-----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, EQGED2DdxkruP+/SIBAQU79j4eYtTNvNu6B56CCJ4l26ZM9WXa5fIHPkzaFVJqn4 8Psn223ssfQRPfp/0Drfog== 0000911971-96-000004.txt : 19961111 0000911971-96-000004.hdr.sgml : 19961111 ACCESSION NUMBER: 0000911971-96-000004 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 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: 96656349 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 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 September 30, 1996 TEEKAY SHIPPING CORPORATION (Exact name of Registrant as specified in its charter) Tradewinds Building, Sixth 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 18 2 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 INDEX -------
PART I: FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Statements of Income and Retained Earnings for the three and six months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets - September 30, 1996 and March 31, 1996 . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the six months ended September 30, 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 Six Months Ended ------------------ ---------------- September 30, September 30, ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- $ (Unaudited) $ $ (Unaudited)$ --------------- -------------- NET VOYAGE REVENUES Voyage revenues 94,158 81,660 184,173 160,944 Voyage expenses 24,646 21,656 49,553 43,452 ----------------------------------------------------------------------------------------------------- Net voyage revenues 69,512 60,004 134,620 117,492 ----------------------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 17,744 16,829 35,412 33,496 Time-charter hire expense 1,680 3,343 Depreciation and amortization 22,521 20,077 44,911 40,956 General and administrative 4,699 4,548 9,095 8,812 ----------------------------------------------------------------------------------------------------- 46,644 41,454 92,761 83,264 ----------------------------------------------------------------------------------------------------- Income from vessel operations 22,868 18,550 41,859 34,228 ----------------------------------------------------------------------------------------------------- Other items Interest expense (15,021) (15,729) (30,067) (31,230) Interest income 1,674 1,635 3,153 3,182 Other income (note 8) (444) 4,318 (474) 3,851 ----------------------------------------------------------------------------------------------------- (13,791) (9,776) (27,388) (24,197) ----------------------------------------------------------------------------------------------------- Net income 9,077 8,774 14,471 10,031 Retained earnings, beginning of the period 363,084 407,804 363,690 406,547 Exchange of redeemable preferred stock(note 6) (60,000) (60,000) Dividends declared and paid (6,024) (12,024) ----------------------------------------------------------------------------------------------------- Retained earnings, end of the period 366,137 356,578 366,137 356,578 ===================================================================================================== Net income per common share (note 6) $ 0.32 $ 0.34 $ 0.52 $ 0.46 Weighted average number of common shares outstanding (note 6) 28,088,370 25,689,358 28,033,393 21,865,688
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 ----- ----- September 30, March 31, ------------- --------- 1996 1996 ---- ---- $ $ --- --- (Unaudited) ----------- ASSETS Current Cash and cash equivalents 137,071 99,790 Restricted cash 1,659 1,990 Accounts receivable -trade 21,698 22,213 -other 2,529 2,725 Prepaid expenses and other assets 15,319 15,331 -------------------------------------------------------------------------------------- Total current assets 178,276 142,049 -------------------------------------------------------------------------------------- Vessels and equipment (notes 5 and 7) At cost, less accumulated depreciation of $415,339 (March 31, 1996 - $377,105) 1,194,182 1,193,557 Advances on vessels 4,925 5,250 -------------------------------------------------------------------------------------- Total vessels and equipment 1,199,107 1,198,807 -------------------------------------------------------------------------------------- Investment 958 1,624 Other assets 12,618 12,821 -------------------------------------------------------------------------------------- 1,390,959 1,355,301 ====================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable 11,074 11,761 Accrued liabilities 25,736 18,303 Current portion of long-term debt (notes 5 and 7) 43,422 19,102 -------------------------------------------------------------------------------------- Total current liabilities 80,232 49,166 -------------------------------------------------------------------------------------- Long-term debt (notes 5 and 7) 702,869 706,740 -------------------------------------------------------------------------------------- Total liabilities 783,101 755,906 -------------------------------------------------------------------------------------- Stockholders' equity Capital stock (note 6) 241,721 235,705 Retained earnings 366,137 363,690 -------------------------------------------------------------------------------------- Total stockholders' equity 607,858 599,395 -------------------------------------------------------------------------------------- 1,390,959 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)
