-----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, JZzCd/5mSlQePTT67sdUhEWRwh1FCIB8F6AZoM0eSWHaWri2pitX2WQgbHgRef1s gNRXimPPYUkX51pj2Xed/w== 0000911971-98-000002.txt : 19980817 0000911971-98-000002.hdr.sgml : 19980817 ACCESSION NUMBER: 0000911971-98-000002 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: SEC FILE NUMBER: 001-12874 FILM NUMBER: 98688174 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, 1998 ------------- TEEKAY SHIPPING CORPORATION (Exact name of Registrant as specified in its charter) Fourth Floor, Euro Canadian Centre Marlborough Street & Navy Lion Road P.O. Box SS-6293, Nassau, 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 18 2 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 INDEX ----- PART I: FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Statements of Income and Retained Earnings for the Three Months Ended June 30, 1998 and 1997...................................3 Consolidated Balance Sheets - June 30, 1998 and March 31, 1998...............................4 Consolidated Statements of Cash Flows for the Three Months Ended June 30, 1998 and 1997.......................................................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 3 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars, except per share amounts)
Three Months Ended June 30, 1998 1997 ---- ---- $ (Unaudited) $ ---- ---------- ---- NET VOYAGE REVENUES Voyage revenues 109,433 98,274 Voyage expenses 22,846 24,417 - -------------------------------------------------------------------------------- Net voyage revenues 86,587 73,857 - -------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 20,774 17,974 Time-charter hire expense 5,253 1,292 Depreciation and amortization 24,291 23,670 General and administrative 5,276 4,773 - -------------------------------------------------------------------------------- 55,594 47,709 - -------------------------------------------------------------------------------- Income from vessel operations 30,993 26,148 - -------------------------------------------------------------------------------- OTHER ITEMS Interest expense (14,034) (14,092) Interest income 2,015 1,803 Other income (note 7) 6,474 154 - -------------------------------------------------------------------------------- (5,545) (12,135) - -------------------------------------------------------------------------------- Net income 25,448 14,013 Retained earnings, beginning of the period 428,102 382,178 - -------------------------------------------------------------------------------- 453,550 396,191 Dividends declared and paid (6,199) (6,090) - -------------------------------------------------------------------------------- Retained earnings, end of the period 447,351 390,101 - -------------------------------------------------------------------------------- Earnings per common share (note 6) - -basic and diluted $0.87 $0.49 - --------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 4 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
As at As at June 30, March 31, 1998 1998 ---- ---- $ $ ---- ---- (Unaudited) ----------- ASSETS Current Cash and cash equivalents 78,651 87,953 Marketable securities (note 2) 22,238 13,448 Accounts receivable - - trade 23,699 23,092 - - other 2,693 1,235 Prepaid expenses and other assets 14,705 13,786 - -------------------------------------------------------------------------------- Total current assets 141,986 139,514 - -------------------------------------------------------------------------------- Marketable securities (note 2) 5,059 13,853 - -------------------------------------------------------------------------------- Vessels and equipment (notes 5 and 8) At cost, less accumulated depreciation of $489,114 (1998 - $500,779) 1,259,689 1,297,883 Advances on vessels (note 8) 31,639 - -------------------------------------------------------------------------------- Total vessels and equipment 1,291,328 1,297,883 - -------------------------------------------------------------------------------- other assets 8,841 8,933 - -------------------------------------------------------------------------------- 1,447,214 1,460,183 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable 14,776 16,164 Accrued liabilities 28,521 29,195 Current portion of long-term debt (notes 5 and 9) 54,962 52,932 - -------------------------------------------------------------------------------- Total current liabilities 98,259 98,291 - -------------------------------------------------------------------------------- Long-term debt (notes 5 and 9) 571,014 672,437 - -------------------------------------------------------------------------------- Total liabilities 669,273 770,728 - -------------------------------------------------------------------------------- Stockholders' equity Capital stock (note 6) 330,590 261,353 Retained earnings 447,351 428,102 - -------------------------------------------------------------------------------- Total stockholders' equity 777,941 689,455 - -------------------------------------------------------------------------------- 1,447,214 1,460,183 ================================================================================
Commitments and contingencies (notes 5 and 8) The accompanying notes are an integral part of the consolidated financial statements. 5 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Three Months Ended June 30, 1998 1997 ---- ---- $ (Unaudited) $ ---- ---- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 25,448 14,013 Add charges to operations not requiring a payment of cash and cash equivalents: Depreciation and amortization 24,291 23,670 Gains on disposition of assets (7,117) Other - net 346 382 Change in non-cash working capital items related to operating activities 1,006 4,254 - -------------------------------------------------------------------------------- Net cash flow from operating activities 43,974 42,319 - -------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 30,000 35,600 Scheduled repayments of long-term debt (14,393) (14,385) Prepayment of long-term debt (115,000) Net proceeds from issuance of Common Stock 68,866 1,385 Cash dividends paid (5,828) (3,369) Other (250) (158) - -------------------------------------------------------------------------------- Net cash flow from financing activities (36,605) 19,073 - -------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (37,720) (36,711) Expenditures for drydocking (2,386) (4,673) Proceeds from disposition of assets 23,435 Net cash flow from investment 6,335 - -------------------------------------------------------------------------------- Net cash flow from investing activities (16,671) (35,049) - -------------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (9,302) 26,343 Cash and cash equivalents, beginning of the period 87,953 117,523 - -------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 78,651 143,866 ================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 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, 1998, and for the Three-Month Periods Ended June 30, 1998 and 1997 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, 1998. 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, 1998 are not necessarily indicative of those for a full fiscal year. 2. Marketable Securities The Company's investments in marketable securities are classified as available-for-sale securities and are carried at fair value. Net unrealized gains or losses on available-for-sale securities, if material, are reported as a separate component of stockholders' equity. The Company classifies all marketable securities with a maturity date of twelve months or less under current assets. 3. Cash Flows Cash interest paid during the three-month periods ended June 30, 1998 and 1997 totalled approximately $7,383,000 and $5,474,000, respectively. 4. Income Taxes The legal jurisdictions of the countries in which the Company and the majority of its subsidiaries are incorporated do not impose income taxes upon shipping-related activities. 5. Long-Term Debt
June 30, March 31, 1998 1998 $ $ ------------------------------------------------------------------------------------- Revolving Credit Facility 14,000 129,000 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 2003 123,718 123,718 Floating rate (LIBOR + 0.50% to 1%) U.S. dollar debt due through 2009 263,258 247,651 ------------------------------------------------------------------------------------- 625,976 725,369 Less current portion 54,962 52,932 ------------------------------------------------------------------------------------- 571,014 672,437 =====================================================================================
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, 1998, and for the Three-Month Periods Ended June 30, 1998 and 1997 is unaudited) 5. Long Term Debt (cont'd) The Company has a long-term Revolving Credit Facility (the "Revolver") available which, as at June 30, 1998 provided for borrowings of up to $200.0 million. Interest payments are based on LIBOR plus a margin depending on the financial leverage of the Company; at June 30, 1998 the margin was +0.50%. The Revolver is collaterized by first priority mortgages granted on eight of the Company's Aframax tankers, together with certain other related collateral, and a guarantee from the Company for all amounts outstanding under the Revolver. The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the "8.32% Notes") are collaterized 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, 1998, the fair value of these net assets approximated $237.5 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 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, 1998, the fair value of these net assets approximated $166.0 million (see Note 9 - Subsequent Events). 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 June 30, 1998, the Company was committed to a series of interest rate swap agreements whereby $150.0 million of the Company's floating rate debt was swapped with fixed rate obligations having an average remaining term of 4.5 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 5.86%. 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. 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, 1998, and for the Three-Month Periods Ended June 30, 1998 and 1997 is unaudited) 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 of Issued and outstanding Stock of shares Stock shares $ $ ------------------------------------------------------------------------------------------------------ Balance March 31, 1998 261,353 28,833 0 0 June 15, 1998 Common Stock offering: 2,800,000 shares at $25.9375 per share of Common Stock (net of share issue costs) 68,815 2,800 Reinvested dividends 371 12 Exercise of stock options 51 2 ------------------------------------------------------------------------------------------------------ Balance June 30, 1998 330,590 31,647 0 0 ------------------------------------------------------------------------------------------------------
