Table of Contents
SECURITIES AND EXCHANGE COMMISSION
the Securities Exchange Act of 1934
69 Pitts Bay Road
Hamilton, HM 08 Bermuda
(Address of principal executive office)
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
REVENUES | 544,947 | 532,473 | 1,109,484 | 1,149,024 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Voyage expenses | 66,367 | 62,925 | 138,917 | 153,594 | ||||||||||||
Vessel operating expenses(note 16) | 150,792 | 144,004 | 305,327 | 296,764 | ||||||||||||
Time-charter hire expense | 68,106 | 116,451 | 139,019 | 253,279 | ||||||||||||
Depreciation and amortization | 111,234 | 108,192 | 219,464 | 214,745 | ||||||||||||
General and administrative(note 16) | 50,256 | 49,220 | 98,347 | 96,928 | ||||||||||||
Loss (gain) on sale of vessels and equipment — net of write-downs (note 13) | 22 | (11,083 | ) | 782 | (10,125 | ) | ||||||||||
Restructuring charge (note 3) | 4,195 | 5,003 | 7,978 | 10,561 | ||||||||||||
Total operating expenses | 450,972 | 474,712 | 909,834 | 1,015,746 | ||||||||||||
Income from vessel operations | 93,975 | 57,761 | 199,650 | 133,278 | ||||||||||||
OTHER ITEMS | ||||||||||||||||
Interest expense | (33,926 | ) | (37,280 | ) | (66,078 | ) | (81,470 | ) | ||||||||
Interest income | 2,209 | 5,023 | 6,483 | 11,701 | ||||||||||||
Realized and unrealized (loss) gain on non-designated derivative instruments(note 16) | (219,225 | ) | 157,485 | (307,072 | ) | 204,730 | ||||||||||
Equity (loss) income from joint ventures(note 11b) | (21,827 | ) | 27,380 | (24,493 | ) | 38,802 | ||||||||||
Foreign exchange gain (loss) (notes 8 and 16) | 27,488 | (25,165 | ) | 56,514 | (13,853 | ) | ||||||||||
Loss on bond repurchase(note 8) | (537 | ) | — | (12,645 | ) | — | ||||||||||
Other income (note 14) | 1,277 | 3,823 | 3,699 | 6,481 | ||||||||||||
Net (loss) income before income taxes | (150,566 | ) | 189,027 | (143,942 | ) | 299,669 | ||||||||||
Income tax recovery (expense)(note 18) | 5,147 | 4,598 | 12,454 | (1,270 | ) | |||||||||||
Net (loss) income | (145,419 | ) | 193,625 | (131,488 | ) | 298,399 | ||||||||||
Less: Net income attributable to non-controlling interests | (7,729 | ) | (34,266 | ) | (35,662 | ) | (57,535 | ) | ||||||||
Net (loss) income attributable to stockholders of Teekay Corporation | (153,148 | ) | 159,359 | (167,150 | ) | 240,864 | ||||||||||
Per common share of Teekay Corporation(note 17) | ||||||||||||||||
• Basic (loss) earnings attributable to stockholders of Teekay Corporation | (2.10 | ) | 2.20 | (2.29 | ) | 3.32 | ||||||||||
• Diluted (loss) earnings attributable to stockholders of Teekay Corporation | (2.10 | ) | 2.19 | (2.29 | ) | 3.30 | ||||||||||
• Cash dividends declared | 0.3163 | 0.3163 | 0.6325 | 0.6325 | ||||||||||||
Weighted average number of common shares outstanding(note 17) | ||||||||||||||||
• Basic | 72,961,471 | 72,535,899 | 72,875,508 | 72,526,101 | ||||||||||||
• Diluted | 72,961,471 | 72,798,023 | 72,875,508 | 72,887,474 |
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As at | As at | |||||||
June 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
ASSETS | ||||||||
Current | ||||||||
Cash and cash equivalents(note 8) | 641,467 | 422,510 | ||||||
Restricted cash(note 9) | 33,601 | 36,068 | ||||||
Accounts receivable, including non-trade of $21,744 (2009 — $19,521) | 247,844 | 234,676 | ||||||
Vessels held for sale (note 13) | — | 10,250 | ||||||
Net investment in direct financing leases(note 4) | 27,313 | 27,210 | ||||||
Prepaid expenses | 96,556 | 96,549 | ||||||
Current portion of derivative assets(note 16) | 18,139 | 29,996 | ||||||
Advances to joint venture partner | 6,900 | — | ||||||
Other assets | 8,509 | 7,119 | ||||||
Total current assets | 1,080,329 | 864,378 | ||||||
Restricted cash — non-current(note 9) | 564,265 | 579,243 | ||||||
Vessels and equipment(note 8) | ||||||||
At cost, less accumulated depreciation of $1,836,848 (2009 — $1,673,380) | 5,655,150 | 5,793,864 | ||||||
Vessels under capital leases, at cost, less accumulated amortization of $155,186 (2009 — $138,569)(note 9) | 891,748 | 903,521 | ||||||
Advances on newbuilding contracts(notes 11a and 11b) | 215,407 | 138,212 | ||||||
Total vessels and equipment | 6,762,305 | 6,835,597 | ||||||
Net investment in direct financing leases — non-current(note 4) | 475,479 | 485,202 | ||||||
Marketable securities | 13,831 | 18,904 | ||||||
Loans to joint ventures, bearing interest between 4.4% to 6.5% | 19,022 | 21,998 | ||||||
Derivative assets(note 16) | 75,762 | 18,119 | ||||||
Deferred income tax asset (note 18) | 16,529 | 6,516 | ||||||
Investment in joint ventures(note 11b) | 126,623 | 139,790 | ||||||
Other non-current assets | 123,734 | 130,624 | ||||||
Intangible assets — net(note 6) | 200,181 | 213,870 | ||||||
Goodwill | 203,191 | 203,191 | ||||||
Total assets | 9,661,251 | 9,517,432 | ||||||
LIABILITIES AND EQUITY | ||||||||
Current | ||||||||
Accounts payable | 47,776 | 57,242 | ||||||
Accrued liabilities(note 16) | 285,503 | 280,947 | ||||||
Current portion of derivative liabilities(note 16) | 147,089 | 136,454 | ||||||
Current portion of long-term debt(note 8) | 284,556 | 231,209 | ||||||
Current obligation under capital leases(note 9) | 39,568 | 41,016 | ||||||
Current portion of in-process revenue contracts(note 6) | 46,945 | 56,758 | ||||||
Loan from joint venture partners | 30 | 1,294 | ||||||
Total current liabilities | 851,467 | 804,920 | ||||||
Long-term debt, including amounts due to joint venture partners of $13,500 (2009 — $16,410)(note 8) | 4,083,874 | 4,187,962 | ||||||
Long-term obligation under capital leases(note 9) | 725,922 | 743,254 | ||||||
Derivative liabilities(note 16) | 504,433 | 223,025 | ||||||
Deferred income tax liability (note 18) | — | 11,628 | ||||||
Asset retirement obligation | 21,238 | 22,092 | ||||||
In-process revenue contracts(note 6) | 172,591 | 187,602 | ||||||
Other long-term liabilities | 230,681 | 241,279 | ||||||
Total liabilities | 6,590,206 | 6,421,762 | ||||||
Commitments and contingencies(notes 4, 9, 11 and 16) | ||||||||
Redeemable non-controlling interest(note 11d) | 42,676 | — | ||||||
Equity | ||||||||
Common stock and additional paid-in capital ($0.001 par value; 725,000,000 shares authorized; 72,978,460 shares outstanding (2009 — 72,694,345); 73,477,660 shares issued (2009 — 73,193,545))(note 10) | 672,820 | 656,193 | ||||||
Retained earnings | 1,398,106 | 1,585,431 | ||||||
Non-controlling interest | 978,942 | 855,580 | ||||||
Accumulated other comprehensive loss(note 15) | (21,499 | ) | (1,534 | ) | ||||
Total equity | 3,028,369 | 3,095,670 | ||||||
Total liabilities and equity | 9,661,251 | 9,517,432 | ||||||
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Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Cash and cash equivalents provided by (used for) | ||||||||
OPERATING ACTIVITIES | ||||||||
Net (loss) income | (131,488 | ) | 298,399 | |||||
Non-cash items: | ||||||||
Depreciation and amortization | 219,464 | 214,745 | ||||||
Amortization of in-process revenue contracts | (24,824 | ) | (37,769 | ) | ||||
Loss (gain) on sale of vessels and equipment | 261 | (27,634 | ) | |||||
Write-down of intangible assets and other | — | 1,076 | ||||||
Write-down of vessels and equipment | 521 | 16,433 | ||||||
Loss on repurchase of bonds | 12,645 | — | ||||||
Equity loss (income), net of dividends received | 24,493 | (35,860 | ) | |||||
Income tax (recovery) expense | (12,454 | ) | 1,270 | |||||
Employee stock option compensation | 8,110 | 6,059 | ||||||
Foreign exchange and other | (53,761 | ) | 7,920 | |||||
Unrealized loss (gain) on derivative instruments | 227,402 | (271,471 | ) | |||||
Change in operating assets and liabilities (note 7) | (25,983 | ) | 82,343 | |||||
Expenditures for drydocking | (24,072 | ) | (26,243 | ) | ||||
Net operating cash flow | 220,314 | 229,268 | ||||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of long-term debt(note 8) | 845,106 | 297,224 | ||||||
Debt issuance costs | (12,538 | ) | (664 | ) | ||||
Scheduled repayments of long-term debt | (107,077 | ) | (137,777 | ) | ||||
Prepayments of long-term debt | (741,898 | ) | (632,910 | ) | ||||
Repayments of capital lease obligations | (1,759 | ) | (4,617 | ) | ||||
Proceeds from loans from joint venture partner | 591 | — | ||||||
Repayment of loans from joint venture partner | (1,264 | ) | (4,973 | ) | ||||
(Increase) decrease in restricted cash | (1,769 | ) | 5,805 | |||||
Net proceeds from issuance of Teekay LNG Partners L.P. units | — | 67,095 | ||||||
Net proceeds from issuance of Teekay Offshore Partners L.P. units (note 5) | 94,491 | — | ||||||
Net proceeds from issuance of Teekay Tankers Ltd. shares (note 5) | 103,036 | 65,556 | ||||||
Issuance of Common Stock upon exercise of stock options | 2,437 | 160 | ||||||
Distribution from subsidiaries to non-controlling interests | (73,736 | ) | (53,093 | ) | ||||
Cash dividends paid | (46,058 | ) | (45,861 | ) | ||||
Net financing cash flow | 59,562 | (444,055 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Expenditures for vessels and equipment | (92,428 | ) | (344,888 | ) | ||||
Proceeds from sale of vessels and equipment | 27,591 | 198,837 | ||||||
Investment in joint ventures | (306 | ) | (7,522 | ) | ||||
Advances to joint ventures and joint venture partner | (4,868 | ) | (1,420 | ) | ||||
Investment in direct financing lease assets | (4,199 | ) | — | |||||
Direct financing lease payments received | 13,819 | 3,251 | ||||||
Other investing activities | (528 | ) | 25,035 | |||||
Net investing cash flow | (60,919 | ) | (126,707 | ) | ||||
Increase (decrease) in cash and cash equivalents | 218,957 | (341,494 | ) | |||||
Cash and cash equivalents, beginning of the period | 422,510 | 814,165 | ||||||
Cash and cash equivalents, end of the period | 641,467 | 472,671 | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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(in thousands of U.S. dollars)
