-----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, S2ahRXUkk3q6XMpzSgty7tFDZUckb+hZAjpWJRoU4XChN5QMebPBoIRyfDPQvmjP oEgBMMoiFG88yD0/WCsKgQ== 0000911971-97-000013.txt : 19971118 0000911971-97-000013.hdr.sgml : 19971118 ACCESSION NUMBER: 0000911971-97-000013 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971117 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: 97722306 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 September 30, 1997 ------------------ TEEKAY SHIPPING CORPORATION (Exact name of Registrant as specified in its charter) Euro Canadian Centre, Fourth Floor Marlborough Street & Navy Lion Road, 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, 1997 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, 1997 and 1996..........................3 Consolidated Balance Sheets - September 30, 1997 and March 31, 1997......................4 Consolidated Statements of Cash Flows for the six months ended September 30, 1997 and 1996...................................................5 Notes to Consolidated Financial Statements.................................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............13 PART II: OTHER INFORMATION..................................................17 SIGNATURES...................................................................18 2 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, 1997 1996 1997 1996 ---- ---- ---- ---- $ (Unaudited) $ $ (Unaudited) $ ---- ----------- ---- ---- ----------- ---- NET VOYAGE REVENUES Voyage revenues 99,705 94,158 197,979 184,173 Voyage expenses 27,597 24,646 52,014 49,553 - --------------------------------------------------------------------------------------------------------- Net voyage revenues 72,108 69,512 145,965 134,620 - --------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 18,610 17,744 36,584 35,412 Time-charter hire expense 2,764 1,680 4,056 3,343 Depreciation and amortization 23,924 22,136 47,594 44,146 General and administrative 4,916 4,699 9,689 9,095 - --------------------------------------------------------------------------------------------------------- 50,214 46,259 97,923 91,996 - --------------------------------------------------------------------------------------------------------- Income from vessel operations 21,894 23,253 48,042 42,624 - --------------------------------------------------------------------------------------------------------- Other items Interest expense (14,688) (15,406) (28,780) (30,832) Interest income 2,089 1,674 3,892 3,153 Other income(loss) (note 7) 2,977 (444) 3,131 (474) - --------------------------------------------------------------------------------------------------------- (9,622) (14,176) (21,757) (28,153) - --------------------------------------------------------------------------------------------------------- Net income 12,272 9,077 26,285 14,471 Retained earnings, beginning of the period 390,101 363,084 382,177 363,690 - --------------------------------------------------------------------------------------------------------- 402,373 372,161 408,462 378,161 Dividends declared and paid (6,125) (6,024) (12,214) (12,024) - --------------------------------------------------------------------------------------------------------- Retained earnings, end of the period 396,248 366,137 396,248 366,137 - --------------------------------------------------------------------------------------------------------- Net income per common share (note 6) $ 0.43 $ 0.32 $ 0.92 $ 0.52 Weighted average number of common shares outstanding (note 6) 28,617,157 28,088,370 28,515,470 28,033,393 - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 3 4 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
As at As at September 30, March 31, 1997 1997 ---- ---- $ $ ---- ---- (Unaudited) ----------- ASSETS Current Cash and cash equivalents 108,709 117,523 Marketable securities (note 2) 1,002 Accounts receivable -trade 21,501 25,745 -vessel sales 9,785 -other 349 1,066 Prepaid expenses and other assets 16,501 14,666 - ---------------------------------------------------------------------------------------------- Total current assets 157,847 159,000 - ---------------------------------------------------------------------------------------------- Marketable securities (note 2) 26,392 Vessels and equipment (note 5) At cost, less accumulated depreciation of $473,937 (March 31, 1997 - $457,779) 1,188,887 1,187,399 Advances on vessels 8,938 - ----------------------------------------------------------------------------------------------- Total vessels and equipment 1,188,887 1,196,337 - ---------------------------------------------------------------------------------------------- Investment 6,335 Other assets 10,621 11,166 - ---------------------------------------------------------------------------------------------- 1,383,747 1,372,838 ============================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable 14,636 16,315 Accrued liabilities 26,100 26,982 Current portion of long-term debt (note 5) 65,132 36,283 - ---------------------------------------------------------------------------------------------- Total current liabilities 105,868 79,580 - ---------------------------------------------------------------------------------------------- Long-term debt (note 5) 624,257 663,443 - ---------------------------------------------------------------------------------------------- Total liabilities 730,125 743,023 - ---------------------------------------------------------------------------------------------- Stockholders' equity Capital stock (note 6) 257,374 247,637 Retained earnings 396,248 382,178 - ---------------------------------------------------------------------------------------------- Total stockholders' equity 653,622 629,815 - ---------------------------------------------------------------------------------------------- 1,383,747 1,372,838 ==============================================================================================
Commitments and contingencies (notes 5 and 8) The accompanying notes are an integral part of the consolidated financial statements. 4 5 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Six Months Ended September 30, 1997 1996 ---- ---- $ (Unaudited) $ ---- ----------- ---- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 26,285 14,471 Add (deduct) charges to operations not requiring a payment of cash and cash equivalents: Depreciation and amortization 47,594 44,911 Gain on disposition of assets (3,914) Other 1,528 717 Change in non-cash working capital items related to operating activities 2,972 1,634 - ------------------------------------------------------------------------------------------------- Net cash flow from operating activities 74,465 61,733 - ------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 35,600 30,000 Scheduled repayments of long-term debt (19,083) (9,551) Prepayments of long-term debt (27,408) Net proceeds from issuance of Common Stock 4,269 498 Cash dividends paid (6,746) (6,506) Other (171) (320) - ------------------------------------------------------------------------------------------------- Net cash flow from financing activities (13,539) 14,121 - ------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (38,617) (31,579) Expenditures for drydocking (9,618) (7,607) Net cash flow from investment 6,335 Proceeds on sale of available-for-sale securities 9,945 Purchases of available-for-sale securities (37,339) Other (446) 282 - ------------------------------------------------------------------------------------------------- Net cash flow from investing activities (69,740) (38,904) - ------------------------------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (8,814) 36,950 Cash and cash equivalents, beginning of the period 117,523 101,780 - ------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of the period 108,709 138,730 =================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 5 6 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at September 30, 1997, and for the Three-Month and Six-Month Periods Ended September 30, 1997 and 1996 is unaudited) 1. Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures required by generally accepted accounting principles for complete annual financial statements have been omitted and, therefore, it is suggested that these interim financial statements be read in conjunction with the Company's audited financial statements for the fiscal year ended March 31, 1997. In the opinion of management, these statements reflect all adjustments (consisting only of normal recurring accruals), necessary to present fairly, in all material respects, the Company's consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three-month and six-month periods ended September 30, 1997 are not necessarily indicative of those for a full fiscal year. Certain of the prior period comparative figures have been reclassified where necessary to conform with the presentation used in the current period. 2. Marketable Securities Investments in marketable securities have been classified by management 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 six-month periods ended September 30, 1997 and 1996 totalled approximately $28,826,000 and $30,032,000, 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, 1997 1997 $ $ --------------------------------------------------------------------------------------- First Preferred Ship Mortgage Notes (8.32%) U.S. dollar debt due through 2008 225,000 225,000 First Preferred Ship Mortgage Notes (9 5/8%) U.S. dollar debt due through 2004 141,146 151,200 Floating rate (LIBOR + 0.55% to 1 1/2%) U.S. dollar debt due through 2010 323,243 323,526 ---------------------------------------------------------------------------------------- 689,389 699,726 Less current portion of long-term debt 65,132 36,283 ---------------------------------------------------------------------------------------- 624,257 663,443 ========================================================================================
6 7 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at September 30, 1997, and for the Three-Month and Six-Month Periods Ended September 30, 1997 and 1996 is unaudited) 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, 1997, the fair value of these net assets approximated $278 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, 1997, the fair value of these net assets approximated $190 million. During the three months ended September 30, 1997, the Company repurchased $8.9 million of the 9 5/8% Notes. 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, 1997, the Company was committed to a series of interest rate swap agreements whereby $150 million of the Company's floating rate debt was swapped with fixed rate obligations having an average remaining term of 13.5 months. The swap agreements expire between October 1998 and December 1998. These arrangements effectively change the Company's interest rate exposure on $150 million of debt from a floating LIBOR rate to an average fixed rate of 5.85%. The Company is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap agreements; however, the Company does not anticipate non-performance by any of the counter parties. 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, 1997 247,637 28,328 0 0 Reinvested dividends 5,468 175 Exercise of stock options 4,269 193 ----------------------------------------------------------------------------------------- Balance September 30, 1997 257,374 28,696 0 0 =========================================================================================
