<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
-------------------------
For the quarterly period ended June 30, 1996
-----------------
TEEKAY SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293,
Nassau, The Bahamas
(Address of principal executive office)
------------------------------
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
---- ----
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No X
----- -----
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82-___________]
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Page 1 of 16
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
INDEX
PART I: FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Statements of Income
and Retained Earnings for the three months
ended June 30, 1996 and 1995................................... 3
Consolidated Balance Sheets -
June 30, 1996 and March 31, 1996............................... 4
Consolidated Statements of Cash Flows
for the three months ended June 30, 1996
and 1995....................................................... 5
Notes to Consolidated Financial
Statements..................................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................. 12
PART II: OTHER INFORMATION.................................................. 15
SIGNATURES................................................................... 16
2
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(in thousands of U.S. dollars)
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
---- ----
$ (UNAUDITED) $
- --------- -
NET VOYAGE REVENUES
Voyage revenues 90,015 79,284
Voyage expenses 24,907 21,796
- --------------------------------------------------------------------------------
Net voyage revenues 65,108 57,488
- --------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 17,668 16,667
Time-charter hire expense 1,663
Depreciation and amortization 22,390 20,879
General and administrative 4,396 4,264
- --------------------------------------------------------------------------------
46,117 41,810
- --------------------------------------------------------------------------------
Income from vessel operations 18,991 15,678
- --------------------------------------------------------------------------------
OTHER ITEMS
Interest expense (15,046) (15,501)
Interest income 1,479 1,547
Other income (loss) (NOTE 8) (30) (467)
- --------------------------------------------------------------------------------
(13,597) (14,421)
- --------------------------------------------------------------------------------
NET INCOME 5,394 1,257
Retained earnings, beginning of the period 363,690 406,547
- --------------------------------------------------------------------------------
369,084 407,804
Dividends declared and paid (6,000)
- --------------------------------------------------------------------------------
RETAINED EARNINGS, END OF THE PERIOD 363,084 407,804
- --------------------------------------------------------------------------------
Net income per common share (NOTE 6) $0.19 $0.07
Weighted average number of
common shares outstanding (NOTE 6) 27,977,813 18,000,000
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
As at As at
----- -----
June 30, March 31,
------- ---------
1996 1996
---- ----
$ $
--- ---
(Unaudited)
-----------
ASSETS
CURRENT
Cash and cash equivalents 117,973 99,790
Restricted cash 1,663 1,990
Accounts receivable
-trade 22,479 22,213
-other 2,876 2,725
Prepaid expenses and other assets 15,532 15,331
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 160,523 142,049
- --------------------------------------------------------------------------------
VESSELS AND EQUIPMENT (NOTES 5 AND 7)
At cost, less accumulated depreciation of $396,357
(March 31, 1996 - $377,105) 1,209,752 1,193,557
Advances on vessels 2,228 5,250
- --------------------------------------------------------------------------------
Total vessels and equipment 1,211,980 1,198,807
- --------------------------------------------------------------------------------
Investment 1,342 1,624
Other assets 12,533 12,821
- --------------------------------------------------------------------------------
1,386,378 1,355,301
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- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable 11,117 11,761
Accrued liabilities 32,404 18,303
Current portion of long-term debt (NOTES 5 AND 7) 19,102 19,102
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 62,623 49,166
- --------------------------------------------------------------------------------
Long-term debt (NOTES 5 AND 7) 721,964 706,740
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 784,587 755,906
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock (note 6) 238,707 235,705
Retained earnings 363,084 363,690
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 601,791 599,395
- --------------------------------------------------------------------------------
1,386,378 1,355,301
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Commitments and contingencies (NOTE 7)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
---- ----
$ (UNAUDITED) $
- --------- -
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income 5,394 1,257
Add (deduct) charges to operations not requiring
a payment of cash and cash equivalents:
Depreciation and amortization 22,390 20,879
Equity loss 574
Other 131 (70)
