<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 June 30, 1999
TEEKAY SHIPPING CORPORATION
(Exact name of Registrant as specified in its charter)
Fourth Floor, Euro Canadian Centre
Marlborough Street & Navy Lyon Road
P.O. Box SS-6293, Nassau, 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 JUNE 30, 1999
INDEX
PART I: FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Income
and Retained Earnings for the three months
ended June 30, 1999 and 1998............................3
Consolidated Balance Sheets -
June 30, 1999 and March 31, 1999........................4
Consolidated Statements of Cash Flows
for the three months ended June 30, 1999
and 1998................................................5
Notes to the Consolidated Financial
Statements..............................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........13
Item 3. Market Rate Risks.....................................................19
PART II: OTHER INFORMATION....................................................20
SIGNATURES....................................................................21
<PAGE> 3
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(in thousands of U.S. dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1999 1998
$ $
(Unaudited)
NET VOYAGE REVENUES
<S> <C> <C>
Voyage revenues 98,626 109,433
Voyage expenses 27,707 22,846
----------------------------------------------- ----------- ------------ --------- -------------- ---
Net voyage revenues 70,919 86,587
----------------------------------------------- ----------- ------------ --------- -------------- ---
OPERATING EXPENSES
Vessel operating expenses 23,326 20,774
Time-charter hire expense 8,880 5,253
Depreciation and amortization 19,645 24,291
General and administrative 7,137 5,276
----------------------------------------------- ----------- ------------ --------- -------------- ---
58,988 55,594
----------------------------------------------- ----------- ------------ --------- -------------- ---
Income from vessel operations 11,931 30,993
----------------------------------------------- ----------- ------------ --------- -------------- ---
OTHER ITEMS
Interest expense (10,738) (14,034)
Interest income 1,629 2,015
Other (loss) income (note 8) (2,090) 6,474
----------------------------------------------- ----------- ------------ --------- -------------- ---
(11,199) (5,545)
----------------------------------------------- ----------- ------------ --------- -------------- ---
Net income 732 25,448
Retained earnings, beginning of the period 446,897 428,102
----------------------------------------------- ----------- ------------ --------- -------------- ---
447,629 453,550
Dividends declared (6,804) (6,199)
----------------------------------------------- ----------- ------------ --------- -------------- ---
Retained earnings, end of the period 440,825 447,351
----------------------------------------------- ----------- ------------ --------- -------------- ---
Earnings per common share (note 7)
-basic and diluted $0.02 $0.87
----------------------------------------------- ----------- ------------ --------- -------------- ---
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 4
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at As at
June 30, March 31,
1999 1999
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Current
Cash and cash equivalents 168,418 118,435
Marketable securities (note 3) 8,771
Accounts receivable 21,584 22,995
Prepaid expenses and other assets 26,769 16,195
------------------------------------------------------- -- --------------- ----- -------------
Total current assets 216,771 166,396
------------------------------------------------------- -- --------------- ----- -------------
Marketable securities (note 3) 5,052 5,050
Vessels and equipment (notes 6 and 9)
At cost, less accumulated depreciation of $576,073
(March 31, 1999 - $557,946) 1,637,177 1,218,916
Advances on newbuilding contracts 63,666 55,623
------------------------------------------------------- -- --------------- ----- -------------
Total vessels and equipment 1,700,843 1,274,539
------------------------------------------------------- -- --------------- ----- -------------
Investment in joint venture 18,603
Other assets 10,076 6,235
------------------------------------------------------- -- --------------- ----- -------------
1,951,345 1,452,220
------------------------------------------------------- -- --------------- ----- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable 11,972 11,926
Accrued liabilities 52,097 21,185
Current portion of long-term debt (note 6) 42,691 39,058
------------------------------------------------------- -- --------------- ----- -------------
Total current liabilities 106,760 72,169
------------------------------------------------------- -- --------------- ----- -------------
Long-term debt (note 6) 969,305 602,661
Other long-term liabilities 561
------------------------------------------------------- -- --------------- ----- -------------
Total liabilities 1,076,626 674,830
------------------------------------------------------- -- --------------- ----- -------------
Minority interest 5,972
Stockholders' equity
Capital stock (note 7) 427,922 330,493
Retained earnings 440,825 446,897
------------------------------------------------------- -- --------------- ----- -------------
Total stockholders' equity 868,747 777,390
------------------------------------------------------- -- --------------- ----- -------------
1,951,345 1,452,220
------------------------------------------------------- -- --------------- ----- -------------
</TABLE>
Commitments and contingencies (notes 6 and 9)
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 5
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1999 1998
$ $
(Unaudited)
Cash and cash equivalents provided by (used for)
<S> <C> <C>
OPERATING ACTIVITIES
Net income 732 25,448
Add charges to operations not requiring
a payment of cash and cash equivalents:
Depreciation and amortization 19,645 24,291
Gains on disposition of assets (7,117)
Other - net 416 346
Change in non-cash working capital items related to
operating activities 6,024 1,006
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
Net cash flow from operating activities 26,817 43,974
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
FINANCING ACTIVITIES
Proceeds from long-term debt 30,000
Scheduled repayments of long-term debt (15,423) (14,393)
Prepayment of long-term debt (115,000)
Net proceeds from issuance of Common Stock 68,866
Cash dividends paid (6,797) (5,828)
Other (250)
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
Net cash flow from financing activities (22,220) (36,605)
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
INVESTING ACTIVITIES
Expenditures for vessels and equipment (9,462) (37,720)
Expenditures for drydocking (847) (2,386)
Expenditure for purchase of Bona Shipholding Ltd.
