-----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, OYYR0v/LF4IcnZb9tM6Km67KAHPj6jkg5idVGCq6LKTGn45PACfKV9tqkfKdl7ud FCRSReFyG1KmsdpjfD+fUw== 0000950150-96-000019.txt : 19960118 0000950150-96-000019.hdr.sgml : 19960118 ACCESSION NUMBER: 0000950150-96-000019 CONFORMED SUBMISSION TYPE: 20-F/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19960117 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: 20-F/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12874 FILM NUMBER: 96505027 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 20-F/A 1 FORM 20-F/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F/A (Mark One) [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] OR [X] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended . . . . . . March 31, 1995 . . . . . . . . OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from . . . . . . . to . . . . . . . . . . . Commission file number. . . . . 33-68680 . . . . . . . . . . . . . TEEKAY SHIPPING CORPORATION (Formerly Viking Star Shipping Inc.) (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Republic of Liberia (Jurisdiction of incorporation or organization) Tradewinds Building, Sixth Floor, Bay Street, P.O. Box SS-6293, Nassau, The Bahamas (address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act.
Name of each exchange Title of each class on which registered Common Stock, no New York Stock Exchange par value per share
Securities registered or to be registered pursuant to Section 12(g) of the Act. None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. 9-5/8% First Preferred Ship Mortgage Notes due 2003 (Title of Class) Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. At March 31, 1995 the capital stock of Teekay Shipping Corporation was not publicly traded and did not have a readily quantifiable market value. At March 31, 1995, there were 36,000,000 shares of Common Stock and 600,000 shares of non-voting Redeemable Preferred Stock of the Company outstanding. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 Item 18 X ---- ---- 2 EXPLANATORY NOTE The Registrant filed an annual report on Form 20-F for its fiscal year ended March 31, 1995 (the "Annual Report") with the Securities and Exchange Commission on June 26, 1995. Subsequent to such filing, (a) the Company reclassified certain expenses reflected in certain line items included in the financial statements set forth in the Annual Report as a result of the acquisition of an affiliated company (see Note 1 to the revised financial statements included herein), and (b) changed the manner in which it presents certain line item information in its financial statements. The Registrant hereby amends the Annual Report pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, as amended, by (a) setting forth herein the complete text, as amended, of Item 8 (Selected Financial Data) and Item 9 (Management's Discussion and Analysis of Financial Condition and Results of Operations) of the Annual Report and (b) including revised financial statements and schedules, together with the report of Ernst & Young thereon, in each case to reflect the reclassification discussed above. 2 3 PART I ITEM 8. SELECTED FINANCIAL DATA Set forth below are selected consolidated financial and other data of the Company for the five fiscal periods ended March 31, 1995, which have been derived from the Company's Consolidated Financial Statements. The data below should be read in conjunction with the Consolidated Financial Statements and the notes thereto and the report of Ernst & Young, independent Chartered Accountants, with respect to the statements for the fiscal periods ended March 31, 1995 and 1994 and April 30, 1993, and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company changed its fiscal year end from April 30 to March 31, effective March 31, 1994, in order to facilitate comparison of the Company's operating results to those of other companies within the transportation industry on a calendar quarter basis.
FISCAL YEAR 11 MONTH ENDED PERIOD ENDED FISCAL YEAR ENDED APRIL 30, MARCH 31, MARCH 31, -------------------------------- 1995 1994(1) 1993 1992 1991 ------------ ------------ ----- ----- ---- (U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER DAY DATA AND RATIOS) STATEMENT OF INCOME DATA: Voyage revenues . . . . . . . . . . . . . $ 319,966 $ 317,742 $ 336,994 $ 414,104 $ 396,542 Voyage expenses . . . . . . . . . . . . . 84,957 81,052 108,805 118,678 138,954 Net voyage revenues . . . . . . . . . . . 235,009 236,690 228,189 295,426 257,588 Income from vessel operations . . . . . . 50,833 59,128 36,915 123,354 115,992 Interest expense . . . . . . . . . . . . (64,321) (48,064) (47,374) ( 39,015) (41,021) Interest income. . . . . . . . . . . . . 5,904 2,904 1,156 2,369 3,982 Other income (loss) . . . . . . . . . . . 11,848 11,777 37,862 9,981 (564) Income from continuing operations before foreign exchange gain (loss) . . . . . 4,264 25,745 28,559 96,689 78,389 Foreign exchange gain (loss)(2) . . . . . 991 (1,532) (77,917) (7,026) (28,581) Net income (loss) from continuing operations . . . . . . . . . . . . . . 5,255 24,213 (49,358) 89,663 49,808 Net income from discontinued operations . 5,945 1,890 1,323 1,014 Cumulative effect of change in accounting for marketable securities . . . . . . . 1,113 Net income (loss) . . . . . . . . . . . . 6,368 30,158 (47,468) 90,986 50,822 BALANCE SHEET DATA (AT END OF PERIOD): Cash and marketable securities . . . . . $ 85,739 $ 107,246 $ 48,770 $ 26,239 $ 41,864 Total assets . . . . . . . . . . . . . . 1,306,474 1,405,147 1,368,966 1,237,942 1,073,530 Total debt . . . . . . . . . . . . . . . 842,874 945,611 884,813 756,454 679,032 Total stockholders' equity . . . . . . . 439,066 433,180 403,022 442,990 345,004 OTHER FINANCIAL DATA: EBITDA(3) . . . . . . . . . . . . . . . . $ 146,756 $ 151,364 $ 136,123 $ 214,196 $ 189,968 Cash earnings(4) . . . . . . . . . . . . 100,699 115,647 126,170 183,164 149,934 Working capital (deficiency) . . . . . . 45,062 37,353 15,470 (31,817) (16,152) Total debt to total capitalization . . . 65.7% 68.6% 68.7% 63.1% 66.3% Capital expenditures: Vessel purchases, gross . . . . . . . . $ 7,465 $ 163,509 $ 334,733 $ 373,501 $ 303,262 Drydocking . . . . . . . . . . . . . . 11,917 13,296 16,440 6,240 33,934 PER SHARE DATA: Net income (loss) from continuing operations . . . . . . . . . . . . . . $ 0.29 $ 1.35 $ (2.74) $ 6.18 $ 3.44 Cumulative effect of change in accounting for marketable securities . . . . . . . 0.06 Net income (loss) . . . . . . . . . . . . 0.35 1.68 (2.64) 6.27 3.50 Cash earnings(4) . . . . . . . . . . . . 5.59 6.42 7.01 12.63 10.34 Weighted average shares outstanding (thousands) . . . . . . . . . . . . . . 18,000 18,000 18,000 14,500 14,500 FLEET DATA: Average number of ships(5) . . . . . . . 42 45 50 46 41 Ships on order (end of period)(5) . . . . 1 1 3 11 9 Average age of Company's Aframax fleet (in years)(6) . . . . . . . . . . . . . 6.7 7.4 8.0 7.7 7.5 Net commitments for vessel acquisitions (end of period)(5)(7) . . . . . . . . . $ 8,425 $ 4,890 $ 8,883 $ 99,600 $ 30,704 TCE per ship per day (5)(8) . . . . . . . 16,552 17,431 13,722 19,270 19,083 Vessel operating expenses per ship per day (5)(9) . . . . . . . . . . . . . . 4,748 4,879 4,276 4,245 3,859 Operating cash flow per ship per day(10) 8,944 9,133 6,511 10,999 11,159 (Footnotes on following page)
3 4 (Footnotes for previous page) (1) For the 12 months ended March 31, 1994, voyage revenues were $345.0 million; income from vessel operations was $62.7 million; net income was $32.0 million; and cash earnings were $123.2 million. See "Change in fiscal year end" in Note 1 to the Consolidated Financial Statements. (2) Prior to fiscal 1993, a significant portion of the Company's debt was denominated in Japanese Yen. In fiscal 1993, the Company experienced a foreign exchange translation loss of $77.9 million. Because all of the Company's Yen-denominated debt has been converted to U.S. Dollar-denominated debt, and because a large portion of the Company's revenues and costs are denominated in U.S. Dollars, the Company's foreign exchange rate risk has been substantially eliminated. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Foreign Exchange Rate Fluctuation." (3) EBITDA represents net income from continuing operations before interest expense, income tax expense, depreciation expense, amortization expense, minority interest, and gains or losses arising from foreign exchange translation and disposal of assets. EBITDA is included because such data is used by certain investors to measure a company's financial performance. EBITDA is not required by generally accepted accounting principles and should not be considered as an alternative to net income or any other indicator of the Company's performance required by generally accepted accounting principles. (4) Cash earnings represents income from continuing operations before foreign exchange gain (loss) and before depreciation and amortization expense. Cash earnings is included because it is used by certain investors to measure a company's financial performance as compared to other companies in the shipping industry. Cash earnings is not required by generally accepted accounting principles and should not be considered as an alternative to net income or any other indicator of the Company's performance required by generally accepted accounting principles. (5) At March 31, 1995, the Company was committed to the construction of one vessel for a cost of $49.5 million, scheduled for delivery in August 1995. "Average number of ships" and "Ships on order" exclude vessels of discontinued operations and the joint venture. Ships on order does not include, at March 31, 1995, an obligation to purchase a second-hand vessel subsequently delivered in April 1995. (6) Average age of Company's Aframax fleet is the average age, at the end of the relevant period, of the Aframax tankers and O/B/Os owned or leased by the Company (including joint venture vessels). (7) Net commitments for vessel acquisitions includes commitments to pay for construction costs of newbuildings and the purchase price of second-hand vessels, and is net of committed and anticipated financing arrangements, which at March 31, 1995 and 1994 and April 30, 1993 totalled $61.8 million, $44.0 million and $142.6 million, respectively. (8) TCE (or "time charter equivalent") is a measure of the revenue performance of a vessel, which, on a per voyage basis, is generally determined by Clarkson Research Studies Ltd. ("Clarkson") and other industry data sources by subtracting voyage expenses incurred in transporting cargo (primarily bunker fuel, canal tolls and port fees) from gross revenue per voyage and dividing the remaining revenue by the total number of days required for the round-trip voyage. For purposes of calculating the Company's average TCE for the year, TCE has been calculated consistent with Clarkson's method, by deducting total voyage expenses (except commissions) from total voyage revenues and dividing the remaining sum by the Company's total voyage days in the year. (9) Vessel operating expenses consist of all expenses relating to the operation of vessels (other than voyage expenses), including crewing, repairs and maintenance, insurance, stores and lubes, and miscellaneous expenses including communications. (10) Operating cash flow represents income from vessel operations before equity income (loss), less drydock expense, plus depreciation and amortization expense. Ship days are calculated on the basis of a 365-day year multiplied by the average number of vessels in the Company's fleet for the respective year. Operating cash flow is not required by generally accepted accounting principles and should not be considered as an alternative to net income or any other indicator of the Company's performance required by generally accepted accounting principles. 4 5 ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL 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 highly 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. During the fiscal year ended March 31, 1995, approximately 79% of the Company's net revenue was derived from spot voyages. This high dependence on spot voyages contributes to the volatility of the Company's revenue, cash flow from operations and net income. However, the Company's dependence on spot voyages is within industry norms: the most recent comprehensive study on Aframax tankers by Drewry Shipping Consultants Ltd., dated August 1993, shows that 90% of Aframax tankers traded on the spot market in 1992. Tanker charter markets have been affected over the past 20 years by changes in the supply of, and demand for, tanker capacity. Significant over-capacity developed in the mid-1970s as large numbers of new vessels, ordered based on pre-1973 oil crisis tanker demand growth expectations, were delivered into a depressed market. Tankers built in the mid-1970s, many of which are still in service today, have been the most significant factor in tanker supply from the time of their delivery to this day. Management believes that many of these tankers will reach the ends of their useful lives during the latter half of the 1990s. With the exception of a strong tanker charter market in 1979-80 due to geo-political events, conditions remained adverse for tanker owners from 1974 to 1986. In particular, a persistent over-supply of tankers in a then-young world fleet (its average age was only approximately 10 years in 1985) adversely affected the charter market. Charter market conditions began to improve in 1986 as a result of the cumulative effect of several years of significant scrapping as well as increased tanker demand. By 1988, charter rates and newbuilding orders had begun to increase. During the period 1988-1991, significant new tonnage was delivered into a strong charter market. Scrapping of older tonnage, which had been expected to continue through this period as the fleet aged, slowed considerably because it was economically feasible to operate older vessels in the prevailing strong charter market conditions. In addition, the tanker industry had not yet entered the current stringent regulatory environment, which management believes has a generally adverse effect on older, substandard tonnage. The tanker charter market experienced a decline in early 1992 as a result of the expansion in tanker supply during the previous four years, as well as the impact of the global recession on demand and pricing. Tanker charter rates increased temporarily in calendar 1993 as a result of a short-term increase in tanker demand, but declined again in calendar 1994, due to lower demand resulting from shorter average tanker voyage distances, and in spite of a decline in tanker supply for the first time since 1986. During the first five months of calendar 1995, scrapping in excess of deliveries has accelerated, resulting in a further decline in tanker supply. Currently, newbuilding ordering activity has declined and scrapping has now returned to levels which, if sustained, should lead to a tanker market recovery. 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 historically led to increased oil trading activities. As a result, revenues have historically been strongest for the Company in its third and fourth fiscal quarters. Throughout the periods discussed in this Report, the Company's average TCE rate was higher than the industry average as calculated by the Company (based upon data reported by Clarkson) as a consequence of higher capacity utilization and the fuel efficiency of its modern fleet. Management believes that average TCE is an appropriate measure of a bulk shipping company's net revenues for the purpose of comparisons to published industry data and companies with similar ships. TCE, as generally calculated by industry sources, deducts from gross revenue all direct voyage costs except for commissions. It does not account for the opportunity cost of off-hire and idle days. 5 6 Over the past five years, certain countries have developed environmental protection laws and regulations affecting the tanker industry. The new requirements, in particular OPA 90 in the United States, have imposed higher operating standards, greater liability, and a variety of higher costs upon tanker owners and operators. The most costly requirement of OPA 90 is that all tankers ordered after June 1990 calling at U.S. ports be constructed with double hulls. As a result, the Company's new vessels are of double hull construction and the Company has plans to replace the older single hull vessels with double hull vessels. RESULTS OF OPERATIONS FISCAL 1995 VERSUS FISCAL 1994 The Company changed its fiscal year end from April 30 to March 31, effective March 31, 1994, in order to facilitate comparison of the Company's operating results with those of other companies within the transportation industry on a calendar quarter basis. As a result, while the fiscal 1995 results are for the twelve-month period ending March 31, 1995, the comparable fiscal 1994 results are for the eleven-month period ending March 31, 1994. Where indicated in the following discussions, percentage change figures have been annualized by adjusting fiscal 1994 results to include the unaudited results for the month of April 1993. Voyage revenues were $320.0 million in fiscal 1995 as compared to $317.7 million in fiscal 1994, representing a 7.2% decrease on an annualized basis from fiscal 1994, primarily as a result of a decline in average fleet size from 45 to 42 vessels and continuing weak charter markets. Voyage expenses were $85.0 million in fiscal 1995 as compared to $81.1 million in fiscal 1994, a decrease of 4.5% on an annualized basis, primarily as a result of a decline in fleet size, partially offset by an increase in fuel costs. Vessel operating expenses were $72.7 million in fiscal 1995 as compared to $73.6 million in fiscal 1994, representing a 9.9% decrease on an annualized basis from fiscal 1994, primarily as a result of the decline in fleet size. Depreciation and amortization was $96.4 million in fiscal 1995 as compared to $89.9 million in fiscal 1994, representing a 1.0% decrease on an annualized basis from fiscal 1994, primarily due to the decline in fleet size, partially offset by a higher average cost base during fiscal 1995 resulting from the sale of some of the Company's older vessels, whose annual depreciation charges were lower than the fleet average. General and administrative expenses were $15.0 million in fiscal 1995 as compared to $14.1 million in fiscal 1994. On an annualized basis, this is virtually unchanged from fiscal 1994. As a result of the decrease in fleet size and continuing weak charter markets, income from vessel operations decreased to $50.8 million in fiscal 1995 from $59.1 million in fiscal 1994. On an annualized basis, this represents a 19.0% decline from fiscal 1994. Interest expense increased to $64.3 million in fiscal 1995 from $48.1 million in fiscal 1994, representing a 22.0% increase on an annualized basis from fiscal 1994, as a result of an increase in interest rates mitigated in part by the repayment and prepayment of long-term debt totalling $102.6 million. Interest income was $5.9 million in fiscal 1995 as compared to $2.9 million in fiscal 1994, representing an increase of 93.8% on an annualized basis from fiscal 1994, as a result of increased interest rates and higher cash and marketable securities balances; however, there were related losses of $4.3 million and $1.6 million on marketable securities included in other income during fiscal years 1995 and 1994, respectively. Other income during fiscal 1995 was $11.8 million, consisting primarily of an $18.2 million gain on the sale of six vessels, partially offset by a $4.3 million loss on available-for-sale securities and a $2.1 million equity loss from the Company's 50% investment in VCSC during the period. Other income during fiscal 1994 was $11.8 million, consisting primarily of a $12.3 million gain on the sale of six vessels and $1 million in equity income from VCSC, partially offset by a $1.6 million loss on marketable securities. There was no income from discontinued operations during fiscal 1995. Net income from discontinued operations was $5.9 million during fiscal 1994, primarily as a result of a $5.7 million gain arising on the sale of nine multipurpose dry cargo vessels obtained in connection with the divestiture of the Company's investment in Baltimar Overseas Limited. As a result of the foregoing factors, the Company's net income decreased to $6.4 million in fiscal 1995 from $30.2 million in fiscal 1994, representing an 80.1% decrease on an annualized basis. 