CALIFORNIA PETROLEUM TRANSPORT CORPORATION
ANNUAL REPORT
For year ended
December, 31 1999
ON FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1999
OR
Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____________ to __________
Commission File number: 33-79220
33-56377
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
(Exact name of Registrant as specified in its charter)
State of Delaware 04-3232976
_______________________ _______________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Room 6/9 One International Place
Boston, Massachusetts, 02101
(Address of principal executive offices) 02110-2624
(Zip Code)
Registrant's telephone number, including area code:
(617) 951-7727
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
None
___________________________
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ____
Documents Incorporation by Reference:
The following documents filed pursuant to Rule 424(b) under the
Securities Act of 1933, as amended, are incorporated by reference
into Part I of this Form 10-K.
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1. Business..................................... 1
Item 2. Properties .................................. 2
Item 3. Legal Proceedings ........................... 2
Item 4. Submission of Matters to a Vote of Security
Holders ..................................... 3
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters............ 3
Item 6. Selected Financial Data ..................... 3
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......... 5
Item 7(a) Quantitative and Qualitative disclosures about
Market Risk.................................. 6
Item 8. Financial Statements and Supplementary Data
............................................. 8
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure......................... 15
PART III
Item 10. Directors and Officers of the Registrant..... 15
Item 11. Executive Compensation ...................... 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management ....................... 15
Item 13. Certain Relationships and Related
Transactions ................................ 16
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K ..................... 16
PART I
Item 1. Business
The Company
California Petroleum Transport Corporation, a Delaware
corporation ("California Petroleum"), is a special purpose
corporation that was organized solely for the purpose of
issuing, as agent on behalf of the Owners, the Term Mortgage
Notes and Serial Mortgage Notes (together the "Notes") as
obligations of California Petroleum and loaning the proceeds of
the sale of the Notes to the Owners to facilitate the funding of
the acquisition of the four vessels (the "Vessels") described
below from Chevron Transport Corporation (the "Initial
Charterer"). All the shares of California Petroleum are held by
The California Trust, a Massachusetts charitable lead trust
formed by JH Holdings, a Massachusetts corporation, for the
benefit of certain charitable institutions in Massachusetts.
The Owners
Each of CalPetro Tankers (Bahamas I) Limited ("CalPetro Bahamas
I"), CalPetro Tankers (Bahamas II) Limited ("Calpetro Bahamas
II") and CalPetro Tankers (Bahamas III) Limited ("CalPetro
Bahamas III"), was organized as a special purpose company under
the laws of the Bahamas for the purpose of acquiring and
chartering one of the Vessels. Similarly, CalPetro Tankers
(IOM) Limited ("CalPetro IOM") has been organized as a special
purpose company under the laws of the Isle of Man for the
purpose of acquiring and chartering one of the Vessels. Each of
the foregoing companies also is referred to in this document as
an "Owner". Each Owner, either pursuant to the terms of its
Memorandum of Association and/or pursuant to the terms of the
related Mortgage, will engage in no business other than the
ownership and chartering of its Vessel and activities resulting
from or incidental to such ownership and chartering. Each Owner
is wholly-owned by California Tankers Investments Limited, a
company organized under the laws of the Bahamas, which is a
wholly-owned subsidiary of CalPetro Holdings Limited, an Isle of
Man company. None of the Owners is owned by or is an affiliate
of California Petroleum and neither of California Petroleum nor
any Owner is owned by or is an affiliate of the Initial
Charterer.
The Charters
1
Each of the Vessels is currently chartered to the Initial
Charterer pursuant to a charter dated as of the date of the
original issuance of the notes (collectively, the "Charters")
and which is due to expire on April 1, 2015. Upon payment of a
termination amount, the Initial Charterer has the right to
terminate the charters on any four (in the case of the double-
hulled Vessels) or three (in the case of the single-hulled
Vessel), termination dates which, for each Vessel, occur at two-
year intervals beginning in 2003, 2004, 2005 or 2006, as the
case may be.