(net of cash acquired of $91,658) 46,971
Proceeds from disposition of assets 23,435
Proceeds on sale of available-for-sale securities 8,724
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
Net cash flow from investing activities 45,386 (16,671)
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
Increase (decrease) in cash and cash equivalents 49,983 (9,302)
Cash and cash equivalents, beginning of the period 118,435 87,953
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
Cash and cash equivalents, end of the period 168,418 78,651
- ------------------------------------------------------ ----------- ------------ -------- --------------- ---
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 6
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
(Information as at June 30, 1999, and for the Three-Month
Periods Ended June 30, 1999 and 1998 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, 1999. In the opinion of
management, these statements reflect all adjustments (consisting only of normal
recurring accruals), necessary to present fairly, in all material respects, the
Company's consolidated financial position, results of operations and cash flows
for the interim periods presented. The results of operations for the three-month
period ended June 30, 1999 are not necessarily indicative of those for a full
fiscal year.
2. Acquisition of Bona Shipholding Ltd.
On June 11, 1999, the Company acquired Bona Shipholding Ltd. ("Bona") for
aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the Company's common stock. The acquisition of Bona has
been accounted for using the purchase method of accounting. Bona's operating
results are reflected in these financial statements commencing the effective
date of the acquisition.
The following table shows comparative summarized condensed pro forma financial
information for the three months ended June 30, 1999 and 1998 and gives effect
to the acquisition as if it had taken place April 1, 1998:
<TABLE>
<CAPTION>
Pro Forma
Three Months
Ended June 30
1999 1998
$ $
- -------------------------------------------------------------------------
<S> <C> <C>
Net voyage revenues 95,038 124,727
Net (loss) income (2,145) 39,371
Net (loss) income per common share
- - basic & diluted (0.06) 1.10
- -------------------------------------------------------------------------
</TABLE>
3. Marketable Securities
The Company's investments in marketable securities are classified 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.
4. Cash Flows
Cash interest paid during the three-month periods ended June 30, 1999 and
1998 totalled approximately $13,387,000 and $7,383,000, respectively.
5. Income Taxes
The legal jurisdictions of the countries in which the Company and the
majority of its subsidiaries are incorporated do not impose income taxes upon
shipping-related activities.
<PAGE> 7
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
(Information as at June 30, 1999, and for the Three-Month
Periods Ended June 30, 1999 and 1998 is unaudited)
6. Long-Term Debt
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
$ $
--- ------------------------------------------------------------- ----- ------------ -- ------------- ---
<S> <C> <C>
Revolving Credit Facilities 544,000 169,000
First Preferred Ship Mortgage Notes (8.32%)
U.S. dollar debt due through 2008 225,000 225,000
Floating rate (LIBOR + 0.50% to 1%)
U.S. dollar debt due through 2009 242,996 247,719
--- ------------------------------------------------------------- ----- ------------ -- ------------- ---
1,011,996 641,719
Less current portion 42,691 39,058
--- ------------------------------------------------------------- ----- ------------ -- ------------- ---
969,305 602,661
--- ------------------------------------------------------------- ----- ------------ -- ------------- ---
</TABLE>
The Company has two long-term Revolving Credit Facilities (the "Revolvers")
available which, as at June 30, 1999, provided for borrowings of up to $655.0
million. Interest payments are based on LIBOR plus a margin depending on the
financial leverage of the Company; at June 30, 1999 the margins were + 0.50% and
+ 0.775%. The Revolvers are collaterized by first priority mortgages granted on
twenty-nine of the Company's Aframax tankers and oil/bulk/ore carriers, together
with certain other related collateral, and a guarantee from the Company for all
amounts outstanding under the Revolvers.
The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the
"8.32% Notes") are collaterized by first preferred mortgages on seven of the
Company's Aframax tankers, together with certain other related collateral, and
are guaranteed by the seven subsidiaries of Teekay that own the mortgaged
vessels (the "8.32% Notes Guarantor Subsidiaries") to a maximum of 95% of the
fair value of their net assets. As at June 30, 1999, the fair value of these net
assets approximated $185 million.
Condensed financial information regarding the Company, the 8.32% Notes
Guarantor Subsidiaries, and non-guarantor subsidiaries of the Company is set out
in Schedule A of these consolidated financial statements.
As at June 30, 1999, the Company was committed to a series of interest rate
swap agreements whereby $100.0 million of the Company's floating rate debt was
swapped with fixed rate obligations having an average remaining term of 67.7
months. The swap agreements expire in February 2005. These arrangements
effectively change the Company's interest rate exposure on $100.0 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.