7 8 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (all tabular amounts stated in thousands of U.S. dollars) (Information as at September 30, 1997, and for the Three-Month and Six-Month Periods Ended September 30, 1997 and 1996 is unaudited) 6. Capital Stock (cont'd) The Company has reserved 1,882,956 shares of Common Stock for issuance upon exercise of options granted pursuant to the Company's 1995 Stock Option Plan. As at September 30, 1997, options to purchase a total of 1,202,322 shares of the Company's Common Stock were outstanding, of which 604,558 options were then exercisable at prices ranging from $21.50 to $27.375 per share. The remaining outstanding options have exercise prices ranging from $21.50 to $33.50 per share. All outstanding options expire between July 19, 2005 and June 13, 2007, ten years after the date of grant. Net income per share is based upon the weighted average number of common shares outstanding during each period. Stock options have not been included in the computation of net income per common share since their effect thereon would not be material. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share" SFAS 128 requires dual presentation of basic earnings per share ("EPS") and diluted EPS on the face of all statements of earnings ending after December 15, 1997 for all entities with complex capital structures. The Company's EPS presentation will be subject to SFAS 128, but the Company does not anticipate the effect on its earnings per share to be material. 7. Other Income (Loss)
Three Months Six Months Ended September 30, Ended September 30, 1997 1996 1997 1996 $ $ $ $ ------------------------------------------------------------------------------------------- Gain on disposition of assets 3,914 3,914 Loss on repurchase of 9 5/8% Notes (761) (761) Miscellaneous - net (176) (494) (22) (474) ------------------------------------------------------------------------------------------- 2,977 (444) 3,131 (474) ===========================================================================================
8. Commitments and Subsequent Events Subsequent to September 30, 1997, the Company repurchased an additional $15.4 million of the 9 5/8% Notes. Subsequent to September 30, 1997 the Company entered into an agreement to sell two of its older Aframax tankers, for delivery during the third quarter of fiscal 1998, for a total sales price of $25.7 million. Also subsequent to September 30, 1997, the Company entered into agreements to purchase a modern second-hand Aframax tanker and a newbuilding Aframax tanker to be delivered during the third and fourth quarters of fiscal 1998, respectively, for $76.1 million in aggregate. 8 9 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars) (Unaudited)
Three Months Ended September 30, 1997 ------------------------------------------------------------------------------------------ 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ------------- ------------ ------------ ------------- ------------ -------------- Net voyage revenues 13,334 9,322 109,769 (60,317) 72,108 Operating expenses 307 5,811 8,581 95,832 (60,317) 50,214 ------------------------------------------------------------------------------------------ Income (loss) from vessel operations (307) 7,523 741 13,937 21,894 Net interest income (expense) (8,365) 147 124 (4,505) (12,599) Equity in net income of subsidiaries 21,657 (21,657) Other income (loss) (713) (9,241) 12,931 2,977 ------------------------------------------------------------------------------------------ Net income 12,272 7,670 865 191 (8,726) 12,272 Retained earnings (deficit), beginning of the period 390,101 18,529 (17,688) 162,055 (162,896) 390,101 Dividends declared and paid (6,125) (8,400) (9,345) 17,745 (6,125) ------------------------------------------------------------------------------------------ Retained earnings (deficit), end of the period 396,248 17,799 (26,168) 162,246 (153,877) 396,248 ==========================================================================================
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 79,173 (47,693) 46,259 ------------------------------------------------------------------------------------------ Income (loss) from vessel operations (427) 1,979 310 21,391 23,253 Net interest income (expense) (8,318) 22 37 (5,473) (13,732) 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 ==========================================================================================
- ------------------ (See Note 5) 9 10 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars) (Unaudited)
