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Schedule I Condensed Non-Consolidated Financial Information of Registrant
 12 Months Ended
Dec. 31, 2018
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
Schedule I Condensed Non-Consolidated Financial Information of Registrant
SCHEDULE I
CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS (NOTE 1)
(in thousands of U.S. dollars)
 
 
As at
December 31, 2018
$
 
As at
December 31, 2017
$
ASSETS
 
 
 
 
Current
 
 
 
 
Cash and cash equivalents
 
81,681

 
22,050

Accounts receivable
 
202

 
699

Prepaid expenses and other
 
12

 
175

Due from affiliates
 
676,087

 
736,938

Total current assets
 
757,982

 
759,862

Investments in subsidiaries (note 1)
 
488,547

 
1,117,291

Other assets
 
329

 
297

Total assets
 
1,246,858

 
1,877,450

LIABILITIES AND EQUITY
 
 
 
 
Current
 
 
 
 
Accounts payable
 
1,339

 
1,660

Accrued liabilities
 
24,641

 
24,972

Due to affiliates
 
203,585

 
254,983

Other current liabilities
 
584

 
2,239

Total current liabilities
 
230,149

 
283,854

Long-term debt (note 2)
 
614,341

 
586,982

Other long-term liabilities
 
7,911

 
10,783

Total liabilities
 
852,401

 
881,619

Equity
 
 
 
 
Common stock and additional paid-in capital
 
1,045,659

 
919,078

(Accumulated deficit) retained earnings
 
(651,202
)
 
76,753

Total equity
 
394,457

 
995,831

Total liabilities and equity
 
1,246,858

 
1,877,450

The accompanying notes are an integral part of the condensed non-consolidated financial information.

TEEKAY CORPORATION
SCHEDULE I
CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF LOSS (NOTE 1)
(in thousands of U.S. dollars)

 
 
Year Ended
December 31,
2018
$
 
Year Ended
December 31,
2017
$
 
Year Ended
December 31,
2016
$
Revenues
 
345

 
5,089

 
14,142

Voyage expenses
 
20

 
(242
)
 
(59
)
Vessel operating expenses
 
(26
)
 
—

 
(30
)
Time-charter hire expense
 
—

 
(17,765
)
 
(24,477
)
General and administrative expenses
 
(23,799
)
 
(20,549
)
 
(20,583
)
Loss from vessel operations
 
(23,460
)
 
(33,467
)
 
(31,007
)
Interest expense
 
(60,166
)
 
(53,103
)
 
(53,164
)
Interest income
 
2,839

 
422

 
18,430

Impairments of investments (note 1)
 
(651,473
)
 
(338,749
)
 
—

Dividend income (note 1)
 
32,751

 
58,000

 
1,039

Other
 
(6,008
)
 
4,764

 
(981
)
Net loss before income taxes
 
(705,517
)
 
(362,133
)
 
(65,683
)
Income tax expense
 
(208
)
 
(251
)
 
(525
)
Net loss
 
(705,725
)
 
(362,384
)
 
(66,208
)

The accompanying notes are an integral part of the condensed non-consolidated financial information.
TEEKAY CORPORATION
SCHEDULE I
CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
 
 
Year Ended
December 31,
2018
$
 
Year Ended
December 31,
2017
$
 
Year Ended
December 31,
2016
$
Cash, cash equivalents and restricted cash provided by (used for)
 
 
 
 
 
 
OPERATING ACTIVITIES
 
 
 
 
 
 
Net loss
 
(705,725
)
 
(362,384
)
 
(66,208
)
Non-cash and non-operating items:
 
 
 
 
 
 
Unrealized (gain) loss on derivative instruments
 
(2,932
)
 
(2,336
)
 
604

Impairments of investments
 
651,473

 
338,749

 
—

Income tax expense
 
208

 
251

 
525

Stock-based compensation
 
7,329

 
6,952

 
7,106

Dividends-in-kind
 
(10,000
)
 
(58,000
)
 
(1,039
)
Other
 
7,453

 
3,262

 
529

Change in operating assets and liabilities
 
(36,296
)
 
718

 
17,050

Net operating cash flow
 
(88,490
)
 
(72,788
)
 
(41,433
)
FINANCING ACTIVITIES
 
 
 
 
 
 
Proceeds from issuance of long-term debt, net of issuance costs
 
120,713

 
—

 
—

Prepayments of long-term debt
 
(85,654
)
 
—

 
—

Advances from (to) affiliates
 
39,293

 
103,400

 
(15,802
)
Net proceeds from equity issuances
 
103,655

 
25,636

 
105,462

Cash dividends paid
 
(22,081
)
 
(18,967
)
 
(17,406
)
Other financing activities
 
(651
)
 
(662
)
 
(666
)
Net financing cash flow
 
155,275

 
109,407

 
71,588

INVESTING ACTIVITIES
 
 
 
 
 
 
Investments in subsidiaries
 
(7,109
)
 
(24,443
)
 
(62,714
)
Other investing activities
 
(45
)
 
1,289

 
660

Net investing cash flow
 
(7,154
)
 
(23,154
)
 
(62,054
)
Increase (decrease) in cash, cash equivalents and restricted cash
 
59,631

 
13,465

 
(31,899
)
Cash, cash equivalents and restricted cash, beginning of the year
 
22,050

 
8,585

 
40,484

Cash, cash equivalents and restricted cash, end of the year
 
81,681

 
22,050

 
8,585

Supplemental cash flow information (note 4)
 
 
 
 
 
 

