<PAGE>1
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, 1997
------------------
TEEKAY SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Euro Canadian Centre, Fourth Floor
Marlborough Street & Navy Lion Road, 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, 1997
INDEX
-----
PART I: FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Statements of Income
and Retained Earnings for the three and six months
ended September 30, 1997 and 1996..........................3
Consolidated Balance Sheets -
September 30, 1997 and March 31, 1997......................4
Consolidated Statements of Cash Flows
for the six months ended September 30, 1997
and 1996...................................................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
2
<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,
1997 1996 1997 1996
---- ---- ---- ----
$ (Unaudited) $ $ (Unaudited) $
---- ----------- ---- ---- ----------- ----
<S> <C> <C> <C> <C>
NET VOYAGE REVENUES
Voyage revenues 99,705 94,158 197,979 184,173
Voyage expenses 27,597 24,646 52,014 49,553
- ---------------------------------------------------------------------------------------------------------
Net voyage revenues 72,108 69,512 145,965 134,620
- ---------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 18,610 17,744 36,584 35,412
Time-charter hire expense 2,764 1,680 4,056 3,343
Depreciation and amortization 23,924 22,136 47,594 44,146
General and administrative 4,916 4,699 9,689 9,095
- ---------------------------------------------------------------------------------------------------------
50,214 46,259 97,923 91,996
- ---------------------------------------------------------------------------------------------------------
Income from vessel operations 21,894 23,253 48,042 42,624
- ---------------------------------------------------------------------------------------------------------
Other items
Interest expense (14,688) (15,406) (28,780) (30,832)
Interest income 2,089 1,674 3,892 3,153
Other income(loss) (note 7) 2,977 (444) 3,131 (474)
- ---------------------------------------------------------------------------------------------------------
(9,622) (14,176) (21,757) (28,153)
- ---------------------------------------------------------------------------------------------------------
Net income 12,272 9,077 26,285 14,471
Retained earnings, beginning of the period 390,101 363,084 382,177 363,690
- ---------------------------------------------------------------------------------------------------------
402,373 372,161 408,462 378,161
Dividends declared and paid (6,125) (6,024) (12,214) (12,024)
- ---------------------------------------------------------------------------------------------------------
Retained earnings, end of the period 396,248 366,137 396,248 366,137
- ---------------------------------------------------------------------------------------------------------
Net income per common share (note 6) $ 0.43 $ 0.32 $ 0.92 $ 0.52
Weighted average number of
common shares outstanding (note 6) 28,617,157 28,088,370 28,515,470 28,033,393
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<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,
1997 1997
---- ----
$ $
---- ----
(Unaudited)
-----------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents 108,709 117,523
Marketable securities (note 2) 1,002
Accounts receivable
-trade 21,501 25,745
-vessel sales 9,785
-other 349 1,066
Prepaid expenses and other assets 16,501 14,666
- ----------------------------------------------------------------------------------------------
Total current assets 157,847 159,000
- ----------------------------------------------------------------------------------------------
Marketable securities (note 2) 26,392
Vessels and equipment (note 5)
At cost, less accumulated depreciation of $473,937
(March 31, 1997 - $457,779) 1,188,887 1,187,399
Advances on vessels 8,938
- -----------------------------------------------------------------------------------------------
Total vessels and equipment 1,188,887 1,196,337
- ----------------------------------------------------------------------------------------------
Investment 6,335
Other assets 10,621 11,166
- ----------------------------------------------------------------------------------------------
1,383,747 1,372,838
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 14,636 16,315
Accrued liabilities 26,100 26,982
Current portion of long-term debt (note 5) 65,132 36,283
- ----------------------------------------------------------------------------------------------
Total current liabilities 105,868 79,580
- ----------------------------------------------------------------------------------------------
Long-term debt (note 5) 624,257 663,443
- ----------------------------------------------------------------------------------------------
Total liabilities 730,125 743,023
- ----------------------------------------------------------------------------------------------
Stockholders' equity
Capital stock (note 6) 257,374 247,637
Retained earnings 396,248 382,178
- ----------------------------------------------------------------------------------------------
Total stockholders' equity 653,622 629,815
- ----------------------------------------------------------------------------------------------
1,383,747 1,372,838
==============================================================================================
</TABLE>
Commitments and contingencies (notes 5 and 8)
The accompanying notes are an integral part of the consolidated financial
statements.
