-----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, OePDbzIgPTHN6340iyw+4R2dMc0usxUDes8YmAEH5EGvUoG+PywRrED13H0lmkwr fyz9DBzXqG98e0wOW/rVnw== 0000950133-96-000097.txt : 19960209 0000950133-96-000097.hdr.sgml : 19960209 ACCESSION NUMBER: 0000950133-96-000097 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960208 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] FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12874 FILM NUMBER: 96513425 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 TEEKAY SHIPPING CORPORATION 6-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 ---------------------- For the quarterly period ended December 31, 1995 ----------------- TEEKAY SHIPPING CORPORATION (Formerly Viking Star Shipping Inc.) (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 19 2 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995 INDEX -----
PART I: FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Statements of Income and Retained Earnings for the three and nine months ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets - December 31, 1995 and March 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the nine months ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 14 PART II: OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2 3 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------- ----------------- DECEMBER 31, DECEMBER 31, ------------ ------------ 1995 1994 1995 1994 ---- ---- ---- ---- $ (UNAUDITED) $ $ (UNAUDITED) $ --- ----------- --- --- ----------- --- NET VOYAGE REVENUES Voyage revenues 84,596 80,162 245,540 242,933 Voyage expenses 21,803 21,556 65,255 64,071 - -------------------------------------------------------------------------------------------------------------------- Net voyage revenues 62,793 58,606 180,285 178,862 - -------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel operating expenses 16,770 19,214 50,266 57,683 Time charter hire expense 841 841 Depreciation and amortization (note 2) 20,996 23,990 61,952 72,228 General and administrative 3,973 3,728 12,785 11,874 - -------------------------------------------------------------------------------------------------------------------- 42,580 46,932 125,844 141,785 - -------------------------------------------------------------------------------------------------------------------- Income from vessel operations 20,213 11,674 54,441 37,077 - -------------------------------------------------------------------------------------------------------------------- OTHER ITEMS Interest expense (14,755) (16,059) (45,985) (47,423) Interest income 1,848 1,495 5,030 4,398 Other income (note 9) 6,009 2,622 9,860 3,663 - -------------------------------------------------------------------------------------------------------------------- (6,898) (11,942) (31,095) (39,362) - -------------------------------------------------------------------------------------------------------------------- Net income (loss) 13,315 (268) 23,346 (2,285) Retained earnings, beginning of the period 356,578 398,162 406,547 400,179 - -------------------------------------------------------------------------------------------------------------------- 369,893 397,894 429,893 397,894 Exchange of redeemable preferred stock (note 7) (60,000) Dividends declared and paid (5,953) (5,953) - -------------------------------------------------------------------------------------------------------------------- RETAINED EARNINGS, END OF THE PERIOD 363,940 397,894 363,940 397,894 - -------------------------------------------------------------------------------------------------------------------- Net income (loss) per common share (note 7) $ 0.48 $ (0.01) $ 0.98 $ (0.13) Weighted average number of common shares outstanding (note 7) 27,756,345 18,000,000 23,836,381 18,000,000
The accompanying notes are an integral part of the consolidated financial statements. 3 4 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
AT DECEMBER 31, 1995 AT MARCH 31, 1995 -------------------- ----------------- $ $ --- --- (UNAUDITED) ----------- ASSETS CURRENT Cash 68,441 16,500 Marketable securities (note 9) 49,896 69,239 Restricted cash 2,764 7,634 Accounts receivable -trade 24,102 16,875 -vessel sale 17,283 -other 2,580 3,271 Prepaid expenses and other assets 13,108 13,273 - -------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 160,891 144,075 - -------------------------------------------------------------------------------------------------------------- VESSELS AND EQUIPMENT (notes 2, 5, 6 and 10) At cost, less accumulated depreciation of $356,858 (March 31, 1995 - $312,281) 1,132,876 1,142,972 Acquired under capital lease, less accumulated amortization of $993 50,148 Advances on vessels 5,066 - -------------------------------------------------------------------------------------------------------------- TOTAL VESSELS AND EQUIPMENT 1,183,024 1,148,038 - -------------------------------------------------------------------------------------------------------------- Investment in 50% owned company 5,261 3,758 Other assets 9,083 10,603 - -------------------------------------------------------------------------------------------------------------- 1,358,259 1,306,474 - -------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable 11,549 11,480 Accrued liabilities 15,238 13,054 Current portion of long-term debt (notes 5 and 8) 36,478 74,479 Current portion of capital lease obligation (notes 6 and 8) 223 - -------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 63,488 99,013 - -------------------------------------------------------------------------------------------------------------- Long-term debt (notes 5 and 8) 654,934 768,395 Capital lease obligation (notes 6 and 8) 43,023 - -------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 761,445 867,408 - -------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Capital stock (note 7) 232,854 33,001 Retained earnings 363,940 406,547 Net unrealized gain (loss) on marketable securities 20 (482) - -------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 596,814 439,066 - -------------------------------------------------------------------------------------------------------------- 1,358,259 1,306,474 - --------------------------------------------------------------------------------------------------------------
Commitments and contingencies (note 8) The accompanying notes are an integral part of the consolidated financial statements. 4 5 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
NINE MONTHS ENDED DECEMBER 31, ------------------------------ 1995 1994 ---- ---- $ (UNAUDITED) $ --- ----------- --- Cash provided by (used for) OPERATING ACTIVITIES Net income (loss) 23,346 (2,285) Add (deduct) charges to operations not requiring a payment of cash: Depreciation and amortization 61,952 72,228 Foreign currency exchange gain (277) Gain on disposition of assets (8,889) (7,746) Loss (gain) on marketable securities (30) 2,893 Equity loss (income) (1,503) 1,000 Other 911 Change in non-cash working capital items related to operating activities (4,165) 6,641 - ----------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM OPERATING ACTIVITIES 71,622 72,454 - ----------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 223,000 Scheduled repayments of long-term debt (49,698) (71,008) Prepayments of long-term debt (323,544) (9,033) Scheduled repayments of capital lease obligation (1,304) Decrease (increase) in restricted cash 4,870 (1,092) Net proceeds from stock issuance 137,613 Cash dividends paid (3,712) Capitalized loan costs (1,086) (942) - ----------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM FINANCING ACTIVITIES (13,861) (82,075) - ----------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (net of capital lease financing of $44,550; December 31, 1994 - $0) (47,640) (4,486) Expenditures for drydocking (6,589) (7,374) Proceeds from disposition of assets 28,514 9,174 Increase in investment (796) Proceeds on sale of available-for-sale securities 60,963 Purchases of available-for-sale securities (41,068) Increase in marketable securities (3,182) Other 107 - ----------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM INVESTING ACTIVITIES (5,820) (6,557) - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in cash 51,941 (16,178) Cash, beginning of the period 16,500 38,614 - ----------------------------------------------------------------------------------------------------------- CASH, END OF THE PERIOD 68,441 22,436 - -----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 5 6 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) (INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted 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, 1995. In the opinion of management, these statements reflect all adjustments (consisting only of normal recurring accruals), necessary to present fairly, in all material respects, the Company's consolidated financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three-month and nine-month periods ended December 31, 1995 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. CHANGE IN ESTIMATE Effective April 1, 1995, the Company revised its estimates of the residual values of its vessels. The effect of this change in estimated residual values was to reduce depreciation expense for the three-month and nine-month periods ended December 31, 1995 by $2.6 million (or $0.09 per common share) and $7.4 million (or $0.31 per common share), respectively. 3. CASH FLOWS Cash interest paid during the nine-month periods ended December 31, 1995 and 1994 totalled approximately $42,862,000 and $44,080,000, respectively. 4. INCOME TAXES The legal jurisdictions of the countries in which the Company and its subsidiaries are incorporated do not impose income taxes upon shipping-related activities. 5. LONG-TERM DEBT
DECEMBER 31, MARCH 31, 1995 1995 $ $ ------------------------------------------------------------------------------- Revolving Credit Facility 88,000 First Preferred Ship Mortgage Notes (9 5/8%) U.S. dollar debt due through 2004 151,200 175,000 Floating rate (LIBOR + 1% to 1 1/2%) U.S. dollar debt due through 2006 452,212 667,874 ------------------------------------------------------------------------------- 691,412 842,874 Less current portion of long-term debt 36,478 74,479 ------------------------------------------------------------------------------- 654,934 768,395 -------------------------------------------------------------------------------
6 7 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) (INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED) 5. LONG-TERM DEBT - CONT'D In May 1995, the Company negotiated a revolving credit facility, (the "Revolver"), with three commercial banks providing for borrowings of up to $243 million in order to refinance certain of the existing debt obligations of the Company and to finance vessel acquisitions. The Revolver is collateralized initially by first priority mortgages granted on fourteen of the Company's Aframax tankers, together with certain other related collateral, and a guarantee from the Company for all amounts outstanding under the Revolver. The commitment amount will be reduced by $9.5 million semi-annually commencing six months after the initial drawdown date, together with a final balloon reduction coincident with the final semi-annual reduction on June 6, 2003. Interest payments are based on LIBOR plus a margin ranging from 0.80% to 1.25% which is dependent on the financial leverage of the Company. Principal repayments under the Revolver are required when the Revolver borrowings exceed the commitment amount which was $213.5 million as of December 31, 1995. In June 1995, the Company made an initial drawdown on the Revolver in the amount of $223 million and simultaneously prepaid approximately $204 million in other floating rate debt. In July 1995, using part of the proceeds from the initial public offering (see Note 7), the Company reduced the amount outstanding under the Revolver by $135 million. During the first quarter of fiscal 1996, the Company retired $23.8 million of its 9 5/8% First Preferred Ship Mortgage Notes, utilizing approximately $18.5 million of funds available under the Revolver. Six of the Company's subsidiaries, Diamond Spirit, Inc., Sebarok Spirit Inc., VSSI Bulkers Inc., VSSI Deepsea Inc., VSSI Star Inc., and VSSI Ulsan Inc. ("the 1993 Notes Guarantor Subsidiaries") have guaranteed the 9 5/8% First Preferred Ship Mortgage Notes due July 2003 issued by Teekay Shipping Corporation to a maximum of 95% of the fair value of their net assets. As of December 31, 1995, the fair value of the net assets of the 1993 Notes Guarantor Subsidiaries approximated $201 million. Condensed financial information regarding the Company, the 1993 Notes Guarantor Subsidiaries and non-guarantor subsidiaries of the Company is set out on Schedule A of these consolidated financial statements. 6. CAPITAL LEASE OBLIGATION On August 7, 1995, the Company took delivery of a bareboat hire purchased vessel which is accounted for as a capital lease.