TOTAL EQUITY | ||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||
Thousands | Stock and | Other | ||||||||||||||||||||||
of Common | Additional | Comprehensive | Non- | |||||||||||||||||||||
Shares | Paid-in | Retained | Income | controlling | ||||||||||||||||||||
Outstanding | Capital | Earnings | (Loss) | Interest | Total | |||||||||||||||||||
# | $ | $ | $ | $ | $ | |||||||||||||||||||
Balance as at December 31, 2009 | 72,694 | 656,193 | 1,585,431 | (1,534 | ) | 855,580 | 3,095,670 | |||||||||||||||||
Net (loss) income | (167,150 | ) | 35,662 | (131,488 | ) | |||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Unrealized loss on marketable securities | (5,073 | ) | (5,073 | ) | ||||||||||||||||||||
Pension adjustments, net of taxes | 413 | 413 | ||||||||||||||||||||||
Unrealized net loss on qualifying cash flow hedging instruments(note 16) | (16,742 | ) | (3,200 | ) | (19,942 | ) | ||||||||||||||||||
Realized net loss on qualifying cash flow hedging instruments(note 16) | 1,437 | 460 | 1,897 | |||||||||||||||||||||
Comprehensive income (loss) | 32,922 | (154,193 | ) | |||||||||||||||||||||
Dividends declared | (46,077 | ) | (73,736 | ) | (119,813 | ) | ||||||||||||||||||
Reinvested dividends | 2 | 19 | 19 | |||||||||||||||||||||
Exercise of stock options and other | 282 | 2,437 | 2,437 | |||||||||||||||||||||
Employee stock option compensation and other(note 10) | 14,171 | 14,171 | ||||||||||||||||||||||
Dilution gain on equity offerings of Teekay Offshore and Teekay Tankers(note 5) | 31,078 | 31,078 | ||||||||||||||||||||||
Dilution loss on initiation of majority owned subsidiary(note 11d) | (5,176 | ) | (2,256 | ) | (7,432 | ) | ||||||||||||||||||
Addition of non-controlling interest from share and unit issuances and other | 166,432 | 166,432 | ||||||||||||||||||||||
Balance as at June 30, 2010 | 72,978 | 672,820 | 1,398,106 | (21,499 | ) | 978,942 | 3,028,369 | |||||||||||||||||
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Net (loss) income | (145,419 | ) | 193,625 | (131,488 | ) | 298,399 | ||||||||||
Other comprehensive (loss) income: | ||||||||||||||||
Unrealized (loss) gain on marketable securities | (3,296 | ) | 3,531 | (5,073 | ) | 1,090 | ||||||||||
Pension adjustments, net of taxes | 64 | 437 | 413 | 874 | ||||||||||||
Unrealized (loss) gain on qualifying cash flow hedging instruments | (16,002 | ) | 21,047 | (19,942 | ) | 20,930 | ||||||||||
Realized loss on qualifying cash flow hedging instruments | 884 | 5,943 | 1,897 | 18,687 | ||||||||||||
Other comprehensive (loss) income | (18,350 | ) | 30,958 | (22,705 | ) | 41,581 | ||||||||||
Comprehensive (loss) income | (163,769 | ) | 224,583 | (154,193 | ) | 339,980 | ||||||||||
Less: Comprehensive income attributable to non-controlling interests | (5,446 | ) | (37,020 | ) | (32,922 | ) | (62,246 | ) | ||||||||
Comprehensive (loss) income attributable to stockholders of Teekay Corporation | (169,215 | ) | 187,563 | (187,115 | ) | 277,734 | ||||||||||
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Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Three months ended June 30, 2010 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues(1) | 167,502 | 124,223 | 60,797 | 192,425 | 544,947 | |||||||||||||||
Voyage expenses | 35,761 | — | 122 | 30,484 | 66,367 | |||||||||||||||
Vessel operating expenses | 41,494 | 50,433 | 11,356 | 47,509 | 150,792 | |||||||||||||||
Time-charter hire expense | 23,433 | — | — | 44,673 | 68,106 | |||||||||||||||
Depreciation and amortization | 33,456 | 23,754 | 15,885 | 38,139 | 111,234 | |||||||||||||||
General and administrative(2) | 14,145 | 4,521 | 5,558 | 26,032 | 50,256 | |||||||||||||||
(Gain) loss on sale of vessels and equipment, net of write-downs | (736 | ) | — | — | 758 | 22 | ||||||||||||||
Restructuring charge | 349 | — | 195 | 3,651 | 4,195 | |||||||||||||||
Income from vessel operations | 19,600 | 45,515 | 27,681 | 1,179 | 93,975 | |||||||||||||||
Total assets of operating segments at June 30, 2010 | 1,709,084 | 1,177,321 | 2,860,598 | 2,797,403 | 8,544,406 |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Three months ended June 30, 2009 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues | 138,324 | 97,572 | 57,265 | 239,312 | 532,473 | |||||||||||||||
Voyage expenses | 16,167 | — | (34 | ) | 46,792 | 62,925 | ||||||||||||||
Vessel operating expenses | 42,941 | 47,301 | 12,434 | 41,328 | 144,004 | |||||||||||||||
Time charter hire expense | 25,695 | — | — | 90,756 | 116,451 | |||||||||||||||
Depreciation and amortization | 28,738 | 25,745 | 15,471 | 38,238 | 108,192 | |||||||||||||||
General and administrative(2) | 12,868 | 7,273 | 5,055 | 24,024 | 49,220 | |||||||||||||||
Loss (gain) on sale of vessels and equipment, net of write-downs | 941 | — | — | (12,024 | ) | (11,083 | ) | |||||||||||||
Restructuring charge | 2,536 | — | 1,030 | 1,437 | 5,003 | |||||||||||||||
Income from vessel operations | 8,438 | 17,253 | 23,309 | 8,761 | 57,761 | |||||||||||||||
Total assets of operating segments at June 30, 2009 | 1,683,936 | 1,285,098 | 2,676,786 | 3,076,582 | 8,722,402 | |||||||||||||||
Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Six months ended June 30, 2010 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues(1) | 323,450 | 256,221 | 123,331 | 406,482 | 1,109,484 | |||||||||||||||
Voyage expenses | 65,064 | — | 95 | 73,758 | 138,917 | |||||||||||||||
Vessel operating expenses | 84,815 | 98,398 | 22,726 | 99,388 | 305,327 | |||||||||||||||
Time-charter hire expense | 48,471 | — | — | 90,548 | 139,019 | |||||||||||||||
Depreciation and amortization | 64,014 | 47,502 | 31,412 | 76,536 | 219,464 | |||||||||||||||
General and administrative(2) | 26,290 | 13,347 | 10,329 | 48,381 | 98,347 | |||||||||||||||
(Gain) loss on sale of vessels and equipment, net of write-downs | (736 | ) | — | — | 1,518 | 782 | ||||||||||||||
Restructuring charge | 674 | — | 314 | 6,990 | 7,978 | |||||||||||||||
Income from vessel operations | 34,858 | 96,974 | 58,455 | 9,363 | 199,650 | |||||||||||||||
Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Six months ended June 30, 2009 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues | 288,189 | 189,498 | 114,848 | 556,489 | 1,149,024 | |||||||||||||||
Voyage expenses | 34,575 | — | 258 | 118,761 | 153,594 | |||||||||||||||
Vessel operating expenses | 89,331 | 93,187 | 24,459 | 89,787 | 296,764 | |||||||||||||||
Time charter hire expense | 57,873 | — | — | 195,406 | 253,279 | |||||||||||||||
Depreciation and amortization | 57,991 | 51,525 | 30,068 | 75,161 | 214,745 | |||||||||||||||
General and administrative(2) | 25,391 | 15,602 | 9,975 | 45,960 | 96,928 | |||||||||||||||
Loss (gain) on sale of vessels and equipment, net of write-downs | 941 | — | — | (11,066 | ) | (10,125 | ) | |||||||||||||
Restructuring charge | 5,298 | — | 3,212 | 2,051 | 10,561 | |||||||||||||||
Income from vessel operations | 16,789 | 29,184 | 46,876 | 40,429 | 133,278 | |||||||||||||||
(1) | FPSO segment includes $29.2 and $59.2 million in revenue for the three and six months ended June 30, 2010, respectively, related to operations in previous years as a result of executing a contract amendment in March 2010. | |
(2) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources). |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
June 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
Total assets of all segments | 8,544,406 | 8,640,315 | ||||||
Cash and restricted cash | 641,467 | 422,510 | ||||||
Accounts receivable and other assets | 475,378 | 454,607 | ||||||
Consolidated total assets | 9,661,251 | 9,517,432 | ||||||
Head Lease | Sublease | |||||||
Year | Receipts(1) | Payments(1) | ||||||
Remainder of 2010 | $ | 14,444 | $ | 12,536 | ||||
2011 | $ | 28,875 | $ | 25,072 | ||||
2012 | $ | 28,860 | $ | 25,072 | ||||
2013 | $ | 28,843 | $ | 25,072 | ||||
2014 | $ | 28,828 | $ | 25,072 | ||||
Thereafter | $ | 303,735 | $ | 357,387 | ||||
Total | $ | 433,585 | $ | 470,211 | ||||
(1) | The Head Leases are fixed-rate operating leases while the Subleases have a small variable-rate component. As at June 30, 2010, the Company has received $76.8 million of Head Lease receipts and has paid $29.4 million of Sublease payments. |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Total minimum lease payments to be received | 831,994 | 869,268 | ||||||
Estimated unguaranteed residual value of leased properties | 203,465 | 203,465 | ||||||
Initial direct costs and other | 1,849 | 1,134 | ||||||
Less unearned revenue | (534,516 | ) | (561,455 | ) | ||||
Total | 502,792 | 512,412 | ||||||
Less current portion | 27,313 | 27,210 | ||||||
Total | 475,479 | 485,202 | ||||||
Weighted-Average | Gross Carrying | Accumulated | Net Carrying | |||||||||||||
Amortization Period | Amount | Amortization | Amount | |||||||||||||
(Years) | $ | $ | $ | |||||||||||||
As at June 30, 2010: | ||||||||||||||||
Contracts of affreightment | 10.2 | 124,251 | (92,044 | ) | 32,207 | |||||||||||
Time-charter contracts | 16.0 | 230,668 | (91,848 | ) | 138,820 | |||||||||||
Vessel purchase options | — | 23,900 | — | 23,900 | ||||||||||||
Other intangible assets | 4.5 | 11,430 | (6,176 | ) | 5,254 | |||||||||||
12.9 | 390,249 | (190,068 | ) | 200,181 | ||||||||||||
As at December 31, 2009: | ||||||||||||||||
Contracts of affreightment | 10.2 | 124,251 | (88,015 | ) | 36,236 | |||||||||||
Time-charter contracts | 16.0 | 231,221 | (83,823 | ) | 147,398 | |||||||||||
Vessel purchase options | — | 23,900 | — | 23,900 | ||||||||||||
Other intangible assets | 2.8 | 20,731 | (14,395 | ) | 6,336 | |||||||||||
12.6 | 400,103 | (186,233 | ) | 213,870 | ||||||||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
June 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
Revolving Credit Facilities | 1,861,339 | 1,975,360 | ||||||
Senior Notes (8.875%) due July 15, 2011 | 16,201 | 177,004 | ||||||
Senior Notes (8.5%) due January 15, 2020 | 446,434 | — | ||||||