In June 1998, the Company completed an offering of 7,000,000 shares of Common Stock, of which 2,800,000 shares were offered by the Company and 4,200,000 shares were offered by a selling shareholder. The Company intends to use the net proceeds to the Company from the offering of approximately $68.8 million, together with other funds, to redeem the outstanding 9 5/8% Notes (see Note 9 - Subsequent Events). The Company has reserved 1,841,750 shares of Common Stock for issuance upon exercise of options granted pursuant to the Company's 1995 Stock Option Plan. As at June 30, 1998, options to purchase a total of 1,728,866 shares of the Company's Common Stock were outstanding, of which 731,460 options were then exercisable at prices ranging from $21.50 to $33.50 per share. The options will expire between July 19, 2005 and June 13, 2008, ten years after the date of the grant. The Company's basic earnings per share is based upon the following weighted average number of shares of Common Stock outstanding: 29,303,499 shares at June 30, 1998; and 28,412,665 shares at June 30, 1997. Diluted earnings per share is based upon the following weighted average number of shares of Common Stock outstanding: 29,416,055 shares at June 30, 1998; and 28,645,310 shares at June 30, 1997. 7. Other Income (Loss)
Three Months Ended June 30 ------------- 1998 1997 $ $ ------------------------------------------------------------------------- Gain on disposition of assets 7,117 Foreign exchange gain (loss) (81) 109 Miscellaneous - net (562) 45 ------------------------------------------------------------------------- 6,474 154 =========================================================================
9 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, 1998, and for the Three-Month Periods Ended June 30, 1998 and 1997 is unaudited) 8. Commitments and Contingencies During the quarter ended June 30, 1998, the Company time-chartered-in two additional Aframax tankers for periods of three and two years, respectively. As at June 30, 1998, the Company was committed to the construction of two Aframax vessels for an aggregate cost of approximately $76.0 million, scheduled for delivery in July and September of 1999. As at June 30, 1998, there had been payments made towards this commitment of approximately $31.6 million. 9. Subsequent Events Subsequent to June 30, 1998, the Company filed notification to redeem the outstanding balance of its 9 5/8% Notes effective as at August 17, 1998. 10 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars) (Unaudited)
Three Months Ended June 30, 1998 --------------------------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Notes Notes Teekay Shipping Guarantor Guarantor Non-Guarantor Shipping Corp. Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ----------- --------------- ------------- --------------- -------------- --------------- Net voyage revenues 13,163 9,423 116,634 (52,633) 86,587 Operating expenses 68 5,754 9,131 93,274 (52,633) 55,594 --------------------------------------------------------------------------------------------- Income (loss) from vessel (68) 7,409 292 23,360 30,993 operations Net interest income (expense) (7,987) 70 42 (4,144) (12,019) Equity in net income of subsidiaries 33,503 (33,503) Other income 12,900 (6,426) 6,474 --------------------------------------------------------------------------------------------- Net income 25,448 7,479 334 32,116 (39,929) 25,448 Retained earnings (deficit), 428,102 25,432 (34,324) 233,479 (224,587) 428,102 beginning of the year Dividends declared and paid (6,199) (6,199) ============================================================================================= Retained earnings (deficit), end of 447,351 32,911 (33,990) 265,595 (264,516) 447,351 the year =============================================================================================
Three Months Ended June 30, 1997 --------------------------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Notes Notes Teekay Shipping Guarantor Guarantor Non-Guarantor Shipping Corp. 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 (74) 7,434 385 18,403 26,148 operations 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), 382,178 11,056 (18,124) 144,125 (137,057) 382,178 beginning of the year Dividends declared and paid (6,090) (6,090) ============================================================================================= Retained earnings (deficit), end of 390,101 18,529 (17,688) 162,055 (162,896) 390,101 the year =============================================================================================
(See Note 5) 11 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED BALANCE SHEETS (in thousands of U.S. dollars) (Unaudited)