The International Tanker Market
International seaborne oil and petroleum products transportation
services are mainly provided by two types of operator: major oil
company captive fleets (both private and state-owned) and
independent shipowner fleets. Both types of operators transport
oil under short-term contracts (including single-voyage "spot
charters") and long-term time charters with oil companies, oil
traders, large oil consumers, petroleum product producers and
government agencies. The oil companies own, or control through
long-term time charters, approximately one third of the current
world tanker capacity, while independent companies own or
control the balance of the fleet. The oil companies use their
fleets not only to transport their own oil, but also to
transport oil for third-party charterers in direct competition
with independent owners and operators in the tanker charter
market.
The oil transportation industry has historically been subject to
regulation by national authorities and through international
conventions. Over recent years, however, an environmental
protection regime has evolved which could have a significant
impact on the operations of participants in the industry in the
form of increasingly more stringent inspection requirements,
closer monitoring of pollution-related events, and generally
higher costs and potential liabilities for the owners and
operators of tankers.
In order to benefit from economies of scale, tanker charterers
will typically charter the largest possible vessel to transport
oil or products, consistent with port and canal dimensional
restrictions and optimal cargo lot sizes. The oil tanker fleet
is generally divided into the following five major types of
vessels, based on vessel carrying capacity: (i) ULCC-size range
of approximately 320,000 to 450,000 dwt; (ii) VLCC-size range of
approximately 200,000 to 320,000; (iii) Suezmax-size range of
approximately 120,000 to 200,000 dwt; (iv) Aframax-size range of
approximately 60,000 to 120,000 dwt; and (v) small tankers of
less than approximately 60,000 dwt. ULCCs and VLCCs typically
2
transport crude oil in long-haul trades, such as from the
Arabian Gulf to Rotterdam via the Cape of Good Hope. Suezmax
tankers also engage in long-haul crude oil trades as well as in
medium-haul crude oil trades, such as from West Africa to the
East Coast of the United States. Aframax-size vessels generally
engage in both medium-and short-haul trades of less than 1,500
miles and carry crude oil or petroleum products. Smaller
tankers mostly transport petroleum products in short-haul to
medium-haul trades.
The shipping industry is highly cyclical, experiencing
volatility in profitability, vessel values and charter rates.
In particular, freight and charterhire rates are strongly
influenced by the supply and demand for shipping capacity. The
tanker market in general has been depressed for a number of
years, largely as a result of an excess of tonnage supply over
demand. In 1999, the Suezmax sector of the tanker market
continued to fluctuate and in the third quarter of 1999 fell to
the lowest level since 1994. This was also the result of
substantially lower volumes of oil transported due to the
adherence by OPEC to their agreed oil production cuts introduced
at the start of 1999, the fact that a high proportion of these
cuts involved long-haul Middle East oil, increased competition
from the VLCC sector and the draw of oil inventories. At the
start of 2000, the Suezmax market has seen some improvement as
scrapping of older tonnage has increased due to high bunker cost
and the difficulties finding cargoes for old tonnage. Tanker
scrapping activity is expected to continue at high levels given
the current tanker market weakness, the relatively high
orderbook, the tanker fleet age demographic, an expensive fifth
special survey and stricter environmental regulations.
Continued improvement in Suezmax freight rates will be largely
dependent on improvement in the Asian economies, increased
output from the OPEC countries and an increase in the rate of
scrapping older vessels.
There is no guarantee that Suezmax rates would be sufficient to
meet the debt service required if the bareboat charters entered
into with Chevron are not extended. However, Suezmax rates are
still sufficient to meet the debt service required if the
bareboat charters entered into with Chevron are not extended.
The average daily time charter equivalent rates earned by modern
Suezmaxes in 1999 was $16,000 on a single voyage basis.
Item 2. Properties
California Petroleum has no property. The Owners paid
approximately $80.7 million for each double-hulled Vessel and
$40.0 million for the single-hulled Vessel. Other than the
Vessels described below the Owners have no property.
3
Information
Delivery Approximate
Vessel Construction Registration date dwt
Samuel Ginn Double Hull Bahamas March 1993 150,000
Condoleezza Rice Double Hull Bahamas August 1993 130,000
Chevron Mariner Double Hull Liberia October 1994 150,000
William E. Crain Single Hull Liberia February 1992 150,000
Item 3. Legal proceedings
Neither California Petroleum nor the Owners are parties to any
legal proceedings, nor are there any legal proceedings threatened
against any of California Petroleum or the Owners, which in
either case are material to California Petroleum's assets or
businesses.
4
PART II
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fiscal year ended December 31, 1999.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
(a) There is no established trading market for the Common
Stock of the Registrant.
(b) As of March 12, 2000 with respect to the Common Stock
there was one (1) holder of record of the Registrant's
Common Stock.
Item 6. Selected Financial Data
The following selected historical financial and other data for
Californian Petroleum was devised from more detailed information
and financial statements and notes appearing elsewhere in this
Annual Report and should be read in conjunction therewith.
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
INCOME STATEMENT DATA
(US Dollars in thousands)
Period
Year ended Apr 1, to
December 31, Dec 31,
1999 1998 1997 1996 1995
Income
Interest income 17,811 19,130 20,421 21,659 16,640
Recovery of general and
administrative
expenses 60 61 64 64 47
______ _______ _________ _________ _________
Deduct: 17,871 19,191 20,485 21,723 16,687
Expenses
Interest payable (17,555) (18,874) (20,165) (21,403) (16,452)
General and administrative
expenses (60) (61) (64) (64) (47)
Amortization of debt issue
costs (256) (256) (256) (256) (188)
5
_______ _______ _________ _________ _________
Net result for the year Nil Nil Nil Nil Nil
======== ======= ======= ======= =======
6
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
BALANCE SHEET DATA
December 31,
(US Dollars in thousands) 1999 1998 1997 1996 1995
Assets
Current assets:
Cash and cash equivalents 1 1 1 1 1
Current portion of Serial
loan 18,160 18,160 18,160 18,160 17,160
Interest receivable 4,306 4,637 4,962 5,279 5,566
Other assets 21 6 28 6 8
_______ _______ _________ _________ _________
Total current assets 22,488 22,804 23,151 23,446 22,735
Serial loans receivable less
current portion 76,858 94,850 112,842 130,834 148,826
Terms loans receivable 116,554 116,466 116,378 116,290 116,202
Deferred charges and other
assets 2,188 2,444 2,700 2,956 3,212
_______ ________ __________ __________ _________
Total assets 218,088 236,564 255,071 273,526 290,275
======== ======== ======== ======== ========
Liabilities and stockholders' equity
Current liabilities:
Interest accrued 4,306 4,637 4,962 5,279 5,566
Current portion of serial
mortgage notes 18,160 18,160 18,160 18,160 17,160
Other liabilities 21 6 28 6 8
_______ _______ _________ _________ _________
Total current liabilities 22,487 22,803 23,150 23,445 22,734
Serial mortgage notes 77,700 95,860 114,020 132,180 150,340
Term mortgage notes 117,900 117,900 117,900 117,900 117,900
________ ________ __________ __________ _________
Total liabilities 218,087 236,563 255,070 273,525 290,274
________ ________ __________ __________ _________
Shareholders' equity 1 1 1 1 1
7
_____ ____ ____ ____ ____
Total liabilities and
stockholders' equity 218,088 236,564 255,071 273,526 290,275
======== ======== ======== ======== ========
8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business Strategy
i) California Petroleum
California Petroleum's strategy has been to issue, as agent
on behalf of the Owners, the Notes and loan the proceeds of
the sale of the Notes to the Owners. California Petroleum's
only sources of funds with respect to the Notes are payments
of interest and principal on the related loans from
California Petroleum to each Owner. General and
administrative expenses comprising trustee fees, legal fees,
agency fees and other costs incurred by California Petroleum
are billed to the Owners. California Petroleum has no
source of income other than payments to it by the Owners.