<PAGE> 8
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars except share data)
(Information as at June 30, 1999, and for the Three-Month
Periods Ended June 30, 1999 and 1998 is unaudited)
7. Capital Stock
Authorized
25,000,000 Preferred Stock with a par value of $1 per share
125,000,000 Common Stock with no par value
<TABLE>
<CAPTION>
------------------------- ---------------------------------------------------- ----------- --------------
Common Thousands of Preferred Thousands of
Issued and outstanding Stock shares Stock shares
$ $
------------------------------------------- -- ------------- -- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Balance March 31, 1999 330,493 31,648 0 0
June 11, 1999 Common Stock issued
on acquisition of Bona 97,422 6,415
Reinvested dividends 7 0
------------------------------------------- -- ------------- -- -------------- ----------- --------------
Balance June 30, 1999 427,922 38,063 0 0
------------------------------------------- -- ------------- -- -------------- ----------- --------------
</TABLE>
As at June 30, 1999, the Company had reserved 3,641,750 shares of Common
Stock for issuance upon exercise of options granted pursuant to the Company's
1995 Stock Option Plan. As at June 30, 1999, options to purchase a total of
2,586,866 shares of the Company's Common Stock were outstanding, of which
1,030,523 options were then exercisable at prices ranging from $21.50 to $33.50
per share. The remaining outstanding options have exercise prices ranging from
$16.875 to $33.50 per share. All outstanding options expire between July 19,
2005 and June 1, 2009, ten years after the date of each respective grant. In
addition, as a result of the acquisition of Bona, the Company has an obligation
to grant an additional 185,000 options at an exercise price of $18.56 per share
to key members of Bona's senior management. The Company's basic earnings per
share is based upon the following weighted average number of common shares
outstanding: 32,987,909 shares for the three months ended June 30, 1999; and
29,303,499 shares for the three months ended June 30, 1998. Diluted earnings per
share is based upon the following weighted average number of common shares
outstanding: 32,998,350 shares for the three months ended June 30, 1999; and
29,416,055 shares for the three months ended June 30, 1998.
8. Other (Loss) Income
<TABLE>
<CAPTION>
Three Months
Ended June 30
1999 1998
$ $
-- ------------------------------------------------------------------ ---------------- -------------- ---
<S> <C> <C>
Gain on disposition of assets 7,117
Foreign exchange loss (16) (81)
Income tax provision - deferred (500) (562)
Miscellaneous - net (1,574)
-- ------------------------------------------------------------------ ---------------- -------------- ---
(2,090) 6,474
-- ------------------------------------------------------------------ ---------------- -------------- ---
</TABLE>
9. Commitments and Contingencies
As at June 30, 1999, the Company was committed to the construction of two
newbuilding Aframax vessels scheduled for delivery in July and September of 1999
for an aggregate contract price of approximately $71.2 million. As at June 30,
1999, there had been payments made towards this commitment of approximately
$63.7 million.
<PAGE> 9
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
----------------------------------------------------------------------------
Teekay 8.32% Notes Teekay
Shipping Guarantor Non-Guarantor Shipping Corp.
Corp. Subsidiaries Subsidiaries Eliminations Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 9,298 106,371 (44,750) 70,919
Operating expenses 91 7,945 95,702 (44,750) 58,988
----------------------------------------------------------------------------
Income (loss) from vessel operations (91) 1,353 10,669 11,931
Net interest income (expense) (4,773) (4,395) 59 (9,109)
Equity in net income of subsidiaries 5,596 (5,596)
Other income (loss) 4,309 (6,399) (2,090)
----------------------------------------------------------------------------
Net income 732 1,353 10,583 (11,936) 732
Retained earnings (deficit), beginning
of the period 446,897 (33,570) 359,286 (325,716) 446,897
Dividends declared (6,804) (6,804)
----------------------------------------------------------------------------
Retained earnings (deficit), end of the
period 440,825 (32,217) 369,869 (337,652) 440,825
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998
----------------------------------------------------------------------------
Teekay 8.32% Notes Teekay
Shipping Guarantor Non-Guarantor Shipping Corp.
Corp. Subsidiaries Subsidiaries Eliminations Subsidiaries
$ $ $ $ $
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net voyage revenues 9,423 129,797 (52,633) 86,587
Operating expenses 68 9,131 99,028 (52,633) 55,594
----------------------------------------------------------------------------
Income (loss) from vessel operations (68) 292 30,769 30,993
Net interest income (expense) (7,987) 42 (4,074) (12,019)
Equity in net income of subsidiaries 33,503 (33,503)
Other income 12,900 (6,426) 6,474
----------------------------------------------------------------------------
Net income 25,448 334 39,595 (39,929) 25,448
Retained earnings (deficit), beginning
of the period 428,102 (34,324) 258,911 (224,587) 428,102
Dividends declared (6,199) (6,199)
----------------------------------------------------------------------------
Retained earnings (deficit), end of the
period 447,351 (33,990) 298,506 (264,516) 447,351
============================================================================
</TABLE>
(See Note 6)
<PAGE> 10
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED BALANCE SHEETS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
As at June 30, 1999
-----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Shipping Guarantor Non-Guarantor Shipping Corp.
Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 218 38,877 129,323 168,418
Other current assets 36 784 143,390 (95,857) 48,353
-----------------------------------------------------------------------------------
Total current assets 254 39,661 272,713 (95,857) 216,771
Vessels and equipment (net) 302,778 1,398,065 1,700,843
Advances due from subsidiaries 206,409 (206,409)
Other assets (principally marketable
securities, and investments in
subsidiaries) 894,996 33,736 (895,001) 33,731
-----------------------------------------------------------------------------------
1,101,659 342,439 1,704,514 (1,197,267) 1,951,345
===================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities 7,912 1,088 194,323 (96,563) 106,760
Long-term debt 225,000 744,866 969,866
Due to (from) affiliates 4,238 246,775 (251,013)
-----------------------------------------------------------------------------------
Total liabilities 232,912 5,326 1,185,964 (347,576) 1,076,626
-----------------------------------------------------------------------------------
Minority interest 5,972 5,972
STOCKHOLDERS' EQUITY
Capital stock 427,922 23 5,943 (5,966) 427,922
Contributed capital 369,307 136,766 (506,073)
Retained earnings (deficit) 440,825 (32,217) 369,869 (337,652) 440,825
-----------------------------------------------------------------------------------
Total stockholders' equity 868,747 337,113 512,578 (849,691) 868,747
-----------------------------------------------------------------------------------
1,101,659 342,439 1,704,514 (1,197,267) 1,951,345
===================================================================================
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
As at March 31, 1999
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------- ------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 5 33,313 85,117 118,435
Other current assets 28 768 142,414 (95,249) 47,961
----------------- ------------- ----------------- --------------- ----------------
Total current assets 33 34,081 227,531 (95,249) 166,396
Vessels and equipment (net) 306,764 967,775 1,274,539
Advances due from subsidiaries 213,498 (213,498)
Other assets (principally marketable
securities, and investments in
subsidiaries) 792,084 11,290 (792,089) 11,285
----------------------------------------------------------------------------------
1,005,615 340,845 1,206,596 (1,100,836) 1,452,220
================= ============= ================= =============== ================
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities 3,225 1,095 163,844 (95,995) 72,169
Long-term debt 225,000 377,661 602,661
Due to (from) affiliates 3,990 163,096 (167,086)
----------------- ------------- ----------------- --------------- ----------------
Total liabilities 228,225 5,085 704,601 (263,081) 674,830
----------------- ------------- ----------------- --------------- ----------------
STOCKHOLDERS' EQUITY
Capital stock 330,493 23 5,943 (5,966) 330,493
Contributed capital 369,307 136,766 (506,073)
Retained earnings (deficit) 446,897 (33,570) 359,286 (325,716) 446,897
----------------- ------------- ----------------- --------------- ----------------
Total stockholders' equity 777,390 335,760 501,995 (837,755) 777,390
----------------------------------------------------------------------------------
1,005,615 340,845 1,206,596 (1,100,836) 1,452,220
================= ============= ================= =============== ================
</TABLE>
(See Note 6)
<PAGE> 12
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES SCHEDULE A
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------- ------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents provided by
(used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------------
Net cash flow from operating
activities (79) 5,323 21,573 26,817
---------------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayments of long-term debt (15,423) (15,423)
Other (46,679) 249 39,633 (6,797)
--------------------------------------------------------------------------------
Net cash flow from financing
activities (46,679) 249 24,210 (22,220)
--------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and
equipment and drydocking (8) (10,301) (10,309)
Expenditure for purchase of Bona
Shipholding Ltd.
(net of cash acquired of $91,658) 46,971 (46,971)
Other 55,695 55,695
-------------------------------------------------------------------------------
Net cash flow from investing
activities 46,971 (8) (1,577) 45,386
-------------------------------------------------------------------------------
Increase in cash and cash equivalents 213 5,564 44,206 49,983
Cash and cash equivalents, beginning
of the period 5 33,313 85,117 118,435
-------------------------------------------------------------------------------
Cash and cash equivalents, end of the
period 218 38,877 129,323 168,418
===============================================================================
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998
----------------------------------------------------------------------------------
8.32% Notes Teekay
Teekay Guarantor Non-Guarantor Shipping Corp.
Shipping Corp. Subsidiaries Subsidiaries Eliminations & Subsidiaries
$ $ $ $ $
----------------- ------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents provided by
(used for)
OPERATING ACTIVITIES
----------------------------------------------------------------------------------
Net cash flow from operating
activities (79) 4,684 39,369 43,974
----------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 30,000 30,000
Prepayments of long-term debt (115,000) (115,000)
Repayments of long-term debt (14,393) (14,393)
Net proceeds from issuance of Common
Stock 68,866 68,866
Other (68,580) 790 61,712 (6,078)
---------------------------------------------------------------------------------
Net cash flow from financing
activities 286 790 (37,681) (36,605)
---------------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for vessels and
equipment and drydocking (285) (37,435) (37,720)
Other 21,049 21,049
---------------------------------------------------------------------------------
Net cash flow from investing (285) (16,386) (16,671)
activities
---------------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents 207 5,189 (14,698) (9,302)
Cash and cash equivalents, beginning
of the period 22 10,687 77,244 87,953
---------------------------------------------------------------------------------
Cash and cash equivalents, end of the
period 229 15,876 62,546 78,651
=================================================================================
</TABLE>
(See Note 6)
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
JUNE 30, 1999
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Teekay Shipping Corporation (the "Company") has changed its fiscal year end
from March 31 to December 31, commencing December 31, 1999, in order to
facilitate comparison of our operating results to those of other companies in
the transportation industry.
RESULTS OF OPERATIONS
General
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. The Company's fleet consists of 74 vessels (including one
newbuilding scheduled for delivery in September this year, three vessels
time-chartered-in and three vessels owned by a joint venture), for a total
cargo-carrying capacity of approximately 7.4 million tonnes.
