Teekay Corporation Reports Fourth Quarter and Annual 2019 Results

Thursday, 27. February 2020 08:00

Highlights

  • GAAP net income attributable to shareholders of Teekay of $11.3 million, or $0.11 per share, and adjusted net income attributable to shareholders of Teekay(1) of $31.3 million, or $0.31 per share (excluding items listed in Appendix A to this release) in the fourth quarter of 2019.
  • Total Adjusted EBITDA(1) of $324.2 million in the fourth quarter of 2019, up 68 percent from the previous quarter.
  • Teekay LNG completed all of its growth projects with the delivery of its two remaining ARC7 LNG carrier newbuildings and the completion of mechanical construction and commissioning of the Bahrain regasification terminal, thereby completing all current newbuilding capital expenditures across the Teekay Group. Teekay LNG intends to increase its quarterly cash distributions by 32 percent commencing with the distribution relating to the first quarter of 2020.
  • Teekay Tankers reported its highest quarterly adjusted net income in the fourth quarter of 2019 and since November 2019, has entered into agreements to opportunistically sell various assets for combined proceeds of approximately $104 million, including three tankers that have been delivered.

VANCOUVER, British Columbia, Feb. 27, 2020 (GLOBE NEWSWIRE) -- Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported results for the fourth quarter and year ended December 31, 2019.  These results include the Company’s two publicly-listed consolidated subsidiaries, Teekay LNG Partners L.P. (Teekay LNG) (NYSE:TGP) and Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK) (collectively, the Daughter Entities), and all remaining subsidiaries and equity-accounted investments. Teekay, together with its subsidiaries other than the Daughter Entities, is referred to in this release as Teekay Parent.  Please refer to the fourth quarter and annual 2019 earnings releases of Teekay LNG and Teekay Tankers, which are available on Teekay's website at www.teekay.com, for additional information on their respective results.

Financial Summary

  Three Months EndedYear Ended
 December 31,September 30,December 31,December 31,December 31,
 20192019201820192018
 (in thousands of U.S. dollars, except per share amounts)(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
TEEKAY CORPORATION CONSOLIDATED    
GAAP FINANCIAL COMPARISON     
Revenues562,865 420,696 491,532 1,922,441 1,707,758 
Income (loss) from vessel operations177,516 (130,389)88,811 202,822 164,319 
Equity income (loss)31,900 21,514 19,356 (14,523)61,054 
Net income (loss) attributable to     
 shareholders of Teekay11,343 (198,178)(18,353)(310,577)(79,237)
Income (loss) per share attributable to     
 shareholders of Teekay0.11 (1.97)(0.18)(3.08)(0.79)
NON-GAAP FINANCIAL COMPARISON     
Total adjusted revenues(1)663,132 512,186 628,270 2,307,970 2,178,292 
Total adjusted EBITDA(1) (2)324,245 192,880 246,675 950,693 775,633 
Adjusted net income (loss) attributable     
 to shareholders of Teekay(1)31,282 (24,070)(2,014)(19,111)(53,271)
Adjusted net income (loss) per share     
 attributable to shareholders of Teekay(1)0.31 (0.24)(0.02)(0.19)(0.53)
TEEKAY PARENT     
NON-GAAP FINANCIAL COMPARISON     
Teekay Parent adjusted EBITDA(1)13,822 (10,068)3,081 5,379 52,762 
Total Teekay Parent free cash flow(1)4,943 (18,782)(11,000)(34,029)(8,573)
  1. These are non-GAAP financial measures.  Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP).
  2. Total Adjusted EBITDA in the year ended December 31, 2019 included $22.3 million related to the Company's ownership interest in Teekay Offshore Partners L.P. (to be renamed Altera Infrastructure L.P.) (Altera), which was sold in the second quarter of 2019. Total Adjusted EBITDA in the fourth quarter and year ended December 31, 2018 included $35.0 million and $94.6 million, respectively, related to the Company's ownership interest in Altera.

CEO Commentary

“The fourth quarter of 2019 marked a return to profitability for Teekay, as we recorded consolidated adjusted net income of $31 million, or $0.31 per share, and saw our total adjusted EBITDA increase by approximately $113 million, or 53 percent, from the same period of the prior year, excluding the contribution related to our equity interest in Altera Infrastructure, which was sold in May 2019.  The increase can be attributed to higher earnings from Teekay Tankers as a result of significantly stronger spot tanker rates during the quarter, from Teekay LNG as a result of the delivery and contract commencement of various growth projects, and from our three directly-owned FPSO units, combined with lower general and administrative expenses across the group,” commented Kenneth Hvid, Teekay’s President and CEO.

“We have continued to execute on our strategic priorities that were laid out at our recent Teekay Group Investor Day,” Mr. Hvid continued. “Teekay LNG has now completed its growth projects, which are expected to provide significant earnings and cash flow growth in 2020, while continuing to delever its balance sheet and returning capital to unitholders. Teekay Tankers took advantage of the strong tanker market and fixed out four Suezmax tankers at attractive levels and secured a new five-year, $533 million revolving credit facility, while also continuing to delever its balance sheet with significant cash flows from the strong spot tanker market and the proceeds from opportunistic asset sales. Taking into account the operating cash flows generated in the fourth quarter of 2019 and the impact of agreed asset sales, Teekay Tankers' proforma net debt(1) has decreased by approximately $153 million, or 15 percent, since the end of the third quarter of 2019.”

Mr. Hvid added, “Looking ahead to 2020, we expect to continue to build balance sheet strength across the group and, despite the recent market volatility and the uncertainty on the impacts of the coronavirus, we expect our cash flows and earnings to be stronger in 2020 compared with 2019.  By virtue of Teekay LNG's current 97 percent fixed employment in 2020 and 92 percent in 2021 for its LNG fleet, we are well-insulated from the current weak spot LNG shipping market, and we expect to continue benefitting from these stable cash flows.  Meanwhile, we believe Teekay Tankers' attractive operating leverage and ongoing balance sheet delevering, position us for increased tanker cash flows on the back of positive underlying tanker supply and demand fundamentals in the medium-term.”

(1) Net debt is a non-GAAP financial measure and represents short-term, current and long-term debt and current and long-term obligations related to finance leases less cash and cash equivalents and restricted cash.

Summary of Results

Teekay Corporation Consolidated

The Company's consolidated results during the quarter ended December 31, 2019 increased compared to the same period of the prior year, primarily due to: higher average spot tanker rates earned by Teekay Tankers in the fourth quarter of 2019; higher earnings in Teekay LNG in 2019 due to the delivery and contract commencement of several newbuildings during the past year, as well as higher revenues earned from certain existing LNG carriers and multi-gas vessels; and lower corporate general and administrative expenses incurred in 2019.

In addition, lower losses on derivatives in 2019 also contributed positively to our GAAP net income in the three months ended December 31, 2019 compared with our GAAP net loss in the same quarter of the prior year.

Total adjusted EBITDA(1) in the fourth quarter of 2018 included $35.0 million related to Teekay Parent's ownership interest in Altera, which was sold in the second quarter of 2019.

Teekay Parent

Total Teekay Parent Free Cash Flow(1) was $4.9 million during the fourth quarter of 2019, compared to negative $11.0 million for the same period of the prior year, primarily due to: lower net interest expense(1) due to the repurchase of unsecured bonds over the past year and the bond refinancing completed in May 2019; higher contribution from the Petrojarl Banff FPSO unit due to higher oil price-linked revenue and lower maintenance costs; lower operating costs related to the Sevan Hummingbird FPSO unit; lower corporate general and administrative expenses incurred in 2019; and a 36 percent increase in Teekay LNG’s quarterly cash distribution commencing in the first quarter of 2019.  Please refer to Appendix D of this release for additional information about Teekay Parent's Free Cash Flow(1).