The net result for the year is neither a gain nor a loss,
the detail relating to such result is set forth in the
Statement of Income included herein.
ii) Owners
The Owners' strategy has been to acquire the Vessels and
charter them to the Initial Charterer under bareboat
charters which are expected to provide (a) charterhire
payments which the Issuer and the Owners expect will be
sufficient to pay, so long as the Initial Charters are in
effect (i) the Owners' obligations under the loans for
acquiring the Vessels, (ii) management fees and technical
advisor's fees (iii) recurring fees and taxes, and (iv) any
other costs and expenses incidental to the ownership and
chartering of the Vessels that are to be paid by the Owners,
(b) Termination Payments sufficient to make sinking fund and
interest payments on the Term Mortgage Notes, to the extent
allocable to the Vessel for which the related Initial
Charter has been terminated, for at least two years
following any such termination, during which time the Vessel
may be sold or rechartered and (c) that the Vessels will be
maintained in accordance with the good commercial
maintenance practices required by the Initial Charters; and
to arrange for vessel management and remarketing services to
be available in case any Initial Charter is terminated by
the Initial Charterer or any Vessel is for any other reason
returned to the possession and use of the Owners.
Year 2000
9
The Vessels are provided with computers and have
computerized control systems. Further the Vessels have
equipment such as for example navigational aids,
communications systems, machinery equipment, cargo measuring
equipment and alarm systems that rely on computers or
embedded computer chips for proper function.
The initial terms of the Charters extend beyond the
year 2000. The initial Charterer has assured the Company
that it is very aware of the year 2000 problem. The Initial
Charterer has confirmed that in the dealings with the
Vessels it has taken, and will continue to take, all
reasonable steps to allow business continuity into the year
2000 and beyond.
The Owners have not incurred and do not expect to
incur any year 2000 related expenses. At this stage no
year 2000 problems have been reported and should any
problems arise the Initial Charterer's obligation to pay
charter hire is absolute. This absolute obligation
includes circumstances where a Vessel should be unfit for
use due to computer related problems, should such occur in
spite of the Initial Charterer's diligent approach to the
preparations for the year 2000. In addition, the Initial
Charterer is obliged to indemnify the relevant Owner and the
Company in respect of events arising through the term of the
Charters with respect to, among other things, all
liabilities claims and proceedings arising in any manner out
of the operation of the Vessels by the Initial Charterer
with no exclusion of events relating to computers or
problems that could affect computers at certain dates. The
Initial Charterer's obligations as described above are
guaranteed by the Chevron Guarantees.
Additionally the Owners rely on the services of
internationally recognised banks and other institutions to
make payments and provide management services. There have
been no year 2000 effects on these services to date, and any
future problems will be covered by normal commercial
arrangements. The owners do not expect to incur any costs
in this area.
Item 7 (a) Quantitative and Qualitative disclosures about
Market Risk
(a) Quantitative information about market risk
Quantitative information about market risk
instruments at December 31, 1999 is as
follows:
10
i) Serial Loans
The principal balances of the Serial Loans
earn interest at rates ranging from 7.35% to
7.62% and mature over a seven year period
beginning April 1, 2000. The loans are
reported net of the related discounts, which
are amortized over the term of the loans.
The outstanding serial loans have the
following characteristics:
Principal Interest Maturity
due rate date
$ 000
18,160 7.35% April 1, 2000
18,160 7.44% April 1, 2001
18,160 7.49% April 1, 2002
18,160 7.55% April 1, 2003
12,950 7.57% April 1, 2004
7,740 7.60% April 1, 2005
2,530 7.62% April 1, 2006
_______
95,860
ii) Term Loans
The principal balances of the Term Loans earn
interest at a rate of 8.52% per annum and are
to be repaid over a twelve-year period
beginning nine years from April 1, 1995. The
loans are reported net of the related
discounts, which are amortized over the term
of the loans.
