Teekay LNG Partners Reports Fourth Quarter and Annual Results

Teekay LNG Partners Reports Fourth Quarter and Annual Results 
HAMILTON, BERMUDA -- (Marketwire) -- 02/21/13 -- Teekay LNG Partners
L.P. (NYSE:TGP) -  
Highlights 


 
--  Generated distributable cash flow of $53.6 million in the fourth quarter
    of 2012, an increase of 22 percent from the fourth quarter of 2011. 
    
--  Declared fourth quarter 2012 cash distribution of $0.675 per unit. 
    
--  On February 12, 2013, completed the previously-announced 50/50 joint
    venture with Exmar NV which owns and charters-in 25 vessels in the LPG
    carrier segment. 
    
--  On December 12, 2012, ordered two LNG carrier newbuildings with options
    to order up to three additional vessels.  
    
--  Total liquidity of approximately $495.0 million as at December 31, 2012.

 
Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P.
(Teekay LNG or the Partnership) (NYSE:TGP), today reported the
Partnership's results for the quarter ended December 31, 2012. During
the fourth quarter of 2012, the Partnership generated distributable
cash flow(1) of $53.6 million, compared to $44.1 million in the same
quarter of the previous year. The increase primarily reflects the
incremental distributable cash flow resulting from the following
acquisitions: a 52 percent interest in six liquefied natural gas
(LNG) carriers acquired in February 2012; a 33 percent interest in
two LNG carriers delivered between October 2011 and January 2012; and
one Multigas carrier delivered in October 2011. 
On January 18, 2013, the Partnership declared a cash distribution of
$0.675 per unit for the quarter ended December 31, 2012. The cash
distribution was paid on February 14, 2013 to all unitholders of
record on February 4, 2013. 


 
1.  Distributable cash flow is a non-GAAP financial measure used by certain
    investors to measure the financial performance of the Partnership and
    other master limited partnerships. Please see Appendix B for a
    reconciliation of this non-GAAP measure to the most directly comparable
    financial measure under United States generally accepted accounting
    principles (GAAP). 

 
Recent Transactions 
New LPG Joint Venture 
In February 2013, the Partnership completed its joint venture
agreement with Belgium-based Exmar NV to own and charter-in liquefied
petroleum gas (LPG) carriers with a primary focus on the mid-size gas
carrier segment. The joint venture entity, called Exmar LPG BVBA,
took economic effect as of November 1, 2012 and includes 16 owned LPG
carriers (including four newbuildings scheduled for delivery in 2014)
and five chartered-in LPG carriers. In addition, the joint venture
recently ordered another four medium-size gas carrier newbuildings
with deliveries scheduled between 2015 and 2016, with options to
order up to four additional vessels, which brings the total fleet
size of Exmar LPG BVBA to 25 vessels, excluding options. For its 50
percent ownership interest in the joint venture, including
newbuilding payments made prior to the November 1, 2012 economic
effective date of the joint venture, Teekay LNG invested
approximately $134 million of equity and assumed approximately $108
million of its pro rata share of existing debt and lease obligations
as of the economic effective date, secured by certain vessels in the
Exmar LPG BVBA fleet. Exmar LPG BVBA is in the process of refinancing
the joint venture fleet and four of the newbuildings with a new $355
million debt facility which is currently in documentation. 
LNG Newbuildings 
In December 2012, Teekay LNG entered into an agreement with Daewoo
Shipbuilding & Marine Engineering Co., Ltd., (DSME) of South Korea
for the construction of two 173,400-cubic meter LNG carrier
newbuildings, for a total purchase price of approximately $400
million, with options to order up to three additional vessels. The
newbuildings will be constructed with M-type, Electronically
Controlled, Gas Injection (MEGI) twin engines, which are expected to
be significantly more fuel-efficient and have lower emission levels
than engines currently being utilized in LNG shipping. The
Partnership intends to secure long-term contract employment for both
vessels prior to their scheduled deliveries in the first half of
2016.  
"Teekay LNG continued to broaden its position as a leader in
liquefied gas shipping during the fourth quarter, entering into a new
joint venture with Exmar in the LPG carrier sector and placing orders
for two LNG newbuilding carriers," commented Peter Evensen, Chief
Executive Officer of Teekay GP L.L.C. "Last week, the Partnership
finalized its 50/50 joint venture with Exmar which will directly own
and charter-in a fleet of 25 LPG carriers, including eight
newbuildings. This accretive transaction provides Teekay LNG with
immediate access to Exmar's well-established commercial presence in
the LPG market, including a sizeable contract of affreightment
portfolio, and deep expertise in medium-sized gas carrier operations.
In addition to providing exposure to the attractive fundamentals in
the LPG shipping market, the newbuilding LPG carriers currently on
order provide the Part
nership with visible distributable cash flow
growth." 
"With the Partnership's recent orders for two 173,400 cubic meter LNG
carrier newbuildings from DSME in South Korea, and options to order
up to three additional vessels, the Partnership is also well
positioned for the expected ramp-up in global LNG supply as several
new liquefaction facilities are scheduled to commence operations in
late-2015," Mr. Evensen continued. "The vessels have manageable
tail-weighted shipyard installment payments and, based on the
increased demand for LNG carrier tonnage that is expected to coincide
with the vessel delivery timeframe, we are confident that we will be
able to secure attractive fixed-rate employment for these modern,
fuel efficient, newbuilding vessels which will further contribute to
the Partnership's distributable cash flow growth." 
Mr. Evensen continued, "In our conventional tanker segment, during
the fourth quarter, we agreed to amend the time-charter contracts for
two of our Suezmax tankers which will result in a reduced cash flows
for 24 months commencing October 1, 2012. However, we expect that
increased cash flow from our recent LPG joint venture will more than
offset any reduction in cash flows from these vessels during this
period. Further to our recent growth transactions, the Partnership
continues to actively bid on new LNG shipping and regasification
projects and review opportunities to acquire quality on-the-water
assets. With approximately $360 million of total liquidity as of
December 31, 2012, giving pro forma effect for the Exmar LPG joint
venture, we believe the Partnership is financially well-positioned
for further growth."  
Teekay LNG's Fleet 
The following table summarizes the Partnership's fleet as of February
15, 2013, including vessels operated through the Exmar LPG BVBA joint
venture:  


 
----------------------------------------------------------------------------
                                           Number of Vessels                
                          --------------------------------------------------
                                    Owned   In-Chartered                    
                                  Vessels        Vessels   Newbuilds   Total
                          --------------------------------------------------
LNG Carrier Fleet                  27 (i)              -           2      29
LPG/Multigas Carrier Fleet        17 (ii)        5 (iii)     8 (iii)      30
Conventional Tanker Fleet              11              -           -      11
----------------------------------------------------------------------------
Total                                  55              5          10      70
----------------------------------------------------------------------------
 
i.  The Partnership's ownership interests in these vessels ranges from 33
    percent to 100 percent. 
ii. The Partnership's ownership interests in these vessels ranges from 50
    percent to 99 percent. 
iii.The Partnership has a 50 percent ownership interests in these vessels. 

 
Financial Summary 
The Partnership reported adjusted net income attributable to the
partners(1) (as detailed in Appendix A to this release) of $38.5
million for the quarter ended December 31, 2012, compared to $29.8
million for the same period of the prior year. Adjusted net income
attributable to the partners excludes a number of specific items that
had the net effect of decreasing net income by $10.3 million and
increasing net income by $10.6 million for the three months ended
December 31, 2012 and 2011, respectively, as detailed in Appendix A.
Including these items, the Partnership reported net income
attributable to the partners, on a GAAP basis, of $28.2 million and
$40.3 million for the three months ended December 31, 2012 and 2011,
respectively.  
For the year ended December 31, 2012, the Partnership reported
adjusted net income attributable to the partners(1) (as detailed in
Appendix A to this release) of $156.3 million, compared to $108.9
million for the same period of the prior year. Adjusted net income
attributable to the partners excludes a number of specific items that
had the net effect of decreasing net income by $32.6 million and
$19.0 million for the years ended December 31, 2012 and 2011,
respectively, as detailed in Appendix A. Including these items, the
Partnership reported net income attributable to the partners, on a
GAAP basis, of $123.7 million and $89.8 million for the years ended
December 31, 2012 and 2011, respectively. 
For accounting purposes, the Partnership is required to recognize the
changes in the fair value of its derivative instruments on its
consolidated statements of income. This method of accounting does not
affect the Partnership's cash flows or the calculation of
distributable cash flow, but results in the recognition of unrealized
gains or losses on the consolidated statements of income as detailed
in footnotes 2 and 3 to the Summary Consolidated Statements of Income
included in this release.  


 
1.  Adjusted net income attributable to the partners is a non-GAAP financial
    measure. Please refer to Appendix A to this release for a reconciliation
    of this non-GAAP measure to the most directly comparable financial
    measure under GAAP and information about specific items affecting net
    income which are typically excluded by securities analysts in their
    published estimates of the Partnership's financial results. 

 
Operating Results 
The following table highlights certain financial info
rmation for
Teekay LNG's two segments: the Liquefied Gas segment and the
Conventional Tanker segment (please refer to the "Teekay LNG's Fleet"
section of this release above and Appendix C for further details).  


 
----------------------------------------------------------------------------
                               Three Months Ended      Three Months Ended   
                               December 31, 2012        December 31, 2011   
                                  (unaudited)              (unaudited)      
                           -------------------------------------------------
                             Lique- Convent-          Lique- Convent-       
                               fied    ional            fied    ional       
(in thousands of U.S.           Gas   Tanker             Gas   Tanker       
 Dollars)                   Segment  Segment   Total Segment  Segment  Total
----------------------------------------------------------------------------
Net voyage revenues(i)       70,545   27,086  97,631  68,966   28,262 97,228
Vessel operating expenses    12,810   10,910  23,720  11,748   10,737 22,485
Depreciation and                                                            
 amortization                17,359    8,590  25,949  16,995    7,372 24,367
----------------------------------------------------------------------------
CFVO from consolidated                                                      
 vessels(ii)                 54,285   13,069  67,354  55,468   15,428 70,896
CFVO from equity accounted                                                  
 vessels(ii) (iii)           38,498        -  38,498  20,005        - 20,005
Total CFVO(ii)               92,783   13,069 105,852  75,473   15,428 90,901
----------------------------------------------------------------------------
 
i.  Net voyage revenues represents voyage revenues less voyage expenses,
    which comprise all expenses relating to certain voyages, including
    bunker fuel expenses, port fees, canal tolls and brokerage commissions.
    Net voyage revenues is a non-GAAP financial measure used by certain
    investors to measure the financial performance of shipping companies.
    Please see the Partnership's website at www.teekaylng.com for a
    reconciliation of this non-GAAP measure as used in this release to the
    most directly comparable GAAP financial measure. 
ii. Cash flow from vessel operations (CFVO) represents income from vessel
    operations before (a) depreciation and amortization expense, (b)
    amortization of in-process revenue contracts, (c) write down of vessels
    and (d) adjustments for direct financing leases to a cash basis. CFVO is
    included because certain investors use this data to measure a company's
    financial performance. CFVO is not required by GAAP and should not be
    considered as an alternative to net income, equity income or any other
    indicator of the Partnership's performance required by GAAP. Please see
    the Partnership's website at www.teekaylng.com for a reconciliation of
    this non-GAAP measure as used in this release to the most directly
    comparable GAAP financial measure. 
iii.The Partnership's equity accounted investments for the three months
    ended December 31, 2012 and 2011 include the Partnership's 40 percent
    interest in Teekay Nakilat (III) Corporation, which owns four LNG
    carriers; the Partnership's 50 percent interest in the Excalibur and
    Excelsior Joint Ventures, which owns one LNG carrier and one
    regasification unit, respectively; and the Partnership's 33 percent
    interest in three LNG carriers servicing the Angola LNG Project. The
    Partnership's equity accounted investment for the three months ended
    December 31, 2012 also includes the Partnership's 33 percent interest in
    one other LNG carrier that was delivered in early 2012 servicing the
    Angola LNG Project; and the Partnership's 52 percent interest in MALT
    LNG Holdings ApS, the joint venture between the Partnership and Maurbeni
    Corporation, which acquired six LNG carriers on February 28, 2012. 

 
Liquefied Gas Segment 
Cash flow from vessel operations from the Partnership's Liquefied Gas
segment, excluding equity-accounted vessels, decreased to $54.3
million in the fourth quarter of 2012 from $55.5 million in the same
quarter of the prior year. The decrease is mainly attributable to
higher general and administrative costs related to an increase in
business development activities. 
Cash flow from vessel operations from the Partnership's
equity-accounted vessels in the Liquefied Gas segment increased to
$38.5 million in the fourth quarter of 2012 from $20.0 million in the
same quarter of the prior year. This increase was primarily due to
the Teekay LNG-Marubeni joint venture's acquisition of six LNG
carriers from A.P. Moller Maersk A/P (the MALT LNG Carriers) in
February 2012 and the acquisition of a 33 percent interest in two of
the Angola LNG carriers from Teekay Corporation between October 2011
and January 2012.  
Conventional Tanker Segment 
Cash flow from vessel operations from the Partnership's Conventional
Tanker segment decreased to $13.1 million in the fourth quarter of
2012 from $15.4 million in the same quarter of the prior year,
primarily as a result of ame
ndments for two of the Partnership's
Suezmax tankers charter contracts which temporarily reduces the daily
hire rate for each vessel by $12,000 from October 2012 until
September 2014. However, during this period, if Suezmax spot tanker
rates exceed the amended rates, the charterer will pay the
Partnership the excess amount up to a maximum of the original daily
charter rate. 
Liquidity 
As of December 31, 2012, the Partnership had total liquidity of
$495.0 million (comprised of $113.6 million in cash and cash
equivalents and $381.4 million in undrawn credit facilities),
compared to total liquidity of $558.9 million as of September 30,
2012. The change in liquidity during the fourth quarter of 2012
primarily reflects shipyard installment payments for the two LNG
newbuildings ordered in December 2012. Giving pro forma effect to the
Partnership's equity contribution for the Exmar LPG joint venture
transaction, the Partnership's total liquidity at December 31, 2012
was approximately $360 million. 
Conference Call 
The Partnership plans to host a conference call on Friday, February
22, 2013 at 11:00 a.m. (ET) to discuss the results for the fourth
quarter and fiscal year of 2012. All unitholders and interested
parties are invited to listen to the live conference call by choosing
from the following options: 