In addition, GAAP net income was positively impacted in the three months ended December 31, 2019, compared to GAAP net loss for the same quarter of the prior year, by various items, including lower losses on derivatives in 2019.  These increases were partially offset by lower equity income in 2019 due to the sale of Magnora ASA (Magnora), formerly Sevan Marine ASA, in the fourth quarter of 2018 and the sale of Teekay Parent's remaining interest in Altera in May 2019.

(1) This is a non-GAAP financial measure.  Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for a definition of this term and a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable financial measures under GAAP.

Summary Results of Daughter Entities

Teekay LNG

Teekay LNG’s adjusted net income and total adjusted EBITDA(1) for the three months ended December 31, 2019, compared to the same quarter of the prior year, were positively impacted by: the deliveries of two wholly-owned LNG carrier newbuildings (the Sean Spirit and Yamal Spirit) between December 2018 and January 2019; higher earnings from the Torben Spirit LNG carrier upon redeployment in December 2018 at a higher charter rate; higher spot revenues for seven multi-gas carriers and higher charter rates earned in Teekay LNG's 50 percent-owned joint venture with Exmar NV during the fourth quarter of 2019; the deliveries of four joint venture ARC7 LNG carrier newbuildings between June and December 2019; the delivery of one joint venture LNG carrier newbuilding in January 2019; and higher earnings from Teekay LNG’s 52 percent-owned joint venture with Marubeni Corporation as a result of the one-year charter contracts for two joint venture LNG vessels, the Arwa Spirit and Marib Spirit, that were secured at higher rates in June and July 2019, respectively, and a decrease in off-hire days for certain LNG carriers.

These increases were partially offset by the sale of four conventional tankers, the African Spirit, European Spirit, Toledo Spirit and Alexander Spirit, between October 2018 and October 2019.

In addition, GAAP net income attributable to the partners and preferred unitholders was positively impacted for the three months ended December 31, 2019, compared to the same quarter of the prior year, by various items, including unrealized gains on non-designated derivative instruments in the fourth quarter of 2019 compared to losses on non-designated derivative instruments in the fourth quarter of 2018; and a gain upon derecognition of two LNG carriers that were previously on charter to Awilco LNG ASA (Awilco) and reclassification as sales-type leases in the fourth quarter of 2019.

Please refer to Teekay LNG's fourth quarter 2019 earnings release for additional information on the financial results for this entity.

Teekay Tankers

Teekay Tankers' net income, adjusted net income(1), and total adjusted EBITDA(1) for the three months ended December 31, 2019 significantly increased compared to the same period of the prior year, primarily due to higher average spot tanker rates earned in the fourth quarter of 2019.

Teekay Tankers has so far secured spot tanker rates for its Suezmax and Aframax/LR2 Product tankers of $51,700 per day and $38,600 per day based on 77 percent and 63 percent of the available spot revenue days fixed to-date in the first quarter of 2020, respectively, compared to $39,100 per day and $33,000 per day in the fourth quarter of 2019, respectively.

(1) This is a non-GAAP financial measure.  Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for a definition of this term and a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable financial measures under GAAP.

Summary of Recent Events

Teekay LNG

In January 2020, Bahrain LNG W.L.L. (BLNG), in which Teekay LNG owns a 30 percent interest, announced that it had completed the mechanical construction and commissioning of the Bahrain Regasification Terminal (Terminal) and that the customer had commenced payments to BLNG under its 20-year terminal use agreement.  BLNG also reported that the customer is looking forward to the commencement of commercial operations of the Terminal. The Bahrain Spirit FSU (which is 100 percent-owned by Teekay LNG) continues to be chartered to BLNG.  Depending on the seasonal requirements for regasification services by the Terminal, BLNG may trade the Bahrain Spirit FSU in the short-term LNG shipping market. Regardless of the deployment strategy utilized by the customer, BLNG will receive its full contractual payments from the customer of the Terminal, and Teekay LNG will continue to receive its full, fixed-rate charter-hire for the Bahrain Spirit FSU from BLNG.

In January 2020, Awilco fulfilled its obligation to repurchase two of Teekay LNG's LNG carriers, Wilforce and Wilpride, for a total of over $260 million. Teekay LNG received net cash proceeds of over $100 million after the repayment of approximately $157 million of debt secured by these two vessels.

In November and December 2019, Teekay LNG took delivery of the fifth and sixth 50 percent-owned ARC7 LNG carrier newbuildings, respectively, the Georgiy Ushakov and Yakov Gakkel, which immediately commenced their 26-year charter contracts servicing the Yamal LNG project.

On October 16, 2019, Teekay LNG sold its last remaining conventional tanker, the Alexander Spirit, for net proceeds of $11.5 million.

In December 2018, the board of directors of Teekay LNG's general partner approved a $100 million common unit repurchase program. Since that time, Teekay LNG has repurchased a total of 2.8 million common units, or approximately 3.5 percent of the outstanding common units immediately prior to commencement of the program, for a total cost of $36.3 million, representing an average repurchase price of $12.85 per unit.

Teekay Tankers

Since November 2019, Teekay Tankers has entered into agreements to sell three 2003-built and one 2004-built Suezmax tankers in separate transactions for combined sales proceeds of approximately $78 million. The first three vessels were delivered to their respective buyers between December 2019 and February 2020, with the fourth vessel expected to be delivered in April 2020.

In December 2019, Teekay Tankers entered into a one-year charter-out contract for a Suezmax tanker at approximately $36,000 per day, which commenced in December 2019.

In January 2020, Teekay Tankers entered into the previously-announced $533 million long-term debt facility to refinance 31 vessels. The proceeds from the new debt facility were used to repay approximately $455 million of Teekay Tankers' existing debt. The new debt facility has substantially similar terms to the previous debt facilities that it replaced and extends balloon maturities from 2020/2021 until the end of 2024. Following the closing of the debt facility, Teekay Tankers had three unencumbered vessels, two of which have been agreed to be sold as highlighted above. In addition, as a result of the refinancing, over $52 million of Teekay Parent debt guarantees of Teekay Tankers' debt were eliminated.

In January 2020, Teekay Tankers reached an agreement to sell a portion of its oil and gas ship-to-ship transfer support services business, which also provides gas terminal management and gas consulting services, for approximately $26 million. The sale is expected to close late in the first quarter of 2020 or early in the second quarter of 2020. Teekay Tankers will retain its entire Full Service Lightering business that operates in the U.S. Gulf, which provides ship-to-ship oil transfers for both U.S. crude imports and exports. In addition, Teekay Tankers will continue to operate oil ship-to-ship transfer support services in North America and the Caribbean, a business that has synergies with its core Full Service Lightering business.

Liquidity

As at December 31, 2019, Teekay Parent had total liquidity of approximately $195.3 million (consisting of $104.2 million of cash and cash equivalents and $91.1 million of undrawn revolving credit facilities) and, on a consolidated basis, Teekay had consolidated total liquidity of approximately $672.0 million (consisting of $354.4 million of cash and cash equivalents, including cash held for sale, and $317.6 million of undrawn revolving credit facilities).

Conference Call

The Company plans to host a conference call on Thursday, February 27, 2020 at 11:00 a.m. (ET) to discuss its results for the fourth quarter and year ended December 31, 2019. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing (800) 367-2403 or (647) 490-5367, if outside North America, and quoting conference ID code 9284962.

  • By accessing the webcast, which will be available on Teekay’s website at www.teekay.com (the archive will remain on the website for a period of one year).