The table below provides the final principal
payments on the Term Loans if none of the
Initial Charters is terminated and if all of
the Initial Charters are terminated on the
earliest termination dates.
Scheduled No Initial All Initial
Payment date Charters Charters
Terminated Terminated
$ 000 $ 000
April 1, 2004 3,355 1,700
April 1, 2005 6,542 3,480
April 1, 2006 9,526 5,320
April 1, 2007 10,942 6,340
11
April 1, 2008 10,942 6,880
April 1, 2009 10,942 7,470
April 1, 2010 10,942 8,110
April 1, 2011 10,942 8,800
April 1, 2012 10,942 9,540
April 1, 2013 10,942 10,360
April 1, 2014 10,942 11,240
April 1, 2015 10,941 38,660
117,900 117,900
12
iii) Serial Mortgage Notes
The Serial Mortgage Notes bear interest at
rates ranging from 7.35% to 7.62% through
maturity. The Notes mature over an eight-year
period beginning one year from April 1, 1999.
Interest is payable semi-annually.
The outstanding serial loans have the
following characteristics:
Principal Interest Maturity
due rate date
$ 000
18,160 7.30% April 1, 1999
18,160 7.35% April 1, 2000
18,160 7.44% April 1, 2001
18,160 7.49% April 1, 2002
18,160 7.55% April 1, 2003
12,950 7.57% April 1, 2004
7,740 7.60% April 1, 2005
2,530 7.62% April 1, 2006
114,020
iv) Term Mortgage Notes
The Term Mortgage Notes bear interest at a
rate of 8.52% per annum. The Principal is
repayable on the Term Mortgage Notes in
accordance with a twelve-year sinking fund
schedule commencing nine years from April 1,
1995. Interest is payable semi-annually.
The table below provides the scheduled sinking
fund redemption amounts and final principal
payments on the Term Mortgage Notes if none of
the Initial Charters is terminated and if all
of the Initial Charters are terminated on the
earliest termination dates.
Scheduled No Initial All Initial
Payment date Charters Charters
Terminated Terminated
$ 000 $ 000
April 1, 2004 3,355 1,700
April 1, 2005 6,542 3,480
April 1, 2006 9,526 5,320
April 1, 2007 10,942 6,340
13
April 1, 2008 10,942 6,880
April 1, 2009 10,942 7,470
April 1, 2010 10,942 8,110
April 1, 2011 10,942 8,800
April 1, 2012 10,942 9,540
April 1, 2013 10,942 10,360
April 1, 2014 10,942 11,240
April 1, 2015 10,941 38,660
117,900 117,900
(b) Qualitative information about market risk
The Corporation was organized solely for the
purpose of issuing, as agent on behalf of
certain ship Owners, the Term Mortgage in
Notes and Serial Mortgage Notes as obligations
of California Petroleum and loaning the
proceeds of the sale of the Notes to the
Owners to facilitate the funding of the
acquisition of four Vessels from Chevron
Transport Corporation.
14
Item 8. Financial statements and Supplementary Data
Report of Ernst & Young, Independent Auditors
The Shareholders and Board of Directors of California
Petroleum Transport Corporation
We have audited the accompanying balance sheets of
California Petroleum Transport Corporation as of December
31, 1999 and 1998 and the related statements of income and
cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the
responsibility of each of the three Company's management.
Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with United
States generally accepted auditing standards. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statement are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the
financial position of California Petroleum Transport
Corporation at December 31, 1999 and 1998, and the results
of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity
with United States generally accepted accounting principles.
