Frontline reports net income of $24.2 million and earnings per share of $0.32 for the third quarter of 2007.
Frontline reports nine month net income of $372.0 million and earning per share of $4.97.
Frontline reports a total gain on sale of assets of $4.8 million.
Frontline announces a cash dividend of $1.50 per share for the third quarter of 2007.
Third Quarter and Nine Months Results 2007
The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income of $24.2 million for the third quarter of 2007, equivalent to earnings per share of $0.32. Operating income for the quarter was $66.9 million compared to $190.9 million in the second quarter. The second quarter included a gain on sale of assets of $66.1 million compared to $4.8 million in the current quarter primarily relating to the sale of Front Horizon.
The reported earnings reflect a substantially weaker spot market. 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 $36,000, $25,000 and $41,300, respectively compared with $51,500, $38,600 and $38,300 respectively in the second quarter. The results show a continued differential in earnings between single and double hull tonnage. The spot earnings for the Company's double hull VLCC and Suezmax vessels were $36,100 and $28,300, in the third quarter, compared to $57,700 and $50,500, in the second quarter. Brokerage commissions related to six VLCC vessels on time charter, which were previously reported under ship operating costs, have been reclassified to voyage expenses this quarter and prior period comparatives have been restated to conform to current period presentation.
Profit share expense of $5.5 million has been recorded in the third quarter as a result of the profit sharing agreement with Ship Finance International Limited ("Ship Finance") compared to $15.7 million in the second quarter.
Charterhire expenses have increased by $5.4 million in the third quarter compared to the second quarter, primarily as a consequence of chartering in two additional vessels in the quarter.
Interest income was $12.6 million in the third quarter, of which $7.3 million relates to restricted deposits held by subsidiaries reported in Independent Tankers Corporation ("ITC"). Interest expense, net of capitalized interest, was $57.5 million in the third quarter of which $13.7 million relates to ITC and $45.9 million relates to the capital lease interest expense in Frontline.
Frontline announces net income of $372.0 million for the nine months ended September 30, 2007, equivalent to earnings per share of $4.97. The average TCEs earned in the spot and period market by the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers for the nine months period ended September 30, 2007 were $45,800, $33,000 and $38,800, respectively.
As of September 30, 2007, the Company had total cash and cash equivalents of $937.4 million which includes $628.3 million of restricted cash. Restricted cash includes $394.5 million relating to deposits in ITC and $232.0 million in Frontline Shipping Limited and Frontline Shipping II Limited which are restricted under the charter agreements with Ship Finance.
The 2006 financial statements have been restated to reflect the revised accounting treatment for three entities within the ITC group which were previously fully consolidated but are now being accounted for as investments under the equity method. The restatement has no effect on net income.
As of November 2007, the Company has average total cash cost breakeven rates on a TCE basis for VLCCs and Suezmaxes of approximately $30,000 and $22,100, respectively.
In October 2007, Frontline agreed with Ship Finance to terminate the long term charter party between the companies for the single hull VLCC Front Duchess and Ship Finance simultaneously sold the vessel for net sales proceeds of $54.5 million. Ship Finance will make a compensation payment to Frontline of approximately $25.4 million for the early termination of the current charter party, which will be recognized in the first quarter of 2008.
In October 2007, Frontline announced the sale of its entire holding of 34,976,500 shares in Dockwise Ltd. ("Dockwise"). The shares were sold at a gross price of NOK 25 per share, with net proceeds of approximately $157 million. Frontline is expected to record a gain of approximately $49 million in the fourth quarter of 2007 as a result of this sale. Simultaneously with the sale of the shares Frontline declared an interim extraordinary dividend of $1.75 per share which was paid on October 24, 2007. In the second quarter of 2007, Frontline recorded a gain on the issuance of shares by Dockwise of $43.7 million.
In November 2007, Frontline announced that it has entered into an agreement to sell its entire holding of 1,714,544 shares in IMAREX ASA to NYMEX Holdings, Inc. The sale price was NOK 160 per share, with proceeds of approximately $51 million. Frontline is expected to record a gain of approximately $43 million in the fourth quarter of 2007 as a result of this sale.
On November 15, 2007, the Board declared a dividend of $1.50 per share. The record date for the dividend is November 28, 2007, ex dividend date is November 26, 2007 and the dividend will be paid on or about December 12, 2007.
74,825,169 ordinary shares were outstanding on September 30, 2007, and the weighted average number of shares outstanding for the quarter was also 74,825,169.
The full report is available in the link below.
November 14, 2007
The Board of Directors
Questions should be directed to:
Bjørn Sjaastad: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management AS