Six Months Ended September 30, ------------------------------ 1996 1995 ---- ---- $ (Unaudited) $ ------------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 14,471 10,031 Add (deduct) charges to operations not requiring a payment of cash and cash equivalents: Depreciation and amortization 44,911 40,956 Gain on disposition of assets (3,728) Equity loss (income) 384 (704) Other - net 333 735 Change in non-cash working capital items related to operating activities 1,634 (5,574) ------------------------------------------------------------------------------------------------------ Net cash flow from operating activities 61,733 41,716 ------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Proceeds from long-term debt 30,000 223,000 Scheduled repayments of long-term debt (9,551) (34,880) Prepayments of long-term debt (317,901) Scheduled repayments of capital lease obligation (640) Decrease in restricted cash 331 4,011 Net proceeds from issuance of Common Stock 498 137,613 Cash dividends paid (6,506) Other (320) (866) ------------------------------------------------------------------------------------------------------ Net cash flow from financing activities 14,452 10,337 ------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Expenditures for vessels and equipment (net of capital lease financing of $NIL; September 30, 1995 - $44,550) (31,579) (47,527) Expenditures for drydocking (7,607) (4,021) Proceeds from disposition of assets 22,794 Proceeds on sale of available-for-sale securities 53,332 Purchases of available-for-sale securities (32,666) Other 282 ------------------------------------------------------------------------------------------------------ Net cash flow from investing activities (38,904) (8,088) ------------------------------------------------------------------------------------------------------ Increase in cash and cash equivalents 37,281 43,965 Cash and cash equivalents, beginning of the period 99,790 16,500 ------------------------------------------------------------------------------------------------------ Cash and cash equivalents, end of the period 137,071 60,465 ======================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. Page 5 of 18 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at September 30, 1996, and for the Three-Month and Six-Month Periods Ended September 30, 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 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 six-month periods ended September 30, 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 six-month periods ended September 30, 1996 and 1995 totalled approximately $30,032,000 and $31,895,000, 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
September 30, March 31, 1996 1996 $ $ --------------------------------------------------------------------------- Revolving Credit Facility (LIBOR + 1.05%) 148,000 118,000 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 + 1% to 1 1/2%) U.S. dollar debt due through 2006 222,091 231,642 ---------------------------------------------------------------------------- 746,291 725,842 Less current portion of long-term debt 43,422 19,102 ---------------------------------------------------------------------------- 702,869 706,740 ============================================================================
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 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 September 30, 1996, the fair value of these net assets approximated $290 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 September 30, 1996, the fair value of these net assets approximated $199 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 September 30, 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 25.5 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 September 30, 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 5,518 201 Exercise of stock options 498 23 -------------------------------------------------------------------------------- Balance September 30, 1996 $241,721 28,128 $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 September 30, 1996, options to purchase a total of 1,097,537 shares of the Company's Common Stock were outstanding, of which 556,912 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 September 30, 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. A long-term financing arrangement exists for $35.6 million of the unpaid cost of this vessel. 8. Other Income
Three Months Six Months Ended September 30, Ended September 30, 1996 1995 1996 1995 $ $ $ $ ------------------------------------------------------------------------------------- Gain on disposition of assets 3,728 3,728 Equity in results of 50% owned company (384) 1,278 (384) 704 Miscellaneous - net (60) (688) (90) (581) ------------------------------------------------------------------------------------- (444) 4,318 (474) 3,851 =====================================================================================
9. Subsequent Events Subsequent to September 30, 1996, the Company entered into two term loan facilities, (the "Term Loan Facilities"), with seven commercial banks providing for borrowings of up to $210 million in order to refinance certain of the existing debt obligations of the Company. The Term Loan Facilities are presently collateralized by first priority mortgages granted on ten of the Company's Aframax tankers, together with certain other related collateral, and a guarantee from the Company for all amounts outstanding under the Term Loan Facilities. The Term Loan Facilities mature in October 2003. Interest payments are based on LIBOR plus a margin ranging from 0.55% to 0.85% which depends upon the financial leverage of the Company. The current portion of long-term debt as at September 30, 1996 has been adjusted to give effect to this refinancing. Subsequent to September 30, 1996, the Company purchased a second-hand Aframax tanker for $26.5 