<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
----------------------
For the quarterly period ended December 31, 1995
-----------------
TEEKAY SHIPPING CORPORATION
(Formerly Viking Star Shipping Inc.)
(Exact name of Registrant as specified in its charter)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293,
Nassau, The Bahamas
(Address of principal executive office)
----------------------
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
----- -----
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.]
Yes No X
----- -----
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82-________]
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Page 1 of 19
<PAGE> 2
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.)
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
INDEX
-----
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Income
and Retained Earnings for the three and nine months
ended December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets -
December 31, 1995 and March 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
for the nine months ended December 31, 1995
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 14
PART II: OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
2
<PAGE> 3
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.)
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------- -----------------
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
$ (UNAUDITED) $ $ (UNAUDITED) $
--- ----------- --- --- ----------- ---
<S> <C> <C> <C> <C>
NET VOYAGE REVENUES
Voyage revenues 84,596 80,162 245,540 242,933
Voyage expenses 21,803 21,556 65,255 64,071
- --------------------------------------------------------------------------------------------------------------------
Net voyage revenues 62,793 58,606 180,285 178,862
- --------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 16,770 19,214 50,266 57,683
Time charter hire expense 841 841
Depreciation and amortization (note 2) 20,996 23,990 61,952 72,228
General and administrative 3,973 3,728 12,785 11,874
- --------------------------------------------------------------------------------------------------------------------
42,580 46,932 125,844 141,785
- --------------------------------------------------------------------------------------------------------------------
Income from vessel operations 20,213 11,674 54,441 37,077
- --------------------------------------------------------------------------------------------------------------------
OTHER ITEMS
Interest expense (14,755) (16,059) (45,985) (47,423)
Interest income 1,848 1,495 5,030 4,398
Other income (note 9) 6,009 2,622 9,860 3,663
- --------------------------------------------------------------------------------------------------------------------
(6,898) (11,942) (31,095) (39,362)
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) 13,315 (268) 23,346 (2,285)
Retained earnings, beginning of the period 356,578 398,162 406,547 400,179
- --------------------------------------------------------------------------------------------------------------------
369,893 397,894 429,893 397,894
Exchange of redeemable preferred stock (note 7) (60,000)
Dividends declared and paid (5,953) (5,953)
- --------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS, END OF THE PERIOD 363,940 397,894 363,940 397,894
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share (note 7) $ 0.48 $ (0.01) $ 0.98 $ (0.13)
Weighted average number of
common shares outstanding (note 7) 27,756,345 18,000,000 23,836,381 18,000,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.)
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995 AT MARCH 31, 1995
-------------------- -----------------
$ $
--- ---
(UNAUDITED)
-----------
<S> <C> <C>
ASSETS
CURRENT
Cash 68,441 16,500
Marketable securities (note 9) 49,896 69,239
Restricted cash 2,764 7,634
Accounts receivable
-trade 24,102 16,875
-vessel sale 17,283
-other 2,580 3,271
Prepaid expenses and other assets 13,108 13,273
- --------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 160,891 144,075
- --------------------------------------------------------------------------------------------------------------
VESSELS AND EQUIPMENT (notes 2, 5, 6 and 10)
At cost, less accumulated depreciation of $356,858
(March 31, 1995 - $312,281) 1,132,876 1,142,972
Acquired under capital lease, less accumulated amortization
of $993 50,148
Advances on vessels 5,066
- --------------------------------------------------------------------------------------------------------------
TOTAL VESSELS AND EQUIPMENT 1,183,024 1,148,038
- --------------------------------------------------------------------------------------------------------------
Investment in 50% owned company 5,261 3,758
Other assets 9,083 10,603
- --------------------------------------------------------------------------------------------------------------
1,358,259 1,306,474
- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable 11,549 11,480
Accrued liabilities 15,238 13,054
Current portion of long-term debt (notes 5 and 8) 36,478 74,479
Current portion of capital lease obligation (notes 6 and 8) 223
- --------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 63,488 99,013
- --------------------------------------------------------------------------------------------------------------
Long-term debt (notes 5 and 8) 654,934 768,395
Capital lease obligation (notes 6 and 8) 43,023
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 761,445 867,408
- --------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock (note 7) 232,854 33,001
Retained earnings 363,940 406,547
Net unrealized gain (loss) on marketable securities 20 (482)
- --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 596,814 439,066
- --------------------------------------------------------------------------------------------------------------
1,358,259 1,306,474
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Commitments and contingencies (note 8)
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
------------------------------
1995 1994
---- ----
$ (UNAUDITED) $
--- ----------- ---
<S> <C> <C>
Cash provided by (used for)
OPERATING ACTIVITIES
Net income (loss) 23,346 (2,285)
Add (deduct) charges to operations not requiring
a payment of cash:
Depreciation and amortization 61,952 72,228
Foreign currency exchange gain (277)
Gain on disposition of assets (8,889) (7,746)
Loss (gain) on marketable securities (30) 2,893
Equity loss (income) (1,503) 1,000
Other 911
