very strong finish of the year 2000, tanker rates slowed
down somewhat in the first quarter of 2001 as a result of
seasonally lower demand and OPEC's production cut in February. In
spite of the decline in activity tanker rates stayed healthy
through the quarter as the overall supply of tankers and demand
for crude oil transportation remain in balance. The trend towards
higher quality awareness among users of tanker tonnage continues
to favor owners of modern tonnage.
In spite of the strong market a total of 5 VLCCs and 7 Suezmaxes
were removed from trading in the quarter either through scrapping
or as they were converted for off-shore purposes. 6 VLCCs and 5
Suezmaxes were delivered from shipyards in the period.
The prices for second-hand vessels have been stable so far this
year, while the price level for newbuildings has strengthened as
a function of a tight yard situation.
CORPORATE AND OTHER MATTERS
In February 2001, Frontline entered into five newbuilding
contracts. Two Suezmaxes were ordered with the Sasebo Shipyard in
Japan for delivery in August and October 2001, and three VLCCs
were ordered with Hitachi for delivery in April, August and
October 2002. The total newbuilding project will have a cost of
approximately $330 million.
In March 2001, Frontline entered into Memoranda of Agreement to
sell the two 1993-built VLCCs, Front Tartar and Front Tarim, at
an agreed total sales price of $104 million. The Front Tartar was
delivered to the purchaser on April 24, 2001 and the Front Tarim
on April 26, 2001. The Company considers these sales as an
important part of its fleet renewal strategy, and the decision
shall be seen against the newbuilding commitments
described above.
In the first quarter of 2001 the Company bought back and
cancelled 1,387,300 of its own shares pursuant to a current Board
authority to acquire up to 5,000,000 shares. The average price
paid for the shares was $13.15. The Board remains of the opinion
that during this period the Frontline share has been undervalued
and considers this share buyback exercise as an effective way to
increase shareholder value. A total of 1,639,454 warrants were
exercised during the quarter and converted into 163,944 shares.
Currently there are warrants outstanding to acquire up to
2,184,621 shares. All outstanding warrants expire on May 11,
2001.
4
On April 23, 2001 the Company announced that it was making an
offer for the outstanding shares of the Oslo listed Mosvold
Shipping Ltd. ("Mosvold") and on April 27, 2001, Frontline
submitted the formal offer document to the Oslo Stock Exchange.
The offer expires May 11, and has certain restrictions attached.
Mosvold has two 1974-built VLCCs and three VLCC newbuilding
contracts with deliveries scheduled for November 2001, August
2002 and July 2003. The offer price values Mosvold at
approximately $46 million. At May 8, 2001 Frontline holds 20.5%
of the shares in Mosvold.
Frontline's wholly owned subsidiary, Golden Ocean, agreed in May
to a settlement with certain parties, in order to formally take
over 5 VLCCs for which Golden Ocean had purchase options. Two of
these vessels are employed through a market related bare boat
charter arrangement with Shell. One vessel is fixed to Arcadia
for another 14 months at a TCE of $40,000 per day. The two last
vessels are trading spot. Frontline controls several debt
instruments related to these vessels. These instruments will
likely be converted to equity, and will together with bank
refinancing of the vessels make up most of the financing needed
to acquire the vessels. The total cost for the 5 vessels
excluding any allocation for the overall acquisition cost for
Golden Ocean amounts to less than $320 million. This is more than
$75 million lower than the assessed market values of the vessels.
The Board expects that the inclusion of the five vessels in
Frontline's Profit and Loss statement will significantly improve
earnings and cash flow per share.
The plans to list the Company's shares at New York Stock Exchange
are progressing as planned. The Board anticipates the Company's
shares to be listed in July this year after the existing ADR
programme has been terminated.
