SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended
September 30, 2001 Commission File Number 33-79220
33-56377
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
(exact name of Registrant as specified in its charter)
Delaware 04-3232976
(State of incorporation) (I.R.S. Employer
Identification No.)
Suite 569, One International Place,
Boston, Massachusetts 02110-2624
(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code (617) 951-7727
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,
and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
Number of shares outstanding of each class of Registrant's Common
Stock as of October 31, 2001
Common, $1.00 par value............................1,000 shares
2
California Petroleum Transport Corporation
Quarterly Report on Form 10-Q
Nine months ended September 30, 2001
Index
Part I Financial Information
Item 1 Financial Statements
Review Report of Independent Accountants
Unaudited Condensed Income Statement - Three and Nine
months ended September 30, 2001 and 2000
Unaudited Condensed Balance Sheet - September 30, 2001
and December 31, 2000
Unaudited Condensed Statement of Cash Flows - Nine
months ended September 30, 2001 and 2000
Notes to Unaudited Condensed Financial statements
Item 2 Management's Discussion and analysis of Financial
Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market
Risk
Part II Other Information
Item 1 Legal Proceedings
Signatures
Omitted items are not applicable
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California Petroleum Transport Corporation
Quarterly Report on Form 10-Q
Nine months ended September 30, 2001
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Review Report of Independent Accountants
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF CALIFORNIA
PETROLEUM TRANSPORT CORPORATION
We have reviewed the accompanying condensed balance sheet of
California Petroleum Transport Corporation as of September 30,
2001, and the related condensed statements of income for the
three and nine-month periods ended September 30, 2001 and 2000
and condensed statements of cash flows for the nine-month periods
ended September 30, 2001 and 2000. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with United States generally accepted
auditing standards, which will be performed for the full year
with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with United States
generally accepted accounting principles.
We have previously audited, in accordance with United States
generally accepted auditing standards, the balance sheet of
California Petroleum Transport Corporation as at December 31,
2000, and the related statements of income and cash flows for the
year then ended, not presented herein, and in our report dated
March 30, 2001, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth
4
in the accompanying condensed balance sheet as of December 31,
2000, is fairly stated, in all material respects, in relation to
balance sheet from which it has been derived.
Ernst & Young
Chartered Accountants
Douglas, Isle of Man
November 9, 2001
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California Petroleum Transport Corporation
Unaudited Condensed Income Statements for the
three and nine months ended September 30, 2001 and 2000
(in thousands of US$)
3 months ended 9 months ended
September 30 September 30
2001 2000 2001 2000
Operating revenues
Interest income 3,725 4,0361 1,452 12,442
Recovery of administrative expenses 25 15 40 45
- ------------------------------------------------------------------------------
Net operating revenues 3,750 4,051 11,492 12,487
Operating expenses
Administrative expenses 25 15 40 45
- ------------------------------------------------------------------------------
Total operating expenses 25 15 40 45
- ------------------------------------------------------------------------------
Net operating income before amortisation 3,725 4,036 11,452 12,442
- ------------------------------------------------------------------------------
Amortisation of deferred charges 64 64 192 192
- ------------------------------------------------------------------------------
Other expenses
Interest expense 3,661 3,972 11,260 12,250
- ------------------------------------------------------------------------------
Net other expenses 3,661 3,972 11,260 12,250
- ------------------------------------------------------------------------------
Net income - - - -
==============================================================================
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California Petroleum Transport Corporation
Unaudited Condensed Balance Sheets as of
September 30, 2001 and December 31, 2000
2001 2000
ASSETS
Current assets
Cash and cash equivalents 1 1
Current maturities of serial loans
receivable 18,160 18,160
(maturity date April 1, 2002)
Interest income receivable 7,288 3,972
Other accounts receivable 40 43
- -----------------------------------------------------------------
Total current assets 25,489 22,176
