Frontline reports net income of $169.2 million and earnings per share of $2.29 for the second quarter of 2004.
Frontline announces a cash dividend of $1.60 per share.
Frontline announces the distribution of a further 10 percentage points of their shares in Ship Finance International Limited to Frontline shareholders.
Second Quarter and Six Months Results
The Board of Frontline Ltd. announces net income of $169.2 million for the second quarter of 2004, equivalent to earnings per share of $2.29. Operating income for the quarter was $183.5 million. The tanker market remained strong in the second quarter although at lower levels than experienced at the start of 2004. 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 $58,500, $36,700 and $27,000, respectively, compared with $74,900, $59,100 and $26,100 respectively in the first quarter of 2004.
Administrative expenses of $5.2 million for the second quarter of 2004 include a charge of $2.0 million for stock option compensation. At June 30, 2004, the Company has no further stock options outstanding. Interest income for the quarter was $8.3 million, of which $6.1 million relates to Independent Tankers Corporation ("ITC"). Interest expense for the quarter was $51.1 million (of which $16.6 million relates to ITC) decreased from $53.8 million in the first quarter primarily due to the first quarter write off of deferred fees of $4.2 million. As anticipated in our first quarter report, the movement in interest rates and the Yen has generated valuation gains in the second quarter. Other financial items for the quarter were a credit of $25.3 million compared to an expense of $13.7 million in the first quarter. At June 30, 2004 the Company had interest rate swaps with a total notional principal amount of $641.3 outstanding and has recorded a $26.8 million credit attributable to the mark to market valuation of these interest rate swaps. The Yen rate moved from 105.64 at March 31, 2004 to 108.38 at June 30, 2004 and accordingly the Company recording a foreign exchange gain of $6.2 million on the Yen debt in subsidiaries and certain Yen currency contracts.
The Company has a 20 percent profit share arrangement with Ship Finance International Limited for any earnings Frontline makes above the fixed charter rates. This profit share is calculated on an annual basis. So far this year approximately $40.0 million has been accumulated of which $1.4 million has been accounted for in the second quarter in accordance with US generally accepted accounting principles. Frontline has recorded a liability and minority interest expense for this $1.4 million.
Frontline announces net income of $383.6 million for the six months ended June 30, 2004, equivalent to earnings per share of $5.20. This is the best half year results ever recorded by the Company. 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 $66,700, $48,200 and $26,600, respectively
As at June 30, 2004, the Company had total cash and cash equivalents of $707.3 million. This amount includes restricted cash of $594.5 million of which $327.1 million relates to deposits in ITC and $250 million in Frontline Shipping Limited. As of August 18, 2004, Frontline has cash breakeven rates on a TCE basis for VLCCs and Suezmaxes of $21,784 and $15,788, respectively.
The full report is enclosed on the following link: