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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
REVENUES | 462,118 | 500,368 | 1,571,602 | 1,649,392 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Voyage expenses | 53,719 | 71,659 | 192,636 | 225,253 | ||||||||||||
Vessel operating expenses(note 16) | 159,570 | 149,790 | 464,897 | 446,554 | ||||||||||||
Time-charter hire expense | 62,189 | 94,964 | 201,208 | 348,243 | ||||||||||||
Depreciation and amortization | 109,194 | 107,111 | 328,658 | 321,856 | ||||||||||||
General and administrative(note 16) | 46,910 | 49,890 | 145,257 | 146,818 | ||||||||||||
Loss (gain) on sale of vessels and equipment — net of write-downs of intangible assets and vessels and equipment (notes 6 and 13) | 24,173 | 915 | 24,955 | (9,210 | ) | |||||||||||
Restructuring charge (note 19) | 3,240 | 1,456 | 11,218 | 12,017 | ||||||||||||
Total operating expenses | 458,995 | 475,785 | 1,368,829 | 1,491,531 | ||||||||||||
Income from vessel operations | 3,123 | 24,583 | 202,773 | 157,861 | ||||||||||||
OTHER ITEMS | ||||||||||||||||
Interest expense | (34,852 | ) | (30,035 | ) | (100,930 | ) | (111,505 | ) | ||||||||
Interest income | 3,467 | 4,193 | 9,949 | 15,894 | ||||||||||||
Realized and unrealized (loss) gain on non-designated derivative instruments(note 16) | (133,241 | ) | (121,664 | ) | (440,313 | ) | 83,066 | |||||||||
Equity (loss) income from joint ventures(note 11b) | (16,010 | ) | (8,945 | ) | (40,503 | ) | 29,857 | |||||||||
Foreign exchange (loss) gain (notes 8 and 16) | (28,717 | ) | (26,047 | ) | 27,797 | (39,900 | ) | |||||||||
Loss on bond repurchase(note 8) | — | — | (12,645 | ) | — | |||||||||||
Other income (note 14) | 2,042 | 2,938 | 5,742 | 9,419 | ||||||||||||
Net (loss) income before income taxes | (204,188 | ) | (154,977 | ) | (348,130 | ) | 144,692 | |||||||||
Income tax (expense) recovery(note 18) | (8,572 | ) | (10,904 | ) | 3,882 | (12,174 | ) | |||||||||
Net (loss) income | (212,760 | ) | (165,881 | ) | (344,248 | ) | 132,518 | |||||||||
Less: Net loss (income) attributable to non-controlling interests | 26,717 | 23,633 | (8,945 | ) | (33,902 | ) | ||||||||||
Net (loss) income attributable to stockholders of Teekay Corporation | (186,043 | ) | (142,248 | ) | (353,193 | ) | 98,616 | |||||||||
Per common share of Teekay Corporation (note 17) | ||||||||||||||||
• Basic (loss) earnings attributable to stockholders of Teekay Corporation | (2.55 | ) | (1.96 | ) | (4.84 | ) | 1.36 | |||||||||
• Diluted (loss) earnings attributable to stockholders of Teekay Corporation | (2.55 | ) | (1.96 | ) | (4.84 | ) | 1.35 | |||||||||
• Cash dividends declared | 0.3163 | 0.3163 | 0.9488 | 0.9488 | ||||||||||||
Weighted average number of common shares outstanding(note 17) | ||||||||||||||||
• Basic | 72,982,870 | 72,553,809 | 72,911,689 | 72,535,438 | ||||||||||||
• Diluted | 72,982,870 | 72,553,809 | 72,911,689 | 72,876,558 |
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As at | As at | |||||||
September 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
ASSETS | ||||||||
Current | ||||||||
Cash and cash equivalents(note 8) | 692,454 | 422,510 | ||||||
Restricted cash(note 9) | 37,639 | 36,068 | ||||||
Accounts receivable, including non-trade of $21,339 (2009 — $19,521) and related party balance $6,103 (2009 — $2,672) | 195,765 | 234,676 | ||||||
Vessels held for sale (note 13) | — | 10,250 | ||||||
Net investment in direct financing leases(note 4) | 27,043 | 27,210 | ||||||
Prepaid expenses | 94,512 | 96,549 | ||||||
Current portion of derivative assets(note 16) | 26,266 | 29,996 | ||||||
Advances to joint venture partner | 6,900 | — | ||||||
Other assets | 9,804 | 7,119 | ||||||
Total current assets | 1,090,383 | 864,378 | ||||||
Restricted cash — non-current(note 9) | 646,580 | 579,243 | ||||||
Vessels and equipment(note 8) | ||||||||
At cost, less accumulated depreciation of $1,907,501 (2009 — $1,673,380) | 5,669,069 | 5,793,864 | ||||||
Vessels under capital leases, at cost, less accumulated amortization of $163,537 (2009 — $138,569)(note 9) | 888,923 | 903,521 | ||||||
Advances on newbuilding contracts(notes 11a and 11b) | 167,386 | 138,212 | ||||||
Total vessels and equipment | 6,725,378 | 6,835,597 | ||||||
Net investment in direct financing leases — non-current(note 4) | 468,603 | 485,202 | ||||||
Marketable securities | 17,173 | 18,904 | ||||||
Loans to joint ventures, bearing interest between 4.4% to 8.0% | 10,791 | 21,998 | ||||||
Derivative assets(note 16) | 109,203 | 18,119 | ||||||
Deferred income tax asset (note 18) | 11,959 | 6,516 | ||||||
Investment in joint ventures(note 11b) | 125,674 | 139,790 | ||||||
Investment in term loans(note 3) | 115,775 | — | ||||||
Other non-current assets | 116,604 | 130,624 | ||||||
Intangible assets — net(note 6) | 181,007 | 213,870 | ||||||
Goodwill | 203,191 | 203,191 | ||||||
Total assets | 9,822,321 | 9,517,432 | ||||||
LIABILITIES AND EQUITY | ||||||||
Current | ||||||||
Accounts payable | 55,986 | 57,242 | ||||||
Accrued liabilities(note 16) | 304,794 | 308,122 | ||||||
Current portion of derivative liabilities(note 16) | 142,875 | 143,770 | ||||||
Current portion of long-term debt(note 8) | 303,398 | 231,209 | ||||||
Current obligation under capital leases(note 9) | 44,750 | 41,016 | ||||||
Current portion of in-process revenue contracts(note 6) | 44,461 | 56,758 | ||||||
Loan from joint venture partners | 44 | 1,294 | ||||||
Total current liabilities | 896,308 | 839,411 | ||||||
Long-term debt, including amounts due to joint venture partners of $13,664 (2009 — $16,410)(note 8) | 4,153,082 | 4,187,962 | ||||||
Long-term obligation under capital leases(note 9) | 732,147 | 743,254 | ||||||
Derivative liabilities(note 16) | 630,452 | 215,709 | ||||||
Deferred income tax liability (note 18) | — | 11,628 | ||||||
Asset retirement obligation | 22,752 | 22,092 | ||||||
In-process revenue contracts(note 6) | 163,504 | 187,602 | ||||||
Other long-term liabilities | 227,618 | 214,104 | ||||||
Total liabilities | 6,825,863 | 6,421,762 | ||||||
Commitments and contingencies(notes 4, 9, 11 and 16) | ||||||||
Redeemable non-controlling interest(note 11d) | 43,330 | — | ||||||
Equity | ||||||||
Common stock and additional paid-in capital ($0.001 par value; 725,000,000 shares authorized; 72,993,003 shares outstanding (2009 — 72,694,345); 73,492,203 shares issued (2009 — 73,193,545))(note 10) | 676,734 | 656,193 | ||||||
Retained earnings | 1,227,690 | 1,585,431 | ||||||
Non-controlling interest | 1,052,626 | 855,580 | ||||||
Accumulated other comprehensive loss(note 15) | (3,922 | ) | (1,534 | ) | ||||
Total equity | 2,953,128 | 3,095,670 | ||||||
Total liabilities and equity | 9,822,321 | 9,517,432 | ||||||
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Nine Months Ended September 30, | ||||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Cash and cash equivalents provided by (used for) | ||||||||
OPERATING ACTIVITIES | ||||||||
Net (loss) income | (344,248 | ) | 132,518 | |||||
Non-cash items: | ||||||||
Depreciation and amortization | 328,658 | 321,856 | ||||||
Amortization of in-process revenue contracts | (36,395 | ) | (56,719 | ) | ||||
Loss (gain) on sale of vessels and equipment | 2,664 | (27,399 | ) | |||||
Write-down of intangible assets and other | 12,300 | 1,076 | ||||||
Write-down of vessels and equipment | 9,991 | 17,113 | ||||||
Loss on repurchase of bonds | 12,645 | — | ||||||
Equity loss (income), net of dividends received | 40,503 | (26,914 | ) | |||||
Income tax (recovery) expense | (3,882 | ) | 12,174 | |||||
Employee stock option compensation | 11,816 | 8,607 | ||||||
Foreign exchange (gain) loss | (19,111 | ) | 24,747 | |||||
Other | 10,955 | 12,302 | ||||||
Unrealized loss (gain) on derivative instruments | 325,038 | (195,048 | ) | |||||
Change in operating assets and liabilities | 36,192 | 132,802 | ||||||
Expenditures for drydocking | (40,223 | ) | (58,815 | ) | ||||
Net operating cash flow | 346,903 | 298,300 | ||||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of long-term debt(note 8) | 1,142,000 | 762,712 | ||||||
Debt issuance costs | (12,808 | ) | (3,852 | ) | ||||
Scheduled repayments of long-term debt | (143,361 | ) | (113,534 | ) | ||||
Prepayments of long-term debt | (954,133 | ) | (1,104,204 | ) | ||||
Repayments of capital lease obligations | (1,961 | ) | (6,949 | ) | ||||
Proceeds from loans from joint venture partner | 1,182 | 591 | ||||||
Repayment of loans from joint venture partner | (1,250 | ) | (23,390 | ) | ||||
(Increase) decrease in restricted cash(note 9) | (75,246 | ) | 5,228 | |||||
Net proceeds from issuance of Teekay LNG Partners L.P. units(note 5) | 50,000 | 67,095 | ||||||
Net proceeds from issuance of Teekay Offshore Partners L.P. units (note 5) | 221,492 | 102,098 | ||||||
Net proceeds from issuance of Teekay Tankers Ltd. shares (note 5) | 103,036 | 65,556 | ||||||
Issuance of Common Stock upon exercise of stock options | 2,627 | 352 | ||||||
Distribution from subsidiaries to non-controlling interests | (113,598 | ) | (83,646 | ) | ||||
Cash dividends paid | (69,615 | ) | (68,800 | ) | ||||
Net financing cash flow | 148,365 | (400,743 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Expenditures for vessels and equipment | (176,238 | ) | (431,607 | ) | ||||
Proceeds from sale of vessels and equipment | 49,402 | 198,837 | ||||||
Investment in term loans(note 3) | (115,575 | ) | — | |||||
Investment in joint ventures | (1,977 | ) | (7,288 | ) | ||||
Repayment (advances) to joint ventures and joint venture partner | 1,510 | (1,206 | ) | |||||
Investment in direct financing lease assets | (4,199 | ) | — | |||||
Direct financing lease payments received | 20,965 | 2,135 | ||||||
Other investing activities | 788 | 22,809 | ||||||
Net investing cash flow | (225,324 | ) | (216,320 | ) | ||||
Increase (decrease) in cash and cash equivalents | 269,944 | (318,763 | ) | |||||
Cash and cash equivalents, beginning of the period | 422,510 | 814,165 | ||||||
Cash and cash equivalents, end of the period | 692,454 | 495,402 | ||||||
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TOTAL EQUITY | ||||||||||||||||||||||||
Thousands | Common | Accumulated | ||||||||||||||||||||||
of Shares | Stock and | Other - | ||||||||||||||||||||||
of Common | Additional | Comprehensive | Non- | |||||||||||||||||||||
Stock | 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 | (353,193 | ) | 8,945 | (344,248 | ) | |||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Unrealized loss on marketable securities | (1,731 | ) | (1,731 | ) | ||||||||||||||||||||
Pension adjustments, net of taxes | 761 | 761 | ||||||||||||||||||||||
Unrealized net loss on qualifying cash flow hedging instruments(note 16) | (3,817 | ) | (1,022 | ) | (4,839 | ) | ||||||||||||||||||
Realized net loss on qualifying cash flow hedging instruments(note 16) | 2,399 | 978 | 3,377 | |||||||||||||||||||||
Comprehensive income (loss) | 8,901 | (346,680 | ) | |||||||||||||||||||||
Dividends declared | (69,652 | ) | (113,598 | ) | (183,250 | ) | ||||||||||||||||||
Reinvested dividends | 2 | 37 | 37 | |||||||||||||||||||||
Exercise of stock options and other | 297 | 2,627 | 2,627 | |||||||||||||||||||||
Employee stock option compensation and other(note 10) | 17,877 | 17,877 | ||||||||||||||||||||||
Dilution gain on equity offerings of Teekay Offshore and Teekay Tankers and direct equity placement of Teekay LNG(note 5) | 70,280 | 70,280 | ||||||||||||||||||||||
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 | 303,999 | 303,999 | ||||||||||||||||||||||
Balance as at September 30, 2010 | 72,993 | 676,734 | 1,227,690 | (3,922 | ) | 1,052,626 | 2,953,128 | |||||||||||||||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Net (loss) income | (212,760 | ) | (165,881 | ) | (344,248 | ) | 132,518 | |||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gain (loss) on marketable securities | 3,341 | 3,963 | (1,731 | ) | 5,053 | |||||||||||
Pension adjustments, net of taxes | 349 | 437 | 761 | 1,308 | ||||||||||||
Unrealized gain (loss) on qualifying cash flow hedging instruments | 15,103 | 22,980 | (4,839 | ) | 43,910 | |||||||||||
Realized loss on qualifying cash flow hedging instruments | 1,480 | 4,628 | 3,377 | 23,315 | ||||||||||||
Other comprehensive income (loss) | 20,273 | 32,008 | (2,432 | ) | 73,586 | |||||||||||
Comprehensive (loss) income | (192,487 | ) | (133,873 | ) | (346,680 | ) | 206,104 | |||||||||
Less: Comprehensive loss (income) attributable to non-controlling interests | 24,021 | 19,657 | (8,901 | ) | (42,589 | ) | ||||||||||
Comprehensive (loss) income attributable to stockholders of Teekay Corporation | (168,466 | ) | (114,216 | ) | (355,581 | ) | 163,515 | |||||||||
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Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Three months ended September 30, 2010 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues(1) | 146,745 | 86,966 | 62,131 | 166,275 | 462,118 | |||||||||||||||
Voyage expenses | 23,525 | — | (50 | ) | 30,244 | 53,719 | ||||||||||||||
Vessel operating expenses | 43,588 | 54,176 | 10,982 | 50,824 | 159,570 | |||||||||||||||
Time-charter hire expense | 20,314 | — | — | 41,875 | 62,189 | |||||||||||||||
Depreciation and amortization | 31,228 | 23,751 | 15,702 | 38,513 | 109,194 | |||||||||||||||
General and administrative(2) | 12,322 | 7,071 | 4,841 | 22,676 | 46,910 | |||||||||||||||
Loss on sale of vessels and equipment, net of write- downs of intangible assets and vessels and equipment | 10,775 | — | — | 13,398 | 24,173 | |||||||||||||||
Restructuring charge | (46 | ) | — | 48 | 3,238 | 3,240 | ||||||||||||||
Income (loss) from vessel operations | 5,039 | 1,968 | 30,608 | (34,493 | ) | 3,123 | ||||||||||||||
Total assets of operating segments at September 30, 2010 | 1,814,207 | 1,157,028 | 2,887,566 | 2,744,951 | 8,603,752 |
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Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Three months ended September 30, 2009 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues | 144,182 | 100,327 | 61,435 | 194,424 | 500,368 | |||||||||||||||
Voyage expenses | 23,652 | — | 465 | 47,542 | 71,659 | |||||||||||||||
Vessel operating expenses | 39,720 | 49,917 | 12,620 | 47,533 | 149,790 | |||||||||||||||
Time-charter hire expense | 27,772 | — | — | 67,192 | 94,964 | |||||||||||||||
Depreciation and amortization | 30,014 | 25,344 | 14,188 | 37,565 | 107,111 | |||||||||||||||
General and administrative(2) | 12,875 | 7,918 | 5,059 | 24,038 | 49,890 | |||||||||||||||
Loss (gain) on sale of vessels and equipment, net of write-downs | 961 | — | — | (46 | ) | 915 | ||||||||||||||
Restructuring charge | 693 | — | 590 | 173 | 1,456 | |||||||||||||||
Income (loss) from vessel operations | 8,495 | 17,148 | 28,513 | (29,573 | ) | 24,583 | ||||||||||||||
Total assets of operating segments at September 30, 2009 | 1,695,154 | 1,272,105 | 2,890,314 | 2,902,175 | 8,759,748 |
Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Nine months ended September 30, 2010 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues(1) | 470,196 | 343,187 | 185,462 | 572,757 | 1,571,602 | |||||||||||||||
Voyage expenses | 88,589 | — | 45 | 104,002 | 192,636 | |||||||||||||||
Vessel operating expenses | 128,403 | 152,574 | 35,582 | 148,338 | 464,897 | |||||||||||||||
Time-charter hire expense | 68,785 | — | — | 132,423 | 201,208 | |||||||||||||||
Depreciation and amortization | 95,242 | 71,253 | 47,114 | 115,049 | 328,658 | |||||||||||||||
General and administrative(2) | 38,612 | 20,418 | 15,170 | 71,057 | 145,257 | |||||||||||||||
Loss on sale of vessels and equipment, net of write-downs of intangible assets and vessels and equipment | 10,039 | — | — | 14,916 | 24,955 | |||||||||||||||
Restructuring charge | 628 | — | 362 | 10,228 | 11,218 | |||||||||||||||
Income (loss) from vessel operations | 39,898 | 98,942 | 87,189 | (23,256 | ) | 202,773 | ||||||||||||||
Shuttle | Liquefied | Conventional | ||||||||||||||||||
Tanker and FSO | FPSO | Gas | Tanker | |||||||||||||||||
Nine months ended September 30, 2009 | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Revenues | 432,371 | 289,825 | 176,283 | 750,913 | 1,649,392 | |||||||||||||||
Voyage expenses | 58,227 | — | 723 | 166,303 | 225,253 | |||||||||||||||
Vessel operating expenses | 129,051 | 143,104 | 37,079 | 137,320 | 446,554 | |||||||||||||||
Time-charter hire expense | 85,645 | — | — | 262,598 | 348,243 | |||||||||||||||
Depreciation and amortization | 88,003 | 76,869 | 44,257 | 112,727 | 321,856 | |||||||||||||||
General and administrative(2) | 38,266 | 23,520 | 15,034 | 69,998 | 146,818 | |||||||||||||||
Loss (gain) on sale of vessels and equipment, net of write-downs of intangible assets and vessels and equipment | 1,902 | — | — | (11,112 | ) | (9,210 | ) | |||||||||||||
Restructuring charge | 5,991 | — | 3,802 | 2,224 | 12,017 | |||||||||||||||
Income from vessel operations | 25,286 | 46,332 | 75,388 | 10,855 | 157,861 | |||||||||||||||
(1) | FPSO segment includes $nil and $59.2 million in revenue for the three and nine months ended September 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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September 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
