Exhibit I
![]() | TEEKAY CORPORATION 4th Floor, Belvedere Building, 69 Pitts Bay Road Hamilton, HM 08 Bermuda |
EARNINGS RELEASE
TEEKAY CORPORATION REPORTS
PRELIMINARY SECOND QUARTER RESULTS;
TEEKAY CORPORATION TO RESTATE RESULTS FOR ACCOUNTING UNDER SFAS 133
PRELIMINARY SECOND QUARTER RESULTS;
TEEKAY CORPORATION TO RESTATE RESULTS FOR ACCOUNTING UNDER SFAS 133
Highlights
• | Teekay Corporation plans to restate certain financial results for accounting of derivatives under SFAS 133. The preliminary results announced today do not reflect these corrections. The restatements will have no impact on the Company’s cash flows, liquidity, or shareholders’ equity as at June 30, 2008. | |
• | Generated cash flow from vessel operations of $221.7 million, up from $184.8 million in the prior quarter | |
• | Reported preliminary second quarter net income of $104.5 million, or $1.43 per share (including specific items, predominantly unrealized gains relating to interest rate swaps, which increased net income by $27.4 million, or $0.38 per share)(1) | |
• | Completed accretive acquisitions and follow-on equity offerings in Teekay LNG Partners L.P. and Teekay Offshore Partners L.P. | |
• | Acquired the remaining 35.3 percent interest in Teekay Petrojarl, increasing ownership to 100 percent |
Hamilton, Bermuda, August 7, 2008 — Teekay Corporation (Teekayorthe Company) (NYSE: TK) today reported preliminary second quarter 2008 financial results. The Company also announced today that it plans to restate previous financial results from 2003 through the end of the second quarter of 2008, including preliminary and previously announced results included in this earnings release, to adjust its accounting treatment for certain derivative transactions under the Statement of Financial Accounting Standards (SFAS) 133,Accounting for Derivative Instruments and Hedging Activities, as more fully discussed below under “-Restatement of Financial Statements for Accounting Under SFAS 133.” None of the results included in this earnings release reflect restatement adjustments.
Summary of Preliminary Results
The Company reported net income of $104.5 million, or $1.43 per share, for the quarter ended June 30, 2008, compared to net income of $78.4 million, or $1.04 per share, for the quarter ended June 30, 2007. The results for the quarters ended June 30, 2008 and 2007 included a number of specific items which had the net effect of increasing net income by $27.4 million (or $0.38 per share) and by $10.8 million (or $0.14 per share), respectively, as detailed inAppendix Ato this release. Net revenues(2) for the second quarter of 2008 increased to $599.7 million from $442.6 million for the same period in 2007, and income from vessel operations increased to $119.7 million from $117.6 million.
Net income for the six months ended June 30, 2008 was $119.6 million, or $1.63 per share, compared to $154.8 million, or $2.07 per share, for the same period last year. The results for the six months ended June 30, 2008 and 2007 included a number of specific items which had the net effect of decreasing net income by $18.2 million (or $0.25 per share) and increasing net income by $3.4 million (or $0.05 per share), respectively, as detailed inAppendix Ato this release. Net revenues(2) for the six months ended June 30, 2008 increased to $1.2 billion from $902.0 million for the same period in 2007, and income from vessel operations decreased to $230.7 million from $243.1 million.
(1) | Please refer toAppendix Ato this release for information about specific items affecting net income. | |
(2) | Net revenues represents revenues less voyage expenses. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site atwww.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP). |
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Executing on Drop-down Strategy
Teekay LNG Partners L.P.
During the second quarter of 2008, Teekay sold two 1993-built, 88,000 cubic meter liquefied natural gas (LNG) carriers (the Kenai LNG Carriers), and interests in four newbuilding, 217,000 cubic meter LNG carriers (the RasGas 3 LNG Carriers), to its majority-owned subsidiary, Teekay LNG Partners L.P. (Teekay LNG). These transactions were partially funded from proceeds raised through a follow-on public offering of Teekay LNG common units in April 2008. Concurrently with the public offering, Teekay acquired in a private placement additional common units of Teekay LNG at the public offering price for $50.0 million. Gross equity proceeds of the two offerings totaled $208.7 million (including the general partner’s 2 percent proportionate capital contribution). As a result of the offering, Teekay’s ownership interest in Teekay LNG was reduced to 57.7 percent from 63.7 percent (including its 2 percent general partner interest). Reflecting the contribution from the acquired Kenai LNG Carriers, Teekay LNG increased its quarterly cash distribution by 4 percent to an annualized distribution of $2.20 per unit, and expects to increase the distribution further as a result of the contribution from the Ras Gas 3 Carriers.
Teekay Offshore Partners L.P.
During the second quarter of 2008, Teekay sold to its subsidiary, Teekay Offshore Partners L.P. (Teekay Offshore), an additional 25 percent interest in Teekay Offshore Operating L.P. (OPCO), a Marshall Islands limited partnership, for $205 million. The transaction reduced Teekay’s ownership in OPCO to 49 percent. At the same time, Teekay also sold to OPCO two 2008-built Aframax lightering tankers for $106.0 million.
These transactions were partially funded from proceeds raised through a follow-on public offering of Teekay Offshore common units. The offering of 7.0 million common units at a price of $20.00 per unit was completed on June 18, 2008 and raised gross proceeds of $140.0 million. On July 16, 2008, the underwriters exercised 375,000 common units of their 30-day over-allotment option, resulting in an additional $7.5 million in gross proceeds to Teekay Offshore.
Concurrently with the public offering, Teekay acquired in a private placement 3.25 million common units of Teekay Offshore at the same public offering price for $65.0 million. As a result of these transactions, Teekay Offshore raised gross equity proceeds of $216.8 million (including the general partner’s 2 percent proportionate capital contribution), and Teekay’s ownership interest in Teekay Offshore was reduced to 49.99 percent from 59.75 percent (including its 2 percent general partner interest).
Reflecting its increased ownership in OPCO and contribution from the acquired Aframax lightering tankers, Teekay Offshore intends to increase its quarterly cash distribution by 12 to 15 percent over the current annualized distribution of $1.60 per unit. If approved, this increase will be reflected in the third quarter’s distribution, which will be paid in November 2008.
Teekay Tankers Ltd.
During the second quarter of 2008, Teekay sold two double-hull Suezmaxes to its majority-owned subsidiary, Teekay Tankers Ltd. (Teekay Tankers), for $186.9 million. In connection with a pre-existing agreement, Teekay is obligated to offer Teekay Tankers the opportunity to purchase an additional two Suezmaxes by July 2009. On August 5, 2008, Teekay Tankers declared a quarterly dividend of $0.90 per share.
Acquisition of Remaining Interest in Teekay Petrojarl
On June 20, 2008, Teekay purchased a 30.1 percent interest in Teekay Petrojarl ASA (Teekay Petrojarl) from Prosafe Production for a total cost of $257.1 million. As a result, Teekay’s ownership of Teekay Petrojarl increased to 94.8 percent. Pursuant to Norweigian Public Limited Liability Companies law, on July 9, 2008 Teekay exercised its right to effect the compulsory acquisition of the remaining 5.2 percent of Teekay Petrojarl for a total cost of $45.1 million, thereby increasing its ownership interest to 100 percent.
