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 , 2002
--------------------------------------------------------------------------------
Frontline Ltd.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
Par-la-Ville Place, 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 17, 2002.
Exhibit 1
FRONTLINE LTD.
INTERIM REPORT JULY - SEPTEMBER 2002
THIRD QUARTER AND NINE MONTH RESULTS
Frontline Ltd. reports earnings before interest, tax, depreciation, and
amortisation including earnings from associated companies (EBITDA) of $26.6
million and a net loss of $37.2 million for the third quarter of 2002. The net
loss figure includes losses of $15.4 million relating to the mark to market
valuation adjustment of the Company's Equity Swap Line. The loss per share for
the quarter was $0.49.
The average daily time charter equivalents ("TCEs") earned by VLCCs, Suezmax
tankers, and Suezmax OBO carriers were $16,900, $14,300 and $13,400,
respectively, compared with $18,600, $17,600 and $15,300, respectively in the
immediately preceding quarter. These TCEs include vessels trading on the spot
market and on time charters. Average daily ship operating expenses are in line
with budget, reflecting drydocking of five vessels during the quarter.
Net interest expense for the quarter was $15.9 million compared to $19.7 million
in the same period in 2001. This decrease reflects the reduction in interest
rates in the period. At September 30, 2002 approximately 74 per cent of the
Company's total debt is floating. Other financial items for the quarter were
negative $17.1 million, which includes a $15.4 million charge for the market
value adjustment on the Company's Equity Swap Line. The $ 15.4 million charged
in the quarter includes a revaluation of 2,695,000 shares down to the market
price at $ 3.82 per share at quarter end. The weakening of the Yen against the
US Dollar in the third quarter of 2002 resulted in an unrealised foreign
currency exchange gain of $4.1 million due to the revaluation of Yen debt in
certain subsidiaries and a gain of $1.4 million included within the share of
results from associated companies. At September 30, 2002 the Company has Yen
debt and capital lease obligations (including our share of associated companies)
of Yen 23.7 billion, decreased from Yen 26.1 billion at June 30, 2002.
For the first nine months of 2002, the Company had EBITDA of $121.6 million and
reports a net loss of $54.1 million. Loss per share for the 2002 year to date is
$0.71. This compares to EBITDA, net income and earnings per share of $459.3
million, $339.0 million and $4.41, respectively for the first nine months of
2001.
Net interest expense for the nine month period was $47.6 million (2001 - $60.8
million). The foreign exchange loss for the nine month period was $8.0 million
The Board has decided not to declare any dividend for the third quarter.
THE MARKET
The VLCC market was extremely weak throughout the third quarter with rates
periodically dropping below $10,000 per day. The main contributing factor was a
lack of demand for VLCC loadings out of the Middle East Gulf. Suezmax earnings
were affected by the difficult situation for the larger vessels but in relative
terms the Suezmaxes traded better in a flat market with earnings of about
$14,000 per day through the quarter. After the end of the quarter the situation
for both categories of vessels improved sharply.
The availability of crude oil tankers has been more or less unchanged in 2002.
So far this year 36 VLCCs and 15 Suezmaxes have been scrapped or otherwise
removed from the trading fleet whereas 32 VLCCs and 20 Suezmax newbuildings have
been delivered from shipyards in the period. Order books currently stand at 66
VLCCs and 57 Suezmaxes for delivery into mid 2005. Ordering activity has been
low for both categories of vessels in 2002. Newbuilding prices as well as second
hand values have been stable during the quarter, however few contracts and
transactions have taken place.
CORPORATE AND OTHER MATTERS
In July 2002, the Company sold its interests in two drybulk vessel joint
ventures. The Company's interest in the drybulk segment has thereby been reduced
to four remaining vessels, all of which are covered with medium to long term
charter arrangements.
