-----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, L4lSGSo7NZGOrYDVO7VCyoQPmBTZO4bEADEGP+i3Tgp8Q1+ZwCyHmKbZW7JmEonR ns35F83s38OMRKSh9MmrYA== 0000911971-97-000011.txt : 19970808 0000911971-97-000011.hdr.sgml : 19970808 ACCESSION NUMBER: 0000911971-97-000011 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970807 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: 97652660 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 FORM 6-K 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 June 30, 1997 ------------- 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- ] ================================================================================ Page 1 of 16 2 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 INDEX ----- PART I: FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Statements of Income and Retained Earnings for the three months ended June 30, 1997 and 1996...........................3 Consolidated Balance Sheets - June 30, 1997 and March 31, 1997.......................4 Consolidated Statements of Cash Flows for the three months ended June 30, 1997 and 1996...............................................5 Notes to Consolidated Financial Statements.............................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........12 PART II: OTHER INFORMATION..................................................15 SIGNATURES...................................................................16 2 3 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended June 30, 1997 1996 ---- ---- $ (Unaudited) $ ---- ----------- ---- NET VOYAGE REVENUES Voyage revenues 98,274 90,015 Voyage expenses 24,417 24,907 - --------------------------------------------------------------------------------------- Net voyage revenues 73,857 65,108 - --------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 17,974 17,668 Time-charter hire expense 1,292 1,663 Depreciation and amortization 23,670 22,010 General and administrative 4,773 4,396 - --------------------------------------------------------------------------------------- 47,709 45,737 - --------------------------------------------------------------------------------------- Income from vessel operations 26,148 19,371 - --------------------------------------------------------------------------------------- Other items Interest expense (14,092) (15,426) Interest income 1,803 1,479 Other income (loss) 154 (30) - --------------------------------------------------------------------------------------- (12,135) (13,977) - --------------------------------------------------------------------------------------- Net income 14,013 5,394 Retained earnings, beginning of the period 382,178 363,690 - --------------------------------------------------------------------------------------- 396,191 369,084 Dividends declared and paid (6,090) (6,000) - --------------------------------------------------------------------------------------- Retained earnings, end of the period 390,101 363,084 ======================================================================================= Net income per common share (note 5) $0.49 $0.19 Weighted average number of common shares outstanding (note 5) 28,412,665 27,977,813 =======================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 3 4 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
As at As at June 30, March 31, 1997 1997 ---- ---- $ $ ---- ---- (Unaudited) ----------- ASSETS Current Cash and cash equivalents 143,866 117,523 Accounts receivable -trade 23,638 25,745 -other 477 1,066 Prepaid expenses and other assets 17,408 14,666 - ---------------------------------------------------------------------------------------------- Total current assets 185,389 159,000 - ---------------------------------------------------------------------------------------------- Vessels and equipment (note 4) At cost, less accumulated depreciation of $479,004 (March 31, 1997 - $457,779) 1,215,586 1,187,399 Advances on vessels 8,938 - ---------------------------------------------------------------------------------------------- Total vessels and equipment 1,215,586 1,196,337 - ---------------------------------------------------------------------------------------------- Investment 6,335 Other assets 10,942 11,166 - ---------------------------------------------------------------------------------------------- 1,411,917 1,372,838 ============================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable 11,020 16,315 Accrued liabilities 38,112 26,982 Current portion of long-term debt (note 4) 40,931 36,283 - ---------------------------------------------------------------------------------------------- Total current liabilities 90,063 79,580 - ---------------------------------------------------------------------------------------------- Long-term debt (note 4) 680,010 663,443 - ---------------------------------------------------------------------------------------------- Total liabilities 770,073 743,023 - ---------------------------------------------------------------------------------------------- Stockholders' equity Capital stock (note 5) 251,743 247,637 Retained earnings 390,101 382,178 - ---------------------------------------------------------------------------------------------- Total stockholders' equity 641,844 629,815 - ---------------------------------------------------------------------------------------------- 1,411,917 1,372,838 ==============================================================================================