Change in non-cash working capital items related to
operating activities (4,165) 6,641
- -----------------------------------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATING ACTIVITIES 71,622 72,454
- -----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 223,000
Scheduled repayments of long-term debt (49,698) (71,008)
Prepayments of long-term debt (323,544) (9,033)
Scheduled repayments of capital lease obligation (1,304)
Decrease (increase) in restricted cash 4,870 (1,092)
Net proceeds from stock issuance 137,613
Cash dividends paid (3,712)
Capitalized loan costs (1,086) (942)
- -----------------------------------------------------------------------------------------------------------
NET CASH FLOW FROM FINANCING ACTIVITIES (13,861) (82,075)
- -----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (net of capital
lease financing of $44,550; December 31, 1994 - $0) (47,640) (4,486)
Expenditures for drydocking (6,589) (7,374)
Proceeds from disposition of assets 28,514 9,174
Increase in investment (796)
Proceeds on sale of available-for-sale securities 60,963
Purchases of available-for-sale securities (41,068)
Increase in marketable securities (3,182)
Other 107
- -----------------------------------------------------------------------------------------------------------
NET CASH FLOW FROM INVESTING ACTIVITIES (5,820) (6,557)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 51,941 (16,178)
Cash, beginning of the period 16,500 38,614
- -----------------------------------------------------------------------------------------------------------
CASH, END OF THE PERIOD 68,441 22,436
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH
AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted principles in
the United States and the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
required by generally accepted accounting principles for complete
annual financial statements have been omitted and, therefore, it is
suggested that these interim financial statements be read in
conjunction with the Company's audited financial statements for the
fiscal year ended March 31, 1995. In the opinion of management, these
statements reflect all adjustments (consisting only of normal recurring
accruals), necessary to present fairly, in all material respects, the
Company's consolidated financial position, results of operations and
cash flows for the interim periods presented. The results of
operations for the three-month and nine-month periods ended December
31, 1995 are not necessarily indicative of those for a full fiscal
year.
Certain of the prior period comparative figures have been reclassified
where necessary to conform with the presentation used in the current
period.
2. CHANGE IN ESTIMATE
Effective April 1, 1995, the Company revised its estimates of the
residual values of its vessels. The effect of this change in estimated
residual values was to reduce depreciation expense for the three-month
and nine-month periods ended December 31, 1995 by $2.6 million (or
$0.09 per common share) and $7.4 million (or $0.31 per common share),
respectively.
3. CASH FLOWS
Cash interest paid during the nine-month periods ended December 31,
1995 and 1994 totalled approximately $42,862,000 and $44,080,000,
respectively.
4. INCOME TAXES
The legal jurisdictions of the countries in which the Company and its
subsidiaries are incorporated do not impose income taxes upon
shipping-related activities.
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1995
$ $
-------------------------------------------------------------------------------
<S> <C> <C>
Revolving Credit Facility 88,000
First Preferred Ship Mortgage Notes (9 5/8%)
U.S. dollar debt due through 2004 151,200 175,000
Floating rate (LIBOR + 1% to 1 1/2%)
U.S. dollar debt due through 2006 452,212 667,874
-------------------------------------------------------------------------------
691,412 842,874
Less current portion of long-term debt 36,478 74,479
-------------------------------------------------------------------------------
654,934 768,395
-------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH
AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED)
5. LONG-TERM DEBT - CONT'D
In May 1995, the Company negotiated a revolving credit facility, (the
"Revolver"), with three commercial banks providing for borrowings of up
to $243 million in order to refinance certain of the existing debt
obligations of the Company and to finance vessel acquisitions. The
Revolver is collateralized initially by first priority mortgages
granted on fourteen of the Company's Aframax tankers, together with
certain other related collateral, and a guarantee from the Company for
all amounts outstanding under the Revolver. The commitment amount will
be reduced by $9.5 million semi-annually commencing six months after
the initial drawdown date, together with a final balloon reduction
coincident with the final semi-annual reduction on June 6, 2003.
Interest payments are based on LIBOR plus a margin ranging from 0.80%
to 1.25% which is dependent on the financial leverage of the Company.
Principal repayments under the Revolver are required when the Revolver
borrowings exceed the commitment amount which was $213.5 million as of
December 31, 1995.
In June 1995, the Company made an initial drawdown on the Revolver in
the amount of $223 million and simultaneously prepaid approximately
$204 million in other floating rate debt.
In July 1995, using part of the proceeds from the initial public
offering (see Note 7), the Company reduced the amount outstanding under
the Revolver by $135 million.
During the first quarter of fiscal 1996, the Company retired $23.8
million of its 9 5/8% First Preferred Ship Mortgage Notes, utilizing
approximately $18.5 million of funds available under the Revolver.
Six of the Company's subsidiaries, Diamond Spirit, Inc., Sebarok
Spirit Inc., VSSI Bulkers Inc., VSSI Deepsea Inc., VSSI Star Inc., and
VSSI Ulsan Inc. ("the 1993 Notes Guarantor Subsidiaries") have
guaranteed the 9 5/8% First Preferred Ship Mortgage Notes due July 2003
issued by Teekay Shipping Corporation to a maximum of 95% of the fair
value of their net assets. As of December 31, 1995, the fair value of
the net assets of the 1993 Notes Guarantor Subsidiaries approximated
$201 million.
Condensed financial information regarding the Company, the 1993 Notes
Guarantor Subsidiaries and non-guarantor subsidiaries of the Company is
set out on Schedule A of these consolidated financial statements.