6 7 FISCAL 1994 VERSUS FISCAL 1993 As the Company has changed its fiscal year end from April 30 to March 31, the fiscal 1994 results are for the eleven-month period ending March 31, 1994, while the comparable fiscal 1993 results are for the twelve-month period ending April 30, 1993. Where indicated in the following discussion, percentage change figures have been annualized by adjusting fiscal 1994 results by a factor of 12/11. No assurance can be given that the fiscal 1994 annualized figures used to calculate percentage changes herein accurately approximate actual results for the month of April 1994. Voyage revenues were $317.7 million in fiscal 1994 as compared to $337.0 million in fiscal 1993, representing a 2.8% increase on an annualized basis from fiscal 1993, primarily as a result of higher charter rates caused by improved spot market conditions, partially offset by a decline in average fleet size from 50 to 45 vessels. Voyage expenses were $81.1 million in fiscal 1994 as compared to $108.8 million in fiscal 1993, a decrease of 18.7% on an annualized basis, as a result of a reduction in fleet size and lower fuel costs. Vessel operating expenses were $73.6 million in fiscal 1994 as compared to $79.6 million in fiscal 1993, representing a 1.0% increase on an annualized basis from fiscal 1993, which was primarily a result of increased insurance costs, partially offset by a reduction in fleet size. Depreciation and amortization was $89.9 million in fiscal 1994 as compared to $97.6 million in fiscal 1993. On an annualized basis, depreciation and amortization was virtually unchanged between the two periods despite a reduction in the size of the fleet as a result of a higher average cost base in fiscal 1994 as compared to fiscal 1993 arising from six newbuildings delivered during fiscal 1993 and three newbuildings delivered during fiscal 1994. General and administrative expenses were $14.1 million in fiscal 1994 as compared to $14.0 million in fiscal 1993, representing a 9.9% increase on an annualized basis from fiscal 1993, reflecting additional administrative expenses associated with new environmental legislation and with increased financing activity. Income from vessel operations was $59.1 million in fiscal 1994 as compared to $36.9 million in fiscal 1993, representing a 74.7% increase on an annualized basis from fiscal 1993, primarily the result of improved charter market conditions. Interest expense was $48.1 million in fiscal 1994 as compared to $47.4 million in fiscal 1993, representing a 10.7% increase on an annualized basis from fiscal 1993, reflecting higher average outstanding debt during the 1994 period. The issuance of $175.0 million of 9 5/8% First Preferred Ship Mortgage Notes in July 1993, together with borrowings associated with the delivery of newbuildings during fiscal 1993, contributed to the higher average outstanding debt during fiscal 1994. During fiscal 1994, other income was $11.8 million, consisting primarily of gains of $12.3 million from the sale of six vessels during the period. Other income during fiscal 1993 was $37.9 million, consisting primarily of gains of $12.2 million from the sale of six vessels and a gain of $25.0 million arising from insurance proceeds receivable on the loss of one of the Company's vessels. Foreign currency exchange loss decreased from $77.9 million in the fiscal 1993 to $1.5 million in fiscal 1994 reflecting the conversion into U.S. dollars of substantially all of the Company's Japanese Yen-denominated debt by June 1993. The Company has now substantially eliminated its remaining foreign currency exposure (other than exposure relating to its 50% interest in VCSC) and as a result, has not incurred any material foreign exchange gains or losses subsequent to June 1993. Net income from discontinued operations increased from $1.9 million in fiscal 1993 to $5.9 million in fiscal 1994, primarily as a result of a $5.7 million gain arising on the sale of the nine multipurpose dry cargo vessels obtained in connection with the divestiture of the Company's investment in Baltimar Overseas Limited. 7 8 Net income improved to $30.2 million in fiscal 1994 from a loss of $47.5 million in fiscal 1993, primarily as a result of the decreased foreign exchange loss, as well as improved charter market conditions. 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 continuing operations is the main source of liquidity for the Company. Additional sources of liquidity include proceeds from asset sales and refinancings. The Company operates in a capital-intensive industry requiring extensive investment in revenue-producing assets. Funds invested are raised mainly from borrowings and the Company's internally generated liquidity. The equity portion of an investment in a newbuilding is usually paid in installments, commencing one to three years in advance of delivery, for 10% to 80% of the vessel purchase price. The equity portion of an investment in a second-hand vessel is usually paid in two portions: 10% on signing a purchase agreement, and an additional 20% to 50% (depending on financing) upon delivery to buyers. Repayment of the debt incurred to purchase the vessel is made from vessel operating cash flow, typically over 8 to 10 years, compared to the vessel's asset life of approximately 20 years. At March 31, 1995, the Company was committed to the construction of one vessel and the purchase of one second-hand vessel for an aggregate commitment of $70.2 million, of which the Company had obtained financing arrangements for $61.8 million. Net cash flow from continuing operations decreased 30.1% on an annualized basis (adjusting fiscal 1994 results to include April 1993 results) to $87.5 million in fiscal 1995 from $117.4 million in the eleven months ended March 31, 1994, due to declining fleet size, declining TCE rates and rising interest expense. Net cash flow from continuing operations increased 52.5% on an annualized basis (adjusting fiscal 1994 results by a factor of 12/11) in fiscal 1994 from $84.0 million during fiscal 1993, primarily as a result of a temporary improvement in charter market conditions. The Company received cash proceeds from the disposition of assets totalling $16.8 million in fiscal 1995 as a result of the sale of six older vessels. Proceeds from the disposition of assets totalled $86.4 million and $156.9 million in fiscal 1994 and 1993, respectively. Proceeds from the disposition of vessels in fiscal 1994 and 1993 resulted from vessel sales which were intended to enhance the Company's liquidity, the disposition of older vessels, and the receipt of insurance proceeds relating to the loss of one of the Company's vessels during the fiscal 1993 period. No additional debt was incurred during fiscal 1995, consistent with the Company's decision not to take delivery of any vessels during this period. Long-term debt increased $220.0 million in the eleven months ended March 31, 1994 as a result of the issuance of $175.0 million of 9 5/8% First Preferred Ship Mortgage Notes and borrowings associated with the delivery of one newbuilding. Proceeds from long-term debt and capital leases provided $292.5 million toward the financing of newbuildings during fiscal 1993. During fiscal 1995, in addition to scheduled debt repayment of $87.6 million, the Company prepaid, from internally generated funds, $15.0 million of long-term debt secured by vessels sold during the year. The Company prepaid long-term debt and capital lease obligations of $243.3 million in the eleven-month fiscal period ended March 31, 1994, primarily representing prepayments out of the proceeds of the Company's issue of $175.0 million of 9 5/8% First Preferred Ship Mortgage Notes and the prepayment of debts associated with vessels which were sold during the period. Total prepayments of long-term debt and capital lease obligations were $131.9 million in fiscal 1993, primarily reflecting the level of vessel sales during that period. Capitalized loan costs were $1.6 million in fiscal 1995 compared to $10.0 million in fiscal 1994. The high level of capitalized loan costs in fiscal 1994 resulted primarily from capitalization of costs incurred on the issuance of the 9 5/8% First Preferred Ship Mortgage Notes. The Company had outstanding a number of interest rate swap agreements with three commercial banks covering a total notional principal amount of $300 million as of March 31, 1995. The agreements expire between May 1995 and April 1996 and have an average remaining term of 7.7 months. These agreements effectively change the Company's interest rate exposure on $300 million of debt from a floating LIBOR rate to an average fixed rate of 5.07%. The Company also had outstanding $200 million of interest rate caps with a strike price of 8.00% vs. 3 month LIBOR. The caps expire in April 1997. 