Based on a pre-existing agreement, Teekay is obligated to offer Teekay Offshore, within one year after having acquired 100 percent of Teekay Petrojarl, its interests in Teekay Petrojarl’s existing floating production, storage and offloading (FPSO) units that operate under charter contracts with remaining terms greater than three years.
In addition, Teekay is also obligated to offer Teekay Offshore its interest in future FPSO projects with charter contracts greater than three years.
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Supplemental Financial Information
Appendix Bto this release includes supplemental financial information for each of the Company’s publicly-listed subsidiaries (Teekay LNG, Teekay Offshore, and Teekay Tankers), its wholly-owned subsidiary, Teekay Petrojarl, and the remaining business (referred to as Teekay Corp. Standalone).Appendix Balso includes consolidation adjustments required to reconcile to Teekay’s consolidated balance sheet and statement of income as at and for the three and six months ended June 30, 2008.
Preliminary Operating Results
During the second quarter of 2008, fixed-rate businesses generated approximately 53 percent of the Company’s cash flow from vessel operations, down from 69 percent in the second quarter of 2007, primarily due to an increase in spot tanker segment cash flows resulting from a significant increase in spot tanker rates during the quarter, as well as an increase in cash flow from the Company’s fixed-rate businesses.
The following table highlights certain financial information for Teekay’s four main operating segments: the offshore segment, the fixed-rate tanker segment, the liquefied gas segment, and the spot tanker segment (please refer to the “Teekay Fleet” section of this release below andAppendix Bfor further details):
Three Months Ended June 30, 2008(1) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
(in thousands of U.S. dollars) | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Net revenues(2) | 227,937 | 65,270 | 53,044 | 253,420 | 599,671 | |||||||||||||||
Vessel operating expenses | 101,055 | 16,387 | 13,125 | 28,381 | 158,948 | |||||||||||||||
Time-charter hire expense | 32,262 | 11,445 | — | 98,995 | 142,702 | |||||||||||||||
Depreciation & amortization | 53,772 | 11,289 | 14,209 | 27,430 | 106,700 | |||||||||||||||
Cash flow from vessel Operations(3) | 53,113 | 29,835 | 33,784 | 104,958 | 221,690 | |||||||||||||||
Three Months Ended June 30, 2007(1) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
(in thousands of U.S. dollars) | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Net revenues(2) | 210,169 | 45,195 | 38,488 | 148,721 | 442,573 | |||||||||||||||
Vessel operating expenses | 74,427 | 11,822 | 7,881 | 14,721 | 108,851 | |||||||||||||||
Time-charter hire expense | 39,549 | 3,981 | — | 57,717 | 101,247 | |||||||||||||||
Depreciation & amortization | 35,627 | 8,260 | 11,571 | 12,637 | 68,095 | |||||||||||||||
Cash flow from vessel Operations(3) | 64,503 | 24,870 | 25,118 | 52,563 | 167,054 | |||||||||||||||
(1) | The Company plans to restate financial results included in this financial summary to adjust its accounting treatment of certain derivative transactions under SFAS 133, as more fully discussed below under "—Restatement of Financial Statements for Accounting under SFAS 133." Results exclude accounting corrections related to SFAS 133. | |
(2) | Net revenues for the spot tanker segment has been reduced by $11.8 million in the three months ended June 30, 2008 relating to unrealized losses from synthetic time charters and forward freight agreements, which is not included inAppendix Aof this release. | |
(3) | Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel write-downs/(gain) loss on sale of vessels and unrealized gains or losses relating to derivatives. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site atwww.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. |
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Offshore Segment
The Company’s offshore segment is comprised of shuttle tankers, floating storage and off-take (FSO) units,and FPSO units.
Cash flow from vessel operations from the Company’s offshore segment decreased to $53.1 million in the second quarter of 2008, compared to $64.5 million in the second quarter of 2007, primarily due to an increase in crewing costs, an increase in repair and maintenance expenditures coinciding with the seasonal maintenance of offshore oil facilities in the North Sea, and depreciation of the U.S. dollar. This was partially offset the addition of theSiriFPSO unit, which commenced its full charter-hire rate in mid-April 2008.
Fixed-Rate Tanker Segment
The Company’s fixed-rate tanker segment includes its conventional tankers, that operate under fixed-rate charter contracts with an initial term of three or more years.
Cash flow from vessel operations from the Company’s fixed-rate tanker segment increased to $29.8 million in the second quarter of 2008, compared to $24.9 million in the second quarter of 2007. This increase was primarily due to an increase in the size of the Company’s fixed-rate tanker fleet, partially offset by an increase in vessel crewing costs and depreciation of the U.S. dollar.
Liquefied Gas Segment
The liquefied gas segment includes LNG and liquefied petroleum gas (LPG) carriers.
The Company’s cash flow from vessel operations from its LNG and LPG carriers during the second quarter of 2008 was $33.8 million, compared to $25.1 million in the second quarter of 2007. This increase was primarily due to the contribution from the two Kenai LNG Carriers acquired in December 2007.
In May 2008, Teekay announced that it had agreed to take over from subsidiaries of IM Skaugen ASA (Skaugen) the existing shipbuilding contracts for two 12,000 cubic meter multi-gas ships capable of carrying LNG, LPG and Ethylene. The vessels have a total cost of approximately $94 million and are expected to deliver in 2010, at which time they are scheduled to commence service on 15-year, fixed-rate charters to Skaugen. The vessels are expected to generate a total of approximately $9.5 million per year in operating cash flow.
Spot Tanker Segment
The Company’s spot tanker segment includes its conventional tankers that operate on voyage and time charters with an initial term of less than three years.
Cash flow from vessel operations from the Company’s spot tanker segment increased to $105.0 million for the second quarter of 2008, from $52.6 million for the second quarter of 2007, primarily due to an increase in the size of the Company’s spot tanker fleet and a significant increase in spot tanker rates, partially offset by an increase in time-charter hire expenses and an increase in vessel crewing costs.
On a net basis, fleet changes increased the total number of revenue days in the Company’s spot tanker segment to 7,461 for the second quarter of 2008, compared to 5,207 for the second quarter of 2007. Revenue days represent the total number of vessel calendar days less off-hire associated with major repairs, drydockings, or mandated surveys.
Crude tanker spot rates increased significantly during the second quarter of 2008, rising to levels not experienced since record high rates during the fourth quarter of 2004. This counter-seasonal strength in tanker rates was primarily driven by continued growth in oil demand from energy-intensive economies in Asia and higher oil production from OPEC suppliers during the quarter, which resulted in increased tanker tonne-mile demand. Spot rates early in the third quarter of 2008 have been volatile but have averaged higher than in the second quarter of 2008, as Saudi Arabia continues to increase output and Asian refineries have come back on-line following maintenance.
