UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________

FORM 6-K
_________________________

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

Date of Report: August 13, 2020

Commission file number 1- 12874
_________________________

TEEKAY CORPORATION
(Exact name of Registrant as specified in its charter)
_________________________

Suite 2000 - 550 Burrard Street, Bentall 5, Vancouver, BC V6C 2K2 Canada
(Address of principal executive offices)
_________________________

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ý            Form 40- F ¨
 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
 Yes ¨            No ý
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).
Yes ¨            No ý
















 


1

Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com



Item 1 — Information Contained in this Form 6-K Report

Attached as Exhibit 1 is a copy of an announcement of Teekay Corporation dated August 13, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
TEEKAY CORPORATION
 
 
Date: August 13, 2020
By:
 
/s/ Vincent Lok
 
 
 
Vincent Lok
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)



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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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TEEKAY CORPORATION REPORTS
SECOND QUARTER 2020 RESULTS
Highlights
GAAP net income attributable to shareholders of Teekay of $21.7 million, or $0.21 per share, and adjusted net income attributable to shareholders of Teekay(1) of $39.7 million, or $0.39 per share, in the second quarter of 2020 (excluding items listed in Appendix A to this release).
Total adjusted EBITDA(1) of $315.9 million in the second quarter of 2020, a 61 percent increase over the same period of the prior year.
Reduced consolidated net debt by over $267 million in the second quarter of 2020; and total consolidated liquidity position of approximately $940 million as of June 30, 2020.
Teekay Parent received $67 million of cash related to the previously-announced new Foinaven FPSO contract in April 2020; eliminated all of its remaining Teekay Tankers debt guarantees as a result of Teekay Tankers' debt refinancing in August 2020; and secured commitments for a new equity margin revolver at substantially similar terms to refinance its undrawn December 2020 debt maturity, subject to final documentation.
Teekay LNG reported another record-high adjusted net income in the second quarter of 2020.
Teekay Tankers delivered nine vessels onto previously announced time charter-out contracts, increasing the percentage of the fleet on fixed-rate charters to approximately 23 percent and reducing its spot fleet free cash flow breakeven rate to $12,700 per day(3) through mid-2021.

Vancouver, Canada, August 13, 2020 - Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported results for the second quarter ended June 30, 2020. These results include the Company’s two publicly-listed consolidated subsidiaries, Teekay LNG Partners L.P. (Teekay LNG) (NYSE:TGP) and Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK) (collectively, the Daughter Entities), and all remaining subsidiaries and equity-accounted investments. Teekay, together with its subsidiaries other than the Daughter Entities, is referred to in this release as Teekay Parent. Please refer to the second quarter 2020 earnings releases of Teekay LNG and Teekay Tankers, which are available on Teekay's website at www.teekay.com, for additional information on their respective results.

Financial Summary
 
 
Three Months Ended
 
June 30,
March 31,
June 30,
 (in thousands of U.S. dollars, except per share amounts)
2020
2020
2019 (2)
(unaudited)
(unaudited)
(unaudited)
TEEKAY CORPORATION CONSOLIDATED
  

  

GAAP FINANCIAL COMPARISON






Revenues
482,805

574,054

462,397

Income from vessel operations
148,504

128,896

71,463

Equity income (loss)
35,343

2,313

(6,284
)
Net income (loss) attributable to
 
 
 
 
shareholders of Teekay
21,723

(49,805
)
(39,485
)
Earnings (loss) per share attributable to
 
 
 
 
shareholders of Teekay
0.21

(0.49
)
(0.39
)
NON-GAAP FINANCIAL COMPARISON






Total adjusted revenues (1)
592,658

681,353

532,138

Total adjusted EBITDA (1)
315,869

342,198

196,609

Adjusted net income (loss) attributable
 
 
 
 
to shareholders of Teekay (1)
39,713

25,259

(13,368
)
Adjusted net income (loss) per share
 
 
 
 
attributable to shareholders of Teekay (1)
0.39

0.25

(0.13
)
TEEKAY PARENT




  

NON-GAAP FINANCIAL COMPARISON






Teekay Parent adjusted EBITDA (1)
9,716

5,139

3,427

Total Teekay Parent free cash flow (1)
(1,886
)
52,689

(6,427
)


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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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(1)
These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP).
(2)
Comparative balances relating to the three months ended June 30, 2019 have been recast to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and Form 6-K for the three and six months ended June 30, 2020.
(3)
Please refer to “Definitions and Non-GAAP Financial Measures” for definition of free cash flow in the Teekay Tankers Second Quarter of 2020 earnings release. The figures also includes expenditures for drydock and ballast water treatment system installation.
CEO Commentary

“In the second quarter of 2020, we reported our third consecutive quarterly adjusted profit, recording consolidated adjusted net income of $39.7 million, or $0.39 per share, and increasing our total adjusted EBITDA by approximately $119 million, or 61 percent, from the same period of last year,” commented Kenneth Hvid, Teekay’s President and Chief Executive Officer. “While COVID-19 continues to have an unprecedented impact on the world and is a major focus for us, Teekay’s fleet has experienced minimal operational impact. As a result of the pandemic, the overall maritime industry has experienced significant challenges related to crew changes, but I am pleased to report that we have safely changed-out a number of crew members on effectively all our vessels. We continue to work hard with both the industry and inter-governmental organizations to tackle this challenge and bring our remaining overdue colleagues home safely as soon as possible. I am truly proud of how our seafarers and onshore colleagues have responded to ensure safe and successful transitions with no reported COVID-19 cases, while providing uninterrupted service to our customers.”

“Our strong second quarter results can be attributed to solid earnings in each of our businesses. Teekay LNG reported another quarterly record-high in adjusted net income and total adjusted EBITDA; Teekay Tankers experienced another quarter of strong spot tanker rates; and our directly-owned FPSO unit operating results improved as a result of the new bareboat charter contract on the Foinaven FPSO unit, which eliminated our exposure to the previous loss-making contract,” commented Mr. Hvid. “Looking ahead to next quarter, we expect Teekay LNG will continue earning stable cash flows as a result of its LNG fleet being 100 percent fixed through the rest of 2020. At Teekay Tankers, the spot tanker market has come under pressure since mid-May 2020 following three quarters of very strong spot tanker rates. The near-term outlook for the tanker business is uncertain at this point, but we are pleased to have significantly reduced our effective free cash flow breakevens and near-term spot exposure by locking-in 23 percent of the tanker fleet on fixed-rate contracts at attractive rates, and we are encouraged by the fleet supply fundamentals which are favorable relative to prior market cycles. In addition, the Banff FPSO unit ceased production on its field in June 2020 and we have commenced the various decommissioning and subsea remediation procedures on the field. The FPSO unit is expected to leave the Banff field during the third quarter of 2020 and prepare for recycling by the end of the year with the remaining subsea remediation work expected to be carried out in the summer of 2021.”