During the quarter ended June 30, 1999, approximately 66% of the Company's
net voyage revenue was 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 given period of time. In the
quarter ended June 30, 1999, approximately 10% of net voyage revenues was
generated by time charters and COAs priced on a spot market basis. In the
aggregate, approximately 76% of the Company's net voyage revenue during the
current quarter was derived from spot voyages or time charters and COAs priced
on a spot market basis, with the remaining 24% being derived from fixed-rate
time charters and COAs. 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.
Historically, the tanker industry has been cyclical, experiencing
volatility in profitability and asset values resulting from changes in the
supply of, and demand for, vessel capacity. In addition, tanker markets have
historically 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.
In December 1997, the Company acquired two vessels and related shore
support services from an Australian affiliate of Caltex Petroleum. These two
tankers, together with one of the Company's existing Aframax tankers, have been
time-chartered to the Caltex affiliate in connection with the Company's
provision of Caltex's oil transportation requirements formerly provided by that
affiliate. In addition, the Company has converted one of its existing vessels to
a floating storage and off-loading vessel, which is sharing crews with the
vessels employed in the Caltex arrangement (together with the other three
vessels involved in the arrangement, the "Australian Vessels"). Vessel operating
expenses for the Australian Vessels are substantially higher than those for the
rest of the Company's fleet, primarily as a result of higher costs associated
with employing an Australian crew. The TCE rates (as defined below) for the
Australian Vessels are correspondingly higher to compensate for these increased
costs. During the quarter ended June 30, 1999, the Australian Vessels earned net
voyage revenues and an average TCE rate of $8.7 million and $23,992
respectively, and incurred vessel operating expenses of $2.9 million or $7,912
on a per ship per day basis. In comparison, during the quarter ended June 30,
1998, the Australian Vessels earned net voyage revenues and an average TCE rate
of $9.1 million and $25,094, respectively, and incurred vessel operating
expenses of $3.7 million, or $10,250 on a per ship per day basis.The results of
operation for the Australian Vessels are included in the Company's Consolidated
Financial Statements included herein.
Acquisition of Bona Shipholding Ltd.
On June 11, 1999, the Company acquired Bona Shipholding Ltd. ("Bona") for
an aggregate consideration (including estimated transaction expenses of $19.0
million) of $450.3 million, consisting of $39.9 million in cash, $294.0 million
of assumed debt (net of cash acquired of $91.7 million) and the balance of $97.4
million in shares of the Company's common stock. Bona was the third largest
operator of medium-size tankers, controlling a fleet of vessels consisting of 15
Aframax tankers, eight oil/bulk/ore carriers and, through a joint venture, 50%
interests in one additional Aframax tanker and two Suezmax tankers. Bona engaged
in the transportation of oil, oil products, and dry bulk commodities, primarily
in the Atlantic region. Through this acquisition, the Company has combined
Bona's market strength in the Atlantic region with the Company's franchise in
the Indo-Pacific Basin. For the year ended December 31, 1998, Bona earned net
voyage revenues of $148.9 million resulting in income from vessel operations of
$29.5 million and net income of $16.6 million.
The acquisition of Bona has been accounted for using the purchase method of
accounting. Bona's operating results are reflected in the Company's financial
statements commencing the effective date of the acquisition.
As a result of this acquisition, the Company anticipates annual cost
savings of approximately $10 million, commencing after a 12-month integration
period, through a reduction in combined overhead costs, increased purchasing
power, and other operational efficiencies. The Company also believes that the
acquisition will create revenue enhancement opportunities as a result of owning
a larger fleet with a greater selection of vessels to match customer demands and
enable the Company to further extend the breadth of services provided to its
customers.
Historically, the Company has depreciated its vessels for accounting
purposes over an economic life of 20 years down to estimated residual values.
Bona depreciated its vessels over an economic life of 25 years down to estimated
scrap values, which method is used by the majority of companies in the shipping
industry. Effective April 1, 1999, the Company changed on a prospective basis,
its useful life estimate to 25 years. As a result, the Company expects that its
average depreciation expense per vessel will decrease from historical levels.
As a result of the Bona acquisition, the Company expects that its general
and administrative expenses, while remaining relatively stable on a per vessel
basis during the first few fiscal quarters of combined operations, will begin to
decline on a per vessel basis as efficiencies are obtained from the integration
of the two companies' operations. The Company also anticipates an increase in
interest expense arising from debt that was assumed as part of the acquisition.
All oil/bulk/ore carriers ("O/B/O") owned by Bona have been operated
through an O/B/O pool managed by a subsidiary of Bona. Net voyage revenues from
the O/B/O pool will be included on a 100% basis in the Company's consolidated
financial statements, with the minority participants' share of the O/B/O pool
reflected as a time charter hire expense. The Company anticipates that these
O/B/Os may have a slight negative impact on the Company's TCE rates over the
medium- to longer-term, since these vessels tend to command lower rates than
modern Aframax tankers under typical market conditions.
Results of Operations
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.
Quarter Ended June 30, 1999 Versus Quarter Ended June 30, 1998
In the near-term, the Company believes that TCE rates will remain weak as a
result of low tanker demand growth, oil production cutbacks, and the large
number of newbuilding tankers that are expected to be delivered over the next
nine months. Aframax rates, in particular, have declined by approximately 35%
from one year ago.
