Teekay Corporation Reports Fourth Quarter and Annual Results

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

29 Feb 2008

Highlights- Reported fourth quarter net income of $9.5 million, or $0.13 per share (including specific items which decreased net income by $13.5 million, or $0.18 per share) (1)- Reported annual net income of $181.3 million, or $2.43 per share (including specific items which decreased net income by $16.3 million, or $0.22 per share)(1)- Generated cash flow from vessel operations of $138.4 million and $622.2 million in the fourth quarter and fiscal 2007, respectively- Successfully completed the initial public offering of Teekay Tankers Ltd.- Entered into a multi-vessel strategic transaction with ConocoPhillips- Acquired two specialized LNG vessels on charter to a ConocoPhillips and Marathon Oil joint ventureTeekay Corporation (Teekay or the Company) today reported net income of $9.5 million, or $0.13 per share, for the quarter ended December 31, 2007, compared to net income of $60.3 million, or $0.81 per share, for the quarter ended December 31, 2006. The results for the quarters ended December 31, 2007 and 2006 included a number of specific items that had the net effect of decreasing net income by $13.5 million, or $0.18 per share, and by $18.9 million, or $0.25 per share, respectively, as detailed in Appendix A to this release. Net revenues(2) for the fourth quarter of 2007 increased to $514.1 million from $443.3 million for the same period in 2006, and income from vessel operations decreased to $74.2 million from $105.2 million.Net income for the year ended December 31, 2007 was $181.3 million, or $2.43 per share, compared to $262.2 million, or $3.49 per share, for the same period last year. The results for the year ended December 31, 2007 and 2006 included a number of specific items that had the net effect of decreasing net income by $16.3 million, or $0.22 per share, and by $63.7 million, or $0.85 per share, respectively, as detailed in Appendix A to this release. Net revenues(2) for the year ended December 31, 2007 increased to $1.9 billion from $1.5 billion for the same period in 2006, and income from vessel operations decreased to $397.9 million from $421.8 million.Initial Public Offering of Teekay Tankers Ltd.On December 18, 2007, Teekay's subsidiary, Teekay Tankers Ltd., completed its initial public offering of 11.5 million class A common shares (including the underwriters' overallotment option) at a price of $19.50 per share. Net proceeds from the offering amounting to $208.2 million were used by Teekay to repay debt. Teekay Tankers owns a fleet of nine Aframax-class oil tankers which Teekay manages through a mix of short- or medium-term fixed-rate time-charter contracts and spot tanker market trading. Teekay has agreed to offer Teekay Tankers, within 18 months following the completion of Teekay Tankers' IPO, the right to purchase from it up to four existing Suezmax-class oil tankers. Teekay Tankers anticipates additional opportunities to expand its fleet through acquisitions of tankers from third parties and additional tankers that it expects Teekay will offer to it from time to time. These tankers may include crude oil and product tankers.Teekay owns 1.0 million class A common shares and 12.5 million class B common shares (entitled to five votes per share but capped at 49% of the total vote), which currently provide Teekay with 54 percent of the economic interest and 53 percent of the voting interest in Teekay Tankers.On February 6, 2008, Teekay Tankers declared a cash dividend of $0.115 per share for the 14-day period from December 18, 2007 to December 31, 2007.Strategic Transaction with ConocoPhillipsIn January 2008, Teekay entered into a multi-vessel transaction with ConocoPhillips, which involved the acquisition of six double-hull Aframax tankers from ConocoPhillips and the time charter-out of five vessels to ConocoPhillips.Of the six Aframax tankers acquired, two are owned and four are bareboat chartered-in for periods ranging from five to ten years. Two of the Aframax tankers have been chartered back to ConocoPhillips for a period of five years. Commencing in the second quarter of 2008, Teekay will also charter to ConocoPhillips its in-chartered VLCC for a period of three years and two of its MR product tankers for a period of five years.Operating ResultsDuring the fourth quarter of 2007, fixed-rate businesses generated approximately 81 percent of the Company's cash flow from vessel operations compared to 66 percent in the fourth quarter of 2006.Fixed-Rate Tanker SegmentThe fixed-rate tanker segment includes Teekay LNG Partners L.P.'s (Teekay LNG) Suezmax fleet and Teekay's directly operated fixed-rate conventional tankers.Cash flow from vessel operations from the Company's fixed-rate tanker segment decreased to $24.0 million in the fourth quarter of 2007, compared to $26.0 million in the fourth quarter of 2006. This decrease was primarily due to lower revenues earned on two vessels, which earn a profit share component when spot tanker rates exceed certain threshold levels, and higher vessel crewing costs, partially offset by the three vessels added to this segment in the third quarter of 2007.Liquefied Gas SegmentThe liquefied gas segment includes Teekay LNG's fleet of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) carriers.In December 2007, Teekay acquired two 1993-built, 88,000 cubic meter LNG vessels from a joint venture between ConocoPhillips and Marathon Oil Corporation for a total cost of $230.0 million. These specialized, ice-strengthened vessels are currently being chartered back to the sellers until April 2009 (transporting LNG from Alaska's Kenai LNG plant to Japan), with options exercisable by the charterers to extend up to an additional seven years. Teekay has offered these vessels to Teekay LNG in accordance with an Omnibus agreement among Teekay, Teekay LNG and Teekay Offshore (the Omnibus Agreement).The Company's cash flow from vessel operations from its existing LNG and LPG carriers during the fourth quarter of 2007 was $35.0 million compared to $19.9 million in the fourth quarter of 2006. This increase was primarily due to the delivery of the three RasGas II LNG carriers which commenced 20-year fixed-rate charters in November 2006, January 2007, and February 2007, respectively, and the acquisition of the two Kenai LNG carriers in December 2007.The Company has ownership interests ranging from 40 percent to 70 percent in six additional LNG newbuildings scheduled to deliver at various dates between the second quarter of 2008 and early 2009, all of which will commence service upon delivery under 20 or 25-year fixed-rate contracts with major energy companies. Download File