-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7g+r+hqpSMK3bbFHGV4m2E72AyW0nCguXbYGwzYbD/LAr4H6VhBgJBjUMC689if LFZ+48rPAQHFwdj1QYnssw== 0000911971-97-000005.txt : 19970225 0000911971-97-000005.hdr.sgml : 19970225 ACCESSION NUMBER: 0000911971-97-000005 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970205 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEEKAY SHIPPING CORP CENTRAL INDEX KEY: 0000911971 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12874 FILM NUMBER: 97517940 BUSINESS ADDRESS: STREET 1: TRADEWINDS BLDG SIXTH FLR STREET 2: BAY ST PO BOX SS-6293 CITY: NASSAU BAHAMAS STATE: C5 BUSINESS PHONE: 8093228020 MAIL ADDRESS: STREET 1: TRADEWINDS BLDG SIXTH FLOOR STREET 2: BAY STREET PO BOX 22-6293 CITY: NASSAU BAHAMAS STATE: C5 FORMER COMPANY: FORMER CONFORMED NAME: VIKING STAR SHIPPING INC DATE OF NAME CHANGE: 19930914 6-K 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 1996 ------------------------------------------------ TEEKAY SHIPPING CORPORATION (Exact name of Registrant as specified in its charter) Tradewinds Building, Fifth Floor Bay Street, P.O. Box SS-6293, Nassau, The Bahamas (Address of principal executive office) [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- ] 2 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 INDEX
PART I: FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Statements of Income and Retained Earnings for the three and nine months ended December 31, 1996 and 1995. . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets - December 31, 1996 and March 31, 1996. . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the nine months ended December 31, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . .13 PART II: OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . .17 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 18
PAGE 2 OF 18 3 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended Nine Months Ended December 31, December 31, 1996 1995 1996 1995 $ (Unaudited) $ $ (Unaudited) $ -------------------------------------------------------- NET VOYAGE REVENUES Voyage revenues 97,302 84,596 281,475 245,540 Voyage expenses 27,154 21,803 76,707 65,255 ------------------------------------------------------------------------------------------------------------------- Net voyage revenues 70,148 62,793 204,768 180,285 ------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 18,194 16,770 53,605 50,266 Time-charter hire expense 118 841 3,462 841 Depreciation and amortization 23,269 20,996 68,181 61,952 General and administrative 4,579 3,973 13,673 12,785 ------------------------------------------------------------------------------------------------------------------- 46,160 42,580 138,921 125,844 ------------------------------------------------------------------------------------------------------------------- Income from vessel operations 23,988 20,213 65,847 54,441 ------------------------------------------------------------------------------------------------------------------- OTHER ITEMS Interest expense (15,132) (14,755) (45,199) (45,985) Interest income 1,637 1,848 4,790 5,030 Other income (loss) (note 8) (598) 6,009 (1,072) 9,860 ------------------------------------------------------------------------------------------------------------------- (14,093) (6,898) (41,481) (31,095) ------------------------------------------------------------------------------------------------------------------- Net income 9,895 13,315 24,366 23,346 Retained earnings, beginning of the period 366,137 356,578 363,690 406,547 Exchange of redeemable preferred stock (note 6) (60,000) Dividends declared and paid (6,048) (5,953) (18,072) (5,953) ------------------------------------------------------------------------------------------------------------------- Retained earnings, end of the period 369,984 363,940 369,984 363,940 ------------------------------------------------------------------------------------------------------------------- Net income per common share (note 6) $ 0.35 $ 0.48 $ 0.87 $ 0.98 Weighted average number of common shares outstanding (note 6) 28,193,291 27,756,345 28,086,886 23,836,381 ===================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. PAGE 3 OF 18 4 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