As at June 30, 1998 ----------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Teekay Notes Notes Shipping Shipping Guarantor Guarantor Non-Guarantor Corp. & Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations Subsidiaries $ $ $ $ $ $ ---------- ------------ ------------ ------------ ------------ ------------- ASSETS Cash and cash equivalents 229 38,745 15,876 23,801 78,651 Other current assets 24 654 974 157,719 (96,036) 63,335 ----------------------------------------------------------------------------- Total current assets 253 39,399 16,850 181,520 (96,036) 141,986 Vessels and equipment (net) 126,892 321,778 842,658 1,291,328 Advances due from subsidiaries 387,212 (387,212) Other assets (principally marketable securities, and investments in 752,627 13,905 (752,632) 13,900 subsidiaries) ============================================================================= 1,140,092 166,291 338,628 1,038,083 (1,235,880) 1,447,214 ============================================================================= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 13,433 1,567 1,761 177,535 (96,037) 98,259 Long-term debt 348,718 222,296 571,014 Due to (from) affiliates (15) 1,527 361,776 (363,288) ----------------------------------------------------------------------------- Total liabilities 362,151 1,552 3,288 761,607 (459,325) 669,273 ----------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Capital Stock 330,590 10 23 5,933 (5,966) 330,590 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 447,351 32,911 (33,990) 265,595 (264,516) 447,351 ----------------------------------------------------------------------------- Total stockholders' equity 777,941 164,739 335,340 276,476 (776,555) 777,941 ----------------------------------------------------------------------------- 1,140,092 166,291 338,628 1,038,083 (1,235,880) 1,447,214 =============================================================================
As at March 31, 1998 ----------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Teekay Notes Notes Shipping Shipping Guarantor Guarantor Non-Guarantor Corp. & Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations Subsidiaries $ $ $ $ $ $ ---------- ------------ ------------ ------------ ------------ ------------- ASSETS Cash and cash equivalents 22 29,595 10,687 47,649 87,953 Other current assets 13 710 722 165,006 (114,890) 51,561 ----------------------------------------------------------------------------- Total current assets 35 30,305 11,409 212,655 (114,890) 139,514 Vessels and equipment (net) 129,050 327,460 841,373 1,297,883 Advances due from subsidiaries 324,460 (324,460) Other assets (principally marketable securities, and investments in 719,369 22,791 (719,374) 22,786 subsidiaries) ============================================================================= 1,043,864 159,355 338,869 1,076,819 (1,158,724) 1,460,183 ============================================================================= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 5,691 2,113 3,126 184,840 (97,479) 98,291 Long-term debt 348,718 323,719 672,437 Due to (from) affiliates (18) 737 323,900 (324,619) ----------------------------------------------------------------------------- Total liabilities 354,409 2,095 3,863 832,459 (422,098) 770,728 ----------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Capital Stock 261,353 10 23 5,933 (5,966) 261,353 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 428,102 25,432 (34,324) 233,479 (224,587) 428,102 ----------------------------------------------------------------------------- Total stockholders' equity 689,455 157,260 335,006 244,360 (736,626) 689,455 ----------------------------------------------------------------------------- 1,043,864 159,355 338,869 1,076,819 (1,158,724) 1,460,183 =============================================================================
- ----------------- (See Note 5) 12 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) (Unaudited)
Three Months Ended June 30, 1998 ----------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Teekay Notes Notes Shipping Shipping Guarantor Guarantor Non-Guarantor Corp. & Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations Subsidiaries $ $ $ $ $ $ ---------- ------------ ------------ ------------ ------------ ------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES ----------------------------------------------------------------------------- Net cash flow from operating activities (79) 9,474 4,684 29,895 43,974 ----------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 30,000 30,000 Prepayments of long-term debt (115,000) (115,000) Repayments of long-term debt (14,393) (14,393) Net proceeds from issuance of Common Stock 68,866 68,866 Other (68,580) 790 61,712 (6,078) ----------------------------------------------------------------------------- Net cash flow from financing activities 286 790 (37,681) (36,605) ----------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (324) (285) (37,111) (37,720) Other 21,049 21,049 ----------------------------------------------------------------------------- Net cash flow from investing activiities (324) (285) (16,062) (16,671) ----------------------------------------------------------------------------- Increase (decrease) in cash and 207 9,150 5,189 (23,848) (9,302) cash equivalents Cash and cash equivalents, 22 29,595 10,687 47,649 87,953 beginning of the year ----------------------------------------------------------------------------- Cash and cash equivalents, end of the year 229 38,745 15,876 23,801 78,651 =============================================================================