4
<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,
1997 1996
---- ----
$ (Unaudited) $
---- ----------- ----
<S> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income 26,285 14,471
Add (deduct) charges to operations not requiring
a payment of cash and cash equivalents:
Depreciation and amortization 47,594 44,911
Gain on disposition of assets (3,914)
Other 1,528 717
Change in non-cash working capital items related to
operating activities 2,972 1,634
- -------------------------------------------------------------------------------------------------
Net cash flow from operating activities 74,465 61,733
- -------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 35,600 30,000
Scheduled repayments of long-term debt (19,083) (9,551)
Prepayments of long-term debt (27,408)
Net proceeds from issuance of Common Stock 4,269 498
Cash dividends paid (6,746) (6,506)
Other (171) (320)
- -------------------------------------------------------------------------------------------------
Net cash flow from financing activities (13,539) 14,121
- -------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (38,617) (31,579)
Expenditures for drydocking (9,618) (7,607)
Net cash flow from investment 6,335
Proceeds on sale of available-for-sale securities 9,945
Purchases of available-for-sale securities (37,339)
Other (446) 282
- -------------------------------------------------------------------------------------------------
Net cash flow from investing activities (69,740) (38,904)
- -------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (8,814) 36,950
Cash and cash equivalents, beginning of the period 117,523 101,780
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of the period 108,709 138,730
=================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<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, 1997, and for the Three-Month
and Six-Month Periods Ended September 30, 1997 and 1996 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, 1997. 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, 1997 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. Marketable Securities
Investments in marketable securities have been classified by management
as available-for-sale securities and are carried at fair value. Net
unrealized gains or losses on available-for-sale securities, if
material, are reported as a separate component of stockholders' equity.
The Company classifies all marketable securities with a maturity date
of twelve months or less under current assets.
3. Cash Flows
Cash interest paid during the six-month periods ended September 30,
1997 and 1996 totalled approximately $28,826,000 and $30,032,000,
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,
1997 1997
$ $
---------------------------------------------------------------------------------------
<S> <C> <C>
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 141,146 151,200
Floating rate (LIBOR + 0.55% to 1 1/2%)
U.S. dollar debt due through 2010 323,243 323,526
----------------------------------------------------------------------------------------
689,389 699,726
Less current portion of long-term debt 65,132 36,283
----------------------------------------------------------------------------------------
624,257 663,443
========================================================================================
</TABLE>
6
<PAGE>7
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, 1997, and for the Three-Month
and Six-Month Periods Ended September 30, 1997 and 1996 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 September
30, 1997, the fair value of these net assets approximated $278 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, 1997, the fair value of these net assets approximated $190 million.
During the three months ended September 30, 1997, the Company
repurchased $8.9 million of the 9 5/8% Notes.
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, 1997, 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 13.5 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%. 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.
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, 1997 247,637 28,328 0 0
Reinvested dividends 5,468 175
Exercise of stock options 4,269 193
-----------------------------------------------------------------------------------------
Balance September 30, 1997 257,374 28,696 0 0
=========================================================================================
</TABLE>
7
<PAGE>8
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, 1997, and for the Three-Month
and Six-Month Periods Ended September 30, 1997 and 1996 is unaudited)
6. Capital Stock (cont'd)
The Company has reserved 1,882,956 shares of Common Stock for issuance
upon exercise of options granted pursuant to the Company's 1995 Stock
Option Plan. As at September 30, 1997, options to purchase a total of
1,202,322 shares of the Company's Common Stock were outstanding, of
which 604,558 options were then exercisable at prices ranging from
$21.50 to $27.375 per share. The remaining outstanding options have
exercise prices ranging from $21.50 to $33.50 per share. All
outstanding options expire between July 19, 2005 and June 13, 2007, 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.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings per Share" SFAS 128 requires dual presentation of basic
earnings per share ("EPS") and diluted EPS on the face of all
statements of earnings ending after December 15, 1997 for all entities
with complex capital structures. The Company's EPS presentation will be
subject to SFAS 128, but the Company does not anticipate the effect on
its earnings per share to be material.
7. Other Income (Loss)
<TABLE>
<CAPTION>
Three Months Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
$ $ $ $
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gain on disposition of assets 3,914 3,914
Loss on repurchase of 9 5/8% Notes (761) (761)
Miscellaneous - net (176) (494) (22) (474)
-------------------------------------------------------------------------------------------
2,977 (444) 3,131 (474)
===========================================================================================
</TABLE>
8. Commitments and Subsequent Events
Subsequent to September 30, 1997, the Company repurchased an
additional $15.4 million of the 9 5/8% Notes.
Subsequent to September 30, 1997 the Company entered into an agreement
to sell two of its older Aframax tankers, for delivery during the third
quarter of fiscal 1998, for a total sales price of $25.7 million.
Also subsequent to September 30, 1997, the Company entered into
agreements to purchase a modern second-hand Aframax tanker and a
newbuilding Aframax tanker to be delivered during the third and fourth
quarters of fiscal 1998, respectively, for $76.1 million in aggregate.
8
<PAGE>9
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1997
------------------------------------------------------------------------------------------
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 13,334 9,322 109,769 (60,317) 72,108
Operating expenses 307 5,811 8,581 95,832 (60,317) 50,214
------------------------------------------------------------------------------------------
Income (loss) from vessel operations (307) 7,523 741 13,937 21,894
Net interest income (expense) (8,365) 147 124 (4,505) (12,599)
Equity in net income of subsidiaries 21,657 (21,657)
Other income (loss) (713) (9,241) 12,931 2,977
------------------------------------------------------------------------------------------
Net income 12,272 7,670 865 191 (8,726) 12,272
Retained earnings (deficit),
beginning of the period 390,101 18,529 (17,688) 162,055 (162,896) 390,101
Dividends declared and paid (6,125) (8,400) (9,345) 17,745 (6,125)
------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 396,248 17,799 (26,168) 162,246 (153,877) 396,248
==========================================================================================
</TABLE>
<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 79,173 (47,693) 46,259
------------------------------------------------------------------------------------------
Income (loss) from vessel operations (427) 1,979 310 21,391 23,253
Net interest income (expense) (8,318) 22 37 (5,473) (13,732)
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>
- ------------------
(See Note 5)
9
<PAGE>10
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended September 30, 1997
------------------------------------------------------------------------------------------
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 26,496 18,408 219,677 (118,616) 145,965
Operating expenses 642 11,539 17,282 187,076 (118,616) 97,923
------------------------------------------------------------------------------------------
Income (loss) from vessel operations (642) 14,957 1,126 32,601 48,042
Net interest income (expense) (16,682) 186 174 (8,566) (24,888)
Equity in net income of subsidiaries 44,274 (44,229) 45
Other income (loss) (665) 10,430 (6,679) 3,086
------------------------------------------------------------------------------------------
Net income 26,285 15,143 1,300 34,465 (50,908) 26,285
Retained earnings (deficit),
beginning of the period 382,177 11,056 (18,124) 144,125 (137,057) 382,177
Dividends declared and paid (12,214) (8,400) (9,345) 17,745 (12,214)
------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 396,248 17,799 (26,169) 178,590 (170,220) 396,248
==========================================================================================
</TABLE>
<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 17,251 157,070 (94,305) 91,996
------------------------------------------------------------------------------------------
Income (loss) from vessel operations (842) 3,991 772 38,703 42,624
Net interest income (expense) (16,739) 59 93 (11,092) (27,679)
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>
- ----------------
(See Note 5)
10
<PAGE>11
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
As at September 30, 1997
------------------------------------------------------------------------------------------
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 198 18,292 9,861 80,358 108,709
Other current assets 18,058 698 711 29,753 (82) 49,138
------------------------------------------------------------------------------------------
Total current assets 18,256 18,990 10,572 110,111 (82) 157,847
Vessels and equipment (net) 134,201 337,147 717,539 1,188,887
Advances due from subsidiaries 332,548 (332,548)
Other assets (principally marketable
securities, and investments in
subsidiaries) 675,141 37,018 (675,146) 37,013
------------------------------------------------------------------------------------------
1,025,945 153,191 347,719 864,668 (1,007,776) 1,383,747
==========================================================================================
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 6,177 3,605 4,529 91,639 (82) 105,868