The Company's net income was $732,000, or 2 cents per share, in the quarter
ended June 30, 1999, compared to $25.4 million, or 87 cents per share, in the
quarter ended June 30, 1998. There were no asset sales in the current quarter,
compared to $7.1 million, or 24 cents per share, in gains on asset sales during
the same period last year. Results for the current quarter were affected by the
decline in tanker freight rates, partly offset by the change in accounting
estimate of the useful life of its vessels from 20 to 25 years.
Income from Vessel Operations
The Company's average fleet size increased 14.1% in the quarter ended June
30, 1999 compared to the quarter ended June 30, 1998, due mainly to the
acquisition of Bona.
Net voyage revenues decreased 18.1% to $70.9 million in the current
quarter, compared to $86.6 million for the same quarter last year. This is
mainly the result of a 28.4% decline in the Company's average TCE rate in the
current quarter to $15,831 from $22,105 in the same quarter last year, partially
offset by the increase in fleet size.
Vessel operating expenses, which include crewing, repairs and maintenance,
insurance, stores and lubes, and miscellaneous expenses, including
communications, increased 12.3% to $23.3 million in the quarter ended June 30,
1999 from $20.8 million in the quarter ended June 30, 1998, as a result of the
increase in fleet size.
Time charter hire expense was $8.9 million in the quarter ended June 30,
1999, up from $5.3 million in the quarter ended June 30, 1998, as the average
number of vessels time-chartered-in by the Company was five in the current
quarter, compared to four in the same quarter last year. We anticipate an
increase in time charter hire expense due to the Bona acquisition because the
minority participants' interest in the O/B/O pool managed by Bona is reflected
as time charter hire expense.
Depreciation and amortization expense decreased 19.1% to $19.6 million in
the current quarter from $24.3 million in the same quarter last year, reflecting
the change in estimated useful life of the vessels from 20 to 25 years,
partially offset by the increase in fleet size arising from the acquisition of
Bona. Depreciation and amortization expense included amortization of drydocking
costs of $2.4 million in the quarter ended June 30, 1999, the same as in the
quarter ended June 30, 1998. Had we retained our previous depreciation policy
and applied this policy to the Bona fleet, depreciation expense would have been
$5.6 million higher.
General and administrative expenses rose 35.3% to $7.1 million in the
current quarter from $5.3 million in the same quarter last year, primarily as a
result of the hiring of additional personnel in connection with the expansion of
the Company's operations and the acquisition of Bona.
Interest Expense
Interest expense decreased 23.5% to $10.7 million in the current quarter
from $14.0 million in the same quarter last year, reflecting lower interest
rates and a reduction in the Company's total debt prior to the Bona acquisition.
The Company anticipates an increase in interest expense arising from the
additional debt assumed as part of the Bona acquisition.
The following table illustrates the relationship between fleet size
(measured in ship-days), TCE performance, and operating results per calendar
ship-day. To facilitate comparison to the prior periods' results, unless
otherwise indicated, the figures in the table below exclude the results from the
Company's Australian Vessels:
<PAGE> 14
<TABLE>
<CAPTION>
-- ---------------------------------------------- -------------------------- -----------------------
Quarter Ended Quarter Ended
June 30, 1999 June 30, 1998
-- ---------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
International Fleet:
Average number of ships 49 42
Total calendar ship-days 4,426 3,828
Revenue-generating ship-days (A) 4,152 3,649
Net voyage revenue before
commissions(B) (000's) $62,762 $79,583
-- ---------------------------------------------- -------------------------- -----------------------
TCE (B/A) $15,116 $21,810
-- ---------------------------------------------- -------------------------- -----------------------
Operating results per calendar ship-day:
Net voyage revenue $13,794 $20,260
Vessel operating expense 5,155 4,785
General and administrative expense 1,490 1,259
Drydocking expense 607 681
-- ---------------------------------------------- -------------------------- -----------------------
Operating cash flow per calendar
ship-day $6,542 $13,535
-- ---------------------------------------------- -------------------------- -----------------------
-- ---------------------------------------------- -------------------------- -----------------------
Australian Vessels:
Operating cash flow per calendar
ship-day $14,590 $13,304
-- ---------------------------------------------- -------------------------- -----------------------
-- ---------------------------------------------- -------------------------- -----------------------
Total Fleet:
Operating cash flow per calendar
ship-day $7,161 $13,486
-- ---------------------------------------------- -------------------------- -----------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 1999, the Company's total liquidity, including cash,
marketable securities, and undrawn long-term lines of credit, increased to
$184.5 million, up from $143.3 million as at March 31, 1999, mainly as a result
of the cash acquired from the Bona acquisition. In addition, as at June 30,
1999, the Company's fleet included 15 unencumbered vessels, including two
newbuildings scheduled for delivery in July and September 1999.
Net cash flow from operating activities decreased to $26.8 million in the
current quarter from $44.0 million in the same period one year ago, mainly
reflecting the decrease in TCE rates.
The Company's scheduled debt repayments were $15.4 million during the
current quarter, compared to $14.4 million in the same quarter last year.
During the quarter ended June 30, 1999, the Company incurred capital
expenditures for vessels and equipment of $9.5 million mainly for advances on
two newbuilding double-hull Aframax tankers, one of which delivered in July 1999
and the other which is scheduled for delivery in September 1999. The Company
intends to pay the remaining cost of approximately $8 million for the two
newbuildings by using existing cash balances. Cash expenditures for drydocking
were $847,000 in the current quarter compared to $2.4 million over the same
period one year ago, reflecting a reduction in scheduled drydockings.