Total assets of all segments | 8,603,752 | 8,640,315 | ||||||
Cash and restricted cash | 692,454 | 422,510 | ||||||
Accounts receivable and other assets | 526,115 | 454,607 | ||||||
Consolidated total assets | 9,822,321 | 9,517,432 | ||||||
Head Lease | Sublease | |||||||
Year | Receipts(1) | Payments(1) | ||||||
Remainder of 2010 | $ | 7,221 | $ | 6,268 | ||||
2011 | $ | 28,875 | $ | 25,072 | ||||
2012 | $ | 28,859 | $ | 25,072 | ||||
2013 | $ | 28,843 | $ | 25,072 | ||||
2014 | $ | 28,828 | $ | 25,072 | ||||
Thereafter | $ | 303,735 | $ | 357,387 | ||||
Total | $ | 426,361 | $ | 463,943 | ||||
(1) | The Head Leases are fixed-rate operating leases while the Subleases have a small variable-rate component. As at September 30, 2010, the Company had received $84.0 million of Head Lease receipts and had paid $35.4 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)
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Total minimum lease payments to be received | 814,057 | 869,268 | ||||||
Estimated unguaranteed residual value of leased properties | 203,465 | 203,465 | ||||||
Initial direct costs and other | 1,797 | 1,134 | ||||||
Less unearned revenue | (523,673 | ) | (561,455 | ) | ||||
Total | 495,646 | 512,412 | ||||||
Less current portion | 27,043 | 27,210 | ||||||
Long-term portion | 468,603 | 485,202 | ||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
Weighted-Average | Gross Carrying | Accumulated | Net Carrying | |||||||||||||
Amortization | Amount | Amortization | Amount | |||||||||||||
(Years) | $ | $ | $ | |||||||||||||
As at September 30, 2010: | ||||||||||||||||
Customer contracts | 14.0 | 354,919 | (190,221 | ) | 164,698 | |||||||||||
Vessel purchase options | — | 11,600 | — | 11,600 | ||||||||||||
Other intangible assets | 4.5 | 11,430 | (6,721 | ) | 4,709 | |||||||||||
13.3 | 377,949 | (196,942 | ) | 181,007 | ||||||||||||
As at December 31, 2009: | ||||||||||||||||
Customer contracts | 14.0 | 355,472 | (171,838 | ) | 183,634 | |||||||||||
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 | ||||||||||||
September 30, 2010 | December 31, 2009 | |||||||
$ | $ | |||||||
Revolving Credit Facilities | 1,797,842 | 1,975,360 | ||||||
Senior Notes (8.875%) due July 15, 2011 | 16,201 | 177,004 | ||||||
Senior Notes (8.5%) due January 15, 2020 | 446,497 | — | ||||||
USD-denominated Term Loans due through 2022 | 1,798,832 | 1,837,980 | ||||||
Euro-denominated Term Loans due through 2023 | 383,444 | 412,417 | ||||||
USD-denominated Unsecured Demand Loan due to Joint Venture Partners | 13,664 | 16,410 | ||||||
Total | 4,456,480 | 4,419,171 | ||||||
Less current portion | 303,398 | 231,209 | ||||||
Long-term portion | 4,153,082 | 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)
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
RasGas II LNG Carriers | 470,594 | 470,138 | ||||||
Spanish-Flagged LNG Carrier | 118,385 | 119,068 | ||||||
Suezmax Tankers | 187,918 | 195,064 | ||||||
Total | 776,897 | 784,270 | ||||||
Less current portion | 44,750 | 41,016 | ||||||
Long-term portion | 732,147 | 743,254 | ||||||
Year | Commitment | |||
Remainder of 2010 | $ | 6,000 | ||
2011 | $ | 24,000 | ||
2012 | $ | 24,000 | ||
2013 | $ | 24,000 | ||
2014 | $ | 24,000 | ||
Thereafter | $ | 929,128 |
Year | Commitment | |||
Remainder of 2010 | 26,918 Euros ($36,700) | |||
2011 | 64,825 Euros ($88,382) |
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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 | $ | 5,892 | ||
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)
September 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 | 1,393,846 | 1,393,846 | 1,056,725 | 1,056,725 | |||||||||||||
Vessels held for sale | — | — | 10,250 | 10,250 | ||||||||||||||
Investment in term loans(note 3) | 115,775 | 115,775 | — | — | ||||||||||||||
Loans to joint ventures | 10,791 | 10,791 | 21,998 | 21,998 | ||||||||||||||
Loans from joint venture partners | (44 | ) | (44 | ) | (1,294 | ) | (1,294 | ) | ||||||||||
Long-term debt | (4,456,480 | ) | (4,197,494 | ) | (4,419,171 | ) | (4,055,367 | ) | ||||||||||
Derivative instruments(note 16)(2) | ||||||||||||||||||
Interest rate swap agreements(3) | Level 2 | (795,767 | ) | (795,767 | ) | (378,407 | ) | (378,407 | ) | |||||||||
Interest rate swap agreements(3) | Level 2 | 124,814 | 124,814 | 36,744 | 36,744 | |||||||||||||
Foreign currency contracts | Level 2 | 10,122 | 10,122 | 10,461 | 10,461 | |||||||||||||
Bunker fuel swap contracts | Level 2 | (272 | ) | (272 | ) | 612 | 612 | |||||||||||
Forward freight agreements | Level 2 | 2,256 | 2,256 | (504 | ) | (504 | ) | |||||||||||
Foinaven embedded derivative | Level 2 | (10,922 | ) | (10,922 | ) | (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 September 30, 2010 includes $31.9 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Volatile organic compound emission plant lease income | 1,109 | 1,570 | 3,674 | 5,172 | ||||||||||||
Miscellaneous income | 933 | 1,368 | 2,068 | 4,247 | ||||||||||||
Other income | 2,042 | 2,938 | 5,742 | 9,419 | ||||||||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
$ | $ | |||||||
Unrealized gain on qualifying cash flow hedging instruments | 1,505 | 2,923 | ||||||
Pension adjustments, net of tax recoveries | (9,533 | ) | (10,294 | ) | ||||
Unrealized gain on marketable securities | 4,106 | 5,837 | ||||||
(3,922 | ) | (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 | 1,288.1 | 6.17 | $ | 3.0 | $ | 4.3 | $ | 39.2 | $ | 119.4 | $ | 49.9 | ||||||||||||||||
Euro | 54.9 | 0.73 | (0.5 | ) | 0.2 | 15.8 | 45.0 | 14.2 | ||||||||||||||||||||
Canadian Dollar | 28.9 | 1.07 | 0.9 | — | 10.2 | 16.5 | 0.3 | |||||||||||||||||||||
British Pounds | 41.0 | 0.66 | 0.3 | 1.9 | 12.4 | 38.3 | 11.4 | |||||||||||||||||||||
$ | 3.7 | $ | 6.4 | $ | 77.6 | $ | 219.2 | $ | 75.8 | |||||||||||||||||||
(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 | 441,339 | (101,730 | ) | 26.3 | 4.9 | ||||||||||||
U.S. Dollar-denominated interest rate swaps | LIBOR | 3,347,744 | (591,181 | ) | 9.1 | 4.6 | ||||||||||||
U.S. Dollar-denominated interest rate swaps(4) | LIBOR | 200,000 | (58,446 | ) | 20.0 | 5.7 | ||||||||||||
LIBOR-Based Restricted Cash Deposit: | ||||||||||||||||||
U.S. Dollar-denominated interest rate swaps(3) | LIBOR | 472,001 | 124,814 | 26.3 | 4.8 | |||||||||||||
EURIBOR-Based Debt: | ||||||||||||||||||
Euro-denominated interest rate swaps(5) (6) | EURIBOR | 383,444 | (44,410 | ) | 13.7 | 3.8 |
(1) | The fair value of the Company’s interest rate swap agreements includes $31.9 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 September 30, 2010 ranged from 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 ($95.6 million) by the maturity dates of the swap agreements. | |
(6) | Principal amount is the U.S. Dollar equivalent of 281.2 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 September 30, 2010: | ||||||||||||||||||||
Derivatives designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 3,341 | 1,528 | — | (1,238 | ) | (4 | ) | |||||||||||||
Derivatives not designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 3,903 | 3,933 | — | (1,276 | ) | (63 | ) | |||||||||||||
Interest rate swaps | 16,720 | 103,742 | (31,904 | ) | (132,655 | ) | (626,850 | ) | ||||||||||||
Forward freight agreements | 2,302 | — | — | (47 | ) | — | ||||||||||||||
Bunker fuel swap contracts | — | — | — | (272 | ) | — | ||||||||||||||
Foinaven embedded derivative | — | — | — | (7,387 | ) | (3,535 | ) | |||||||||||||
26,266 | 109,203 | (31,904 | ) | (142,875 | ) | (630,452 | ) | |||||||||||||
As at December 31, 2009: | ||||||||||||||||||||
Derivatives designated as a cash flow hedge: | ||||||||||||||||||||
Foreign currency contracts | 11,697 | 250 | — | (2,021 | ) | (71 | ) | |||||||||||||
Derivatives 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 | — | — | — | (7,316 | ) | (1,453 | ) | |||||||||||||
29,996 | 18,119 | (28,499 | ) | (143,770 | ) | (215,709 | ) | |||||||||||||
Three Months Ended September 30, 2010 | Three Months Ended September 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 | |||||||||||||||||||||||
15,108 | (262 | ) | 94 | Vessel operating expenses | 22,980 | (2,115 | ) | 2,979 | Vessel operating expenses | |||||||||||||||||||
(1,218 | ) | 496 | General and administrative expenses | (2,513 | ) | 2,615 | General and administrative expenses | |||||||||||||||||||||
15,108 | (1,480 | ) | 590 | 22,980 | (4,628 | ) | 5,594 | |||||||||||||||||||||