6. CAPITAL LEASE OBLIGATION
On August 7, 1995, the Company took delivery of a bareboat hire
purchased vessel which is accounted for as a capital lease.
<TABLE>
<CAPTION>
DECEMBER 31,
1995
$
-------------------------------------------------------------------------------
<S> <C>
Floating rate (LIBOR + 1.25%)
U.S. dollar capital lease due through 2008 43,246
Less current portion of capital lease obligation 223
-------------------------------------------------------------------------------
43,023
-------------------------------------------------------------------------------
</TABLE>
The Company holds a purchase option on this vessel which is exercisable,
at the Company's discretion, on any monthly lease payment date at a
price equal to the unpaid principal balance of the capital lease
obligation outstanding as at the date the purchase option is exercised.
7
<PAGE> 8
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH
AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED)
7. CAPITAL STOCK
AUTHORIZED
25,000,000 Preferred Stock with a par value of $1 per share.
125,000,000 Common Stock with no par value
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Common Thousands Preferred Thousands
Issued and outstanding Stock of shares Stock of shares
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance March 31, 1994 and 1995 $33,000 36,000 $1 600
May 15, 1995 1-for-2 Reverse Common
Stock Split (18,000)
July 19, 1995 Initial Public Offering
6,900,000 shares @ $21.50 per share
of Common Stock (net of share issue costs) 137,613 6,900
July 19, 1995 Exchange of Redeemable Preferred
Stock for 2,790,698 shares of Common Stock 60,000 2,791 (1) (600)
October 30, 1995 Reinvested dividends 2,241 96
----------------------------------------------------------------------------------------------------------------
Balance December 31, 1995 $232,854 27,787 0 0
----------------------------------------------------------------------------------------------------------------
</TABLE>
On July 19, 1995, the Company completed its initial public offering of
6,900,000 shares of Common Stock. The Company's Common Stock was
initially offered at a price of $21.50 per share, resulting in aggregate
net proceeds to the Company of approximately $137.6 million. $135
million of the net proceeds from the offering was used to reduce the
amounts outstanding under the Company's revolving credit facility. In
conjunction with the contemplation of the initial public offering, the
Company exchanged all of its outstanding Redeemable Preferred Stock for
2,790,698 shares of Common Stock.
The Company has reserved 2,148,571 shares of Common Stock for issuance
upon exercise of options granted pursuant to the Company's 1995 Stock
Option Plan of which options to purchase up to 796,750 shares of Common
Stock, at an exercise price of $21.50 per share, was granted
concurrently with the consummation of the offering.
Net income (loss) per common share is based upon the weighted average
number of common shares outstanding during each period, after giving
effect to the 1 for 2 reverse stock split. Stock options have not been
included in the computation of net income (loss) per common share since
their effect thereon would not be material.
8
<PAGE> 9
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH
AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED)
8. COMMITMENTS AND CONTINGENCIES
In October 1995, the Company entered into an agreement for a one-year
time-charter and subsequent purchase of a modern second-hand Aframax
tanker for a cost $26.5 million. The cost of this vessel will be
financed through cash and marketable securities balances.
As at December 31, 1995, the Company was commited to a series of
interest rate swap agreements whereby $350 million of the Company's
floating rate debt was swapped with fixed rate obligations having an
average remaining term of 25.5 months. The swap agreements expire
between January 1996 and December 1998. These arrangements effectively
change the Company's interest rate exposure on $350 million of debt
from a floating LIBOR rate to an average fixed rate of 6.08%. The
Company is exposed to credit loss in the event of non-performance by
the counter parties to the interest rate swap agreements; however, the
Company does not anticipate non-performance by any of the counter
parties.
As at December 31, 1995, the Company was a party to interest rate cap
contracts which effectively limit the interest rate exposure on $200
million of the Company's floating rate debt to a maximum of 8%. $100
million of the contracts became effective on February 24, 1995; the
remaining $100 million of contracts became effective on October 2,
1995. All of the contracts expire on April 1, 1997. The premiums paid
by the Company have been recorded at cost and are being amortized over
the lives of the individual contracts. Receipts, if any, under the
interest rate cap contracts are reflected as adjustments to interest
expense since the contracts are designated as hedges in connection with
long-term debt obligations.
As at December 31, 1995, the Company was committed to foreign exchange
contracts for the forward purchase of approximately Japanese Yen 950
million and Singapore dollars 1,302,300 for U.S. dollars, at an average
rate of Japanese Yen 95.22 per U.S. dollar and Singapore dollar 1.40
per U.S. dollar, respectively. Foreign exchange gains and losses, if
any, arising from Japanese Yen 850 million of the foreign exchange
contracts are reflected as adjustments to the equity in the results of
its 50% owned investment in Viking Consolidated Shipping Corp., since
the contract is designated as a hedge in connection with the Company's
50% portion of a Japanese Yen-denominated long-term debt obligation
held in the joint venture. The remaining foreign exchange contracts
are for the purpose of hedging accounts payable and accrued
liabilities.
The Company has guaranteed vessel loans of its 50% owned investment,
Viking Consolidated Shipping Corp. At December 31, 1995, the
guaranteed portions of these loans amounted to $16.4 million.
9. OTHER INCOME
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ ------------------
1995 1994 1995 1994
$ $ $ $
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gain on disposition of assets 5,161 4,048 8,889 7,746
Gain (loss) on marketable securities 140 (174) 30 (2,893)
Foreign currency exchange gain (loss) (98) (168) (611) (106)
Equity in results of 50% owned company 799 (1,000) 1,503 (1,000)
Miscellaneous - net 7 (84) 49 (84)
------------------------------------------------------------------------------------------------------------
6,009 2,622 9,860 3,663
------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT DECEMBER 31, 1995, AND FOR THE THREE-MONTH
AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995 AND 1994 IS UNAUDITED)
10. SUBSEQUENT EVENTS
Subsequent to December 31, 1995, the Company completed an offering of
$225 million of 8.32% First Preferred Ship Mortgage Notes due 2008,
the net proceeds of which were used to refinance existing floating
rate debt. In addition, subsequent to December 31, 1995, the Company
prepaid an additional $35 million of other floating rate debt which
will be applied to reduce the scheduled principal repayments of
certain loans over the next two years by one-half. The current portion
of long-term debt and capital lease obligation as at December 31, 1995
have been adjusted to give effect of the reduction in scheduled
principal repayments arising from these debt prepayments.
Subsequent to December 31, 1995, the Company entered into an
agreement for the construction of an Aframax vessel for a cost of $44.5
million, scheduled for delivery in July 1997. A long-term financing
agreement exists for approximately $35.6 million of the unpaid cost of
the vessel. In addition, the Company has entered into an agreement to
purchase an Aframax vessel from its 50% owned investment, VCSC, for a
cost of $30.5 million.
10
<PAGE> 11
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.) SCHEDULE A
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended December 31, 1995
--------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 7,626 111,727 (56,560) 62,793
Operating expenses 388 5,208 99,458 (62,474) 42,580
--------------------------------------------------------------------------
Income (loss) from vessel operations (388) 2,418 12,269 5,914 20,213
Net interest income (expense) (3,640) 219 (9,486) (12,907)
Equity in net income (loss) of subsidiaries 17,295 (16,496) 799
Other income 48 1 12,172 (7,011) 5,210
--------------------------------------------------------------------------
Net income (loss) 13,315 2,638 14,955 (17,593) 13,315
Retained earnings, beginning of the period 356,578 19,353 59,921 (79,274) 356,578
--------------------------------------------------------------------------
369,893 21,991 74,876 (96,867) 369,893
--------------------------------------------------------------------------
Dividends paid (5,953) (16,270) 16,270 (5,953)
--------------------------------------------------------------------------
Retained earnings, end of the period 363,940 21,991 58,606 (80,597) 363,940
<CAPTION>
Three Months Ended December 31, 1994
--------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 8,320 112,546 (62,260) 58,606
Operating expenses 250 6,235 102,698 (62,251) 46,932
--------------------------------------------------------------------------
Income (loss) from vessel operations (250) 2,085 9,848 (9) 11,674
Net interest income (expense) (4,118) 179 (10,625) (14,564)
Equity in net income (loss) of subsidiaries 4,100 (5,100) (1,000)
Other income 3,622 3,622
--------------------------------------------------------------------------
Net income (loss) (268) 2,264 2,845 (5,109) (268)
Retained earnings, beginning of the period 398,162 50,801 84,202 (135,003) 398,162
--------------------------------------------------------------------------
397,894 53,065 87,047 (140,112) 397,894
Dividends paid (16,844) (15,989) 32,833
--------------------------------------------------------------------------
Retained earnings, end of the period 397,894 36,221 71,058 (107,279) 397,894
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1995
-------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 22,218 336,268 (178,201) 180,285
Operating expenses 1,085 15,643 294,315 (185,199) 125,844
--------------------------------------------------------------------------
Income (loss) from vessel operations (1,085) 6,575 41,953 6,998 54,441
Net interest income (expense) (10,954) 306 (30,307) (40,955)
Equity in net income (loss) of subsidiaries 34,174 (32,671) 1,503
Other income 1,211 1 14,156 (7,011) 8,357
--------------------------------------------------------------------------
Net income (loss) 23,346 6,882 25,802 (32,684) 23,346
Retained earnings, beginning of the period 406,547 22,309 84,274 (106,583) 406,547
--------------------------------------------------------------------------
429,893 29,191 110,076 (139,267) 429,893
Exchange of redeemable preferred stock (60,000) (60,000)
Dividends paid (5,953) (7,200) (51,470) 58,670 (5,953)
--------------------------------------------------------------------------
Retained earnings, end of the period 363,940 21,991 58,606 (80,597) 363,940
--------------------------------------------------------------------------
<CAPTION>
Nine Months Ended December 31, 1994
--------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 24,543 338,477 (184,158) 178,862
Operating expenses 1,051 18,677 306,327 (184,270) 141,785
--------------------------------------------------------------------------
Income (loss) from vessel operations (1,051) 5,866 32,150 112 37,077
Net interest income (expense) (12,777) 464 (30,712) (43,025)
Equity in net income (loss) of subsidiaries 11,543 (12,543) (1,000)
Other income 4,663 4,663
--------------------------------------------------------------------------
Net income (loss) (2,285) 6,330 6,101 (12,431) (2,285)
Retained earnings, beginning of the period 400,179 46,735 80,946 (127,681) 400,179
--------------------------------------------------------------------------
