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 --------------- Date of report: June 7, 2001 TEEKAY SHIPPING CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter) TK House Bayside Executive Park West Bay Street & Blake Road P.O. Box AP-59213, 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 1 of 29 2 As of June 1, 2001, Teekay Shipping Corporation ("Teekay") had purchased the remaining two percent of the outstanding shares of Ugland Nordic Shipping ASA ("UNS"), for Norwegian Kroner 140 per share. This brings the total purchase price for all of the outstanding shares in UNS to approximately $223.3 million (including estimated transaction expenses of $7.0 million). UNS is the world's largest owner of shuttle tankers, controlling a modern fleet of 18 vessels (including three newbuildings) that engage in the transportation of oil from offshore production platforms to onshore storage and refinery facilities. The UNS fleet has an average age of 8.5 years (excluding three newbuildings), and operates primarily in the North Sea under long-term fixed-rate contracts. In addition, as of June 1, 2001, UNS owned approximately 14.4% of the publicly traded company Nordic American Tankers Shipping Ltd., the owner of three Suezmax tankers on a long-term contract to BP. For the year ended December 31, 2000, UNS earned net voyage revenues of approximately $69.1 million, resulting in income from vessel operations of approximately $23.8 million and net income of approximately $15.4 million. These amounts reflect the conversion from accounting principles generally accepted in Norway to those generally accepted in the United States. The acquisition of UNS has been accounted for using the purchase method of accounting, based upon preliminary estimates of fair value. The operating results of UNS have been reflected in Teekay's financial statements on a 100% basis commencing March 6, 2001, the effective date that Teekay acquired a majority interest in UNS. Minority interest expense, which is included as part of other income (loss), has been recorded to reflect the minority shareholders' share of UNS' net income for the period from March 6, 2001 to March 31, 2001. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION (a) Financial Statements of Business Acquired Ugland Nordic Shipping ASA Audited Consolidated Financial Statements: (i) Auditor's Reports of Deloitte & Touche, dated March 28, 2001 and April 7, 2000; (ii) Ugland Nordic Shipping ASA Consolidated Statements of Income for the years ended December 31, 2000, and 1999; (iii) Ugland Nordic Shipping ASA Consolidated Balance Sheets as at December 31, 2000, and 1999; (iv) Ugland Nordic Shipping ASA Consolidated Statements of Cash Flow for the years ended December 31, 2000, and 1999; and (v) Notes to the Consolidated Financial Statements. Ugland Nordic Shipping ASA Unaudited Interim Consolidated Financial Statements: (vi) Unaudited Consolidated Statements of Income for the three months ended March 31, 2001 and 2000 and Unaudited Consolidated Balance Sheet as at March 31, 2001. (b) Unaudited Pro Forma Consolidated Condensed Financial Statements: (i) Unaudited Pro Forma Consolidated Condensed Balance Sheet as at March 31, 2001; (ii) Unaudited Pro Forma Consolidated Condensed Statement of Income for the three months ended March 31, 2001; (iii) Unaudited Pro Forma Consolidated Condensed Statement of Income for the year ended December 31, 2000; and (iv) Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. 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. 2 3 Deloitte & Touche Statsautoriserte revisorer Radhusgt, 1 N-3201 Tonsberg Tel: 33 00 39 00 Fax: 33 00 39 01 www.deloitte.no / ww.deloitte- legal.no [LOGO] Translation from the original Norwegian version To the Annual Shareholders' Meeting of Ugland Nordic Shipping ASA AUDITOR'S REPORT FOR 2000 We have audited the annual financial statements of Ugland Nordic Shipping ASA as of 31 December 2000, showing a profit of NOK 28.373.000 for the parent company and a profit of NOK 41.320.000 for the group. We have also audited the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements comprise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements are the responsibility of the Company's Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other information according to the requirements of the Norwegian Act on Auditing and Auditors. We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and generally accepted auditing standards in Norway. Generally accepted auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 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. To the extent required by law and generally accepted auditing standards, an audit also comprises a review of the management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. In our opinion, - the financial statements are prepared in accordance with the law and regulations and present the financial position of the Company and of the Group as of 31. December 2000, and the results of its operations and its cash flows for the year then ended, in accordance with generally accepted accounting principles in Norway. - the Company's management has fulfilled its duty to maintain the Company's accounting process in such a proper and well-arranged manner that the accounting process is in accordance with the law and generally accepted accounting practices. - the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations. Tonsberg, 28, March 2001 DELOITTE & TOUCHE Alf-Anton Eid (signed) State Authorised Public Accountant (Norway) [LOGO] Bergen Floro Forde Haugesund Knarvik Kristiansand Levanger Lyngdal Oslo Skien Sogndal Stavanger Steinkjer Trondheim Tonsberg Orsta Medlemmer av Den Norske Revisorforening org.nr: 980 211 282 3 4 Deloitte & Touche Statsautoriserte revisorer Radhusgt, 1 N-3201 Tonsberg Tel: 33 00 39 00 Fax: 33 00 39 01 www.deloitte.no / ww.deloitte- legal.no [LOGO] Translation from the original Norwegian version To the Annual Shareholders' Meeting of Ugland Nordic Shipping ASA AUDITOR'S REPORT FOR 1999 We have audited the annual financial statements of Ugland Nordic Shipping ASA as of 31 December 1999, showing a profit of NOK 32.297.000 for the parent company and a profit of NOK 1.468.000 for the group. We have also audited the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements comprise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements are the responsibility of the Company's Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other information according to the requirements of the Norwegian Act on Auditing and Auditors. We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and generally accepted auditing standards in Norway. Generally accepted auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 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. To the extent required by law and generally accepted auditing standards, an audit also comprises a review of the management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. In our opinion, - the financial statements are prepared in accordance with the law and regulations and present the financial position of the Company and of the Group as of 31. December 1999, and the results of its operations and its cash flows for the year then ended, in accordance with generally accepted accounting principles in Norway. - the Company's management has fulfilled its duty to maintain the Company's accounting process in such a proper and well-arranged manner that the accounting process is in accordance with the law and generally accepted accounting practices. - the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations. Tonsberg, 7, April 2000 DELOITTE & TOUCHE Alf-Anton Eid (signed) State Authorised Public Accountant (Norway) [LOGO] Bergen Floro Forde Haugesund Knarvik Kristiansand Levanger Lyngdal Oslo Skien Sogndal Stavanger Steinkjer Trondheim Tonsberg Orsta Medlemmer av Den Norske Revisorforening org.nr: 980 211 282 4 5 UGLAND NORDIC SHIPPING GROUP PROFIT & LOSS ACCOUNT (ALL FIGURES IN NOK '000) UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP ----------------- ------------------- 1999 2000 NOTE 2000 1999 ------- ------- ----- -------- -------- 4,522 6,271 OPERATING INCOME............................................ 11/18 817,055 601,955 ------- ------- -------- -------- OPERATING COSTS/DEPRECIATION 0 0 Operating costs vessels..................................... (238,520) (201,554) 0 0 Docking costs............................................... 2 (24,439) (25,717) (11,933) (14,311) Payroll expense............................................. 3 (14,311) (11,933) (7,489) (10,545) Other administrative expense................................ 2/3 (12,252) (9,313) (554) (624) Ordinary depreciation....................................... 2 (134,714) (117,103) ------- ------- -------- -------- (19,976) (25,480) Sum operating costs......................................... (424,236) (365,620) ------- ------- -------- -------- (15,454) (19,209) OPERATING PROFIT............................................ 