Teekay Corporation
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 20-FTEEKAY CORP - TKFiled: April 30, 2018 (period: December 31, 2017)Annual and transition report of foreign private issuers under sections 13 or 15(d)The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549____________________________________FORM 20-F ____________________________________(Mark One)¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGEACT OF 1934ORýANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR¨TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF1934OR¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934Date of event requiring this shell company report For the transition period from to Commission file number 1-12874 ____________________________________TEEKAY CORPORATION(Exact name of Registrant as specified in its charter) ____________________________________Republic of The Marshall Islands(Jurisdiction of incorporation or organization)Not Applicable(Translation of Registrant’s name into English)4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, BermudaTelephone: (441) 298-2530(Address and telephone number of principal executive offices)Edith Robinson4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, BermudaTelephone: (441) 298-2530Fax: (441) 292-3931(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered, or to be registered, pursuant to Section 12(b) of the Act.Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Title of each class Name of each exchange on which registeredCommon Stock, par value of $0.001 per share New York Stock ExchangeSecurities registered, or to be registered, pursuant to Section 12(g) of the Act.NoneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act.None ____________________________________Indicate the number of outstanding shares of each issuer’s classes of capital or common stock as of the close of the period covered by the annual report.89,127,041 shares of Common Stock, par value of $0.001 per share.Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ýIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Actof 1934. Yes ¨ No ýIndicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨Indicate by check mark if the registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitand post such files). Yes ý No ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See the definitions of“large accelerated filer", "accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):Large Accelerated Filer ¨ Accelerated Filer ý Non-Accelerated Filer ¨ Emerging growth company ¨If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use theextended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codificationafter April 5, 2012.Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board ¨ Other ¨If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow: Item 17 ¨ Item 18 ¨If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATIONINDEX TO REPORT ON FORM 20-FINDEXPART I PAGEItem 1.Identity of Directors, Senior Management and Advisors6Item 2.Offer Statistics and Expected Timetable6Item 3.Key Information6 Selected Financial Data7 Risk Factors10 Tax Risks26Item 4.Information on the Company27 A.Overview, History and Development27 B.Operations28 Our Fleet32 Safety, Management of Ship Operations and Administration33 Risk of Loss, Insurance and Risk Management34 Operations Outside of the United States34 Customers34 Flag, Classification, Audits and Inspections34 Regulations35 C.Organizational Structure42 D.Properties43 E.Taxation of the Company43 1.United States Taxation43 2.Marshall Islands Taxation44 3.Other Taxation44Item 4A.Unresolved Staff Comments44Item 5.Operating and Financial Review and Prospects45 Overview45 Important Financial and Operational Terms and Concepts46 Items You Should Consider When Evaluating Our Results47 Recent Developments and Results of Operations48 Liquidity and Capital Resources76 Commitments and Contingencies82 Off-Balance Sheet Arrangements83 Critical Accounting Estimates83Item 6.Directors, Senior Management and Employees87 Directors and Senior Management.87 Compensation of Directors and Senior Management90 Options to Purchase Securities from Registrant or Subsidiaries90 Board Practices91 Crewing and Staff92 Share Ownership93Item 7.Major Shareholders and Certain Relationships and Related Party Transactions93 Major Shareholders93 Our Major Shareholder94 Our Directors and Executive Officers94 Relationships with Our Public Entity Subsidiaries94Item 8.Financial Information98Item 9.The Offer and Listing98Item 10.Additional Information99 Memorandum and Articles of Association993Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Material Contracts99 Exchange Controls and Other Limitations Affecting Security Holders101 Taxation101 Material U.S. Federal Income Tax Considerations101 Non-United States Tax Considerations105 Documents on Display105Item 11.Quantitative and Qualitative Disclosures About Market Risk105Item 12.Description of Securities Other than Equity Securities PART II. 108Item 13.Defaults, Dividend Arrearages and Delinquencies108Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds108Item 15.Controls and Procedures108 Management’s Report on Internal Control over Financial Reporting108Item 16A.Audit Committee Financial Expert109Item 16B.Code of Ethics109Item 16C.Principal Accountant Fees and Services109Item 16D.Exemptions from the Listing Standards for Audit Committees109Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers109Item 16F.Change in Registrant’s Certifying Accountant110Item 16G.Corporate Governance110Item 16H.Mine Safety Disclosure110PART III. 110Item 17.Financial Statements110Item 18.Financial Statements110Item 19.Exhibits110Signature 1144Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART IThis annual report of Teekay Corporation on Form 20-F for the year ended December 31, 2017 (or Annual Report) should be read in conjunction with the consolidatedfinancial statements and accompanying notes included in this report.Unless otherwise indicated, references in this Annual Report to “Teekay,” “the Company,” “we,” “us” and “our” and similar terms refer to Teekay Corporation and itssubsidiaries. References in this Annual Report to Teekay LNG refer to Teekay LNG Partners L.P. (NYSE: TGP), references in this Annual Report to Teekay Tankers referto Teekay Tankers Ltd. (NYSE: TNK), and references in this Annual Report to “Teekay Offshore” refer to Teekay Offshore Partners L.P. (NYSE: TOO).In addition to historical information, this Annual Report contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements relate tofuture events and our operations, objectives, expectations, performance, financial condition and intentions. When used in this Annual Report, the words “expect,” “intend,”“plan,” “believe,” “anticipate,” “estimate” and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-lookingstatements in this Annual Report include, in particular, statements regarding:•our future financial condition and results of operations and our future revenues, expenses and capital expenditures, and our expected financial flexibility to pursuecapital expenditures, acquisitions and other expansion opportunities;•our dividend policy and our ability to pay cash dividends on our shares of common stock or any increases in quarterly distributions, and the distribution and dividendpolicies of our publicly-listed subsidiaries Teekay LNG and Teekay Tankers (or the Controlled Daughter Entities), and our publicly-listed equity-accounted investeeTeekay Offshore (together with the Controlled Daughter Entities, the Daughter Entities), including the ability to increase the distribution levels of the Daughter Entitiesin the future;•meeting our going concern requirements and our liquidity needs, and the liquidity needs of Teekay LNG and Teekay Tankers, including our working capital deficit,anticipated funds and sources of financing for liquidity needs and the sufficiency of cash flows, and our estimation that we will have sufficient liquidity for at least thenext 12 months;•our ability and plans to obtain financing for new and existing projects, including unfinanced newbuildings, refinance existing debt obligations and fulfill our debtobligations;•our plans for Teekay Parent, which excludes our controlling interests in the Controlled Daughter Entities and our equity-accounted investment in Teekay Offshore,and includes Teekay and its remaining subsidiaries, not to have a direct ownership in any floating production, storage and offloading (or FPSO) units, and to increaseits free cash flow per share and reduce its debt levels;•offshore, liquefied natural gas (or LNG), liquefied petroleum gas (or LPG), Long Range 2 (or LR2) and tanker market conditions and fundamentals, including thebalance of supply and demand in these markets and spot tanker charter rates, fleet growth, price of oil, and oil production in the tanker market, including the expectedtanker market recovery during the latter part of 2018 and into 2019;•the expected lifespan of our vessels, including our expectations as to any impairment of our vessels;•our future growth prospects and future trends of the markets in which we operate;•the impact of future changes in the demand for and price of oil, and the related effects on the demand for and price of natural gas;•certainty of completion, estimated delivery and completion dates, commencement dates and rates of charters and charter extensions, intended financing andestimated costs, and the location of service and intended use for newbuildings, acquisitions and conversions;•our expectations regarding the ability of Awilco LNG ASA (or Awilco), and our other customers to make charter payments to us, and the ability of our customers tofulfill purchase obligations at the end of charter contracts, including obligations relating to two of Teekay LNG's LNG carriers completing charters with Awilco in 2019;•our ability to maximize the use of our vessels, including the redeployment or disposition of vessels no longer under long-term charter or whose charter contract isexpiring;•the future resumption of a LNG plant in Yemen operated by Yemen LNG Company Limited (or YLNG), the expected repayment of deferred hire amounts on TeekayLNG's two 52% owned vessels, the Marib Spirit and Arwa Spirit, on charter to YLNG, and the expected reduction to Teekay LNG's equity income in 2018 as a resultof the charter payment deferral;•expected funding of Teekay LNG's proportionate share of the remaining shipyard installment payments for its joint venture with China LNG, CETS InvestmentManagement (HK) Co. Ltd. and BW LNG Investments Pte. Ltd. (or the Pan Union Joint Venture);•the cost of supervision and crew training in relation to the Pan Union Joint Venture, and our expected recovery of a portion of those costs;•our expectation that the owner of Teekay LNG’s Suezmax tanker under capital lease, the Toledo Spirit, will cancel the charter contract for the vessel and sell it to athird party, rather than requiring Teekay LNG to purchase the vessel under capital lease;•the expected technical and operational capabilities of newbuildings, including the benefits of the M-type, Electronically Controlled, Gas Injection (or MEGI) twin enginesin certain LNG carrier newbuildings;5Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•our expectations regarding the schedule and performance of the receiving and regasification terminal in Bahrain, which will be owned and operated by a new jointventure, Bahrain LNG W.L.L., owned by Teekay LNG (30%), National Oil & Gas Authority (or Nogaholding) (30%), Gulf Investment Corporation (or GIC) (24%) andSamsung C&T (or Samsung) (16%) (or the Bahrain LNG Joint Venture), and our expectations regarding the supply, modification and charter of a floating storage unit(or FSU) vessel for the project;•Teekay Offshore’s ability to recover the lower day rate on the Petrojarl I FPSO unit under the amended variable rate contract;•the future valuation or impairment of goodwill;•our expectations and estimates regarding future charter business, including with respect to minimum charter hire payments, revenues and our vessels’ ability toperform to specifications and maintain their hire rates in the future;•compliance with financing agreements and the expected effect of restrictive covenants in such agreements;•operating expenses, availability of crew and crewing costs, number of off-hire days, dry-docking requirements, our ability to recover dry-docking expenses fromcharterers, and durations and the adequacy and cost of insurance;•the effectiveness of our risk management policies and procedures and the ability of the counterparties to our derivative contracts to fulfill their contractual obligations;•the impact of, and our ability to comply with, new and existing governmental regulations and maritime self-regulatory organization standards and environmentalliabilities applicable to our business, including the expected cost to install ballast water treatment systems on our vessels in compliance with the International MarineOrganization (or IMO) proposals;•the outcome of the investigation into allegations of improper payments by one of our subsidiaries to Brazilian agents;•the timing of the new shuttle tanker contract of affreightment (or CoA) contracts and the number of shuttle tankers to serve these new CoAs;•the ability of Teekay Offshore to grow its long-distance ocean towage and offshore installation services business;•expected uses of proceeds from vessel or securities transactions;•our entering into joint ventures or partnerships with companies;•our expectations regarding the benefits of the Brookfield Transaction (as defined below in Item 5);•our expectations regarding whether the UK taxing authority can successfully challenge the tax benefits available under certain of our former and current leasingarrangements, and the potential financial exposure to us if such a challenge is successful;•our hedging activities relating to foreign exchange, interest rate and spot market risks, and the effects of fluctuations in foreign exchange, interest rate and spotmarket rates on our business and results of operations;•our expectations regarding uncertain tax positions;•the potential impact of new accounting guidance; and•our business strategy and other plans and objectives for future operations.Forward-looking statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significantuncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-lookingstatements. Important factors that could cause actual results to differ materially include, but are not limited to, those factors discussed below in “Item 3. Key Information—Risk Factors” and other factors detailed from time to time in other reports we file with the U.S. Securities and Exchange Commission (or SEC).We do not intend to revise any forward-looking statements in order to reflect any change in our expectations or events or circumstances that may subsequently arise. Youshould carefully review and consider the various disclosures included in this Annual Report and in our other filings made with the SEC that attempt to advise interestedparties of the risks and factors that may affect our business, prospects and results of operations.Item 1.Identity of Directors, Senior Management and AdvisorsNot applicable.Item 2.Offer Statistics and Expected TimetableNot applicable.Item 3.Key Information6Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSelected Financial DataSet forth below is selected consolidated financial and other data of Teekay for fiscal years 2013 through 2017, which have been derived from our consolidated financialstatements. The data below should be read in conjunction with the consolidated financial statements and the notes thereto and the Reports of the Independent RegisteredPublic Accounting Firm thereon with respect to fiscal years in the three-year period ended December 31, 2017 (which are included herein) and “Item 5. Operating andFinancial Review and Prospects.”Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (or GAAP). Years Ended December 31, 2017 2016 2015 2014 2013 (in thousands of U.S. Dollars, except share and per share data)Income Statement Data: Revenues $1,880,332 $2,328,569 $2,450,382 $1,993,920 $1,830,085Income from vessel operations (1) 6,700 384,290 625,132 427,159 62,746Interest expense (268,400) (282,966) (242,469) (208,529) (181,396)Interest income 6,290 4,821 5,988 6,827 9,708Realized and unrealized (loss) gain on non-designatedderivative instruments (38,854) (35,091) (102,200) (231,675) 18,414Equity (loss) income (37,344) 85,639 102,871 128,114 136,538Foreign exchange (loss) gain (26,463) (6,548) (2,195) 13,431 (13,304)Other (loss) income (53,981) (39,013) 1,566 (1,152) 5,646Income tax (expense) recovery (12,232) (24,468) 16,767 (10,173) (2,872)Net (loss) income (529,072) 86,664 405,460 124,002 35,480Less: Net loss (income) attributable to non- controllinginterests 365,796 (209,846) (323,309) (178,759) (150,218)Net (loss) income attributable to shareholders of TeekayCorporation (163,276) (123,182) 82,151 (54,757) (114,738)Per Common Share Data: Basic (loss) earnings attributable to shareholders ofTeekay Corporation (1.89) (1.62) 1.13 (0.76) (1.63)Diluted (loss) earnings attributable to shareholders ofTeekay Corporation (1.89) (1.62) 1.12 (0.76) (1.63)Cash dividends declared 0.2200 0.2200 1.7325 1.2650 1.2650Balance Sheet Data (at end of year): Cash and cash equivalents $445,452 $567,994 $678,392 $806,904 $614,660Restricted cash 106,722 237,248 176,437 119,351 502,732Vessels and equipment 5,208,544 9,138,886 9,366,593 8,106,247 7,351,144Net investments in direct financing leases 495,990 660,594 684,129 704,953 727,262Total assets 8,092,437 12,814,752 13,061,248 11,779,690 11,506,393Total debt (including obligations related to capital leases) 4,578,162 7,032,385 7,443,213 6,715,526 6,658,491Capital stock and additional paid-in capital 919,078 887,075 775,018 770,759 713,760Non-controlling interest 2,102,465 3,189,928 2,782,049 2,290,305 2,071,262Total equity 2,879,656 4,089,293 3,701,074 3,388,633 3,203,050Number of outstanding shares of common stock 89,127,041 86,149,975 72,711,371 72,500,502 70,729,399Other Financial Data: Net revenues (2) $1,726,566 $2,190,230 $2,334,595 $1,866,073 $1,717,867EBITDA (3) 231,099 961,102 1,134,674 758,781 641,126Adjusted EBITDA (3) 898,246 1,268,668 1,393,696 1,037,284 817,382Total debt to total capitalization (4) 61.4% 63.2% 66.8% 66.5% 67.5%Net debt to total net capitalization (5) 58.3% 60.4% 64.0% 63.1% 63.4%Capital expenditures: Expenditures for vessels and equipment $1,054,052 $648,326 $1,795,901 $994,931 $753,7557Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(1)Income from vessel operations includes, among other things, the following: Years Ended December 31, 2017 2016 2015 2014 2013 (in thousands of U.S. Dollars)Asset impairments and net (loss) gain on sale of vessels, equipment and other operating assets $(270,743) $(112,246) $(70,175) $11,271 $(166,358)Restructuring charges (5,101) (26,811) (14,017) (9,826) (6,921) $(275,844) $(139,057) $(84,192) $1,445 $(173,279)(2)Net revenues is a non-GAAP financial measure. consistent with general practice in the shipping industry, we use net revenues (defined as revenues less voyage expenses)as a measure of equating revenues generated from voyage charters to revenues generated from time charters, which assists us in making operating decisions about thedeployment of our vessels and their performance. Under time charters, the charterer pays the voyage expenses, which are all expenses unique to a particular voyage,including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions, whereas under voyage-charter contractsthe ship-owner pays these expenses. Some voyage expenses are fixed, and the remainder can be estimated. If we, as the ship-owner, pay the voyage expenses, wetypically pass the approximate amount of these expenses on to our customers by charging higher rates under the contract or billing the expenses to them. As a result,although revenues from different types of contracts may vary, the net revenues after subtracting voyage expenses, which we call “net revenues,” are comparable across thedifferent types of contracts. We principally use net revenues because it provides more meaningful information to us than revenues, the most directly comparable GAAPfinancial measure. Net revenues are also widely used by investors and analysts in the shipping industry for comparing financial performance between companies and toindustry averages. Net revenues should not be considered as an alternative to revenues or any other measure of financial performance in accordance with GAAP. Netrevenues is adjusted for expenses that we classify as voyage expenses and, therefore, may not be comparable to similarly titled measures of other companies. The followingtable reconciles net revenues with revenues. Years Ended December 31, 2017 2016 2015 2014 2013 (in thousands of U.S. Dollars)Revenues $1,880,332 $2,328,569 $2,450,382 $1,993,920 $1,830,085Voyage expenses (153,766) (138,339) (115,787) (127,847) (112,218)Net revenues $1,726,566 $2,190,230 $2,334,595 $1,866,073 $1,717,867(3)EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDArepresents EBITDA before restructuring charges, foreign exchange loss (gain), items included in other loss (income), asset impairments, and net loss (gain) on sale of vessels,equipment and other operating assets, amortization of in-process revenue contracts, unrealized (gains) loss on derivative instruments, realized losses on interest rate swaps,realized losses on interest rate swap amendments and terminations, loss on deconsolidation of Teekay Offshore, write-downs related to equity-accounted investments, andour share of the above items in non-consolidated joint ventures which are accounted for using the equity method of accounting. EBITDA and Adjusted EBITDA are used assupplemental financial measures by management and by external users of our financial statements, such as investors, as discussed below.•Financial and operating performance. EBITDA and Adjusted EBITDA assist our management and security holders by increasing the comparability of our fundamentalperformance from period to period and against the fundamental performance of other companies in our industry that provide EBITDA or Adjusted EBITDA-basedinformation. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest expense, taxes,depreciation or amortization (or other items in determining Adjusted EBITDA), which items are affected by various and possibly changing financing methods, capitalstructure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA and Adjusted EBITDA asfinancial and operating measures benefits security holders in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoingfinancial and operational strength and health in order to assess whether to continue to hold our equity, or debt securities, as applicable.•Liquidity. EBITDA and Adjusted EBITDA allow us to assess the ability of assets to generate cash sufficient to service debt, pay dividends and undertake capitalexpenditures. By eliminating the cash flow effect resulting from our existing capitalization and other items such as dry-docking expenditures, working capital changes andforeign currency exchange gains and losses (which may vary significantly from period to period), EBITDA and Adjusted EBITDA provide consistent measures of ourability to generate cash over the long term. Management uses this information as a significant factor in determining (a) our proper capitalization structure (includingassessing how much debt to incur and whether changes to our capitalization should be made) and (b) whether to undertake material capital expenditures and how tofinance them, all in light of our dividend policy. Use of EBITDA and Adjusted EBITDA as liquidity measures also permits security holders to assess the fundamental abilityof our business to generate cash sufficient to meet our financial and operational needs, including dividends on shares of our common stock and repayments under debtinstruments.Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure offinancial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income and operatingincome, and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titledmeasures of other companies.The following table reconciles our historical consolidated EBITDA and Adjusted EBITDA to net (loss) income, and our historical consolidated Adjusted EBITDA to netoperating cash flow. 8Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands of U.S. Dollars)Income Statement Data: Reconciliation of EBITDA and Adjusted EBITDAto Net (loss) income Net (loss) income $(529,072) $86,664 $405,460 $124,002 $35,480Income tax expense (recovery) 12,232 24,468 (16,767) 10,173 2,872Depreciation and amortization 485,829 571,825 509,500 422,904 431,086Interest expense, net of interest income 262,110 278,145 236,481 201,702 171,688EBITDA 231,099 961,102 1,134,674 758,781 641,126Restructuring charges 5,101 26,811 14,017 9,826 6,921Foreign exchange loss (gain) (a) 26,463 6,548 2,195 (13,431) 13,304Items included in other loss (income) (b) (c) 48,750 42,401 — 7,699 —Asset impairments and net loss (gain) on saleof vessels, equipment and other operating assets 270,743 112,246 70,175 (11,271) 166,358Amortization of in-process revenue contracts (26,958) (28,109) (30,085) (40,939) (61,700)Unrealized (gains) losses on derivative instruments (13,634) (69,401) (38,319) 100,496 (178,731)Realized losses on interest rate swaps 53,921 87,320 108,036 125,424 122,439Realized losses on interest rate swap amendmentsand terminations 610 8,140 10,876 1,319 35,985Loss on deconsolidation of Teekay Offshore (note 3) 104,788 — — — —Write-downs related to equity-accounted investments 46,168 2,357 — — —Adjustments relating to equity income (d) 151,195 119,253 122,127 99,380 71,680Adjusted EBITDA 898,246 1,268,668 1,393,696 1,037,284 817,382Reconciliation of Adjusted EBITDA to netoperating cash flow Net operating cash flow 513,745 620,783 775,832 456,177 299,295Expenditures for dry docking 50,899 45,964 68,380 74,379 72,205Interest expense, net of interest income 262,110 278,145 236,481 201,702 171,688Change in non-cash working capital items related tooperating activities (106,567) (38,333) 12,291 (60,631) (64,184)Equity income (loss), net of dividends received (87,602) 47,563 (3,203) 94,726 121,144Other items (b) (c) 54,834 73,022 48,859 34,982 (19,791)Restructuring charges 5,101 26,811 14,017 9,826 6,921Realized losses on interest rate swaps 53,921 87,320 108,036 125,424 122,439Realized losses on interest rate swap resets andterminations 610 8,140 10,876 1,319 35,985Adjustments relating to equity income (d) 151,195 119,253 122,127 99,380 71,680Adjusted EBITDA 898,246 1,268,668 1,393,696 1,037,284 817,382(a)Foreign exchange loss (gain) includes the unrealized gain of $82.7 million in 2017 (2016 – gain of $75.0 million, 2015 – loss of $89.2 million, 2014 – loss of $167.3 million,and 2013 – loss of $65.4 million) on cross currency swaps.(b)In June 2016, as part of its financing initiatives, Teekay Offshore canceled the construction contracts for its two UMS newbuildings. As a result, Teekay Offshore accrued forpotential damages resulting from the cancellations and reversed contingent liabilities previously recorded that were relating to the delivery of the UMS newbuildings. This netloss provision of $23.4 million for the year ended December 31, 2016 is reported in Other (loss) income in our consolidated statements of income. The newbuilding contractsare held in Teekay Offshore's separate subsidiaries and obligations of these subsidiaries are non-recourse to Teekay Offshore.(c)The Company held cost-accounted investments at cost. During the year ended December 31, 2016, the Company recorded a write-down of an investment of $19.0 million.This investment was subsequently sold in 2017, resulting in a gain on sale of cost-accounted investment of $1.3 million. During 2017, the Company recognized an additionaltax indemnification guarantee liability of $50 million related to the Teekay Nakilat capital leases. For additional information regarding the Teekay Nakilat capital leases, pleaseread "Item 18 - Financial Statements: Note 16d – Commitments and Contingencies".9Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(d)Adjustments relating to equity income, which is a non-GAAP measure, should not be considered as an alternative to equity income or any other measure of financialperformance or liquidity presented in accordance with GAAP. Adjustments relating to equity income exclude some, but not all, items that affect equity income and thesemeasures may vary among other companies. Therefore, adjustments relating to equity income as presented in this Annual Report may not be comparable to similarly titledmeasures of other companies. When using Adjusted EBITDA as a measure of liquidity it should be noted that this measure includes the Adjusted EBITDA from our equityaccounted for investments. We do not have control over the operations, nor do we have any legal claim to the revenue and expenses of our equity accounted forinvestments. Consequently, the cash flow generated by our equity accounted for investments may not be available for use by us in the period generated. Equity income fromequity accounted investments is adjusted for depreciation and amortization, interest expense, net of interest income, income tax expense (recovery), amortization of in-process revenue contracts, foreign currency exchange loss (gain), realized and unrealized loss (gain) on derivative instruments and certain other items. Adjustments relatingto equity income from our equity accounted investments are as follows: Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands of U.S. Dollars)Depreciation and amortization 82,513 69,781 69,103 61,367 56,188Interest expense, net of interest income 63,189 45,584 47,799 42,713 37,863Income tax expense (recovery) 503 724 476 (188) (21)Amortization of in-process revenue contracts (4,307) (5,482) (7,153) (8,295) (14,173)Foreign currency exchange loss (gain) 366 132 (527) (441) 709Asset impairments and net loss (gain) on sale of vessels,equipment and other operating assets 5,479 4,763 (7,472) (16,923) —Realized and unrealized loss (gain) on derivative instruments 3,452 3,075 15,027 21,147 (8,886)Other — 676 4,874 — —Adjustments relating to equity income 151,195 119,253 122,127 99,380 71,680(4)Total capitalization represents total debt and total equity.(5)Net debt is a non-GAAP financial measure. Net debt represents total debt less cash, cash equivalents and restricted cash. Total net capitalization represents net debt andtotal equity.Risk FactorsSome of the following risks relate principally to the industry in which we operate and to our business in general. Other risks relate principally to the securities market and toownership of our common stock. The occurrence of any of the events described in this section could materially and adversely affect our business, financial condition,operating results and ability to pay interest or principal or dividends on, and the trading price of our public debt and common stock.Changes in the oil and natural gas markets could result in decreased demand for our vessels and services.Demand for our vessels and services in transporting, production and storage of oil, petroleum products, LNG and LPG depend upon world and regional oil, petroleum andnatural gas markets. Any decrease in shipments of oil, petroleum products, LNG or LPG in those markets could have a material adverse effect on our business, financialcondition and results of operations. Historically, those markets have been volatile as a result of the many conditions and events that affect the price, production andtransport of oil, petroleum products, LNG or LPG, and competition from alternative energy sources. A slowdown of the U.S. and world economies may result in reducedconsumption of oil, petroleum products and natural gas and decreased demand for our vessels and services, which would reduce vessel earnings.A decline in oil prices may adversely affect our growth prospects and results of operations.Global crude oil prices have declined since mid-2014. The decline in oil prices has also contributed to depressed natural gas prices. Although global crude oil prices haveincreased since early-2016, a continuation of lower oil prices or a further decline in oil prices may adversely affect our business, results of operations and financialcondition and our ability to make cash distributions, as a result of, among other things:•a reduction in exploration for or development of new offshore oil fields, or the delay or cancelation of existing offshore projects as energy companies lower their capitalexpenditures budgets, which may reduce our growth opportunities;•a reduction in or termination of production of oil at certain fields we service, which may reduce our revenues under production-based components of our FPSO unitcontracts or life-of-field contracts;•a reduction in both the competitiveness of natural gas as a fuel for power generation and the market price of natural gas, to the extent that natural gas prices arebenchmarked to the price of crude oil;10Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•lower demand for vessels of the types we own and operate, which may reduce available charter rates and revenue to us upon redeployment of our vessels, inparticular FPSO units, following expiration or termination of existing contracts or upon the initial chartering of vessels, or which may result in extended periods of ourvessels being idle between contracts;•customers potentially seeking to renegotiate or terminate existing vessel contracts, failing to extend or renew contracts upon expiration, or seeking to negotiatecancelable contracts;•the inability or refusal of customers to make charter payments to us, including purchase obligations at the end of certain charter contracts, due to financial constraintsor otherwise; or•declines in vessel values, which may result in losses to us upon vessel sales or impairment charges against our earnings.Current market conditions limit our access to capital and our growth.We have relied primarily upon bank financing and debt and equity offerings, primarily by our Daughter Entities, to fund our growth. Current market conditions generally inthe energy sector and for master limited partnerships have significantly reduced our and our Daughter Entities’ access to capital, particularly equity capital, compared toperiods prior to mid-2014. Debt financing and refinancing are more challenging to obtain, and terms are less attractive to us. Issuing additional common equity given currentmarket conditions is more dilutive and costly than it has been in the past. Lack of access to debt or equity capital at reasonable rates would adversely affect our growthprospects and our ability to refinance debt and pay dividends to our equityholders.The ability of us and our Controlled Daughter Entities to repay or refinance debt obligations and to fund capital expenditures will depend on certainfinancial, business and other factors, many of which are beyond our control. We and our Controlled Daughter Entities will need to obtain additionalfinancing, which financing may limit our and their ability to make cash dividends and distributions, increase our or their financial leverage and result indilution to our or their equityholders.To fund existing and future debt obligations and capital expenditures of us and our Controlled Daughter Entities and to meet the minimum liquidity requirements under thefinancial covenants in our or their credit facilities, we and they will be required to obtain additional sources of financing, in addition to amounts generated from operations.These anticipated sources of financing include: raising additional capital through equity issuances; refinancing and increasing amounts available under various loan facilitiesof Teekay Tankers and Teekay LNG; negotiating new secured debt financings related to vessels under construction or other unencumbered operating vessels for TeekayTankers and Teekay LNG.The ability of us and our Controlled Daughter Entities to obtain external financing may be limited by our and their financial condition at the time of any such financing as wellas by adverse market conditions in general. Even if we or our Controlled Daughter Entities are successful in obtaining necessary funds, the terms of such financings couldlimit our or their ability to pay cash dividends or distributions to security holders or operate our or their businesses as currently conducted. In addition, incurring additionaldebt may significantly increase interest expense and financial leverage, and issuing additional equity securities may result in significant equityholder dilution and wouldincrease the aggregate amount of cash required to maintain quarterly dividends and distributions. The sale of certain assets will reduce cash from operations and the cashavailable for distribution to equityholders. For more information on our and our Controlled Daughter Entities’ liquidity requirements, please read “Item 18 - FinancialStatements: Note 16c — Commitments and Contingencies - Liquidity."We have guaranteed significant debt of certain of our Controlled Daughter Entities, and will be directly obligated to make related payments if the ControlledDaughter Entities default in their payment obligations.We have guaranteed obligations pursuant to certain credit facilities of Teekay Tankers. As at December 31, 2017, the aggregate outstanding balance on such creditfacilities was $252.7 million. If Teekay Tankers defaults in paying these obligations, we will be obligated to make the required payments.We have experienced significant dilution of our ownership interest in Teekay Offshore and reduced control over the management of Teekay Offshore as aresult of the issuance of Teekay Offshore common units and warrants to Brookfield and the sale of part of our interest in Teekay Offshore’s general partnerto Brookfield.On September 25, 2017, Teekay, Teekay Offshore and Brookfield Business Partners L.P. together with its institutional partners (collectively, Brookfield) completed astrategic partnership (or the Brookfield Transaction) which resulted in the deconsolidation of Teekay Offshore as of that date. Although Teekay owned less than 50% ofTeekay Offshore prior to the completion of the Brookfield Transaction, Teekay maintained control of Teekay Offshore until September 25, 2017, by virtue of its 100%ownership interest in the general partner of Teekay Offshore. Subsequent to the closing of the Brookfield Transaction, Teekay accounts for its investment in TeekayOffshore using the equity method.As part of the Brookfield Transaction, Teekay Offshore issued to Brookfield and Teekay Parent approximately 244 million and 12 million common units, respectively, pluswarrants to purchase approximately 62.4 million and 3.1 million common units, respectively, which diluted the percentage of Teekay Offshore’s common units outstandingheld by Teekay Parent from approximately 29% to approximately 14%.11Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAdditionally, Brookfield acquired from Teekay Parent a 49% interest in Teekay Offshore's general partner and an option to purchase an additional 2% interest in TeekayOffshore's general partner. If Brookfield exercises its option to purchase from Teekay Parent the additional 2% interest in Teekay Offshore’s general partner, TeekayParent will no longer have the right to elect a majority of the general partner’s board of directors. Brookfield has the right to appoint four of nine directors of the generalpartner and reasonably approve three of the remaining nine directors prior to any exercise of the 2% option, and the terms of the amended and restated general partnerLLC agreement entered into upon closing of the Brookfield Transaction restricts Teekay Offshore’s general partner from, with respect to Teekay Offshore, making certainacquisitions and divestitures, entering into certain contracts, incurring certain indebtedness and expenditures, commencing or settling litigation or disputes, repurchasing orissuing securities outside of existing equity award programs, and taking other specified actions without Brookfield consent, until Brookfield exercises its 2% option anddirectors elected by Brookfield constitute a majority of the general partner’s board of directors. These restrictions could have the effect of delaying or preventing strategictransactions involving Teekay Offshore at any time while these restrictions remain in place.We or Teekay Offshore may fail to realize the anticipated benefits of the Brookfield Transaction, and the transition of services could adversely impact ourand Teekay Offshore’s ongoing operations.We, Brookfield and Teekay Offshore entered into the Brookfield Transaction with the expectation that the investment and related transactions would result in variousbenefits, including, among other things, the ability to fully finance Teekay Offshore’s existing growth projects, resulting in significant near-term cash flow growth, the abilityto better service Teekay Offshore’s customers and take advantage of future growth opportunities, and the ability to separate Teekay Offshore’s shuttle tanker businessinto a wholly-owned subsidiary, with the subsidiary’s indebtedness having no recourse to Teekay Parent, Teekay Offshore, or Teekay Offshore’s subsidiaries, other thanthe newly-created shuttle tanker subsidiary and its subsidiaries. The success of the Brookfield Transaction will depend, in part, on our and Teekay Offshore’s ability torealize such anticipated benefits. The anticipated benefits of the Brookfield Transaction may not be realized fully, or at all, or may take longer to realize than expected.Failure to achieve anticipated benefits could result in increased costs and decreases in the amounts of expected revenues or operating results of Teekay Offshore or us.In connection with the Brookfield Transaction, Teekay entered into a transition services agreement with Teekay Offshore and its general partner which provided for,among other things, the transfer from Teekay to Teekay Offshore and its subsidiaries (a) the employment of Ingvild Sæther (President and Chief Executive Officer ofTeekay Offshore Group Ltd.) and David Wong (Chief Financial Officer of Teekay Offshore Group Ltd.) and certain other persons who devoted all, or substantially all oftheir professional time providing services to Teekay Offshore and its subsidiaries pursuant to existing services agreements and (b) as of January 1, 2018, the Teekaysubsidiaries (or the assets of such subsidiaries) that were devoted exclusively or nearly exclusively to providing services to Teekay Offshore and its subsidiariespursuant to existing services agreements. Although the transferred personnel and assets were devoted exclusively or nearly exclusively to Teekay Offshore and itssubsidiaries, it is possible that the transfer could result in the loss of key employees, the disruption of the ongoing businesses or inconsistencies in standards, controls,procedures or policies that adversely affect our and Teekay Offshore’s ability to achieve the anticipated benefits of the Brookfield Transaction.Our cash flow depends substantially on the ability of our subsidiaries and equity-accounted investees, primarily our Daughter Entities, to makedistributions to us. Our Daughter Entities have significantly reduced their distribution levels.The source of our cash flow includes cash distributions from our subsidiaries and equity-accounted investees, primarily Teekay Offshore and Teekay LNG. The amount ofcash our subsidiaries and equity-accounted investees can distribute to us principally depends upon the amount of distributions declared by each of their board of directorsand the amount of cash they generate from their operations.Effective for the quarterly distribution of the fourth quarter of 2015, we reduced our quarterly cash dividend per share to $0.055 from $0.55, Teekay LNG reduced itsquarterly cash distribution per common unit to $0.14 from $0.70, and Teekay Offshore reduced its quarterly cash distribution per common unit to $0.11 from $0.56. At thetime these changes were made, there was a dislocation in the capital markets relative to the stability of our businesses. More specifically, the future equity capitalrequirements for our committed growth projects, coupled with the relative weakness in energy and capital markets, resulted in our conclusion that it would be in the bestinterests of our shareholders to conserve more of our internally generated cash flows to fund committed existing growth projects and to reduce debt levels. We andTeekay LNG each maintained these reduced dividend and distribution levels throughout 2016 and 2017. Teekay Offshore maintained its reduced distribution levelthroughout 2016, and in September 2017, Teekay Offshore further reduced its quarterly cash distribution per common unit to $0.01 in connection with the BrookfieldTransaction. Pursuant to the terms of the amended limited liability company agreement entered into upon closing of the Brookfield Transaction, Teekay Offshore’s generalpartner and we have agreed not to declare or pay (or cause the general partner to declare or to pay) any quarterly distribution on the Teekay Offshore common units in anamount over $0.01 per unit without the prior consent of Brookfield. There is no guarantee that quarterly cash distributions payable to common unit holders of TeekayOffshore will return to historical levels. These distribution reductions by Teekay Offshore and Teekay LNG substantially reduced our cash flows from them, including bycurrently eliminating any distributions on our incentive distribution rights in such Daughter Entities.The amount of cash our subsidiaries and equity-accounted investees generate from their operations may fluctuate from quarter to quarter based on, among other things:•the rates they obtain from their charters, voyages and contracts;•the price and level of production of, and demand for, crude oil, LNG and LPG, including the level of production at the offshore oil fields Teekay Offshore servicesunder contracts of affreightment;•the operating performance of our and Teekay Offshore's FPSO units, whereby receipt of incentive-based revenue from the FPSO units is dependent upon thefulfillment of the applicable performance criteria;12Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•the level of their operating costs, such as the cost of crews and repairs and maintenance;•the number of off-hire days for their vessels and the timing of, and number of days required for, dry docking of vessels;•the rates, if any, at which Teekay Offshore may be able to redeploy shuttle tankers in the spot market as conventional oil tankers during any periods of reduced orterminated oil production at fields serviced by contracts of affreightment;•the rates, if any, at which our subsidiaries and equity-accounted investees may be able to redeploy vessels, particularly FPSO units, after they complete theircharters or contracts and are redelivered to us;•the rates, if any, and ability, at which our subsidiaries and equity-accounted investees may be able to contract our newbuilding vessels, including our newbuildingtowage vessels;•delays in the delivery of any newbuildings and the beginning of payments under charters relating to those vessels;•prevailing global and regional economic and political conditions;•currency exchange rate fluctuations; and•the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of business.The actual amount of cash our subsidiaries and equity-accounted investees have available for distribution also depends on other factors such as:•the level of their capital expenditures, including for maintaining vessels or converting existing vessels for other uses and complying with regulations;•their debt service requirements and restrictions on distributions contained in their debt agreements, including financial ratio covenants which may indirectly restrictloans, distributions or dividends;•fluctuations in their working capital needs;•their ability to make working capital borrowings; and•the amount of any cash reserves, including reserves for future maintenance capital expenditures, working capital and other matters, established by the boards ofdirectors of our Daughter Entities at their discretion.The amount of cash our subsidiaries and equity-accounted investees generate from operations may differ materially from their profit or loss for the period, which will beaffected by non-cash items and the timing of debt service payments. As a result of this and the other factors mentioned above, our subsidiaries and equity-accountedinvestees may make cash distributions during periods when they record losses and may not make cash distributions during periods when they record net income.The cyclical nature of the tanker industry may lead to volatile changes in charter rates and significant fluctuations in the utilization of our vessels, whichmay adversely affect our earnings and profitability.Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of and demand for tanker capacity and changes in thesupply of and demand for oil and oil products. The cyclical nature of the tanker industry may cause significant increases or decreases in the revenue we earn from ourvessels and may also cause significant increases or decreases in the value of our vessels. If the tanker market is depressed, our earnings may decrease, particularlywith respect to the conventional tanker vessels owned by Teekay Tankers, which accounted for approximately 20% and 23% of our net revenues during 2017 and 2016,respectively. These vessels are primarily employed on the spot-charter market, which is highly volatile and fluctuates based upon tanker and oil supply and demand.Declining spot rates in a given period generally will result in corresponding declines in operating results for that period. The successful operation of our vessels in the spot-charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spenttraveling unladen to pick up cargo. Future spot rates may not be sufficient to enable our vessels trading in the spot tanker market to operate profitably or to providesufficient cash flow to service our debt obligations. The factors affecting the supply of and demand for tankers are outside of our control, and the nature, timing and degreeof changes in industry conditions are unpredictable.Factors that influence demand for tanker capacity include:•demand for oil and oil products;•supply of oil and oil products;•regional availability of refining capacity;•global and regional economic and political conditions;•the distance oil and oil products are to be moved by sea; and•changes in seaborne and other transportation patterns.Factors that influence the supply of tanker capacity include:•the number of newbuilding deliveries;13Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•the scrapping rate of older vessels;•conversion of tankers to other uses;•the number of vessels that are out of service; and•environmental concerns and regulations.Changes in demand for transportation of oil over longer distances and in the supply of tankers to carry that oil may materially affect our revenues, profitability and cashflows.Reduction in oil produced from offshore oil fields could harm our shuttle tanker and FPSO businesses.As at December 31, 2017, we had 30 vessels operating in Teekay Offshore's shuttle tanker fleet and eleven FPSO units operating in our and Teekay Offshore's FPSOfleet (of which two are operating in joint ventures). The revenue earned by certain shuttle tankers and FPSO units depends upon the volume of oil we transport or thevolume of oil produced from offshore oil fields. Oil production levels are affected by several factors, all of which are beyond our control, including: geologic factors, includinggeneral declines in production that occur naturally over time; mechanical failure or operator error; the rate of technical developments in extracting oil and relatedinfrastructure and implementation costs; and operator decisions based on revenue compared to costs from continued operations.Factors that may affect an operator’s decision to initiate or continue production include: changes in oil prices; capital budget limitations; the availability of necessary drillingand other governmental permits; the availability of qualified personnel and equipment; the quality of drilling prospects in the area; and regulatory changes. In addition, thevolume of oil we transport may be adversely affected by extended repairs to oil field installations or suspensions of field operations as a result of oil spills, operationaldifficulties, strikes, employee lockouts or other labor unrest. The rate of oil production at fields we service may decline from existing or future levels, and may beterminated, all of which could harm our business and operating results. In addition, if such a reduction or termination occurs, the spot tanker market rates, if any, in theconventional oil tanker trades at which we may be able to redeploy the affected shuttle tankers may be lower than the rates previously earned by the vessels undercontracts of affreightment, which would also harm our business and operating results.The redeployment risk of FPSO units is high given their lack of alternative uses and significant costs.FPSO units are specialized vessels that have very limited alternative uses and high fixed costs. In addition, FPSO units typically require substantial capital investmentsprior to being redeployed to a new field and production service agreement. These factors increase the redeployment risk of FPSO units. Unless extended, one of our andone of Teekay Offshore's FPSO production service agreements will expire in 2018 and two further agreements of Teekay Offshore's will expire in 2019. Our clients mayalso terminate certain of our FPSO production service agreements prior to their expiration under specified circumstances. Any idle time prior to the commencement of anew contract or our inability to redeploy the vessels at acceptable rates may have an adverse effect on our business and operating results.The duration of many of our shuttle tanker, FSO and FPSO contracts is the life of the relevant oil field or is subject to extension by the field operator orvessel charterer. If the oil field no longer produces oil or is abandoned or the contract term is not extended, we will no longer generate revenue under therelated contract and will need to seek to redeploy affected vessels.Many of Teekay Offshore's shuttle tanker contracts have a “life-of-field” duration, which means that the contract continues until oil production at the field ceases. Ifproduction at a field terminates or a field is abandoned for any reason, we no longer will generate revenue under the related contract. Other shuttle tanker, FSO and FPSOcontracts under which our vessels operate are subject to extensions beyond their initial term. The likelihood of these contracts being extended may be negatively affectedby reductions in oil field reserves, low oil prices generally or other factors. If we are unable to promptly redeploy any affected vessels at rates at least equal to those underthe contracts, if at all, our operating results will be harmed. Any potential redeployment may not be under long-term contracts, which may affect the stability of our businessand operating results.Charter rates for conventional oil and product tankers and towage vessels may fluctuate substantially over time and may be lower when we are attemptingto re-charter these vessels, which could adversely affect our operating results. Any changes in charter rates for LNG or LPG carriers, shuttle tankers, FSO orFPSO units, or UMS could also adversely affect redeployment opportunities for those vessels.Our ability to re-charter our conventional oil and product tankers following expiration of existing time-charter contracts and the rates payable upon any renewal orreplacement charters will depend upon, among other things, the state of the conventional tanker market. Conventional oil and product tanker trades are highly competitiveand have experienced significant fluctuations in charter rates based on, among other things, oil, refined petroleum product and vessel demand. For example, anoversupply of conventional oil tankers can significantly reduce their charter rates. Our ability to charter our towage vessels will depend, among other things, on the state ofthe towage market. Towage contracts are highly competitive and are based on the level of projects undertaken by the customer base. There also exists some volatility incharter rates for LNG and LPG carriers, shuttle tankers, FSO and FPSO units, and UMS, which could also adversely affect redeployment opportunities for those vessels.14Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOver time, the value of our vessels may decline, which could adversely affect our operating results.Vessel values for oil and product tankers, LNG and LPG carriers, UMS, and FPSO and FSO units can fluctuate substantially over time due to a number of different factors,including:•prevailing economic conditions in oil and energy markets;•a substantial or extended decline in demand for oil or natural gas;•increases in the supply of vessel capacity;•competition from more technologically advanced vessels;•the cost of retrofitting or modifying existing vessels, as a result of technological advances in vessel design or equipment, changes in applicable environmental or otherregulations or standards, or otherwise; and•a decrease in oil reserves in the fields and other fields in which our FPSO units or other vessels might otherwise be deployed.Vessel values may decline from existing levels. If operation of a vessel is not profitable, or if we cannot redeploy a chartered vessel at attractive rates upon chartertermination, rather than continue to incur costs to maintain and finance the vessel, we may seek to dispose of it. Our inability to dispose of the vessel at a fair market valueor the disposal of the vessel at a fair market value that is lower than its book value could result in a loss on its sale and adversely affect our results of operations andfinancial condition. Further, if we determine at any time that a vessel’s future useful life and earnings require us to impair its value on our financial statements, we may needto recognize a significant charge against our earnings. We recognized asset impairment charges, excluding impairment charges recognized by Teekay Offshoresubsequent to its deconsolidation on September 25, 2017, of $233 million, $46 million and $68 million in 2017, 2016, 2015, respectively, and net loss on sale of assets of$38 million, $66 million and $2 million in 2017, 2016 and 2015, respectively.Declining market values of our vessels could adversely affect our liquidity and result in breaches of our financing agreements.Market values of vessels fluctuate depending upon general economic and market conditions affecting relevant markets and industries and competition from other shippingcompanies and other modes of transportation. In addition, as vessels become older, they generally decline in value. Declining vessel values could adversely affect ourliquidity by limiting our ability to raise cash by refinancing vessels. Declining vessel values could also result in a breach of loan covenants and events of default undercertain of our credit facilities that require us to maintain certain loan-to-value ratios. If we are unable to pledge additional collateral in the event of a decline in vessel values,the lenders under these facilities could accelerate our debt and foreclose on our vessels pledged as collateral for the loans. As of December 31, 2017, the total outstandingdebt under credit facilities (excluding credit facilities of Teekay Offshore) with this type of loan-to-value covenant tied to conventional tanker values was $805.7 million andtied to LNG carrier values was $61.1 million. We have five financing arrangements that require us to maintain vessel value to outstanding loan principal balance ratiosranging from 105% to 135%. At December 31, 2017, we were in compliance with these required ratios.Our growth depends on continued growth in demand for LNG and LPG, and LNG and LPG shipping, as well as offshore oil transportation, production,processing and storage services.A significant portion of our growth strategy focuses on continued expansion in the LNG and LPG shipping sectors and on expansion in the FPSO, shuttle tanker, and FSOsectors.Expansion of the LNG and LPG shipping sectors depends on growth in world and regional demand for LNG and LPG and marine transportation of LNG and LPG, as wellas the supply of LNG and LPG. Demand for LNG and LPG and for the marine transportation of LNG and LPG could be negatively affected by a number of factors, suchas:•increases in the cost of natural gas derived from LNG relative to the cost of natural gas generally;•increases in the cost of LPG relative to the cost of naphtha and other competing petrochemicals;•increases in the production of natural gas in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems inmarkets we may serve, or the conversion of existing non-natural gas pipelines to natural gas pipelines in those markets;•decreases in the consumption of natural gas due to increases in its price relative to other energy sources or other factors making consumption of natural gas lessattractive;•additional sources of natural gas, including shale gas;•availability of alternative energy sources; and•negative global or regional economic or political conditions, particularly in LNG and LPG consuming regions, which could reduce energy consumption or its rate ofgrowth.15Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsReduced demand for LNG or LPG and LNG or LPG shipping could have a material adverse effect on future growth of Teekay LNG, and could harm its results. Growth ofthe LNG and LPG markets may be limited by infrastructure constraints and community and environmental group resistance to new LNG and LPG infrastructure overconcerns about the environment, safety and terrorism. If the LNG or LPG supply chain is disrupted or does not continue to grow, or if a significant LNG or LPG explosion,spill or similar incident occurs, it could have a material adverse effect on demand for LNG or LPG and could harm our business, results of operations and financialcondition.Expansion of the FPSO, shuttle tanker, FSO, and towing sectors depends on continued growth in world and regional demand for these offshore services, which could benegatively affected by a number of factors, such as:•decreases in the actual or projected price of oil, which could lead to a reduction in or termination of production of oil at certain fields we service, delays or cancellationsof projects under development or a reduction in exploration for or development of new offshore oil fields;•increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in marketswe may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets;•decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oil less attractive or energyconservation measures;•availability of new, alternative energy sources; and•negative global or regional economic or political conditions, particularly in oil consuming regions, which could reduce energy consumption or its growth.Reduced demand for offshore marine transportation, production, processing, storage services, offshore accommodation or towing and offshore installation would have amaterial adverse effect on our future growth and could harm our business, results of operations and financial condition.The intense competition in our markets may lead to reduced profitability or reduced expansion opportunities.Our vessels operate in highly competitive markets. Competition arises primarily from other vessel owners, including major oil companies and independent companies. Wealso compete with owners of other size vessels. Our market share is insufficient to enforce any degree of pricing discipline in the markets in which we operate and ourcompetitive position may erode in the future. Any new markets that we enter could include participants that have greater financial strength and capital resources than wehave. We may not be successful in entering new markets.One of our objectives is to enter into additional long-term, fixed-rate charters for our LNG and LPG carriers, shuttle tankers, UMS, FPSO and FSO units. The process ofobtaining new long-term time charters is highly competitive and generally involves an intensive screening process and competitive bids, and often extends for severalmonths. We expect competition for providing services for potential gas and offshore projects from other experienced companies, including state-sponsored entities. Ourcompetitors may have greater financial resources than us. This increased competition may cause greater price competition for charters. As a result of these factors, wemay be unable to expand our relationships with existing customers or to obtain new customers on a profitable basis, if at all, which would have a material adverse effect onour business, results of operations and financial condition.The loss of any key customer or its inability to pay for our services could result in a significant loss of revenue in a given period.We have derived, and believe that we will continue to derive, a significant portion of our revenues from a limited number of customers. Two customers, international oilcompanies, accounted for an aggregate of 24%, or $442.4 million of our consolidated revenues during 2017 (2016 – two customers for 29%, or $653.6 million, 2015 – twocustomers for 21%, or $495.2 million). During these periods, no other customer accounted for over 10% of our revenues for the applicable period. The loss of anysignificant customer or a substantial decline in the amount of services requested by a significant customer, or the inability of a significant customer to pay for our services,could have a material adverse effect on our business, financial condition and results of operations.We could lose a customer or the benefits of a contract if:•the customer fails to make payments because of its financial inability, disagreements with us or otherwise;•we agree to reduce the payments due to us under a contract because of the customer’s inability to continue making the original payments;•the customer exercises certain rights to terminate the contract; or•the customer terminates the contract because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are seriousdeficiencies in the vessel or prolonged periods of off-hire, or we default under the contract.16Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf we lose a key customer, we may be unable to obtain replacement long-term charters or contracts of affreightment and may increase our exposure, with respect to anyshuttle tankers redeployed on conventional oil tanker trades, to the volatile spot market, which is highly competitive and subject to significant price fluctuations. If acustomer exercises its right under some charters to purchase the vessel, or terminate the charter, we may be unable to acquire an adequate replacement vessel orcharter. Any replacement newbuilding would not generate revenues during its construction and we may be unable to charter any replacement vessel on terms as favorableto us as those of the terminated charter.The loss of any of our significant customers or a reduction in revenues from them could have a material adverse effect on our business, results of operations and financialcondition and our ability to pay dividends and service our debt.Future adverse economic conditions, including disruptions in the global credit markets, could adversely affect our business, financial condition and resultsof operations.Economic downturns and financial crises in the global markets could produce illiquidity in the capital markets, market volatility, increased exposure to interest rate andcredit risks and reduced access to capital markets. If global financial markets and economic conditions significantly deteriorate in the future, we may face restrictedaccess to the capital markets or bank lending, which may make it more difficult and costly to fund future growth. Decreased access to such resources could have amaterial adverse effect on our business, financial condition and results of operations.Future adverse economic conditions or other developments may affect our customers’ ability to charter our vessels and pay for our services and mayadversely affect our business and results of operations.Future adverse economic conditions or other developments relating directly to our customers may lead to a decline in our customers’ operations or ability to pay for ourservices, which could result in decreased demand for our vessels and services. Our customers’ inability to pay for any reason could also result in their default on ourcurrent contracts and charters. The decline in the amount of services requested by our customers or their default on our contracts with them could have a materialadverse effect on our business, financial condition and results of operations.Our operations are subject to substantial environmental and other regulations, which may significantly increase our expenses.Our operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties and conventions in force ininternational waters, the jurisdictional waters of the countries in which our vessels operate, as well as the countries of our vessels’ registration, including those governing oilspills, discharges to air and water, and the handling and disposal of hazardous substances and wastes. Many of these requirements are designed to reduce the risk of oilspills and other pollution. In addition, we believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers willlead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on vessels. Weexpect to incur substantial expenses in complying with these laws and regulations, including expenses for vessel modifications and changes in operating procedures.These requirements can affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, ship modifications or operational changes orrestrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, ordetention in, certain ports. Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including clean-upobligations, in the event that there is a release of petroleum or other hazardous substances from our vessels or otherwise in connection with our operations. We could alsobecome subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with our operations. In addition,failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations,including, in certain instances, seizure or detention of our vessels. For further information about regulations affecting our business and related requirements on us, pleaseread “Item 4. Information on the Company—B. Operations—Regulations.”We may be unable to make or realize expected benefits from acquisitions, and implementing our long-term strategy of growth through acquisitions mayharm our financial condition and performance.A principal component of our long-term strategy is to continue to grow by expanding our business both in the geographic areas and markets where we have historicallyfocused as well as into new geographic areas, market segments and services. We may not be successful in expanding our operations and any expansion may not beprofitable. Our long-term strategy of growth through acquisitions involves business risks commonly encountered in acquisitions of companies, including:•interruption of, or loss of momentum in, the activities of one or more of an acquired company’s businesses and our businesses;•additional demands on members of our senior management while integrating acquired businesses, which would decrease the time they have to manage our existingbusiness, service existing customers and attract new customers;•difficulties integrating the operations, personnel and business culture of acquired companies;•difficulties coordinating and managing geographically separate organizations;•adverse effects on relationships with our existing suppliers and customers, and those of the companies acquired;•difficulties entering geographic markets or new market segments in which we have no or limited experience; and17Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•loss of key officers and employees of acquired companies.Acquisitions may not be profitable to us at the time of their completion and may not generate revenues sufficient to justify our investment. In addition, our acquisition growthstrategy exposes us to risks that may harm our results of operations and financial condition, including risks that we may: fail to realize anticipated benefits, such as cost-savings, revenue and cash flow enhancements and earnings accretion; decrease our liquidity by using a significant portion of our available cash or borrowing capacity tofinance acquisitions; incur additional indebtedness, which may result in significantly increased interest expense or financial leverage, or issue additional equity securities tofinance acquisitions, which may result in significant shareholder dilution; incur or assume unanticipated liabilities, losses or costs associated with the business acquired; orincur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.Unlike newbuildings, existing vessels typically do not carry warranties as to their condition. While we generally inspect existing vessels prior to purchase, such aninspection would normally not provide us with as much knowledge of a vessel’s condition as we would possess if it had been built for us and operated by us during its life.Repairs and maintenance costs for existing vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. Thesecosts could decrease our cash flow and reduce our liquidity.The strain that growth places upon our systems and management resources may harm our business.Our growth has placed, and we believe it will continue to place, significant demands on our management, operational and financial resources. As we expand ouroperations, we must effectively manage and monitor operations, control costs and maintain quality and control in geographically dispersed markets. In addition, ourDaughter Entities have increased the complexity of our operations and placed additional demands on our management. Any future joint venture, partnering or other similartransactions may further increase our complexity and demands on our management. Our future growth and financial performance will also depend on our ability to recruit,train, manage and motivate our employees to support our expanded operations and continue to improve our customer support, financial controls and information systems.These efforts may not be successful and may not occur in a timely or efficient manner. Failure to effectively manage our growth and transitions in systems and proceduresrequired by expansion in a cost-effective manner could have a material adverse effect on our business.Our insurance may not be sufficient to cover losses that may occur to our property or as a result of our operations.The operation of oil and product tankers, lightering vessels, LNG and LPG carriers, FPSO and FSO units, UMS, towage vessels, and the HiLoad DP unit is inherentlyrisky. Although we carry hull and machinery (marine and war risk) and protection and indemnity insurance, all risks may not be adequately insured against, and anyparticular claim may not be paid. In addition, with the exception of the Petrojarl Knarr FPSO unit and Libra FPSO unit, we do not generally carry insurance on our vesselscovering the loss of revenues resulting from vessel off-hire time, based on its cost compared to our off-hire experience. Any significant off-hire time of our vessels couldharm our business, operating results and financial condition. Any claims relating to our operations covered by insurance would be subject to deductibles, and since it ispossible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintainedthrough mutual protection and indemnity associations and as a member of such associations we may be required to make additional payments over and above budgetedpremiums if member claims exceed association reserves.We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations haveled in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A catastrophicoil spill, marine disaster or natural disaster could result in losses that exceed our insurance coverage, which could harm our business, financial condition and operatingresults. Any uninsured or under-insured loss could harm our business and financial condition. In addition, our insurance may be voidable by the insurers as a result ofcertain of our actions, such as our ships failing to maintain certification with applicable maritime regulatory organizations.Changes in the insurance markets attributable to terrorist attacks, environmental catastrophes or political changes may also make certain types of insurance more difficultfor us to obtain. In addition, the insurance that may be available may be significantly more expensive than our existing coverage.Past port calls by our vessels, or third-party vessels from which we derived pooling revenues, to countries that are subject to sanctions imposed by theUnited States and the European Union may impact investors’ decisions to invest in our securities.The United States has imposed sanctions on Syria and Sudan. The United States and the European Union (or EU) also had imposed sanctions on trade with Iran. The EUlifted these sanctions in January 2016. At that time, the U.S. lifted its secondary sanctions on Iran which applied to foreign persons, but has retained its primary sanctionswhich apply to U.S. entities and their foreign subsidiaries. In the past, conventional oil tankers owned or chartered-in by us, or third-party vessels participating incommercial pooling arrangements from which we derive revenue, made limited port calls to those countries for the loading and discharging of oil products. Those port callsdid not violate U.S. or EU sanctions at the time and we intend to maintain our compliance with all U.S. and EU sanctions. In addition, we have no future contracted loadingsor discharges in any of those countries and intend not to enter into voyage charter contracts for the transport of oil or gas to or from Iran or Syria.18Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe believe that our compliance with these sanctions and our lack of any future port calls to those countries does not and will not adversely impact our revenues, becauseport calls to these countries have never accounted for any material amount of our revenues. However, some investors might decide not to invest in us simply because wehave previously called on, or through our participation in pooling arrangements have previously received revenue from calls on, ports in these sanctioned countries. Anysuch investor reaction could adversely affect the market for our common shares.Marine transportation and oil production is inherently risky, and an incident involving loss or damage to a vessel, significant loss of product orenvironmental contamination by any of our vessels could harm our reputation and business.Our vessels and their cargoes are at risk of being damaged or lost because of events such as:•marine disaster;•bad weather or natural disasters;•mechanical failures;•grounding, fire, explosions and collisions;•piracy;•cyber-attack;•human error; and•war and terrorism.An accident involving any of our vessels could result in any of the following:•death or injury to persons, loss of property or environmental damage or pollution;•delays in the delivery of cargo;•loss of revenues from or termination of charter contracts;•governmental fines, penalties or restrictions on conducting business;•higher insurance rates; and•damage to our reputation and customer relationships generally.Any of these results could have a material adverse effect on our business, financial condition and operating results. In addition, any damage to, or environmentalcontamination involving, oil production facilities serviced by our vessels could result in the suspension or curtailment of operations by our customer, which would in turnresult in loss of revenues to us.Our operating results are subject to seasonal fluctuations.We operate our conventional tankers in markets that have historically exhibited seasonal variations in demand and, therefore, in charter rates. This seasonality may resultin quarter-to-quarter volatility in our results of operations. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in theNorthern Hemisphere. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling, which historically has increased oil price volatility andoil trading activities in the winter months. As a result, our revenues have historically been weaker during the fiscal quarters ended June 30 and September 30, and strongerin our fiscal quarters ended March 31 and December 31.Due to harsh winter weather conditions, oil field operators in the North Sea typically schedule oil platform and other infrastructure repairs and maintenance during thesummer months. Because the North Sea is our primary existing offshore oil market, this seasonal repair and maintenance activity contributes to quarter-to-quarter volatilityin our results of operations, as oil production typically is lower in the fiscal quarters ended June 30 and September 30 in this region compared with production in the fiscalquarters ended March 31 and December 31. Because a number of Teekay Offshore's North Sea shuttle tankers operate under contracts of affreightment, under whichrevenue is based on the volume of oil transported, the results of our shuttle tanker operations in the North Sea under these contracts generally reflect this seasonalproduction pattern. When we redeploy affected shuttle tankers as conventional oil tankers while platform maintenance and repairs are conducted, the overall financialresults for our North Sea shuttle tanker operations may be negatively affected if the rates in the conventional oil tanker markets are lower than the contract of affreightmentrates. In addition, we seek to coordinate some of the general dry-docking schedule of our fleet with this seasonality, which may result in lower revenues and increased dry-docking expenses during the summer months.19Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe expend substantial sums during construction of newbuildings and the conversion of tankers to FPSO or FSO units without earning revenue andwithout assurance that they will be completed.We are typically required to expend substantial sums as progress payments during construction of a newbuilding or vessel conversion, but we do not derive any revenuefrom the vessel until after its delivery. In addition, under some of our time charters if our delivery of a vessel to a customer is delayed, we may be required to pay liquidateddamages in amounts equal to or, under some charters, almost double the hire rate during the delay. For prolonged delays, the customer may terminate the time charterand, in addition to the resulting loss of revenues, we may be responsible for additional substantial liquidated charges.Our newbuilding financing commitments typically have been pre-arranged. However, if we are unable to obtain financing required to complete payments on any of ournewbuilding orders, we could effectively forfeit all or a portion of the progress payments previously made. As of December 31, 2017, Teekay LNG had 15 LNG carriernewbuildings scheduled for delivery between 2018 and 2020 (of which six are 50%-owned, two are 20%-owned and one is 30%-owned), three 50%-owned LPG carriernewbuildings scheduled for delivery during 2018 and one 30%-owned LNG receiving and regasification terminal under construction scheduled for completion in 2019. As ofDecember 31, 2017, Teekay Offshore had five shuttle tanker newbuildings, one of which was delivered in March 2018, and one long-distance towing and offshoreinstallation vessel newbuilding, which was delivered in February 2018. Our obligations to purchase the newbuilding vessels is not conditional upon our ability to obtainfinancing for such purchases. As at December 31, 2017, Teekay LNG had in place $1.7 billion of financing for its remaining newbuilding vessels and Teekay LNG wasseeking further debt financing for two newbuilding vessels. Although we believe we will obtain the remainder of the uncommitted financing for our newbuildings during 2018,there is no assurance that we will do so.In addition, conversion of tankers to FPSO and FSO units exposes us to a number of risks, including lack of shipyard capacity and the difficulty of completing theconversions in a timely and cost-effective manner. During conversion of a vessel, we do not earn revenue from it. In addition, conversion projects may not be successful.We make substantial capital expenditures to expand the size of our fleet. Depending on whether we finance our expenditures through cash from operationsor by incurring debt or issuing equity securities, our financial leverage could increase or our shareholders could be diluted.We regularly evaluate and pursue opportunities to provide the marine transportation requirements for various projects, and we have recently submitted bids to providetransportation solutions for LNG and LPG, towage, FPSO and FSO projects. We may submit additional bids from time to time. The award process relating to LNG and LPGtransportation, and FPSO and FSO opportunities typically involves various stages and takes several months to complete. If we bid on and are awarded contracts relatingto any LNG and LPG, FPSO and FSO projects, we will need to incur significant capital expenditures to build the related LNG and LPG carriers, and FPSO and FSO units.To fund the remaining portion of existing or future capital expenditures, we will be required to use existing liquidity, cash from operations or incur borrowings or raise capitalthrough the incurrence of debt or issuance of additional equity, debt or hybrid securities. Our ability to obtain bank financing or to access the capital markets for futureofferings may be limited by our financial condition at the time of any such financing or offering as well as by adverse market conditions resulting from, among other things,general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditurescould have a material adverse effect on our business, results of operations and financial condition. Even if we are successful in obtaining necessary funds, incurringadditional debt may significantly increase our interest expense and financial leverage, which could limit our financial flexibility and ability to pursue other businessopportunities. Issuing additional equity securities may result in significant shareholder dilution and would increase the aggregate amount of cash required to pay quarterlydividends.Exposure to currency exchange rate and interest rate fluctuations results in fluctuations in our cash flows and operating results.Substantially all of our revenues are earned in U.S. Dollars, although we are paid in Euros, Australian Dollars, Norwegian Kroner and British Pounds under some of ourcharters. A portion of our operating costs are incurred in currencies other than U.S. Dollars. This partial mismatch in operating revenues and expenses leads tofluctuations in net income due to changes in the value of the U.S. Dollar relative to other currencies, in particular the Norwegian Kroner, the British Pound, the Euro,Singapore Dollar, Australian Dollar, and Canadian Dollar. We also make payments under two Euro-denominated term loans. If the amount of these and other Euro-denominated obligations exceeds our Euro-denominated revenues, we must convert other currencies, primarily the U.S. Dollar, into Euros. An increase in the strength ofthe Euro relative to the U.S. Dollar would require us to convert more U.S. Dollars to Euros to satisfy those obligations.Because we report our operating results in U.S. Dollars, changes in the value of the U.S. Dollar relative to other currencies also result in fluctuations of our reportedrevenues and earnings. Under U.S. accounting guidelines, all foreign currency-denominated monetary assets and liabilities, such as cash and cash equivalents, accountsreceivable, restricted cash, accounts payable, accrued liabilities, advances from affiliates and long-term debt are revalued and reported based on the prevailing exchangerate at the end of the applicable period. This revaluation historically has caused us to report significant unrealized foreign currency exchange gains or losses each period.The primary source of these gains and losses is our Euro-denominated term loans and our Norwegian Kroner-denominated bonds. We have entered into foreign currencyforward contracts to economically hedge portions of our forecasted expenditures denominated in Norwegian Kroner. We also incur interest expense on our NorwegianKroner-denominated bonds. We have entered into cross currency swaps to economically hedge the foreign exchange risk on the principal and interest payments of ourNorwegian Kroner-denominated bonds.20Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe are exposed to the impact of interest rate changes primarily through our borrowings that require us to make interest payments based on LIBOR, EURIBOR or NIBOR.Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. From time to time, we useinterest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costsassociated with our floating-rate debt.Many of our seafaring employees are covered by collective bargaining agreements and the failure to renew those agreements or any future labor agreementsmay disrupt operations and adversely affect our cash flows.A significant portion of our seafarers are employed under collective bargaining agreements. We may become subject to additional labor agreements in the future. We maysuffer labor disruptions if relationships deteriorate with the seafarers or the unions that represent them. Our collective bargaining agreements may not prevent labordisruptions, particularly when the agreements are being renegotiated. Salaries are typically renegotiated annually or bi-annually for seafarers and annually for onshoreoperational staff and may increase our cost of operation. Any labor disruptions could harm our operations and could have a material adverse effect on our business,results of operations and financial condition.We and certain of our joint venture partners may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business.Our success depends in large part on our ability to attract and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employeeswith specialized training who can perform physically demanding work. Any inability we experience in the future to hire, train and retain a sufficient number of qualifiedemployees could impair our ability to manage, maintain and grow our business.Terrorist attacks, piracy, increased hostilities, political change or war could lead to further economic instability, increased costs and disruption of business.Terrorist attacks, piracy and the current or future conflicts in the Middle East, West Africa (Nigeria), Libya and elsewhere, and political change, may adversely affect ourbusiness, operating results, financial condition, and ability to raise capital and future growth. Continuing hostilities in the Middle East especially among Qatar, Saudi Arabia,the United Arab Emirates, Yemen and elsewhere may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the United States orelsewhere, which may contribute to economic instability and disruption of oil production and distribution, which could result in reduced demand for our services and have anadverse impact on our operations and or our ability to conduct business.In addition, oil facilities, shipyards, vessels, pipelines and oil fields could be targets of future terrorist attacks and warlike operations and our vessels could be targets ofpirates, hijackers, terrorists or warlike operations. Any such attacks could lead to, among other things, bodily injury or loss of life, vessel or other property damage,increased vessel operational costs, including insurance costs, and the inability to transport oil to or from certain locations. Terrorist attacks, war, piracy, hijacking or otherevents beyond our control that adversely affect the distribution, production or transportation of oil to be shipped by us could entitle customers to terminate charters, whichwould harm our cash flow and business.Acts of piracy on ocean-going vessels continue to be a risk, which could adversely affect our business.Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, Gulf of Guinea and the Indian Ocean off thecoast of Somalia. While there continues to be a significant risk of piracy incidents in the Gulf of Aden and Indian Ocean, recently there have been increases in thefrequency and severity of piracy incidents off the coast of West Africa and a resurgent piracy risk in the Straits of Malacca and surrounding waters. If these piracy attacksresult in regions in which our vessels are deployed being named on the Joint War Committee Listed Areas, war risk insurance premiums payable for such coverage canincrease significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which are incurred to the extent we employ on-board armed security guards and escort vessels, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, whichcould have a material adverse effect on us. In addition, hijacking as a result of an act of piracy against our vessels, or an increase in cost or unavailability of insurance forour vessels, could have a material adverse impact on our business, financial condition and results of operations.Our and many of our customers’ substantial operations outside the United States expose us to political, governmental and economic instability, whichcould harm our operations.Because our operations, and the operations of certain of our customers, are primarily conducted outside of the United States, they may be affected by economic, politicaland governmental conditions in the countries where we engage in business, including Brazil, or where our vessels are registered. Any disruption caused by these factorscould harm our business, including by reducing the levels of oil exploration, development and production activities in these areas. We derive some of our revenues fromshipping oil and gas from politically and economically unstable regions. Conflicts in these regions have included attacks on ships and other efforts to disrupt shipping.21Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsHostilities, strikes, or other political or economic instability in regions where we operate or where we may operate could have a material adverse effect on the growth of ourbusiness, results of operations and financial condition and ability to make cash distributions. In addition, tariffs, trade embargoes and other economic sanctions by theUnited States or other countries against countries in which we operate or to which we trade could harm our business and ability to make cash distributions. Finally, agovernment could requisition one or more of our vessels, which is most likely during war or national emergency. Any such requisition would cause a loss of the vessel andcould harm our cash flow and financial results.Two vessels owned by the Teekay LNG-Marubeni Joint Venture, the Marib Spirit and Arwa Spirit, are currently under long-term contracts expiring in 2029 with YLNG, aconsortium led by Total SA. Due to the political situation in Yemen, YLNG decided to temporarily close operation of its LNG plant in Yemen in 2015. As a result, the TeekayLNG-Marubeni Joint Venture agreed in December 2015 to defer a portion of the charter payments for the two LNG carriers from January 1, 2016 to December 31, 2016and further deferrals were agreed with YLNG to extend the deferral period to the end of the short-term sub-charter contracts for the Marib Spirit and Arwa Spirit, which iscurrently anticipated to be in August 2018 and March 2019, respectively, unless the short-term sub-charter contracts are further extended in accordance with their terms.Should the LNG plant in Yemen resume operations, it is intended that YLNG will repay the deferred amounts in full, plus interest over a period of time to be agreed upon.However, there is no assurance if or when the LNG plant will resume operations or if YLNG will repay the deferred amounts, and this deferral period may extend beyond2018 and 2019 as it relates to the Marib Spirit and Arwa Spirit, respectively. Teekay LNG's proportionate share of the estimated impact of the charter payment deferral for2018 compared to original charter rates earned prior to December 31, 2015 is estimated to be a reduction to equity income ranging from $4 million to $5 million per quarter,depending on any sub-chartering employment opportunities for the Marib Spirit and Arwa Spirit in 2018.A cyber-attack could materially disrupt our businessWe rely on information technology systems and networks in our operations and the administration of our business. Cyber-attacks have increased in number andsophistication in recent years. Our operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks,or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information oralteration of information on our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business andresults of operations.The ARC7 LNG carrier newbuildings for the Yamal LNG Project are customized vessels and Teekay LNG's financial condition, results of operations andability to make distributions to us could be substantially affected if the Yamal LNG Project is not completed.On July 9, 2014, Teekay LNG entered into a 50/50 joint venture with China LNG (or the Yamal LNG Joint Venture) and ordered six internationally-flagged icebreaker LNGcarriers for a project located on the Yamal Peninsula in Northern Russia (or the Yamal LNG Project), one of which newbuilding carriers delivered in January 2018. TheYamal LNG Project is a joint venture between Russia-based Novatek OAO (50.1%), France-based Total S.A. (20%), China-based China National Petroleum Corporation(20%) and Silk Road Fund (9.9%).The five remaining ARC7 LNG carrier newbuildings ordered by the Yamal LNG Joint Venture, which are scheduled for delivery between the remainder of 2018 and 2020,are being specifically built for the Arctic requirements of the Yamal LNG Project and will have limited redeployment opportunities to operate as conventional trading LNGcarriers if the project is abandoned or cancelled. If the project is abandoned or cancelled or not completed for any reason, either before or after commencement ofoperations, the Yamal LNG Joint Venture may be unable to reach an agreement with the shipyard allowing for the termination of the shipbuilding contracts (since no suchoptional termination right exists under these contracts), change the vessel specifications to reflect those applicable to more conventional LNG carriers and which do notincorporate ice-breaking capabilities, or find suitable alternative employment for the newbuilding vessels on a long-term basis with other LNG projects or otherwise.The Yamal LNG Project may be abandoned or not completed for various reasons, including, among others:•failure to achieve expected operating results;•changes in demand for LNG;•adverse changes in Russian regulations or governmental policy relating to the project or the export of LNG;•technical challenges of completing and operating the complex project, particularly in extreme Arctic conditions;•labor disputes; and•environmental regulations or potential claims.If the project is not completed or is abandoned, proceeds if any, received from limited Yamal LNG project sponsor guarantees and potential alternative employment, if any,of the vessels and from potential sales of components and scrapping of the vessels likely would fall substantially short of the cost of the vessels to the Yamal LNG JointVenture. Any such shortfall could have a material adverse effect on Teekay LNG's financial condition, results of operations and ability to make distributions to us.22Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSanctions against key participants in the Yamal LNG Project could impede completion or performance of the Yamal LNG Project, which could have amaterial adverse effect on us.The U.S. Treasury Department’s Office of Foreign Assets Control (or OFAC) placed Russia-based Novatek OAO (or Novatek), a 50.1% owner of the Yamal LNG Project,on the Sectoral Sanctions Identifications List. OFAC previously imposed sanctions on an investor in Novatek and these sanctions also remain in effect. Effective as ofNovember 2017, the restrictions on Novatek prohibit U.S. persons (and their subsidiaries) from participating in debt financing transactions of greater than 60 days maturitywith Novatek and, by virtue of Novatek’s 50.1% ownership interest, the Yamal LNG Project. The European Union also imposed certain sanctions on Russia. Thesesanctions require a European Union license or authorization before a party can provide certain technologies or technical assistance, financing, financial assistance, orbrokering with regard to these technologies. However, the technologies being currently sanctioned by the EU appear to focus on oil exploration projects, not gas projects.In addition, OFAC and other governments or organizations may impose additional sanctions on Novatek, the Yamal LNG Project or other project participants, which mayfurther hinder the ability of the Yamal LNG Project to receive necessary financing. Although we believe that we are in compliance with all applicable sanctions laws andregulations, and intend to maintain such compliance, the scope of these sanctions laws may be subject to change. Future sanctions may prohibit the Yamal LNG JointVenture from performing under its contracts with the Yamal LNG Project, which could have a material adverse effect on Teekay LNG's financial condition, results ofoperations and ability to make distributions.Failure of the Yamal LNG Project to achieve expected results could lead to a default under the time-charter contracts by the charter party.The charter party under the Yamal LNG Joint Venture’s time-charter contracts for the Yamal LNG Project is Yamal Trade Pte. Ltd., a wholly-owned subsidiary of YamalLNG, the project’s sponsor. If the Yamal LNG Project does not achieve expected results, the risk of charter party default may increase. If the charter party defaults on thetime-charter contracts, Teekay LNG may be unable to redeploy the vessels under other time-charter contracts or may be forced to scrap the vessels. Any such defaultcould adversely affect Teekay LNG’s results of operations and ability to make distributions to us.Maritime claimants could arrest, or port authorities could detain, our vessels, which could interrupt our cash flow.Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts,claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of oneor more of our vessels could interrupt our cash flow and require us to pay large sums of funds to have the arrest or attachment lifted. In addition, in some jurisdictions,such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel that is subject to the claimant’s maritime lien and any “associated”vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating toanother of our ships. In addition, port authorities may seek to detain our vessels in port, which could adversely affect our operating results or relationships with customers.Climate change and greenhouse gas restrictions may adversely impact our operations and markets.Due to concern over the risk of climate change, a number of countries have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gasemissions. These regulatory measures include, among others, adoption of cap and trade regimes, carbon taxes, increased efficiency standards, and incentives ormandates for renewable energy. Compliance with changes in laws, regulations and obligations relating to climate change could increase our costs related to operating andmaintaining our vessels and require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions, or administer andmanage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be adversely affected.Adverse effects upon the oil and gas industry relating to climate change may also adversely affect demand for our services. Although we do not expect that demand for oiland gas will lessen dramatically over the short-term, in the long-term, climate change may reduce the demand for oil and gas or increased regulation of greenhouse gasesmay create greater incentives for use of alternative energy sources. Any long-term material adverse effect on the oil and gas industry could have a significant financial andoperational adverse impact on our business that we cannot predict with certainty at this time.We have substantial debt levels and may incur additional debt.As of December 31, 2017, our consolidated debt and obligations related to capital leases totaled $4.6 billion and we had the capacity to borrow an additional $0.5 billionunder our revolving credit facilities. These credit facilities may be used by us for general corporate purposes. Our consolidated debt and obligations related to capitalleases could increase substantially. We will continue to have the ability to incur additional debt, subject to limitations in our credit facilities. Our level of debt could haveimportant consequences to us, including:•our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes, and our ability to refinance our creditfacilities may be impaired or such financing may not be available on favorable terms, if at all;•we will need to use a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available foroperations, future business opportunities and dividends to shareholders;23Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•our debt level may make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally; and•our debt level may limit our flexibility in obtaining additional financing, pursuing other business opportunities and responding to changing business and economicconditions.Financing agreements containing operating and financial restrictions may restrict our business and financing activities.The operating and financial restrictions and covenants in our revolving credit facilities, term loans, indentures and in any of our future financing agreements could adverselyaffect our ability to finance future operations or capital needs or to pursue and expand our business activities. For example, these financing arrangements restrict ourability to:•pay dividends;•incur or guarantee indebtedness;•change ownership or structure, including mergers, consolidations, liquidations and dissolutions;•grant liens on our assets;•sell, transfer, assign or convey assets;•make certain investments; and•enter into new lines of business.Our ability to comply with covenants and restrictions contained in debt instruments may be affected by events beyond our control, including prevailing economic, financialand industry conditions. If market or other economic conditions deteriorate, we may fail to comply with these covenants. If we breach any of the restrictions, covenants,ratios or tests in our financing agreements or indentures, our obligations may become immediately due and payable, and the lenders’ commitment under our credit facilities,if any, to make further loans may terminate. This could lead to cross-defaults under other financing agreements and result in obligations becoming due and commitmentsbeing terminated under such agreements. A default under financing agreements could also result in foreclosure on any of our vessels and other assets securing relatedloans.Furthermore, the termination of any of our charter contracts by our customers could result in the repayment of the debt facilities to which the chartered vessels relate.Certain of Teekay LNG’s lease arrangements contain provisions whereby it has provided a tax indemnification to third parties, which may result in increasedlease payments or termination of favorable lease arrangements.Teekay LNG and certain of its joint ventures are party and were party to lease arrangements whereby the lessor could claim tax depreciation on the capital expenditures itincurred to acquire these vessels. As is typical in these leasing arrangements, tax and change of law risks are assumed by the lessee. The rentals payable under thelease arrangements are predicated on the basis of certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect orthere is a change in the applicable tax legislation or the interpretation thereof by the United Kingdom (U.K.) taxing authority, the lessor is entitled to increase the rentals soas to maintain its agreed after-tax margin. Under the capital lease arrangements, Teekay LNG does not have the ability to pass these increased rentals onto its charterparty. However, the terms of the lease arrangements enable Teekay LNG and its joint venture partner to jointly terminate the lease arrangements on a voluntary basis atany time. In the event of an early termination of the lease arrangements, the lessee is obliged to pay termination sums to the lessor sufficient to repay its investment in thevessels and to compensate it for the tax effect of the terminations, including recapture of tax depreciation, if any.Teekay LNG owns a 70% interest in Teekay Nakilat Corporation (or Teekay Nakilat Joint Venture) a subsidiary of the lessee under three separate 30-year capital leasearrangements with a third party for three LNG carriers (or the RasGas II LNG Carriers). Under the terms of the leases in respect of the RasGas II LNG Carriers, thelessor claimed tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leases, tax and change of law risks were assumed bythe lessee, in this case the Teekay Nakilat Joint Venture. Lease payments under the leases were based on certain tax and financial assumptions at the commencement ofthe leases and subsequently adjusted to maintain its agreed after-tax margin. On December 22, 2014, the Teekay Nakilat Joint Venture terminated the leasing of theRasGas II LNG Carriers. However, the Teekay Nakilat Joint Venture remains obligated to the lessor to maintain the lessor’s agreed after-tax margin from thecommencement of the lease to the lease termination date and as at December 31, 2017, the Teekay Nakilat Joint Venture’s carrying amount of this estimated taxindemnification guarantee was $62.7 million or GBP 46.4 million (December 31, 2016 - $13.3 million or GBP 10.8 million) which is included as part of accrued liabilities andother in our consolidated balance sheets. Additionally, as at December 31, 2017, the Teekay Nakilat Joint Venture had $7.0 million (December 31, 2016 - $6.8 million) ondeposit with the lessor as security against any future claims and recorded as part of restricted cash in our consolidated balance sheets.24Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe UK taxing authority (or HMRC) has been challenging the use of similar lease structures in the UK courts. One of those challenges was eventually decided in favor ofHMRC (Lloyds Bank Equipment Leasing No. 1 or LEL1), with the lessor and lessee choosing not to appeal further. The LEL1 tax case concluded that capital allowanceswere not available to the lessor. On the basis of this conclusion, HMRC is now asking lessees on other leases, including the Teekay Nakilat Joint Venture, to accept thatcapital allowances are not available to their lessor. Under the terms of the lease, the lessor is entitled to make a determination that additional rentals are due, even where acourt has not made a determination on whether capital allowances are available or where discussions are otherwise ongoing with HMRC on the matter. The TeekayNakilat Joint Venture now believes that it is probable that the lessor will make such a determination, and demand additional rentals. As a result, in the three months endedDecember 31, 2017, the Teekay Nakilat Joint Venture recognized an additional tax indemnification guarantee liability of $50.0 million (which is included in the afore-mentioned total accrued liability of $62.7 million as at December 31, 2017) as estimated primarily based on information received from the lessor and presented in other(loss) income on the consolidated statements of (loss) income for the year ended December 31, 2017.In addition, Teekay LNG’s subsidiaries of another joint venture formed to service the Tangguh LNG project in Indonesia have lease arrangements with a third party for twoLNG carriers. The terms of the lease arrangements provide similar tax and change of law risk assumption by this joint venture as Teekay LNG had with the three RasGasII LNG Carriers.Our joint venture arrangements impose obligations upon us but limit our control of the joint ventures, which may affect our ability to achieve our jointventure objectives.For financial or strategic reasons, we conduct a portion of our business through joint ventures. Generally, we are obligated to provide proportionate financial support for thejoint ventures although our control of the business entity may be substantially limited. Due to this limited control, we generally have less flexibility to pursue our ownobjectives through joint ventures or to access available cash of the joint ventures than we would with our own subsidiaries. There is no assurance that our joint venturepartners will continue their relationships with us in the future or that we will be able to achieve our financial or strategic objectives relating to the joint ventures and themarkets in which they operate. In addition, our joint venture partners may have business objectives that are inconsistent with ours, experience financial and otherdifficulties that may affect the success of the joint venture, or be unable or unwilling to fulfill their obligations under the joint ventures, which may affect our financial conditionor results of operations.Allegations of improper payments may harm our reputation and businessIn May 2016, a former executive of Transpetro, the transportation and logistics subsidiary of Petrobras S.A. (or Petrobras), alleged in a plea bargain that a subsidiary ofTeekay Offshore, among a number of other third-party shipping companies, purportedly made improper payments to obtain shuttle tanker business with Transpetro. Suchpayments were alleged to have been made by the subsidiary between 2004 and 2006, in an aggregate amount of approximately 1.5 million Brazilian Reals (less than $0.5million at the December 31, 2017 exchange rate). We conducted an extensive internal investigation, with the assistance of United States, Brazilian and Norwegian counseland forensic accountants, to evaluate these allegations. Based on the information reasonably available and reviewed as part of the investigation, the investigation did notidentify conclusive proof that we, Teekay Offshore or any of our or Teekay Offshore's subsidiaries made the alleged improper payments or that any of our or oursubsidiaries’ current or former employees intended for the alleged improper payments to be made. However, there is no assurance the conclusions of the investigation areaccurate or will not be challenged, or that other information may not exist or become available that would affect such conclusions, and such conclusions are not binding onregulatory or governmental authorities. It is uncertain how these allegations ultimately may affect us or Teekay Offshore, if at all, including the possibility of penalties thatcould be assessed by relevant authorities. Any claims against us or Teekay Offshore may adversely affect our reputation, business, financial condition and operatingresults. In addition, any dispute with Petrobras in connection with this matter may adversely affect our relationship with Petrobras. As of the date of this Annual Report, nolegal or governmental proceedings are pending or, to our knowledge, contemplated against us or Teekay Offshore relating to these allegations.In January 2015, Teekay Offshore, through the Libra joint venture, its 50/50 joint venture with Ocyan S.A. (or Ocyan, formerly Odebrecht Oil & Gas S.A), finalized thecontract with Petrobras to provide an FPSO unit for the Libra field located in the Santos Basin offshore Brazil. The contract is being serviced by the Pioneiro de Libra (orLibra), an FPSO unit converted from Teekay Offshore's 1995-built shuttle tanker, the Navion Norvegia, which was sold by Teekay Offshore to the joint venture. Theconverted unit commenced operations in late-2017 under a 12-year firm period fixed-rate contract with Petrobras and its international partners. Senior Odebrecht S.A.personnel, including a former executive of Ocyan, have been implicated in corruption charges related to improper payments to Brazilian politicians and political parties. Anyadverse effect of these charges against Ocyan may harm our growth prospects, reputation, financial condition and results of operations.We depend on certain joint venture partners to assist us in operating our businesses and competing in our markets.Our ability to compete for offshore oil marine transportation, processing, floating accommodation, towage and storage projects and to enter into new charters or contractsof affreightment and expand our customer relationships depends on our ability to leverage our relationship with our joint venture partners and their reputation andrelationships in the shipping industry. If our joint venture partners suffer material damage to its financial condition, reputation or relationships, it may harm the ability of us orour subsidiaries to:25Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•renew existing charters and contracts of affreightment upon their expiration;•obtain new charters and contracts of affreightment;•successfully interact with shipyards during periods of shipyard construction constraints;•obtain financing on commercially acceptable terms, if at all; or•maintain satisfactory relationships with suppliers and other third parties.If our or our subsidiaries’ ability to do any of the things described above is impaired, it could have a material adverse effect on our business, results of operations andfinancial condition and our ability to make cash distributions.We may experience operational problems with vessels that reduce revenue and increase costs.Shuttle tankers, FSO and FPSO units, towing and offshore installation vessels and UMS are complex and their operations are technically challenging. Marine transportationand oil production operations are subject to mechanical risks and problems as well as environmental risks. Operational problems may lead to loss of revenue or higherthan anticipated operating expenses or require additional capital expenditures. Any of these results could harm our business, financial condition and operating results.Teekay Tankers’ U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports, which may limit its earnings in this area ofits operations.Teekay Tankers’ U.S. Gulf lightering business faces competition from alternative methods of delivering crude oil shipments to port, including offshore offloading facilities.While we believe that lightering offers advantages over alternative methods of delivering crude oil to U.S. Gulf ports, Teekay Tankers’ lightering revenues may be limiteddue to the availability of alternative methods.Teekay Tankers’ full service lightering operations are subject to specific risks that could lead to accidents, oil spills or property damage.Lightering is subject to specific risks arising from the process of safely bringing two large moving tankers next to each other and mooring them for lightering operations.These operations require a high degree of expertise and present a higher risk of collision compared to when docking a vessel at port. Lightering operations, similar tomarine transportation in general, are also subject to risks due to events such as mechanical failures, human error, and weather conditions.Tax RisksIn addition to the following risk factors, you should read "Item 4E — Taxation of the Company", "Item 10 — Additional Information — Material U.S. Federal Income TaxConsiderations" and "Item 10 — Additional Information — Non-United States Tax Consequences" for a more complete discussion of the expected material U.S. federal andnon-U.S. income tax considerations relating to us and the ownership and disposition of our common stock.U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S.shareholders.A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a “passive foreign investment company” (or PFIC) for such purposes inany taxable year for which either (a) at least 75% of its gross income consists of “passive income” or (b) at least 50% of the average value of the entity’s assets isattributable to assets that produce or are held for the production of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gainsfrom the sale or exchange of investment property and rents and royalties (other than rents and royalties that are received from unrelated parties in connection with theactive conduct of a trade or business). By contrast, income derived from the performance of services does not constitute “passive income.”There are legal uncertainties involved in determining whether the income derived from our time-chartering activities constitutes rental income or income derived from theperformance of services, including the decision in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), which held that income derived from certain time-charteringactivities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of the Internal Revenue Code of 1986, asamended (or the Code). However, the Internal Revenue Service (or IRS) stated in an Action on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to,the way that the rental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated that the time charters at issue inTidewater would be treated as producing services income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or otherwise cited asprecedent by taxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory provisions governing PFICs, there can be noassurance that the IRS or a court would not follow the Tidewater decision in interpreting the PFIC provisions of the Code. Nevertheless, based on the current compositionof our assets and operations (and those of our subsidiaries), we intend to take the position that we are not now and have never been a PFIC. No assurance can be given,however, that this position would be sustained by a court if contested by the IRS or that we would not constitute a PFIC for any future taxable year if there were to bechanges in our assets, income or operations.26Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf the IRS were to determine that we are or have been a PFIC for any taxable year during which a U.S. Holder (as defined below under "Item 10 — Additional Information —Material U.S. Federal Income Tax Considerations") held our common stock, such U.S. Holder would face adverse tax consequences. For a more comprehensivediscussion regarding the tax consequences to U.S. Holders if we are treated as a PFIC, please read "Item 10 — Additional Information — Material U.S. Federal IncomeTax Considerations — United States Federal Income Taxation of U.S. Holders — Consequences of Possible PFIC Classification".We may be subject to taxes, which could affect our operating results.We or our subsidiaries are subject to tax in certain jurisdictions in which we or our subsidiaries are organized, own assets or have operations, which reduces our operatingresults. In computing our tax obligations in these jurisdictions, we are required to take various tax accounting and reporting positions on matters that are not entirely freefrom doubt and for which we have not received rulings from the governing authorities. We cannot assure you that upon review of these positions, the applicable authoritieswill agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on us or our subsidiaries, further reducing our operatingresults. In addition, changes in our operations or ownership could result in additional tax being imposed on us or on our subsidiaries in jurisdictions in which operations areconducted. For example, changes in the ownership of our stock may cause us to be unable to claim an exemption from U.S. federal income tax under Section 883 of theCode. If we were not exempt from tax under Section 883 of the Code, we would be subject to U.S. federal income tax on shipping income attributable to our subsidiaries’transportation of cargoes to or from the U.S., the amount of which is not within our complete control. Also, jurisdictions in which we or our subsidiaries are organized, ownassets or have operations may change their tax laws, or we may enter into new business transactions relating to such jurisdictions, which could result in increased taxliability and reduce our operating results. Please read "Item 4 — Information on the Company — Taxation of the Company".Item 4.Information on the CompanyA.Overview, History and DevelopmentOverviewWe are a leading provider of international