Nine Months Ended September 30, 2010 | Nine Months Ended September 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 | |||||||||||||||||||||||
(4,839 | ) | (816 | ) | (3,421 | ) | Vessel operating expenses | 43,910 | (13,413 | ) | 9,675 | Vessel operating expenses | |||||||||||||||||
(2,561 | ) | (1,240 | ) | General and administrative expenses | (9,901 | ) | 6,304 | General and administrative expenses | ||||||||||||||||||||
(4,839 | ) | (3,377 | ) | (4,661 | ) | 43,910 | (23,314 | ) | 15,979 | |||||||||||||||||||
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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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | ||||||||||||||
Realized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (37,197 | ) | (41,321 | ) | (116,417 | ) | (91,737 | ) | ||||||||
Foreign currency forward contracts | (818 | ) | (981 | ) | (2,163 | ) | (8,926 | ) | ||||||||
Forward freight agreements and bunker fuel swap contracts | 3,000 | 2,655 | (1,356 | ) | 4,660 | |||||||||||
(35,015 | ) | (39,647 | ) | (119,936 | ) | (96,003 | ) | |||||||||
Unrealized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (116,045 | ) | (81,114 | ) | (325,883 | ) | 164,333 | |||||||||
Foreign currency forward contracts | 17,837 | 2,060 | 5,784 | 15,227 | ||||||||||||
Forward freight agreements and bunker fuel swap contracts | 2,848 | (916 | ) | 1,875 | 3,973 | |||||||||||
Foinaven embedded derivative | (2,866 | ) | (2,047 | ) | (2,153 | ) | (4,464 | ) | ||||||||
(98,226 | ) | (82,017 | ) | (320,377 | ) | 179,069 | ||||||||||
Total realized and unrealized (losses) gains on non-designated derivative instruments | (133,241 | ) | (121,664 | ) | (440,313 | ) | 83,066 | |||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Net (loss) income attributable to stockholders’ of Teekay Corporation | (186,043 | ) | (142,248 | ) | (353,193 | ) | 98,616 | |||||||||
Weighted average number of common shares | 72,982,870 | 72,553,809 | 72,911,689 | 72,535,438 | ||||||||||||
Dilutive effect of stock-based compensation | — | — | — | 341,120 | ||||||||||||
Common stock and common stock equivalents | 72,982,870 | 72,553,809 | 72,911,689 | 72,876,558 | ||||||||||||
(Loss) earnings per common share: | ||||||||||||||||
- Basic | (2.55 | ) | (1.96 | ) | (4.84 | ) | 1.36 | |||||||||
- Diluted | (2.55 | ) | (1.96 | ) | (4.84 | ) | 1.35 |
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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 | 3,535 | |||
Increase for positions taken in prior years | 8,979 | |||
Decrease for positions taken in prior years | (4,544 | ) | ||
Decrease related to statute of limitations | (1,600 | ) | ||
Balance of unrecognized tax benefits as at September 30, 2010 | $ | 47,313 | ||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Current | (2,586 | ) | (2,061 | ) | (12,035 | ) | (2,459 | ) | ||||||||
Deferred | (5,986 | ) | (8,843 | ) | 15,917 | (9,715 | ) | |||||||||
Income tax (expense) recovery | (8,572 | ) | (10,904 | ) | 3,882 | (12,174 | ) | |||||||||
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)
a) | In October 2010, Teekay Tankers completed a public offering of approximately 8.6 million common shares of its Class A Common Stock (including 395,000 common shares issued upon the partial exercise of the underwriter’s overallotment option) at a price of $12.15 per share, for gross proceeds of approximately $104.4 million. As a result, the Company’s ownership of Teekay Tankers has been reduced from 37.1% to 31.0%. Teekay maintains voting control of Teekay Tankers through its ownership of shares of Teekay Tankers’ Class A and Class B common stock and continues to consolidate this subsidiary. | |
b) | In October 2010, the Company announced that it had signed a contract with Petroleo Brasileiro SA (orPetrobras) to provide a FPSO unit for the Tiro and Sidon fields located in the Santos Basin offshore Brazil. The contract with Petrobras will be serviced by a newly converted FPSO unit, to be named thePetrojarl Cidade de Itajai, which is currently under conversion from an existing Aframax tanker, for a total estimated cost of approximately $370 million. The new FPSO is scheduled to deliver in the second quarter of 2012 when it will commence operations under a nine-year, fixed-rate time-charter contract to Petrobras with six additional one-year extension options. | |
c) | On November 4, 2010, Teekay LNG acquired a 50% interest in companies that own two LNG carriers (collectively the Exmar Joint Venture) from Exmar NV for a total purchase price of approximately $70.3 million. Teekay LNG paid $35.4 million of the purchase price by issuing to Exmar NV 1,052,749 of its common units and the balance of $34.9 million was financed by drawing on one of its revolving credit facilities. On the date of the acquisition, the Exmar Joint Venture had $206.3 million of debt, of which 50% has been guaranteed by Teekay LNG. Exmar NV retains a 50% ownership interest in the Exmar Joint Venture. The two vessels acquired are the 2002-builtExcalibur, a conventional LNG carrier, and the 2005-builtExcelsior, a specialized gas carrier which can both transport and regasify LNG onboard. Both vessels are on long-term, fixed-rate charter contracts to Excelerate Energy LP for firm periods until 2022 and 2025, respectively. | |
d) | In November 2010, Teekay Offshore issued 600 million Norwegian Kroner in senior unsecured bonds that mature in November 2013. The aggregate principal amount of the bonds is equivalent to approximately $100 million U.S. dollars and bears interest at NIBOR plus 4.75% per annum. The proceeds of the bonds are for general purposes including repayment of existing credit facility debt. Teekay Offshore will apply for listing of the bonds on the Oslo Stock Exchange. | |
e) | In December 2010, Teekay Offshore completed a public offering of approximately 6.4 million common units (including 840,000 common units issued upon the exercise of the underwriter’s overallotment option) at a price of $27.84 per unit, for gross proceeds of $182.9 million (including the general partner’s $3.7 million proportionate capital contribution). As a result, the Company’s ownership of Teekay Offshore has been reduced from 31.7% to 28.3% (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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SEPTEMBER 30, 2010
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except calendar-ship- | September 30, | September 30, | ||||||||||||||||||||||
days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 146,745 | 144,182 | 1.8 | 470,196 | 432,371 | 8.7 | ||||||||||||||||||
Voyage expenses | 23,525 | 23,652 | (0.5 | ) | 88,589 | 58,227 | 52.1 | |||||||||||||||||
Net revenues | 123,220 | 120,530 | 2.2 | 381,607 | 374,144 | 2.0 | ||||||||||||||||||
Vessel operating expenses | 43,588 | 39,720 | 9.7 | 128,403 | 129,051 | (0.5 | ) | |||||||||||||||||
Time-charter hire expense | 20,314 | 27,772 | (26.9 | ) | 68,785 | 85,645 | (19.7 | ) | ||||||||||||||||
Depreciation and amortization | 31,228 | 30,014 | 4.0 | 95,242 | 88,003 | 8.2 | ||||||||||||||||||
General and administrative(1) | 12,322 | 12,875 | (4.3 | ) | 38,612 | 38,266 | 0.9 | |||||||||||||||||
Loss on sale of vessels and equipment, net of write-downs | 10,775 | 961 | 1,021.2 | 10,039 | 1,902 | 427.8 | ||||||||||||||||||
Restructuring charge | (46 | ) | 693 | (106.6 | ) | 628 | 5,991 | (89.5 | ) | |||||||||||||||
Income from vessel operations | 5,039 | 8,495 | (40.7 | ) | 39,898 | 25,286 | 57.8 | |||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 2,671 | 2,667 | 0.1 | 8,403 | 7,917 | 6.1 | ||||||||||||||||||
Chartered-in Vessels | 577 | 764 | (24.5 | ) | 1,877 | 2,328 | (19.4 | ) | ||||||||||||||||
Total | 3,248 | 3,431 | (5.3 | ) | 10,280 | 10,245 | 0.3 | |||||||||||||||||
(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.” |
• | an increase of $2.8 million for the nine months ended September 30, 2010, due to increased rates on certain bareboat and time-charter contracts, partially offset by a decrease in rates on certain contracts of affreightment; | ||
• | increases of $2.7 million and $7.9 million, respectively, for the three and nine months ended September 30, 2010, due to the inclusion of theFalcon SpiritFSO unit commencing in December 2009; | ||
• | an increase of $0.8 million for the nine months ended September 30, 2010, due to a payment made to us by our joint venture partner as the number of drydock days for their vessel exceeded the maximum allowed under our agreement with this joint venture partner; and | ||