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In the first half of 2008, Chinese crude imports averaged 3.6 million barrels per day, which was 11 percent higher than for the same period in the prior year. Thirty-five percent of Chinese import volumes were sourced from long-haul suppliers in the Atlantic basin, further increasing tanker tonne-mile demand.
The trend of tanker sales for conversion to offshore units and dry bulk vessels increased during the quarter and continues to dampen tanker supply growth. Record-high scrap steel prices have also led to an increase in oil tankers being sold for demolition. Overall, the world tanker fleet grew by only 1.6 percent during the first half of 2008, the slowest rate since 2002. In addition, increased discrimination against single-hull tankers, a series of port strikes at Fos-Lavera in the Mediterranean, and Iran using VLCCs and Suezmax tankers for floating storage, contributed to higher tanker freight rates during the quarter by reducing the effective supply of vessels.
The following table highlights the operating performance of the Company’s spot tanker segment measured in net revenues per revenue day (before deducting commissions), or time-charter equivalent (TCE) rates, and includes the realized gains and losses from forward freight agreements (FFAs) and synthetic time charters, which are entered into as hedges against a portion of the Company’s exposure to spot market rates or for speculative purposes:
Three Months Ended | ||||||||||||
Spot Tanker Segment | June 30, 2008 | March 31, 2008 | June 30, 2007 | |||||||||
Suezmax Tanker Fleet | ||||||||||||
Spot revenue days | 432 | 553 | 197 | |||||||||
Average spot rate(1) | $ | 73,356 | $ | 45,672 | $ | 40,221 | ||||||
Time charter revenue days | 740 | 668 | 140 | |||||||||
Average time charter rate(2)(3) | $ | 30,609 | $ | 28,138 | $ | 18,108 | ||||||
Aframax Tanker Fleet | ||||||||||||
Spot revenue days | 3,635 | 3,708 | 2,729 | |||||||||
Average spot rate(1) | $ | 43,606 | $ | 36,253 | $ | 33,270 | ||||||
Time charter revenue days | 180 | 142 | 91 | |||||||||
Average time charter rate(2) | $ | 31,803 | $ | 31,759 | $ | 28,500 | ||||||
Large/Medium-Size Product Tanker Fleet | ||||||||||||
Spot revenue days | 1,156 | 1,062 | 876 | |||||||||
Average spot rate(1) | $ | 30,870 | $ | 27,585 | $ | 31,549 | ||||||
Time charter revenue days | 431 | 813 | 273 | |||||||||
Average time charter rate(2) | $ | 28,156 | $ | 22,794 | $ | 29,191 | ||||||
Small Product Tanker Fleet | ||||||||||||
Spot revenue days | 887 | 902 | 901 | |||||||||
Average spot rate(1) | $ | 13,750 | $ | 13,745 | $ | 15,466 | ||||||
(1) | Average spot rate includes short-term time-charters and fixed-rate contracts of affreightment less than 1 year, and realized gains and losses from FFAs less than 1 year. | |
(2) | Average time charter rate includes short-term time charters and fixed-rate contracts of affreightment with terms of between 1-3 years, and realized gains and losses from synthetic time charters and FFAs with terms of between 1-3 years. | |
(3) | Suezmax average time charter rate excludes the cost of in-chartering vessels on a spot basis for contract of affreightment cargoes. |
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Teekay Fleet
As at July 31, 2008, Teekay’s fleet consisted of 189 vessels, including chartered-in vessels and newbuildings on-order, but excluding vessels managed for third parties.
The following table summarizes the Teekay fleet as at July 31, 2008:
Number of Vessels(1) | ||||||||||||||||
Owned | Chartered-in | |||||||||||||||
Vessels | Vessels | Newbuildings | Total | |||||||||||||
Offshore Segment | ||||||||||||||||
Shuttle Tankers(2) | 28 | 9 | 4 | 41 | ||||||||||||
Floating Storage & Offtake (“FSO”) Units(3) | 5 | — | — | 5 | ||||||||||||
Floating Production Storage & Offloading (“FPSO”) Units | 5 | — | — | 5 | ||||||||||||
Total Offshore Segment | 38 | 9 | 4 | 51 | ||||||||||||
Fixed-Rate Tanker Segment | ||||||||||||||||
Conventional Tankers (4) | 19 | 6 | — | 25 | ||||||||||||
Total Fixed-Rate Tanker Segment | 19 | 6 | — | 25 | ||||||||||||
Liquefied Gas Segment | ||||||||||||||||
LNG Carriers (5) | 13 | — | 6 | 19 | ||||||||||||
LPG Carriers | 1 | — | 5 | 6 | ||||||||||||
Total Liquefied Gas Segment | 14 | — | 11 | 25 | ||||||||||||
Spot Tanker Segment | ||||||||||||||||
Suezmaxes(6) | 7 | 5 | 9 | 21 | ||||||||||||
Aframaxes(7) | 22 | 24 | — | 46 | ||||||||||||
Panamaxes | — | 1 | — | 1 | ||||||||||||
Large/Medium Product Tankers | 9 | 10 | 1 | 20 | ||||||||||||
Total Spot Tanker Segment | 38 | 40 | 10 | 88 | ||||||||||||
Total | 109 | 55 | 25 | 189 | ||||||||||||
(1) | Excludes vessels managed on behalf of third parties. | |
(2) | Includes six shuttle tankers in which the Company’s ownership interest is 50 percent. | |
(3) | Includes one unit in which the Company’s ownership interest is 89 percent. | |
(4) | Includes eight Suezmax tankers owned by Teekay LNG. | |
(5) | All of the existing LNG vessels are owned by Teekay LNG. Teekay LNG has agreed to acquire Teekay’s 70 percent interest in two of the LNG newbuildings upon delivery of the vessels. | |
(6) | Includes two Suezmax tankers owned by Teekay Tankers. | |
(7) | Includes nine Aframax tankers owned by Teekay Offshore and chartered to Teekay and nine Aframaxes owned by Teekay Tankers. |
During the second quarter of 2008, the Company sold and delivered one Handymax product tanker for net proceeds of $39.3 million and recognized a $0.2 million gain on the sale of this vessel. During the third quarter of 2008, the Company expects to deliver three vessels sold previously (one Handymax product tanker, one MR product tanker and one older Aframax tanker) for net proceeds of $152.0 million and a net gain of approximately $33.8 million from the sale of these vessels.
In July 2008, the Company sold its 50 percent interest in the Swift Product Tanker Pool, which included 10 of the Company's in-chartered intermediate product tankers, for gross proceeds of $49 million. The closing of the sale is subject to regulatory approvals.
For a detailed listing of recent vessel sales and deliveries, please refer to the Company’s Web site atwww.teekay.com.