USD-denominated Term Loans due through 2022 | 1,683,977 | 1,837,980 | ||||||
Euro-denominated Term Loans due through 2023 | 346,979 | 412,417 | ||||||
USD-denominated Unsecured Demand Loan due to Joint Venture Partners | 13,500 | 16,410 | ||||||
4,368,430 | 4,419,171 | |||||||
Less current portion | 284,556 | 231,209 | ||||||
4,083,874 | 4,187,962 | |||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
RasGas II LNG Carriers | 470,439 | 470,138 | ||||||
Spanish-Flagged LNG Carrier | 104,735 | 119,068 | ||||||
Suezmax Tankers | 190,316 | 195,064 | ||||||
Total | 765,490 | 784,270 | ||||||
Less current portion | 39,568 | 41,016 | ||||||
Total | 725,922 | 743,254 | ||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Year | Commitment | |||
Remainder of 2010 | $ | 12,000 | ||
2011 | $ | 24,000 | ||
2012 | $ | 24,000 | ||
2013 | $ | 24,000 | ||
2014 | $ | 24,000 | ||
Thereafter | $ | 929,284 |
Year | Commitment | |||
Remainder of 2010 | 26,918 Euros ($32,942) | |||
2011 | 64,825 Euros ($79,300) |
Year | Commitment | |||
Remainder of 2010 | $ | 11,812 | ||
2011 | $ | 197,854 |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
June 30, 2010 | December 31, 2009 | |||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||
Fair Value | Amount | Value | Amount | Value | ||||||||||||||
Hierarchy | Asset (Liability) | Asset (Liability) | Asset (Liability) | Asset (Liability) | ||||||||||||||
Level(1) | $ | $ | $ | $ | ||||||||||||||
Cash and cash equivalents, restricted cash, and marketable securities | Level 1 | 1,253,164 | 1,253,164 | 1,056,725 | 1,056,725 | |||||||||||||
Vessels held for sale | — | — | 10,250 | 10,250 | ||||||||||||||
Loans to joint ventures | 19,022 | 19,022 | 21,998 | 21,998 | ||||||||||||||
Loans from joint venture partners | (30 | ) | (30 | ) | (1,294 | ) | (1,294 | ) | ||||||||||
Long-term debt | (4,368,430 | ) | (4,080,879 | ) | (4,419,171 | ) | (4,055,367 | ) | ||||||||||
Derivative instruments(note 16)(2) | ||||||||||||||||||
Interest rate swap agreements(3) | Level 2 | (649,397 | ) | (649,397 | ) | (378,407 | ) | (378,407 | ) | |||||||||
Interest rate swap agreements(3) | Level 2 | 95,481 | 95,481 | 36,744 | 36,744 | |||||||||||||
Foreign currency contracts | Level 2 | (25,470 | ) | (25,470 | ) | 10,461 | 10,461 | |||||||||||
Bunker fuel swap contracts | Level 2 | (1,417 | ) | (1,417 | ) | 612 | 612 | |||||||||||
Forward freight agreements | Level 2 | 552 | 552 | (504 | ) | (504 | ) | |||||||||||
Foinaven embedded derivative | Level 2 | (9,837 | ) | (9,837 | ) | (8,769 | ) | (8,769 | ) |
(1) | The fair value hierarchy level is only applicable to each financial instrument on the consolidated balance sheets that are recorded at fair value on a recurring basis. | |
(2) | The Company transacts all of its derivative instruments through investment-grade rated financial institutions at the time of the transaction and requires no collateral from these institutions. | |
(3) | The fair value of the Company’s interest rate swap agreements at June 30, 2010 includes $32.5 million (December 31, 2009 — $28.5 million) of net accrued interest which is recorded in accrued liabilities on the consolidated balance sheet. |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Volatile organic compound emission plant lease income | 1,135 | 1,708 | 2,565 | 3,602 | ||||||||||||
Miscellaneous income | 142 | 2,115 | 1,134 | 2,879 | ||||||||||||
Other income | 1,277 | 3,823 | 3,699 | 6,481 | ||||||||||||
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Unrealized (loss) gain on qualifying cash flow hedging instruments | (12,381 | ) | 2,923 | |||||
Pension adjustments, net of tax recoveries | (9,882 | ) | (10,294 | ) | ||||
Unrealized gain on marketable securities | 764 | 5,837 | ||||||
(21,499 | ) | (1,534 | ) | |||||
Fair Value / Carrying Amount | ||||||||||||||||||||||||||||
Contract Amount | of Asset / (Liability) | Expected Maturity | ||||||||||||||||||||||||||
In Foreign | Average | Remainder of | ||||||||||||||||||||||||||
Currency | Forward | Hedge | Non-Hedge | 2010 | 2011 | 2012 | ||||||||||||||||||||||
(millions) | Rate(1) | (in millions of U.S. Dollars) | (in millions of U.S. Dollars) | |||||||||||||||||||||||||
Norwegian Kroner | 1,543.9 | 6.19 | $ | (10.8 | ) | $ | (4.2 | ) | $ | 79.9 | $ | 120.5 | $ | 48.8 | ||||||||||||||
Euro | 67.4 | 0.73 | (2.1 | ) | (7.6 | ) | 33.1 | 45.0 | 14.2 | |||||||||||||||||||
Canadian Dollar | 36.4 | 1.09 | 0.7 | — | 20.1 | 13.4 | — | |||||||||||||||||||||
British Pounds | 51.6 | 0.66 | (1.2 | ) | (0.3 | ) | 30.0 | 37.2 | 11.4 | |||||||||||||||||||
$ | (13.4 | ) | $ | (12.1 | ) | $ | 163.1 | $ | 216.1 | $ | 74.4 | |||||||||||||||||
(1) | Average forward rate represents the contracted amount of foreign currency one U.S. Dollar will buy. |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Fair Value / | Weighted- | |||||||||||||||||
Carrying Amount | Average | Fixed | ||||||||||||||||
Interest | Principal | of Asset / | Remaining | Interest | ||||||||||||||
Rate | Amount | (Liability)(1) | Term | Rate | ||||||||||||||
Index | $ | $ | (Years) | (%)(2) | ||||||||||||||
LIBOR-Based Debt: | ||||||||||||||||||
U.S. Dollar-denominated interest rate swaps(3) | LIBOR | 445,231 | (79,215 | ) | 26.6 | 4.9 | ||||||||||||
U.S. Dollar-denominated interest rate swaps | LIBOR | 3,407,360 | (492,404 | ) | 9.2 | 4.7 | ||||||||||||
U.S. Dollar-denominated interest rate swaps(4) | LIBOR | 200,000 | (43,415 | ) | 20.0 | 5.7 | ||||||||||||
LIBOR-Based Restricted Cash Deposit: | ||||||||||||||||||
U.S. Dollar-denominated interest rate swaps(3) | LIBOR | 472,524 | 95,481 | 26.6 | 4.8 | |||||||||||||
EURIBOR-Based Debt: | ||||||||||||||||||
Euro-denominated interest rate swaps(5) (6) | EURIBOR | 346,979 | (34,363 | ) | 14.0 | 3.8 |
(1) | The fair value of the Company’s interest rate swap agreements includes $32.5 million of accrued interest which is recorded in accrued liabilities on the consolidated balance sheet. | |
(2) | Excludes the margins the Company pays on its variable-rate debt, which at of June 30, 2010 ranged between 0.30% to 3.25%. | |
(3) | Principal amount reduces quarterly. | |
(4) | Inception dates of swaps in 2011 ($200.0 million). | |
(5) | Principal amount reduces monthly to 70.1 million Euros ($85.8 million) by the maturity dates of the swap agreements. | |
(6) | Principal amount is the U.S. Dollar equivalent of 283.5 million Euros. |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Current | Current | |||||||||||||||||||
Portion of | Portion of | |||||||||||||||||||
Derivative | Derivative | Accrued | Derivative | Derivative | ||||||||||||||||
Assets | Assets | Liabilities | Liabilities | Liabilities | ||||||||||||||||
As at June 30, 2010: | ||||||||||||||||||||
Derivatives designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 1,314 | — | — | (9,962 | ) | (4,800 | ) | |||||||||||||
Derivative not designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 601 | 476 | — | (9,199 | ) | (3,900 | ) | |||||||||||||
Interest rate swaps | 15,672 | 75,286 | (32,467 | ) | (126,511 | ) | (485,896 | ) | ||||||||||||
Forward freight agreements | 552 | — | — | — | — | |||||||||||||||
Bunker fuel swap contracts | — | — | — | (1,417 | ) | — | ||||||||||||||
Foinaven embedded derivative | — | — | — | — | (9,837 | ) | ||||||||||||||
18,139 | 75,762 | (32,467 | ) | (147,089 | ) | (504,433 | ) | |||||||||||||
As at December 31, 2009: | ||||||||||||||||||||
Derivatives designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 11,697 | 250 | — | (2,021 | ) | (71 | ) | |||||||||||||
Derivative not designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 1,351 | 174 | — | (705 | ) | (214 | ) | |||||||||||||
Interest rate swaps | 16,336 | 17,695 | (28,499 | ) | (133,224 | ) | (213,971 | ) | ||||||||||||
Forward freight agreements | — | — | — | (504 | ) | — | ||||||||||||||
Bunker fuel swap contracts | 612 | — | — | — | — | |||||||||||||||
Foinaven embedded derivative | — | — | — | — | (8,769 | ) | ||||||||||||||
29,996 | 18,119 | (28,499 | ) | (136,454 | ) | (223,025 | ) | |||||||||||||
Three Months Ended June 30, 2010 | Three Months Ended June 30, 2009 | |||||||||||||||||||||||||||||
Balance | Balance | |||||||||||||||||||||||||||||
Sheet | Sheet | |||||||||||||||||||||||||||||
(AOCI) | Statement of Income (Loss) | (AOCI) | Statement of Income (Loss) | |||||||||||||||||||||||||||
Effective | Effective | Ineffective | Effective | Effective | Ineffective | |||||||||||||||||||||||||
Portion | Portion | Portion | Portion | Portion | Portion | |||||||||||||||||||||||||
(16,002 | ) | (177 | ) | (1,433 | ) | Vessel operating expenses | 21,047 | (2,845 | ) | 6,919 | Vessel operating expenses | |||||||||||||||||||
(707 | ) | (844 | ) | General and administrative expenses | (3,098 | ) | 1,692 | General and administrative expenses | ||||||||||||||||||||||
(16,002 | ) | (884 | ) | (2,277 | ) | 21,047 | (5,943 | ) | 8,611 | |||||||||||||||||||||
Six Months Ended June 30, 2010 | Six Months Ended June 30, 2009 | |||||||||||||||||||||||||||||
Balance | Balance | |||||||||||||||||||||||||||||
Sheet | Sheet | |||||||||||||||||||||||||||||
(AOCI) | Statement of Income (Loss) | (AOCI) | Statement of Income (Loss) | |||||||||||||||||||||||||||
Effective | Effective | Ineffective | Effective | Effective | Ineffective | |||||||||||||||||||||||||
Portion | Portion | Portion | Portion | Portion | Portion | |||||||||||||||||||||||||
(19,942 | ) | (551 | ) | (3,515 | ) | Vessel operating expenses | 20,930 | (11,299 | ) | 6,696 | Vessel operating expenses | |||||||||||||||||||
(1,346 | ) | (1,736 | ) | General and administrative expenses | (7,388 | ) | 3,690 | General and administrative expenses | ||||||||||||||||||||||
(19,942 | ) | (1,897 | ) | (5,251 | ) | 20,930 | (18,687 | ) | 10,386 | |||||||||||||||||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Realized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (40,634 | ) | (29,528 | ) | (79,220 | ) | (50,416 | ) | ||||||||
