UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 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- ]
Page 1 of 18
<PAGE> 2
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
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 six months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets -
September 30, 1996 and March 31, 1996 . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
for the six months ended September 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 . . . . . . . . .13
PART II: OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . .17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
</TABLE>
Page 2 of 18
<PAGE> 3
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
$ (Unaudited) $ $ (Unaudited)$
--------------- --------------
<S> <C> <C> <C> <C>
NET VOYAGE REVENUES
Voyage revenues 94,158 81,660 184,173 160,944
Voyage expenses 24,646 21,656 49,553 43,452
-----------------------------------------------------------------------------------------------------
Net voyage revenues 69,512 60,004 134,620 117,492
-----------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 17,744 16,829 35,412 33,496
Time-charter hire expense 1,680 3,343
Depreciation and amortization 22,521 20,077 44,911 40,956
General and administrative 4,699 4,548 9,095 8,812
-----------------------------------------------------------------------------------------------------
46,644 41,454 92,761 83,264
-----------------------------------------------------------------------------------------------------
Income from vessel operations 22,868 18,550 41,859 34,228
-----------------------------------------------------------------------------------------------------
Other items
Interest expense (15,021) (15,729) (30,067) (31,230)
Interest income 1,674 1,635 3,153 3,182
Other income (note 8) (444) 4,318 (474) 3,851
-----------------------------------------------------------------------------------------------------
(13,791) (9,776) (27,388) (24,197)
-----------------------------------------------------------------------------------------------------
Net income 9,077 8,774 14,471 10,031
Retained earnings, beginning of the period 363,084 407,804 363,690 406,547
Exchange of redeemable preferred stock(note 6) (60,000) (60,000)
Dividends declared and paid (6,024) (12,024)
-----------------------------------------------------------------------------------------------------
Retained earnings, end of the period 366,137 356,578 366,137 356,578
=====================================================================================================
Net income per common share (note 6) $ 0.32 $ 0.34 $ 0.52 $ 0.46
Weighted average number of
common shares outstanding (note 6) 28,088,370 25,689,358 28,033,393 21,865,688
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3 of 18
<PAGE> 4
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at As at
----- -----
September 30, March 31,
------------- ---------
1996 1996
---- ----
$ $
--- ---
(Unaudited)
-----------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents 137,071 99,790
Restricted cash 1,659 1,990
Accounts receivable
-trade 21,698 22,213
-other 2,529 2,725
Prepaid expenses and other assets 15,319 15,331
--------------------------------------------------------------------------------------
Total current assets 178,276 142,049
--------------------------------------------------------------------------------------
Vessels and equipment (notes 5 and 7)
At cost, less accumulated depreciation of $415,339
(March 31, 1996 - $377,105) 1,194,182 1,193,557
Advances on vessels 4,925 5,250
--------------------------------------------------------------------------------------
Total vessels and equipment 1,199,107 1,198,807
--------------------------------------------------------------------------------------
Investment 958 1,624
Other assets 12,618 12,821
--------------------------------------------------------------------------------------
1,390,959 1,355,301
======================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 11,074 11,761
Accrued liabilities 25,736 18,303
Current portion of long-term debt (notes 5 and 7) 43,422 19,102
--------------------------------------------------------------------------------------
Total current liabilities 80,232 49,166
--------------------------------------------------------------------------------------
Long-term debt (notes 5 and 7) 702,869 706,740
--------------------------------------------------------------------------------------
Total liabilities 783,101 755,906
--------------------------------------------------------------------------------------
Stockholders' equity
Capital stock (note 6) 241,721 235,705
Retained earnings 366,137 363,690
--------------------------------------------------------------------------------------
Total stockholders' equity 607,858 599,395
--------------------------------------------------------------------------------------
1,390,959 1,355,301
======================================================================================
</TABLE>
Commitments and contingencies (note 7)
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4 of 18
<PAGE> 5
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Six Months Ended September 30,