8 9 Capital expenditures for vessels and equipment, net of capital lease financing, decreased to $7.5 million in fiscal 1995 from $65.7 million during the eleven months ended March 31, 1994 and $190.0 million in fiscal 1993, reflecting a slowing of the Company's fleet expansion program. Capital expenditures for drydocking decreased to $11.9 million in fiscal 1995 from $13.3 million during the eleven months ended March 31, 1994 and $16.4 million in fiscal 1993, reflecting the reduction in fleet size during these periods. The Company has two Aframax tankers that will, within the next two years, reach the age of 20 years, which is generally accepted as the useful economic life of a tanker and a time when vessels generally require a fourth special survey, a critical inspection point which often results in high repair costs to enable the ship to continue in service. Management does not currently intend to operate these vessels beyond their fourth special surveys. The Company intends to replace these aging tankers with new and second-hand vessels consistent with its fleet modernization program. Actual acquisition of additional tankers will be subject to a number of factors, including the Company's expectations for future market rates, supply and demand within the tanker industry generally and the Company's ability to obtain debt financing upon favorable terms. The Company believes that, assuming a continuation of current market conditions, its financial resources are sufficient to meet its liquidity needs. INFLATION Although inflation has had a moderate impact on operating expenses, drydocking expenses and corporate overhead, management does not consider inflation to be a significant risk to direct costs in the current and foreseeable economic environment. However, in the event that inflation becomes a significant factor in the world economy, inflationary pressures could result in increased operating and financing costs. FOREIGN EXCHANGE RATE FLUCTUATION The international tanker industry's functional currency is the U.S. dollar. Virtually all of the Company's revenues are in U.S. dollars and most of its operating costs are incurred in U.S. dollars. The Company incurs certain operating expenses in foreign currencies, the most significant of which are in Japanese Yen and Singapore dollars. During fiscal 1995, approximately 12.3% of vessel and voyage costs, overhead and drydock expenditures were denominated in these currencies. However, the Company has the ability to shift its purchase of goods and services from one country to another and, thus, from one currency to another, on relatively short notice. During the Company's period of high growth and strong operating performance, management borrowed funds denominated in Japanese Yen. This led to fluctuations in net income and retained earnings, recorded as gains or losses from foreign exchange translations in the Company's financial statements, with corresponding increases or decreases in long-term debt. In fiscal 1993, the Company commenced an aggressive foreign exchange hedging policy in order to reduce its exposure to fluctuating Yen/U.S. dollar exchange rates. The Company completed this program in July 1994 and does not intend to undertake any unnecessary material exposure to foreign exchange fluctuations henceforth. While the Company no longer has any Yen-denominated debt, the Company's net income may be affected by fluctuations in equity income caused by foreign exchange gains or losses from approximately $22 million (at current exchange rates) of Yen-denominated debt held by VCSC, a joint venture in which the Company owns a 50% interest. 9 10 SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on this Report on Form 20-F/A and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. TEEKAY SHIPPING CORPORATION By: /s/ ANTHONY GURNEE ----------------------------- Anthony Gurnee Vice President and Chief Financial Officer Dated: January 17, 1996 10 11 [ERNST & YOUNG LETTERHEAD] AUDITORS' REPORT To the Shareholders of Teekay Shipping Corporation We have audited the accompanying consolidated balance sheets of TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES as of March 31, 1995 and 1994, and the related consolidated statements of income and retained earnings and cash flows for the year ended March 31, 1995 and the eleven month period ended March 31, 1994 and the year ended April 30, 1993. Our audits also included the financial statement schedule listed in the Index Item 19[a]. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES at March 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for the year ended March 31, 1995 and for the eleven month period ended March 31, 1994 and for the year ended April 30, 1993, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material aspects the information set forth therein. /s/ ERNST & YOUNG Nassau, Bahamas, May 15, 1995. Chartered Accountants F-1 12 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
YEAR ENDED ELEVEN MONTHS ENDED YEAR ENDED MARCH 31, MARCH 31, APRIL 30, --------- --------- --------- 1995 1994 1993 $ $ $ ---- ---- ---- REVENUES Voyage revenues 319,966 317,742 336,994 Voyage expenses 84,957 81,052 108,805 - -------------------------------------------------------------------------------------------------------------- Net voyage revenues 235,009 236,690 228,189 - -------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Vessel (note 3) 72,723 73,597 79,649 Depreciation and amortization 96,435 89,902 97,611 General and administrative (note 3) 15,018 14,063 14,014 - -------------------------------------------------------------------------------------------------------------- 184,176 177,562 191,274 - -------------------------------------------------------------------------------------------------------------- Income from vessel operations 50,833 59,128 36,915 - -------------------------------------------------------------------------------------------------------------- OTHER ITEMS Interest expense (64,321) (48,064) (47,374) Interest income 5,904 2,904 1,156 Other income (notes 3 and 12) 11,848 11,777 37,862 - -------------------------------------------------------------------------------------------------------------- (46,569) (33,383) (8,356) - -------------------------------------------------------------------------------------------------------------- Income before foreign currency exchange gain (loss) 4,264 25,745 28,559 Foreign currency exchange gain (loss) 991 (1,532) (77,917) - -------------------------------------------------------------------------------------------------------------- Net income (loss) from continuing operations 5,255 24,213 (49,358) Net income from discontinued operations (note 4) 5,945 1,890 - -------------------------------------------------------------------------------------------------------------- Net income (loss) before cumulative effect of accounting change 5,255 30,158 (47,468) Cumulative effect of change in accounting for marketable securities (notes 1 and 5) 1,113 - -------------------------------------------------------------------------------------------------------------- Net income (loss) 6,368 30,158 (47,468) Retained earnings, beginning of the period 400,179 370,021 409,989 - -------------------------------------------------------------------------------------------------------------- 406,547 400,179 362,521 Contribution arising on continuity of interest combination 7,500 RETAINED EARNINGS, END OF THE PERIOD 406,547 400,179 370,021 - --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. F-2 13 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars)
MARCH 31, MARCH 31, --------- --------- 1995 1994 $ $ ---- ---- ASSETS CURRENT Cash 16,500 38,614 Marketable securities (notes 5 and 12) 69,239 68,632 Restricted cash (note 7) 7,634 6,338 Accounts receivable -trade 16,875 18,061 -vessel sales (note 12) 17,283 4,877 -other 3,271 5,776 Prepaid expenses and other assets 13,273 10,893 - -------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 144,075 153,191 - -------------------------------------------------------------------------------------------------------------- VESSELS AND EQUIPMENT (notes 7 and 11) At cost, less accumulated depreciation of $312,281 (1994 - $270,833) 1,142,972 1,232,754 Advances on vessels 5,066 - -------------------------------------------------------------------------------------------------------------- TOTAL VESSELS AND EQUIPMENT 1,148,038 1,232,754 - -------------------------------------------------------------------------------------------------------------- Investment 3,758 8,407 Other assets 10,603 10,795 - -------------------------------------------------------------------------------------------------------------- 1,306,474 1,405,147 - -------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable (note 3) 11,480 11,306 Accrued liabilities (note 6) 13,054 15,050 Current portion of long-term debt (note 7) 74,479 89,482 - -------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 99,013 115,838 - -------------------------------------------------------------------------------------------------------------- Long-term debt (note 7) 768,395 856,129 - -------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 867,408 971,967 - -------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Capital stock (note 10) 33,001 33,001 Retained earnings 406,547 400,179 Less net unrealized loss on marketable securities (notes 1 and 5) 482 - -------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 439,066 433,180 - -------------------------------------------------------------------------------------------------------------- 1,306,474 1,405,147 - --------------------------------------------------------------------------------------------------------------
Commitments and contingencies (note 11) The accompanying notes are an integral part of the consolidated financial statements. F-3 14 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
