<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 December 31, 1996
------------------------------------------------
TEEKAY SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Tradewinds Building, Fifth 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> 2
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 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 nine months
ended December 31, 1996 and 1995. . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets -
December 31, 1996 and March 31, 1996. . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
for the nine months ended December 31, 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 Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
$ (Unaudited) $ $ (Unaudited) $
--------------------------------------------------------
<C> <C> <C> <C>
<S>
NET VOYAGE REVENUES
Voyage revenues 97,302 84,596 281,475 245,540
Voyage expenses 27,154 21,803 76,707 65,255
-------------------------------------------------------------------------------------------------------------------
Net voyage revenues 70,148 62,793 204,768 180,285
-------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Vessel operating expenses 18,194 16,770 53,605 50,266
Time-charter hire expense 118 841 3,462 841
Depreciation and amortization 23,269 20,996 68,181 61,952
General and administrative 4,579 3,973 13,673 12,785
-------------------------------------------------------------------------------------------------------------------
46,160 42,580 138,921 125,844
-------------------------------------------------------------------------------------------------------------------
Income from vessel operations 23,988 20,213 65,847 54,441
-------------------------------------------------------------------------------------------------------------------
OTHER ITEMS
Interest expense (15,132) (14,755) (45,199) (45,985)
Interest income 1,637 1,848 4,790 5,030
Other income (loss) (note 8) (598) 6,009 (1,072) 9,860
-------------------------------------------------------------------------------------------------------------------
(14,093) (6,898) (41,481) (31,095)
-------------------------------------------------------------------------------------------------------------------
Net income 9,895 13,315 24,366 23,346
Retained earnings, beginning of the period 366,137 356,578 363,690 406,547
Exchange of redeemable preferred stock (note 6) (60,000)
Dividends declared and paid (6,048) (5,953) (18,072) (5,953)
-------------------------------------------------------------------------------------------------------------------
Retained earnings, end of the period 369,984 363,940 369,984 363,940
-------------------------------------------------------------------------------------------------------------------
Net income per common share (note 6) $ 0.35 $ 0.48 $ 0.87 $ 0.98
Weighted average number of
common shares outstanding (note 6) 28,193,291 27,756,345 28,086,886 23,836,381
===================================================================================================================
</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
December 31, 1996 March 31, 1996
$ $
(Unaudited)
----------------- --------------
<C> <C>
<S>
ASSETS
Current
Cash and cash equivalents 123,511 99,790
Restricted cash 1,086 1,990
Accounts receivable
-trade 22,403 22,213
-other 2,851 2,725
Prepaid expenses and other assets 15,176 15,331
----------------------------------------------------------------------------------------------------
Total current assets 165,027 142,049
----------------------------------------------------------------------------------------------------
Vessels and equipment (notes 5 and 7)
At cost, less accumulated depreciation of $438,234
(March 31, 1996 - $377,105) 1,201,911 1,193,557
Advances on vessels 4,463 5,250
----------------------------------------------------------------------------------------------------
Total vessels and equipment 1,206,374 1,198,807
----------------------------------------------------------------------------------------------------
Investment 958 1,624
Other assets 12,259 12,821
----------------------------------------------------------------------------------------------------
1,384,618 1,355,301
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 13,000 11,761
Accrued liabilities 35,171 18,303
Current portion of long-term debt (notes 5 and 7) 36,461 19,102
----------------------------------------------------------------------------------------------------
Total current liabilities 84,632 49,166
----------------------------------------------------------------------------------------------------
Long-term debt (notes 5 and 7) 685,369 706,740
----------------------------------------------------------------------------------------------------
Total liabilities 770,001 755,906
----------------------------------------------------------------------------------------------------
Stockholders' equity
Capital stock (note 6) 244,633 235,705
Retained earnings 369,984 363,690
----------------------------------------------------------------------------------------------------
Total stockholders' equity 614,617 599,395
----------------------------------------------------------------------------------------------------
1,384,618 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>
Nine Months Ended December 31,
1996 1995
$ (Unaudited) $
-------------------------------
<S> <C> <C>
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income 24,366 23,346
Add (deduct) charges to operations not requiring
a payment of cash and cash equivalents:
Depreciation and amortization 68,181 61,952
Gain on disposition of assets (8,889)
Equity loss (income) 384 (1,503)
Other - net 1,044 881