Ernst & Young
Douglas, Isle of Man Chartered Accountants
March 30, 2000
15
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
STATEMENT OF INCOME
(US Dollars in thousands)
Year ended
December 31,
1999 1998 1997
Income
Interest income 17,811 19,130 20,421
Recovery of general and
administrative expenses 60 61 64
_______ _______ _______
17,871 19,191 20,485
Deduct:
Expenses
Interest payable (17,555) (18,874) (20,165)
General and administrative
expenses (60) (61) (64)
Amortization of debt issue costs (256) (256) (256)
_______ _______ _______
Net result for the year Nil Nil Nil
======= ======= =======
16
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
BALANCE SHEET
December 31,
(US Dollars in thousands) Notes 1999 1998
Assets
Current assets:
Cash and cash equivalents
Current portion of Serial loan 3 1 1
Current portion of Serial Loan 18,160 18,160
Interest receivable 4,306 4,637
Other assets 21 6
_______ _______
Total current assets 22,488 22,804
Serial loans receivable less
current portion 3 76,858 94,850
Terms loans receivable 4 116,554 116,466
Deferred charges and other
assets 2(b) 2,188 2,444
_______ ________
Total assets 218,088 236,564
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Interest accrued 4,306 4,637
Current portion of serial
mortgage notes 5,6 18,160 18,160
Other liabilities 21 6
_______ _______
Total current liabilities 22,487 22,803
Serial mortgage notes 5,6 77,700 95,860
Term mortgage notes 5,7 117,900 117,900
________ ________
Total liabilities 218,087 236,563
________ ________
Shareholders' equity:
Common stock: 1,000 shares
authorized, issued and
outstanding 1 1
____ ___
17
Total liabilities and
stockholders' equity 218,088 236,564
======== ========
18
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
STATEMENT OF CASH FLOWS
Year ended
December 31,
1999 1998 1997
(US Dollars in thousands)
Cash Flows from Operating Activities:
Net result for the year - - -
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Recognition of deferred
expenses 256 256 256
Changes in assets and
liabilities
Accounts receivable (316) 347 295
Accounts payable 316 (347) (295)
____ ____ ____
Net cash provided by
operating activities 256 256 256
____ ____ ____
Cash Flows from Investing Activities:
Term and Serial loans
repaid 17,904 17,904 17,904
______ ______ ______
Net cash from investing
activities 17,904 17,904 17,904
______ ______ ______
Cash Flows from Financing Activities
Serial notes redeemed (18,160) (18,160) (18,160)
______ _______ ________
Net cash used in financing
activities (18,160) (18,160) (18,160)
______ _______ ________
Net increase in cash and cash
equivalents Nil Nil Nil
=== === ===
19
Cash and cash equivalents
at bank at the beginning and
end of year Nil Nil Nil
=== === ===
20
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
1- Basis of Preparation
The Company which is incorporated in Delaware, is a
special purpose corporation that has been organized
solely for the purpose of issuing, as agent on behalf of
Calpetro Tankers (Bahamas I) Limited, Calpetro Tankers
(Bahamas II) Limited, Calpetro Tankers (Bahamas III)
Limited and Calpetro Tankers (IOM) Limited (each an
"Owner" and, together the "Owners"), the Serial Mortgage
Notes and the Term Mortgage Notes as full recourse
obligations of the Company and loaning the proceeds of
the sale of the Notes to the Owners to facilitate the
funding of the acquisition of four vessels from Chevron
Transport Corporation (the "Initial Charterer"). These
statements reflect the net proceeds from the sale of the
Term Mortgage Notes together with the net proceeds from
sale of the Serial Mortgage Notes having been applied by
way of long-term loans to the Owners to fund the
acquisition of the Vessels from the Initial Charterer.
2- Principal accounting policies
The financial statements have been prepared in
accordance with United States generally accepted
accounting principles. A summary of the more important
accounting policies, which have been consistently
applied, is set out below.
