TEEKAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cash and cash equivalents provided by (used for)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
405,460
|
|
|
|
124,002
|
|
|
|
35,480
|
|
Non-cash items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
509,500
|
|
|
|
422,904
|
|
|
|
431,086
|
|
Amortization of in-process revenue contracts
(note 6)
|
|
|
(30,085
|
)
|
|
|
(40,939
|
)
|
|
|
(61,700
|
)
|
Unrealized loss (gain) on derivative instruments
|
|
|
51,910
|
|
|
|
267,830
|
|
|
|
(113,344
|
)
|
Gain on sale of vessels and equipment
|
|
|
(1,466
|
)
|
|
|
(13,509
|
)
|
|
|
(1,995
|
)
|
Asset impairments and loan loss provisions
(note 18b)
|
|
|
71,641
|
|
|
|
2,238
|
|
|
|
168,353
|
|
Equity income, net of dividends received
|
|
|
3,203
|
|
|
|
(94,726
|
)
|
|
|
(121,144
|
)
|
Income tax (recovery) expense
|
|
|
(16,767
|
)
|
|
|
10,173
|
|
|
|
2,872
|
|
Unrealized foreign exchange gain and other
|
|
|
(142,416
|
)
|
|
|
(217,908
|
)
|
|
|
(39,003
|
)
|
Change in operating assets and liabilities
(note 17a)
|
|
|
(12,291
|
)
|
|
|
60,631
|
|
|
|
64,184
|
|
Expenditures for dry docking
|
|
|
(68,380
|
)
|
|
|
(74,379
|
)
|
|
|
(72,205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating cash flow
|
|
|
770,309
|
|
|
|
446,317
|
|
|
|
292,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt, net of issuance costs
(note 8)
|
|
|
2,452,878
|
|
|
|
3,365,045
|
|
|
|
2,451,828
|
|
Prepayments of long-term debt
|
|
|
(554,831
|
)
|
|
|
(1,331,469
|
)
|
|
|
(1,017,818
|
)
|
Scheduled repayments of long-term debt
|
|
|
(1,040,292
|
)
|
|
|
(1,291,322
|
)
|
|
|
(695,688
|
)
|
Repayments of capital lease obligations
|
|
|
(4,423
|
)
|
|
|
(479,115
|
)
|
|
|
(10,315
|
)
|
(Increase) decrease in restricted cash
|
|
|
(21,005
|
)
|
|
|
380,953
|
|
|
|
31,776
|
|
Net proceeds from equity issuances of subsidiaries
(note 5)
|
|
|
575,368
|
|
|
|
452,061
|
|
|
|
446,893
|
|
Equity contribution by joint venture partner
|
|
|
5,500
|
|
|
|
27,267
|
|
|
|
4,934
|
|
Issuance of Common Stock upon exercise of stock options
(note 12)
|
|
|
1,217
|
|
|
|
55,165
|
|
|
|
27,219
|
|
Distribution from subsidiaries to non-controlling interests
|
|
|
(360,392
|
)
|
|
|
(360,820
|
)
|
|
|
(269,987
|
)
|
Cash dividends paid
|
|
|
(125,881
|
)
|
|
|
(91,004
|
)
|
|
|
(90,265
|
)
|
Other financing activities
|
|
|
(3,682
|
)
|
|
|
|
|
|
|
(12,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financing cash flow
|
|
|
924,457
|
|
|
|
726,761
|
|
|
|
866,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for vessels and equipment
|
|
|
(1,795,901
|
)
|
|
|
(994,931
|
)
|
|
|
(753,755
|
)
|
Proceeds from sale of vessels and equipment
|
|
|
20,472
|
|
|
|
180,638
|
|
|
|
47,704
|
|
Purchase of SPT (net of cash acquired of $377)
(note 3c)
|
|
|
(46,961
|
)
|
|
|
|
|
|
|
|
|
Purchase of ALP (net of cash acquired of $294)
(note 3g)
|
|
|
|
|
|
|
(2,322
|
)
|
|
|
|
|
Purchase of Logitel (net of cash acquired of $8,089)
(note 3d)
|
|
|
|
|
|
|
4,090
|
|
|
|
|
|
Increase in restricted cash
|
|
|
(34,290
|
)
|
|
|
|
|
|
|
|
|
Recovery (investment) in term loans
(note 4)
|
|
|
|
|
|
|
4,814
|
|
|
|
(12,552
|
)
|
Investment in equity-accounted investees
(note 23)
|
|
|
(40,595
|
)
|
|
|
(79,602
|
)
|
|
|
(157,762
|
)
|
Loan repayments from (advances to) equity-accounted investees
|
|
|
53,173
|
|
|
|
(87,130
|
)
|
|
|
(14,466
|
)
|
Investment in direct financing lease assets
(note 9)
|
|
|
|
|
|
|
|
|
|
|
(307,950
|
)
|
Direct financing lease payments received
|
|
|
20,824
|
|
|
|
22,856
|
|
|
|
17,289
|
|
Investment in cost accounted investment
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
|
|
Other investing activities
|
|
|
|
|
|
|
(4,247
|
)
|
|
|
(2,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investing cash flow
|
|
|
(1,823,278
|
)
|
|
|
(980,834
|
)
|
|
|
(1,183,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(128,512
|
)
|
|
|
192,244
|
|
|
|
(24,831
|
)
|
Cash and cash equivalents, beginning of the year
|
|
|
806,904
|
|
|
|
614,660
|
|
|
|
639,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of the year
|
|
|
678,392
|
|
|
|
806,904
|
|
|
|
614,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information
(note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
F-6
TEEKAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY
(in thousands of U.S. dollars and shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumul-
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousands
|
|
|
Common
|
|
|
|
|
|
ated Other
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Stock and
|
|
|
|
|
|
Compre-
|
|
|
|
|
|
|
|
|
Redeemable
|
|
|
|
of Common
|
|
|
Additional
|
|
|
|
|
|
hensive
|
|
|
Non-
|
|
|
|
|
|
Non-
|
|
|
|
Stock
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Income
|
|
|
controlling
|
|
|
|
|
|
controlling
|
|
|
|
Outstanding
|
|
|
Capital
|
|
|
Earnings
|
|
|
(Loss)
|
|
|
Interest
|
|
|
Total
|
|
|
Interest
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance as at December 31, 2012
|
|
|
69,704
|
|
|
|
681,933
|
|
|
|
648,224
|
|
|
|
(14,768
|
)
|
|
|
1,876,085
|
|
|
|
3,191,474
|
|
|
|
28,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(114,738
|
)
|
|
|
|
|
|
|
150,218
|
|
|
|
35,480
|
|
|
|
|
|
Reclassification of redeemable non-controlling interest in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,391
|
|
|
|
6,391
|
|
|
|
(6,391
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,421
|
)
|
|
|
150
|
|
|
|
(2,271
|
)
|
|
|
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(90,273
|
)
|
|
|
|
|
|
|
(263,141
|
)
|
|
|
(353,414
|
)
|
|
|
(5,860
|
)
|
Reinvested dividends
|
|
|
1
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
Exercise of stock options and other
(note 12)
|
|
|
1,324
|
|
|
|
27,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,219
|
|
|
|
|
|
Repurchase of Common Stock
(note 12)
|
|
|
(300
|
)
|
|
|
(2,722
|
)
|
|
|
(9,278
|
)
|
|
|
|
|
|
|
|
|
|
|
(12,000
|
)
|
|
|
|
|
Employee stock compensation
(note 12)
|
|
|
|
|
|
|
7,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,322
|
|
|
|
|
|
Dilution gains on public offerings of Teekay Offshore, Teekay Tankers, Teekay LNG and share
issuances of Teekay Offshore
(note 5)
|
|
|
|
|
|
|
|
|
|
|
36,703
|
|
|
|
|
|
|
|
|
|
|
|
36,703
|
|
|
|
|
|
Excess of purchase price over the carrying value upon acquisition of Variable Interest Entity
(note 3f)
|
|
|
|
|
|
|
|
|
|
|
(35,421
|
)
|
|
|
|
|
|
|
|
|
|
|
(35,421
|
)
|
|
|
|
|
Additions to non-controlling interest from share and unit issuances of subsidiaries and
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301,559
|
|
|
|
301,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31, 2013
|
|
|
70,729
|
|
|
|
713,760
|
|
|
|
435,217
|
|
|
|
(17,189
|
)
|
|
|
2,071,262
|
|
|
|
3,203,050
|
|
|
|
16,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(54,757
|
)
|
|
|
|
|
|
|
178,759
|
|
|
|
124,002
|
|
|
|
|
|
Reclassification of redeemable non-controlling interest in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,777
|
)
|
|
|
(7,777
|
)
|
|
|
7,777
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,109
|
)
|
|
|
(1,046
|
)
|
|
|
(12,155
|
)
|
|
|
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(93,021
|
)
|
|
|
|
|
|
|
(363,685
|
)
|
|
|
(456,706
|
)
|
|
|
(11,499
|
)
|
Reinvested dividends
|
|
|
1
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Exercise of stock options and other
(note 12)
|
|
|
1,771
|
|
|
|
55,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,165
|
|
|
|
|
|
Employee stock compensation
(note 12)
|
|
|
|
|
|
|
1,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,828
|
|
|
|
|
|
Dilution gains on public offerings of Teekay LNG, Teekay Offshore and Teekay Tankers
(note
5)
|
|
|
|
|
|
|
|
|
|
|
68,428
|
|
|
|
|
|
|
|
|
|
|
|
68,428
|
|
|
|
|
|
Additions to non-controlling interest from share and unit issuances of subsidiaries and
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,792
|
|
|
|
412,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31, 2014
|
|
|
72,501
|
|
|
|
770,759
|
|
|
|
355,867
|
|
|
|
(28,298
|
)
|
|
|
2,290,305
|
|
|
|
3,388,633
|
|
|
|
12,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
82,151
|
|
|
|
|
|
|
|
323,309
|
|
|
|
405,460
|
|
|
|
|
|
Reclassification of redeemable non-controlling interest in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,280
|
)
|
|
|
(13,280
|
)
|
|
|
13,280
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,407
|
|
|
|
|
|
|
|
13,407
|
|
|
|
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
(126,391
|
)
|
|
|
|
|
|
|
(354,069
|
)
|
|
|
(480,460
|
)
|
|
|
(20,201
|
)
|
Reinvested dividends
|
|
|
1
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
Exercise of stock options
(note 12)
|
|
|
209
|
|
|
|
1,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,217
|
|
|
|
|
|
Employee stock compensation
(note 12)
|
|
|
|
|
|
|
3,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,032
|
|
|
|
|
|
Dilution losses on public offerings of Teekay LNG, Teekay Offshore and Teekay Tankers
(note
5)
|
|
|
|
|
|
|
|
|
|
|
(152,729
|
)
|
|
|
|
|
|
|
|
|
|
|
(152,729
|
)
|
|
|
|
|
Additions to non-controlling interest from share and unit issuances of subsidiaries and
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535,784
|
|
|
|
535,784
|
|
|
|
249,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31, 2015
|
|
|
72,711
|
|
|
|
775,018
|
|
|
|
158,898
|
|
|
|
(14,891
|
)
|
|
|
2,782,049
|
|
|
|
3,701,074
|
|
|
|
255,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
F-7
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
1.
|
Summary of Significant Accounting Policies
|
Basis of presentation
These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (or
GAAP
). They include the assets, liabilities, revenues and expenses of Teekay Corporation (or
Teekay
), which is incorporated under the laws of the Republic of The Marshall Islands, its wholly-owned subsidiaries and those non-wholly
owned subsidiaries in which Teekay has a controlling financial interest (collectively, the
Company
). Certain of Teekays significant non-wholly owned subsidiaries are consolidated in these financial statements even though Teekay owns
less than a 50% ownership interest in the subsidiaries. These significant subsidiaries include the following publicly traded subsidiaries (collectively, the
Public Subsidiaries
): Teekay LNG Partners L.P. (or
Teekay LNG
); Teekay
Offshore Partners L.P. (or
Teekay Offshore
); and Teekay Tankers Ltd. (or
Teekay Tankers
). As of December 31, 2015, Teekay owned a 33.1% interest in Teekay LNG (33.5% - December 31, 2014), including common units and its 2%
general partner interest, a 37.0% interest in Teekay Offshore (27.3% - December 31, 2014), including common units and its 2% general partner interest, and 25.9% of the capital stock of Teekay Tankers (26.2% - December 31, 2014), including
Teekay Tankers outstanding shares of Class B common stock, which entitle the holders to five votes per share, subject to a 49% aggregate Class B Common Stock voting power maximum. While Teekay owns less than 50% of each of the Public
Subsidiaries, Teekay maintains control of Teekay LNG and Teekay Offshore by virtue of its 100% ownership interest in the general partners of Teekay LNG and Teekay Offshore, which are both master limited partnerships, and maintains control of Teekay
Tankers through its ownership of a sufficient number of Class A common shares and Class B common shares, which provide increased voting rights, to maintain a majority voting interest in Teekay Tankers and thus consolidates these subsidiaries.
Significant intercompany balances and transactions have been eliminated upon consolidation. Teekay has entered into an omnibus agreement with Teekay LNG and Teekay Offshore to govern, among other things, when the Company, Teekay LNG and Teekay
Offshore may compete with each other and to provide the applicable parties certain rights of first offer on LNG carriers, oil tankers, shuttle tankers, FSO units and FPSO units.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Given the current challenging credit markets, it is possible that the amounts recorded as derivative assets and
liabilities could vary by material amounts.
In the current period, the Company has presented debt issuance costs
associated with a specific debt instrument as a direct deduction from the carrying amount of that debt liability in the Companys consolidated balance sheets as part of the adoption of Accounting Standards Update 2015-03,
Simplifying the
Presentation of Debt Issuance Costs
(or
ASU 2015-03
). Prior to the adoption of ASU 2015-03, all debt issuance costs were presented as other non-current assets in the Companys consolidated balance sheets. The Company early adopted
ASU 2015-03 effective December 31, 2015 and in accordance with ASU 2015-03, previously reported amounts recorded in comparative periods have been reclassified from non-current assets to current portion of long-term debt and long-term debt in
the Companys consolidated balance sheets. As a result of adopting ASU 2015-03, non-current assets and total assets have decreased by $91.7 million (December 31, 2015) and $84.5 million (December 31, 2014), current portion of long-term debt and
current liabilities have decreased by $3.5 million (December 31, 2015) and $1.5 million (December 31, 2014), long-term debt decreased by $88.2 million (December 31, 2015) and $83.0 million (December 31, 2014) and total liabilities decreased by $91.7
million (December 31, 2015) and $84.5 million (December 31, 2014). Such changes have also impacted the Companys reconciliation of segment assets to total assets (see Note 2) and the carrying value of long-term debt (see Notes 8 and 11).
Non-Controlling Interests
Where Teekays ownership interest in a consolidated subsidiary is less than 100%, the non-controlling interests
share of these non-wholly owned subsidiaries are reported in the Companys consolidated balance sheets as a separate component of equity. The non-controlling interests share of the net income of these non-wholly owned subsidiaries is
reported in the Companys consolidated statements of income as a deduction from the Companys net income to arrive at net income (loss) attributable to shareholders of Teekay.
The basis for attributing net income of each non-wholly owned subsidiary to the controlling interest and the non-controlling
interests, with the exception of Teekay LNG and Teekay Offshore, is based on the relative ownership interests of the non-controlling interests compared to the controlling interest, which is consistent with how dividends and distributions are paid or
are payable for these non-wholly owned subsidiaries.
Teekay LNG and Teekay Offshore each have limited partners and one
general partner. Both general partners are owned by Teekay. For Teekay LNG, the limited partners hold common units. For Teekay Offshore, the limited partners hold common units and preferred units. For each quarterly period, the method of attributing
Teekay LNGs and Teekay Offshores net income (loss) of that period to the non-controlling interests of Teekay LNG and Teekay Offshore begins by attributing net income (loss) of Teekay Offshore to the non-controlling interests which hold
100% of the preferred units of Teekay Offshore in an amount equal to the amount of preferred unit distributions declared for the quarterly period. The remaining net income (loss) to be attributed to the controlling interest and the non-controlling
interests of Teekay LNG and Teekay Offshore is divided into two components. The first component consists of the cash distribution that Teekay LNG or Teekay Offshore will declare and pay to limited and general partners for that quarterly period (the
Distributed Earnings
). The second component consists of the difference between the net income (loss) of Teekay LNG or Teekay Offshore that is available to be allocated to the common unitholders and the general partner of such entity and the
amount of the first component cash distribution (the
Undistributed Earnings
). The portion of the Distributed Earnings that is allocated to the non-controlling interests is the amount of the cash distribution that Teekay LNG or Teekay Offshore
will declare and pay to the non-controlling interests for that quarterly period. The portion of the Undistributed Earnings that is allocated to the non-controlling interests is based on the relative ownership percentages of the non-controlling
interests of Teekay LNG and Teekay Offshore compared to the controlling interest. The controlling interests include both limited partner common units and the general partner interests.
F-8
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The total net income of Teekays consolidated partially-owned entities
and the attribution of that net income to controlling and non-controlling interests is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to non-controlling interests
|
|
|
Controlling Interest
|
|
|
Net
income
(loss) of
partially-
owned
consol-
idated
entities
(1)
|
|
|
|
Non-public
partially-
owned
sub-
sidiaries
|
|
|
Preferred
unit
holders
|
|
|
Distri
buted
Earnings
|
|
|
Undistri
buted
Earnings
|
|
|
Total
|
|
|
Distri
buted
Earnings
|
|
|
Undistri
buted
Earnings
|
|
|
Total
|
|
|
Teekay Offshore
|
|
|
13,911
|
|
|
|
28,609
|
|
|
|
119,971
|
|
|
|
(103,949
|
)
|
|
|
58,542
|
|
|
|
70,414
|
|
|
|
(38,913
|
)
|
|
|
31,501
|
|
|
|
90,043
|
|
Teekay LNG
|
|
|
16,627
|
|
|
|
|
|
|
|
120,482
|
|
|
|
(1,510
|
)
|
|
|
135,599
|
|
|
|
82,791
|
|
|
|
(880
|
)
|
|
|
81,911
|
|
|
|
217,510
|
|
Teekay Tankers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,725
|
|
|
|
129,725
|
|
|
|
|
|
|
|
47,202
|
|
|
|
47,202
|
|
|
|
176,927
|
|
Other entities and eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(557
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2015
|
|
|
30,538
|
|
|
|
28,609
|
|
|
|
240,453
|
|
|
|
24,266
|
|
|
|
323,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore
|
|
|
10,503
|
|
|
|
10,875
|
|
|
|
136,743
|
|
|
|
(150,724
|
)
|
|
|
7,397
|
|
|
|
71,166
|
|
|
|
(60,907
|
)
|
|
|
10,259
|
|
|
|
17,656
|
|
Teekay LNG
|
|
|
13,489
|
|
|
|
|
|
|
|
143,292
|
|
|
|
(26,116
|
)
|
|
|
130,665
|
|
|
|
101,946
|
|
|
|
(13,684
|
)
|
|
|
88,262
|
|
|
|
218,927
|
|
Teekay Tankers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,048
|
|
|
|
41,048
|
|
|
|
|
|
|
|
16,094
|
|
|
|
16,094
|
|
|
|
57,142
|
|
Other entities and eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2014
|
|
|
23,992
|
|
|
|
10,875
|
|
|
|
280,035
|
|
|
|
(135,792
|
)
|
|
|
178,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore
|
|
|
(19,089
|
)
|
|
|
7,250
|
|
|
|
127,523
|
|
|
|
(86,148
|
)
|
|
|
29,536
|
|
|
|
65,393
|
|
|
|
(20,789
|
)
|
|
|
44,604
|
|
|
|
74,140
|
|
Teekay LNG
|
|
|
12,073
|
|
|
|
|
|
|
|
127,087
|
|
|
|
(13,101
|
)
|
|
|
126,059
|
|
|
|
94,253
|
|
|
|
(6,997
|
)
|
|
|
87,256
|
|
|
|
213,315
|
|
Teekay Tankers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,096
|
)
|
|
|
(6,096
|
)
|
|
|
|
|
|
|
(2,042
|
)
|
|
|
(2,042
|
)
|
|
|
(8,138
|
)
|
Other entities and eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2013
|
|
|
(7,016
|
)
|
|
|
7,250
|
|
|
|
254,610
|
|
|
|
(105,345
|
)
|
|
|
150,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes the results of the acquisition of interests in vessels between Teekay Corporation, Teekay Offshore
and Teekay Tankers during the periods the vessels were under common control and had begun operations.
|
When Teekays non-wholly owned subsidiaries declare dividends or distributions to their owners, or require all of their
owners to contribute capital to the non-wholly owned subsidiaries, such amounts are paid to, or received from, each of the owners of the non-wholly owned subsidiaries based on the relative ownership interests in the non-wholly owned subsidiary. As
such, any dividends or distributions paid to, or capital contributions received from, the non-controlling interests are reflected as a reduction (dividends or distributions) or an increase (capital contributions) in non-controlling interest in the
Companys consolidated balance sheets.
When Teekays non-wholly owned subsidiaries issue additional equity
interests to non-controlling interests, Teekay is effectively selling a portion of the non-wholly owned subsidiaries. Consequently, the proceeds received by the subsidiaries from their issuance of additional equity interests are allocated between
non-controlling interest and retained earnings in the Companys consolidated balance sheets. The portion allocated to non-controlling interest on the Companys consolidated balance sheets consists of the carrying value of the portion of
the non-wholly owned subsidiary that is effectively disposed of, with the remaining amount attributable to the controlling interest, which consists of the Companys dilution gain or loss that is allocated to retained earnings.
Reporting currency
The consolidated financial statements are stated in U.S. Dollars. The functional currency of the Company is the
U.S. Dollar because the Company operates in the international shipping market, which typically utilizes the U.S. Dollar as the functional currency. Transactions involving other currencies during the year are converted into U.S. Dollars
using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the U.S. Dollar are translated to reflect the year-end exchange rates.
Resulting gains or losses are reflected separately in the accompanying consolidated statements of income.
F-9
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Operating revenues and expenses
Contracts of Affreightment and Voyage Charters
Revenues from contracts of affreightment and voyage charters are recognized on a proportionate performance method. The Company
uses a discharge-to-discharge basis in determining proportionate performance for all voyage charters, whereby it recognizes revenue ratably from when product is discharged (unloaded) at the end of one voyage to when it is discharged after the next
voyage. Shuttle tanker voyages servicing contracts of affreightment with offshore oil fields commence with tendering of notice of readiness at a field, within the agreed lifting range, and ends with tendering of notice of readiness at a field for
the next lifting. The Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage.
Time Charters, Bareboat Charters and FPSO Contracts
Operating Leases
- The Company recognizes revenues from time charters, bareboat charters and floating, production,
storage and offloading (or
FPSO
) contracts accounted for as operating leases on a straight-line basis daily over the term of the charter as the applicable vessel operates under the charter. Receipt of incentive-based revenue from the
Companys FPSO units is dependent upon its operating performance and such revenue is recognized when earned by fulfillment of the applicable performance criteria. The Company does not recognize revenue during days that the vessel is off hire
unless the contract provides for compensation while off hire.
Direct Financing Leases
- Charter contracts that are
accounted for as direct financing leases are reflected on the consolidated balance sheets as net investments in direct financing leases. The lease revenue is recognized on an effective interest rate method over the lease term so as to produce a
constant periodic rate of return over the lease terms and is included in revenues. Revenue from rendering of services is recognized as the service is performed. Revenues are not recognized during days that the vessel is off hire unless the contract
provides for compensation while off hire.
The Company employs four liquefied natural gas (or
LNG
) carriers and a
floating storage and off-take (or
FSO
) unit on long-term time charters which are accounted for as direct financing leases. The lease payments received by the Company under these lease arrangements are allocated between the net investments in
the leases and revenues or other income using the effective interest method so as to produce a constant periodic rate of return over the lease terms.
Pooling Arrangements
Revenues and voyage expenses of the vessels operating in pool arrangements are pooled and the resulting net pool revenues,
calculated on a time-charter equivalent basis, are allocated to the pool participants according to an agreed formula. The agreed formula used to allocate net pool revenues varies between pools; however, the formula generally allocates revenues to
pool participants on the basis of the number of days a vessel operates in the pool with weighting adjustments made to reflect vessels differing capacities and performance capabilities. The same revenue and expense recognition principles stated
above for voyage charters are applied in determining the net pool revenues of the pool. The pools are responsible for paying voyage expenses and distribute net pool revenues to the participants. The Company accounts for the net allocation from the
pool as revenues and amounts due from the pool are included in accounts receivable.
Other Revenue
Revenues and expenses relating to engineering studies are recognized when the service is completed, unless the expenses are not
recoverable in which case the expenses are recognized as incurred. Revenue from lightering operations are recognized when services have been completed. Revenues are accrued when operations are carried over into the following month. Revenues from
management services are recognized on a proportionate performance method over the term of the management contract.
Operating Expenses
Voyage expenses are all expenses unique to a particular voyage, including bunker fuel expenses, port fees, cargo
loading and unloading expenses, canal tolls, agency fees and commissions. Vessel operating expenses include crewing, ship management services, repairs and maintenance, insurance, stores, lube oils and communication expenses. Voyage expenses and
vessel operating expenses are recognized when incurred.
Cash
and cash equivalents
The Company classifies all highly liquid investments with a maturity date of three months or less
at their inception as cash equivalents.
Restricted Cash
The Company maintains restricted cash deposits relating to certain term loans, collateral for derivatives, project tenders,
leasing arrangements, amounts received from charterers to be used only for dry-docking expenditures and emergency repairs and other obligations.
Accounts receivable and allowance for doubtful accounts
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the
Companys best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer economic data. The Company reviews the allowance for
doubtful accounts regularly and past due balances are reviewed for collectability. Account balances are charged off against the allowance when the Company believes that the receivable will not be recovered. There was no significant amounts recorded
as allowance for doubtful accounts as at December 31, 2015, 2014, and 2013.
F-10
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Marketable securities
The Companys investments in marketable securities are classified as available-for-sale securities and are carried at fair
value. Net unrealized gains and losses on available-for-sale securities are reported as a component of accumulated other comprehensive loss. Realized gains and losses on available-for-sale securities are computed based upon the historical cost of
these securities applied using the weighted-average historical cost method.
The Company analyzes its available-for-sale
securities for impairment during each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significantly adverse effect on the fair value of the investment. The Company records an
impairment charge through current-period earnings and adjusts the cost basis for such other-than-temporary declines in fair value when the fair value is not anticipated to recover above cost within a three-month period after the measurement date,
unless there are mitigating factors that indicate an impairment charge through earnings may not be required. If an impairment charge is recorded, subsequent recoveries in fair value are not reflected in earnings until sale of the security.
Vessels and equipment
All pre-delivery costs incurred during the construction of newbuildings, including interest, supervision and technical costs,
are capitalized. The acquisition cost and all costs incurred to restore used vessels purchased by the Company to the standard required to properly service the Companys customers are capitalized.
Depreciation is calculated on a straight-line basis over a vessels estimated useful life, less an estimated residual
value. Depreciation is calculated using an estimated useful life of 25 years for tankers carrying crude oil and refined product, 20 to 25 years for FPSO units, 35 years for LNG carriers and 30 years for liquefied petroleum gas (or
LPG
)
carriers, commencing the date the vessel is delivered from the shipyard, or a shorter period if regulations prevent the Company from operating the vessels for those periods of time. FSO units are depreciated over the term of the contract. Units for
maintenance and safety (or
UMS
) are depreciated over an estimated useful life of 35 years commencing the date the unit arrives at the oil field and is in a condition that is ready to operate. Long-distance towing and offshore installation
vessels are depreciated over an estimated useful life of 25 years commencing the date the vessel is delivered from the shipyard. Depreciation includes depreciation on all owned vessels and amortization of vessels accounted for as capital leases.
Depreciation of vessels and equipment, excluding amortization of dry-docking expenditures, for the years ended December 31, 2015, 2014, and 2013 aggregated $445.2 million, $341.5 million and $346.5 million, respectively. Amortization of vessels
accounted for as capital leases was $5.4 million, $21.6 million and $22.8 million for the years ended December 31, 2015, 2014, and 2013, respectively.
Vessel capital modifications include the addition of new equipment or can encompass various modifications to the vessel that
are aimed at improving or increasing the operational efficiency and functionality of the asset. This type of expenditure is amortized over the estimated useful life of the modification. Expenditures covering recurring routine repairs and maintenance
are expensed as incurred.
Interest costs capitalized to vessels and equipment for the years ended December 31, 2015,
2014, and 2013, aggregated $22.0 million, $51.3 million and $14.6 million, respectively.
Generally, the Company dry docks
each shuttle tanker, conventional oil tanker, long-distance towing and offshore installation vessel and gas carrier every two and a half to five years. UMS, FSO and FPSO units are generally not dry docked. The Company capitalizes a substantial
portion of the costs incurred during dry docking and amortizes those costs on a straight-line basis over their estimated useful life, which typically is from the completion of a dry docking or intermediate survey to the estimated completion of the
next dry docking. The Company includes in capitalized dry-docking costs those costs incurred as part of the dry docking to meet classification and regulatory requirements. The Company expenses costs related to routine repairs and maintenance
performed during dry docking, and for annual class survey costs on the Companys FPSO units.
The continuity of
capitalized dry-docking costs for the years ended December 31, 2015, 2014, and 2013, is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance at the beginning of the year
|
|
|
135,331
|
|
|
|
118,194
|
|
|
|
100,928
|
|
Costs incurred for dry dockings
|
|
|
69,927
|
|
|
|
74,018
|
|
|
|
72,545
|
|
Dry-dock amortization
|
|
|
(47,271
|
)
|
|
|
(50,926
|
)
|
|
|
(50,325
|
)
|
Write down / sales of vessels
|
|
|
(7,285
|
)
|
|
|
(5,955
|
)
|
|
|
(4,954
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
|
|
150,702
|
|
|
|
135,331
|
|
|
|
118,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels and equipment that are held and used are assessed for impairment when
events or circumstances indicate the carrying amount of the asset may not be recoverable. If the assets net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining useful life, the carrying amount of
the asset is reduced to its estimated fair value. The estimated fair value for the Companys impaired vessels is determined using discounted cash flows or appraised values. In cases where an active second hand sale and purchase market does not
exist, the Company uses a discounted cash flow approach to estimate the fair value of an impaired vessel. In cases where an active second hand sale and purchase market exists an appraised value is used to estimate the fair value of an impaired
vessel. An appraised value is generally the amount the Company would expect to receive if it were to sell the vessel. Such appraisal is normally completed by the Company and based on second-hand sale and purchase data.
F-11
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Vessels and equipment that are held for sale are measured at the
lower of their carrying amount or fair value less costs to sell and are not depreciated while classified as held for sale. Interest and other expenses attributable to vessels and equipment classified as held for sale, or to their related
liabilities, continue to be recognized as incurred.
Gains on vessels sold and leased back under capital leases are
deferred and amortized over the remaining term of the capital lease. Losses on vessels sold and leased back under capital leases are recognized immediately when the fair value of the vessel at the time of sale and lease-back is less than its book
value. In such case, the Company would recognize a loss in the amount by which book value exceeds fair value.
Other loan receivables
The Companys investments in loan receivables are recorded at cost. The premium paid over the outstanding
principal amount was amortized to interest income over the term of the loan using the effective interest rate method. The Company analyzes its loans for collectability during each reporting period. A loan is impaired when, based on current
information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors the Company considers in determining that a loan is impaired include, among other
things, an assessment of the financial condition of the debtor, payment history of the debtor, general economic conditions, the credit rating of the debtor (when available) any information provided by the debtor regarding their ability to repay the
loan and the fair value of the underlying collateral. When a loan is impaired, the Company measures the amount of the impairment based on the present value of expected future cash flows discounted at the loans effective interest rate and
recognizes the resulting impairment in the consolidated statements of income. The carrying value of the loans will be adjusted each subsequent reporting period to reflect any changes in the present value of estimated future cash flows.
The following table contains a summary of the Companys financing receivables by type of borrower, the method by which the
Company monitors the credit quality of its financing receivables on a quarterly basis, and the grade as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Class of Financing Receivable
|
|
Credit Quality
Indicator
|
|
Grade
|
|
|
2015
$
|
|
|
2014
$
|
|
Direct financing leases
|
|
Payment activity
|
|
|
Performing
|
|
|
|
684,129
|
|
|
|
704,953
|
|
Other loan receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to equity-accounted investees and joint venture partners
|
|
Other internal metrics
|
|
|
Performing
|
|
|
|
191,517
|
|
|
|
253,426
|
|
Long-term receivable included in other assets
|
|
Payment activity
|
|
|
Performing
|
|
|
|
37,032
|
|
|
|
43,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
912,678
|
|
|
|
1,002,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint ventures
The Companys investments in joint ventures are accounted for using the equity method of accounting. Under the equity
method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Companys proportionate share of earnings or losses and distributions. The Company evaluates its investments in joint
ventures for impairment when events or circumstances indicate that the carrying value of such investments may have experienced an other than temporary decline in value below their carrying value. If the estimated fair value is less than the carrying
value and is considered an other than temporary decline, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated statements of income.
Debt issuance costs
Debt issuance costs, including fees, commissions and legal expenses, are deferred and presented as a direct reduction from the
carrying amount of the debt liability. Debt issuance costs related to loan facilities without a recognized debt liability will continue to be presented as non-current assets in the consolidated balance sheet. Debt issuance costs of revolving credit
facilities are amortized on a straight-line basis over the term of the relevant facility. Debt issuance costs of term loans are amortized using the effective interest rate method over the term of the relevant loan. Amortization of debt issuance
costs is included in interest expense.
Derivative
instruments
All derivative instruments are initially recorded at fair value as either assets or liabilities in the
accompanying consolidated balance sheets and subsequently remeasured to fair value, regardless of the purpose or intent for holding the derivative. The method of recognizing the resulting gain or loss is dependent on whether the derivative contract
is designed to hedge a specific risk and whether the contract qualifies for hedge accounting. The Company does not apply hedge accounting to its derivative instruments, except for certain foreign exchange currency contracts and certain types of
interest rate swaps (See Note 15).
F-12
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
When a derivative is designated as a cash flow hedge, the Company formally
documents the relationship between the derivative and the hedged item. This documentation includes the strategy and risk management objective for undertaking the hedge and the method that will be used to assess the effectiveness of the hedge. Any
hedge ineffectiveness is recognized immediately in earnings, as are any gains and losses on the derivative that are excluded from the assessment of hedge effectiveness. The Company does not apply hedge accounting if it is determined that the hedge
was not effective or will no longer be effective, the derivative was sold or exercised, or the hedged item was sold, or repaid.
For derivative financial instruments designated and qualifying as cash flow hedges, changes in the fair value of the effective
portion of the derivative financial instruments are initially recorded as a component of accumulated other comprehensive loss in total equity. In the periods when the hedged items affect earnings, the associated fair value changes on the hedging
derivatives are transferred from total equity to the corresponding earnings line item in the consolidated statements of income. The ineffective portion of the change in fair value of the derivative financial instruments is immediately recognized in
earnings in the consolidated statements of income. If a cash flow hedge is terminated and the originally hedged item is still considered possible of occurring, the gains and losses initially recognized in total equity remain there until the hedged
item impacts earnings, at which point they are transferred to the corresponding earnings line item (e.g. general and administrative expense) item in the consolidated statements of income. If the hedged items are no longer possible of occurring,
amounts recognized in total equity are immediately transferred to the earnings item in the consolidated statements of income.
For derivative financial instruments that are not designated or that do not qualify as hedges under Financial Accounting
Standards Board (or
FASB
) Accounting Standards Codification (or
ASC
) 815,
Derivatives and Hedging
, the changes in the fair value of the derivative financial instruments are recognized in earnings. Gains and losses from the
Companys non-designated interest rate swaps related to long-term debt, capital lease obligations, restricted cash deposits, non-designated bunker fuel swap contracts and forward freight agreements, and non-designated foreign exchange currency
forward contracts are recorded in realized and unrealized (loss) gain on non-designated derivative instruments. Gains and losses from the Companys hedge accounted foreign currency forward contracts are recorded primarily in vessel operating
expenses and general and administrative expense. Gains and losses from the Companys non-designated cross currency swap are recorded in foreign currency exchange (loss) gain in the consolidated statements of income.
Goodwill and intangible assets
Goodwill is not amortized, but reviewed for impairment at the reporting unit level on an annual basis or more frequently if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. When goodwill is reviewed for impairment, the Company may elect to assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, the Company may bypass this step and use a fair value approach to identify potential goodwill impairment
and, when necessary, measure the amount of impairment. The Company uses a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value. Intangible assets are assessed for
impairment when and if impairment indicators exist. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value.
The Companys intangible assets consist primarily of acquired time-charter contracts, contracts of affreightment, and
customer relationships. The value ascribed to the acquired time-charter contracts and contracts of affreightment are being amortized over the life of the associated contract, with the amount amortized each year being weighted based on the projected
revenue to be earned under the contracts. The value ascribed to customer relationships intangible assets are amortized over the expected life of a customer contract or the expected duration that the customer relationships are estimated to contribute
to the cash flows of the Company. The amount amortized each year is weighted based on the projected revenue to be earned under the contracts or projected revenue to be earned as a result of the customer relationships.
Asset retirement obligation
The Company has an asset retirement obligation (or
ARO
) relating to the sub-sea production facility associated with the
Petrojarl Banff
FPSO unit operating in the North Sea. This obligation generally involves the costs associated with the restoration of the environment surrounding the facility and removal and disposal of all production equipment. This
obligation is expected to be settled at the end of the contract under which the FPSO unit currently operates, which is anticipated no later than 2020. The ARO will be covered in part by contractual payments to be received from FPSO contract
counterparties.
The Company records the fair value of an ARO as a liability in the period when the obligation arises. The
fair value of the ARO is measured using expected future cash outflows discounted at the Companys credit-adjusted risk-free interest rate. When the liability is recorded, the Company capitalizes the cost by increasing the carrying amount of the
related equipment. Each period, the liability is increased for the change in its present value, and the capitalized cost is depreciated over the useful life of the related asset. Changes in the amount or timing of the estimated ARO are recorded as
an adjustment to the related asset and liability. As at December 31, 2015, the ARO and associated receivable, which is recorded in other non-current assets, were $25.5 million and $6.9 million, respectively (2014 - $25.0 million and $6.8
million, respectively).
Repurchase of common stock
The Company accounts for repurchases of common stock by decreasing common stock by the par value of the stock repurchased. In
addition, the excess of the repurchase price over the par value is allocated between additional paid in capital and retained earnings. The amount allocated to additional paid in capital is the pro-rata share of the capital paid in and the balance is
allocated to retained earnings.
F-13
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Share-based compensation
The Company grants stock options, restricted stock units, performance share units and restricted stock awards as
incentive-based compensation to certain employees and directors. The Company measures the cost of such awards using the grant date fair value of the award and recognizes that cost, net of estimated forfeitures, over the requisite service period,
which generally equals the vesting period. For stock-based compensation awards subject to graded vesting, the Company calculates the value for the award as if it was one single award with one expected life and amortizes the calculated expense for
the entire award on a straight-line basis over the vesting period of the award.
Compensation cost for awards with
performance conditions is recognized when it is probable that the performance condition will be achieved. The compensation cost of the Companys stock-based compensation awards are substantially reflected in general and administrative expense.
Income taxes
The Company accounts for income taxes using the liability method. Under the liability method, deferred tax assets and
liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Companys assets and liabilities using the applicable jurisdictional tax rates. A
valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized.
Recognition of uncertain tax positions is dependent upon whether it is more-likely-than-not that a tax position taken or
expected to be taken in a tax return will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition
threshold, it is measured to determine the amount of benefit to recognize in the financial statements. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
The Company believes that it and its subsidiaries are not subject to taxation under the laws of the Republic of The Marshall
Islands or Bermuda, or that distributions by its subsidiaries to the Company will be subject to any taxes under the laws of such countries, and that it qualifies for the Section 883 exemption under U.S. federal income tax purposes.
Accumulated other comprehensive income (loss)
The following table contains the changes in the balances of each component of accumulated other comprehensive income (loss)
attributable to shareholders of Teekay for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying Cash
Flow Hedging
Instruments
|
|
|
Pension
Adjustments
|
|
|
Unrealized
(Loss) Gain on
Available for
Sale Marketable
Securities
|
|
|
Foreign
Exchange Gain
(Loss)
on
Currency
Translation
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance as of December 31, 2012
|
|
|
341
|
|
|
|
(16,253
|
)
|
|
|
|
|
|
|
1,144
|
|
|
|
(14,768
|
)
|
Other comprehensive (loss) income
|
|
|
(324
|
)
|
|
|
(2,666
|
)
|
|
|
(171
|
)
|
|
|
740
|
|
|
|
(2,421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013
|
|
|
17
|
|
|
|
(18,919
|
)
|
|
|
(171
|
)
|
|
|
1,884
|
|
|
|
(17,189
|
)
|
Other comprehensive (loss) income
|
|
|
(485
|
)
|
|
|
(10,969
|
)
|
|
|
171
|
|
|
|
174
|
|
|
|
(11,109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2014
|
|
|
(468
|
)
|
|
|
(29,888
|
)
|
|
|
|
|
|
|
2,058
|
|
|
|
(28,298
|
)
|
Other comprehensive income (loss)
|
|
|
49
|
|
|
|
14,038
|
|
|
|
(463
|
)
|
|
|
(217
|
)
|
|
|
13,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
|
|
(419
|
)
|
|
|
(15,850
|
)
|
|
|
(463
|
)
|
|
|
1,841
|
|
|
|
(14,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee pension plans
The Company has defined contribution pension plans covering the majority of its employees. Pension costs associated with the
Companys required contributions under its defined contribution pension plans are based on a percentage of employees salaries and are charged to earnings in the year incurred. The Company also has defined benefit pension plans covering
certain of its employees. The Company accrues the costs and related obligations associated with its defined benefit pension plans based on actuarial computations using the projected benefits obligation method and managements best estimates of
expected plan investment performance, salary escalation, and other relevant factors. For the purpose of calculating the expected return on plan assets, those assets are valued at fair value. The overfunded or underfunded status of the defined
benefit pension plans are recognized as assets or liabilities in the consolidated balance sheet. The Company recognizes as a component of other comprehensive loss, the gains or losses that arise during a period but that are not recognized as part of
net periodic benefit costs.
Earnings (loss) per common share
The computation of basic earnings (loss) per share is based on the weighted average number of common shares outstanding during
the period. The computation of diluted earnings per share assumes the exercise of all dilutive stock options and restricted stock awards using the treasury stock method. The computation of diluted loss per share does not assume such exercises.
F-14
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Adoption of new accounting pronouncements
In April 2014, the FASB issued ASU 2014-08,
Reporting Discontinued Operations and Disclosures of Disposals of Components of
an Entity
, which raises the threshold for disposals to qualify as discontinued operations. A discontinued operation is now defined as: (i) a component of an entity or group of components that has been disposed of or classified as held for
sale and represents a strategic shift that has or will have a major effect on an entitys operations and financial results; or (ii) an acquired business that is classified as held for sale on the acquisition date. ASU 2014-08 also requires
additional disclosures regarding discontinued operations, as well as material disposals that do not meet the definition of discontinued operations. ASU 2014-08 was adopted on January 1, 2015. The impact, if any, of adopting ASU 2014-08 on the
Companys financial statements will depend on the occurrence and nature of disposals that occur.
In April 2015, the
FASB issued Accounting Standards Update 2015-03,
Simplifying the Presentation of Debt Issuance Costs
(or
ASU 2015-03
). The Company early adopted ASU 2015-03 effective December 31, 2015. Prior period information has been
retrospectively adjusted. Prior to the adoption of ASU 2015-03, all debt issuance costs were presented as other non-current assets in the Companys consolidated balance sheets. With the adoption of ASU 2015-03 the Company presents those debt
issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability in the Companys consolidated balance sheets. Debt issuance costs related to loan facilities without a recognized debt
liability will continue to be presented as non-current assets in the Companys consolidated balance sheets.
In
November 2015, the FASB issued ASU 2015-17,
Balance Sheet Classification of Deferred Taxes
, amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current on the consolidated
balance sheet. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The ASU may be adopted either prospectively or retrospectively. The Company early adopted ASU 2015-17 effective
December 31, 2015 and this ASU was prospectively adopted in the Companys consolidated financial statements.
Accounting
pronouncements not yet adopted
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers
.
ASU 2014-09 will require companies to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This
update creates a five-step model that requires companies to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance
obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performance obligation is satisfied. ASU 2014-09
is effective for interim and annual periods beginning after December 15, 2017 and shall, at the Companys option, be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Early
adoption is not permitted. The Company is evaluating the effect of adopting this new accounting guidance.
In February
2015, the FASB issued Accounting Standards Update 2015-02,
Amendments to the Consolidation Analysis
(or
ASU 2015-02
) which eliminates the deferral of certain consolidation standards for entities considered to be investment companies,
modifies the consolidation analysis performed on limited partnerships and modifies the impact of fee arrangements and related parties on the determination of the primary beneficiary of a variable interest entity. ASU 2015-02 is effective for interim
and annual periods beginning after December 15, 2015. ASU 2015-02 may be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting
entity also may apply ASU 2015-02 retrospectively. The Company adopted ASU 2015-02 on January 1, 2016 and the adoption did not have an impact on the Companys financial statements.
In February 2016, the FASB issued Accounting Standards Update 2016-02,
Leases (or ASU 2016-02)
. ASU 2016-02 establishes
a right-of-use model that requires a lessee to record a right of use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification
affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified
retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients
available. The Company is evaluating the effect of adopting this new accounting guidance.
The Company has four primary lines of business: offshore logistics (shuttle tankers, the
HiLoad DP
unit, FSO units, UMS and long-distance towing and offshore installation vessels), offshore production (FPSO units), liquefied gas carriers (LNG and LPG carriers) and conventional tankers. The Company manages these businesses for the benefit of all
stakeholders. The Company allocates capital and assesses performance both from the separate perspectives of our publicly-traded subsidiaries Teekay Offshore, Teekay LNG, Teekay Tankers (together, the
Daughter Companies
) and Teekay and its
remaining subsidiaries (or
Teekay Parent
) as well as from the perspective of the lines of business. Historically, the Companys organizational structure and internal reporting has been primarily based on the lines of business (the Line
of Business approach), resulting in the Companys segment disclosure presentation on a lines-of-business basis, without reference to the legal entities. With the establishment of the Daughter Companies and subsequent dropdown of vessels from
Teekay Parent to the Daughter Companies, the Companys organizational structure and internal reporting has gradually evolved to focus less on lines of business and more on the Daughter Companies and Teekay Parent (the Legal Entity approach). As
a result of an internal re-organization that was completed in the third quarter of 2015, the primary focus of the Companys organizational structure, internal reporting and allocation of resources by the chief operating decision maker is now
the Legal Entity approach. As such, the Company has modified the presentation of its segments to incorporate the Legal Entity approach. However, the Company has continued to incorporate the Line of Business approach within its segments, as in
certain cases there is more than one line of business in each Daughter Company and the Company believes this information allows a better understanding of the Companys performance and prospects for future net cash flows. All segment information
for prior periods has been retroactively adjusted to be consistent with the change in segment presentation beginning with the third quarter of 2015.
F-15
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The following table includes results for the Companys revenue and
income from vessel operations by segment for the periods presented in these financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
(1)
|
|
|
Income (Loss) from Vessel
Operations
(2)
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Teekay Offshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Logistics
|
|
|
667,629
|
|
|
|
631,455
|
|
|
|
611,035
|
|
|
|
108,119
|
|
|
|
146,756
|
|
|
|
40,127
|
|
Offshore Production
|
|
|
531,554
|
|
|
|
354,518
|
|
|
|
284,932
|
|
|
|
165,152
|
|
|
|
95,991
|
|
|
|
48,170
|
|
Conventional Tankers
|
|
|
30,230
|
|
|
|
33,566
|
|
|
|
55,010
|
|
|
|
10,128
|
|
|
|
13,471
|
|
|
|
10,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,229,413
|
|
|
|
1,019,539
|
|
|
|
950,977
|
|
|
|
283,399
|
|
|
|
256,218
|
|
|
|
98,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay LNG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquefied Gas Carriers
|
|
|
305,056
|
|
|
|
307,426
|
|
|
|
285,694
|
|
|
|
151,200
|
|
|
|
156,868
|
|
|
|
144,430
|
|
Conventional Tankers
|
|
|
92,935
|
|
|
|
95,502
|
|
|
|
113,582
|
|
|
|
30,172
|
|
|
|
26,955
|
|
|
|
31,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
397,991
|
|
|
|
402,928
|
|
|
|
399,276
|
|
|
|
181,372
|
|
|
|
183,823
|
|
|
|
176,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Tankers
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Tankers
|
|
|
504,347
|
|
|
|
235,593
|
|
|
|
170,087
|
|
|
|
184,083
|
|
|
|
58,271
|
|
|
|
3,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Production
|
|
|
277,842
|
|
|
|
259,945
|
|
|
|
282,687
|
|
|
|
(40,227
|
)
|
|
|
(78,804
|
)
|
|
|
(67,486
|
)
|
Conventional Tankers
|
|
|
65,777
|
|
|
|
94,376
|
|
|
|
83,520
|
|
|
|
4,984
|
|
|
|
(12,407
|
)
|
|
|
(158,091
|
)
|
Other
|
|
|
75,547
|
|
|
|
95,791
|
|
|
|
73,801
|
|
|
|
5,015
|
|
|
|
17,488
|
|
|
|
12,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
419,166
|
|
|
|
450,112
|
|
|
|
440,008
|
|
|
|
(30,228
|
)
|
|
|
(73,723
|
)
|
|
|
(213,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations and other
|
|
|
(100,535
|
)
|
|
|
(114,252
|
)
|
|
|
(130,263
|
)
|
|
|
6,506
|
|
|
|
2,570
|
|
|
|
(2,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,450,382
|
|
|
|
1,993,920
|
|
|
|
1,830,085
|
|
|
|
625,132
|
|
|
|
427,159
|
|
|
|
62,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain vessels are chartered between the Daughter Companies and Teekay Parent. The amounts in the table below
represent revenue earned by each segment from other segments within the group. Such intersegment revenue for the year ended 2015, 2014 and 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Teekay Offshore - Offshore Logistics
|
|
|
38,734
|
|
|
|
34,603
|
|
|
|
37,876
|
|
Teekay Offshore - Conventional Tankers
|
|
|
29,259
|
|
|
|
32,411
|
|
|
|
44,269
|
|
Teekay LNG - Liquefied Gas Carriers
|
|
|
35,887
|
|
|
|
37,596
|
|
|
|
34,573
|
|
Teekay Tankers - Conventional Tankers
|
|
|
1,380
|
|
|
|
13,707
|
|
|
|
13,545
|
|
Teekay Parent - Conventional Tankers
|
|
|
3,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108,340
|
|
|
|
118,317
|
|
|
|
130,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Includes direct general and administrative expenses and indirect general and administrative expenses
(allocated to each segment based on estimated use of corporate resources).
|
(3)
|
Financial information for Teekay Tankers includes operations of the
SPT Explorer
and
Navigator
Spirit
from December 18, 2015, the date Teekay Tankers acquired the vessels from Teekay Offshore.
|
The following table presents revenues and percentage of consolidated revenues for customers that accounted for more than 10% of
the Companys consolidated revenues during the periods presented. All of these customers are international oil companies.
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
(U.S. dollars in millions)
|
|
2015
|
|
2014
|
|
2013
|
BG Group
(1)
|
|
$263.4 or 11%
|
|
(5)
|
|
(5)
|
Petroleo Brasileiro SA
(2)
|
|
$231.8 or 10%
|
|
$248.2 or 12%
|
|
$244.3 or 13%
|
Statoil ASA
(3)
|
|
(5)
|
|
$239.8 or 12%
|
|
$250.5 or 14%
|
BP PLC
(4)
|
|
(5)
|
|
(5)
|
|
$182.5 or 10%
|
(1)
|
Teekay Offshore - Offshore Logistics and Offshore Production. In February 2016, Royal Dutch Shell Plc acquired
BG Group Plc.
|
F-16
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
(2)
|
Teekay Offshore - Offshore Logistics and Offshore Production, Teekay Tankers - Conventional Tankers and Teekay
Parent Conventional Tankers
|
(3)
|
Teekay Offshore - Offshore Logistics, Teekay TankersConventional Tankers, Teekay Parent Offshore
Production and Teekay Parent Conventional Tankers
|
(4)
|
Teekay Offshore - Offshore Logistics, Teekay LNG - Liquefied Gas, Teekay Parent Offshore Production and
Teekay Parent - Conventional Tankers
|
The following table includes other income statement items by segment for the periods presented in these financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
Asset Impairment and Loan
Loss (Provisions) Recoveries
|
|
|
Equity Income (Loss)
|
|
|
|
Year Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Teekay Offshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Logistics
|
|
|
(130,102
|
)
|
|
|
(118,968
|
)
|
|
|
(126,091
|
)
|
|
|
(67,744
|
)
|
|
|
(4,759
|
)
|
|
|
(76,782
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Production
|
|
|
(137,914
|
)
|
|
|
(72,905
|
)
|
|
|
(66,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,672
|
|
|
|
10,341
|
|
|
|
6,731
|
|
Conventional Tankers
|
|
|
(6,583
|
)
|
|
|
(6,680
|
)
|
|
|
(7,747
|
)
|
|
|
(3,897
|
)
|
|
|
|
|
|
|
(18,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(274,599
|
)
|
|
|
(198,553
|
)
|
|
|
(200,242
|
)
|
|
|
(71,641
|
)
|
|
|
(4,759
|
)
|
|
|
(94,946
|
)
|
|
|
7,672
|
|
|
|
10,341
|
|
|
|
6,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay LNG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquefied Gas Carriers
|
|
|
(71,323
|
)
|
|
|
(71,711
|
)
|
|
|
(71,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,171
|
|
|
|
115,478
|
|
|
|
123,282
|
|
Conventional Tankers
|
|
|
(20,930
|
)
|
|
|
(22,416
|
)
|
|
|
(26,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92,253
|
)
|
|
|
(94,127
|
)
|
|
|
(97,884
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,171
|
|
|
|
115,478
|
|
|
|
123,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Tankers
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Tankers
|
|
|
(71,429
|
)
|
|
|
(50,152
|
)
|
|
|
(47,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,411
|
|
|
|
5,228
|
|
|
|
854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offshore Production
|
|
|
(69,508
|
)
|
|
|
(78,630
|
)
|
|
|
(77,551
|
)
|
|
|
|
|
|
|
2,521
|
|
|
|
(2,634
|
)
|
|
|
(12,196
|
)
|
|
|
(1,357
|
)
|
|
|
4,649
|
|
Conventional Tankers
|
|
|
(2,852
|
)
|
|
|
(2,216
|
)
|
|
|
(9,882
|
)
|
|
|
|
|
|
|
|
|
|
|
(92,699
|
)
|
|
|
16,712
|
|
|
|
3,052
|
|
|
|
1,291
|
|
Other
|
|
|
451
|
|
|
|
774
|
|
|
|
2,306
|
|
|
|
|
|
|
|
|
|
|
|
21,926
|
|
|
|
(1,101
|
)
|
|
|
(2,546
|
)
|
|
|
(269
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(71,909
|
)
|
|
|
(80,072
|
)
|
|
|
(85,127
|
)
|
|
|
|
|
|
|
2,521
|
|
|
|
(73,407
|
)
|
|
|
3,415
|
|
|
|
(851
|
)
|
|
|
5,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,798
|
)
|
|
|
(2,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(509,500
|
)
|
|
|
(422,904
|
)
|
|
|
(431,086
|
)
|
|
|
(71,641
|
)
|
|
|
(2,238
|
)
|
|
|
(168,353
|
)
|
|
|
102,871
|
|
|
|
128,114
|
|
|
|
136,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Financial information for Teekay Tankers includes operations of the
SPT Explorer
and
Navigator
Spirit
from December 18, 2015, the date Teekay Tankers acquired the vessels from Teekay Offshore.
|
A reconciliation of total segment assets to total assets presented in the accompanying consolidated balance sheets is as
follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
$
|
|
|
December 31, 2014
$
|
|
Teekay Offshore - Offshore Logistics
|
|
|
2,591,489
|
|
|
|
2,186,789
|
|
Teekay Offshore - Offshore Production
|
|
|
2,717,193
|
|
|
|
1,261,569
|
|
Teekay Offshore - Conventional Tankers
|
|
|
63,900
|
|
|
|
150,044
|
|
Teekay LNG - Liquefied Gas Carriers
|
|
|
3,550,396
|
|
|
|
3,379,279
|
|
Teekay LNG - Conventional Tankers
|
|
|
360,527
|
|
|
|
381,175
|
|
Teekay Tankers - Conventional Tankers
|
|
|
2,073,059
|
|
|
|
1,000,864
|
|
Teekay Parent - Offshore Production
|
|
|
710,533
|
|
|
|
2,138,445
|
|
Teekay Parent - Conventional Tankers
|
|
|
142,236
|
|
|
|
138,504
|
|
Teekay Parent - Other
|
|
|
17,256
|
|
|
|
31,328
|
|
Cash and cash equivalents
|
|
|
678,392
|
|
|
|
806,904
|
|
Other assets not allocated
|
|
|
301,586
|
|
|
|
394,341
|
|
Eliminations
|
|
|
(145,319
|
)
|
|
|
(89,552
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated total assets
|
|
|
13,061,248
|
|
|
|
11,779,690
|
|
|
|
|
|
|
|
|
|
|
F-17
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The following table includes capital expenditures by segment for the periods
presented in these financial statements.
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
$
|
|
|
December 31, 2014
$
|
|
Teekay Offshore - Offshore Logistics
|
|
|
552,219
|
|
|
|
154,896
|
|
Teekay Offshore - Offshore Production
|
|
|
120,160
|
|
|
|
17,022
|
|
Teekay Offshore - Conventional Tankers
|
|
|
97
|
|
|
|
251
|
|
Teekay LNG - Liquefied Gas Carriers
|
|
|
191,642
|
|
|
|
193,669
|
|
Teekay LNG - Conventional Tankers
|
|
|
327
|
|
|
|
586
|
|
Teekay Tankers - Conventional Tankers
|
|
|
848,250
|
|
|
|
2,063
|
|
Teekay Parent - Offshore Production
|
|
|
57,778
|
|
|
|
671,277
|
|
Teekay Parent - Conventional Tankers
|
|
|
92
|
|
|
|
(44
|
)
|
Teekay Parent - Other
|
|
|
199
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,770,764
|
|
|
|
1,039,733
|
|
|
|
|
|
|
|
|
|
|
a)
|
Teekay LNG Bahrain LNG Joint Venture
|
In December 2015, Teekay LNG entered into an agreement with National Oil & Gas Authority (or
Nogaholding
),
Samsung C&T (or
Samsung
) and Gulf Investment Corporation (or
GIC
) to form a joint venture, Bahrain LNG W.L.L. (or the
Bahrain LNG Joint Venture)
, for the development of an LNG receiving and regasification terminal in
Bahrain. The Bahrain LNG Joint Venture is a joint venture between Nogaholding (30%), Teekay LNG (30%), Samsung (20%) and GIC (20%). The project will include an offshore LNG receiving jetty and breakwater, an adjacent regasification platform,
subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility with a total LNG terminal capacity of 800 million standard cubic feet per day and will be owned and operated under a
20-year agreement commencing in mid-2018 with a fully-built up cost of approximately $872.0 million, which will be funded by the Bahrain LNG Joint Venture through a combination of equity capital and project-level debt through a consortium of
regional and international banks. Teekay LNG will supply a floating storage unit (or
FSU
) in connection with this project, which will be modified specifically from one of the Teekay LNGs nine MEGI LNG carrier newbuildings ordered from
Daewoo Shipbuilding & Marine Engineering Co. (or
DSME
), through a twenty year time-charter contract with the Bahrain LNG Joint Venture.
b)
|
Teekay Tankers Principal Maritime
|
In August 2015, Teekay Tankers agreed to acquire 12 modern Suezmax tankers from Principal Maritime Tankers Corporation (or
Principal Maritime
). As of December 31, 2015, all 12 of the vessels had been delivered for a total purchase price of $661.3 million, consisting of $612.0 million in cash and approximately 7.2 million shares of Teekay Tankers
Class A common stock with a value of $49.3 million. To finance the cash portion of the acquisition price, Teekay Tankers secured a $397.2 million loan facility maturing January 29, 2016. The loan was fully drawn as of December 31,
2015. In addition, Teekay Tankers has issued approximately 13.6 million shares of its Class A common stock for net proceeds of $90.6 million, including approximately 4.5 million shares which were issued to Teekay Parent. Teekay
Tankers financed the remainder of the cash purchase price with existing liquidity.
c)
|
Teekay Tankers Ship-to-Ship Transfer Business
|
In July 2015, Teekay Tankers acquired a ship-to-ship transfer business (or
SPT
) from a company jointly-owned by Teekay
and a Norway-based marine transportation company, I.M. Skaugen SE, for a cash purchase price of $47.3 million (including $1.8 million for working capital). To finance this acquisition, Teekay subscribed for approximately 6.5 million shares of
Teekay Tankers Class B common stock at a subscription price of approximately $6.99 per share. SPT provides a full suite of ship-to-ship transfer services in the oil, gas and dry bulk industries. In addition to full service lightering and
lightering support, it also provides consultancy, terminal management and project development services. This acquisition establishes Teekay Tankers in the ship-to-ship (or
STS
) transfer business, which is expected to increase Teekay
Tankers fee-based revenue and its overall fleet utilization. SPT owns and operates a fleet of six STS support vessels.
The acquisition of SPT was accounted for using the acquisition method of accounting, based upon preliminary estimates of fair
value.
F-18
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The following table summarizes the preliminary estimates of fair values of
the SPT assets acquired and liabilities assumed by Teekay Tankers on the acquisition date of July 31, 2015. Teekay Tankers is continuing to obtain information to finalize estimated fair value of the SPT assets acquired and liabilities assumed
at the acquisition date of July 31, 2015 and expects to complete this process as soon as practicable, but no later than one year from the acquisition date.
|
|
|
|
|
|
|
As at
July 31, 2015
$
|
|
ASSETS
|
|
|
|
|
Cash, cash equivalents and short-term restricted cash
|
|
|
1,292
|
|
Accounts receivable
|
|
|
10,332
|
|
Prepaid expenses and other current assets
|
|
|
3,763
|
|
Vessels and equipment
|
|
|
6,475
|
|
Other assets
|
|
|
143
|
|
Intangible assets subject to amortization
|
|
|
|
|
Customer relationships
(Note 6)
|
|
|
30,879
|
|
|
|
|
|
|
Total assets acquired
|
|
|
52,884
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable
|
|
|
(3,650
|
)
|
Accrued liabilities
|
|
|
(3,276
|
)
|
|
|
|
|
|
Total liabilities assumed
|
|
|
(6,926
|
)
|
|
|
|
|
|
Net assets acquired
(1)
|
|
|
45,958
|
|
|
|
|
|
|
(1)
|
Prior to the SPT acquisition date, SPT had in-chartered the
SPT Explorer
from the Company. $1.4 million
of the SPT acquisition purchase price was allocated to the settlement of this pre-existing relationship. Such amount has been accounted for as a reduction to revenue on the SPT acquisition date.
|
Operating results of SPT are reflected in the Companys consolidated financial statements commencing July 31, 2015,
the effective date of acquisition. Pro forma revenues and net income if the acquisition of SPT had occurred at the beginning of 2013 would not be materially different than actual operating results reported. Teekay Tankers has ascribed value to the
customer relationships assumed as part of the acquisition of the STS transfer business. Aggregate amortization expense of intangible assets relating to this acquisition for the year ended December 31, 2015 was $1.3 million, which is included in
depreciation and amortization. The Companys prior 50% interest in SPT was remeasured to its estimated fair value on the acquisition date and the resulting gain of $8.7 million was recognized in equity income in July 2015.
d)
|
Teekay Offshore Logitel Offshore Holding AS
|
In August 2014, Teekay Offshore acquired 100% of the outstanding shares of Logitel Offshore Holding AS (or
Logitel
). The
purchase price for the shares of Logitel consisted of $4.0 million in cash paid at closing and a potential additional cash amount of $27.6 million, subject to reductions of some or all of this potential additional amount if certain performance
criteria are not met, primarily relating to the construction of the three UMS ordered from the COSCO (Nantong) Shipyard (or
COSCO
) in China (see Note 11).
Teekay Offshore committed to acquire three UMS ordered from COSCO for a total cost of approximately $596 million, including
estimated site supervision costs and license fees to be paid to Sevan Marine ASA (or
Sevan
) to allow for use of its cylindrical hull design in these UMS, and $30.0 million from Teekay Offshores assumption of Logitels obligations
under a bond agreement from Sevan. Prior to the acquisition, Logitel secured a three-year fixed-rate charter contract, with Petroleo Brasileiro S.A. (or
Petrobras
) in Brazil for the first UMS, the
Arendal Spirit
, which delivered in
February 2015 and commenced its contract with Petrobras in June 2015. The second UMS is currently in lay-up. During the second quarter of 2015, Teekay Offshore exercised its option to defer the delivery of its second UMS newbuilding by up to one
year. During this period, COSCO will maintain and preserve this unit for the account of Teekay Offshore, including Teekay Offshore incurring interest at 5.0% per annum on the unpaid balance of the final yard installment. In August 2014, Teekay
Offshore exercised one of its existing six options with COSCO to construct a third UMS. During the second quarter of 2015, Teekay Offshore exercised its option to defer the delivery and all related construction work of its third UMS by 120 days.
Teekay Offshore may decide to exercise an option to further defer the delivery of the unit by an additional two years. While Teekay Offshore is pursuing charter contracts for the remaining two UMS newbuildings prior to their respective deferred
deliveries in late-2016 and subject to the exercise of a deferred delivery option, mid-2019, it may decide to cancel or further defer the delivery of the second UMS, as well as to defer the delivery of, or cancel the third UMS.
Teekay Offshore has assumed Logitels obligations under a bond agreement from Sevan as part of this acquisition. The bond
is non-interest bearing and is repayable in amounts of $10.0 million within six months of delivery of each of the three UMS ordered from COSCO, for a total of $30.0 million, of which $10.0 million has been repaid as of December 31, 2015. If
Logitel orders additional UMS with the Sevan cylindrical design, Logitel will be required to pay Sevan up to $11.9 million for each of the next three UMS ordered. If the fourth of six options with COSCO is not exercised by its option expiry date on
November 30, 2016, Sevan has a one-time option to receive the remaining two options with COSCO.
The acquisition of
Logitel was accounted for using the acquisition method of accounting, based upon finalized estimates of fair value.
F-19
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The following table summarizes the preliminary and final valuations of the
Logitel assets and liabilities on the acquisition date. The estimates of fair values of the Logitel assets acquired and liabilities assumed by Teekay Offshore were finalized during the second quarter of 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. Dollars)
|
|
Preliminary
Valuation
August 11, 2014
$
|
|
|
Adjustments
$
|
|
|
Final Valuation
August 11, 2014
$
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
8,089
|
|
|
|
|
|
|
|
8,089
|
|
Prepaid expenses
|
|
|
640
|
|
|
|
|
|
|
|
640
|
|
Advances on newbuilding contracts
|
|
|
46,809
|
|
|
|
(2,239
|
)
|
|
|
44,570
|
|
Intangible assets
|
|
|
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
55,538
|
|
|
|
(1,239
|
)
|
|
|
54,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
|
4,098
|
|
|
|
|
|
|
|
4,098
|
|
Long-term debt
|
|
|
26,270
|
|
|
|
1,330
|
|
|
|
27,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
30,368
|
|
|
|
1,330
|
|
|
|
31,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
25,170
|
|
|
|
(2,569
|
)
|
|
|
22,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash consideration
|
|
|
4,000
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
|
21,170
|
|
|
|
(2,569
|
)
|
|
|
18,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating results of Logitel are reflected in the Companys consolidated financial
statements commencing August 11, 2014, the effective date of acquisition. Pro forma revenues and net income if the acquisition of Logitel had occurred at the beginning of 2014 would not be materially different than actual operating results
reported.
e)
|
Teekay LNG Yamal LNG Joint Venture
|
In July 2014, Teekay LNG, through a new 50/50 joint venture with China LNG Shipping (Holdings) Limited (or
China LNG
)
(or the
Yamal LNG Joint Venture
), ordered six internationally-flagged icebreaker LNG carriers for a project located on the Yamal Peninsula in Northern Russia (or the
Yamal LNG Project
). The Yamal LNG Project is a joint venture between
Russia-based Novatek OAO (60%), France-based Total S.A. (20%) and China-based China National Petroleum Corporation (or CNPC) (20%), and will consist of three LNG trains with a total expected capacity of 16.5 million metric tons of LNG per
annum and is currently scheduled to start-up in early-2018. The six 172,000-cubic meter ARC7 LNG carrier newbuildings will be constructed by DSME, of South Korea, for a total fully built-up cost of approximately $2.1 billion. The vessels, which will
be constructed with maximum 2.1 meter icebreaking capabilities in both the forward and reverse directions, are scheduled to deliver at various times between the first quarter of 2018 and first quarter of 2020. Upon their deliveries, the six LNG
carriers will each operate under fixed-rate time-charter contracts with Yamal Trade Pte. Ltd. until December 31, 2045, plus extension options.
As of December 31, 2015, Teekay LNG had advanced $96.9 million to the Yamal LNG Joint Venture to fund newbuilding
installments (December 31, 2014 - $95.3 million), representing Teekay LNGs proportionate share.
f)
|
Teekay LNG BG International Limited Joint Venture
|
In June 2014, Teekay LNG acquired from BG International Limited (or
BG
) its ownership interests in four 174,000-cubic
meter Tri-Fuel Diesel Electric LNG carrier newbuildings, which will be constructed by Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. in China for an estimated total fully built-up cost to the joint venture of approximately $1.0 billion. The vessels
upon delivery, which are scheduled between September 2017 and January 2019, will each operate under 20-year fixed-rate time-charter contracts, plus extension options with Methane Services Limited, a wholly-owned subsidiary of BG. As compensation for
BGs ownership interest in these four LNG carrier newbuildings, Teekay LNG assumed BGs obligation to provide the shipbuilding supervision and crew training services for the four LNG carrier newbuildings up to their delivery date pursuant
to a ship construction support agreement. Teekay LNG estimates it will incur approximately $38.7 million of costs to provide these services, of which BG has agreed to pay a fixed amount of $20.3 million. Teekay LNG estimated that the fair value of
the service obligation was $33.3 million and the fair value of the amount due from BG was $16.5 million. As at December 31, 2015, the carrying value of the service obligation of $29.7 million (December 31, 2014 $33.7 million) is included
in both the current portion of in-process revenue contracts and in-process revenue contracts and the carrying value of the receivable from BG of $16.5 million (December 31, 2014 $17.1 million) is included in both accounts receivable and other
non-current assets in the Companys consolidated balance sheet. Through this transaction, Teekay LNG has a 30% ownership interest in two LNG carrier newbuildings and a 20% ownership interest in the remaining two LNG carrier newbuildings
(collectively, the
BG Joint Venture
).
g)
|
Teekay Offshore ALP Maritime Services B.V.
|
In March 2014, Teekay Offshore acquired 100% of the shares of ALP Maritime Services B.V. (or
ALP
), a Netherlands-based
provider of long-distance ocean towage and offshore installation services to the global offshore oil and gas industry. Concurrently with this transaction, Teekay Offshore and ALP entered into an agreement with Niigata Shipbuilding & Repair
of Japan for the construction of four state-of-the-art SX-157 Ulstein Design ultra-long-distance towing and offshore installation vessel newbuildings. These vessels will be equipped with dynamic positioning capability and are scheduled for delivery
in 2016. Teekay Offshore is committed to acquire these newbuildings for a total cost of approximately $232 million.
F-20
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Teekay Offshore acquired ALP for a purchase price of $2.6 million, which was
paid in cash, and also entered into an arrangement to pay additional compensation to three former shareholders of ALP if certain requirements are satisfied. This contingent compensation consists of $2.4 million, which is payable upon the delivery
and employment of ALPs four newbuildings, which are scheduled throughout 2016, and a further amount of up to $2.6 million, which is payable if ALPs annual operating results from 2017 to 2021 meet certain targets. Teekay Offshore has the
option to pay up to 50% of this compensation through the issuance of common units of Teekay Offshore. Each of the contingent compensation amounts are payable only if the three former shareholders are employed by ALP at the time the performance
conditions are met. For the year ended December 31, 2015, compensation cost was $0.7 million and was recorded in general and administrative expenses in the Companys consolidated statements of income (December 31, 2014 - $0.5 million).
Teekay Offshore also incurred a $1.0 million fee to a third party associated with the acquisition of ALP, which has been recognized in general and administrative expenses during 2014.
The acquisition of ALP was accounted for using the purchase method of accounting, based upon finalized estimates of fair value.
The following table summarizes the finalized estimates of fair values of the ALP assets acquired and liabilities assumed
by Teekay Offshore on the acquisition date.
|
|
|
|
|
(in thousands of U.S. dollars)
|
|
As at
March 14, 2014
$
|
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
|
294
|
|
Other current assets
|
|
|
404
|
|
Advances on newbuilding contracts
|
|
|
164
|
|
Other assets - long-term
|
|
|
395
|
|
Goodwill
|
|
|
2,032
|
|
|
|
|
|
|
Total assets acquired
|
|
|
3,289
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current liabilities
|
|
|
387
|
|
Other long-term liabilities
|
|
|
286
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
673
|
|
|
|
|
|
|
Net assets acquired
|
|
|
2,616
|
|
|
|
|
|
|
Consideration
|
|
|
2,616
|
|
|
|
|
|
|
The goodwill recognized in connection with the ALP acquisition is attributable primarily to
the assembled workforce of ALP, including their experience, skills and abilities. Operating results of ALP are reflected in the Companys consolidated financial statements commencing March 14, 2014, the effective date of the acquisition.
On a pro forma basis for the Company for the years ended December 31, 2014 and 2013, there would be no material changes to revenues and net income giving effect to Teekay Offshores acquisition of ALP as if it had taken place on
January 1, 2014.
h)
|
Tanker Investments Ltd.
|
In January 2014, Teekay and Teekay Tankers formed Tanker Investments Ltd. (or
TIL
), which seeks to opportunistically
acquire, operate and sell modern second-hand tankers to benefit from an expected recovery in the tanker market. In connection with TILs formation, Teekay and Teekay Tankers received stock purchase warrants entitling them to purchase in the
aggregate up to 1.5 million shares of common stock of TIL (see Note 15). The stock purchase warrants are derivative assets for accounting purposes which had an aggregate value of $10.3 million as at December 31, 2015. Teekay also received
one Series A-1 preferred share and Teekay Tankers received one Series A-2 preferred share, each of which entitles the holder to elect one board member of TIL. The preferred shares do not give the holder a right to any dividends or distributions of
TIL. The Company accounts for its investment in TIL using the equity method. As of December 31, 2015, Teekay and Teekay Tankers ownership interest in TIL totaled 17.62%
4.
|
Investment in Term Loans
|
In February 2011, Teekay made a $70 million term loan (or
the TKC Loan
) to a ship-owner of a
2011-built VLCC, based in Asia. The TKC Loans interest rate was 9% per annum, which was payable quarterly. The TKC Loan was repayable in full in February 2014. The TKC Loan was collateralized by a first-priority mortgage on the VLCC,
together with other related collateral.
In July 2010, Teekay Tankers acquired two term loans, whose borrowers had the same
ultimate parent company as the borrower under the TKC Loan, with a total principal amount outstanding of $115.0 million for a total cost of $115.6 million (or
the TNK Loans
). The TNK Loans had an annual interest rate of 9% per annum, and
included a repayment premium feature which provided a total investment yield of approximately 10% per annum. The TNK Loans matured in July 2013. The TNK Loans were collateralized by first-priority mortgages on two 2010-built VLCCs, together
with other related security. The principal amount of the TNK Loans and repayment premium were payable in full at maturity in July 2013. The TKC Loan and TNK Loans are collectively referred to as the
Loans
.
F-21
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The borrowers of the Loans had been in default on their interest payment
obligations since the first quarter of 2013, and of their loan principal and repayment premium obligations on the TNK Loans from their maturity date in July 2013. In March 2014, the Company exercised its rights under security documentation to
realize the amounts owed under its investment in term loans and assumed full ownership of the three VLCC vessels, which previously secured the investment in term loans. At the time of assumption of ownership, these vessels had an aggregate fair
value of approximately $222 million, which exceeded the carrying value of the Loans. As a result of the exercise of remedies and the increase in VLCC vessel values during early 2014, in the first quarter of 2014 the Company recognized $15.2 million
of interest income, of which $11.2 million related to prior periods and was previously unrecognized, owing under the Loans. In May 2014, Teekay Tankers sold two single-ship wholly-owned subsidiaries, each of which owned one VLCC, to TIL for
aggregate proceeds of $154 million, plus related working capital on closing. Teekay Tankers recognized a $10 million gain on the sale of the VLCCs in 2014.
5.
|
Equity Financing Transactions
|
During the years ended December 31, 2015, 2014, and 2013, the Companys publicly traded
subsidiaries, Teekay Tankers, Teekay Offshore and Teekay LNG, completed the following public offerings and private placements of equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proceeds
Received
$
|
|
|
Less:
Teekay
Corporation
Portion
$
(1)
|
|
|
Offering
Expenses
$
|
|
|
Net Proceeds
Received
$
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore Preferred B Units Offering
|
|
|
125,000
|
|
|
|
|
|
|
|
(4,210
|
)
|
|
|
120,790
|
|
Teekay Offshore Preferred C Units Offering
|
|
|
250,000
|
|
|
|
|
|
|
|
(250
|
)
|
|
|
249,750
|
|
Teekay Offshore Continuing Offering Program
|
|
|
3,551
|
|
|
|
(71
|
)
|
|
|
(66
|
)
|
|
|
3,414
|
|
Teekay LNG Continuous Offering Program
|
|
|
36,274
|
|
|
|
(725
|
)
|
|
|
(900
|
)
|
|
|
34,649
|
|
Teekay Tankers Public Offering
|
|
|
13,716
|
|
|
|
|
|
|
|
(31
|
)
|
|
|
13,685
|
|
Teekay Tankers Continuous Offering Program
|
|
|
94,595
|
|
|
|
|
|
|
|
(2,155
|
)
|
|
|
92,440
|
|
Teekay Tankers Private Placement
|
|
|
109,907
|
|
|
|
|
|
|
|
|
|
|
|
109,907
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore Continuous Offering Program
|
|
|
7,784
|
|
|
|
(156
|
)
|
|
|
(153
|
)
|
|
|
7,475
|
|
Teekay Offshore Direct Equity Placement
|
|
|
178,569
|
|
|
|
(3,571
|
)
|
|
|
(75
|
)
|
|
|
174,923
|
|
Teekay LNG Public Offering
|
|
|
140,784
|
|
|
|
(2,816
|
)
|
|
|
(299
|
)
|
|
|
137,669
|
|
Teekay LNG Continuous Offering Program
|
|
|
42,556
|
|
|
|
(851
|
)
|
|
|
(901
|
)
|
|
|
40,804
|
|
Teekay Tankers Public Offering
|
|
|
116,000
|
|
|
|
(20,000
|
)
|
|
|
(4,810
|
)
|
|
|
91,190
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore Direct Equity Placements
|
|
|
115,688
|
|
|
|
(2,314
|
)
|
|
|
(188
|
)
|
|
|
113,186
|
|
Teekay Offshore Preferred Units Offering
|
|
|
150,000
|
|
|
|
|
|
|
|
(5,200
|
)
|
|
|
144,800
|
|
Teekay Offshore Continuous Offering Program
|
|
|
2,819
|
|
|
|
(59
|
)
|
|
|
(449
|
)
|
|
|
2,311
|
|
Teekay LNG Continuous Offering Program
|
|
|
5,383
|
|
|
|
(107
|
)
|
|
|
(457
|
)
|
|
|
4,819
|
|
Teekay LNG Direct Equity Placement
|
|
|
40,816
|
|
|
|
(816
|
)
|
|
|
(40
|
)
|
|
|
39,960
|
|
Teekay LNG Public Offering
|
|
|
150,040
|
|
|
|
(3,001
|
)
|
|
|
(5,222
|
)
|
|
|
141,817
|
|
In 2015, in addition to the issuances of equity to third parties noted in the table above,
Teekay purchased $30.0 million or 4.5 million shares of Class A common stock of Teekay Tankers for Teekay Tankers to partially finance the acquisition of 12 modern Suezmax tankers from Principal Maritime (see Note 3b), $300.0 million or
14.4 million common units of Teekay Offshore for Teekay Offshore to partially finance the July 1, 2015 acquisition of the
Petrojarl Knarr
FPSO from Teekay, and $45.5 million or 6.5 million shares of Class B common stock of
Teekay Tankers to finance the acquisition of SPT (see Note 3c). These increases in Teekays ownership interest of Teekay Tankers and Teekay Offshore have been accounted for as equity transactions. Therefore, no gains or losses were recognized
in the Companys consolidated statements of income as a result of these purchases. However, the carrying amount of the non-controlling interests share of Teekay Offshore and Teekay Tankers increased by an aggregate of $168.1 million and
retained earnings decreased by $168.1 million to reflect the increase in Teekays ownership interest in Teekay Offshore and Teekay Tankers and the increase in the carrying value of Teekay Offshores and Teekay Tankers total equity.
This adjustment to non-controlling interest and retained earnings was primarily the result of Teekay Offshores 14.4 million common units being issued to Teekay at fair value, which was significantly greater than the carrying value.
F-22
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
In August 2014, Teekay Tankers purchased from Teekay a 50% interest in Teekay
Tanker Operations Ltd. (
TTOL
), which owns conventional tanker commercial management and technical management operations, including the direct ownership in three commercially managed tanker pools, for an aggregate price of approximately $23.5
million, including net working capital. As consideration for this acquisition, Teekay Tankers issued to Teekay 4.2 million Class B common shares. The 4.2 million Class B common shares had an approximate aggregate value of $15.6 million, or
$3.70 per share, when the purchase price was agreed to between the parties and an aggregate value of $17.0 million, or $4.03 per share, on the acquisition closing date. The purchase price, for accounting purposes, is based upon the value of the
Class B common shares on the acquisition closing date. In addition, Teekay Tankers reimbursed Teekay for $6.5 million of working capital it assumed from Teekay in connection with the purchase. The book value of the assets acquired, including working
capital, was $16.9 million on the date of acquisition.
In April 2013, the
Voyageur Spirit
FPSO unit began
production and on May 2, 2013, Teekay completed the acquisition of the
Voyageur Spirit
FPSO unit and, immediately thereafter, Teekay Offshore acquired the unit from Teekay for an original purchase price of $540.0 million. Teekay Offshore
financed the acquisition with the assumption of the $230.0 million debt facility secured by the unit, $253.0 million in cash and a $44.3 million equity private placement of common units to Teekay (including the general partners 2%
proportionate capital contribution), which had a value of $40.0 million at the time Teekay offered to sell the FPSO unit to Teekay Offshore.
As a result of the public offerings and equity placements of Teekay Tankers, Teekay Offshore and Teekay LNG, the Company
recorded (decreases) increases to retained earnings of ($152.7) million (2015), $68.4 million (2014) and $36.7 million (2013). These amounts represent Teekays dilution (losses) gains from the issuance of units and shares by these
consolidated subsidiaries.
6.
|
Goodwill, Intangible Assets and In-Process Revenue Contracts
|
Goodwill
The carrying amount of goodwill for the years ended December 31, 2015 and 2014, for the Companys reportable segments
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore
Segment -
Offshore Logistics
$
|
|
|
Teekay LNG
Segment -
Liquefied Gas
$
|
|
|
Total
$
|
|
Balance as of December 31, 2013
|
|
|
130,908
|
|
|
|
35,631
|
|
|
|
166,539
|
|
Goodwill acquired
|
|
|
2,032
|
|
|
|
|
|
|
|
2,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2014 and 2015
|
|
|
132,940
|
|
|
|
35,631
|
|
|
|
168,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In March 2014, Teekay Offshore acquired 100% of the shares of ALP, a Netherlands-based
provider of long-distance ocean towage and offshore installation services to the global offshore oil and gas industry. The goodwill recognized in connection with the ALP acquisition is attributable primarily to the assembled workforce of ALP,
including their experience, skills and abilities (see Note 3g).
Intangible Assets
As at December 31, 2015, the Companys intangible assets consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying Amount
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Customer contracts
|
|
|
316,684
|
|
|
|
(234,894
|
)
|
|
|
81,790
|
|
Customer relationships
|
|
|
30,879
|
|
|
|
(1,260
|
)
|
|
|
29,619
|
|
Other intangible assets
|
|
|
1,000
|
|
|
|
(500
|
)
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,563
|
|
|
|
(236,654
|
)
|
|
|
111,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2014 the Companys intangible assets consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying Amount
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Customer contracts
|
|
|
316,684
|
|
|
|
(223,018
|
)
|
|
|
93,666
|
|
Other intangible assets
|
|
|
1,000
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
317,684
|
|
|
|
(223,018
|
)
|
|
|
94,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In July 2015, as part of Teekay Tankers acquisition of SPT (see Note 3c), Teekay Tankers
ascribed a value of $30.9 million to the customer relationships assumed as part of the acquisition of the STS transfer business. The Company is amortizing the customer relationships over a period of 10 years. Amortization expense relating to this
acquisition for the year ended December 31, 2015 was $1.3 million, which is included in depreciation and amortization.
F-23
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Aggregate amortization expense of intangible assets for the year ended
December 31, 2015, was $13.6 million (2014 - $13.2 million, 2013 - $18.2 million), which is included in depreciation and amortization. Amortization of intangible assets following 2015 is expected to be $15.1 million (2016), $12.8 million
(2017), $11.8 million (2018), $11.8 million (2019), $11.8 million (2020) and $48.6 million (thereafter).
In-Process Revenue
Contracts
As part of the Companys acquisition of FPSO units from Sevan and its previous acquisition of
Petrojarl ASA (subsequently renamed Teekay Petrojarl AS, or
Teekay Petrojarl
), and Teekay LNGs acquisition of BGs ownership interests in four LNG carrier newbuildings, the Company assumed certain FPSO contracts, time-charter-out
contracts with terms that were less favorable than the then prevailing market terms, and a service obligation for shipbuilding supervision and crew training services for the four LNG carrier newbuildings. At the time of the acquisitions, the Company
recognized liabilities based on the estimated fair value of these contracts and service obligations. The Company is amortizing these liabilities over the estimated remaining terms of their associated contracts on a weighted basis, based on the
projected revenue to be earned under the contracts.
Amortization of in-process revenue contracts for the year ended
December 31, 2015 was $30.1 million (2014 - $40.9 million, 2013 - $61.7 million), which is included in revenues on the consolidated statements of income. Amortization following 2015 is expected to be $32.1 million (2016), $30.7 million (2017),
$22.5 million (2018), $14.3 million (2019), $13.8 million (2020) and $37.4 million (thereafter).
7.
|
Accrued Liabilities and Other Long-Term Liabilities
|
Accrued Liabilities
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
$
|
|
|
$
|
|
Voyage and vessel expenses
|
|
|
168,120
|
|
|
|
163,155
|
|
Interest
|
|
|
66,110
|
|
|
|
60,064
|
|
Payroll and benefits and other
|
|
|
88,239
|
|
|
|
100,606
|
|
Deferred revenue - current
|
|
|
76,883
|
|
|
|
66,027
|
|
Loan from affiliates
|
|
|
12,426
|
|
|
|
4,907
|
|
Liabilities associated with assets held for sale
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,278
|
|
|
|
394,759
|
|
|
|
|
|
|
|
|
|
|
Other Long-Term Liabilities
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
$
|
|
|
$
|
|
Deferred revenues and gains
|
|
|
248,984
|
|
|
|
253,639
|
|
Guarantee liability
|
|
|
26,467
|
|
|
|
24,880
|
|
Asset retirement obligation
|
|
|
25,484
|
|
|
|
25,006
|
|
Pension liabilities
|
|
|
14,953
|
|
|
|
31,365
|
|
Contingent consideration liability
|
|
|
6,225
|
|
|
|
18,969
|
|
Unrecognized tax benefits and deferred income tax
|
|
|
21,967
|
|
|
|
21,779
|
|
Other
|
|
|
8,298
|
|
|
|
7,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352,378
|
|
|
|
383,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
$
|
|
|
$
|
|
Revolving Credit Facilities
|
|
|
1,500,848
|
|
|
|
1,766,824
|
|
Senior Notes (8.5%) due January 15, 2020
|
|
|
592,657
|
|
|
|
392,657
|
|
Norwegian Kroner-denominated Bonds due through May 2020
|
|
|
621,957
|
|
|
|
697,798
|
|
U.S. Dollar-denominated Term Loans due through 2028
|
|
|
4,020,665
|
|
|
|
3,103,255
|
|
U.S. Dollar Bonds due through 2024
|
|
|
502,449
|
|
|
|
496,098
|
|
Euro-denominated Term Loans due through 2023
|
|
|
241,798
|
|
|
|
284,993
|
|
|
|
|
|
|
|
|
|
|
Total principal
|
|
|
7,480,374
|
|
|
|
6,741,625
|
|
Unamortized discount and debt issuance costs
|
|
|
(96,288
|
)
|
|
|
(89,649
|
)
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
7,384,086
|
|
|
|
6,651,976
|
|
Less current portion
|
|
|
(1,106,104
|
)
|
|
|
(652,645
|
)
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
6,277,982
|
|
|
|
5,999,331
|
|
|
|
|
|
|
|
|
|
|
F-24
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
As of December 31, 2015, the Company had 12 revolving credit facilities
(or the
Revolvers
) available, which, as at such date, provided for aggregate borrowings of up to $1.7 billion, of which $0.2 billion was undrawn. Interest payments are based on LIBOR plus margins; at December 31, 2015 and
December 31, 2014, the margins ranged between 0.45% and 3.95%. At December 31, 2015 and December 31, 2014, the three-month LIBOR was 0.61% and 0.26%, respectively. The aggregate amount available under the Revolvers is scheduled to
decrease by $662.7 million (2016), $512.6 million (2017), $460.5 million (2018) and $47.4 million (2019). The Revolvers are collateralized by first-priority mortgages granted on 44 of the Companys vessels, together with other related
security, and include a guarantee from Teekay or its subsidiaries for all outstanding amounts. Included in other security are 38.2 million common units in Teekay Offshore, 25.2 million common units in Teekay LNG and 16.8 million
Class A common shares in Teekay Tankers, which secure a $300 million credit facility.
Teekays $300 million
revolving credit facility is secured by common units of Teekay Offshore and Teekay LNG that are owned by Teekay. On October 5, 2015, Teekay amended the existing equity margin revolving credit facility to pledge additional common units of Teekay
Offshore owned by Teekay and shares of Class A common stock of Teekay Tankers owned by Teekay and modify the required loan to value ratio. If, as a result of a decline in the aggregate market value of the pledged securities, the outstanding
balance of the loans exceeds the loan-to-value ratio, the Company must prepay amounts under the facility. In December 2015, Teekay finalized with its lenders another amendment to decrease the maximum amount available under the existing equity margin
revolving credit facility by $200 million to a $300 million credit facility and to include loan-to-value thresholds. As of December 31, 2015, based on the loan-to-value thresholds, there was $41.7 million credit available under this facility,
of which $28.2 million was drawn and $13.5 million was undrawn.
The Companys 8.5% senior unsecured notes are due
January 15, 2020 with an original principal amount of $450 million (or the
Original Notes
). The Original Notes issued on January 27, 2010 were sold at a price equal to 99.181% of par. In November 2015, the Company issued an
aggregate principal amount of $200 million of the Companys 8.5% senior unsecured notes due on January 15, 2020 (or
the Notes
) at 99.01% of face value, plus accrued interest from July 15, 2015. The Notes are an additional
issuance of the Companys Original Notes (cumulatively referred to as the
8.5% Notes)
. The Notes will be issued under the same indenture governing the Original Notes, but will not be fungible with the Original Notes unless and until such
time as the Notes are exchanged for additional Original Notes pursuant to the terms of a registration rights agreement. The discount on the 8.5% Notes is accreted through the maturity date of the notes using the effective interest rate of
8.67% per year.
The Company capitalized issuance costs of $13.3 million which will be amortized to interest expense
over the term of the 8.5% Notes. As of December 31, 2015, the unamortized balance of the capitalized issuance cost was $7.4 million which is recorded in long-term debt in the consolidated balance sheet. The 8.5% Notes rank equally in right of
payment with all of Teekays existing and future senior unsecured debt and senior to any future subordinated debt of Teekay. The 8.5% Notes are not guaranteed by any of Teekays subsidiaries and effectively rank behind all existing and
future secured debt of Teekay and other liabilities of its subsidiaries.
The Company may redeem the 8.5% Notes in whole or
in part at any time before their maturity date at a redemption price equal to the greater of (i) 100% of the principal amount of the 8.5% Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of
principal and interest on the 8.5% Notes to be redeemed (excluding accrued interest), discounted to the redemption date on a semi-annual basis, at the treasury yield plus 50 basis points, plus accrued and unpaid interest to the redemption
date. During 2014, the Company repurchased the principal amount of $57.3 million of the 8.5% Notes at a premium of $7.7 million and such amount is reflected in other income in the Companys consolidated statements of income.
Prior to 2015, Teekay Offshore, Teekay LNG and Teekay issued in the Norwegian bond market a total of NOK 5.2 billion of senior
unsecured bonds that mature through January 2019. Senior unsecured bonds in an aggregate principal amount of NOK 700 million matured in October 2015. As at December 31, 2015, the total carrying amount of the remaining NOK 4.5 billion
senior unsecured bonds was $508.9 million. The bonds are listed on the Oslo Stock Exchange. The interest payments on the bonds are based on NIBOR plus a margin, which ranges from 4.00% to 5.75%. The Company entered into cross currency rate swaps to
swap all interest and principal payments of the bonds into U.S. Dollars, with the interest payments fixed at rates ranging from 4.94% to 7.49%, and the transfer of principal fixed at $771.8 million upon maturity in exchange for NOK 4.5 billion (see
Note 15).
In May 2015, Teekay LNG issued in the Norwegian bond market NOK 1,000 million in senior unsecured bonds
that mature in May 2020. As of December 31, 2015, the carrying amount of the bonds was $113.1 million. The interest payments on the bonds are based on NIBOR plus a margin of 3.70%. Teekay LNG entered into a cross currency swap to swap all
interest and principal payments into U.S. Dollars, with the interest payments fixed at a rate of 5.92%, and the transfer of the principal amount fixed at $134.0 million upon maturity in exchange for NOK 1,000 million (see Note 15). The net
proceeds from the bond offering were used for general partnership purposes. The bonds are listed on the Oslo Stock Exchange.
As of December 31, 2015, the Company had 26 U.S. Dollar-denominated term loans outstanding, which totaled $4.0
billion in aggregate principal amount (December 31, 2014 $3.1 billion). Certain of the term loans with a total outstanding principal balance of $48.6 million as at December 31, 2015 (December 31, 2014 $37.8 million) bear interest
at a weighted-average fixed rate of 4.0% (December 31, 2014 4.8%). Interest payments on the remaining term loans are based on LIBOR plus a margin. At December 31, 2015 and December 31, 2014, the margins ranged between 0.3% and
3.25%. At December 31, 2015 and December 31, 2014, the three-month LIBOR was 0.61% and 0.26%, respectively. The term loan payments are made in quarterly or semi-annual payments commencing three or six months after delivery of each
newbuilding vessel financed thereby, and 23 of the term loans have balloon or bullet repayments due at maturity. The term loans are collateralized by first-priority mortgages on 67 (December 31, 2014 34) of the Companys vessels,
together with certain other security. In addition, at December 31, 2015, all but $64.6 million (December 31, 2014 $79.3 million) of the outstanding term loans were guaranteed by Teekay or its subsidiaries.
F-25
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
During May 2014, Teekay Offshore issued $300 million in five-year senior
unsecured bonds that mature in July 2019 in the U.S. bond market. As of December 31, 2015, the carrying amount of the bonds was $300.0 million. The bonds are listed on the New York Stock Exchange. The interest payments on the bonds are fixed at
a rate of 6.0%.
In September 2013 and November 2013, Teekay Offshore issued $174.2 million of ten-year senior bonds that
mature in December 2023 and that were issued in a U.S. private placement to finance the
Bossa Nova Spirit
and the
Sertanejo Spirit
shuttle tankers. The bonds accrue interest at a fixed combined rate of 4.96%. The bonds are
collateralized by first-priority mortgages on the two vessels to which the bonds relate, together with other related security. Teekay Offshore makes semi-annual repayments on the bonds and as of December 31, 2015, the carrying amount of the
bonds was $155.3 million.
In February 2015, Teekay Offshore issued $30.0 million in senior bonds that mature in June 2024
in a U.S. private placement. As of December 31, 2015, the carrying amount of the bonds was $27.1 million. The interest payments on the bonds are fixed at a rate of 4.27%. The bonds are collateralized by a first-priority mortgage on the Dampier
Spirit FSO unit to which the bonds relate, together with other related security and are guaranteed by two subsidiaries of Teekay Offshore.
In August 2014, Teekay Offshore assumed Logitels obligations under a bond agreement from Sevan as part of the acquisition
(see note 3d). The bonds are retractable at par at any time by Teekay Offshore. As of December 31, 2015, the outstanding amount of the bonds was $20.0 million with a carrying value of $18.8 million and the bonds are guaranteed by Teekay
Offshore.
Teekay LNG has two Euro-denominated term loans outstanding, which, as at December 31, 2015, totaled
222.7 million Euros ($241.8 million) (December 31, 2014 235.6 million Euros ($285.0 million)). Teekay LNG is repaying the loans with funds generated by two Euro-denominated, long-term time-charter contracts. Interest payments on the
loans are based on EURIBOR plus a margin. At December 31, 2015 and December 31, 2014, the margins ranged between 0.6% and 2.25% and the one-month EURIBOR at December 31, 2015 was (0.21%) (December 31, 2014 0.02%). The
Euro-denominated term loans reduce in monthly payments with varying maturities through 2023, are collateralized by first-priority mortgages on two of Teekay LNGs vessels, together with certain other security, and are guaranteed by Teekay LNG
and one of its subsidiaries.
Both Euro-denominated term loans and NOK-denominated bonds are revalued at the end of each
period using the then-prevailing U.S. Dollar exchange rate. Due primarily to the revaluation of the Companys NOK-denominated bonds, the Companys Euro-denominated term loans, capital leases and restricted cash, and the change in the
valuation of the Companys cross currency swaps, the Company recognized foreign exchange loss of $2.2 million (2014 $13.4 million gain, 2013 $13.3 million loss).
The weighted-average effective interest rate on the Companys aggregate long-term debt as at December 31, 2015 was
3.4% (December 31, 2014 3.2%). This rate does not include the effect of the Companys interest rate swap agreements (see Note 15).
In January 2016, Teekay Tankers entered into a new $894.4 million long-term debt facility, consisting of both a term loan and a
revolving credit facility, which is scheduled to mature in January 2021, of which $845.8 million was used to repay Teekay Tankers two bridge loan facilities which matured in late January 2016 and Teekay Tankers main corporate revolving
credit facility which was scheduled to mature in 2017.
The aggregate annual long-term debt principal repayments required
to be made by the Company subsequent to December 31, 2015, including the impact of Teekay Tankers debt refinancing completed in January 2016, are $1.1 billion (2016), $1.1 billion (2017), $1.6 billion (2018), $0.9 billion (2019), $1.1
billion (2020) and $1.7 billion (thereafter).
Among other matters, the Companys long-term debt agreements
generally provide for maintenance of minimum consolidated financial covenants and 11 loan agreements require the maintenance of vessel market value to loan ratios. As at December 31, 2015, these ratios ranged from 126.5% to 1,076.8% compared to
their minimum required ratios of 105% to 135%. The vessel values used in these ratios are the appraised values prepared by the Company based on second hand sale and purchase market data. Changes in the conventional tanker, FPSO, shuttle tanker,
towage and UMS market and a weakening of the LNG/LPG carrier market could negatively affect the Companys compliance with these ratios. Certain loan agreements require that a minimum level of free cash be maintained and as at December 31,
2015 and December 31, 2014, this amount was $100.0 million. Most of the loan agreements also require that the Company maintain an aggregate minimum level of free liquidity and undrawn revolving credit lines with at least six months to maturity,
in amounts ranging from 5% to 7.5% of total debt. As at December 31, 2015, this aggregate amount was $410.5 million (December 31, 2014- $368.1 million). As at December 31, 2015, the Company was in compliance with all covenants under its
credit facilities and other long-term debt.
9.
|
Operating and Direct Financing Leases
|
Charters-in
As at December 31, 2015, minimum commitments to be incurred by the Company under vessel operating leases by which the
Company charters-in vessels were approximately $185.5 million, comprised of $106.8 million (2016), $52.1 million (2017), $8.7 million (2018), $8.3 million (2019), $8.3 million (2020) and $1.3 million (thereafter). The Company recognizes the
expense from these charters, which is included in time-charter hire expense, on a straight-line basis over the firm period of the charters.
F-26
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Charters-out
Time charters and bareboat charters of the Companys vessels to third parties (except as noted below) are accounted for as
operating leases. Certain of these charters provide the charterer with the option to acquire the vessel or the option to extend the charter. As at December 31, 2015, minimum scheduled future revenues to be received by the Company on time
charters and bareboat charters then in place were approximately $9.2 billion, comprised of $1.5 billion (2016), $1.4 billion (2017), $1.3 billion (2018), $1.2 billion (2019), $1.1 billion (2020) and $2.7 billion (thereafter). The minimum
scheduled future revenues should not be construed to reflect total charter hire revenues for any of the years. Minimum scheduled future revenues do not include revenue generated from new contracts entered into after December 31, 2015, revenue
from unexercised option periods of contracts that existed on December 31, 2015, revenue from vessels in the Companys equity accounted investments, or variable or contingent revenues. In addition, minimum scheduled future revenues
presented in this paragraph have been reduced by estimated off-hire time for scheduled periodic maintenance. The amounts may vary given future events such as unscheduled vessel maintenance.
The carrying amount of the vessels accounted for as operating leases at December 31, 2015, was $7.1 billion (2014 - $6.8
billion). The cost and accumulated depreciation of the vessels employed on operating leases as at December 31, 2015 were $9.6 billion (2014 - $8.9 billion) and $2.5 billion (2014 - $2.1 billion), respectively.
Operating Lease Obligations
Teekay Tangguh Joint Venture
As at December 31, 2015, the Teekay Tangguh Joint Venture was a party to operating leases (or
Head Leases
) whereby
it is leasing its two LNG carriers (or the
Tangguh LNG Carriers
) to a third party company. The Teekay Tangguh Joint Venture is then leasing back the LNG carriers from the same third party company (or the
Subleases
). Under the terms of
these leases, the third party company claims tax depreciation on the capital expenditures it incurred to lease the vessels. As is typical in these leasing arrangements, tax and change of law risks are assumed by the Teekay Tangguh Joint Venture.
Lease payments under the Subleases are based on certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lease payments are increased or decreased under the Sublease to maintain the agreed
after-tax margin. The Teekay Tangguh Joint Ventures carrying amounts of this tax indemnification guarantee as at December 31, 2015 and December 31, 2014 were $8.0 million and $8.4 million, respectively, and are included as part of
other long-term liabilities in the consolidated balance sheets of the Company. The tax indemnification is for the duration of the lease contract with the third party plus the years it would take for the lease payments to be statute barred, and ends
in 2033. Although there is no maximum potential amount of future payments, the Teekay Tangguh Joint Venture may terminate the lease arrangements on a voluntary basis at any time. If the lease arrangements terminate, the Teekay Tangguh Joint Venture
will be required to make termination payments to the third party company sufficient to repay the third party companys investment in the vessels and to compensate it for the tax effect of the terminations, including recapture of any tax
depreciation. The Head Leases and the Subleases have 20 year terms and are classified as operating leases. The Head Lease and the Sublease for the two Tangguh LNG Carriers commenced in November 2008 and March 2009, respectively.
As at December 31, 2015, the total estimated future minimum rental payments to be received and paid under the lease
contracts are as follows:
|
|
|
|
|
|
|
|
|
Year
|
|
Head Lease
Receipts
(1)
|
|
|
Sublease
Payments
(1)(2)
|
|
2016
|
|
|
21,242
|
|
|
|
24,113
|
|
2017
|
|
|
21,242
|
|
|
|
24,113
|
|
2018
|
|
|
21,242
|
|
|
|
24,113
|
|
2019
|
|
|
21,242
|
|
|
|
24,113
|
|
2020
|
|
|
21,242
|
|
|
|
24,113
|
|
Thereafter
|
|
|
175,337
|
|
|
|
199,072
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
281,547
|
|
|
$
|
319,637
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Head Leases are fixed-rate operating leases while the Subleases have a small variable-rate component. As
at December 31, 2015, the Teekay Tangguh Subsidiary had received $228.8 million of aggregate Head Lease receipts and had paid $163.7 million of aggregate Sublease payments. The portion of the Head Lease receipts that have not been recognized
into earnings, is deferred and amortized on a straight line basis over the lease terms and, as at December 31, 2015, $3.8 million and $40.4 million of Head Lease receipts had been deferred and included in accrued liabilities and other long-term
liabilities, respectively, in the Companys consolidated balance sheets.
|
(2)
|
The amount of payments under the Subleases is updated annually to reflect any changes in the lease payments
due to changes in tax law.
|
F-27
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Net Investment in Direct Financing Leases
The time charters for the two Tangguh LNG carriers and one FSO unit of Teekay Offshore are accounted for as direct financing
leases. In addition, in September and November 2013, Teekay LNG acquired two 155,900-cubic meter LNG carriers (or
Awilco LNG Carriers
) from Norway-based Awilco LNG ASA (or
Awilco
) and chartered them back to Awilco on a five- and
four-year fixed-rate bareboat charter contract (plus a one year extension option), respectively, with Awilco holding a fixed-price purchase obligation at the end of the charter. The bareboat charters with Awilco are accounted for as direct financing
leases. The purchase price of each vessel was $205 million less a $51.0 million upfront prepayment of charter hire by Awilco (inclusive of a $1.0 million upfront fee), which is in addition to the daily bareboat charter rate. The following table
lists the components of the net investments in direct financing leases:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
$
|
|
|
$
|
|
Total minimum lease payments to be received
|
|
|
855,655
|
|
|
|
936,164
|
|
Estimated unguaranteed residual value of leased properties
|
|
|
203,465
|
|
|
|
203,465
|
|
Initial direct costs and other
|
|
|
428
|
|
|
|
461
|
|
Less unearned revenue
|
|
|
(375,419
|
)
|
|
|
(435,137
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
684,129
|
|
|
|
704,953
|
|
Less current portion
|
|
|
(26,542
|
)
|
|
|
(20,823
|
)
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
657,587
|
|
|
|
684,130
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2015, minimum lease payments to be received by the Company in each of
the next five years following 2015 were $83.9 million (2016), $207.9 million (2017), $173.7 million (2018), $39.1 million (2019) and $39.2 million (2020). The FSO contract is scheduled to expire in 2017, the LNG time charters are both scheduled
to expire in 2029 and the two LNG carriers under the Awilco LNG carrier leases expire in 2017 and 2018.
10.
|
Capital Lease Obligations
|
Capital Lease Obligations
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
$
|
|
|
$
|
|
Suezmax Tankers
|
|
|
59,127
|
|
|
|
63,550
|
|
Less current portion
|
|
|
(4,546
|
)
|
|
|
(4,422
|
)
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
54,581
|
|
|
|
59,128
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2015, Teekay LNG was a party to capital leases on two Suezmax tankers.
Under these capital leases, the owner has the option to require Teekay LNG to purchase the two vessels. The charterer, who is also the owner, also has the option to cancel the charter contracts and the cancellation options are first exercisable in
October 2017 and July 2018, respectively.
The amounts in the table below assume the owner will not exercise its options to
require Teekay LNG to purchase either of the two remaining vessels, but rather it assumes the owner will cancel the charter contracts when the cancellation right is first exercisable (in October 2017 and July 2018, respectively), and sell the
vessels to a third party, upon which the lease obligation will be extinguished. At the inception of these leases, the weighted-average interest rate implicit in these leases was 5.5%. These capital leases are variable-rate capital leases. However,
any change in the lease payments resulting from changes in interest rates is offset by a corresponding change in the charter hire payments received by Teekay LNG.
As at December 31, 2015, the remaining commitments under the two capital leases, including the purchase obligations for
the two Suezmax tankers, approximated $65.9 million, including imputed interest of $6.8 million, repayable from 2016 through 2018, as indicated below:
|
|
|
|
|
Year
|
|
Commitment
|
|
2016
|
|
$
|
7,673
|
|
2017
|
|
$
|
30,953
|
|
2018
|
|
$
|
27,296
|
|
The Companys capital leases do not contain financial or restrictive covenants other than
those relating to operation and maintenance of the vessels.
11.
|
Fair Value Measurements
|
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments and other non-financial assets.
Cash and cash equivalents, restricted cash and marketable securities
-
The fair value of the Companys cash and cash equivalents restricted cash, and marketable securities approximates their carrying amounts reported in the accompanying consolidated balance sheets.
Vessels and equipment and assets held for sale
The estimated fair value of the Companys vessels and
equipment and assets held for sale was determined based on discounted cash flows or appraised values. In cases where an active second hand sale and purchase market does not exist, the Company uses a discounted cash flow approach to estimate the
fair value of an impaired vessel. In cases where an active second hand sale and purchase market exists, an appraised value is generally the amount the Company would expect to receive if it were to sell the vessel. Such appraisal is normally
completed by the Company. Other assets held for sale include working capital balances and the fair value of such amounts generally approximate their carrying value.
F-28
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Loans to equity-accounted investees and joint venture partners
The fair value of the Companys loans to joint ventures and joint venture partners approximates their carrying amounts reported in the accompanying consolidated balance sheets.
Long-term receivable included in accounts receivable and other assets
The fair values of the Companys
long-term loan receivable is estimated using discounted cash flow analysis based on rates currently available for debt with similar terms and remaining maturities and the current credit worthiness of the counterparty.
Long-term debt and liabilities associated with assets held for sale
The fair value of the Companys
fixed-rate and variable-rate long-term debt is either based on quoted market prices or estimated using discounted cash flow analyses, based on rates currently available for debt with similar terms and remaining maturities and the current credit
worthiness of the Company. Alternatively, if the fixed-rate and variable-rate long-term debt is held for sale the fair value is based on the estimated sales price. Other liabilities held for sale include working capital balances and the fair value
of such amounts generally approximate their carrying value.
Derivative instruments
The fair value of the
Companys derivative instruments is the estimated amount that the Company would receive or pay to terminate the agreements at the reporting date, taking into account, as applicable, fixed interest rates on interest rate swaps, current interest
rates, foreign exchange rates, and the current credit worthiness of both the Company and the derivative counterparties. The estimated amount is the present value of future cash flows. 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. Given the current volatility in the credit markets, it is reasonably possible that the amounts recorded as derivative
assets and liabilities could vary by material amounts in the near term.
The Company categorizes its fair value estimates
using a fair value hierarchy based on the inputs used to measure fair value. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value as follows:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.
The following table includes the estimated fair value and carrying value of those assets and liabilities that
are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Companys financial instruments that are not accounted for at a fair value on a recurring basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
Fair
Value
Hierarchy
Level
|
|
|
Carrying
Amount
Asset
(Liability)
$
|
|
|
Fair
Value
Asset
(Liability)
$
|
|
|
Carrying
Amount
Asset
(Liability)
$
|
|
|
Fair
Value
Asset
(Liability)
$
|
|
Recurring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, restricted cash, and marketable securities
|
|
|
Level 1
|
|
|
|
855,107
|
|
|
|
855,107
|
|
|
|
927,679
|
|
|
|
927,679
|
|
Derivative instruments
(note 15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements - assets
(1)
|
|
|
Level 2
|
|
|
|
6,136
|
|
|
|
6,136
|
|
|
|
1,051
|
|
|
|
1,051
|
|
Interest rate swap agreements - liabilities
(1)
|
|
|
Level 2
|
|
|
|
(370,952
|
)
|
|
|
(370,952
|
)
|
|
|
(406,783
|
)
|
|
|
(406,783
|
)
|
Cross currency interest swap agreement
(1)
|
|
|
Level 2
|
|
|
|
(312,110
|
)
|
|
|
(312,110
|
)
|
|
|
(221,391
|
)
|
|
|
(221,391
|
)
|
Foreign currency contracts
|
|
|
Level 2
|
|
|
|
(18,826
|
)
|
|
|
(18,826
|
)
|
|
|
(18,407
|
)
|
|
|
(18,407
|
)
|
Stock purchase warrants
(note 3h and 15)
|
|
|
Level 3
|
|
|
|
10,328
|
|
|
|
10,328
|
|
|
|
9,314
|
|
|
|
9,314
|
|
Logitel contingent consideration
(see below)
|
|
|
Level 3
|
|
|
|
(14,830
|
)
|
|
|
(14,830
|
)
|
|
|
(21,448
|
)
|
|
|
(21,448
|
)
|
Non-recurring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels and equipment
(note 18b)
|
|
|
Level 2
|
|
|
|
100,600
|
|
|
|
100,600
|
|
|
|
|
|
|
|
|
|
Assets held for sale
(note 18b)
|
|
|
Level 2
|
|
|
|
55,450
|
|
|
|
55,450
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to equity-accounted investees and joint venture partners - Current
|
|
|
|
(2)
|
|
|
7,127
|
|
|
|
|
(2)
|
|
|
26,209
|
|
|
|
|
(2)
|
Loans to equity-accounted investees and joint venture partners - Long-term
|
|
|
|
(2)
|
|
|
184,390
|
|
|
|
|
(2)
|
|
|
227,217
|
|
|
|
|
(2)
|
Long-term receivable
(3)
|
|
|
Level 2
|
|
|
|
16,453
|
|
|
|
16,427
|
|
|
|
17,137
|
|
|
|
17,164
|
|
|
|
|
|
|
|
Long-term debt - public
(note 8)
|
|
|
Level 1
|
|
|
|
(1,493,915
|
)
|
|
|
(1,161,729
|
)
|
|
|
(1,371,174
|
)
|
|
|
(1,405,711
|
)
|
Long-term debt - non-public
(note 8)
|
|
|
Level 2
|
|
|
|
(5,890,171
|
)
|
|
|
(5,881,483
|
)
|
|
|
(5,280,802
|
)
|
|
|
(5,263,586
|
)
|
(1)
|
The fair value of the Companys interest rate swap agreements at December 31, 2015 includes $21.7
million (December 31, 2014 - $24.5 million) accrued interest expense which is recorded in accrued liabilities on the consolidated balance sheets.
|
F-29
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
(2)
|
In the consolidated financial statements, the Companys loans to and equity investments in
equity-accounted investees form the aggregate carrying value of the Companys interests in entities accounted for by the equity method. In addition, the loans to joint venture partners together with the joint venture partners equity
investment in joint ventures form the net aggregate carrying value of the Companys interest in the joint ventures. The fair value of the individual components of such aggregate interests is not determinable.
|
(3)
|
As at December 31, 2015, the estimated fair value of the non-interest bearing receivable was based on the
remaining future fixed payments of $18.2 million to be received from BG, as part of the ship construction support agreement, as well as an estimated discount rate of 8.0%. As there is no market rate for the equivalent of an unsecured non-interest
bearing receivable from BG, the discount rate was based on unsecured debt instruments of similar maturity held, adjusted for a liquidity premium. A higher or lower discount rate would result in a lower or higher fair value asset.
|
Stock purchase warrants
During January 2014, the Company received stock purchase warrants
entitling it to purchase up to 1.5 million shares of the common stock of TIL (see Note 15). The estimated fair value of the stock purchase warrants was determined using a Monte-Carlo simulation and is based, in part, on the historical price of
common shares of TIL, the risk-free rate, vesting conditions and the historical volatility of comparable companies. The estimated fair value of these stock purchase warrants as of December 31, 2015 was based on the historical volatility of the
comparable companies of 54.6%. A higher or lower volatility would result in a higher or lower fair value of this derivative asset.
Changes in fair value during the year ended December 31, 2015 for one of the Companys derivative instruments, the
TIL stock purchase warrants, which are described below and are measured at fair value on the recurring basis using significant unobservable inputs (Level 3), are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
$
|
|
|
2014
$
|
|
Fair value at the beginning of the year
|
|
|
9,314
|
|
|
|
|
|
Fair value on issuance
|
|
|
|
|
|
|
6,840
|
|
Unrealized gain included in earnings
|
|
|
1,014
|
|
|
|
2,474
|
|
|
|
|
|
|
|
|
|
|
Fair value at the end of the year
|
|
|
10,328
|
|
|
|
9,314
|
|
|
|
|
|
|
|
|
|
|
Logitel contingent consideration liability
In August 2014, Teekay Offshore
acquired 100% of the outstanding shares of Logitel, a Norway-based company focused on high-end UMS from CeFront Technology AS (or
CeFront
) for $4 million, which was paid in cash at closing, plus a potential additional amount of up to $27.6
million, depending upon certain performance criteria, which is payable from the present through mid-2020 (see Note 3d).
Teekay Offshore will owe the additional amount of up to $27.6 million if there are no yard cost overruns and no charterer late
delivery penalties; the two unchartered UMS under construction are chartered above specified rates and no material defects from construction are identified up until one year after the delivery of each UMS. To the extent such events occur, the
potential additional amount of $27.6 million will be reduced in accordance with the terms of the purchase agreement. The estimated fair value of the contingent consideration liability of $14.8 million at December 31, 2015 is the amount Teekay
Offshore expects to pay to CeFront discounted to its present value using a weighted average cost of capital rate of 11.5%. As of December 31, 2015, the amount of the expected payments for each UMS was based upon the status of the construction
project for the remaining two UMS newbuildings, the state of the charter market for the remaining two UMS newbuildings, the expectation of potential material defects for each UMS and, to a lesser extent, the timing of delivery of the remaining two
UMS newbuildings. An increase (decrease) in Teekay Offshores estimates of yard cost overruns, charterer late delivery penalties, material defects and the discount rate, as well as a decrease (increase) in Teekay Offshores estimates of
day rates at which it expects to charter the two unchartered UMS, will decrease (increase) the estimated fair value of the contingent consideration liability.
Changes in the estimated fair value of Teekay Offshores contingent consideration liability relating to the acquisition of
Logitel, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), during the year ended December 31, 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
$
|
|
|
2014
$
|
|
Balance at beginning of year
|
|
|
(21,448
|
)
|
|
|
|
|
Acquisition of Logitel
|
|
|
2,569
|
|
|
|
(21,170
|
)
|
Settlement of liability
|
|
|
3,540
|
|
|
|
|
|
Unrealized gain (loss) included in Other income
|
|
|
509
|
|
|
|
(278
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
|
(14,830
|
)
|
|
|
(21,448
|
)
|
|
|
|
|
|
|
|
|
|
F-30
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The authorized capital stock of Teekay at December 31, 2015 and 2014, was 25,000,000 shares of
Preferred Stock, with a par value of $1 per share, and 725,000,000 shares of Common Stock, with a par value of $0.001 per share. During 2015, the Company issued 0.2 million common shares upon the exercise of stock options and restricted stock
units and awards, and had no share repurchases of common shares. During 2014, the Company issued 1.8 million common shares upon the exercise of stock options and restricted stock units and awards, and had no share repurchases of common shares.
As at December 31, 2015, Teekay had issued 72,711,371 shares of Common Stock (2014 73,399,702) and no shares of Preferred Stock issued. As at December 31, 2015, Teekay had 72,711,371 shares of Common Stock outstanding (2014
72,500,502).
Dividends may be declared and paid out of surplus, but if there is no surplus, dividends may be declared or
paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Surplus is the excess of the net assets of the Company over the aggregated par value of the issued shares of the Teekay. Subject to
preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to share equally in any dividends that the board of directors may declare from time to time out of funds legally available
for dividends.
During 2008, Teekay announced that its Board of Directors had authorized the repurchase of up to $200
million of shares of its Common Stock in the open market, subject to cancellation upon approval by the Board of Directors. As at December 31, 2015, Teekay had repurchased approximately 5.2 million shares of Common Stock for $162.3 million
pursuant to such authorization. The total remaining share repurchase authorization at December 31, 2015, was $37.7 million. The shares of Common Stock repurchased during 2013 were under a separate authorization.
On July 2, 2010, the Company amended and restated its Shareholder Rights Agreement (the
Rights Agreement
), which
was originally adopted by the Board of Directors in September 2000. In September 2000, the Board of Directors declared a dividend of one common share purchase right (a
Right
) for each outstanding share of the Companys common
stock. These Rights continue to remain outstanding and will not be exercisable and will trade with the shares of the Companys common stock until after such time, if any, as a person or group becomes an acquiring person as set
forth in the amended Rights Agreement. A person or group will be deemed to be an acquiring person, and the Rights generally will become exercisable, if a person or group acquires 20% or more of the Companys common stock, or if
a person or group commences a tender offer that could result in that person or group owning more than 20% of the Companys common stock, subject to certain higher thresholds for existing shareholders that owned in excess of 15% of the
Companys common stock when the Rights Agreement was amended. Once exercisable, each Right held by a person other than the acquiring person would entitle the holder to purchase, at the then-current exercise price, a number of
shares of common stock of the Company having a value of twice the exercise price of the Right. In addition, if the Company is acquired in a merger or other business combination transaction after any such event, each holder of a Right would then
be entitled to purchase, at the then-current exercise price, shares of the acquiring companys common stock having a value of twice the exercise price of the Right. The amended Rights Agreement will expire on July 1, 2020, unless the
expiry date is extended or the Rights are earlier redeemed or exchanged by the Company.
Stock-based compensation
In March 2013, the Company adopted the 2013 Equity Incentive Plan (or the
2013 Plan
) and suspended the 1995 Stock Option
Plan and the 2003 Equity Incentive Plan (collectively referred to as the
Plans
). As at December 31, 2015, the Company had reserved 4,527,282 (2014 - 4,009,878) shares of Common Stock pursuant to the 2013 Plan, for issuance upon the
exercise of options or equity awards granted or to be granted.
During the years ended December 31, 2015, 2014 and
2013, the Company granted options under the 2013 Plan to acquire up to 265,135, 15,243 and 72,810 shares of Common Stock, respectively, to certain eligible officers, employees and directors of the Company. The options under the Plans have ten-year
terms and vest equally over three years from the grant date. All options outstanding as of December 31, 2015, expire between March 7, 2016 and March 9, 2025, ten years after the date of each respective grant.
A summary of the Companys stock option activity
and related information for the years ended December 31, 2015, 2014, and 2013, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
|
Options
(000s)
|
|
|
Weighted-
Average
|
|
|
Options
(000s)
|
|
|
Weighted-
Average
|
|
|
Options
(000s)
|
|
|
Weighted-
Average
|
|
|
|
|
Exercise
Price
|
|
|
|
Exercise
Price
|
|
|
|
Exercise
Price
|
|
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
Outstanding- beginning of year
|
|
|
2,710
|
|
|
|
36.61
|
|
|
|
4,237
|
|
|
|
36.33
|
|
|
|
5,285
|
|
|
|
34.40
|
|
Granted
|
|
|
265
|
|
|
|
43.99
|
|
|
|
15
|
|
|
|
56.76
|
|
|
|
73
|
|
|
|
34.07
|
|
Exercised
|
|
|
(36
|
)
|
|
|
33.79
|
|
|
|
(1,528
|
)
|
|
|
36.10
|
|
|
|
(1,039
|
)
|
|
|
26.21
|
|
Forfeited / expired
|
|
|
(139
|
)
|
|
|
46.80
|
|
|
|
(14
|
)
|
|
|
28.51
|
|
|
|
(82
|
)
|
|
|
38.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding - end of year
|
|
|
2,800
|
|
|
|
36.84
|
|
|
|
2,710
|
|
|
|
36.61
|
|
|
|
4,237
|
|
|
|
36.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable - end of year
|
|
|
2,500
|
|
|
|
36.03
|
|
|
|
2,508
|
|
|
|
37.03
|
|
|
|
3,848
|
|
|
|
37.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-31
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
A summary of the Companys non-vested stock option activity and related
information for the years ended December 31, 2015, 2014 and 2013, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
|
Options
(000s)
#
|
|
|
Weighted-
Average
Grant
Date Fair
Value $
|
|
|
Options
(000s)
#
|
|
|
Weighted-
Average
Grant
Date Fair
Value $
|
|
|
Options
(000s)
#
|
|
|
Weighted-
Average
Grant
Date Fair
Value $
|
|
Outstanding non-vested stock options - beginning of year
|
|
|
202
|
|
|
|
9.37
|
|
|
|
389
|
|
|
|
9.24
|
|
|
|
723
|
|
|
|
8.74
|
|
Granted
|
|
|
265
|
|
|
|
7.74
|
|
|
|
15
|
|
|
|
11.50
|
|
|
|
73
|
|
|
|
10.54
|
|
Vested
|
|
|
(167
|
)
|
|
|
9.07
|
|
|
|
(188
|
)
|
|
|
9.30
|
|
|
|
(401
|
)
|
|
|
8.57
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
9.01
|
|
|
|
(6
|
)
|
|
|
9.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding non-vested stock options - end of year
|
|
|
300
|
|
|
|
8.09
|
|
|
|
202
|
|
|
|
9.37
|
|
|
|
389
|
|
|
|
9.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average grant date fair value for non-vested options forfeited in 2015 was $0
(2014 - $0.1 million, 2013 - $0.1 million).
As of December 31, 2015, there was $0.4 million of total unrecognized
compensation cost related to non-vested stock options granted under the Plans. Recognition of this compensation is expected to be $0.2 million (2016), and $0.2 million (2017). During the years ended December 31, 2015, 2014, and 2013, the
Company recognized $1.7 million, $1.0 million and $1.8 million, respectively, of compensation cost relating to stock options granted under the Plans. The intrinsic value of options exercised during 2015 was $0.5 million (2014 - $22.6 million; 2013 -
$22.6 million).
As at December 31, 2015, there was no intrinsic value in the outstanding and exercisable stock
options. As at December 31, 2014, the intrinsic value in the outstanding in-the-money stock options was $39.0 million and the intrinsic value in the exercisable in-the-money stock options $35.0 million. As at December 31, 2015, the
weighted-average remaining life of options vested and expected to vest was 3.4 years (2014 3.6 years).
Further
details regarding the Companys outstanding and exercisable stock options at December 31, 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Options
|
|
|
Exercisable Options
|
|
Range of Exercise Prices
#
|
|
Options
(000s)
#
|
|
|
Weighted-
Average
Remaining
Life
(Years)
|
|
|
Weighted-
Average
Exercise
Price
$
|
|
|
Options
(000s)
#
|
|
|
Weighted-
Average
Remaining
Life
(Years)
|
|
|
Weighted-
Average
Exercise
Price
$
|
|
$10.00 $ 19.99
|
|
|
188
|
|
|
|
3.2
|
|
|
|
11.84
|
|
|
|
188
|
|
|
|
3.2
|
|
|
|
11.84
|
|
$20.00 $ 24.99
|
|
|
293
|
|
|
|
4.2
|
|
|
|
24.42
|
|
|
|
293
|
|
|
|
4.2
|
|
|
|
24.42
|
|
$25.00 $ 29.99
|
|
|
365
|
|
|
|
6.2
|
|
|
|
27.69
|
|
|
|
365
|
|
|
|
6.2
|
|
|
|
27.69
|
|
$30.00 $ 34.99
|
|
|
117
|
|
|
|
6.3
|
|
|
|
34.44
|
|
|
|
93
|
|
|
|
6.1
|
|
|
|
34.53
|
|
$35.00 $ 39.99
|
|
|
364
|
|
|
|
0.4
|
|
|
|
39.01
|
|
|
|
364
|
|
|
|
0.4
|
|
|
|
39.01
|
|
$40.00 $ 44.99
|
|
|
1,029
|
|
|
|
4.0
|
|
|
|
41.33
|
|
|
|
764
|
|
|
|
2.2
|
|
|
|
40.41
|
|
$50.00 $ 54.99
|
|
|
429
|
|
|
|
1.2
|
|
|
|
51.40
|
|
|
|
429
|
|
|
|
1.2
|
|
|
|
51.40
|
|
$55.00 $ 59.99
|
|
|
15
|
|
|
|
8.2
|
|
|
|
56.76
|
|
|
|
5
|
|
|
|
8.2
|
|
|
|
56.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,800
|
|
|
|
3.5
|
|
|
|
36.84
|
|
|
|
2,500
|
|
|
|
2.8
|
|
|
|
36.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-32
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The weighted-average grant-date fair value of options granted during 2015 was
$7.74 per option (2014 - $11.50, 2013 - $10.54). The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in computing the fair
value of the options granted: expected volatility of 31.1% in 2015, 34.7% in 2014 and 53.7% in 2013; expected life of five years in 2015 and 2014 and four years in 2013; dividend yield of 4.4% in 2015 and 2014 and 4.8% in 2013; risk-free interest
rate of 1.4% in 2015, 1.6% in 2014, and 0.8% in 2013; and estimated forfeiture rate of 8% in 2015 and 12% in 2014 and 2013. The expected life of the options granted was estimated using the historical exercise behavior of employees. The expected
volatility was generally based on historical volatility as calculated using historical data during the five years prior to the grant date.
The Company grants restricted stock units and performance share units to certain eligible officers and employees of the
Company. Each restricted stock unit and performance share unit is equivalent in value to one share of the Companys common stock plus reinvested dividends from the grant date to the vesting date. The restricted stock units vest equally over
three years from the grant date and the performance share units vest two or three years from the grant date. Upon vesting, the value of the restricted stock units, restricted stock awards and performance shares are paid to each grantee in the form
of shares or cash. The number of performance share units that vest will range from zero to a multiple of the original number granted, based on certain performance and market conditions.
During 2015, the Company granted 63,912 restricted stock units with a fair value of $2.8 million and 61,774 performance share
units with a fair value of $3.4 million, based on the quoted market price and a Monte Carlo valuation model, to certain of the Companys employees. During 2015, a total of 101,419 restricted stock units with a market value of $4.3 million
vested and that amount, net of withholding taxes, was paid to grantees by issuing 98,381 shares of common stock. During 2014, the Company granted 81,388 restricted stock units with a fair value of $4.6 million and 50,689 performance share units with
a fair value of $3.4 million, based on the quoted market price and a Monte Carlo valuation model, to certain of the Companys employees. During 2014, a total of 261,911 restricted stock units with a market value of $8.5 million vested and that
amount, net of withholding taxes, was paid to grantees by issuing 149,082 shares of common stock. During 2013, the Company granted 158,957 restricted stock units with a fair value of $5.4 million and 54,773 performance share units with a fair value
of $2.3 million, based on the quoted market price and a Monte Carlo valuation model, to certain of the Companys employees. During 2013, a total of 296,798 restricted stock units with a market value of $8.8 million vested and that amount, net
of withholding taxes, was paid to grantees by issuing 175,206 shares of common stock. For the year ended December 31, 2015, the Company recorded an expense of $4.5 million (2014 - $7.5 million, 2013 - $9.9 million) related to the restricted
stock units and performance share units.
During 2015, the Company also granted 22,502 (2014 18,230 and 2013
26,412) shares as restricted stock awards with a fair value of $1.0 million (2014 $1.0 million and 2013 $0.9 million), based on the quoted market price, to certain of the Companys directors. The shares of restricted stock are
issued when granted.
Share-based Compensation of Subsidiaries
During the years ended December 31, 2015, 2014 and 2013, 14,603, 9,482 and 8,307 common units of Teekay Offshore, 10,447,
9,521 and 7,362 common units of Teekay LNG and 51,948, 17,073 and 142,157 shares of Class A common stock of Teekay Tankers, with aggregate values of $1.0 million, $0.8 million, and $1.0 million, respectively, were granted and issued to the
non-management directors of the general partners of Teekay Offshore and Teekay LNG and the non-management directors of Teekay Tankers as part of their annual compensation for 2015, 2014 and 2013.
Teekay Offshore, Teekay LNG and Teekay Tankers grant equity-based compensation awards as incentive-based compensation to
certain employees of Teekays subsidiaries that provide services to Teekay Offshore, Teekay LNG and Teekay Tankers. During March 2015, 2014 and 2013, Teekay Offshore and Teekay LNG granted phantom unit awards and Teekay Tankers granted
restricted stock-based compensation awards with respect to 102,843, 67,569 and 63,309 units of Teekay Offshore, 32,054, 31,961 and 36,878 units of Teekay LNG and 192,387, 586,014 and 411,629 Class A common shares of Teekay Tankers,
respectively, with aggregate grant date fair values of $4.2 million, $5.7 million and $4.3 million, respectively, based on Teekay Offshore, Teekay LNG and Teekay Tankers closing unit or stock prices on the grant dates. Each phantom unit or
restricted stock unit is equal in value to one of Teekay Offshores, Teekay LNGs or Teekay Tankers common units or common shares plus reinvested distributions or dividends from the grant date to the vesting date. The awards vest
equally over three years from the grant date. Any portion of an award that is not vested on the date of a recipients termination of service is cancelled, unless their termination arises as a result of the recipients retirement, in which
case the award will continue to vest in accordance with the vesting schedule. Upon vesting, the awards are paid to a substantial majority of the grantees in the form of common units or common shares, net of withholding tax. During March 2015, Teekay
Tankers granted 58,434 stock options with an exercise price of $5.39 per share that have a ten-year term and vest equally over three years from the grant date to an officer of Teekay Tankers. During June 2014, Teekay Tankers granted 110,829 stock
options with an exercise price of $4.25 per share that have a ten-year term and vest equally over three years from the grant date to an officer of Teekay Tankers. During March 2014, Teekay Tankers granted 152,346 stock options with an exercise price
of $4.10 per share that have a ten-year term and vest immediately to non-management directors of Teekay Tankers.
13.
|
Related Party Transactions
|
As at December 31, 2015, Resolute Investments, Ltd. (or
Resolute
) owned 39.1% (2014
34.8%, 2013 35.7%) of the Companys outstanding Common Stock. One of the Companys directors, Thomas Kuo-Yuen Hsu, is the President and a director of Resolute. Another of the Companys directors, Axel Karlshoej, is among the
directors of Path Spirit Limited, which is the trust protector for the trust that indirectly owns all of Resolutes outstanding equity. The Companys Chairman, C. Sean Day, is engaged as a consultant to Kattegat Limited, the parent company
of Resolute, to oversee its investments, including that in the Teekay group of companies. Another of the Companys directors, Bjorn Moller, is a director of Kattegat Limited.
F-33
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
TIL stock purchase warrants received
(note 15)
|
|
|
|
|
|
|
6,839
|
|
|
|
|
|
Volatile organic compound emission plant lease (loss) income
|
|
|
(417
|
)
|
|
|
24
|
|
|
|
238
|
|
Impairment of marketable securities
|
|
|
(683
|
)
|
|
|
(1,322
|
)
|
|
|
(2,062
|
)
|
Miscellaneous income
|
|
|
2,666
|
|
|
|
1,006
|
|
|
|
9,229
|
|
Loss on bond repurchases
|
|
|
|
|
|
|
(7,699
|
)
|
|
|
(1,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss)
|
|
|
1,566
|
|
|
|
(1,152
|
)
|
|
|
5,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.
|
Derivative Instruments and Hedging Activities
|
The Company uses derivatives to manage certain risks in accordance with its overall risk management
policies.
Foreign Exchange Risk
The Company economically hedges portions of its forecasted expenditures denominated in foreign currencies with foreign currency
forward contracts.
As at December 31, 2015, the Company was committed to the following foreign currency forward
contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Amount
in Foreign
Currency
|
|
|
Average Forward
Rate
(1)
|
|
|
Fair Value /
Carrying Amount
of Asset (Liability)
$
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected Maturity
|
|
|
|
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
|
$
|
|
|
$
|
|
Euro
|
|
|
11,103
|
|
|
|
0.91
|
|
|
|
(45
|
)
|
|
|
12,153
|
|
|
|
|
|
Norwegian Kroner
|
|
|
1,105,000
|
|
|
|
7.72
|
|
|
|
(18,005
|
)
|
|
|
100,812
|
|
|
|
42,274
|
|
Singapore Dollar
|
|
|
22,442
|
|
|
|
1.36
|
|
|
|
(776
|
)
|
|
|
16,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,826
|
)
|
|
|
129,502
|
|
|
|
42,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Average contractual exchange rate represents the contracted amount of foreign currency one U.S. Dollar
will buy.
|
The Company enters into cross currency swaps and pursuant to these swaps the Company receives
the principal amount in NOK on the maturity date of the swap, in exchange for payment of a fixed U.S. Dollar amount. In addition, the cross currency swaps exchange a receipt of floating interest in NOK based on NIBOR plus a margin for a payment
of U.S. Dollar fixed interest. The purpose of the cross currency swaps is to economically hedge the foreign currency exposure on the payment of interest and principal at maturity of the Companys NOK-denominated bonds due in 2016 through
2020. In addition, the cross currency swaps economically hedge the interest rate exposure on the NOK bonds due in 2016 through 2020. The Company has not designated, for accounting purposes, these cross currency swaps as cash flow hedges of its
NOK-denominated bonds due in 2016 through 2020. As at December 31, 2015, the Company was committed to the following cross currency swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional
Amount
NOK
|
|
Notional
Amount
USD
|
|
|
|
|
|
|
|
|
|
|
Fair Value /
Carrying
Amount of
Asset /
(Liability)
|
|
|
Remaining
Term (years)
|
|
|
Floating Rate Receivable
|
|
|
|
|
|
|
|
|
Reference
Rate
|
|
Margin
|
|
|
Fixed Rate
Payable
|
|
|
|
500,000
|
|
|
89,710
|
|
|
NIBOR
|
|
|
4.00
|
%
|
|
|
4.94
|
%
|
|
|
(33,714
|
)
|
|
0.1
|
600,000
|
|
|
101,351
|
|
|
NIBOR
|
|
|
5.75
|
%
|
|
|
7.49
|
%
|
|
|
(36,505
|
)
|
|
1.1
|
700,000
|
|
|
125,000
|
|
|
NIBOR
|
|
|
5.25
|
%
|
|
|
6.88
|
%
|
|
|
(49,703
|
)
|
|
1.3
|
800,000
|
|
|
143,536
|
|
|
NIBOR
|
|
|
4.75
|
%
|
|
|
6.07
|
%
|
|
|
(56,985
|
)
|
|
2.1
|
900,000
|
|
|
150,000
|
|
|
NIBOR
|
|
|
4.35
|
%
|
|
|
6.43
|
%
|
|
|
(54,027
|
)
|
|
2.7
|
1,000,000
|
|
|
162,200
|
|
|
NIBOR
|
|
|
4.25
|
%
|
|
|
6.42
|
%
|
|
|
(56,124
|
)
|
|
3.1
|
1,000,000
|
|
|
134,000
|
|
|
NIBOR
|
|
|
3.70
|
%
|
|
|
5.92
|
%
|
|
|
(25,052
|
)
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312,110
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Risk
The Company enters into interest rate swap agreements, which exchange a receipt of floating interest for a payment of fixed
interest, to reduce the Companys exposure to interest rate variability on its outstanding floating-rate debt. The Company designates certain of its interest rate swap agreements as cash flow hedges for accounting purposes.
F-34
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
As at December 31, 2015, the Company was committed to the following
interest rate swap agreements related to its LIBOR-based debt and EURIBOR-based debt, whereby certain of the Companys floating-rate debt were swapped with fixed-rate obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
Index
|
|
Principal
Amount
$
|
|
|
Fair Value /
Carrying
Amount of
Asset /
(Liability)
$
|
|
|
Weighted-
Average
Remaining
Term
(years)
|
|
Fixed
Interest
Rate
(%)
(1)
|
LIBOR-Based Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Dollar-denominated interest rate swaps
(2)
|
|
LIBOR
|
|
|
3,092,442
|
|
|
|
(312,131
|
)
|
|
5.4
|
|
3.4
|
U.S. Dollar-denominated interest rate swaps
(3)
|
|
LIBOR
|
|
|
412,392
|
|
|
|
(16,227
|
)
|
|
3.0
|
|
2.8
|
U.S. Dollar-denominated interest rate swaption
(4)
|
|
LIBOR
|
|
|
155,000
|
|
|
|
(2,626
|
)
|
|
1.3
|
|
2.2
|
U.S. Dollar-denominated interest rate swaption
(4)
|
|
LIBOR
|
|
|
155,000
|
|
|
|
685
|
|
|
1.3
|
|
3.3
|
U.S. Dollar-denominated interest rate swaption
(5)
|
|
LIBOR
|
|
|
160,000
|
|
|
|
(2,041
|
)
|
|
2.1
|
|
2.0
|
U.S. Dollar-denominated interest rate swaption
(5)
|
|
LIBOR
|
|
|
160,000
|
|
|
|
1,956
|
|
|
2.1
|
|
3.1
|
U.S. Dollar-denominated interest rate swaption
(6)
|
|
LIBOR
|
|
|
160,000
|
|
|
|
(1,739
|
)
|
|
2.5
|
|
1.8
|
U.S. Dollar-denominated interest rate swaption
(6)
|
|
LIBOR
|
|
|
160,000
|
|
|
|
2,981
|
|
|
2.5
|
|
2.9
|
|
|
|
|
|
|
EURIBOR-Based Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro-denominated interest rate swaps
(7)
(8)
|
|
EURIBOR
|
|
|
241,798
|
|
|
|
(35,674
|
)
|
|
5.0
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(364,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes the margins the Company pays on its variable-rate debt, which, as of December 31, 2015, ranged
from 0.3% to 3.95%.
|
(2)
|
Principal amount of $200 million is fixed at 2.14%, unless LIBOR exceeds 6%, in which case the Company pays a
floating rate of interest.
|
(3)
|
Interest rate swaps with an aggregate principal amount of $320 million are being used to economically hedge
expected interest payments on new debt that is planned to be outstanding from 2016 to 2021. These interest rate swaps are subject to mandatory early termination in 2016 whereby the swaps will be settled based on their fair value at that time.
|
(4)
|
During June 2015, as part of its hedging program, Teekay LNG entered into interest rate swaption agreements
whereby it has a one-time option in April 2017 to enter into an interest rate swap at a fixed rate of 3.34% with a third party, and the third party has a one-time option in April 2017 to require Teekay LNG to enter into an interest swap at a fixed
rate of 2.15%. If Teekay LNG or the third party exercises its option, there will be a cash settlement in April 2017 for the fair value of the interest rate swap, in lieu of taking delivery of the actual interest rate swap.
|
(5)
|
During August 2015, as part of its hedging program, Teekay LNG entered into interest rate swaption agreements
whereby it has a one-time option in January 2018 to enter into an interest rate swap at a fixed rate of 3.10% with a third party, and the third party has a one-time option in January 2018 to require Teekay LNG to enter into an interest swap at a
fixed rate of 1.97%. If Teekay LNG or the third party exercises its option, there will be a cash settlement in January 2018 for the fair value of the interest rate swap, in lieu of taking delivery of the actual interest rate swap.
|
(6)
|
During October 2015, as part of its hedging program, Teekay LNG entered into interest rate swaption agreements
whereby it has a one-time option in July 2018 to enter into an interest rate swap at a fixed rate of 2.935% with a third party, and the third party has a one-time option in July 2018 to require Teekay LNG to enter into an interest swap at a fixed
rate of 1.83%. If Teekay LNG or the third party exercises its option, there will be a cash settlement in July 2018 for the fair value of the interest rate swap, in lieu of taking delivery of the actual interest rate swap.
|
(7)
|
Principal amount reduces monthly to 70.1 million Euros ($76.1 million) by the maturity dates of the swap
agreements.
|
(8)
|
Principal amount is the U.S. Dollar equivalent of 222.7 million Euros.
|
Stock Purchase Warrants
In January 2014, Teekay and Teekay Tankers formed TIL. Teekay and Teekay Tankers purchased an aggregate of 5.0 million
shares of TILs common stock, representing an initial 20% interest in TIL, as part of a $250 million private placement by TIL, which represents a total investment by Teekay and Teekay Tankers of $50.0 million. In addition, Teekay and Teekay
Tankers received stock purchase warrants entitling them to purchase an aggregate of up to 1.5 million shares of common stock of TIL at a fixed price of $10 per share. Alternatively, if the shares of TILs common stock trade on a National
Stock Exchange or over-the-counter market denominated in NOK, Teekay and Teekay Tankers may also exercise their stock purchase warrants at 61.67 NOK per share using a cashless exercise procedure. The estimated fair value of the warrants on issuance
was $6.8 million and is included in other income in the consolidated statements of income. The stock purchase warrants vest in four equally sized tranches and as at December 31, 2015, two tranches have vested. If the shares of TILs common
stock trade on a National Stock Exchange or over-the-counter market denominated in NOK, each tranche will vest and become exercisable when and if the fair market value of a share of TILs common stock equals or exceeds 77.08 NOK, 92.50 NOK,
107.91 NOK and 123.33 NOK, respectively, for such tranche for any ten consecutive trading days. The stock purchase warrants expire on January 23, 2019. The fair value of the stock purchase warrants at December 31, 2015 was $10.3 million.
The Company reports the unrealized gains from the stock purchase warrants in realized and unrealized (losses) gains on non-designated derivatives in the consolidated statements of income.
F-35
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Tabular Disclosure
The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on
the Companys consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
Expenses
and Other
|
|
|
Derivative
Assets
|
|
|
Accrued
Liabilities
|
|
|
Current
Portion of
Derivative
Liabilities
|
|
|
Derivative
Liabilities
|
|
As at December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as a cash flow hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(338
|
)
|
|
|
(777
|
)
|
Derivatives not designated as a cash flow hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
(16,372
|
)
|
|
|
(2,534
|
)
|
Interest rate swap agreements
|
|
|
|
|
|
|
7,516
|
|
|
|
(18,348
|
)
|
|
|
(198,196
|
)
|
|
|
(154,673
|
)
|
Cross currency swap agreements
|
|
|
|
|
|
|
|
|
|
|
(3,377
|
)
|
|
|
(52,633
|
)
|
|
|
(256,100
|
)
|
Stock purchase warrants
|
|
|
|
|
|
|
10,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
|
|
17,844
|
|
|
|
(21,725
|
)
|
|
|
(267,539
|
)
|
|
|
(414,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as a cash flow hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,218
|
)
|
|
|
(4,189
|
)
|
Interest rate swap agreements
|
|
|
|
|
|
|
5,101
|
|
|
|
(22,656
|
)
|
|
|
(148,006
|
)
|
|
|
(240,171
|
)
|
Cross currency swap agreements
|
|
|
|
|
|
|
|
|
|
|
(1,835
|
)
|
|
|
(41,733
|
)
|
|
|
(177,822
|
)
|
Stock purchase warrants
|
|
|
|
|
|
|
9,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,415
|
|
|
|
(24,491
|
)
|
|
|
(203,957
|
)
|
|
|
(422,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the periods indicated, the following table presents the effective portion of gains
(losses) on interest rate swap agreements designated and qualifying as cash flow hedges that were (1) recognized in other comprehensive (loss) income, (2) recorded in accumulated other comprehensive income (or
AOCI)
during the term
of the hedging relationship and reclassified to earnings, and (3) recognized in the ineffective portion of gains (losses) on derivative instruments designated and qualifying as cash flow hedges.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
Balance
Sheet
(AOCI)
|
|
|
Statement of Income (Loss)
|
Effective
Portion
|
|
|
Effective
Portion
|
|
|
Ineffective
Portion
|
|
|
|
|
(65
|
)
|
|
|
|
|
|
|
(1,050
|
)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(65
|
)
|
|
|
|
|
|
|
(1,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2015, the Company had multiple interest rate swaps, cross currency
swaps and foreign currency forward contracts with the same counterparty that are subject to the same master agreements. Each of these master agreements provides for the net settlement of all derivatives subject to that master agreement through a
single payment in the event of default or termination of any one derivative. The fair value of these derivatives is presented on a gross basis in the Companys consolidated balance sheets. As at December 31, 2015, these derivatives had an
aggregate fair value asset amount of nil and an aggregate fair value liability amount of $588.1 million. As at December 31, 2015, the Company had $105.3 million on deposit with the relevant counterparties as security for swap liabilities under
certain master agreements. The deposit is presented in restricted cash on the consolidated balance sheets.
Realized and
unrealized gains and (losses) from derivative instruments that are not designated for accounting purposes as cash flow hedges, are recognized in earnings and reported in realized and unrealized losses on non-designated derivatives in the
consolidated statements of income. The effect of the gains and losses on derivatives not designated as hedging instruments in the consolidated statements of income are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2015
$
|
|
|
Year Ended
December 31,
2014
$
|
|
|
Year Ended
December 31,
2013
$
|
|
Realized losses relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements
|
|
|
(108,036
|
)
|
|
|
(125,424
|
)
|
|
|
(122,439
|
)
|
Interest rate swap agreement terminations
|
|
|
(10,876
|
)
|
|
|
(1,319
|
)
|
|
|
(35,985
|
)
|
Foreign currency forward contracts
|
|
|
(21,607
|
)
|
|
|
(4,436
|
)
|
|
|
(2,027
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(140,519
|
)
|
|
|
(131,179
|
)
|
|
|
(160,451
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements
|
|
|
37,723
|
|
|
|
(86,045
|
)
|
|
|
182,800
|
|
Foreign currency forward contracts
|
|
|
(418
|
)
|
|
|
(16,926
|
)
|
|
|
(3,935
|
)
|
Stock purchase warrants
|
|
|
1,014
|
|
|
|
2,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,319
|
|
|
|
(100,496
|
)
|
|
|
178,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total realized and unrealized (losses) gains on derivative instruments
|
|
|
(102,200
|
)
|
|
|
(231,675
|
)
|
|
|
18,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-36
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Realized and unrealized (losses) gains of the cross currency swaps are
recognized in earnings and reported in foreign currency exchange (loss) gain in the consolidated statements of income. The effect of the loss on cross currency swaps on the consolidated statements of income is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
$
|
|
|
2014
$
|
|
|
2013
$
|
|
Realized (loss) gain on maturity and partial termination of cross currency swaps
|
|
|
(36,155
|
)
|
|
|
|
|
|
|
6,800
|
|
Realized (losses) gains
|
|
|
(18,973
|
)
|
|
|
(3,955
|
)
|
|
|
2,089
|
|
Unrealized losses
|
|
|
(89,178
|
)
|
|
|
(167,334
|
)
|
|
|
(65,387
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total realized and unrealized (losses) gains on cross currency swaps
|
|
|
(144,306
|
)
|
|
|
(171,289
|
)
|
|
|
(56,498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company is exposed to credit loss to the extent the fair value represents an asset in the
event of non-performance by the counterparties to the foreign currency forward contracts, and cross currency and interest rate swap agreements; however, the Company does not anticipate non-performance by any of the counterparties. In order to
minimize counterparty risk, the Company only enters into derivative transactions with counterparties that are rated A- or better by Standard & Poors or A3 or better by Moodys at the time of the transaction. In addition, to the
extent possible and practical, interest rate swaps are entered into with different counterparties to reduce concentration risk.
16.
|
Commitments and Contingencies
|
|
a)
|
Vessels under Construction
|
As at December 31, 2015, the Company was committed to the construction of 11 LNG carriers, four long-distance towing and
offshore installation vessels, two UMS, three shuttle tankers, one FSO conversion and one FPSO upgrade for a total cost of approximately $3.6 billion, excluding capitalized interest and other miscellaneous construction costs. Vessels in which the
Company holds an interest through non-consolidated joint ventures are excluded from the above amounts and are described on Note 16b. Two LNG carriers are scheduled for delivery in 2016, three LNG carriers are scheduled for delivery in 2017, four LNG
carriers are scheduled for delivery in 2018 and two LNG carriers are scheduled for delivery in 2019, four long-distance towing and offshore installation vessels are scheduled for delivery in 2016, two UMS are scheduled for delivery in the third
quarter of 2016 and the second quarter of 2019, three shuttle tankers are expected to be delivered in the fourth quarter of 2017 through the first half of 2018, the one FSO conversion is scheduled for completion in early-2017 and the one FPSO
upgrade is scheduled for completion in the fourth quarter of 2016. As at December 31, 2015, payments made towards these commitments totaled $800.6 million (excluding $29.4 million of capitalized interest and other miscellaneous construction
costs). As at December 31, 2015, the remaining payments required to be made under these newbuilding and conversion capital commitments were $864.6 million (2016), $887.0 million (2017), $616.3 million (2018), $426.1 million (2019) and $3.5
million (2020).
As described in Note 3a, the Teekay LNG has a 30% ownership interest in the Bahrain LNG Joint Venture for the development of an
LNG receiving and regasification terminal in Bahrain. The project will include a FSU, which will be modified from one of Teekay LNGs existing MEGI LNG newbuilding carriers, an offshore gas receiving facility, and an onshore nitrogen production
facility. The terminal will have a capacity of 800 million standard cubic feet per day and will be owned and operated under a 20-year agreement commencing July 2018. The receiving and regasification terminal is expected to have a fully-built up
cost of approximately $872 million. As at December 31, 2015, Teekay LNGs proportionate share of the costs to be incurred are $115.2 million (2016), $84.0 million (2017) and $62.4 million (2018).
As described in Note 3f, Teekay LNG has an ownership interest in the BG Joint Venture and, as part of the acquisition, agreed
to assume BGs obligation to provide shipbuilding supervision and crew training services for the four LNG carrier newbuildings up to their delivery dates pursuant to a ship construction support agreement. As at December 31, 2015, Teekay
LNG had incurred $4.2 million, net of reimbursement from BG, relating to shipbuilding and crew training services. The remaining estimated amounts to be incurred for the shipbuilding and crew training obligation, net of the reimbursement from BG, are
$6.0 million (2016), $3.8 million (2017), $4.1 million (2018) and $0.4 million (2019).
F-37
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
In addition, the BG Joint Venture secured a $787.0 million debt facility to
finance a portion of the estimated fully built-up cost of $1.0 billion for its four newbuilding carriers, with the remaining portion to be financed pro-rata based on ownership interests by Teekay LNG and the other partners. As at December 31,
2015, Teekay LNGs proportionate share of the remaining newbuilding installments, net of debt financing, totaled $7.9 million (2016), $15.0 million (2017), $17.3 million (2018) and $6.3 million (2019).
As described in Note 23 Equity Method Investments, Teekay LNG, has a 50% ownership interest in the Exmar LPG Joint
Venture which has seven LPG newbuilding vessels scheduled for delivery between 2016 and 2018 and has obtained financing for three of these newbuilding vessels. As at December 31, 2015, Teekay LNGs proportionate share of the remaining costs for
these seven newbuilding carriers, net of the financing, totaled $4.9 million (2016), $62.7 million (2017) and $19.3 million (2018).
As described in Note 3e, Teekay LNG has a 50% ownership interest in the Yamal LNG Joint Venture which will build six
172,000-cubic meter ARC7 LNG carrier newbuildings for an estimated total fully built-up cost of approximately $2.1 billion. As at December 31, 2015, Teekay LNGs proportionate costs incurred under these newbuilding contracts totaled $100.5
million and Teekay LNGs proportionate share of the estimated remaining costs to be incurred were $74.4 million (2016), $97.6 million in (2017), $356.6 million in (2018), $214.4 million in (2019) and $198.3 million (2020). The Yamal LNG
Joint Venture intends to secure debt financing for 70% to 80% of the fully built-up cost of the six LNG carrier newbuildings.
In October 2014, Teekay Offshore sold a 1995-built shuttle tanker, the
Navion Norvegia,
to a 50/50 joint venture with
Brazilian-based Odebrecht Oil & Gas S.A. (or
OOG
). The vessel is committed to a new FPSO conversion for the Libra field located in the Santos Basin offshore Brazil. The conversion project will be completed at Sembcorp Marines
Jurong Shipyard in Singapore and the FPSO unit is scheduled to commence operations in early-2017 under a 12-year fixed-rate contract with Petroleo Brasileiro SA (
Petrobras
). The FPSO conversion is expected to cost approximately $1.0 billion.
As at December 31, 2015, payments made by the joint venture towards these commitments totaled $251.6 million and the remaining payments required to be made are $739.4 million (2016) and $13.6 million (2017). Teekay Offshore intends to
finance its share of the conversion through existing long-term debt financing within the joint venture, and to a lesser extent, through existing liquidity. The joint venture secured a $248 million short-term loan in late-2014, which was refinanced
in 2015 with a long-term debt facility providing total borrowings of up to $804 million for the FPSO unit.
In December
2015, Teekay Offshore entered into a put and call option agreement with its 50/50 joint venture partner, OOG, relating to the FPSO conversion for the Libra field. The agreement provides OOG, with a put option to sell 15%, 20% or 25% of its shares in
the joint venture to Teekay Offshore for consideration of $24.1 million, $32.1 million or $40.2 million, respectively. The exercise date for the put option was April 25, 2016 with a settlement date on May 25, 2016. Upon exercise of the put
option, the agreement further provides OOG with a call option to repurchase the shares sold pursuant to the put option, for the same consideration from the put option plus 20% per annum from the put option date until the call option date as
well as an additional $7.5 million. The exercise date for the call option is August 31, 2017 with settlement on January 5, 2018. Teekay Offshore expected to finance the put option, if exercised, with its existing liquidity. OOG did not
exercise the put option on April 25, 2016 and the put and call option agreement was discontinued.
Teekay, through a
50/50 joint venture (or the
KT Maritime Joint Venture
) with Kotug International B.V., has a 50% ownership interest in three infield support vessels type ART100-42 towage newbuildings that have an estimated total cost of approximately $55.5
million and are expected to deliver during the first half of 2016. Teekays proportionate costs to be incurred under these newbuilding contracts total $27.8 million. As at December 31, 2015, payments made by Teekay towards these
commitments totaled $7.9 million, with remaining payments of $19.9 million required to be made by Teekay in 2016.
|
c)
|
Legal Proceedings and Claims
|
The Company may, from time to time, be involved in legal proceedings and claims that arise in the ordinary course
of business. The Company believes that any adverse outcome of existing claims, other than with respect to the items noted below, individually or in the aggregate, would not have a material effect on its financial position, results of
operations or cash flows, when taking into account its insurance coverage and indemnifications from charterers.
Claims by Minority Shareholders of Sevan
The Company has a 43% ownership interest in Sevan. In February 2016, a special committee of the Board of Directors of Sevan (or
Special Committee
), responding to allegations made by certain minority shareholders of Sevan
, advised that they had initiated a review of the legality of the agreements between Sevan and CeFront Technology AS (or
CeFront
)
relating to the transfer to Logitel Offshore Pte. Ltd. or its wholly-owned subsidiaries (collectively
Logitel Offshore
) in 2013 of two hulls to be converted into UMS, including the $60 million bond loan (of which $41 million was a vendor
credit and $19 million was a cash loan) granted by Sevan Holding V AS to Logitel Offshore Pte. Ltd. (or the
2013 Transaction
). This review also included a review of the legality of the agreements between Sevan and Teekay Offshore entered into
in connection with the 2014 transaction whereby Teekay Offshore acquired Logitel Offshore from CeFront (or the
2014 Transaction
). The Special Committee advised Teekay Offshore by letter dated February 16, 2016, that it had obtained legal
advice indicating that Sevan had failed to obtain the necessary shareholder approvals in connection with both the 2013 Transaction and the 2014 Transaction. The Special Committee also advised that, in its view, the $60 million bond loan to Logitel
Offshore represents lending to a related party of a Sevan shareholder, which is in breach of mandatory limitations on such financing under Norwegian corporate law. The Special Committee has advised Teekay Offshore that the failure to obtain the
necessary approval of Sevans shareholders would render certain of the agreements in the 2013 Transaction and 2014 Transaction either void or voidable, exposing Teekay Offshore to potential claims for restitution as mandated by Norwegian
corporate law. As a result, Sevan claims that Teekay Offshore and/or Logitel owes Sevan approximately $50 million, representing the unpaid amount of the original $60 million bond loan. As at December 31, 2015, Teekay Offshore had accrued a bond
loan payable amount of $18.8 million, based upon the terms of the agreements as entered into by Sevan, Logitel and Teekay Offshore. Teekay Offshore is in discussions with Sevan regarding the potential financial impact on Teekay Offshore of the
failure of Sevan to obtain the necessary shareholder approvals of the 2013 Transaction and 2014 Transaction.
F-38
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Piranema Spirit FPSO contract
In March 2016, Petrobras claimed that Teekay Offshores November 2011 cessation of paying certain agency fees with respect
to the
Piranema Spirit
FPSO units charter contract should have resulted in a corresponding 2% rate reduction on the FPSO charter contract with Petrobras. Teekay Offshore disagrees with this claim. Teekay Offshore has estimated the total
claim to be approximately $7.5 million, consisting of $4.4 million relating to 2% of the charter hire previously paid by Petrobras to Teekay Offshore for the period from November 2011 up to the end of 2015, and $3.1 million relating to 2% of
estimated future charter hire from 2016 to the end of the term of the FPSO contract with Petrobras.
STX Offshore &
Shipbuilding Co.
In April 2013, four special purpose subsidiary companies of Teekay Tankers entered into agreements
with STX Offshore & Shipbuilding Co., Ltd (or
STX
) of South Korea to construct four, fuel-efficient 113,000 dead-weight tonne Long Range 2 (or
LR2
) product tanker newbuildings. At the same time, Teekay Tankers entered an
Option Agreement with STX allowing Teekay Tankers to order up to 12 additional vessels. The payment of Teekay Tankers first shipyard installment was contingent on Teekay Tankers receiving acceptable refund guarantees for the shipyard
installment payments. At around the same time, however, STX commenced a voluntary financial restructuring with its lenders, and as a result, STXs ability to obtain the necessary refund guarantees in respect of the four firm shipbuilding
contracts was severely affected. In October and November 2013, Teekay Tankers went on to exercise its rights under the Option Agreement to order eight additional newbuildings. The further required shipbuilding contracts were not entered into by STX
within the timeframe specified in the Option Agreement. By December 2013, Teekay Tankers had determined that there was no prospect of the refund guarantees being provided under any of the firm shipbuilding contracts and then by February 2014 that
there was no prospect of the same in respect of the further contracts to be entered pursuant to the Option Agreement or of that agreement being otherwise performed by STX. In December 2013, therefore, the subsidiaries of Teekay Tankers gave STX
notice that it was treating STX as having repudiated the four firm shipbuilding contracts. Then in February 2014, Teekay Tankers gave STX notice that it was treating STX as having repudiated the Option Agreements. Having asserted that this was the
position, in February and March 2014, Teekay Tankers and its subsidiaries commenced legal proceedings against STX for damages. This involved arbitration proceedings in London in respect of the four firm shipbuilding contracts and English High Court
proceedings in respect of the Option Agreement. In November 2014, Teekay Tankers, on behalf of the subsidiaries, placed $0.6 million in an escrow account as cash security in respect of STXs legal costs relating to the arbitration proceedings.
These funds are classified as cash and cash equivalents in Teekay Tankers consolidated balance sheets as of December 31, 2015 and 2014.
In February 2016, Teekay Tankers subsidiaries had successfully obtained an English Court Order requiring STX to pay a
total of $32.4 million in respect of the four firm shipbuilding contracts. As a result, Teekay Tankers subsidiaries have exercised their rights under English law to seek the assistance of the English court in the enforcement of the arbitration
awards. Teekay Tankers and its subsidiaries are pursuing other routes to enforce the awards against STX. Additionally, the $0.6 million cash deposit was refunded subsequent to December 31, 2015. No amounts have been recorded as receivable in
respect of these awards due to uncertainty of their collection.
The trial in the English High Court in respect of the
Option Agreement will commence in April 2016.
Class Action Complaint
Following the Companys announcement in December 2015 that its Board of Directors had approved a plan to reduce the
Companys quarterly dividend to $0.055 per share, down from $0.55 per share in the third quarter of 2015, commencing with the fourth quarter of 2015 dividend payable in February 2016 and the subsequent decline of the price of the Companys
common stock, a class action complaint was filed on March 1, 2016 in the U.S. District Court for the District of Connecticut against the Company and certain of its officers. The complaint includes claims that the Company and certain of its
officers violated Section 10(b) of the Securities Exchange Act 1934 and Rule 10b-5 promulgated thereunder. In general, the complaint alleges the Company and certain of its officers violated federal securities laws by making materially false and
misleading statements regarding the Companys ability and intention to maintain a quarterly dividend of at least $0.55 per share, thereby artificially inflating the price of its common stock. The plaintiffs are seeking unspecified monetary
damages, including reasonable costs and expenses incurred in this action. The Company plans to vigorously defend against the claim. Based on the early stage of the claim and evaluation of the facts available at this time, the amount or range of
reasonably possible losses to which the Company is exposed cannot be estimated and the ultimate resolution of this matter and the associated financial impact to the Company, if any, remains uncertain at this time. The Company maintains a Directors
and Officers Insurance policy that provides coverage for such claims, subject to a maximum amount and a deductible.
Teekay Nakilat
Capital Lease
Teekay LNG owned a 70% interest in Teekay Nakilat Corporation (or
Teekay Nakilat Joint Venture
)
that was the lessee under three separate 30-year capital lease arrangements with a third party for three LNG carriers (or
the RasGas II LNG Carriers
) until December 2014. Under the terms of the leasing arrangements for the RasGas II LNG
Carriers, the lessor claimed tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leasing arrangements, tax and change of law risks were assumed by the lessee, in this case the Teekay Nakilat
Joint Venture. Lease payments under the lease arrangements were based on certain tax and financial assumptions at the commencement of the leases and subsequently adjusted to maintain the lessors agreed after-tax margin. On December 22,
2014, the Teekay Nakilat Joint Venture terminated the leasing of the RasGas II LNG Carriers. However, the Teekay Nakilat Joint Venture remains obligated to the lessor to maintain the lessors agreed after-tax margin from the commencement of the
lease to the lease termination date and placed $6.8 million on deposit with the lessor as security against any future claims.
The UK taxing authority (or
HMRC
) has been challenging the use of similar lease structures. One of those challenges was
eventually decided in favor of HMRC (Lloyds Bank Equipment Leasing No. 1 or
LEL1
), with the lessor and lessee choosing not to appeal further. Recent indications are that HMRC will attempt to progress matters on other leases including the
lease of Teekay Nakilat Joint Venture with the intent of asking the lessees to accept the LEL1 tax case verdict that capital allowances were not due. If the Teekay Nakilat Joint Venture was to be challenged by HMRC, it is uncertain whether the
Teekay Nakilat Joint Venture would eventually prevail in court. If the former lessor of the RasGas II LNG Carriers were to lose on a similar claim from HMRC, Teekay LNGs 70% share of the potential exposure in the Teekay Nakilat Joint Venture
is estimated to be approximately $60 million. Such estimate is primarily based on information received from the lessor.
F-39
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Petrojarl Banff Storm Damage
On December 7, 2011, the Petrojarl Banff FPSO unit (or
Banff
), which operates on the Banff field in the U.K. sector
of the North Sea, suffered a severe storm event and sustained damage to its moorings, turret and subsea equipment, which necessitated the shutdown of production on the unit. Due to the damage, Teekay declared force majeure under the customer
contract on December 8, 2011 and the
Banff
FPSO unit commenced a period of off-hire while the necessary repairs and upgrades were completed and the weather permitted re-installation of the unit on the Banff field. The Company does not
have off-hire insurance covering the
Banff
FPSO. The repairs and upgrades were completed in 2014, and the
Banff
FPSO unit resumed production on the Banff field in July 2014. In May 2015, the Company entered into a commercial settlement
agreement with the charterer whereby the charterer agreed to contribute approximately $55 million towards the upgrade costs. No claims remain outstanding on this matter and the Company has collected $55 million from the charterer in this regard.
|
d)
|
Redeemable Non-Controlling Interest
|
During 2010, an unrelated party contributed a shuttle tanker with a value of $35.0 million to a subsidiary of Teekay Offshore
for a 33% equity interest in the subsidiary. The non-controlling interest owner of Teekay Offshores 67%-owned subsidiary holds a put option which, if exercised, would obligate Teekay Offshore to purchase the non-controlling interest
owners 33% share in the entity for cash in accordance with a defined formula. The redeemable non-controlling interest is subject to remeasurement if the formulaic redemption amount exceeds the carrying value. No remeasurement was required as
at December 31, 2015.
In July 2015, Teekay Offshore issued 10.4 million 8.60% Series C Cumulative Convertible
Perpetual Preferred Units (or
Series C Preferred Units
) in a private placement for net proceeds of $249.8 million. At any time after the 18 month anniversary of the closing date, at the election of each holder, the Series C Preferred Units
may be converted on a one-for-one basis into common units of Teekay Offshore. Pursuant to the partnership agreement, distributions on the Series C Preferred Units to preferred unitholders are cumulative from the date of original issue and are
payable quarterly in arrears, when, as and if declared by the board of directors of the general partner. The Series C Preferred Units may be redeemed in cash if a change of control occurs in Teekay Offshore. As a result, the Series C Preferred Units
are included on the Companys consolidated balance sheet as part of temporary equity which is above the equity section but below the liabilities section.
The Company enters into indemnification agreements with certain officers and directors. In addition, the Company enters into
other indemnification agreements in the ordinary course of business. The maximum potential amount of future payments required under these indemnification agreements is unlimited. However, the Company maintains what it believes is appropriate
liability insurance that reduces its exposure and enables the Company to recover future amounts paid up to the maximum amount of the insurance coverage, less any deductible amounts pursuant to the terms of the respective policies, the amounts of
which are not considered material.
17.
|
Supplemental Cash Flow Information
|
|
a)
|
The changes in operating assets and liabilities for the years ended December 31, 2015, 2014, and 2013,
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Accounts receivable
|
|
|
(6,488
|
)
|
|
|
136,660
|
|
|
|
(77,837
|
)
|
Prepaid expenses and other assets
|
|
|
(10,607
|
)
|
|
|
(1,618
|
)
|
|
|
(2,386
|
)
|
Accounts payable
|
|
|
(24,727
|
)
|
|
|
(17,643
|
)
|
|
|
(10,877
|
)
|
Accrued and other liabilities
|
|
|
29,531
|
|
|
|
(56,768
|
)
|
|
|
155,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,291
|
)
|
|
|
60,631
|
|
|
|
64,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b)
|
Cash interest paid, including realized interest rate swap settlements, during the years ended
December 31, 2015, 2014, and 2013, totaled $318.1 million, $328.2 million and $282.4 million, respectively. In addition, during the years ended December 31, 2015, 2014, and 2013, cash interest paid relating to interest rate swap amendments
and terminations totaled $10.9 million, $1.3 million and $36.0 million, respectively.
|
|
c)
|
As described in Note 3b, in August 2015, Teekay Tankers agreed to acquire 12 modern Suezmax tankers from
Principal Maritime. As of December 31, 2015, all 12 of the vessels had been delivered for a total purchase price of $661.3 million, consisting of $612.0 million in cash and approximately 7.2 million shares of Teekay Tankers
Class A common stock or $49.3 million, which was treated as a non-cash transaction in the consolidated statement of cash flows.
|
|
d)
|
During 2014, the Company took ownership of three VLCCs, which were collateral for all amounts owing under the
investment in term loans, and the investment in term loans was concurrently discharged. The VLCCs had an estimated aggregate fair value of $222.0 million on this date, which approximated all the amounts owing under the investment in term loans.
During the first quarter of 2014, second-hand vessel values for VLCCs increased and, as a result, the Company recognized $15.2 million of interest income owing under the investment in term loans in the first quarter of 2014. The assumption of
ownership of the VLCCs and concurrent discharge of the loans has been treated as a non-cash transaction in the Companys consolidated statement of cash flows.
|
F-40
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
|
e)
|
As described in Note 3f, during 2014, Teekay LNG acquired BGs ownership interest in the BG Joint
Venture. As compensation, Teekay LNG assumed BGs obligation (net of an agreement by BG to pay Teekay LNG approximately $20.3 million) to provide shipbuilding supervision and crew training services for the four LNG carrier newbuildings up to
their delivery dates pursuant to a ship construction support agreement. The estimated fair value of the assumed obligation of approximately $33.3 million was used to offset the purchase price and Teekay LNGs receivable from BG and was treated
as a non-cash transaction in the Companys consolidated statement of cash flows.
|
|
f)
|
During 2014, Teekay LNG acquired an LPG carrier, the
Norgas Napa
, from Skaugen for $27.0 million, of
which $21.6 million was paid in cash upon delivery and the remaining $5.4 million is an interest-bearing loan to Skaugen.
|
|
g)
|
During 2014 and 2013, the sales of the
Tenerife Spirit, Huelva Spirit,
and
Algeciras Spirit
conventional tankers resulted in the vessels under capital leases being returned to the owner and the capital lease obligations being concurrently extinguished. Therefore, the sales of the
Algeciras Spirit
and
Huelva Spirit
under
capital lease of $56.2 million in 2014 and the sale of the
Tenerife Spirit
under capital lease of $29.7 million in 2013 and the concurrent extinguishment of the corresponding capital lease obligations of $56.2 million in 2014 and $29.7
million in 2013 were treated as non-cash transactions in the Companys consolidated statements of cash flows.
|
|
h)
|
During 2014, the portion of dividends declared by the Teekay Tangguh Joint Venture that was used to settle the
advances made to BLT LNG Tangguh Corporation and P.T. Berlian Laju Tanker of $14.4 million was treated as a non-cash transaction in the consolidated statements of cash flows.
|
|
i)
|
During 2013, Teekay LNG acquired two LNG carriers from Awilco for a purchase price of $205.0 million per
vessel. The upfront prepayment of charter hire of $51.0 million (inclusive of a $1.0 million upfront fee) per vessel was used to offset the purchase price and was treated as a non-cash transaction in the consolidated statements of cash flows.
|
18.
|
Vessel Sales, Asset Impairments and Provisions
|
a) Sale of Vessels, Equipment and Other Assets
During 2015, Teekay Offshore sold a 1997-built shuttle tanker, the
Navion Svenita
, for net proceeds of $8.6 million. The
Companys consolidated statement of income for the year ended December 31, 2015 includes a $1.6 million gain related to the sale of this vessel. The gain on sale of vessel is included in the Companys Teekay Offshore Segment -
Offshore Logistics.
During 2015, Teekay Tankers sold one Conventional tanker for a sales price of $11.2 million. The
Companys consolidated statement of income for the year ended December 31 2015 includes a gain on sale of the vessel of $0.8 million related to the sale of this vessel. The gain on sale of vessel is included in the Companys Teekay
Tankers Segment - Conventional Tanker.
During 2015, the Company disposed of equipment from the
Hummingbird Spirit
.
The Companys consolidated statement of income for the year ended December 31, 2015 includes a $0.9 million loss related to the disposal of this equipment. The loss on disposal of this equipment is included in the Companys Teekay
Parent Segment Offshore Production.
During 2014, Teekay Offshore sold a 1995-built shuttle tanker, the
Navion
Norvegia
, to a joint venture held between Teekay Offshore and a joint venture partner. The Companys consolidated statement of income for the year ended December 31, 2014 includes a $3.1 million gain related to the sale of this vessel.
The gain on sale of vessel is included in the Companys Teekay Offshore Segment - Offshore Logistics.
During 2014,
the Company sold an office building. The Companys consolidated statement of income for the year ended December 31, 2014, includes a $0.9 million gain on sale related to this office, which is included in the Companys Teekay Parent
Segment - Offshore Production.
During 2014, Teekay Tankers sold two wholly-owned subsidiaries, each of which owned one
VLCC, to TIL for aggregate proceeds of $154.0 million plus related working capital on closing of $1.7 million. The Company received the purchase price in cash. The Company used a portion of the proceeds from this transaction to prepay $152 million
on one of the Companys revolving credit facilities and the remainder of the proceeds was used for general corporate purposes. During the year ended December 31, 2014, the Company realized a net gain of $10.0 million from the sale of the
two subsidiaries to TIL (See Note 18b).
During 2014, the Company sold to TIL four 2009-built Suezmax tankers that were
part of the Companys conventional tanker segment. These vessels were classified as held for sale on the consolidated balance sheet as at December 31, 2013, with their net book values written down to their estimated sale proceeds. During
the year ended December 31, 2014, the Company realized a net loss of $0.5 million from the sale of these vessels.
During 2013, Teekay Offshore sold a 1992-built shuttle tanker, a 1992-built conventional tanker, two 1995-built conventional
tankers and a 1998-built conventional tanker that were part of the Companys Teekay Offshore - Offshore Logistics and Conventional Tanker segments. The Company realized a net gain of $0.7 million from the sale of these vessels. All of the
vessels were older vessels that the Company disposed of in the ordinary course of business. During 2013, the Company also sold sub-sea equipment from the
Petrojarl I
FPSO unit that is part of the Companys Teekay Parent Segment
Offshore Production. The Company realized a gain of $1.3 million from the sale of the equipment.
F-41
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
b) Asset Impairments and Provisions
During 2015, the carrying values of two of Teekay Offshores 2000s-built conventional tankers and seven of Teekay
Offshores 1990s-built shuttle tankers were written down to their estimated fair value, using appraised values. The write-down of the two conventional tankers was the result of the expected sale of the vessels and the vessels were classified as
held for sale on the Companys consolidated balance sheet as at December 31, 2015. The Companys consolidated statement of income for the year ended December 31, 2015, includes a $3.9 million write-down related to these two
conventional tankers. The write-down is included in the Companys Teekay Offshore Segment - Conventional Tankers. Of the seven shuttle tankers, during the first quarter of 2015, one shuttle tanker was written down as a result of the expected
sale of the vessel and the vessel was classified as held for sale on the Companys consolidated balance sheet as at December 31, 2015. The vessel was subsequently sold in January 2016 for gross proceeds of $5.1 million (see Note 24). An
additional shuttle tanker was written down during the first quarter of 2015 as a result of a change in the operating plan of the vessel. In the fourth quarter of 2015, the write-down of five shuttle tankers, which had an average age of 17.5 years,
was the result of changes in Teekay Offshores expectations of their future opportunities, primarily due to their advanced age. While Teekay Offshore expects four of the five vessels to continue to actively trade as shuttle tankers over the
near-term and the fifth vessel to actively trade in the conventional tanker market, Teekay Offshore anticipates fewer opportunities for alternative usage and increased age discrimination over time for these shuttle tankers. The Companys
consolidated statement of income for the year ended December 31, 2015, includes total write-downs of $66.7 million related to these seven shuttle tankers. The write-downs are included in the Companys Teekay Offshore Segment - Offshore
Logistics.
During 2014, the carrying value of one of Teekay Offshores 1990s-built shuttle tanker was written down to
its estimated fair value, using an appraised value. The write-down was the result of the tanker coming off charter and the expectation that it would be re-chartered at a lower rate. The Companys consolidated statement of income for the year
ended December 31, 2014, includes a $4.8 million write-down related to this vessel, which is included in the Companys Teekay Offshore Segment - Offshore Logistics.
During 2014, the Company reversed a $2.5 million loss provision for an amount receivable related to an FPSO front-end
engineering and design study completed in 2013, as this receivable was recovered in 2014. During 2013, the Company recorded a $2.6 million of loss provision relating to this receivable.
During December 2013, the Company commenced a process to dispose of four vessel owning companies (or
LLCs
), each of
which owns one 2009-built Suezmax tanker, through the sale to a new entity, TIL, which was ultimately incorporated on January 10, 2014. On January 23, 2014, TIL completed a $250 million equity private placement in which Teekay Tankers and
Teekay co-invested $25 million each for a combined 20% ownership interest in the new company. Concurrently with this equity private placement, Teekay entered into an agreement to sell the four Suezmax tankers to TIL for $163.2 million plus working
capital less outstanding debt of the LLCs on closing, which occurred on February 28, 2014.
During 2013, the Company
wrote down the four Suezmax tankers to their estimated fair value of $163.2 million, which consists of their sale price, resulting in the recognition of an asset impairment of $90.8 million in the Companys consolidated statement of income for
the year ended December 31, 2013. The vessels were part of the Companys Teekay Parent Segment - Conventional Tankers.
In 2013, the carrying value of six of Teekay Offshores 1990s-built shuttle tankers were written down to their estimated
fair values, using an appraised value. The Companys consolidated statement of income (loss) for the year ended December 31, 2013, includes a $76.8 million write-down related to these six vessels, of which $56.5 million relates to four
shuttle tankers which Teekay Offshore owns through subsidiaries with ownership interests ranging from 50% to 67%. During the third quarter of 2013, four of these six shuttle tankers were written down as the result of the re-contracting of one of the
vessels at lower rates than expected during the third quarter of 2013, the cancellation of a short-term contract which occurred in September 2013 and a change in expectations for the contract renewal for two of the shuttle tankers. In the fourth
quarter of 2013, the remaining two of the six shuttle tankers were written down due to a cancellation in their contract renewal. The $76.8 million write-down is included within the Companys Teekay Offshore Segment Offshore Logistics.
During 2013, the Company increased the net carrying amount of the investments in term loans, which includes accrued
interest income, by $1.9 million as the estimated future cash flows, which primarily reflected the estimated value of the underlying collateral, increased during 2013. The investments in term loans are part of the Companys Teekay Parent
Segment - Conventional Tankers. The net carrying amount of the loans consists of the present value of estimated future cash flows at December 31, 2013 (see Note 4). However, as at December 31, 2013, $11.2 million of interest receivable
under the term loans, including default interest, was not recorded in respect of its investments in the three term loans based on the Companys estimates of amounts receivable from its collateral. During March 2014, the Company assumed
ownership of the three VLCCs that collateralized the investment in term loans (see Note 18a). At the time of assumption of ownership, these vessels had an aggregate fair value of approximately $222 million, which exceeded the carrying value of the
loans. As a result, in the first quarter of 2014, the Company recognized $15.2 million of interest income, of which $11.2 million related to prior periods and was previously unrecognized owing under the loans.
See Note 2 Segment Reporting for the total write down of vessels by segment for 2015, 2014 and 2013.
F-42
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
19.
|
Income (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Net income (loss) attributable to shareholders of Teekay Corporation
|
|
|
82,151
|
|
|
|
(54,757
|
)
|
|
|
(114,738
|
)
|
Reduction in net earnings due to dilutive impact of stock-based compensation in Teekay LNG, Teekay
Offshore and Teekay Tankers and Series C Preferred Units in Teekay Offshore
|
|
|
(227
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to shareholders of Teekay Corporation for diluted income (loss) per
share
|
|
|
81,924
|
|
|
|
(54,757
|
)
|
|
|
(114,738
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
|
|
|
72,665,783
|
|
|
|
72,066,008
|
|
|
|
70,457,958
|
|
Dilutive effect of stock-based compensation
|
|
|
524,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and common stock equivalents
|
|
|
73,190,564
|
|
|
|
72,066,008
|
|
|
|
70,457,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic
|
|
|
1.13
|
|
|
|
(0.76
|
)
|
|
|
(1.63
|
)
|
- Diluted
|
|
|
1.12
|
|
|
|
(0.76
|
)
|
|
|
(1.63
|
)
|
Stock-based awards, which have an anti-dilutive effect on the calculation of diluted loss per
common share, are excluded from this calculation. For the years ended December 31, 2015 and 2013, options and equity awards to acquire 1.4 million and 1.0 million shares of Common Stock, respectively, had an anti-dilutive effect on
the calculation of diluted income per common share.
20.
|
Restructuring Charges
|
During 2015, the Company recorded restructuring charges of $14.0 million ($9.8 million 2014, $6.9 million - 2013).
The restructuring charges in 2015 relate to the termination of the employment of certain seafarers upon the expiration of a
time-charter-out contract, the reorganization of the Companys marine operations and corporate services, and the change in crew on a vessel as requested by a charterer. The actual restructuring charges relating to the termination of the
employment of certain seafarers upon the expiration of a time-charter-out contract and the change in crew on a vessel as requested by a charterer in the amount of $8.4 million were fully reimbursed to the Company by the charterers and the net
reimbursement is included in voyage revenues.
The restructuring charges in 2014 relate to the termination of the
employment of certain seafarers upon the re-delivery of an in-chartered conventional tanker in December 2014 and upon the sale of a vessel under capital lease to a third party in August 2014, and the reflagging of one shuttle tanker which commenced
in January 2014 and was completed in March 2014, partially offset by an adjustment to the accrual for costs related to the reorganization of the Companys marine operations.
The restructuring charges in 2013 relates to the termination of the employment of certain seafarers from the sale of two
vessels and the reflagging of one shuttle tanker and to the reorganization of the Companys marine operations and certain of its commercial and administrative functions. The purpose of this restructuring was to create better alignment between
certain of the Companys business units and its three publicly-listed subsidiaries, as well as a lower cost organization. The Company does not expect to incur further restructuring charges associated with this reorganization.
At December 31, 2015 and 2014 $3.2 million and $9.0 million, respectively, of restructuring liabilities were recorded in
accrued liabilities on the consolidated balance sheets.
Teekay and a majority of its subsidiaries are not subject to income tax in the jurisdictions in which they are incorporated
because they do not conduct business or operate in those jurisdictions. However, among others, the Companys U.K. and Norwegian subsidiaries are subject to income taxes.
The significant components of the Companys
deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
$
|
|
|
$
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Vessels and equipment
|
|
|
43,289
|
|
|
|
43,268
|
|
Tax losses carried forward
(1)
|
|
|
310,019
|
|
|
|
360,547
|
|
Other
|
|
|
22,141
|
|
|
|
28,973
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
375,449
|
|
|
|
432,788
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Vessels and equipment
|
|
|
10,577
|
|
|
|
12,514
|
|
Long-term debt
|
|
|
3,218
|
|
|
|
2,295
|
|
Other
|
|
|
15,090
|
|
|
|
19,954
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
28,885
|
|
|
|
34,763
|
|
Net deferred tax assets
|
|
|
346,564
|
|
|
|
398,025
|
|
Valuation allowance
|
|
|
(310,862
|
)
|
|
|
(385,431
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
35,702
|
|
|
|
12,594
|
|
|
|
|
|
|
|
|
|
|
F-43
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
Net deferred tax assets are presented in other non-current assets and other
long term liabilities in the accompanying consolidated balance sheets.