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Capital Expenditures and Liquidity
As of June 30, 2008, the Company’s remaining capital commitments relating to its portion of newbuildings were as follows:
(in millions) | 2008 | 2009 | 2010 | 2011 | 2012 | Total | ||||||||||||||||||
Offshore Segment | — | $ | 23 | $ | 231 | $ | 163 | — | $ | 417 | ||||||||||||||
Fixed-Rate Tanker Segment | — | — | — | — | — | — | ||||||||||||||||||
Liquefied Gas Segment | 120 | 149 | 46 | 157 | 45 | 517 | ||||||||||||||||||
Spot Tanker Segment | 227 | 193 | — | — | — | 420 | ||||||||||||||||||
Total | $ | 347 | $ | 365 | $ | 277 | $ | 320 | $ | 45 | $ | 1,354 | ||||||||||||
Pre-arranged debt facilities are in place for $1.3 billion of these capital commitments. Additionally, as of June 30, 2008, the Company had total liquidity of $1.8 billion (excluding debt related to capital commitments), comprised of $499 million in cash and cash equivalents and $1.3 billion in undrawn credit facilities.
Restatement of Financial Statements for Accounting Under SFAS 133
The Company plans to restate financial results from 2003 through the end of the second quarter of 2008, including preliminary and previously announced results included in this earnings release, to adjust its accounting treatment for certain derivative transactions under SFAS 133.
The restatements will correct the Company’s accounting for certain of its interest rate swaps, foreign exchange forward contracts, and freight forward agreements used in its hedging strategies to manage interest rate, foreign currency, and tanker freight rate risks. To date, the Company has accounted for the applicable derivatives as hedging instruments in accordance with SFAS 133. The fair values of these derivatives were recorded as derivative assets and liabilities on the Company’s consolidated balance sheet, with the fair value changes each quarter recorded in accumulated other comprehensive income (loss). The Company recently discovered that since 2003 certain of its derivatives did not qualify for hedge accounting treatment under SFAS 133 because aspects of the Company’s hedge documentation did not meet the strict technical requirements of the standard. Accordingly, the Company will recognize changes in the fair value of these derivatives through the statement of income (loss) rather than as a component of accumulated other comprehensive income (loss) on the Company’s consolidated balance sheet and statement of changes in stockholders’ equity.
The Company believes that the applicable derivative transactions were consistent with its risk management policies and that its overall hedging strategy continues to be sound. The change to the accounting treatment for these transactions will not affect the economics of the derivative transactions nor the Company’s cash flows, liquidity, or total stockholders’ equity as at June 30, 2008. However, the restatements will result in greater fluctuations in reported net income for the restated periods and are expected to affect the preliminary financial results announced today for the three- and six-month periods ended June 30, 2008. The Company will finalize restatement amounts for the current period and applicable previous periods as soon as practicable and will release restated results and file amendments to its previous filings with the U.S. Securities and Exchange Commission as required. Accordingly, the Company’s previously reported financial statements for the periods from 2003 through the first quarter of 2008 should not be relied upon and the financial results included in this earnings release, which do not reflect the accounting adjustments described above, should be considered preliminary. Ernst & Young LLP, the Company’s independent registered public accounting firm, will complete its review of the financial statements as at June 30, 2008 and for the three-and six-month periods ended June 30, 2008 and 2007 following the completion of the restatements noted above.
The Company’s Audit Committee has discussed the matters related to the restatement with Ernst & Young LLP.
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About Teekay
Teekay Corporation transports more than 10 percent of the world’s seaborne oil, has built a significant presence in the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P. (NYSE: TGP), is further growing its operations in the offshore oil production, storage and transportation sector through its publicly-listed subsidiary, Teekay Offshore Partners L.P. (NYSE: TOO), and continues to expand its conventional tanker business through its publicly-listed subsidiary, Teekay Tankers Ltd. (NYSE: TNK). With a fleet of approximately 189 vessels, offices in 22 countries and 6,400 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay’s reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.
Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.
Earnings Conference Call
The Company plans to host a conference call on Thursday, August 7, 2008 at 11:00 a.m. (ET) to discuss the results for the quarter. All shareholders and interested parties are invited to listen to the live conference call and view the Company’s earnings presentation through the Company’s Web site atwww.teekay.com. The Company plans to make available a recording of the conference call until midnight August 14, 2008, by dialing (888) 203-1112 or (647) 436-0148, access code 7394678, or via the Company’s Web site until September 6, 2008.
For Investor Relations enquiries contact:
Kent Alekson
Tel: +1 (604) 844-6654
Kent Alekson
Tel: +1 (604) 844-6654
For Media enquiries contact:
Alana Duffy
Tel: +1 (604) 844-6605
Alana Duffy
Tel: +1 (604) 844-6605
Web site:www.teekay.com
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TEEKAY CORPORATION
PRELIMINARY SUMMARY CONSOLIDATED STATEMENTS OF INCOME(1)
(in thousands of U.S. dollars, except share and per share data)
PRELIMINARY SUMMARY CONSOLIDATED STATEMENTS OF INCOME(1)
(in thousands of U.S. dollars, except share and per share data)
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
REVENUES | 790,530 | 736,391 | 566,127 | 1,526,921 | 1,144,522 | |||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Voyage expenses | 190,859 | 168,723 | 123,554 | 359,582 | 242,493 | |||||||||||||||
Vessel operating expenses(2) | 158,948 | 145,443 | 108,851 | 304,391 | 206,292 | |||||||||||||||
Time-charter hire expense | 142,702 | 144,921 | 101,247 | 287,623 | 199,748 | |||||||||||||||
Depreciation and amortization | 106,700 | 97,707 | 68,095 | 204,407 | 147,358 | |||||||||||||||
General and administrative(2) | 69,899 | 67,671 | 58,358 | 137,570 | 117,155 | |||||||||||||||
Gain on sale of vessels and equipment | (2,925 | ) | (496 | ) | (11,613 | ) | (3,421 | ) | (11,613 | ) | ||||||||||