392,819 236,335 ------- ------- -------- -------- FINANCIAL INCOME/FINANCIAL COSTS 36,759 33,531 Interest income............................................. 7 21,537 16,262 (4,787) (6,624) Exchange gains/losses....................................... (34,113) 2,195 63,416 68,911 Other financial income 7 65,343 21,614 (30,324) (17,288) Interest expense............................................ 7/14 (193,733) (136,867) (307) (704) Other financial costs....................................... (1,475) (849) (10,055) (18,630) Unrealised currency loss.................................... (197,448) (120,722) ------- ------- -------- -------- 54,702 59,196 NET FINANCIAL COSTS......................................... (339,889) (218,367) ------- ------- -------- -------- 39,248 39,987 PROFIT (LOSS) BEFORE TAXES AND MINORITY INTEREST............ 52,930 17,968 ------- ------- -------- -------- (6,951) (11,614) Taxes....................................................... 16 (11,610) (16,500) ------- ------- -------- -------- 32,297 28,373 PROFIT (LOSS) FOR THE YEAR.................................. 41,320 1,468 ======= ======= ======== ======== 0 0 Minority interest........................................... (30,438) 368 ------- ------- -------- -------- 32,297 28,373 PROFIT (LOSS) FOR THE YEAR AFTER MINORITY INTEREST.......... 10,882 1,836 ======= ======= ======== ======== Result and diluted result per share......................... 10 0.89 0.17 (25,130) 2,242 Proposed dividend........................................... 5 6 UGLAND NORDIC SHIPPING GROUP BALANCE SHEET AS AT 31.12 ASSETS (ALL FIGURES IN NOK '000) UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP ------------------- --------------------- 1999 2000 NOTE 2000 1999 ------- --------- ---- --------- --------- FIXED ASSETS INTANGIBLE FIXED ASSETS 22,001 12,623 Deferred tax assets......................................... 16 12,905 22,213 ------- --------- --------- --------- 22,001 12,623 TOTAL INTANGIBLE FIXED ASSETS............................... 12,905 22,213 ------- --------- --------- --------- TANGIBLE FIXED ASSETS 0 0 Vessels..................................................... 2/8/13 3,404,550 2,583,050 2,706 2,333 Fixtures and fittings, office machinery, etc................ 2 2,333 2,706 ------- --------- --------- --------- 2,706 2,333 TOTAL TANGIBLE FIXED ASSETS................................. 3,406,883 2,585,756 ------- --------- --------- --------- FINANCIAL FIXED ASSETS 259,822 380,561 Investment in subsidiaries.................................. 4 0 0 392,319 507,875 Loans to group companies.................................... 6 0 0 0 14,320 Investments in associates................................... 4 13,912 64,865 205,604 177,083 Investments in shares and parts of companies................ 5/13 177,305 205,741 299 1,194 Other receivables........................................... 1 194 299 ------- --------- --------- --------- 858,044 1,081,033 TOTAL FINANCIAL FIXED ASSETS................................ 192,411 270,905 ------- --------- --------- --------- 882,751 1,095,989 TOTAL FIXED ASSETS.......................................... 3,612,199 2,878,874 ------- --------- --------- --------- CURRENT ASSETS DEBTORS 8,232 52 Other debtors............................................... 11,162 17,049 ------- --------- --------- --------- 8,232 52 TOTAL DEBTORS............................................... 11,162 17,049 ------- --------- --------- --------- INVESTMENTS 2,424 1,542 Marketable securities....................................... 5 1,542 2,424 ------- --------- --------- --------- 2,424 1,542 TOTAL INVESTMENTS........................................... 1,542 2,424 ------- --------- --------- --------- 36,412 137,202 Bank deposits, cash in hand, etc............................ 13 282,288 176,374 ------- --------- --------- --------- 47,068 138,796 TOTAL CURRENT ASSETS........................................ 294,992 195,847 ------- --------- --------- --------- 929,819 1,234,785 TOTAL ASSETS................................................ 3,907,191 3,074,721 ======= ========= ========= ========= 6 7 UGLAND NORDIC SHIPPING GROUP BALANCE SHEET AS AT 31.12 EQUITY AND LIABILITIES (ALL FIGURES IN NOK '000) UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP ------------------- --------------------- 1999 2000 NOTE 2000 1999 ------- --------- ------- --------- --------- EQUITY PAID-IN CAPITAL 54,630 69,549 Share capital (13,909,772 shares @ NOK 5)................... 9/12/17 69,549 54,630 446,369 669,273 Share premium reserve....................................... 12 669,273 420,369 ------- --------- --------- --------- 500,999 738,822 TOTAL PAID-IN CAPITAL....................................... 738,822 474,999 ------- --------- --------- --------- RETAINED EARNINGS 136,475 162,605 Other equity................................................ 12 76,616 92,893 ------- --------- --------- --------- 136,475 162,605 TOTAL RETAINED EARNINGS..................................... 76,616 92,893 ------- --------- --------- --------- 637,474 901,427 TOTAL EQUITY BEFORE MINORITIES.............................. 815,438 567,892 ------- --------- --------- --------- 0 0 Minority interest........................................... 53,375 (1,719) ------- --------- --------- --------- 637,474 901,427 TOTAL EQUITY................................................ 868,813 566,173 ------- --------- --------- --------- LIABILITIES OTHER LONG-TERM LIABILITIES 195,858 250,188 Liabilities to financial institutions....................... 13/14 2,977,118 2,435,756 64,526 76,054 Loans to subsidiaries....................................... 6 0 0 ------- --------- --------- --------- 260,384 326,242 TOTAL OTHER LONG-TERM LIABILITIES........................... 2,977,118 2,435,756 ------- --------- --------- --------- CURRENT LIABILITIES 3,747 3,033 Accounts payable............................................ 0 3,746 0 0 Taxes payable............................................... 3,530 3,528 3,084 4,042 Public duties payable....................................... 4,041 3,084 25,130 0 Dividends................................................... 0 25,130 0 41 Other short-term liabilities................................ 53,689 37,304 ------- --------- --------- --------- 31,961 7,116 TOTAL CURRENT LIABILITIES................................... 61,260 72,792 ------- --------- --------- --------- 292,345 333,358 TOTAL LIABILITIES........................................... 3,038,378 2,508,548 ------- --------- --------- --------- 929,819 1,234,785 TOTAL EQUITY AND LIABILITIES................................ 3,907,191 3,074,721 ======= ========= ========= ========= 7 8 UGLAND NORDIC SHIPPING GROUP CASH FLOW ANALYSIS (ALL FIGURES IN NOK '000) UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP ------------------ --------------------- 1999 2000 2000 1999 ------- -------- ---------- -------- CASH FLOW FROM OPERATING ACTIVITIES 39,248 39,987 Operating income before tax................................. 52,930 17,968 554 624 Ordinary depreciation....................................... 134,714 117,103 (25) 0 Profit from sale of non-current assets...................... (76,895) (29,714) 0 0 Result from associated companies............................ (222) (14,521) 9,340 8,465 Change in trade receivables/payables........................ 20,621 1,903 ------- -------- ---------- -------- 49,117 49,076 NET CASH PROVIDED BY OPERATING ACTIVITIES................... 131,148 92,739 ------- -------- ---------- -------- CASH FLOW FROM INVESTING ACTIVITIES 318 0 Proceeds from sale of fixed assets.......................... 154,100 234,578 (1,652) (1,146) Purchase of fixed assets.................................... (1,034,060) (698,545) 0 (14,320) Investment in related companies............................. 75,831 0 0 0 Payments from related companies............................. 0 1,417 (1,888) (120,739) Investments in subsidiaries................................. 0 0 (25,960) 29,403 Purchase of shares and parts in other companies............. 29,318 (25,892) ------- -------- ---------- -------- (29,182) (106,802) NET CASH PROVIDED BY INVESTING ACTIVITIES................... (774,811) (488,442) ------- -------- ---------- -------- CASH FLOW FROM FINANCING ACTIVITIES 0 70,913 Proceeds from long-term borrowings.......................... 842,971 569,483 (83,380) (16,583) Repayment of long-term borrowings........................... (301,609) (279,769) 81,888 (104,029) Payment on long-term account receivable (payable)........... 0 (35,523) 0 235,587 Proceeds from issue of shares............................... 235,587 0 (21,851) (27,372) Dividends paid.............................................. (27,372) (21,851) ------- -------- ---------- -------- (23,343) 158,516 NET CASH PROVIDED FROM FINANCING ACTIVITIES................. 