Foreign currency forward contracts | (1,022 | ) | (2,448 | ) | (1,345 | ) | (7,945 | ) | ||||||||
Forward freight agreements and bunker fuel swap contracts | (2,207 | ) | 4,294 | (4,356 | ) | 2,005 | ||||||||||
(43,863 | ) | (27,682 | ) | (84,921 | ) | (56,356 | ) | |||||||||
Unrealized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (164,032 | ) | 182,471 | (209,838 | ) | 245,447 | ||||||||||
Foreign currency forward contracts | (8,836 | ) | 6,416 | (12,053 | ) | 13,167 | ||||||||||
Forward freight agreements and bunker fuel swap contracts | (4,118 | ) | (2,805 | ) | (973 | ) | 4,889 | |||||||||
Foinaven embedded derivative | 1,624 | (915 | ) | 713 | (2,417 | ) | ||||||||||
(175,362 | ) | 185,167 | (222,151 | ) | 261,086 | |||||||||||
Total realized and unrealized (losses) gains on non-designated derivative instruments | (219,225 | ) | 157,485 | (307,072 | ) | 204,730 | ||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Net (loss) income attributable to stockholders’ of Teekay Corporation | (153,148 | ) | 159,359 | (167,150 | ) | 240,864 | ||||||||||
Weighted average number of common shares | 72,961,471 | 72,535,899 | 72,875,508 | 72,526,101 | ||||||||||||
Dilutive effect of stock-based compensation | — | 262,124 | — | 361,373 | ||||||||||||
Common stock and common stock equivalents | 72,961,471 | 72,798,023 | 72,875,508 | 72,887,474 | ||||||||||||
(Loss) earnings per common share: | ||||||||||||||||
- Basic | (2.10 | ) | 2.20 | (2.29 | ) | 3.32 | ||||||||||
- Diluted | (2.10 | ) | 2.19 | (2.29 | ) | 3.30 |
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Balance of unrecognized tax benefits as at December 31, 2009 | $ | 40,943 | ||
Increase for positions related to the current period | 1,880 | |||
Increase for positions taken in prior years | 8,979 | |||
Decrease for positions taken in prior years | (5,847 | ) | ||
Decrease related to statute of limitations | (1,600 | ) | ||
Balance of unrecognized tax benefits as at June 30, 2010 | $ | 44,355 | ||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Current | (7,662 | ) | 450 | (9,449 | ) | (397 | ) | |||||||||
Deferred | 12,809 | 4,148 | 21,903 | (873 | ) | |||||||||||
Income tax recovery (expense) | 5,147 | 4,598 | 12,454 | (1,270 | ) | |||||||||||
a) | On July 15, 2010, Teekay LNG completed a direct equity placement of approximately 1.7 million common units at the price of $29.18 per unit, for net proceeds (including the general partner’s proportionate capital contribution) of approximately $51 million. As a result, the Company’s ownership of Teekay LNG has been reduced from 49.2% to 47.7% (including the Company’s 2% general partner interest). Teekay maintains control of Teekay LNG by virtue of its control of the general partner and will continue to consolidate this subsidiary. |
b) | On July 16, 2010, Teekay Tankers made loans totaling $115 million to a third party ship-owner (theLoans). The Loans bear interest at an annual interest rate of 9% per annum and have a fixed term of three years. The Loans are repayable in full, together with a 3% premium of the Loans then outstanding, on maturity and are collateralized by first priority mortgages on two 2010-built Very Large Crude Carriers owned by the ship-owner. |
c) | On August 20, 2010, Teekay Offshore completed a public offering of approximately 6.0 million common units (including 787,500 common units issued upon the exercise of the underwriter’s overallotment option) at a price of $22.15 per unit, for gross proceeds (including the general partner’s proportionate capital contribution) of approximately $136.5 million. As a result, the Company’s ownership of Teekay Offshore has been reduced from 35.9% to 31.7% (including the Company’s 2% general partner interest). Teekay maintains control of Teekay Offshore by virtue of its control of the general partner and will continue to consolidate this subsidiary. |
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JUNE 30, 2010
PART I — FINANCIAL INFORMATION
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
calendar-ship-days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 167,502 | 138,324 | 21.1 | 323,450 | 288,189 | 12.2 | ||||||||||||||||||
Voyage expenses | 35,761 | 16,167 | 121.2 | 65,064 | 34,575 | 88.2 | ||||||||||||||||||
Net revenues | 131,741 | 122,157 | 7.8 | 258,386 | 253,614 | 1.9 | ||||||||||||||||||
Vessel operating expenses | 41,494 | 42,941 | (3.4 | ) | 84,815 | 89,331 | (5.1 | ) | ||||||||||||||||
Time-charter hire expense | 23,433 | 25,695 | (8.8 | ) | 48,471 | 57,873 | (16.2 | ) | ||||||||||||||||
Depreciation and amortization | 33,456 | 28,738 | 16.4 | 64,014 | 57,991 | 10.4 | ||||||||||||||||||
General and administrative(1) | 14,145 | 12,868 | 9.9 | 26,290 | 25,391 | 3.5 | ||||||||||||||||||
(Gain) loss on sale of vessels and equipment, net of write-downs | (736 | ) | 941 | (178.2 | ) | (736 | ) | 941 | (178.2 | ) | ||||||||||||||
Restructuring charge | 349 | 2,536 | (86.2 | ) | 674 | 5,298 | (87.3 | ) | ||||||||||||||||
Income from vessel operations | 19,600 | 8,438 | 132.3 | 34,858 | 16,789 | 107.6 | ||||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 2,669 | 2,641 | 9.9 | 5,550 | 5,431 | 6.5 | ||||||||||||||||||
Chartered-in Vessels | 624 | 593 | (34.6 | ) | 1,300 | 1,553 | (31.5 | ) | ||||||||||||||||
Total | 3,293 | 3,234 | 1.7 | 6,850 | 6,984 | (2.0 | ) | |||||||||||||||||
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to the shuttle tanker and FSO segment based on estimated use of corporate resources). For further discussion, please read “Other Operating Results — General and Administrative Expenses.” |
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• | increases of $4.5 million and $5.1 million, respectively, for the three and six months ended June 30, 2010, due to increased rates on certain contracts of affreightment, bareboat and time-charter contracts; |
• | an increase of $3.0 million for the three months ended June 30, 2010, from an increase in shuttle tanker revenue days due to the impact on revenue generated by our shuttle tankers operating in the conventional spot market from increased demand for conventional crude transportation, partially offset by fewer revenue days from our shuttle tankers due to declining oil production at mature oil fields in the North Sea, compared to the same period last year; |
• | increases of $2.6 million and $5.2 million, respectively, for the three and six months ended June 30, 2010, due to the inclusion of theFalcon SpiritFSO unit commencing in December 2009; |
• | increases of $1.0 million and $3.1 million, respectively, for the three and six months ended June 30, 2010, due to foreign currency exchange differences as compared to the same periods last year; and |
• | an increase of $0.8 million for the three and six months ended June 30, 2010, due to an agreement with one of our joint venture partners to receive compensation as the number of drydocking days for their vessel exceeded the maximum allowed; |
• | decreases of $3.0 million and $6.3 million, respectively, for the three and six months ended June 30, 2010, due to the redelivery of one in-chartered vessel in June 2009 as it completed its time-charter contract; |
• | decreases of $1.2 million and $0.3 million, respectively, for the three and six months ended June 30, 2010, due to a lower charter rate on theNavion Sagain accordance with the charter contract that took effect in the second quarter of 2010 as compared to the same periods last year, partially offset by a one-time reimbursement from customers for certain crewing costs in the three months ended March 31, 2010; |
• | a decrease of $1.8 million for the six months ended June 30, 2010, from fewer shuttle tanker revenue days due to declining oil production at mature oil fields in the North Sea, partially offset by an increase in revenue days from our shuttle tankers due to the impact on revenue generated by our shuttle tankers operating in the conventional spot market from increased demand for conventional crude transportation; and |
• | a decrease of $1.3 million for the six months ended June 30, 2010, from a reduction in the number of cargo liftings due to declining oil production at theHeidrunfield, a mature oil field in the North Sea that is serviced by certain shuttle tankers on contracts of affreightment. |
• | decreases of $2.3 million and $4.6 million, respectively, for the three and six months ended June 30, 2010, due to a decrease in the number of vessels drydocked, and the cost of services, spares and consumables during 2010. Certain repair and maintenance items are more efficient to complete while a vessel is in drydock. (Consequently, repair and maintenance costs will typically increase in periods when there is an increase in the number of vessels drydocked); |
• | decreases of $2.1 million and $5.6 million, respectively, for the three and six months ended June 30, 2010, relating to the net realized and unrealized changes in fair value of our foreign currency forward contracts that are or have been designated as hedges for accounting purposes; |
• | decreases of $1.9 million and $1.5 million, respectively, for the three and six months ended June 30, 2010, in crewing costs resulting primarily from cost saving initiatives which commenced in 2009; and |
• | decreases of $0.8 million and $1.6 million, respectively, for the three and six months ended June 30, 2010, due to the redelivery of one in-chartered vessel in June 2009 as it completed its time-charter agreement; |
• | increases of $2.7 million and $3.6 million, respectively, for the three and six months ended June 30, 2010, due to the acquisition of a shuttle tanker in February 2010; |
• | increases of $1.4 million and $1.2 million, respectively, for the three and six months ended June 30, 2010, relating to repairs and maintenance performed for certain vessels; |
