Item 1. Business
The Company
California Petroleum Transport Corporation, ("California Petroleum"), was incorporated in Delaware in 1995. California Petroleum is a special purpose corporation that was organized solely for the purpose of issuing, as agent on behalf of the Owners (see below), the Term Mortgage Notes and Serial Mortgage Notes (together the "Notes") as obligations of California Petroleum and loaning the proceeds of the sale of the Notes to the Owners to facilitate the funding of the acquisition of the four vessels (the "Vessels") described below from Chevron Transport Corporation (the "Initial Charterer"). All the shares of California Petroleum are held by The California Trust, a Massachusetts charitable lead trust formed by JH Holdings, a Massachusetts corporation, for the benefit of certain charitable institutions in Massachusetts.
Information about revenues, profits and total assets is provided in the financial statements included in this report.
California Petroleum has no employees.
The Owners
Each of CalPetro Tankers (Bahamas I) Limited ("CalPetro Bahamas I"), CalPetro Tankers (Bahamas II) Limited ("CalPetro Bahamas II") and CalPetro Tankers (Bahamas III) Limited ("CalPetro Bahamas III"), was organized as a special purpose company under the laws of the Bahamas for the purpose of acquiring and chartering one of the Vessels. Similarly, CalPetro Tankers (IOM) Limited ("CalPetro IOM") has been organized as a special purpose company under the laws of the Isle of Man for the purpose of acquiring and chartering one of the Vessels. Each of the foregoing companies also is referred to in this document as an "Owner". Each Owner, either pursuant to the terms of its Memorandum of Association and/or pursuant to the terms of the related Mortgage, will engage in no business other than the ownership and chartering of its Vessel and activities resulting from or incidental to such ownership and chartering. Each Owner is wholly-owned by California Tankers Investments Limited, a company organized under the laws of the Bahamas, which is a wholly-owned subsidiary of CalPetro Holdings Limited, an Isle of Man company. None of the Owners is owned by or is an affiliate of California Petroleum and neither of California Petroleum nor any Owner is owned by or is an affiliate of the Initial Charterer.
The Charters
Each of the Vessels is currently chartered to the Initial Charterer pursuant to a charter dated as of the date of the original issuance of the Notes (collectively, the "Charters") and which are due to expire on April 1, 2015. Upon payment of a termination amount (the "Termination Payment"), the Initial Charterer has the right to terminate the charters on any four (in the case of the double-hulled Vessels) or three (in the case of the single-hulled Vessel), termination dates, which, for each Vessel, occur at two-year intervals beginning in 2003, 2004, 2005 or 2006, respectively.
The International Tanker Market
Two types of operators mainly provide international seaborne oil and petroleum products transportation services: major oil company captive fleets (both private and state-owned) and independent shipowner fleets. Both types of operators transport oil under short-term contracts (including single-voyage "spot charters") and long-term time charters with oil companies, oil traders, large oil consumers, petroleum product producers and government agencies. The oil companies own, or control through long-term time charters, approximately one third of the current world tanker capacity, while independent companies own or control the balance of the fleet. The oil companies use their fleets not only to transport their own oil, but also to transport oil for third-party charterers in direct competition with independent owners and operators in the tanker charter market.
The oil transportation industry has historically been subject to regulation by national authorities and through international conventions. Over recent years, however, an environmental protection regime has evolved which could have a significant impact on the operations of participants in the industry in the form of increasingly more stringent inspection requirements, closer monitoring of pollution-related events, and generally higher costs and potential liabilities for the owners and operators of tankers.
In order to benefit from economies of scale, tanker charterers will typically charter the largest possible vessel to transport oil or products, consistent with port and canal dimensional restrictions and optimal cargo lot sizes. The oil tanker fleet is generally divided into the following five major types of vessels, based on vessel carrying capacity: (i) ULCC-size range of approximately 320,000 to 450,000 deadweight tons (dwt); (ii) VLCC-size range of approximately 200,000 to 320,000; (iii) Suezmax-size range of approximately 120,000 to 200,000 dwt; (iv) Aframax-size range of approximately 60,000 to 120,000 dwt; and (v) small tankers of less than approximately 60,000 dwt. ULCCs and VLCCs typically transport crude oil in long-haul trades, such as from the Arabian Gulf to Rotterdam via the Cape of Good Hope. Suezmax tankers also engage in long-haul crude oil trades as well as in medium-haul crude oil trades, such as from West Africa to the East Coast of the United States. Aframax-size vessels generally engage in both medium-and short-haul trades of less than 1,500 miles and carry crude oil or petroleum products. Smaller tankers mostly transport petroleum products in short-haul to medium-haul trades.