749,577 232,340 ------- -------- ---------- -------- (3,408) 100,790 Net change in cash and cash equivalents..................... 105,914 (163,363) 15,552 36,412 Cash and cash equivalents at beginning of year.............. 176,374 339,737 ------- -------- ---------- -------- 12,144 137,202 CASH AND CASH EQUIVALENTS AT END OF YEAR.................... 282,288 176,374 ======= ======== ========== ======== 8 9 NOTE 1: ACCOUNTING PRINCIPLES The annual accounts are showing the 2000 Profit and Loss Account and Balance Sheet of the holding company Ugland Nordic Shipping ASA and the Ugland Nordic Shipping Group. During 2000 merger have taken place within the Group. Profit and Loss Account and Balance Sheet for 1999 have been restated for comparative purposes. The financial statements are prepared in accordance with The Norwegian Accounting Act of 1998. The accounting principles are described below. All figures are stated in NOK 1,000. Exact figures or figures in a different currency are specially commented. CONSOLIDATION The consolidated accounts cover Ugland Nordic Shipping ASA and subsidiaries where Ugland Nordic Shipping ASA either directly or indirectly owns more than 50% of the shares. Identical accounting principles have been applied to all accounts within the Group. When consolidating the subsidiaries, the holding company's shares in subsidiaries have been replaced by these companies' assets and liabilities. All values in excess of the booked equity in subsidiaries have been allocated to those assets (vessels) to which the added value relates. The added value of the vessels is depreciated over the economical life of the vessel. All significant transactions and inter-company balances within the Group have been eliminated. Investments in companies where the group owns between 20% and 50% of the voting capital, or where it has a controlling influence (related companies), has been consolidated according to the equity method in the consolidated accounts. The result from these companies is treated as operating income in the consolidated Group accounts. Ownership in jointly controlled companies has been entered according to the gross method in the consolidated accounts. The gross method means that incomes, expenses, assets and liabilities are included in the accounts pro rata according to the percentage owned by the Group. The figures are specified per main section in the notes to the accounts. Figures for foreign subsidiaries have been converted at rates prevailing at the date of the Balance Sheet, average rates, however, have been utilized for the profit and loss account. MAIN RULE FOR VALUATION AND CLASSIFICATION OF ASSETS AND LIABILITIES Assets meant for permanent ownership or use in the business are classified as fixed assets. Other assets are classified as current assets. Accounts receivable, which fall due for payment within one year are classified as current assets. The classification of current and long-term liabilities is based on the corresponding criteria. Some items are valued by other principles. These are mentioned below. OWNED ITEMS THAT ARE DEPRECIATED Fixed assets with a limited lifespan are being depreciated on a linear basis. Newbuildings purchased after 1997 have an expected lifespan of 25 years. Vessels acquired earlier than this has an expected lifespan of 23 years. In both cases an expected residual value has been taken into account. Vessels are written down to their fair market value if the vessel's future discounted cash flow is lower than its book value, however, a write-down will be reversed if the basis for it is no longer present. DOCKING EXPENSES Costs related to dry-docking are capitalised as docking costs and depreciated on a linear basis up to the next expected dry-docking. For newbuildings, a part of the purchase price is redefined and capitalised as docking costs. If a vessel is sold, the capitalised docking expenses are booked as part of the gain or loss. 9 10 REVENUE RECOGNITION Income and expenses related to the voyages are accrued on the basis of the number of days that the voyage lasted in the fiscal period. A voyage is defined as the period from the last discharge until discharge at the next port of call. FOREIGN CURRENCY Monetary items denominated in a foreign currency are translated to the exchange rate on the Balance Sheet day (USD 1 = NOK 8.85). Currency gains or losses are booked as a financial item in the Profit and Loss account. INTEREST SWAPS AND CURRENCY EXCHANGE FUTURES Effects on the result that are related to interest swaps are recorded over the period of the contract. Currency exchange futures are valued at the market value on the date of the Balance Sheet. CAPITALISED INTEREST EXPENSES Interests associated with newbuildings under construction are capitalised as a part of the cost price. SHARES IN SUBSIDIARIES, JOINTLY CONTROLLED ACTIVITIES AND ASSOCIATES Investments in subsidiaries, jointly controlled activities and associates are valued at cost. OTHER LONG-TERM INVESTMENTS IN SHARES Other long-term investments in shares and minor investments in general and limited partnerships, where the company does not hold substantial influence, are carried at cost. These investments will be written down if a permanent deterioration in the value should occur. Dividends received and other surplus distributions from these companies are entered as financial income. INVESTMENT IN SHARES Listed shares, which form part of a trading portfolio, are valued at market value on the Balance Sheet day. Other shares are valued at the lower of average cost and market price on the Balance Sheet day. BANK DEPOSITS, CASH IN HAND, ETC. Bank deposits, cash in hand, etc., includes cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. DEBTORS Trade debtors and other debtors are carried at face value less provisions for expected loss. Provisions for bad debts are made after evaluation of the individual claim. PENSIONS The basis for recording pension liabilities is estimated salary level upon retirement and years of service. Deviations from estimates and effects of changes in assumptions are amortised over expected remaining years of service if exceeding 10% of the greater of pension liabilities and pension funds (corridor). Changes in the plan are distributed over the remaining years of service. The numbers include social security tax. 10 11 NEWBUILDING CONTRACTS Payments made according to contract as well as interest and running expenses during the construction are capitalised. Costs, subtracted possible incomes, during the period where the vessel is positioned in order to commence a long-term contract are capitalised as a part of the cost price. TAXES Tax expenses are matched with operating income before tax. Tax associated with equity transactions, e.g. Group contribution, is posted directly to equity. Tax related to recognised share of net income from Norwegian subsidiaries or associated companies is not accounted for, due to the special Norwegian tax legislation for adjusting tax values (RISK). The tax expense comprises of taxes payable (tax on this year's direct taxable income) and change in net deferred tax. For the part of the Group's companies that have activities outside the Norwegian tax regime for shipping companies, deferred tax liabilities/assets are calculated as 28% of the temporary timing differences and tax losses carried forward. Temporary timing differences that reverse or may reverse during the same period are offset and reported net. Net deferred tax assets considered recoverable on the basis of future earnings are reported in the Balance Sheet as intangible fixed assets. The company's main activities are taxed within the special taxation scheme for shipowning companies, which means that profits are not taxed at the time earned. Taxation is based upon net financial income and dividends paid from untaxed equity. The taxation scheme is providing for a tax credit. The basis for this is that earnings should be used for reinvestment in shipping activities and that all dividend payments in the foreseeable future are to be paid from already taxed profits. If the company was to leave the taxation scheme the company would be taxed after an income valuation based on the actual value of the assets. If the market value of the assets is equal to the book value at that time, untaxed capital at the time of exit will be taxed. Values in excess of the book values will increase the taxable income. The present value of deferred tax relating to the temporary timing differences at companies covered by the special tax scheme for shipowning companies is considered immaterial as the company does not expect the taxable income that these differences represent to materialise within the foreseeable future. The assessment is based on the company's dividend policy, liquidity reserve and the distributable taxed equity in those parts of the Group not covered by the new tax scheme and the company's intention to continue its shipping activities. CASH FLOW The cash flow statement has been prepared using the indirect method. The cash and cash equivalent figures excludes shares and financial instruments with a maturity of more than three months from the date of acquisition. NOTE 2: FIXED ASSETS VARIOUS UNS ASA OPERATING ASSETS - ------- ---------------- Acquisition cost as at 01.01.2000........................... 