• | increases of $0.9 million and $1.7 million, respectively, for the three and six months ended June 30, 2010, due to the inclusion of an FSO unit in December 2009; and |
• | increases of $0.3 million and $1.5 million, respectively, for the three and six months ended June 30, 2010, due to weakening of the U.S. Dollar against the Australian Dollar compared to the same periods last year. |
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• | decreases of $6.9 million and $14.2 million, respectively, for the three and six months ended June 30, 2010, from the redelivery of three in-chartered shuttles to their respective owners in June 2009, November 2009 and February 2010, whose in-charter contracts expired; |
• | increases of $4.4 million and $5.2 million, respectively, for the three and six months ended June 30, 2010, due primarily to less off-hire in the in-chartered fleet and an increase in spot in-chartering of vessels, compared to the same periods last year. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
calendar-ship-days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 124,223 | 97,572 | 27.3 | 256,221 | 189,498 | 35.2 | ||||||||||||||||||
Vessel operating expenses | 50,433 | 47,301 | 6.6 | 98,398 | 93,187 | 5.6 | ||||||||||||||||||
Depreciation and amortization | 23,754 | 25,745 | (7.7 | ) | 47,502 | 51,525 | (7.8 | ) | ||||||||||||||||
General and administrative(1) | 4,521 | 7,273 | (37.8 | ) | 13,347 | 15,602 | (14.5 | ) | ||||||||||||||||
Income from vessel operations | 45,515 | 17,253 | 163.8 | 96,974 | 29,184 | 232.3 | ||||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 728 | 819 | (11.1 | ) | 1,448 | 1,629 | (11.1 | ) | ||||||||||||||||
Total | 728 | 819 | (11.1 | ) | 1,448 | 1,629 | (11.1 | ) | ||||||||||||||||
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to the FPSO segment based on estimated use of corporate resources). For further discussion, please read “Other Operating Results — General and Administrative Expenses.” |
• | increases of $29.2 million and $59.2 million, respectively, for the three and six months ended June 30, 2010, from payments under the amended operating contract for ourFoinaven FPSO unit related to operations in previous years (as discussed above); |
• | increases of $2.8 million and $5.8 million, respectively, for the three and six months ended June 30, 2010, due to supplemental efficiency payments also made under the amendedFoinavenFPSO contract; |
• | increases of $2.7 million and $6.5 million, respectively, for the three and six months ended June 30, 2010, from thePetrojarl VargFPSO unit commencing operations under a new four-year fixed-rate contract extension beginning in the third quarter of 2009; and |
• | an increase of $5.5 million for the six months ended June 30, 2010, from increased daily rates, tariff and incentive payments; |
• | decreases of $6.3 million and $10.3 million, respectively, for the three and six months ended June 30, 2010, from the decrease in amortization of contract value liabilities relating to FPSO service contracts (as discussed below) due to extensions to the duration of the firm periods of certain contracts. |
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
calendar-ship-days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 60,797 | 57,265 | 6.2 | 123,331 | 114,848 | 7.4 | ||||||||||||||||||
Voyage expenses | 122 | (34 | ) | (458.8 | ) | 95 | 258 | (63.2 | ) | |||||||||||||||
Net revenues | 60,675 | 57,299 | 5.9 | 123,236 | 114,590 | 7.5 | ||||||||||||||||||
Vessel operating expenses | 11,356 | 12,434 | (8.7 | ) | 22,726 | 24,459 | (7.1 | ) | ||||||||||||||||
Depreciation and amortization | 15,885 | 15,471 | 2.7 | 31,412 | 30,068 | 4.5 | ||||||||||||||||||
General and administrative(1) | 5,558 | 5,055 | 10.0 | 10,329 | 9,975 | 3.5 | ||||||||||||||||||
Restructuring charge | 195 | 1,030 | (81.1 | ) | 314 | 3,212 | (90.2 | ) | ||||||||||||||||
Income from vessel operations | 27,681 | 23,309 | 18.8 | 58,455 | 46,876 | 24.7 | ||||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels and Vessels under Direct Financing Lease | 1,274 | 1,182 | 7.8 | 2,534 | 2,187 | 15.9 |
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to the liquefied gas segment based on estimated use of corporate resources). For further discussion, please read “Other Operating Results — General and Administrative Expenses.” |
• | increases of $5.6 million and $14.6 million, respectively, for the three and six months ended June 30, 2010, due to the commencement of the time-charters from the Tangguh LNG Delivery and the LPG Deliveries; |
• | decreases of $0.2 million and $5.3 million, respectively, for the three and six months ended June 30, 2010, due to theArctic Spiritbeing off-hire during the first half of 2010 primarily due to the vessel being off-hire and in part due to a scheduled drydocking; |
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• | decreases of $1.3 million and $0.3 million, respectively, for the three and six months ended June 30, 2010, due to the effect on our Euro-denominated revenues from the weakening of the Euro against the U.S. Dollar compared to the same periods last year; and |
• | a decrease of $0.2 million for the three months ended June 30, 2010, due to theDania Spiritbeing off-hire for 15 days in the second quarter of 2010 for a scheduled drydocking. |
• | decreases of $1.8 million and $2.1 million, respectively, for the three and six months ended June 30, 2010, relating to lower crewing, insurance, repairs and maintenance costs; and |
• | decreases of $0.7 million and $1.0 million, respectively, for the three and six months ended June 30, 2010, due to our cancellation of loss-of-hire insurance in 2009 and reduction in crewing levels for certain of our LNG carriers; |
• | an increase of $1.4 million for the three and six months ended June 30, 2010, due to additional crew training expenses relating to the three newly delivered LNG carriers. |
• | increases of $1.3 million and $1.7 million, respectively, for the three and six months ended June 30, 2010, relating to amortization of capitalized drydocking expenditures incurred during the third and fourth quarters of 2009 and the first quarter of 2010; and |
• | increases of $0.3 million and $0.8 million, respectively, for the three and six months ended June 30, 2010, from the LPG Deliveries; |
• | decreases of $0.9 million and $1.1 million, respectively, for the three and six months ended June 30, 2010, from the commencement of the time-charter contracts for theTangguh HiriandTangguh Sagoin January 2009 and May 2009, respectively, which are accounted for as direct financing leases. |
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
calendar-ship-days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 95,139 | 100,858 | (5.7 | ) | 189,171 | 194,538 | (2.8 | ) | ||||||||||||||||
Voyage expenses | 1,381 | 1,758 | (21.4 | ) | 2,077 | 3,062 | (32.2 | ) | ||||||||||||||||
Net revenues | 93,758 | 99,100 | (5.4 | ) | 187,094 | 191,476 | (2.3 | ) | ||||||||||||||||
Vessel operating expenses | 31,000 | 21,246 | 45.9 | 56,997 | 43,617 | 30.7 | ||||||||||||||||||
Time-charter hire expense | 14,064 | 21,369 | (34.2 | ) | 29,203 | 41,479 | (29.6 | ) | ||||||||||||||||
Depreciation and amortization | 19,367 | 16,526 | 17.2 | 39,184 | 31,598 | 24.0 | ||||||||||||||||||
General and administrative(1) | 8,872 | 10,271 | (13.6 | ) | 17,851 | 18,753 | (4.8 | ) | ||||||||||||||||
Loss on sale of vessels and equipment, net of write-downs | 401 | 3,280 | — | 1,166 | 3,280 | — | ||||||||||||||||||
Restructuring charge | 5 | 354 | (98.6 | ) | 111 | 505 | (78.0 | ) | ||||||||||||||||
�� | ||||||||||||||||||||||||
Income from vessel operations | 20,049 | 26,054 | (23.0 | ) | 42,582 | 52,244 | (18.5 | ) | ||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 2,990 | 2,600 | 15.0 | 5,856 | 5,210 | 12.4 | ||||||||||||||||||
Chartered-in Vessels | 688 | 945 | (27.2 | ) | 1,399 | 1,775 | (21.2 | ) | ||||||||||||||||
Total | 3,678 | 3,545 | 3.8 | 7,255 | 6,985 | 3.9 | ||||||||||||||||||
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to the fixed-rate tanker sub-segment based on estimated use of corporate resources). For further discussion, please read “Other Operating Results — General and Administrative Expenses.” |
• | the delivery of two new Suezmax tankers in June 2009 (theSuezmax Deliveries); |
• | the purchase of a 2007-built product tanker which commenced a 10-year fixed-rate time-charter to Caltex Australia Petroleum Pty Ltd. during September 2009; |
• | the transfer of five Suezmax tankers from the spot tanker sub-segment between September 2009 and April 2010 (theSuezmax Transfers); and |
• | the transfer of two Aframax tankers, on a net basis, from the spot tanker sub-segment in 2009 and 2010 upon commencement of long-term time-charters, which have an original term of one year or more (theAframax Transfers); |
• | the transfer of two product tankers to the spot tanker sub-segment in July 2009 and January 2010 (theProduct Tanker Transfers); |
• | the sale of one product tanker in October 2009 and two Aframax tankers in November 2009 and January 2010 (theVessel Sales); and | ||
• | an overall decrease in the number of in-chartered vessels. |
• | decreases of $10.7 million and $20.0 million, respectively, for the three and six months ended June 30, 2010, from the redelivery of in-chartered vessels to their owners upon the expiration of the related in-charter contracts; |
• | decreases of $10.0 million and $19.4 million, respectively, for the three and six months ended June 30, 2010, from the Vessel Sales; |
• | decreases of $2.2 million and $6.2 million, respectively, for the three and six months ended June 30, 2010, from the Product Tanker Transfers; and |