397,894 53,065 87,047 (140,112) 397,894
Exchange of redeemable preferred stock
Dividends paid (16,844) (15,989) 32,833
--------------------------------------------------------------------------
Retained earnings, end of the period 397,894 36,221 71,058 (107,279) 397,894
--------------------------------------------------------------------------
</TABLE>
- ---------------------
Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First
Preferred Ship Mortgage Notes due July 2003. (See Note 5)
11
<PAGE> 12
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.) SCHEDULE A
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at December 31, 1995
--------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
-------------- ------------- ------------ ------------- --------------
<S> <S> <S> <C> <C> <C>
ASSETS
Cash 127 11,410 56,904 68,441
Restricted cash 2,764 2,764
Other current assets 435 856 88,593 (198) 89,686
--------------------------------------------------------------------------
Total current assets 562 12,266 148,261 (198) 160,891
Vessels and equipment (net) 142,299 1,040,725 1,183,024
Advances due from subsidiaries 514,647 (514,647)
Other assets (principally
investments in subsidiaries) 239,585 4,590 (229,831) 14,344
--------------------------------------------------------------------------
754,794 154,565 1,193,576 (744,676) 1,358,259
--------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 6,780 790 55,625 293 63,488
Long-term debt 151,200 503,734 654,934
Capital lease obligation 43,023 43,023
Due to parent 519,482 (519,482)
--------------------------------------------------------------------------
Total liabilities 157,980 790 1,121,864 (519,189) 761,445
--------------------------------------------------------------------------
Stockholders' Equity
Capital stock 232,854 6 5,933 (5,939) 232,854
Contributed capital 131,778 7,173 (138,951)
Retained earnings 363,940 21,991 58,606 (80,597) 363,940
Net unrealized (gain) loss on marketable securities 20 20
--------------------------------------------------------------------------
Total stockholders' equity 596,814 153,775 71,712 (225,487) 596,774
--------------------------------------------------------------------------
754,794 154,565 1,193,576 (744,676) 1,358,219
--------------------------------------------------------------------------
<CAPTION>
As at March 31, 1995
-----------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- ------------- ------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash 97 6,856 9,547 16,500
Restricted cash 7,634 7,634
Other current assets 180 1,287 118,685 (211) 119,941
--------------------------------------------------------------------------
Total current assets 277 8,143 135,866 (211) 144,075
Vessels and equipment (net) 162,812 985,226 1,148,038
Advances due from subsidiaries 354,330 (354,330)
Other assets (principally
investments in subsidiaries) 264,302 4,935 (254,876) 14,361
--------------------------------------------------------------------------
618,909 170,955 1,126,027 (609,417) 1,306,474
--------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 4,843 2,214 92,142 (186) 99,013
Long-term debt 175,000 593,395 768,395
Capital lease obligation
Due to parent 358,223 (358,223)
--------------------------------------------------------------------------
Total liabilities 179,843 2,214 1,043,760 (358,409) 867,408
--------------------------------------------------------------------------
Stockholders' Equity
Capital stock 33,001 11 5,922 (5,933) 33,001
Contributed capital 138,492 (138,492)
Retained earnings 406,547 30,238 76,345 (106,583) 406,547
Net unrealized (gain) loss on marketable securities (482) (482)
--------------------------------------------------------------------------
Total stockholders' equity 439,066 168,741 82,267 (251,008) 439,066
--------------------------------------------------------------------------
618,909 170,955 1,126,027 (609,417) 1,306,474
--------------------------------------------------------------------------
</TABLE>
Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First
Preferred Ship Mortgage Notes due July 2003. (See Note 5)
12
<PAGE> 13
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(Formerly Viking Star Shipping Inc.) SCHEDULE A
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1995
--------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used for)
OPERATING ACTIVITIES
--------------------------------------------------------------------------
Net cash flow from operating activities (9,191) 12,468 68,345 71,622
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 223,000 223,000
Repayments of long-term debt (22,580) (350,662) (373,242)
Repayments of capital lease obligations (1,304) (1,304)
Net proceeds from stock issuance 137,613 137,613
Other (171,203) (7,200) 178,475 72
--------------------------------------------------------------------------
Net cash flow from financing activities (56,170) (7,200) 49,509 (13,861)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (203) (54,026) (54,229)
Proceeds from disposition of assets 28,514 28,514
Other 65,391 459 (45,955) 19,895
--------------------------------------------------------------------------
Net cash flow from investing activities 65,391 256 (71,467) (5,820)
--------------------------------------------------------------------------
Increase (decrease) in cash 30 5,524 46,387 51,941
Cash (deficiency), beginning of the period 97 5,886 16,500 16,500
--------------------------------------------------------------------------
Cash, end of the period 127 11,410 62,887 68,441
--------------------------------------------------------------------------
<CAPTION>
Nine Months Ended December 31, 1994
-------------------------------------------------------------------------
1993 Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
--------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used for)
OPERATING ACTIVITIES
--------------------------------------------------------------------------