------------------------------
1996 1995
---- ----
$ (Unaudited) $
-------------------
<S> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income 14,471 10,031
Add (deduct) charges to operations not requiring
a payment of cash and cash equivalents:
Depreciation and amortization 44,911 40,956
Gain on disposition of assets (3,728)
Equity loss (income) 384 (704)
Other - net 333 735
Change in non-cash working capital items related to
operating activities 1,634 (5,574)
------------------------------------------------------------------------------------------------------
Net cash flow from operating activities 61,733 41,716
------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 30,000 223,000
Scheduled repayments of long-term debt (9,551) (34,880)
Prepayments of long-term debt (317,901)
Scheduled repayments of capital lease obligation (640)
Decrease in restricted cash 331 4,011
Net proceeds from issuance of Common Stock 498 137,613
Cash dividends paid (6,506)
Other (320) (866)
------------------------------------------------------------------------------------------------------
Net cash flow from financing activities 14,452 10,337
------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (net of capital lease
financing of $NIL; September 30, 1995 - $44,550) (31,579) (47,527)
Expenditures for drydocking (7,607) (4,021)
Proceeds from disposition of assets 22,794
Proceeds on sale of available-for-sale securities 53,332
Purchases of available-for-sale securities (32,666)
Other 282
------------------------------------------------------------------------------------------------------
Net cash flow from investing activities (38,904) (8,088)
------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 37,281 43,965
Cash and cash equivalents, beginning of the period 99,790 16,500
------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of the period 137,071 60,465
======================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5 of 18
<page 6>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars)
(Information as at September 30, 1996, and for the Three-Month
and Six-Month Periods Ended September 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 and
six-month periods ended September 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 six-month periods ended September 30, 1996
and 1995 totalled approximately $30,032,000 and $31,895,000, 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> September 30, March 31,
1996 1996
$ $
<S> <C> <C>
---------------------------------------------------------------------------
Revolving Credit Facility (LIBOR + 1.05%) 148,000 118,000
First Preferred Ship Mortgage Notes (8.32%)
U.S. dollar debt due through 2008 225,000 225,000
First Preferred Ship Mortgage Notes (9 5/8%)
U.S. dollar debt due through 2004 151,200 151,200
Floating rate (LIBOR + 1% to 1 1/2%)
U.S. dollar debt due through 2006 222,091 231,642
----------------------------------------------------------------------------
746,291 725,842
Less current portion of long-term debt 43,422 19,102
----------------------------------------------------------------------------
702,869 706,740
============================================================================
</TABLE>
Page 6 of 18
<PAGE> 7
5. Long-Term Debt (cont'd)
The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the
"8.32% Notes") are collateralized by first preferred mortgages on seven of
the Company's Aframax tankers, together with certain other related
collateral, and are guaranteed by seven subsidiaries of Teekay that own
the mortgaged vessels (the "8.32% Notes Guarantor Subsidiaries") to a
maximum of 95% of the fair value of their net assets. As at September 30,
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 September 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 September 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 25.5 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 September 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
<TABLE>
<S> <C>
25,000,000 Preferred Stock with a par value of $1 per share.
125,000,000 Common Stock with no par value
</TABLE>
<TABLE>
<CAPTION>
================================================================================
Common Thousands Preferred Thousands
Issued and outstanding Stock of shares Stock of shares
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance March 31, 1996 $235,705 27,904 $0 0
Reinvested dividends 5,518 201
Exercise of stock options 498 23
--------------------------------------------------------------------------------
Balance September 30, 1996 $241,721 28,128 $0 0
================================================================================
</TABLE>
Page 7 of 18
<PAGE> 8
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 September 30, 1996, options to purchase a total of 1,097,537
shares of the Company's Common Stock were outstanding, of which 556,912
options were then exercisable at $21.50 per share. The remaining
outstanding options will be 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
As at September 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 $35.6 million of
the unpaid cost of this vessel.