• | increases of $0.4 million and $3.5 million, respectively, for the three and nine months ended September 30, 2010, due to foreign currency exchange differences as compared to the same periods last year; |
• | a decrease of $6.3 million for the nine months ended September 30, 2010, due to the redelivery of one in-chartered vessel in June 2009 as it completed its time-charter contract; | ||
• | a decrease of $1.3 million for the nine months ended September 30, 2010, from a reduction in the number of cargo liftings due to declining oil production at theHeidrun field, a mature oil field in the North Sea that is serviced by certain shuttle tankers on contracts of affreightment; | ||
• | net decreases of $0.5 million and $0.2 million, respectively, for the three and nine months ended September 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 in the conventional spot market from increased demand for conventional crude transportation; and | ||
• | a decrease of $0.3 million for the three months ended September 30, 2010, primarily due to decreased rates on certain contracts of affreightment. |
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• | an increase of $1.5 million due to an increase in maintenance activities performed for certain vessels and the cost of services, spares and consumables during 2010, partially offset by lower maintenance costs from drydockings compared to the same period last year; | ||
• | an increase of $1.4 million due to the acquisition of a shuttle tanker in February 2010; | ||
• | an increase of $0.8 million due to the inclusion of theFalcon SpiritFSO unit in December 2009; and | ||
• | an increase of $0.4 million relating to crew training costs; |
• | a decrease of $0.7 million in crew and manning costs resulting primarily from cost saving initiatives that commenced in 2009, as described below under restructuring charges; and | ||
• | a decrease of $0.7 million 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. |
• | a decrease of $6.3 million 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; | ||
• | a decrease of $2.0 million due to the redelivery of one in-chartered vessel in June 2009 as it completed its time-charter agreement; | ||
• | a decrease of $1.6 million in crew and manning costs resulting primarily from cost saving initiatives that commenced in 2009, as described below under restructuring charges; and | ||
• | a decrease of $1.6 million due to decreases in the cost of services, spares and consumables, and port costs during 2010; |
• | an increase of $5.0 million due to the acquisition of a shuttle tanker in February 2010; | ||
• | an increase of $2.5 million due to the inclusion of theFalcon SpiritFSO unit in December 2009; | ||
• | an increase of $1.8 million relating to repairs and maintenance performed in 2010 on certain vessels; and | ||
• | an increase of $1.6 million due to weakening of the U.S. Dollar against the Australian Dollar compared to the same period last year. |
• | decreases of $5.0 million and $19.3 million, respectively, for the three and nine months ended September 30, 2010, resulting from the redelivery of three in-chartered shuttles to their owners in June 2009, November 2009 and February 2010, upon expiration of their in-charter contracts; and | ||
• | decreases of $3.6 million and $8.9 million, respectively, for the three and nine months ended September 30, 2010, due to the acquisition of a previously in-chartered shuttle tanker in February 2010; |
• | increases of $0.7 million and $9.8 million, respectively, for the three and nine months ended September 30, 2010, due primarily to less offhire in the in-chartered fleet and an increase in spot in-chartering of vessels; | ||
• | increases of $0.2 million and $1.1 million, respectively, for the three and nine months ended September 30, 2010, due to higher drydocking amortization relating to one of our in-chartered vessels; and | ||
• | increases of $0.2 million and $0.5 million, respectively, for the three and nine months ended September 30, 2010, due to increased rates on certain time-charter contracts. |
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except calendar-ship- | September 30, | September 30, | ||||||||||||||||||||||
days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 86,966 | 100,327 | (13.3 | ) | 343,187 | 289,825 | 18.4 | |||||||||||||||||
Vessel operating expenses | 54,176 | 49,917 | 8.5 | 152,574 | 143,104 | 6.6 | ||||||||||||||||||
Depreciation and amortization | 23,751 | 25,344 | (6.3 | ) | 71,253 | 76,869 | (7.3 | ) | ||||||||||||||||
General and administrative(1) | 7,071 | 7,918 | (10.7 | ) | 20,418 | 23,520 | (13.2 | ) | ||||||||||||||||
Income from vessel operations | 1,968 | 17,148 | (88.5 | ) | 98,942 | 46,332 | 113.5 | |||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 736 | 736 | — | 2,184 | 2,365 | (7.7 | ) |
(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.” |
• | a decrease of $7.2 million 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; | ||
• | a decrease of $6.5 million from lower oil production primarily from scheduled maintenance shutdowns on thePetrojarl FoinavenFPSO and thePetrojarl VargFPSO in the third quarter of 2010; and | ||
• | a decrease of $3.1 million from decreased daily rates on theRio das OstrasFPSO; |
• | an increase of $2.2 million from increased daily rates, performance incentive payments on thePetrojarl 1FPSO andPetrojarl BanffFPSO units and from thePetrojarl Banffbeing shutdown for 20 days for electrical equipment repairs in the same period of the prior year; and | ||
• | an increase of $1.5 million due to supplemental efficiency payments made under the amendedFoinavenFPSO contract. |
• | an increase of $59.2 million for the nine months ended September 30, 2010, from payments under the amended operating contract for ourFoinavenFPSO unit related to operations in previous years; | ||
• | an increase of $7.3 million due to supplemental efficiency payments made under the amendedFoinavenFPSO contract; and | ||
• | a net increase of $4.8 million from thePetrojarl VargFPSO unit commencing operations under a new four-year fixed-rate contract extension beginning in the third quarter of 2009, partially offset by a decrease in revenues resulting from a planned maintenance shutdown of the unit in the third quarter of 2010; |
• | a decrease of $17.5 million from the decrease in amortization of contract value liabilities relating to FPSO service contracts (as discussed below). |
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except calendar-ship- | September 30, | September 30, | ||||||||||||||||||||||
days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 62,131 | 61,435 | 1.1 | 185,462 | 176,283 | 5.2 | ||||||||||||||||||
Voyage expenses | (50 | ) | 465 | (110.8 | ) | 45 | 723 | (93.8 | ) | |||||||||||||||
Net revenues | 62,181 | 60,970 | 2.0 | 185,417 | 175,560 | 5.6 | ||||||||||||||||||
Vessel operating expenses | 10,982 | 12,620 | (13.0 | ) | 35,582 | 37,079 | (4.0 | ) | ||||||||||||||||
Depreciation and amortization | 15,702 | 14,188 | 10.7 | 47,114 | 44,257 | 6.5 | ||||||||||||||||||
General and administrative(1) | 4,841 | 5,059 | (4.3 | ) | 15,170 | 15,034 | 0.9 | |||||||||||||||||
Restructuring charge | 48 | 590 | (91.9 | ) | 362 | 3,802 | (90.5 | ) | ||||||||||||||||
Income from vessel operations | 30,608 | 28,513 | 7.3 | 87,189 | 75,388 | 15.7 | ||||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels and Vessels under Direct Financing Lease | 1,288 | 1,196 | 7.7 | 3,822 | 3,383 | 13.0 |
(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.” |
• | an increase of $4.0 million for the three and nine months ended September 30, 2010, respectively, due to the decrease in offhire days relating toGalacia SpiritandMadrid Spiritof 53 days in 2009 compared to no offhire days in 2010; and |
• | increases of $3.4 million and $17.9 million, respectively, for the three and nine months ended September 30, 2010, due to the commencement of the time-charters relating to the Tangguh LNG Delivery and the LPG Deliveries; |
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• | decreases of $4.3 million and $9.6 million, respectively, for the three and nine months ended September 30, 2010, due to theArctic Spiritbeing offhire during the first nine months of 2010 primarily due to the completion of its time-charter contract in December 2009 and in part due to a scheduled drydocking; |
• | decreases of $1.1 million and $1.4 million, respectively, for the three and nine months ended September 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; |