Net cash flow from operating activities (8,973) 14,350 67,077 72,454
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt
Repayments of long-term debt (80,041) (80,041)
Repayments of capital lease obligations
Net proceeds from stock issuance
Other (22,740) (16,844) 37,550 (2,034)
--------------------------------------------------------------------------
Net cash flow from financing activities (22,740) (16,844) (42,491) (82,075)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (488) (11,372) (11,860)
Proceeds from disposition of assets 9,174 9,174
Other 31,971 62 (35,904) (3,871)
--------------------------------------------------------------------------
Net cash flow from investing activities 31,971 (426) (38,102) (6,557)
--------------------------------------------------------------------------
Increase (decrease) in cash 258 (2,920) (13,516) (16,178)
Cash (deficiency), beginning of the period (242) 13,736 25,120 38,614
--------------------------------------------------------------------------
Cash, end of the period 16 10,816 11,604 22,436
--------------------------------------------------------------------------
</TABLE>
- --------------
Note: The 1993 Notes Guarantor subsidiaries have guaranteed the 9 5/8% First
Preferred Ship Mortgage Notes due July 2003. (See Note 5)
13
<PAGE> 14
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
DECEMBER 31, 1995
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Teekay Shipping Corporation (the "Company") is a leading provider of
international crude oil and petroleum product transportation services through
its fleet of predominantly Aframax tankers. The charter rates that the Company
is able to obtain for these services are determined in a competitive global
tanker charter market. Historically, the tanker industry has been cyclical,
experiencing volatility in profitability and asset values resulting from
changes in the supply of and demand for vessel capacity. The Company's future
operating results will be subject to a number of uncertainties, many of which
reflect the cyclical nature of the tanker industry.
The Company operates its tankers in markets that have historically exhibited
seasonal variations in demand and, therefore, charter rates. Tanker markets are
typically stronger in the winter months as a result of increased oil
consumption in the northern hemisphere. In addition, unpredictable weather
patterns in the winter months tend to disrupt vessel scheduling. The oil price
volatility resulting from these factors has also historically led to increased
oil trading activities. As a result, revenues have usually been stronger for
the Company in its third and fourth fiscal quarters.
THREE MONTHS ENDED DECEMBER 31, 1995 VERSUS THREE MONTHS ENDED DECEMBER 31,
1994
Operating results for the third quarter of fiscal 1996 reflected the steady
improvement in average time charter equivalent ("TCE") rates experienced by the
Company's fleet during the past 15 months. Despite a 7.1% decrease in fleet
size from 42 vessels in the third quarter of fiscal 1995 to 39 100%-owned
vessels in the third quarter of fiscal 1996, voyage revenues increased by 5.5%
to $84.6 million from $80.2 million. Net voyage revenue was up by 7.2%, to
$62.8 million in the third quarter of fiscal 1996 from $58.6 million in third
quarter of fiscal 1995. This reflects an improvement in TCE rates, as well as
the increased capacity and fuel efficiency associated with the Company's newer
fleet. The Company completed the sale of its last mid-1970's built tanker
during the third quarter of fiscal 1996. The disposal of these older and less
efficient vessels over the past two years has reduced the Company's fleet size,
without reducing net voyage revenues.
Vessel operating expenses decreased 12.5% to $16.8 million in the third quarter
of fiscal 1996 from $19.2 million in the third quarter of fiscal 1995, a
function of the reduced fleet size, as well as the result of a stable operating
cost environment and a more modern fleet.
Depreciation and amortization decreased 12.5% to $21.0 million in the third
quarter of fiscal 1996 from $24.0 million in the third quarter of fiscal 1995,
again a function of the reduction in fleet size, and as a result of a revision
to estimates of residual values of the Company's vessels which reduced
depreciation expense by approximately $2.6 million in the third quarter of
fiscal 1996. Depreciation and amortization expense included amortization of
drydocking costs of $2.3 million in the third quarter of fiscal 1996 and $2.5
million in the third quarter of fiscal 1995.
General and administrative expenses increased 8.1% to $4.0 million in the third
quarter of fiscal 1996 from $3.7 million in the third quarter of fiscal 1995,
primarily as a result of increased administrative costs subsequent to the
acquisition of Teekay Shipping Limited in March, 1995.
14
<PAGE> 15
The combination of improved TCE rates, a more modern and efficient fleet, and
stable costs, resulted in a 72.6% increase in income from vessel operations to
$20.2 million in the third quarter of fiscal 1996 from $11.7 million in the
third quarter of fiscal 1995.
Interest expense decreased 8.1% to $14.8 million in the third quarter of fiscal
1996 from $16.1 million in the third quarter of fiscal 1995, mainly as a result
of a reduction in debt levels. As of December 31, 1995 the Company had a total
of $734.7 million in debt and capital lease obligations, down from $865.4
million a year earlier. A continued decline in the Company's total debt and a
reduction in the Company's average credit spread on commercial bank borrowings
were offset by an increase in short-term interest rates. Changes in market
interest rates have had a delayed effect on interest expense, as rates on the
Company's floating rate debt are set in advance for three to six month periods.
Interest income was $1.8 million in the third quarter of fiscal 1996, up from
$1.5 million in the third quarter of fiscal 1995 as a result of higher cash and
marketable securities balances.