4,568 Additions................................................... 272 Disposals................................................... 0 --------- ACQUISITION COST AS AT 31.12.2000........................... 4,840 ========= Accumulated depreciation as at 31.12.2000................... 2,507 --------- BOOK VALUE AS AT 31.12.2000................................. 2,333 ========= Current year depreciation................................... 624 Useful life................................................. 3-5 years Depreciation schedule....................................... Linear 11 12 During 2000 the company has renovated leased offices for approximately NOK 1,000,000. The investment will be depreciated over the duration of the lease, which is 10 years and expires in 2010. The depreciation is presented under administration costs. The company has entered into agreements concerning the lease of offices and company cars totalling NOK 1,200,000 per year. The amortization cost of the leased assets is included in other administration expense in the Profit and Loss account. VARIOUS CAPITALIZED OPERATING UNS GROUP SHIPS DOCKING ASSETS - --------- ----------- ----------- --------- Acquisition cost as at 01.01.2000........................ 2,738,787 33,441 4,568 Additions................................................ 1,017,618 39,616 272 Disposals................................................ (89,879) 0 0 ----------- --------- --------- ACQUISITION COST AS AT 31.12.2000........................ 3,666,526 73,057 4,840 =========== ========= ========= Activated borrowing costs for ships...................... 41,223 Accumulated depreciation as at 31.12.2000................ 310,594 24,439 2,507 ----------- --------- --------- Depreciations, write downs and reversed write downs...... 310,594 24,439 2,507 ----------- --------- --------- BOOK VALUE AS AT 31.12.2000.............................. 3,355,932 48,618 2,333 =========== ========= ========= Current year depreciation................................ 134,090 24,439 624 Useful life.............................................. 23-25 years 2.5 years 3-5 years Depreciation schedule.................................... Linear Linear Linear NOTE 3: SALARIES, NUMBER OF EMPLOYEES, BENEFITS, LOANS TO EMPLOYEES ETC. UNS ASA UNS GROUP --------------- --------------- 1999 2000 PAYROLL COSTS 2000 1999 ------ ------ ------------- ------ ------ 8,857 9,431 Salaries.................................................... 9,431 8,857 1,863 3,083 Social security tax......................................... 3,083 1,863 515 580 Pension costs............................................... 580 515 698 1,217 Other benefits.............................................. 1,217 698 ------ ------ ------ ------ 11,933 14,311 Total....................................................... 14,311 11,933 ====== ====== ====== ====== 13 14 Average number of employees................................. 14 13 The company's employees and the Managing Director are all included in the pension plan. MANAGING DIRECTOR/BOARD OF DIRECTORS The Managing Director received a remuneration of NOK 3,121,009 for 2000, whereof NOK 1,508,400 was salary, NOK 1,436,800 was a bonus and the remaining was other taxable benefits. The Managing Director has an agreement to receive two years remuneration if he leaves the company. At 10 May 2000 the Board of Directors allotted 110,000 shares to the Managing Director and 150,000 shares to the management. The subscription price for these shares was NOK 70 per share. By the issuing of this report all shares have been released. Remuneration to the Board of Directors has been paid with NOK 105,000 to the Chairman, Andreas Ove Ugland, and NOK 85,000 to the other members of the Board. No loans or guarantees have been issued for the management. The management of the company has a bonus scheme related to the annual results of the company. This is calculated on an annual basis. 12 13 THE AUDITOR Expensed auditor fees for 2000 amounts to NOK 248,000 and NOK 477,240 for consultancy services. For Group companies the auditor fees amounts to NOK 607,500 and NOK 663,825 for consultancy services. NOTE 4: SUBSIDIARIES, RELATED COMPANIES ETC. VOTE-AND TIME OF OWNERSHIP COMPANIES PURCHASE OFFICES SHARE - --------- -------- ------- --------- SHARES AND PARTS IN SUBSIDIARIES Jahre Prince AS........................................ 1998 Sandefjord 100.00% Thorsfreddy AS......................................... 1998 Sandefjord 100.00% Ugland Nordic Investment AS............................ 1993 Sandefjord 100.00% Nordic Akarita AS...................................... 1996 Sandefjord 100.00% Nordic Akarita Investment AS........................... 1993 Sandefjord 100.00% Nordic Apollo AS....................................... 1991 Sandefjord 100.00% Nordic Laurita AS...................................... 1991 Sandefjord 100.00% Nordic Sarita Investment AS............................ 1997 Sandefjord 100.00% Nordic Akarita KS...................................... 1996 Sandefjord 65.50% Nordic Laurita KS...................................... 1991 Sandefjord 50.50% Nordic Apollo KS....................................... 1991 Sandefjord 89.00% Nordic Canadian Shipping Ltd........................... 1992 Canada 100.00% SHARES AND PARTS IN ASSOCIATED COMPANIES IUM Shipmanagement AS.................................. 2000 Grimstad 33.33% SHARE OF JOINTLY CONTROLLED COMPANIES P/R Stena Ugland Shuttle Tankers I DA.................. 1998 Sandefjord 50.00% P/R Stena Ugland Shuttle Tankers II DA................. 1998 Sandefjord 50.00% P/R Stena Ugland Shuttle Tankers III DA................ 1998 Sandefjord 50.00% Ugland Stena Storage AS................................ 2000 Sandefjord 50.00% Stena Ugland Aframax Shuttle Ltd....................... 1997 Cayman Islands 50.00% The ownership of Nordic American Tanker Shipping Ltd. (NAT) shares has not been included according to the equity method as UNS do not have the influence required in order to define NAT as a related company. ASSOCIATED COMPANIES THAT ARE PRESENTED BY THE GROSS METHOD The jointly controlled companies, Partrederiene (PR) Stena Ugland Shuttle Tankers I, II and III DA and Stena Ugland Aframax Shuttle Ltd. are included in the accounts according to the gross method. The Profit and Loss account and Balance Sheet items are incorporated line by line. The table below illustrates the main items, which have been included in the accounts. There is no added value at the time of acquisition. 13 14 PR SUST PR SUST PR SUST I DA II DA III DA SUAS USS TOTAL ------- ------- ------- ------ ---- ------- Share of operating income......................... 67,601 62,541 0 626 0 130,768 Share of operating costs.......................... (32,097) (32,641) 0 (241) (340) (65,319) Share of net financial items...................... (48,033) (49,289) 0 190 (11) (97,143) Share of taxes.................................... 0 0 0 0 98 98 ------- ------- ------ ------ ---- ------- SHARE OF PROFIT/(LOSS) FOR THE YEAR............... (12,529) (19,389) 0 575 (253) (31,596) ------- ------- ------ ------ ---- ------- Share of fixed assets............................. 296,351 300,247 85,211 1,201 98 683,108 Share of current assets........................... 22,771 9,964 0 0 267 33,002 ------- ------- ------ ------ ---- ------- SHARE OF TOTAL ASSETS............................. 319,122 310,211 85,211 1,201 365 716,110 ------- ------- ------ ------ ---- ------- Share of other long-term debt..................... 296,557 297,806 0 0 0 594,363 Share of short-term debt.......................... 300 1,813 3,428 0 368 5,909 ------- ------- ------ ------ ---- ------- SHARE OF TOTAL DEBT............................... 296,857 299,619 3,428 0 368 600,272 ------- ------- ------ ------ ---- ------- Share capital..................................... 22,264 10,591 81,783 1,201 (3) 115,836 BALANCE AS AT 01.01.2000.......................... 34,793 29,980 23,591 2,580 0 90,944 ------- ------- ------ ------ ---- ------- Additions/disposals............................... 0 0 0 0 250 250 Share of profit................................... (12,529) (19,389) 0 575 (253) (31,596) Translation differences........................... 0 0 0 296 0 296 Paid-up/repaid share capital during the period.... 0 0 58,192 (2,250) 0 55,942 ------- ------- ------ ------ ---- ------- BALANCE AS AT 31.12.2000.......................... 22,264 10,591 81,783 1,201 (3) 115,836 ======= ======= ====== ====== ==== ======= ASSOCIATED COMPANIES THAT ARE PRESENTED BY THE EQUITY METHOD IUM SHIPMANAGEMENT AS -------------- Additions during the period Original acquisition cost................................... 13,690 Book equity at the time of acquisitions..................... 