 
--  By dialing (866) 322-2356 or (416) 640-3405, if outside North America,
    and quoting
 conference ID code 7443167. 
--  By accessing the webcast, which will be available on Teekay LNG's
    website at www.teekaylng.com (the archive will remain on the web site
    for a period of 30 days). 

 
A supporting Fourth Quarter and Fiscal Year 2012 Earnings
Presentation will also be available at www.teekaylng.com in advance
of the conference call start time.  
The conference call will be recorded and made available until Friday,
March 1, 2013. This recording can be accessed following the live call
by dialing (888) 203-1112 or (647) 436-0148, if outside North
America, and entering access code 7443167.  
About Teekay LNG Partners L.P. 
Teekay LNG Partners is the world's third largest independent owner
and operator of LNG carriers, providing LNG, LPG and crude oil marine
transportation services primarily under long-term, fixed-rate charter
contracts with major energy and utility companies through its
interests in 29 LNG carriers (including one LNG regasification unit
and two newbuildings), 30 LPG/Multigas carriers (including five
chartered-in LPG carriers and eight newbuildings) and 11 conventional
tankers. The Partnership's interests in these vessels range from 33
to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master
limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as
part of its strategy to expand its operations in the LNG and LPG
shipping sectors. 
Teekay LNG Partners' common units trade on the New York Stock
Exchange under the symbol "TGP". 


 
TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED STATEMENTS OF INCOME                                   
(in thousands of U.S. Dollars, except units outstanding)                    
                                                                            
                                                                            
                        Three Months Ended                 Year Ended       
               -------------------------------------------------------------
                  December    September    December    December    December 
                       31,          30,         31,         31,         31, 
                      2012         2012        2011        2012        2011 
               (unaudited)  (unaudited) (unaudited) (unaudited) (unaudited) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
VOYAGE REVENUES     97,958       98,723      97,253     392,251     379,975 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OPERATING                                                                   
 EXPENSES                                                                   
Voyage expenses        327          860          25       1,772       1,387 
Vessel                                                                      
 operating                                                                  
 expenses           23,720       21,992      22,485      86,347      89,046 
Depreciation                                                                
 and                                                                        
 amortization       25,949       24,570      24,367      99,825      91,919 
General and                                                                 
 administrative      7,273        6,254       5,455      27,149      24,120 
Write down of                                                               
 vessels(1)         29,367            -           -      29,367           - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                    86,636       53,676      52,332     244,460     206,472 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from                                                                 
 vessel                                                                     
 operations         11,322       45,047      44,921     147,791     173,503 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OTHER ITEMS                                                                 
Equity                                                                      
 income(2)          29,634       21,098       8,189      78,866      20,584 
Interest                                                                    
 expense           (13,265)     (14,414)    (13,861)    (54,211)    (49,880)
Interest income        771          850       1,835       3,502       6,687 
Realized and                                                                
 unrealized                                                                 
 gain (loss) on                                                             
 derivative                                                                 
 instruments(3)     14,373       (9,945)     (8,780)    (29,620)    (63,030)
Foreign                                                                     
 exchange                                                                   
 (loss) gain(4)     (6,255)      (6,248)     10,722      (8,244)     10
,310 
Other income                                                                
 (expense) -                                                                
 net                   540         (305)         98       1,058        (818)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income          37,120       36,083      43,124     139,142      97,356 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income                                                                  
 attributable                                                               
 to:                                                                        
  Non-                                                                      
   controlling                                                              
   interest          8,895        3,022       2,777      15,437       7,508 
  Partners          28,225       33,061      40,347     123,705      89,848 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Limited                                                                     
 partners'                                                                  
 units                                                                      
 outstanding:                                                               
Weighted-                                                                   
 average number                                                             
 of common and                                                              
 total units                                                                
 outstanding -                                                              
 basic and                                                                  
 diluted        69,683,763   65,882,450  62,885,074  66,328,496  59,147,422 
Total number of                                                             
 units                                                                      
 outstanding at                                                             
 end of period  69,683,763   69,683,763  64,857,900  69,683,763  64,857,900 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
1.  The carrying value of three of the Partnership's conventional Suezmax
    tankers (the Tenerife Spirit, Algeciras Spirit and Huelva Spirit) was
    written down during the three months and year ended December 31, 2012
    due to the expected termination of their time-charter contracts between
    August 2013 and April 2014. The estimated fair value was based on a
    discounted cash flow approach and such estimates of cash flows were
    based on existing time-charter contracts, lease obligations and budgeted
    operating costs. 
2.  Equity income includes unrealized gains (losses) gains on derivative
    instruments as detailed in the table below. 
 
                                       Three Months Ended        Year Ended 
                           -------------------------------------------------
                             December September  December December December 
                             31, 2012  30, 2012  31, 2011 31, 2012 31, 2011 
                           -------------------------------------------------
Equity income                  29,634    21,098     8,189   78,866   20,584 
Proportionate share of                                                      
 unrealized gains (losses)                                                  
 on derivative instruments                                                  
 included in equity income      9,599      (870)      158    5,548   (5,956)
                           -------------------------------------------------
Equity income excluding                                                     
 unrealized gains (losses)                                                  
 on derivative instruments     20,035    21,968     8,031   73,318   26,540 
                           -------------------------------------------------
 
3.  The realized (losses) gains relate to the amounts the Partnership
    actually paid to settle derivative instruments and the unrealized gains
    (losses) relate to the change in fair value of such derivative
    instruments as detailed in the table below:  
 
                               Three Months Ended            Year Ended     
                         ---------------------------------------------------
                          December  September  December  December  December 
                          31, 2012   30, 2012  31, 2011  31, 2012  31, 2011 
                         ---------------------------------------------------
Realized (losses) gains                                                     
 relating to:                                                               
Interest rate swaps         (9,614)    (9,450)   (9,795)  (37,427)  (40,100)
Interest rate swaps                                                         
 terminations                    -          -   (22,560)        -   (22,560)
Toledo Spirit time-                                                         
 charter derivative                                                         
 contract                      945          -       (40)      907       (93)
                         ---------------------------------------------------
                            (8,669)    (9,450)  (32,395)  (36,520)  (62,753)
                         ---------------------------------------------------
Unrealized gains (losses)                                                   
 relating to:                                                               
Interest rate swaps         21,442       (295)   (6,345)    5,200   (32,237)
Interest rate swaps                                                         
 terminations                    -          -    22,560         -    22,560 
Toledo Spirit time-                                                         
 charter derivative                                                         
 contract                    1,600       (200)    7,400     1,700     9,400 
                         ---------------------------------------------------
                            23,042       (495)   23,615     6,900      (277)
                         ---------------------------------------------------
Total realized and                                                          
 unrealized gains                                                           
 (losses) derivative                                                        
 instruments                14,373     (9,945)   (8,780)  (29,620)  (63,030)
                         ---------------------------------------------------
 
4.  For accounting purposes, the Partnership is required to revalue all
    foreign currency-denominated monetary assets and liabilities based on
    the prevailing exchange rate at the end of each reporting period. This
    revaluation does not affect the Partnership's cash flows or the
    calculation of distributable cash flow, but results in the recognition
    of unrealized foreign currency translation gains or losses in the
    consolidated statements of income.
    
    Foreign exchange (loss) gain includes realized gains relating to the
    amounts the Partnership received to settle the Partnership's non-
    designated cross currency swap that was entered into as an economic
    hedge in relation to the Partnership's Norwegian Kroner (NOK)-
    denominated unsecured bonds. The Partnership issued NOK 700 million
    unsecured bonds in May 2012 maturing in 2017. Foreign exchange (loss
)
    gain also includes unrealized gains (losses) relating to the change in
    fair value of such derivative instruments, partially offset by
    unrealized gains (losses) on the revaluation of the NOK bonds as
    detailed in the table below: 
 
                                 Three Months Ended           Year Ended    
                           -------------------------------------------------
                            December  September  December December  December
                            31, 2012   30, 2012  31, 2011 31, 2012  31, 2011
                           -------------------------------------------------
Realized gains on cross-                                                    
 currency swaps                  102        107         -      257         -
Unrealized gains (losses)                                                   
 on cross-currency swaps       4,516      3,077         -   (2,677)        -
Unrealized losses on                                                        
 revaluation of NOK bonds     (3,523)    (4,828)        -     (791)        -
                                                                            
                                                                            
TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED BALANCE SHEETS                                         
(in thousands of U.S. Dollars)                                              
                                                                            