Three Months Ended June 30, 1997 ----------------------------------------------------------------------------- 9 5/8% 8.32% Teekay Teekay Notes Notes Shipping Shipping Guarantor Guarantor Non-Guarantor Corp. & 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 (decrease) in cash and 220 8,272 4,385 13,466 26,343 cash equivalents Cash and cash equivalents, 32 9,248 8,732 99,511 117,523 beginning of the year ----------------------------------------------------------------------------- Cash and cash equivalents, end of the year 252 17,520 13,117 112,977 143,866 =============================================================================
(See Note 5) 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES JUNE 30, 1998 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 46 tankers, including 42 Aframax oil tankers and oil/bulk/ore carriers (including four vessels time-chartered-in), three smaller tankers, and one Very Large Crude Carrier ("VLCC"), for a total cargo-carrying capacity of approximately 4.6 million tonnes. In addition, the Company entered into an agreement to purchase two newbuilding Aframax tankers, which are scheduled for delivery in July and September 1999. During the first quarter of fiscal 1999, approximately 58% of the Company's net voyage revenue was derived from spot voyages. The balance of the Company's revenue was generated primarily by two other modes of employment: time charters, whereby vessels are chartered to customers for a fixed period; and contracts of affreightment ("COAs"), whereby the Company carries an agreed quantity of cargo for a customer over a specified trade route over a given period of time. In the first quarter of fiscal 1999, 19% of net voyage revenues was generated by time charters and COAs priced on a spot market basis. In the aggregate, approximately 77% of the Company's net voyage revenue during the first quarter of fiscal 1999 was derived from spot voyages or time charters and COAs priced on a spot market basis, with the remaining 23% being derived from fixed-rate time-charters and COAs. This dependence on the spot market, which is within industry norms, contributes to the volatility of the Company's revenues, cash flow from operations, and net income. Historically, the tanker industry has been cyclical, experiencing volatility in profitability and asset values resulting from changes in the supply of, and demand for, vessel capacity. Additionally, tanker markets have historically 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. In December 1997, the Company acquired two vessels and related shore support services from an Australian affiliate of Caltex Petroleum. These two tankers, together with one of the Company's existing Aframax tankers, have been time chartered to the Caltex affiliate in connection with the Company's provision of Caltex's oil transportation requirements formerly provided by that affiliate. The Company has converted one of its existing vessels to a floating storage and off-loading vessel, which is sharing crews with the vessels employed in the Caltex arrangement (together with the other three vessels involved in this arrangement, the "Australian Vessels"). Vessel operating expenses for the Australian Vessels are substantially higher than those for the rest of the Company's fleet, primarily as a result of higher costs associated with employing an Australian crew. The TCE rates (as defined below) for the Australian Vessels are correspondingly higher to compensate for these increased costs. During the first quarter of fiscal 1999, the Australian Vessels earned net voyage revenues and an average TCE rate of $9.0 million and $25,094, respectively, and incurred vessel operating expenses of $3.7 million, or $10,250 on a per ship per day basis. The results of the Australian Vessels are included in the Company's Consolidated Financial Statements included herein. 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. 14 First Quarter Fiscal 1999 versus First Quarter Fiscal 1998 The Company's net income was $25.4 million, or 87 cents per share, in the first quarter of fiscal 1999, up from $14.0 million, or 49 cents per share, in the first quarter of fiscal 1998. The current quarter's results include $7.1 million, or 24 cents per share, in gains on asset sales, while there were no asset dispositions during the same period last year. A combination of firm freight rates for Aframax tankers in the Indo-Pacific basin and lower bunker fuel costs contributed to stronger results for the first quarter of fiscal 1999 in comparison to the same period one year ago. Income from Vessel Operations An increase in the size of the Company's fleet and an increase in freight rates contributed to an 18.8% increase in income from vessel operations, from $26.1 million in the first quarter of fiscal 1998 to $31.0 million in the first quarter of fiscal 1999. The Company's average fleet size increased 10.0% in