Interim Report January – March 2004


  •          Frontline reports a record quarterly result of $214.4 million and earnings per share of $2.91 for the first quarter of 2004.
  •          Frontline announces a cash dividend of $5.00 per share.
  •          Frontline announces the partial spin off of Ship Finance International Limited (“Ship Finance”) through the distribution of one share in Ship Finance for each four shares held in Frontline.
  •          In the first quarter, Frontline’s wholly-subsidiary, Ship Finance, completed the acquisition of 46 tankers, plus an option to acquire a further tanker, from Frontline. The acquisition was financed using the proceeds of the issue of $580 million in 8.5% Senior Notes in December 2003, and refinancing of existing debt with a new $1,058 million facility.
    The Board of Frontline Ltd. is pleased to announce net income of $214.4 million for the first quarter of 2004, equivalent to earnings per share of $2.91. Net operating revenues (being total operating revenues less voyage expenses) and net operating income before depreciation for the quarter were $368.9 million and $320.4 million, respectively.
    The average daily time charter equivalents (“TCEs”) earned in the spot and period market by the Company’s VLCCs, Suezmax tankers, and Suezmax OBO carriers were $74,900, $59,100 and $26,100, respectively, compared with $40,600 $32,600 and $27,900 respectively in the fourth quarter of 2004.
    In accordance with FASB Interpretation 46 Revised, Frontline has consolidated Independent Tankers Corporation (“ITC”), a company over which Frontline holds a purchase option, with effect from December 31, 2003.  The net effect of ITC in the first quarter is a net income of approximately $1.0 million. As at March 31, 2004, the total book value of ITC’s consolidated assets was approximately $900 million, including restricted cash balances of $307.0 million. ITC has total Notes outstanding of $596.4 million. (See Note to the Unaudited Frontline Group First Quarter Report).
    Interest income for the quarter was $7.9 million, of which $5.8 million relates to ITC. Interest expense for the quarter was $53.8 million, increased from $22.0 million in the immediately preceding quarter. This increase reflects the inclusion of ITC, a full quarters interest on the 8.5% Senior Notes and the write off of deferred fees due to the debt refinancing amounting to $16.8 million, $12.3 million and $4.2 million, respectively. In the first quarter of 2004 the Company entered into interest rates swaps with a total notional principal amount of $500 million. Other financial items for the quarter were an expense of $13.7 million of which $12.8 million is attributable to the mark to market valuation of these interest rate swaps. The strengthening of the Yen in the first quarter resulted in the Company recording a foreign exchange loss of $4.1 million on the Yen debt in subsidiaries and certain Yen currency contracts.
    The Yen rate at the end of the quarter was 105.64 while 5 years US Treasury Bonds traded March 31st with a yield of 2.78%. Both prices have moved in the second quarter and look as of today to generate mark to market revaluation gains in the second quarter
    As at March 31, 2004, the Company had total cash and cash equivalents of $857.2 million. This amount includes restricted cash of $571.8 million of which $307.0 million relates to deposits in ITC and $250.0 million in Frontline Shipping Limited.
    As of May 28, 2004, Frontline has cash breakeven rates for VLCCs and Suezmaxes of $21,878 and $15,961, respectively.
    Please find the full report on the following link: