Slide 1: Teekay Corporation Financial Restatement and Update
TEEKAY CORPORATION Financial Restatement and Update November 25, 2008 www.teekay.com
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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 regarding: the Company’
Slide 3: Restatement Process Update
Restatement Process Update Restatement completed for TOO, TGP and TNK Restatement substantially completed for Teekay Corporation f One late arising non-cash item remains to be finalized* Key Findings: f As anticipated, all reported changes are non-cash in nature f no impact on historical or future c
Slide 4: Restatement Process Overview
Restatement Process Overview Process has taken longer than anticipated: f Ernst and Young’s audit team included subject matter experts from their Canadian and US National Offices f Teekay management engaged independent, 3rd party subject matter experts f Together, all parties focused on complex, non
Slide 5: Changes in Hedge Accounting Treatment
Changes in Hedge Accounting Treatment Reason for Restatement: f Certain derivative instruments used to hedge interest rate, charter-rate and foreign exchange risks did not meet strict technical requirements for hedge accounting treatment under SFAS 133 f Examples- transfer of swaps to ‘Daughter’ com
Slide 6: Gross-up Presentation for RasGas Joint Ventures
Gross-up Presentation for RasGas Joint Ventures RasGas II Restatement: f Only impacts Dec. 31, 2006 balance sheet: increase to both assets and liabilities by $295 million RasGas 3 Restatement: f Teekay (40%) and QGTC* (60%) formed a joint venture that owns 4 LNG carriers f Each venturer is a joint a
Slide 7: Long-term Incentive Program
Long-term Incentive Program f Long-term incentive program linked to shareholder value metrics f Currently reviewing accounting methodology for determining fair value of future liability and amortization period f Any adjustments would only impact timing of expense/accrual recognition; no impact on to
Slide 8: Restatements Have No Impact on Adjusted Earnings
Restatements Have No Impact on Adjusted Earnings (1) f All restatements are non-cash in nature, thus adjusted earnings and EPS, as reported by securities analysts, are not affected for any periods Three Months Ended June 30, 2008 Adjustments (in thousands of U.S. dollars) Gross-Up As As Previously D
Slide 9: Changes Made as a Result of Restatement Process
Changes Made as a Result of Restatement Process f Implemented a more rigorous process to determine the appropriate accounting treatment for: f complex accounting issues f non-routine financial structures and arrangements f Engagement of the appropriately qualified external expertise f Going forward,
Slide 10: Financial Update
Financial Update www.teekay.com
Slide 11: Teekay is well-positioned in the current economic and financial environment
Teekay is well-positioned in the current economic and financial environment: 1. Strong liquidity position, with all future CAPEX fully financed 2. Favorable debt profile with no near-term refinancing requirements and no covenant concerns 3. Substantial long-term fixed-rate revenue and cash flow 11 w
Slide 12: Strong Liquidity Position with 100% Funding for CAPEX
Strong Liquidity Position with 100% Funding for CAPEX TOTAL LIQUIDITY CAPEX & FUNDING As of June 30, 2008 As of June 30, 2008 Cash $ 499m Total CAPEX $1,328m Undrawn Revolving Pre-arranged, committed $1,253m <$1,159m> Facilities newbuild financing To be funded from operating cash Current Liquidity $
Slide 13: Teekay Has a Favorable Debt Profile
Teekay Has a Favorable Debt Profile No refinancing requirements through 2010 f Only $36 million in balloon payments due between now and mid-2010 f Current liquidity more than sufficient to repay all facilities coming due 2,000 Current Liquidity Bullet Debt Repayments $1,752 1,500 $ Millions 1,000 50
Slide 14: Covenant-lite Debt Provides Flexibility
Covenant-lite Debt Provides Flexibility f Primary financial covenant across all entities is based on maintaining a modest minimum liquidity f The Company has no covenant concerns at the Teekay ‘Standalone’ or ‘Daughter’ level Minimum hull value covenants topical in other shipping segments today f Te
Slide 15: Teekay's Business Model Provides Substantial Stable Revenues
Teekay’s Business Model Provides Substantial Stable Revenues Over 70% of Teekay’s Invested Capital operates under long- term, fixed-rate contracts with high quality counterparties Total Forward Fixed-rate Revenues exceed $12.2 billion Avg. Remaining Forward Fixed-rate Segment # of Vessels Primary Ch
Slide 16: Fixed-rate Business Supports Teekay's Entire Current Debt Servicing
Fixed-rate Business Supports Teekay’s Entire Current Debt Servicing f Annualized Fixed-rate CFVO* alone is more than sufficient to service 100% of the Company’s current principal and interest payments Annualized Fixed-rate $467m CFVO Current TOTAL Teekay <$179m> principal payments Current TOTAL Teek
Slide 17: Teekay Debt Profile
Teekay Debt Profile As of June 30, 2008, 80% of consolidated total debt is at subsidiary level and is non-recourse to Teekay Standalone Teekay Disaggregated Debt (as at June 30, 2008) Teekay Offshore Teekay LNG Partners Teekay Tankers Teekay Petrojarl Teekay Standalone Teekay Consolidated Partners N
Slide 18: Accounting Treatment Does Not Reflect Net Principal Payments
Accounting Treatment Does Not Reflect Net Principal Payments Debt and Capital Lease Obligations in Financial Statements Overstate Actual Cash Repayments 2H 2008 2009 2010 Long-term debt 139.6 326.0 477.4 Commitments under capital leases 62.8 198.8 74.8 Debt and Capital Lease Obligations per financia
Slide 19: Teekay is well-positioned in the current economic and financial environment
Teekay is well-positioned in the current economic and financial environment: 1. Total available liquidity of ~$3.0 billion, including committed financing for all future CAPEX 2. Favorable debt profile with no need to access capital markets and no covenant concerns 3. Substantial fixed-rate contract
Slide 20: Appendix
Appendix www.teekay.com
Slide 21: Support for Slide #16
Support for Slide #16 Calculation of Q2 2008 Calculation of Q2 2008 Annualized Net Interest Annualized Fixed-rate CFVO Expense Interest Gain 114.0 Offshore 53.1 SFAS 133 adj. gain 191.8 Fixed-rate Tanker 29.8 actual interest expense -77.8 Liquefied Gas 33.8 Interest (loss) -2.1 116.7 SFAS 133 adj lo
Slide 22: Teekay Disaggregated Debt Support
Teekay Disaggregated Debt Support (USD millions) as at June 30, 2008 Teekay Offshore Teekay LNG Partners Teekay Tankers Teekay Petrojarl Teekay Standalone Teekay Consolidated Partners Long-term Long-term Long-term Long-term Long-term Long-term 2,985.8 1,618.5 320.6 446.0 1,248.4 6,619.3 debt debt de