Change in non-cash working capital items related to
operating activities 12,139 (3,949)
--------------------------------------------------------------------------------------------------------------------------
Net cash flow from operating activities 106,114 71,838
--------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 220,000 223,000
Scheduled repayments of long-term debt (13,140) (49,698)
Prepayments of long-term debt (210,872) (323,544)
Scheduled repayments of capital lease obligation (1,304)
Decrease in restricted cash 904 4,870
Net proceeds from issuance of Common Stock 705 137,613
Cash dividends paid (9,848) (3,712)
Other (1,053) (1,086)
--------------------------------------------------------------------------------------------------------------------------
Net cash flow from financing activities (13,304) (13,861)
--------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and equipment (net of capital lease
financing of $NIL; December 31, 1995 - $44,550) (58,408) (47,640)
Expenditures for drydocking (10,963) (6,805)
Proceeds from disposition of assets 28,514
Proceeds on sale of available-for-sale securities 60,963
Purchases of available-for-sale securities (41,068)
Other 282
--------------------------------------------------------------------------------------------------------------------------
Net cash flow from investing activities (69,089) (6,036)
--------------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 23,721 51,941
Cash and cash equivalents, beginning of the period 99,790 16,500
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of the period 123,511 68,441
===========================================================================================================================
</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 December 31, 1996, and for the Three-Month
and Nine-Month Periods Ended December 31, 1996 and 1995 is unaudited)
<PAGE>
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 consolidated 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 nine-month periods ended December 31, 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 nine-month periods ended December 31, 1996
and 1995 totalled approximately $35,063,000 and $42,862,000, respectively.
4. Income Taxes
The legal jurisdictions of the countries in which the Company and its
subsidiaries are incorporated do not impose income taxes upon
shipping-related activities.
5. Long-Term Debt
<TABLE>
<CAPTION> December 31, March 31,
1996 1996
$ $
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Revolving Credit Facility (LIBOR + 1.05%) 0 118,000
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 + 0.65% to 1 1/2%)
U.S. dollar debt due through 2006 345,630 231,642
- ------------------------------------------------------------------------------------------------------------
721,830 725,842
Less current portion of long-term debt 36,461 19,102
- ------------------------------------------------------------------------------------------------------------
685,369 706,740
============================================================================================================
</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 of the Company's subsidiaries 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 December 31,
1996, the fair value of these net assets approximated $285 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 of the Company's subsidiaries 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 December 31, 1996,
the fair value of these net assets approximated $197 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 December 31, 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 22.5 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 December 31, 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 8,223 288
Exercise of stock options 705 32
------------------------------------------------------------------------------------------------------------
Balance December 31, 1996 $244,633 28,224 $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 December 31, 1996, options to purchase a total of 1,087,926
shares of the Company's Common Stock were outstanding, of which 547,301
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 December 31, 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. To December 31, 1996, there had been payments made towards this
commitment of $4.5 million. A long-term financing arrangement exists for
$35.6 million of the unpaid cost of this vessel.
8. Other Income <Loss>
<TABLE>
<CAPTION>
Three Months Nine Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
$ $ $ $
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gain on disposition of assets 5,161 8,889
Equity in results of 50% owned company 799 (384) 1,503
Write-off of capitalized loan costs (568) (568) (1,144)
Miscellaneous - net (30) 49 (120) 612
------------------------------------------------------------------------------------------------------------
(598) 6,009 (1,072) 9,860
============================================================================================================
</TABLE>
PAGE 8 OF 18
<PAGE> 9
<TABLE>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
<CAPTION>
Three Months Ended December 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 7,657 8,954 105,274 (51,737) 70,148
Operating expenses 383 5,742 8,360 83,412 (51,737) 46,160
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from vessel
operations (383) 1,915 594 21,862 23,988
Net interest income (expense) (8,317) 42 70 (5,290) (13,495)
Equity in net income of
subsidiaries 18,547 (18,547)
Other income (loss) 48 2,595 (3,241) (598)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 9,895 1,957 664 19,167 (21,788) 9,895