Serial loans receivable 40,832 58,866
Term loans receivable 116,708 116,642
Deferred charges 1,740 1,932
- -----------------------------------------------------------------
Total assets 184,769 199,616
- -----------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of serial mortgage
notes 18,160 18,160
(maturity date April 1, 2002)
Accrued interest expense 7,288 3,972
Other accounts payable 40 43
- -----------------------------------------------------------------
Total current liabilities 25,488 22,175
Long-term liabilities
Serial mortgage notes 41,380 59,540
Term mortgage notes 117,900 117,900
- -----------------------------------------------------------------
Total liabilities 184,768 199,615
Commitments and contingencies - -
Stockholders' equity
Share capital (1,000 shares of
$1 authorised, issued and outstanding) 1 1
Retained earnings - -
- -----------------------------------------------------------------
Total stockholders' equity 1 1
- -----------------------------------------------------------------
Total liabilities and stockholders'
equity 184,769 199,616
=================================================================
7
California Petroleum Transport Corporation
Unaudited Condensed Statements of Cash Flows for
the nine months ended September 30, 2001 and 2000
(in thousands of US$)
2001 2000
Operating activities
Net income - -
Adjustments to reconcile net income to
net cash provided by operating activities
Amortisation of deferred charges 192 192
Amortisation of issue discount on
loans receivable (191) (192)
Changes in operating assets and
liabilities:
Interest income receivable (3,316) (3,637)
Other accounts receivable 3 (23)
Accrued interest expense 3,316 3,637
Other accounts payable (3) 23
- -----------------------------------------------------------------
Net cash provided by operating activities - -
- -----------------------------------------------------------------
Investing activities
Maturity of serial loans receivable 18,160 18,160
- -----------------------------------------------------------------
Net cash provided by investing
activities 18,160 18,160
- -----------------------------------------------------------------
Financing activities
Redemption of serial mortgage notes (18,160) (18,160)
- -----------------------------------------------------------------
Net cash used in financing activities (18,160) (18,160)
- -----------------------------------------------------------------
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of year 1 1
- -----------------------------------------------------------------
Cash and cash equivalents at end of year 1 1
=================================================================
Supplemental disclosure of cash flow
information:
Interest paid 7,945 8,612
=================================================================
8
California Petroleum Transport Corporation
Unaudited Statements of Changes in Stockholders'
Equity for the Nine months ended September 30,
2001 and 2000
(in thousands of US$, except number of shares)
2001 2000
Number of Shares Outstanding
Balance at beginning of year 1,000 1,000
Shares issued - -
- -----------------------------------------------------------------
Balance at end of year 1,000 1,000
- -----------------------------------------------------------------
Share Capital
Balance at beginning of year 1 1
Shares issued - -
- -----------------------------------------------------------------
Balance at end of year 1 1
- -----------------------------------------------------------------
Retained Earnings
Balance at beginning of year - -
Net income - -
- -----------------------------------------------------------------
Balance at end of year - -
- -----------------------------------------------------------------
Total Stockholders' Equity 1 1
=================================================================
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California Petroleum Transport Corporation
Notes to the Unaudited Condensed Financial
Statements
1. GENERAL
Organization and history
California Petroleum Transport Corporation was incorporated
under the laws of the state of Delaware on May 18, 1994. The
company is a special purpose corporation that has been
organized solely for the purpose of issuing as agent Serial
Mortgage Notes and Term Mortgage Notes as full recourse
obligations of the company and loaning the proceeds of the
sale of the Notes to four vessel-owning companies. The
Serial Mortgage Notes and the Term Mortgage Notes were issued
on April 5, 1995.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with United
States generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. The principal accounting policies used in the
preparation of these financial statements are set out below.
The balance sheet at December 31, 2000 has been derived from
the audited financial statements at that date but does not
include all of the information and footnotes required by
generally accepted accountancy principles for complete
financial statements.
2. ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared in accordance
with generally accepted accounting principles in the United
States. The preparation of financial statements in
accordance with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results
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could differ from those estimates. The following are the
significant accounting policies adopted by the Company:
Cash and cash equivalents
For the purposes of the consolidated statements of cash
flows, all demand and time deposits and highly liquid, low
risk investments with original maturities of three months or
less are considered equivalent to cash.
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 vessel-owning companies.
Deferred charges
Deferred charges represent the capitalisation of debt issue
costs. These costs are amortised over the term of the Notes
to which they relate.
3. SERIAL LOANS
The principal balances of the Serial Loans earn interest at
rates ranging from 7.44% to 7.62% and mature over a six-year
period beginning April 1, 2001. The loans are reported net
of the related discounts, which are amortised 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
amortised over the term of the loans.
5. SERIAL MORTGAGE NOTES
The Serial Mortgage Notes bear interest at rates ranging from
7.44% to 7.62% through maturity. The Notes mature over a
six-year period beginning April 1, 2001. Interest is payable
semi-annually.
6. TERM MORTGAGE NOTES
The Term Mortgages 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.
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California Petroleum Transport Corporation
Quarterly Report on Form 10-Q
Nine months ended September 30, 2001
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
N/A
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
(a) Quantitative information about market risk
Quantitative information about market risk instruments at
September 30, 2001 is as follows: -
i) Serial Loans
The principal balances of the Serial Loans earn interest at
rates ranging from 7.44% to 7.62% and mature over a six-year
period beginning April 1, 2001. The loans are reported net
of the related discounts, which are amortised over the term
of the loans.
The outstanding serial loans have the following
characteristics:
Maturity date Interest Principal
rate amount
($ 000's)
April 1, 2002 7.49% 18,160
April 1, 2003 7.55% 18,160
April 1, 2004 7.57% 12,950
April 1, 2005 7.60% 7,740
April 1, 2006 7.62% 2,530
- -----------------------------------------------------------------
Total loans 59,540
- -----------------------------------------------------------------
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
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if all of the Initial Charters are terminated on the
earliest termination dates.
Scheduled payment date No initial
charters
terminated terminated
($000's) ($000's)
April 1, 2004 3,355 1,700
April 1, 2005 6,542 3,480
April 1, 2006 9,526 5,320
April 1, 2007 10,942 6,340
April 1, 2008 10,942 6,880
April 1, 2009 10,942 7,470
April 1, 2010 10,942 8,110
April 1, 2011 10,942 8,800
April 1, 2012 10,942 9,540
April 1, 2013 10,942 10,360
April 1, 2014 10,942 11,240
April 1, 2015 10,941 38,660
- -----------------------------------------------------------------
117,900 117,900
- -----------------------------------------------------------------
iii) Serial Mortgage Notes
The Serial Mortgage Notes bear interest at rates ranging
from 7.44% to 7.62% through maturity. The Notes mature over
a six-year period beginning one year from April 1, 2001.
Interest is payable semi-annually.
The outstanding serial loans have the following
characteristics:
Maturity date Principal
Interest amount
rate ($ 000's)
April 1, 2002 7.49% 18,160
April 1, 2003 7.55% 18,160
April 1, 2004 7.57% 12,950
April 1, 2005 7.60% 7,740
April 1, 2006 7.62% 2,530
- -----------------------------------------------------------------
Total loans 59,540
- -----------------------------------------------------------------
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iv) 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 payment date No initial
charters
terminated terminated
($000's) ($000's)
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
- -----------------------------------------------------------------
(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.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
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The company is not party to any legal proceedings the
results of which could, in the opinion of management, have a
material adverse effect upon the company.
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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.
CALIFORNIA PETROLEUM
TRANSPORT CORPORATION
Registrant
/s/ R. Douglas Donaldson
_________________________
R. Douglas Donaldson
November 9, 2001
R. Douglas Donaldson
16
02089006.AE2