Restructuring charge | 4,617 | 1,500 | — | 6,117 | — | |||||||||||||||
670,800 | 625,469 | 448,492 | 1,296,269 | 901,433 | ||||||||||||||||
Income from vessel operations | 119,730 | 110,922 | 117,635 | 230,652 | 243,089 | |||||||||||||||
OTHER ITEMS | ||||||||||||||||||||
Interest expense(3) | (25,398 | ) | (87,188 | ) | (64,158 | ) | (112,586 | ) | (124,541 | ) | ||||||||||
Interest income | 16,703 | 18,359 | 23,390 | 35,062 | 39,558 | |||||||||||||||
Income tax recovery (expense) | 10,160 | (2,726 | ) | (287 | ) | 7,434 | 3,795 | |||||||||||||
Equity loss from joint ventures | (2,063 | ) | (3,609 | ) | (2,092 | ) | (5,672 | ) | (3,687 | ) | ||||||||||
Foreign exchange gain (loss) | 958 | (29,483 | ) | 1,214 | (28,525 | ) | (4,674 | ) | ||||||||||||
Minority interest (expense) income | (20,951 | ) | 3,472 | (6,341 | ) | (17,479 | ) | (11,981 | ) | |||||||||||
Other — net | 5,328 | 5,431 | 9,050 | 10,759 | 13,227 | |||||||||||||||
(15,263 | ) | (95,744 | ) | (39,224 | ) | (111,007 | ) | (88,303 | ) | |||||||||||
Net income | 104,467 | 15,178 | 78,411 | 119,645 | 154,786 | |||||||||||||||
Earnings per common share | ||||||||||||||||||||
— Basic | $ | 1.44 | $ | 0.21 | $ | 1.06 | $ | 1.65 | $ | 2.11 | ||||||||||
— Diluted | $ | 1.43 | $ | 0.21 | $ | 1.04 | $ | 1.63 | $ | 2.07 | ||||||||||
Weighted-average number of common shares outstanding | ||||||||||||||||||||
— Basic | 72,377,684 | 72,644,397 | 73,843,784 | 72,511,041 | 73,488,668 | |||||||||||||||
— Diluted | 73,279,213 | 73,435,167 | 75,310,567 | 73,357,190 | 74,929,991 | |||||||||||||||
(1) | The Company plans to restate financial results included in this financial statement to adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed above under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | The Company has entered into foreign exchange forward contracts, which are economic hedges of vessel operating expenses and general and administrative expenses; however, certain of these forward contracts have not been designated as cash flow hedges pursuant to GAAP. As a result, gains and losses from these undesignated contracts are reflected in foreign exchange gain (loss) in the above Statements of Income. During the three months ended June 30, 2008 and March 31, 2008, the Company recorded approximately $3.7 million and $4.7 million of gains, respectively, relating to these undesignated forward contracts, which effectively reduced the Company’s vessel operating expenses and general and administrative expenses. | |
(3) | The three months ended June 30, 2008 includes $48.1 million of unrealized gains from interest rate swaps. |
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TEEKAY CORPORATION
PRELIMINARY SUMMARY CONSOLIDATED BALANCE SHEETS(1)
(in thousands of U.S. dollars)
PRELIMINARY SUMMARY CONSOLIDATED BALANCE SHEETS(1)
(in thousands of U.S. dollars)
As at June 30, | As at December 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | (unaudited) | |||||||
ASSETS | ||||||||
Cash and cash equivalents | 498,933 | 442,673 | ||||||
Other current assets | 538,833 | 461,546 | ||||||
Restricted cash — current | 53,067 | 33,479 | ||||||
Vessels held for sale | 18,203 | 79,689 | ||||||
Restricted cash — long-term | 661,758 | 652,717 | ||||||
Vessels and equipment | 6,664,153 | 6,229,809 | ||||||
Advances on newbuilding contracts | 693,292 | 617,066 | ||||||
Other assets | 893,160 | 848,632 | ||||||
Intangible assets | 256,070 | 259,952 | ||||||
Goodwill | 491,911 | 434,590 | ||||||
Total Assets | 10,769,380 | 10,060,153 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable and accrued liabilities | 438,867 | 364,635 | ||||||
Current portion of long-term debt | 426,189 | 474,873 | ||||||
Long-term debt | 5,708,236 | 5,285,397 | ||||||
Other long-term liabilities / In process revenue contracts | 792,472 | 719,884 | ||||||
Minority interest | 588,916 | 527,494 | ||||||
Stockholders’ equity | 2,814,700 | 2,687,870 | ||||||
Total Liabilities and Stockholders’ Equity | 10,769,380 | 10,060,153 | ||||||
(1) | The Company plans to restate financial results included in this financial statement to adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed above under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. |
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TEEKAY CORPORATION
PRELIMINARY SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS(1)
(in thousands of U.S. dollars)
PRELIMINARY SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS(1)
(in thousands of U.S. dollars)
Six Months Ended | ||||||||
June 30, | ||||||||
2008 | 2007 | |||||||
(unaudited) | (unaudited) | |||||||
Cash and cash equivalents provided by (used for) | ||||||||
OPERATING ACTIVITIES | ||||||||
Net operating cash flow | 164,420 | 152,702 | ||||||
FINANCING ACTIVITIES | ||||||||
Net proceeds from long-term debt | 1,155,095 | 1,783,863 | ||||||
Scheduled repayments of long-term debt | (198,320 | ) | (31,816 | ) | ||||
Prepayments of long-term debt | (645,321 | ) | (710,506 | ) | ||||
Increase in restricted cash | (11,503 | ) | (79,230 | ) | ||||
Repurchase of common stock | (20,512 | ) | (3,035 | ) | ||||
Net proceeds from the public offering of Teekay LNG | 148,345 | 84,186 | ||||||
Net proceeds from the public offering of Teekay Offshore | 134,265 | — | ||||||
Other | (36,188 | ) | 10,879 | |||||
Net financing cash flow | 525,861 | 1,054,341 | ||||||
INVESTING ACTIVITIES | ||||||||
Expenditures for vessels and equipment | (410,495 | ) | (356,104 | ) | ||||
Proceeds from sale of vessels and equipment | 79,224 | 118,975 | ||||||
Purchase of marketable securities | (542 | ) | (28,636 | ) | ||||
Proceeds from sale of marketable securities | 11,058 | 49,059 | ||||||
Purchase of Teekay Petrojarl ASA | (257,142 | ) | — | |||||
Purchase of 50 percent of OMI Corporation | — | (896,841 | ) | |||||
Loan to joint ventures | (87,198 | ) | (144,270 | ) | ||||
Other | 31,074 | (808 | ) | |||||
Net investing cash flow | 643,021 | (1,258,625 | ) | |||||
Increase (decrease) in cash and cash equivalents | 56,260 | (51,582 | ) | |||||
Cash and cash equivalents, beginning of the period | 442,673 | 343,914 | ||||||
Cash and cash equivalents, end of the period | 498,933 | 292,332 | ||||||
(1) | The Company plans to restate financial results included in this financial statement to adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed above under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. |
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TEEKAY CORPORATION
APPENDIX A — PRELIMINARY SPECIFIC ITEMS AFFECTING NET INCOME(1)
(in thousands of U.S. dollars, except per share data)
APPENDIX A — PRELIMINARY SPECIFIC ITEMS AFFECTING NET INCOME(1)
(in thousands of U.S. dollars, except per share data)