13,851 Goodwill.................................................... 9,073 Balance as at 01.01.2000.................................... 0 ------ Additions/(disposals)....................................... 13,690 Share of profit/(loss) of the year.......................... 222 ------ BALANCE AS AT 31.12.2000.................................... 13,912 ====== NOTE 5: SHARES AND OWNERSHIP IN OTHER COMPANIES, ETC. ACQUISITION BOOK MARKET OWNERSHIP COSTS VALUE VALUE --------- ----------- ------- ------- FIXED ASSETS Nordic American Tanker Shipping Ltd. -- Bermuda... 18.80% 177,083 177,083 322,392 ------- ------- ------- TOTAL MARKETABLE FIXED ASSETS..................... 177,083 177,083 322,392 ======= ======= ======= CURRENT ASSETS Shares............................................ 2,044 1,542 1,542 ------- ------- ------- TOTAL MARKETABLE CURRENT ASSETS................... 2,044 1,542 1,542 ======= ======= ======= 14 15 NOTE 6: INTER-COMPANY BALANCES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE ----------------- ---------------- 2000 1999 2000 1999 ------- ------- ------ ------- Subsidiaries................................................ 507,875 392,319 76,054 64,526 ------- ------- ------ ------- TOTAL....................................................... 507,875 392,319 76,054 64,526 ======= ======= ====== ======= NOTE 7: SPECIFICATION OF FINANCIAL ITEMS INTEREST INCOME INTEREST EXPENSE --------------- ----------------- 2000 1999 2000 1999 ------ ------ ------- ------- Subsidiaries................................................ 26,303 20,672 0 9,614 Others...................................................... 7,228 16,087 17,288 20,710 ------ ------ ------ ------ TOTAL....................................................... 33,531 36,759 17,288 30,324 ====== ====== ====== ====== OTHER FINANCIAL INCOME UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP --------------- --------------- 1999 2000 2000 1999 ------ ------ ------ ------ 27,177 45,019 Dividend.................................................... 45,090 21,546 0 2,250 Income from jointly controlled activities................... 0 0 0 0 Income from associated companies............................ 222 0 36,171 1,160 Group contribution.......................................... 0 0 68 20,482 Gain on shares.............................................. 20,031 68 ------ ------ ------ ------ 63,416 68,911 TOTAL....................................................... 65,343 21,614 ====== ====== ====== ====== NOTE 8: NEWBUILDING CONTRACTS The jointly controlled company, P/R Stena Ugland Shuttle Tankers III DA, which is owned 50% by Ugland Nordic Investment AS, decided on June 11th, 1998 to purchase the newbuilding contract of Hull 1166 at Tsuneishi Shipbuilding Co., Japan. The ship is a DP2 shuttle tanker of 107,425 dwt, which will be delivered in May 2001. The contract amounts to USD 63,410,000 whereof USD 12,582,000 has been paid as at December 31st, 2000. The next installment in the amount of USD 6,291,000 is due in January 2001. Final installment is USD 44,537,000 and is due at the time of delivery. In July 2000 the company entered into an agreement with Golar-Nor Offshore AS on affreightment of two new DP2 shuttle tankers of 92,500 dwt. The contracts are on a bareboat basis and have a timespan of seven years. They will commence in the 4th quarter 2002 and the 1st quarter 2003, respectively. The contracts amount to USD 48,500,000 per vessel. In November 2000 the company entered into an agreement with Navion on affreightment of a shuttle tanker of 147,500 dwt during a time period of ten years. The agreement includes options to increase the timespan to a maximum of 25 years and amounts to USD 70,000,000. The charterer has call options during the contract time period. NOTE 9: AUTHORISATION TO ISSUE SHARES At the Ordinary General Meeting held on 10 May 2000, the Board was given unanimous authority to issue up to 2,000,000 new shares, each of NOK 5 value, at a subscription price to be set by the Board in each instance. The shares will be used in connection with the acquisition of shares, participation in companies including limited partnerships, ships and other assets. Mergers are also included in this authorisation framework. The authorisation comprises share issues against cash deposits. Existing 15 16 shareholders' preferential participation in the capital increase is withdrawn. The authorisation was given until the next Ordinary General Meeting. At the time of issuing this report, a total of 1,985,000 shares are issued in accordance with the mentioned authority. At the Extraordinary General Meeting held on 28 September 1993, the Board authorised to issue 225,000 shares to a total nominal value of NOK 1,125,000 against cash payment of NOK 50 per share. In accordance with detailed conditions, the company's management is entitled to subscribe for these shares. The authorisation runs until 28 September 2001. At present, 110,000 of the options are remaining, of which Herbjorn Hansson is entitled to all, at a nominal value of NOK 81.75. The authorisation given at the Extraordinary General Meeting held on 28 September 1993 was at the Ordinary General Meeting replaced with a new authorisation. It authorises the Board to issue 110,000 shares to CEO Herbjorn Hansson and 150,000 shares to the company management at a price set by the Board. The authorisation is given until 10 May 2002 but the General Meeting agreed that the authorisation was to be valid until 28 September 2003. On 10 May 2000 the Board set the subscription price of the CEO's 110,000 shares and the management's 150,000 shares to NOK 70 per share. At the time of issuing this report, all the shares are issued in accordance with the authorisation. NOTE 10: EARNINGS PER SHARE Earnings per share is calculated by dividing net profit by the average number of outstanding shares. 1999 2000 ---------- ---------- Net profit after minority interests......................... 1,836,000 10,882,000 Average number of outstanding shares........................ 10,926,063 12,204,349 Net profit and diluted profit per share..................... 0.17 0.89 NOTE 11: MAJOR TRANSACTIONS 1999 2000 ------- ------ Gain on sale of Newbuilding Halla........................... 41,736 0 Gain on sale of M/T Jahre Prince............................ 0 76,895 Loss on sale of M/T Nordic Liberita......................... (12,022) 0 ------- ------ TOTAL....................................................... 29,714 76,895 ======= ====== NOTE 12: EQUITY UGLAND NORDIC SHIPPING ASA SHARE SHARE OTHER EQUITY CAPITAL PREMIUM RESERVES ------- ------- ------------ Equity as at 31.12.1999..................................... 54,630 420,369 136,131 Equity issue................................................ 14,919 222,904 Merger...................................................... 26,000 344 Dividend.................................................... (2,243) Net profit.................................................. 28,373 ------ ------- ------- EQUITY AS AT 31.12.2000..................................... 69,549 669,273 162,605 ====== ======= ======= 16 17 UGLAND NORDIC SHIPPING GROUP SHARE SHARE OTHER EQUITY CAPITAL PREMIUM RESERVES -------- ------- ------------ Equity as at 31.12.1999..................................... 54,630 420,369 92,892 Equity issue................................................ 14,919 222,904 Merger...................................................... 26,000 (26,000) Dividend.................................................... (2,243) Translation differences..................................... 1,085 Net profit.................................................. 10,882 ------ ------- ------- EQUITY AS AT 31.12.2000..................................... 69,549 669,273 76,616 ====== ======= ======= NOTE 13: GUARANTEES AND PLEDGED ASSETS UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP ----------------- --------------------- 1999 2000 2000 1999 ------- ------- --------- --------- Total debt secured by pledged assets, etc. 195,858 250,188 Debt to financial institutions.............................. 2,977,118 2,435,756 ------- ------- --------- --------- 195,858 250,188 TOTAL....................................................... 2,977,118 2,435,756 ======= ======= ========= ========= Book value of pledged assets: 0 0 Vessels..................................................... 3,404,550 2,583,050 5,765 21,331 Dividends................................................... 21,331 5,765 206,648 0 Shares in subsidiaries...................................... 0 0 205,604 177,083 Other shares................................................ 177,305 205,741 ------- ------- --------- --------- 418,017 198,414 TOTAL....................................................... 3,603,186 2,794,556 ------- ------- --------- --------- 35,000 48,232 Guarantees.................................................. 