YEAR ENDED ELEVEN MONTHS ENDED YEAR ENDED MARCH 31, MARCH 31, APRIL 30, --------- --------- --------- 1995 1994 1993 $ $ $ ---- ---- ---- Cash provided by (used for) OPERATING ACTIVITIES Net income (loss) from continuing operations 5,255 24,213 (49,358) Add (deduct) charges to operations not requiring a payment of cash: Depreciation and amortization 96,435 89,902 97,611 Foreign currency exchange loss (gain) (1,050) 2,583 76,728 Gain on disposition of assets (18,245) (12,347) (37,213) Loss on marketable securities (note 12) 1,553 Loss on available-for-sale securities (note 12) 4,303 Equity loss (income) (net of dividend received: March 31, 1995 - $NIL; March 31, 1994 - $500) 2,089 (483) (441) Minority interest (19) (208) Change in non-cash working capital items related to continuing operations (note 13) (1,263) 11,966 (3,085) - -------------------------------------------------------------------------------------------------------------- Net cash flow from continuing operations 87,505 117,387 84,034 Net cash flow from discontinued operations 347 4,492 - -------------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM OPERATING ACTIVITIES 87,505 117,734 88,526 - -------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 220,000 147,782 Scheduled repayments of long-term debt (87,570) (37,067) (20,750) Prepayments of long-term debt (15,033) (132,416) (92,100) Scheduled payments on capital lease obligations (18,472) (13,139) Prepayments of capital lease obligations (110,839) (39,827) Decrease (increase) in restricted cash (1,296) 8,143 (1,653) Net capital contribution 7,500 Payment received on direct financing leases 2,241 Capitalized loan costs (1,565) (9,955) Financing activities associated with discontinued operations (20,077) (9,894) - -------------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM FINANCING ACTIVITIES (105,464) (100,683) (19,840) - -------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (net of capital lease financing of: March 31, 1995 - $NIL; March 31, 1994 - $97,776; April 30, 1993 - $144,696) (7,465) (65,733) (190,037) Expenditures for drydocking (11,917) (13,296) (16,440) Proceeds from disposition of assets 16,817 86,351 156,909 Repayments of advances to investee 2,650 1,479 Increase in marketable securities (70,185) Proceeds on sale of available-for-sale securities 110,806 Purchases of available-for-sale securities (115,085) Other 39 (50) (3,563) Investing activities associated with discontinued operations 35,706 5,497 - -------------------------------------------------------------------------------------------------------------- NET CASH FLOW FROM INVESTING ACTIVITIES (4,155) (27,207) (46,155) - -------------------------------------------------------------------------------------------------------------- (Decrease) increase in cash (22,114) (10,156) 22,531 Cash, beginning of the period 38,614 48,770 26,239 - -------------------------------------------------------------------------------------------------------------- CASH, END OF THE PERIOD 16,500 38,614 48,770 - --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. F-4 15 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) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION On April 30, 1993, Teekay Shipping Corporation ("Teekay") acquired 100% of the outstanding stock of Palm Shipping Inc. ("Palm"), an affiliated company, for nominal consideration. This transaction has been presented using the continuity of interest method of accounting under which it is assumed the companies have been combined from their inception. Accordingly, the consolidated balance sheets include the assets and liabilities of Teekay and Palm at their carrying values, after adjustments to conform the accounting policies of the two companies, and the consolidated statements of income and retained earnings and cash flows include the results of their operations for all years presented. On March 31, 1995, Teekay acquired 100% of the outstanding stock of Teekay Shipping Limited ("TSL"), an affiliated company, for cash consideration of $1.27 million representing the net book value of TSL at March 31, 1995. The impact of this transaction on the financial position and results of operations of Teekay is not considered significant. The assets and liabilities of TSL have been combined with those of Teekay effective March 31, 1995. Teekay's results of operations will include those of TSL subsequent to that date. As a result, certain voyage expenses which were paid to TSL have been reclassified to general and administrative expenses, in order to conform with the presentation to be adopted subsequent to March 31, 1995. REPORTING CURRENCY The consolidated financial statements are stated in U.S. dollars because the Company operates in international shipping markets which utilize the U.S. dollar as the functional currency. CONSOLIDATION The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. They include the accounts of Teekay Shipping Corporation (which is incorporated under the laws of Liberia) and its wholly owned or controlled subsidiaries (the "Company"). Significant intercompany items and transactions have been eliminated upon consolidation. CHANGE IN FISCAL YEAR END The Company changed its fiscal year end from April 30 to March 31, effective March 31, 1994. The following is a summary of selected financial information for the comparative twelve-month periods ended March 31, 1995 and 1994 and for the comparative eleven-month periods ended March 31, 1994 and 1993, respectively. F-5 16 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) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
TWELVE MONTHS ENDED MARCH 31, ----------------------------- 1995 1994 $ $ ---- ---- (UNAUDITED) RESULTS OF OPERATIONS Voyage revenues 319,966 344,960 Voyage expenses 84,957 88,974 Vessel operating expenses 72,723 80,738 Depreciation and amortization 96,435 97,300 General and administrative expenses 15,018 15,208 Net income from vessel operations 50,833 62,740 Interest expense (64,321) (52,709) Interest income 5,904 3,046 Other income 11,848 12,857 Income before foreign currency exchange gain (loss) 4,264 25,934 Foreign currency exchange gain (loss) 991 (43) Net income from continuing operations 5,255 25,891 Net income from discontinued operations 6,103 Cumulative effect of change in accounting for marketable securities 1,113 Net income 6,368 31,994 CASH FLOWS Net cash flow from continuing operations 87,505 125,189 Net cash flow from discontinued operations 505 Net cash flow used for financing activities (105,464) (144,592) Net cash flow provided by (used for) investing activities (4,155) 7,990
ELEVEN MONTHS ENDED MARCH 31, ----------------------------- 1994 1993 $ $ ---- ---- (UNAUDITED) RESULTS OF OPERATIONS Net voyage revenues 236,690 205,021 Income from vessel operations 59,128 33,303 Income before foreign currency exchange loss 25,745 28,370 Foreign currency exchange loss 1,532 79,406 Net income (loss) from continuing operations 24,213 (51,036) Net income from discontinued operations 5,945 1,732 Net income (loss) 30,158 (49,304) CASH FLOWS Net cash flow from continuing operations 117,387 76,232 Net cash flow from discontinued operations 347 4,334 Net cash flow provided by (used for) financing activities (100,683) 24,069 Net cash flow used for investing activities (27,207) (81,352)
F-6 17 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) INVESTMENT The Company's 50% interest in Viking Consolidated Shipping Corp. is carried at the Company's original cost plus its proportionate share of the undistributed net income. OPERATING REVENUES AND EXPENSES Voyage revenues and expenses are recognized on the percentage of completion method of accounting. Estimated losses on voyages are provided for in full at the time such losses become evident. The consolidated balance sheets reflect the deferred portion of revenues and expenses applicable to subsequent periods. Vessel expenses comprise all expenses relating to the operation of vessels, including crewing, repairs and maintenance, insurance, stores and lubes, and miscellaneous expenses including communications. Voyage expenses comprise all expenses relating to particular voyages, including bunker fuel expenses, port fees, canal tolls, and brokerage commissions. MARKETABLE SECURITIES The Company adopted the Statement of Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115") for the year ended March 31, 1995. In applying FAS 115, 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 are reported as a separate component of stockholders' equity. The cumulative effect on opening retained earnings from application of this Statement has been reflected separately as an adjustment to net income for the year (see note 5). VESSELS AND EQUIPMENT All predelivery costs incurred during the construction of newbuildings, including interest costs, and supervision and technical costs are capitalized. The acquisition cost and all costs incurred to restore used vessel purchases to the standard required to properly service the Company's customers are capitalized. Depreciation is calculated on a straight-line basis over a vessel's useful life, estimated by the Company to be twenty years from the date a vessel is initially placed in service. Interest costs capitalized to vessels and equipment for the year ended March 31, 1995, the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $151,000, $1,653,000, and $5,276,000, respectively. Expenditures incurred during drydocking are capitalized and amortized on a straight-line basis over the period until the next anticipated drydocking. When significant drydocking expenditures recur prior to the expiry of this period, the remaining balance of the original drydocking is expensed in the month of the subsequent drydocking. Drydocking amortization for the year ended March 31, 1995, the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $10,281,000, $11,831,000, and $16,808,000, respectively. Vessels acquired pursuant to bareboat hire purchase agreements are capitalized as capital leases and are amortized over the estimated useful life of the acquired vessel. F-7 18 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) OTHER ASSETS Loan costs, including fees, commissions and legal expenses, are capitalized and amortized over the term of the relevant loan. INTEREST RATE SWAP AGREEMENTS The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense. INTEREST RATE CAP AGREEMENTS Premiums paid for interest rate cap agreements are recorded at cost and amortized over the lives of the individual contracts. FORWARD CONTRACTS The Company enters into forward contracts as a hedge against changes in foreign exchange rates. Market value gains and losses are recognized and the resulting credit or debit offsets the effect of increases or decreases in foreign exchange gains or losses. CASH FLOWS Cash interest paid during the year ended March 31, 1995, the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 totalled $65,358,000, $49,456,000, and $50,893,000, respectively. The Company classifies all highly liquid investments with a maturity date of three months or less when purchased to be included in cash. 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. 2. BUSINESS OPERATIONS The Company is engaged in the ocean transportation of petroleum cargoes worldwide through the ownership and operation of a fleet of tankers. All of the Company's revenues are earned in international markets. 