                                                                            
                                               As at       As at       As at
                                            December   September    December
                                                 31,         30,         31,
                                                2012        2012        2011
                                         (unaudited) (unaudited) (unaudited)
                                        ------------------------------------
ASSETS                                                                      
Cash and cash equivalents                    113,577      91,931      93,627
Restricted cash - current                     34,160      31,361           -
Other current assets                          19,244      19,327      18,837
Advances to affiliates                        13,864       3,338      11,922
Restricted cash - long-term                  494,429     496,309     495,634
Vessels and equipment                      1,911,016   1,960,756   2,021,125
Advances on newbuilding contracts             38,624           -           -
Net investments in direct financing                                         
 leases                                      403,386     404,981     409,541
Derivative assets                            162,559     167,638     155,259
Investments in and advances to equity                                       
 accounted
 joint ventures                    409,735     388,722     191,448
Other assets                                  39,237      37,668      34,760
Intangible assets                            109,984     113,731     120,950
Goodwill                                      35,631      35,631      35,631
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Assets                               3,785,446   3,751,393   3,588,734
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND EQUITY                                                      
Accounts payable, accrued liabilities                                       
 and unearned revenue                         59,729      46,019      60,030
Current portion of long-term debt and                                       
 capital leases                              156,761     253,791     131,925
Advances from affiliates and joint                                          
 venture partners                             12,083      11,072      17,400
Long-term debt and capital leases          1,894,166   1,730,220   1,830,353
Derivative liabilities                       296,295     328,930     293,218
Other long-term liabilities                  112,138  
   111,310     116,099
Equity                                                                      
Non-controlling interest(1)                   41,294      32,434      26,242
Partners' equity                           1,212,980   1,237,617   1,113,467
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Liabilities and Total Equity         3,785,446   3,751,393   3,588,734
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
1.  Non-controlling interest includes a 30 percent equity interest in the
    RasGas II project (which owns three LNG carriers), a 31 percent equity
    interest in the Tangguh Project (which owns two LNG carriers), a 1
    percent equity interest in the two Kenai LNG carriers, a 1 percent
    equity interest in the Excalibur joint venture (which owns one LNG
    carrier), and a 1 percent equity interest in the five LPG/Multigas
    carriers, which in each case the Partnership does not own.  
 
TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS                               
(in thousands of U.S. Dollars)                                              
                                                                            
                                                    Year Ended December 31, 
                                                          2012         2011 
                                                   (unaudited)  (unaudited) 
                                                  --------------------------
Cash and cash equivalents provided by (used for)                            
OPERATING ACTIVITIES                                                        
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net operating cash flow                                192,013      122,046 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FINANCING ACTIVITIES                                                        
Proceeds from issuance of long-term debt               500,335      600,862 
Debt issuance costs                                     (2,065)      (2,578)
Scheduled repayments of long-term debt                 (84,666)    (290,940)
Prepayments of long-term debt                         (324,274)    (383,000)
Scheduled repayments of capital lease obligations                           
 and other long-term liabilities                       (10,161)     (89,350)
Proceeds from equity offering, net of offering                              
 costs                                                 182,316      341,178 
Advances to and from affiliates                              -       27,048 
(Increase) decrease in restricted cash                 (31,217)      76,249 
Cash distributions paid                               (195,909)    (159,380)
Purchase of Skaugen Multigas Subsidiary                      -     (114,466)
Advances to joint venture partners                      (3,600)           - 
Other                                                     (385)       1,551 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net financing cash flow                                 30,374        7,174 
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INVESTING ACTIVITIES                                                        
Purchase of equity accounted investments              (170,067)     (57,287)
Receipts from direct financing leases                    6,155        6,154 
Expenditures for vessels and equipment                 (39,894)     (64,685)
Other                                                    1,369         (830)
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Net investing cash flow                               (202,437)    (116,648)
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Increase in cash and cash equivalents                   19,950       12,572 
Cash and cash equivalents, beginning of the year        93,627       81,055 
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Cash and cash equivalents, end of the year             113,577       93,627 
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TEEKAY LNG PARTNERS L.P.                                                    
APPENDIX A - SPECIFIC ITEMS AFFECTING NET INCOME                            
(in thousands of U.S. Dollars)                                              

 
Set forth below is a reconciliation of the Partnership's unaudited
adjusted net income attributable to the partners, a non-GAAP
financial measure, to net income attributable to the partners as
determined in accordance with GAAP. The Partnership believes that, in
addition to conventional measures prepared in accordance with GAAP,
certain investors use this information to evaluate the Partnership's
financial performance. The items below are also typically excluded by
securities analysts in their published estimates of the Partnership's
financial results. Adjusted net income attributable to the partners
is intended to provide additional information and should not be
considered a substitute for measures of performance prepared in
accordance with GAAP. 