Dividends declared during the current quarter were $6.8 million, or 21.5
cents per share.
As part of its growth strategy, the Company will continue to consider
strategic opportunities, including the acquisition of additional vessels and
expansion into new markets. The Company may choose to pursue such opportunities
through internal growth, joint ventures, or business acquisitions. The Company
intends to finance any future acquisitions through various sources of capital,
including internally generated cash flow, existing credit lines, additional debt
borrowings, and the issuance of additional shares of capital stock.
YEAR 2000 COMPLIANCE
The Company relies on computer systems, software, databases, third party
electronic data interchange interfaces and embedded processors to operate its
business. Some of these applications may be unable to appropriately interpret
the calendar year 2000 and certain other dates and some level of modification or
replacement of such applications or embedded systems will be necessary.
The Company has been actively engaged in systematically addressing the Year
2000 problem since December 1997. A Year 2000 Compliance Task Force comprised of
employees from a broad cross section of the Company has been charged with the
task of ensuring that the Company achieves Year 2000 compliance. The Task Force
includes full-time dedicated Year 2000 staff. The Company expects to be largely
Year 2000 compliant by October 1, 1999, and to reach full compliance by
mid-November 1999.
The Company's Year 2000 compliance project has been divided into several phases.
1. First, the Company completed a business and safety risk analysis to
prioritize the efforts of the Year 2000 Task Force. Those areas of the Company's
operations that posed the greatest safety risk or were the most important to the
survival and continuity of the business were assigned the highest priority.
2. Second, a full inventory of all computer hardware and software
applications, and all systems which utilize "embedded chips", both on the ships
and in the Company's offices, has been completed. Embedded chips are used, for
example, in navigation systems, communication systems, safety and detection
systems, and electrical and electro-mechanical control systems on the Company's
vessels.
3. Third, a comprehensive audit and test program of information technology
and non-information technology systems, such as embedded chips, was developed
and is being deployed to ensure seamless operation through all of the dates
which have been identified as potentially problematic. These dates include
August 22, 1999, September 9, 1999, January 1, 2000, and February 29, 2000.
Extensive safe testing has been conducted on vessels and off-line testing will
continue later in 1999 during scheduled drydockings. We have requested, and in
most cases have received, Certificates of Compliance from the manufacturers of
the equipment identified in the inventory phase as possibly containing date
sensitive functions. In addition, the Company has completed a "Year 2000
Readiness Survey" with its top customers, lenders, suppliers and other
organizations with which it conducts business. This survey has confirmed that
our key business partners are aware of the Year 2000 issue, are actively working
toward, and expect to achieve Year 2000 compliance. This "investigation phase"
is now complete.
4. Fourth, the Company is currently undertaking remedial action with
respect to all non-compliant systems and items. Remedial action includes
modifying, repairing or replacing systems or items which are of high safety or
business criticality, or a "work around" strategy for less critical systems.
Testing is occurring concurrently with the remedial action. The Company has
completed the majority of this work; however, the Company's two
Australian-flagged product tankers must be drydocked to have the remedial work
done. The second vessel may not be completed until mid-November 1999 due to the
scheduling of the drydocking. Currently, the Company is aligning the Bona Year
2000 project with its own.
5. The final phase consists of preparing contingency plans, vessel
placement strategies, and business continuity plans. These plans have been
developed and distributed. Final revisions of contingency plans are anticipated
to be distributed by September 1999 which will include roll-over procedures.
These plans have been developed and refined in consultation with our key
business partners. Drills are scheduled for the third and fourth quarter of 1999
to ensure that sea and shore staff are competent with contingency instructions.
Global Positioning Systems rollover has been fully addressed through remedial
action and contingency plans.
Although the Company expects to be Year 2000 compliant in a timely manner,
no assurance can be given that all of the Company's systems, including those
acquired as part of its acquisition of Bona, will be Year 2000 compliant or that
its customers, lenders, suppliers or the other organizations with which it
conducts business will become fully Year 2000 compliant in a timely manner. If
the Company does not achieve full compliance in a timely manner or complete its
Year 2000 project within its current cost estimates, or if one or more of its
key customers, bankers, lenders, suppliers or other organizations with which it
does business fails to become fully Year 2000 compliant, the Company's business,
financial condition and results of operations could be adversely affected. There
are also risks inherent in the Company's operations arising from the potential
failure of systems and equipment aboard other vessels sharing navigable waters
with the Company's vessels as well as problems which could arise from the
malfunction or failure of port and shore-based infrastructure systems.
The Company estimates that it will cost $2.5 million to achieve Year 2000
compliance. The increase of $500,000 over the Company's previous estimate is due
to the acquisition of Bona. The majority of these costs will either be recovered
directly from customers of the Company pursuant to contractual arrangements
currently in place or represent ongoing equipment upgrades which would have been
undertaken regardless of the Year 2000 issues. Based on the findings of the Year
2000 Task Force to date, the Company does not expect Year 2000 compliance costs
to have a material adverse effect on the Company.