DECEMBER 31, 1995 $ ------------------------------------------------------------------------------- Floating rate (LIBOR + 1.25%) U.S. dollar capital lease due through 2008 43,246 Less current portion of capital lease obligation 223 ------------------------------------------------------------------------------- 43,023 -------------------------------------------------------------------------------
The Company holds a purchase option on this vessel which is exercisable, at the Company's discretion, on any monthly lease payment date at a price equal to the unpaid principal balance of the capital lease obligation outstanding as at the date the purchase option is exercised. 7 8 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) (INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED) 7. 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, 1994 and 1995 $33,000 36,000 $1 600 May 15, 1995 1-for-2 Reverse Common Stock Split (18,000) July 19, 1995 Initial Public Offering 6,900,000 shares @ $21.50 per share of Common Stock (net of share issue costs) 137,613 6,900 July 19, 1995 Exchange of Redeemable Preferred Stock for 2,790,698 shares of Common Stock 60,000 2,791 (1) (600) October 30, 1995 Reinvested dividends 2,241 96 ---------------------------------------------------------------------------------------------------------------- Balance December 31, 1995 $232,854 27,787 0 0 ----------------------------------------------------------------------------------------------------------------
On July 19, 1995, the Company completed its initial public offering of 6,900,000 shares of Common Stock. The Company's Common Stock was initially offered at a price of $21.50 per share, resulting in aggregate net proceeds to the Company of approximately $137.6 million. $135 million of the net proceeds from the offering was used to reduce the amounts outstanding under the Company's revolving credit facility. In conjunction with the contemplation of the initial public offering, the Company exchanged all of its outstanding Redeemable Preferred Stock for 2,790,698 shares of Common Stock. 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 of which options to purchase up to 796,750 shares of Common Stock, at an exercise price of $21.50 per share, was granted concurrently with the consummation of the offering. Net income (loss) per common share is based upon the weighted average number of common shares outstanding during each period, after giving effect to the 1 for 2 reverse stock split. Stock options have not been included in the computation of net income (loss) per common share since their effect thereon would not be material. 8 9 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) (INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED) 8. COMMITMENTS AND CONTINGENCIES In October 1995, the Company entered into an agreement for a one-year time-charter and subsequent purchase of a modern second-hand Aframax tanker for a cost $26.5 million. The cost of this vessel will be financed through cash and marketable securities balances. As at December 31, 1995, the Company was commited to a series of interest rate swap agreements whereby $350 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 January 1996 and December 1998. These arrangements effectively change the Company's interest rate exposure on $350 million of debt from a floating LIBOR rate to an average fixed rate of 6.08%. 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. As at December 31, 1995, 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%. $100 million of the contracts became effective on February 24, 1995; the remaining $100 million of contracts became effective on October 2, 1995. All of the contracts expire on April 1, 1997. The premiums paid by the Company have been recorded at cost and are being amortized over the lives of the individual contracts. Receipts, if any, under the interest rate cap contracts are reflected as adjustments to interest expense since the contracts are designated as hedges in connection with long-term debt obligations. As at December 31, 1995, the Company was committed to foreign exchange contracts for the forward purchase of approximately Japanese Yen 950 million and Singapore dollars 1,302,300 for U.S. dollars, at an average rate of Japanese Yen 95.22 per U.S. dollar and Singapore dollar 1.40 per U.S. dollar, respectively. Foreign exchange gains and losses, if any, arising from Japanese Yen 850 million of the foreign exchange contracts are reflected as adjustments to the equity in the results of its 50% owned investment in Viking Consolidated Shipping Corp., since the contract is designated as a hedge in connection with the Company's 50% portion of a Japanese Yen-denominated long-term debt obligation held in the joint venture. The remaining foreign exchange contracts are for the purpose of hedging accounts payable and accrued liabilities. The Company has guaranteed vessel loans of its 50% owned investment, Viking Consolidated Shipping Corp. At December 31, 1995, the guaranteed portions of these loans amounted to $16.4 million. 9. OTHER INCOME
THREE MONTHS NINE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------ ------------------ 1995 1994 1995 1994 $ $ $ $ ------------------------------------------------------------------------------------------------------------ Gain on disposition of assets 5,161 4,048 8,889 7,746 Gain (loss) on marketable securities 140 (174) 30 (2,893) Foreign currency exchange gain (loss) (98) (168) (611) (106) Equity in results of 50% owned company 799 (1,000) 1,503 (1,000) Miscellaneous - net 7 (84) 49 (84) ------------------------------------------------------------------------------------------------------------ 6,009 2,622 9,860 3,663 ------------------------------------------------------------------------------------------------------------