An accompanying Fourth Quarter and Annual Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

About Teekay

Teekay is a leading provider of international crude oil and gas marine transportation services and also provides offshore production and logistics. Teekay provides these services primarily through its directly-owned fleet and its controlling ownership interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the world’s largest independent owner and operator of LNG carriers, and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest owners and operators of mid-sized crude tankers. The consolidated Teekay entities manage and operate total assets under management of approximately $11 billion, comprised of approximately 140 liquefied gas, offshore, and conventional tanker assets. With offices in 12 countries and approximately 5,700 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies.

Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.

For Investor Relations enquiries contact:
Ryan Hamilton
Tel:  +1 (604) 609-2963
Website:  www.teekay.com

Definitions and Non-GAAP Financial Measures

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission (SEC). These non-GAAP financial measures, which include Adjusted Net Income (Loss) Attributable to Shareholders of Teekay, Teekay Parent Free Cash Flow, Total Adjusted Revenues, Net Interest Expense and Adjusted Equity Income, and commencing in the first quarter of 2019, Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings across companies, and therefore may not be comparable to similar measures presented by other companies. The Company believes that certain investors use this information to evaluate the Company’s financial performance, as does management.

In 2018 and prior periods, the Company reported Cash Flow from Vessel Operations (CFVO), as a non-GAAP measure. In the first quarter of 2019, the Company made certain changes to its non-GAAP financial measures to more closely align with internal management reporting, Company reporting in its SEC Annual Report on Form 20-F and metrics used by certain investors. CFVO from Consolidated Vessels and Total CFVO are replaced with Consolidated Adjusted EBITDA and Total Adjusted EBITDA, respectively, for current and comparative periods.

Non-GAAP Financial Measures

Total Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, foreign exchange gain (loss), items included in other (loss) income, write-down and (loss) gain on sale of vessels, equipment and other operating assets, amortization of in-process revenue contracts, adjustments for direct financing leases to a cash basis, unrealized gains (losses) on derivative instruments, realized losses on interest rate swaps, realized losses on interest rate swap amendments and terminations, loss on deconsolidation of Altera, write-downs related to equity-accounted investments, and our share of the above items in non-consolidated joint ventures which are accounted for using the equity method of accounting. Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Company's financial statements.  Adjusted EBITDA from Equity-Accounted Vessels represents the Company's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Company holds the equity-accounted investments or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners. Total Adjusted EBITDA represents Consolidated Adjusted EBITDA plus Adjusted EBITDA from Equity-Accounted Joint Ventures. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to Appendices C and E of this release for reconciliations of Adjusted EBITDA to net income (loss) and equity (loss) income, respectively, which are the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.

Total Adjusted Revenues represents the Company's revenues from its consolidated vessels, as shown in the Company's Consolidated Statements of Income (Loss), and its proportionate ownership percentage of the revenues from its equity-accounted joint ventures, as shown in Appendix E of this release. Please refer to Appendix E of this release for a reconciliation of this non-GAAP financial measure to revenues and equity income, the most directly comparable GAAP measure reflected in the Company's consolidated financial statements.  The Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Company holds the equity-accounted investments or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners.

Adjusted Net Income (Loss) Attributable to Shareholders of Teekay excludes items of income or loss from GAAP net income (loss) that are typically excluded by securities analysts in their published estimates of the Company’s financial results. The Company believes that certain investors use this information to evaluate the Company’s financial performance, as does management. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income (loss), and refer to footnote (3) of the statements of income (loss) for a reconciliation of adjusted equity income to equity income (loss), the most directly comparable GAAP measure reflected in the Company’s consolidated financial statements.

Teekay Parent Financial Measures

Teekay Parent Adjusted EBITDA represents the sum of (a) distributions or dividends (including payments-in-kind) relating to a given quarter (but received by Teekay Parent in the following quarter) as a result of ownership interests in its consolidated publicly-traded subsidiaries (Teekay LNG and Teekay Tankers) and its equity-accounted investment in Altera prior to it being sold in May 2019, net of Teekay Parent’s corporate general and administrative expenditures for the given quarter and (b) Adjusted EBITDA attributed to Teekay Parent’s directly-owned and chartered-in assets. Teekay Parent Free Cash Flow represents Teekay Parent Adjusted EBITDA, less Teekay Parent’s net interest expense and dry-dock expenditures for the given quarter. Net Interest Expense includes interest expense (excluding the amortization of prepaid loan costs), interest income and realized losses on interest rate swaps. Please refer to Appendices B, C, D and E of this release for further details and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.


Teekay Corporation
Summary Consolidated Statements of Income (Loss)
(in thousands of U.S. dollars, except share and per share data)

 Three Months EndedYear Ended
 December 31,September 30,December 31,December 31,December 31,
 20192019201820192018
 (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
      
Revenues562,865 420,696 491,532 1,922,441 1,707,758 
      
Voyage expenses(107,455)(92,689)(117,199)(401,947)(388,887)
Vessel operating expenses(165,216)(159,616)(162,268)(644,445)(637,474)
Time-charter hire expense(31,174)(28,932)(25,434)(118,761)(86,458)
Depreciation and amortization(71,083)(73,633)(71,069)(290,672)(276,307)
General and administrative expenses(17,588)(20,016)(26,751)(81,444)(96,555)
Write-down and gain (loss) on sale of vessels (1)8,803 (175,785) (170,310)(53,693)
Restructuring charges(1,636)(414) (12,040)(4,065)
Income (loss) from vessel operations177,516 (130,389)88,811 202,822 164,319 
      
Interest expense(67,476)(67,707)(72,632)(279,059)(254,126)
Interest income1,397 1,485 2,650 7,804 8,525 
Realized and unrealized gain (loss) on     
  non-designated derivative instruments (2)4,592 (1,924)(32,833)(13,719)(14,852)
Equity income (loss) (3)31,900 21,514 19,356 (14,523)61,054 
Income tax expense (4)(12,731)(3,091)(6,727)(24,262)(19,724)
Foreign exchange (loss) gain(10,721)5,628 (5,764)(13,574)6,140 
Loss on deconsolidation of Altera    (7,070)
Other (loss) income – net (5)(1,980)(1,424)782 (14,475)(2,013)
Net income (loss)122,497 (175,908)(6,357)(148,986)(57,747)
Net income attributable to     
  non-controlling interests(111,154)(22,270)(11,996)(161,591)(21,490)
Net income (loss) attributable to the shareholders     
  of Teekay Corporation11,343 (198,178)(18,353)(310,577)(79,237)
Income (loss) per common share of Teekay Corporation     
  -  Basic$0.11 $(1.97)$(0.18)$(3.08)$(0.79)
  -  Diluted$0.11 $(1.97)$(0.18)$(3.08)$(0.79)
Weighted-average number of common     
  shares outstanding     
  -  Basic100,784,425 100,784,683 100,435,155 100,719,224 99,670,176 
  -  Diluted101,425,574 100,784,683 100,435,155 100,719,224 99,670,176 

(1) Write-down and loss on sales of vessels for the year ended December 31, 2019 and three months ended September 30, 2019 includes $175.0 million relating to the write-down of two FPSO units owned by Teekay Parent.  Write-down and loss on sales of vessels for the three months and year ended December 31, 2019 includes a $14.3 million gain upon derecognition of the vessels and reclassification as sales-type leases as a result of Awilco fulfilling its obligation to repurchase from Teekay LNG the WilPride and WilForce LNG carriers.

(2) Realized and unrealized  gains (losses) related to derivative instruments that are not designated in qualifying hedging relationships for accounting purposes are included as a separate line item in the consolidated statements of income (loss). The realized losses relate to the amounts the Company actually paid to settle such derivative instruments and the unrealized gains (losses) relate to the change in fair value of such derivative instruments, as detailed in the table below:

  Three Months EndedYear Ended
  December 31,September 30,December 31,December 31,December 31,
  20192019201820192018
  (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Realized (losses) gains relating to     
 Interest rate swap agreements(2,576)(2,247)(2,354)(8,296)(13,898)
 Interest rate swap agreement terminations    (13,681)
 Foreign currency forward contracts(147)  (147) 
 Stock purchase warrants(i)   (25,559) 
 Forward freight agreements1,097 435 274 1,490 137 
  (1,626)(1,812)(2,080)(32,512)(27,442)
Unrealized gains (losses) relating to     
 Interest rate swap agreements6,961 (623)(10,469)(7,878)33,700 
 Foreign currency forward contracts336 (435) (200) 
 Stock purchase warrants(i)  (20,202)26,900 (21,053)
 Forward freight agreements(1,079)946 (82)(29)(57)
  6,218 (112)(30,753)18,793 12,590 
Total realized and unrealized gains (losses) on derivative instruments4,592 (1,924)(32,833)(13,719)(14,852)
  1. Relates to the sale of the Company's remaining interest in Altera in May 2019. Also refer to (3) below.

(3) The Company’s proportionate share of items within equity income (loss) as identified in Appendix A of this release is detailed in the table below. By excluding these items from equity income (loss) as reflected in the consolidated statements of income (loss), the Company believes the resulting adjusted equity income is a normalized amount that can be used to evaluate the financial performance of the Company’s equity-accounted investments. Adjusted equity income is a non-GAAP financial measure.

  Three Months EndedYear Ended
  December 31,September 30,December 31,December 31,December 31,
  20192019201820192018
  (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Equity income (loss)31,900 21,514 19,356 (14,523)61,054 
Proportionate share of unrealized (gains) losses     
 on derivative instruments (6,271)5,170 15,387 12,867 (17,600)
Loss on sale/write-down of investment in     
  Altera(i)    72,753  
Other1,436 (150)(10,411)2,309 4,122 
Equity income adjusted for items in Appendix A27,065 26,534 24,332 73,406 47,576 
  1. During the year ended December 31, 2019, the Company recognized a write-down of $64.9 million on its equity-accounted investment in Altera and a loss of $7.9 million on sale of its investment in Altera to Brookfield Business Partners L.P. (or Brookfield), which occurred in May 2019.  Also refer to (2) above in respect of gains and losses on stock purchase warrants. 

(4)  Income tax expense for the three months and year ended December 31, 2019, includes adjustments to freight tax accruals.

(5)   Other loss for the year ended December 31, 2019 includes $10.6 million relating to the repurchase of the Company's 2020 bonds.


Teekay Corporation
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)

 As at December 31,As at September 30,As at December 31,
 201920192018
 (unaudited)(unaudited)(unaudited)
ASSETS  
Cash and cash equivalents - Teekay Parent104,196 73,796 220,238 
Cash and cash equivalents - Teekay LNG160,221 142,860 149,014 
Cash and cash equivalents - Teekay Tankers88,824 76,705 54,917 
Current portion of loans and advances to   
 equity-accounted investments (1)82,174 99,314 169,197 
Assets held for sale65,458 11,515  
Accounts receivable and other current assets (1)393,745 296,186 251,527 
Restricted cash - Teekay Parent2,048 1,946 2,030 
Restricted cash - Teekay LNG93,070 91,671 73,850 
Restricted cash - Teekay Tankers6,508 5,778 5,590 
Vessels and equipment - Teekay Parent95,984 102,031 304,049 
Vessels and equipment - Teekay LNG3,027,342 3,303,126 3,242,581 
Vessels and equipment - Teekay Tankers1,750,166 1,836,138 1,883,561 
Operating lease right-of-use assets (2)159,638 177,052  
Advances on newbuilding contracts  86,942 
Net investment in direct financing leases818,809 561,437 575,163 
Investments in and loans to equity-accounted investments1,099,795 1,034,713 1,193,741 
Other non-current assets131,766 137,510 179,270 
Total Assets8,079,744 7,951,778 8,391,670 
LIABILITIES AND EQUITY  
Accounts payable and other current liabilities (1)420,430 379,594 266,585 
Liabilities associated with assets held for sale2,980   
Advances from equity-accounted investments (1)18,647 24,895 75,292 
Short-term debt50,000 50,000  
Current portion of long-term debt - Teekay Parent86,674 36,663  
Current portion of long-term debt - Teekay LNG669,047 460,230 217,120 
Current portion of long-term debt - Teekay Tankers68,930 126,170 127,132 
Long-term debt - Teekay Parent349,403 347,830 614,341 
Long-term debt - Teekay LNG2,573,253 2,795,767 3,051,212 
Long-term debt - Teekay Tankers905,537 903,724 983,563 
Operating lease liabilities (2)148,602 165,414  
Other long-term liabilities214,648 212,591 189,397 
Equity:   
Non-controlling interests2,089,730 1,983,896 2,058,037 
Shareholders of Teekay481,863 465,004 808,991 
Total Liabilities and Equity8,079,744 7,951,778 8,391,670 
     
Net debt - Teekay Parent (3)329,833 308,751 392,073 
Net debt - Teekay LNG (3)2,989,009 3,021,466 3,045,468 
Net debt - Teekay Tankers (3)929,135 997,411 1,050,188 

(1)   Subsequent to the sale of the Company's remaining interest in Altera in May 2019, amounts receivable and payable to Altera are presented in accounts receivable and accounts payable, respectively. These were previously presented in current portion of loans and advances to equity-accounted investments, and advances from equity-accounted investments, respectively.

(2)    Upon adoption of the new lease accounting standard on January 1, 2019, the Company's long-term chartered-in vessels, with lease terms of more than one year, are now treated as operating lease right-of-use assets and operating lease liabilities. This resulted in an increase in the Company’s assets and liabilities by $148.6 million at December 31, 2019, and by $165.4 million at September 30, 2019.

(3)   Net debt is a non-GAAP financial measure and represents short-term debt, current portion of long-term debt and long-term debt, less cash and cash equivalents, and, if applicable, restricted cash.


Teekay Corporation
Summary Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)

 Year Ended
 December 31,
 20192018
 (unaudited)(unaudited)
Cash, cash equivalents and restricted cash provided by (used for)  
OPERATING ACTIVITIES  
Net loss(148,986)(57,747)
Non-cash and non-operating items:  
  Depreciation and amortization290,672 276,307 
  Unrealized loss (gain) on derivative instruments20,007 (34,570)
  Write-down and loss on sales of vessels170,310 53,693 
  Equity income, net of dividends received54,826 (44,312)
  Foreign currency exchange loss and other

44,835 48,208 
Direct financing lease payments received17,073  
Change in operating assets and liabilities(4,823)(14,754)
Expenditures for dry docking(60,608)(44,690)
Net operating cash flow383,306 182,135 
   
FINANCING ACTIVITIES  
Proceeds from issuance of long-term debt, net of issuance costs527,465 1,325,482 
Prepayments of long-term debt(804,748)(771,827)
Scheduled repayments of long-term debt(233,734)(671,803)
Proceeds from short-term debt200,000  
Prepayment of short-term debt(150,000) 
Proceeds from financing related to sales-leaseback of vessels381,526 611,388 
Prepayment of obligations related to finance leases(111,617) 
Repayments of obligations related to finance leases(95,946)(74,680)
Net proceeds from equity issuances of Teekay Corporation 103,655 
Repurchase of Teekay LNG common units(25,729) 
Distributions paid from subsidiaries to non-controlling interests(63,343)(64,676)
Cash dividends paid(5,523)(22,082)
Other financing activities(580)(671)
Net financing cash flow(382,229)434,786 
   