3. CONTRACTUAL RELATIONSHIPS Prior to the acquisition of TSL, (see Note 1 - Basis of presentation), TSL and its affiliated companies rendered administrative, operating and ship management services to the Company in return for a monthly fee and commissions at rates considered usual and customary to the industry. Amounts payable to TSL and its affiliated companies related to these services at March 31, 1995 and March 31, 1994 amounted to $NIL and $1,604,000, respectively. F-8 19 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 3. CONTRACTUAL RELATIONSHIPS - (CONTINUED) Fees incurred, included in general and administrative expenses, for the year ended March 31, 1995, for the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $7,845,000, $8,074,000 and $9,174,000, respectively. Commissions incurred, included in general and administrative expenses, for year ended March 31, 1995, for the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $3,981,000, $3,956,000 and $4,109,000 respectively. Commissions incurred, related to vessel dispositions, for the year ended March 31, 1995, for the eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $295,000, $579,000, and $Nil, respectively. 4. DISCONTINUED OPERATIONS In October 1992, the Company adopted a plan to divest its 50% investment in Baltimar Overseas Limited ("Baltimar"), previously accounted for as a controlled subsidiary, in order to focus its resources on the tanker shipping industry. Baltimar operated a fleet of multipurpose dry cargo vessels through eighteen single purpose shipping companies. On April 30, 1993, the Company entered into an agreement to exchange its entire interest in Baltimar in return for the shares of nine of Baltimar's single purpose shipping companies. No gain or loss was recognized on this transaction. The vessels were sold in December 1993 for a total sales price of $37.3 million resulting in a net gain of $5.7 million. The amounts shown as discontinued operations in the accompanying consolidated statements of income and retained earnings for 1993 represent the results of operations prior to the plan of discontinuance. Revenues from discontinued operations for the eleven-month period ended March 31, 1994 and for the year ended April 30, 1993 amounted to $8,653,000 and $27,195,000, respectively. 5. INVESTMENTS IN MARKETABLE SECURITIES
Approximate Gross Gross Market and Unrealized Unrealized Carrying Cost Gains Losses Amount - -------------------------------------------------------------------------------------------------------------- 1995 - ---- Available-For-Sale Securities 69,721 450 932 69,239 - -------------------------------------------------------------------------------------------------------------- 1994 - ---- Available-For-Sale Securities 69,745 20 1,133 68,632 - --------------------------------------------------------------------------------------------------------------
The cost and approximate market value of available-for-sale debt securities by contractual maturity are shown as follows: F-9 20 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 5. INVESTMENTS IN MARKETABLE SECURITIES - (CONTINUED)
Approximate Market and Carrying Cost Amount - -------------------------------------------------------------------------------------------------------------- Less than one year 44,767 44,424 Due after one year through five years 24,954 24,815 Due after 5 years NIL NIL - -------------------------------------------------------------------------------------------------------------- 69,721 69,239 - --------------------------------------------------------------------------------------------------------------
The unrealized loss on marketable securities included as a separate component of shareholder's equity increased by $482,000 as at March 31, 1995. 6. ACCRUED LIABILITIES
MARCH 31, MARCH 31, --------- --------- 1995 1994 $ $ ---- ---- Voyage and vessel 5,776 7,683 Interest 5,415 6,332 Payroll and benefits 1,863 1,016 Other 19 ------ ------ 13,054 15,050 ====== ======
7. LONG-TERM DEBT
MARCH 31, MARCH 31, --------- --------- 1995 1994 $ $ ---- ---- First Preferred Ship Mortgage Notes (9 5/8%) U.S. dollar debt due through 2004 175,000 175,000 Floating rate (LIBOR + 1% to 1 3/4%) U.S. dollar debt due through 2006 667,874 735,499 Floating rate (Japanese long-term prime + 0.7% to 1.2%) Japanese Yen debt due through 2002 35,112 ------- ------- 842,874 945,611 Less current portion 74,479 89,482 ------- ------- 768,395 856,129 ======= =======
In July 1994, the Company converted its remaining Japanese Yen long-term debt of Yen 3.45 billion to U.S. denominated long-term debt of $33.5 million. The $175,000,000 First Preferred Ship Mortgage Notes due July 15, 2003 are collateralized by first preferred mortgages on seven of the Company's Aframax tankers, together with certain other related collateral, and were guaranteed by the subsidiaries of Teekay that owned the seven mortgaged vessels. The Notes are also subject to a sinking fund, which will retire $25,000,000 principal amount of the Notes, on each July 15, commencing July 15, 1997. The Notes are redeemable at the option of the Company, in whole or in part, on or after July 15, 1998 at the following redemption prices expressed as a percentage of principal. F-10 21 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 7. LONG-TERM DEBT - (CONTINUED)
JULY 15 REDEMPTION PRICE ------- ---------------- 1998 104.813% 1999 102.406% 2000 100.000%
In addition, the Company may, at any time prior to July 15, 1996, redeem up to $61.25 million of the Notes at 109.625% of their principal amount from the proceeds of a public equity offering. Upon a Change of Control each Note holder has the right, unless the Company elects to redeem the Notes, to require the Company to purchase the Notes at 101% of their principal amount plus accrued interest. Seven of the Company's subsidiaries, Diamond Spirit Inc., Sebarok Spirit Inc., VSSI Bulkers Inc., VSSI Deepsea Inc., VSSI Star Inc., VSSI Sun Inc., and VSSI Ulsan Inc. ("the Guarantor Subsidiaries") have guaranteed the $175 million First Preferred Ship Mortgage Notes to a maximum of 95% of the fair value of their net assets. As of March 31, 1995, the fair value of the net assets of the Guarantor Subsidiaries approximated $229.0 million. Condensed financial information regarding the Company, the Guarantor Subsidiaries and non-guarantor subsidiaries of the Company is set out in Schedule A of these audited consolidated financial statements. In May 1995, the Company negotiated a revolving credit facility, (the "Facility"), with three commercial banks providing for borrowings of up to $240 million in order to refinance certain of the existing debt obligations of the Company and to finance vessel acquisitions. The Facility will be 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 Facility. The first drawdown under the Agreement is expected to occur not later than June 30, 1995. The commitment amount will be reduced in 16 semi-annual instalments commencing six months after the initial drawdown date together with a final balloon payment coincident with the final semi-annual reduction. Interest payments are based on LIBOR plus a margin which is dependent on the capital structure of the Company. All other loans are collateralized by first preferred mortgages on the vessels to which the loans relate, together with certain other collateral, and guarantees from the parent Company. In certain instances the shares of the ship-owning subsidiary have been pledged as collateral or second and third preferred mortgages have been recorded against specific vessels. Amongst other matters, the long-term debt agreements generally provide for such items as maintenance of various hull and fleet value to loan ratios, prepayment privileges (in some cases with penalties), restrictions on the payment of dividends and advances to shareholders by the individual subsidiaries (at March 31, 1995, approximately $30.0 million of subsidiary retained earnings may not be distributed to Teekay without prior lender consent), and restrictions against the incurrence of additional debt and new investments by the individual subsidiaries without prior lender consent. Certain bank loans require retention deposits. Retention deposits as at March 31, 1995 and 1994 were $4,443,000 and $3,098,000, respectively. As at March 31, 1995, the Company was committed to a series of interest rate swap agreements whereby $300 million of the Company's floating rate debt was swapped with fixed rate obligations having an average remaining term of 7.7 months. The swap agreements expire between May 1995 and April 1996. These arrangements effectively change the Company's interest rate exposure on $300 million of debt from a floating LIBOR rate to an average fixed rate of 5.07%. Payments and receipts under the swap agreements are being reflected as adjustments to interest expense since the agreements are designated as hedges in connection with long-term debt obligations. F-11 22 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 7. LONG-TERM DEBT - (CONTINUED) 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 March 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 will become effective in October 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 will be reflected as adjustments to interest expense since the agreements are designated as hedges in connection with long-term debt obligations. Scheduled long-term principal debt repayments reflect the new revolving credit facility repayment provisions. Long-term debt principal repayments required to be made in the fiscal years subsequent to March 31, 1995 are as follows:
$ - --------------------------------------------------------------------------------------------------------------- 1996 74,479 1997 65,570 1998 76,996 1999 100,796 2000 100,796 Thereafter 424,237 - --------------------------------------------------------------------------------------------------------------- 842,874 - ---------------------------------------------------------------------------------------------------------------
8. LEASES CHARTERS-OUT Time charters to third parties of the Company's vessels are accounted for as operating leases. The minimum future revenues to be received on time charters currently in place are as follows:
$ - -------------------------------------------------------------------------------------------------------------- 1996 36,708 1997 9,946 1998 855 - -------------------------------------------------------------------------------------------------------------- 47,509 - --------------------------------------------------------------------------------------------------------------
The minimum future revenues should not be construed to reflect total charter hire revenues for any of the years. F-12 23 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 9. FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash, restricted cash, and marketable securities - The carrying amounts approximate fair value. Long-term debt - The carrying amounts of floating rate debt approximate fair value. The fair values of the Company's other long-term debt are based on either quoted market prices or estimated using discounted cash flow analyses, based on rates currently available for debt with similar terms and remaining maturities. Interest rate swap agreements - The fair value of interest rate swaps, used for hedging purposes, is the estimated amount that the Company would receive or pay to terminate the swap agreements at the reporting date, taking into account current interest rates and the current credit worthiness of the swap counter parties. The fair value of interest rate cap agreements is the estimated amount that the Company would receive from selling the contracts as at the reporting date. The fair value of foreign currency contracts used for hedging purposes is the estimated amount that the Company would receive or pay to terminate the contract at the reporting date, taking into account current currency exchange rates. The estimated fair value of the Company's financial instruments is as follows:
MARCH 31, 1995 MARCH 31, 1994 -------------- -------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE $ $ $ $ -------- ----- -------- ----- Cash, restricted cash, and marketable securities 93,373 93,373 113,584 113,584 Long-term debt 842,874 834,562 945,611 942,111 Interest rate swap agreement - net receivable position 3,047 1,679 Foreign currency contracts - net receivable position 78 144 3,270 3,270 Interest rate cap agreements 975 820
10. CAPITAL STOCK AUTHORIZED 600,000 Redeemable Preferred Stock with a par value of $100 each 125,000,000 Common Stock with no par value
COMMON PREFERRED STOCK THOUSANDS STOCK THOUSANDS $ OF SHARES $ OF SHARES ------ --------- --------- --------- ISSUED AND OUTSTANDING Balance April 30, 1992 and 1993 33,000 18,000 1 600 2-for-1 Common Stock Split 18,000 ------ ------ ---- --- Balance March 31, 1994 and 1995 33,000 36,000 1 600 ====== ====== ==== ===
F-13 24 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 10. CAPITAL STOCK - (CONTINUED) The preferred stock, which is redeemable at par value at the Company's option, is non-interest bearing, non-dividend bearing, and non-voting, but otherwise unrestricted in nature. On March 10, 1994, the Company filed an amended Registration Statement with the U.S. Securities and Exchange Commission providing for the public offering of up to 17,250,000 shares of its common stock. If the planned public offering is completed the Company intends to exchange all of its outstanding Redeemable Preferred Stock for Common Stock. During 1995, the Company implemented a stock option plan under which the Company may grant, to key employees of the Company options to acquire shares of Common Stock at an exercise price that is not less than fair market value on the date of grant. A total of 1,500,000 shares of Common Stock has been reserved for issuance under the plan. In May 1995, the Company completed a reverse stock split of its common stock on a 1 for 2 basis, effectively changing its outstanding common stock from 36 million to 18 million shares. 11. COMMITMENTS AND CONTINGENCIES As at March 31, 1995, the Company was committed to the construction of one vessel for a cost of $49.5 million, scheduled for delivery in August 1995, as well as for the purchase of an additional vessel for a total cost of $25.8 million. Long-term financing arrangements exist for approximately $61.8 million of the unpaid costs of these vessels. As at March 31, 1995, the Company was committed to foreign exchange contracts providing for the forward purchase of Japanese Yen 200 million and approximately Singapore dollars 3.6 million for U.S. dollars, at an average rate of Japanese Yen 89.41 per U.S. dollar and Singapore dollar 1.44 per U.S. dollar, respectively. As at March 31, 1995, the Company was committed to a series of interest rate swap agreements whereby $300 million of the Company's floating rate debt was swapped with fixed rate obligations having an average remaining term of 7.7 months. The swap agreements expire between May 1995 and April 1996. These arrangements effectively change the Company's interest rate exposure on $300 million of debt from a floating LIBOR rate to an average fixed rate of 5.07%. The Company has guaranteed vessel loans of its 50% owned investment, Viking Consolidated Shipping Corp. At March 31, 1995, the portions of these loans guaranteed by the Company amounted to $22.2 million. A lawsuit has been commenced against the representative of the estate of the Company's founder, the late Mr. Torben Karlshoej, by Mr. Karlshoej's first wife, claiming an interest in certain assets, including the Company, at one time directly or indirectly held by Mr. Karlshoej. The Company, based upon advice of its legal counsel, believes that the suit is without merit and does not anticipate that the outcome of the lawsuit will have a material adverse effect upon it or its assets. F-14 25 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 12. OTHER INCOME
ELEVEN MONTHS YEAR ENDED ENDED YEAR ENDED MARCH 31, MARCH 31, APRIL 30, --------- --------- --------- 1995 1994 1993 $ $ $ ---- ---- ---- Gain on disposition of assets 18,245 12,347 37,213 Minority interest 19 208 Loss on marketable securities (1,553) Loss on available-for-sale securities (4,303) Equity in results of 50% owned company (2,089) 983 441 Other (24) ------ ------ ------ 11,848 11,777 37,862 ====== ====== ======
During the year ended March 31, 1995 the Company disposed of six vessels resulting in a gain of $18,245,000. Proceeds of $11,490,000 relating to the sale of two vessels were received in May 1995. Gross realized gains on sales of available-for-sale securities for the year ended March 31, 1995, eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $691,000, $118,000, and $NIL, respectively. Gross realized losses on sales of available-for-sale securities for the year ended March 31, 1995, eleven-month period ended March 31, 1994, and for the year ended April 30, 1993 aggregated $4,994,000, $328,000, and $NIL, respectively. 13. CHANGE IN NON-CASH WORKING CAPITAL ITEMS RELATED TO CONTINUING OPERATIONS
ELEVEN MONTHS YEAR ENDED ENDED YEAR ENDED MARCH 31, MARCH 31, APRIL 30, -------- --------- --------- 1995 1994 1993 $ $ $ ---- ---- ---- Accounts receivable 3,585 4,492 316 Prepaid expenses and other assets (1,597) 6,054 (778) Accounts payable (310) 22 1,427 Accrued liabilities (2,941) 1,398 (4,050) ------ ----- ------ (1,263) 11,966 (3,085) ====== ====== ======
14. COMPARATIVE FIGURES Certain of the comparative figures have been reclassified to conform with the presentation adopted in the current year. F-15 26 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (FORMERLY VIKING STAR SHIPPING INC.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) (ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS) 15. SUBSEQUENT EVENTS On April 28, 1995, the Company purchased one vessel for a cost of $20.5 million, scheduled for delivery in May or June 1995. A long-term financing arrangement exists for approximately $13.3 million of the unpaid cost of the vessel. In May 1995, the Company negotiated a revolving credit facility with three commercial banks providing for borrowings of up to $240 million. Subsequent to year end, the Company retired $23.8 million of its First Preferred Ship Mortgage Notes utilizing approximately $18.5 million of funds available under the revolving credit facility (see note 7). Subsequent to year end, the Company completed a reverse stock split of its common stock on a 1 for 2 basis, effectively changing its outstanding common stock from 36 million to 18 million shares. F-16 27 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (in thousands of U.S. dollars)
Year Ended March 31, 1995 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------ ------------ -------------- Net voyage revenues 32,687 448,437 (246,115) 235,009 Operating expenses 1,999 24,410 403,975 (246,208) 184,176 ------- ------- ------- -------- ------- Income (loss) from vessel operations (1,999) 8,277 44,462 93 50,833 Net interest income (expense) (16,963) 491 (41,945) (58,417) Equity in net income (loss) of subsidiaries 24,161 (26,250) (2,089) Other income 56 1 13,880 13,937 ------- ------- ------- -------- ------- Income before foreign currency exchange gain 5,255 8,769 16,397 (26,157) 4,264 Foreign currency exchange gain (991) (991) ------- ------- ------- -------- ------- Net income from continuing operations 5,255 8,769 17,388 (26,157) 5,255 Cumulative effect of change in accounting for marketable securities 1,113 1,113 ------- ------- ------- -------- ------- Net income 6,368 8,769 17,388 (26,157) 6,368 Retained earnings, beginning of the period 400,179 46,735 80,946 (127,681) 400,179 ------- ------- ------- -------- ------- 406,547 55,504 98,334 (153,838) 406,547 Dividends paid (25,266) (21,989) 47,255 ------- ------- ------- -------- ------- Retained earnings, end of the period 406,547 30,238 76,345 (106,583) 406,547 ====== ======= ======= ======== =======