Retained earnings (deficit),
beginning of the period 366,137 14,227 (9,830) 100,409 (104,806) 366,137
Dividends declared and paid (6,048) (6,048)
- -----------------------------------------------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 369,984 16,184 (9,166) 119,576 (126,594) 369,984
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 7,626 14,179 97,548 (56,560) 62,793
Operating expenses 388 5,208 8,107 91,351 (62,474) 42,580
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
vessel operations (388) 2,418 6,072 6,197 5,914 20,213
Net interest income (expense) (3,640) 219 (4,005) (5,481) (12,907)
Equity in net income of
subsidiaries 17,295 (16,496) 799
Other income 48 1 12,172 (7,011) 5,210
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 13,315 2,638 2,067 12,888 (17,593) 13,315
Retained earnings (deficit),
beginning of the period 356,578 19,353 (1,738) 61,659 (79,274) 356,578
Dividends declared and paid (5,953) (5,953)
- -----------------------------------------------------------------------------------------------------------------------------------
Retained earnings,
end of the period 363,940 21,991 329 74,547 (96,867) 363,940
===================================================================================================================================
- ---------------
(See Note 5)
PAGE 9 OF 18
<PAGE> 10
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 22,786 26,977 301,047 (146,042) 204,768
Operating expenses 1,225 16,880 25,611 241,247 (146,042) 138,921
Income (loss) from
vessel operations (1,225) 5,906 1,366 59,800 65,847
Net interest income (expense) (25,056) 101 163 (15,617) (40,409)
Equity in net income (loss)
of subsidiaries 50,503 (50,887) (384)
Other income (loss) 144 8,700 (9,532) (688)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 24,366 6,007 1,529 52,883 (60,419) 24,366
Retained earnings (deficit),
beginning of the period 363,690 17,377 (1,245) 66,693 (82,825) 363,690
Dividends declared and paid (18,072) (7,200) (9,450) 16,650 (18,072)
- -----------------------------------------------------------------------------------------------------------------------------------
Retained earnings (deficit),
end of the period 369,984 16,184 (9,166) 119,576 (126,594) 369,984
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 22,218 40,606 295,662 (178,201) 180,285
Operating expenses 1,085 15,643 23,241 271,074 (185,199) 125,844
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
vessel operations (1,085) 6,575 17,365 24,588 6,998 54,441
Net interest income (expense) (10,954) 306 (12,009) (18,298) (40,955)
Equity in net income
of subsidiaries 34,174 (32,671) 1,503
Other income 1,211 1 14,156 (7,011) 8,357
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 23,346 6,882 5,356 20,446 (32,684) 23,346
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 (5,953) (7,200) (35,200) 42,400 (5,953)
- -----------------------------------------------------------------------------------------------------------------------------------
Retained earnings, end of
the period 363,940 21,991 329 74,547 (96,867) 363,940
===================================================================================================================================
- -----------------
(See Note 5)
PAGE 10 OF 18
<PAGE> 11
</TABLE>
<TABLE>
<CAPTION>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
As at December 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 143 12,905 12,669 97,794 123,511
Restricted cash 1,086 1,086
Other current assets 123 733 839 38,925 (190) 40,430
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 266 13,638 13,508 137,805 (190) 165,027
Vessels and equipment (net) 138,474 347,481 720,419 1,206,374
Advances due from subsidiaries 364,625 (364,625)
Other assets (principally
investments in subsidiaries) 639,293 11,696 (637,772) 13,217
- -----------------------------------------------------------------------------------------------------------------------------------
1,004,184 152,112 360,989 869,920 (1,002,587) 1,384,618
===================================================================================================================================
LIABILITIES & STOCKHOLDERS'
EQUITY
Current liabilities 14,567 4,111 804 65,340 (190) 84,632
Long-term debt 375,000 310,369 685,369
Due to parent 363,754 (363,754)
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 389,567 4,111 804 739,463 (363,944) 770,001
- -----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
Capital stock 244,633 6 23 5,933 (5,962) 244,633
Contributed capital 131,811 369,328 4,948 (506,087)
Retained earnings (deficit) 369,984 16,184 (9,166) 119,576 (126,594) 369,984
- -----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 614,617 148,001 360,185 30,457 (638,643) 614,617
- -----------------------------------------------------------------------------------------------------------------------------------
1,004,184 152,112 360,989 869,920 (1,002,587) 1,384,618
===================================================================================================================================
</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
===================================================================================================================================
- ----------------
(See Note 5)
</TABLE>
PAGE 11 OF 18
<PAGE> 12
<TABLE>
<CAPTION>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Nine Months Ended December 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 (15,043) 14,418 16,914 89,825 106,114
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 220,000 220,000
Repayments of long-term debt (224,012) (224,012)
Net proceeds from issuance of
Common Stock 705 705