the first quarter of fiscal 1999 compared to the first quarter of fiscal 1998, as five older vessels were sold and nine newer vessels were added to the fleet (including four time-chartered-in vessels) since the beginning of fiscal 1998. Net voyage revenues increased 17.2% to $86.6 million in the first quarter of fiscal 1999, as compared to $73.9 million in the first quarter of fiscal 1998. The increase mainly reflects a combination of the Company's increased fleet size and an improvement in TCE rates, which includes the effect of higher TCE rates earned by the four Australian Vessels. The Company's average TCE rate during the first quarter of fiscal 1999, excluding the Australian Vessels, increased 2.8% to $21,810 from $21,214 in the first quarter of fiscal 1998. Vessel operating expenses include crewing, repairs and maintenance, insurance, stores and lubes, and miscellaneous expenses, including communications. Vessel operating expenses increased 15.6% to $20.8 million in the first quarter of fiscal 1999 from $18.0 million in the first quarter of fiscal 1998, as a result of an increase in the size of the Company's owned fleet and the higher crewing costs associated with the Australian Vessels. Time-charter hire expense was $5.3 million in the first quarter of fiscal 1999, up from $1.3 million in the first quarter of fiscal 1998 as a result of four vessels time-chartered-in by the Company during the first quarter of fiscal 1999 as compared to only one vessel time-chartered-in during the first quarter of fiscal 1998. Depreciation and amortization expense increased 2.6% to $24.3 million in the first quarter of fiscal 1999 from $23.7 million in the first quarter of fiscal 1998, reflecting the increase in the size of the Company's owned fleet, partially offset by fewer scheduled drydockings. Depreciation and amortization expense included amortization of drydocking costs of $2.4 million in the first quarter of fiscal 1999 and $3.3 million in the first quarter of fiscal 1998. General and administrative expenses rose 10.5% to $5.3 million in the first quarter of fiscal 1999 from $4.8 million in the first quarter of fiscal 1998, mainly as the result of the hiring of additional personnel in connection with the expansion of the Company's operations, particularly in Australia. Interest Expense Interest expense remained virtually unchanged at $14.0 million in the first quarter of fiscal 1999, compared to $14.1 million in the first quarter of fiscal 1998. Interest expense is expected to decrease as the Company intends to use the net proceeds received from the public offering of its Common Stock to redeem its 9 5/8% First Preferred Ship Mortgage Notes due 2003 in August 1998. 15 The following table illustrates the relationship between fleet size (measured in ship-days), TCE performance, and operating results per calendar ship-day. To facilitate comparison to the prior years' results, the figures in the table below exclude the results from the Company's Australian Vessels:
First Quarter First Quarter Fiscal 1999 Fiscal 1998 - ----------------------------------------------------------------------------------------------------- Average number of ships 46 42 Total calendar ship-days 3,828 3,813 - ----------------------------------------------------------------------------------------------------- Voyage days (A) 3,649 3,561 - ----------------------------------------------------------------------------------------------------- Net voyage revenue before commissions (B) (000s) $79,583 $75,543 - ----------------------------------------------------------------------------------------------------- TCE (B/A) $21,810 $21,214 ===================================================================================================== Operating results per calendar ship-day: Net voyage revenue $20,260 $19, 370 Vessel operating expense 4,785 4,799 General and administrative expense 1,259 1,252 Drydocking expense 681 857 - ----------------------------------------------------------------------------------------------------- Operating cash flow per calendar ship-day $13,535 $12,462 =====================================================================================================
LIQUIDITY AND CAPITAL RESOURCES The Company's total liquidity, including cash, marketable securities, and undrawn long-term lines of credit, increased to $291.9 million as at June 30, 1998 from $186.3 million as at March 31, 1998, as a result of internally generated cash and the Company's receipt of net proceeds from its issuance of 2.8 million shares of Common Stock in June 1998. Net cash flow from operating activities rose to $44.0 million in the first quarter of fiscal 1999 from $42.3 million in the same period one year ago, mainly reflecting the improvement in TCE rates and the increase in the size of the Company's fleet. The Company's scheduled debt repayments were $14.4 million during the first quarter of fiscal 1999, virtually unchanged from the first quarter of fiscal 1998. In addition, the Company prepaid $115.0 million of long-term debt under its revolving credit facility (the "Revolver"). In June 1998, the Company completed a public offering of 7.0 million shares of its Common Stock, of which 2.8 million shares were issued by the Company