(a)Revenue and expense recognition
Interest receivable on the Serial Loans and on the
Term Loans is accrued on a daily basis. Interest
payable on the Serial Mortgage Notes and on the
Term Mortgage Notes is accrued on a daily basis.
General and administrative expenses incurred by the
company are reimbursed by the Owners.
(b) Deferred charges
Deferred charges represent the capitalization of
debt issue costs. These costs are amortized over
the term of the Notes to which they relate.
(c) Reporting currency
21
The reporting and functional currency is United
States Dollars.
3-Serial Loans
The principal balances of the Serial Loans earn interest
at rates ranging from 7.35% to 7.62% and mature over a
seven year period beginning April 1, 2000. The loans
are reported net of the related discounts which are
amortized over the term of the loans.
4- Term Loans
The principal balances of the Term Loans earn interest
at a rate of 8.52% per annum and are to be repaid over a
twelve year period beginning nine years from April 1,
1995. The loans are reported net of the related
discounts which are amortized over the term of the
loans.
5- Serial Loans and Term Loans Collateral
The Term and Serial Loans are collateralized by first
preference mortgages on the Vessels to the Company. The
earnings and insurance relating to the Vessels have been
collaterally assigned pursuant to an Assignment of Earnings
and Insurance to the Company which in turn has assigned such
Assignment of Earnings and Insurance to the Collateral
Trustee. The Initial Charters and Chevron Guarantees
relating to the Vessels have been collaterally assigned
pursuant to the Assignment of Initial Charter and Assignment
of Initial Charter Guarantee to the Company, which in turn
has assigned such Assignments to the Collateral Trustee.
The Capital Stock of each of the Owners has been pledged to
the Company pursuant to the Stock Pledge Agreements.
6- Serial Mortgage Notes
The Serial Mortgage Notes bear interest at rates ranging
from 7.35% to 7.62% through maturity. The Notes mature
over a seven year period beginning one year from April
1, 2000. Interest is payable semi-annually.
The outstanding serial loans have the following
characteristics:
Principal Interest Maturity
due rate date
$ 000
22
18,160 7.35% April 1, 2000
18,160 7.44% April 1, 2001
18,160 7.49% April 1, 2002
18,160 7.55% April 1, 2003
12,950 7.57% April 1, 2004
7,740 7.60% April 1, 2005
2,530 7.62% April 1, 2006
_______
95,860
_______
7- Term Mortgage Notes
The Term Mortgage Notes bear interest at a rate of 8.52%
per annum. Principal is repayable on the Term Mortgage
Notes in accordance with a twelve year sinking fund
schedule commencing nine years from April 1, 1995.
Interest is payable semi-annually.
The table below provides the scheduled sinking fund
redemption amounts and final principal payments on the
Term Mortgage Notes if none of the Initial Charters is
terminated and if all of the Initial Charters are
terminated on the earliest termination dates.
Scheduled No Initial All Initial
Payment date Charters Charters
Terminated Terminated
$ 000 $ 000
April 1, 2004 3,355 1,700
April 1, 2005 6,542 3,480
April 1, 2006 9,526 5,320
April 1, 2007 10,942 6,340
April 1, 2008 10,942 6,880
April 1, 2009 10,942 7,470
April 1, 2010 10,942 8,110
April 1, 2011 10,942 8,800
April 1, 2012 10,942 9,540
April 1, 2013 10,942 10,360
April 1, 2014 10,942 11,240
April 1, 2015 10,941 38,660
_______ ______
117,900 117,900
________ ________
8- Recently Issued Accounting Standards and Securities and
Exchange Commission Rules
23
SFAS No. 133, "Accounting for Derivatives and Hedging
Activities" is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000 (January 1,
2001 for the Company) and requires that all derivative
instruments be recorded on the balance sheet at their
fair value. Changes in the fair value of derivatives
are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative
is designated as part of a hedge transaction and, if it
is, the type of hedge transaction.