Long-term debt 366,146 258,111 624,257
Due to (from) parent (41) 29 357,405 (357,393)
------------------------------------------------------------------------------------------
Total liabilities 372,323 3,564 4,558 707,155 (357,475) 730,125
------------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 257,374 10 23 5,933 (5,966) 257,374
Contributed capital 131,818 369,307 4,948 (506,073)
Retained earnings (deficit) 396,248 17,799 (26,169) 178,590 (170,220) 396,248
------------------------------------------------------------------------------------------
Total stockholders' equity 653,622 149,627 343,161 189,471 (682,259) 653,622
------------------------------------------------------------------------------------------
1,025,945 153,191 347,719 896,626 (1,039,734) 1,383,747
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
As at March 31, 1997
------------------------------------------------------------------------------------------
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 32 9,248 8,732 99,511 117,523
Other current assets 128 667 755 40,009 (82) 41,477
------------------------------------------------------------------------------------------
Total current assets 160 9,915 9,487 139,520 (82) 159,000
Vessels and equipment (net) 137,486 344,315 714,536 1,196,337
Advances due from subsidiaries 362,704 (362,704)
Other assets (principally
investments in subsidiaries) 649,337 11,171 (643,007) 17,501
------------------------------------------------------------------------------------------
1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838
==========================================================================================
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 7,386 4,573 2,581 65,122 (82) 79,580
Long-term debt 375,000 288,443 663,443
Due to (from) parent (56) 15 356,656 (356,615)
------------------------------------------------------------------------------------------
Total liabilities 382,386 4,517 2,596 710,221 (356,697) 743,023
------------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 247,637 10 23 5,933 (5,966) 247,637
Contributed capital 131,818 369,307 4,948 (506,073)
Retained earnings (deficit) 382,178 11,056 (18,124) 144,125 (137,057) 382,178
------------------------------------------------------------------------------------------
Total stockholders' equity 629,815 142,884 351,206 155,006 (649,096) 629,815
------------------------------------------------------------------------------------------
1,012,201 147,401 353,802 865,227 (1,005,793) 1,372,838
==========================================================================================
</TABLE>
- ----------------
(See Note 5)
11
<PAGE>12
SCHEDULE A
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended September 30, 1997
------------------------------------------------------------------------------------------
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 (36,610) 19,808 11,824 79,443 74,465
------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 35,600 35,600
Repayments of long-term debt (8,854) (37,637) (46,491)
Net proceeds from issuance of Common Stock 4,269 4,269
Other 23,616 (8,385) (9,331) (12,817) (6,917)
------------------------------------------------------------------------------------------
Net cash flow from financing activities 19,031 (8,385) (9,331) (14,854) (13,539)
------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (2,379) (1,364) (44,492) (48,235)
Other 17,745 0 0 (39,250) (21,505)
------------------------------------------------------------------------------------------
Net cash flow from investing activities 17,745 (2,379) (1,364) (83,742) (69,740)
------------------------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents 166 9,044 1,129 (19,153) (8,814)
Cash and cash equivalents,
beginning of the period 32 9,248 8,732 99,511 117,523
------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of the period 198 18,292 9,861 80,358 108,709
==========================================================================================
</TABLE>
<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) 13,370 (6,826)
------------------------------------------------------------------------------------------
Net cash flow from financing activities (3,048) (7,200) (9,450) 33,819 14,121
------------------------------------------------------------------------------------------
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 in cash and cash equivalents 81 768 1,694 34,407 36,950
Cash and cash equivalents,
beginning of the period 28 8,613 5,210 87,929 101,780
------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of the period 109 9,381 6,904 122,336 138,730
==========================================================================================
</TABLE>
- ----------------
(See Note 5)
12
<PAGE>13
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
September 30, 1997
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 43 tankers, including 40 Aframax oil tankers and oil/bulk/ore
carriers, two smaller tankers, and one VLCC, for a total cargo-carrying capacity
of approximately 4.3 million tonnes. Two of the Company's Aframax tankers are
time-chartered in to the fleet.