Other (2,469) (7,200) (9,450) 9,122 (9,997)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flow from
financing activities (1,764) (7,200) (9,450) 5,110 (13,304)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels
and equipment (2,919) (28) (66,424) (69,371)
Other 16,922 (7) 23 (16,656) 282
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flow from investing
activities 16,922 (2,926) (5) (83,080) (69,089)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in cash and
cash equivalents 115 4,292 7,459 11,855 23,721
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 143 12,905 12,669 97,794 123,511
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
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 (9,191) 13,243 19,506 48,280 71,838
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 223,000 223,000
Repayments of long-term debt (22,580) (27,694) (324,272) (374,546)
Net proceeds from issuance of
Common Stock 137,613 137,613
Other (171,203) (7,200) 11,321 167,154 72
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flow from financing
activities (56,170) (7,200) (16,373) 65,882 (13,861)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels
and equipment (979) (162) (53,304) (54,445)
Proceeds from disposition of assets 28,514 28,514
Other 65,391 460 (2,946) (43,010) 19,895
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flow from
investing activities 65,391 (519) (3,108) (67,800) (6,036)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents 30 5,524 25 46,362 51,941
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 127 11,410 3,101 53,803 68,441
===================================================================================================================================
- ------------------
(See Note 5)
PAGE 12 OF 18
<PAGE> 13
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
December 31, 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 79% 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 December 31, 1996 versus Three Months Ended December 31,
1995
The Company's net income was $9.9 million, or 35 cents per share, in the
third quarter of fiscal 1997. This is down from $13.3 million, or 48 cents
per share, earned in the third quarter of fiscal 1996 which included $5.2
million, or 19 cents per share, in gains on asset sales. Excluding gains
on asset sales, net income increased by $1.7 million over last fiscal
year's third quarter, reflecting a continuation of the gradual
year-over-year improvement in the tanker charter market since the bottom of
the market cycle in 1992 as well as the increase in fleet size. The
seasonal rise in tanker charter rates which typically occurs in the months
of October and November was delayed until late December this year. This,
in addition to a temporary increase in bunker prices, resulted in TCE rates
for the third quarter of fiscal 1997 which were only marginally higher than
those experienced during the summer of 1996.
PAGE 13 OF 18
<PAGE> 14
Income from Vessel Operations
The Company's fleet was 5.1% larger on average in the third quarter of
fiscal 1997 than in the third quarter of fiscal 1996, as three modern
Aframax tankers were acquired during the past year, while the Company's one
remaining mid-1970s-built tanker was sold.
Net voyage revenues increased 11.7%, to $70.1 million in the third quarter
of fiscal 1997, from $62.8 million in the third 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 achieved an
average TCE rate of $20,076 in the third quarter of fiscal 1997, up 6.5%
from $18,846 in the third quarter of fiscal 1996.
Increases in vessel operating expenses, depreciation and amortization, and
general and administrative expenses were largely attributable to the
increase in fleet size. Depreciation and amortization expense included
amortization of drydocking costs of $2.6 million in the third quarter of
fiscal 1997 and $2.3 million in the third quarter of fiscal 1996.
Interest Expense
Interest expense increased 2.6% to $15.1 million in the third quarter of
fiscal 1997, from $14.8 million in the third quarter of fiscal 1996 due to
$400,000 in prepayment penalties incurred as a result of the term loan
refinancing completed in October 1996 (see "Liquidity and Capital
Resources").
Nine months Ended December 31, 1996 versus Nine months Ended December 31,
1995
The Company's net income was $24.4 million, or 87 cents per share, in the
first three quarters of fiscal 1997, up from $23.3 million, or 98 cents
per share, in the first three quarters of fiscal 1996, reflecting an
improvement in the tanker charter market accompanied by a relatively stable
cost environment. Net income for the first three quarters of fiscal 1996
included gains on asset sales of $8.9 million, or 37 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 21.0% increase in
income from vessel operations, to $65.8 million in the first three quarters
of fiscal 1997 from $54.4 million in the first three quarters 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 three quarters of fiscal 1997, the Company
added one additional Aframax tanker to its fleet and fulfilled its
commitment to purchase an Aframax tanker previously chartered-in. As a
result, the Company's fleet was 5.4% larger on average in the first three
quarters of fiscal 1997 than during the first three quarters of fiscal
1996.
Net voyage revenues increased 13.6%, to $204.8 million in the first three
quarters of fiscal 1997, from $180.3 million in the first three quarters of
fiscal 1996. In addition to the increase in fleet size, this reflects an
improvement in tanker charter market conditions, with an average TCE rate
of $19,732 in the first three quarters of fiscal 1997, up 8.6% from $18,170
in the first three quarters of fiscal 1996.