The shipping industry is highly cyclical, experiencing volatility in profitability, vessel values and charter rates. In particular, freight and charterhire rates are strongly influenced by the supply and demand for shipping capacity.
The charter rates for Suezmax tankers started to decline in the second half of 2001 as a result of a general slowdown in the global economy and reduction of OPEC oil production. The negative trend continued into 2002 and rates remained below USD 20,000 per day through a large part of the year. Rates finally started to improve at the beginning of the 4th quarter and ended the year at above USD 50,000 per day. In spite of the rate improvement in the last quarter average time charter equivalent spot earnings for the year came out just below USD 20,000 per day compared to just over USD 30,000 per day in 2001. Several factors contributed to improving rates in the late part of the year including increased seasonal demand and increased oil consumption in the Asian region, but the main reason for the rate spike in the last months of the year was the strike in Venezuela. The loss of exports from Venezuela, especially into the United States, required replacement oil from more distant sources resulting in increased tonnage demand. The strong market continued in January 2003. The weak market in 2001 and 2002 resulted in scrapping of 48 elderly Suezmaxes in the two years.
There is no guarantee that Suezmax rates would be sufficient to meet the debt service required if the bareboat charters entered into with the Initial Charterer are not extended. Spot market rates are volatile and generally linked to global economic development and especially demand for oil but also to political events affecting oil producing countries.
Risk Factors
California Petroleum derives 100% of its cash receipts from and is dependent on the Owners, who are foreign corporations as described above. The Owners derive 100% of their revenues from and are dependent on the Initial Charterer until such time as the Initial Charterer terminates the Charters. After the Charters are terminated, the Owners may not be able to arrange further charters at rates sufficient to meet interest and principal payments due to California Petroleum on the serial and term loans. Should the Owners default on payment of interest and principal due to California Petroleum, the value of collateral to the serial and term loans may be insufficient to repay the serial and term loans.
It is not considered possible to quantify possible losses to California Petroleum that may arise due to exposure to these risk factors.
Item 2.
Item 2. Properties
California Petroleum has no property. The serial and term loans granted to the Owners are collateralised by first preferred mortgages over the property of the Owners as outlined below. The Owners paid approximately $80.7 million for each double-hulled Vessel and $40.0 million for the single-hulled Vessel (in 1995). Other than the Vessels described below the Owners have no property.
Item 3.
Item 3. Legal Proceedings
California Petroleum and the Owners are not a party to any material pending legal proceedings and no such proceedings are known to be contemplated.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) There is no established trading market for the Common Stock of the Registrant.
(b) As of March 28, 2003 with respect to the Common Stock there was one (1) holder of record of the Registrant's Common Stock.
Item 6.
Item 6. Selected Financial Data
The following selected historical financial and other data for Californian Petroleum was devised from more detailed information and financial statements and notes appearing elsewhere in this Annual Report and should be read in conjunction therewith.
2002 2001 2000 1999 1998 $'000 $'000 $'000 $'000 $'000 Net operating revenues 13,808 15,210 16,538 17,871 19,191 Net income - - - - - Net income per share - - - - - Dividends per share - - - - - Total assets 162,618 181,115 199,616 218,088 236,564 Long term liabilities 141,120 159,280 177,440 195,600 213,760
The following table sets forth a summary of quarterly results of operations for the years ended December 31, 2002 and 2001.