As at As at December 31, 1996 March 31, 1996 $ $ (Unaudited) ----------------- -------------- ASSETS Current Cash and cash equivalents 123,511 99,790 Restricted cash 1,086 1,990 Accounts receivable -trade 22,403 22,213 -other 2,851 2,725 Prepaid expenses and other assets 15,176 15,331 ---------------------------------------------------------------------------------------------------- Total current assets 165,027 142,049 ---------------------------------------------------------------------------------------------------- Vessels and equipment (notes 5 and 7) At cost, less accumulated depreciation of $438,234 (March 31, 1996 - $377,105) 1,201,911 1,193,557 Advances on vessels 4,463 5,250 ---------------------------------------------------------------------------------------------------- Total vessels and equipment 1,206,374 1,198,807 ---------------------------------------------------------------------------------------------------- Investment 958 1,624 Other assets 12,259 12,821 ---------------------------------------------------------------------------------------------------- 1,384,618 1,355,301 ==================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable 13,000 11,761 Accrued liabilities 35,171 18,303 Current portion of long-term debt (notes 5 and 7) 36,461 19,102 ---------------------------------------------------------------------------------------------------- Total current liabilities 84,632 49,166 ---------------------------------------------------------------------------------------------------- Long-term debt (notes 5 and 7) 685,369 706,740 ---------------------------------------------------------------------------------------------------- Total liabilities 770,001 755,906 ---------------------------------------------------------------------------------------------------- Stockholders' equity Capital stock (note 6) 244,633 235,705 Retained earnings 369,984 363,690 ---------------------------------------------------------------------------------------------------- Total stockholders' equity 614,617 599,395 ---------------------------------------------------------------------------------------------------- 1,384,618 1,355,301 ====================================================================================================
Commitments and contingencies (note 7) The accompanying notes are an integral part of the consolidated financial statements. PAGE 4 OF 18 5 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Nine Months Ended December 31, 1996 1995 $ (Unaudited) $ ------------------------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 24,366 23,346 Add (deduct) charges to operations not requiring a payment of cash and cash equivalents: Depreciation and amortization 68,181 61,952 Gain on disposition of assets (8,889) Equity loss (income) 384 (1,503) Other - net 1,044 881 Change in non-cash working capital items related to operating activities 12,139 (3,949) -------------------------------------------------------------------------------------------------------------------------- Net cash flow from operating activities 106,114 71,838 -------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 220,000 223,000 Scheduled repayments of long-term debt (13,140) (49,698) Prepayments of long-term debt (210,872) (323,544) Scheduled repayments of capital lease obligation (1,304) Decrease in restricted cash 904 4,870 Net proceeds from issuance of Common Stock 705 137,613 Cash dividends paid (9,848) (3,712) Other (1,053) (1,086) -------------------------------------------------------------------------------------------------------------------------- Net cash flow from financing activities (13,304) (13,861) -------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (net of capital lease financing of $NIL; December 31, 1995 - $44,550) (58,408) (47,640) Expenditures for drydocking (10,963) (6,805) Proceeds from disposition of assets 28,514 Proceeds on sale of available-for-sale securities 60,963 Purchases of available-for-sale securities (41,068) Other 282 -------------------------------------------------------------------------------------------------------------------------- Net cash flow from investing activities (69,089) (6,036) -------------------------------------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 23,721 51,941 Cash and cash equivalents, beginning of the period 99,790 16,500 --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 123,511 68,441 ===========================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. PAGE 5 OF 18 6 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at December 31, 1996, and for the Three-Month and Nine-Month Periods Ended December 31, 1996 and 1995 is unaudited) 1. Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures required by generally accepted accounting principles for complete annual financial statements have been omitted and, therefore, it is suggested that these interim financial statements be read in conjunction with the Company's audited consolidated financial statements for the fiscal year ended March 31, 1996. In the opinion of management, these statements reflect all adjustments (consisting only of normal recurring accruals), necessary to present fairly, in all material respects, the Company's consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three-month and nine-month periods ended December 31, 1996 are not necessarily indicative of those for a full fiscal year. Certain of the prior period comparative figures have been reclassified where necessary to conform with the presentation used in the current period. 