Approximately 71% of the Company's net voyage revenue is currently derived from
spot voyages. 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; and contracts of affreightment ("COAs"), whereby the Company
carries an agreed quantity of cargo for a customer over a specified trade route
over a specified period of time. In aggregate, approximately 87% of the
Company's net voyage revenue is currently derived from spot voyages or spot
market- related COAs and time-charters. This dependence on the spot market,
which is within industry norms, contributes to the volatility of the Company's
revenue, cash flow from operations, and net income. 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, 1997 versus Three Months Ended
September 30, 1996.
The Company's net income was $12.3 million, or 43 cents per share, in the second
quarter of fiscal 1998, which includes $3.9 million, or 14 cents per share, in
gains on asset sales. In comparison, the Company earned $9.1 million, or 32
cents per share, in the second quarter of fiscal 1997, which did not include any
gains or losses on asset sales. During the second quarter of fiscal 1998,
Aframax spot charter rates in the Indo-Pacific basin suffered from seasonal
weakness, which began in May and continued for a longer period than in the
previous year, before recovering in September.
13
<PAGE>14
Income from Vessel Operations
The prolonged weakness in tanker rates during the summer months resulted in
income from vessel operations decreasing 6.0%, from $23.3 million in the second
quarter of fiscal 1997 to $21.9 million in the second quarter of fiscal 1998.
The Company's average fleet size was 6.4% larger in the second quarter of fiscal
1998 than in the second quarter of fiscal 1997, as three modern Aframax tankers
were added to the Company's fleet and one older tanker was sold during the first
half of fiscal 1998.
Net voyage revenues were $72.1 million in the second quarter of fiscal 1998, an
increase of 3.7% over the second quarter of fiscal 1997, primarily due to the
increase in average fleet size. The Company's fleet earned an average TCE rate
of $19,834 in the second quarter of fiscal 1998, down 1.1% from $20,045 in the
second quarter of fiscal 1997, primarily due to seasonal weakness in Aframax
spot charter rates in the Indo-Pacific basin.
Increases in operating expenses were approximately in line with the increase in
fleet size. Depreciation and amortization expense included amortization of
drydocking costs of $3.1 million in the second quarter of fiscal 1998 and $2.5
million in the second quarter of fiscal 1997.
Interest Expense
Interest expense decreased 4.6% to $14.7 million in the second quarter of fiscal
1998, from $15.4 million in the second quarter of fiscal 1997, reflecting a
reduction in the Company's total debt.
Six Months Ended September 30, 1997 versus Six Months Ended September 30, 1996
The Company's net income was $26.3 million, or 92 cents per share, in the first
half of fiscal 1998, up from $14.5 million, or 52 cents per share, in the first
half of fiscal 1997, primarily reflecting an improvement in the tanker charter
market accompanied by a relatively stable cost environment. Net income for the
first half of fiscal 1998 included gains on asset sales of $3.9 million, or 14
cents per share, while there were no asset sales in the same period of the prior
year.