• | a decrease of $0.9 million for the three and six months ended June 30, 2010, due to interest-rate adjustments to the daily charter rates under the time-charter contracts for five of our Suezmax tankers (however, under the terms of the capital lease for these vessels, we had corresponding decreases in our lease payments, which are reflected as decreases to interest expense; therefore, these and future interest rate adjustments do not and will not affect our cash flow or net income); |
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• | increases of $13.0 million and $28.5 million, respectively, for the three and six months ended June 30, 2010, from the Aframax Transfers and the Suezmax Transfers; |
• | increases of $4.5 million and $8.7 million, respectively, for the three and six months ended June 30, 2010, from the Suezmax Deliveries; and |
• | increases of $3.2 million and $6.3 million, respectively, for the three and six months ended June 30, 2010, from the purchase of the product tanker. |
• | increases of $6.2 million and $6.8 million, respectively, for the three and six months ended June 30, 2010, relating to higher crewing costs, higher insurance renewal rates upon annual renewal, and timing of repairs and maintenance costs; |
• | increases of $3.8 million and $7.4 million, respectively, for the three and six months ended June 30, 2010, from the Aframax Transfers and Suezmax Transfers; |
• | increases of $1.7 million and $3.6 million, respectively, for the three and six months ended June 30, 2010, from the purchase of the product tanker; and |
• | increases of $1.3 million and $1.7 million, respectively, for the three and six months ended June 30, 2010, from the Suezmax Deliveries; |
• | decreases of $3.2 million and $6.1 million, respectively, for the three and six months ended June 30, 2010, from the Vessel Sales. |
• | increases of $4.2 million and $8.5 million, respectively, for the three and six months ended June 30, 2010, from the Aframax and Suezmax Transfers; |
• | increases of $1.6 million and $3.1 million, respectively, for the three and six months ended June 30, 2010, from the Suezmax Deliveries; and |
• | increases of $0.5 million and $1.1 million, respectively, for the three and six months ended June 30, 2010, from an increase in capitalized drydocking expenditures being amortized; |
• | decreases of $2.6 million and $5.0 million, respectively, for the three and six months ended June 30, 2010, from the Vessel Sales and Product Tanker Transfers. |
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
calendar-ship-days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 97,286 | 138,454 | (29.7 | ) | 217,310 | 361,951 | (40.0 | ) | ||||||||||||||||
Voyage expenses | 29,103 | 45,034 | (35.4 | ) | 71,681 | 115,699 | (38.0 | ) | ||||||||||||||||
Net revenues | 68,183 | 93,420 | (27.0 | ) | 145,629 | 246,252 | (40.9 | ) | ||||||||||||||||
Vessel operating expenses | 16,509 | 20,082 | (17.8 | ) | 42,391 | 46,170 | (8.2 | ) | ||||||||||||||||
Time-charter hire expense | 30,609 | 69,387 | (55.9 | ) | 61,345 | 153,927 | (60.1 | ) | ||||||||||||||||
Depreciation and amortization | 18,772 | 21,712 | (13.5 | ) | 37,352 | 43,563 | (14.3 | ) | ||||||||||||||||
General and administrative(1) | 17,160 | 13,753 | 24.8 | 30,530 | 27,207 | 12.2 | ||||||||||||||||||
(Gain) loss on sale of vessels and equipment, net of write-downs | 357 | (15,304 | ) | (102.3 | ) | 352 | (14,346 | ) | (102.5 | ) | ||||||||||||||
Restructuring charge | 3,646 | 1,083 | 236.7 | 6,879 | 1,546 | 345.0 | ||||||||||||||||||
(Loss) income from vessel operations | (18,870 | ) | (17,293 | ) | 9.1 | (33,220 | ) | (11,815 | ) | 181.2 | ||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 2,113 | 2,453 | (13.9 | ) | 4,400 | 5,128 | (14.2 | ) | ||||||||||||||||
Chartered-in Vessels | 1,422 | 2,520 | (43.6 | ) | 2,859 | 5,392 | (47.0 | ) | ||||||||||||||||
Total | 3,535 | 4,973 | (28.9 | ) | 7,259 | 10,520 | (31.0 | ) | ||||||||||||||||
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to the spot tanker sub-segment based on estimated use of corporate resources). For further discussion, please read “Other Operating Results — General and Administrative Expenses.” |
• | the sale of two product tankers in May 2009 (theSpot Product Tanker Sales); |
• | the transfer of five Suezmax tankers to the fixed-rate tanker sub-segment between September 2009 and April 2010 (theSpot Suezmax Transfers); |
• | the net transfer of two Aframax tankers to the fixed-rate tanker sub-segment in 2009 and 2010 (theSpot Aframax Tanker Transfers); and | ||
• | an overall decrease in the number of in-chartered vessels; |
• | the delivery of five new Suezmax tankers between January 2009 to December 2009 (theSpot Suezmax Deliveries); and |
• | the transfer of two product tankers from the fixed-rate tanker sub-segment in July 2009 and January 2010 (theProduct Tanker Transfers). |
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Three Months Ended | ||||||||||||||||||||||||
June 30, 2010 | June 30, 2009 | |||||||||||||||||||||||
Net | TCE | Net | TCE | |||||||||||||||||||||
Revenues | Revenue | Rate | Revenues | Revenue | Rate | |||||||||||||||||||
Vessel Type | ($000’s) | Days | $ | ($000’s) | Days | $ | ||||||||||||||||||
Spot Fleet(1) | ||||||||||||||||||||||||
Suezmax Tankers | 29,797 | 976 | 30,528 | 27,633 | 1,099 | 25,139 | ||||||||||||||||||
Aframax Tankers | 32,300 | 1,787 | 18,076 | 53,324 | 3,106 | 17,165 | ||||||||||||||||||
Large/Medium Product Tankers | 7,233 | 511 | 14,147 | 11,041 | 663 | 16,643 | ||||||||||||||||||
Other(2) | (1,147 | ) | 1,422 | |||||||||||||||||||||
Totals | 68,183 | 3,274 | 20,824 | 93,420 | 4,868 | 19,186 | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
June 30, 2010 | June 30, 2009 | |||||||||||||||||||||||
Net | TCE | Net | TCE | |||||||||||||||||||||
Revenues | Revenue | Rate | Revenues | Revenue | Rate | |||||||||||||||||||
Vessel Type | ($000’s) | Days | $ | ($000’s) | Days | $ | ||||||||||||||||||
Spot Fleet(1) | ||||||||||||||||||||||||
Suezmax Tankers | 59,273 | 1,945 | 30,474 | 67,910 | 2,111 | 32,166 | ||||||||||||||||||
Aframax Tankers | 74,492 | 3,981 | 18,712 | 146,179 | 6,727 | 21,729 | ||||||||||||||||||
Large/Medium Product Tankers | 14,355 | 1,006 | 14,265 | 30,952 | 1,540 | 20,093 | ||||||||||||||||||
Other(2) | (2,491 | ) | 1,211 | |||||||||||||||||||||
Totals | 145,629 | 6,932 | 21,008 | 246,252 | 10,378 | 23,726 | ||||||||||||||||||
(1) | Spot fleet includes short-term time-charters and fixed-rate contracts of affreightment less than 1 year. | |
(2) | Includes the cost of spot in-charter vessels servicing fixed-rate contract of affreightment cargoes, the amortization of in-process revenue contracts and the cost of fuel while offhire. |
• | decreases of $17.6 million and $43.1 million, respectively, for the three and six months ended June 30, 2010, from a decrease in the number of in-chartered vessels as we continued to reduce our exposure to the spot tanker market; |
• | a decrease of $42.3 million for the six months ended June 30, 2010, primarily from decreases in our average spot tanker TCE rate due to spot tanker market weakness; |
• | decreases of $9.5 million and $27.0 million, respectively, for the three and six months ended June 30, 2010, from the Spot Aframax and Spot Suezmax Transfers; |
• | decreases of $2.5 million and $2.8 million, respectively, for the three and six months ended June 30, 2010, from a change in the number of days our vessels were off-hire due to regularly scheduled maintenance; and |
• | decreases of $1.3 million and $6.7 million, respectively, for the three and six months ended June 30, 2010, from the Spot Product Tanker Sales; |
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• | increases of $8.9 million and $17.2 million, respectively, for the three and six months ended June 30, 2010, from the Spot Suezmax Deliveries; and |
• | increases of $2.1 million and $4.0 million, respectively, for the three and six months ended June 30, 2010, from the Product Tanker Transfers. |
• | decreases of $3.1 million and $5.8 million, respectively, for the three and six months ended June 30, 2010, from the Spot Aframax Transfers and Suezmax Transfers; |
• | decreases of $2.8 million and $2.4 million, respectively, for the three and six months ended June 30, 2010, from lower crewing costs due to the positive impact of foreign currency exchange rate fluctuations, a reduction in the number of crew on some vessels, as well as lower repairs and maintenance, and consumable costs resulting from the review and renegotiation of several key supplier contracts during 2009; and |
• | decreases of $0.6 million and $1.8 million, respectively, for the three and six months ended June 30, 2010, from the Spot Product Tanker Sales; |
• | increases of $2.0 million and $4.0 million, respectively, for the three and six months ended June 30, 2010, from the Spot Suezmax Deliveries; and |
• | increases of $0.8 million and $2.2 million, respectively, for the three and six months ended June 30, 2010, from the Product Tanker Transfers. |
• | decreases of $4.2 million and $8.4 million, respectively, for the three and six months ended June 30, 2010, from the Spot Aframax and Spot Suezmax Transfers; and |
• | decreases of $0.3 million and $1.2 million, respectively, for the three and six months ended June 30, 2010, from the Spot Product Tanker Sales; |
• | increases of $1.7 million and $4.0 million, respectively, for the three and six months ended June 30, 2010, from the Spot Suezmax Tanker Deliveries. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except | June 30, | June 30, | ||||||||||||||||||||||
percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
General and administrative | (50,256 | ) | (49,220 | ) | 2.1 | (98,347 | ) | (96,928 | ) | 1.5 | ||||||||||||||
Interest expense | (33,926 | ) | (37,280 | ) | (9.0 | ) | (66,078 | ) | (81,470 | ) | (18.9 | ) | ||||||||||||
Interest income | 2,209 | 5,023 | (56.0 | ) | 6,483 | 11,701 | (44.6 | ) | ||||||||||||||||