and 4.2 million shares were offered by an existing shareholder, the Cirrus Trust. The Company received net proceeds of approximately $68.8 million from the offering, which was applied temporarily against outstanding indebtedness under the Company's Revolver and in August 1998 is intended to be used, along with other funds, to redeem the Company's outstanding 9 5/8% First Preferred Ship Mortgage Notes. During the first quarter of fiscal 1999, the Company incurred capital expenditures for vessels and equipment of $37.7 million, which includes $31.6 million in payments towards the two newbuilding double-hull Aframax tankers scheduled for delivery in July and September 1999, and $4.6 million related to the conversion of the floating storage and off-loading vessel. The Company intends to pay for the remaining cost of approximately $44 million for the two newbuildings by using existing cash balances, borrowings under the Revolver or other debt financing. Capital expenditures for drydocking were $2.4 million in the first quarter of fiscal 1999 compared to $4.7 million in the same period one year ago, reflecting a reduction in scheduled drydockings. 16 Dividend payments during the first quarter of fiscal 1999 were $6.2 million, or 21.5 cents per share, of which $5.8 million was paid in cash and the remainder was paid in the form of shares of common stock issued under the Company's dividend reinvestment plan. As part of its growth strategy, the Company will continue to consider strategic opportunities, including the acquisition of additional vessels and the expansion into new markets. The Company may choose to pursue such opportunities through internal growth, joint ventures, or business acquisitions. The Company intends to finance any future acquisitions through various sources of capital, including internally generated cash flow, existing credit lines, additional debt borrowings, and the issuance of additional shares of capital stock. YEAR 2000 COMPLIANCE The Company relies on computer systems and software to operate its business, including applications used in chartering, shipping, communications, finance and various administrative functions. To the extent that the Company's software applications contain source code that is unable to appropriately interpret the calendar year 2000 and subsequent years, some level of modification for replacement of such applications will be necessary. The Company is reviewing all of its systems in order to verify that they are "Year 2000 compliant" and believes, with limited exceptions, that they will require only minor modification. Accordingly, management does not expect Year 2000 compliance costs to have a material adverse effect on the Company. No assurance can be given however, that all of the Company's systems will be Year 2000 compliant or that compliance costs or the impact of any failure by the Company to achieve full Year 2000 compliance will not have a material adverse effect on the Company. In addition, the Company could be adversely affected by the failure of one or more of its customers, lenders, suppliers or other organizations with which it conducts business to become fully Year 2000 compliant. FORWARD-LOOKING STATEMENTS This Report on Form 6-K for the quarterly period ended June 30, 1998 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 future capital expenditures including expenditures for newbuilding vessels; the redemption of the Company's 9 5/8% First Preferred Ship Mortgage Notes; and the Company's growth strategy and expansion. The following factors are among those that could cause actual results to differ materially from the forward-looking statement 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, including Asia; the cyclical nature of the tanker industry and its dependence on oil markets; greater than anticipated levels of tanker newbuilding orders or less than anticipated rates of tanker scrapping; the supply of tankers available to meet the demand for transportation of petroleum products; changes in trading patterns significantly impacting overall tanker tonnage requirements; changes in demand for modern, high quality vessels; the Company's dependence on spot oil voyages; 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; environmental and other regulation; the Company's potential inability to achieve and manage growth; risks associated with operations outside the United States; 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 statements contained in this paragraph and in other reports hereafter filed by the Company with the U.S. Securities and Exchange Commission. 17 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES JUNE 30, 1998 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 None 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. 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: August 14, 1998 By: /s/ Peter S. Antturi -------------------- Peter S. Antturi Chief Financial Officer 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-31-1999 APR-01-1998 JUN-30-1998 78,651 22,238 23,699 0 0 141,986 1,780,442 489,114 1,447,214 98,259 571,014 0 0 330,590 447,351 1,447,214 0 109,433 0 22,846 55,594 0 14,034 25,448 0 25,448 0 0 0 25,448 0.87 0.87
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