First Second Third Fourth Quarter Quarter Quarter Quarter $'000 $'000 $'000 $'000 Net operating revenues 3,601 3,308 3,326 3,573 Expenses 3,601 3,308 3,326 3,573 Net income - - - - Net operating revenues 4,051 3,691 3,750 3,718 Expenses 4,051 3,691 3,750 3,718 Net income - - - -
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Strategy
California Petroleum
California Petroleum's strategy has been to issue, as agent on behalf of the Owners, the Notes and loan the proceeds of the sale of the Notes to the Owners. California Petroleum's only sources of funds with respect to the Notes are payments of interest and principal on the related loans from California Petroleum to each Owner. General and administrative expenses comprising trustee fees, legal fees, agency fees and other costs incurred by California Petroleum are billed to the Owners. California Petroleum has no source of income other than payments to it by the Owners. The net result for the year is neither a gain nor a loss, the detail relating to such result is set forth in the Statement of Operations included herein.
The Owners
The Owners' strategy has been to acquire the Vessels and charter them to the Initial Charterer under bareboat charters which are expected to provide (a) charterhire payments which California Petroleum and the Owners expect will be sufficient to pay, so long as the Initial Charters are in effect (i) the Owners' obligations under the loans for acquiring the Vessels, (ii) management fees and technical advisor's fees, (iii) recurring fees and taxes, and (iv) any other costs and expenses incidental to the ownership and chartering of the Vessels that are to be paid by the Owners; (b) Termination Payments sufficient to make sinking fund and interest payments on the Term Mortgage Notes, to the extent allocable to the Vessel for which the related Initial Charter has been terminated, for at least two years following any such termination, during which time the Vessel may be sold or rechartered; and (c) that the Vessels will be maintained in accordance with the good commercial maintenance practices required by the Initial Charters; and to arrange for vessel management and remarketing services to be available in case any Initial Charter is terminated by the Initial Charterer or any Vessel is for any other reason returned to the possession and use of the Owners.
Liquidity and Capital Resources
California Petroleum is a passive entity, and its activities are limited to collecting cash from the Owners and making repayments on the Notes. California Petroleum has no source of liquidity and no capital resources other than the cash receipts attributable to the Loans.
Critical Accounting Policies
California Petroleum's principal accounting policies are described in Note 2 to the financial statements include in Item 8 of this Form 10-K. The most critical accounting policies include:
o revenue and expense recognition o accounting for deferred charges
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
No instruments issued by California Petroleum are for trading purposes. California Petroleum is exposed to business risk inherent in the international tanker market as outlined in Risk Factors.
Quantitative information about instruments exposed to business risk inherent in the international tanker market at December 31, 2002 is as follows:
Serial Loans
The principal balances of the Serial Loans earn interest at rates ranging from 7.55% to 7.62% and mature over a four-year period beginning April 1, 2003. The loans are reported net of the related discounts, which are amortized over the term of the loans.
The outstanding serial loans have the following characteristics:
Maturity date Interest Principal rate due ($ 000's)
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 - -------------------------------------------------------------------------------- 41,380 - --------------------------------------------------------------------------------
The outstanding amount of serial loans as at December 31, 2002 was $41,380,000.
Term Loans
The principal balances of the Term Loans earn interest at a rate of 8.52% per annum and are to be repaid over a twelve-year period beginning nine years from April 1, 1995. The loans are reported net of the related discounts, which are amortized over the term of the loans.
The table below provides the final principal payments on the Term Loans if none of the Initial Charters is terminated and if all of the Initial Charters are terminated on the earliest termination dates.
- -------------------------------------------------------------------------------- Scheduled No initial All payment date charters initial terminated charters $'000 terminated $'000 - -------------------------------------------------------------------------------- April 1, 2004 3,355 1,700 April 1, 2005 6,542 3,480 April 1, 2006 9,526 5,320 April 1, 2007 10,942 6,340 April 1, 2008 10,942 6,880 April 1, 2009 10,942 7,470 April 1, 2010 10,942 8,110 April 1, 2011 10,942 8,800 April 1, 2012 10,942 9,540 April 1, 2013 10,942 10,360 April 1, 2014 10,942 11,240 April 1, 2015 10,941 38,660 - -------------------------------------------------------------------------------- 117,900 117,900 - --------------------------------------------------------------------------------
The outstanding amount of term loans at December 31, 2002 was $117,900,000.