Change in non-cash working capital items related to
operating activities 12,839 (1,285)
- --------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATING ACTIVITIES 40,754 21,355
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 20,000 223,000
Scheduled repayments of long-term debt (4,776) (20,060)
Prepayments of long-term debt (184,121)
Decrease in restricted cash 327 3,593
Net proceeds from issuance of Common Stock 251
Cash dividends paid (3,249)
Other (223) 1,092
- --------------------------------------------------------------------------------
NET CASH FLOW FROM FINANCING ACTIVITIES 12,330 23,504
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (28,020) (44,509)
Expenditures for drydocking (7,163) (1,937)
Proceeds from disposition of assets 17,283
Proceeds on sale of available-for-sale securities 21,771
Purchases of available-for-sale securities (17,688)
Other 282 (5)
- --------------------------------------------------------------------------------
NET CASH FLOW FROM INVESTING ACTIVITIES (34,901) (25,085)
- --------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 18,183 19,774
Cash and cash equivalents, beginning of the period 99,790 16,500
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD 117,973 36,274
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT JUNE 30, 1996, AND FOR THE THREE-MONTH
PERIODS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
in the United States and the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures required
by generally accepted accounting principles for complete annual financial
statements have been omitted and, therefore, it is suggested that these
interim financial statements be read in conjunction with the Company's
audited financial statements for the fiscal year ended March 31, 1996. In
the opinion of management, these statements reflect all adjustments
(consisting only of normal recurring accruals), necessary to present
fairly, in all material respects, the Company's consolidated financial
position, results of operations and cash flows for the interim periods
presented. The results of operations for the three-month period ended June
30, 1996 are not necessarily indicative of those for a full fiscal year.
Certain of the prior period comparative figures have been reclassified
where necessary to conform with the presentation used in the current
period.
2. ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company accounts for its stock option plan in accordance with
provisions of the Accounting Principles Board's Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees." In 1995, the Financial
Accounting Standards Board released the Statement of Financial Accounting
Standard No. 123 (SFAS 123), "Accounting for Stock-Based Compensation."
SFAS 123 provides an alternative to APB 25 and is effective for fiscal
years beginning after December 15, 1995. The Company expects to continue
to account for its employee stock plans in accordance with the provisions
of APB 25 and will disclose the required proforma effect on net income and
earnings per share.
3. CASH FLOWS
Cash interest paid during the three-month periods ended June 30, 1996 and
1995 totalled approximately $6,757,000 and $12,424,000, 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
JUNE 30, MARCH 31,
1996 1996
$ $
----------------------------------------------------------------------------
Revolving Credit Facility 138,000 118,000
First Preferred Ship Mortgage Notes (8.32%)
U.S. dollar debt through 2008 225,000 225,000
First Preferred Ship Mortgage Notes (9 5/8%)
U.S. dollar debt due through 2004 151,200 151,200
Floating rate (LIBOR + 1% to 1 1/2%)
U.S. dollar debt due through 2006 226,866 231,642
----------------------------------------------------------------------------
741,066 725,842
Less current portion of long-term debt 19,102 19,102
----------------------------------------------------------------------------
721,964 706,740
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6
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT JUNE 30, 1996, AND FOR THE THREE-MONTH
PERIODS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
5. LONG-TERM DEBT (CONT'D)
The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the
"8.32% Notes") are collateralized by first preferred mortgages on seven of
the Company's Aframax tankers, together with certain other related
collateral, and are guaranteed by seven subsidiaries of Teekay that own the
mortgaged vessels (the "8.32% Notes Guarantor Subsidiaries") to a maximum
of 95% of the fair value of their net assets. As at June 30, 1996, the
fair value of these net assets approximated $290 million.
The 9 5/8% First Preferred Ship Mortgage Notes due July 15, 2003 (the "9
5/8% Notes") are collateralized by first preferred mortgages on six of the
Company's Aframax tankers, together with certain other related collateral,
and are guaranteed by six subsidiaries of Teekay that own the mortgaged
vessels (the "9 5/8% Notes Guarantor Subsidiaries") to a maximum of 95% of
the fair value of their net assets. As at June 30, 1996, the fair value of
these net assets approximated $199 million.
Condensed financial information regarding the Company, the 9 5/8% Notes
Guarantor Subsidiaries, the 8.32% Notes Guarantor Subsidiaries and non-
guarantor subsidiaries of the Company is set out in Schedule A of these
consolidated financial statements.