Realized and unrealized (losses) gains on non-designated derivative instruments | (219,225 | ) | 157,485 | (239.2 | ) | (307,072 | ) | 204,730 | (250.0 | ) | ||||||||||||||
Equity (loss) income from joint ventures | (21,827 | ) | 27,380 | (179.7 | ) | (24,493 | ) | 38,802 | (163.1 | ) | ||||||||||||||
Foreign exchange gain (loss) | 27,488 | (25,165 | ) | (209.2 | ) | 56,514 | (13,853 | ) | (508.0 | ) | ||||||||||||||
Loss on bond repurchase | (537 | ) | — | — | (12,645 | ) | — | — | ||||||||||||||||
Other income | 1,277 | 3,823 | (66.6 | ) | 3,699 | 6,481 | (42.9 | ) | ||||||||||||||||
Income tax recovery (expense) | 5,147 | 4,598 | 11.9 | 12,454 | (1,270 | ) | (1,080.6 | ) |
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• | increases of $2.1 million and $3.1 million, respectively, for the three and six months ended June 30, 2010, associated with our equity-based compensation and long-term incentive program for management; |
• | an increase of $1.7 million in compensation for the six months ended June 30, 2010 for shore-based employees and other personnel expenses primarily due to the weakening of the U.S. dollar against the Canadian dollar and the increase in the number of personnel, compared to the same period last year; and |
• | increases of $0.7 million and $0.9 million, respectively, for the three and six months ended June 30, 2010, from timing of travel costs; |
• | decreases of $0.7 million and $2.3 million, respectively, for the three and six months ended June 30, 2010, in corporate-related expenses; and |
• | decreases of $0.3 million and $2.0 million, respectively, for the three and six months ended June 30, 2010, in unrealized and realized losses on foreign currency forward contracts. |
• | decreases of $7.1 million and $21.7 million, respectively, for the three and six months ended June 30, 2010, primarily due to repayments of debt drawn under long-term revolving credit facilities and term loans and decreases in interest rates relating to long-term debt, which is explained in further detail below; |
• | decreases of $2.1 million and $3.4 million, respectively, for the three and six months ended June 30, 2010, from the scheduled loan payments on the LNG carrier, theCatalunya Spirit, and scheduled capital lease repayments on the LNG carrier, theMadrid Spirit(theMadrid Spiritis financed pursuant to a Spanish tax lease arrangement, under which we borrowed under a term loan and deposited the proceeds into a restricted cash account and entered into a capital lease for the vessel; as a result, this decrease in interest expense from the capital lease is offset by a corresponding decrease in the interest income from restricted cash); and |
• | decreases of $0.2 million and $0.4 million, respectively, for the three and six months ended June 30, 2010, from declining interest rates on our five Suezmax tanker capital lease obligations; |
• | increases of $6.0 million and $10.1 million, respectively, for the three and six months ended June 30, 2010, primarily due to the effect of the public offering of $450 million 8.5% senior unsecured notes due January 2020, partially offset by the repurchase of a majority of our 8.875% senior notes due 2011 in January 2010. |
• | decreases of $1.1 million and $2.8 million, respectively, for the three and six months ended June 30, 2010, due to decreases in LIBOR rates relating to the restricted cash in Teekay Nakilat Corporation (orTeekay Nakilat) that is used to fund capital lease payments for its three LNG carriers; |
• | decreases of $0.9 million and $1.2 million, respectively, for the three and six months ended June 30, 2010, primarily from scheduled capital lease repayments on one of our LNG carriers which was funded from restricted cash deposits; and |
• | decreases of $0.8 million and $1.2 million, respectively, for the three and six months ended June 30, 2010, primarily relating to lower interest rates earned on our cash balances. |
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands of U.S. Dollars) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Realized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (40,634 | ) | (29,528 | ) | (79,220 | ) | (50,416 | ) | ||||||||
Foreign currency forward contracts | (1,022 | ) | (2,448 | ) | (1,345 | ) | (7,945 | ) | ||||||||
Forward freight agreements and bunker fuel swap contracts | (2,207 | ) | 4,294 | (4,356 | ) | 2,005 | ||||||||||
(43,863 | ) | (27,682 | ) | (84,921 | ) | (56,356 | ) | |||||||||
Unrealized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (164,032 | ) | 182,471 | (209,838 | ) | 245,447 | ||||||||||
Foreign currency forward contracts | (8,836 | ) | 6,416 | (12,053 | ) | 13,167 | ||||||||||
Forward freight agreements and bunker fuel swap contracts and other | (2,494 | ) | (3,720 | ) | (260 | ) | 2,472 | |||||||||
(175,362 | ) | 185,167 | (222,151 | ) | 261,086 | |||||||||||
Total realized and unrealized (losses) gains on non-designated derivative instruments | (219,225 | ) | 157,485 | (307,072 | ) | 204,730 | ||||||||||
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Six Months Ended June 30, | ||||||||
(in thousands of U.S. Dollars) | 2010 | 2009 | ||||||
Net operating cash flows | 220,314 | 229,268 | ||||||
Net financing cash flows | 59,562 | (444,055 | ) | |||||
Net investing cash flows | (60,919 | ) | (126,707 | ) |
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• | incurred capital expenditures for vessels and equipment of $92.4 million, primarily for capitalized vessel modifications and shipyard construction installment payments on our newbuilding shuttle tankers; and |
• | received net proceeds of $27.6 million from the sale of two Aframax tankers. |
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Remainder of | ||||||||||||||||||||
In millions of U.S. Dollars | Total | 2010 | 2011 and 2012 | 2013 and 2014 | Beyond 2014 | |||||||||||||||
U.S. Dollar-Denominated Obligations: | ||||||||||||||||||||
Long-term debt(1) | 4,021.4 | 109.3 | 599.7 | 1,319.1 | 1,993.3 | |||||||||||||||
Chartered-in vessels (operating leases) | 512.4 | 107.1 | 271.6 | 90.9 | 42.8 | |||||||||||||||
Commitments under capital leases(2) | 209.7 | 11.8 | 197.9 | — | — | |||||||||||||||
Commitments under capital leases(3) | 1,037.3 | 12.0 | 48.0 | 48.0 | 929.3 | |||||||||||||||
Commitments under operating leases (4) | 470.2 | 12.5 | 50.1 | 50.2 | 357.4 | |||||||||||||||
Newbuilding installments(5) (6) | 633.4 | 250.4 | 383.0 | — | — | |||||||||||||||
Asset retirement obligation | 21.2 | — | — | — | 21.2 | |||||||||||||||
Total U.S. Dollar-denominated obligations | 6,905.6 | 503.1 | 1,550.3 | 1,508.2 | 3,344.0 | |||||||||||||||
Euro-Denominated Obligations:(7) | ||||||||||||||||||||
Long-term debt(8) | 347.0 | 5.6 | 200.6 | 13.9 | 126.9 | |||||||||||||||
Commitments under capital leases(2) (9) | 112.2 | 32.9 | 79.3 | — | — | |||||||||||||||
Total Euro-denominated obligations | 459.2 | 38.5 | 279.9 | 13.9 | 126.9 | |||||||||||||||
Total | 7,364.8 | 541.6 | 1,830.2 | 1,522.1 | 3,470.9 | |||||||||||||||
(1) | Excludes expected interest payments of $47.9 million (remainder of 2010), $183.3 million (2011 and 2012), $151.0 million (2013 and 2014) and $293.2 million (beyond 2014). Expected interest payments are based on the existing interest rates (fixed-rate loans) and LIBOR plus margins that ranged up to 3.25% at June 30, 2010 (variable-rate loans). The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our floating-rate debt. | |
(2) | Includes, in addition to lease payments, amounts we are required to pay to purchase certain leased vessels at the end of the lease terms. We are obligated to purchase five of our existing Suezmax tankers upon the termination of the related capital leases, which will occur in 2011. The purchase price will be based on the unamortized portion of the vessel construction financing costs for the vessels, which we expect to range from $31.7 million to $39.2 million per vessel. We expect to satisfy the purchase price by assuming the existing vessel financing, although we may be required to obtain separate debt or equity financing to complete the purchases if the lenders do not consent to our assuming the financing obligations. We are also obligated to purchase one of our existing LNG carriers upon the termination of the related capital leases on December 31, 2011. The purchase obligation has been fully funded with restricted cash deposits. Please read Item 1 — Financial Statements: Note 9 — Capital Lease Obligations and Restricted Cash. | |
(3) | Existing restricted cash deposits of $478.1 million, together with the interest earned on the deposits, are expected to be sufficient to repay the remaining amounts we currently owe under the lease arrangements. | |
(4) | We have corresponding leases whereby we are the lessor and expect to receive $433.6 million for these leases from 2010 to 2029. | |
(5) | Represents remaining construction costs (excluding capitalized interest and miscellaneous construction costs) for one LPG carrier, two multi-gas carriers and four shuttle tankers as of June 30, 2010. Please read Item 1 — Financial Statements: Note 11(a) — Commitments and Contingencies — Vessels Under Construction. | |
(6) | We also have a 33% interest in a joint venture that has entered into agreements for the construction of four LNG carriers. As at June 30, 2010, the remaining commitments on these vessels, excluding capitalized interest and other miscellaneous construction costs, totaled $724.8 million of which our share is $239.2 million. Please read Item 1 — Financial Statements: Note 11(b) — Commitments and Contingencies — Joint Ventures. | |
(7) | Euro-denominated obligations are presented in U.S. Dollars and have been converted using the prevailing exchange rate as at June 30, 2010. | |