48,232 35,000 ======= ======= ========= ========= The total guarantees to lenders of subsidiaries, jointly owned companies, and associated companies amount to NOK 1,936,000,000. The total debt of the Group consists of a number of loans that are secured by pledged assets, assignments of earnings, bank accounts for freight revenues and assignment of assurance of the respective vessel. NOTE 14: LONG TERM DEBT UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP INSTALLMENT PROFILE 2000 2000 - ------------------- ------------- -------------- 2001........................................................ 131,686 507,840 2002........................................................ 35,931 298,909 2003........................................................ 40,356 426,747 2004........................................................ 42,215 386,037 2005 and thereafter......................................... 0 1,357,585 ------- --------- TOTAL DEBT TO FINANCIAL INSTITUTIONS........................ 250,188 2,977,118 ======= ========= There have been no loans taken at a discount. The average interest rate in 2000 has been 7.12%. The loan agreements include a number of financial and non-financial covenants. Significant covenants are related to change in ownership structure, contract signings or change of existing contracts, minimum value adjusted equity and minimum liquidity. The company satisfies all covenants as at 31 December 2000. 17 18 NOTE 15: RELATED PARTIES Andreas Ove Ugland, the Chairman of UNS, owns a controlling stake in Ugland International Holding, which is a company that owns 2/3 of the shares in IUM Shipmanagement AS. The costs associated with these services are based on competitive rates. UNS is utilising technical management resources from IUM for ten vessels and four newbuildings. Total management-fee paid to IUM for 2000 amounts to USD 1,621,000. As at 31 December 2000 IUM has accounts receivable against UNS Group of USD 581,000. Ulf G. Ryder, a Boardmember of UNS, is the President of Stena Bulk AB. The Stena Group owns 500,000 shares in UNS as well as having ownership in three of our vessels, Stena Alexita (50%), Stena Sirita (50%) and the newbuilding with delivery in 2001 (50%). Additionally, Stena owns 50% of Ugland Stena Storage AS and 50% of a company that is chartering in and timechartering out the Stena Akarita. NOTE 16: TAX EXPENSE UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP --------------- ---------------- 1999 2000 THE TAX EXPENSE COMPRISES FROM 2000 1999 ------ ------ ------------------------------ ------- ------ 0 0 Tax payable................................................. 112 698 6,951 11,614 Change in deferred taxes.................................... 11,498 15,802 0 0 Effect of tax law changes................................... 0 0 ------ ------ ------- ------ 6,951 11,614 Tax expense -- ordinary result, Norway...................... 11,610 16,500 ====== ====== ======= ====== UGLAND NORDIC UGLAND NORDIC SHIPPING ASA SHIPPING GROUP --------------- ---------------- 1999 2000 RECONCILIATION OF NOMINAL TO ACTUAL TAX RATE 2000 1999 ------ ------ -------------------------------------------- ------- ------ 39,248 39,987 Ordinary result after taxes................................. 52,930 17,968 0 0 Extraordinary result before taxes........................... 0 0 ------ ------ ------- ------ 39,248.. 39,987 NET PROFIT BEFORE TAXES..................................... 52,930 17,968 ====== ====== ======= ====== 10,990 11,197 Expected income tax according to nominal tax rate (28%)..... 14,820 5,031 ------ ------ ------- ------ Tax effect from the following items 336... 269 Non-tax-deductible expenses................................. 667 356 (4,506) 0 Non-taxable revenue......................................... (161) (4,506) 0 0 Results from tax scheme for ship owning companies........... 15,941 19,247 (5) (5) Effect of dividend.......................................... 0 (5) 0..... 0 Change in deferred tax asset................................ (13,267) 271 136 153 Other items................................................. (6,390) (3,894) ------ ------ ------- ------ 6,951 11,614 Tax expense................................................. 11,610 16,500 ------ ------ ------- ------ 17.7% 29.0% Effective tax rate.......................................... 21.9% 91.8% ====== ====== ======= ====== 18 19 UGLAND NORDIC SHIPPING ASA Specification of tax effect from temporary differences and tax losses carried forward 2000 1999 ------------------ ------------------ ASSETS LIABILITY ASSETS LIABILITY ------ --------- ------ --------- Operating assets.......................................... 11 Intangible fixed assets................................... 2 Fixed financial assets.................................... 618 230 Receivables............................................... 84 Investments............................................... 44 2,699 Current liabilities....................................... 84 Profit & Loss Account..................................... 7,579 9,468 Tax losses carry forward.................................. 4,464 9,677 ------ -- ------ ------ TOTAL..................................................... 12,707 84 22,085 84 ====== == ====== ====== Deferred tax assets/liabilities........................... 12,623 22,001 Off-balance sheet deferred tax asset ------ -- ------ ------ NET DEFERRED TAX ASSET/LIABILITY.......................... 12,623 0 0 22,001 ====== == ====== ====== The deferred tax asset is based on future income. UGLAND NORDIC SHIPPING GROUP Specification of tax effect from temporary differences and tax losses carried forward 2000 1999 ------------------ ------------------ ASSETS LIABILITY ASSETS LIABILITY ------ --------- ------ --------- Operating assets.......................................... 2 452 Intangible fixed assets................................... 618 Fixed financial assets.................................... 478 230 Receivables............................................... 83 Investments............................................... 37 2,215 Current liabilities....................................... 86 Profit & Loss Account..................................... 2,316 9,086 Tax losses carry forward.................................. 15,134 23,580 ------ ----- ------ -- TOTAL..................................................... 15,791 2,880 35,563 83 ====== ===== ====== == Deferred tax asset........................................ 12,911 35,480 Off-balance sheet deferred tax asset...................... 6 13,267 ------ ----- ------ -- NET DEFERRED TAX ASSET.................................... 12,905 0 22,213 0 ====== ===== ====== == The Group has NOK 486,215 in untaxed equity covered by the special taxation scheme for shipowners. The deferred tax asset is based on future income. As at 31 December 2000 UNS and the UNS Group have tax losses to be carried forward amounting to NOK 15,942 and NOK 54,049, respectively. The tax losses to be carried forward expire in 2004. 19 20 NOTE 17: SHARE CAPITAL AND SHAREHOLDERS As at 31 December 2000 the share capital of UNS consists of 13,909,772 A-class shares at a nominal value of NOK 5. Refer to page 32 for a list of shareholders as at 26 March 2001. All shares give equal voting rights. THE 20 LARGEST SHAREHOLDERS AS AT 31 DECEMBER 2000 NAME NO. OF SHARES % OF TOTAL - ---- ------------- ---------- 1 Andreas Ugland family................................... 2,667,753 19.18% 2 Knut Axel Ugland Holding................................ 1,377,809 9.91% 3 ABBC Asset Management................................... 1,242,867 8.94% 4 L. Gill-Johannessen AS.................................. 640,000 4.60% 5 Odin Norge.............................................. 596,300 4.29% 6 Orkla ASA............................................... 515,964 3.71% 7 Stena Bulk AB........................................... 500,000 3.59% 8 Folketrygdfondet........................................ 460,000 3.31% 9 Tine Pensjonskasse...................................... 434,950 3.13% 10 First Olsen Tankers..................................... 361,500 2.60% 11 Storebrand Livsforsikring............................... 308,300 2.22% 12 Aksjefondet Gambak...................................... 300,000 2.16% 13 Verdipapirfondet Skagen................................. 300,000 2.16% 14 DnB Markets............................................. 288,300 2.07% 15 Hartog & Co. AS......................................... 210,000 1.51% 16 Vital Forsikring ASA.................................... 200,700 1.44% 17 Ugland Capital Partners................................. 185,000 1.33% 18 K-Holding AS............................................ 166,000 1.19% 19 Euroclear Bank AS....................................... 150,900 1.08% 20 Gezina AS............................................... 145,200 1.04% Others................................................. 2,858,229 20.55% ---------- ------- TOTAL....................................................... 