9 10 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) (INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED) 10. SUBSEQUENT EVENTS Subsequent to December 31, 1995, the Company completed an offering of $225 million of 8.32% First Preferred Ship Mortgage Notes due 2008, the net proceeds of which were used to refinance existing floating rate debt. In addition, subsequent to December 31, 1995, the Company prepaid an additional $35 million of other floating rate debt which will be applied to reduce the scheduled principal repayments of certain loans over the next two years by one-half. The current portion of long-term debt and capital lease obligation as at December 31, 1995 have been adjusted to give effect of the reduction in scheduled principal repayments arising from these debt prepayments. Subsequent to December 31, 1995, the Company entered into an agreement for the construction of an Aframax vessel for a cost of $44.5 million, scheduled for delivery in July 1997. A long-term financing agreement exists for approximately $35.6 million of the unpaid cost of the vessel. In addition, the Company has entered into an agreement to purchase an Aframax vessel from its 50% owned investment, VCSC, for a cost of $30.5 million. 10 11 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) SCHEDULE A CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Three Months Ended December 31, 1995 -------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- -------------- ------------ ---------------- Net voyage revenues 7,626 111,727 (56,560) 62,793 Operating expenses 388 5,208 99,458 (62,474) 42,580 -------------------------------------------------------------------------- Income (loss) from vessel operations (388) 2,418 12,269 5,914 20,213 Net interest income (expense) (3,640) 219 (9,486) (12,907) Equity in net income (loss) of subsidiaries 17,295 (16,496) 799 Other income 48 1 12,172 (7,011) 5,210 -------------------------------------------------------------------------- Net income (loss) 13,315 2,638 14,955 (17,593) 13,315 Retained earnings, beginning of the period 356,578 19,353 59,921 (79,274) 356,578 -------------------------------------------------------------------------- 369,893 21,991 74,876 (96,867) 369,893 -------------------------------------------------------------------------- Dividends paid (5,953) (16,270) 16,270 (5,953) -------------------------------------------------------------------------- Retained earnings, end of the period 363,940 21,991 58,606 (80,597) 363,940 Three Months Ended December 31, 1994 -------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- -------------- ------------ ---------------- Net voyage revenues 8,320 112,546 (62,260) 58,606 Operating expenses 250 6,235 102,698 (62,251) 46,932 -------------------------------------------------------------------------- Income (loss) from vessel operations (250) 2,085 9,848 (9) 11,674 Net interest income (expense) (4,118) 179 (10,625) (14,564) Equity in net income (loss) of subsidiaries 4,100 (5,100) (1,000) Other income 3,622 3,622 -------------------------------------------------------------------------- Net income (loss) (268) 2,264 2,845 (5,109) (268) Retained earnings, beginning of the period 398,162 50,801 84,202 (135,003) 398,162 -------------------------------------------------------------------------- 397,894 53,065 87,047 (140,112) 397,894 Dividends paid (16,844) (15,989) 32,833 -------------------------------------------------------------------------- Retained earnings, end of the period 397,894 36,221 71,058 (107,279) 397,894 --------------------------------------------------------------------------
Nine Months Ended December 31, 1995 ------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- ------------- ------------- --------------- Net voyage revenues 22,218 336,268 (178,201) 180,285 Operating expenses 1,085 15,643 294,315 (185,199) 125,844 -------------------------------------------------------------------------- Income (loss) from vessel operations (1,085) 6,575 41,953 6,998 54,441 Net interest income (expense) (10,954) 306 (30,307) (40,955) Equity in net income (loss) of subsidiaries 34,174 (32,671) 1,503 Other income 1,211 1 14,156 (7,011) 8,357 -------------------------------------------------------------------------- Net income (loss) 23,346 6,882 25,802 (32,684) 23,346 Retained earnings, beginning of the period 406,547 22,309 84,274 (106,583) 406,547 -------------------------------------------------------------------------- 429,893 29,191 110,076 (139,267) 429,893 Exchange of redeemable preferred stock (60,000) (60,000) Dividends paid (5,953) (7,200) (51,470) 58,670 (5,953) -------------------------------------------------------------------------- Retained earnings, end of the period 363,940 21,991 58,606 (80,597) 363,940 -------------------------------------------------------------------------- Nine Months Ended December 31, 1994 -------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- -------------- ------------ ---------------- Net voyage revenues 24,543 338,477 (184,158) 178,862 Operating expenses 1,051 18,677 306,327 (184,270) 141,785 -------------------------------------------------------------------------- Income (loss) from vessel operations (1,051) 5,866 32,150 112 37,077 Net interest income (expense) (12,777) 464 (30,712) (43,025) Equity in net income (loss) of subsidiaries 11,543 (12,543) (1,000) Other income 4,663 4,663 -------------------------------------------------------------------------- Net income (loss) (2,285) 6,330 6,101 (12,431) (2,285) Retained earnings, beginning of the period 400,179 46,735 80,946 (127,681) 400,179 -------------------------------------------------------------------------- 397,894 53,065 87,047 (140,112) 397,894 Exchange of redeemable preferred stock Dividends paid (16,844) (15,989) 32,833 -------------------------------------------------------------------------- Retained earnings, end of the period 397,894 36,221 71,058 (107,279) 397,894 --------------------------------------------------------------------------