2. Accounting for Stock-Based Compensation The Company accounts for its stock option plan in accordance with provisions of the Accounting Principles Board's Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." In 1995, the Financial Accounting Standards Board released the Statement of Financial Accounting Standard No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." SFAS 123 provides an alternative to APB 25 and is effective for fiscal years beginning after December 15, 1995. The Company expects to continue to account for its employee stock plans in accordance with the provisions of APB 25 and will disclose the required proforma effect on net income and earnings per share. 3. Cash Flows Cash interest paid during the nine-month periods ended December 31, 1996 and 1995 totalled approximately $35,063,000 and $42,862,000, respectively. 4. Income Taxes The legal jurisdictions of the countries in which the Company and its subsidiaries are incorporated do not impose income taxes upon shipping-related activities. 5. Long-Term Debt
December 31, March 31, 1996 1996 $ $ - ------------------------------------------------------------------------------------------------------------ Revolving Credit Facility (LIBOR + 1.05%) 0 118,000 First Preferred Ship Mortgage Notes (8.32%) U.S. dollar debt due through 2008 225,000 225,000 First Preferred Ship Mortgage Notes (9 5/8%) U.S. dollar debt due through 2004 151,200 151,200 Floating rate (LIBOR + 0.65% to 1 1/2%) U.S. dollar debt due through 2006 345,630 231,642 - ------------------------------------------------------------------------------------------------------------ 721,830 725,842 Less current portion of long-term debt 36,461 19,102 - ------------------------------------------------------------------------------------------------------------ 685,369 706,740 ============================================================================================================
PAGE 6 OF 18 7 5. Long-Term Debt (cont'd) The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the "8.32% Notes") are collateralized by first preferred mortgages on seven of the Company's Aframax tankers, together with certain other related collateral, and are guaranteed by seven of the Company's subsidiaries that own the mortgaged vessels (the "8.32% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value of their net assets. As at December 31, 1996, the fair value of these net assets approximated $285 million. The 9 5/8% First Preferred Ship Mortgage Notes due July 15, 2003 (the "9 5/8% Notes") are collateralized by first preferred mortgages on six of the Company's Aframax tankers, together with certain other related collateral, and are guaranteed by six of the Company's subsidiaries that own the mortgaged vessels (the "9 5/8% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value of their net assets. As at December 31, 1996, the fair value of these net assets approximated $197 million. Condensed financial information regarding the Company, the 9 5/8% Notes Guarantor Subsidiaries, the 8.32% Notes Guarantor Subsidiaries and non-guarantor subsidiaries of the Company is set out in Schedule A of these consolidated financial statements. As at December 31, 1996, the Company was committed to a series of interest rate swap agreements whereby $150 million of the Company's floating rate debt was swapped with fixed rate obligations having an average remaining term of 22.5 months. The swap agreements expire between October 1998 and December 1998. These arrangements effectively change the Company's interest rate exposure on $150 million of debt from a floating LIBOR rate to an average fixed rate of 5.85%. As at December 31, 1996, the Company was a party to interest rate cap contracts which effectively limit the interest rate exposure on $200 million of the Company's floating rate debt to a maximum of 8%. All of the contracts expire on April 1, 1997. The Company is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap and cap agreements; however, the Company does not anticipate non-performance by any of the counter parties. 6. Capital Stock Authorized 25,000,000 Preferred Stock with a par value of $1 per share. 125,000,000 Common Stock with no par value
============================================================================================================ Common Thousands Preferred Thousands Issued and outstanding Stock of shares Stock of shares ------------------------------------------------------------------------------------------------------------ Balance March 31, 1996 $235,705 27,904 $0 0 Reinvested dividends 8,223 288 Exercise of stock options 705 32 ------------------------------------------------------------------------------------------------------------ Balance December 31, 1996 $244,633 28,224 $0 0 ============================================================================================================