crude oil and gas marine transportation services and we also offer offshore oil production, storage and offloading services,primarily under long-term, fixed-rate contracts. Over the past decade, we have undergone a major transformation from being primarily an owner of ships in the cyclicalspot tanker business to being a growth-oriented asset manager in the “Marine Midstream” sector. This transformation has included our expansion into the liquefied naturalgas (or LNG) and liquefied petroleum gas (or LPG) shipping sectors through our publicly-listed subsidiary Teekay LNG Partners L.P. (NYSE: TGP) (or Teekay LNG), thecontinuation of our conventional tanker business through our publicly-listed subsidiary Teekay Tankers Ltd. (NYSE: TNK) (or Teekay Tankers), and further growth of ouroperations in the offshore production, storage and transportation sector through our ownership of TPO Investments AS and through our equity-accounted investmentTeekay Offshore Partners L.P. (NYSE: TOO) (or Teekay Offshore). The combined Teekay entities operate total assets under management of approximately $13 billion,comprised of approximately 220 liquefied gas, offshore, and conventional tanker assets (excluding vessels managed for third parties). With offices in 14 countries andapproximately 8,300 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies. Ourorganizational structure can be divided into (a) our controlling interests in our publicly-listed subsidiaries, Teekay LNG and Teekay Tankers (or the Controlled DaughterEntities), our equity-accounted investment in Teekay Offshore (together with the Controlled Daughter Entities, the Daughter Entities), and (b) Teekay and its remainingsubsidiaries, which is referred to herein as Teekay Parent.Our business strategy across the Teekay Group is focused on the following:•Generate attractive long-term risk-adjusted returns, utilizing our market leading positions, global footprint and operational excellence;•Offer a wide breadth of marine midstream solutions to meet our customers’ needs; and•Provide superior customer service by maintain high reliability, safety, environmental and quality standards.Teekay LNG includes all of our LNG and LPG carriers. LNG carriers are usually chartered to carry LNG pursuant to time-charter contracts, where a vessel is hired for afixed period of time. LPG carriers are mainly chartered to carry LPG and ammonia on time charters, on contracts of affreightment or spot voyage charters. As ofDecember 31, 2017, Teekay LNG’s fleet, including newbuildings on order, had a total cargo carrying capacity of approximately 9.1 million cubic meters. Please read “—B.Operations—Our Fleet.”Teekay Tankers includes a substantial majority of our conventional crude oil tankers and product carriers. Teekay Tankers' conventional crude oil tankers and producttankers primarily operate in the spot-tanker market or are subject to time charters or contracts of affreightment that are priced on a spot-market basis or are short-term,fixed-rate contracts. Teekay Tankers considers contracts that have an original term of less than one year in duration to be short-term. Certain of its conventional crude oiltankers and product tankers are on fixed-rate time-charter contracts with an initial duration of at least one year. Our conventional Aframax, Suezmax, and large producttankers are among the vessels included in Teekay Tankers. Please read “—B. Operations—Our Fleet.”We have chartering staff located in Singapore; London, England; and Houston, USA. Each office serves our clients headquartered in that office’s region. Fleet operations,vessel positions and charter market rates are monitored around the clock. We believe that monitoring such information is critical to making informed bids on competitivebrokered business.Teekay Offshore includes shuttle tanker operations, FPSO units, FSO units, and offshore support which includes UMS, which primarily operate under long-term fixed-ratecontracts, and long-distance towing and offshore installation vessels. As of December 31, 2017, our shuttle tanker fleet, including newbuildings, had a total cargo capacityof approximately 4.8 million deadweight tonnes (or dwt), which represented approximately 47% of the total tonnage of the world shuttle tanker fleet. Please read “-B.Operations-Our Fleet.”27Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay Parent currently owns three FPSO units. Our long-term vision is for Teekay Parent not to have a direct ownership in any vessels.The Teekay organization was founded in 1973. We are incorporated under the laws of the Republic of The Marshall Islands as Teekay Corporation and maintain ourprincipal executive office at 4th floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda. Our telephone number at such address is (441) 298-2530.Our Ownership of the Daughter Entities and Recent Equity Offerings and Transactions by Daughter EntitiesOur ownership of Teekay Tankers was 28.8% as of March 1, 2018. We maintain voting control of Teekay Tankers through our ownership of shares of Class A and ClassB Common Stock and continue to consolidate this subsidiary. Our ownership of Teekay LNG was 33.0% (including our 2% general partner interest) as of March 1, 2018.We maintain control of Teekay LNG by virtue of our control of the general partner and will continue to consolidate this subsidiary. Our ownership interest in TeekayOffshore was 14.1% (including 13.8% of the outstanding publicly traded common units and 51% of the general partner interest) as of March 1, 2018. We have significantinfluence over Teekay Offshore and account for our investment in Teekay Offshore using the equity method. Please read “Item 18. Financial Statements: Note 5 — EquityFinancing Transactions of the Daughter Entities.”Please read “Item 5. Operating and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition and Results of Operations— RecentDevelopments and Results of Operations” for more information on recent transactions.B.OperationsWe (excluding our investment in Teekay Offshore) have three primary lines of business: offshore production (FPSO units), liquefied gas carriers, and conventionaltankers. We manage these businesses for the benefit of all stakeholders. We allocate capital and assess performance from the separate perspectives of Teekay LNG andTeekay Tankers, Teekay Parent, and its investment in Teekay Offshore, as well as from the perspective of the lines of business (the Line of Business approach). Theprimary focus of our organizational structure, internal reporting and allocation of resources by the chief operating decision maker is on Teekay LNG and Teekay Tankers,Teekay Parent, and Teekay Parent's investment in Teekay Offshore (the Legal Entity approach). However, we have continued to incorporate the Line of Businessapproach as in certain cases there is more than one line of business in each of Teekay LNG, Teekay Tankers and Teekay Parent, and we believe this information allows abetter understanding of our performance and prospects for future net cash flows. Subsequent to the Brookfield Transaction on September 25, 2017, we assess theperformance of, and make decisions to allocate resources to, our investment in Teekay Offshore as a whole and not at the level of the individual lines of business withinTeekay Offshore, which are (1) offshore production (FPSO units), (2) offshore logistics (shuttle tankers, the HiLoad DP unit, floating storage and offtake (or FSO) units,units for maintenance and safety (or UMS) and long-distance towing and offshore installation vessels), and (3) conventional tankers. We have determined that ourinvestment in Teekay Offshore represents a separate operating segment and as such, individual lines of business within Teekay Offshore are no longer disclosed in ouroperating segments and are not discussed individually in the following sections.Teekay LNGTeekay LNG’s vessels primarily compete in the LNG and LPG markets. LNG carriers are usually chartered to carry LNG pursuant to time-charter contracts, where avessel is hired for a fixed period of time and the charter rate is payable to the owner on a monthly basis. LNG shipping historically has been transacted with long-term,fixed-rate time-charter contracts. LNG projects require significant capital expenditures and typically involve an integrated chain of dedicated facilities and cooperativeactivities. Accordingly, the overall success of an LNG project depends heavily on long-range planning and coordination of project activities, including marine transportation.Most shipping requirements for new LNG projects continue to be provided on a long-term basis, though the level of spot voyages (typically consisting of a single voyage),short-term time-charters and medium-term time-charters have grown in the past few years. The amount of LNG traded on a spot and short-term basis (defined ascontracts with a duration of four years or less) has increased from approximately 19% of total LNG trade in 2010 to approximately 27% in 2017.In the LNG markets, Teekay LNG competes principally with private and state-controlled energy and utilities companies that generally operate captive fleets, andindependent ship owners and operators. Many major energy companies compete directly with independent owners by transporting LNG for third parties in addition to theirown LNG. Given the complex, long-term nature of LNG projects, major energy companies historically have transported LNG through their captive fleets. However,independent fleet operators have been obtaining an increasing percentage of charters for new or expanded LNG projects as some major energy companies havecontinued to divest non-core businesses. Other major operators of LNG carriers include Qatar Gas Transport (Nakilat), Malaysian International Shipping Company, MitsuiO.S.K. Lines, Maran Gas Maritime, BW Gas, GasLog, NYK Line, and Golar LNG.LNG carriers transport LNG internationally between liquefaction facilities and import terminals. After natural gas is transported by pipeline from production fields to aliquefaction facility, it is supercooled to a temperature of approximately negative 260 degrees Fahrenheit. This process reduces its volume to approximately 1/600th of itsvolume in a gaseous state. The reduced volume facilitates economical storage and transportation by ship over long distances, enabling countries with limited natural gasreserves or limited access to long-distance transmission pipelines to meet their demand for natural gas. LNG carriers include a sophisticated containment system thatholds the LNG and provides insulation to reduce the amount of LNG that boils off naturally. That natural boil off is either used as fuel to power the engines on the ship or itcan be reliquified and put back into the tanks. LNG is transported overseas in specially built tanks on double-hulled ships to a receiving terminal, where it is offloaded andstored in insulated tanks. In regasification facilities at the receiving terminal, the LNG is returned to its gaseous state (or regasified) and then shipped by pipeline fordistribution to natural gas customers.28Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn the LPG market, Teekay LNG competes principally with independent ship owners and operators, and other private and state-controlled energy and chemical companiesthat generally operate captive fleets.LPG carriers are mainly chartered to carry LPG on time-charters, contracts of affreightment or spot voyage charters. The two largest consumers of LPG are residentialusers and the petrochemical industry. Residential users, particularly in developing regions where electricity and gas pipelines are not developed, do not have fuel switchingalternatives and generally are not LPG price sensitive. The petrochemical industry, however, has the ability to switch between LPG and other feedstock fuels depending onprice and availability of alternatives.With the exception of the Arctic Spirit and Polar Spirit, which are the only two ships in the world that utilize the Ishikawajima Harima Heavy Industries Self SupportingPrismatic Tank IMO Type B (or IHI SPB) independent tank technology, Teekay LNG's fleet makes use of one of the Gaz Transport and Technigaz (or GTT) membranecontainment systems. The GTT membrane systems are used in the majority of LNG tankers now being constructed. New LNG carriers generally have an expectedlifespan of approximately 35 to 40 years. Unlike the oil tanker industry, there are currently no regulations that require the phase-out from trading of LNG carriers after theyreach a certain age. As at December 31, 2017, there were approximately 502 vessels in the worldwide LNG fleet, with an average age of approximately 11 years, and anadditional 119 LNG carriers under construction or on order for delivery through 2020. As of December 31, 2017, the worldwide LPG tanker fleet consisted of approximately1,452 vessels with an average age of approximately 15 years and approximately 71 additional LPG vessels on order for delivery through 2020. LPG carriers range in sizefrom approximately 100 to approximately 88,000 cubic meters (or cbm). Approximately 43% (in terms of vessel numbers) of the worldwide fleet is less than 5,000 cbm.Teekay LNG includes substantially all of our LNG and LPG carriers. As at December 31, 2017, Teekay LNG had ownership interests in 35 LNG carriers, as well as 15additional newbuilding LNG carriers on order. In addition, as at December 31, 2017, Teekay LNG had full ownership of seven LPG carriers and 50% ownership, through itsjoint venture agreement with Exmar, in another 18 LPG carriers, three newbuilding LPG carriers on order, and two chartered-in LPG carriers.Teekay TankersTeekay Tankers owns a substantial majority of our conventional crude oil tankers and product carriers. Our conventional crude oil tankers and product tankers primarilyoperate in the spot-tanker market or are subject to time charters or contracts of affreightment that are priced on a spot-market basis or are short-term, fixed-ratecontracts. We consider contracts that have an original term of less than one year in duration to be short-term. Certain of our conventional crude oil tankers and producttankers are on fixed-rate time-charter contracts with an initial duration of at least one year.Teekay Tankers’ vessels compete primarily in the Aframax and Suezmax tanker markets. In these markets, international seaborne oil and other petroleum productstransportation services are provided by two main types of operators: captive fleets of major oil companies (both private and state-owned) and independent ship-ownerfleets. Many major oil companies and other oil trading companies, the primary charterers of our vessels, also operate their own vessels and transport their own oil and oilfor third-party charterers in direct competition with independent owners and operators. Competition for charters in the Aframax and Suezmax spot charter market isintense and is based upon price, location, the size, age, condition and acceptability of the vessel, and the reputation of the vessel’s manager.Teekay Tankers competes principally with other owners in the spot-charter market through the global tanker charter market. This market is comprised of tanker brokercompanies that represent both charterers and ship-owners in chartering transactions. Within this market, some transactions, referred to as “market cargoes,” are offeredby charterers through two or more brokers simultaneously and shown to the widest possible range of owners; other transactions, referred to as “private cargoes,” aregiven by the charterer to only one broker and shown selectively to a limited number of owners whose tankers are most likely to be acceptable to the charterer and are inposition to undertake the voyage.Most of Teekay Tankers’ conventional tankers operate pursuant to pooling or revenue sharing commercial management arrangements. Under such arrangements,different vessel owners pool their vessels, which are managed by a pool manager, to improve utilization and reduce expenses. In general, revenues generated by thevessels operating in a pool or revenue sharing commercial management arrangement, less related voyage expenses (such as fuel and port charges) and administrativeexpenses, are pooled and allocated to the vessel owners according to a pre-determined formula. As of December 31, 2017, 36 of Teekay Tankers' owned vessels, four ofTeekay Tankers' capital lease vessels and one of Teekay Tankers' time-chartered in vessels operated in the spot market through participation in Teekay-managed RSAsor on spot voyage charters. 24 of Teekay Tankers' owned and capital lease vessels operated in the Teekay Suezmax RSA, seven of Teekay Tankers' owned vesselsoperated in the Teekay Aframax RSA and six of Teekay Tankers' owned vessels operated in the Taurus Tankers LR2 RSA. In addition, three of Teekay Tankers' ownedvessels and one time-chartered in vessel operated in the spot market on voyage charters.Teekay Tankers’ competition in the Aframax (80,000 to 124,999 dwt) market is also affected by the availability of other size vessels that compete in that market. Suezmax(125,000 to 199,999 dwt) vessels and Panamax (55,000 to 79,999 dwt) vessels can compete for many of the same charters for which our Aframax tankers compete.Because of their large size, Very Large Crude Carriers (or VLCCs) and Ultra Large Crude Carriers (or ULCCs) (320,000+ dwt) rarely compete directly with Aframaxtankers, and ULCCs rarely compete with Suezmax tankers for specific charters. However, because VLCCs and ULCCs comprise a substantial portion of the totalcapacity of the market, movements by such vessels into Suezmax trades and of Suezmax vessels into Aframax trades would heighten the already intense competition.Teekay Tankers also competes in the Long Range 2 (or LR2) (80,000 to 119,999 dwt) product tanker market. Competition in the LR2 product tanker market is affected bythe availability of other size vessels that compete in the market. Long Range 1 (or LR1) (60,000-79,999 dwt) size vessels can compete for many of the same charters forwhich our LR2 tankers compete.29Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe believe that we have competitive advantages in the Aframax and Suezmax tanker market as a result of the quality, type and dimensions of our vessels and our marketshare in the Indo-Pacific and Atlantic Basins. As of December 31, 2017, our Aframax tanker fleet (excluding Aframax-size shuttle tankers and newbuildings) had anaverage age of approximately 10.2 years and our Suezmax tanker fleet (excluding Suezmax-size shuttle tankers and newbuildings) had an average age of approximately8.7 years. This compares to an average age for the world oil tanker fleet of approximately 10.4 years, for the world Aframax tanker fleet of approximately 10.2 years andfor the world Suezmax tanker fleet of approximately 9.5 years.As of December 31, 2017, other large operators of Aframax tonnage (including newbuildings on order) included Sovcomflot (approximately 48 vessels), MalaysianInternational Shipping Corporation (approximately 43 Aframax vessels), Sigma Pool (approximately 36 vessels), and the Navig8 Pool (approximately 17 vessels). Otherlarge operators of Suezmax tonnage (including newbuildings on order) as of such date included the Nordic American Tankers (approximately 33 vessels), the Blue FinPool (approximately 23 vessels), Euronav (approximately 22 vessels), the Stena Sonangol Pool (18 vessels), Navig8 (approximately 16 vessels), and Sovcomflot(approximately 15 vessels).Teekay Tankers completed a merger with TIL in November 2017, acquiring all of the remaining 27.0 million issued and outstanding common shares of TIL, in a share-for-share exchange at a ratio of 3.3 shares of Teekay Tankers' Class A common stock for each share of TIL common stock. As a result of the merger, TIL became a wholly-owned subsidiary of Teekay Tankers. At the time of the merger, TIL owned a modern fleet of 10 Suezmax tankers, six Aframax tankers and two LR2 product tankers. Foradditional information, please read "Item 18 - Financial Statements: Note 14a - Investments".In May 2017, Teekay Tankers completed the acquisition from Teekay Holdings Ltd., a wholly-owned subsidiary of Teekay, of the remaining 50% interest in Teekay TankerOperations Ltd. (or TTOL), which owns conventional tanker commercial management and technical management operations and directly administers four commerciallymanaged tanker revenue sharing arrangements (or RSAs).Teekay Tankers acquired SPT (now known as Teekay Marine Solutions or TMS) in July 2015 from a company jointly owned by Teekay and I.M. Skaugen SE (orSkaugen). TMS provides a full suite of ship-to-ship transfer services in the oil, gas and dry bulk industries. In addition to full service lightering and lightering support, it alsoprovides consultancy, terminal management and project development services. TMS owns a fleet of four STS support vessels and has two in-chartered Aframax tankers.Teekay OffshoreFPSO UnitsFPSO units are offshore production facilities that are ship-shaped or cylindrical-shaped and store processed crude oil in tanks located in the hull of the vessel. FPSO unitsare typically used as production facilities to develop marginal oil fields or deepwater areas remote from existing pipeline infrastructure. Of four major types of floatingproduction systems, FPSO units are the most common type. Typically, the other types of floating production systems do not have significant storage and need to beconnected into a pipeline system or use an FSO unit for storage. FPSO units are less weight-sensitive than other types of floating production systems and their extensivedeck area provides flexibility in process plant layouts. In addition, the ability to utilize surplus or aging tanker hulls for conversion to an FPSO unit provides a relativelyinexpensive solution compared to the new construction of other floating production systems. A majority of the cost of an FPSO comes from its top-side productionequipment and thus, FPSO units are expensive relative to conventional tankers. An FPSO unit carries on board all the necessary production and processing facilitiesnormally associated with a fixed production platform. As the name suggests, FPSO units are not fixed permanently to the seabed but are designed to be moored at onelocation for long periods of time. In a typical FPSO unit installation, the untreated well-stream is brought to the surface via subsea equipment on the sea floor that isconnected to the FPSO unit by flexible flow lines called risers. The risers carry oil, gas and water from the ocean floor to the vessel, which processes it on board. Theresulting crude oil is stored in the hull of the vessel and subsequently transferred to tankers either via a buoy or tandem loading system for transport to shore.Traditionally for large field developments, the major oil companies have owned and operated new, custom-built FPSO units. FPSO units for smaller fields have generallybeen provided by independent FPSO contractors under life-of-field production contracts, where the contract’s duration is for the useful life of the oil field. FPSO units havebeen used to develop offshore fields around the world since the late 1970s. Most independent FPSO contractors have backgrounds in marine energy transportation, oilfield services or oil field engineering and construction. As of December 31, 2017, there were approximately 176 FPSO units operating and 22 FPSO units on order in theworld fleet. At December 31, 2017, Teekay Offshore owned six FPSO units, in which it has 100% ownership interests, and two FPSO units, in which it has 50% ownershipinterests. Other major independent FPSO contractors are SBM Offshore N.V., BW Offshore, MODEC, Bumi Armada and Bluewater.Shuttle TankersA shuttle tanker is a specialized ship designed to transport crude oil and condensates from offshore oil field installations to onshore terminals and refineries. Shuttle tankersare equipped with sophisticated loading systems and dynamic positioning systems that allow the vessels to load cargo safely and reliably from oil field installations, even inharsh weather conditions. Shuttle tankers were developed in the North Sea as an alternative to pipelines. The first cargo from an offshore field in the North Sea wasshipped in 1977, and the first dynamically positioned shuttle tankers were introduced in the early 1980s. Shuttle tankers are often described as “floating pipelines” becausethese vessels typically shuttle oil from offshore installations to onshore facilities in much the same way a pipeline would transport oil along the ocean floor.30Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay Offshore’s shuttle tankers are primarily subject to long-term, fixed-rate time-charter contracts for a specific offshore oil field or under contracts of affreightment forvarious fields. The number of voyages performed under these contracts of affreightment normally depends upon the oil production of each field. Competition for charters isprimarily based upon price, availability, the size, technical sophistication, age and condition of the vessel and the reputation of the vessel’s manager. Although the size ofthe world shuttle tanker fleet has been relatively unchanged in recent years, conventional tankers could be converted into shuttle tankers by adding specialized equipmentto meet customer requirements. Shuttle tanker demand may also be affected by the possible substitution of sub-sea pipelines to transport oil from offshore productionplatforms. The shuttle tankers in Teekay Offshore's contract of affreightment fleet may operate in the conventional spot market during downtime or maintenance periodsfor oil field installations or otherwise, which provides greater capacity utilization for the fleet.As of December 31, 2017, there were approximately 81 vessels in the world shuttle tanker fleet (including seven newbuildings), the majority of which operate in the NorthSea and Brazil. Shuttle tankers also operate off the East Coast of Canada and in the U.S. Gulf. As of December 31, 2017, Teekay Offshore owned 34 shuttle tankers(including five vessels under construction and the HiLoad DP unit), in which their ownership interests ranged from 50% to 100%, and chartered-in an additional threeshuttle tankers. Other shuttle tanker owners include Knutsen NYK Offshore Tankers AS, KNOT Offshore Partners LP, SCF Group, Viken Shipping and AET Inc. Limited(or AET), which, as of December 31, 2017, controlled fleets of 5 to 29 shuttle tankers each. We believe that we have competitive advantages in the shuttle tanker marketas a result of the quality, type and dimensions of our vessels combined with our market share in the North Sea, Brazil and the East Coast of Canada.FSO UnitsFSO units provide on-site storage for oil field installations that have no storage facilities or that require supplemental storage. An FSO unit is generally used in combinationwith a jacked-up fixed production system, floating production systems that do not have sufficient storage facilities or as supplemental storage for fixed platform systems,which generally have some on-board storage capacity. An FSO unit is usually of similar design to a conventional tanker, but has specialized loading and off-take systemsrequired by field operators or regulators. FSO units are moored to the seabed at a safe distance from a field installation and receive cargo from the production facility via adedicated loading system. An FSO unit is also equipped with an export system that transfers cargo to shuttle or conventional tankers. Depending on the selected mooringarrangement and where they are located, FSO units may or may not have any propulsion systems. FSO units are usually conversions of older single hull conventional oiltankers. These conversions, which include installation of a loading and off-take system and hull refurbishment, can generally extend the lifespan of a vessel as an FSO unitby up to 20 years over the normal conventional tanker lifespan of 25 years.Teekay Offshore’s FSO units are generally placed on long-term, fixed-rate time charters or bareboat charters as an integrated part of the field development plan, whichprovides more stable cash flow to Teekay Offshore.As of December 31, 2017, there were approximately 94 FSO units operating and five FSO units on order in the world fleet. As at December 31, 2017, Teekay Offshore hadownership interests in six FSO units, in which their ownership interests ranged from 89% to 100%. The major markets for FSO units are Asia, West Africa, NorthernEurope, the Mediterranean and the Middle East. Our primary competitors in the FSO market are conventional tanker owners, who have access to tankers available forconversion, and oil field services companies and oil field engineering and construction companies who compete in the floating production system market. Competition in theFSO market is primarily based on price, expertise in FSO operations, management of FSO conversions and relationships with shipyards, as well as the ability to accessvessels for conversion that meet customer specifications.UMSUMS are used primarily for offshore accommodation, storage and support for maintenance and modification projects on existing offshore installations, or during theinstallation and decommissioning of large floating exploration, production and storage units, including FPSO units, FLNG units and floating drill rigs. Teekay Offshore’s UMSunit is available for world-wide operations, excluding operations on the Norwegian Continental Shelf, and includes DP3 keeping systems that are capable of operating indeep water and harsh weather.As of December 31, 2017, there were approximately 51 DP UMS operating and 13 units on order in the world fleet. As at December 31, 2017, Teekay Offshore's fleetconsisted of one unit, the Arendal Spirit, in which Teekay Offshore owns a 100% interest.Towage VesselsLong-distance towing and offshore installation vessels are used for the towing, station-keeping, installation and decommissioning of large floating objects, such asexploration, production and storage units, including FPSO units, floating liquefied natural gas (or FLNG) units and floating drill rigs. Teekay Offshore operates with high-endvessels which can be defined as long-distance towing and offshore installation vessels with a bollard pull of greater than 190 tonnes and a fuel capacity of more than 2,000metric tonnes. Teekay Offshore’s focus is on intercontinental towages requiring trans-ocean movements.Teekay Offshore’s towage vessels operate on voyage-charter and spot contracts. Voyage-charter contract revenue is less volatile than revenue from spot market rates,as project budgets are prepared and maintained well in advance of the contract commencement.31Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs of December 31, 2017, there were approximately 31 long-distance towing and offshore installation vessels with a bollard pull greater than 150 tonnes, which is theminimum specification for vessels in direct competition with us, operating and one long-distance towing and offshore installation vessels on order in the world fleet. AtDecember 31, 2017, Teekay Offshore’s fleet included ten long-distance towing and offshore installation vessels (including one newbuilding which was delivered in February2018), all of which Teekay Offshore has 100% ownership interests.Teekay ParentIn addition to Teekay Parent’s significant investments in Teekay LNG, Teekay Tankers and Teekay Offshore, Teekay Parent continues to own and operate three FPSOunits. Our long-term vision is for Teekay Parent to be primarily a portfolio manager and project developer with the Teekay Group’s fixed assets primarily owned directly byits Daughter Entities. Our primary financial objectives for Teekay Parent is to increase the value of our three FPSO units and the value of our investments in Teekay LNG,Teekay Tankers and Teekay Offshore, increase Teekay Parent’s free cash flow per share and, as a service provider to its Daughter Entities, provide scale and otherbenefits across the Teekay Group.Our Consolidated Fleet under ManagementAs at December 31, 2017, the combined Teekay entities operated under management a fleet of 217 vessels (excluding vessels managed for third parties), includingchartered-in vessels and newbuildings/conversions on order. The following table summarizes our fleet under management as at December 31, 2017: OwnedVessels Chartered-in Vessels Newbuildings / Conversions TotalTeekay LNG LNG Vessels 35(1) — 15(2) 50LPG/Multigas Vessels 25(3) 2 3(4) 30Suezmax Tankers 4(5) — — 4Handymax Product Tanker 1 — — 1 65 2 18 85Teekay Tankers Aframax Tankers 17 1 — 18Suezmax Tankers 30 — — 30VLCC 1(6) — — 1Product Tankers 9 — — 9STS Support Vessels 3 3 — 6 60 4 — 64Teekay Parent (7) FPSO Units 3 — — 3Bunker Barge — 1 — 1 3 1 — 4Teekay Offshore FPSO Units 8 — — 8Shuttle Tankers 28(8) 3 5(9) 36FSO Units 6(10) — — 6Unit for Maintenance and Safety (UMS) 1 — — 1Towage Vessels 9 — 1(11) 10HiLoad Dynamic Positioning Unit 1 — — 1Aframax Tankers — 2 — 2 53 5 6 64Total 181 12 24 217(1)Includes a 52% interest in six LNG carriers, a 50% interest in one LNG carrier which was sold in January 2018, a 49% interest in one LNG carrier, a 40% interest in four LNGcarriers, a 33% interest in four LNG carriers, and a 30% interest in one LNG carrier.(2)Includes a 99% interest in three LNG newbuildings, one of which, the Magdala, was delivered in February 2018, a 50% interest in six LNG newbuildings, one of which, theEduard Toll, was delivered in January 2018, a 30% interest in one LNG newbuilding, the Pan Americas, that was delivered in January 2018, and a 20% interest in two LNGnewbuildings.(3)Includes 18 LPG carriers 50%-owned by Teekay LNG. Includes one LPG carrier 50%-owned by Teekay LNG, Courcheville, that was sold in January 2018.(4)All LPG newbuildings are 50%-owned by Teekay LNG. Includes one LPG carrier 50%-owned by Teekay LNG, Kapellen, that was delivered in March 2018.32Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(5)Includes two vessels, the African Spirit and the European Spirit, that were classified as held-for-sale as at December 31, 2017.(6)VLCC is 50%-owned by Teekay Tankers.(7)Excludes two LNG carriers chartered from Teekay LNG, and two shuttle tankers and three FSO units chartered from Teekay Offshore, all of which are included in therespective Daughter Entity totals in this table.(8)Includes six shuttle tankers 50%-owned by Teekay Offshore.(9)Includes one shuttle tanker newbuilding, the Dorset Spirit, which was delivered in March 2018.(10)Includes one FSO unit 89%-owned by Teekay Offshore.(11)Includes one towage and offshore installation newbuilding, the ALP Keeper, which was delivered in February 2018.Our vessels are of Bahamian, Belgian, Canadian, Cyprus, Danish, Greek, Hong Kong, Isle of Man, Liberian, Malta, Marshall Islands, Netherlands, Norwegian, Panama,Singapore, and Spanish registry.Many of our Aframax and Suezmax vessels and some of our shuttle tankers have been designed and constructed as substantially identical sister ships. These vesselscan, in many situations, be interchanged, providing scheduling flexibility and greater capacity utilization. In addition, spare parts and technical knowledge can be applied toall the vessels in the particular series, thereby generating operating efficiencies.Please read “Item 18. Financial Statements: Note 8 — Long-Term Debt” for information with respect to major encumbrances against our vessels.Safety, Management of Ship Operations and AdministrationSafety and environmental compliance are our top operational priorities. We operate our vessels in a manner intended to protect the safety and health of our employees, thegeneral public and the environment. We seek to manage the risks inherent in our business and are committed to eliminating incidents that threaten the safety and integrityof our vessels, such as groundings, fires, collisions and petroleum spills. In 2008, we introduced the Quality Assurance and Training Officers Program (or QATO) toconduct rigorous internal audits of our processes and provide our seafarers with on-board training. In 2007, we introduced a behavior-based safety program called “Safetyin Action” to improve the safety culture in our fleet. We are also committed to reducing our emissions and waste generation. In 2010, we introduced a training program forour employees titled “Operational Leadership, The Journey” which sets out our operational expectations, the responsibilities of individual employees and our commitment toempowering our employees to work safely and live Teekay’s vision through a positive and responsible attitude. In 2016, we introduced a 5-year "Safety Road Map" thatcomprises a number of safety projects to further enhance the culture of safety on board Teekay's vessels.Key performance indicators facilitate regular monitoring of our operational performance. Targets are set on an annual basis to drive continuous improvement, andindicators are reviewed quarterly to determine if remedial action is necessary to reach the targets.We, through certain of our subsidiaries, assist our operating subsidiaries in managing their ship operations. All vessels are operated under our comprehensive andintegrated Safety Management System that complies with the International Safety Management Code (or ISM Code), the International Standards Organization’s (or ISO)9001 for Quality Assurance, ISO 14001 for Environment Management Systems, Occupational Health and Safety Advisory Services (or OHSAS) 18001 and the MaritimeLabour Convention 2006 (MLC 2006) that became effective in 2013. The management system is certified by Det Norske Veritas Germanischer Lloyd (or DNV-GL), theNorwegian classification society. It has also been separately approved by the Australian and Spanish flag administrations. Although certification is valid for five years,compliance with the above-mentioned standards is confirmed on a yearly basis by a rigorous auditing procedure that includes both internal audits as well as externalverification audits by DNV-GL and certain flag states.We provide, through certain of our subsidiaries, expertise in various functions critical to the operations of our operating subsidiaries. We believe this arrangement affords asafe, efficient and cost-effective operation. Our subsidiaries also provide to us access to human resources, financial and other administrative functions pursuant toadministrative services agreements.Critical ship management functions undertaken by our subsidiaries are:•vessel maintenance (including repairs and dry docking) and certification;•crewing by competent seafarers;•procurement of stores, bunkers and spare parts;•management of emergencies and incidents;•supervision of shipyard and projects during new-building and conversions;•insurance; and•financial management services.These functions are supported by onboard and onshore systems for maintenance, inventory, purchasing and budget management.33Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur day-to-day focus on cost efficiencies is applied to all aspects of our operations. We believe that the generally uniform design of some of our existing and new-buildingvessels and the adoption of common equipment standards provides operational efficiencies, including with respect to crew training and vessel management, equipmentoperation and repair, and spare parts ordering. In addition, we and two other shipping companies have a purchasing alliance, Teekay Bergesen Worldwide, whichleverages the purchasing power of the combined fleets, mainly in such commodity areas as lube oils, paints and other chemicals.Risk of Loss and InsuranceThe operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters, death or injury of persons and property losses caused by adverseweather conditions, mechanical failures, human error, war, terrorism, piracy and other circumstances or events. In addition, the transportation of crude oil, petroleumproducts, LNG and LPG is subject to the risk of spills and to business interruptions due to political circumstances in foreign countries, hostilities, labor strikes, sanctionsand boycotts. The occurrence of any of these events may result in loss of revenues or increased costs.We carry hull and machinery (marine and war risks) and protection and indemnity insurance coverage to protect against most of the accident-related risks involved in theconduct of our business. Hull and machinery insurance covers loss of or damage to a vessel due to marine perils such as collision, grounding and weather. Protection andindemnity insurance indemnifies us against liabilities incurred while operating vessels, including injury to our crew or third parties, cargo loss and pollution. The currentmaximum amount of our coverage for pollution is $1 billion per vessel per incident. We also carry insurance policies covering war risks (including piracy and terrorism)and, for some of our LNG carriers and for two FPSO units, loss of revenues resulting from vessel off-hire time due to a marine casualty. We believe that our currentinsurance coverage is adequate to protect against most of the accident-related risks involved in the conduct of our business and that we maintain appropriate levels ofenvironmental damage and pollution insurance coverage. However, we cannot guarantee that all covered risks are adequately insured against, that any particular claim willbe paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. More stringent environmental regulations haveresulted in increased costs for, and may result in the lack of availability of, insurance against risks of environmental damage or pollution.In our operations, we use a thorough risk management program that includes, among other things, risk analysis tools, maintenance and