8. Other Income
<TABLE>
<CAPTION> Three Months Six Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
$ $ $ $
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gain on disposition of assets 3,728 3,728
Equity in results of 50% owned company (384) 1,278 (384) 704
Miscellaneous - net (60) (688) (90) (581)
-------------------------------------------------------------------------------------
(444) 4,318 (474) 3,851
=====================================================================================
</TABLE>
9. Subsequent Events
Subsequent to September 30, 1996, the Company entered into two term loan
facilities, (the "Term Loan Facilities"), with seven commercial banks
providing for borrowings of up to $210 million in order to refinance
certain of the existing debt obligations of the Company. The Term Loan
Facilities are presently collateralized by first priority mortgages
granted on ten of the Company's Aframax tankers, together with certain
other related collateral, and a guarantee from the Company for all amounts
outstanding under the Term Loan Facilities. The Term Loan Facilities
mature in October 2003. Interest payments are based on LIBOR plus a
margin ranging from 0.55% to 0.85% which depends upon the financial
leverage of the Company. The current portion of long-term debt as at
September 30, 1996 has been adjusted to give effect to this refinancing.
Subsequent to September 30, 1996, the Company purchased a second-hand
Aframax tanker for $26.5 million, which was financed through one of the
Term Loan Facilities. This vessel was previously time-chartered-in by the
Company.
Page 8 of 18
<PAGE> 9
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1996
-----------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
-------------- ------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net voyage revenues 7,580 9,061 100,564 (47,693) 69,512
Operating expenses 427 5,601 8,751 79,558 (47,693) 46,644
-----------------------------------------------------------------------------------
Income (loss) from vessel operations (427) 1,979 310 21,006 22,868
Net interest income (expense) (8,318) 22 37 (5,088) (13,347)
Equity in net income (loss) of subsidiaries 17,774 (18,158) (384)
Other income (loss) 48 3,051 (3,159) (60)
-----------------------------------------------------------------------------------
Net income 9,077 2,001 347 18,969 (21,317) 9,077
Retained earnings(deficit), beginning of the period 363,084 19,426 (727) 81,440 (100,139) 363,084
Dividends declared and paid (6,024) (7,200) (9,450) 16,650 (6,024)
-----------------------------------------------------------------------------------
Retained earnings (deficit), end of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 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 7,400 13,819 98,447 (59,662) 60,004
Operating expenses 226 4,876 7,581 88,460 (59,689) 41,454
-----------------------------------------------------------------------------------
Income (loss) from vessel operations (226) 2,524 6,238 9,987 27 18,550
Net interest expense (4,116) (55) (4,034) (5,889) (14,094)
Equity in net income (loss) of subsidiaries 13,068 (11,790) 1,278
Other income 48 147 2,845 3,040
-----------------------------------------------------------------------------------
Net income 8,774 2,616 2,204 6,943 (11,763) 8,774
Retained earnings(deficit), beginning of the period 407,804 16,737 (3,942) 54,716 (67,511) 407,804
Dividends declared and paid (60,000) (60,000)
-----------------------------------------------------------------------------------
Retained earnings (deficit), end of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578
===================================================================================
</TABLE>
(See Note 5)
Page 9 of 18
<PAGE> 10
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Six Months Ended September 30, 1996
-----------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations &Subsidiaries
$ $ $ $ $ $
-------------- ------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net voyage revenues 15,129 18,023 195,773 (94,305) 134,620
Operating expenses 842 11,138 17,251 157,835 (94,305) 92,761
-----------------------------------------------------------------------------------
Income (loss) from vessel operations (842) 3,991 772 37,938 41,859
Net interest income (expense) (16,739) 59 93 (10,327) (26,914)
Equity in net income (loss) of subsidiaries 31,956 (32,340) (384)
Other income (loss) 96 6,105 (6,291) (90)
-----------------------------------------------------------------------------------
Net income 14,471 4,050 865 33,716 (38,631) 14,471
Retained earnings(deficit), beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690
Dividends declared and paid (12,024) (7,200) (9,450) 16,650 (12,024)
-----------------------------------------------------------------------------------
Retained earnings (deficit), end of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended September 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 14,592 26,427 198,114 (121,641) 117,492
Operating expenses 697 10,435 15,134 179,723 (122,725) 83,264
-----------------------------------------------------------------------------------
Income (loss) from vessel operations (697) 4,157 11,293 18,391 1,084 34,228
Net interest expense (7,314) (60) (8,004) (12,670) (28,048)