million, which was financed through one of the Term Loan Facilities. This vessel was previously time-chartered-in by the Company. Page 8 of 18 9 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended September 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 7,580 9,061 100,564 (47,693) 69,512 Operating expenses 427 5,601 8,751 79,558 (47,693) 46,644 ----------------------------------------------------------------------------------- Income (loss) from vessel operations (427) 1,979 310 21,006 22,868 Net interest income (expense) (8,318) 22 37 (5,088) (13,347) Equity in net income (loss) of subsidiaries 17,774 (18,158) (384) Other income (loss) 48 3,051 (3,159) (60) ----------------------------------------------------------------------------------- Net income 9,077 2,001 347 18,969 (21,317) 9,077 Retained earnings(deficit), beginning of the period 363,084 19,426 (727) 81,440 (100,139) 363,084 Dividends declared and paid (6,024) (7,200) (9,450) 16,650 (6,024) ----------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137 ===================================================================================
Three Months Ended September 30, 1995 ----------------------------------------------------------------------------------- 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 7,400 13,819 98,447 (59,662) 60,004 Operating expenses 226 4,876 7,581 88,460 (59,689) 41,454 ----------------------------------------------------------------------------------- Income (loss) from vessel operations (226) 2,524 6,238 9,987 27 18,550 Net interest expense (4,116) (55) (4,034) (5,889) (14,094) Equity in net income (loss) of subsidiaries 13,068 (11,790) 1,278 Other income 48 147 2,845 3,040 ----------------------------------------------------------------------------------- Net income 8,774 2,616 2,204 6,943 (11,763) 8,774 Retained earnings(deficit), beginning of the period 407,804 16,737 (3,942) 54,716 (67,511) 407,804 Dividends declared and paid (60,000) (60,000) ----------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578 ===================================================================================
(See Note 5) Page 9 of 18 10 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Six Months Ended September 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 15,129 18,023 195,773 (94,305) 134,620 Operating expenses 842 11,138 17,251 157,835 (94,305) 92,761 ----------------------------------------------------------------------------------- Income (loss) from vessel operations (842) 3,991 772 37,938 41,859 Net interest income (expense) (16,739) 59 93 (10,327) (26,914) Equity in net income (loss) of subsidiaries 31,956 (32,340) (384) Other income (loss) 96 6,105 (6,291) (90) ----------------------------------------------------------------------------------- Net income 14,471 4,050 865 33,716 (38,631) 14,471 Retained earnings(deficit), beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690 Dividends declared and paid (12,024) (7,200) (9,450) 16,650 (12,024) ----------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137 ===================================================================================
Six Months Ended September 30, 1995 ----------------------------------------------------------------------------------- 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 14,592 26,427 198,114 (121,641) 117,492 Operating expenses 697 10,435 15,134 179,723 (122,725) 83,264 ----------------------------------------------------------------------------------- Income (loss) from vessel operations (697) 4,157 11,293 18,391 1,084 34,228 Net interest expense (7,314) (60) (8,004) (12,670) (28,048) Equity in net income (loss) of subsidiaries 16,879 (16,175) 704 Other income 1,163 147 1,837 3,147 ----------------------------------------------------------------------------------- Net income 10,031 4,244 3,289 7,558 (15,091) 10,031 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 (7,200) (35,200) 42,400 ----------------------------------------------------------------------------------- Retained earnings (deficit), end of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578 ===================================================================================
(See Note 5) Page 10 of 18 11 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED BALANCE SHEETS (in thousands of U.S. dollars)
As at September 30, 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 109 9,381 6,904 120,677 137,071 Restricted cash 1,659 1,659 Other current assets 147 854 1,022 37,605 (82) 39,546 --------------------------------------------------------------------------------------- Total current assets 256 10,235 7,926 159,941 (82) 178,276 Vessels and equipment (net) 140,731 352,464 705,912 1,199,107 Advances due from subsidiaries 369,045 (369,045) Other assets (principally investments in subsidiaries) 620,998 12,048 (619,470) 13,576 --------------------------------------------------------------------------------------- 990,299 150,966 360,390 877,901 (988,597) 1,390,959 ======================================================================================= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 6,241 4,931 873 68,269 (82) 80,232 Long-term debt 376,200 326,669 702,869 Due to parent 371,673 (371,673) --------------------------------------------------------------------------------------- Total liabilities 382,441 4,931 873 766,611 (371,755) 783,101 --------------------------------------------------------------------------------------- Stockholders' Equity Capital stock 241,721 6 23 5,933 (5,962) 241,721 Contributed capital 131,802 369,324 4,948 (506,074) Retained earnings (deficit) 366,137 14,227 (9,830) 100,409 (104,806) 366,137 --------------------------------------------------------------------------------------- Total stockholders' equity 607,858 146,035 359,517 111,290 (616,842) 607,858 --------------------------------------------------------------------------------------- 990,299 150,966 360,390 877,901 (988,597) 1,390,959 =======================================================================================