Serial Mortgage Notes
The Serial Mortgage Notes bear interest at rates ranging from 7.55% to 7.62% through maturity. The Notes mature over a four-year period beginning one-year from April 1, 2003. Interest is payable semi-annually.
The outstanding serial notes have the following characteristics:
------------------------------------------------------------------------------ Maturity date Interest Principal rate due ($ 000's) ------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------ 41,380 ------------------------------------------------------------------------------
Term Mortgage Notes
The Term Mortgage Notes bear interest at a rate of 8.52% per annum. The Principal is repayable on the Term Mortgage Notes in accordance with a twelve-year sinking fund schedule commencing nine years from April 1, 1995. Interest is payable semi-annually.
The table below provides the scheduled sinking fund redemption amounts and final principal payments on the Term Mortgage Notes if none of the Initial Charters is terminated and if all of the Initial Charters are terminated on the earliest termination dates.
------------------------------------------------------------------------------ Scheduled No initial All payment date charters initial terminated charters $'000 terminated $'000 ------------------------------------------------------------------------------ April 1, 2004 3,355 1,700 April 1, 2005 6,542 3,480 April 1, 2006 9,526 5,320 April 1, 2007 10,942 6,340 April 1, 2008 10,942 6,880 April 1, 2009 10,942 7,470 April 1, 2010 10,942 8,110 April 1, 2011 10,942 8,800 April 1, 2012 10,942 9,540 April 1, 2013 10,942 10,360 April 1, 2014 10,942 11,240 April 1, 2015 10,941 38,660 ------------------------------------------------------------------------------ 117,900 117,900 ------------------------------------------------------------------------------
California Petroleum was organized solely for the purpose of issuing, as agent on behalf of certain ship Owners, the Term Mortgage 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 the Initial Charterer.
Item 8.
Item 8. Financial Statements and Supplementary Data Page
Report of Ernst & Young, Chartered Accountants, Independent Auditors 9
Balance Sheets as of December 31, 2002 and 2001 10
Statements of Operations and Retained Earnings for the Years Ended 11 December 31, 2002, 2001 and 2000
Statements of Cash Flows for the Years Ended 12 December 31, 2002, 2001 and 2000
Notes to Financial Statements 13
Report of Ernst & Young, Chartered Accountants, Independent Auditors
To the Board of Directors and Stockholder California Petroleum Transport Corporation
We have audited the accompanying balance sheets of California Petroleum Transport Corporation as of December 31, 2002 and 2001, and the related statements of operations and retained earnings, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of California Petroleum Transport Corporation at December 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
/s/ Ernst & Young Ernst & Young Chartered Accountants
Douglas, Isle of Man 28 March, 2003
California Petroleum Transport Corporation
Balance Sheets as of December 31, 2002 and 2001
(in thousands of US$)
Note 2002 2001
ASSETS
Current assets:
Cash and cash equivalents 1 1
Current portion of serial loans receivable 3 18,160 18,160
Interest receivable 3,322 3,664
Other current assets 15 10 --------- ---------
Total current assets 21,498 21,835
Serial loans receivable, less current portion 3 22,882 40,874
Term loans receivable 4 116,818 116,730
Deferred charges and other long-term assets 2(b) 1,420 1,676 -------- --------
Total assets 162,618 181,115 ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accrued interest 3,322 3,664
Current portion of serial mortgage notes 5,6 18,160 18,160
Other current liabilities 15 10 --------- ---------
Total current liabilities 21,497 21,834
Serial mortgage notes 5,6 23,220 41,380
Term mortgage notes 5,7 117,900 117,900 --------- ---------
Total liabilities 162,617 181,114
Stockholder's equity
Common stock, $1 par value; 1,000 shares authorised, issued and outstanding 1 1 --------- ---------
Total liabilities and stockholder's equity 162,618 181,115 ========= =========
See accompanying Notes to the Financial Statements
California Petroleum Transport Corporation
Statements of Operations and Retained Earnings for the years ended December 31, 2002, 2001 and 2000
(in thousands of US$)
2002 2001 2000
Revenue
Interest income 13,772 15,164 16,478
Fees reimbursed by related parties 36 46 60 ------- -------- -------