(1)
|
Substantially all of the Companys net operating loss carryforwards of $1.28 billion relate primarily to
its Norwegian, U.K., and Spanish subsidiaries and, to a lesser extent, to its Australian ship-owning subsidiaries. These net operating loss carryforwards are available to offset future taxable income in the respective jurisdictions, and can be
carried forward indefinitely. The Company also has $37.2 million in disallowed finance costs that relate to its Spanish subsidiaries and are available to offset future taxable income in Spain and can also be carried forward indefinitely.
|
The components of the provision for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Current
|
|
|
(10,440
|
)
|
|
|
(6,460
|
)
|
|
|
2,742
|
|
Deferred
|
|
|
27,207
|
|
|
|
(3,713
|
)
|
|
|
(5,614
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
16,767
|
|
|
|
(10,173
|
)
|
|
|
(2,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company operates in countries that have differing tax laws and rates. Consequently, a
consolidated weighted average tax rate will vary from year to year according to the source of earnings or losses by country and the change in applicable tax rates. Reconciliations of the tax charge related to the relevant year at the applicable
statutory income tax rates and the actual tax charge related to the relevant year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Net income before taxes
|
|
|
388,693
|
|
|
|
134,175
|
|
|
|
38,352
|
|
Net income (loss) not subject to taxes
|
|
|
252,604
|
|
|
|
(80,454
|
)
|
|
|
(267,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income subject to taxes
|
|
|
136,089
|
|
|
|
214,629
|
|
|
|
306,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At applicable statutory tax rates
|
|
|
32,750
|
|
|
|
39,382
|
|
|
|
12,719
|
|
Permanent and currency differences, adjustments to valuation allowances and uncertain tax
positions
|
|
|
(49,789
|
)
|
|
|
(28,027
|
)
|
|
|
(8,173
|
)
|
Other
|
|
|
272
|
|
|
|
(1,182
|
)
|
|
|
(1,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax (recovery) expense related to the current year
|
|
|
(16,767
|
)
|
|
|
10,173
|
|
|
|
2,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a roll-forward of the Companys unrecognized tax benefits, recorded in
other long-term liabilities, from January 1, 2013 to December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance of unrecognized tax benefits as at January 1
|
|
|
20,335
|
|
|
|
20,304
|
|
|
|
29,364
|
|
Increases for positions related to the current year
|
|
|
4,578
|
|
|
|
3,643
|
|
|
|
1,141
|
|
Changes for positions taken in prior years
|
|
|
(2,965
|
)
|
|
|
1,015
|
|
|
|
(1,284
|
)
|
Decreases related to statute of limitations
|
|
|
(3,558
|
)
|
|
|
(4,627
|
)
|
|
|
(8,917
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance of unrecognized tax benefits as at December 31
|
|
|
18,390
|
|
|
|
20,335
|
|
|
|
20,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-44
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The majority of the net decrease for positions for the year ended
December 31, 2015 relates to a potential tax on freight income becoming statute barred.
The Company does not
presently anticipate such uncertain tax positions will significantly increase or decrease in the next 12 months; however, actual developments could differ from those currently expected. The tax years 2010 through 2015 remain open to examination by
some of the major jurisdictions in which the Company is subject to tax.
The Company recognizes interest and penalties
related to uncertain tax positions in income tax expense. The interest and penalties on unrecognized tax benefits are included in the roll-forward schedule above and are approximately a reduction of $0.3 million in 2015, net of statute barred
liabilities, and $1.6 million in 2014 and $7.2 million in 2013.
a)
|
Defined Contribution Pension Plans
|
With the exception of certain of the Companys employees in Australia and Norway, the Companys employees are
generally eligible to participate in defined contribution plans. These plans allow for the employees to contribute a certain percentage of their base salaries into the plans. The Company matches all or a portion of the employees contributions,
depending on how much each employee contributes. During the years ended December 31, 2015, 2014, and 2013, the amount of cost recognized for the Companys defined contribution pension plans was $15.2 million, $13.9 million and $14.8
million, respectively.
b)
|
Defined Benefit Pension Plans
|
The Company has a number of defined benefit pension plans (or the
Benefit Plans
) which primarily cover its employees in
Norway and certain employees in Australia. As at December 31, 2015, approximately 71% of the defined benefit pension assets were held by the Norwegian plans and approximately 29% were held by the Australian plan. The pension assets in the
Norwegian plans have been guaranteed a minimum rate of return by the provider, thus reducing potential exposure to the Company to the extent the counterparty honors its obligations. Potential exposure to the Company has also been reduced,
particularly for the Australian plans, as a result of certain of its time-charter and management contracts that allow the Company, under certain conditions, to recover pension plan costs from its customers.
The following table provides information about changes in the benefit obligation and the fair value of the Benefit Plans
assets, a statement of the funded status, and amounts recognized on the Companys balance sheets:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31, 2015
$
|
|
|
December 31, 2014
$
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
121,604
|
|
|
|
150,996
|
|
Service cost
|
|
|
7,726
|
|
|
|
8,800
|
|
Interest cost
|
|
|
2,532
|
|
|
|
4,975
|
|
Contributions by plan participants
|
|
|
365
|
|
|
|
292
|
|
Actuarial (gain) loss
|
|
|
(9,165
|
)
|
|
|
15,982
|
|
Benefits paid
|
|
|
(9,651
|
)
|
|
|
(5,476
|
)
|
Plan settlements and amendments
|
|
|
(14,891
|
)
|
|
|
(21,235
|
)
|
Benefit obligations assumed on acquisition
|
|
|
|
|
|
|
1,083
|
|
Foreign currency exchange rate changes
|
|
|
(16,001
|
)
|
|
|
(33,680
|
)
|
Other
|
|
|
(104
|
)
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
82,415
|
|
|
|
121,604
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
97,158
|
|
|
|
138,876
|
|
Actual return on plan assets
|
|
|
2,221
|
|
|
|
2,849
|
|
Contributions by the employer
|
|
|
7,858
|
|
|
|
12,283
|
|
Contributions by plan participants
|
|
|
365
|
|
|
|
292
|
|
Benefits paid
|
|
|
(9,646
|
)
|
|
|
(5,456
|
)
|
Plan settlements and amendments
|
|
|
(11,420
|
)
|
|
|
(22,405
|
)
|
Plan assets assumed on acquisition
|
|
|
203
|
|
|
|
998
|
|
Foreign currency exchange rate changes
|
|
|
(13,096
|
)
|
|
|
(29,721
|
)
|
Other
|
|
|
(568
|
)
|
|
|
(558
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
73,075
|
|
|
|
97,158
|
|
|
|
|
|
|
|
|
|
|
Funded status deficiency
|
|
|
(9,340
|
)
|
|
|
(24,446
|
)
|
|
|
|
|
|
|
|
|
|
Amounts recognized in the balance sheets:
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
9,340
|
|
|
|
24,446
|
|
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
Net actuarial losses
|
|
|
(17,374
|
)
|
|
|
(32,060
|
)
|
|
|
|
|
|
|
|
|
|
(1)
|
As at December 31, 2015, the estimated amount that will be amortized from accumulated other comprehensive
(loss) income into net periodic benefit cost in 2016 is $(0.6) million.
|
F-45
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
As of December 31, 2015 and 2014, the accumulated benefit obligations
for the Benefit Plans were $67.1 million and $95.7 million, respectively. The following table provides information for those pension plans with a benefit obligation in excess of plan assets and those pension plans with an accumulated benefit
obligation in excess of plan assets:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
$
|
|
|
$
|
|
Benefit obligation
|
|
|
61,124
|
|
|
|
90,042
|
|
Fair value of plan assets
|
|
|
50,517
|
|
|
|
64,631
|
|
|
|
|
Accumulated benefit obligation
|
|
|
1,821
|
|
|
|
60,828
|
|
Fair value of plan assets
|
|
|
925
|
|
|
|
55,095
|
|
The components of net periodic pension cost relating to the Benefit Plans for the years ended
December 31, 2015, 2014 and 2013 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Net periodic pension cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
7,726
|
|
|
|
8,800
|
|
|
|
9,768
|
|
Interest cost
|
|
|
2,532
|
|
|
|
4,975
|
|
|
|
4,974
|
|
Expected return on plan assets
|
|
|
(2,895
|
)
|
|
|
(5,333
|
)
|
|
|
(5,688
|
)
|
Amortization of net actuarial loss
|
|
|
1,538
|
|
|
|
7,148
|
|
|
|
1,484
|
|
Plan settlement
|
|
|
(140
|
)
|
|
|
(3,332
|
)
|
|
|
973
|
|
Other
|
|
|
568
|
|
|
|
557
|
|
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cost
|
|
|
9,329
|
|
|
|
12,815
|
|
|
|
11,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-46
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The components of other comprehensive income (loss) relating to the Plans for
the years ended December 31, 2015, 2014 and 2013 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2015
$
|
|
|
Year Ended
December 31,
2014
$
|
|
|
Year Ended
December 31,
2013
$
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) arising during the period
|
|
|
13,288
|
|
|
|
(14,954
|
)
|
|
|
(3,930
|
)
|
Amortization of net actuarial loss
|
|
|
1,538
|
|
|
|
7,148
|
|
|
|
1,484
|
|
Plan settlement
|
|
|
(140
|
)
|
|
|
(3,332
|
)
|
|
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (loss)
|
|
|
14,686
|
|
|
|
(11,138
|
)
|
|
|
(1,473
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company estimates that it will make contributions into the Benefit Plans of $4.9 million
during 2016. The following table provides the estimated future benefit payments, which reflect expected future service, to be paid by the Benefit Plans:
|
|
|
|
|
Year
|
|
Pension
Benefit
Payments
$
|
|
2016
|
|
|
3,567
|
|
2017
|
|
|
3,111
|
|
2018
|
|
|
2,791
|
|
2019
|
|
|
2,834
|
|
2020
|
|
|
2,748
|
|
2021 2025
|
|
|
17,706
|
|
|
|
|
|
|
Total
|
|
|
32,757
|
|
|
|
|
|
|
The fair value of the plan assets, by category, as of December 31, 2015 and 2014 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
Pooled Funds
(1)
|
|
|
52,150
|
|
|
|
66,563
|
|
Mutual Funds
(2)
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
11,089
|
|
|
|
7,343
|
|
Debt securities
|
|
|
2,512
|
|
|
|
6,119
|
|
Real estate
|
|
|
2,929
|
|
|
|
1,530
|
|
Cash and money market
|
|
|
1,674
|
|
|
|
12,238
|
|
Other
|
|
|
2,720
|
|
|
|
3,365
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
73,075
|
|
|
|
97,158
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company does not control the investment mix or strategy of the pooled funds. The pooled funds guarantee a
minimum rate of return. If actual investment returns are less than the guarantee minimum rate, then the providers statutory reserves are used to top up the shortfall. The pooled funds primarily invest in hold to maturity bonds, real estate and
other fixed income investments, which are expected to provide a stable rate of return.
|
(2)
|
The mutual funds primary aim is to provide investors with an exposure to a diversified mix of predominantly
growth oriented assets (70%) with moderate to high volatility and some defensive assets (30%).
|
The
investment strategy for all plan assets is generally to actively manage a portfolio that is diversified among asset classes, markets and regions. Certain of the investment funds do not invest in companies that do not meet certain socially
responsible investment criteria. In addition to diversification, other risk management strategies employed by the investment funds include gradual implementation of portfolio adjustments and hedging currency risks.
The Companys plan assets are primarily invested in commingled funds holding equity and debt securities, which are valued
using the net asset value (or
NAV)
provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares or units outstanding.
Commingled funds are classified within Level 2 of the fair value hierarchy as the NAVs are not publicly available.
F-47
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
The Company has a pension committee that is comprised of various members of
senior management. Among other things, the Companys pension committee oversees the investment and management of the plan assets, with a view to ensuring the prudent and effective management of such plans. In addition, the pension committee
reviews investment manager performance results annually and approves changes to the investment managers.
The weighted
average assumptions used to determine benefit obligations at December 31, 2015 and 2014 were as follows:
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
Discount rates
|
|
3.0%
|
|
2.9%
|
Rate of compensation increase
|
|
3.4%
|
|
4.2%
|
The weighted average assumptions used to determine net pension expense for the years ended
December 31, 2015, 2014 and 2013 were as follows:
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2015
$
|
|
Year Ended
December 31,
2014
$
|
|
Year Ended
December 31,
2013
$
|
Discount rates
|
|
3.0%
|
|
2.9%
|
|
3.9%
|
Rate of compensation increase
|
|
3.4%
|
|
4.2%
|
|
4.7%
|
Expected long-term rates of return
(1)
|
|
4.0%
|
|
4.0%
|
|
4.8%
|
(1)
|
To the extent the expected return on plan assets varies from the actual return, an actuarial gain or loss
results. The expected long-term rates of return on plan assets are based on the estimated weighted-average long-term returns of major asset classes. In determining asset class returns, the Company takes into account long-term returns of major asset
classes, historical performance of plan assets, as well as the current interest rate environment. The asset class returns are weighted based on the target asset allocations.
|
23.
|
Equity-accounted Investments
|
In December 2015, Teekay LNG entered into an agreement with National Oil & Gas Holding Authority
(or
Nogaholding
), Samsung C&T (or
Samsung
) and Gulf Investment Corporation (or GIC) to form a joint venture, Bahrain LNG W.L.L. (or the
Bahrain LNG Joint Venture
), for the development of an LNG receiving and regasification
terminal in Bahrain and the supply of a FSU vessel. The Bahrain LNG Joint Venture is a joint venture between Nogaholding (30%), Teekay LNG (30%), Samsung (20%) and GIC (20%), and will comprise of an offshore LNG receiving jetty and breakwater,
an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility with a total LNG terminal capacity of 800 million standard cubic feet per day
and will be owned and operated under a twenty-year agreement commencing in mid-2018 with a fully-built up cost of approximately $872 million. Teekay LNG will supply the FSU vessel, which will be modified specifically from one of the nine MEGI LNG
newbuildings through a twenty year time-charter contract (see Note 3a).
In October 2014, Teekay Offshore sold a 1995-built
shuttle tanker, the
Navion Norvegia,
to the OOG-TK Libra GmbH & Co KG (or
Libra Joint Venture
), a 50/50 joint venture with OOG. The vessel is committed to a new FPSO unit conversion for the Libra field located in the Santos
Basin offshore Brazil. The conversion project will be completed at Sembcorp Marines Jurong Shipyard in Singapore and the FPSO unit is scheduled to commence operations in early-2017 under a 12-year fixed-rate contract with Petrobras (see Note
16b).
In July 2014, Teekay LNG, through a new 50/50 joint venture, the Yamal LNG Joint Venture, ordered six
internationally-flagged icebreaker LNG carriers for the Yamal LNG Project. The Yamal LNG Project is a joint venture between Russia-based Novatek OAO (60%), France-based Total S.A. (20%) and China-based CNPC (20%), and will consist of three LNG
trains with a total expected capacity of 16.5 million metric tons of LNG per annum and is currently scheduled to start-up in early-2018 (see Note 3e).
In June 2014, Teekay LNG acquired from BG its ownership interests in four 174,000-cubic meter Tri-Fuel Diesel Electric LNG
carrier newbuildings, which will be constructed by Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. in China for an estimated total fully built-up cost to the joint venture of approximately $1.0 billion. The vessels, upon delivery, which are scheduled
between September 2017 and January 2019, will each operate under 20-year fixed-rate time-charter contracts, plus extension options, with Methane Services Limited, a wholly-owned subsidiary of BG (see Note 3f).
In January 2014, Teekay and Teekay Tankers formed
TIL, which seeks to opportunistically acquire, operate and sell modern second-hand tankers to benefit from an expected recovery in the current cyclical low of the tanker market. Teekay and Teekay Tankers in the aggregate purchased 5.0 million
shares of common stock, representing an initial 20% interest in TIL, as part of a $250 million private placement by TIL, which represents a total investment by Teekay and Teekay Tankers of $50.0 million. In October 2014, Teekay Tankers acquired an
additional 0.9 million common shares in TIL, representing 2.43% of the then outstanding share capital of TIL. In October 2014, TIL authorized a share repurchase program for up to $30 million and in September 2015, TIL authorized an increase in
its share repurchase program to $60 million. As of December 31, 2015, TIL has repurchased $55.8 million at an average price of NOK 93.97 per share. The Companys combined interests of Teekay and Teekay Tankers in TIL were 17.62% as at
December 31, 2015. (see Note 3h).
F-48
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
In June 2013, Teekay Offshore completed the acquisition from Teekay of its
50% interest in a FPSO unit, the
Cidade de Itajai
(or
Itajai
). The
Itajai
FPSO has been operating on the Baúna and Piracaba (previously named Tiro and Sidon) fields in the Santos Basin offshore Brazil since February 2013
under a nine-year fixed-rate time-charter contract, plus extension options, with Petrobras. The remaining 50% interest in the
Itajai
FPSO unit is owned by OOG.
In February 2013, Teekay LNG entered into a joint venture agreement with Exmar to own and charter-in LPG carriers with a
primary focus on the mid-size gas carrier segment. Exmar LPG BVBA (or the
Exmar LPG Joint Venture)
, took economic effect as of November 1, 2012 and, as of December 31, 2015, its fleet included 20 owned LPG carriers (including seven
newbuilding carriers scheduled for delivery between 2015 and 2018) and two chartered-in LPG carriers. For Teekay LNGs 50% ownership interest in the joint venture, including newbuilding payments made prior to the November 1, 2012 economic
effective date of the joint venture, Teekay LNG invested $133.1 million in exchange for equity and a shareholder loan and assumed approximately $108 million of its pro rata share of existing debt and lease obligations as of the economic effective
date. These debt and lease obligations are secured by certain vessels in the Exmar LPG Joint Venture fleet. The excess of the book value of net assets acquired over Teekay LNGs investment in the Exmar LPG Joint Venture, which amounted to
approximately $6.0 million, has been accounted for as an adjustment to the value of the vessels, charter agreements and lease obligations of the Exmar LPG Joint Venture and recognition of goodwill, in accordance with the final purchase price
allocation. Control of the Exmar LPG Joint Venture is shared equally between Exmar and Teekay LNG. Teekay LNG accounts for its investment in the Exmar LPG Joint Venture using the equity method.
Teekay LNG has a 52% ownership interest in the joint venture between Marubeni Corporation and Teekay LNG (or the
Teekay
LNG-Marubeni Joint Venture
), which owns six LNG carriers. Since control of the Teekay LNG-Marubeni Joint Venture is shared jointly between Marubeni and Teekay LNG, Teekay LNG accounts for its investment in the Teekay LNG-Marubeni Joint Venture
using the equity method.
Teekay LNG has a 33% ownership interest in four newbuilding 160,400-cubic meter LNG carriers (or
the
Angola LNG Carriers
). The Angola LNG Carriers are chartered at fixed rates to the Angola LNG Project. The High-Q Joint Venture is a joint venture arrangement between Teekay Tankers and Wah Kwong Maritime Transport Holdings Limited (or
Wah Kwong
) whereby Teekay Tankers holds a 50% interest. SkaugenPetrotrans Joint Venture is a joint venture arrangement between Teekay and I.M. Skaugen Marine Services Pte Ltd. whereby Teekay holds a 50% interest. Teekay has a joint venture
interest of 49% in Remora AS, a Norway-based offshore marine technology company from which Teekay Offshore acquired a 2010-built
HiLoad DP
unit. The RasGas 3 Joint Venture is a joint venture arrangement between Teekay LNG and QGTC Nakilat
(1643-6) Holdings Corporation whereby Teekay LNG holds a 40% interest. The RasGas 3 Joint Venture owns four LNG carriers and related long-term fixed-rate time charters to service the expansion of a LNG project in Qatar. Teekay LNG has ownership
interests ranging from 49% to 50% in its joint ventures with Exmar (or the
Exmar LNG Joint Venture
) which owns two LNG carriers that are chartered out under long term contracts.
In November 2011, Teekay acquired a 40% interest in a recapitalized Sevan for approximately $25 million. Sevan owns
(i) two partially-completed hulls available for upgrade to FPSOs or other offshore projects; (ii) a licensing agreement with ENI SpA; (iii) an engineering and offshore project development business; and (iv) intellectual property
rights, including offshore unit design patents. As of December 31, 2015, the aggregate value of the Companys 43% interest (43% interest December 31, 2014) in Sevan, based on the quoted market price of Sevans common stock
on the Oslo Stock Exchange, was $44.9 million ($61.4 million December 31, 2014).
A condensed summary of the
Companys investments in equity-accounted investees by segment are as follows (in thousands of U.S. dollars, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31,
|
|
Investments in Equity-accounted Investees
(1)
|
|
Ownership
Percentage
|
|
2015
$
|
|
|
2014
$
|
|
Teekay Offshore - Offshore Production
|
|
|
|
|
|
|
|
|
|
|
Libra Joint Venture
|
|
50%
|
|
|
17,952
|
|
|
|
413
|
|
Itajai
|
|
50%
|
|
|
59,692
|
|
|
|
59,764
|
|
Teekay LNG - iquefied Gas
|
|
|
|
|
|
|
|
|
|
|
Angola LNG Carriers
|
|
33%
|
|
|
56,203
|
|
|
|
47,863
|
|
BG
(note 3f)
|
|
20% - 30%
|
|
|
25,574
|
|
|
|
20,704
|
|
Exmar LNG Joint Venture
|
|
50%
|
|
|
77,844
|
|
|
|
99,541
|
|
Exmar LPG Joint Venture
|
|
50%
|
|
|
163,730
|
|
|
|
209,367
|
|
RasGas3 Joint Venture
|
|
40%
|
|
|
160,684
|
|
|
|
145,764
|
|
Teekay LNG - Marubeni Joint Venture
|
|
52%
|
|
|
283,589
|
|
|
|
274,431
|
|
Yamal LNG Joint Venture
(note 3e)
|
|
50%
|
|
|
100,084
|
|
|
|
96,791
|
|
Teekay Tanker - Conventional Tankers
|
|
|
|
TIL
(note 3h)
|
|
10%
|
|
|
44,195
|
|
|
|
36,907
|
|
High-Q Joint Venture
|
|
50%
|
|
|
21,166
|
|
|
|
18,948
|
|
Teekay Parent - Offshore Production
|
|
|
|
|
|
|
|
|
|
|
Sevan
|
|
43%
|
|
|
22,581
|
|
|
|
34,985
|
|
Itajai
|
|
|
|
|
|
|
|
|
12,781
|
|
Teekay Parent - Conventional Tankers
|
|
|
|
|
|
|
|
|
|
|
TIL
(note 3h)
|
|
7%
|
|
|
34,224
|
|
|
|
29,043
|
|
Other
|
|
50%
|
|
|
16,072
|
|
|
|
32,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,083,590
|
|
|
|
1,120,093
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Investments in equity-accounted investees is presented under current portion of loans to equity-accounted
investees, loans to equity-accounted investees, equity-accounted investments and accrued liabilities in the Companys consolidated balance sheets.
|
F-49
TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)
A condensed summary of the Companys financial information for equity-accounted
investments (16% to 52% owned) shown on a 100% basis are as follows:
|
|
|
|
|
|
|
|
|
|
|
As at December 31,
|
|
|
|
2015
|
|
|
2014
(1)
|
|
Cash and restricted cash
|
|
|
386,727
|
|
|
|
434,833
|
|
Other assets - current
|
|
|
162,414
|
|
|
|
249,882
|
|
Vessels and equipment
|
|
|
3,936,718
|
|
|
|
3,329,796
|
|
Net investment in direct financing leases
|
|
|
1,813,991
|
|
|
|
1,850,279
|
|
Other assets - non-current
|
|
|
80,987
|
|
|
|
132,849
|
|
|
|
|
Current portion of long-term debt and obligations under capital lease
|
|
|
345,336
|
|
|
|
521,148
|
|
Other liabilities - current and obligations under capital lease
|
|
|
162,076
|
|
|
|
217,180
|
|
Long-term debt and obligations under capital lease
|
|
|
3,459,187
|
|
|
|
2,906,560
|
|
Other liabilities - non-current
|
|
|
447,947
|
|
|
|
459,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2015
|
|
|
2014
(1)
|
|
|
2013
(2)
|
|
Revenues
|
|
|
985,318
|
|
|
|
998,655
|
|
|
|
940,156
|
|
Income from vessel operations
|
|
|
433,023
|
|
|
|
454,135
|
|
|
|
328,430
|
|
Realized and unrealized (loss) gain on derivative instruments
|
|
|
(38,955
|
)
|
|
|
(58,884
|
)
|
|
|
16,334
|
|
Net income
|
|
|
275,259
|
|
|
|
300,837
|
|
|
|
288,550
|
|
Certain of the comparative figures have been adjusted to conform to the presentation adopted
in the current year.
(1)
|
The results included for TIL are from the date of incorporation in January 2014.
|
(2)
|
The results included for the Exmar LPG BVBA are from the date of acquisition in February 2013.
|
For the year ended December 31, 2015, the Company recorded equity income of $102.9 million (2014
$128.1 million and 2013 - $136.5 million). The income was primarily comprised of the Companys share of net income (loss) from the Teekay LNG-Marubeni Joint Venture, Angola LNG Project, the RasGas
3
Joint Venture, Sevan, Exmar LNG
Joint Venture, Exmar LPG BVBA, and from the interest in the Itajai. For the year ended December 31, 2015, $5.9 million of the equity gain related to the Companys share of unrealized gain (loss) on interest rate swaps associated with these
projects (2014 $1.1 million and 2013 - $31.2 million).
|
a)
|
In January 2016, Teekay Tankers entered into a new $894.4 million long-term debt facility, consisting of both
a term loan and a revolving credit facility, which is scheduled to mature in January 2021, of which $845.8 million was used to repay Teekay Tankers two bridge loan facilities, which matured in late January 2016, and Teekay Tankers main
corporate revolving credit facility, which was scheduled to mature in 2017.
|
|
b)
|
In February 2016, a special committee of the Board of Directors of Sevan advised that they had initiated a
review of the legality of agreements between Sevan, CeFront and Teekay Offshore. Please read Note 16c Commitments and Contingencies Legal Proceedings and Claims Claims by Minority Shareholders of Sevan.
|
|
c)
|
In March 2016, Petrobras claimed that Teekay Offshore should have reduced the rate of the FPSO charter
contract relating to the
Piranema
Spirit
by 2%. Please read Note 16c Commitments and Contingencies Legal Proceedings and Claims
Piranema
Spirit
FPSO Contract.
|
|
d)
|
In March 2016, a class action complaint was filed in the U.S. District Court for the District of Connecticut
against the Company and certain of its officers. Please read Note 16c Commitments and Contingencies Legal Proceedings and Claims Class Action Complaint.
|
|
e)
|
On April 21, 2016, during the process to lift off the gangway connecting the
Arenda
l
Spirit
UMS to the P48 FPSO, the gangway of the
Arenda
l
Spirit
suffered damage. The Company is currently assessing options to have the gangway repaired or replaced. The financial impact is
uncertain at this early stage; however, it is possible this event may result in the
Arendal
Spirit
being off-hire for an extended period of time and may result in the charterers contract termination option becoming
exercisable in mid-2016, should the
Arendal
Spirit
remain off-hire until that time.
|
F-50
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