Equity in net income (loss) of subsidiaries 16,879 (16,175) 704
Other income 1,163 147 1,837 3,147
-----------------------------------------------------------------------------------
Net income 10,031 4,244 3,289 7,558 (15,091) 10,031
Retained earnings(deficit), beginning of the period 406,547 22,309 (5,027) 89,301 (106,583) 406,547
Exchange of redeemable preferred stock (60,000) (60,000)
Dividends declared and paid (7,200) (35,200) 42,400
-----------------------------------------------------------------------------------
Retained earnings (deficit), end of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578
===================================================================================
</TABLE>
(See Note 5)
Page 10 of 18
<PAGE> 11
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at September 30, 1996
----------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations &Subsidiaries
$ $ $ $ $ $
-------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 109 9,381 6,904 120,677 137,071
Restricted cash 1,659 1,659
Other current assets 147 854 1,022 37,605 (82) 39,546
---------------------------------------------------------------------------------------
Total current assets 256 10,235 7,926 159,941 (82) 178,276
Vessels and equipment (net) 140,731 352,464 705,912 1,199,107
Advances due from subsidiaries 369,045 (369,045)
Other assets (principally
investments in subsidiaries) 620,998 12,048 (619,470) 13,576
---------------------------------------------------------------------------------------
990,299 150,966 360,390 877,901 (988,597) 1,390,959
=======================================================================================
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 6,241 4,931 873 68,269 (82) 80,232
Long-term debt 376,200 326,669 702,869
Due to parent 371,673 (371,673)
---------------------------------------------------------------------------------------
Total liabilities 382,441 4,931 873 766,611 (371,755) 783,101
---------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 241,721 6 23 5,933 (5,962) 241,721
Contributed capital 131,802 369,324 4,948 (506,074)
Retained earnings (deficit) 366,137 14,227 (9,830) 100,409 (104,806) 366,137
---------------------------------------------------------------------------------------
Total stockholders' equity 607,858 146,035 359,517 111,290 (616,842) 607,858
---------------------------------------------------------------------------------------
990,299 150,966 360,390 877,901 (988,597) 1,390,959
=======================================================================================
</TABLE>
<TABLE>
<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)
Page 11 of 18
<PAGE> 12
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Six Months Ended September 30, 1996
---------------------------------------------------------------------------------------
9 5/8% Notes 8.32% Notes Teekay
Teekay Guarantor Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $ $
-------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------------------
Net cash flow from operating activities (13,802) 9,819 11,151 54,565 61,733
---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 30,000 30,000
Repayments of long-term debt (9,551) (9,551)
Net proceeds from issuance of Common Stock 498 498
Other (3,546) (7,200) (9,450) 13,701 (6,495)
---------------------------------------------------------------------------------------
Net cash flow from financing activities (3,048) (7,200) (9,450) 34,150 14,452
---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (1,835) (24) (37,327) (39,186)
Other 16,931 (16) 17 (16,650) 282
---------------------------------------------------------------------------------------
Net cash flow from investing activities 16,931 (1,851) (7) (53,977) (38,904)
---------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 81 768 1,694 34,738 37,281
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 109 9,381 6,904 120,677 137,071
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended September 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 (8,625) 8,239 12,535 29,567 41,716
---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 223,000 223,000
Repayments of long-term debt (22,580) (21,567) (309,274) (353,421)
Net proceeds from issuance of Common Stock 137,613 137,613
Other (155,520) (7,200) 11,267 154,598 3,145
---------------------------------------------------------------------------------------
Net cash flow from financing activities (40,487) (7,200) (10,300) 68,324 10,337
---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (749) (161) (50,638) (51,548)
Proceeds from disposition of assets 22,794 22,794
Other 49,146 431 (2,859) (26,052) 20,666
---------------------------------------------------------------------------------------
Net cash flow from investing activities 49,146 (318) (3,020) (53,896) (8,088)
---------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 34 721 (785) 43,995 43,965
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 131 6,607 2,291 51,436 60,465
=======================================================================================
</TABLE>
(See Note 5)
Page 12 of 18
<PAGE> 13
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
September 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 80% 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.