PAGE 7 OF 18 8 6. Capital Stock (cont'd) The Company has reserved 2,148,571 shares of Common Stock for issuance upon exercise of options granted pursuant to the Company's 1995 Stock Option Plan. As at December 31, 1996, options to purchase a total of 1,087,926 shares of the Company's Common Stock were outstanding, of which 547,301 options were then exercisable at $21.50 per share. The remaining outstanding options will be exercisable at prices ranging from $21.50 to $27.375 per share and expire between July 19, 2005 and May 28, 2006, ten years after the date of grant. Net income per share is based upon the weighted average number of common shares outstanding during each period. Stock options have not been included in the computation of net income per common share since their effect thereon would not be material. 7. Commitments and Contingencies As at December 31, 1996, the Company was committed to the construction of an Aframax vessel for a cost of $44.5 million, scheduled for delivery in July 1997. To December 31, 1996, there had been payments made towards this commitment of $4.5 million. A long-term financing arrangement exists for $35.6 million of the unpaid cost of this vessel. 8. Other Income
Three Months Nine Months Ended December 31, Ended December 31, 1996 1995 1996 1995 $ $ $ $ ------------------------------------------------------------------------------------------------------------ Gain on disposition of assets 5,161 8,889 Equity in results of 50% owned company 799 (384) 1,503 Write-off of capitalized loan costs (568) (568) (1,144) Miscellaneous - net (30) 49 (120) 612 ------------------------------------------------------------------------------------------------------------ (598) 6,009 (1,072) 9,860 ============================================================================================================
PAGE 8 OF 18 9 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended December 31, 1996 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Net voyage revenues 7,657 8,954 105,274 (51,737) 70,148 Operating expenses 383 5,742 8,360 83,412 (51,737) 46,160 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from vessel operations (383) 1,915 594 21,862 23,988 Net interest income (expense) (8,317) 42 70 (5,290) (13,495) Equity in net income of subsidiaries 18,547 (18,547) Other income (loss) 48 2,595 (3,241) (598) - ----------------------------------------------------------------------------------------------------------------------------------- Net income 9,895 1,957 664 19,167 (21,788) 9,895 Retained earnings (deficit), beginning of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137 Dividends declared and paid (6,048) (6,048) - ----------------------------------------------------------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 369,984 16,184 (9,166) 119,576 (126,594) 369,984 ===================================================================================================================================
Three Months Ended December 31, 1995 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Net voyage revenues 7,626 14,179 97,548 (56,560) 62,793 Operating expenses 388 5,208 8,107 91,351 (62,474) 42,580 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from vessel operations (388) 2,418 6,072 6,197 5,914 20,213 Net interest income (expense) (3,640) 219 (4,005) (5,481) (12,907) Equity in net income of subsidiaries 17,295 (16,496) 799 Other income 48 1 12,172 (7,011) 5,210 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 13,315 2,638 2,067 12,888 (17,593) 13,315 Retained earnings (deficit), beginning of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578 Dividends declared and paid (5,953) (5,953) - ----------------------------------------------------------------------------------------------------------------------------------- Retained earnings, end of the period 363,940 21,991 329 74,547 (96,867) 363,940 =================================================================================================================================== - --------------- (See Note 5) PAGE 9 OF 18 10 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Nine Months Ended December 31, 1996 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Net voyage revenues 22,786 26,977 301,047 (146,042) 204,768 Operating expenses 1,225 16,880 25,611 241,247 (146,042) 138,921 Income (loss) from vessel operations (1,225) 5,906 1,366 59,800 65,847 Net interest income (expense) (25,056) 101 163 (15,617) (40,409) Equity in net income (loss) of subsidiaries 50,503 (50,887) (384) Other income (loss) 144 8,700 (9,532) (688) - ----------------------------------------------------------------------------------------------------------------------------------- Net income 24,366 6,007 1,529 52,883 (60,419) 24,366 Retained earnings (deficit), beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690 Dividends declared and paid (18,072) (7,200) (9,450) 16,650 (18,072) - ----------------------------------------------------------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 369,984 16,184 (9,166) 119,576 (126,594) 369,984 ===================================================================================================================================