“We continue to execute on our delevering path and further simplifying our structure,” commented Mr. Hvid. “During the quarter, we reduced our consolidated net debt by over $267 million as a result of strong cash flows, proceeds from asset sales and cash received from the new Foinaven FPSO unit contract. Over the past year, we have reduced our consolidated net debt by approximately $887 million, or 20 percent. In addition, with the recent refinancing of four of Teekay Tankers’ Suezmax tankers, we have eliminated all of our remaining guarantees of Teekay Tankers’ debt. As announced in May, we also eliminated the incentive distribution rights we held in Teekay LNG in exchange for 10.75 million newly-issued Teekay LNG common units.”

Mr. Hvid added, “With our balance sheets continuing to strengthen, extensive contracted revenues at Teekay LNG and higher contracted revenue at Teekay Tankers, and no committed growth capital expenditures or significant near-term debt maturities, we have made significant progress in both insulating our companies from near-term market volatility and positioning the Teekay Group to create long-term shareholder value and remain a leader in shaping the future of marine energy transportation.”






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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Summary of Results
Teekay Corporation Consolidated
The Company's consolidated results during the quarter ended June 30, 2020 improved compared to the same period of the prior year, primarily due to: higher average spot tanker rates earned by Teekay Tankers in the second quarter of 2020; higher earnings in Teekay LNG due to earnings from six liquefied natural gas (LNG) carrier newbuildings which delivered into its consolidated fleet and equity-accounted joint ventures last year, and higher earnings by certain of Teekay LNG's joint ventures as their individual projects commenced or certain of their vessels commenced charters at, or earned, higher rates; improved results from the commencement of the Foinaven FPSO unit's new bareboat charter in late-March 2020; and fewer dry docking and off-hire days in the second quarter of 2020. These improvements were partially offset by Teekay Tankers' sale of four Suezmax tankers during December 2019 and the first quarter of 2020, as well as the sale of the non-US portion of the ship-to-ship support services business and its LNG terminal management business in the second quarter of 2020; a reduction in Teekay LNG's earnings following the sale of two LNG carriers in early-2020; and a reduction in the Banff FPSO unit's earnings due to the decommissioning of the Banff oil field, which commenced on June 1, 2020, and lower oil price tariffs earned due to lower oil prices in the second quarter of 2020.

In addition, consolidated GAAP net income was positively impacted in the three months ended June 30, 2020, compared to the same quarter of the prior year, by various items, including a reduction in freight tax accruals in the second quarter of 2020, losses of $10.7 million and $7.8 million recognized in the second quarter of 2019 relating to the repurchase of Teekay's 8.5% senior notes due 2020 (the 2020 Notes) and the sale of Teekay Parent's remaining investment in Altera Infrastructure L.P. (or Altera), respectively, as well as a $3.1 million gain recognized on Teekay Tankers' sale of the non-US portion of the ship-to-ship support services business and its LNG terminal management business in the second quarter of 2020. These items were partially offset by a $13.6 million provision in the second quarter of 2020 relating to an adjustment in the Banff FPSO unit's estimated asset retirement obligation and the write-down of the unit's remaining residual value. The Banff FPSO unit's estimated asset retirement obligation relating to the remediation of the subsea infrastructure, net of a customer receivable of $8.1 million, was $43.9 million as of June 30, 2020 (excluding remaining operating expenses and recycling costs relating to the FPSO unit).

Teekay Parent

Total Teekay Parent Free Cash Flow(1) was negative $1.9 million during the second quarter of 2020, compared to negative $6.4 million for the same period of the prior year, primarily due to: the elimination of the operating losses on the Foinaven FPSO unit as a result of the commencement of the new bareboat contract at the end of the first quarter of 2020; higher distributions received from Teekay LNG as a result of Teekay LNG's 32 percent increase in its quarterly cash distributions in May 2020 and the newly-issued Teekay LNG common units Teekay Parent received as consideration for the Teekay LNG incentive distribution rights (IDR) transaction completed in May 2020; and lower net interest expense(1) as a result of the repurchase of unsecured bonds over the past year and the bond refinancing completed in May 2019. These increases are partially offset by: higher general and administrative costs incurred in the second quarter of 2020 mainly due to a change in timing of the annual equity-based compensation grants in 2020 and professional fees associated with the IDR transaction; and lower contribution from the Banff FPSO unit due to the decommissioning of the Banff oil field, which commenced on June 1, 2020, and lower oil price tariffs earned due to lower oil prices in the second quarter of 2020.
Please refer to Appendix D of this release for additional information about Teekay Parent's Free Cash Flow(1).



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


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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Summary Results of Daughter Entities
Teekay LNG
Teekay LNG’s net income and adjusted net income(1) and total adjusted EBITDA(1) for the three months ended June 30, 2020, compared to the same quarter of the prior year, were positively impacted by: earnings from six LNG carrier newbuildings which delivered into Teekay LNG's consolidated fleet and equity-accounted joint ventures last year; fewer dry docking and repair off-hire days; and higher earnings by certain of Teekay LNG's joint ventures as their individual projects commenced or certain of their vessels commenced charters at, or earned, higher rates. These increases were partially offset by a reduction in earnings as a result of the sales of two LNG carriers in January 2020, and an oil tanker in October 2019.

Please refer to Teekay LNG's second quarter 2020 earnings release for additional information on the financial results for this entity.

Teekay Tankers

Teekay Tankers' net income, adjusted net income(1), and total adjusted EBITDA(1) for the three months ended June 30, 2020 significantly increased compared to the same period of the prior year, primarily due to higher average spot tanker rates and fewer off-hire days in the second quarter of 2020. These increases were partially offset by the sale of four Suezmax tankers during December 2019 and the first quarter of 2020, as well as the sale of the non-US portion of the ship-to-ship support services business and the LNG terminal management business in the second quarter of 2020.

In addition, GAAP net income was positively impacted in the three months ended June 30, 2020, compared to GAAP net loss for the same quarter of the prior year, as a result of a $15.2 million reduction in freight tax accruals and a $3.1 million gain on sale of assets.

Spot tankers rates have come under pressure since mid-May 2020 as a result of the unwinding of floating storage and record OPEC+ production cuts, in addition to lower non-OPEC production, which reduced crude exports. Teekay Tankers has so far secured spot tanker rates for its Suezmax and Aframax-sized vessels of $24,800 per day and $15,200 per day, based on 57 percent and 47 percent of the available spot revenue days fixed to-date in the third quarter of 2020, respectively, compared to $46,500 per day and $29,600 per day in the second quarter of 2020, respectively.

Please refer to Teekay Tankers' second quarter 2020 earnings release for additional information on the financial results for this entity.













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


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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Summary of Recent Events
Teekay Parent

In July 2020, Teekay Parent secured commitments for a two-year equity margin revolver of up to $150 million to refinance its existing facility, which is currently undrawn and scheduled to mature in December 2020. The new revolver, which has substantially similar terms to the existing facility, is expected to be closed in August 2020 and remains subject to final documentation.
Teekay LNG

In July 2020, Teekay LNG entered into a new commercial management agreement with the current manager of its seven wholly-owned multi-gas vessels. The new agreement has a two-year term commencing in September 2020 and is in direct continuation of the expiry of the current commercial management agreement.