• | a decrease of $0.2 million for the three and nine months ended September 30, 2010, due to theHispania Spiritbeing offhire for two days in the third quarter of 2010 for a scheduled in-water survey; and |
• | decreases of $0.1 million and $0.6 million, respectively, for the three and nine months ended September 30, 2010, due to a decrease in the hire rate for thePolar Spiritas compared to the same periods last year as a result of crewing rate adjustments. |
• | decreases of $0.8 million and $1.0 million, respectively, for the three and nine months ended September 30, 2010, due to the effect on our Euro-denominated expenses from the weakening of the Euro against the U.S. Dollar compared to the same periods last year; |
• | decreases of $0.6 million and $1.3 million, respectively, for the three and nine months ended September 30, 2010, due to theArctic Spiritbeing laid up and as a result, operating with a reduced number of crew on board and with reduced repair and maintenance activities; and |
• | decreases of $0.6 million and $1.7 million, respectively, for the three and nine months ended September 30, 2010, due to our electing to cancel our loss-of-hire insurance in 2009 and a reduction in crew manning levels for certain of our LNG carriers; |
• | an increase of $1.1 million for the nine months ended September 30, 2010, due to additional crew training expenses relating to theAl Marrouna,theAl Areeshand theAl Daayen; |
• | an increase of $0.7 million for the three and nine months ended September 30, 2010, due to additional crew training expenses and from the delivery of theTangguh Sagoin March 2009; and |
• | an increase of $0.3 million for the nine months ended September 30, 2010, due to additional repairs and maintenance on theDania Spirit. |
• | increases of $0.7 million and $2.3 million, respectively, for the three and nine months ended September 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 $1.0 million, respectively, for the three and nine months ended September 30, 2010, from the LPG Deliveries; |
• | a decrease of $1.0 million for the nine months ended September 30, 2010, from the delivery of theTangguh Sagoin March 2009, prior to the commencement of the external time-charter contract in May 2009 which is accounted for as a direct financing lease. |
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except calendar-ship- | September 30, | September 30, | ||||||||||||||||||||||
days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 99,009 | 96,149 | 3.0 | 288,181 | 290,687 | (0.9 | ) | |||||||||||||||||
Voyage expenses | 2,054 | 1,552 | 32.3 | 4,131 | 4,614 | (10.5 | ) | |||||||||||||||||
Net revenues | 96,955 | 94,597 | 2.5 | 284,050 | 286,073 | (0.7 | ) | |||||||||||||||||
Vessel operating expenses | 31,075 | 24,354 | 27.6 | 86,198 | 67,970 | 26.8 | ||||||||||||||||||
Time-charter hire expense | 14,212 | 20,690 | (31.3 | ) | 43,415 | 62,169 | (30.2 | ) | ||||||||||||||||
Depreciation and amortization | 21,575 | 16,579 | 30.1 | 61,862 | 48,525 | 27.5 | ||||||||||||||||||
General and administrative(1) | 14,316 | 10,800 | 32.6 | 32,167 | 29,492 | 9.1 | ||||||||||||||||||
(Gain) loss on sale of vessels and equipment, net of write-downs | (676 | ) | 680 | (199.4 | ) | 490 | 3,960 | (87.6 | ) | |||||||||||||||
Restructuring charge | 154 | 108 | 42.6 | 265 | 613 | (56.8 | ) | |||||||||||||||||
Income from vessel operations | 16,299 | 21,386 | (23.8 | ) | 59,653 | 73,344 | (18.7 | ) | ||||||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 3,113 | 2,782 | 11.9 | 8,969 | 7,992 | 12.2 | ||||||||||||||||||
Chartered-in Vessels | 653 | 859 | (24.0 | ) | 2,052 | 2,634 | (22.1 | ) | ||||||||||||||||
Total | 3,766 | 3,641 | 3.4 | 11,021 | 10,626 | 3.7 | ||||||||||||||||||
(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 contract to Caltex Australia Petroleum Pty Ltd. in 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. |
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• | an increase of $10.6 million from the Aframax Transfers and the Suezmax Transfers; |
• | an increase of $2.6 million from the purchase of the product tanker; and |
• | an increase of $2.4 million resulting from interest income from an investment in term loans, as discussed below; |
• | a decrease of $7.5 million from the Vessel Sales; |
• | a decrease of $4.7 million from the redelivery of in-chartered vessels to their owners upon the expiration of the related in-charter contracts; and |
• | a decrease of $2.1 million due to theTenerife Spirit, Algeciras Spiritand theToledo Spiritbeing offhire during the third quarter of 2010 for scheduled drydockings. |
• | a decrease of $26.9 million from the Vessel Sales; |
• | a decrease of $24.7 million from the redelivery of in-chartered vessels to their owners upon the expiration of the related in-charter contracts; |
• | a decrease of $5.6 million from the Product Tanker Transfers; |
• | a decrease of $3.3 million due to theTenerife Spirit, Algeciras Spiritand theToledo Spiritbeing offhire for 73, 41 and 15 days during the second and third quarters of 2010 for scheduled drydockings; and |
• | a decrease of $0.3 million 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 for these capital leases, 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); |
• | an increase of $39.2 million from the Aframax Transfers and the Suezmax Transfers; |
• | an increase of $8.8 million from the purchase of the product tanker; |
• | an increase of $8.7 million from the Suezmax Deliveries; and |
• | an increase of $2.4 million resulting from interest income from an investment in term loans, as discussed below. |
• | increases of $7.3 million and $15.4 million, respectively, for the three and nine months ended September 30, 2010, from the Aframax Transfers and Suezmax Transfers; |
• | an increase of $2.2 million for the nine months ended September 30, 2010, relating to higher crewing costs, higher insurance renewal rates upon annual renewal, and timing of repairs and maintenance costs; |
• | increases of $1.5 million and $5.1 million, respectively, for the three and nine months ended September 30, 2010, from the purchase of a product tanker; |
• | an increase of $1.5 million for the nine months ended September 30, 2010, from the Suezmax Deliveries; and |
• | increases of $1.2 million and $2.4 million, respectively, for the three and nine months ended September 30, 2010, from the increased costs associated with certain vessels being changed over to Australian crewing as part of new time-charter contacts with a customer in Australia; |
• | decreases of $2.9 million and $9.0 million, respectively, for the three and nine months ended September 30, 2010, from the Vessel Sales. |
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• | increases of $6.1 million and $15.7 million, respectively, for the three and nine months ended September 30, 2010, from the Aframax and Suezmax Transfers; |
• | an increase of $2.8 million for the nine months ended September 30, 2010, from the Suezmax Deliveries; and |
• | increases of $1.6 million and $2.8 million, respectively, for the three and nine months ended September 30, 2010, from an increase in capitalized drydocking expenditures incurred; |
• | decreases of $1.9 million and $2.9 million, respectively, for the three and nine months ended September 30, 2010, due to certain intangible assets related to time-charter contracts being fully amortized in 2009; and |
• | decreases of $0.6 million and $5.6 million, respectively, for the three and nine months ended September 30, 2010, from the Vessel Sales and Product Tanker Transfers. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands of U.S. dollars, except calendar-ship- | September 30, | September 30, | ||||||||||||||||||||||
days and percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
Revenues | 67,266 | 98,275 | (31.6 | ) | 284,576 | 460,226 | (38.2 | ) | ||||||||||||||||
Voyage expenses | 28,190 | 45,990 | (38.7 | ) | 99,871 | 161,689 | (38.2 | ) | ||||||||||||||||
Net revenues | 39,076 | 52,285 | (25.3 | ) | 184,705 | 298,537 | (38.1 | ) | ||||||||||||||||
Vessel operating expenses | 19,749 | 23,179 | (14.8 | ) | 62,140 | 69,350 | (10.4 | ) | ||||||||||||||||
Time-charter hire expense | 27,663 | 46,502 | (40.5 | ) | 89,008 | 200,429 | (55.6 | ) | ||||||||||||||||
Depreciation and amortization | 16,938 | 20,986 | (19.3 | ) | 53,187 | 64,202 | (17.2 | ) | ||||||||||||||||
General and administrative(1) | 8,360 | 13,238 | (36.8 | ) | 38,890 | 40,506 | (4.0 | ) | ||||||||||||||||