Nine Months Ended December 31, 1995 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Net voyage revenues 22,218 40,606 295,662 (178,201) 180,285 Operating expenses 1,085 15,643 23,241 271,074 (185,199) 125,844 - ----------------------------------------------------------------------------------------------------------------------------------- Income (loss) from vessel operations (1,085) 6,575 17,365 24,588 6,998 54,441 Net interest income (expense) (10,954) 306 (12,009) (18,298) (40,955) Equity in net income of subsidiaries 34,174 (32,671) 1,503 Other income 1,211 1 14,156 (7,011) 8,357 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 23,346 6,882 5,356 20,446 (32,684) 23,346 Retained earnings (deficit), beginning of the period 406,547 22,309 (5,027) 89,301 (106,583) 406,547 Exchange of redeemable preferred stock (60,000) (60,000) Dividends declared and paid (5,953) (7,200) (35,200) 42,400 (5,953) - ----------------------------------------------------------------------------------------------------------------------------------- Retained earnings, end of the period 363,940 21,991 329 74,547 (96,867) 363,940 =================================================================================================================================== - ----------------- (See Note 5) PAGE 10 OF 18 11
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED BALANCE SHEETS (in thousands of U.S. dollars) As at December 31, 1996 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents 143 12,905 12,669 97,794 123,511 Restricted cash 1,086 1,086 Other current assets 123 733 839 38,925 (190) 40,430 - ----------------------------------------------------------------------------------------------------------------------------------- Total current assets 266 13,638 13,508 137,805 (190) 165,027 Vessels and equipment (net) 138,474 347,481 720,419 1,206,374 Advances due from subsidiaries 364,625 (364,625) Other assets (principally investments in subsidiaries) 639,293 11,696 (637,772) 13,217 - ----------------------------------------------------------------------------------------------------------------------------------- 1,004,184 152,112 360,989 869,920 (1,002,587) 1,384,618 =================================================================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 14,567 4,111 804 65,340 (190) 84,632 Long-term debt 375,000 310,369 685,369 Due to parent 363,754 (363,754) - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 389,567 4,111 804 739,463 (363,944) 770,001 - ----------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Capital stock 244,633 6 23 5,933 (5,962) 244,633 Contributed capital 131,811 369,328 4,948 (506,087) Retained earnings (deficit) 369,984 16,184 (9,166) 119,576 (126,594) 369,984 - ----------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 614,617 148,001 360,185 30,457 (638,643) 614,617 - ----------------------------------------------------------------------------------------------------------------------------------- 1,004,184 152,112 360,989 869,920 (1,002,587) 1,384,618 ===================================================================================================================================
As at March 31, 1996 - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents 28 8,613 5,210 85,939 99,790 Restricted cash 1,990 1,990 Other current assets 293 1,475 1,064 37,527 (90) 40,269 - ----------------------------------------------------------------------------------------------------------------------------------- Total current assets 321 10,088 6,274 125,456 (90) 142,049 Vessels and equipment (net) 139,652 362,424 696,731 1,198,807 Advances due from subsidiaries 372,233 (372,233) Other assets (principally investments in subsidiaries) 606,269 12,826 (604,650) 14,445 - ----------------------------------------------------------------------------------------------------------------------------------- 978,823 149,740 368,698 835,013 (976,973) 1,355,301 =================================================================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 3,228 539 613 44,876 (90) 49,166 Long-term debt 376,200 330,540 706,740 Due to parent 382,023 (382,023) - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 379,428 539 613 757,439 (382,113) 755,906 - ----------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Capital stock 235,705 6 23 5,933 (5,962) 235,705 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 363,690 17,377 (1,245) 66,693 (82,825) 363,690 - ----------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 599,395 149,201 368,085 77,574 (594,860) 599,395 - ----------------------------------------------------------------------------------------------------------------------------------- 978,823 149,740 368,698 835,013 (976,973) 1,355,301 =================================================================================================================================== - ---------------- (See Note 5)
PAGE 11 OF 18 12