13,909,772 100.00% ========== ======= SHARES IN UNS AS OWNED/CONTROLLED BY THE COMPANY'S DIRECTORS AS AT 31 DECEMBER 2000 NO. OF SHARES ------------- Tharald Brovig.............................................. 145,200 Herbjorn Hansson (CEO.)..................................... 90,000 Njal Hansson................................................ 128,000 Ulf G. Ryder................................................ 0 Christian Rytter jr......................................... 641,000 Andreas Ove Ugland (Chairman)............................... 185,000 Johan Benad Ugland.......................................... 2,667,753 --------- TOTAL....................................................... 3,856,953 ========= NOTE 18: AREA OF BUSINESS The UNS Group has only one area of business, which is oceangoing transportation. The company operating income is split between 86% sales in Norway and 14% in Finland. 20 21 NOTE 19: FORWARD RATE AGREEMENTS The following forward rate agreements have been entered AMOUNT INTEREST RATE START DATE DURATION - ------ ------------- ---------- -------- USD 10 m.................................................... 6.030% 19.12.97 4 years USD 15 m.................................................... 6.030% 12.05.98 4 years USD 10 m.................................................... 5.940% 19.05.98 3 years USD 10 m.................................................... 5.700% 17.03.99 3 years In addition, USD 67,000,000 relating to debt on two vessels has been secured through regulations in the time charter rate as a result of interest changes. NOTE 20: CONDITIONAL OUTCOME There are no events with conditional outcome at the end of the financial year and no events have taken place subsequent to the balance sheet date that will affect the given financial statements. 21 22 UGLAND NORDIC SHIPPING GROUP PROFIT AND LOSS ACCOUNT (ALL FIGURES ARE EXPRESSED IN NOK IN MILLIONS) THREE MONTHS ENDED MARCH 31, --------------- 2001 2000 ----- ------ (UNAUDITED) Operating income............................................ 226.0 148.9 Operating expenses.......................................... (69.5) (47.4) Administrative expenses..................................... (7.3) (4.9) ----- ------ Result before depreciation.................................. 149.2 96.6 ----- ------ Docking expenses............................................ (7.1) (5.8) Ordinary depreciation....................................... (41.8) (33.3) ----- ------ OPERATING PROFIT............................................ 100.3 57.5 ----- ------ Interest income............................................. 2.7 1.4 Currency gain/(loss) realised............................... 9.8 6.7 Other financial income...................................... 40.8 6.0 Interest expenses........................................... (49.5) (41.0) Other financial expenses.................................... (11.8) (0.5) Net financial items......................................... (8.0) (27.4) ----- ------ Profit before unrealised currency items..................... 92.3 30.1 ----- ------ Unrealised currency items................................... (85.1) (123.1) ----- ------ RESULT BEFORE TAX AND MINORITY INTERESTS.................... 7.2 (93.0) ----- ------ Tax......................................................... 0.0 0.0 ----- ------ RESULT BEFORE MINORITY INTERESTS............................ 7.2 (93.0) ----- ------ Minority interests.......................................... (11.0) 5.6 ----- ------ RESULT...................................................... (3.8) (87.4) ===== ====== BALANCE SHEET (ALL FIGURES ARE EXPRESSED IN NOK IN MILLIONS) AS AT AS AT MARCH 31, DECEMBER 31, 2001 2000 --------- ------------ (UNAUDITED) ASSETS Ships....................................................... 3,419.8 3,404.5 Other fixed assets.......................................... 212.8 207.7 Other current assets........................................ 85.1 12.7 Bank deposits............................................... 281.9 282.3 ------- ------- TOTAL ASSETS................................................ 3,999.6 3,907.2 ======= ======= EQUITY AND LIABILITIES Equity (incl. 14,169,772 shares @ NOK 5).................... 829.7 815.4 Minority interests.......................................... 64.3 53.4 Long-term Debt.............................................. 3,052.2 2,977.1 Current liabilities......................................... 53.4 61.3 ------- ------- TOTAL LIABILITIES AND EQUITY................................ 3,999.6 3,907.2 ======= ======= 22 23 TEEKAY SHIPPING CORPORATION UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET AS AT MARCH 31, 2001 (IN THOUSANDS OF U.S. DOLLARS) PRO FORMA PRO FORMA TEEKAY(i) ADJUSTMENTS NOTES CONSOLIDATED(ii) --------- ----------- ----- ----------------- ASSETS Current Cash and cash equivalents.......................... 296,940 (79,399) (4) 217,541 Marketable securities.............................. 7,270 -- 7,270 Accounts receivable................................ 76,180 -- 76,180 Prepaid expenses and other assets.................. 27,188 -- 27,188 --------- ------- --------- Total current assets............................... 407,578 (79,399) 328,179 --------- ------- --------- Marketable securities.............................. 43,844 -- 43,844 Vessels and equipment (including advances on new building contracts).............................. 1,944,208 -- 1,944,208 Investment in joint ventures....................... 46,402 -- 46,402 Other assets....................................... 17,482 -- 17,482 Goodwill........................................... 58,818 31,688 (4) 90,506 --------- ------- --------- 2,518,332 (47,711) 2,470,621 ========= ======= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable................................... 20,924 -- 20,924 Accrued liabilities................................ 48,408 -- 48,408 Current portion of long-term debt.................. 123,058 -- 123,058 --------- ------- --------- Total current liabilities.......................... 192,390 -- 192,390 --------- ------- --------- Long-term debt..................................... 985,636 -- 985,636 Other long-term liabilities........................ 38,558 -- 38,558 --------- ------- --------- Total liabilities.................................. 1,216,584 -- 1,216,584 --------- ------- --------- Minority interest.................................. 66,968 (47,711) (4) 19,257 Stockholders' equity............................... 458,605 -- 458,605 Capital stock...................................... 777,618 -- 777,618 Accumulated other comprehensive loss............... (1,443) -- (1,443) --------- ------- --------- Total stockholders' equity......................... 1,234,780 -- 1,234,780 --------- ------- --------- 2,518,332 (47,711) 2,470,621 ========= ======= ========= - --------------- (i) Reflects the acquisition of a 64% interest in UNS on March 6, 2001. (ii) Pro Forma as though the remaining 36% interest in UNS was purchased on March 31, 2001. The accompanying notes are an integral part of the unaudited pro forma consolidated condensed financial statements 23 24 TEEKAY SHIPPING CORPORATION UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2001 (IN THOUSANDS OF U.S. DOLLARS) UNS (JANUARY 1 - MARCH PRO FORMA PRO FORMA TEEKAY(i) 5/01) ADJUSTMENTS NOTES CONSOLIDATED --------- ------------ ----------- ----- ------------ NET VOYAGE REVENUES Voyage revenues.............................. 307,886 17,188 325,074 Voyage expenses.............................. 62,730 928 63,658 ------- ------ ------ ------- Net voyage revenues.......................... 245,156 16,260 261,416 ------- ------ ------ ------- OPERATING EXPENSES Vessel operating expenses.................... 33,879 4,371 38,250 Time charter hire expense.................... 17,183 -- 17,183 Depreciation and amortization................ 27,351 4,206 31,557 Goodwill amortization........................ 170 -- 948 (5a) 1,118 General and administrative................... 10,838 1,207 12,045 ------- ------ ------ ------- 89,421.. 9,784 948 100,153 ------- ------ ------ ------- Income from vessel operations................ 155,735 6,476 (948) 161,263 ------- ------ ------ ------- OTHER ITEMS Interest expense............................. (14,786) (3,717) (2,840) (5b) (21,343) Interest income.............................. 2,803 197 3,000 Equity income................................ 2,793 481 94 (5c) 3,368 Other income (loss).......................... (1,857) 455 211 (5d) (1,191) ------- ------ ------ ------- (11,047) (2,584) (2,535) (16,166) ------- ------ ------ ------- NET INCOME................................... 144,688 3,892 (3,483) 145,097 ======= ====== ====== ======= Proforma Basic Earnings per Common Share..... $ 3.70 Proforma Diluted Earnings per Common Share... $ 3.60 Weighted average number of shares outstanding (thousands)................................ 