Commitments and contingencies (notes 4 and 6) The accompanying notes are an integral part of the consolidated financial statements. 4 5 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Three Months Ended June 30, 1997 1996 ---- ---- $ (Unaudited) $ ---- ----------- ---- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 14,013 5,394 Add charges to operations not requiring a payment of cash and cash equivalents: Depreciation and amortization 23,670 22,010 Other 382 511 Change in non-cash working capital items related to operating activities 4,254 8,650 - ----------------------------------------------------------------------------------------------------- Net cash flow from operating activities 42,319 36,565 - ----------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 35,600 20,000 Scheduled repayments of long-term debt (14,385) (4,776) Net proceeds from issuance of Common Stock 1,385 251 Cash dividends paid (3,369) (3,249) Other (158) (223) - ----------------------------------------------------------------------------------------------------- Net cash flow from financing activities 19,073 12,003 - ----------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (36,711) (28,020) Expenditures for drydocking (4,673) (2,974) Net cash flow from investment 6,335 Other 282 - ----------------------------------------------------------------------------------------------------- Net cash flow from investing activities (35,049) (30,712) - ----------------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 26,343 17,856 Cash and cash equivalents, beginning of the period 117,523 101,780 - ----------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 143,866 119,636 =====================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 5 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 June 30, 1997, and for the Three-Month Periods Ended June 30, 1997 and 1996 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 financial statements for the fiscal year ended March 31, 1997. 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 period ended June 30, 1997 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. Cash Flows Cash interest paid during the three-month periods ended June 30, 1997 and 1996 totalled approximately $11,626,000 and $6,757,000, respectively. 3. 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. 4. Long-Term Debt
June 30, March 31, 1997 1997 $ $ ------------------------------------------------------------------------------------ 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 + 0.55% to 1 1/2%) U.S. dollar debt due through 2010 344,741 323,526 ------------------------------------------------------------------------------------ 720,941 699,726 Less current portion of long-term debt 40,931 36,283 ------------------------------------------------------------------------------------ 680,010 663,443 ====================================================================================
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 subsidiaries of Teekay 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 June 30, 1997, the fair value of these net assets approximated $278 million. 6 7 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at June 30, 1997, and for the Three-Month Periods Ended June 30, 1997 and 1996 is unaudited) 4. Long-Term Debt (cont'd) 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 subsidiaries of Teekay 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 June 30, 1997, the fair value of these net assets approximated $191 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. The Company also has an undrawn long-term Revolving Credit Facility available which, as at June 30, 1997, provided for borrowings of up to $134.2 million on a revolving credit basis. As at June 30, 1997, 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 16.5 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%. The Company is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap agreements; however, the Company does not anticipate non-performance by any of the counter parties. 5. 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, 1997 247,637 28,328 0 0 Reinvested dividends 2,721 97 Exercise of stock options 1,385 62 ------------------------------------------------------------------------------------ Balance June 30, 1997 251,743 28,487 0 0 ====================================================================================
The Company has reserved 2,013,278 shares of Common Stock for issuance upon exercise of options granted pursuant to the Company's 1995 Stock Option Plan. As at June 30, 1997, options to purchase a total of 1,352,332 shares of the Company's Common Stock were outstanding, of which 540,238 options were then exercisable at prices ranging from $21.50 to $27.375 per share. The remaining outstanding options have exercise prices ranging from $21.50 to $33.50 per share. All outstanding options expire between July 19, 2005 and June 13, 2007, 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 8 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at June 30, 1997, and for the Three-Month Periods Ended June 30, 1997 and 1996 is unaudited) 5. Capital Stock (cont'd) In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share". SFAS 128 requires dual presentation of basic earnings per share ("EPS") and diluted EPS on the face of all statements of earnings ending after December 15, 1997 for all entities with complex capital structures. The Company's EPS presentation will be subject to SFAS 128, but the Company does not anticipate the effect on its earnings per share to be material. 6. Commitments and Contingencies and Subsequent Event In April 1997, the Company chartered-in a modern, second-hand Aframax tanker for a period of one year. Subsequent to June 30, 1997, the Company chartered-in another modern, second-hand Aframax tanker for a period of one year. 8 9 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended June 30, 1997 ------------------------------------------------------------------------------------- 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 13,162 9,086 109,908 (58,299) 73,857 Operating expenses 74 5,728 8,701 91,505 (58,299) 47,709 ------------------------------------------------------------------------------------- Income (loss) from vessel operations (74) 7,434 385 18,403 26,148 Net interest income (expense) (8,578) 39 51 (3,801) (12,289) Equity in net income of subsidiaries 22,617 (22,572) 45 Other income 48 3,328 (3,267) 109 ------------------------------------------------------------------------------------- Net income 14,013 7,473 436 17,930 (25,839) 14,013 Retained earnings (deficit), beginning of the period 382,178 11,056 (18,124) 144,125 (137,057) 382,178 Dividends declared and paid (6,090) (6,090) ------------------------------------------------------------------------------------- Retained earnings (deficit),end of the period 390,101 18,529 (17,688) 162,055 (162,896) 390,101 ======================================================================================