Set forth below are some of the significant items of income and expense that affected the Company’s net income for the three months ended June 30, 2008 and 2007, all of which items are typically excluded by securities analysts in their published estimates of the Company’s financial results:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2008 | June 30, 2008 | |||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
$ Per | $ Per | |||||||||||||||
$ | Share | $ | Share | |||||||||||||
Gain on sale of vessels and equipment | 2,925 | 0.04 | 3,421 | 0.05 | ||||||||||||
Foreign currency exchange losses(2) | (2,764 | ) | (0.04 | ) | (36,987 | ) | (0.50 | ) | ||||||||
Deferred income tax expense on unrealized foreign exchange gains(3) | (284 | ) | — | (8,680 | ) | (0.12 | ) | |||||||||
Unrealized gains from interest rate swaps | 48,092 | 0.66 | 36,637 | 0.50 | ||||||||||||
Net effect from non-cash changes in purchase price allocation for the acquisition of Teekay Petrojarl ASA(4) | (6,398 | ) | (0.09 | ) | (6,398 | ) | (0.09 | ) | ||||||||
Net effect from non-cash changes in purchase price allocation for the acquisition of 50 percent of OMI Corporation(5) | (3,084 | ) | (0.04 | ) | (7,028 | ) | (0.10 | ) | ||||||||
Restructuring charge(6) | (4,617 | ) | (0.06 | ) | (4,617 | ) | (0.06 | ) | ||||||||
Other(7) | (712 | ) | (0.01 | ) | (4,810 | ) | (0.07 | ) | ||||||||
Minority owners’ share of items above(8) | (5,768 | ) | (0.08 | ) | 10,285 | 0.14 | ||||||||||
Total | 27,390 | 0.38 | (18,177 | ) | (0.25 | ) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2007 | June 30, 2007 | |||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
$ Per | $ Per | |||||||||||||||
$ | Share | $ | Share | |||||||||||||
Gain on sale of vessels | 11,613 | 0.16 | 11,613 | 0.16 | ||||||||||||
Gain on sale of marketable securities | 4,836 | 0.06 | 4,836 | 0.06 | ||||||||||||
Foreign currency exchange gains (losses)(2) | 1,214 | 0.02 | (4,674 | ) | (0.06 | ) | ||||||||||
Deferred income tax expense on unrealized foreign exchange gains(3) | (4,382 | ) | (0.06 | ) | (7,713 | ) | (0.10 | ) | ||||||||
Net effect from non-cash changes in purchase price allocation for acquisition of Teekay Petrojarl ASA(4) | (4,240 | ) | (0.06 | ) | (4,240 | ) | (0.06 | ) | ||||||||
Minority owners’ share of items above(8) | 1,711 | 0.02 | 3,561 | 0.05 | ||||||||||||
Total | 10,752 | 0.14 | 3,383 | 0.05 | ||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Ato adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Ais attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Foreign currency exchange gains and losses primarily relate to the Company’s debt denominated in Euros and deferred tax liability denominated in Norwegian Kroner. Nearly all of the Company’s foreign currency exchange gains and losses are unrealized and have been included in the amounts in the above table except for $3.7 million and $8.4 million of gains in the three- and six-month periods ended June 30, 2008, respectively, from foreign exchange forward contracts relating to vessel operating expenses and general and administrative expenses not designated as hedges. | |
(3) | Portion of deferred income tax related to unrealized foreign exchange gains and losses. | |
(4) | Primarily relates to changes in amortization of in-process revenue contracts as a result of adjustments to the purchase price allocation of Teekay Petrojarl ASA. | |
(5) | Primarily relates to changes in amortization of intangible assets as a result of adjustments to the purchase price allocation of OMI Corporation. | |
(6) | Restructuring charges relate to the reorganization of certain of the Company’s operational functions. | |
(7) | Primarily relates to a change in a non-cash deferred tax balance related to 2006, settlement of a previous claim against OMI Corporation, and loss on bond repurchases (8.875% Notes due 2011). | |
(8) | Primarily relates to minority owners’ share of foreign currency exchange gains (losses) and unrealized gains from interest rate swaps. |
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TEEKAY CORPORATION
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY BALANCE SHEET AS AT JUNE 30, 2008
(in thousands of U.S. dollars)
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY BALANCE SHEET AS AT JUNE 30, 2008
(in thousands of U.S. dollars)
(unaudited)
Teekay | ||||||||||||||||||||||||||||
Teekay | Teekay | Teekay | Teekay | Corp. | Consolidation | |||||||||||||||||||||||
Offshore | LNG | Tankers | Petrojarl | Standalone | Adjustments | Total | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Cash and cash equivalents | 113,021 | 78,811 | 19,706 | 44,155 | 243,240 | — | 498,933 | |||||||||||||||||||||
Other current assets | 112,456 | 17,385 | 25,655 | 73,217 | 328,323 | — | 557,036 | |||||||||||||||||||||
Restricted cash (current & non-current) | — | 695,128 | — | 2,745 | 16,952 | — | 714,825 | |||||||||||||||||||||
Other assets(2) | 70,906 | 402,222 | 994 | (13,055 | ) | 432,093 | — | 893,160 | ||||||||||||||||||||
Vessels and equipment | 1,751,281 | 1,810,796 | 441,135 | 1,413,694 | 1,247,247 | — | 6,664,153 | |||||||||||||||||||||
Advances on vessels | — | 322,897 | — | — | 370,395 | — | 693,292 | |||||||||||||||||||||
Equity investment in subsidiaries | — | — | — | — | 1,715,893 | (1,715,893 | ) | — | ||||||||||||||||||||
Intangibles and goodwill | 177,436 | 185,650 | — | 273,859 | 111,036 | — | 747,981 | |||||||||||||||||||||
TOTAL ASSETS | 2,225,100 | 3,512,889 | 487,490 | 1,794,615 | 4,465,179 | (1,715,893 | ) | 10,769,380 | ||||||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | 73,973 | 64,136 | 11,899 | 78,503 | 210,356 | — | 438,867 | |||||||||||||||||||||
Current portion of debt and leases | 96,988 | 253,835 | 3,600 | 47,100 | 24,666 | — | 426,189 | |||||||||||||||||||||
Long-term debt and capital leases | 1,521,519 | 2,247,031 | 317,028 | 398,900 | 1,223,758 | — | 5,708,236 | |||||||||||||||||||||
Other long-term liabilities / in process revenue contracts | 111,168 | 66,915 | 6,792 | 420,114 | 187,483 | — | 792,472 | |||||||||||||||||||||
Minority interest(3) | 29,148 | 20,288 | — | 534 | 4,215 | 534,730 | 588,915 | |||||||||||||||||||||
Equity | 392,304 | 860,684 | 148,171 | 849,464 | 2,814,701 | (2,250,623 | ) | 2,814,701 | ||||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | 2,225,100 | 3,512,889 | 487,490 | 1,794,615 | 4,465,179 | (1,715,893 | ) | 10,769,380 | ||||||||||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Bto adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Bis attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Other assets includes equity investments in joint ventures. | |
(3) | Minority interest in the Teekay Offshore, Teekay LNG, Teekay Tankers and Teekay Petrojarl columns represent the joint venture partners’ share of the joint venture net assets. Minority interest in the Consolidation Adjustments column represents the public’s share of the net assets of Teekay’s publicly-traded subsidiaries. |