OUTLOOK
The seasonal slowdown in the market created by refinery overhaul
and reduced OPEC production has lead to lower rates for May
fixtures. The Board expects tanker rates to firm again in the
summer when oil production is anticipated to increase. It is
likely that the OPEC production in the fourth quarter will be at
least 2 million barrels higher than the current levels. This will
lead to an improvement in the supply / demand balance and result
in increased freight rates.
The new rules that were agreed at IMO's recent meeting will, lead
to phase-out of more than 30% of the existing Suezmax and VLCC
fleet before 2006. Currently the order book comprises 67
Suezmaxes and 92 VLCCs and shipyard capacity for deliveries
before 2004 is very limited, which points towards a positive
market development in coming years.
5
Frontline will still after the dividend payment of $1.00 per
share have a strong liquidity position and will consider new
investments and continued buyback of shares. The Board has in
order to facilitate such buyback agreed to increase the existing
authorization to buy back shares from 5,000,000 shares up to
7,500,000 shares. To date 3,107,145 shares have been acquired
under the authorization.
Frontline has so far in the second quarter averaged TCE rates of
$52,000 for the VLCCs and $39,000 for the Suezmaxes. It is likely
that the net income before currency effects and sales profit for
the second quarter will be lower than for the first quarter. The
second quarter results will include a sales profit of $15 million
linked to the sale of Front Tarim and Front Tartar.
With the outlook for a significantly increased OPEC production in
the second half of the year, combined with the increased fleet,
the Board is confident that the full year net income before
currency effects and sales profits will be significantly higher
than the comparable $298 million the Company made in 2000.
May 8, 2001
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
6
Questions should be directed to:
Contact: Tor Olav Troim: Director
+47 23 11 40 00
Ola Lorentzon: Managing Director Frontline Management AS
+47 23 11 40 00
Tom E. Jebsen: CFO Frontline Management A.S.
+47 23 11 40 00
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FRONTLINE GROUP FIRST QUARTER REPORT (UNAUDITED)
INCOME STATEMENT 2001 20001 2000
(IN THOUSANDS OF $) JAN-MAR JAN-MAR JAN-DEC
Freight revenues 244,465 94,655 697,260
Voyage expenses (22,373) (25,510) (97,316)
NET OPERATING REVENUES 222,092 69,145 599,944
Gain (loss) from sale of assets 717 463 1,160
Ship operating expenses 26,077 18,772 88,455
Charterhire expenses 10,547 8,181 34,351
Administrative expenses 3,495 2,203 9,326
Operating income before
depreciation
and amortisation 182,690 40,452 468,972
Depreciation and amortisation 29,323 19,689 92,880
OPERATING INCOME (LOSS) AFTER
DEPRECIATION AND AMORTISATION 153,367 20,763 376,092
Interest income 4,592 697 6,858
Interest expense (26,769) (20,704) (96,174)
Share of results from
associated companies 13,860 693 12,817
Other financial items (4,215) (214) 248
Foreign currency exchange gain 22,321 (221) 14,563
Income (loss) before taxes
and minority interest 163,156 1,014 313,908
Minority interest (1,431) - -
Taxes - - 41
NET INCOME AFTER TAX 161,725 1,014 313,867