THREE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS THREE MONTHS ENDED SEPTEMBER 30,
1995
The Company's net income was $9.1 million, or 32 cents per share, in the
second quarter of fiscal 1997. This is up from $8.8 million, or 34 cents per
share, earned in the second quarter of fiscal 1996 which included $3.7 million,
or 15 cents per share, in gains on asset sales. This increase in earnings
reflects a continuation of the gradual year-over-year improvement in the tanker
charter market since the bottom of the market cycle in 1992. Aframax spot
charter rates in the Indo-Pacific basin improved relative to both the previous
quarter and one year ago, underpinning the Company's continued strong
performance relative to the open market, and resulting in the Company's best
chartering and cash flow performance in almost six years. The Company's one
VLCC, presently on a market-related one year time-charter, performed well as
spot charter rates for modern VLCC's rose sharply through competition among
Japanese and Korean charterers for high-quality, modern tonnage. In spite of
these results, though, the quarter ended on a down note as tanker spot charter
rates softened temporarily during September, largely a result of the impact of
the Iraqi crude export program delay on oil markets.
<PAGE> 14
Income from Vessel Operations
The Company's fleet was 4.6% larger on average in the second quarter of fiscal
1997 than in the second quarter of fiscal 1996, as four modern Aframax tankers
were acquired during the past year, while the Company's two remaining
mid-1970s-built tankers were sold.
Net voyage revenues were $69.5 million in the second quarter of fiscal 1997, an
increase of 15.9% over the second quarter of fiscal 1996. This reflects the
increase in fleet size as well as an improvement in tanker charter market
conditions, as the Company's fleet earned an average TCE rate of $20,045 in the
second quarter of fiscal 1997, up 11.5% from $17,979 in the second quarter of
fiscal 1996.
Increases in vessel operating expenses, depreciation and amortization, and
general and administrative expenses were approximately in line with the 4.6%
increase in fleet size. Depreciation and amortization expense included
amortization of drydocking costs of $2.5 million in the second quarter of
fiscal 1997 and $2.0 million in the second quarter of fiscal 1996.
Interest Expense
Interest expense decreased 4.5% to $15.0 million in the second quarter of
fiscal 1997, from $15.7 million in the second quarter of fiscal 1996,
reflecting a reduction in the Company's total debt. This was partially offset
by a higher average interest rate resulting from the Company's issue of $225
million 8.32% First Preferred Ship Mortgage Notes in January 1996, which
replaced floating-rate debt.
SIX MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 1995
The Company's net income was $14.5 million, or 52 cents per share, in the first
half of fiscal 1997, up from $10.0 million, or 46 cents per share, in the first
half of fiscal 1996, reflecting an improvement in the tanker charter market
accompanied by a relatively stable cost environment. Net income for the first
half of fiscal 1996 included gains on asset sales of $3.7 million, or 17 cents
per share.
Income from Vessel Operations
The combination of increased average TCE rates and a larger fleet operating in
a relatively stable cost environment resulted in a 22.3% increase in income
from vessel operations, to $41.9 million in the first half of fiscal 1997 from
$34.3 million in the first half of fiscal 1996.
During fiscal 1996, the Company disposed of four older, mid-1970s-built
tankers, and chartered-in one Aframax tanker and acquired four newer Aframax
tankers. In the first half of fiscal 1997, the Company added an additional
Aframax tanker to its fleet. As a result, the Company's fleet was 5.6% larger
on average in the first half of fiscal 1997 than during the first half of
fiscal 1996.
Net voyage revenues were $134.6 million in the first half of fiscal 1997, an
increase of 14.6% as compared to the first half of fiscal 1996. This reflects
an improvement in the performance of the Company's fleet and in tanker charter
market conditions, with an average TCE rate of $19,557 in the first half of
fiscal 1997, up 9.7% from $17,828 in the first half of fiscal 1996.