Net operating revenues 13,808 15,210 16,538
Expenses
General and administrative expenses (36) (46) (60)
Amortisation of debt issue costs (256) (256) (256)
Interest expense (13,516) (14,908) (16,222) -------- -------- --------
(13,808) (15,210) (16,538) -------- -------- --------
Net income - - - ======== ======== ========
Retained earnings, beginning of year - - - -------- -------- --------
Retained earnings, end of year - - - ======== ======== ========
See accompanying Notes to the Financial Statements
California Petroleum Transport Corporation
Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000
(in thousands of US$)
2002 2001 2000
Cash flows from operating activities
Net income - - -
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortisation of deferred debt issue costs 256 256 256
Changes in assets and liabilities:
Decrease in interest receivable and other current assets 337 341 312
Decrease in accrued interest and other current liabilities (337) (341) (312) -------- -------- -------
Net cash provided by operating activities 256 256 256 -------- -------- -------
Cash flows from investing activities
Collections on term and serial loans 17,904 17,904 17,904 -------- -------- --------
Net cash provided by investing activities 17,904 17,904 17,904 -------- -------- --------
Cash flows from financing activities
Repayments of serial notes (18,160) (18,160) (18,160) -------- -------- --------
Net cash used in financing activities (18,160) (18,160) (18,160) -------- -------- --------
Net change in cash and cash equivalents 0 0 0
Cash and cash equivalents at beginning of year 1 1 1 -------- -------- --------
Cash and cash equivalents at end of year 1 1 1 ======== ======== ========
Supplemental disclosure of cash flow information:
Interest paid 13,858 15,213 17,186
See accompanying Notes to Financial Statements
California Petroleum Transport Corporation
Notes to Financial Statements
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
California Petroleum Transport Corporation (the Company), which is incorporated in Delaware, is a special purpose corporation that has been organized solely for the purpose of issuing, as agent on behalf of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers (Bahamas III) Limited and CalPetro Tankers (IOM) Limited (each an "Owner" and, together the "Owners"), the Serial Mortgage Notes and the Term Mortgage Notes (together, "the Notes") as full recourse obligations of the Company and loaning the proceeds of the sale of the Notes to the Owners to facilitate the funding of the acquisition of four vessels (the "Vessels") from Chevron Transport Corporation (the "Initial Charterer").
The Owners have chartered the Vessels to the Initial Charterer under bareboat charters that are expected to provide sufficient payments to cover the Owners' obligations under the loans from the Company. The Initial Charterer can terminate a charter at specified dates prior to the expiration of the charter, provided it notify the Owner at least 12 months prior to such termination and make a Termination Payment. The Owners' only source of funds with respect to the loans from the Company is payments from the Initial Charterer, including Termination Payments. The Owners do not have any other source of capital for payment of the loans.
The Company's only source of funds with respect to the Notes are payments of principal and interest on the loans to the Owners. The Company does not have any other source of capital for payment of the Notes.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These statements reflect the net proceeds from the sale of the Term Mortgage Notes together with the net proceeds from sale of the Serial Mortgage Notes having been applied by way of long-term loans to the Owners to fund the acquisition of the Vessels from the Initial Charterer.
2. PRINCIPAL ACCOUNTING POLICIES
(a) Revenue and expense recognition
Interest receivable on the Serial Loans and on the Term Loans is accrued on a daily basis. Interest payable on the Serial Mortgage Notes and on the Term Mortgage Notes is accrued on a daily basis. The Owners reimburse the Company for general and administrative expenses incurred on their behalf.
(b) Deferred charges
Deferred charges represent the capitalization of debt issue costs. These costs are amortized over the term of the Notes to which they relate.
(c) Reporting currency
The reporting and functional currency is United States dollars.
(d) Cash and cash equivalents
For the purpose of the statement 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.
