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Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Commitment of Foreign Currency Forward Contracts
As at September 30, 2017, the Company was committed to the following foreign currency forward contracts:
 
 
 
 
 
Fair Value /
Carrying
Amount
Of Asset
$
 
Expected Maturity
 
Contract Amount in
Foreign Currency
 
Average
Forward Rate (1)
 
 
2017
 
2018
 
 
 
 
$
 
$
Norwegian Kroner
130,000

 
8.24

 
537

 
3,616

 
12,153

 
(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 September 30, 2017, the Company was committed to the following cross currency swaps:
 
 
 
 
 
 
 
 
 
 
Fair Value /
Carrying
Amount of
Asset /
(Liability)
$
 
 
Notional
Amount
NOK
 
Notional
Amount
USD
 
Floating Rate Receivable
 
 
 
 
 
 
 
Reference
Rate
 
Margin
 
Fixed Rate
Payable
 
 
Remaining
Term (years)
900,000
 
150,000

 
NIBOR
 
4.35%
 
6.43%
 
(39,088
)
 
0.9
1,000,000
 
134,000

 
NIBOR
 
3.70%
 
5.92%
 
(9,862
)
 
2.6
1,200,000
 
146,500

 
NIBOR
 
6.00%
 
7.70%
 
7,682

 
4.1
 
 
 
 
 
 
 
 
 
 
(41,268
)
 
 
Interest Rate Swap Agreements
As at September 30, 2017, 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 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
 
1,014,701

 
(31,522
)
 
5.2
 
2.8

U.S. Dollar-denominated interest rate swaps (3)
LIBOR
 
331,933

 
(20,538
)
 
1.8
 
3.4

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

 
(535
)
 
0.3
 
2.0

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

 
15

 
0.3
 
3.1

EURIBOR-Based Debt:
 
 
 
 
 
 
 
 
 
Euro-denominated interest rate swaps (5) (6)
EURIBOR
 
233,763

 
(30,813
)
 
3.2
 
3.1

 
 
 
 
 
(83,393
)
 
 
 
 

(1)
Excludes the margins the Company pays on its variable-rate debt, which, as of September 30, 2017, ranged from 0.3% to 4.0%.
(2)
Includes interest rate swaps with the notional amount reducing quarterly or semi-annually.
(3)
Forward-starting interest rate swaps with inception dates ranging from October 2017 to April 2018. Interest rate swaps 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 2018 and 2020 whereby the swaps will be settled based on their fair value at that time.
(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 rate 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)
Principal amount reduces monthly to 70.1 million Euros ($82.8 million) by the maturity dates of the swap agreements.
(6)
Principal amount is the U.S. Dollar equivalent of 197.9 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 unaudited consolidated balance sheets.
 
Prepaid Expenses and Other
 
Other Non-Current Assets
 
Accrued
Liabilities and Other
 
Current
Portion of
Derivative
Liabilities
 
Derivative
Liabilities
 
$
 
$
 
$
 
$
 
$
As at September 30, 2017
 
 
 
 
 
 
 
 
 
Derivatives designated as a cash flow hedge:
 
 
 
 
 
 
 
 
 
Interest rate swap agreements
—

 
587

 
(25
)
 
(1,366
)
 
(605
)
Derivatives not designated as a cash flow hedge:
 
 
 
 
 
 
 
 
 
Foreign currency contracts
537

 
—

 
—

 
—

 
—

Interest rate swap agreements
220

 
3,069

 
(2,256
)
 
(28,978
)
 
(54,039
)
Cross currency swap agreements
—

 
8,688

 
(700
)
 
(41,612
)
 
(7,644
)
Stock purchase warrants
—

 
32,135

 
—

 
—

 
—

Forward freight agreements
29

 
—

 
(108
)
 
—

 
—

 
786

 
44,479

 
(3,089
)
 
(71,956
)
 
(62,288
)
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

 
9,839

 
(11,979
)
 
(59,055
)
 
(233,901
)
Cross currency swap agreements
—

 
—

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

 
575

 
—

 
—

 
—

Time-charter swap agreement
875

 
—

 
(667
)
 
—

 
—

 
1,206

 
11,754

 
(16,473
)
 
(115,813
)
 
(415,041
)
Schedule of Cash Flow Hedges
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 (excluding such agreements in equity-accounted investments):

Three Months Ended September 30, 2017

Effective Portion

Effective Portion
Ineffective

Recognized in AOCI(1)

Reclassified from AOCI(2)
Portion(3)

$
 
$
$
 
(115)

(424)
(7)
Interest expense
(115)

(424)
(7)






Three Months Ended September 30, 2016

Effective Portion
 
Effective Portion
Ineffective

Recognized in AOCI(1)
 
Reclassified from AOCI(2)
Portion(3)

1,482
 
—
(3)
Interest expense
1,482
 
—
(3)

Nine Months Ended September 30, 2017
 
Effective Portion
 
Effective Portion
Ineffective
 
Recognized in AOCI(1)
 
Reclassified from AOCI(2)
Portion(3)
 
$
 
$
$
 
(1,677)
 
(1,186)
(762)
Interest expense
(1,677)
 
(1,186)
(762)
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
Effective Portion
 
Effective Portion
Ineffective
 
Recognized in AOCI(1)
 
Reclassified from AOCI(2)
Portion(3)
 
(12,543)
 
—
(59)
Interest expense
(12,543)
 
—
(59)
 
 
 
 
 
 

(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 (losses) and gains on derivatives not designated as hedging instruments in the unaudited consolidated statements of (loss) income is as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
$
 
$
 
$
 
$
Realized (losses) gains relating to:
 
 
 
 
 
 
 
Interest rate swap agreements
(15,729
)
 
(22,219
)
 
(48,199
)
 
(67,808
)
Interest rate swap agreement terminations
—

 
—

 
(610
)
 
(8,140
)
Foreign currency forward contracts
1,609

 
(2,583
)
 
638

 
(9,915
)
Time charter swap agreement
—

 
1,096

 
1,106

 
1,222

Forward freight agreements
234

 
—

 
347

 
—

 
(13,886
)
 
(23,706
)
 
(46,718
)
 
(84,641
)
Unrealized gains (losses) relating to:
 
 
 
 
 
 
 
Interest rate swap agreements
11,575

 
47,816

 
5,181

 
(96,055
)
Foreign currency forward contracts
735

 
6,006

 
4,383

 
21,070

Stock purchase warrants
(4,461
)
 
(398
)
 
(5,036
)
 
(8,894
)
Time charter swap agreement
—

 
208

 
(875
)
 
1,553

Forward freight agreements
(91
)
 
—

 
(108
)
 
—

 
7,758

 
53,632

 
3,545

 
(82,326
)
Total realized and unrealized (losses) gains on derivative instruments
(6,128
)
 
29,926

 
(43,173
)
 
(166,967
)
Effect of Gains (Losses) on Cross Currency Swaps
The effect of the losses on cross currency swaps on the consolidated statements of (loss) income is as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
$
 
$
 
$
 
$
Realized losses on maturity and termination of cross currency swaps
—

 
—

 
(25,733
)
 
(32,628
)
Realized losses
(4,234
)
 
(5,612
)
 
(16,369
)
 
(15,551
)
Unrealized gains
41,653

 
40,019

 
91,749

 
93,232

Total realized and unrealized gains on cross currency swaps
37,419

 
34,407

 
49,647

 
45,053