Three Months Ended June 30, 1996 ------------------------------------------------------------------------------------- 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 7,549 8,962 95,209 (46,612) 65,108 Operating expenses 155 5,537 8,500 78,157 (46,612) 45,737 ------------------------------------------------------------------------------------- Income (loss) from vessel operations (155) 2,012 462 17,052 19,371 Net interest income (expense) (8,681) 37 56 (5,359) (13,947) Equity in net income of subsidiaries 14,182 (14,182) Other income (loss) 48 3,054 (3,132) (30) ------------------------------------------------------------------------------------- Net income 5,394 2,049 518 14,747 (17,314) 5,394 Retained earnings (deficit), beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690 Dividends declared and paid (6,000) (6,000) ------------------------------------------------------------------------------------- Retained earnings (deficit),end of the period 363,084 19,426 (727) 81,440 (100,139) 363,084 ======================================================================================
(See Note 4) 9 10 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED BALANCE SHEETS (in thousands of U.S. dollars)
As at June 30, 1997 ------------------------------------------------------------------------------------------ 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 252 17,520 13,117 112,977 143,866 Other current assets 58 865 903 39,887 (190) 41,523 ------------------------------------------------------------------------------------------ Total current assets 310 18,385 14,020 152,864 (190) 185,389 Vessels and equipment (net) 136,615 341,131 737,840 1,215,586 Advances due from subsidiaries 360,608 (360,608) Other assets (principally investments in subsidiaries) 671,693 10,947 (671,698) 10,942 ------------------------------------------------------------------------------------------ 1,032,611 155,000 355,151 901,651 (1,032,496) 1,411,917 ========================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 15,767 4,700 3,486 66,300 (190) 90,063 Long-term debt 375,000 305,010 680,010 Due to (from) parent (57) 23 357,405 (357,371) ------------------------------------------------------------------------------------------ Total liabilities 390,767 4,643 3,509 728,715 (357,561) 770,073 ------------------------------------------------------------------------------------------ Stockholders' Equity Capital stock 251,743 10 23 5,933 (5,966) 251,743 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 390,101 18,529 (17,688) 162,055 (162,896) 390,101 ------------------------------------------------------------------------------------------ Total stockholders' equity 641,844 150,357 351,642 172,936 (674,935) 641,844 ------------------------------------------------------------------------------------------ 1,032,611 155,000 355,151 901,651 (1,032,496) 1,411,917 ==========================================================================================
As at March 31, 1997 ------------------------------------------------------------------------------------------ 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 32 9,248 8,732 99,511 117,523 Other current assets 128 667 755 40,009 (82) 41,477 ------------------------------------------------------------------------------------------ Total current assets 160 9,915 9,487 139,520 (82) 159,000 Vessels and equipment (net) 137,486 344,315 714,536 1,196,337 Advances due from subsidiaries 362,704 (362,704) Other assets (principally investments in subsidiaries) 649,337 11,171 (643,007) 17,501 ------------------------------------------------------------------------------------------ 1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838 ========================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 7,386 4,573 2,581 65,122 (82) 79,580 Long-term debt 375,000 288,443 663,443 Due to (from) parent (56) 15 356,656 (356,615) ------------------------------------------------------------------------------------------ Total liabilities 382,386 4,517 2,596 710,221 (356,697) 743,023 ------------------------------------------------------------------------------------------ Stockholders' Equity Capital stock 247,637 10 23 5,933 (5,966) 247,637 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 382,178 11,056 (18,124) 144,125 (137,057) 382,178 ------------------------------------------------------------------------------------------ Total stockholders' equity 629,815 142,884 351,206 155,006 (649,096) 629,815 ------------------------------------------------------------------------------------------ 1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838 ==========================================================================================