(e) Use of estimates
The preparation of financial statements in accordance with GAAP requires the Company to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities on the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
3. SERIAL LOANS
The principal balances of the Serial Loans earn interest at rates ranging from 7.55% to 7.62% and mature over a four-year period beginning April 1, 2003. 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 LOANS AND TERM LOANS COLLATERAL
The Serial and Term Loans are collateralised by first preference mortgages on the Vessels to the Company. The earnings and insurance relating to the Vessels have been collaterally assigned pursuant to an Assignment of Earnings and Insurance to the Company, which in turn has assigned such Assignment of Earnings and Insurance to JP Morgan Chase (formerly Chemical Trust Company of California) as the Collateral Trustee. The Initial Charters and Chevron Guarantees (where the obligations of the Initial Charterer are guaranteed by Chevron Corporation) relating to the Vessels have been collaterally assigned pursuant to the Assignment of Initial Charter and Assignment of Initial Charter Guarantee to the Company, which in turn has assigned such Assignments to the Collateral Trustee. The Capital Stock of each of the Owners has been pledged to the Company pursuant to the Stock Pledge Agreements.
6. SERIAL MORTGAGE NOTES
The Serial Mortgage Notes bear interest at rates ranging from 7.55% to 7.62% through maturity. The Notes mature over a four-year period beginning April 1, 2003. Interest is payable semi-annually.
The outstanding serial notes have the following characteristics:
------------------------------------------------------------------------------ Maturity date Interest Principal due rate due ($ 000's) ------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------ 41,380 ------------------------------------------------------------------------------
The Serial Mortgage Notes include certain covenants such as restriction on the payment of dividends and making additional loans or advances to affiliates. At December 31, 2002 and 2001, the Company was in compliance with these covenants.
7. TERM MORTGAGE NOTES
The Term Mortgage Notes bear interest at a rate of 8.52% per annum. Principal is repayable on the Term Mortgage Notes in accordance with a twelve-year sinking fund schedule commencing nine years from April 1, 1995. Interest is payable semi-annually.
The table below provides the scheduled sinking fund redemption amounts and final principal payments on the Term Mortgage Notes if none of the Initial Charters is terminated and if all of the Initial Charters are terminated on the earliest termination dates.
------------------------------------------------------------------------------ Scheduled No initial All payment date charters initial terminated charters $'000 terminated $'000 ------------------------------------------------------------------------------ April 1, 2004 3,355 1,700 April 1, 2005 6,542 3,480 April 1, 2006 9,526 5,320 April 1, 2007 10,942 6,340 April 1, 2008 10,942 6,880 April 1, 2009 10,942 7,470 April 1, 2010 10,942 8,110 April 1, 2011 10,942 8,800 April 1, 2012 10,942 9,540 April 1, 2013 10,942 10,360 April 1, 2014 10,942 11,240 April 1, 2015 10,941 38,660 ------------------------------------------------------------------------------ 117,900 117,900 ------------------------------------------------------------------------------
The Term Mortgage Notes include certain covenants such as restriction on the payment of dividends and making additional loans or advances to affiliates. At December 31, 2002 and 2001, the Company was in compliance with these covenants.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The Company does not have operations nor does it have any employees involved in management. The following table sets forth the name, age and principal position with the Company of each of its directors and executive officers.
Name Age Position with the Company
Nancy D. Smith 35 Director and President Geraldine St-Louis 27 Vice President Louise E. Colby 54 Director and Assistant Secretary R. Douglas Donaldson 61 Treasurer Dimitris P.Spiliakos 25 Secretary
Officers are appointed by the Board of Directors and will serve until they resign or are removed by the Board of Directors.
Nancy D. Smith has been a Director and the President of California Petroleum since 1994. She joined JH Management Corporation, a Massachusetts business corporation that engages in the management of special purpose corporations for structured financial transactions in 1993 as its President and is currently the Vice President of JH Management Corporation. From 1991 to 1992, she was a legal secretary at Ropes & Gray, a law firm in Boston, MA. From 1992 to 1993, she was a personal assistant to Bob Woolf Associates, Inc.
Geraldine St-Louis has been the Vice President of the Company since March 2001. She joined JH Management Corporation in March 2001 as the vice president. From 1999 to 2001, she was an Executive Secretary in the Health Systems Group at Harvard University School of Public Health, specialising in the field of health studies in Third World countries.