Other income totalled $6.0 million in the third quarter of fiscal 1996,
including a $5.2 million gain on the sale of a vessel. Other income in the
third quarter of fiscal 1995 totalled $2.6 million, which included a $4.0
million gain on the sale of a vessel, partially offset by a $1.0 million equity
loss from the Company's 50% investment in Viking Consolidated Shipping
Corporation ("VCSC") during the period. Both of the vessels sold were
mid-1970's built Aframax tankers.
NINE MONTHS ENDED DECEMBER 31, 1995 VERSUS NINE MONTHS ENDED DECEMBER 31, 1994
Despite a 9.3% decrease in average fleet size from 43 to 39 100%-owned vessels,
voyage revenues increased by 1.1% to $245.5 million in the first three
quarters of fiscal 1996 from $242.9 million in the first three quarters of
fiscal 1995, and net voyage revenue was up 1.0%, to $180.3 million from $178.9
million. This reflects an improvement in tanker charter market conditions, as
well as the increased capacity and fuel efficiency associated with a more
modern fleet.
Vessel operating expenses decreased 12.8% to $50.3 million in the first three
quarters of fiscal 1996 from $57.7 million in the first three quarters of
fiscal 1995, a result of the decline in fleet size, as well as the result of a
stable operating cost environment and a more modern fleet.
Depreciation and amortization decreased 14.1% to $62.0 million in the first
three quarters of fiscal 1996 from $72.2 million in the first three quarters of
fiscal 1995, due to the decline in fleet size and a revision to estimates of
residual values of the Company's vessels which reduced depreciation expense by
approximately $7.4 million in the first three quarters of fiscal 1996.
Depreciation and amortization expense included amortization of drydocking costs
of $6.5 million in the first three quarters of fiscal 1996 and $7.5 million in
the first three quarters of fiscal 1995.
General and administrative expenses increased 7.6% to $12.8 million in the
first three quarters of fiscal 1996 from $11.9 million in the first three
quarters of fiscal 1995 primarily as a result of increased administrative costs
subsequent to the acquisition of Teekay Shipping Limited in March, 1995.
As a result of the above, income from vessel operations increased 46.6% to
$54.4 million in the first three quarters of fiscal 1996 from $37.1 million in
the first three quarters of fiscal 1995.
Interest expense decreased 3.0% to $46.0 million in the first three quarters of
fiscal 1996, compared to $47.4 million in the first three quarters of fiscal
1995. A continued decline in the Company's total debt and a reduction in the
Company's average credit spread on commercial bank borrowings were offset by
the increase in short-term interest rates which occurred during 1994. Changes
in market interest rates have had a delayed effect on interest expense, as
rates on the Company's floating rate debt are set in advance for three to six
month periods. Interest income increased 13.6% to $5.0 million in the first
three quarters of fiscal 1996 from $4.4 million in the first three quarters of
fiscal 1995 as a result of higher cash and marketable securities balances.
15
<PAGE> 16
Other income during the first three quarters of fiscal 1996 was $9.9 million,
consisting primarily of $8.9 million in gains on the sale of two vessels.
Other income during the first three quarters of fiscal 1995 was $3.7 million,
consisting primarily of $7.7 million in gains on the sale of two vessels,
offset by a $2.9 million loss on marketable securities and a $1.0 million
equity loss from the Company's 50% investment in VCSC.
The following table illustrates the relationship between fleet size (measured
in ship-days), time charter equivalent ("TCE") per revenue-generating ship-day
performance, and operating results per calendar ship-day:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DEC 31/95 DEC 31/94 DEC 31/95 DEC 31/94
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total calendar ship-days 3,590 3,847 10,670 11,715
Non-revenue days 188 160 533 619
--------------------------------------------------------------------------------------------
Revenue-generating ship-days (A) 3,402 3,687 10,137 11,096
--------------------------------------------------------------------------------------------
Net voyage revenue (000's) $ 62,793 $ 58,606 $ 180,285 $ 178,862
Add back: commissions (000's) 1,322 1,320 3,905 3,871
--------------------------------------------------------------------------------------------
Net voyage revenue before
commissions (B) (000's) $ 64,115 $ 59,926 $ 184,190 $ 182,733
--------------------------------------------------------------------------------------------
TCE per revenue-generating
ship-day (B/A) $ 18,846 $ 16,253 $ 18,170 $ 16,468
--------------------------------------------------------------------------------------------
Operating results per calendar ship-day:
Net voyage revenue $ 17,491 $ 15,234 $ 16,896 $ 15,268
Vessel operating expense 4,733 4,995 4,732 4,924
General and administrative
expense 1,107 969 1,198 1,014
Drydocking expense 633 662 605 641
--------------------------------------------------------------------------------------------
Operating cash flow per
calendar ship-day $ 11,018 $ 8,608 $ 10,361 $ 8,689
--------------------------------------------------------------------------------------------
</TABLE>
The decrease in calendar ship-days in the third quarter and first three
quarters of fiscal 1996 is a result of the disposal of older Aframax tankers as
part of the Company's fleet modernization program.
TCE per revenue-generating ship-day increased 16.0% in the third quarter and
10.3% in the first three quarters of fiscal 1996 over the comparable prior
periods, reflecting the improvement in charter market conditions as well as the
increased capacity and fuel efficiency of a more modern fleet.