INVESTING ACTIVITIES  
Expenditures for vessels and equipment(109,523)(693,792)
Proceeds from sale of vessels and equipment31,523 28,837 
Proceeds from sale of equity-accounted investments and related assets100,000 81,823 
Investment in equity-accounted investments(72,391)(41,018)
Loans to joint ventures and joint venture partners (24,934)
Cash of transferred subsidiaries on sale, net of proceeds received (25,254)
Direct financing lease payments received 10,882 
Other investing activities  
Net investing cash flow(50,391)(663,456)
   
Decrease in cash, cash equivalents and restricted cash(49,314)(46,535)
Cash, cash equivalents and restricted cash, beginning of the year505,639 552,174 
Cash, cash equivalents and restricted cash, end of the year456,325 505,639 


Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
(in thousands of U.S. dollars, except per share data)

  Three Months EndedYear Ended
  December 31,September 30,December 31,
  201920192019
  (unaudited)(unaudited)(unaudited)
   $ Per $ Per $ Per
  $Share(1)$Share(1)$Share(1)
Net income (loss) – GAAP basis122,497  (175,908) (148,986) 
Adjust for: Net income attributable to      
  non-controlling interests(111,154) (22,270) (161,591) 
Net income (loss) attributable to      
 shareholders of Teekay11,343 0.11 (198,178)(1.97)(310,577)(3.08)
Add (subtract) specific items affecting net loss      
 Unrealized (gains) losses from derivative      
  instruments(2)(12,488)(0.12)5,283 0.05 (5,923)(0.06)
 Foreign exchange losses (gains)(3)9,612 0.10 (7,059)(0.07)8,513 0.08 
 Write-down and (gain) loss on sale of vessels and
      
 other assets(8,803)(0.09)175,785 1.74 243,063 2.41 
 Restructuring charges, net of recoveries(612)(0.01)414  3,329 0.03 
 Other(4)18,710 0.19 1,267 0.01 59,304 0.59 
 Non-controlling interests’ share of items above(5)13,520 0.13 (1,582)(0.02)(16,820)(0.17)
Total adjustments19,939 0.20 174,108 1.71 291,466 2.89 
Adjusted net income (loss) attributable to      
 shareholders of Teekay31,282 0.31 (24,070)(0.24)(19,111)(0.19)
  1. Basic per share amounts.
  2. Reflects unrealized (gains) losses relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those (gains) losses included in the Company's proportionate share of equity income (loss) from joint ventures.
  3. Foreign currency exchange losses (gains) primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds. Nearly all of the Company’s foreign currency exchange gains and losses are unrealized.
  4. Other for the three months ended December 31, 2019 includes adjustments to freight tax accruals for periods prior to 2019, and the impact of the Awilco charter contracts being reclassified from operating leases to sales-type leases. Other for the three months ended September 30, 2019 includes upfront fees on the refinancing of a vessel. Other for the year ended December 31, 2019 also includes the realized loss on sale of stock purchase warrants in Altera and a loss on the repurchase of 2020 bonds.
  5. Items affecting net income (loss) include items from the Company’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income (loss) are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to determine the non-controlling interests’ share of the amount. The amount identified as “Non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table.

Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
(in thousands of U.S. dollars, except per share data)

  Three Months EndedYear Ended
  December 31,December 31,
  20182018
  (unaudited)(unaudited)
   $ Per $ Per
  $Share(1)$Share(1)
Net loss – GAAP basis(6,357) (57,747) 
Adjust for: Net income attributable to    
  non-controlling interests(11,996) (21,490) 
Net loss attributable to    
 shareholders of Teekay(18,353)(0.18)(79,237)(0.79)
Add (subtract) specific items affecting net loss    
 Unrealized losses (gains) from derivative    
  instruments(2)46,140 0.46 (30,930)(0.31)
 Foreign exchange losses (gains)(3)4,526 0.04 (16,723)(0.17)
 Write-down and loss on sale of vessels and
    
 other assets(4)3,697 0.04 63,635 0.64 
 Restructuring charges(5)  2,611 0.03 
 Loss on deconsolidation of Altera  7,070 0.07 
 Realized loss on interest rate swap    
  terminations and amendments(6)  14,560 0.15 
 Other(7)(12,526)(0.12)5,482 0.06 
 Non-controlling interests’ share of items above(8)(25,498)(0.26)(19,739)(0.21)
Total adjustments16,339 0.16 25,966 0.26 
Adjusted net loss attributable to    
 shareholders of Teekay(2,014)(0.02)(53,271)(0.53)
  1. Basic per share amounts.
  2. Reflects unrealized losses (gains) relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those losses (gains) included in the Company's proportionate share of equity income (loss) from joint ventures, and hedge ineffectiveness from derivative instruments designated as hedges for accounting purposes.
  3. Foreign currency exchange losses (gains) primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds. Nearly all of the Company’s foreign currency exchange gains and losses are unrealized.
  4. Includes the Company's proportionate share of write-downs and gain (loss) on sale of vessels and other operating assets in equity-accounted joint ventures and the consolidated write-downs and gain (loss) on sale of vessels and other operating assets.
  5. Restructuring charges for the year ended December 31, 2018, primarily relate to severance costs resulting from reorganization and realignment of resources of certain of the Company's business development, marine solutions and fleet operations functions to better respond to the changing business environment, and the Company's proportionate share of restructuring charges related to severance costs from crew reduction on the Petrojarl Varg FPSO in Altera.
  6. Refer to footnote (2) of the summary consolidated statements of loss for the three months and year ended December 31, 2018.
  7. Includes the write-off of prepaid loan costs by Teekay LNG and Teekay Tankers relating to the refinancing of certain vessels and a gain on bond repurchase by the company. Also refer to footnote (3) of the summary consolidated statements of income (loss) for more detail on items relating to equity-accounted joint ventures.
  8. Items affecting net loss include items from the Company’s consolidated non-wholly-owned subsidiaries. The specific items affecting net loss are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to determine the non-controlling interests’ share of the amount. The amount identified as “Non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table.


Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income for the Three Months Ended December 31, 2019
(in thousands of U.S. dollars)
(unaudited)

  TeekayTeekayTeekayConsolidationTotal
  LNGTankersParentAdjustments(1) 
       
Revenues148,797 303,885 112,059 (1,876)562,865 
       
Voyage expenses(4,628)(102,831)(16)20 (107,455)
Vessel operating expenses(30,706)(51,875)(82,635) (165,216)
Time-charter hire expense(5,987)(12,312)(14,703)1,828 (31,174)
Depreciation and amortization(33,053)(31,943)(6,087) (71,083)
General and administrative expenses(4,829)(8,992)(3,195)(572)(17,588)
Write-down and gain (loss) on sale of vessels14,349 (5,544)(2) 8,803 
Restructuring charges(339) (1,897)600 (1,636)
       
Income from vessel operations83,604 90,388 3,524  177,516 
      
Interest expense(40,712)(15,679)(11,147)62 (67,476)
Interest income922 147 390 (62)1,397 
Realized and unrealized gain on     
 non-designated derivative instruments4,352 205 35  4,592 
Equity income30,207 1,693   31,900 
Equity in earnings of subsidiaries(2)  22,994 (22,994) 
Income tax (expense) recovery(985)(13,195)1,449  (12,731)
Foreign exchange loss(4,545)(615)(5,561) (10,721)
Other (loss) income – net(1,767)128 (341) (1,980)
Net income71,076 63,072 11,343 (22,994)122,497 
Net income attributable to     
 non-controlling interests(3)(3,706)  (107,448)(111,154)
Net income attributable to shareholders/     
 unitholders of publicly-listed entities67,370 63,072 11,343 (130,442)11,343 
  1. Consolidation Adjustments column includes adjustments which eliminate transactions between Teekay LNG, Teekay Tankers and Teekay Parent.
  2. Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries.
  3. Net income attributable to non-controlling interests in the Teekay LNG column represents the joint venture partners’ share of the net income of its respective consolidated joint ventures. Net income attributable to non-controlling interest in the Consolidation Adjustments column represents the public’s share of the net income of Teekay’s publicly-traded consolidated subsidiaries.

Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income (Loss) for the Year Ended December 31, 2019
(in thousands of U.S. dollars)
(unaudited)

  TeekayTeekayTeekayConsolidationTotal
  LNGTankersParentAdjustments(1) 
       
Revenues601,256 920,967 413,806 (13,588)1,922,441 
       
Voyage expenses(21,387)(380,564)(43)47 (401,947)
Vessel operating expenses(111,585)(208,601)(326,238)1,979 (644,445)
Time-charter hire expense(19,994)(43,189)(67,139)11,561 (118,761)
Depreciation and amortization(136,765)(124,002)(29,905) (290,672)
General and administrative expenses(22,521)(36,404)(22,520)1 (81,444)
Write-down and gain (loss) on sale of vessels13,564 (5,544)(178,330) (170,310)
Restructuring charges(3,315) (8,725) (12,040)
       
Income (loss) from vessel operations299,253 122,663 (219,094) 202,822 
      
Interest expense(164,521)(65,362)(49,431)255 (279,059)
Interest income3,985 871 3,203 (255)7,804 
Realized and unrealized (loss) gain on     
 non-designated derivative instruments(13,361)(967)609  (13,719)
Equity income (loss)58,819 2,345 (75,687) (14,523)
Equity in earnings of subsidiaries(2)  44,375 (44,375) 
Income tax (expense) recovery(7,477)(18,883)2,098  (24,262)
Foreign exchange loss(9,640)486 (4,420) (13,574)
Other (loss) income – net(2,454)209 (12,230) (14,475)
Net income (loss)164,604 41,362 (310,577)(44,375)(148,986)
Net income attributable to     
 non-controlling interests(3)(11,814)  (149,777)(161,591)
Net income (loss) attributable to shareholders/     
 unitholders of publicly-listed entities152,790 41,362 (310,577)(194,152)(310,577)
  1. Consolidation Adjustments column includes adjustments which eliminate transactions between Teekay LNG, Teekay Tankers and Teekay Parent.
  2. Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries.
  3. Net income attributable to non-controlling interests in the Teekay LNG column represents the joint venture partners’ share of the net income of its respective consolidated joint ventures. Net income attributable to non-controlling interest in the Consolidation Adjustments column represents the public’s share of the net income of Teekay’s publicly-traded consolidated subsidiaries.


Teekay Corporation
Appendix C - Supplemental Financial Information
Teekay Parent Summary Operating Results
For the Three Months Ended December 31, 2019
(in thousands of U.S. dollars)
(unaudited)

    Teekay
    Parent
 FPSOsOther(1)GPCOTotal
     
Revenues58,992 53,067  112,059 
     
Voyage expenses(9)(7) (16)
Vessel operating expenses(38,489)(44,146) (82,635)
Time-charter hire expense(9,582)(5,121) (14,703)
Depreciation and amortization(6,052)(35) (6,087)
General and administrative expenses(66) (3,129)(3,195)
Write-down of vessels(2)  (2)
Restructuring charges (1,897) (1,897)
Income (loss) from vessel operations4,792 1,861 (3,129)3,524 
     
Depreciation and amortization6,052 35  6,087 
Amortization of in-process revenue    
  contracts and other(1,483)602  (881)
Write-down of vessels2   2 
Daughter Entities distributions (2)  5,090 5,090 
Teekay Parent adjusted EBITDA9,363 2,498 1,961 13,822 
  1. Includes the results of one chartered-in FSO unit owned by Altera, and one chartered-in LNG unit owned by Teekay LNG that completed on November 1, 2019, both of which are largely on a flow-through basis with Teekay Parent earning a small margin.
  2. In addition to the adjusted EBITDA generated by its directly owned and chartered-in assets, Teekay Parent also receives cash distributions from its consolidated publicly-traded subsidiary, Teekay LNG. For the three months ended December 31, 2019, Teekay Parent received cash distributions of $5.1 million from Teekay LNG, including those made with respect to its general partner interests in Teekay LNG.  Distributions received for a given quarter consist of the amount of distributions relating to such quarter but received by Teekay Parent in the following quarter. Please refer to Appendix D of this release for further details.


Teekay Corporation
Appendix D - Reconciliation of Non-GAAP Financial Measures
Teekay Parent Free Cash Flow
(in thousands of U.S. dollars, except share and per share data)

  Three Months EndedYear Ended
  December 31,September 30,December 31,December 31,December 31,
  20192019201820192018
  (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
TEEKAY PARENT GPCO     
Daughter Entities distributions to
  Teekay Parent(1)
     
   Limited Partner interests (2)     
   Teekay LNG4,790 4,790 3,529 19,160 14,116 
   Altera    1,698 
   GP interests     
   Teekay LNG300 300 227 1,209 911 
   Altera (3)    47 
Total Daughter Entity Distributions to
  Teekay Parent
5,090 5,090 3,756 20,369 16,772 
Corporate general and 
  administrative expenses
(3,129)(2,720)(5,134)(13,152)(19,140)
Total Teekay Parent GPCO1,961 2,370 (1,378)7,217 (2,368)
       
TEEKAY PARENT OPCO     
Teekay Parent OPCO (4)     
   FPSOs9,363 (13,087)3,737 (6,935)48,347 
   Other2,498 649 722 5,097 6,783 
Total Teekay Parent OPCO (5)11,861 (12,438)4,459 (1,838)55,130 
      
TEEKAY PARENT ADJUSTED
  EBITDA
13,822 (10,068)3,081 5,379 52,762 
      
Net interest expense (6)(8,879)(8,714)(14,081)(39,408)(61,335)
       
 TOTAL TEEKAY PARENT FREE
  CASH FLOW
4,943 (18,782)(11,000)(34,029)(8,573)
      
 Weighted-average number of
  common shares - Basic
100,784,425100,784,683100,435,155100,719,22499,670,176
  1. Daughter Entities dividends and distributions for a given quarter consist of the amount of dividends and distributions relating to such quarter but received by Teekay Parent in the following quarter.
  2. Common unit distribution cash flows to Teekay Parent are based on Teekay Parent’s ownership on the ex-dividend date for its publicly-traded subsidiary Teekay LNG and equity-accounted investment in Altera for the periods as follows:
  Three Months EndedYear Ended
  December 31,September 30,December 31,December 31,December 31,
  20192019201820192018
  (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Teekay LNG          
  Distribution per common unit$0.19 $0.19 $0.14 $0.76$0.56 
  Common units owned by          
  Teekay Parent 25,208,274  25,208,274  25,208,274  25,208,274  25,208,274 
  Total distribution$4,789,572 $4,789,572 $3,529,158 $19,158,288 $14,116,633 
Altera          
  Distribution per common unit$ $ $ $ $0.03 
  Common units owned by          
  Teekay Parent     56,587,484    56,587,484 
  Total distribution$ $ $ $ $1,697,625 
  1. For the first three quarters of 2018, Altera paid a quarterly distribution of $0.01 per common unit. Commencing with the distribution for the fourth quarter of 2018, the board of directors of Altera's general partner reduced the quarterly distribution to zero. Teekay sold its remaining interests in Altera to Brookfield in the second quarter of 2019.
  2. Please refer to Appendices C and E for additional financial information on Teekay Parent’s adjusted EBITDA.
  3. Excludes corporate general and administrative expenses relating to Teekay Parent GPCO.
  4. Please see Appendix E to this release for a description of this measure and a reconciliation of this non-GAAP financial measure as used in this release to interest expense net of interest income, the most directly comparable GAAP financial measure.


Teekay Corporation
Non-GAAP Financial Reconciliations


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Consolidated
(in thousands of U.S. dollars)

  Three Months Ended
  December 31,September 30,December 31,
  201920192018
 (unaudited)(unaudited)(unaudited)
Net income (loss)122,497 (175,908)(6,357)
Depreciation and amortization71,083 73,633 71,069 
Interest expense, net of interest income66,079 66,222 69,982 
Income tax expense12,731 3,091 6,727 
EBITDA272,390 (32,962)141,421 
Specific income statement items affecting EBITDA:   
 Write-down and (gain) loss on sale of vessels(8,803)175,785  
 Direct finance lease payments received in excess of revenue recognized10,310 4,071 2,475 
 Amortization of in-process contracts and other(881)(880)(2,609)
 Realized and unrealized (gain) loss on derivative instruments(4,592)1,924 32,833 
 Realized gains from the settlements of non-designated derivative instruments1,097 435  
 Equity income(31,900)(21,514)(19,356)
 Foreign currency exchange loss (gain)10,721 (5,628)5,764 
 Other expense (income) - net1,980 1,424 (782)
Consolidated Adjusted EBITDA250,322 122,655 159,746 
Adjusted EBITDA from equity-accounted vessels (See Appendix E)73,923 70,225 86,929 
Total Adjusted EBITDA324,245 192,880 246,675 


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Consolidated
(in thousands of U.S. dollars)

  Year Ended
  December 31,December 31,
  20192018
 (unaudited)(unaudited)
Net loss(148,986)(57,747)
Depreciation and amortization290,672 276,307 
Interest expense, net of interest income271,255 245,601 
Income tax expense24,262 19,724 
EBITDA437,203 483,885 
Specific income statement items affecting EBITDA:  
 Write-down and loss on sale of vessels170,310 53,693 
 Direct finance lease payments received in excess of revenue recognized21,636 11,082 
 Amortization of in-process contracts and other(4,131)(10,217)
 Realized and unrealized loss on derivative instruments13,719 14,852 
 Realized gains from the settlements of non-designated derivative instruments1,532  
 Equity loss (income)14,523 (61,054)
 Loss on deconsolidation of Altera 7,070 
 Foreign currency exchange loss (gain)13,574 (6,140)
 Other expense - net14,475 2,013 
Consolidated Adjusted EBITDA682,841 495,184 
Adjusted EBITDA from equity-accounted vessels (See Appendix E)267,852 280,449 
Total Adjusted EBITDA950,693 775,633 


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA – Equity-Accounted Vessels
(in thousands of U.S. dollars)

  Three Months Ended
  December 31, 2019September 30, 2019December 31, 2018
  (unaudited)(unaudited)(unaudited)
  AtCompany'sAtCompany'sAtCompany's
  100%Portion(1)100%Portion(1)100%Portion(1)
Revenues223,716 100,267 207,749 91,490 601,685 136,738 
Vessel and other operating expenses(73,139)(32,600)(60,219)(26,779)(237,912)(53,703)
Depreciation and amortization(29,609)(14,392)(29,799)(14,416)(129,669)(28,917)
Write-down and gain on sale of      
 vessels    (26,292)(3,697)
Income from vessel operations of equity-accounted vessels120,968 53,275 117,731 50,295 207,812 50,421 
       
Net interest expense(62,291)(25,821)(57,031)(23,423)(103,802)(28,380)
Income tax expense(200)(107)(32)(16)(5,586)(785)
Other items including realized and      
 unrealized loss on derivative      
 instruments12,823 4,553 (18,270)(5,492)(77,273)(17,202)
Write-down and gain on sale of      
 equity-accounted investments (2)   150  15,302 
Net income / equity income of equity-accounted vessels71,300 31,900 42,398 21,514 21,151 19,356 
        
Net income / equity income      
 of equity-accounted vessels71,300 31,900 42,398 21,514 21,151 19,356 
Depreciation and amortization29,609 14,392 29,799 14,416 129,669 28,917 
Net interest expense62,291 25,821 57,031 23,423 103,802 28,380 
Income tax expense200 107 32 16 5,586 785 
EBITDA163,400 72,220 129,260 59,369 260,208 77,438 
Specific income statement items affecting EBITDA:     
 Write-down and gain on sale of vessels    26,292 3,697 
 Direct finance lease payments received in excess of revenue recognized19,286 7,212 17,701 6,470 14,057 5,066 
 Amortization of in-process contracts and other(1,758)(956)(1,758)(956)(1,804)(965)
 Other items including realized and unrealized loss on derivative instruments
(12,823)(4,553)18,270 5,492 77,273 17,202 
 Realized loss on foreign currency forward contracts    (1,470)(207)
 Write-down and (gain) on sale of equity-accounted investments(2)   (150) (15,302)
Adjusted EBITDA from equity-accounted vessels(3)(4)168,105 73,923 163,473 70,225 374,556 86,929 
  1. For the three months ended December 31, 2019 and September 30, 2019, the Company’s proportionate share of its equity-accounted vessels and other investments, ranged from 20% to 52%. For the three months ended December 31, 2018, the Company’s proportionate share of its equity-accounted vessels and other investments, ranged from 14% to 52%, and included $35.0 million related to the Company's proportionate share of its investment in Altera, which was sold in the second quarter of 2019.
  2. For the three months ended December 31, 2018, includes a gain on the sale of Teekay's 43.5% stake in Magnora in November 2018.
  3. Adjusted EBITDA from equity-accounted vessels represents the Company’s proportionate share of adjusted EBITDA from its equity-accounted vessels and other investments.
  4. The Company sold its investment in Altera in May 2019 and consequently did not include any share of Altera's adjusted EBITDA for the three months ended December 31, 2019 and September 30, 2019. The three months ended December 31, 2018 include the Company's proportionate share of the adjusted EBITDA from Altera.

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA – Equity-Accounted Vessels
(in thousands of U.S. dollars)

  Year Ended
  December 31, 2019December 31, 2018
  (unaudited)(unaudited)
  AtCompany'sAtCompany's
  100%Portion(1)100%Portion(1)
Revenues1,100,576 385,529 2,008,308 470,534 
Vessel and other operating expenses(421,592)(138,293)(929,731)(203,948)
Depreciation and amortization(201,478)(68,921)(511,113)(111,019)
Write-down and loss on sale of    
 vessels  (114,348)(16,277)
Income from vessel operations of equity-accounted vessels477,506 178,315 453,116 139,290 
     
Net interest expense(278,572)(99,567)(361,313)(98,731)
Income tax expense(6,078)(1,757)(5,832)(900)
Other items including realized and unrealized loss    
 on derivative instruments(85,088)(18,911)(6,445)(181)
Write-down and gain on sale of    
 equity-accounted investments (2) (72,603) 21,576 
Net income / equity (loss) income of equity-accounted vessels107,768 (14,523)79,526 61,054 
      