Louise E. Colby has been a Director of the Company since 1994. She was the Secretary and Treasurer in 1994 and has served as an Assistant Secretary from 1995 to present. She is a former Director, Secretary and Treasurer of JH Management Corporation beginning in 1989 and currently serves as its Assistant Treasurer. She has also served as the Trustee of the Cazenove Street Realty Trust since 1983 and, since 1985, a Trustee of The 1960 Trust, a charitable trust for the benefit of Harvard University.
R. Douglas Donaldson has been the Treasurer of the Company since 1995. He has been President of JH Management Corporation since 1994. He was the Vice President of a sibling management corporation, JH Holdings Corporation, from 1994 to early 1999, when he was promoted to President of that corporation as well. Prior to 1994, he as a bank officer (primarily at Bank of New England) for over twenty-five years in the field of personal trust and estate planning. He is also the sole trustee of two charitable trusts for the benefit of Harvard University.
Dimitris P. Spiliakos has been the Secretary of the Company since September 2002. He is currently a corporate paralegal at the law offices of Ropes & Gray in Boston. From 1999 to 2001, he worked as a corporate paralegal at Hutchins,Wheeler & Dittmar, a law firm in Boston.
Item 11.
Item 11. Executive Compensation
None of the directors or executive officers of the Company receive any compensation in connection with their respective positions. The Company has not entered into any affiliate transactions, other than the original agency agreement for the issuance of the notes.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table provides information as of March 28, 2003 with respect to the ownership by each person or group of persons, known by the registrant to be a beneficial owner of 5% or more of the Common Stock.
Except as set forth below, the Registrant is not aware of any beneficial owner of more than 5% of the Common Stock as of close of business on March 25, 2003.
Beneficial Ownership
Name and Number Class of address of of Percent Shares Beneficial Owners Shares of Class ------ ----------------- ------ --------
Ordinary Shares The California Trust 1,000 100% C/o JH Holdings Corporation P.O. Box 4024 Room 6/9, One International Place Boston MA 02101
Item 13.
Item 13. Certain Relationships and Related Transactions
Not applicable.
Item 14.
Item 14. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's manager Frontline Ltd, including the Company's President and Treasurer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the President and Treasurer concluded that the Company's disclosure controls and procedures are effective in alerting them timely to material information relating to the Company required to be included in the Company's periodic Securities and Exchange Commission (SEC) filings.
(b) Changes in internal controls
There have been no significant changes in our internal controls or in other factors that could have significantly affected those controls subsequent to the date of our most recent evaluation of internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this Annual Report:
Financial Statements
Report of Ernst & Young, Chartered Accountants, Independent Auditors
Balance Sheets at December 31, 2002 and 2001
Statements of Operations and Retained Earnings for the Years Ended December 31, 2002, 2001 and 2000
Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000
Notes to Financial Statements
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The Company has not filed any current reports on Form 8-K with the SEC during the last quarter of the fiscal period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
California Petroleum Transport Corporation ------------------------------------------ (Registrant)
Date 3/28/03 By /s/ Nancy D. Smith ------------------------------ --------------------------------------- Nancy D. Smith President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date 3/28/03 By /s/ Nancy D. Smith ------------------------------ ---------------------------------------- Nancy D. Smith Director and President
Date 3/28/03 By /s/ R. Douglas Donaldson ------------------------------ ---------------------------------------- R. Douglas Donaldson Director and Treasurer
CERTIFICATION OF THE PRESIDENT - ------------------------------
I, Nancy D Smith, certify that:
1. I have reviewed this annual report on Form 10-K of California Petroleum Transport Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: 3/28/03
/s/ Nancy D. Smith - ----------------------- Nancy D. Smith President
CERTIFICATION OF TREASURER - --------------------------
I, R Douglas Donaldson, certify that:
1. I have reviewed this annual report on Form 10-K of California Petroleum Transport Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: 3/28/03
/s/ R. Douglas Donaldson - --------------------------- R. Douglas Donaldson Treasurer
Exhibit 99.1 CERTIFICATIONS UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly represents, in all material respects, the financial condition and results of operations of California Petroleum Transport Corporation.
/s/ Nancy D. Smith ------------------------- Nancy D. Smith President
/s/ R. Douglas Donaldson ------------------------- R. Douglas Donaldson Treasurer
Date: 3/28/03
02089.0009 #395095