39,230 - --------------- (i) Includes results of UNS (64% interest) for the period March 6, 2001 to March 31, 2001. The accompanying notes are an integral part of the unaudited pro forma consolidated condensed financial statements 24 25 TEEKAY SHIPPING CORPORATION UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2000 (IN THOUSANDS OF U.S. DOLLARS) PRO FORMA PRO FORMA TEEKAY UNS ADJUSTMENTS NOTES CONSOLIDATED ------- ------- ----------- ----- ------------ NET VOYAGE REVENUES Voyage revenues............................. 893,226 69,081 962,307 Voyage expenses............................. 248,957 -- 248,957 ------- ------- ------- --------- Net voyage revenues......................... 644,269 69,081 713,350 ------- ------- ------- --------- OPERATING EXPENSES Vessel operating expenses................... 125,415 20,660 146,075 Time charter hire expense................... 53,547 -- 53,547 Depreciation and amortization............... 100,153 18,610 118,763 Goodwill amortization....................... -- -- 4,534 (5a) 4,534 General and administrative.................. 37,479 5,966 43,445 ------- ------- ------- --------- 316,594 45,236 4,534 366,364 ------- ------- ------- --------- Income from vessel operations............... 327,675 23,845 (4,534) 346,986 ------- ------- ------- --------- OTHER ITEMS Interest expense............................ (74,540) (16,641) (15,319) (5b) (106,500) Interest income............................. 13,021 2,069 15,090 Equity income 9,546 2,240 11,786 Other income (loss)......................... (5,682) 3,874 (1,808) ------- ------- ------- --------- (57,055) (8,458) (15,319) (81,432) ------- ------- ------- --------- Net income.................................. 270,020 15,387 (19,853) 265,554 ======= ======= ======= ========= Pro forma Basic Earnings per Common Share... $ 6.90 Pro forma Diluted Earnings per Common Share.............................. $ 6.75 Weighted average number of shares outstanding (thousands)................... 38,468 The accompanying notes are an integral part of the unaudited pro forma consolidated condensed financial statements 25 26 TEEKAY SHIPPING CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The unaudited pro forma consolidated condensed financial statements (the "Financial Statements") give effect to the acquisition (the "Acquisition") of 100% of the issued and outstanding shares of Ugland Nordic Shipping ASA ("UNS") by Teekay Shipping Corporation ("Teekay"). The Financial Statements have been prepared by management in accordance with accounting principles generally accepted in the United States from the information derived from the audited historical financial statements of Teekay and UNS (adjusted as indicated in Note 3 below) for the year ended December 31, 2000 and the unaudited historical financial statements for the three months ended March 31, 2001. In the opinion of management, the Financial Statements include all adjustments necessary for fair presentation. As of March 31, 2001, Teekay had purchased approximately 64% of the issued and outstanding shares of UNS. Subsequent to March 31, 2001, Teekay acquired the remaining 36% of the issued and outstanding shares in UNS. Accordingly, the Financial Statements contained herein give effect to the acquisition of 100% of the issued and outstanding shares of UNS. The unaudited pro forma consolidated condensed statements of income for the three months ended March 31, 2001 and the year ended December 31, 2000 give effect to the Acquisition as though it had taken place on January 1, 2000. The unaudited pro forma consolidated condensed balance sheet as at March 31, 2001 is based on the unaudited consolidated balance sheets of Teekay and UNS as of that date and gives effect to the Acquisition as though the remaining 36% of the issued and outstanding shares in UNS were purchased on March 31, 2001. The Financial Statements are not necessarily indicative of what the results of operations and financial position would have been, nor do they purport to project Teekay's results of operations for any future periods. The Financial Statements also do not include any expected benefits or cost savings arising from the Acquisition. The Financial Statements should be read in conjunction with the consolidated financial statements of Teekay and UNS referred to above. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed in preparing the Financial Statements are those used by Teekay as set out in the consolidated financial statements contained in Teekay's Annual Report on Form 20-F as at and for the year ended December 31, 2000, and in Teekay's Quarterly Report on Form 6-K for the three months ended March 31, 2001. 3. ACCOUNTING TREATMENT FOR THE ACQUISITION The Acquisition has been accounted for using the purchase method of accounting. The results of operations of UNS are included from the assumed date of acquisition. UNS' accounting policies have been adjusted to be consistent with those of Teekay. 26 27 TEEKAY SHIPPING CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) 4. PRO FORMA GENERAL ASSUMPTIONS AND PURCHASE PRICE ALLOCATION GENERAL ASSUMPTIONS Teekay purchased all of the issued and outstanding shares of Ugland Nordic Shipping ASA ("UNS Shares") at an average price per share of Norwegian Kroner 136 in cash or U.S. $15.26 per share. The Financial Statements reflect the following: - 100% of outstanding UNS Shares were exchanged for cash; - all common shareholders of UNS at March 31, 2001 have tendered their shares, representing 14,169,772 UNS Shares; - total purchase consideration (in millions of U.S. dollars): Cash paid -- prior to March 31, 2001................ $136.9 Cash paid -- subsequent to March 31, 2001........... 79.4 Estimated transaction and integration costs included in accounts payable and accrued liabilities........ 7.0 ------ $223.3 ====== PURCHASE PRICE ALLOCATION The excess of the purchase price over the fair market value of the net assets of UNS has been allocated to goodwill. The purchase price includes an accrual of $7.0 million for estimated transaction and integration costs. The following table describes the allocation of the purchase price as at March 31, 2001 (in millions of U.S. dollars): 64% 36% INTEREST INTEREST TOTAL -------- -------- ----- $ $ $ Net assets acquired......................................... 84.9 47.7 132.6 Goodwill.................................................... 59.0 31.7 90.7 ----- ---- ----- 143.9 79.4 223.3 ===== ==== ===== The pro forma consolidated condensed balance sheet incorporates the following adjustments: - the purchase price consideration and allocation adjustments as described above, including the following adjustment to minority interest (in millions of U.S. dollars): Net assets acquired......................................... $132.6 Ownership interest as of March 31, 2001..................... 64% Minority interest portion of net assets acquired............ $ 47.7 ====== 27 28 TEEKAY SHIPPING CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED) 5. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME The unaudited pro forma consolidated condensed statements of income incorporates the following adjustments: (a) Goodwill amortization related to the Acquisition of UNS is calculated on a straight-line basis over a 20 year period. As a result, goodwill amortization increased by $0.9 million for the three months ended March 31, 2001 and by $4.5 million for the year ended December 31, 2000. (b) Interest expense at 6.5% and 7.1% (the average historical cost of debt on outstanding debt for the three months ended March 31, 2001 and the year ended December 31, 2000, respectively) has been increased by $2.8 million for the three months ended March 31, 2001 and by $15.3 million for the year ended December 31, 2000 to reflect the additional interest expense that would have been incurred had the Acquisition occurred on January 1, 2000. (c) Teekay's equity income for the three months ended March 31, 2001 has been adjusted to reverse the equity loss earned from the 9% ownership in UNS for the period from January 1, 2001 to March 5, 2001 so that the results for the three months ended March 31, 2001 give effect to the Acquisition as if it had it taken place on January 1, 2000. (d) Teekay's other income (loss) for the three months ended March 31, 2001 has been adjusted to reverse the minority interest portion of UNS' results for the period from March 6, 2001 to March 31, 2001 so that the results for the three months ended March 31, 2001 give effect to the Acquisition as if it had it taken place on January 1, 2000. 6. UNAUDITED PRO FORMA CONSOLIDATED EARNINGS PER SHARE The unaudited pro forma consolidated earnings per share have been calculated based upon the weighted average number of Teekay Shares outstanding during the periods presented. 28 29 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: June 7, 2001 By: /s/ Peter S. Antturi ------------------------------------ Peter S. Antturi Vice President and Chief Financial Officer 29