- --------------------- Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First Preferred Ship Mortgage Notes due July 2003. (See Note 5) 11 12 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) SCHEDULE A CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
As at December 31, 1995 -------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------- ------------ ------------- -------------- ASSETS Cash 127 11,410 56,904 68,441 Restricted cash 2,764 2,764 Other current assets 435 856 88,593 (198) 89,686 -------------------------------------------------------------------------- Total current assets 562 12,266 148,261 (198) 160,891 Vessels and equipment (net) 142,299 1,040,725 1,183,024 Advances due from subsidiaries 514,647 (514,647) Other assets (principally investments in subsidiaries) 239,585 4,590 (229,831) 14,344 -------------------------------------------------------------------------- 754,794 154,565 1,193,576 (744,676) 1,358,259 -------------------------------------------------------------------------- LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 6,780 790 55,625 293 63,488 Long-term debt 151,200 503,734 654,934 Capital lease obligation 43,023 43,023 Due to parent 519,482 (519,482) -------------------------------------------------------------------------- Total liabilities 157,980 790 1,121,864 (519,189) 761,445 -------------------------------------------------------------------------- Stockholders' Equity Capital stock 232,854 6 5,933 (5,939) 232,854 Contributed capital 131,778 7,173 (138,951) Retained earnings 363,940 21,991 58,606 (80,597) 363,940 Net unrealized (gain) loss on marketable securities 20 20 -------------------------------------------------------------------------- Total stockholders' equity 596,814 153,775 71,712 (225,487) 596,774 -------------------------------------------------------------------------- 754,794 154,565 1,193,576 (744,676) 1,358,219 -------------------------------------------------------------------------- As at March 31, 1995 ----------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- ------------- ------------------------------ ASSETS Cash 97 6,856 9,547 16,500 Restricted cash 7,634 7,634 Other current assets 180 1,287 118,685 (211) 119,941 -------------------------------------------------------------------------- Total current assets 277 8,143 135,866 (211) 144,075 Vessels and equipment (net) 162,812 985,226 1,148,038 Advances due from subsidiaries 354,330 (354,330) Other assets (principally investments in subsidiaries) 264,302 4,935 (254,876) 14,361 -------------------------------------------------------------------------- 618,909 170,955 1,126,027 (609,417) 1,306,474 -------------------------------------------------------------------------- LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 4,843 2,214 92,142 (186) 99,013 Long-term debt 175,000 593,395 768,395 Capital lease obligation Due to parent 358,223 (358,223) -------------------------------------------------------------------------- Total liabilities 179,843 2,214 1,043,760 (358,409) 867,408 -------------------------------------------------------------------------- Stockholders' Equity Capital stock 33,001 11 5,922 (5,933) 33,001 Contributed capital 138,492 (138,492) Retained earnings 406,547 30,238 76,345 (106,583) 406,547 Net unrealized (gain) loss on marketable securities (482) (482) -------------------------------------------------------------------------- Total stockholders' equity 439,066 168,741 82,267 (251,008) 439,066 -------------------------------------------------------------------------- 618,909 170,955 1,126,027 (609,417) 1,306,474 --------------------------------------------------------------------------
Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First Preferred Ship Mortgage Notes due July 2003. (See Note 5) 12 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) SCHEDULE A CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Nine Months Ended December 31, 1995 -------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- -------------- ------------ ---------------- Cash provided by (used for) OPERATING ACTIVITIES -------------------------------------------------------------------------- Net cash flow from operating activities (9,191) 12,468 68,345 71,622 -------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 223,000 223,000 Repayments of long-term debt (22,580) (350,662) (373,242) Repayments of capital lease obligations (1,304) (1,304) Net proceeds from stock issuance 137,613 137,613 Other (171,203) (7,200) 178,475 72 -------------------------------------------------------------------------- Net cash flow from financing activities (56,170) (7,200) 49,509 (13,861) -------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (203) (54,026) (54,229) Proceeds from disposition of assets 28,514 28,514 Other 65,391 459 (45,955) 19,895 -------------------------------------------------------------------------- Net cash flow from investing activities 65,391 256 (71,467) (5,820) -------------------------------------------------------------------------- Increase (decrease) in cash 30 5,524 46,387 51,941 Cash (deficiency), beginning of the period 97 5,886 16,500 16,500 -------------------------------------------------------------------------- Cash, end of the period 127 11,410 62,887 68,441 -------------------------------------------------------------------------- Nine Months Ended December 31, 1994 ------------------------------------------------------------------------- 1993 