(8) | Excludes expected interest payments of $1.9 million (remainder of 2010), $6.4 million (2011 and 2012), $3.1 million (2013 and 2014) and $8.6 million (beyond 2014). Expected interest payments are based on EURIBOR at June 30, 2010, plus margins that ranged up to 0.66%, as well as the prevailing U.S. Dollar/Euro exchange rate as of June 30, 2010. The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our floating-rate debt. | |
(9) | Existing restricted cash deposits of $105.8 million, together with the interest earned on these deposits, are expected to equal the remaining amounts we owe under the lease arrangement, including our obligation to purchase the vessel at the end of the lease term. |
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• | our future growth prospects; |
• | tanker market fundamentals, including the balance of supply and demand in the tanker market and spot tanker charter rates; |
• | the impact of theFoinavenamended contract on our future operating results; |
• | the expected return on our first priority ship mortgage loans; |
• | our belief that the master time charter arrangement with Statoil will provide more seasonally stable cash flows and predictability and the use of the Aframax newbuilding shuttle tankers under the new arrangement; |
• | the sufficiency of working capital for short-term liquidity requirements; |
• | future capital expenditure commitments and the financing requirements for such commitments; |
• | delivery dates of and financing for newbuildings, and the commencement of service of newbuildings under long-term time-charter contracts; |
• | potential newbuilding order cancellations; |
• | construction and delivery delays in the general tanker industry; |
• | the expected timing and costs of upgrades to any vessels; |
• | the future valuation of goodwill; |
• | our compliance with covenants under our credit facilities; |
• | our hedging activities relating to foreign currency exchange and interest rate risks; |
• | the adequacy of restricted cash deposits to fund capital lease obligations; |
• | the effectiveness of our risk management policies and procedures and the ability of the counter-parties to our derivative contracts to fulfill their contractual obligations; |
• | the condition of financial and economic markets, including the recent credit crisis, interest rate volatility and the availability and cost of capital; and |
• | the growth of global oil demand. |
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JUNE 30, 2010
PART I — FINANCIAL INFORMATION
Expected Maturity Date | ||||||||||||||||||||
Remainder of | Total | |||||||||||||||||||
2010 | 2011 | 2012 | Total | Fair Value(1) | ||||||||||||||||
Contract | Contract | Contract | Contract | Asset | ||||||||||||||||
Amount(1) | Amount(1) | Amount(1) | Amount(1) | (Liability) | ||||||||||||||||
Norwegian Kroner: | $ | 79.9 | $ | 120.5 | $ | 48.8 | $ | 249.2 | $ | (15.0 | ) | |||||||||
Average contractual exchange rate(2) | 6.16 | 6.13 | 6.40 | 6.19 | ||||||||||||||||
Euro: | $ | 33.1 | $ | 45.0 | $ | 14.2 | $ | 92.3 | $ | (9.7 | ) | |||||||||
Average contractual exchange rate(2) | 0.71 | 0.73 | 0.76 | 0.73 | ||||||||||||||||
Canadian Dollar: | $ | 20.0 | $ | 13.4 | — | $ | 33.4 | $ | 0.7 | |||||||||||
Average contractual exchange rate(2) | 1.11 | 1.05 | — | 1.09 | ||||||||||||||||
British Pounds: | $ | 30.0 | $ | 37.2 | $ | 11.4 | $ | 78.6 | $ | (1.5 | ) | |||||||||
Average contractual exchange rate(2) | 0.66 | 0.65 | 0.67 | 0.66 |
(1) | Contract amounts and fair value amounts in millions of U.S. Dollars. | |
(2) | Average contractual exchange rate represents the contractual amount of foreign currency one U.S. Dollar will buy. |
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Fair | ||||||||||||||||||||||||||||||||||||
Expected Maturity Date | Value | |||||||||||||||||||||||||||||||||||
Balance | Asset / | |||||||||||||||||||||||||||||||||||
of 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | (Liability) | Rate(1) | ||||||||||||||||||||||||||||
(in millions of U.S. dollars, except percentages) | ||||||||||||||||||||||||||||||||||||
Long-Term Debt: | ||||||||||||||||||||||||||||||||||||
Variable Rate ($U.S.)(2) | 86.2 | 255.5 | 235.7 | 403.9 | 823.0 | 1,287.8 | 3,092.1 | (2,843.7 | ) | 1.2 | % | |||||||||||||||||||||||||
Variable Rate (Euro)(3) (4) | 5.6 | 11.9 | 188.7 | 6.7 | 7.2 | 126.9 | 347.0 | (317.2 | ) | 1.1 | % | |||||||||||||||||||||||||
Fixed-Rate Debt ($U.S.) | 23.1 | 62.4 | 46.2 | 46.2 | 46.2 | 705.2 | 929.2 | (920.0 | ) | 6.9 | % | |||||||||||||||||||||||||
Average Interest Rate | 5.2 | % | 6.1 | % | 5.2 | % | 5.2 | % | 5.2 | % | 7.3 | % | 6.9 | % | ||||||||||||||||||||||
Capital Lease Obligations(5) (6) | ||||||||||||||||||||||||||||||||||||
Fixed-Rate ($U.S.)(7) | 4.8 | 185.5 | — | — | — | — | 190.3 | (190.3 | ) | 7.4 | % | |||||||||||||||||||||||||
Average Interest Rate(8) | 7.5 | % | 7.4 | % | — | — | — | — | 7.4 | % | ||||||||||||||||||||||||||
Interest Rate Swaps: | ||||||||||||||||||||||||||||||||||||
Contract Amount ($U.S.)(6) (9)(10) | 239.8 | 170.3 | 276.3 | 82.5 | 96.4 | 2,742.1 | 3,607.4 | (537.8 | ) | 4.8 | % | |||||||||||||||||||||||||
Average Fixed Pay Rate(2) | 4.2 | % | 3.5 | % | 3.0 | % | 4.9 | % | 4.8 | % | 6.0 | % | 4.8 | % | ||||||||||||||||||||||
Contract Amount (Euro)(4) | 5.6 | 11.9 | 188.7 | 13.7 | 14.7 | 112.4 | 347.0 | (34.4 | ) | 3.8 | % | |||||||||||||||||||||||||
Average Fixed Pay Rate(3) | 3.8 | % | 3.8 | % | 3.8 | % | 3.8 | % | 3.8 | % | 3.8 | % | 3.8 | % |
(1) | Rate refers to the weighted-average effective interest rate for our long-term debt and capital lease obligations, including the margin we pay on our floating-rate, which as of June 30, 2010, ranged from 0.3% to 3.25%. The average interest rate for our capital lease obligations is the weighted-average interest rate implicit in our lease obligations at the inception of the leases. | |
(2) | Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR. The average fixed pay rate for our interest rate swaps excludes the margin we pay our floating-rate debt. | |
(3) | Interest payments on Euro-denominated debt and interest rate swaps are based on EURIBOR. | |
(4) | Euro-denominated amounts have been converted to U.S. Dollars using the prevailing exchange rate as of June 30, 2010. | |
(5) | Excludes capital lease obligations (present value of minimum lease payments) of 85.5 million Euros ($104.7 million) on one of our existing LNG carriers with a weighted-average fixed interest rate of 5.8%. Under the terms of this fixed-rate lease obligation, we are required to have on deposit, subject to a weighted-average fixed interest rate of 5.0%, an amount of cash that, together with the interest earned thereon, will fully fund the amount owing under the capital lease obligation, including a vessel purchase obligation. As at June 30, 2010, this amount was 86.5 million Euros ($105.8 million). Consequently, we are not subject to interest rate risk from these obligations or deposits. | |
(6) | Under the terms of the capital leases for the RasGas II LNG Carriers (see Item 1 — Financial Statements: Note 9 — Capital Lease Obligations and Restricted Cash), we are required to have on deposit, subject to a variable rate of interest, an amount of cash that, together with interest earned on the deposit, will equal the remaining amounts owing under the variable-rate leases. The deposits, which as at June 30, 2010, totaled $478.1 million, and the lease obligations, which as at June 30, 2010, totaled $470.4 million, have been swapped for fixed-rate deposits and fixed-rate obligations. Consequently, we are not subject to interest rate risk from these obligations and deposits and, therefore, the lease obligations, cash deposits and related interest rate swaps have been excluded from the table above. As at June 30, 2010, the contract amount, fair value and fixed interest rates of these interest rate swaps related to the RasGas II LNG Carriers capital lease obligations and restricted cash deposits were $445.2 million and $472.5 million, ($79.2) million and $95.5 million, and 4.9% and 4.8% respectively. | |
(7) | The amount of capital lease obligations represents the present value of minimum lease payments together with our purchase obligation, as applicable (see Item 1 — Financial Statements: Note 9 — Capital Lease Obligations and Restricted Cash). | |
(8) | The average interest rate is the weighted-average interest rate implicit in the capital lease obligations at the inception of the leases. | |
(9) | The average variable receive rate for our interest rate swaps is set monthly at the 1-month LIBOR or EURIBOR, quarterly at the 3-month LIBOR or semi-annually at the 6-month LIBOR. | |
(10) | Includes interest rate swaps of $200.0 million that commence in 2011. |
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JUNE 30, 2010
Votes Against or | Shares which | Broker | ||||||||||||||
Terms Expiring in 2013 | Votes For | Withheld | Abstained | Non-Votes | ||||||||||||
Peter S. Janson | 59,437,521 | 178,426 | N/A | N/A | ||||||||||||
Eileen A. Mercier | 56,601,342 | 3,014,605 | N/A | N/A | ||||||||||||
Tore I. Sandvold | 59,459,293 | 156,654 | N/A | N/A |
• | REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-97746) FILED WITH THE SEC ON OCTOBER 4, 1995; |
• | REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-42434) FILED WITH THE SEC ON JULY 28, 2000; |
• | REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-119564) FILED WITH THE SEC ON OCTOBER 6, 2004; |
• | REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-147683) FILED WITH THE SEC ON NOVEMBER 28, 2007; |
• | REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-166523) FILED WITH THE SEC ON MAY 5, 2010; AND |
• | REGISTRATION STATEMENT ON FORM 8-A/A (FILE NO. 001-12874) FILED WITH THE SEC ON JULY 2, 2010. |
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TEEKAY CORPORATION | ||||
Date: September 13, 2010 | By: | /s/ Vincent Lok | ||
Vincent Lok | ||||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
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