As at June 30, 1996, the Company was committed to a series of interest rate
swap agreements whereby $150 million of the Company's floating rate debt
was swapped with fixed rate obligations having an average remaining term of
28.5 months. The swap agreements expire between October 1998 and December
1998. These arrangements effectively change the Company's interest rate
exposure on $150 million of debt from a floating LIBOR rate to an average
fixed rate of 5.85%. As at June 30, 1996, the Company was a party to
interest rate cap contracts which effectively limit the interest rate
exposure on $200 million of the Company's floating rate debt to a maximum
of 8%. All of the contracts expire on April 1, 1997. The Company is
exposed to credit loss in the event of non-performance by the counter
parties to the interest rate swap and cap agreements; however, the Company
does not anticipate non-performance by any of the counter parties.
6. CAPITAL STOCK
AUTHORIZED
25,000,000 Preferred Stock with a par value of $1 per share.
125,000,000 Common Stock with no par value
---------------------------------------------------------------------------
Common Thousands Preferred Thousands
Issued and outstanding Stock of shares Stock of shares
---------------------------------------------------------------------------
Balance March 31, 1996 $235,705 27,904 $0 0
Reinvested dividends 2,751 100
Exercise of stock options 251 11
---------------------------------------------------------------------------
Balance June 30, 1996 $238,707 28,015 $0 0
---------------------------------------------------------------------------
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7
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS)
(INFORMATION AS AT JUNE 30, 1996, AND FOR THE THREE-MONTH
PERIODS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
6. CAPITAL STOCK (CONT'D)
The Company has reserved 2,148,571 shares of Common Stock for issuance upon
exercise of options granted pursuant to the Company's 1995 Stock Option
Plan. As at June 30, 1996, options to purchase a total of 1,109,000 shares
of the Company's Common Stock were outstanding, of which 568,375 options
were then exercisable at $21.50 per share. The options outstanding are
exercisable at prices ranging from $21.50 to $27.375 per share and expire
between July 19, 2005 and May 28, 2006, ten years after the date of grant.
Net income per share is based upon the weighted average number of common
shares outstanding during each period. Stock options have not been
included in the computation of net income per common share since their
effect thereon would not be material.
7. COMMITMENTS AND CONTINGENCIES
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 of $26.5 million. The cost of this vessel will be financed through
cash balances. As at June 30, 1996, the Company was committed to the
construction of an Aframax vessel for a cost of $44.5 million, scheduled
for delivery in July 1997. A long-term financing arrangement exists for
approximately $35.6 million of the unpaid cost of this vessel.
8. OTHER INCOME (LOSS)
THREE MONTHS
ENDED JUNE 30,
-----------------
1996 1995
$ $
---------------------------------------------------------------------------
Equity in results of 50% owned company (574)
Miscellaneous - net (30) 107
---------------------------------------------------------------------------
(30) (467)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
8
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1996
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net voyage revenues 7,549 8,962 95,209 (46,612) 65,108
Operating expenses 415 5,537 8,500 78,277 (46,612) 46,117
---------------------------------------------------------------------------------------------
Income (loss) from vessel
operations (415) 2,012 462 16,932 18,991
Net interest income (expense) (8,421) 37 56 (5,239) (13,567)
Equity in net income (loss)
of subsidiaries 14,182 (14,182)
Other income (loss) 48 3,054 (3,132) (30)
---------------------------------------------------------------------------------------------
Net income 5,394 2,049 518 14,747 (17,314) 5,394
Retained earnings (deficit),
beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690
---------------------------------------------------------------------------------------------
369,084 19,426 (727) 81,440 (100,139) 369,084
Dividends declared and paid (6,000) (6,000)
---------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 363,084 19,426 (727) 81,440 (100,139) 363,084
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended June 30, 1995
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net voyage revenues 7,192 12,608 99,667 (61,979) 57,488
Operating expenses 471 5,559 7,553 90,206 (61,979) 41,810
---------------------------------------------------------------------------------------------
Income (loss) from vessel
operations (471) 1,633 5,055 9,461 15,678
Net interest income (expense) (3,198) (5) (3,970) (6,781) (13,954)
Equity in net income (loss)
of subsidiaries 3,811 (4,385) (574)
Other income (loss) 1,115 (1,008) 107
---------------------------------------------------------------------------------------------
Net income 1,257 1,628 1,085 1,672 (4,385) 1,257
Retained earnings (deficit),