<PAGE> 15
Expenses increased in line with the larger fleet. Depreciation and
amortization expense included amortization of drydocking costs of $5.1 million
in the first half of fiscal 1997 and $4.2 million in the first half 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:
<TABLE>
<CAPTION>
==============================================================================
Three Months Ended Six Months Ended
September September
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total calendar ship-days 3,773 3,603 7,475 7,080
Non-revenue days 229 188 441 345
- ------------------------------------------------------------------------------
Revenue-generating ship-days (A) 3,544 3,415 7,034 6,735
- ------------------------------------------------------------------------------
Net voyage revenue before
commissions (B) (000's) $71,039 $61,396 $137,562 $120,074
- ------------------------------------------------------------------------------
Time charter equivalent (TCE) (B/A) $20,045 $17,979 $19,557 $17,828
- ------------------------------------------------------------------------------
Operating results per calendar ship-day:
Net voyage revenue $18,424 $16,653 $18,009 $16,596
Vessel operating expense 4,820 4,671 4,856 4,731
General and administrative expense 1,245 1,262 1,217 1,245
Drydocking expense 668 570 683 590
- ------------------------------------------------------------------------------
Operating cash flow
per calendar ship-day $11,691 $10,150 $11,253 $10,030
==============================================================================
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's total liquidity, including cash, cash equivalents and undrawn
long-term lines of credit, was $193.1 million as at September 30, 1996
virtually unchanged from $195.3 million as of the beginning of the fiscal year,
as the Company has used its free operating cash flow, after debt principal and
dividend payments, for capital expenditures.
Net cash flow from operating activities was $61.7 million in the first half of
fiscal 1997, compared to $41.7 million in the first half of fiscal 1996. The
increase was mainly caused by an improvement in the Company's income from
vessel operations before depreciation, as well as, temporary changes in
non-cash working capital.
During the first half of fiscal 1997, the Company had capital expenditures for
vessels and equipment of $31.6 million as a result of the delivery of the
SEMAKAU SPIRIT. Subsequent to September 30, 1996, the Company purchased
another second-hand Aframax tanker for $26.5 million, which was previously
time-chartered-in by the Company. These acquisitions were largely financed
through operating cash flow, augmented by long-term revolving credit facility
drawings. Capital expenditures for drydocking were higher than average, at
$7.6 million in the first half of fiscal 1997, reflecting a larger than usual
number of scheduled drydockings.
<PAGE> 16
The Company is committed to the construction of a newbuilding double-hull
Aframax tanker scheduled for delivery in July 1997, for a total cost of $44.5
million. The remaining unpaid cost of $42.3 million for this vessel will be
financed through a $35.6 million financing arrangement and cash balances.
The Company's scheduled debt repayments were $9.6 million during the first half
of fiscal 1997, down from $34.9 million in the first half of fiscal 1996 as a
result of debt refinancings which have occurred over the past year. Subsequent
to September 30, 1996, the Company entered into two new term loan facilities
(the "Term Loan Facilities"), with seven commercial banks providing borrowings
of up to $210 million in order to refinance existing debt at improved rates and
credit terms. The Term Loan Facilities also provide an additional $49 million
of liquidity to the Company. The current portion of long-term debt as at
September 30, 1996 has been adjusted to give effect to this refinancing.
Dividend payments during the first half of fiscal 1997 were $12.0 million, or
43 cents per share, of which $6.5 million was paid in cash and $5.5 million
was paid in the form of common shares issued under the Company's dividend
reinvestment plan.
<PAGE> 17
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
SEPTEMBER 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 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.
Page 17 of 18
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEEKAY SHIPPING CORPORATION
Date: November 7, 1996 By: /s/ Anthony Gurnee
------------------- ----------------------------
Anthony Gurnee
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<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> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 130,071
<SECURITIES> 0
<RECEIVABLES> 21,698
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 178,276
<PP&E> 1,614,446
<DEPRECIATION> 415,339
<TOTAL-ASSETS> 1,390,959
<CURRENT-LIABILITIES> 80,232
<BONDS> 702,869
0
0
<COMMON> 241,721
<OTHER-SE> 366,137
<TOTAL-LIABILITY-AND-EQUITY> 1,390,959
<SALES> 0
<TOTAL-REVENUES> 184,173
<CGS> 0
<TOTAL-COSTS> 49,553
<OTHER-EXPENSES> 92,761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,067
<INCOME-PRETAX> 14,471
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,471
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,471
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.52
</TABLE>