Loss (gain) on sale of vessels and equipment, net of write-downs of intangible assets and vessels and equipment | 14,074 | (726 | ) | (2,038.6 | ) | 14,426 | (15,072 | ) | (195.7 | ) | ||||||||||||||
Restructuring charge | 3,084 | 65 | 4,644.6 | 9,963 | 1,611 | 518.4 | ||||||||||||||||||
Loss from vessel operations | (50,792 | ) | (50,959 | ) | (0.3 | ) | (82,909 | ) | (62,489 | ) | 32.7 | |||||||||||||
Calendar-Ship-Days | ||||||||||||||||||||||||
Owned Vessels | 1,859 | 2,523 | (26.3 | ) | 6,259 | 7,650 | (18.2 | ) | ||||||||||||||||
Chartered-in Vessels | 1,135 | 2,032 | (44.2 | ) | 3,993 | 7,425 | (46.2 | ) | ||||||||||||||||
Total | 2,994 | 4,555 | (34.3 | ) | 10,252 | 15,075 | (32.0 | ) | ||||||||||||||||
(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 and two Aframax tankers in April 2010 and August 2010 (theSpot Vessel 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; |
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• | 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). |
Three Months Ended | ||||||||||||||||||||||||
September 30, 2010 | September 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 | 16,777 | 921 | 18,217 | 15,904 | 1,185 | 13,421 | ||||||||||||||||||
Aframax Tankers | 17,220 | 1,437 | 11,986 | 28,599 | 2,629 | 10,878 | ||||||||||||||||||
Large/Medium Product Tankers | 5,997 | 368 | 16,296 | 7,897 | 640 | 12,339 | ||||||||||||||||||
Other(2) | (918 | ) | (115 | ) | ||||||||||||||||||||
Totals | 39,076 | 2,726 | 14,337 | 52,285 | 4,454 | 11,739 | ||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
September 30, 2010 | September 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 | 76,050 | 2,866 | 26,536 | 83,814 | 3,296 | 25,429 | ||||||||||||||||||
Aframax Tankers | 91,712 | 5,418 | 16,928 | 174,778 | 9,356 | 18,681 | ||||||||||||||||||
Large/Medium Product Tankers | 20,352 | 1,374 | 14,812 | 38,849 | 2,180 | 17,821 | ||||||||||||||||||
Other(2) | (3,409 | ) | 1,096 | |||||||||||||||||||||
Totals | 184,705 | 9,658 | 19,125 | 298,537 | 14,832 | 20,128 | ||||||||||||||||||
(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. |
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• | a decrease of $25.5 million for the nine months ended September 30, 2010, primarily from decreases in our average spot tanker TCE rates due to the relative weakening of the spot tanker market, a decrease in the amortization of contract value liabilities relating to certain spot tanker contracts and an increase in the cost of fuel for offhire vessels; |
• | decreases of $19.3 million and $62.4 million, respectively, for the three and nine months ended September 30, 2010, from a decrease in the number of in-chartered vessels, as we continued to reduce our exposure to the spot tanker market by redelivering in-chartered vessels to their owners upon the expiration of in-charter contracts; |
• | decreases of $7.9 million and $37.6 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Aframax and Spot Suezmax Transfers; |
• | decreases of $3.3 million and $6.1 million, respectively, for the three and nine months ended September 30, 2010, from a change in the number of days our vessels were offhire due to regularly scheduled maintenance; and |
• | decreases of $0.8 million and $9.0 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Vessel Sales; |
• | an increase of $12.5 million for the three months ended September 30, 2010, primarily from increases in our average spot tanker TCE rates; |
• | increases of $4.4 million and $21.6 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Suezmax Deliveries; and |
• | increases of $1.2 million and $5.2 million, respectively, for the three and nine months ended September 30, 2010, from the Product Tanker Transfers. |
• | decreases of $3.0 million and $4.8 million, respectively, for the three and nine months ended September 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; |
• | decreases of $2.8 million and $8.4 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Aframax Transfers and Suezmax Transfers; and |
• | decreases of $1.1 million and $3.7 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Vessel Sales; |
• | increases of $2.1 million and $4.3 million, respectively, for the three and nine months ended September 30, 2010, from the Product Tanker Transfers; and |
• | increases of $1.3 million and $5.3 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Suezmax Deliveries. |
• | decreases of $6.8 million and $16.3 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Aframax and Spot Suezmax Transfers; and |
• | decreases of $0.4 million and $2.0 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Vessel Sales; |
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• | increases of $1.3 million and $5.3 million, respectively, for the three and nine months ended September 30, 2010, from the Spot Suezmax Tanker Deliveries; |
• | increases of $1.0 million and $1.2 million, respectively, for the three and nine months ended September 30, 2010, from capitalized drydocking expenditures incurred during the first nine months of 2010; and |
• | increases of $0.4 million and $2.3 million, respectively, for the three and nine months ended September 30, 2010, from the Product Tanker Transfers. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
(in thousands of U.S. dollars, except percentages) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||
General and administrative | (46,910 | ) | (49,890 | ) | (6.0 | ) | (145,257 | ) | (146,818 | ) | (1.1 | ) | ||||||||||||
Interest expense | (34,852 | ) | (30,035 | ) | 16.0 | (100,930 | ) | (111,505 | ) | (9.5 | ) | |||||||||||||
Interest income | 3,467 | 4,193 | (17.3 | ) | 9,949 | 15,894 | (37.4 | ) | ||||||||||||||||
Realized and unrealized (losses) gains on non- designated derivative instruments | (133,241 | ) | (121,664 | ) | 9.5 | (440,313 | ) | 83,066 | (630.1 | ) | ||||||||||||||
Equity (loss) income from joint ventures | (16,010 | ) | (8,945 | ) | 79.0 | (40,503 | ) | 29,857 | (235.7 | ) | ||||||||||||||
Foreign exchange (loss) gain | (28,717 | ) | (26,047 | ) | 10.3 | 27,797 | (39,900 | ) | (169.7 | ) | ||||||||||||||
Loss on bond repurchase | — | — | — | (12,645 | ) | — | — | |||||||||||||||||
Other income | 2,042 | 2,938 | (30.5 | ) | 5,742 | 9,419 | (39.0 | ) | ||||||||||||||||
Income tax (expense) recovery | (8,572 | ) | (10,904 | ) | (21.4 | ) | 3,882 | (12,174 | ) | (131.9 | ) |
• | decreases of $5.2 million and $7.6 million, respectively, for the three and nine months ended September 30, 2010, in corporate-related expenses, which includes our office expenses, rent, utilities, and information systems; and |
• | a decrease of $2.0 million for the nine months ended September 30, 2010, in unrealized and realized losses on foreign currency forward contracts; |
• | increases of $1.0 million and $4.1 million, respectively, for the three and nine months ended September 30, 2010, associated with our equity-based compensation for management and our short-term incentive program for employees and management; |
• | increases of $0.8 million and $2.5 million, respectively, for the three and nine months ended September 30, 2010, in compensation 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 periods last year; and |
• | increases of $0.5 million and $1.4 million, respectively, for the three and nine months ended September 30, 2010, from timing of travel costs. |
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• | an increase of $5.7 million due to the effect of the public offering of the 8.5% senior unsecured notes due January 2020, with a principal amount of $450 million, partially offset by the repurchase of a majority of our 8.875% senior notes due July 2011 in January 2010; |
• | a decrease of $0.8 million 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 |
• | a decrease of $0.2 million from declining interest rates on our five Suezmax tanker capital lease obligations. |
• | a decrease of $21.9 million 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; |
• | a decrease of $4.2 million from the scheduled loan payments on the LNG carrier, theCatalunya Spirit, and scheduled capital lease repayments on the LNG carrier, theMadrid Spirit; and |
• | a decrease of $0.5 million from declining interest rates on our five Suezmax tanker capital lease obligations; |
• | an increase of $16.0 million due to the effect of the public offering of the 8.5% senior unsecured notes due January 2020, with a principal amount of $450 million, partially offset by the repurchase of a majority of our 8.875% senior notes due July 2011 in January 2010. |