beginning of the period 406,547 22,309 (5,027) 89,301 (106,583) 406,547
---------------------------------------------------------------------------------------------
407,804 23,937 (3,942) 90,973 (110,968) 407,804
Dividends declared and paid (7,200) (35,200) 42,400
---------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 407,804 16,737 (3,942) 55,773 (68,568) 407,804
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
(See Note 5)
9
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at June 30, 1996
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 247 13,013 10,964 93,749 117,973
Restricted cash 1,663 1,663
Other current assets 212 1,554 1,018 38,293 (190) 40,887
---------------------------------------------------------------------------------------------
Total current assets 459 14,567 11,982 133,705 (190) 160,523
Vessels and equipment (net) 139,136 357,452 715,392 1,211,980
Advances due from subsidiaries 371,707 (371,707)
Other assets (principally
investments in subsidiaries) 620,516 12,538 (619,179) 13,875
---------------------------------------------------------------------------------------------
992,682 153,703 369,434 861,635 (991,076) 1,386,378
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 14,691 2,261 639 45,222 (190) 62,623
Long-term debt 376,200 345,764 721,964
Due to parent 378,328 (378,328)
---------------------------------------------------------------------------------------------
Total liabilities 390,891 2,261 639 769,314 (378,518) 784,587
---------------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 238,707 6 23 5,933 (5,962) 238,707
Contributed capital 132,010 369,499 4,948 (506,457)
Retained earnings (deficit) 363,084 19,426 (727) 81,440 (100,139) 363,084
---------------------------------------------------------------------------------------------
Total stockholders' equity 601,791 151,442 368,795 92,321 (612,558) 601,791
---------------------------------------------------------------------------------------------
992,682 153,703 369,434 861,635 (991,076) 1,386,378
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
<CAPTION>
As at March 31, 1996
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 28 8,613 5,210 85,939 99,790
Restricted cash 1,990 1,990
Other current assets 293 1,475 1,064 37,527 (90) 40,269
---------------------------------------------------------------------------------------------
Total current assets 321 10,088 6,274 125,456 (90) 142,049
Vessels and equipment (net) 139,652 362,424 696,731 1,198,807
Advances due from subsidiaries 372,233 (372,233)
Other assets (principally
investments in subsidiaries) 606,269 12,826 (604,650) 14,445
---------------------------------------------------------------------------------------------
978,823 149,740 368,698 835,013 (976,973) 1,355,301
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 3,228 539 613 44,876 (90) 49,166
Long-term debt 376,200 330,540 706,740
Due to parent 382,023 (382,023)
---------------------------------------------------------------------------------------------
Total liabilities 379,428 539 613 757,439 (382,113) 755,906
---------------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 235,705 6 23 5,933 (5,962) 235,705
Contributed capital 131,818 369,307 4,948 (506,073)
Retained earnings (deficit) 363,690 17,377 (1,245) 66,693 (82,825) 363,690
---------------------------------------------------------------------------------------------
Total stockholders' equity 599,395 149,201 368,085 77,574 (594,860) 599,395
---------------------------------------------------------------------------------------------
978,823 149,740 368,698 835,013 (976,973) 1,355,301
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
(See Note 5)
10
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1996
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents
provided by (used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------------------------
Net cash flow from operating
activities 3,016 5,944 5,580 26,214 40,754
---------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 20,000 20,000
Repayments of long-term debt (4,776) (4,776)
Net proceeds from issuance of
Common Stock 251 251
Other (2,946) (199) (3,145)
---------------------------------------------------------------------------------------------
Net cash flow from financing
activities (2,695) 15,025 12,330
---------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels
and equipment (1,736) (19) (33,428) (35,183)
Proceeds from disposition
of assets
Other (102) 192 193 (1) 282
---------------------------------------------------------------------------------------------
Net cash flow from investing
activities (102) (1,544) 174 (33,429) (34,901)
---------------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 219 4,400 5,754 7,810 18,183
Cash and cash equivalents,
beginning of the period 28 8,613 5,210 85,939 99,790
---------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of the period 247 13,013 10,964 93,749 117,973
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended June 30, 1995
---------------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp
Shipping Corp Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents
provided by (used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------------------------
Net cash flow from operating
activities (2,036) 3,903 5,570 13,918 21,355
---------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 223,000 223,000
Repayments of long-term debt (22,580) (15,463) (166,138) (204,181)
Net proceeds from issuance of
Common Stock
Other (24,869) (7,200) 8,390 28,364 4,685
---------------------------------------------------------------------------------------------
Net cash flow from financing
activities (47,449) (7,200) (7,073) 85,226 23,504
---------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and
equipment (147) (123) (46,176) (46,446)
Proceeds from disposition
of assets 17,283 17,283
Other 49,409 444 (45,775) 4,078
---------------------------------------------------------------------------------------------
Net cash flow from investing
activities 49,409 297 (123) (74,668) (25,085)
---------------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (76) (3,000) (1,626) 24,476 19,774
Cash and cash equivalents,
beginning of the period 97 5,886 3,076 7,441 16,500
---------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of the period 21 2,886 1,450 31,917 36,274
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
(See Note 5)
11
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
JUNE 30, 1996
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Teekay Shipping Corporation (the "Company") is a leading provider of
international crude oil and petroleum product transportation services to major
oil companies, major oil traders, and government agencies, principally in the
region spanning from the Red Sea to the U.S. West Coast. The Company's fleet
consists of 42 tankers, including 38 Aframax oil tankers and oil/bulk/ore
carriers, two smaller tankers, one VLCC and, through a joint venture, a 50%
interest in an additional Aframax tanker, for a total cargo-carrying capacity of
approximately 4.2 million tonnes.
Approximately 82% of the Company's net revenue is currently derived from spot
voyages. This dependence on spot voyages, which management believes is within
industry norms, contributes to the volatility of the Company's revenue, cash
flow from operations, and net income. The balance of the Company's revenue is
generated by two other modes of employment: time charters, whereby vessels are
chartered to customers for a fixed period at a fixed rate; and by contracts of
affreightment, whereby the Company carries an agreed quantity of cargo for a
customer over a specified trade route over a specified period of time.
Management believes that the Company has a competitive advantage over other
tanker owners in the Aframax spot market.
Historically, the tanker industry has been cyclical, experiencing volatility in
profitability resulting from changes in the supply of and demand for tankers.
Additionally, tanker markets have exhibited seasonal variations in charter
rates. Tanker markets are typically stronger in the winter months as a result
of increased oil consumption in the northern hemisphere and unpredictable winter
weather patterns which tend to disrupt vessel scheduling.
Bulk shipping industry freight rates are commonly measured at the net voyage
revenue level in terms of "time charter equivalent" (or "TCE") rates, defined as
voyage revenues less voyage expenses (excluding commissions), divided by
revenue-generating ship-days for the round-trip voyage. Voyage revenues and
voyage expenses are a function of the type of charter, either spot charter or
time charter, and port, canal and fuel costs depending on the trade route upon
which a vessel is sailing, in addition to being a function of the level of
shipping freight rates. For this reason, shipowners base economic decisions
regarding the deployment of their vessels upon anticipated TCE rates, and
industry analysts typically measure bulk shipping freight rates in terms of TCE
rates. Therefore, the discussion of revenue below focuses on net voyage revenue
and TCE rates.
FIRST QUARTER FISCAL 1997 VERSUS FIRST QUARTER FISCAL 1996
Teekay's net income was $5.4 million, or 19 cents per share, in the first
quarter of fiscal 1997, up from $1.3 million, or 7 cents per share, in the first
quarter of fiscal 1996, reflecting a continued, gradual improvement in the
tanker charter market.
INCOME FROM VESSEL OPERATIONS
The Company's fleet was 6.5% larger on average in the first quarter of fiscal
1997 than in the first quarter of fiscal 1996, due to the acquisition of four
modern Aframax tankers during the past year, partially offset by the disposal of
the Company's two remaining mid-1970s-built tankers.
12
<PAGE>
Net voyage revenues were $65.1 million in the first quarter of fiscal 1997, an
increase of 13.3% as compared to the first quarter of fiscal 1996. This
reflects the increase in fleet size as well as an improvement in tanker charter
market conditions, with an average TCE rate of $19,061 in the first quarter of
fiscal 1997, up 7.9% from $17,674 in the first quarter of fiscal 1996.
Expenses increased in line with the larger fleet. Depreciation and amortization
expense included amortization of drydocking costs of $2.6 million in the first
quarter of fiscal 1997 and $2.1 million in the first quarter of fiscal 1996.