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) Nine Months Ended December 31, 1996 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from operating activities (15,043) 14,418 16,914 89,825 106,114 - ----------------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 220,000 220,000 Repayments of long-term debt (224,012) (224,012) Net proceeds from issuance of Common Stock 705 705 Other (2,469) (7,200) (9,450) 9,122 (9,997) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from financing activities (1,764) (7,200) (9,450) 5,110 (13,304) - ----------------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (2,919) (28) (66,424) (69,371) Other 16,922 (7) 23 (16,656) 282 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from investing activities 16,922 (2,926) (5) (83,080) (69,089) - ----------------------------------------------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 115 4,292 7,459 11,855 23,721 Cash and cash equivalents, beginning of the period 28 8,613 5,210 85,939 99,790 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 143 12,905 12,669 97,794 123,511 ===================================================================================================================================
Nine Months Ended December 31, 1995 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from operating activities (9,191) 13,243 19,506 48,280 71,838 - ----------------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 223,000 223,000 Repayments of long-term debt (22,580) (27,694) (324,272) (374,546) Net proceeds from issuance of Common Stock 137,613 137,613 Other (171,203) (7,200) 11,321 167,154 72 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from financing activities (56,170) (7,200) (16,373) 65,882 (13,861) - ----------------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (979) (162) (53,304) (54,445) Proceeds from disposition of assets 28,514 28,514 Other 65,391 460 (2,946) (43,010) 19,895 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash flow from investing activities 65,391 (519) (3,108) (67,800) (6,036) - ----------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 30 5,524 25 46,362 51,941 Cash and cash equivalents, beginning of the period 97 5,886 3,076 7,441 16,500 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 127 11,410 3,101 53,803 68,441 =================================================================================================================================== - ------------------ (See Note 5) PAGE 12 OF 18 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES December 31, 1996 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS General Teekay Shipping Corporation (the "Company") is a leading provider of international crude oil and petroleum product transportation services to major oil companies, major oil traders, and government agencies, principally in the region spanning from the Red Sea to the U.S. West Coast. The Company's fleet consists of 42 tankers, including 38 Aframax oil tankers and oil/bulk/ore carriers, two smaller tankers, one VLCC and, through a joint venture, a 50% interest in an additional Aframax tanker, for a total cargo-carrying capacity of approximately 4.2 million tonnes. Approximately 79% of the Company's net revenue is currently derived from spot voyages. This dependence on spot voyages, which management believes is within industry norms, contributes to the volatility of the Company's revenue, cash flow from operations, and net income. The balance of the Company's revenue is generated by two other modes of employment: time charters, whereby vessels are chartered to customers for a fixed period at a fixed rate; and by contracts of affreightment, whereby the Company carries an agreed quantity of cargo for a customer over a specified trade route over a specified period of time. Management believes that the Company has a competitive advantage over other tanker owners in the Aframax spot market. Historically, the tanker industry has been cyclical, experiencing volatility in profitability resulting from changes in the supply of and demand for tankers. Additionally, tanker markets have exhibited seasonal variations in charter rates. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere and unpredictable winter weather patterns which tend to disrupt vessel scheduling. Bulk shipping industry freight rates are commonly measured at the net voyage revenue level in terms of "time charter equivalent" (or "TCE") rates, defined as voyage revenues less voyage expenses (excluding commissions), divided by revenue-generating ship-days for the round-trip voyage. Voyage revenues and voyage expenses are a function of the type of charter, either spot charter or time charter, and port, canal and fuel costs depending on the trade route upon which a vessel is sailing, in addition to being a function of the level of shipping freight rates. For this reason, shipowners base economic decisions regarding the deployment of their vessels upon anticipated TCE rates, and industry analysts typically measure bulk shipping freight rates in terms of TCE