Notes Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ --------------- ------------- ------------- ------------- --------------- Cash provided by (used for) OPERATING ACTIVITIES -------------------------------------------------------------------------- Net cash flow from operating activities (8,973) 14,350 67,077 72,454 -------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt Repayments of long-term debt (80,041) (80,041) Repayments of capital lease obligations Net proceeds from stock issuance Other (22,740) (16,844) 37,550 (2,034) -------------------------------------------------------------------------- Net cash flow from financing activities (22,740) (16,844) (42,491) (82,075) -------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (488) (11,372) (11,860) Proceeds from disposition of assets 9,174 9,174 Other 31,971 62 (35,904) (3,871) -------------------------------------------------------------------------- Net cash flow from investing activities 31,971 (426) (38,102) (6,557) -------------------------------------------------------------------------- Increase (decrease) in cash 258 (2,920) (13,516) (16,178) Cash (deficiency), beginning of the period (242) 13,736 25,120 38,614 -------------------------------------------------------------------------- Cash, end of the period 16 10,816 11,604 22,436 --------------------------------------------------------------------------
- -------------- Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First Preferred Ship Mortgage Notes due July 2003. (See Note 5) 13 14 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) DECEMBER 31, 1995 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 through its fleet of predominantly Aframax tankers. The charter rates that the Company is able to obtain for these services are determined in a competitive global tanker charter market. Historically, the tanker industry has been cyclical, experiencing volatility in profitability and asset values resulting from changes in the supply of and demand for vessel capacity. The Company's future operating results will be subject to a number of uncertainties, many of which reflect the cyclical nature of the tanker industry. The Company operates its tankers in markets that have historically exhibited seasonal variations in demand and, therefore, charter rates. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere. In addition, unpredictable weather patterns in the winter months tend to disrupt vessel scheduling. The oil price volatility resulting from these factors has also historically led to increased oil trading activities. As a result, revenues have usually been stronger for the Company in its third and fourth fiscal quarters. THREE MONTHS ENDED DECEMBER 31, 1995 VERSUS THREE MONTHS ENDED DECEMBER 31, 1994 Operating results for the third quarter of fiscal 1996 reflected the steady improvement in average time charter equivalent ("TCE") rates experienced by the Company's fleet during the past 15 months. Despite a 7.1% decrease in fleet size from 42 vessels in the third quarter of fiscal 1995 to 39 100%-owned vessels in the third quarter of fiscal 1996, voyage revenues increased by 5.5% to $84.6 million from $80.2 million. Net voyage revenue was up by 7.2%, to $62.8 million in the third quarter of fiscal 1996 from $58.6 million in third quarter of fiscal 1995. This reflects an improvement in TCE rates, as well as the increased capacity and fuel efficiency associated with the Company's newer fleet. The Company completed the sale of its last mid-1970's built tanker during the third quarter of fiscal 1996. The disposal of these older and less efficient vessels over the past two years has reduced the Company's fleet size, without reducing net voyage revenues. Vessel operating expenses decreased 12.5% to $16.8 million in the third quarter of fiscal 1996 from $19.2 million in the third quarter of fiscal 1995, a function of the reduced fleet size, as well as the result of a stable operating cost environment and a more modern fleet. Depreciation and amortization decreased 12.5% to $21.0 million in the third quarter of fiscal 1996 from $24.0 million in the third quarter of fiscal 1995, again a function of the reduction in fleet size, and as a result of a revision to estimates of residual values of the Company's vessels which reduced depreciation expense by approximately $2.6 million in the third quarter of fiscal 1996. Depreciation and amortization expense included amortization of drydocking costs of $2.3 million in the third quarter of fiscal 1996 and $2.5 million in the third quarter of fiscal 1995. General and administrative expenses increased 8.1% to $4.0 million in the third quarter of fiscal 1996 from $3.7 million in the third quarter of fiscal 1995, primarily as a result of increased administrative costs subsequent to the acquisition of Teekay Shipping Limited in March, 1995. 14 15 The combination of improved TCE rates, a more modern and efficient fleet, and stable costs, resulted in a 72.6% increase in income from vessel operations to $20.2 million in the third quarter of fiscal 1996 from $11.7 million in the third quarter of fiscal 1995. Interest expense decreased 8.1% to $14.8 million in the third quarter of fiscal 1996 from $16.1 million in the third quarter of fiscal 1995, mainly as a result of a reduction in debt levels. As of December 31, 1995 the Company had a total of $734.7 million in debt and capital lease obligations, down from $865.4 million a year earlier. A continued decline in the Company's total debt and a reduction in the Company's average credit spread on commercial bank borrowings were offset by an increase in short-term interest rates. Changes in market interest rates have had a delayed effect on interest expense, as rates on the Company's floating rate debt are set in advance