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TEEKAY CORPORATION
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2008
(in thousands of U.S. dollars)
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2008
(in thousands of U.S. dollars)
(unaudited)
Teekay | ||||||||||||||||||||||||||||
Teekay | Teekay | Teekay | Teekay | Corp. | Consolidation | |||||||||||||||||||||||
Offshore | LNG | Tankers | Petrojarl | Standalone | Adjustments | Total | ||||||||||||||||||||||
Voyage revenues | 222,282 | 71,592 | 35,745 | 92,104 | 435,815 | (67,008 | ) | 790,530 | ||||||||||||||||||||
Voyage expenses | 59,811 | 649 | 618 | — | 129,781 | — | 190,859 | |||||||||||||||||||||
Vessel operating expense | 45,970 | 20,792 | 7,669 | 55,017 | 29,500 | — | 158,948 | |||||||||||||||||||||
Time charter hire expense | 32,262 | — | — | 6,718 | 170,730 | (67,008 | ) | 142,702 | ||||||||||||||||||||
Depreciation and amortization | 35,747 | 18,872 | 5,429 | 22,565 | 24,087 | — | 106,700 | |||||||||||||||||||||
General and administrative | 15,869 | 5,745 | 1,670 | 11,431 | 35,184 | — | 69,899 | |||||||||||||||||||||
Gain on disposal of vessels and equipment | — | — | — | — | (2,925 | ) | — | (2,925 | ) | |||||||||||||||||||
Restructuring charge | — | — | — | — | 4,617 | — | 4,617 | |||||||||||||||||||||
Total operating expenses | 189,659 | 46,058 | 15,386 | 95,731 | 390,974 | (67,008 | ) | 670,800 | ||||||||||||||||||||
Income from vessel operations | 32,623 | 25,534 | 20,359 | (3,627 | ) | 44,841 | — | 119,730 | ||||||||||||||||||||
Net interest expense | 18,911 | (16,774 | ) | 1,655 | (6,774 | ) | (5,713 | ) | — | (8,695 | ) | |||||||||||||||||
Income tax recovery (expense) | 5,942 | 551 | — | — | 3,667 | — | 10,160 | |||||||||||||||||||||
Equity income (loss) | — | (1,627 | ) | — | — | (436 | ) | — | (2,063 | ) | ||||||||||||||||||
Equity in earnings of subsidiaries(2) | — | — | — | — | 57,976 | (57,976 | ) | — | ||||||||||||||||||||
Foreign exchange gain (loss) | (532 | ) | (29 | ) | (8 | ) | (248 | ) | 1,775 | — | 958 | |||||||||||||||||
Minority interest income (expense)(3) | (486 | ) | (1,114 | ) | — | 180 | (348 | ) | (19,183 | ) | (20,951 | ) | ||||||||||||||||
Other (net) | 2,315 | 1,093 | — | (784 | ) | 2,704 | 5,328 | |||||||||||||||||||||
Total other income | 26,150 | (17,900 | ) | 1,647 | (7,626 | ) | 59,625 | (77,159 | ) | (15,263 | ) | |||||||||||||||||
NET INCOME (LOSS) | 58,773 | 7,634 | 22,006 | (11,253 | ) | 104,466 | (77,159 | ) | 104,467 | |||||||||||||||||||
CASH FLOW FROM VESSEL OPERATIONS(4) | 68,370 | 44,406 | 25,788 | 7,024 | 76,102 | — | 221,690 | |||||||||||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Bto adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Bis attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries. | |
(3) | Minority interest income (expense) in the Teekay Offshore, Teekay LNG, Teekay Tankers and Teekay Petrojarl columns represent the joint venture partners’ share of the net income (loss) of the respective joint ventures. Minority interest income (expense) in the Consolidation Adjustments column represents the public’s share of the net income (loss) of Teekay’s publicly-traded subsidiaries. | |
(4) | Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel write-downs/(gain) loss on sale of vessels and unrealized gains or losses relating to derivatives. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site at www.teekay.com for a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable GAAP financial measure. |
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TEEKAY CORPORATION
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2008
(in thousands of U.S. dollars)
APPENDIX B — PRELIMINARY SUPPLEMENTAL FINANCIAL INFORMATION(1)
SUMMARY STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2008
(in thousands of U.S. dollars)
(unaudited)
Teekay | ||||||||||||||||||||||||||||
Teekay | Teekay | Teekay | Teekay | Corp. | Consolidation | |||||||||||||||||||||||
Offshore | LNG | Tankers | Petrojarl | Standalone | Adjustments | Total | ||||||||||||||||||||||
Voyage revenues | 426,068 | 137,614 | 62,416 | 185,953 | 836,471 | (121,601 | ) | 1,526,921 | ||||||||||||||||||||
Voyage expenses | 111,188 | 944 | 714 | — | 246,736 | — | 359,582 | |||||||||||||||||||||
Vessel operating expense | 87,456 | 36,192 | 13,249 | 101,679 | 65,815 | — | 304,391 | |||||||||||||||||||||
Time charter hire expense | 65,908 | — | — | 13,712 | 329,604 | (121,601 | ) | 287,623 | ||||||||||||||||||||
Depreciation and amortization | 68,293 | 34,944 | 8,918 | 40,568 | 51,684 | — | 204,407 | |||||||||||||||||||||
General and administrative | 31,463 | 9,705 | 2,991 | 25,108 | 68,303 | — | 137,570 | |||||||||||||||||||||
Gain on disposal of vessels and equipment | — | — | — | — | (3,421 | ) | — | (3,421 | ) | |||||||||||||||||||
Restructuring charge | — | — | — | — | 6,117 | — | 6,117 | |||||||||||||||||||||
Total operating expenses | 364,308 | 81,785 | 25,872 | 181,067 | 764,838 | (121,601 | ) | 1,296,269 | ||||||||||||||||||||
Income from vessel operations | 61,760 | 55,829 | 36,544 | 4,886 | 71,633 | — | 230,652 | |||||||||||||||||||||
Net interest expense | (3,806 | ) | (37,885 | ) | (487 | ) | (10,796 | ) | (24,550 | ) | — | (77,524 | ) | |||||||||||||||
Income tax recovery (expense) | 5,745 | 228 | — | — | 1,461 | — | 7,434 | |||||||||||||||||||||
Equity income (loss) | — | (1,691 | ) | — | — | (3,981 | ) | — | (5,672 | ) | ||||||||||||||||||
Equity in earnings of subsidiaries(2) | — | — | — | — | 54,780 | (54,780 | ) | — | ||||||||||||||||||||
Foreign exchange gain (loss) | (3,870 | ) | (33,920 | ) | (13 | ) | (5,970 | ) | 15,248 | — | (28,525 | ) | ||||||||||||||||
Minority interest income (expense)(3) | (1,119 | ) | (1,019 | ) | — | 180 | (704 | ) | (14,817 | ) | (17,479 | ) | ||||||||||||||||
Other (net) | 4,940 | 1,092 | — | (1,031 | ) | 5,758 | 10,759 | |||||||||||||||||||||
Total other income | 1,890 | (73,195 | ) | (500 | ) | (17,617 | ) | 48,012 | (69,597 | ) | (111,007 | ) | ||||||||||||||||
NET INCOME (LOSS) | 63,650 | (17,366 | ) | 36,044 | (12,731 | ) | 119,645 | (69,597 | ) | 119,645 | ||||||||||||||||||
CASH FLOW FROM VESSEL OPERATIONS(4) | 130,053 | 90,773 | 45,462 | 15,228 | 124,956 | — | 406,472 | |||||||||||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Bto adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Bis attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries. | |
(3) | Minority interest income (expense) in the Teekay Offshore, Teekay LNG, Teekay Tankers and Teekay Petrojarl columns represent the joint venture partners’ share of the net income (loss) of the respective joint ventures. Minority interest income (expense) in the Consolidation Adjustments column represents the public’s share of the net income (loss) of Teekay’s publicly-traded subsidiaries. | |