• | decreases of $0.2 million and $2.4 million, respectively, for the three and nine months ended September 30, 2010, due to decreases in LIBOR rates relating to the restricted cash in Teekay Nakilat Corporation that is used to fund capital lease payments for its three LNG carriers; |
• | decreases of $0.6 million and $2.9 million, respectively, for the three and nine months ended September 30, 2010, primarily from scheduled capital lease repayments on one of our LNG carriers which was funded from restricted cash deposits; and |
• | a decrease of $0.7 million for the nine months ended September 30, 2010, primarily relating to lower interest income earned on our cash account balances. |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands of U.S. Dollars) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Realized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (37,197 | ) | (41,321 | ) | (116,417 | ) | (91,737 | ) | ||||||||
Foreign currency forward contracts | (818 | ) | (981 | ) | (2,163 | ) | (8,926 | ) | ||||||||
Forward freight agreements and bunker fuel swap contracts | 3,000 | 2,655 | (1,356 | ) | 4,660 | |||||||||||
(35,015 | ) | (39,647 | ) | (119,936 | ) | (96,003 | ) | |||||||||
Unrealized (losses) gains relating to: | ||||||||||||||||
Interest rate swaps | (116,045 | ) | (81,114 | ) | (325,883 | ) | 164,333 | |||||||||
Foreign currency forward contracts | 17,837 | 2,060 | 5,784 | 15,227 | ||||||||||||
Forward freight agreements and bunker fuel swap contracts and other | (18 | ) | (2,963 | ) | (278 | ) | (491 | ) | ||||||||
(98,226 | ) | (82,017 | ) | (320,377 | ) | 179,069 | ||||||||||
Total realized and unrealized (losses) gains on non-designated derivative instruments | (133,241 | ) | (121,664 | ) | (440,313 | ) | 83,066 | |||||||||
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Nine Months Ended September 30, | ||||||||
(in thousands of U.S. Dollars) | 2010 | 2009 | ||||||
Net operating cash flows | 346,903 | 298,300 | ||||||
Net financing cash flows | 148,365 | (400,743 | ) | |||||
Net investing cash flows | (225,324 | ) | (216,320 | ) |
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• | incurred capital expenditures for vessels and equipment of $176.2 million, primarily for capitalized vessel modifications and shipyard construction installment payments on our newbuilding shuttle tankers; |
• | invested in two term loans by Teekay Tankers for $115.6 million; and |
• | received net proceeds of $49.4 million from the sale of three Aframax tankers and one product tanker. |
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) | 4,073.1 | 66.8 | 629.9 | 1,243.2 | 2,133.2 | |||||||||||||||
Chartered-in vessels (operating leases) | 469.2 | 54.6 | 281.5 | 90.3 | 42.8 | |||||||||||||||
Commitments under capital leases(2) | 203.8 | 5.9 | 197.9 | — | — | |||||||||||||||
Commitments under capital leases(3) | 1,031.3 | 6.0 | 48.0 | 48.0 | 929.3 | |||||||||||||||
Commitments under operating leases (4) | 464.0 | 6.3 | 50.1 | 50.2 | 357.4 | |||||||||||||||
Newbuilding installments(5) (6) | 606.1 | 150.4 | 436.1 | 19.6 | — | |||||||||||||||
Asset retirement obligation | 22.8 | — | — | — | 22.8 | |||||||||||||||
Total U.S. Dollar-denominated obligations | 6,870.3 | 290.0 | 1,643.5 | 1,451.3 | 3,485.5 | |||||||||||||||
Euro-Denominated Obligations:(7) | ||||||||||||||||||||
Long-term debt(8) | 383.4 | 3.2 | 223.4 | 15.4 | 141.4 | |||||||||||||||
Commitments under capital leases(2) (9) | 125.1 | 36.7 | 88.4 | — | — | |||||||||||||||
Total Euro-denominated obligations | 508.5 | 39.9 | 311.8 | 15.4 | 141.4 | |||||||||||||||
Total | 7,378.8 | 329.9 | 1,955.3 | 1,466.7 | 3,626.9 | |||||||||||||||
(1) | Excludes expected interest payments of $23.6 million (remainder of 2010), $182.1 million (2011 and 2012), $155.3 million (2013 and 2014) and $306.7 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 September 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 $477.9 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 approximately $426.4 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 three shuttle tankers as of September 30, 2010. Please read Item 1 — Financial Statements: Note 11(a) — Commitments and Contingencies — Vessels Under Construction. | |
(6) | We have a 33% interest in a joint venture that has entered into agreements for the construction of four LNG carriers and a 50% interest in a joint venture that has entered into an agreement for the construction of a VLCC. As at September 30, 2010, the remaining commitments on these vessels, excluding capitalized interest and other miscellaneous construction costs, totaled $800.1 million of which our share is $280.7 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 September 30, 2010. | |
(8) | Excludes expected interest payments of $1.2 million (remainder of 2010), $8.0 million (2011 and 2012), $3.8 million (2013 and 2014) and $10.6 million (beyond 2014). Expected interest payments are based on EURIBOR at September 30, 2010, plus margins that ranged up to 0.66%, as well as the prevailing U.S. Dollar/Euro exchange rate as of September 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 $119.3 million, together with the interest earned on these deposits, will be 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 investment in 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; |
• | 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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SEPTEMBER 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: | $ | 39.2 | $ | 119.4 | $ | 49.9 | $ | 208.5 | $ | 7.3 | ||||||||||
Average contractual exchange rate(2) | 6.02 | 6.13 | 6.32 | 6.17 | ||||||||||||||||
Euro: | $ | 15.8 | $ | 45.1 | $ | 14.2 | $ | 75.1 | $ | (0.3 | ) | |||||||||
Average contractual exchange rate(2) | 0.70 | 0.73 | 0.76 | 0.73 | ||||||||||||||||
Canadian Dollar: | $ | 10.2 | $ | 16.5 | $ | 0.30 | $ | 27.0 | $ | 0.9 | ||||||||||
Average contractual exchange rate(2) | 1.10 | 1.05 | 1.06 | 1.07 | ||||||||||||||||
British Pounds: | $ | 12.4 | $ | 38.3 | $ | 11.4 | $ | 62.1 | $ | 2.2 | ||||||||||
Average contractual exchange rate(2) | 0.68 | 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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Expected Maturity Date | Fair 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 ($U.S.)(2) | 55.3 | 270.6 | 250.7 | 296.1 | 854.7 | 1,428.0 | 3,155.4 | (2,887.3 | ) | 1.1 | % | |||||||||||||||||||||||||
Variable Rate (Euro)(3) (4) | 3.2 | 13.3 | 210.2 | 7.4 | 8.0 | 141.4 | 383.4 | (351.9 | ) | 1.3 | % | |||||||||||||||||||||||||
Fixed-Rate Debt ($U.S.) | 11.5 | 62.4 | 46.2 | 46.2 | 46.2 | 705.2 | 917.7 | (961.9 | ) | 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 ($U.S.)(7) | 2.4 | 185.5 | — | — | — | — | 187.9 | (187.9 | ) | 7.4 | % | |||||||||||||||||||||||||
Average Interest Rate(8) | 7.5 | % | 7.4 | % | — | — | — | — | 7.4 | % | ||||||||||||||||||||||||||
Interest Rate Swaps: | ||||||||||||||||||||||||||||||||||||
Contract Amount ($U.S.)(6) (9)(10) | 65.1 | 170.2 | 276.3 | 82.5 | 96.4 | 2,857.2 | 3,547.7 | (649.6 | ) | 4.6 | % | |||||||||||||||||||||||||
Average Fixed Pay Rate(2) | 2.9 | % | 3.5 | % | 3.0 | % | 4.9 | % | 4.8 | % | 5.8 | % | 4.6 | % | ||||||||||||||||||||||
Contract Amount (Euro)(4) | 3.2 | 13.2 | 190.1 | 15.2 | 16.4 | 145.3 | 383.4 | (44.4 | ) | 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 September 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 on 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 September 30, 2010. | |
(5) | Excludes capital lease obligations (present value of minimum lease payments) of 83.1 million Euros ($113.4 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 5.1%, 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 September 30, 2010, this amount was 87.5 million Euros ($119.3 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 September 30, 2010, totaled $477.9 million, and the lease obligations, which as at September 30, 2010, totaled $470.6 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 September 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 $441.3 million and $472.0 million, ($101.7) million and $124.8 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 million that commence in 2011. |
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SEPTEMBER 30, 2010
• | 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: December 9, 2010 | By: | /s/ Vincent Lok | ||
Vincent Lok | ||||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
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