assessment programs, aseafarers' competence training program, seafarers' workshops and membership in emergency response organizations.We have achieved certification under the standards reflected in ISO 9001 for quality assurance, ISO 14001 for environment management systems, OHSAS 18001, and theIMO’s International Management Code for the Safe Operation of Ships and Pollution Prevention on a fully integrated basis.Operations Outside of the United StatesBecause our operations are primarily conducted outside of the United States, we are affected by currency fluctuations, to the extent we do not contract in U.S. dollars, andby changing economic, political and governmental conditions in the countries where we engage in business or where our vessels are registered. Past political conflicts inthose regions, particularly in the Arabian Gulf, have included attacks on tankers, mining of waterways and other efforts to disrupt shipping in the area. Vessels trading incertain regions have also been subject to acts of piracy. In addition to tankers, targets of terrorist attacks could include oil pipelines, LNG facilities and offshore oil fields.The escalation of existing, or the outbreak of future, hostilities or other political instability in regions where we operate could affect our trade patterns, increase insurancecosts, increase tanker operational costs and otherwise adversely affect our operations and performance. In addition, tariffs, trade embargoes, and other economicsanctions by the United States or other countries against countries in the Indo-Pacific Basin or elsewhere as a result of terrorist attacks or otherwise may limit tradingactivities with those countries, which could also adversely affect our operations and performance.CustomersWe have derived, and believe that we will continue to derive, a significant portion of our revenues from a limited number of customers. Our customers include major energyand utility companies, major oil traders, large oil and LNG consumers and petroleum product producers, government agencies, and various other entities that depend uponmarine transportation. Two customers, international oil companies, accounted for an aggregate of 24%, or $442.4 million of our consolidated revenues during 2017 (2016 –two customers for 29%, or $653.6 million, 2015 – two customers for 21%, or $495.2 million). During these periods, no other customer accounted for over 10% of ourrevenues for the applicable period. No other customer accounted for more than 10% of our consolidated revenues during 2017, 2016, or 2015. The loss of any significantcustomer or a substantial decline in the amount of services requested by a significant customer, or the inability of a significant customer to pay for our services, could havea material adverse effect on our business, financial condition and results of operations.Flag, Classification, Audits and InspectionsOur vessels are registered with reputable flag states, and the hull and machinery of all of our vessels have been “Classed” by one of the major classification societies andmembers of International Association of Classification Societies ltd (or IACS): Bureau Veritas (or BV), Lloyd’s Register of Shipping, the American Bureau of Shipping orDNV-GL.34Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe applicable classification society certifies that the vessel’s design and build conform to the applicable Class rules and meets the requirements of the applicable rulesand regulations of the country of registry of the vessel and the international conventions to which that country is a signatory. The classification society also verifiesthroughout the vessel’s life that it continues to be maintained in accordance with those rules. In order to validate this, the vessels are surveyed by the classification society,in accordance to the classification society rules, which in the case of our vessels follows a comprehensive five-year special survey cycle, renewed every fifth year. Duringeach five-year period, the vessel undergoes annual and intermediate surveys, the scrutiny and intensity of which is primarily dictated by the age of the vessel. As ourvessels are modern and we have enhanced the resiliency of the underwater coatings of each vessel hull and marked the hull to facilitate underwater inspections by divers,their underwater areas are inspected in a dry dock at two and a half to five-year intervals. In-water inspection is carried out during the second or third annual inspection(i.e. during an intermediate survey).In addition to class surveys, the vessel’s flag state also verifies the condition of the vessel during annual flag state inspections, either independently or by additionalauthorization to class. Also, port state authorities of a vessel’s port of call are authorized under international conventions to undertake regular and spot checks of vesselsvisiting their jurisdiction.Processes followed onboard are audited by either the flag state or the classification society acting on behalf of the flag state to ensure that they meet the requirements ofthe ISM Code. DNV-GL typically carries out this task. We also follow an internal process of internal audits undertaken annually at each office and vessel.We follow a comprehensive inspections scheme supported by our sea staff, shore-based operational and technical specialists and members of our QATO program. Wecarry out a minimum of two such inspections annually, which helps ensure us that:•our vessels and operations adhere to our operating standards;•the structural integrity of the vessel is being maintained;•machinery and equipment is being maintained to give reliable service;•we are optimizing performance in terms of speed and fuel consumption; and•our vessels’ appearance supports our brand and meets customer expectations.Our customers also often carry out vetting inspections under the Ship Inspection Report Program, which is a significant safety initiative introduced by the Oil CompaniesInternational Marine Forum to specifically address concerns about sub-standard vessels. The inspection results permit charterers to screen a vessel to ensure that itmeets their general and specific risk-based shipping requirements.We believe that the heightened environmental and quality concerns of insurance underwriters, regulators and charterers will generally lead to greater scrutiny, inspectionand safety requirements on all vessels in the oil tanker and LNG and LPG carrier markets and will accelerate the scrapping or phasing out of older vessels throughoutthese markets.Overall, we believe that our well-maintained and high-quality vessels provide us with a competitive advantage in the current environment of increasing regulation andcustomer emphasis on quality of service.RegulationsGeneralOur business and the operation of our vessels are significantly affected by international conventions and national, state and local laws and regulations in the jurisdictions inwhich our vessels operate, as well as in the country or countries of their registration. Because these conventions, laws and regulations change frequently, we cannotpredict the ultimate cost of compliance or their impact on the resale price or useful life of our vessels. Additional conventions, laws, and regulations may be adopted thatcould limit our ability to do business or increase the cost of our doing business and that may materially affect our operations. We are required by various governmental andquasi-governmental agencies to obtain permits, licenses and certificates with respect to our operations. Subject to the discussion below and to the fact that the kinds ofpermits, licenses and certificates required for the operations of the vessels we own will depend on a number of factors, we believe that we will be able to continue to obtainall permits, licenses and certificates material to the conduct of our operations.International Maritime Organization (or IMO)The IMO is the United Nations’ agency for maritime safety and prevention of pollution. IMO regulations relating to pollution prevention for oil tankers have been adopted bymany of the jurisdictions in which our tanker fleet operates. Under IMO regulations and subject to limited exceptions, a tanker must be of double-hull construction inaccordance with the requirements set out in these regulations, or be of another approved design ensuring the same level of protection against oil pollution. All of ourtankers are double hulled.35Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMany countries, but not the United States, have ratified and follow the liability regime adopted by the IMO and set out in the International Convention on Civil Liability for OilPollution Damage, 1969, as amended (or CLC). Under this convention, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of acontracting state by discharge of persistent oil (e.g., crude oil, fuel oil, heavy diesel oil or lubricating oil), subject to certain defenses. The right to limit liability to specifiedamounts that are periodically revised is forfeited under the CLC when the spill is caused by the owner’s actual fault or when the spill is caused by the owner’s intentional orreckless conduct. Vessels trading to contracting states must provide evidence of insurance covering the limited liability of the owner. In jurisdictions where the CLC has notbeen adopted, various legislative regimes or common law governs, and liability is imposed either on the basis of fault or in a manner similar to the CLC.IMO regulations also include the International Convention for Safety of Life at Sea (or SOLAS), including amendments to SOLAS implementing the International Ship andPort Facility Security Code (or ISPS), the ISM Code, the International Convention on Load Lines of 1966, and, specifically with respect to LNG and LPG carriers, theInternational Code for Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (the IGC Code). The IMO Marine Safety Committee has also publishedguidelines for vessels with dynamic positioning (DP) systems, which would apply to shuttle tankers and DP-assisted FSO units and FPSO units. SOLAS provides rules forthe construction of and the equipment required for commercial vessels and includes regulations for their safe operation. Flag states which have ratified the convention andthe treaty generally employ the classification societies, which have incorporated SOLAS requirements into their class rules, to undertake surveys to confirm compliance.SOLAS and other IMO regulations concerning safety, including those relating to treaties on training of shipboard personnel, lifesaving appliances, radio equipment and theglobal maritime distress and safety system, are applicable to our operations. Non-compliance with IMO regulations, including SOLAS, the ISM Code, ISPS, the IGC Codefor LNG and LPG carriers, and the specific requirements for shuttle tankers, FSO units and FPSO units under the NPD (Norway) and HSE (United Kingdom) regulations,may subject us to increased liability or penalties, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to ordetention in some ports. For example, the United States Coast Guard (or USCG) and European Union authorities have indicated that vessels not in compliance with theISM Code will be prohibited from trading in United States and European Union ports. The ISM Code requires vessel operators to obtain a safety management certificationfor each vessel they manage, evidencing the shipowner’s development and maintenance of an extensive safety management system. Each of the existing vessels in ourfleet is currently ISM Code-certified, and we expect to obtain safety management certificates for each newbuilding vessel upon delivery.With regard to offshore support vessels, such as UMS, SOLAS permits certain exemptions and equivalents to be allowed by the relevant vessel’s flag state. TheInternational Code on Intact Stability, 2008 also applies generally to offshore support vessels. In 2016, the IMO’s Maritime Safety Committee (or MSC) adoptedamendments to the IS Code relating to ships engaged in anchor handling operations and to ships engaged in lifting and towing operations, including escort towing. Theseamendments are expected to enter into force on January 1, 2020. The IMO has also developed non-mandatory codes and guidelines which apply to various types oraspects of offshore support vessels.LNG and LPG carriers are also subject to regulation under the IGC Code. Each LNG and LPG carrier must obtain a certificate of compliance evidencing that it meets therequirements of the IGC Code, including requirements relating to its design and construction. Each of our LNG and LPG carriers is currently IGC Code compliant, andeach of the shipbuilding contracts for our LNG newbuildings, and for the LPG newbuildings requires ICG Code compliance prior to delivery. A revised and updated IGCCode, which takes account of advances in science and technology, was adopted by the IMO’s MSC on May 22, 2014 and entered into force on January 1, 2016 with animplementation/application date of July 1, 2016.In addition, the IMO’s MSC has adopted the International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (the IGF Code), which is mandatory for shipsfueled by gases or other low-flashpoint fuels, setting out mandatory provisions for the arrangement, installation, control and monitoring of machinery, equipment andsystems using low-flashpoint fuel.Annex VI to the IMO’s International Convention for the Prevention of Pollution from Ships (MARPOL) (or Annex VI) sets limits on sulfur oxide and nitrogen oxide (or NOx)emissions from ship exhausts and prohibits emissions of ozone depleting substances, emissions of volatile compounds from cargo tanks and the incineration of specificsubstances. Annex VI also includes a world-wide cap on the sulfur content of fuel oil and allows for special “emission control areas” (or ECAs) to be established with morestringent controls on sulfur emissions. Annex VI provides for a three-tier reduction in NOx emissions from marine diesel engines, with the final tier (or Tier III) to apply toengines installed on vessels constructed on or after January 1, 2016, and which operate in the North American ECA or the U.S. Caribbean Sea ECA as well as ECAsdesignated in the future by the IMO. In October 2016, the IMO’s Marine Environment Protection Committee (or MEPC) approved the designation of the North Sea and theBaltic Sea as ECAs for NOx emissions; these ECAs and the related amendments to Annex VI of MARPOL (with some exceptions) shall enter into effect on January 1,2019.As of March 1, 2018, amendments to Annex VI impose new requirements for ships of 5,000 gross tonnage and above to collect consumption data for each type of fuel oilthey use, as well as certain other data including proxies for transport work.The IMO has issued guidance regarding protecting against acts of piracy off the coast of Somalia. We comply with these guidelines.The IMO's Ballast Water Management Convention entered into force on September 8, 2017. As of December 31, 2017, there were 67 contracting states to the convention.The convention stipulates two standards for discharged ballast water. The D-1 standard covers ballast water exchange while the D-2 standard covers ballast watertreatment. The convention requires the implementation of either the D-1 or D-2 standard. There will be a transitional period from the entry into force to the International OilPollution Prevention (or IOPP) renewal survey in which ballast water exchange (reg. D-1) can be employed. The IMO’s Marine Environment Protection Committee (orMEPC) agreed to a compromise on the implementation dates for the D-2 discharge standard: ships constructed on or after September 8, 2017 must comply with the D-2standard upon delivery. Existing ships should be D-2 compliant on the first IOPP renewal following entry into force if the survey is completed on or after September 8, 2019,or a renewal IOPP survey is completed on or after September 8, 2014 but prior to September 8,36Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents2017. Ships should be D-2 compliant on the second IOPP renewal survey after September 8, 2017 if the first renewal survey after that date is completed prior toSeptember 8, 2019 and if the previous two conditions are not met. Vessels will be required to meet the discharge standard D-2 by installing an approved Ballast WaterManagement System (or BWMS). Besides the IMO convention, ships sailing in U.S. waters are required to employ a type-approved BWMS which is compliant with USCGregulations. The USCG has approved a number of BWMS. We estimate that the installation of approved BWMS may cost between $2 million and $3 million per vessel.The IMO has also adopted an International Code for Ships Operating in Polar Waters (or Polar Code) which deals with matters regarding design, construction, equipment,operation, search and rescue and environmental protection in relation to ships operating in waters surrounding the two poles. The Polar Code includes both safety andenvironmental provisions. The Polar Code and related amendments entered into force in January 2017. The Polar Code is mandatory for new vessels built after January 1,2017. For existing ships, this code will be applicable from the first intermediate or renewal survey, whichever occurs first, beginning on or after January 1, 2018.MARPOL Annex I also states that oil residue may be discharged directly from the sludge tank to the shore reception facility through standard discharge connections. Theymay also be discharged to the incinerator or to an auxiliary boiler suitable for burning the oil by means of a dedicated discharge pump. Amendments to Annex I expand onthe requirements for discharge connections and piping to ensure residues are properly disposed of. Annex I is applicable for existing vessels with a first renewal surveybeginning on or after January 1, 2017.MSC 91 adopted amendments to SOLAS Regulation II-2/10 to clarify that a minimum of two-way portable radiotelephone apparatus for each fire party for firefighters'communication shall be carried on board. These radio devices shall be of explosion proof type or intrinsically safe type. All existing ships built before July 1, 2014 shouldcomply with this requirement by the first safety equipment survey after July 1, 2018. All new vessels constructed (keel laid) on or after July 1, 2014 must comply with thisrequirement at the time of delivery.As per MSC. 338(91), requirements have been highlighted for audio and visual indicators for breathing apparatus which will alert the user before the volume of the air in thecylinder has been reduced to no less than 200 liters. This applies to ships constructed on or after July 1, 2014. Ships constructed before July 1, 2014 must comply no laterthan July 1, 2019.The IMO continues to review and introduce new regulations; as such, it is impossible to predict what additional requirements, if any, may be adopted by the IMO and whateffect, if any, such regulations might have on our operations.European Union (or EU)The EU has adopted legislation that: bans from European waters manifestly sub-standard vessels (defined as vessels that have been detained twice by EU portauthorities, in the preceding two years); creates obligations on the part of EU member port states to inspect minimum percentages of vessels using these ports annually;provides for increased surveillance of vessels posing a high risk to maritime safety or the marine environment; and provides the EU with greater authority and control overclassification societies, including the ability to seek to suspend or revoke the authority of negligent societies.Two regulations were introduced by the European Commission in September 2010, as part of the implementation of the Port State Control Directive. These came into forceon January 1, 2011 and introduced a ranking system (published on a public website and updated daily) displaying shipping companies operating in the EU with the worstsafety records. The ranking is judged upon the results of the technical inspections carried out on the vessels owned by a particular shipping company. Those shippingcompanies that have the most positive safety records are rewarded by subjecting them to fewer inspections, while those with the most safety shortcomings or technicalfailings recorded upon inspection will in turn be subject to a greater frequency of official inspections to their vessels.The EU has, by way of Directive 2005/35/EC, which has been amended by Directive 2009/123/EC created a legal framework for imposing criminal penalties in the event ofdischarges of oil and other noxious substances from ships sailing in its waters, irrespective of their flag. This relates to discharges of oil or other noxious substances fromvessels. Minor discharges shall not automatically be considered as offenses, except where repetition leads to deterioration in the quality of the water. The personsresponsible may be subject to criminal penalties if they have acted with intent, recklessly or with serious negligence and the act of inciting, aiding and abetting a person todischarge a polluting substance may also lead to criminal penalties.The EU has adopted a Directive requiring the use of low sulfur fuel. Since January 1, 2015, vessels have been required to burn fuel with sulfur content not exceeding 0.1%while within EU member states’ territorial seas, exclusive economic zones and pollution control zones that are included in SOX Emission Control Areas. Other jurisdictionshave also adopted similar regulations. Since January 1, 2014, the California Air Resources Board has required vessels to burn fuel with 0.1% sulfur content or less within24 nautical miles of California. China also established emission control areas and continues to establish such areas, restricting the maximum sulfur content of the fuel to beused by vessels within those areas, which limits become progressively stricter over time.IMO regulations require that as of January 1, 2015, all vessels operating within ECAs worldwide recognized under MARPOL Annex VI must comply with 0.1% sulfurrequirements. Currently, the only grade of fuel meeting 0.1% sulfur content requirement is low sulfur marine gas oil (or LSMGO). Certain modifications were completed onour Suezmax tankers in order to optimize operation on LSMGO of equipment originally designed to operate on Heavy Fuel Oil (or HFO), and to ensure our compliance withthe EU Directive. In addition, LSMGO is more expensive than HFO and this impacts the costs of operations. Our exposure to increased cost is in our spot trading vessels,although our competitors bear a similar cost increase as this is a regulatory item applicable to all vessels. All required vessels in our fleet trading to and within regulated lowsulfur areas are able to comply with fuel requirements. The global cap on the sulfur content of fuel oil is currently 3.5%, to be reduced to 0.5% by January 1, 2020.37Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe EU Ship Recycling Regulation aims to prevent, reduce and minimize accidents, injuries and other negative effects on human health and the environment when shipsare recycled and the hazardous waste they contain is removed. The legislation applies to all ships flying the flag of an EU country and to vessels with non-EU flags that callat an EU port or anchorage. It sets out responsibilities for ship owners and for recycling facilities both in the EU and in other countries. Each new ship has to have on boardan inventory of the hazardous materials (such as asbestos, lead or mercury) it contains in either its structure or equipment. The use of certain hazardous materials isforbidden. Before a ship is recycled, its owner must provide the company carrying out the work with specific information about the vessel and prepare a ship recyclingplan. Recycling may only take place at facilities listed on the EU ‘List of facilities’. In 2014, the Council Decision 2014/241/EU authorized EU countries having ships flyingtheir flag or registered under their flag to ratify or to accede to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. The EUShip Recycling Regulation is to apply generally not later than December 31, 2018, with certain provisions applicable from December 31, 2020. The EU Commission alsoadopted a European List of approved ship recycling facilities, as well as four further implementing decisions dealing with certification and other administrative requirementsset out in the EU Ship Recycling Regulation.North Sea, Canada, and BrazilOur shuttle tankers and FPSO units primarily operate in the North Sea and Brazil.There is no international regime in force which deals with compensation for oil pollution from offshore craft, such as FPSOs. Whether the CLC and the InternationalConvention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971, as amended by the 1992 Protocol (or the Fund Convention),which deal with liability and compensation for oil pollution and the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol (or the1976 Limitation of Liability Convention), which deals with limitation of liability for maritime claims, apply to FPSOs is neither straightforward nor certain. This is due to thedefinition of “ship” under these conventions and the requirement that oil is “carried” on board the relevant vessel. Nevertheless, the wording of the 1992 Protocol to theCLC leaves room for arguing that FPSOs and oil pollution caused by them can come under the ambit of these conventions for the purposes of liability and compensation.However, the application of these conventions also depends on their implementation by the relevant domestic laws of the countries which are parties to them.UK’s Merchant Shipping Act 1995, as amended (or MSA), implements the CLC but uses a wider definition of a “ship” than the one used in the CLC and in its 1992 Protocolbut still refers to the criteria used by the CLC. It is therefore doubtful that FPSOs fall within its wording. However, the MSA also includes separate provisions for liability foroil pollution. These apply to vessels which fall within a much wider definition and include non-seagoing vessels. It is arguable that the wording of these MSA provisions iswide enough to cover oil pollution caused by offshore crafts such as FPSOs. The liability regime under these MSA provisions is similar to that imposed under the CLC butlimitation of liability is subject to the 1976 Limitation of Liability Convention regime (as implemented in the MSA).With regard to the 1976 Limitation of Liability Convention, it is, again, doubtful whether it applies to FPSOs, as it contains certain exceptions in relation to vesselsconstructed for or adapted to and engaged in drilling and in relation to floating platforms constructed for the purpose of exploring or exploiting natural resources of theseabed or its subsoil. However, these exceptions are not included in the legislation implementing the 1976 Limitation of Liability Convention in the UK, which is also to befound in the MSA. In addition, the MSA sets out a very wide definition of “ship” in relation to which the 1976 Limitation of Liability Convention is to apply and there is room forargument that if FPSOs fall within that definition of “ship”, they are subject in the UK to the limitation provisions of the 1976 Limitation of Liability Convention.In the absence of an international regime regulating liability and compensation for oil pollution caused by offshore oil and gas facilities, the Offshore Pollution LiabilityAgreement 1974 was entered into by a number of oil companies and became effective in 1975. This is a voluntary industry oil pollution compensation scheme which isfunded by the parties to it. These are operators or intending operators of offshore facilities used in the exploration for and production of oil and gas located within thejurisdictions of a number of “Designated States” which include the UK, Denmark, Norway, Germany, France, Greenland, Ireland, the Netherlands, the Isle of Man and theFaroe Islands. The scheme provides for strict liability of the relevant operator for pollution damage and remedial costs, subject to a limit, and the operators must provideevidence of financial responsibility in the form of insurance or other security to meet the liability under the scheme.With regard to FPSOs, Chapter 7 of Annex I of MARPOL (which contains regulations for the prevention of oil pollution) sets out special requirements for fixed and floatingplatforms, including, amongst others, FPSOs and FSUs. The IMO’s Marine Environment Protection Committee has issued guidelines for the application of MARPOL AnnexI requirements to FPSOs and FSUs.38Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe EU’s Directive 2004/35/CE on environmental liability with regard to the prevention and remedying of environmental damage (or the Environmental Liability Directive)deals with liability for environmental damage on the basis of the “polluter pays” principle. Environmental damage includes damage to protected species and natural habitatsand damage to water and land. Under this Directive, operators whose activities caused the environmental damage or the imminent threat of such damage are to be heldliable for the damage (subject to certain exceptions). With regard to environmental damage caused by specific activities listed in the Directive, operators are strictly liable.This is without prejudice to their right to limit their liability in accordance with national legislation implementing the 1976 Limitation of Liability Convention. The Directive appliesboth to damage which has already occurred and where there is an imminent threat of damage. It also requires the relevant operator to take preventive action, to report animminent threat and any environmental damage to the regulators and to perform remedial measures, such as clean-up. The Environmental Liability Directive has beenimplemented in the UK by the Environmental Damage (Prevention and Remediation) Regulations 2009.In June 2013, the EU adopted Directive 2013/30/EU on safety of offshore oil and gas operations and amending Directive 2004/35/EC (or the Offshore Safety Directive).This new Directive lays down minimum requirements for member states and the European Maritime Safety Agency for the purposes of reducing the occurrence of majoraccidents related to offshore oil and gas operations, thus increasing protection of the marine environment and coastal economies against pollution, establishing minimumconditions for safe offshore exploration and exploitation of oil and gas, and limiting disruptions to the EU’s energy production and improving responses to accidents. TheOffshore Safety Directive sets out extensive requirements, such as preparation of a major hazard report with risk assessment, emergency response plan and safety andenvironmental management system applicable to the relevant oil and gas installation before the planned commencement of the operations, independent verification ofsafety and environmental critical elements identified in the risk assessment for the relevant oil and gas installation, and ensuring that factors such as the applicant’s safetyand environmental performance and its financial capabilities or security to meet potential liabilities arising from the oil and gas operations are taken into account whenconsidering granting a license. Under the Offshore Safety Directive, Member States are to ensure that the relevant licensee is financially liable for the prevention andremediation of environmental damage (as defined in the Environmental Liability Directive) caused by offshore oil and gas operations carried out by or on behalf of thelicensee or the operator. Member States must lay down rules on penalties applicable to infringements of the legislation adopted pursuant to this Directive. Member Stateswere required to bring into force laws, regulations and administrative provisions necessary to comply with this Directive by July 19, 2015. The Offshore Safety Directivehas been implemented in the UK by a number of different UK Regulations, including the Environmental Damage (Prevention and Remediation) (England) Regulations 2015,as amended, (which revoked and replaced the Environmental Damage (Prevention and Remediation) Regulations 2009)) and the Offshore Installations (Offshore SafetyDirective) (Safety Case etc.) Regulations 2015, as amended, both of which entered into force on July 19, 2015.In addition to the regulations imposed by the IMO and EU, countries having jurisdiction over North Sea areas impose regulatory requirements in connection with operationsin those areas, including HSE in the United Kingdom and NPD in Norway. These regulatory requirements, together with additional requirements imposed by operators inNorth Sea oil fields, require that we make further expenditures for sophisticated equipment, reporting and redundancy systems on the shuttle tankers and for the training ofseagoing staff. Additional regulations and requirements may be adopted or imposed that could limit our ability to do business or further increase the cost of doing businessin the North Sea.In Norway, the Norwegian Pollution Control Authority requires the installation of volatile organic compound emissions (or VOC) reduction units on most shuttle tankersserving the Norwegian continental shelf. Customers bear the cost to install and operate the VOC equipment on board the shuttle tankers.In addition to the requirements of major IMO shipping conventions, the exploration for and production of oil and gas within the Newfoundland & Labrador (or NL) offshorearea is conducted pursuant to the Canada Newfoundland and Labrador Atlantic Accord Implementation Act (the Accord Act) in accordance with the conditions of a licenseand authorization issued by the Canada-Newfoundland and Labrador Offshore Petroleum Board (or CNLOPB). Various regulations dealing with environmental,occupational health and safety, and other aspects of offshore oil and gas activities have been enacted under the Accord Act. The CNLOPB has also issued interpretiveguidelines concerning compliance with the regulations, and compliance with CNLOPB guidelines may be a condition of the issuance or renewal of the license andauthorizations. These regulations and guidelines require that the shuttle tankers in the NL offshore area meet stringent standards for equipment, reporting and redundancysystems, and for the training and equipping of seagoing staff. Further, licensees are required by the Accord Act to provide a benefits plan satisfactory to CNLOPB. Suchplans generally require the licensee to: establish an office in NL; give NL residents first consideration for training and employment; make expenditures for research anddevelopment and education and training to be carried out in NL; and give first consideration to services provided from within NL and to goods manufactured in NL. Theseregulatory requirements may change as regulations and CNLOPB guidelines are amended or replaced from time to time.In addition to the regulations imposed by the IMO, Brazil imposes regulatory requirements in connection with operations in its territory, including specific requirements forthe operations of vessels flagged in countries other than Brazil. Brazil has several maritime regulations and frequent amendments and updates. With respect toenvironmental protection while operating under Brazilian waters, the Federal Constitution establishes that the State shall regulate and impose protections to theenvironment, establishing liability in the civil, administrative and criminal spheres. Law no. 6938/1981 sets the National Environmental Policy and Law no. 9966/2000, knownas “The Oil Law”, institutes several rules, liabilities and penalties regarding the handling oil or other dangerous substances, being applicable to foreign vessels andplatforms operating in Brazilian waters.Regulating the exploitation and production of oil and natural gas, Law no. 9.478/1997, known as “The Petroleum Law”, created the National Petroleum Agency (or ANP),responsible for regulating and supervising the industry through directives and resolutions. After the discovery of the pre-salt, the mentioned law was altered in some pointsby Law no. 12.351/2010 being the industry also regulated by several administrative Regulations issued by the ANP.Additional requirements and restrictions for the operation of offshore vessels and shuttle tankers are imposed by Law 9.432/97 and by the National Waterway TransportAgency (or ANTAQ), instituted by Law 10.233/2001, by way of frequently updated administrative resolutions.39Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe transit of vessels and permanence and operation of offshore units in Brazil are further regulated by the Maritime Authorities, through law and administrativeOrdinances known as “NORMAM”. Under Brazil’s environmental laws, owners and operators of vessels are strictly liable for damages to the environment. Other penaltiesfor non-compliance with environmental laws include fines, loss of tax incentives and suspension of activities. Operators such as Petrobras may impose additionalrequirements, such as compliance with specific health, safety and environmental standards or the use of local labor. Additional regulations and requirements may beadopted or imposed that could limit our ability to do business or further increase the cost of doing business in Brazil.United StatesThe United States has enacted an extensive regulatory and liability regime for the protection and clean-up of the environment from oil spills, including discharges of oilcargoes, bunker fuels or lubricants, primarily through the Oil Pollution Act of 1990 (or OPA 90) and the Comprehensive Environmental Response, Compensation andLiability Act (or CERCLA). OPA 90 affects all owners, bareboat charterers, and operators whose vessels trade to the United States or its territories or possessions orwhose vessels operate in United States waters, which include the U.S. territorial sea and 200-mile exclusive economic zone around the United States. CERCLA applies tothe discharge of “hazardous substances” rather than “oil” and imposes strict joint and several liabilities upon the owners, operators or bareboat charterers of vessels forclean-up costs and damages arising from discharges of hazardous substances. We believe that petroleum products and LNG and LPG should not be consideredhazardous substances under CERCLA, but additives to oil or lubricants used on LNG or LPG carriers and other vessels might fall within its scope.Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the oil spill results solelyfrom the act or omission of a third party, an act of God or an act of war and the responsible party reports the incident and reasonably cooperates with the appropriateauthorities) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. These other damagesare defined broadly to include: natural resources damages and the related assessment costs; real and personal property damages; net loss of taxes, royalties, rents, feesand other lost revenues; lost profits or impairment of earning capacity due to property or natural resources damage; net cost of public services necessitated by a spillresponse, such as protection from fire, safety or health hazards; and loss of subsistence use of natural resources.OPA 90 limits the liability of responsible parties in an amount it periodically updates. The liability limits do not apply if the incident was proximately caused by violation ofapplicable U.S. federal safety, construction or operating regulations, including IMO conventions to which the United States is a signatory, or by the responsible party’sgross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the oil removalactivities. Liability under CERCLA is also subject to limits unless the incident is caused by gross negligence, willful misconduct or a violation of certain regulations. Wecurrently maintain for each of our vessels pollution liability coverage in the maximum coverage amount of $1 billion per incident. A catastrophic spill could exceed thecoverage available, which could harm our business, financial condition and results of operations.Under OPA 90, with limited exceptions, all newly built or converted tankers delivered after January 1, 1994 and operating in U.S. waters must be double-hulled. All of ourtankers are double-hulled.OPA 90 also requires owners and operators of vessels to establish and maintain with the United States Coast Guard (or Coast Guard) evidence of financial responsibilityin an amount at least equal to the relevant limitation amount for such vessels under the statute. The Coast Guard has implemented regulations requiring that an owner oroperator of a fleet of vessels must demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximumlimited liability under OPA 90 and CERCLA. Evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance, guaranty or an alternatemethod subject to approval by the Coast Guard. Under the self-insurance provisions, the ship owners or operators must have a net worth and working capital, measuredin assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied withthe Coast Guard regulations by using self-insurance for certain vessels and obtaining financial guaranties from a third party for the remaining vessels. If other vessels inour fleet trade into the United States in the future, we expect to obtain guaranties from third-party insurers.OPA 90 and CERCLA permit individual U.S. states to impose their own liability regimes with regard to oil or hazardous substance pollution incidents occurring within theirboundaries, and some states have enacted legislation providing for unlimited strict liability for spills. Several coastal states, such as California, Washington and Alaskarequire state-specific evidence of financial responsibility and vessel response plans. We intend to comply with all applicable state regulations in the ports where our vesselscall.Owners or operators of vessels, including tankers operating in U.S. waters, are required to file vessel response plans with the Coast Guard, and their tankers are requiredto operate in compliance with their Coast Guard approved plans. Such response plans must, among other things: address a “worst case” scenario and identify andensure, through contract or other approved means, the availability of necessary private response resources to respond to a “worst case discharge”; describe crewtraining and drills; and identify a qualified individual with full authority to implement removal actions.We have filed vessel response plans with the Coast Guard and have received its approval of such plans. In addition, we conduct regular oil spill response drills inaccordance with the guidelines set out in OPA 90. The Coast Guard has announced it intends to propose similar regulations requiring certain vessels to prepare responseplans for the release of hazardous substances.OPA 90 and CERCLA do not preclude claimants from seeking damages resulting from the discharge of oil and hazardous substances under other applicable law, includingmaritime tort law. Such claims could include attempts to characterize the transportation of LNG or LPG aboard a vessel as an ultra-hazardous activity under a doctrine thatwould impose strict liability for damages resulting from that activity. The application of this doctrine varies by jurisdiction.40Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe U.S. Clean Water Act (or the Clean Water Act) also prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in theform of penalties for unauthorized discharges. The Clean Water Act imposes substantial liability for the costs of removal, remediation and damages and complements theremedies available under OPA 90 and CERCLA discussed above.Our vessels that discharge certain effluents, including ballast water, in U.S. waters must obtain a Clean Water Act permit from the Environmental Protection Agency (orEPA) titled the “Vessel General Permit” and comply with a range of effluent limitations, best management practices, reporting, inspections and other requirements. Thecurrent Vessel General Permit incorporates Coast Guard requirements for ballast water exchange and includes specific technology-based requirements for vessels, andincludes an implementation schedule to require vessels to meet the ballast water effluent limitations by the first dry docking after January 1, 2016, depending on the vesselsize. This permit is effective to December 18, 2018. Vessels that are constructed after December 1, 2013 are subject to the ballast water numeric effluent limitations.Several U.S. states have added specific requirements to the Vessel General Permit and, in some cases, may require vessels to install ballast water treatment technologyto meet biological performance standards.Greenhouse Gas RegulationIn February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change (or the Kyoto Protocol) entered into force. Pursuant to the KyotoProtocol, adopting countries are required to implement national programs to reduce emissions of greenhouse gases. In December 2009, more than 27 nations, includingthe United States, entered into the Copenhagen Accord. The Copenhagen Accord is non-binding, but is intended to pave the way for a comprehensive, international treatyon climate change. In December 2015, the Paris Agreement (or the Paris Agreement) was adopted by a large number of countries at the 21st Session of the Conference ofParties (commonly known as COP 21, a conference of the countries which are parties to the United Nations Framework Convention on Climate Change; the COP is thehighest decision-making authority of this organization). The Paris Agreement, which entered into force on November 4, 2016, deals with greenhouse gas emissionreduction measures and targets from 2020 in order to limit the global temperature increases to well below 2˚ Celsius above pre-industrial levels. Although shipping wasultimately not included in the Paris Agreement, it is expected that the adoption of the Paris Agreement may lead to regulatory changes in relation to curbing greenhouse gasemissions from shipping.In July 2011, the IMO adopted regulations imposing technical and operational measures for the reduction of greenhouse gas emissions. These new regulations formed anew chapter in Annex VI and became effective on January 1, 2013. The new technical and operational measures include the “Energy Efficiency Design Index” (or theEEDI), which is mandatory for newbuilding vessels, and the “Ship Energy Efficiency Management Plan,” which is mandatory for all vessels. In October 2016, the IMO’sMEPC adopted updated guidelines for the calculation of the EEDI. In addition, the IMO is evaluating various mandatory measures to reduce greenhouse gas emissionsfrom international shipping, which may include market-based instruments or a carbon tax. In October 2014, the IMO’s MEPC agreed in principle to develop a system ofdata collection regarding fuel consumption of ships. In October 2016, the IMO adopted a mandatory data collection system under which vessels of 5,000 gross tonnagesand above are to collect fuel consumption and other data and to report the aggregated data so collected to their flag state at the end of each calendar year. The newrequirements entered into force on March 1, 2018. The IMO also approved a roadmap for the development of a comprehensive IMO strategy on reduction of greenhousegas emissions from ships with an initial strategy to be adopted in 2018 (July 7, 2017 saw the MEPC agree on a draft outline of the IMO’s strategy for reducing greenhousegas emissions in the shipping sector) and a revised strategy to be adopted in 2023.The EU also has indicated that it intends to propose an expansion of an existing EU emissions trading regime to include emissions of greenhouse gases from vessels, andindividual countries in the EU may impose additional requirements. The EU has adopted Regulation (EU) 2015/757 on the monitoring, reporting and verification (or MRV) ofCO2 emissions from vessels (or the MRV Regulation), which entered into force on July 1, 2015. The MRV Regulation aims to quantify and reduce CO2 emissions fromshipping. It lists the requirements on the MRV of carbon dioxide emissions and requires ship owners and operators to annually monitor, report and verify CO2 emissionsfor vessels larger than 5,000 gross tonnage calling at any EU and EFTA (Norway and Iceland) port (with a few exceptions, such as fish-catching or fish-processingvessels). Data collection takes place on a per voyage basis and started January 1, 2018. The reported CO2 emissions, together with additional data, such as cargo andenergy efficiency parameters, are to be verified by independent verifiers and sent to a central database, managed by the European Maritime Safety Agency. To complywith the MRV Regulation, we have prepared an EU MRV monitoring plan and EU MRV monitoring template in line with legislative requirement. While the EU was consideringa proposal for the inclusion of shipping in the EU Emissions Trading System as from 2021 (in the absence of a comparable system operating under the IMO), it appearsthat the decision to include shipping may be deferred until 2023.In the United States, the EPA issued an “endangerment finding” regarding greenhouse gases under the Clean Air Act. While this finding in itself does not impose anyrequirements on our industry, it authorizes the EPA to regulate directly greenhouse gas emissions through a rule-making process. In addition, climate change initiatives arebeing considered in the United States Congress and by individual states. Any passage of new climate control legislation or other regulatory initiatives by the IMO, EU, theUnited States or other countries or states where we operate that restrict emissions of greenhouse gases could have a significant financial and operational impact on ourbusiness that we cannot predict with certainty at this time.41Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsVessel SecurityThe ISPS was adopted by the IMO in December 2002 in the wake of heightened concern over worldwide terrorism and became effective on July 1, 2004. The objective ofISPS is to enhance maritime security by detecting security threats to ships and ports and by requiring the development of security plans and other measures designed toprevent such threats. Each of the existing vessels in our fleet currently complies with the requirements of ISPS and Maritime Transportation Security Act of 2002 (U.S.specific requirements). Procedures are in place to inform the relevant reporting regimes such as Maritime Security Council Horn of Africa (or MSCHOA), the MaritimeDomain Awareness for Trade - Gulf of Guinea (or MDAT-GoG), the Information Fusion Center (or IFC) whenever our vessels are calling in the Indian Ocean Region, orWest Coast of Africa (or WAC) or Southeast Asia high-risk areas respectively. In order to mitigate the security risk, security arrangements are required for vessels whichtravel through these high-risk areas.C.Organizational StructureOur organizational structure includes, among others, our interests in Teekay LNG and Teekay Tankers, which are our publicly-traded subsidiaries, and our publicly-tradedequity-accounted investment Teekay Offshore. We created Teekay LNG and Teekay Offshore primarily to hold assets that generate long-term fixed-rate cash flows. Thestrategic rationale for establishing these two limited partnerships was to:•illuminate higher value of fixed-rate cash flows to Teekay investors;•realize advantages of a lower cost of equity when investing in new offshore or LNG projects; and•enhance returns to Teekay through fee-based revenue and ownership of the limited partnership’s incentive distribution rights, which entitle the holder todisproportionate distributions of available cash as cash distribution levels to unitholders increase.We also established Teekay LNG, Teekay Tankers and Teekay Offshore to increase our access to capital to grow each of our businesses in the LNG, conventionaltanker and offshore markets.The following chart provides an overview of our organizational structure as at March 1, 2018. Please read Exhibit 8.1 to this Annual Report for a list of our subsidiaries asat March 1, 2018.(1)Teekay LNG is controlled by its general partner. Teekay Corporation indirectly owns a 100% beneficial ownership in the general partner. However, in certain limited cases,approval of a majority of the unitholders of Teekay LNG is required to approve certain actions.(2)Teekay Tankers has two classes of shares: Class A common stock and Class B common stock. Teekay Corporation indirectly owns 100% of the Class B shares which havefive votes each but aggregate voting power capped at 49%. As a result of Teekay Corporation’s ownership of Class A and Class B shares, it holds aggregate voting power of54.1% as of March 1, 2018.(3)Teekay Offshore is controlled by its general partner. Teekay Corporation and an affiliate of Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) (or Brookfield)indirectly have ownership interests of 51% and 49% of the general partner, respectively. However, in certain limited cases, approval of a majority of the unitholders of TeekayOffshore is required to approve certain actions. Teekay Corporation has granted to Brookfield an option, exercisable upon certain conditions, to acquire an additional 2%interest in the general partner. As a result of the Brookfield Transaction described below, Teekay Offshore is no longer a consolidated subsidiary of Teekay Corporation.Teekay LNG is a Marshall Islands limited partnership formed by us in 2004 as part of our strategy to expand our operations in the LNG and LPG shipping sectors. TeekayLNG provides LNG, LPG and crude oil marine transportation service under long-term, fixed-rate contracts with major energy and utility companies. As of December 31,2017, Teekay LNG’s fleet included 50 LNG carriers (including 15 newbuildings), 30 LPG/multigas carriers (including three newbuildings, one of which was delivered inMarch 2018), four conventional tankers and one Handymax product tanker. Teekay LNG’s ownership interests in these vessels range from 20% to 100%.42Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay Offshore is a Marshall Islands limited partnership formed by us in 2006 as part of our strategy to expand our operations in the offshore oil marine transportation,processing and storage sectors. As of December 31, 2017, Teekay Offshore’s fleet included eight FPSO units, 36 shuttle tankers (including three chartered-in vesselsand five newbuildings (including one newbuilding that was delivered in March 2018)), six FSO units, one UMS, ten towage vessels (including one newbuilding that wasdelivered in February 2018), one HiLoad DP unit, and two in-chartered conventional Aframax tankers. Teekay Offshore’s ownership interests in its owned vessels rangefrom 50% to 100%. Most of Teekay Offshore’s vessels operate under long-term, fixed-rate contracts. Teekay Parent owns three FPSO units which pursuant to anomnibus agreement we entered into in connection with Teekay Offshore’s initial public offering in 2006, we have agreed to offer to Teekay Offshore in the future. Pleaseread "Item 7. Major Shareholders and Certain Relationships with Related Party Transactions - Competition with Teekay Tankers, Teekay Offshore and Teekay LNG" forinformation with respect to the omnibus agreement.In December 2007, we added Teekay Tankers to our structure. Teekay Tankers is a Marshall Islands corporation formed by us to own our conventional tanker business.As of December 31, 2017, Teekay Tankers’ fleet included 17 double-hull Aframax tankers (including one chartered-in vessel), 30 double-hull Suezmax tankers, nineproduct tankers, six ship-to-ship (or STS) support vessels (including three chartered-in vessels), and one VLCC, all of which trade either in the spot tanker market orunder short- or medium-term, fixed-rate time-charter contracts. Teekay Tankers owns 100% of its fleet, other than a 50% interest in the VLCC and the in-charteredvessels. Teekay Tankers’ primary objective is to grow through the acquisition of conventional tanker assets from third parties and from us. Through a wholly-ownedsubsidiary, we provide Teekay Tankers with commercial, technical, administrative, and strategic services under a long-term management agreement.We entered into an omnibus agreement with Teekay LNG, Teekay Offshore and related parties governing, among other things, when we, Teekay LNG, and TeekayOffshore may compete with each other and certain rights of first offer on LNG carriers, oil tankers, shuttle tankers, FSO units and FPSO units.D.PropertiesOther than our vessels, we do not have any material property. Please read “Item 18. Financial Statements: Note 8 — Long-Term Debt for information about majorencumbrances against our vessels.E.Taxation of the CompanyUnited States TaxationThe following is a discussion of the expected material U.S. federal income tax considerations applicable to us. This discussion is based upon the provisions of the InternalRevenue Code of 1986, as amended (or the Code), legislative history, applicable U.S. Treasury Regulations (or Treasury Regulations), judicial authority and administrativeinterpretations, all as in effect on the date of this Annual Report, and which are subject to change, possibly with retroactive effect, or are subject to different interpretations.Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.Taxation of Operating Income. A significant portion of our gross income will be attributable to the transportation of crude oil and related products. For this purpose, grossincome attributable to transportation (or Transportation Income) includes income derived from, or in connection with, the use (or hiring or leasing for use) of a vessel totransport cargo, or the performance of services directly related to the use of any vessel to transport cargo, and thus includes income from time charters, contracts ofaffreightment, bareboat charters, and voyage charters.Fifty percent (50%) of Transportation Income that either begins or ends, but that does not both begin and end, in the United States (or U.S. Source InternationalTransportation Income) is considered to be derived from sources within the United States. Transportation Income that both begins and ends in the United States (or U.S.Source Domestic Transportation Income) is considered to be 100% derived from sources within the United States. Transportation Income exclusively between non-U.S.destinations is considered to be 100% derived from sources outside the United States. Transportation Income derived from sources outside the United States generally isnot subject to U.S. federal income tax.Based on our current operations, a substantial portion of our Transportation Income is from sources outside the United States and not subject to U.S. federal income tax.However, certain of our subsidiaries which have made special U.S. tax elections to be treated as partnerships or disregarded as entities separate from us for U.S. federalincome tax purposes are potentially engaged in activities which could give rise to U.S. Source International Transportation Income. Unless the exemption from U.S.taxation under Section 883 of the Code (or the Section 883 Exemption) applies, our U.S. Source International Transportation Income generally will be subject to U.S. federalincome taxation under either the net basis and branch profits taxes or the 4% gross basis tax, each of which is discussed below. Furthermore, certain of our subsidiariesengaged in activities which could give rise to U.S. Source International Transportation Income rely on our ability to claim the Section 883 Exemption.The Section 883 Exemption. In general, the Section 883 Exemption provides that if a non-U.S. corporation satisfies the requirements of Section 883 of the Code and theTreasury Regulations thereunder (or the Section 883 Regulations), it will not be subject to the net basis and branch profits taxes or the 4% gross basis tax describedbelow on its U.S. Source International Transportation Income. As discussed below, we believe the Section 883 Exemption will apply and we will not be taxed on our U.S.Source International Transportation Income. The Section 883 Exemption does not apply to U.S. Source Domestic Transportation Income.43Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsA non-U.S. corporation will qualify for the Section 883 Exemption if, among other things, it (i) is organized in a jurisdiction outside the United States that grants an exemptionfrom tax to U.S. corporations on international Transportation Income (or an Equivalent Exemption), (ii) meets one of three ownership tests (or Ownership Tests) describedin the Section 883 Regulations, and (iii) meets certain substantiation, reporting and other requirements (or the Substantiation Requirements).We are organized under the laws of the Republic of The Marshall Islands. The U.S. Treasury Department has recognized the Republic of The Marshall Islands as ajurisdiction that grants an Equivalent Exemption. We also believe that we will be able to satisfy the Substantiation Requirements necessary to qualify for the Section 883Exemption. Consequently, our U.S. Source International Transportation Income (including for this purpose, our share of any such income earned by our subsidiaries thathave properly elected to be treated as partnerships or disregarded as entities separate from us for U.S. federal income tax purposes) will be exempt from U.S. federalincome taxation provided we satisfy one of the Ownership Tests. We believe that we should satisfy one of the Ownership Tests because our stock is primarily andregularly traded on an established securities market in the United States within the meaning of Section 883 of the Code and the Section 883 Regulations. We can give noassurance, however, that changes in the ownership of our stock subsequent to the date of this report will permit us to continue to qualify for the Section 883 exemption.The Net Basis and Branch Profits Taxes. If the Section 883 Exemption does not apply, our U.S. Source International Transportation Income may be treated aseffectively connected with the conduct of a trade or business in the United States (or Effectively Connected Income) if we have a fixed place of business in the UnitedStates and substantially all of our U.S. Source International Transportation Income is attributable to regularly scheduled transportation or, in the case of income derivedfrom bareboat charters, is attributable to a fixed place of business in the United States. Based on our current operations, none of our potential U.S. Source InternationalTransportation Income is attributable to regularly scheduled transportation or is derived from bareboat charters attributable to a fixed place of business in the United States.As a result, we do not anticipate that any of our U.S. Source International Transportation Income will be treated as Effectively Connected Income. However, there is noassurance that we will not earn income pursuant to regularly scheduled transportation or bareboat charters attributable to a fixed place of business in the United States inthe future, which would result in such income being treated as Effectively Connected Income. U.S. Source Domestic Transportation Income generally will be treated asEffectively Connected Income.Any income we earn that is treated as Effectively Connected Income would be subject to U.S. federal corporate income tax (the highest statutory rate for 2018 onwards is21%) and a 30% branch profits tax imposed under Section 884 of the Code. In addition, a branch interest tax could be imposed on certain interest paid, or deemed paid, byus.On the sale of a vessel that has produced Effectively Connected Income, we generally would be subject to the net basis and branch profits taxes with respect to our gainrecognized up to the amount of certain prior deductions for depreciation that reduced Effectively Connected Income. Otherwise, we would not be subject to U.S. federalincome tax with respect to gain realized on the sale of a vessel, provided the sale is considered to occur outside of the United States under U.S. federal income taxprinciples.The 4% Gross Basis Tax. If the Section 883 Exemption does not apply and we are not subject to the net basis and branch profits taxes described above, we will besubject to a 4% U.S. federal income tax on our subsidiaries’ gross U.S. Source International Transportation Income, without benefit of deductions. For 2017, we estimatethat, if the Section 883 Exemption and the net basis tax did not apply, the U.S. federal income tax on such U.S. Source International Transportation Income would havebeen approximately $5.5 million. In addition, we estimate that certain of our subsidiaries that are unable to claim the Section 883 Exemption were subject to less than $0.2million in the aggregate of U.S. federal income tax on the U.S. source portion of their U.S. Source International Transportation Income for 2017 and we estimate that thesesubsidiaries will be subject to less than $0.2 million in the aggregate of U.S. federal income tax on the U.S. source portion of their U.S. Source International TransportationIncome in subsequent years. The amount of such tax for which we or our subsidiaries may be liable in any year will depend upon the amount of income we earn fromvoyages into or out of the United States in such year, however, which is not within our complete control.Marshall Islands TaxationWe believe that neither we nor our subsidiaries will be subject to taxation under the laws of the Marshall Islands, or that distributions by our subsidiaries to us will be subjectto any taxes under the laws of the Marshall Islands, other than taxes, fines, or fees due to (i) the incorporation, dissolution, continued existence, merger, domestication (orsimilar concepts) of legal entities registered in the Republic of the Marshall Islands, (ii) filing certificates (such as certificates of incumbency, merger, or re-domiciliation)with the Marshall Islands registrar, (iii) obtaining certificates of good standing from, or certified copies of documents filed with, the Marshall Islands registrar, (iv) compliancewith Marshall Islands law concerning vessel ownership, such as tonnage tax, or (v) non-compliance with requests made by the Marshall Islands registrar of corporationsrelating to our books and records and the books and records of our subsidiaries.Other TaxationIn certain non-U.S. jurisdictions, we and our subsidiaries are subject to taxation because we or our subsidiaries are either organized in, or conduct business or operationsin those jurisdictions. In other non-U.S. jurisdictions, we rely on statutory exemptions from tax. We cannot assure that any statutory exemptions from tax on which we relywill continue as tax laws in those jurisdictions may change or we may enter into new business transactions relating to such jurisdictions, which could affect our tax liability.Please read “Item 18. Financial Statements: Note 21 — Income Taxes".Item 4A.Unresolved Staff Comments44Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNone.Item 5.Operating and Financial Review and ProspectsThe following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewTeekay Corporation is an operational leader and project developer in the marine midstream space. We have general partnership interests in two publicly-listed masterlimited partnerships, Teekay Offshore and Teekay LNG. In addition, we have a controlling ownership of publicly-listed Teekay Tankers and we have a small fleet ofdirectly-owned vessels. Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies.StructureTo understand our financial condition and results of operations, a general understanding of our organizational structure is required. Our organizational structure can bedivided into (a) our controlling interests in two publicly-traded subsidiaries, Teekay LNG and Teekay Tankers (together, the Controlled Daughter Entities), (b) Teekay andits remaining subsidiaries, which is referred to herein as Teekay Parent, and (c) our equity-accounted investee Teekay Offshore (together with the Controlled DaughterEntities, the Daughter Entities). Since we control the voting interests of the Controlled Daughter Entities through our ownership of the sole general partner interest ofTeekay LNG and of Class A and Class B common shares of Teekay Tankers, we consolidate the results of these subsidiaries. On September 25, 2017, Teekay, TeekayOffshore and Brookfield Business Partners L.P. together with its institutional partners (collectively, Brookfield) completed a strategic partnership (or the BrookfieldTransaction) which resulted in the deconsolidation of Teekay Offshore as of that date. Although Teekay owned less than 50% of Teekay Offshore, Teekay maintainedcontrol of Teekay Offshore until September 25, 2017, by virtue of its 100% ownership interest in the general partner of Teekay Offshore, Teekay Offshore GP L.L.C. (orTOO GP). In connection with Brookfield's acquisition of a 49% interest in TOO GP as part of the Brookfield Transaction, Teekay and Brookfield entered into an amendedlimited liability company agreement whereby Brookfield obtained certain participatory rights in the management of TOO GP, which resulted in Teekay deconsolidatingTeekay Offshore for accounting purposes on September 25, 2017. Subsequent to the closing of the Brookfield Transaction, Teekay has significant influence over TeekayOffshore and accounts for its investment in Teekay Offshore using the equity method.As of December 31, 2017, we had economic interests in Teekay LNG, Teekay Tankers and Teekay Offshore (collectively, the Daughter Entities) of 33.0%, 28.8% and14.1% respectively. Please read “Item 4.C. Information on the Company – Organizational Structure.”Teekay Offshore and Teekay LNG primarily hold assets that generate long-term fixed-rate cash flows. The strategic rationale for establishing these two master limitedpartnerships was to illuminate the higher value of fixed-rate cash flows to Teekay investors, realize advantages of a lower cost of equity when investing in new offshore orliquefied natural gas (or LNG) projects, enhance returns to Teekay through fee-based revenue and ownership of the partnerships’ incentive distribution rights and increaseour access to capital for growth. Teekay Tankers holds a substantial majority of our conventional tanker assets. In addition to Teekay Parent’s significant investments inTeekay LNG, Teekay Tankers and Teekay Offshore, Teekay Parent continues to own and operate three FPSO units. Our long-term vision is for Teekay Parent to beprimarily a portfolio manager and project developer with the Teekay Group’s fixed assets primarily owned directly by its Daughter Entities. Our primary financial objectivesfor Teekay Parent are to increase the value of our three FPSO units and the value of our investments in Teekay LNG, Teekay Tankers and Teekay Offshore, increaseTeekay Parent’s free cash flow per share and, as a service provider to its Daughter Entities, provide scale and other benefits across the Teekay Group.Teekay entered into an omnibus agreement with Teekay LNG, Teekay Offshore and related parties governing, among other things, when Teekay, Teekay LNG, andTeekay Offshore may compete with each other and certain rights of first offer on LNG carriers, oil tankers, shuttle tankers, floating storage and offtake (or FSO) units andFPSO units.We (excluding our investment in Teekay Offshore) have three primary lines of business: offshore production (FPSO units), liquefied gas carriers and conventional tankers.We manage these businesses for the benefit of all stakeholders. We allocate capital and assess performance from the separate perspectives of Teekay LNG and TeekayTankers, Teekay Parent, and its investment in Teekay Offshore, as well as from the perspective of the lines of business (the Line of Business approach). The primaryfocus of our organizational structure, internal reporting and allocation of resources by the chief operating decision maker, is on Teekay LNG and Teekay Tankers, TeekayParent, and its investment in Teekay Offshore (the Legal Entity approach). As such, a substantial majority of the information provided herein has been presented inaccordance with the Legal Entity approach. However, we have continued to incorporate the Line of Business approach as in certain cases there is more than one line ofbusiness in each of Teekay LNG, Teekay Tankers and Teekay Parent, and we believe this information allows a better understanding of our performance and prospectsfor future net cash flows. Subsequent to the Brookfield Transaction on September 25, 2017, we assess the performance of, and make decisions to allocate resources to,our investment in Teekay Offshore as a whole and not at the level of the individual lines of business within Teekay Offshore, which are (1) offshore production (FPSOunits), (2) offshore logistics (shuttle tankers, the HiLoad DP unit, FSO units, units for maintenance and safety (or UMS) and long-distance towing and offshore installationvessels), and (3) conventional tankers. We have determined that our investment in Teekay Offshore represents a separate operating segment and that individual lines ofbusiness within Teekay Offshore are no longer disclosed in our operating segments and are not discussed individually in the following sections.45Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIMPORTANT FINANCIAL AND OPERATIONAL TERMS AND CONCEPTSWe use a variety of financial and operational terms and concepts when analyzing our performance. These include the following:Revenues. Revenues primarily include revenues from voyage charters, pool arrangements, time charters accounted for under operating and direct financing leases,contracts of affreightment and FPSO contracts. Revenues are affected by hire rates and the number of days a vessel operates, the daily production volume on FPSOunits, and the oil price for certain FPSO units. Revenues are also affected by the mix of business between time charters, voyage charters, contracts of affreightment andvessels operating in pool arrangements. Hire rates for voyage charters are more volatile, as they are typically tied to prevailing market rates at the time of a voyage.Voyage Expenses. Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel expenses, port fees, cargo loading and unloadingexpenses, canal tolls, agency fees and commissions. Voyage expenses are typically paid by the customer under time charters and FPSO contracts and by us undervoyage charters and contracts of affreightment.Net Revenues. Net revenues represent revenues less voyage expenses. The amount of voyage expenses we incur for a particular charter depends upon the form of thecharter. For example, under time-charter contracts and FPSO contracts the customer usually pays the voyage expenses and for contracts of affreightment the ship-owner usually pays the voyage expenses, which typically are added to the hire rate at an approximate cost. Consequently, we use net revenues to improve thecomparability between periods of reported revenues that are generated by the different forms of charters and contracts. We principally use net revenues, a non-GAAPfinancial measure, because it provides more meaningful information to us about the deployment of our vessels and their performance than revenues, the most directlycomparable financial measure under United States generally accepted accounting principles (or GAAP).Vessel Operating Expenses. Under all types of charters and contracts for our vessels, except for bareboat charters, we are responsible for vessel operating expenses,which include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. The two largest components of our vessel operating expensesare crew costs and repairs and maintenance. We expect these expenses to increase as our fleet matures and to the extent that it expands. We are taking steps tomaintain these expenses at a stable level, but expect an increase in line with inflation in respect of crew, material, and maintenance costs. The strengthening or weakeningof the U.S. Dollar relative to foreign currencies may result in significant decreases or increases, respectively, in our vessel operating expenses, depending on thecurrencies in which such expenses are incurred.Income from Vessel Operations. To assist us in evaluating our operations by segment, we analyze our income from vessel operations for each segment, whichrepresents the income we receive from the segment after deducting operating expenses, but prior to the deduction of interest expense, realized and unrealized gains(losses) on non-designated derivative instruments, income taxes, foreign currency and other income and losses.Dry docking. We must periodically dry dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification orgovernmental requirements. Generally, we dry dock each of our vessels every two and a half to five years, depending upon the type of vessel and its age. In addition, ashipping society classification intermediate survey is performed on our LNG carriers between the second and third year of the five-year dry-docking cycle. We capitalize asubstantial portion of the costs incurred during dry docking and for the survey, and amortize those costs on a straight-line basis from the completion of a dry docking orintermediate survey over the estimated useful life of the dry dock. We expense as incurred costs for routine repairs and maintenance performed during dry dockings thatdo not improve or extend the useful lives of the assets and annual class survey costs for our FPSO units. The number of dry dockings undertaken in a given period andthe nature of the work performed determine the level of dry-docking expenditures.Depreciation and Amortization. Our depreciation and amortization expense typically consists of:•charges related to the depreciation and amortization of the historical cost of our fleet (less an estimated residual value) over the estimated useful lives of our vessels;•charges related to the amortization of dry-docking expenditures over the useful life of the dry dock; and•charges related to the amortization of intangible assets, including the fair value of time charters, contracts of affreightment and customer relationships where amountshave been attributed to those items in acquisitions; these amounts are amortized over the period in which the asset is expected to contribute to our future cash flows.Time-Charter Equivalent (TCE) Rates. Bulk shipping industry freight rates are commonly measured in the shipping industry at the net revenues level in terms of “time-charter equivalent” (or TCE) rates, which represent net revenues divided by revenue days.Revenue Days. Revenue days are the total number of calendar days our vessels were in our possession during a period, less the total number of off-hire days during theperiod associated with major repairs, dry dockings or special or intermediate surveys. Consequently, revenue days represent the total number of days available for thevessel to earn revenue. Idle days, which are days when the vessel is available for the vessel to earn revenue, yet is not employed, are included in revenue days. We userevenue days to explain changes in our net revenues between periods.46Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCalendar-Ship-Days. Calendar-ship-days are equal to the total number of calendar days that our vessels were in our possession during a period. As a result, we usecalendar-ship-days primarily in explaining changes in vessel operating expenses, time-charter hire expense and depreciation and amortization.ITEMS YOU SHOULD CONSIDER WHEN EVALUATING OUR RESULTSYou should consider the following factors when evaluating our historical financial performance and assessing our future prospects:•Our revenues are affected by cyclicality in the tanker markets. The cyclical nature of the tanker industry causes significant increases or decreases in therevenue we earn from our vessels, particularly those we trade in the spot conventional tanker market.•Tanker rates also fluctuate based on seasonal variations in demand. Tanker markets are typically stronger in the winter months as a result of increased oilconsumption in the Northern Hemisphere but weaker in the summer months as a result of lower oil consumption in the Northern Hemisphere and increased refinerymaintenance. In addition, unpredictable weather patterns during the winter months tend to disrupt vessel scheduling, which historically has increased oil price volatilityand oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 andSeptember 30, and stronger in the quarters ended December 31 and March 31.•The size of and types of vessels in our fleet continues to change. Our results of operations reflect changes in the size and composition of our fleet due tocertain vessel deliveries, vessel dispositions and changes to the number of vessels we charter in, as well as our entry into new markets. Please read “—Results ofOperations” below for further details about vessel dispositions, deliveries and vessels chartered in. Due to the nature of our business, we expect our fleet to continueto fluctuate in size and composition.•Vessel operating and other costs are facing industry-wide cost pressures. The shipping industry continues to forecast a shortfall in qualified personnel, althoughweak shipping and offshore markets and slowing growth may ease officer shortages. We will continue to focus on our manning and training strategies to meet futureneeds, but going forward crew compensation may increase. In addition, factors such as pressure on commodity and raw material prices, as well as changes inregulatory requirements could also contribute to operating expenditure increases. We continue to take action aimed at improving operational efficiencies and to temperthe effect of inflationary and other price escalations; however, increases to operational costs are still likely to occur in the future.•Our net income is affected by fluctuations in the fair value of our derivative instruments. Most of our existing cross currency and interest rate swapagreements and foreign currency forward contracts are not designated as hedges for accounting purposes. Although we believe the non-designated derivativeinstruments are economic hedges, the changes in their fair value are included in our consolidated statements of (loss) income as unrealized gains or losses on non-designated derivatives. The unrealized changes in fair value do not affect our cash flows or liquidity.•The amount and timing of dry dockings of our vessels can affect our revenues between periods. Our vessels are off hire at various times due to scheduledand unscheduled maintenance. During 2017 and 2016, on a consolidated basis we incurred 796 and 601 off-hire days relating to dry docking, respectively. Thefinancial impact from these periods of off-hire, if material, is explained in further detail below in “—Results of Operations”. 17 of our vessels are scheduled for drydocking during 2018.•The division of our results of operations between the Daughter Entities and Teekay Parent is impacted by the sale of vessels or operations from TeekayParent to the Daughter Entities. The Controlled Daughter Entities (and Teekay Offshore until its deconsolidation on September 25, 2017) account for the acquisitionof the vessels or operations from Teekay as a transfer of a business between entities under common control. The method of accounting for such transfers is similarto the pooling of interests method of accounting. Under this method, the carrying amount of net assets recognized in the balance sheets of each combining entity arecarried forward to the balance sheet of the combined entity, and no other assets or liabilities are recognized as a result of the combination. In addition, such transfersare accounted for as if the transfer occurred from the date that the acquiring subsidiary and the acquired vessels were both under the common control of Teekay andhad begun operations. As a result, the historical financial information of the Controlled Daughter Entities (and of Teekay Offshore until its deconsolidation onSeptember 25, 2017) included in this Annual Report reflects the financial results of the vessels or operations acquired from Teekay Parent from the date the vesselsor operations were both under the common control of Teekay and had begun operations but prior to the date they were owned by the Controlled Daughter Entity (orTeekay Offshore until its deconsolidation on September 25, 2017).•Our financial results are affected by fluctuations in currency exchange rates. Under GAAP, all foreign currency-denominated monetary assets and liabilities(including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, unearned revenue, advances from affiliates, andlong-term debt) are revalued and reported based on the prevailing exchange rate at the end of the period. These foreign currency translations fluctuate based on thestrength of the U.S. Dollar relative to the applicable foreign currency, mainly to the Euro and NOK, and are included in our results of operations. The translation of allforeign currency-denominated monetary assets and liabilities at each reporting date results in unrealized foreign currency exchange gains or losses but do not impactour cash flows.47Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•The duration of many of the shuttle tanker, FSO and FPSO contracts is the life of the relevant oil field or is subject to extension by the field operator orvessel charterer. If the oil field no longer produces oil or is abandoned or the contract term is not extended, we will no longer generate revenue underthe related contract and will need to seek to redeploy affected vessels. Many of the shuttle tanker contracts have a “life-of-field” duration, which means that thecontract continues until oil production at the field ceases. If production terminates for any reason, we or Teekay Offshore no longer will generate revenue under therelated contract. Other shuttle tanker, FSO and FPSO contracts under which our and Teekay Offshore's vessels operate are subject to extensions beyond their initialterm. The likelihood of these contracts being extended may be negatively affected by reductions in oil field reserves, low oil prices generally or other factors. If we orTeekay Offshore are unable to promptly redeploy any affected vessels at rates at least equal to those under the contracts, if at all, our operating results will beharmed. Any potential redeployment may not be under long-term contracts, which may affect the stability of our cash flow and our ability to make cash distributions.FPSO units, in particular, are specialized vessels that have very limited alternative uses and high fixed costs. In addition, FPSO units typically require substantialcapital investments prior to being redeployed to a new field and production service agreement. Any idle time prior to the commencement of a new contract or ourinability to redeploy the vessels at acceptable rates may have an adverse effect on our business and operating results.RECENT DEVELOPMENTS AND RESULTS OF OPERATIONSThe results of operations that follow have first been divided into (a) our controlling interests in our publicly-traded subsidiaries Teekay LNG and Teekay Tankers,(b) Teekay Parent, and (c) the results of Teekay Offshore until its deconsolidation on September 25, 2017. Within the first two of these three groups, we have furthersubdivided the results into their respective lines of business. The following table (a) presents revenues and income from vessel operations for each of Teekay LNG andTeekay Tankers, for Teekay Parent, and for Teekay Offshore until its deconsolidation on September 25, 2017, and (b) reconciles these amounts to our consolidatedfinancial statements. Revenues Income from Vessel Operations(in thousands of U.S. dollars) 2017 2016 2015 2017 2016 2015Teekay LNG 432,676 396,444 397,991 148,649 153,181 181,372Teekay Tankers (1)(2) 431,178 550,543 524,834 1,416 96,752 190,589Teekay Parent 303,566 340,513 419,166 (290,425) (96,496) (30,228)Teekay Offshore (3) 796,711 1,152,390 1,229,413 147,060 230,853 283,399Elimination of intercompany (1)(4) (83,799) (111,321) (121,022) — — —Teekay Corporation Consolidated 1,880,332 2,328,569 2,450,382 6,700 384,290 625,132(1)During 2014, Teekay sold to Teekay Tankers a 50% interest in Teekay Tankers Operations Ltd. (or TTOL), which owns our conventional tanker commercial management andtechnical management operations, including direct ownership in five commercially managed revenue sharing arrangements of the Teekay group. Following that sale, TeekayTankers and Teekay Parent each accounted for their 50% interests in TTOL as equity-accounted investments and, as such, TTOL’s results were reflected in equity income ofTeekay Tankers and Teekay Parent. Upon consolidation of Teekay Tankers into Teekay, the results of TTOL were accounted for on a consolidated basis by Teekay. On May31, 2017, Teekay Tankers acquired from Teekay Parent the remaining 50% interest in TTOL. As a result of the acquisition, the financial information for Teekay Tankers priorto the date that Teekay Tankers acquired interests in TTOL are retroactively adjusted to include the results of TTOL on a consolidated basis during the periods they wereunder common control of Teekay and had begun operations.(2)In December 2015, Teekay Offshore sold two Aframax tankers to Teekay Tankers and the results of the two vessels are included in Teekay Offshore up to the date of saleand in Teekay Tankers from the date of acquisition.(3)On September 25, 2017, Teekay deconsolidated Teekay Offshore (see “Item 5. Operating and Financial Review and Prospects - Management’s Discussion and Analysis ofFinancial Condition and Results of Operations - Recent Developments and Results of Operations - Recent Developments in Teekay Offshore” for additional information). Thefigures above are those of Teekay Offshore until the date of deconsolidation.(4)During 2017, Teekay Parent chartered in three FSO units and two shuttle tankers from Teekay Offshore, and two LNG carriers from Teekay LNG. During 2016, TeekayParent chartered in three FSO units, three shuttle tankers and one Aframax tanker from Teekay Offshore, two LNG carriers from Teekay LNG and two Aframax tankers fromTeekay Tankers. During 2015, Teekay Parent chartered in three FSO units, two shuttle tankers and four Aframax tankers from Teekay Offshore, and two LNG carriers fromTeekay LNG, and Teekay Parent chartered out one Aframax tanker to Teekay Tankers.SummaryTeekay Corporation consolidated income from vessels operations decreased to $6.7 million for the year ended December 31, 2017 compared to $384.3 million in the prioryear. The primary reasons for this decrease are as follows:48Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•in Teekay Parent, the write-downs of the Petrojarl Foinaven and Petrojarl Banff FPSO units, lower results on the Petrojarl Foinaven as a result the temporaryscheduled shutdown in the third quarter of 2017, and a contract amendment related to the Hummingbird Spirit FPSO which reduced its revenues, partially offsetby a contract amendment related to the Petrojarl Banff FPSO which increased its revenues and the loss on sale of the Shoshone Spirit VLCC in 2016;•in Teekay LNG, the write-downs of the European Spirit, African Spirit, Teide Spirit and Toledo Spirit conventional tankers in 2017 and a decrease in revenue dueto uncertainty of collection of hire relating to Teekay LNG's six LPG carriers on charter to I.M. Skaugen SE (or Skaugen) in 2017;•in Teekay Tankers, lower average TCE rates earned in the spot tanker market in 2017 compared to 2016, and various vessel employment changes, in-chartered vessel redeliveries and vessel sales in 2016 and 2017; and•in Teekay Offshore, primarily the impact of deconsolidating Teekay Offshore on September 25, 2017, the termination of the charter contract of the Petrojarl VargFPSO in 2016, lower towage fleet rates and utilization in 2017, and the redelivery of the Navion Saga FSO, partially offset by the write-down in 2016 relating to thecancellation of two UMS newbuildings contracts;partially offset by•in Teekay LNG, the loss on sale of conventional tankers recorded in 2016 upon the charterer, Centrofin Management Inc. (or Centrofin), exercising its purchaseoptions on the Bermuda Spirit and Hamilton Spirit in February 2016 and March 2016, respectively, and the deliveries of the Oak Spirit, Creole Spirit, Torben Spirit,Macoma and Murex LNG carrier newbuildings in 2016 and 2017.Details of the changes to our results of operations for the year ended December 31, 2017, compared to the year ended December 31, 2016 are provided in the followingsection.Year Ended December 31, 2017 versus Year Ended December 31, 2016Teekay LNGRecent Developments in Teekay LNGIn January 2018, Teekay LNG's 50/50 joint venture with China LNG Shipping (Holdings) Limited (or the Yamal LNG Joint Venture) took delivery of its first ARC7 LNGcarrier newbuilding, the Eduard Toll. The vessel concurrently commenced its 28-year charter contract with Yamal Trade Pte. Ltd.49Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn January 2018, Teekay LNG sold its 50% ownership interest in the Excelsior Joint Venture to a third party for net proceeds of approximately $44 million after repayingoutstanding debt obligations within the joint venture.During November 2017, Teekay LNG terminated the bareboat charter contracts for its six LPG carriers chartered to wholly-owned subsidiaries of I.M. Skaugen SE (orSkaugen) due to Skaugen's breach of the charters resulting from its failure to pay charter hire amounts owed thereunder. The six bareboat charter contracts had termsending between 2019 and 2026. In addition, in December 2017, Teekay LNG withdrew the Sonoma Spirit (formerly Norgas Sonoma) from the Norgas Pool and transferredthe commercial management of all seven of these LPG carriers into a newly formed in-house commercial management solution for ethylene-capable LPG and small-scaleLNG vessels, the Teekay Multigas Pool, which Teekay LNG launched in November 2017. As at December 31, 2017, as a result of Skaugen's breach of the six charters,Skaugen owed Teekay LNG an aggregate amount of approximately $25 million in unpaid hire that remains in arrears calculated based on the contracted charter rates, andsuch amount has not been recorded as revenue given the uncertainty of its collection. Teekay LNG has commenced legal claims against Skaugen to recover alloutstanding amounts, damages and losses. Skaugen has filed a counter-suit against us for amounts unspecified at this time.During 2017, as an alternative payment for a portion of unpaid amounts Skaugen owed to Teekay LNG, Skaugen offered to Teekay LNG its 35% ownership interest in anLPG carrier, the Norgas Sonoma, which was owned by Skaugen Gulf Petchem Carriers B.S.C.(c), a joint venture between Skaugen (35%), The National Oil & GasAuthority B.S.C.(c) (or Nogaholding) (35%) and Suffun Bahrain W.L.L. (or Suffun) (30%) (or the Skaugen LPG Joint Venture). Both Nogaholding and Suffun exercised theiroptions to participate in the sale of the Norgas Sonoma and as a result, on April 20, 2017, Teekay LNG acquired a 100% ownership interest in the Skaugen LPG JointVenture for an aggregate purchase price of $13.2 million, including the application of $4.6 million of the outstanding hire owing to Teekay LNG by Skaugen to acquireSkaugen's 35% ownership interest in the Skaugen LPG Joint Venture.In October 2017, Teekay LNG's joint venture with China LNG, CETS Investment Management (HK) Co. Ltd. and BW LNG Investments Pte. Ltd. (or the Pan Union JointVenture), took delivery of its first LNG carrier newbuilding, the Pan Asia. In January 2018, the Pan Union Joint Venture took delivery of its second LNG carrier newbuilding,the Pan Americas. Teekay LNG has a 30% ownership interest in both vessels through the Pan Union Joint Venture and both vessels concurrently commenced their 20-year charter contracts with Shell Royal Dutch Plc (or Shell) upon delivery.In August 2017, Compania Espanole de Petroleos, S.A. (or CEPSA), the charterer (who is also the owner) of a vessel related to a capital lease, the Teide Spirit, gaveformal notification to Teekay LNG of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. InOctober 2017, the charterer notified Teekay LNG that it is marketing the Teide Spirit for sale and, upon sale of the vessel, the charterer would concurrently terminate itsexisting charter contract with Teekay LNG. The same charterer’s cancellation option for the Toledo Spirit is first exercisable in August 2018. Given Teekay LNG's priorexperience with this charterer, Teekay LNG expects the charterer will also cancel the charter contract and sell the Toledo Spirit to a third party in 2018. Teekay LNGrecorded a write-down of $25.5 million on a combined basis related to the Teide Spirit and Toledo Spirit for the third quarter of 2017.In February 2018, CEPSA sold the Teide Spirit to a third party. As a result of this sale, Teekay LNG returned the vessel to CEPSA and the full amount of the associatedobligation related to the capital lease was concurrently extinguished. In addition, Teekay LNG incurred seafarer severance payments in 2018 of approximately $1.4 millionupon the sale of the vessel.In late-June 2017, the charterer for the European Spirit Suezmax tanker gave formal notice to Teekay LNG that it would not exercise its one-year extension option underthe charter contract and the charterer redelivered the vessel to Teekay LNG in August 2017. Upon receiving this notification, Teekay LNG commenced marketing thevessel for sale and recorded a $12.6 million write-down of the vessel during the second quarter of 2017. In addition, during the third quarter of 2017, Teekay LNG recordeda write-down of the African Spirit of $12.5 million as Teekay LNG received notification from the charterer of the vessel in August 2017 that it would redeliver the vessel toTeekay LNG upon completion of its charter contract in November 2017. Upon the redelivery of the African Spirit, Teekay LNG has commenced marketing the vessel forsale.In March 2017 and July 2017, Teekay LNG's 50/50 joint venture with Exmar (or the Exmar LPG Joint Venture), of which Teekay LNG has a 50% ownership interest, tookdelivery of the Kallo LPG carrier and Kruibeke LPG carrier, respectively, and upon delivery sold and leased back the vessels. In April 2017, the Exmar LPG Joint Ventureentered into a shipbuilding agreement with Hyundai Heavy Industries Co., Ltd. for one additional LPG carrier newbuilding scheduled for delivery in mid-2018. As atDecember 31, 2017, the Exmar LPG Joint Venture had three LPG carrier newbuildings scheduled for delivery in 2018. On March 5, 2018, the Exmar LPG Joint Venturetook delivery of its seventh LPG carrier newbuilding in the past four years, the Kapellen.Teekay LNG has two LNG carriers currently on bareboat charter contracts with Awilco LNG ASA (or Awilco) with original fixed contract terms ending in November 2017and August 2018 with one-year extension options. Awilco had purchase obligations under the charter contracts to repurchase each vessel from Teekay LNG at the end oftheir respective terms. As a result of Awilco facing financial challenges, including going concern issues, in June 2017, Teekay LNG amended the charter contracts withAwilco to defer a portion of charter hire and extend the bareboat charter contracts and related purchase obligations on both vessels to December 2019. A key condition ofthe amendments required Awilco to raise a minimum of $25 million of equity, which was successfully completed in May 2017. The amendments have the effect of deferringbetween $10,600 per day and $20,600 per day per vessel of charter hire from July 2017 until December 2019, with such deferred amounts added to the purchaseobligation amounts.On February 28, 2017, Teekay LNG took delivery of the Torben Spirit LNG carrier newbuilding and concurrently sold this vessel to a third party and leased it back under a10-year bareboat charter contract. The Torben Spirit commenced its charter contract with a major energy company in March 2017, with a firm charter period ending inJune 2018 plus four consecutive extension options ending in June 2021.50Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThree of Teekay LNG's LNG carrier newbuildings delivered between October 2017 and February 2018: the Macoma, Murex and Magdala. Upon delivery, these vesselswere sold to third parties and leased back under 10-year bareboat charter contracts with purchase obligations for each respective vessel and concurrently commencedtheir six to eight-year charter contracts with Shell.Teekay LNG currently has five wholly-owned LNG carrier newbuildings on order, including a FSU, which are scheduled for delivery between mid-2018 and early-2019. Allfive LNG carrier newbuildings have fixed-rate, time-charter contracts in place and four of Teekay LNG's five LNG carrier newbuildings have financing in place.Two of the six LNG carriers (or MALT LNG Carriers) in the Teekay LNG-Marubeni Joint Venture, the Marib Spirit and Arwa Spirit, are currently under long-term contractsexpiring in 2029 with Yemen LNG Ltd. (or YLNG), a consortium led by Total SA. Due to the political situation in Yemen, YLNG decided to temporarily close operation of itsLNG plant in Yemen in 2015. As a result, the Teekay LNG-Marubeni Joint Venture agreed in December 2015 to defer a portion of the charter payments for the two LNGcarriers from January 1, 2016 to December 31, 2016 and further deferrals were agreed in August 2016 and in January 2017 to extend the deferral period to the end of theshort-term sub-charter contracts for the Marib Spirit and Arwa Spirit, which are currently anticipated to be in August 2018 and March 2019, respectively, unless the short-term sub-charter contracts are further extended in accordance with their terms. Should the LNG plant in Yemen resume operations, it is intended that YLNG will repay thedeferred amounts in full, plus interest over a period of time to be agreed upon. However, there is no assurance if or when the LNG plant will resume operations or if YLNGwill repay the deferred amounts, and this deferral period may extend beyond 2018 and 2019 as it relates to the Marib Spirit and Arwa Spirit, respectively. Teekay LNG'sproportionate share of the estimated impact of the charter payment deferral for 2018 compared to original charter rates earned prior to January 1, 2016 is estimated to be areduction to equity income ranging from $4 million to $5 million per quarter (2017 - $5.7 million per quarter), which we expected will be partially offset by sub-charteringemployment opportunities for the Marib Spirit and Arwa Spirit in 2018.Between July and December 2017, the Teekay LNG-Marubeni Joint Venture secured short-term charter contracts for four of its vessels trading in the short-term market.These short-term charter contracts were secured in respect of the Magellan Spirit (which was delivered to the charterer in July 2017), the Marib Spirit (which wasdelivered to the charterer in October 2017), the Arwa Spirit (which was delivered to the charterer in December 2017) and the Methane Spirit (which was delivered to thecharterer in December 2017). It is anticipated that the contractual redeliveries under these various short-term charter contracts will occur during mid-2018 through toearly-2019, unless extended in accordance with their terms.Operating Results – Teekay LNGThe following table compares Teekay LNG’s operating results and number of calendar-ship-days for its vessels for 2017 and 2016, and compares its net revenues (whichis a non-GAAP financial measure) for 2017 and 2016, to revenues, the most directly comparable GAAP financial measure, for the same periods. Liquefied GasCarriers ConventionalTankers Teekay LNGTotal(in thousands of U.S. dollars, except calendar-ship-days) 2017 2016 2017 2016 2017 2016Revenues 385,683 336,530 46,993 59,914 432,676 396,444Voyage expenses (3,020) (449) (5,182) (1,207) (8,202) (1,656)Net revenues 382,663 336,081 41,811 58,707 424,474 394,788Vessel operating expenses (84,928) (66,087) (18,211) (22,503) (103,139) (88,590)Depreciation and amortization (95,025) (80,084) (10,520) (15,458) (105,545) (95,542)General and administrative expenses (1) (14,034) (15,310) (2,507) (3,189) (16,541) (18,499)Write-down and loss on sale of vessels — — (50,600) (38,976) (50,600) (38,976)Income (loss) from vessel operations 188,676 174,600 (40,027) (21,419) 148,649 153,181Equity income 9,789 62,307 — — 9,789 62,307Calendar-Ship-Days (2) Liquefied Gas Carriers 8,357 7,440 — — 8,357 7,440Conventional Tankers — — 1,904 2,439 1,904 2,439(1)Includes direct general and administrative expenses and indirect general and administrative expenses allocated to the liquefied gas carriers and conventional tankers basedon estimated use of corporate resources.(2)Calendar-ship-days presented relate to consolidated vessels.51Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay LNG – Liquefied Gas CarriersAs at December 31, 2017, Teekay LNG’s liquefied gas fleet, including newbuildings, included 50 LNG carriers and 30 LPG/Multigas carriers, in which its interests rangedfrom 20% to 100%. The number of calendar-ship-days for Teekay LNG’s liquefied gas carriers consolidated in its financial results increased to 8,357 days in 2017 from7,440 days in 2016, as a result of the deliveries to Teekay LNG of the Creole Spirit and Oak Spirit during 2016 and the deliveries of the Torben Spirit, Macoma, and Murexduring 2017. During 2017, three of Teekay LNG's consolidated vessels in this segment were off-hire for scheduled dry dockings, and the Torben Spirit was idle for threedays prior to its charter contract commencement, compared to three consolidated vessels in this segment being off-hire for repairs, and the Creole Spirit and Oak Spiritbeing idle for 12 days and 15 days, respectively, prior to their charter contract commencements in 2016. As a result, Teekay LNG's liquefied gas fleet utilization decreasedto 98.6% in 2017, compared to 99.1% in 2016.Income from vessel operations increased to $188.7 million in 2017 compared to $174.6 million in 2016, primarily as a result of:•an increase of $26.6 million as a result of the deliveries of the Creole Spirit, Oak Spirit, Torben Spirit, Macoma, and Murex and the commencement of their chartercontracts; and•an increase of $6.9 million primarily related to additional revenue recognized relating to the accelerated dry docking of two LNG carriers, the costs of which will berecoverable from the charterer, and higher pass-through operating expenses due to timing of main engine maintenance;partially offset by•a decrease of $4.8 million due to uncertainty of collection of hire receipts relating to Teekay LNG's six LPG carriers on charter to Skaugen in 2017;•a decrease of $4.1 million due to higher dry-docking amortization due to recent dry dockings;•a decrease of $3.0 million for two of Teekay LNG's LNG carriers as a result of timing of main engine maintenance;•a decrease of $2.4 million relating to 35 days of unscheduled off-hire in the second quarter of 2017 due to repairs required for one of Teekay LNG's LNG carriers; and•a decrease of $2.3 million as a result of the acquisition of the Sonoma Spirit in April 2017 and due to the six LPG carriers, which were previously on bareboat chartercontracts, following their redelivery from Skaugen during 2017.Equity income related to Teekay LNG’s liquefied gas carriers decreased to $9.8 million in 2017 compared to $62.3 million in 2016, as set forth in the table below:(in thousands of U.S.Dollars)Year Ended December 31, AngolaLNGCarriersExmarLNGCarriersExmarLPGCarriersMALTLNGCarriersRasGas 3LNGCarriersPan Union LNGCarriersOtherTotalEquityIncome201716,7557,397(7,863)(16,547)16,324496(6,773)9,789201615,7139,03813,6744,50319,817(104)(334)62,307Difference1,042(1,641)(21,537)(21,050)(3,493)600(6,439)(52,518)The $1.0 million increase in Teekay LNG's 33% investment in the four Angola LNG Carriers was primarily due to an increase in unrealized gains on non-designatedderivative instruments due to mark-to-market changes. The mark-to-market changes resulted from changes in long-term LIBOR benchmark interest rates for interest rateswaps compared to 2016.The $1.6 million decrease in Teekay LNG's 50% investment in the two Exmar LNG Carriers was primarily due to the Excalibur being off-hire in 2017 for a scheduled drydocking.The $21.5 million decrease in equity income from Teekay LNG's 50% ownership interest in Exmar LPG BVBA was primarily due to more vessels trading in the spot marketat lower rates during 2017 compared to higher fixed rates earned in 2016, the scheduled dry dockings of the Eupen and Brussels in the second and third quarters of 2017,respectively, the write-downs of the Courcheville and Temse recorded in 2017, and the sale of the Brugge Venture in January 2017. These decreases were partially offsetby income earned from five LPG carrier newbuildings that were delivered to the Exmar LPG Joint Venture between February 2016 and July 2017, and a write-down of theBrugge Venture recorded in 2016.The $21.1 million decrease in equity income from Teekay LNG's 52% investment in the MALT LNG Carriers was primarily due to a settlement payment awarded to the jointventure in 2016 for the disputed contract termination relating to the Magellan Spirit, of which Teekay LNG's proportionate share was $20.3 million; a further deferraleffective August 2016 of a portion of the charter payments for the Marib Spirit and Arwa Spirit that are chartered to service the YLNG plant in Yemen, which has beenclosed since 2015. These decreases were partially offset by higher fleet utilization in the second half of 2017 due to commencements of short-term charter contracts forcertain vessels which were previously trading in the spot market.The $3.5 million decrease in equity income from Teekay LNG's 40% investment in the RasGas 3 LNG Carriers was primarily due to higher interest expense resulting fromthe completion of debt refinancing in December 2016.52Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe $6.4 million decrease in Teekay LNG's other equity-accounted investments was primarily due to unrealized losses on interest rate swaps relating to Teekay LNG's30% ownership interest in the Bahrain LNG Joint Venture in 2017, and higher crew training expenses for the Yamal LNG Joint Venture in preparation for its vesseldeliveries commencing in 2018.Teekay LNG – Conventional TankersAs at December 31, 2017, Teekay LNG’s conventional tanker fleet included four Suezmax-class double-hulled conventional crude oil tankers and one Handymax producttanker, three of which it owns (including the European Spirit and African Spirit which are classified as held for sale) and two of which it leases under capital leases. Three ofTeekay LNG’s five conventional tankers operate under fixed-rate charters. The European Spirit and African Spirit have been trading in the spot market since August andNovember 2017, respectively, as Teekay LNG continues to market these vessels for sale. The number of calendar-ship-days for Teekay LNG’s conventional tankersdecreased to 1,904 days in 2017 from 2,439 days in 2016, primarily as a result of the sales of the Bermuda Spirit, Hamilton Spirit and Asian Spirit in April 2016, May 2016and March 2017, respectively. During 2017, the Asian Spirit was idle for 34 days between the time its firm charter contract ended in January 2017 and the time the vesselwas sold and the European Spirit was off-hire for two days for vessel maintenance, compared to no off-hire days during 2016. As a result, Teekay LNG's conventionaltanker fleet utilization decreased to 98.1% in 2017 compared to 100.0% in 2016.Loss from vessel operations was $40.0 million during 2017 compared to $21.4 million in 2016, primarily as a result of:•a decrease of $25.5 million due to the combined write-downs of the Teide Spirit and Toledo Spirit. In August 2017, the charterer of the Teide Spirit gave formalnotification to Teekay LNG of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. InFebruary 2018, the charterer sold the Teide Spirit and concurrently terminated its existing charter contract with Teekay LNG. The charterer’s cancellation option forthe Toledo Spirit is first exercisable in August 2018. Given Teekay LNG's prior experience with this charterer, Teekay LNG expects it will also cancel the chartercontract and sell the Toledo Spirit to a third party in 2018;•a decrease of $12.6 million due to the write-down of the European Spirit as Teekay LNG commenced marketing the vessel for sale upon receiving notification from thecharterer of the vessel that it would redeliver the vessel to Teekay LNG upon completion of its charter contract in August 2017;•a decrease of $12.5 million due to the write-down of the African Spirit as Teekay LNG received notification from the charterer of the vessel in August 2017 that it wouldredeliver the vessel to Teekay LNG upon completion of its charter contract in November 2017; and•a decrease of $1.3 million due to lower revenues earned by the Toledo Spirit in 2017 relating to the profit-sharing agreement between Teekay LNG and CEPSA;partially offset by•an increase of $32.4 million due to the sales of the Bermuda Spirit and Hamilton Spirit in 2016 and Asian Spirit in the first quarter of 2017, comprised of a $39.0 millionloss on the sales of the vessels in 2016, partially offset by a resulting decrease in operating income in 2017.Teekay TankersRecent Developments in Teekay TankersIn November 2017, Teekay Tankers completed a merger with Tanker Investments Ltd. (or TIL) by acquiring all of the remaining 27.0 million issued and outstandingcommon shares of TIL, by way of a share-for-share exchange of 3.3 shares of Teekay Tankers' Class A common stock for each share of TIL common stock, and as aresult TIL became a wholly-owned subsidiary of Teekay Tankers. As consideration for the merger, Teekay Tankers issued 88,977,544 Class A common shares to the TILshareholders, including 8,250,000 shares to Teekay. At the time of the merger, TIL owned a modern fleet of 10 Suezmax tankers, six Aframax tankers and two LR2product tankers with an average age of 7.3 years as of November 2017. Commencing on November 27, 2017, Teekay Tankers consolidates the results of TIL. Prior to thecompletion of the merger, Teekay Tankers equity accounted for its interest in TIL.Prior to the completion of the merger, Teekay Tankers' shareholders voted in favor of increasing the authorized number of its Class A common shares to permit theissuance of Class A common shares as consideration for the merger with TIL. Teekay Tankers amended its amended and restated articles of incorporation on November27, 2017, increasing the authorized Class A common shares from 200,000,000 to 285,000,000 and the total authorized capital stock from 400,000,000 to 485,000,000. InSeptember 2017, Teekay Tankers announced that the Board of Directors had authorized a share repurchase program for the repurchase of up to $45.0 million of itsshares of Class A common stock in the open market.In July 2017, Teekay Tankers completed a $153.0 million sale-leaseback financing transaction relating to four of its Suezmax tankers. The transaction was structured as a12-year bareboat charter at an average rate of approximately $11,100 per day, with purchase options for all four vessels throughout the lease term beginning in July 2020.In May 2017, Teekay Tankers completed the acquisition from Teekay of the remaining 50% interest in TTOL for $39.0 million, which included $13.1 million for assumedworking capital, in exchange for Teekay Tankers' issuance to Teekay of approximately 13.8 million shares of its Class B common stock and working capital considerationof $13.1 million. Prior to May 31, 2017, Teekay Tankers owned 50% of TTOL and accounted for this investment using the equity method of accounting. Since TeekayTankers acquired the remaining 50% of TTOL on May 31,53Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents2017, Teekay Tankers owns 100% of TTOL and now consolidates its results. Periods prior to May 31, 2017 have been recast to include 100% of TTOL results in TeekayTankers on a consolidated basis in accordance with common control accounting as required under GAAP.In June, September and November 2017, Teekay Tankers completed the sales of three of its older Aframax tankers, the Kyeema Spirit, Kanata Spirit and Kareela Spirit,resulting in an aggregate loss on sale of the vessels of $11.2 million.In January and March 2017, Teekay Tankers completed the sales of two Suezmax tankers, the Ganges Spirit and Yamuna Spirit, for an aggregate sales price of $32.6million. Teekay Tankers recognized a loss on sale of the vessels of $1.8 million in 2017.Operating Results – Teekay TankersThe following table compares Teekay Tankers’ operating results and number of calendar-ship-days for its vessels for 2017 and 2016, and compares its net revenues(which is a non-GAAP financial measure) for 2017 and 2016, to revenues, the most directly comparable GAAP financial measure, for the same periods. Year Ended December 31,(in thousands of U.S. dollars, except calendar-ship-days) 2017 2016Revenues 431,178 550,543Voyage expenses (77,368) (53,604)Net revenues 353,810 496,939Vessel operating expenses (175,389) (182,598)Time-charter hire expense (30,661) (59,647)Depreciation and amortization (100,481) (104,149)General and administrative expenses (32,879) (33,199)Asset impairments — —Loss on sale of vessels (12,984) (20,594)Restructuring charges — —Income from vessel operations 1,416 96,752Equity (loss) income (25,370) 7,680Calendar-Ship-Days (1) Conventional Tankers 16,654 19,303(1)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels.Tanker MarketFor 2017, tanker rates fell to cyclical lows due to the combined impact of high fleet growth and OPEC supply cuts. The global tanker fleet grew by 26.6 million deadweighttonnes (mdwt), or 4.8% in 2017, following 31.4 mdwt, or 6.0% growth in 2016. In addition, numerous vessels that were being used as floating storage returned to thetrading fleet in 2017 as the crude oil curve flipped into backwardation, further adding to fleet supply. On the demand side, OPEC implemented 1.2 million barrels per day(mb/d) of supply cuts in January 2017 and maintained a high rate of compliance with these cuts throughout the year. This led to a reduction in cargoes from the MiddleEast, which in turn forced more Very Large Crude Carriers (or VLCC) tankers to compete with Suezmax Tankers for Atlantic cargoes, thus putting pressure on mid-sizetanker rates. An increase in U.S. crude exports to a record high of 2.0 mb/d by October 2017 gave some support to crude tanker demand, however, it was not enough tofully offset the negative impact of OPEC supply cuts.Looking ahead to 2018, there are signs of improving fundamentals on both the supply and demand fronts. First, tanker fleet growth is expected to moderate due to acombination of lower deliveries and higher scrapping. Tanker scrapping for the global fleet totaled 11.5 mdwt in 2017, the highest level of tanker scrapping since 2012, andhas remained firm with 1.6 mdwt scrapped in January 2018. The level of newbuild tanker deliveries is expected to reduce during 2018, particularly during the second half ofthe year, and is set to fall further in 2019 as the orderbook rolls off. As such, we estimate that tanker fleet growth will fall to approximately 3% in 2018 and 2% in 2019.Global oil demand is estimated to grow by 1.5 mb/d in 2018 (average of IEA, EIA and OPEC forecasts), which is above long-term average growth levels. This high level ofdemand, combined with OPEC supply cuts, is leading to a rapid decline in global oil inventories back towards five-year average levels. Inventory drawdowns are negativefor tanker demand in the short-term; however, a rebalancing in oil markets could lead OPEC to exit its supply agreement sooner than expected, which would be positive forthe mid-size tanker market as it would draw VLCC tankers away from the Atlantic and back to the Middle East, thus reducing competition between the asset classes.Finally, a continued increase in U.S. crude oil production - which recently hit 10 mb/d for the first time since 1970 - will likely lead to higher U.S. crude oil exports, which ispositive for mid-size tanker demand as well as U.S. Gulf lightering demand.Overall, Teekay Tankers expects the tanker market to remain challenging over the near-term as ongoing OPEC supply cuts and the need to absorb recent fleet growth willlikely keep the market subdued through the first few quarters of 2018. However, we expect that lower fleet54Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsgrowth, an expected increase in U.S. crude exports, and the potential for an increase in OPEC supply later in the year should lead to a tanker market recovery during thelatter part of 2018 and into 2019.Teekay Tankers – Conventional TankersAs at December 31, 2017, Teekay Tankers owned 52 double-hulled conventional oil tankers, time-chartered in one Aframax tanker, had capital leases for four Suezmaxtankers from third parties and owned a 50% interest in one VLCC, the results of which are included in equity (loss) income.Teekay Tankers' calendar ship days decreased in 2017 compared to 2016 primarily due to the redeliveries of various in-charters to their owners at various times during2016 and 2017 and the sale of two Suezmax product tankers, three Aframax tankers and two MR product tankers in 2016 and 2017, partially offset by the addition of 18vessels that Teekay Tankers acquired as part of the TIL merger in November 2017 and three Aframax in-charters that were delivered to Teekay Tankers during 2016 and2017.Income from vessel operations decreased to $1.4 million in 2017 compared to $96.8 million in 2016, primarily as a result of:•a decrease of $66.5 million due to lower average realized rates earned by the Suezmax, Aframax and LR2 tankers trading in the spot tanker market in 2017compared to 2016;•a net decrease of $27.9 million due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower averagerealized rates and more vessels transitioned from voyage charter to full service lightering employment in 2017 compared to 2016;•a net decrease of $7.2 million primarily due to the redeliveries of various in-charters to their owners at various times during 2016 and 2017 and the sale of twoSuezmax product tankers, three Aframax tankers and two MR product tankers in 2016 and 2017, partially offset by the addition of 18 vessels that Teekay Tankersacquired as part of the TIL merger and three Aframax in-charters that were delivered to Teekay Tankers during 2016 and 2017; and•a decrease of $1.2 million due to in-process revenue contract amortization that Teekay Tankers recognized in revenue in the first quarter of 2016;partially offset by•a net increase of $3.0 million due to the scope of repairs and planned maintenance activities in 2017 as compared to 2016;•an increase of $2.9 million due to higher transition costs incurred in 2016 compared to 2017 directly relating to 12 Suezmax tankers which were acquired in the latterpart of 2015; and•an increase of $1.3 million due to higher corporate expenses incurred during 2016 primarily as a result of legal expenses related to the vessel construction and optionagreements with STX Offshore & Shipbuilding Co. Ltd (or STX) of South Korea.Equity (loss) income decreased to a loss of $25.4 million in 2017 from income of $7.7 million for 2016 primarily due to:•a decrease of $31.9 million primarily due to a $26.7 million net write-down of Teekay Tankers' investment in TIL to its fair market value in June 2017 and prior to theTIL merger completion, and lower equity earnings from TIL resulting from overall lower realized average spot rates earned in 2017 compared to 2016; and•a decrease of $1.3 million due to lower equity earnings from the High-Q Investment Ltd (or High-Q) joint venture primarily resulting from profit share recognized in thesecond quarter of 2016 as VLCC rates averaged above certain thresholds, triggering a profit sharing with the customer.Teekay ParentRecent Developments in Teekay ParentIn October 2017, Teekay Parent terminated, prior to their expiration dates, the charter-in contracts for its last two remaining in-chartered conventional tankers,the Constitution Spirit and Sentinel Spirit, resulting in a total net termination fee payment of approximately $1.6 million. The vessels were redelivered in October 2017.In September 2017, Teekay and Teekay Offshore completed the Brookfield Transaction, which is explained more fully in “Item 5. Operating and Financial Review andProspects-Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments and Results of Operations - RecentDevelopments in Teekay Offshore.” Teekay Parent directly and indirectly provides substantially all of Teekay Offshore’s commercial, technical, crew training, strategic,business development and administrative service needs. In the fourth quarter of 2017, Teekay Parent presented the fees received from Teekay Offshore for providingthese services in revenues, and the related costs to provide such services, in vessel operating expenses.The Banff FPSO has been operating on the Banff field since its delivery nearly 20 years ago under a charter contract with Canadian Natural Resources (or CNR) thatpermitted CNR to terminate the contract at any time with six months’ notice. In January 2017, Teekay Parent entered55Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsinto a contract amendment with CNR to ensure the unit will stay on the current field at least until the third quarter of 2018 and to revise the charter rate structure to includea variable component (through an oil price and oil production tariff) in addition to a fixed charter rate.In the first half of 2016, the Hummingbird Spirit FPSO was operating in the latter part of its charter contract with Spirit Energy Limited (or Spirit Energy, previously CentricaEnergy) whereby Spirit Energy could terminate the contract at any time with 90 days’ notice. In June 2016, Teekay Parent entered into a contract amendment with SpiritEnergy to extend the firm period to September 2017 (with Spirit Energy's right to terminate the contract no earlier than March 1, 2017) in exchange for a lower fixed charterrate and an oil price tariff. The contract amendment took effect on July 1, 2016. In February 2017, Teekay Parent entered into a new heads of terms with Spirit Energy toextend the contract for an additional three years from October 2017 to September 2020. This contract extension was completed during the second quarter of 2017.In the second quarter of 2016, Teekay Parent entered into an agreement to sell the Shoshone Spirit VLCC to a third party and the vessel was written down to its netrealizable value as a result of the expected sale. The vessel was subsequently sold and delivered to its new owner in October 2016.Operating Results – Teekay ParentThe following table compares Teekay Parent’s operating results and number of calendar-ship-days for its vessels for 2017 and 2016, and compares its net revenues(which is a non-GAAP financial measure) for 2017 and 2016, to revenues, the most directly comparable GAAP financial measure, for the same periods. OffshoreProduction ConventionalTankers Other andCorporate G&A Teekay ParentTotal(in thousands of U.S. dollars, except calendar-ship-days) 2017 2016 2017 2016 2017 2016 2017 2016Revenues (1) 209,394 231,435 5,065 32,967 89,107 76,111 303,566 340,513Voyage expenses (186) (269) (81) (287) (1,426) (2,879) (1,693) (3,435)Net revenues 209,208 231,166 4,984 32,680 87,681 73,232 301,873 337,078Vessel operating expenses (1) (144,325) (159,084) (5,481) (10,468) (53,179) (26,576) (202,985) (196,128)Time-charter hire expense (38,346) (33,366) (12,461) (23,166) (47,847) (48,452) (98,654) (104,984)Depreciation and amortization (60,560) (70,855) — (1,717) 163 449 (60,397) (72,123)General and administrative expenses (1)(2) (16,966) (14,099) (432) (809) (5,251) (10,707) (22,649) (25,615)Asset impairments (205,659) — — — — (205,659) —Net loss on sale of vessels andequipment — (110) — (12,487) — — — (12,597)Restructuring charges (110) (1,962) — — (1,844) (20,165) (1,954) (22,127)(Loss) income from vessel operations (256,758) (48,310) (13,390) (15,967) (20,277) (32,219) (290,425) (96,496)Equity (loss) income (7,861) (575) (20,677) 132 (2,792) (1,838) (31,330) (2,281)Calendar-Ship-Days (3) FPSO Units 1,095 1,098 — — — — 1,095 1,098Conventional Tankers — — 587 1,278 — — 587 1,278Gas carriers — — — — 730 732 730 732FSO Units 365 366 — — 730 732 1,095 1,098Shuttle Tankers 730 732 — — — — 730 732Bunker Barges — — — — 365 672 365 672(1)Revenues and vessel operating expenses for 2017 include $17.8 million and $16.1 million, respectively, related to intercompany transactions between Teekay Offshore andTeekay Parent, which as a result of the deconsolidation of Teekay Offshore, are no longer eliminated upon consolidation. The intercompany transactions relate to services forship management, crew training, commercial, technical, project management, strategic, business development and administrative services provided by Teekay Parent toTeekay Offshore.