The adoption of SFAS No. 133 will have no effect on the
presentation of the Company's balance sheet or results
of operations.
Item 9- Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
24
PART III
Item 10- Directors and Officers of Registrant
Directors and Executive
Officers of California Petroleum Age Position
Nancy D. Smith 32 Director and
President
Louise E. Colby 51 Director and
Assistant
Secretary
R. Douglas Donaldson 58 Treasurer
Jacy L. Wilson 26 Secretary
Nancy D. Smith has been a Director and the President of
California Petroleum since 1994. She jointed
JH Management Corporation, a Massachusetts business
corporation that engages in the management of special
purpose corporations for structured financial transactions
in 1993 as its President currently the Vice President of the
corporation. From 1997 to 1992, she was a legal secretary
at Ropes & Gray, a law firm in Boston, MA. From 1992 to
1993, she was a personal assistant to Bob Woolf Associates,
Inc.
Louise E. Colby has been a Director of the Corporation
since 1994. She was the Secretary and Treasurer in 1994
and has served as an Assistant Secretary from 1995 to
present. She is a former Director, Secretary and Treasurer
of JH Management Corporation beginning in 1989 and currently
serves as its Assistant Treasurer. She has also served as
the Trustee of the Cazenove Street Realty Trust since 1983
and, since 1985, a Trustee of The 1960 Trust, a charitable
trust for the benefit of Harvard University.
R. Douglas Donaldson has been the Treasurer of the
Corporation since 1995 He has been President of JH
Management Corporation since 1994. He was the Vice
President of a sibling management corporation, JH Holdings
Corporation, from 1994 to early 1999, when he was promoted
to President of that corporation as well. Prior to 1994, he
as a bank officer (primarily at Bank of New England) for
over twenty-five years in the field of personal trust and
estate planning. He is also the sole trustee of two
charitable trusts for the benefit of Harvard University.
25
Jacey L. Wilson has been the Secretary of the Corporation
since 1998. She joined the Boston law firm of Ropes & Gray
in 1998 as a paralegal, after obtaining her bachelor's
degree in 1995 from Boston College and here master's degree
in 1997 from Northeastern University.
Item 11- Executive Compensation
The directors and officers of California Petroleum are
not compensated.
Item 12- Security Ownership of Certain Beneficial Owners
and Management
The following table provides information as of March, 12
2000 with respect to the ownership by each person or group
of persons, known by the registrant to be a record owner of
5% or more of the Common Stock.
Except as set forth below, the Registrant is not aware of
any record owner of more than 5% of the Common Stock as of
close of business on March, 12 2000.
26
Title of Class Number of Percent of
of Securities Name and address Shares Class
Common Stock The California Trust 1,000 100%
c/o J H Holdings Corporation
P.O. Box 4024
Room 6/9
One International Place
Boston,
Massachusetts 02101
Item 13- Certain Relationships and Related Transactions
None.
Item 14- Exhibits, Financial Statement Schedules and Reports
on Form 8-K
None.
Supplemental Information to be furnished with
reports filed pursuant to Section 15(d) by
Registrants which have not registered securities
pursuant to Section 12 of the Act
No annual report, proxy statement, form of proxy or
other soliciting material has been sent to
Certificateholders, and the Registrant does not
contemplate sending any such materials subsequent
to the filing of this report.
27
SIGNATURES
Subject to the requirements of Section 13 or 15(d)
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.
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
Registrant
/s/ Nancy D. Smith
Nancy D. Smith
President
Date: March 30, 2000
Pursuant to the requirement of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons and in the capacities and on the date indicated.
Name Title Date
/s/ Nancy D. Smith
Nancy D. Smith Director and President March 30, 2000
(Principal Executive
Officer)
/s/ Louise E. Colby
Louise E. Colby Director March 30, 2000
/s/ R. Douglas Donaldson
R. Douglas Donaldson Principal Financial
and Accounting Officer March 30, 2000
28
02089006.AC1