The accompanying notes are an integral part of the condensed non-consolidated financial information.
1. Summary of Significant Accounting Policies
Basis of presentation
The accompanying condensed non-consolidated financial information is required by SEC Regulation S-X 5-04 for Teekay Corporation (or Teekay), which requires the inclusion of financial information for Teekay on a stand-alone basis if the restricted net assets of consolidated subsidiaries exceed 25% of total consolidated net assets as of the last day of its most recent fiscal year.
Teekay’s investments in subsidiaries are presented in this financial information under the cost method of accounting, whereby Teekay’s investment in subsidiaries is measured initially at cost. Under the cost method of accounting for investments in common stock, dividends are the basis for recognition of earnings from an investment. Under this method, an investor recognizes as income dividends received that are distributed from net accumulated earnings of the investee since the date of acquisition by the investor. The net accumulated earnings of an investee subsequent to the date of investment are recognized by the investor only to the extent distributed by the investee as dividends. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions of cost of the investment. Teekay received dividends from its subsidiaries of $32.8 million (2018), $58.0 million (2017) and $1.0 million (2016), respectively.
Teekay recognizes an impairment loss on its investments in its subsidiaries when the fair value of its investments is lower than the carrying value. The fair value of Teekay's investments in its subsidiaries is primarily influenced by the publicly-traded prices of Teekay LNG's and Teekay Offshore's common units, and the publicly-traded share price of Teekay Tankers' common shares as of the respective balance sheet dates. During the years ended December 31, 2018, 2017 and 2016, Teekay recognized impairment losses of $651.5 million, $338.7 million and $nil, respectively, in relation to declines in the fair value of its investments.
A substantial amount of Teekay’s operating, investing and financing activities are conducted by its affiliates and not reflected in this financial information. The condensed non-consolidated financial information should be read in conjunction with Teekay’s consolidated financial statements.
2. Long-term debt
 
December 31, 2018
$
 
December 31, 2017
$
Senior Notes (8.5%) due January 15, 2020
508,577

 
592,657

Convertible Senior Notes (5%) due January 15, 2023
125,000

 
—

Less unamortized discount and debt issuance costs
(19,236
)
 
(5,675
)
Total debt
614,341

 
586,982

Long-term portion
614,341

 
586,982

The Company’s 8.5% senior unsecured notes are due January 15, 2020 with an original aggregate principal amount of $450 million (or the Original Notes). The Original Notes issued on January 27, 2010 were sold at a price equal to 99.2% of par. During 2014, the Company repurchased $57.3 million of the Original Notes. In November 2015, the Company issued an aggregate principal amount of $200 million of the Company’s 8.5% senior unsecured notes due on January 15, 2020 (or the Notes) at 99.01% of face value, plus accrued interest from July 15, 2015. The Notes are an additional issuance of the Company’s Original Notes (collectively referred to as the 8.5% Notes). The Notes were issued under the same indenture governing the Original Notes and are fungible with the Original Notes. The discount on the 8.5% Notes is accreted through the maturity date of the notes using the effective interest rate of 8.67% per year. During 2018, the Company repurchased $84.1 million in aggregate principal amount of the 8.5% Notes. During the first quarter of 2019, the Company repurchased an additional $10.9 million in aggregate principal amount of the 8.5% Notes.

The Company capitalized aggregate issuance costs of $13.3 million which are amortized to interest expense over the term of the 8.5% Notes. As of December 31, 2018, the unamortized balance of the capitalized issuance cost was $1.6 million which is recorded in long-term debt in the condensed balance sheet. The 8.5% Notes rank equally in right of payment with all of Teekay’s existing and future senior unsecured debt and senior to any future subordinated debt of Teekay. The 8.5% Notes are not guaranteed by any of Teekay’s subsidiaries and effectively rank behind all existing and future secured debt of Teekay and other liabilities of its subsidiaries.
The Company may redeem the 8.5% Notes in whole or in part at any time before their maturity date at a redemption price equal to the greater of (i) 100% of the principal amount of the 8.5% Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the 8.5% Notes to be redeemed (excluding accrued interest), discounted to the redemption date on a semi-annual basis, at the treasury yield plus 50 basis points, plus accrued and unpaid interest to the redemption date.
On January 26, 2018, Teekay completed a private offering of $125.0 million of aggregate principal amount of 5% Convertible Senior Notes due January 15, 2023 (the Convertible Notes). The Convertible Notes are convertible into Teekay’s common stock, initially at a rate of 85.4701 shares of common stock per $1,000 principal amount of Convertible Notes. This represents an initial effective conversion price of $11.70 per share of common stock. The initial conversion price represents a premium of 20% to the concurrent common stock offering price of $9.75 per share. The conversion rate is subject to customary adjustments for, among other things, payments of dividends by Teekay beyond the current quarterly dividend of $0.055 per share of common stock. On issuance of the Convertible Notes, $104.6 million of the net proceeds was reflected in long-term debt and is being accreted to $125.0 million over its 5-year term through interest expense. The remaining amount of the net proceeds of $16.1 million was allocated to the conversion feature and reflected in additional paid-in capital.
3. Guarantees
Teekay Corporation has guaranteed obligations pursuant to certain credit facilities of its subsidiaries. As at December 31, 2018, the aggregate outstanding balance on such credit facilities of Teekay Tankers was $166.4 million (December 31, 2017 - $252.7 million). In September 2017, Teekay was released from all of its previous guarantees relating to Teekay Offshore's long-term debt and interest rate swap and cross currency swap agreements.
4. Supplemental Cash Flow Information
During 2018, one of the Company's subsidiaries returned capital in the amount of $1.7 million, paid-in-kind, which was treated as a non-cash transaction in the Company's condensed statement of cash flows.

During 2018, 2017 and 2016, the Company received dividends of $10.0 million, $58.0 million and $1.0 million, respectively, paid-in-kind, which were treated as non-cash transactions in the Company's condensed statement of cash flows.