In May 2020, Teekay Parent and Teekay LNG eliminated all of Teekay LNG's IDRs held by Teekay LNG's general partner (the General Partner) in exchange for 10.75 million newly-issued Teekay LNG common units. Following the completion of this transaction on May 11, 2020, Teekay Parent now beneficially owns approximately 36 million of Teekay LNG's common units and remains the sole owner of the General Partner, which together represents an economic interest of approximately 42 percent in Teekay LNG.

In May 2020, on maturity, Teekay LNG repaid its 1 billion Norwegian Krone (NOK) -denominated bonds and the associated cross currency swap arrangement. This repayment amounted to $111 million, net of $23 million of cash collateral released on the associated cross currency swap.

In May 2020, Teekay LNG's 52 percent-owned joint venture with Marubeni Corporation (the MALT Joint Venture) chartered the Marib Spirit LNG carrier to an international trading company for a period of six months, which commenced in mid-June 2020.

In April 2020, the MALT Joint Venture secured new charters for the Arwa Spirit and the Methane Spirit LNG carriers for periods of twelve and eight months, respectively. The new charters commenced upon completion and in direct continuation of their existing charters in May and July 2020, respectively.

Teekay Tankers

In August 2020, Teekay Tankers secured a new three-year, $67 million term loan to refinance four Suezmax tankers. The proceeds from the new debt facility along with existing cash are expected to be used to repay approximately $85 million outstanding on Teekay Tankers' existing debt facility with respect to these vessels that was scheduled to mature in 2021. The new facility is priced at LIBOR plus 225 basis points and matures in 2023.

In late-April 2020, Teekay Tankers closed the previously announced sale of a portion of its oil and gas ship-to-ship transfer support business, which also provides gas terminal management and consulting services, for approximately $27.1 million, of which approximately $14.3 million was received in May 2020 with the remaining cash received in July 2020. During the second quarter of 2020, Teekay Tankers recognized a gain of $3.1 million from this transaction. Teekay Tankers retained its entire Full Service Lightering business that operates in the U.S. Gulf, which provides ship-to-ship oil transfers for both U.S. crude imports and exports. In addition, Teekay Tankers will continue to operate oil ship-to-ship transfer support services in North America and the Caribbean, a business that has synergies with its core Full Service Lightering business.




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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Liquidity
As at June 30, 2020, Teekay Parent had total liquidity of approximately $165.5 million (consisting of $66.9 million of cash and cash equivalents and $98.6 million of undrawn capacity from a revolving credit facility), up from Teekay Parent liquidity of $87.1 million as at March 31, 2020.
On a consolidated basis, Teekay had consolidated total liquidity of approximately $939.4 million (consisting of $461.2 million of cash and cash equivalents and $478.2 million of undrawn capacity from its revolving credit facilities), up from total consolidated liquidity of $827.9 million as at March 31, 2020.
Conference Call
The Company plans to host a conference call on Thursday, August 13, 2020 at 11:00 a.m. (ET) to discuss its results for the second quarter of 2020. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:

• By dialing (800) 367-2403 or (647) 490-5367, if outside North America, and quoting conference ID code 2738323.

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

An accompanying Second Quarter 2020 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
 
About Teekay
Teekay is a leading provider of international crude oil and gas marine transportation services and also provides offshore production. Teekay provides these services primarily through its directly-owned fleet and its controlling ownership interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the world’s largest independent owners and operators of LNG carriers, and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest owners and operators of mid-sized crude tankers. The consolidated Teekay entities manage and operate total assets under management of approximately $10 billion, comprised of approximately 140 liquefied gas, offshore, and conventional tanker assets. With offices in 10 countries and approximately 5,500 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies.

Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.
For Investor Relations enquiries contact:
Ryan Hamilton
Tel: +1 (604) 609-2963
Website: www.teekay.com



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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission (SEC). These non-GAAP financial measures, which include Adjusted Net Income (Loss) Attributable to Shareholders of Teekay, Teekay Parent Free Cash Flow, Total Adjusted Revenues, Net Interest Expense, Adjusted Equity Income and Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings across companies, and therefore may not be comparable to similar measures presented by other companies. The Company believes that certain investors use this information to evaluate the Company’s financial performance, as does management.
Non-GAAP Financial Measures
Total Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, foreign exchange gain (loss), items included in other (loss) income, write-down and gain (loss) on sale, gain on commencement of sales-type lease, equipment and other operating assets, adjustments for direct financing and sales-type leases to a cash basis, amortization of in-process revenue contracts, unrealized (losses) gains on derivative instruments, realized losses on interest rate swaps, realized losses on interest rate swap amendments and terminations, unrealized credit loss adjustments, write-downs related to equity-accounted investments, and our share of the above items in non-consolidated joint ventures which are accounted for using the equity method of accounting.
Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Company's financial statements. Adjusted EBITDA from Equity-Accounted Vessels represents the Company's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Company holds the equity-accounted investments or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners. Total Adjusted EBITDA represents Consolidated Adjusted EBITDA plus Adjusted EBITDA from Equity-Accounted Joint Ventures. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to Appendices C and E of this release for reconciliations of Adjusted EBITDA to net income (loss) and equity (loss) income, respectively, which are the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.
Total Adjusted Revenues represents the Company's revenues from its consolidated vessels, as shown in the Company's Consolidated Statements of Income (Loss), and its proportionate ownership percentage of the revenues from its equity-accounted joint ventures, as shown in Appendix E of this release, and commencing in 2020, less the Company's proportionate share of revenues earned directly from its equity-accounted joint ventures. Please refer to Appendix E of this release for a reconciliation of this non-GAAP financial measure to revenues and equity income, the most directly comparable GAAP measure reflected in the Company's consolidated financial statements. The Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Company holds the equity-accounted investments or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners.
Adjusted Net Income (Loss) Attributable to Shareholders of Teekay excludes items of income or loss from GAAP net income (loss) that are typically excluded by securities analysts in their published estimates of the Company’s financial results. The Company believes that certain investors use this information to evaluate the Company’s financial performance, as does management. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income (loss), and refer to footnote (6) of the statements of income (loss) for a reconciliation of adjusted equity income to equity income (loss), the most directly comparable GAAP measure reflected in the Company’s consolidated financial statements.


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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Teekay Parent Financial Measures
Teekay Parent Adjusted EBITDA represents the sum of (a) distributions or dividends (including payments-in-kind) relating to a given quarter (but received by Teekay Parent in the following quarter) as a result of ownership interests in its consolidated publicly-traded subsidiaries (Teekay LNG and Teekay Tankers) and its equity-accounted investment in Altera prior to it being sold in May 2019, net of Teekay Parent’s corporate general and administrative expenditures for the given quarter and (b) Adjusted EBITDA attributed to Teekay Parent’s directly-owned and chartered-in assets.
Teekay Parent Free Cash Flow represents Teekay Parent Adjusted EBITDA, plus upfront cash receivable in respect of a sales-type lease, less Teekay Parent’s net interest expense and, commencing in the second quarter of 2020, asset retirement costs incurred for the given quarter. Net Interest Expense includes interest expense (excluding the amortization of prepaid loan costs), interest income and realized losses on interest rate swaps. Please refer to Appendices B, C, D and E of this release for further details and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.


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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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

Three Months Ended
Six Months Ended

June 30,
March 31,
June 30,
June 30,
June 30,

2020
2020
2019 (1)
2020
2019

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
 
 
 
 
 
 
Revenues
482,805

574,054

462,397

1,056,859

949,270

 
 
 
 
 
 
Voyage expenses
(66,896
)
(121,564
)
(103,410
)
(188,460
)
(212,193
)
Vessel operating expenses
(147,796
)
(153,293
)
(162,621
)
(301,089
)
(319,613
)
Time-charter hire expense
(17,714
)
(27,056
)
(28,817
)
(44,770
)
(58,655
)
Depreciation and amortization
(62,936
)
(72,917
)
(73,849
)
(135,853
)
(145,956
)
General and administrative expenses
(23,668
)
(18,277
)
(20,868
)
(41,945
)
(43,840
)
Write-down and gain (loss) on sale of assets (2)
(10,669
)
(94,606
)

(105,275
)
(3,328
)
Gain on commencement of sales-type lease (3)

44,943


44,943


Restructuring charges (4)
(4,622
)
(2,388
)
(1,369
)
(7,010
)
(9,990
)
Income from vessel operations
148,504

128,896

71,463

277,400

155,695


 
 
 
 
 
Interest expense
(59,245
)
(62,520
)
(70,205
)
(121,765
)
(143,876
)
Interest income
2,314

2,803

2,233

5,117

4,922

Realized and unrealized loss on non-


 


 
 
   designated derivative instruments (5)
(9,270
)
(21,663
)
(10,964
)
(30,933
)
(16,387
)
Equity income (loss) (6)
35,343

2,313

(6,284
)
37,656

(67,937
)
Income tax recovery (expense) (7)
17,175

(3,792
)
(3,404
)
13,383

(8,440
)
Foreign exchange (loss) gain
(8,922
)
6,646

(5,851
)
(2,276
)
(8,481
)
Other loss – net (8)
(399
)
(681
)
(11,099
)
(1,080
)
(11,071
)
Net income (loss)
125,500

52,002

(34,111
)
177,502

(95,575
)
Net income attributable to


 


 
 
   non-controlling interests
(103,777
)
(101,807
)
(5,374
)
(205,584
)
(28,167
)
Net income (loss) attributable to the shareholders


 


 
 
   of Teekay Corporation
21,723

(49,805
)
(39,485
)
(28,082
)
(123,742
)
Earnings (loss) per common share of Teekay Corporation


 


 
 
     - Basic
$
0.21

$
(0.49
)
$
(0.39
)
$
(0.28
)
$
(1.23
)
     - Diluted
$
0.21

$
(0.49
)
$
(0.39
)
$
(0.28
)
$
(1.23
)
Weighted-average number of common shares outstanding
 
 
 
 
 
     - Basic
101,107,362
100,887,551
100,783,496
100,997,456
100,652,685
     - Diluted
101,196,383
100,887,551
100,783,496
100,997,456
100,652,685

(1)
Comparative balances relating to the three and six months ended June 30, 2019 have been recast to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and Form 6-K for the three and six months ended June 30, 2020.

(2)
Write-down and gain (loss) on sale of assets for the three months ended June 30, 2020 includes a $13.6 million provision in the second quarter of 2020 relating to an adjustment in the Banff FPSO unit's estimated asset retirement obligation and the write-down of the unit's remaining residual value, partially offset by a gain of $3.1 million on the sale of the non-US portion of Teekay Tankers' ship-to-ship support services business and its LNG terminal management business. Write-down and gain (loss) on sale for the three months ended March 31, 2020 includes write-downs of six multi-gas carriers totaling $45.0 million and write-downs of two FPSO units totaling $46.5 million.

(3)
Gain on commencement of sales-type lease for the three months ended March 31, 2020 of $44.9 million relates to the commencement of the sales-type lease for the Foinaven FPSO unit as a result of a new bareboat charter agreement.


11

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(4)
Restructuring charges for the three months ended June 30, 2020 include severance costs resulting from the expected termination of the contract for an FSO unit based in Australia, which are fully recoverable from the customer. Restructuring charges also include severance costs resulting from the reorganization and realignment of resources of the Company's shared services functions, of which a portion of the costs are recoverable from the customer, Altera. Recoverable severance costs totalling $4.5 million are presented in revenue for the three months ended June 30, 2020.

(5)
Realized and unrealized losses related to derivative instruments that are not designated in qualifying hedging relationships for accounting purposes are included as a separate line item in the consolidated statements of income (loss). The realized losses relate to the amounts the Company actually paid to settle such derivative instruments and the unrealized (losses) gains relate to the change in fair value of such derivative instruments, as detailed in the table below:
 
 
Three Months Ended
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2020
2020
2019
2020
2019
 
 
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Realized losses relating to
 
 
 
 
 
 
Interest rate swap agreements
(3,879
)
(2,677
)
(1,785
)
(6,556
)
(3,473
)
 
Stock purchase warrants (i)


(25,559
)

(25,559
)
 
Foreign currency forward contracts

(241
)

(241
)

 
Forward freight agreements
(201
)
(49
)
(29
)
(250
)
(42
)
 
 
(4,080
)
(2,967
)
(27,373
)
(7,047
)
(29,074
)
Unrealized (losses) gains relating to
 
 
 
 
 
 
Interest rate swap agreements
(5,251
)
(18,812
)
(8,195
)
(24,063
)
(14,216
)
 
Foreign currency forward contracts
53

202

(101
)
255

(101
)
 
Stock purchase warrants


24,584


26,900

 
Forward freight agreements
8

(86
)
121

(78
)
104

 
 
(5,190
)
(18,696
)
16,409

(23,886
)
12,687

Total realized and unrealized losses on derivative instruments
(9,270
)
(21,663
)
(10,964
)
(30,933
)
(16,387
)

(i)
Stock purchase warrants for the three and six months ended June 30, 2019 relates to the sale of the Company's remaining interest in Altera in May 2019. Also refer to footnote (6)(i) below.

(6)
The Company’s proportionate share of items within equity income (loss) as identified in Appendix A of this release is detailed in the table below. By excluding these items from equity income (loss) as reflected in the consolidated statements of income (loss), the Company believes the resulting adjusted equity income is a normalized amount that can be used to evaluate the financial performance of the Company’s equity-accounted investments. Adjusted equity income is a non-GAAP financial measure.
 
 
Three Months Ended
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2020
2020
2019
2020
2019
 
 
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Equity income (loss)
35,343

2,313

(6,284
)
37,656

(67,937
)
Proportionate share of unrealized losses
 
 
 
 
 
 
on derivative instruments
3,806

22,204

5,203

26,010

13,968

Loss on sale of investment in Altera (i)


7,853


72,753

Other (ii)
(61
)
8,441

1,023

8,380

1,023

Equity income adjusted for items in Appendix A
39,088

32,958

7,795

72,046

19,807


(i)
During the three and six months ended June 30, 2019, the Company recognized a loss of $7.9 million on sale of its investment in Altera to affiliates of Brookfield Business Partners L.P. (or Brookfield), which occurred in May 2019. Also refer to footnote (5)(i) above in respect of gains and losses on stock purchase warrants.
(ii)
Other for the three months ended June 30, 2020 and March 31, 2020 includes credit loss provision adjustments to the Company's financial instruments upon adoption of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13).



12

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(7)
Income tax recovery (expense) for the three and six months ended June 30, 2020 includes a reduction in freight tax accruals of $16.8 million related to periods prior to 2020.

(8)
Other loss – net for the three and six months ended June 30, 2019 includes a $10.7 million loss relating to the repurchase of the Company's 2020 Notes.



13

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Teekay Corporation
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)
 
As at June 30,
As at March 31,
As at June 30,
 
2020
2020
2019
 
(unaudited)
(unaudited)
(unaudited)
ASSETS
 

Cash and cash equivalents - Teekay Parent
66,917

48,366

74,890

Cash and cash equivalents - Teekay LNG
226,328

312,710

124,880

Cash and cash equivalents - Teekay Tankers
167,907

203,325

35,429

Assets held for sale

50,818

12,300

Accounts receivable and other current assets
318,726

359,705

424,735

Restricted cash - Teekay Parent
3,915

3,569

2,023

Restricted cash - Teekay LNG
66,147

113,528

80,308

Restricted cash - Teekay Tankers
8,203

6,755

5,353

Vessels and equipment - Teekay Parent
13,964

18,791

284,840

Vessels and equipment - Teekay LNG
2,931,602

2,959,067

3,320,937

Vessels and equipment - Teekay Tankers
1,672,976

1,676,213

1,856,766

Operating lease right-of-use assets
81,255

91,624

185,716

Net investment in direct financing and sales-type leases
554,986

625,541

564,685

Investments in and loans to equity-accounted investments
1,102,386

1,083,741

1,011,530

Other non-current assets
130,200

130,051

141,626

Total Assets
7,345,512

7,683,804

8,126,018

LIABILITIES AND EQUITY


Accounts payable and other current liabilities
441,857

427,640

397,111

Liabilities associated with assets held for sale

2,535


Short-term debt - Teekay Tankers
10,000

55,000

15,000

Current portion of long-term debt - Teekay Parent

60,000

36,663

Current portion of long-term debt - Teekay LNG
366,237

398,839

468,038

Current portion of long-term debt - Teekay Tankers
53,830

55,685

125,661

Long-term debt - Teekay Parent
354,065

351,594

345,768

Long-term debt - Teekay LNG
2,568,258

2,679,835

2,799,426

Long-term debt - Teekay Tankers
661,627

829,671

894,501

Operating lease liabilities
72,982

83,456

173,476

Other long-term liabilities
229,415

252,885

197,749

Equity:
 
 
 
Non-controlling interests
2,058,273

2,085,617

2,005,399

Shareholders of Teekay
528,968

401,047

667,226

Total Liabilities and Equity
7,345,512

7,683,804

8,126,018

 
 




 
Net debt - Teekay Parent (1)
283,233

359,659

305,518

Net debt - Teekay LNG (1)
2,642,020

2,652,436

3,062,276

Net debt - Teekay Tankers (1)
549,347

730,276

994,380


(1)
Net debt is a non-GAAP financial measure and represents short-term debt, current portion of long-term debt and long-term debt, less cash and cash equivalents, and, if applicable, restricted cash.


14

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

Six Months Ended

June 30,

2020
2019

(unaudited)
(unaudited)
Cash, cash equivalents and restricted cash provided by (used for)


OPERATING ACTIVITIES


Net income (loss)
177,502

(95,575
)
Non-cash and non-operating items:




   Depreciation and amortization
135,853

145,956

   Unrealized loss on derivative instruments
27,544

14,933

   Write-down and (gain) loss on sale
105,275

3,328

   Gain on commencement of sales-type lease
(44,943
)

   Equity (income) loss, net of dividends received
(22,804
)
85,211

   Foreign currency exchange (gain) loss and other
(7,250
)
34,744

Direct financing lease payments received
334,146

6,050

Change in operating assets and liabilities
75,978

18,427

Expenditures for dry docking
(5,608
)
(34,150
)
Net operating cash flow
775,693

178,924






FINANCING ACTIVITIES
 
 
Proceeds from issuance of long-term debt, net of issuance costs
931,871

376,658

Prepayments of long-term debt
(1,302,389
)
(759,401
)
Scheduled repayments of long-term debt
(240,355
)
(117,110
)
Proceeds from short-term debt
205,000

65,000

Prepayment of short-term debt
(245,000
)
(50,000
)
Proceeds from financing related to sales-leaseback of vessels

222,400

Repayments of obligations related to finance leases
(47,162
)
(45,928
)
Repurchase of Teekay LNG common units
(15,635
)
(12,056
)
Distributions paid from subsidiaries to non-controlling interests
(35,519
)
(30,465
)
Cash dividends paid

(5,523
)
Other financing activities
(794
)
(580
)
Net financing cash flow
(749,983
)
(357,005
)





INVESTING ACTIVITIES




Expenditures for vessels and equipment
(12,824
)
(89,120
)
Proceeds from sale of vessels and equipment
60,915


Proceeds from sale of assets, net of cash sold
12,221

100,000

Loan repayment by joint venture
3,500


Proceeds from sale of equity-accounted investments and related assets


Investment in equity-accounted investments

(15,555
)
Other investing activities
(6,430
)

Net investing cash flow
57,382

(4,675
)





Increase (decrease) in cash, cash equivalents and restricted cash
83,092

(182,756
)
Cash, cash equivalents and restricted cash, beginning of the period
456,325

505,639

Cash, cash equivalents and restricted cash, end of the period
539,417

322,883



15

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

 
Three Months Ended
Six Months Ended

 
June 30,
March 31,
June 30,


2020
2020
2020

 
(unaudited)
(unaudited)
(unaudited)
 
 
 
$ Per
 
$ Per
 
$ Per
 
 
$
Share(1)
$
Share(1)
$
Share(1)
Net income – GAAP basis
125,500

 
52,002

 
177,502

 
Adjust for: Net income attributable to

 

 
 
 
    non-controlling interests
(103,777
)
  
(101,807
)
  
(205,584
)
 
Net income (loss) attributable to




 
 

shareholders of Teekay
21,723

0.21

(49,805
)
(0.49
)
(28,082
)
(0.28
)
Add (subtract) specific items affecting net loss

 

 
 
 
 
Unrealized losses (gains) from
 
 
 
 
 
 
 
  derivative instruments(2)
8,995

0.09

40,900

0.41

49,895

0.49

 
Foreign exchange losses (gains)(3)
7,492

0.07

(8,463
)
(0.08
)
(971
)
(0.01
)
 
Banff FPSO decommissioning costs
 
 
 
 
 
 
 
net of recoveries(4)
5,854

0.06



5,854

0.06

 
Write-down and (gain) loss on sale
 
 
 
 
 
 
 
 of vessels and other assets(5)
10,669

0.11

94,606

0.94

105,275

1.04

 
Gain on commencement of sales-type lease(6)


(44,943
)
(0.45
)
(44,943
)
(0.44
)
 
Restructuring charges, net of recoveries
112


1,188

0.01

1,300

0.01

 
Other(7)
(17,598
)
(0.17
)
8,230

0.08

(9,368
)
(0.09
)
 
Non-controlling interests’ share of items above(8)
2,466

0.02

(16,454
)
(0.16
)
(13,988
)
(0.14
)
Total adjustments
17,990

0.18

75,064

0.75

93,054

0.92

Adjusted net income attributable to

 

 
 
 
 
shareholders of Teekay
39,713

0.39

25,259

0.25

64,972

0.64

(1)
Basic per share amounts.
(2)
Reflects unrealized losses (gains) relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those losses (gains) included in the Company's proportionate share of equity income (loss) from joint ventures.
(3)
Foreign currency exchange losses (gains) primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds.
(4)
In the first quarter of 2020, CNR International (U.K.) Limited (or CNR) provided formal notice to the Company of its intention to decommission the Banff field and remove the Banff FPSO and the Apollo Spirit FSO from the field in June 2020. The oil production under the existing contract for the Banff FPSO unit ceased in June 2020, and the Company has commenced decommissioning activities during the second quarter of 2020.
(5)
Refer to footnote (2) of the Consolidated Statements of Income (Loss) for additional information.
(6)
Gain on commencement of sales-type lease for the three months ended March 31, 2020 relates to the commencement of the sales-type lease for the Foinaven FPSO unit as a result of a new bareboat charter agreement.
(7)
Other for the three and six months ended June 30, 2020 includes a reduction in freight tax accruals and credit loss provision adjustments to the Company's financial instruments upon adoption of ASU 2016-13.
(8)
Items affecting net income include items from the Company’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to determine the non-controlling interests’ share of the amount. The amount identified as “Non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table.




16

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Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
(in thousands of U.S. dollars, except per share data)
 
 
Three Months Ended
Six Months Ended
 
 
June 30,
June 30,
 
 
2019
2019
 
 
(unaudited)
(unaudited)
 
 
 
$ Per
 
$ Per
 
 
$
Share(1)
$
Share(1)
Net loss – GAAP basis
(34,111
)
 
(95,575
)
 
Adjust for: Net income attributable to
 
 
 
 
    non-controlling interests
(5,374
)
 
(28,167
)
 
Net loss attributable to
 
 
 
 
 
shareholders of Teekay
(39,485
)
(0.39
)
(123,742
)
(1.23
)
Add (subtract) specific items affecting net loss
 
 
 
 
 
Unrealized (gains) losses from derivative instruments (2)
(11,206
)
(0.11
)
1,282

0.01

 
Foreign exchange losses (3)
4,764

0.05

5,960

0.06

 
Write-down and loss on sale of vessels and
 
 
 
 
 
other assets (4)
7,853

0.08

76,081

0.76

 
Restructuring charges, net of recoveries
1,369

0.01

3,527

0.04

 
Other (5)
37,329

0.37

39,327

0.39

 
Non-controlling interests’ share of items above (6)
(13,992
)
(0.14
)
(28,758
)
(0.29
)
Total adjustments
26,117

0.26

97,419

0.97

Adjusted net loss attributable to
 
 
 
 
 
shareholders of Teekay
(13,368
)
(0.13
)
(26,323
)
(0.26
)
 
 
 
 
 
 
(1)
Basic per share amounts.
(2)
Reflects unrealized (gains) losses relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those (gains) losses included in the Company's proportionate share of equity income (loss) from joint ventures.
(3)
Foreign currency exchange losses primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds.
(4)
Refer to footnote (2) of the Summary Consolidated Statements of Income (Loss) for additional information.
(5)
Other for the three and six months ended June 30, 2019 includes the realized loss on sale of stock purchase warrants in Altera and a loss on the repurchase of 2020 Notes. Other for the six months ended June 30, 2019 also includes the loan extinguishment costs related to Teekay LNG's refinancing of one of its debt facilities.
(6)
Items affecting net loss include items from the Company’s consolidated non-wholly-owned subsidiaries. The specific items affecting net loss are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to determine the non-controlling interests’ share of the amount. The amount identified as “Non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table.




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Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income for the Three Months Ended June 30, 2020
(in thousands of U.S. dollars)
(unaudited)
 
 
Teekay
Teekay
Teekay
Consolidation
Total
 
 
LNG
Tankers
Parent
Adjustments(1)

 
 
 
 
 
 
 
Revenues
148,205

246,492

88,108


482,805

 
 










Voyage expenses
(5,329
)
(61,558
)
(9
)

(66,896
)
Vessel operating expenses
(28,407
)
(46,218
)
(73,171
)

(147,796
)
Time-charter hire expense
(5,368
)
(9,296
)
(3,050
)

(17,714
)
Depreciation and amortization
(31,629
)
(29,546
)
(1,761
)

(62,936
)
General and administrative expenses
(7,883
)
(9,784
)
(6,001
)

(23,668
)
Write-down and gain on sale

2,896

(13,565
)

(10,669
)
Gain on commencement of sales-type lease





Restructuring charges


(4,622
)

(4,622
)
Income (loss) from vessel operations
69,589

92,986

(14,071
)

148,504

 










Interest expense
(35,143
)
(13,492
)
(10,667
)
57

(59,245
)
Interest income
1,697

567

107

(57
)
2,314

Realized and unrealized loss on










 
non-designated derivative instruments
(8,516
)
(589
)
(165
)

(9,270
)
Equity income
32,155

3,188



35,343

Equity in earnings of subsidiaries (2)


43,704

(43,704
)

Income tax recovery
1,804

14,598

773


17,175

Foreign exchange (loss) gain
(11,624
)
(87
)
2,789


(8,922
)
Other (loss) income – net
(679
)
1,027

(747
)

(399
)
Net income
49,283

98,198

21,723

(43,704
)
125,500

Net income attributable to
 
 
 
 
 
 
non-controlling interests (3)
(4,349
)


(99,428
)
(103,777
)
Net income attributable to shareholders/
 
 
 
 
 
 
unitholders of publicly-listed entities
44,934

98,198

21,723

(143,132
)
21,723


(1)
Consolidation Adjustments column includes adjustments which eliminate transactions between Teekay LNG, Teekay Tankers and Teekay Parent.
(2)
Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries.
(3)
Net income attributable to non-controlling interests in the Teekay LNG column represents the joint venture partners’ share of the net income of its respective consolidated joint ventures. Net income attributable to non-controlling interest in the Consolidation Adjustments column represents the public’s share of the net income of Teekay’s publicly-traded consolidated subsidiaries.








18

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Teekay Corporation
Appendix C - Supplemental Financial Information
Teekay Parent Summary Operating Results
For the Three Months Ended June 30, 2020
(in thousands of U.S. dollars)
(unaudited)
 
 
 

Teekay
 
 
 
Corporate
Parent
 
FPSOs
Other(1)
G&A
Total
 
 
 
 
 
Revenues
28,787

59,321


88,108

 






 
Voyage expenses
(9
)


(9
)
Vessel operating expenses
(24,404
)
(48,767
)

(73,171
)
Time-charter hire expense
(20
)
(3,030
)

(3,050
)
Depreciation and amortization
(1,761
)


(1,761
)
General and administrative expenses
(578
)

(5,423
)
(6,001
)
Write-down of vessels (2)
(13,565
)


(13,565
)
Restructuring charges
10

(4,632
)

(4,622
)
(Loss) income from vessel operations
(11,540
)
2,892

(5,423
)
(14,071
)
 
 

 

 

 

Depreciation and amortization
1,761



1,761

Amortization of operating lease liability
 
 

 


and other
(1,536
)
596


(940
)
Write-down of vessels (2)
13,565



13,565

Daughter Entities distributions (3)


9,401

9,401

Teekay Parent adjusted EBITDA
2,250

3,488

3,978

9,716


(1)
Includes the results of one chartered-in FSO unit owned by Altera, which is largely on a flow-through basis with Teekay Parent earning a small margin.
(2)
Write-down of vessels for the three months ended June 30, 2020 relates to write-down of the remaining residual value of the Banff FPSO unit and an adjustment to the unit's estimated asset retirement obligation. In the first quarter of 2020, CNR provided formal notice to Teekay of its intention to cease production in June 2020 and decommission the Banff field shortly thereafter. As such, the Company expects to remove the Banff FPSO and Apollo Spirit FSO from the Banff field in 2020 and the subsea equipment in 2021. The Company expects to recycle the FPSO unit and subsea equipment and redeliver the FSO unit to its owner following removal from the field.
(3)
In addition to the adjusted EBITDA generated by its directly owned and chartered-in assets, Teekay Parent also receives cash distributions from its consolidated publicly-traded subsidiary, Teekay LNG. For the three months ended June 30, 2020, Teekay Parent received cash distributions of $9.4 million from Teekay LNG, including those made with respect to its general partner interests in Teekay LNG. Distributions received for a given quarter consist of the amount of distributions relating to such quarter but received by Teekay Parent in the following quarter. Please refer to Appendix D of this release for further details.




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Teekay Corporation
Appendix D - Reconciliation of Non-GAAP Financial Measures
Teekay Parent Free Cash Flow
(in thousands of U.S. dollars, except share and per share data)
 
 
Three Months Ended
 
 
June 30,
March 31,
June 30,
 
 
2020
2020
2019
 
 
(unaudited)
(unaudited)
(unaudited)
Daughter Entities distributions to Teekay Parent (1)
  

  

  

  
Teekay LNG
  

  

  

  
Limited Partner interests (2)
8,990

6,302

4,790

  
GP interests
411

389

304

Total Daughter Entity Distributions to Teekay Parent
9,401

6,691

5,094

 
 
 
 
 
 
FPSOs
2,250

(1,448
)
(99
)
 
Other income and corporate general and administrative expenses
 
 
 
 
Other Income
3,488

2,021

1,251

 
Corporate general and administrative expenses (3)
(5,423
)
(2,125
)
(2,819
)
TEEKAY PARENT ADJUSTED EBITDA (4)
9,716

5,139

3,427

 
 
 
 
Net interest expense (5)
(8,675
)
(8,577
)
(9,854
)
Asset retirement costs incurred (6)
(2,927
)


Upfront lease payment received in excess of revenue recognized (7)

56,127


 TOTAL TEEKAY PARENT FREE CASH FLOW
(1,886
)
52,689

(6,427
)
 
  

  

  

 Weighted-average number of common shares - Basic
101,107,362
100,887,551
100,783,496

(1)
Daughter Entities dividends and distributions for a given quarter consist of the amount of dividends and distributions relating to such quarter but received by Teekay Parent in the following quarter.
(2)
Common unit distribution cash flows to Teekay Parent are based on Teekay Parent’s ownership on the ex-dividend date for its publicly-traded subsidiary Teekay LNG for the periods as follows:
 
 
Three Months Ended
 
 
June 30,
March 31,
June 30,
 
 
2020
2020
2019
 
 
(unaudited)
(unaudited)
(unaudited)
Teekay LNG
  
  
  
  
  
  
    Distribution per common unit
$
0.25

$
0.25

$
0.19

    Common units owned by
 
 
 
 
 
 
        Teekay Parent
 
35,958,274

 
25,208,274

 
25,208,274

    Total distribution
$
8,989,569

$
6,302,069

$
4,789,572


(3)
Increase in corporate general and administrative expenses for the three months ended June 30, 2020 relates primarily to a change in timing of annual equity-based compensation grants in 2020 and professional fees associated with the IDR transaction completed in May 2020.
(4)
Please refer to Appendices C and E for additional financial information on Teekay Parent’s adjusted EBITDA.
(5)
Please see Appendix E to this release for a description of this measure and a reconciliation of this non-GAAP financial measure as used in this release to interest expense net of interest income, the most directly comparable GAAP financial measure.
(6)
Relates to decommissioning activities for the Banff FPSO, which have been accrued on the balance sheet as an asset retirement obligation. Please see Appendix C footnote (2) for additional information.
(7)
Upfront lease payment relates to cash received in early April 2020 in excess of revenue recognized in the three months ended March 31, 2020, as a result of a new bareboat charter agreement relating to the Foinaven FPSO unit. Please refer to Summary Consolidated Statements of Income (Loss) for additional information.


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Teekay Corporation
Non-GAAP Financial Reconciliations


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Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Consolidated
(in thousands of U.S. dollars)
 
 
Three Months Ended
 
 
June 30,
March 31,
June 30,
 
 
2020
2020
2019
 
(unaudited)
(unaudited)
(unaudited)
Net income (loss)
125,500

52,002

(34,111
)
Depreciation and amortization
62,936

72,917

73,849

Interest expense, net of interest income
56,931

59,717

67,972

Income tax (recovery) expense
(17,175
)
3,792

3,404

EBITDA
228,192

188,428

111,114

Specific income statement items affecting EBITDA:
 
 
 
 
Write-down and (gain) loss on sale of assets
10,669

94,606


 
Gain on commencement of sales-type lease

(44,943
)

 
Adjustments for direct financing and sales-type lease to a cash basis and other
2,452

2,963

2,782

 
Realized and unrealized losses on derivative instruments
9,270

21,663

10,964

 
Realized loss from the settlements of non-designated derivative instruments
(200
)
(49
)

 
Equity (income) loss
(35,343
)
(2,313
)
6,284

 
Foreign currency exchange loss (gain)
8,922

(6,646
)
5,851

 
Other expense - net
399

681

11,099

Consolidated Adjusted EBITDA
224,361

254,390

148,094

Adjusted EBITDA from equity-accounted vessels (See Appendix E)
91,508

87,808

48,515

Total Adjusted EBITDA
315,869

342,198

196,609







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

 
June 30, 2020
March 31, 2020
June 30, 2019

 
(unaudited)
(unaudited)
(unaudited)
 
 
At
Company's
At
Company's
At
Company's
 
 
100%
Portion(1)
100%
Portion(1)
100%
Portion(1)
Revenues
266,539

115,422

260,488

113,054

174,382

74,266

Vessel and other operating expenses
(74,233
)
(32,468
)
(74,396
)
(33,336
)
(69,135
)
(30,565
)
Depreciation and amortization
(26,075
)
(13,006
)
(26,564
)
(13,441
)
(29,459
)
(14,195
)
Income from vessel operations of equity-accounted vessels
166,231

69,948

159,528

66,277

75,788

29,506

 
 
 
 
 
 
 
Net interest expense
(73,310
)
(29,465
)
(76,359
)
(30,644
)
(53,356
)
(21,467
)
Income tax recovery (expense)
225

110

(598
)
(299
)
(670
)
(246
)
Other items including realized and
 
 
 
 
 
 
 
unrealized loss on derivative
 
 
 
 
 
 
 
instruments (2)
(17,786
)
(5,250
)
(102,926
)
(33,021
)
(18,764
)
(6,224
)
Loss on sale of equity-accounted
 
 
 
 
 
 
 
 investments (3)
 

 

 
(7,853
)
Net income (loss) / equity income (loss) of equity-accounted vessels
75,360

35,343

(20,355
)
2,313

2,998

(6,284
)
 
 
 
 
 
 
 
 
Net income (loss) / equity income (loss)
 
 
 
 
 
 
 
of equity-accounted vessels
75,360

35,343

(20,355
)
2,313

2,998

(6,284
)
Depreciation and amortization
26,075

13,006

26,564

13,441

29,459

14,195

Net interest expense
73,310

29,465

76,359

30,644

53,356

21,467

Income tax (recovery) expense
(225
)
(110
)
598

299

670

246

EBITDA
174,520

77,704

83,166

46,697

86,483

29,624

Specific income statement items affecting EBITDA:
 
 
 
 
 
 
Adjustments for direct financing and sales-type lease to a cash basis
26,381

9,499

24,976

9,025

16,131

5,759

 
Amortization of in-process contracts and other
(1,738
)
(945
)
(1,718
)
(935
)
(1,736
)
(945
)
 
Other items including realized and unrealized loss on derivative instruments(2)
17,786

5,250

102,927

33,021

18,764

6,224

 
Loss on sale of equity-accounted investments (3)
 

 

 
7,853

Adjusted EBITDA from equity-accounted vessels (4)
216,949

91,508

209,351

87,808

119,642

48,515

(1)
The Company’s proportionate share of its equity-accounted vessels and other investments ranged from 20% to 52%.
(2)
For the three months ended June 30 and March 31, 2020, includes unrealized credit losses recorded upon the adoption of ASU 2016-13.
(3)
For the three months ended June 30, 2019, includes a loss on sale of the Company's investment in Altera.
(4)
Adjusted EBITDA from equity-accounted vessels represents the Company’s proportionate share of adjusted EBITDA from its equity-accounted vessels and other investments.


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

 
 
Three Months Ended
 
 
 
June 30,
March 31,
June 30,



2020
2020
2019 (1)
 
 
 
(unaudited)
(unaudited)
(unaudited)
Revenues
482,805

574,054

462,397

Proportionate share of revenues
 
 
 
 
from equity-accounted joint ventures
115,422

113,054

74,266

Less proportionate share of voyage revenues
 
 
 
 
earned directly from equity-accounted joint ventures
(5,569
)
(5,755
)
(4,525
)
Total adjusted revenues
592,658

681,353

532,138


(1)
Comparative balances relating to the three months ended June 30, 2019 have been recast to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and Form 6-K for the three and six months ended June 30, 2020.


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Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Teekay Parent
(in thousands of U.S. dollars)
 
 
Three Months Ended March 31, 2020
 
 
(unaudited)
 
 
 
 
 
 
Teekay
 
 
 
 
 
Corporate
Parent
 
 
FPSOs
Other
G&A
Total
 
 
 
 
 
 
 
 
 
Teekay Parent (loss) income from vessel operations
 
(12,268
)
 
1,425

(2,125
)
 
(12,968
)
Write-down of vessels
 
46,519

 


 
46,519

Gain on commencement of sales-type lease
 
(44,943
)
 


 
(44,943
)
Depreciation and amortization
 
10,646

 


 
10,646

Amortization of in-process revenue contracts and other
 
(1,402
)
 
596


 
(806
)
Daughter Entities distributions
 

 

6,691

 
6,691

Adjusted EBITDA – Teekay Parent
 
(1,448
)
 
2,021

4,566

 
5,139


 
 
Three Months Ended June 30, 2019
 
 
(unaudited)
 
 
 
 
 
 
Teekay
 
 
 
 
 
Corporate
Parent
 
 
FPSOs
Other
G&A
Total
 
 
 
 
 
 
 
 
 
Teekay Parent (loss) income from vessel operations
 
(5,987
)
 
541

(2,819
)
 
(8,265
)
Depreciation and amortization
 
7,811

 
42


 
7,853

Amortization of in-process revenue contracts and other
 
(1,923
)
 
668


 
(1,255
)
Daughter Entities distributions
 

 

5,094

 
5,094

Adjusted EBITDA – Teekay Parent
 
(99
)
 
1,251

2,275

 
3,427





















25

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

 
 
Three Months Ended
 
 
 
June 30,
March 31,
June 30,



2020
2020
2019
 
 
 
(unaudited)
(unaudited)
(unaudited)
Interest expense
(59,245
)
(62,520
)
(70,205
)
Interest income
2,314

2,803

2,233

Interest expense net of interest income consolidated
(56,931
)
(59,717
)
(67,972
)
Less: Non-Teekay Parent interest expense net of interest income
(46,371
)
(49,213
)
(56,444
)
Interest expense net of interest income - Teekay Parent
(10,560
)
(10,504
)
(11,528
)
Teekay Parent non-cash accretion and loan cost amortization
2,191

2,215

1,896

Teekay Parent realized losses on interest rate swaps
(306
)
(288
)
(222
)
Net interest expense - Teekay Parent
(8,675
)
(8,577
)
(9,854
)





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Teekay Corporation Investor Relations Tel: +1 604 609 2963 www.teekay.com


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Forward Looking Statements

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements, among other things, regarding: the impact of COVID-19 and related global events on the Company’s business and financial results; the Company's ability to complete remaining crew changes and anticipated timing thereof; the Company's results for the third quarter of 2020; the future outlook for the tanker market; Teekay Tankers future free cash flow breakevens for its spot fleet; the timing on the Banff FPSO unit leaving its field and undergoing green recycling and the timing and costs associated with the remediation of the Banff field’s subsea infrastructure and the Banff FPSO unit's decommissioning and recycling; the Company's liquidity and the Teekay Group’s positioning for both near-term market volatility and to create long-term shareholder value and the ability in the longer-term to shape the future of