(4) | Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel write-downs/(gain) loss on sale of vessels and unrealized gains or losses relating to derivatives. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site at www.teekay.com for a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable GAAP financial measure. |
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TEEKAY CORPORATION
APPENDIX C — PRELIMINARY SUPPLEMENTAL SEGMENT INFORMATION(1)
(in thousands of U.S. dollars)
APPENDIX C — PRELIMINARY SUPPLEMENTAL SEGMENT INFORMATION(1)
(in thousands of U.S. dollars)
Three Months Ended June 30, 2008 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues(2) | 227,937 | 65,270 | 53,044 | 253,420 | 599,671 | |||||||||||||||
Vessel operating expenses | 101,055 | 16,387 | 13,125 | 28,381 | 158,948 | |||||||||||||||
Time-charter hire expense | 32,262 | 11,445 | — | 98,995 | 142,702 | |||||||||||||||
Depreciation and amortization | 53,772 | 11,289 | 14,209 | 27,430 | 106,700 | |||||||||||||||
General and administrative | 26,266 | 7,237 | 5,914 | 30,482 | 69,899 | |||||||||||||||
Gain on sale of vessels and equipment | (3,150 | ) | — | — | 225 | (2,925 | ) | |||||||||||||
Restructuring charge | 3,327 | 58 | 221 | 1,011 | 4,617 | |||||||||||||||
Income from vessel operations | 14,405 | 18,854 | 19,575 | 66,896 | 119,730 | |||||||||||||||
Three Months Ended March 31, 2008 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues(2) | 219,887 | 60,135 | 55,982 | 231,664 | 567,668 | |||||||||||||||
Vessel operating expenses | 86,353 | 16,370 | 11,623 | 31,097 | 145,443 | |||||||||||||||
Time-charter hire expense | 35,475 | 11,720 | — | 97,726 | 144,921 | |||||||||||||||
Depreciation and amortization | 46,074 | 9,673 | 14,195 | 27,765 | 97,707 | |||||||||||||||
General and administrative | 27,682 | 5,667 | 5,611 | 28,711 | 67,671 | |||||||||||||||
Gain on sale of vessels and equipment | — | — | — | (496 | ) | (496 | ) | |||||||||||||
Restructuring charge | — | 1,500 | — | — | 1,500 | |||||||||||||||
Income from vessel operations | 24,303 | 15,205 | 24,553 | 46,861 | 110,922 | |||||||||||||||
Three Months Ended June 30, 2007 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues(2) | 210,169 | 45,195 | 38,488 | 148,721 | 442,573 | |||||||||||||||
Vessel operating expenses | 74,427 | 11,822 | 7,881 | 14,721 | 108,851 | |||||||||||||||
Time-charter hire expense | 39,549 | 3,981 | — | 57,717 | 101,247 | |||||||||||||||
Depreciation and amortization | 35,627 | 8,260 | 11,571 | 12,637 | 68,095 | |||||||||||||||
General and administrative | 24,627 | 4,522 | 5,489 | 23,720 | 58,358 | |||||||||||||||
Gain on sale of vessels and equipment | (11,613 | ) | — | — | — | (11,613 | ) | |||||||||||||
Income from vessel operations | 47,552 | 16,610 | 13,547 | 39,926 | 117,635 | |||||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Cto adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Cis attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. |
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TEEKAY CORPORATION
APPENDIX C — PRELIMINARY SUPPLEMENTAL SEGMENT INFORMATION(1)
(in thousands of U.S. dollars)
APPENDIX C — PRELIMINARY SUPPLEMENTAL SEGMENT INFORMATION(1)
(in thousands of U.S. dollars)
Six Months Ended June 30, 2008 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues(2) | 447,824 | 125,405 | 109,026 | 485,084 1 | ,167,339 | |||||||||||||||
Vessel operating expenses | 187,408 | 32,757 | 24,748 | 59,478 | 304,391 | |||||||||||||||
Time-charter hire expense | 67,737 | 23,165 | — | 196,721 | 287,623 | |||||||||||||||
Depreciation and amortization | 99,846 | 20,962 | 28,404 | 55,195 | 204,407 | |||||||||||||||
General and administrative | 53,948 | 12,904 | 11,525 | 59,193 | 137,570 | |||||||||||||||
Gain on sale of vessels and equipment | (3,150 | ) | — | — | (271 | ) | (3,421 | ) | ||||||||||||
Restructuring charge | 3,327 | 1,558 | 221 | 1,011 | 6,117 | |||||||||||||||
Income from vessel operations | 38,708 | 34,059 | 44,128 | 113,757 | 230,652 | |||||||||||||||
Six Months Ended June 30, 2007 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Fixed-Rate | Liquefied | Spot | ||||||||||||||||||
Offshore | Tanker | Gas | Tanker | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues(2) | 430,318 | 89,224 | 75,960 | 306,527 9 | 02,029 | |||||||||||||||
Vessel operating expenses | 137,141 | 23,512 | 14,339 | 31,300 | 206,292 | |||||||||||||||
Time-charter hire expense | 80,866 | 7,818 | — | 111,064 | 199,748 | |||||||||||||||
Depreciation and amortization | 81,349 | 16,728 | 22,365 | 26,916 | 147,358 | |||||||||||||||
General and administrative | 50,133 | 8,998 | 10,688 | 47,336 | 117,155 | |||||||||||||||
Gain on sale of vessels and equipment | (11,613 | ) | — | — | — | (11,613 | ) | |||||||||||||
Income from vessel operations | 92,442 | 32,168 | 28,568 | 89,911 | 243,089 | |||||||||||||||
(1) | The Company plans to restate financial results included in thisAppendix Cto adjust its accounting treatment for certain derivative transactions under SFAS 133, as more fully discussed in the earnings release to which thisAppendix Cis attached under “-Restatement of Financial Statements for Accounting Under SFAS 133.” Results exclude accounting corrections related to SFAS 133. | |
(2) | Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. |
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FORWARD LOOKING STATEMENTS
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements regarding: the Company’s future growth prospects; tanker market fundamentals, including the balance of supply and demand in the tanker market, and spot tanker charter rates; the Company’s future capital expenditure commitments and the financing requirements for such commitments; the timing of newbuilding deliveries; the commencement of charter contracts; and the timing of the Company’s determination of restated results for prior periods and the effect of restatements on prior period results. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs and FPSOs; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts; changes affecting the offshore tanker market; shipyard production delays; the Company’s future capital expenditure requirements; the Company’s, Teekay LNG’s, Teekay Offshore’s, and Teekay Tankers’ potential inability to raise financing to purchase additional vessels; conditions in the United States capital markets; changes affecting the conventional tanker market; the determination of the Company’s restatement of prior period results; and other factors discussed in Teekay’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2007. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
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