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 12.7% increase in income from
vessel operations, to $48.0 million in the first half of fiscal 1998 from $42.6
million in the first half of fiscal 1997.
In the first half of fiscal 1998, the Company chartered-in two Aframax tankers,
added a new Aframax tanker to its fleet and sold a 1979-built Aframax tanker. As
a result, the Company's fleet was 4.7% larger on average in the first half of
fiscal 1998 than during the first half of fiscal 1997.
Net voyage revenues were $146.0 million in the first half of fiscal 1998, an
increase of 8.4% as compared to the first half of fiscal 1997. This reflects the
increase in the Company's average fleet size, as well as improvements in tanker
charter market conditions. The Company's fleet earned an average TCE rate of
$20,508 in the first half of fiscal 1998, up 4.9% from $19,557 in the first half
of fiscal 1997.
Operating expenses increased approximately in line with the larger fleet.
Depreciation and amortization expense included amortization of drydocking costs
of $6.3 million in the first half of fiscal 1998 and $5.1 million in the first
half of fiscal 1997.
14
<PAGE>15
Interest Expense
Interest expense decreased 6.5% to $28.8 million in the first half of fiscal
1998, from $30.8 million in the first half of fiscal 1997, reflecting a
reduction in the Company's total debt.
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
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total calendar ship-days 4,015 3,773 7,828 7,475
Non-revenue days 286 229 538 441
- -----------------------------------------------------------------------------------------------------------------
Revenue-generating ship-days (A) 3,729 3,544 7,290 7,034
- -----------------------------------------------------------------------------------------------------------------
Net voyage revenue before commissions (B) $73,960 $71,039 $149,503 $137,562
(000's)
- -----------------------------------------------------------------------------------------------------------------
Time charter equivalent (TCE) (B/A) $19,834 $20,045 $20,508 $19,557
=================================================================================================================
Operating results per calendar ship-day:
Net voyage revenue $17,960 $18,424 $18,647 $18,009
Vessel operating expense 4,816 4,820 4,808 4,856
General and administrative expense 1,224 1,245 1,238 1,217
Drydocking expense 762 668 808 683
- ------------------------------------------------------------------------------------------------------------------
Operating cash flow per calendar ship-day $11,158 $11,691 $11,793 $11,253
==================================================================================================================
</TABLE>
Liquidity and Capital Resources
The Company's total liquidity, including cash, cash equivalents, marketable
securities, and undrawn long-term lines of credit, was $265.5 million as at
September 30, 1997, virtually unchanged from $258.6 million as of the beginning
of the fiscal year, as the Company has used its free operating cash flow during
the first half of 1998, after debt principal and dividend payments, for capital
expenditures.
Net cash flow from operating activities was $74.5 million in the first half of
fiscal 1998, compared to $61.7 million in the first half of fiscal 1997,
reflecting an improvement in tanker charter market conditions and the increase
in the size of the Company's fleet.
15
<PAGE>16
During the first half of fiscal 1998, the Company incurred capital expenditures
for vessels and equipment of $38.6 million, mainly as a result of the delivery
of the HAMANE SPIRIT. This expenditure was financed through additional debt.
Capital expenditures for drydocking were higher than average, at $9.6 million in
the first half of fiscal 1998, reflecting a larger than usual number of
scheduled drydockings. Subsequent to September 30, 1997, the Company sold two of
its older tankers for a total sales price of $25.7 million. Also subsequent to
September 30, 1997, the Company entered into agreements to purchase a modern
second-hand Aframax tanker, and a newbuilding Aframax tanker to be delivered
during the third and fourth quarters of fiscal 1998, respectively, for $76.1
million in aggregate. It is intended that these acquisitions will be financed
through operating cash flow, existing lines of credit, and cash balances.