Six Months Ended September 30, 1997 ------------------------------------------------------------------------------------------ 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ------------- ------------ ------------ ------------- ------------ -------------- Net voyage revenues 26,496 18,408 219,677 (118,616) 145,965 Operating expenses 642 11,539 17,282 187,076 (118,616) 97,923 ------------------------------------------------------------------------------------------ Income (loss) from vessel operations (642) 14,957 1,126 32,601 48,042 Net interest income (expense) (16,682) 186 174 (8,566) (24,888) Equity in net income of subsidiaries 44,274 (44,229) 45 Other income (loss) (665) 10,430 (6,679) 3,086 ------------------------------------------------------------------------------------------ Net income 26,285 15,143 1,300 34,465 (50,908) 26,285 Retained earnings (deficit), beginning of the period 382,177 11,056 (18,124) 144,125 (137,057) 382,177 Dividends declared and paid (12,214) (8,400) (9,345) 17,745 (12,214) ------------------------------------------------------------------------------------------ Retained earnings (deficit), end of the period 396,248 17,799 (26,169) 178,590 (170,220) 396,248 ==========================================================================================
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 17,251 157,070 (94,305) 91,996 ------------------------------------------------------------------------------------------ Income (loss) from vessel operations (842) 3,991 772 38,703 42,624 Net interest income (expense) (16,739) 59 93 (11,092) (27,679) 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 ==========================================================================================
- ---------------- (See Note 5) 10 11 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED BALANCE SHEETS (in thousands of U.S. dollars) (Unaudited)
As at September 30, 1997 ------------------------------------------------------------------------------------------ 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ------------- ------------ ------------ ------------- ------------ -------------- ASSETS Cash and cash equivalents 198 18,292 9,861 80,358 108,709 Other current assets 18,058 698 711 29,753 (82) 49,138 ------------------------------------------------------------------------------------------ Total current assets 18,256 18,990 10,572 110,111 (82) 157,847 Vessels and equipment (net) 134,201 337,147 717,539 1,188,887 Advances due from subsidiaries 332,548 (332,548) Other assets (principally marketable securities, and investments in subsidiaries) 675,141 37,018 (675,146) 37,013 ------------------------------------------------------------------------------------------ 1,025,945 153,191 347,719 864,668 (1,007,776) 1,383,747 ========================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 6,177 3,605 4,529 91,639 (82) 105,868 Long-term debt 366,146 258,111 624,257 Due to (from) parent (41) 29 357,405 (357,393) ------------------------------------------------------------------------------------------ Total liabilities 372,323 3,564 4,558 707,155 (357,475) 730,125 ------------------------------------------------------------------------------------------ Stockholders' Equity Capital stock 257,374 10 23 5,933 (5,966) 257,374 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 396,248 17,799 (26,169) 178,590 (170,220) 396,248 ------------------------------------------------------------------------------------------ Total stockholders' equity 653,622 149,627 343,161 189,471 (682,259) 653,622 ------------------------------------------------------------------------------------------ 1,025,945 153,191 347,719 896,626 (1,039,734) 1,383,747 ==========================================================================================
As at March 31, 1997 ------------------------------------------------------------------------------------------ 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ------------- ------------ ------------ ------------- ------------ -------------- ASSETS Cash and cash equivalents 32 9,248 8,732 99,511 117,523 Other current assets 128 667 755 40,009 (82) 41,477 ------------------------------------------------------------------------------------------ Total current assets 160 9,915 9,487 139,520 (82) 159,000 Vessels and equipment (net) 137,486 344,315 714,536 1,196,337 Advances due from subsidiaries 362,704 (362,704) Other assets (principally investments in subsidiaries) 649,337 11,171 (643,007) 17,501 ------------------------------------------------------------------------------------------ 1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838 ========================================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 7,386 4,573 2,581 65,122 (82) 79,580 Long-term debt 375,000 288,443 663,443 Due to (from) parent (56) 15 356,656 (356,615) ------------------------------------------------------------------------------------------ Total liabilities 382,386 4,517 2,596 710,221 (356,697) 743,023 ------------------------------------------------------------------------------------------ Stockholders' Equity Capital stock 247,637 10 23 5,933 (5,966) 247,637 Contributed capital 131,818 369,307 4,948 (506,073) Retained earnings (deficit) 382,178 11,056 (18,124) 144,125 (137,057) 382,178 ------------------------------------------------------------------------------------------ Total stockholders' equity 629,815 142,884 351,206 155,006 (649,096) 629,815 ------------------------------------------------------------------------------------------ 1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838 ==========================================================================================
- ---------------- (See Note 5) 11 12 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) (Unaudited)