 
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                                 Three Months Ended        Year Ended       
                               December    December    December    December 
                                    31,         31,         31,         31, 
                                   2012        2011        2012        2011 
                            (unaudited) (unaudited) (unaudited) (unaudited) 
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Net income - GAAP basis          37,120      43,124     139,142      97,356 
Less:                                                                       
  Net income attributable to                                                
   non-controlling interest      (8,895)     (2,777)    (15,437)     (7,508)
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Net income attributable to                                                  
 the partners                    28,225      40,347     123,705      89,848 
Add (subtract) specific                              
                       
 items affecting net income:                                                
  Write down of vessels(1)       29,367           -      29,367           - 
  Unrealized foreign                                                        
   exchange loss (gain)(2)        6,300     (10,722)      8,213     (10,310)
  Unrealized (gains) losses                                                 
   from derivative                                                          
   instruments(3)               (23,042)    (23,615)     (6,900)        277 
  Unrealized (gains) losses                                                 
   from derivative                                                          
   instruments and other                                                    
   items from equity                                                        
   accounted investees(4)        (8,849)        677      (3,721)      6,790 
  Interest rate swap                                                        
   cancellation costs                 -      22,560           -      22,560 
  Other items(5)                      -           -           -         949 
  Non-controlling interests'                                                
   share of items above           6,497         507       5,650      (1,256)
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Total adjustments                10,273     (10,593)     32,609      19,010 
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Adjusted net income                                                         
 attributable to the                                                        
 partners                        38,498      29,754     156,314     108,858 
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1.  The carrying value of three of the Partnership's conventional Suezmax
    tankers (the Tenerife Spirit, Algeciras Spirit and Huelva Spirit) was
    written down during the three months and year ended December 31, 2012
    due to the expected termination of their time-charter contracts between
    August 2013 and April 2014. The estimated fair value was based on a
    discounted cash flow approach and such estimates of cash flows were
    based on existing time-charter contracts, lease obligations and budgeted
    operating costs. 
2.  Unrealized foreign exchange losses (gains) primarily relate to the
    Partnership's revaluation of all foreign currency-denominated monetary
    assets and liabilities based on the prevailing exchange rate at the end
    of each reporting period and unrealized loss on the cross-currency swap
    economically hedging the Partnership's NOK bonds and exclude the
    realized gains relating to the cross currency swap for the NOK bonds. 
3.  Reflects the unrealized (gain) loss due to changes in the mark-to-market
    value of interest rate derivative instruments that are not designated as
    hedges for accounting purposes. 
4.  Reflects the unrealized (gain) loss due to changes in the mark-to-market
    value of derivative instruments that are not designated as hedges for
    accounting purposes within the Partnership's equity-accounted
    investments and $1.1 million, $0.8 million and $0.8 million of
    acquisition-related costs during the year ended December 31, 2012, and
    the three months and the year ended December 31, 2011, respectively,
    relating to the acquisition of the six MALT LNG Carriers. In addition,
    the three months and the year ended December 31, 2012 each includes a
    $0.8 million provision relating to a customer claim relating to a prior
    year. 
5.  Amount for the year ended December 31, 2011 relates to a one-time
    management fee associated with the portion of stock-based compensation
    grants to Teekay Corporation's former President and Chief Executive
    Officer that had not yet vested prior to the date of his retirement on
    March 31, 2011. 
 
TEEKAY LNG PARTNERS L.P.                                                    
APPENDIX B - RECONCILIATION OF NON-GAA
P FINANCIAL MEASURE                   
(in thousands of U.S. Dollars)                                              

 
Description of Non-GAAP Financial Measure - Distributable Cash Flow
(DCF) 
Distributable cash flow represents net income adjusted for
depreciation and amortization expense, non-cash items, estimated
maintenance capital expenditures, unrealized gains and losses from
derivatives, deferred income taxes and foreign exchange related
items. Maintenance capital expenditures represent those capital
expenditures required to maintain over the long-term the operating
capacity of, or the revenue generated by, the Partnership's capital
assets. Distributable cash flow is a quantitative standard used in
the publicly-traded partnership investment community to assist in
evaluating a partnership's ability to make quarterly cash
distributions. Distributable cash flow is not required by GAAP and
should not be considered as an alternative to net income or any other
indicator of the Partnership's performance required by GAAP. The
table below reconciles distributable cash flow to net income. 


 
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                                               Three Months    Three Months 
                                                      Ended           Ended 
                                               December 31,    December 31, 
                                                       2012            2011 
                                                (unaudited)     (unaudited) 
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Net income:                                          37,120          43,124 
Add:                                                                        
  Depreciation and amortization                      25,949          24,367 
  Write down of vessels                              29,367               - 
  Partnership's share of equity accounted                                   
   joint ventures' DCF before estimated                                     
   maintenance capital expenditures                  27,748          12,359 
  Unamortized amount relating to swap                                       
   cancellation costs                                     -          21,782 
  Unrealized foreign exchange loss (gain)             6,300         (10,722)
Less:                                                                       
  Unrealized gain on derivatives and other                                  
   non-cash items                                   (25,089)        (23,130)
  Estimated maintenance capital expenditures        (14,345)        (12,045)
  Equity income                                     (29,634)         (8,189)
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Distributable Cash Flow before Non-                                         
 controlling interest                                57,416          47,546 
Non-controlling interests' share of DCF                                     
 before estimated maintenance capital                                       
 expenditures                                        (3,817)         (3,442)
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Distributable Cash Flow                              53,599          44,104 
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TEEKAY LNG PARTNERS L.P.                                                    
APPENDIX C - SUPPLEMENTAL SEGMENT INFORMATION                               
(in thousands of U.S. Dollars)                                              
                                                                            