for three to six month periods. Interest income was $1.8 million in the third quarter of fiscal 1996, up from $1.5 million in the third quarter of fiscal 1995 as a result of higher cash and marketable securities balances. Other income totalled $6.0 million in the third quarter of fiscal 1996, including a $5.2 million gain on the sale of a vessel. Other income in the third quarter of fiscal 1995 totalled $2.6 million, which included a $4.0 million gain on the sale of a vessel, partially offset by a $1.0 million equity loss from the Company's 50% investment in Viking Consolidated Shipping Corporation ("VCSC") during the period. Both of the vessels sold were mid-1970's built Aframax tankers. NINE MONTHS ENDED DECEMBER 31, 1995 VERSUS NINE MONTHS ENDED DECEMBER 31, 1994 Despite a 9.3% decrease in average fleet size from 43 to 39 100%-owned vessels, voyage revenues increased by 1.1% to $245.5 million in the first three quarters of fiscal 1996 from $242.9 million in the first three quarters of fiscal 1995, and net voyage revenue was up 1.0%, to $180.3 million from $178.9 million. This reflects an improvement in tanker charter market conditions, as well as the increased capacity and fuel efficiency associated with a more modern fleet. Vessel operating expenses decreased 12.8% to $50.3 million in the first three quarters of fiscal 1996 from $57.7 million in the first three quarters of fiscal 1995, a result of the decline in fleet size, as well as the result of a stable operating cost environment and a more modern fleet. Depreciation and amortization decreased 14.1% to $62.0 million in the first three quarters of fiscal 1996 from $72.2 million in the first three quarters of fiscal 1995, due to the decline in fleet size and a revision to estimates of residual values of the Company's vessels which reduced depreciation expense by approximately $7.4 million in the first three quarters of fiscal 1996. Depreciation and amortization expense included amortization of drydocking costs of $6.5 million in the first three quarters of fiscal 1996 and $7.5 million in the first three quarters of fiscal 1995. General and administrative expenses increased 7.6% to $12.8 million in the first three quarters of fiscal 1996 from $11.9 million in the first three quarters of fiscal 1995 primarily as a result of increased administrative costs subsequent to the acquisition of Teekay Shipping Limited in March, 1995. As a result of the above, income from vessel operations increased 46.6% to $54.4 million in the first three quarters of fiscal 1996 from $37.1 million in the first three quarters of fiscal 1995. Interest expense decreased 3.0% to $46.0 million in the first three quarters of fiscal 1996, compared to $47.4 million in the first three quarters of fiscal 1995. A continued decline in the Company's total debt and a reduction in the Company's average credit spread on commercial bank borrowings were offset by the increase in short-term interest rates which occurred during 1994. Changes in market interest rates have had a delayed effect on interest expense, as rates on the Company's floating rate debt are set in advance for three to six month periods. Interest income increased 13.6% to $5.0 million in the first three quarters of fiscal 1996 from $4.4 million in the first three quarters of fiscal 1995 as a result of higher cash and marketable securities balances. 15 16 Other income during the first three quarters of fiscal 1996 was $9.9 million, consisting primarily of $8.9 million in gains on the sale of two vessels. Other income during the first three quarters of fiscal 1995 was $3.7 million, consisting primarily of $7.7 million in gains on the sale of two vessels, offset by a $2.9 million loss on marketable securities and a $1.0 million equity loss from the Company's 50% investment in VCSC. The following table illustrates the relationship between fleet size (measured in ship-days), time charter equivalent ("TCE") per revenue-generating ship-day performance, and operating results per calendar ship-day:
THREE MONTHS ENDED NINE MONTHS ENDED DEC 31/95 DEC 31/94 DEC 31/95 DEC 31/94 -------------------------------------------------------------------------------------------- Total calendar ship-days 3,590 3,847 10,670 11,715 Non-revenue days 188 160 533 619 -------------------------------------------------------------------------------------------- Revenue-generating ship-days (A) 3,402 3,687 10,137 11,096 -------------------------------------------------------------------------------------------- Net voyage revenue (000's) $ 62,793 $ 58,606 $ 180,285 $ 178,862 Add back: commissions (000's) 1,322 1,320 3,905 3,871 -------------------------------------------------------------------------------------------- Net voyage revenue before commissions (B) (000's) $ 64,115 $ 59,926 $ 184,190 $ 182,733 -------------------------------------------------------------------------------------------- TCE per revenue-generating ship-day (B/A) $ 18,846 $ 16,253 $ 18,170 $ 16,468 -------------------------------------------------------------------------------------------- Operating results per calendar ship-day: Net voyage revenue $ 17,491 $ 15,234 $ 16,896 $ 15,268 Vessel operating expense 4,733 4,995 4,732 4,924 General and administrative expense 1,107 969 1,198 1,014 Drydocking expense 633 662 605 641 -------------------------------------------------------------------------------------------- Operating cash flow per calendar ship-day $ 11,018 $ 8,608 $ 10,361 $ 8,689 --------------------------------------------------------------------------------------------