Six Months Ended September 30, 1997 ------------------------------------------------------------------------------------------ 9 5/8% Notes 8.32% Notes Teekay Teekay Guarantor Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ $ ------------- ------------ ------------ ------------- ------------ -------------- Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES ------------------------------------------------------------------------------------------ Net cash flow from operating activities (36,610) 19,808 11,824 79,443 74,465 ------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Proceeds from long-term debt 35,600 35,600 Repayments of long-term debt (8,854) (37,637) (46,491) Net proceeds from issuance of Common Stock 4,269 4,269 Other 23,616 (8,385) (9,331) (12,817) (6,917) ------------------------------------------------------------------------------------------ Net cash flow from financing activities 19,031 (8,385) (9,331) (14,854) (13,539) ------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Expenditures for vessels and equipment (2,379) (1,364) (44,492) (48,235) Other 17,745 0 0 (39,250) (21,505) ------------------------------------------------------------------------------------------ Net cash flow from investing activities 17,745 (2,379) (1,364) (83,742) (69,740) ------------------------------------------------------------------------------------------ Increase (decrease) in cash and cash equivalents 166 9,044 1,129 (19,153) (8,814) Cash and cash equivalents, beginning of the period 32 9,248 8,732 99,511 117,523 ------------------------------------------------------------------------------------------ Cash and cash equivalents, end of the period 198 18,292 9,861 80,358 108,709 ==========================================================================================
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) 13,370 (6,826) ------------------------------------------------------------------------------------------ Net cash flow from financing activities (3,048) (7,200) (9,450) 33,819 14,121 ------------------------------------------------------------------------------------------ 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 in cash and cash equivalents 81 768 1,694 34,407 36,950 Cash and cash equivalents, beginning of the period 28 8,613 5,210 87,929 101,780 ------------------------------------------------------------------------------------------ Cash and cash equivalents, end of the period 109 9,381 6,904 122,336 138,730 ==========================================================================================
- ---------------- (See Note 5) 12 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES September 30, 1997 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS General Teekay Shipping Corporation (the "Company") is a leading provider of international crude oil and petroleum product transportation services to major oil companies, major oil traders, and government agencies, principally in the region spanning from the Red Sea to the U.S. West Coast. The Company's fleet consists of 43 tankers, including 40 Aframax oil tankers and oil/bulk/ore carriers, two smaller tankers, and one VLCC, for a total cargo-carrying capacity of approximately 4.3 million tonnes. Two of the Company's Aframax tankers are time-chartered in to the fleet. Approximately 71% of the Company's net voyage revenue is currently derived from spot voyages. The balance of the Company's revenue is generated by two other modes of employment: time charters, whereby vessels are chartered to customers for a fixed period; and contracts of affreightment ("COAs"), whereby the Company carries an agreed quantity of cargo for a customer over a specified trade route over a specified period of time. In aggregate, approximately 87% of the Company's net voyage revenue is currently derived from spot voyages or spot market- related COAs and time-charters. This dependence on the spot market, which is within industry norms, contributes to the volatility of the Company's revenue, cash flow from operations, and net income. Management believes that the Company has a competitive advantage over other tanker owners in the Aframax spot market. Historically, the tanker industry has been cyclical, experiencing volatility in profitability resulting from changes in the supply of and demand for tankers. Additionally, tanker markets have exhibited seasonal variations in charter rates. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere and unpredictable winter weather patterns which tend to disrupt vessel scheduling. Bulk shipping industry freight rates are commonly measured at the net voyage revenue level in terms of "time charter equivalent" (or "TCE") rates, defined as voyage revenues less voyage expenses (excluding commissions), divided by revenue-generating ship-days for the round-trip voyage. Voyage revenues and voyage expenses are a function of the type of charter, either spot charter or time charter, and port, canal and fuel costs depending on the trade route upon which a vessel is sailing, in addition to being a function of the level of shipping freight rates. For this reason, shipowners base economic decisions regarding the deployment of their vessels upon anticipated TCE rates, and industry analysts typically measure bulk shipping freight rates in terms of TCE rates. Therefore, the discussion of revenue below focuses on net voyage revenue and TCE rates. Three Months Ended September 30, 1997 versus Three Months Ended September 30, 1996. The Company's net income was $12.3 million, or 43 cents per share, in the second quarter of fiscal 1998, which includes $3.9 million, or 14 cents per share, in gains on asset sales. In comparison, the Company earned $9.1 million, or 32 cents per share, in the second quarter of fiscal 1997, which did not include any gains or losses on asset sales. During the second quarter of fiscal 1998, Aframax spot charter rates in the Indo-Pacific basin suffered from seasonal weakness, which began in May and continued for a longer period than in the previous year, before recovering in September. 