In the third quarter of 2002, the Company together with joint venture partners
took delivery of one VLCC newbuilding, Hakata, in which the Company has a one
third share. The Company also took delivery of a wholly-owned VLCC newbuilding,
Front Stratus. In October 2002 the Company took delivery of a further two
wholly-owned VLCC newbuildings, with delivery of these vessels financed through
traditional bank financing. The Company now has one remaining newbuilding VLCC
on order for delivery in 2003, and as per balance sheet date the remaining
equity investment was estimated to be $19 million. Except for this the Company
has no other material capital commitments.
The Board is pleased to announce that the banks in the largest syndicate have
agreed to extend their loan for two years until November 2005. The loan
originally had a bullet of $163 million due November next year. The extension
also includes a right to defer two quarterly instalments equal to $15.7 million.
The Board will continue to work with the target of lowering the cash break even
rates, through similar agreements with other syndicates.
At September 30, 2002, and for the quarter then ended, 76,466,566 ordinary
shares were outstanding. At September 30, 2002, the Bank of Nova Scotia Group
had acquired 2,695,000 Frontline shares pursuant to the existing Equity Swap
Line, of which 595,000 have been acquired in 2002. The facility has been
extended to February 2004.
The VLCC chartering cargo agreement with BP has worked out to mutual
satisfaction. Certain adjustments have been made to the initial agreement.
OUTLOOK
Tanker rates have improved considerably in the first half of the fourth quarter
due to a seasonal demand increase, more stable Iraqian exports and more oil
going west. Some oil company VLCCs have possibly been employed for floating
storage, thereby reducing overall transportation capacity. Approximately 60 per
cent and 75 per cent of Frontline's Suezmax and VLCC fleet capacity respectively
has been covered for the fourth quarter at rates of about $21,000 per day for
Suezmaxes and $28,000 per day for VLCCs with earnings trending upwards as new
fixtures are concluded at rates above the current average.
The Board expressed in the second quarter report comfort with the Company's
financial position. Based on the improved markets, the reduced cash breakeven
rates (currently $22,100 per day for VLCCs and $14,200 per day for Suezmaxes),
the new agreements with the banks and certain other measures under
implementation, this comfort has increased further. The Board feels the Company
is well positioned for future growth, but will remain cautious in its investment
considerations.
Based on the rates achieved so far in the fourth quarter it is anticipated that
the Company will generate a net income from ordinary operations in excess of $40
million. This number does not include effects from marked to market valuation of
the Equity Swap Line, currency changes and interest rate swaps. Current rates
for VLCCs and Suezmaxes are $50,000 and $30,000 per day respectively, which are
rates significantly higher than the average fixed so far in quarter. Therefore,
if these rates are maintained, the projected net income will be significantly
higher.
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 charter hire 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 17, 2002
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
FRONTLINE GROUP THIRD QUARTER REPORT (UNAUDITED)
____________________________________________________________________________________________________________________________________
2001 2002 INCOME STATEMENT 2002 2001 2001
Jul-Sep Jul-Sep (in thousands of $) Jan-Sep Jan-Sep Jan-Dec
(audited)
____________________________________________________________________________________________________________________________________
132,406 81,985 Net operating revenues 269,687 537,752 647,345
18,822 (602) Gain (loss) from sale of assets (2,872) 34,839 35,620
32,240 29,021 Ship operating expenses 86,387 89,611 121,452
10,460 19,724 Charterhire expenses 39,269 31,516 41,858
1,767 4,657 Administrative expenses 9,734 8,126 13,176
106,761 27,981 Operating income before depreciation and amortisation 131,425 443,338 506,479
31,118 34,916 Depreciation and amortisation 103,643 89,264 121,725
75,643 (6,935) Operating income after depreciation and amortisation 27,782 354,074 384,754
2,234 2,381 Interest income 7,812 10,115 12,953