The decrease in calendar ship-days in the third quarter and first three quarters of fiscal 1996 is a result of the disposal of older Aframax tankers as part of the Company's fleet modernization program. TCE per revenue-generating ship-day increased 16.0% in the third quarter and 10.3% in the first three quarters of fiscal 1996 over the comparable prior periods, reflecting the improvement in charter market conditions as well as the increased capacity and fuel efficiency of a more modern fleet. Total expenses, including drydocking and general and administrative expenses, were relatively constant on a per-day basis throughout the periods shown above. Therefore, the increases in TCE per revenue-generating ship-day caused operating cash flow per calendar ship-day to increase by 28.0% in the third quarter and 19.2% in the first three quarters of fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES The liquidity requirements of the Company relate to servicing its debt, funding the equity portion of investments in vessels, funding working capital and maintaining cash reserves against fluctuations in operating cash flow. Net cash flow generated by operations has historically been the main source of liquidity for the Company. Additional sources 16 17 of liquidity have included proceeds from asset sales and refinancings. During the current fiscal year, the Company has undertaken further steps to improve its financial position and liquidity. During the first quarter of fiscal 1996, the Company refinanced certain of its existing term debt as well as $23.8 million of 9 5/8% First Preferred Ship Mortgage Notes with a new $223 million corporate revolving credit facility at improved rates and credit terms. The revolving credit facility also provided an additional $20 million of liquidity to the Company. In July 1995, the Company received $137.6 million net proceeds from its initial public offering of common stock, thereby further boosting liquidity and reducing debt through a $135 million reduction in the amount outstanding under the revolving credit facility. Subsequent to December 31, 1995, the Company completed an offering of $225 million of 8.32% First Preferred Ship Mortgage Notes due 2008, the proceeds of which were used to refinance existing floating rate debt. In addition, subsequent to December 31, 1995, the Company prepaid an additional $35 million of other floating rate debt which will be applied to reduce the scheduled principal repayments of certain loans over the next two years by one-half. Net cash flow from operations was $71.6 million in the first three quarters of fiscal 1996 compared to $72.5 million during the first three quarters of fiscal 1995. Higher income from operations was offset by an increase in non-cash working capital balances. During the first three quarters of fiscal 1996, the Company sold two older secondhand vessels resulting in net proceeds of $11.3 million. In addition, the Company received cash proceeds totalling $17.2 million in the first quarter of fiscal 1996 from the receipt of vessel sales proceeds receivable at the end of fiscal 1995. The Company took delivery of two modern second-hand Aframax tankers and one newbuilding double-hull Aframax tanker during the first three quarters of fiscal 1996, as replacements for older tankers recently sold, resulting in expenditures of $46.9 million net of capital lease financing of $44.6 million. The Company has entered into agreements for a one-year time-charter and subsequent purchase of a modern Aframax tanker, and for the construction of a newbuilding double-hull Aframax tanker, scheduled for delivery in July 1997, for a total cost of $71.0 million. The Company has also entered into an agreement to purchase an Aframax tanker from its VCSC joint venture for a cost of $30.5 million. A long-term financing arrangement exists for approximately $35.6 million of the unpaid cost of one of these vessels. The remaining unpaid cost will be financed through existing lines of credit and cash and marketable securities balances. The Company has outstanding a number of interest rate swap agreements with commercial banks covering a total notional principal amount of $350 million as at December 31, 1995. The agreements expire between January 1996 and December 1998 and have an average remaining life of 25.5 months. These agreements effectively change the Company's interest rate exposure on $350 million of debt from a floating LIBOR rate to an average fixed rate of 6.08%. The Company also has outstanding $200 million of interest rate caps with a strike price of 8.00% vs. 3 month LIBOR. These caps expire in April 1997. At December 31, 1995, the Company's total liquidity, including cash, marketable securities and undrawn lines of credit, totalled $243.8 million, as compared to $85.7 million as at March 31, 1995. The Company believes that its financial resources are sufficient to meet its liquidity needs. 17 18 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) DECEMBER 31, 1995 PART II: OTHER INFORMATION Item 1 - Legal Proceedings Item 2 - Changes in Securities Item 3 - Defaults Upon Senior Securities Item 4 - Submission of Matters to a Vote of Security Holders Item 5 - Other Information Item 6 - Exhibits and Reports on Form 6-K a. Exhibits 27.1 Financial Data Schedule b. Reports on Form 6-K THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON OCTOBER 4, 1995. 18 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TEEKAY SHIPPING CORPORATION Date: February 8, 1996 By: /s/ Anthony Gurnee ------------------------------- Anthony Gurnee, Vice-President and Chief Financial Officer 19 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY SHIPPING CORPORATION AND SUSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS MAR-31-1996 APR-01-1995 DEC-31-1995 68,441 48,896 24,102 0 0 160,891 1,540,875 357,851 1,358,259 63,488 697,957 0 0 232,854 363,960 1,358,960 0 245,540 0 65,255 125,844 0 45,985 23,346 0 23,346 0 0 0 23,346 0.98 0.98
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