13 14 Income from Vessel Operations The prolonged weakness in tanker rates during the summer months resulted in income from vessel operations decreasing 6.0%, from $23.3 million in the second quarter of fiscal 1997 to $21.9 million in the second quarter of fiscal 1998. The Company's average fleet size was 6.4% larger in the second quarter of fiscal 1998 than in the second quarter of fiscal 1997, as three modern Aframax tankers were added to the Company's fleet and one older tanker was sold during the first half of fiscal 1998. Net voyage revenues were $72.1 million in the second quarter of fiscal 1998, an increase of 3.7% over the second quarter of fiscal 1997, primarily due to the increase in average fleet size. The Company's fleet earned an average TCE rate of $19,834 in the second quarter of fiscal 1998, down 1.1% from $20,045 in the second quarter of fiscal 1997, primarily due to seasonal weakness in Aframax spot charter rates in the Indo-Pacific basin. Increases in operating expenses were approximately in line with the increase in fleet size. Depreciation and amortization expense included amortization of drydocking costs of $3.1 million in the second quarter of fiscal 1998 and $2.5 million in the second quarter of fiscal 1997. Interest Expense Interest expense decreased 4.6% to $14.7 million in the second quarter of fiscal 1998, from $15.4 million in the second quarter of fiscal 1997, reflecting a reduction in the Company's total debt. Six Months Ended September 30, 1997 versus Six Months Ended September 30, 1996 The Company's net income was $26.3 million, or 92 cents per share, in the first half of fiscal 1998, up from $14.5 million, or 52 cents per share, in the first half of fiscal 1997, primarily reflecting an improvement in the tanker charter market accompanied by a relatively stable cost environment. Net income for the first half of fiscal 1998 included gains on asset sales of $3.9 million, or 14 cents per share, while there were no asset sales in the same period of the prior year. 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 12.7% increase in income from vessel operations, to $48.0 million in the first half of fiscal 1998 from $42.6 million in the first half of fiscal 1997. In the first half of fiscal 1998, the Company chartered-in two Aframax tankers, added a new Aframax tanker to its fleet and sold a 1979-built Aframax tanker. As a result, the Company's fleet was 4.7% larger on average in the first half of fiscal 1998 than during the first half of fiscal 1997. Net voyage revenues were $146.0 million in the first half of fiscal 1998, an increase of 8.4% as compared to the first half of fiscal 1997. This reflects the increase in the Company's average fleet size, as well as improvements in tanker charter market conditions. The Company's fleet earned an average TCE rate of $20,508 in the first half of fiscal 1998, up 4.9% from $19,557 in the first half of fiscal 1997. Operating expenses increased approximately in line with the larger fleet. Depreciation and amortization expense included amortization of drydocking costs of $6.3 million in the first half of fiscal 1998 and $5.1 million in the first half of fiscal 1997. 14 15 Interest Expense Interest expense decreased 6.5% to $28.8 million in the first half of fiscal 1998, from $30.8 million in the first half of fiscal 1997, reflecting a reduction in the Company's total debt. 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 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------------------- Total calendar ship-days 4,015 3,773 7,828 7,475 Non-revenue days 286 229 538 441 - ----------------------------------------------------------------------------------------------------------------- Revenue-generating ship-days (A) 3,729 3,544 7,290 7,034 - ----------------------------------------------------------------------------------------------------------------- Net voyage revenue before commissions (B) $73,960 $71,039 $149,503 $137,562 (000's) - ----------------------------------------------------------------------------------------------------------------- Time charter equivalent (TCE) (B/A) $19,834 $20,045 $20,508 $19,557 ================================================================================================================= Operating results per calendar ship-day: Net voyage revenue $17,960 $18,424 $18,647 $18,009 Vessel operating expense 4,816 4,820 4,808 4,856 General and administrative expense 1,224 1,245 1,238 1,217 Drydocking expense 762 668 808 683 - ------------------------------------------------------------------------------------------------------------------ Operating cash flow per calendar ship-day $11,158 $11,691 $11,793 $11,253 ==================================================================================================================