(21,942) (18,244) Interest expense (55,442) (70,881) (91,800)
684 (1,374) Share of results from associated companies (9,838) 15,953 22,317
(7,455) (17,116) Other financial items (16,397) (11,618) (5,709)
(9,638) 4,118 Foreign currency exchange gain (loss) (7,999) 9,328 28,318
39,526 (37,170) Income (loss) before taxes and minority interest (54,082) 306,971 350,833
271 1 Taxes 2 256 444
(31) - Minority interest - 14 -
- - Cumulative effect of change in accounting principle - 32,339 32,339
39,286 (37,171) Net income (loss) (54,084) 339,040 382,728
Earnings (loss) Per Share Amounts ($)
$0.51 $(0.49) EPS before cumulative effect of change in accounting principle $(0.71) $3.99 $4.57
- - Cumulative effect of change in accounting principle - $0.42 $0.42
$0.51 $(0.49) EPS $(0.71) $4.41 $4.99
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
Income on timecharter basis ($ per day per ship)*
30,800 16,900 VLCC 18,900 47,600 40,800
23,100 14,300 Suezmax 16,100 34,100 30,700
23,000 13,400 Suezmax OBO 15,500 31,900 28,900
____________________________________________________________________________________________________________________________________
* Basis = Calendar days minus off-hire. Figures after
deduction of broker commission
____________________________________________________________________________________________________________________________________
BALANCE SHEET 2002 2001 2001
(in thousands of $) Sep 30 Sep 30 Dec 31
(audited)
____________________________________________________________________________________________________________________________________
ASSETS
Short term
Cash and cash equivalents 84,841 117,351 189,277
Other current assets 91,086 96,879 88,641
Long term
Newbuildings and vessel purchase options 65,236 100,968 102,781
Vessels and equipment, net 2,332,649 2,397,743 2,196,959
Vessels under capital lease, net 229,866 105,012 317,208
Investment in associated companies 110,262 98,565 109,898
Goodwill 11,891 14,224 14,049
Deferred charges and other long-term assets 6,027 16,867 14,961
Total assets 2,931,858 2,947,609 3,033,774
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Short term interest bearing debt 212,951 223,930 227,597
Current portion of obligations under capital lease 12,511 7,782 17,127
Other current liabilities 59,868 62,706 70,332
Long term
Long term interest bearing debt 1,218,106 1,331,107 1,164,354
Obligations under capital lease 217,959 89,524 283,663
Other long term liabilities 34,173 14,470 11,478
Minority interest - 6,070 6,822
Stockholders' equity 1,176,290 1,212,020 1,252,401
Total liabilities and stockholders' equity 2,931,858 2,947,609 3,033,774
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
STATEMENT OF CASHFLOWS 2002 2002
(in thousands of $) Jul-Sep Jan-Sep
____________________________________________________________________________________________________________________________________
OPERATING ACTIVITIES
Net income (loss) (37,171) (54,084)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortisation 35,452 105,205
Unrealised foreign currency exchange (gain) loss (1,962) 10,397
Gain or loss on sale of assets 602 2,871
Results from associated companies 1,374 9,838
Adjustment of financial derivatives to market value 5,551 6,459
Change in operating assets and liabilities 17,332 9,856
Net cash provided by operating activities 21,178 90,542
INVESTING ACTIVITIES
Additions to newbuildings, vessels and equipment (60,819) (197,755)
Advances to associated companies, net 1,135 (10,067)
Purchase of minority interest (166) (4,665)
Proceeds from sale of assets 31,800 74,241
Net cash provided by (used in) investing activities (28,050) (138,246)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of fees paid 54,204 226,958
Repayments of long-term debt (53,245) (197,903)
Repayment of capital leases (4,318) (66,894)
Dividends paid - (19,116)
Issue of shares, net - 223
Net cash used in financing activities (3,359) (56,732)
Net increase (decrease) in cash and cash equivalents (10,231) (104,436)
Cash and cash equivalents at start of period 95,072 189,277
Cash and cash equivalents at end of period 84,841 84,841
____________________________________________________________________________________________________________________________________
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 18, 2002 By /s/ Kate Blankenship
--------------------------------------
Kate Blankenship
Secretary and Chief Accounting Officer
02089.0009 #364977