Earnings per Share ($) $2.10 $0.02 $4.28
INCOME ON TIMECHARTER BASIS
($ PER DAY PER SHIP)*
VLCC 62,100 21,300 46,300
Suezmax 43,000 20,300 35,500
Suezmax OBO 39,400 18,900 33,300
* Basis = Calendar days minus off-hire. Figures after deduction
of broker commission
BALANCE SHEET 2001 20001 2000
(IN THOUSANDS OF $) MAR 31 MAR 31 DEC 31
ASSETS Short term
Cash and cash equivalents 212,678 86,056 116,094
Marketable securities 798 17,463 4,045
Other current assets 127,024 57,861 172,840
Long term
Newbuildings and vessel purchase options57,664 12,119 36,326
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Vessel and equipment, net 2,436,816 1,601,976 2,363,308
Investment in associated companies 40,824 6,025 27,361
Goodwill 14,237 12,030 12,785
Deferred charges and other long-term assets 44,206 5,079
46,628
TOTAL ASSETS 2,934,247 1,798,609 2,779,387
LIABILITIES AND STOCKHOLDERS' EQUITY
SHORT TERM
Short term interest bearing debt 227,482 157,054 212,767
Other current liabilities 62,976 42,868 77,623
LONG TERM
Long term interest bearing
debt 1,352,811 956,221 1,331,372
Other long term liabilities 112,960 20,867 123,665
Minority interest 7,501 4,372 4,470
Stockholders'
equity 1,170,517 617,227 1,029,490
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 2,934,247 1,798,609 2,779,387
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UNAUDITED FIRST QUARTER SUPPLEMENTARY INFORMATION
SELECTED FINANCIAL DATA FRONTLINE GOLDEN OCEAN
JAN-MAR JAN-MAR
2001 2001
NET OPERATING REVENUES 199,056 23,036
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTISATION 165,694 16,996
Depreciation and amortisation 23,978 5,345
OPERATING INCOME AFTER
DEPRECIATION AND AMORTISATION 141,716 11,651
Interest income 5,670 258
Interest expense (22,130) (5,974)
Share of results from
associated companies 372 13,488
Other financial items (4,215) -
Foreign currency exchange gain (470) 22,791
Net income before taxes
and minority 120,943 42,214
TOTAL CURRENT ASSETS 333,953 17,178
Vessels and equipment
(including options and
vessels under capital lease) 2,003,981 462,543
Total assets 2,462,910 541,640
Total current liabilities 248,066 48,388
Total liabilities 1,359,596 460,131
TOTAL STOCKHOLDERS' EQUITY 1,103,314 81,509
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FRONTLINE LTD.
VESSEL MANAGER FLAG BUILT DWT YARD
SUEZMAX TANKERS
Polytrader (40%) Rasmussen MS NOR 1978 126,000 Uddevalla
Polytraveller (35%) Rasmussen MS NOR 1979 126,000 Uddevalla
Front Birch Acomarit NIS 1991 152,000 Daewoo
Front Maple Acomarit NIS 1991 152,000 Daewoo
Granite Wallem BS 1991 142,000 Split
Lillo ITM LIB 1991 147,253 AESA
Front Emperor Acomarit SING 1992 147,273 AESA
Front Sunda Wallem NIS 1992 142,000 Split
*Marble (0%) Wallem BS 1992 142,000 Split
Front Comor Wallem NIS 1993 142,000 Split
Front Spirit Acomarit NIS 1993 147,273 AESA
Front Pride Acomarit NIS 1993 149,686 Mitsui
Front Splendour Acomarit NIS 1995 149,745 Mitsui
Front Glory Acomarit NIS 1995 149,834 Mitsui
Front Ardenne V.Ships NIS 1997 153,000 Hyundai
Front Brabant V.Ships NIS 1998 153,000 Hyundai
Front Fighter V.Ships NIS 1998 153,328 Hyundai
Front Hunter V.Ships NIS 1998 153,344 Hyundai
Front Warrior Cardston/
V.Ships BS 1998 153,409 Hyundai
Kim Jacob (T/C) V.Ships SING 1998 158,000 Daewoo