The Company's scheduled debt repayments were $19.1 million during the first half
of fiscal 1998, up from $9.6 million in the first half of fiscal 1997, as a
result of debt refinancings which have occurred over the past twelve months.
During the second quarter of fiscal 1998, the Company prepaid $18.0 million of
its floating rate debt and repurchased a principal amount of $8.9 million of its
9 5/8% First Preferred Ship Mortgage Notes. Subsequent to the end of the
quarter, the Company repurchased an additional principal amount of $15.4 million
of such notes.
Dividend payments during the first half of fiscal 1998 were $12.2 million, or 43
cents per share, of which $6.7 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.
Forward-Looking Statements
This Report on Form 6-K for the quarterly period ended September 30, 1997
contains forward-looking statements (as defined in Section 21E of the Securities
Exchange Act of 1934, as amended) which reflect management's current views with
respect to future events and financial performance, in particular the statements
regarding the Company's competitive advantage over other tanker owners in the
Aframax spot market and seasonal variations in the tanker market. The following
factors are among those that could cause actual results to differ materially
from the forward- looking statements and that should be considered in evaluating
any such statement: changes in production of or demand for oil and petroleum
products, either generally or in particular regions; greater than anticipated
levels of tanker newbuilding orders or less than anticipated rates of tanker
scrapping; changes in trading patterns significantly impacting overall tanker
tonnage requirements; unanticipated changes in laws and regulations and the
Company's ability to comply with all existing and future laws and regulations;
changes in demand for modern, high quality vessels; risks incident to vessel
operation, including pollution; whether, as is typical, oil consumption in the
northern hemisphere will increase in the fall and winter months and
unpredictable weather patterns in the winter months will tend to disrupt vessel
scheduling, factors that historically have resulted in increased oil price
volatility and increased oil trading activity; and other risks detailed from
time to time in the Company's periodic reports filed with the U.S. Securities
and Exchange Commission. Certain of these factors affect whether oil consumption
growth is met by increased production in the Mideast, or by suppliers closer to
markets, a variable which affects tonne-mile demand growth. The Company may
issue additional written or oral forward-looking statements from time to time
which are qualified in their entirety by the cautionary statement contained in
this paragraph and in other reports filed by the Company with the U.S.
Securities and Exchange Commission.
16
<PAGE>17
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
SEPTEMBER 30, 1997
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
As reported in the Company's press release dated July 22, 1997, the
Company announced that Anthony Gurnee, the Company's Chief Financial Officer and
VP Business Development, resigned from his position with the Company, and
accepted a position as President of Nedship International, Inc., the New
York-based subsidiary of Nedship Bank, effective early September, 1997.
As reported in the Company's press release dated October 8, 1997, the
Company announced that Peter Antturi was promoted to the position of Vice
President and Chief Financial Officer . Mr. Antturi joined the Company in 1991
and held the position of Controller since March 1992, before becoming the acting
Chief Financial Officer in July 1997. Prior to joining Teekay, he served in
various accounting and finance roles in the shipping industry since 1985.
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.
17
<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 14, 1997 By: /s/ Peter S. Antturi
--------------------
Peter S. Antturi
Chief Financial Officer
18
<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> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 108,709
<SECURITIES> 1,002
<RECEIVABLES> 21,501
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 157,847
<PP&E> 1,662,824
<DEPRECIATION> 473,937
<TOTAL-ASSETS> 1,383,747
<CURRENT-LIABILITIES> 105,868
<BONDS> 624,257
0
0
<COMMON> 257,374
<OTHER-SE> 396,248
<TOTAL-LIABILITY-AND-EQUITY> 1,383,747
<SALES> 0
<TOTAL-REVENUES> 197,979
<CGS> 0
<TOTAL-COSTS> 52,014
<OTHER-EXPENSES> 97,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,780
<INCOME-PRETAX> 26,285
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,285
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.92
</TABLE>