Eleven Months Ended March 31, 1994 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------ ------------ -------------- Net voyage revenues 30,932 447,155 (241,397) 236,690 Operating expenses 921 22,666 395,484 (241,509) 177,562 ------- ------- ------- -------- ------- Income (loss) from vessel operations (921) 8,266 51,671 112 59,128 Net interest income (expense) (11,794) (545) (32,821) (45,160) Equity in net income (loss) of subsidiaries 42,873 (41,890) 983 Other income 10,794 10,794 ------- ------- ------- -------- ------- Income (loss) before foreign currency exchange loss 30,158 7,721 29,644 (41,778) 25,745 Foreign currency exchange loss 1,532 1,532 ------- ------- ------- -------- ------- Net income (loss) from continuing operations 30,158 7,721 28,112 (41,778) 24,213 Net income from discontinued operations 5,945 5,945 ------- ------- ------- -------- ------- Net income (loss) 30,158 7,721 34,057 (41,778) 30,158 Retained earnings, beginning of the period 370,021 39,014 70,673 (109,687) 370,021 ------- ------- ------- -------- ------- 400,179 46,735 104,730 (151,465) 400,179 Dividends paid (23,784) 23,784 Contribution arising on continuity of interest combination Net capital contribution (distribution) ------- ------- ------- -------- ------- Retained earnings, end of the period 400,179 46,735 80,946 (127,681) 400,179 ======= ======= ======= ======== =======
(See Note 7)
Year Ended April 30, 1993 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ ------------- ------------ ------------ ------------ -------------- Net voyage revenues 33,956 474,253 (280,020) 228,189 Operating expenses 111 18,806 453,154 (280,797) 191,274 ------- ------- ------- -------- ------- Income (loss) from vessel operations (111) 15,150 21,099 777 36,915 Net interest income (expense) 1,225 (4,678) (42,765) (46,218) Equity in net income (loss) of subsidiaries (48,582) 49,023 441 Other income 37,214 207 37,421 ------- ------- ------- -------- ------- Income (loss) before foreign currency exchange loss (47,468) 10,472 15,548 50,007 28,559 Foreign currency exchange loss 77,917 77,917 ------- ------- ------- -------- ------- Net income (loss) from continuing operations (47,468) 10,472 (62,369) 50,007 (49,358) Net income from discontinued operations 1,890 1,890 ------- ------- ------- -------- ------- Net income (loss) (47,468) 10,472 (60,479) 50,007 (47,468) Retained earnings, beginning of the period 409,989 28,542 126,452 (154,994) 409,989 ------- ------- ------- -------- ------- 362,521 39,014 65,973 (104,987) 362,521 Dividends paid (2,800) 2,800 Contribution arising on continuity of interest combination 7,500 7,500 Net capital contribution (distribution) 7,500 (7,500) ------- ------- ------- -------- ------- Retained earnings, end of the period 370,021 39,014 70,673 (109,687) 370,021 ======= ======= ======= ======== =======
- ------------- (See Note 7) F-17 28 SCHEDULE A TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES (Formerly Viking Star Shipping Inc.) CONDENSED BALANCE SHEETS (in thousands of U.S. dollars)
At March 31, 1995 -------------------------------------------------------------------------- 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) 0 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 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) 0 Retained earnings 406,547 30,238 76,345 (106,583) 406,547 Less net unrealized 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 ==========================================================================
At March 31, 1994 --------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------- ------------ -------------- ASSETS Cash 13,736 25,120 (242) 38,614 Restricted cash 6,338 6,338 Other current assets 67 813 107,502 (143) 108,239 -------------------------------------------------------------------------- Total current assets 67 14,549 138,960 (385) 153,191 Vessels and equipment (net) 171,756 1,060,998 1,232,754 Advances due from subsidiaries 323,362 (323,362) Other assets (principally investments in subsidiaries) 288,914 4,243 (273,955) 19,202 -------------------------------------------------------------------------- 612,343 186,305 1,204,201 (597,702) 1,405,147 ========================================================================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities 4,163 1,086 110,837 (248) 115,838 Long-term debt 175,000 681,129 856,129 Due to parent 325,367 (325,367) -------------------------------------------------------------------------- Total liabilities 179,163 1,086 1,117,333 (325,615) 971,967 -------------------------------------------------------------------------- Stockholders' Equity Capital stock 33,001 11 5,922 (5,933) 33,001 Contributed capital 138,473 (138,473) Retained earnings 400,179 46,735 80,946 (127,681) 400,179 Less net unrealized loss on marketable securities -------------------------------------------------------------------------- Total stockholders' equity 433,180 185,219 86,868 (272,087) 433,180 -------------------------------------------------------------------------- 612,343 186,305 1,204,201 (597,702) 1,405,147 ==========================================================================
- --------------- (See Note 7) F-18 29 TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A (Formerly Viking Star Shipping Inc.) CONDENSED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars)
Year Ended March 31, 1995 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------- ------------ -------------- Cash provided by (used for) OPERATING ACTIVITIES Net cash flows from continuing operations (40,919) 20,403 108,021 87,505 Net cash flows from discontinued operations ------------------------------------------------------------------------- Net cash flow from operating activities (40,919) 20,403 108,021 87,505 ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt Repayments of long-term debt (102,603) (102,603) Payments on capital lease obligations Other (31,518) (25,263) 53,920 (2,861) Financing activities of discontinued operations ------------------------------------------------------------------------- Net cash flow from financing activities (31,518) (25,263) (48,683) (105,464) ------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (2,039) (17,343) (19,382) Proceeds from disposition of assets 16,817 16,817 Other 72,776 19 (74,385) (1,590) Investing activities of discontinued operations ------------------------------------------------------------------------- Net cash flow from investing activities 72,776 (2,020) (74,911) (4,155) ------------------------------------------------------------------------- Increase (decrease) in cash 339 (6,880) (15,573) (22,114) Cash (deficiency), beginning of the period (242) 13,736 25,120 38,614 ------------------------------------------------------------------------- Cash, end of the period 97 6,856 9,547 16,500 =========================================================================
Eleven Months Ended March 31, 1994 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------- ------------ -------------- Cash provided by (used for) OPERATING ACTIVITIES Net cash flows from continuing operations (8,310) 16,849 108,848 117,387 Net cash flows from discontinued operations 347 347 ------------------------------------------------------------------------- Net cash flow from operating activities (8,310) 16,849 109,195 117,734 ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 175,000 45,000 220,000 Repayments of long-term debt (75,452) (94,031) (169,483) Payments on capital lease obligations (47,129) (82,182) (129,311) Other (51,652) (52,367) 102,207 (1,812) Financing activities of discontinued operations (20,077) (20,077) ------------------------------------------------------------------------- Net cash flow from financing activities 123,348 (174,948) (49,083) (100,683) ------------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for vessels and equipment (1,882) (77,147) (79,029) Proceeds from disposition of assets 86,351 86,351 Other (114,739) 138,473 (93,969) (70,235) Investing activities of discontinued operations 35,706 35,706 ------------------------------------------------------------------------- Net cash flow from investing activities (114,739) 136,591 (49,059) (27,207) ------------------------------------------------------------------------- Increase (decrease) in cash 299 (21,508) 11,053 (10,156) Cash (deficiency), beginning of the period (541) 35,244 14,067 48,770 ------------------------------------------------------------------------- Cash (deficiency), end of the period (242) 13,736 25,120 38,614 =========================================================================
Year Ended April 30, 1993 ------------------------------------------------------------------------- Teekay Teekay Guarantor Non-Guarantor Shipping Corp. Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries $ $ $ $ $ -------------- ------------ ------------- ------------ -------------- Cash provided by (used for) OPERATING ACTIVITIES Net cash flows from continuing operations 3,668 19,149 61,909 (692) 84,034 Net cash flows from discontinued operations 4,492 4,492 ------------------------------------------------------------------------- Net cash flow from operating activities 3,668 19,149 66,401 (692) 88,526 ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 147,782 147,782 Repayments of long-term debt (7,477) (105,373) (112,850) Payments on capital lease obligations (52,966) (52,966) Other 546 11,424 (3,882) 8,088 Financing activities of discontinued operations (10,586) 692 (9,894) ------------------------------------------------------------------------ Net cash flow from financing activities 546 3,947 (25,025) 692 (19,840) ------------------------------------------------------------------------ INVESTING ACTIVITIES Expenditures for vessels and equipment (9,880) (196,597) (206,477) Proceeds from disposition of assets 156,909 156,909 Other 4,620) (9) 2,545 (2,084) Investing activities of discontinued operations 5,497 5,497 ------------------------------------------------------------------------ Net cash flow from investing activities (4,620) (9,889) (31,646) (46,155) ------------------------------------------------------------------------ Increase (decrease) in cash (406) 13,207 9,730 22,531 Cash (deficiency), beginning of the period (135) 22,037 4,337 26,239 ------------------------------------------------------------------------ Cash (deficiency), end of the period (541) 35,244 14,067 48,770 ------------------------------------------------------------------------
- ------------- (See Note 7) F-19 -----END PRIVACY-ENHANCED MESSAGE-----