Mindanao V.Ships SING 1998 158,000 Daewoo
Front Sky V.Ships NIS 2000 159,999 Hyundai
Front Archer Farsund NIS 2000 152,980 Hyundai
Front Sun V.Ships NIS 2000 159,998 Hyundai
*Sonangol Girassol (0%) Wallem BS 2000 158,000 Daewoo
*Sonangol Luanda (0%) Wallem BS 2000 158,000 Daewoo
*Sonangol Kizomba (0%) Wallem BS 2001 158,000 Daewoo
Hull No. S477 Aug-01 150,000 Sasebo
Hull No. S478 Oct-01 150,000 Sasebo
SUEZMAX OBOS
Front Breaker ITM NIS 1991 169,177 Daewoo
Front Climber Acomarit SING 1991 169,178 Hyundai
Front Driver Acomarit NIS 1991 169,177 Hyundai
Front Guider Acomarit SING 1991 169,142 Daewoo
Front Leader Acomarit SING 1991 169,381 Daewoo
Front Rider Acomarit SING 1992 169,718 Hyundai
Front Striver Acomarit SING 1992 169,204 Daewoo
Front Viewer ITM SING 1992 169,381 Daewoo
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VLCCs
Front Sabang Wallem SING 1990 285,000 Daewoo
Vanadis Wallem SING 1990 285,000 Daewoo
Front Highness Acomarit SING 1991 284,420 Hyundai
Front Lady Acomarit SING 1991 284,420 Hyundai
Front Lord Acomarit SING 1991 284,420 Hyundai
Front Duke Acomarit SING 1992 284,420 Hyundai
Front Duchess Acomarit SING 1993 284,480 Hyundai
Front Ace Wallem LIB 1993 275,000 Hitachi
Front Tobago (40%) V.Ships LIB 1993 260,619 IHI
Dundee (50.1%) ITM LIB 1993 302,432 Daewoo
Edinburgh (50.1%) ITM LIB 1993 302,493 Daewoo
Front Century Cardston/ITM BS 1998 311,189 Hyundai
Front Champion Cardston/ITM BS 1998 311,286 Hyundai
Front Chief ITM BS 1999 311,224 Hyundai
Front Commander Acomarit BS 1999 311,168 Hyundai
Front Crown Acomarit BS 1999 311,176 Hyundai
Front Tina V.Ships LIB 2000 298,500 Kawasaki
Hull No. 4978 Apr-02 298,500 Hitachi
Hull No. 4979 Aug-02 298,500 Hitachi
Hull No. 4980 Oct-02 298500 Hitachi
* Vessels commercially managed by Frontline Management AS
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GOLDEN OCEAN
VESSEL MANAGER FLAG BUILT DWT YARD
DRYBULK
Golden Protea Wallem PH 1998 45,725 Tsuneishi
Golden Aloe Wallem PH 1998 45,726 Tsuneishi
Cos Hero Cosco (b/b) PH 1999 45,725 Tsuneishi
Golden Daisy (50%) Samartzis PH 1998 47,183 Oshima
Golden Rose (50%) Samartzis PH 1998 47,183 Oshima
Golden Disa Wallem PH 1999 75,462 Hitachi
Golden Nerina Wallem PH 1999 75,484 Hitachi
Channel Alliance Wallem PH 1996 171,978 NKK
Channel Navigator Wallem PH 1997 172,058 NKK
Channel Poterne Wallem PH 1997 172,091 NKK
VLCCs
Golden Stream Thome PA 1995 275,616 Hitachi
Golden Fountain (50%) Thome PA 1995 301,665 Hitachi
Navix Astral Sammy (b/b) PA 1996 275,644 Hitachi
New Vanguard Ming Wah (b/b) HK 1998 300,058 Hitachi
New Vista Ming Wah (b/b) HK 1998 300,149 Hitachi
Golden Victory Thome PA 1999 305,155 Hitachi
New Circassia (50%) Euronav (b/b) PA 1999 306,009 MHI
Pacific Lagoon (45%) Thome PA 1999 305,839 MHI
Opalia Shell (b/b) IoM 1999 302,193 KHI
Stena Commerce Stena PA 1999 300,144 Hitachi
Stena Comanche Stena PA 1999 300,133 Hitachi
Stena Commodore Stena BER 2000 298,620 Hitachi
Oscilla Shell (b/b) IoM 2000 302,193 KHI
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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 May 10, 2001 By /s/ Kate Blankenship
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Kate Blankenship
Secretary
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02089009.AE4