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Derivative Instruments and Hedging Activities (Tables)
 12 Months Ended
Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Commitment of Foreign Currency Forward Contracts
As at December 31, 2016, the Company was committed to the following foreign currency forward contracts:

 
 
 
 
 
Fair Value /
Carrying
Amount
Of Asset
(Liability)
$
 
Expected Maturity
 
Contract 
Amount in
Foreign Currency

 
Average Forward Rate (1)

 
 
2017
 
2018
 
 
 
 
$
 
$
Euro
13,750

 
0.92

 
(304
)
 
14,879

 
—

Norwegian Kroner
610,000

 
8.31

 
(2,689
)
 
60,677

 
12,719

 
 
 
 
 
(2,993
)
 
75,556

 
12,719

(1)Average contractual exchange rate represents the contracted amount of foreign currency one U.S. Dollar will buy.
Commitment of Cross Currency Swaps
As at December 31, 2016, 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
 
408,500
 
72,946

 
NIBOR
 
5.25
%
 
6.88
%
 
(26,417
)
 
0.3
       420,000 (1) (2)
 
70,946

 
NIBOR
 
5.75
%
 
8.84
%
 
(25,821
)
 
1.9
       800,000 (1) (3)
 
143,536

 
NIBOR
 
5.75
%
 
7.58
%
 
(56,272
)
 
2.0
900,000
 
110,400

 
NIBOR
 
6.00
%
 
7.72
%
 
(3,814
)
 
4.8
900,000
 
150,000

 
NIBOR
 
4.35
%
 
6.43
%
 
(49,655
)
 
1.7
1,000,000
 
162,200

 
NIBOR
 
4.25
%
 
7.45
%
 
(55,286
)
 
2.1
1,000,000
 
134,000

 
NIBOR
 
3.70
%
 
5.92
%
 
(19,900
)
 
3.4
 
 
 
 
 
 
 
 
 
 
(237,165
)
 
 
Interest Rate Swap Agreements
As at December 31, 2016, 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 Company’s floating-rate debt obligations 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
LIBOR
 
2,974,274

 
(243,261
)
 
5.4
 
3.3
U.S. Dollar-denominated interest rate swaps (2)
LIBOR
 
517,629

 
(16,489
)
 
4.2
 
3.0
U.S. Dollar-denominated interest rate swaption (3)
LIBOR
 
155,000

 
(1,525
)
 
0.3
 
2.2
U.S. Dollar-denominated interest rate swaption (3)
LIBOR
 
155,000

 
31

 
0.3
 
3.3
U.S. Dollar-denominated interest rate swaption (4)
LIBOR
 
160,000

 
(1,457
)
 
1.1
 
2.0
U.S. Dollar-denominated interest rate swaption (4)
LIBOR
 
160,000

 
1,140

 
1.1
 
3.1
U.S. Dollar-denominated interest rate swaption (5)
LIBOR
 
160,000

 
(1,248
)
 
1.5
 
1.8
U.S. Dollar-denominated interest rate swaption (5)
LIBOR
 
160,000

 
2,112

 
1.5
 
2.9
EURIBOR-Based Debt:
 
 
 
 
 
 
 
 
 
Euro-denominated interest rate swaps (6) (7)
EURIBOR
 
219,733

 
(34,295
)
 
4.0
 
3.1
 
 
 
 
 
(294,992
)
 
 
 
 
(1)
Excludes the margins the Company pays on its variable-rate debt, which, as of December 31, 2016, ranged from 0.3% to 4.0%.
(2)
Inception dates range from September 2017 to April 2018. 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 2017 to 2024. These interest rate swaps are subject to mandatory early termination in 2017 and 2018 whereby the swaps will be settled based on their fair value at that time.
(3)
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.
(4)
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.
(5)
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.
(6)
Principal amount reduces monthly to 70.1 million Euros ($73.7 million) by the maturity dates of the swap agreements.
(7)
Principal amount is the U.S. Dollar equivalent of 208.9 million Euros.
Location and Fair Value Amounts of Derivative Instruments
The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Company’s consolidated balance sheets.
 
Prepaid
Expenses
and Other
 
Other Non-Current Assets
 
Accrued
Liabilities
 
Current
Portion of
Derivative
Liabilities
 
Derivative
Liabilities
As at December 31, 2016
 
 
 
 
 
 
 
 
 
Derivatives designated as a cash flow hedge:
 
 
 
 
 
 
 
 
 
Interest rate swap agreements
—

 
1,340

 
(363
)
 
(1,033
)
 
(52
)
Derivatives not designated as a cash flow hedge:

 

 

 

 

Foreign currency contracts
119

 
—

 
—

 
(2,601
)
 
(511
)
Interest rate swap agreements
212

 
9,841

 
(11,979
)
 
(59,055
)
 
(233,903
)
Cross currency swap agreements
—

 
—

 
(3,464
)
 
(53,124
)
 
(180,577
)
Stock purchase warrants
—

 
575

 
—

 
—

 
—

Time-charter swap agreement
875

 
—

 
(667
)
 
—

 
—

 
1,206

 
11,756

 
(16,473
)
 
(115,813
)
 
(415,043
)
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
)
Effective Portion of Gains (Losses) on Interest Rate Swap Agreements
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:
Year Ended December 31, 2016
Effective Portion
 
Effective Portion
 
Ineffective
 
 
Recognized in AOCI(1)
 
Reclassified from AOCI(2)
 
Portion
 
 
$
 
$
 
$
 
 
691

 
(68
)
 
682

 
Interest expense
691

 
(68
)
 
682

 
 

Year Ended December 31, 2015
Effective Portion
 
Effective Portion
 
Ineffective
 
 
Recognized in AOCI(1)
 
Reclassified from AOCI(2)
 
Portion
 
 
$
 
$
 
$
 
 
(65
)
 
—

 
(1,050
)
 
Interest expense
(65
)
 
—

 
(1,050
)
 
 



(1) Recognized in accumulated other comprehensive loss (or AOCI).
(2) Recorded in AOCI during the term of the hedging relationship and reclassified to earnings.
(3) Recognized in the ineffective portion of gains (losses) on derivative instruments designated and qualifying as cash flow hedges.
Effect of Gain (Loss) on Derivatives Not Designated as Hedging Instruments
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, 2016
$
 
Year Ended
December 31, 2015
$
 
Year Ended
December 31, 2014
$
Realized (losses) gains relating to:
 
 
 
 
 
Interest rate swap agreements
(87,320
)
 
(108,036
)
 
(125,424
)
Interest rate swap agreement terminations
(8,140
)
 
(10,876
)
 
(1,319
)
Foreign currency forward contracts
(11,186
)
 
(21,607
)
 
(4,436
)
Time charter swap agreement
2,154

 
—

 
—

 
(104,492
)
 
(140,519
)
 
(131,179
)
Unrealized gains (losses) relating to:
 
 
 
 
 
Interest rate swap agreements
62,446

 
37,723

 
(86,045
)
Foreign currency forward contracts
15,833

 
(418
)
 
(16,926
)
Stock purchase warrants
(9,753
)
 
1,014

 
2,475

Time-charter swap agreement
875

 
—

 
—

 
69,401

 
38,319

 
(100,496
)
Total realized and unrealized (losses) gains on derivative instruments
(35,091
)
 
(102,200
)
 
(231,675
)
Effect of Gains (Losses) on Cross Currency Swaps
The effect of the loss on cross currency swaps on the consolidated statements of income is as follows:
 
Year Ended December 31,
 
2016
$
 
2015
$
 
2014
$
Realized losses on maturity and partial termination of cross currency swap
(41,707
)
 
(36,155
)
 
—

Realized losses
(38,564
)
 
(18,973
)
 
(3,955
)
Unrealized gains (losses)
75,033

 
(89,178
)
 
(167,334
)
Total realized and unrealized losses on cross currency swaps
(5,238
)
 
(144,306
)
 
(171,289
)