The combination of an increased average TCE rate and a larger fleet resulted in
a 21.1% increase in income from vessel operations, to $19.0 million in the first
quarter of fiscal 1997 from $15.7 million in the first quarter of fiscal 1996.
The following table illustrates the relationship between fleet size (measured in
ship-days), time charter equivalent ("TCE") per revenue-generating ship-day
performance, and operating results per calendar ship-day:
FIRST QUARTER FIRST QUARTER
FISCAL 1997 FISCAL 1996
- --------------------------------------------------------------------------------
Total calendar ship-days 3,702 3,477
Non-revenue days 212 157
- --------------------------------------------------------------------------------
Revenue-generating ship-days (A) 3,490 3,320
- --------------------------------------------------------------------------------
Net voyage revenue before commissions (B) (000's) $66,523 $58,678
- --------------------------------------------------------------------------------
Time charter equivalent (TCE) (B/A) $19,061 $17,674
- --------------------------------------------------------------------------------
Operating results per calendar ship-day:
Net voyage revenue $17,587 $16,534
Vessel operating expense 4,893 4,794
General and administrative expense 1,187 1,226
Drydocking expense 699 611
- --------------------------------------------------------------------------------
Operating cash flow per calendar ship-day $10,808 $9,903
- --------------------------------------------------------------------------------
INTEREST EXPENSE
Interest expense decreased 2.9% to $15.0 million in the first quarter of fiscal
1997, from $15.5 million in the first quarter of fiscal 1996, reflecting a
reduction in the Company's total debt, partially offset by higher interest
rates.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1997, the Company's total liquidity,
including cash, cash equivalents and undrawn long-term lines of credit,
decreased slightly to $184.0 million as at June 30, 1996 from $195.3 million as
at March 31, 1996. This slight decline in liquidity was largely due to the
purchase of a second-hand Aframax tanker, renamed the SEMAKAU SPIRIT, during
the quarter.
13
<PAGE>
Net cash flow from operating activities was $40.8 million in the first quarter
of fiscal 1997, compared to $21.4 million in the first quarter of fiscal 1996.
The increase was mainly caused by a reduction in non-cash working capital
balances, and higher income from operations.
During the first quarter of fiscal 1997, the Company had capital expenditures
for vessels and equipment of $28.0 million as a result of the delivery of the
SEMAKAU SPIRIT. To finance this acquisition, the Company drew an additional
$20.0 million of its long-term revolving credit facility. Capital expenditures
for drydocking were higher than average, at $7.1 million in the quarter,
reflecting a larger than usual number of scheduled drydockings.
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 remaining unpaid cost of $68.8 million for
these two vessels will be financed through a $35.6 million financing arrangement
for the newbuilding, existing lines of credit, and cash balances.
The Company's scheduled debt repayments were $4.8 million during the first
quarter of fiscal 1997, down from $20.1 million in the first quarter of fiscal
1996 as a result of debt refinancings in fiscal 1996.
Dividend payments during the first quarter of fiscal 1997 were $6.0 million, or
21.5 cents per share, of which $3.2 million was paid in cash and $2.8 million
was paid in the form of common shares issued under the Company's dividend
reinvestment plan.
14
<PAGE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
JUNE 30, 1996
PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 6-K
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 6-K
None
THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE
REGISTRATION STATEMENT OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON
OCTOBER 4, 1995.
15
<PAGE>
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: August 9, 1996 By: /s/ Anthony Gurnee
----------------------------
Anthony Gurnee
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY
SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 117,973
<SECURITIES> 0
<RECEIVABLES> 22,479
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 160,523
<PP&E> 1,608,337
<DEPRECIATION> 396,357
<TOTAL-ASSETS> 1,386,378
<CURRENT-LIABILITIES> 62,623
<BONDS> 721,964
0
0
<COMMON> 238,707
<OTHER-SE> 363,084
<TOTAL-LIABILITY-AND-EQUITY> 1,386,378
<SALES> 0
<TOTAL-REVENUES> 90,015
<CGS> 0
<TOTAL-COSTS> 24,907
<OTHER-EXPENSES> 46,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,046
<INCOME-PRETAX> 5,394
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,394
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,394
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