Operating expenses increased approximately in line with the larger fleet.
Depreciation and amortization expense included amortization of drydocking
costs of $7.7 million in the first three quarters of fiscal 1997 and $6.5
million in the first three quarters of fiscal 1996.
PAGE 14 OF 18
<PAGE> 15
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>
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
December 31, December 31,
1996 1995 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total calendar ship-days 3,772 3,590 11,247 10,670
Non-revenue days 199 188 640 533
--------------------------------------------------------------------------------------------------------------------------------
Revenue-generating ship-days (A) 3,573 3,402 10,607 10,137
--------------------------------------------------------------------------------------------------------------------------------
Net voyage revenue before commissions (B) (000's) $71,732 $64,115 $209,294 $184,189
--------------------------------------------------------------------------------------------------------------------------------
Time charter equivalent (TCE) (B/A) $20,076 $18,846 $19,732 $18,170
--------------------------------------------------------------------------------------------------------------------------------
Operating results per calendar ship-day:
Net voyage revenue $18,597 $17,491 $18,206 $16,896
Vessel operating expense 4,832 4,733 4,848 4,732
General and administrative expense 1,214 1,107 1,216 1,198
Drydocking expense 694 633 687 605
--------------------------------------------------------------------------------------------------------------------------------
Operating cash flow per calendar ship-day $11,857 $11,018 $11,455 $10,361
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's total liquidity, including cash, cash equivalents and undrawn
long-term lines of credit, was $264.6 million as at December 31, 1996 up
from $195.3 million as of the beginning of the fiscal year, as a
result of internally generated cash flow and a term loan refinancing
completed in October 1996.
Net cash flow from operating activities increased 47.7%, to $106.1 million
in the first three quarters of fiscal 1997, compared to $71.8 million in
the first three quarters 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 fluctuations in non-cash working
capital.
During the first three quarters of fiscal 1997, the Company incurred
capital expenditures for vessels and equipment of $58.4 million as a result
of the acquisition of two modern secondhand Aframax tankers, the SEMAKAU
SPIRIT and the SINGAPORE SPIRIT. These acquisitions were financed through
the term loan facilities completed in October 1996. Capital expenditures
for drydocking were higher than average, at $11.0 million in the first
three quarters of fiscal 1997, reflecting a larger than usual number of
scheduled drydockings.
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 $40.0 million for this vessel
will be financed through a $35.6 million financing arrangement and cash
balances.
PAGE 15 OF 18
<PAGE 16>
The Company's scheduled debt repayments were $13.1 million during the first
three quarters of fiscal 1997, down significantly from $51.0 million in the
first three quarters of fiscal 1996 as a result of debt refinancings which
have lengthened repayment terms. In October 1996, the Company completed 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 provided an additional $49 million of liquidity to the
Company.
Dividend payments during the first three quarters of fiscal 1997 were
$18.1 million, or 64 cents per share, of which $9.8 million was paid in
cash and $8.3 million was paid in the form of common shares issued under
the Company's dividend reinvestment plan.
<PAGE>
<PAGE> 17
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
DECEMBER 31, 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
As reported in the Company's press release dated December 18, 1996, the
Company announced that Bjorn Moller, previously the Company's Vice
President, Group Chartering and Business Development, was promoted to
the new position of Chief Operating Officer effective January 1, 1997.
Mr. Moller's promotion to Chief Operating Officer is part of the
Company's succession planning process.
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 STATEMENTS OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION ON
OCTOBER 4, 1995 AND JANUARY 19, 1996, RESPECTIVELY.
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: February 4, 1997 By: /s/ James N. Hood
-------------------- ---------------------------
James N. Hood
President and Chief Executive Officer
<PAGE>
PAGE 18 OF 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> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 123,511
<SECURITIES> 0
<RECEIVABLES> 22,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 165,027
<PP&E> 1,644,608
<DEPRECIATION> 438,234
<TOTAL-ASSETS> 1,384,618
<CURRENT-LIABILITIES> 84,632
<BONDS> 685,369
0
0
<COMMON> 224,633
<OTHER-SE> 369,984
<TOTAL-LIABILITY-AND-EQUITY> 1,384,618
<SALES> 0
<TOTAL-REVENUES> 281,475
<CGS> 0
<TOTAL-COSTS> 76,707
<OTHER-EXPENSES> 138,921
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,199
<INCOME-PRETAX> 24,366
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,366
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.87
</TABLE>