Total expenses, including drydocking and general and administrative expenses,
were relatively constant on a per-day basis throughout the periods shown above.
Therefore, the increases in TCE per revenue-generating ship-day caused
operating cash flow per calendar ship-day to increase by 28.0% in the third
quarter and 19.2% in the first three quarters of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of the Company relate to servicing its debt, funding
the equity portion of investments in vessels, funding working capital and
maintaining cash reserves against fluctuations in operating cash flow. Net
cash flow generated by operations has historically been the main source of
liquidity for the Company. Additional sources
16
<PAGE> 17
of liquidity have included proceeds from asset sales and refinancings.
During the current fiscal year, the Company has undertaken further steps to
improve its financial position and liquidity. During the first quarter of
fiscal 1996, the Company refinanced certain of its existing term debt as well
as $23.8 million of 9 5/8% First Preferred Ship Mortgage Notes with a new $223
million corporate revolving credit facility at improved rates and credit terms.
The revolving credit facility also provided an additional $20 million of
liquidity to the Company. In July 1995, the Company received $137.6 million
net proceeds from its initial public offering of common stock, thereby further
boosting liquidity and reducing debt through a $135 million reduction in the
amount outstanding under the revolving credit facility. Subsequent to December
31, 1995, the Company completed an offering of $225 million of 8.32% First
Preferred Ship Mortgage Notes due 2008, the proceeds of which were used to
refinance existing floating rate debt. In addition, subsequent to December 31,
1995, the Company prepaid an additional $35 million of other floating rate debt
which will be applied to reduce the scheduled principal repayments of certain
loans over the next two years by one-half.
Net cash flow from operations was $71.6 million in the first three quarters of
fiscal 1996 compared to $72.5 million during the first three quarters of fiscal
1995. Higher income from operations was offset by an increase in non-cash
working capital balances.
During the first three quarters of fiscal 1996, the Company sold two older
secondhand vessels resulting in net proceeds of $11.3 million. In addition,
the Company received cash proceeds totalling $17.2 million in the first
quarter of fiscal 1996 from the receipt of vessel sales proceeds receivable at
the end of fiscal 1995.
The Company took delivery of two modern second-hand Aframax tankers and one
newbuilding double-hull Aframax tanker during the first three quarters of
fiscal 1996, as replacements for older tankers recently sold, resulting in
expenditures of $46.9 million net of capital lease financing of $44.6 million.
The Company has entered into agreements for a one-year time-charter and
subsequent purchase of a modern Aframax tanker, and for the construction of a
newbuilding double-hull Aframax tanker, scheduled for delivery in July 1997,
for a total cost of $71.0 million. The Company has also entered into an
agreement to purchase an Aframax tanker from its VCSC joint venture for a cost
of $30.5 million. A long-term financing arrangement exists for approximately
$35.6 million of the unpaid cost of one of these vessels. The remaining unpaid
cost will be financed through existing lines of credit and cash and marketable
securities balances.
The Company has outstanding a number of interest rate swap agreements with
commercial banks covering a total notional principal amount of $350 million as
at December 31, 1995. The agreements expire between January 1996 and December
1998 and have an average remaining life of 25.5 months. These agreements
effectively change the Company's interest rate exposure on $350 million of debt
from a floating LIBOR rate to an average fixed rate of 6.08%. The Company also
has outstanding $200 million of interest rate caps with a strike price of 8.00%
vs. 3 month LIBOR. These caps expire in April 1997.
At December 31, 1995, the Company's total liquidity, including cash, marketable
securities and undrawn lines of credit, totalled $243.8 million, as compared to
$85.7 million as at March 31, 1995. The Company believes that its financial
resources are sufficient to meet its liquidity needs.
17
<PAGE> 18
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
(FORMERLY VIKING STAR SHIPPING INC.)
DECEMBER 31, 1995
PART II: OTHER INFORMATION
Item 1 - Legal Proceedings
Item 2 - Changes in Securities
Item 3 - Defaults Upon Senior Securities
Item 4 - Submission of Matters to a Vote of Security Holders
Item 5 - Other Information
Item 6 - Exhibits and Reports on Form 6-K
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 6-K
THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE
REGISTRATION STATEMENT OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON
OCTOBER 4, 1995.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEEKAY SHIPPING CORPORATION
Date: February 8, 1996 By: /s/ Anthony Gurnee
-------------------------------
Anthony Gurnee,
Vice-President and Chief Financial
Officer
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY
SHIPPING CORPORATION AND SUSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 68,441
<SECURITIES> 48,896
<RECEIVABLES> 24,102
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 160,891
<PP&E> 1,540,875
<DEPRECIATION> 357,851
<TOTAL-ASSETS> 1,358,259
<CURRENT-LIABILITIES> 63,488
<BONDS> 697,957
0
0
<COMMON> 232,854
<OTHER-SE> 363,960
<TOTAL-LIABILITY-AND-EQUITY> 1,358,960
<SALES> 0
<TOTAL-REVENUES> 245,540
<CGS> 0
<TOTAL-COSTS> 65,255
<OTHER-EXPENSES> 125,844
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,985
<INCOME-PRETAX> 23,346
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,346
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