Liquidity and Capital Resources The Company's total liquidity, including cash, cash equivalents, marketable securities, and undrawn long-term lines of credit, was $265.5 million as at September 30, 1997, virtually unchanged from $258.6 million as of the beginning of the fiscal year, as the Company has used its free operating cash flow during the first half of 1998, after debt principal and dividend payments, for capital expenditures. Net cash flow from operating activities was $74.5 million in the first half of fiscal 1998, compared to $61.7 million in the first half of fiscal 1997, reflecting an improvement in tanker charter market conditions and the increase in the size of the Company's fleet. 15 16 During the first half of fiscal 1998, the Company incurred capital expenditures for vessels and equipment of $38.6 million, mainly as a result of the delivery of the HAMANE SPIRIT. This expenditure was financed through additional debt. Capital expenditures for drydocking were higher than average, at $9.6 million in the first half of fiscal 1998, reflecting a larger than usual number of scheduled drydockings. Subsequent to September 30, 1997, the Company sold two of its older tankers for a total sales price of $25.7 million. Also subsequent to September 30, 1997, the Company entered into agreements to purchase a modern second-hand Aframax tanker, and a newbuilding Aframax tanker to be delivered during the third and fourth quarters of fiscal 1998, respectively, for $76.1 million in aggregate. It is intended that these acquisitions will be financed through operating cash flow, existing lines of credit, and cash balances. The Company's scheduled debt repayments were $19.1 million during the first half of fiscal 1998, up from $9.6 million in the first half of fiscal 1997, as a result of debt refinancings which have occurred over the past twelve months. During the second quarter of fiscal 1998, the Company prepaid $18.0 million of its floating rate debt and repurchased a principal amount of $8.9 million of its 9 5/8% First Preferred Ship Mortgage Notes. Subsequent to the end of the quarter, the Company repurchased an additional principal amount of $15.4 million of such notes. Dividend payments during the first half of fiscal 1998 were $12.2 million, or 43 cents per share, of which $6.7 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. Forward-Looking Statements This Report on Form 6-K for the quarterly period ended September 30, 1997 contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to future events and financial performance, in particular the statements regarding the Company's competitive advantage over other tanker owners in the Aframax spot market and seasonal variations in the tanker market. The following factors are among those that could cause actual results to differ materially from the forward- looking statements and that should be considered in evaluating any such statement: changes in production of or demand for oil and petroleum products, either generally or in particular regions; greater than anticipated levels of tanker newbuilding orders or less than anticipated rates of tanker scrapping; changes in trading patterns significantly impacting overall tanker tonnage requirements; unanticipated changes in laws and regulations and the Company's ability to comply with all existing and future laws and regulations; changes in demand for modern, high quality vessels; risks incident to vessel operation, including pollution; whether, as is typical, oil consumption in the northern hemisphere will increase in the fall and winter months and unpredictable weather patterns in the winter months will tend to disrupt vessel scheduling, factors that historically have resulted in increased oil price volatility and increased oil trading activity; and other risks detailed from time to time in the Company's periodic reports filed with the U.S. Securities and Exchange Commission. Certain of these factors affect whether oil consumption growth is met by increased production in the Mideast, or by suppliers closer to markets, a variable which affects tonne-mile demand growth. The Company may issue additional written or oral forward-looking statements from time to time which are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports filed by the Company with the U.S. Securities and Exchange Commission. 16 17 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SEPTEMBER 30, 1997 PART II: OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Information As reported in the Company's press release dated July 22, 1997, the Company announced that Anthony Gurnee, the Company's Chief Financial Officer and VP Business Development, resigned from his position with the Company, and accepted a position as President of Nedship International, Inc., the New York-based subsidiary of Nedship Bank, effective early September, 1997. As reported in the Company's press release dated October 8, 1997, the Company announced that Peter Antturi was promoted to the position of Vice President and Chief Financial Officer . Mr. Antturi joined the Company in 1991 and held the position of Controller since March 1992, before becoming the acting Chief Financial Officer in July 1997. Prior to joining Teekay, he served in various accounting and finance roles in the shipping industry since 1985. 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. 17 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 14, 1997 By: /s/ Peter S. Antturi -------------------- Peter S. Antturi Chief Financial Officer 18 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 6-MOS MAR-31-1998 APR-01-1997 SEP-30-1997 108,709 1,002 21,501 0 0 157,847 1,662,824 473,937 1,383,747 105,868 624,257 0 0 257,374 396,248 1,383,747 0 197,979 0 52,014 97,923 0 28,780 26,285 0 26,285 0 0 0 26,285 0.92 0.92
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