rates. Therefore, the discussion of revenue below focuses on net voyage revenue and TCE rates. Three Months Ended December 31, 1996 versus Three Months Ended December 31, 1995 The Company's net income was $9.9 million, or 35 cents per share, in the third quarter of fiscal 1997. This is down from $13.3 million, or 48 cents per share, earned in the third quarter of fiscal 1996 which included $5.2 million, or 19 cents per share, in gains on asset sales. Excluding gains on asset sales, net income increased by $1.7 million over last fiscal year's third quarter, reflecting a continuation of the gradual year-over-year improvement in the tanker charter market since the bottom of the market cycle in 1992 as well as the increase in fleet size. The seasonal rise in tanker charter rates which typically occurs in the months of October and November was delayed until late December this year. This, in addition to a temporary increase in bunker prices, resulted in TCE rates for the third quarter of fiscal 1997 which were only marginally higher than those experienced during the summer of 1996. PAGE 13 OF 18 14 Income from Vessel Operations The Company's fleet was 5.1% larger on average in the third quarter of fiscal 1997 than in the third quarter of fiscal 1996, as three modern Aframax tankers were acquired during the past year, while the Company's one remaining mid-1970s-built tanker was sold. Net voyage revenues increased 11.7%, to $70.1 million in the third quarter of fiscal 1997, from $62.8 million in the third quarter of fiscal 1996. This reflects the increase in fleet size as well as an improvement in tanker charter market conditions, as the Company's fleet achieved an average TCE rate of $20,076 in the third quarter of fiscal 1997, up 6.5% from $18,846 in the third quarter of fiscal 1996. Increases in vessel operating expenses, depreciation and amortization, and general and administrative expenses were largely attributable to the increase in fleet size. Depreciation and amortization expense included amortization of drydocking costs of $2.6 million in the third quarter of fiscal 1997 and $2.3 million in the third quarter of fiscal 1996. Interest Expense Interest expense increased 2.6% to $15.1 million in the third quarter of fiscal 1997, from $14.8 million in the third quarter of fiscal 1996 due to $400,000 in prepayment penalties incurred as a result of the term loan refinancing completed in October 1996 (see "Liquidity and Capital Resources"). Nine months Ended December 31, 1996 versus Nine months Ended December 31, 1995 The Company's net income was $24.4 million, or 87 cents per share, in the first three quarters of fiscal 1997, up from $23.3 million, or 98 cents per share, in the first three quarters of fiscal 1996, reflecting an improvement in the tanker charter market accompanied by a relatively stable cost environment. Net income for the first three quarters of fiscal 1996 included gains on asset sales of $8.9 million, or 37 cents per share. Income from Vessel Operations The combination of increased average TCE rates and a larger fleet operating in a relatively stable cost environment resulted in a 21.0% increase in income from vessel operations, to $65.8 million in the first three quarters of fiscal 1997 from $54.4 million in the first three quarters of fiscal 1996. During fiscal 1996, the Company disposed of four older, mid-1970s-built tankers, and chartered-in one Aframax tanker and acquired four newer Aframax tankers. In the first three quarters of fiscal 1997, the Company added one additional Aframax tanker to its fleet and fulfilled its commitment to purchase an Aframax tanker previously chartered-in. As a result, the Company's fleet was 5.4% larger on average in the first three quarters of fiscal 1997 than during the first three quarters of fiscal 1996. Net voyage revenues increased 13.6%, to $204.8 million in the first three quarters of fiscal 1997, from $180.3 million in the first three quarters of fiscal 1996. In addition to the increase in fleet size, this reflects an improvement in tanker charter market conditions, with an average TCE rate of $19,732 in the first three quarters of fiscal 1997, up 8.6% from $18,170 in the first three quarters of fiscal 1996. Operating expenses increased approximately in line with the larger fleet. Depreciation and amortization expense included amortization of drydocking costs of $7.7 million in the first three quarters of fiscal 1997 and $6.5 million in the first three quarters of fiscal 1996. PAGE 14 OF 18 15 The following table illustrates the relationship between fleet size (measured in ship-days), time charter equivalent ("TCE") per revenue-generating ship-day performance, and operating results per calendar ship-day:
Three Months Ended Nine months Ended December 31, December 31, 1996 1995 1996 1995 -------------------------------------------------------------------------------------------------------------------------------- Total calendar ship-days 3,772 3,590 11,247 10,670 Non-revenue days 199 188 640 533 -------------------------------------------------------------------------------------------------------------------------------- Revenue-generating ship-days (A) 3,573 3,402 10,607 10,137 -------------------------------------------------------------------------------------------------------------------------------- Net voyage revenue before commissions (B) (000's) $71,732 $64,115 $209,294 $184,189 -------------------------------------------------------------------------------------------------------------------------------- Time charter equivalent (TCE) (B/A) $20,076 $18,846 $19,732 $18,170 -------------------------------------------------------------------------------------------------------------------------------- Operating results per calendar ship-day: Net voyage revenue $18,597 $17,491 $18,206 $16,896 Vessel operating expense 4,832 4,733 4,848 4,732 General and administrative expense 1,214 1,107 1,216 1,198 Drydocking expense 694 633 687 605 -------------------------------------------------------------------------------------------------------------------------------- Operating cash flow per calendar ship-day $11,857 $11,018 $11,455 $10,361 --------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES The Company's total liquidity, including cash, cash equivalents and undrawn long-term lines of credit, was $264.6 million as at December 31, 1996 up from $195.3 million as of the beginning of the fiscal year, as a result of internally generated cash flow and a term loan refinancing completed in October 1996. Net cash flow from operating activities increased 47.7%, to $106.1 million in the first three quarters of fiscal 1997, compared to $71.8 million in the first three quarters of fiscal 1996. The increase was mainly caused by an improvement in the Company's income from vessel operations before depreciation, as well as temporary fluctuations in non-cash working capital. During the first three quarters of fiscal 1997, the Company incurred capital expenditures for vessels and equipment of $58.4 million as a result of the acquisition of two modern secondhand Aframax tankers, the SEMAKAU SPIRIT and the SINGAPORE SPIRIT. These acquisitions were financed through the term loan facilities completed in October 1996. Capital expenditures for drydocking were higher than average, at $11.0 million in the first three quarters of fiscal 1997, reflecting a larger than usual number of scheduled drydockings. The Company is committed to the construction of a newbuilding double-hull Aframax tanker scheduled for delivery in July 1997, for a total cost of $44.5 million. The remaining unpaid cost of $40.0 million for this vessel will be financed through a $35.6 million financing arrangement and cash balances. PAGE 15 OF 18 The Company's scheduled debt repayments were $13.1 million during the first three quarters of fiscal 1997, down significantly from $51.0 million in the first three quarters of fiscal 1996 as a result of debt refinancings which have lengthened repayment terms. In October 1996, the Company completed two new term loan facilities (the "Term Loan Facilities"), with seven commercial banks providing borrowings of up to $210 million in order to refinance existing debt at improved rates and credit terms. The Term Loan Facilities also provided an additional $49 million of liquidity to the Company. Dividend payments during the first three quarters of fiscal 1997 were $18.1 million, or 64 cents per share, of which $9.8 million was paid in cash and $8.3 million was paid in the form of common shares issued under the Company's dividend reinvestment plan. 17 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES DECEMBER 31, 1996 PART II: OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Information As reported in the Company's press release dated December 18, 1996, the Company announced that Bjorn Moller, previously the Company's Vice President, Group Chartering and Business Development, was promoted to the new position of Chief Operating Officer effective January 1, 1997. Mr. Moller's promotion to Chief Operating Officer is part of the Company's succession planning process. Item 6 - Exhibits and Reports on Form 6-K a. Exhibits 27.1 Financial Data Schedule b. Reports on Form 6-K None THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENTS OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON OCTOBER 4, 1995 AND JANUARY 19, 1996, RESPECTIVELY. PAGE 17 OF 18 18 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 authorized. TEEKAY SHIPPING CORPORATION Date: February 4, 1997 By: /s/ James N. Hood -------------------- --------------------------- James N. Hood President and Chief Executive Officer PAGE 18 OF 18 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS MAR-31-1997 APR-01-1996 DEC-31-1996 123,511 0 22,403 0 0 165,027 1,644,608 438,234 1,384,618 84,632 685,369 0 0 224,633 369,984 1,384,618 0 281,475 0 76,707 138,921 0 45,199 24,366 0 24,366 0 0 0 24,366 0.87 0.87
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