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 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Six Months Ended September 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 (13,802) 9,819 11,151 54,565 61,733 --------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 30,000 30,000 Repayments of long-term debt (9,551) (9,551) Net proceeds from issuance of Common Stock 498 498 Other (3,546) (7,200) (9,450) 13,701 (6,495) --------------------------------------------------------------------------------------- Net cash flow from financing activities (3,048) (7,200) (9,450) 34,150 14,452 --------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (1,835) (24) (37,327) (39,186) Other 16,931 (16) 17 (16,650) 282 --------------------------------------------------------------------------------------- Net cash flow from investing activities 16,931 (1,851) (7) (53,977) (38,904) --------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 81 768 1,694 34,738 37,281 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 109 9,381 6,904 120,677 137,071 =======================================================================================
Six Months Ended September 30, 1995 --------------------------------------------------------------------------------------- 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 (8,625) 8,239 12,535 29,567 41,716 --------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 223,000 223,000 Repayments of long-term debt (22,580) (21,567) (309,274) (353,421) Net proceeds from issuance of Common Stock 137,613 137,613 Other (155,520) (7,200) 11,267 154,598 3,145 --------------------------------------------------------------------------------------- Net cash flow from financing activities (40,487) (7,200) (10,300) 68,324 10,337 --------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (749) (161) (50,638) (51,548) Proceeds from disposition of assets 22,794 22,794 Other 49,146 431 (2,859) (26,052) 20,666 --------------------------------------------------------------------------------------- Net cash flow from investing activities 49,146 (318) (3,020) (53,896) (8,088) --------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 34 721 (785) 43,995 43,965 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 131 6,607 2,291 51,436 60,465 =======================================================================================
(See Note 5) Page 12 of 18 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES September 30, 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 80% 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 SEPTEMBER 30, 1996 VERSUS THREE MONTHS ENDED SEPTEMBER 30, 1995 The Company's net income was $9.1 million, or 32 cents per share, in the second quarter of fiscal 1997. This is up from $8.8 million, or 34 cents per share, earned in the second quarter of fiscal 1996 which included $3.7 million, or 15 cents per share, in gains on asset sales. This increase in earnings reflects a continuation of the gradual year-over-year improvement in the tanker charter market since the bottom of the market cycle in 1992. Aframax spot charter rates in the Indo-Pacific basin improved relative to both the previous quarter and one year ago, underpinning the Company's continued strong performance relative to the open market, and resulting in the Company's best chartering and cash flow performance in almost six years. The Company's one VLCC, presently on a market-related one year time-charter, performed well as spot charter rates for modern VLCC's rose sharply through competition among Japanese and Korean charterers for high-quality, modern tonnage. In spite of these results, though, the quarter ended on a down note as tanker spot charter rates softened temporarily during September, largely a result of the impact of the Iraqi crude export program delay on oil markets. 14 Income from Vessel Operations The Company's fleet was 4.6% larger on average in the second quarter of fiscal 1997 than in the second quarter of fiscal 1996, as four modern Aframax tankers were acquired during the past year, while the Company's two remaining mid-1970s-built tankers were sold. Net voyage revenues were $69.5 million in the second quarter of fiscal 1997, an increase of 15.9% over the second 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 earned an average TCE rate of $20,045 in the second quarter of fiscal 1997, up 11.5% from $17,979 in the second quarter of fiscal 1996. Increases in vessel operating expenses, depreciation and amortization, and general and administrative expenses were approximately in line with the 4.6% increase in fleet size. Depreciation and amortization expense included amortization of drydocking costs of $2.5 million in the second quarter of fiscal 1997 and $2.0 million in the second quarter of fiscal 1996. Interest Expense Interest expense decreased 4.5% to $15.0 million in the second quarter of fiscal 1997, from $15.7 million in the second quarter of fiscal 1996, reflecting a reduction in the Company's total debt. This was partially offset by a higher average interest rate resulting from the Company's issue of $225 million 8.32% First Preferred Ship Mortgage Notes in January 1996, which replaced floating-rate debt. SIX MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 1995 The Company's net income was $14.5 million, or 52 cents per share, in the first half of fiscal 1997, up from $10.0 million, or 46 cents per share, in the first half of fiscal 1996, reflecting an improvement in the tanker charter market accompanied by a relatively stable cost environment. Net income for the first half of fiscal 1996 included gains on asset sales of $3.7 million, or 17 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 22.3% increase in income from vessel operations, to $41.9 million in the first half of fiscal 1997 from $34.3 million in the first half 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 half of fiscal 1997, the Company added an additional Aframax tanker to its fleet. As a result, the Company's fleet was 5.6% larger on average in the first half of fiscal 1997 than during the first half of fiscal 1996. Net voyage revenues were $134.6 million in the first half of fiscal 1997, an increase of 14.6% as compared to the first half of fiscal 1996. This reflects an improvement in the performance of the Company's fleet and in tanker charter market conditions, with an average TCE rate of $19,557 in the first half of fiscal 1997, up 9.7% from $17,828 in the first half of fiscal 1996. 15 Expenses increased in line with the larger fleet. Depreciation and amortization expense included amortization of drydocking costs of $5.1 million in the first half of fiscal 1997 and $4.2 million in the first half of fiscal 1996. 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 Six Months Ended September September 1996 1995 1996 1995 ------- ------- ------- ------- Total calendar ship-days 3,773 3,603 7,475 7,080 Non-revenue days 229 188 441 345 - ------------------------------------------------------------------------------ Revenue-generating ship-days (A) 3,544 3,415 7,034 6,735 - ------------------------------------------------------------------------------ Net voyage revenue before commissions (B) (000's) $71,039 $61,396 $137,562 $120,074 - ------------------------------------------------------------------------------ Time charter equivalent (TCE) (B/A) $20,045 $17,979 $19,557 $17,828 - ------------------------------------------------------------------------------ Operating results per calendar ship-day: Net voyage revenue $18,424 $16,653 $18,009 $16,596 Vessel operating expense 4,820 4,671 4,856 4,731 General and administrative expense 1,245 1,262 1,217 1,245 Drydocking expense 668 570 683 590 - ------------------------------------------------------------------------------ Operating cash flow per calendar ship-day $11,691 $10,150 $11,253 $10,030 ==============================================================================
LIQUIDITY AND CAPITAL RESOURCES The Company's total liquidity, including cash, cash equivalents and undrawn long-term lines of credit, was $193.1 million as at September 30, 1996 virtually unchanged from $195.3 million as of the beginning of the fiscal year, as the Company has used its free operating cash flow, after debt principal and dividend payments, for capital expenditures. Net cash flow from operating activities was $61.7 million in the first half of fiscal 1997, compared to $41.7 million in the first half 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 changes in non-cash working capital. During the first half of fiscal 1997, the Company had capital expenditures for vessels and equipment of $31.6 million as a result of the delivery of the SEMAKAU SPIRIT. Subsequent to September 30, 1996, the Company purchased another second-hand Aframax tanker for $26.5 million, which was previously time-chartered-in by the Company. These acquisitions were largely financed through operating cash flow, augmented by long-term revolving credit facility drawings. Capital expenditures for drydocking were higher than average, at $7.6 million in the first half of fiscal 1997, reflecting a larger than usual number of scheduled drydockings. 16 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 $42.3 million for this vessel will be financed through a $35.6 million financing arrangement and cash balances. The Company's scheduled debt repayments were $9.6 million during the first half of fiscal 1997, down from $34.9 million in the first half of fiscal 1996 as a result of debt refinancings which have occurred over the past year. Subsequent to September 30, 1996, the Company entered into 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 provide an additional $49 million of liquidity to the Company. The current portion of long-term debt as at September 30, 1996 has been adjusted to give effect to this refinancing. Dividend payments during the first half of fiscal 1997 were $12.0 million, or 43 cents per share, of which $6.5 million was paid in cash and $5.5 million was paid in the form of common shares issued under the Company's dividend reinvestment plan. 17 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SEPTEMBER 30, 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 None Item 6 - Exhibits and Reports on Form 6-K a. Exhibits 27 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. 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: November 7, 1996 By: /s/ Anthony Gurnee ------------------- ---------------------------- Anthony Gurnee Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 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 6-MOS MAR-31-1997 APR-01-1996 SEP-30-1996 130,071 0 21,698 0 0 178,276 1,614,446 415,339 1,390,959 80,232 702,869 0 0 241,721 366,137 1,390,959 0 184,173 0 49,553 92,761 0 30,067 14,471 0 14,471 0 0 0 14,471 0.52 0.52
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