FORWARD-LOOKING STATEMENTS
This Report on Form 6-K for the quarterly period ended June 30, 1999
contains certain forward-looking statements (as such term is defined in Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended) concerning future events and the Company's
operations, performance and financial condition, including, in particular,
statements regarding: TCE rates in the near-term; tanker supply and demand;
supply and demand for oil; expectations as to funding the Company's future
capital requirements; future capital expenditures, including expenditures for
newbuilding vessels; the Company's growth strategy and measures to implement
such strategy; cost savings and other benefits that may be realized in
connection with the Bona acquisition; the Company's ability to effectively
integrate the operations of Bona with the Company's operations; and Year 2000
compliance. Words such as "expects," "intends," "plans," "believes,"
"anticipates," "estimates" and variations of such words and similar expressions
are intended to identify forward-looking statements. These statements involve
known and unknown risks and are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and contingencies,
many of which are beyond the control of the Company. Actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to: changes in production of or demand for oil and petroleum
products, either generally or in particular regions; the cyclical nature of the
tanker industry and its dependence on oil markets; the supply of tankers
available to meet the demand for transportation of petroleum products; 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; the Company's dependence on spot oil
voyages; competitive factors in the markets in which the Company operates;
environmental and other regulation; the Company's potential inability to achieve
and manage growth; risks associated with operations outside the United States;
the potential inability of the Company to generate internal cash flow and obtain
additional debt or equity financing to fund capital expenditures and progress
payments on newbuildings; the Company's potential inability to identify embedded
processors in a timely manner or to achieve Year 2000 compliance within current
cost estimates; the failure of the Company's key business partners to achieve
Year 2000 compliance and the subsequent impact on the Company's operating
results; the Company's potential inability to successfully integrate Bona into
the Company's operations; and other factors detailed from time to time in the
Company's periodic reports filed with the U.S. Securities and Exchange
Commission. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with
respect thereto or any change in events, conditions or circumstances on which
any such statement is based.
<PAGE> 15
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
JUNE 30, 1999
PART I - FINANCIAL INFORMATION
ITEM 3 - MARKET RATE RISKS
The Company is exposed to market risk from interest and foreign currency
rate fluctuations. The Company uses interest rate swaps and forward foreign
currency contracts to manage these risks, but do not use financial instruments
for trading or speculative purposes.
Interest Rate Risk
The Company invests its cash and marketable securities in financial
instruments with a duration of less than three months within the parameters of
its investment policy and guidelines. The majority of these investments pay a
rate of return that fluctuates due to changes in market interest rates.
The Company uses interest rate swaps to manage the impact of interest rate
changes on earnings and cash flows. The differential to be paid or received
under these swap agreements is accrued as interest rates change and is
recognized as an adjustment to interest expense. Premiums and receipts, if any,
are recognized as adjustments to interest expense over the lives of the
individual contracts.
Foreign Exchange Rate Risk
The international tanker industry's functional currency is the U.S. dollar.
Virtually all of the Company's revenues are earned and most of its operating
costs are paid in U.S. dollars. However, the Company incurs a limited amount of
operating, drydocking, and overhead expenses in foreign currencies, primarily
the Japanese Yen, Korean Won, Singapore Dollar, Canadian Dollar and Australian
Dollar. Approximately 15% of vessel and voyage, drydocking and overhead costs
and expenditures are denominated in these currencies. The Company can shift its
purchase of goods and services from one country to another and, thus, from one
currency to another, on relatively short notice.
The Company enters into forward contracts as a hedge against changes in
relevant foreign exchange rates. Market value gains and losses are deferred and
recognized during the period in which the hedged transaction is recorded in the
accounts.
<TABLE>
<CAPTION>
Contract Carrying Amount Fair
Amount Asset Liability Value
- --------------------------------------- ---------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
June 30, 1999:
FX Forward Contracts $ 8,291 $ $ (141)
Interest Rate Swap Agreements
- net receivable position 100,000 1,850
Debt 1,011,996 1,011,996 998,496
Fiscal 1999:
FX Forward Contracts $ 2,905 $ $ (22)
Debt 641,719 641,719 637,219
- --------------------------------------- ---------------- ----------------- --------------- -----------------
</TABLE>
Inflation
Although inflation has had a moderate impact on operating, drydocking and
corporate overhead expenses, management does not consider inflation to be a
significant risk to direct costs in the current and foreseeable economic
environment. However, in the event that inflation becomes a significant factor
in the world economy, inflationary pressures could result in increased operating
and financing costs.
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
JUNE 30, 1999
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 6-K
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 6-K
None
THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE
REGISTRATION STATEMENT OF THE COMPANY ON FORM F-3 FILED WITH THE COMMISSION
ON OCTOBER 4, 1995.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEEKAY SHIPPING CORPORATION
Date: August 16, 1999 By: /s/ Peter S. Antturi
Peter S. Antturi
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEEKAY
SHIPPING CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 168,418
<SECURITIES> 0
<RECEIVABLES> 21,584
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 216,771
<PP&E> 2,276,916
<DEPRECIATION> 576,073
<TOTAL-ASSETS> 1,951,345
<CURRENT-LIABILITIES> 106,760
<BONDS> 969,305
0
0
<COMMON> 427,922
<OTHER-SE> 440,825
<TOTAL-LIABILITY-AND-EQUITY> 1,951,345
<SALES> 0
<TOTAL-REVENUES> 98,626
<CGS> 0
<TOTAL-COSTS> 27,707
<OTHER-EXPENSES> 58,988
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,738
<INCOME-PRETAX> 732
<INCOME-TAX> 0
<INCOME-CONTINUING> 732
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 732
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