(See Note 4) 10 11 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Three Months Ended June 30, 1997 ------------------------------------------------------------------------------------- 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 108 9,933 5,176 27,102 42,319 ------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 35,600 35,600 Repayments of long-term debt (14,385) (14,385) Net proceeds from issuance of Common Stock 1,385 1,385 Other (1,273) 1 8 (2,263) (3,527) ------------------------------------------------------------------------------------- Net cash flow from financing activities 112 1 8 18,952 19,073 ------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (1,662) (799) (38,923) (41,384) Other 6,335 6,335 ------------------------------------------------------------------------------------- Net cash flow from investing activities (1,662) (799) (32,588) (35,049) ------------------------------------------------------------------------------------- Increase in cash and cash equivalents 220 8,272 4,385 13,466 26,343 Cash and cash equivalents, beginning of the period 32 9,248 8,732 99,511 117,523 ------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 252 17,520 13,117 112,977 143,866 =====================================================================================
Three Months Ended June 30, 1996 ------------------------------------------------------------------------------------- 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 3,016 4,984 5,580 22,985 36,565 ------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 20,000 20,000 Repayments of long-term debt (4,776) (4,776) Net proceeds from issuance of Common Stock 251 251 Other (2,946) (526) (3,472) ------------------------------------------------------------------------------------- Net cash flow from financing activities (2,695) 14,698 12,003 ------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (776) (19) (30,199) (30,994) Other (102) 192 193 (1) 282 ------------------------------------------------------------------------------------- Net cash flow from investing activities (102) (584) 174 (30,200) (30,712) ------------------------------------------------------------------------------------- Increase in cash and cash equivalents 219 4,400 5,754 7,483 17,856 Cash and cash equivalents, beginning of the period 28 8,613 5,210 87,929 101,780 ------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 247 13,013 10,964 95,412 119,636 =====================================================================================
(See Note 4) 11 12 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES JUNE 30, 1997 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 44 tankers, including 41 Aframax oil tankers and oil/bulk/ore carriers, two smaller tankers, and one VLCC, for a total cargo-carrying capacity of approximately 4.4 million tonnes. Two of the Company's Aframax tankers are time-chartered in to the fleet. Approximately 74% of the Company's net voyage revenue is currently derived from spot voyages. 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; and by contracts of affreightment ("COAs"), whereby the Company carries an agreed quantity of cargo for a customer over a specified trade route over a specified period of time. In aggregate, approximately 88% of the Company's net voyage revenue is currently derived from spot voyages or spot market-related COAs and time-charters. This dependence on the spot market, which is within industry norms, contributes to the volatility of the Company's revenue, cash flow from operations, and net income. 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. First Quarter Fiscal 1998 versus First Quarter Fiscal 1997 The Company's net income was $14.0 million, or 49 cents per share, in the first quarter of fiscal 1998, up from $5.4 million, or 19 cents per share, in the first quarter of fiscal 1997, reflecting an improvement in the tanker charter market over the prior year. Income from Vessel Operations The Company's average fleet size increased 3.0% in the first quarter of fiscal 1998 compared to the first quarter of fiscal 1997, due to the acquisition of a 1988-built Aframax tanker in October 1996. 12 13 Net voyage revenues increased 13.4% to $73.9 million in the first quarter of fiscal 1998, as compared to the first quarter of fiscal 1997. This reflects an improvement in tanker charter market conditions, and to a lesser extent, the increase in fleet size, as the Company's fleet achieved an average TCE rate of $21,214 in the first quarter of fiscal 1998, up 11.3% from $19,061 in the first quarter of fiscal 1997. Vessel operating expenses, which include crewing, repairs and maintenance, insurance, stores and lubes, and miscellaneous expenses, including communications, increased 1.7% to $18.0 million in the first quarter of fiscal 1998 from $17.7 million in the first quarter of fiscal 1997, as a result of an increase in average fleet size, partially offset by a decrease in insurance costs. Depreciation and amortization expense increased 7.5% to $23.7 million in the first quarter of fiscal 1998 from $22.0 million in the first quarter of fiscal 1997, reflecting the increase in average fleet size, and a higher than usual number of scheduled drydockings. Depreciation and amortization expense included amortization of drydocking costs of $3.3 million in the first quarter of fiscal 1998 and $2.6 million in the first quarter of fiscal 1997. General and administrative expenses rose 8.6% to $4.8 million in the first quarter of fiscal 1998 from $4.4 million in the first quarter of fiscal 1997, mainly as the result of increases in senior management compensation. The following table illustrates the relationship between fleet size (measured in ship-days), TCE per revenue-generating ship-day performance, and operating results per calendar ship-day:
First Quarter First Quarter Fiscal 1998 Fiscal 1997 - --------------------------------------------------- ---------------- -------------------- Total calendar ship-days 3,813 3,702 Non-revenue days 252 212 - --------------------------------------------------- ---------------- -------------------- Revenue-generating ship-days (A) 3,561 3,490 - --------------------------------------------------- ---------------- -------------------- Net voyage revenue before commissions (B) $75,543 $66,523 (000's) - --------------------------------------------------- ---------------- -------------------- Time charter equivalent (TCE) (B/A) $21,214 $19,061 =================================================== ================ ==================== Operating results per calendar ship-day: Net voyage revenue $19,370 $17,587 Vessel operating expense 4,799 4,893 General and administrative expense 1,252 1,187 Drydocking expense 857 699 - --------------------------------------------------- ---------------- -------------------- Operating cash flow per calendar ship-day $12,462 $10,808 =================================================== ================ ====================
Interest Expense Interest expense decreased 8.6% to $14.1 million in the first quarter of fiscal 1998, from $15.4 million in the first quarter of fiscal 1997, reflecting a reduction in the Company's total debt, as well as lower interest rates on some of the Company's long-term debt. 13 14 Liquidity and Capital Resources During the first quarter of fiscal 1998, the Company's total liquidity, including cash, cash equivalents and undrawn long-term lines of credit, increased to $278.1 million as at June 30, 1997 from $258.6 million as at March 31, 1997, as a result of internally generated cash flow. Net cash flow from operating activities rose to $42.3 million in the first quarter of fiscal 1998 from $36.6 million in the same period one year ago, reflecting an improvement in tanker charter market conditions. The Company's scheduled debt repayments were $14.4 million during the first quarter of fiscal 1998, up from $4.8 million in the first quarter of fiscal 1997, as a result of the resumption of scheduled repayments on a portion of the Company's long-term debt. During fiscal 1997, there were no scheduled repayments of debt outstanding under the Company's revolving credit facility, which resulted in a temporary reduction in repayments during that fiscal year. During the first quarter of fiscal 1998, the Company incurred capital expenditures for vessels and equipment of $36.7 million as a result of the delivery of an Aframax tanker newbuilding, the HAMANE SPIRIT, financed through a $35.6 million term bank loan. Expenditures for drydocking were $4.7 million in the quarter compared to $3.0 million over the same period one year ago, reflecting a larger than usual number of scheduled drydockings. Dividend payments during the first quarter of fiscal 1998 were $6.1 million, or 21.5 cents per share, of which $3.4 million was paid in cash and $2.7 million was paid in the form of common shares issued under the Company's dividend reinvestment plan. Forward-Looking Statements This Report on Form 6-K for the quarterly period ended June 30, 1997 contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to future events and financial performance, in particular the statements regarding the Company's competitive advantage over other tanker owners in the Aframax spot market and seasonal variations in the tanker market. The following factors are among those that could cause actual results to differ materially from the forward-looking statements and that should be considered in evaluating any such statement: changes in production of or demand for oil and petroleum products, either generally or in particular regions; greater than anticipated levels of tanker newbuilding orders or less than anticipated rates of tanker scrapping; changes in trading patterns significantly impacting overall tanker tonnage requirements; unanticipated changes in laws and regulations and the Company's ability to comply with all existing and future laws and regulations; changes in demand for modern, high quality vessels; risks incident to vessel operation, including pollution; whether, as is typical, oil consumption in the northern hemisphere will increase in the fall and winter months and unpredictable weather patterns in the winter months will tend to disrupt vessel scheduling, factors that historically have resulted in increased oil price volatility and increased oil trading activity; and other risks detailed from time to time in the Company's periodic reports filed with the U.S. Securities and Exchange Commission. The Company may issue additional written or oral forward-looking statements from time to time which are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by the Company with the U.S. Securities and Exchange Commission. 14 15 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES JUNE 30, 1997 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 July 22, 1997, the Company announced that Anthony Gurnee, the Company's Chief Financial Officer and VP Business Development, has resigned from his position with the Company, and has accepted a position as President of Nedship International, Inc., the New York-based subsidiary of Nedship Bank, effective early September, 1997. He will remain with the Company until the end of July to assist in an orderly transfer of his current responsibilities. Peter Antturi, Controller of the Company since 1992, will act as Chief Financial Officer until a permanent replacement is identified. Mr. Gurnee's responsibilities in the business development area will be reassigned internally. 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 STATEMENT OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON OCTOBER 4, 1995. 15 16 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: August 6, 1997 By: /s/ Peter S. Antturi ----------------- Peter S. Antturi Chief Financial Officer 16 EX-27.1 2 FDS
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. 1,000 3-MOS MAR-31-1998 APR-01-1997 JUN-30-1997 143,866 0 23,638 0 0 185,389 1,694,590 479,004 1,411,917 90,063 680,010 0 0 251,743 390,101 1,411,917 0 98,274 0 24,417 47,709 0 14,092 14,013 0 14,013 0 0 0 14,013 0.49 0.49
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