Net income / equity (loss) income    
 of equity-accounted vessels107,768 (14,523)79,526 61,054 
Depreciation and amortization201,478 68,921 511,113 111,019 
Net interest expense278,572 99,567 361,313 98,731 
Income tax expense6,078 1,757 5,832 900 
EBITDA593,896 155,722 957,784 271,704 
Specific income statement items affecting EBITDA:   
Write-down and loss on sale of vessels  114,348 16,277 
Direct finance lease payments received in excess of    
 revenue recognized67,807 24,574 56,680 19,486 
Amortization of in-process contracts and other(6,974)(3,793)(26,779)(5,424)
Other items including realized and unrealized loss on    
  derivative instruments

85,088 18,911 6,445 181 
Realized loss on foreign currency forward contracts(1,175)(165)(1,416)(199)
Write-down and (gain) on sale of equity-accounted investments(2) 72,603  (21,576)
Adjusted EBITDA from equity-accounted vessels(3)(4)738,642 267,852 1,107,062 280,449 
  1. For the year ended December 31, 2019, the Company’s proportionate share of its equity-accounted vessels and other investments, ranged from 20% to 52%, excluding its investment in Altera which was 14% until the sale thereof in May 2019. For the year ended December 31, 2018, the Company’s proportionate share of its equity-accounted vessels and other investments, ranged from 14% to 52%, and included $94.6 million related to the Company's proportionate share of its investment in Altera, which was sold in the second quarter of 2019.
  2. For the year ended December 31, 2019, includes a loss on sale of the Company's investment in Altera. For the year ended December 31, 2018, includes a gain on the sale of Teekay's 43.5% stake in Magnora in November 2018, a gain on the sale of a 2% ownership interest in Altera's general partner to Brookfield in July 2018, a loss on the sale of Teekay's investment in KT Maritime (Pty) Ltd. and a gain on the sale of Teekay LNG's 50% ownership interest in the Excelsior Joint Venture.
  3. Adjusted EBITDA from equity-accounted vessels represents the Company’s proportionate share of adjusted EBITDA from its equity-accounted vessels and other investments.
  4. The Company sold its investment in Altera in May 2019 and consequently did not include any share of Altera's adjusted EBITDA for the last three quarters of 2019. The year ended December 31, 2018 includes the Company's proportionate share of the adjusted EBITDA from Altera.


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Total Adjusted Revenues
(in thousands of U.S. dollars)

   Three Months EndedYear Ended
   December 31,September 30,December 31,December 31,December 31,
   20192019201820192018
   (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Revenues562,865 420,696 491,532 1,922,441 1,707,758 
Proportionate share of revenues     
 from equity-accounted joint ventures 100,267 91,490 136,738 385,529 470,534 
Total adjusted revenues663,132 512,186 628,270 2,307,970 2,178,292 


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Teekay Parent
(in thousands of U.S. dollars)

  Three Months Ended September 30, 2019
  (unaudited)
      Teekay
      Parent
  FPSOsOtherGPCOTotal
         
Teekay Parent (loss) income from vessel operations (194,415) 8 (2,720) (197,127)
Write down of vessels 175,000     175,000 
Depreciation and amortization 7,811  38   7,849 
Amortization of in-process revenue contracts and other (1,483) 603   (880)
Daughter Entities distributions    5,090  5,090 
Adjusted EBITDA – Teekay Parent (13,087) 649 2,370  (10,068)


  Three Months Ended December 31, 2018
  (unaudited)
      Teekay
      Parent
  FPSOsOtherGPCOTotal
         
Teekay Parent loss from vessel operations (2,370) (845)(5,134) (8,349)
Depreciation and amortization 8,035  39   8,074 
Amortization of in-process revenue contracts and other (1,928) 1,528   (400)
Daughter Entities distributions    3,756  3,756 
Adjusted EBITDA – Teekay Parent 3,737  722 (1,378) 3,081 


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Teekay Parent
(in thousands of U.S. dollars)

  Year Ended December 31, 2019
  (unaudited)
      Teekay
      Parent
  FPSOsOtherGPCOTotal
         
Teekay Parent (loss) income from vessel operations (208,167) 2,225 (13,152) (219,094)
Write-down of vessels 178,330     178,330 
Depreciation and amortization 29,710  195   29,905 
Amortization of in-process revenue contracts and other (6,808) 2,677   (4,131)
Daughter Entities distributions    20,369  20,369 
Adjusted EBITDA – Teekay Parent (6,935) 5,097 7,217  5,379 


  Year Ended December 31, 2018
  (unaudited)
      Teekay
      Parent
  FPSOsOtherGPCOTotal
         
Teekay Parent income (loss) from vessel operations 22,958  4,698 (19,140) 8,516 
Depreciation and amortization 33,254  161   33,415 
Amortization of in-process revenue contracts and other (7,865) 1,924   (5,941)
Daughter Entities distributions    16,772  16,772 
Adjusted EBITDA – Teekay Parent 48,347  6,783 (2,368) 52,762 


Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Net Interest Expense - Teekay Parent
(in thousands of U.S. dollars)

   Three Months EndedYear Ended
   December 31,September 30,December 31,December 31,December 31,
   2019
2019
2018
2019 2018
   (unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
Interest expense(67,476)(67,707)(72,632)(279,059)(254,126)
Interest income1,397 1,485 2,650 7,804 8,525 
Interest expense net of interest income consolidated(66,079)(66,222)(69,982)(271,255)(245,601)
Less: Non-Teekay Parent interest expense net of interest income(55,322)(55,545)(55,223)(225,027)(182,277)
Interest expense net of interest income - Teekay Parent(10,757)(10,677)(14,759)(46,228)(63,324)
Teekay Parent non-cash accretion and loan cost amortization2,161 2,204 969 7,823 3,550 
Teekay Parent realized losses on interest rate swaps(283)(241)(291)(1,003)(1,561)
Net interest expense - Teekay Parent(8,879)(8,714)(14,081)(39,408)(61,335)


Forward Looking Statements

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934,as amended) which reflect management’s current views with respect to certain future events and performance, including statements, among other things, regarding: Teekay LNG’s intention to increase its quarterly cash distributions on its common units by 32 percent in 2020; expected stronger earnings, cash flows, and balance sheet strength in 2020 for the Teekay Group; Teekay LNG’s ability to be insulated from the near-term weakness in the spot LNG shipping market or international LNG markets; expected increase in Teekay Tankers' earnings and cash flows in 2020; tanker supply and demand fundamentals in 2020; the impact of the coronavirus outbreak on LNG, oil and tanker supply and demand; agreed asset sales by Teekay Tankers and the anticipated timing of closings of such transactions; and the Company's strategic priorities. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: market or counterparty reaction to changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth; changes in the demand for oil, refined products, LNG or LPG; changes in trading patterns significantly affecting overall vessel tonnage requirements; greater or less than anticipated levels of vessel newbuilding orders and deliveries and greater or less than anticipated rates of vessel scrapping; changes in global oil prices or tanker rates; issues with vessel operations; increased operating expenses; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the effects of IMO 2020; the potential for early termination of long-term contracts of existing vessels; delays in the commencement of charter or other contracts, including potential further delays to the commencement of commercial operations of the Bahrain Regasification Terminal; the ability to fund debt maturities; changes in borrowing costs or equity valuations; declaration by Teekay LNG’s board of directors of increased common unit distributions; available cash to reduce financial leverage at Teekay LNG and Teekay Tankers; the impact of geopolitical tensions and changes in global economic conditions; the duration and extent of the coronavirus outbreak; and other factors discussed in Teekay’s filings from time to time with the SEC, including its Annual Report on Form 20-F for the fiscal year ended December 31, 2018. Teekay expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Teekay’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

 

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