                                                                            
                                        Three Months Ended December 31, 2012
                                       -------------------------------------
                                                    (unaudited)             
                                          Liquefied   Conventional          
                                               Gas         Tanker           
                                            Segment        Segment     Total
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Net voyage revenue
s(1)                       70,545         27,086    97,631
Vessel operating expenses                    12,810         10,910    23,720
Depreciation and amortization                17,359          8,590    25,949
General and administrative                    4,925          2,348     7,273
Write down of vessels                             -         29,367    29,367
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Income (loss) from vessel operations         35,451        (24,129)   11,322
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                                        Three Months Ended December 31, 2011
                                       -------------------------------------
                                                    (unaudited)             
                                          Liquefied   Conventional          
                                               Gas         Tanker           
                                            Segment        Segment     Total
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Net voyage revenues(1)                       68,966         28,262    97,228
Vessel operating expenses                    11,748         10,737    22,485
Depreciation and amortization                16,995          7,372    24,367
General and administrative                    3,398          2,057     5,455
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Income from vessel operations                36,825          8,096    44,921
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1.  Net voyage revenues represents voyage revenues less voyage expenses,
    which comprise all expenses relating to certain voyages, including
    bunker fuel expenses, port fees, canal tolls and brokerage commissions.
    Net voyage revenues is a non-GAAP financial measure used by certain
    investors to measure the financial performance of shipping companies.
    Please see the Partnership's website at www.teekaylng.com for a
    reconciliation of this non-GAAP measure as used in this release to the
    most directly comparable GAAP financial measure. 

 
FORWARD-LOOKING STATEMENTS 
This release 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: future growth
opportunities, including the Partnership's ability to successfully
bid for new LNG shipping and regasification projects, the
Partnership's ability to secure long-term contract employment for the
DSME LNG carrier newbuildings and the Partnership's ability to
acquire quality on-the-water assets; increase in the Partnerships
distributable cash flow resulting from newbuildings and joint
ventures, including the Partnership's two DSME LNG carrier
newbuildings and Exmar LPG BVBA joint venture; the ability of cash
flow from the Exmar LPG BVBA joint venture to offset the reduced cash
flow in the conventional tanker segment; the success of the
Partnership's joint ventures, including the Exmar LPG BVBA joint
venture; Exmar LPG BVBA's ability to refinance its joint venture
fleet and four newbuildings; the expected delivery dates for the
Partnership's newbuildings; the expected fuel-efficiency and emission
levels of the DSME LNG carrier newbuilding; LNG and LPG shipping
market fundamentals, including the future growth in global LNG
supply, the balance of supply and demand of shipping capacity and
shipping charter rates in these sectors; the Partnership's financial
position, including available liquidity; and the Partnership's
ability to secure additional accretive growth opportunities. 
The following factors are among those that could cause actual results
to differ materially from the forward-looking statements, which
involve risks and uncertainties, and that should be considered in
evaluating any such statement: availability of LNG shipping LPG
shipping, floating storage, regasification and other growth project
opportunities; changes in production of LNG or LPG, either generally
or in particular regions; changes in trading patterns or timing of
start-up of new LNG liquefaction and regasification projects
significantly affecting overall vessel tonnage requirements; the
Partnership's ability to secure new contracts through bidding on
project tenders and/or acquire existing on-the-water assets; changes
in applicable industry laws and regulations and the timing of
implementation of new laws and regulations; the potential for early
termination of long-term contracts of existing vessels in the Teekay
LNG fleet; and the inability of the Partnership to renew or replace
long-term contracts on existing vessels or attain fixed-rate
long-term contracts for newbuilding vessels; the Partnership's
ability to raise financing to purchase additional vessels or to
pursue other projects; changes to the amount or proportion of
revenues, expenses, or debt service costs denominated in foreign
currencies; competitive dynamics in bidding for potential LNG or LPG
projects; and other factors discussed in Teekay LNG Partners' filings
from time to time with the SEC, including its Report on Form 20-F for
the fiscal year ended December 31, 2011. The Partnership expressly
disclaims any obligation to release publicly any updates or revisions
to any forward-looking statements contained herein to reflect any
change in the Partnership's expectations with respect thereto or any
change in events, conditions or circumstances on which any such
statement is based.
Contacts:
Teekay LNG Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442
www.teekaylng.com
 
 
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