(2)Includes direct general and administrative expenses and indirect general and administrative expenses allocated to offshore production, conventional tankers and other andcorporate G&A based on estimated use of corporate resources.(3)Apart from three FPSO units and one conventional tanker, all remaining calendar-ship-days presented relate to in-chartered days.Teekay Parent – Offshore ProductionOffshore Production consists primarily of our FPSO units. As at December 31, 2017, we had a direct interest in three 100%-owned FPSO units, and we in-chartered twoshuttle tankers and one FSO unit from Teekay Offshore.The Hummingbird Spirit FPSO charter contract includes an incentive compensation component based on the oil price. In addition, the Petrojarl Foinaven FPSO unit’scharter contract includes incentives based on total oil production for the year, certain operational measures, and the56Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsaverage annual oil price. The decline in the price of oil since 2014 has negatively impacted our incentive compensation under these contracts and may negatively impactour future revenues if oil prices remain at or fall below current levels.Asset impairments for the year ended December 31, 2017, primarily relate to the impairments of the Petrojarl Banff and Petrojarl Foinaven FPSO units. Factors contributingto the impairments included changes to the estimated cash flows and carrying values of the asset groups as a result of the deconsolidation of Teekay Offshore onSeptember 25, 2017, and a re-evaluation of the estimated future net cash flows of the units. Please read "Item 18 - Financial Statements: Note 18a - Asset Impairments".Loss from vessel operations increased to $256.8 million during 2017 compared to $48.3 million in 2016, primarily as a result of:•an increase in loss of $205.7 million from impairment charges in respect of the Petrojarl Banff and Petrojarl Foinaven FPSO units, described above;•an increase in loss of $14.2 million related to the Hummingbird Spirit FPSO unit primarily due to the contract amendment described above that took effect on July 1,2016; and•an increase in loss of $18.5 million related to the Petrojarl Foinaven FPSO unit primarily due to lower revenue earned and higher repairs and maintenance costsincurred during the shutdown in the third quarter for 2017, and insurance proceeds recognized in 2016;partially offset by•a decrease in loss of $25.4 million related to the Petrojarl Banff FPSO unit primarily due to higher day rate and tariff earned in 2017 due to the contract amendmentdescribed above and higher repairs and maintenance costs in 2016 due to the temporary loss of two mooring lines in the second quarter of 2016, partially offset byinsurance proceeds received in 2016; and•a decrease in loss of $1.9 million for the year ended December 31, 2017 primarily due to reorganization of the FPSO business in 2016.Teekay Parent – Conventional TankersAs at December 31, 2017, Teekay Parent had no conventional tankers remaining in the fleet. The average fleet size (including in-chartered vessels), as measured bycalendar-ship-days, decreased in 2017 compared with 2016 due to the redeliveries of two Aframax in-chartered vessels to their owners, one Aframax in-chartered vesselto Teekay Offshore and two Aframax in-chartered vessels to Teekay Tankers, and due to the sale of one VLCC during 2016. The collective impact from the noted fleetchanges are referred to below as the Net Fleet Reductions.Loss from vessel operations for Teekay Parent’s Conventional Tankers was $13.4 million in 2017 compared to loss from vessel operations of $16.0 million in 2016,primarily as a result of:•a decrease in loss of $12.5 million due to the write-down of the VLCC to its agreed sales price in the second quarter of 2016; and•a decrease in loss of $2.4 million due to a cancellation fee paid by Teekay Parent to Teekay Offshore in the first quarter of 2016 related to the termination of a time-charter contract, partially offset by a cancellation fee paid to the owners in the fourth quarter of 2017 related to the termination of two bareboat charter-in contracts;partially offset by•an increase in loss of $6.2 million due to the Net Fleet Reductions;•an increase in loss of $5.1 million due to lower average realized TCE rates earned in 2017 compared to 2016; and•an increase in loss of $2.0 million due to a distribution received from Gemini Pool L.L.C. in the first quarter of 2016.Teekay Parent – Other and Corporate G&AAs at December 31, 2017, Teekay Parent had two chartered-in LNG carriers owned by Teekay LNG, two chartered-in FSO units owned by Teekay Offshore and onechartered-in bunker barge owned by a third party.Loss from vessel operations was $20.3 million for the year ended December 31, 2017 compared to loss from vessel operations of $32.2 million for the year endedDecember 31, 2016, primarily as a result of:•a decrease in loss of $14.5 million from Teekay Parent's in-chartered LNG carriers primarily due to the start of a one-year charter contract for the Polar Spirit LNGcarrier in the second quarter of 2017 and the start of a seven-month charter contract for the Arctic Spirit LNG carrier in the third quarter of 2017; partially offset by•an increase in loss of $1.8 million in 2017, due to transaction fees received from TIL in 2016 for our arrangement of the sale of the Voss Spirit and Hemsedal Spirit byTIL; and 57Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•an increase in loss of $1.7 million relating to the Suksan Salamander FSO unit from amortization of the off-market in-charter contract subsequent to thedeconsolidation of Teekay Offshore and contract amendments during 2017.Equity loss was $31.3 million for the year ended December 31, 2017, compared to equity income of $2.3 million for the year ended December 31, 2016, primarily due to a$20.5 million write-down of Teekay Parent's investment in TIL in June 2017 and lower equity earnings from lower average realized spot rates earned by TIL in the 2017periods, and losses from Sevan Marine AS.Teekay OffshoreRecent Developments in Teekay OffshoreIn September 2017, Teekay, Teekay Offshore and Brookfield finalized the strategic partnership with Brookfield and related transactions (or the Brookfield Transaction),which included, among other things, the following:•Brookfield and Teekay invested $610.0 million and $30.0 million, respectively, in exchange for 244.0 million and 12.0 million common units of Teekay Offshore,respectively, at a price of $2.50 per common unit and 62.4 million and 3.1 million common unit warrants (or the Brookfield Transaction Warrants), with an exerciseprice of $0.01 per unit and which warrants are exercisable at any time until September 25, 2024 if Teekay Offshore's common unit volume-weighted average price isequal to or greater than $4.00 per unit for 10 consecutive trading days prior to that date. Following the investment, Brookfield owns approximately 59.5% and Teekayowns approximately 13.8% of Teekay Offshore's outstanding common units;•Brookfield acquired from Teekay a 49% interest in Teekay Offshore's general partner in exchange for $4.0 million and an option to purchase an additional 2.0%interest in Teekay Offshore's general partner from Teekay in exchange for 1.0 million of the Brookfield Transaction Warrants initially issued to Brookfield;•Teekay Offshore repurchased and canceled all of its outstanding Series C-1 and Series D Preferred Units from existing unitholders, for an aggregate of approximately$250.0 million in cash. Concurrently, the per unit exercise price of Teekay Offshore's Series D tranche B warrants to purchase common units issued on June 29,2016 was reduced from $6.05 to $4.55;•Brookfield acquired, from a subsidiary of Teekay, the $200 million subordinated promissory note issued by Teekay Offshore on July 1, 2016, which was amended andrestated in connection with the acquisition by Brookfield to, among other things, extend the maturity from 2019 to 2022 (as amended, the Brookfield Promissory Note).Brookfield purchased the Brookfield Promissory Note from Teekay for $140.0 million and 11.4 million of the Brookfield Transaction Warrants initially issued toBrookfield;•Teekay Offshore agreed with the lenders of the Arendal Spirit UMS debt facility to extend the mandatory prepayment date to September 30, 2018, in exchange for aprincipal prepayment of $30 million, which was paid in October 2017;•Certain financial institutions providing interest rate swaps to Teekay Offshore (i) lowered the fixed interest rate on the swaps, (ii) extended the termination option of theswaps by two years to 2021, and (iii) eliminated the financial guarantee and security package previously provided by Teekay in return for a prepayment amount andfees; and•Teekay Offshore acquired certain management companies from Teekay that focus on the operations or operations management of its shuttle and FPSO segments.These companies became a part of Teekay Offshore's consolidated group, effective January 1, 2018.As part of the Brookfield Transaction, Teekay Offshore reduced its quarterly common unit distribution to $0.01 per common unit to reinvest cash in the business andfurther strengthen Teekay Offshore’s balance sheet.In April 2018, Teekay Offshore finalized the previously announced contract extension with Premier Oil to extend the employment of the Voyageur Spirit FPSO unit on theHuntington field for at least an additional twelve months to April 2019. The new contract, which took effect in April 2018, includes a fixed charter rate component plus and acomponent based on oil production and oil price.In February 2018, ALP Maritime, Teekay Offshore's towage subsidiary, was awarded a contract by Interoil / Saipem to provide five towage vessels to perform towage andfield installation services for the Kaombo Norte FPSO project in spring 2018. Two ALP vessels will tow the FPSO from its shipyard in South East Asia to its field in WestAfrica, where it will be met by a further three ALP vessels to perform field installation. The contract requires approximately 330 vessel equivalent days throughout theproject.In January 2018, Teekay Offshore entered into a contract extension with Petroleo Brasileiro S.A. (or Petrobras) to extend the employment of the Petrojarl Cidade de Riodas Ostras (or Ostras) FPSO for four months at a slightly lower fixed rate. Petrobras also has an option to extend the contract a further two months out to July 2018.In November 2017, the Pioneiro de Libra (or Libra) FPSO, which was converted from one of Teekay Offshore's shuttle tankers at Sembcorp’s Jurong shipyard inSingapore, commenced its 12-year charter contract with a consortium of international oil companies, including Petrobras, Total S.A., Shell, CNPC and CNOOC Limited, onthe Libra oil field.58Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn November 2017, Teekay Offshore delivered the Navion Marita to its buyers. Teekay Offshore received gross proceeds of $5.7 million, resulting in a loss on sale ofapproximately $0.2 million recorded during the fourth quarter of 2017.In early-October 2017, the Randgrid FSO, which was converted from one of Teekay Offshore's shuttle tankers at Sembcorp’s Sembawang shipyard in Singapore,commenced its three-year charter contract with Statoil ASA (Statoil), including 12 additional one-year extension options, on the Gina Krog oil and gas field in the Norwegiansector of the North Sea.In October 2017, November 2017 and March 2018, Teekay Offshore took delivery of three East Coast of Canada shuttle tanker newbuildings, the Beothuk Spirit, theNorse Spirit and the Dorset Spirit, respectively. The Beothuk Spirit and the Norse Spirit commenced operations under the 15-year charter contracts (of whichapproximately 12.5 years remain), plus extension options in December 2017 and January 2018, respectively, with a group of oil companies, and the Dorset Spirit isexpected to commence operations under the 15-year charter contract (of which approximately 12.5 years remain), plus extension options, in mid-2018, with the samegroup of oil companies. These newbuildings are replacing the existing in-chartered vessels servicing the East Coast of Canada, with the first replaced vessel redeliveringto its owner and the second and third replaced vessels transferring to the North Sea to operate in Teekay Offshore's contract of affreightment (or CoA) fleet.In October 2017, the Navion Saga FSO unit was delivered to its buyers. Teekay Offshore received gross proceeds of $7.4 million, resulting in a gain on sale ofapproximately $0.5 million recorded during the fourth quarter of 2017.In July 2017, Teekay Offshore entered into shipbuilding contracts with Samsung Heavy Industries Co. Ltd., to construct two Suezmax DP2 shuttle tanker newbuildings, foran aggregate fully built-up cost of approximately $294 million, with options to order up to two additional vessels. These newbuilding vessels will be constructed based onTeekay Offshore's New Shuttle Spirit design which incorporates technologies to increase fuel efficiency and reduce emissions, including LNG propulsion technology. Upondelivery in late-2019 and early-2020, these vessels will provide shuttle tanker services in the North Sea under Teekay Offshore's existing master agreement with Statoil,which will add vessel capacity to service Teekay Offshore's CoA portfolio in the North Sea. In late-November 2017, Teekay Offshore declared options with Samsung forthe construction of two additional, Suezmax-sized, DP2 shuttle tanker newbuildings for a total fully-built-up cost of approximately $293 million. Upon scheduled delivery ofthese two vessels in 2020, they will join Teekay Offshore's CoA portfolio in the North Sea.In July 2017, Teekay Offshore signed an amendment to the Petrojarl I FPSO five-year charter contract with Queiroz Galvão Exploração e Produção SA (or QGEP). Theamended charter contract includes an extension to the delivery window for the project and an adjusted charter rate profile which reduces the day rate for the FPSO unitduring the first 18 months of production. During the final 3.5 years of the contract, the charter contract will revert to a rate that is higher than the original day rate plus oilprice and production tariffs, which will provide the potential for Teekay Offshore to recover more than the reduction given in the first 18 months of the charter contract. Theunit sailed away from Aibel AS shipyard (or Aibel) in Norway in December 2017 and arrived on the field in Brazil in January 2018 for field installation and testing. The start-up of oil production on the Atlanta Field is expected to occur during the second quarter of 2018.In June 2017, October 2017 and January 2018, Teekay Offshore took delivery of the ALP Defender, ALP Sweeper and the ALP Keeper, respectively, the final three unitsof four state-of-the-art SX-157 Ulstein Design ultra-long distance towing and offshore installation newbuildings, constructed by Niigata Shipbuilding & Repair in Japan. Dueto the delayed delivery of the vessels, Teekay Offshore received damages from the shipyard of $24.6 million during the second quarter of 2017.In June 2017, Teekay Offshore finalized a three-year shuttle tanker CoA to service a development in the U.K. North Sea. The CoA, which commenced during the thirdquarter of 2017, requires the use of up to approximately 0.6 shuttle tanker equivalents per annum, and is serviced by Teekay Offshore's existing CoA shuttle tanker fleet.In May 2017, Teekay Offshore completed a five-year contract extension, plus extension options, for the Falcon Spirit FSO unit, which extension commenced June 1, 2017.The contract extension includes a termination fee payable if the contract is terminated prior to mid-2018. The Falcon Spirit FSO unit operates on the Al Rayyan field locatedoffshore Qatar.In April 2017, Petroleo Netherlands B.V. notified Logitel Offshore Norway AS, a subsidiary of Teekay Offshore, that Petroleo Netherlands B.V. was terminating the chartercontract for the Arendal Spirit UMS and would not pay the charter hire payments from November 2016. Teekay Offshore has disputed the termination and has initiated aclaim for unpaid standby fees and damages for wrongful termination of the time-charter contract. The unit is currently in lay-up.In March 2017, Teekay Offshore finalized a five-year shuttle tanker CoA, plus extension options, with a consortium of oil companies to service a development located inthe U.K. Central North Sea. This CoA commenced during the first quarter of 2018 and is serviced by Teekay Offshore's existing CoA shuttle tanker fleet. The CoA requiresthe use of up to approximately 0.6 shuttle tanker equivalents per annum.In March 2017, Teekay Offshore entered into a six-month, customer-funded, front-end engineering and design (or FEED) study agreement for the Petrojarl Varg FPSOunit with Alpha Petroleum Resources Limited, which is backed by private equity firm Petroleum Equity, for the development of the Cheviot field, formerly known as theEmerald field, located in the U.K. sector of the North Sea. The purpose of the FEED study is to define the modifications required for the Petrojarl Varg FPSO unit and use itto negotiate the terms of a potential FPSO contract for the development of the Cheviot field. The FEED study was completed in early-2018.Operating Results – Teekay OffshoreThe following table compares Teekay Offshore’s operating results and number of calendar-ship-days for its vessels for the period up to September 25, 2017 and the yearended December 31, 2016, and compares its net revenues (which is a non-GAAP financial measure) for such periods, to revenues, the most directly comparable GAAPfinancial measure, for the same periods.59Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Teekay OffshoreTotal(in thousands of U.S. dollars, except calendar-ship-days)2017 (1) 2016Revenues796,711 1,152,390Voyage expenses(68,802) (80,750)Net revenues727,909 1,071,640Vessel operating expenses(249,805) (364,441)Time-charter hire expense(60,592) (75,485)Depreciation and amortization(219,406) (300,011)General and administrative expenses(46,399) (56,122)Asset impairments and net gain on sale of vessels (2)(1,500) (40,079)Restructuring charges(3,147) (4,649)Income from vessel operations147,060 230,853Equity income12,028 17,933Calendar-Ship-Days (3) FPSO Units1,602 2,196Shuttle Tankers8,378 11,913FSO Units1,869 2,562UMS267 366Towage vessels2,018 2,307Conventional Tankers534 732(1)On September 25, 2017, we deconsolidated Teekay Offshore (please read "Item 18 - Financial Statements: Note 3 - Deconsolidation of Teekay Offshore"). Figures representTeekay Offshore's results for the period up to September 25, 2017.(2)Commencing on September 25, 2017, Teekay accounts for its investment in Teekay Offshore using the equity method, and recognized an equity loss of $2.5 million for theyear ended December 31, 2017. In the period after deconsolidation of Teekay Offshore to September 30, 2017, Teekay Offshore incurred impairment charges of $316.7million which did not impact the equity loss recognized by Teekay as Teekay recognized its equity-accounted investment in Teekay Offshore at fair value on September 25,2017.(3)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels.As at December 31, 2017, Teekay Offshore's FPSO fleet consisted of the Petrojarl Knarr, the Petrojarl Varg, the Ostras, the Piranema Spirit, the Voyageur Spirit, and thePetrojarl I FPSO units, all of which Teekay Offshore owns 100%, and the Itajai and the Libra FPSO units, of which Teekay Offshore owns 50%. One equity accountedFSPO unit, the Libra FPSO unit owned through Teekay Offshore's 50/50 joint venture with Ocyan, achieved first oil and commenced its 12-year charter contract in late-November 2017. The Petrojarl I FPSO unit completed its upgrades and arrived on the Atlanta field in early-January 2018 and is currently undergoing field installation andtesting prior to commencing its five-year charter contract with QGEP during the second quarter of 2018.In late-2015, Teekay Offshore received a termination notice for the Petrojarl Varg FPSO charter contract from Repsol S.A. (or Repsol), based on a termination right thatwas specific to the Petrojarl Varg FPSO contract. In accordance with the termination provision of the charter contract, the charterer ceased paying the capital componentof the charter hire six months prior to the July 2016 redelivery date. The unit is now in lay-up in Norway.FPSO units provide production, processing and storage services to oil companies operating offshore oil field installations. These services are typically provided underlong-term, fixed-rate FPSO contracts, some of which also include certain incentive compensation or penalties based on the level of oil production and other operationalmeasures. Historically, the utilization of FPSO units and other vessels in the North Sea, where the Petrojarl Knarr and Voyageur Spirit operate, is higher in the wintermonths, as favorable weather conditions in the summer months provide opportunities for repairs and maintenance to Teekay Offshore's units and the offshore oilplatforms, which generally reduces oil production. The strengthening or weakening of the U.S. Dollar relative to the Norwegian Kroner, Brazilian Real, and British Poundmay result in significant decreases or increases, respectively, in Teekay Offshore's revenues and vessel operating expenses.As at December 31, 2017, Teekay Offshore's shuttle tanker fleet consisted of 30 vessels that operate under fixed-rate CoAs, time charters and bareboat charters, oneshuttle commenced operations under a fixed-rate CoA in the East Coast of Canada in January 2018, five shuttle tanker newbuildings (one of which was delivered in March2018) and the HiLoad DP unit, which is currently in lay-up. Of these 37 shuttle tankers, six are owned through 50%-owned subsidiaries and three were chartered-in. Theremaining vessels are owned 100% by Teekay Offshore. All of Teekay Offshore's operating shuttle tankers, with the exception of two shuttle tankers that are currentlytrading as conventional tankers and the HiLoad DP unit, provide transportation services to energy companies in the North Sea, Brazil and the East Coast of Canada.Teekay Offshore's shuttle tankers occasionally service the conventional spot tanker market. The strengthening or weakening of the U.S. Dollar relative to the NorwegianKroner, Euro and Brazilian Real may result in significant decreases or increases, respectively, in Teekay Offshore's vessel operating expenses.60Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs at December 31, 2017, Teekay Offshore's FSO fleet consisted of six units that operate under fixed-rate time charters or fixed-rate bareboat charters, for which TeekayOffshore's ownership interests range from 89% to 100%. The Randgrid completed its conversion from a shuttle tanker to an FSO unit in June 2017 and commencedoperations in early-October 2017 at the Gina Krog oil and gas field located in the North Sea, under a three-year time-charter contract, which includes 12 additional one-year extension options. The Navion Saga FSO unit was sold in October 2017.FSO units provide an on-site storage solution to oil field installations that have no oil storage facilities or that require supplemental storage. Teekay Offshore's revenuesand vessel operating expenses for the FSO segment are affected by fluctuations in currency exchange rates, as a significant component of revenues are earned andvessel operating expenses are incurred in Norwegian Kroner and Australian Dollars for certain vessels. The strengthening or weakening of the U.S. Dollar relative to theNorwegian Kroner or Australian Dollar may result in significant decreases or increases, respectively, in Teekay Offshore's revenues and vessel operating expenses.As at December 31, 2017, Teekay Offshore's UMS fleet consisted of one unit, the Arendal Spirit, in which Teekay Offshore owns a 100% interest. The Arendal Spirit wasoff-hire from mid-April 2016 until early-July 2016 due to damage suffered to the gangway of the unit. No revenue has been recognized for this unit since November 2016,for the reasons described above.As at December 31, 2017, Teekay Offshore's towage vessel fleet consisted of nine long-distance towing and offshore installation vessels and one long-distance towingand offshore installation vessel newbuilding which was delivered in February 2018. Two of the vessels are currently in lay-up. Teekay Offshore owns a 100% interest ineach of the vessels in Teekay Offshore's towage fleet. Long-distance towing and offshore installation vessels are used for the towage, station-keeping, installation anddecommissioning of large floating objects, such as exploration, production and storage units, including FPSO units, FLNG and floating drill rigs.As at December 31, 2017, Teekay Offshore's conventional tanker fleet consisted of two in-chartered conventional tankers. Both vessels are currently trading in the spotconventional tanker market.Income from vessel operations for Teekay Offshore decreased to $147.1 million for the period up to September 25, 2017 compared to $230.9 million for the year endedDecember 31, 2016, primarily a result of:FPSO Fleet•a decrease of $13.7 million for the nine months ended September 30, 2017 for the Petrojarl Varg due to no longer receiving the capital portion of the charter hire for thePetrojarl Varg FPSO since February 1, 2016 and the unit being in lay-up since August 1, 2016 subsequent to the termination of the charter contract by Repsol and netrevenue received for offshore field studies in 2016;•a decrease of $4.2 million for the nine months ended September 30, 2017 for the Voyageur Spirit FPSO primarily due to a decrease in incentive compensation;•a decrease of $2.6 million for the nine months ended September 30, 2017 for the Piranema Spirit primarily due to the timing of repair and maintenance costs; and•a decrease of $1.0 million for the nine months ended September 30, 2017 for the Petrojarl I FPSO primarily due to higher pre-operational costs incurred as the unitcontinues upgrades and is undergoing installation before commencing operations during the second quarter of 2018;partially offset by•an increase of $6.5 million for the nine months ended September 30, 2017 for the Petrojarl Knarr FPSO primarily due to a one-time performance bonus earned duringthe third quarter of 2017 and crew and repair and maintenance costs in 2016 relating to the unit preparing for its final performance test, which was completed duringthe third quarter of 2016; and•an increase of $4.2 million for the nine months ended September 30, 2017 for the Petrojarl Varg primarily due to lower costs from the unit being in lay-up since August1, 2016.Shuttle Tanker Fleet•an increase of $11.3 million for the nine months ended September 30, 2017 due to an increase in project revenues, mainly due to providing offloading services toStatoil for the Gina Krog field as an interim measure pending the start-up of the recently converted Randgrid FSO unit in October 2017;•an increase of $9.2 million for the nine months ended September 30, 2017 primarily due to an increase in revenues in Teekay Offshore's CoA fleet mainly due tohigher fleet utilization and higher average rates; and•an increase of $2.7 million for the nine months ended September 30, 2017, due to cost savings as a result of the sale of one vessel in November 2016;partially offset by•a decrease of $13.1 million for the nine months ended September 30, 2017 due to the in-chartering of one vessel from September 2016.FSO Fleet•a decrease of $10.3 million for the nine months ended September 30, 2017 due to the redelivery to Teekay Offshore of the Navion Saga in October 2016 and thewrite-down of the Falcon Spirit as a result of a decrease in the estimated residual value of the unit.61Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUMS Fleet•an increase of $11.4 million for the nine months ended September 30, 2017 primarily due to the termination of the Arendal Spirit UMS charter contract in April 2017,partially offset by the write-down relating to the cancellation of two UMS newbuilding contracts in June 2016.Towage Fleet•a decrease of $8.8 million for the nine months ended September 30, 2017 mainly due to lower utilization for the towage fleet as a result of lower demand in the offshoremarket, and increased costs associated with the delivery of the ALP Striker and ALP Defender in September 2016 and June 2017, respectively, partially offset by anincrease in the owned and chartered-in fleet size.Conventional Tanker Fleet•a decrease of $7.6 million for the nine months ended September 30, 2017 primarily due to a $4.0 million termination fee received from Teekay Parent for the earlytermination of the time-charter-out contract of the Kilimanjaro Spirit in March 2016, and the in-chartering of the Blue Pride and the Blue Power conventional tankersfrom March 2016, partially offset by lower costs as a result of the sale of two conventional tankers in March 2016.General and Administrative Expenses•General and administrative expenses increased by $4.4 million for the nine months ended September 30, 2017 mainly due to costs associated with the BrookfieldTransaction and higher business development fees relating to its FPSO segment, partially offset by lower management fees relating to the FPSO and shuttle tankersegments primarily from its cost saving initiatives and lower expenses as a result of the redelivery and lay-up of the Petrojarl Varg FPSO unit in August 2016.Impact of Deconsolidation of Teekay Offshore•a decrease of $59.1 million in 2017, including $56.5 million of income from vessel operations of Teekay Offshore for the fourth quarter of 2016 and $2.6 million ofincome from vessel operations of Teekay Offshore for the five days subsequent to its deconsolidation on September 25, 2017, of which our 14% share wasrecognized in equity loss, and which is not included in the above results (please read "Item 18 - Financial Statements: Note 3 - Deconsolidation of Teekay Offshore").The Company recognized an equity loss of $2.5 million from September 25, 2017 to December 31, 2017.Other Consolidated Operating ResultsThe following table compares our other consolidated operating results for 2017 and 2016: Year Ended December 31, (in thousands of U.S. dollars, except percentages) 2017 2016 % ChangeInterest expense (268,400) (282,966) (5.1)Interest income 6,290 4,821 30.5Realized and unrealized loss on non-designated derivative instruments (38,854) (35,091) 10.7Foreign exchange loss (26,463) (6,548) 304.1Loss on deconsolidation of Teekay Offshore (104,788) — 100.0Other loss (53,981) (39,013) 38.4Income tax expense (12,232) (24,468) (50.0)Interest expense. Interest expense decreased to $268.4 million in 2017, compared to $283.0 million in 2016, primarily due to:•a decrease of $5.2 million primarily due to a termination fee and write-off in 2016 of deferred loan costs due to the cancellation of a portion of Teekay Parent's equitymargin loan in 2016;•a decrease of $4.8 million due to interest expense incurred relating to costs associated with the delay in the delivery of a UMS newbuilding in the first and secondquarters of 2016 up until its construction contract cancellation by subsidiaries of Teekay Offshore in late-June 2016;•a decrease of $4.1 million due to increases in capitalized interest relating to additional advances and capital contributions to the Yamal LNG Joint Venture and BahrainLNG Joint Venture for newbuilding installments and construction costs;•a decrease of $3.0 million due to decreases in Teekay Offshore's average debt balance;•a decrease of $1.5 million due to the repayment of the bridge loan relating to the Shoshone Spirit upon its sale by Teekay Parent in 2016; and•a decrease of $0.9 million due to the partial repayment of Teekay Parent's revolving credit facility in 2017;partially offset by62Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•an increase of $16.3 million primarily relating to interest incurred on the obligations related to capital leases for the Creole Spirit, Oak Spirit, Torben Spirit, Murex, andMacoma commencing upon their deliveries in 2016 and 2017;•an increase of $7.9 million due to an increase in the weighted-average interest rates on Teekay Offshore's long-term debt;•an increase of $4.6 million as a result of Teekay LNG's issuances of NOK bonds in October 2016 and January 2017, net of NOK bond repurchases in October 2016and the maturity of certain of the NOK bonds in May 2017;•an increase of $4.1 million as a result of interest expense accretion on the Pan Union Joint Venture crew training and site supervision obligation, and higher LIBORrates net of debt principal repayments;•an increase of $2.3 million due to the ineffective portion of the unrealized loss, and the reclassification of the realized loss from accumulated other comprehensive lossto interest expense, on interest rate swaps designated as cash flow hedges relating to Teekay Offshore's towage segment; and•an increase of $1.5 million primarily due to additional interest incurred related to the sale and leaseback of four Suezmax tankers and the completion of the TIL mergerin November 2017, partially offset by higher expenses incurred in 2016 due to the refinancing of Teekay Tanker's debt facilities in the first quarter of 2016.On September 25, 2017, we deconsolidated Teekay Offshore (please read "Item 18 - Financial Statements: Note 3 - Deconsolidation of Teekay Offshore"). As a result,consolidated interest expense decreased by $30.0 million for the year ended December 31, 2017, compared to the same period of the prior year.Realized and unrealized (losses) gains on non-designated derivative instruments. Realized and unrealized (losses) gains related to derivative instruments that are notdesignated as hedges for accounting purposes are included as a separate line item in the consolidated statements of (loss) income. Net realized and unrealized losses onnon-designated derivatives were $38.9 million for 2017, compared to $35.1 million for 2016, as detailed in the table below: Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$Realized (losses) gains relating to: Interest rate swap agreements(53,921) (87,320)Interest rate swap agreement terminations(610) (8,140)Foreign currency forward contracts667 (11,186)Time charter swap agreement1,106 2,154Forward freight agreements270 — (52,488) (104,492)Unrealized gains (losses) relating to: Interest rate swap agreements17,005 62,446Foreign currency forward contracts3,925 15,833Stock purchase warrants(6,421) (9,753)Time charter swap agreement(875) 875 13,634 69,401Total realized and unrealized losses on derivative instruments(38,854) (35,091)The realized losses relate to amounts we actually realized for settlements related to these derivative instruments in normal course, and amounts paid to terminate interestrate swap agreement terminations.During 2017 and 2016, we had interest rate swap agreements with aggregate average net outstanding notional amounts of approximately $2.6 billion and $3.3 billion,respectively, with average fixed rates of approximately 3.1% and 3.4%. The decrease in the notional amounts is mainly due to the deconsolidation of Teekay Offshore,which had interest rate swaps with aggregate average notional amount of $1.8 billion. Short-term variable benchmark interest rates during these periods were generallyless than 2.0% and, as such, we incurred realized losses of $53.9 million and $87.3 million during 2017 and 2016, respectively, under the interest rate swap agreements.We also incurred realized losses of $0.6 million during 2017, compared to losses of $8.1 million during 2016, from the termination of interest rate swaps.We recognized realized gains of $0.7 million in 2017, compared to realized losses of $11.2 million in 2016 under the foreign currency forward contracts.We recognized realized gains on a time charter swap agreement of $1.1 million in 2017 and $2.2 million in 2016. The time-charter swap agreement ended on April 30, 2017.Primarily as a result of significant changes in long-term benchmark interest rates during 2017 and 2016, we recognized unrealized gains of $17.0 million for 2017 comparedto $62.4 million for 2016 under the interest rate swap agreements. We recognized unrealized gains of $3.9 million for 2017 compared to unrealized losses of $15.8 millionfor 2016 under the foreign currency forward contracts.63Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs at December 31, 2017, Teekay held 14.5 million Brookfield Transaction Warrants. Please read “Item 18 - Financial Statements: Note 3 – Deconsolidation of TeekayOffshore". The fair value of the Brookfield Transaction Warrants was $29.4 million as at December 31, 2017. We recognized $5.2 million of unrealized losses on thesewarrants in 2017. Please read “Item 18 Financial Statements: Note 15 — Derivative Instruments and Hedging Activities.”As of December 31, 2017, Teekay held 1,755,000 Teekay Offshore stock purchase warrants with an exercise price of $4.55, which have a seven-year term and areexercisable any time after six months following their issuance date. The fair value of these warrants was $1.3 million as at December 31, 2017. We recognized $0.6 millionof unrealized losses on these warrants. Please read “Item 18 - Financial Statements: Note 15 — Derivative Instruments and Hedging Activities.”In January 2014, we and Teekay Tankers received TIL stock purchase warrants which entitled us and Teekay Tankers to purchase up to 1.5 million shares of commonstock of TIL at a fixed price of $10 per share. On May 31, 2017, TIL entered into a definitive agreement to merge with Teekay Tankers (Please read “Item 18 - FinancialStatements: Note 4 – Investments”). Following the completion of the merger, TIL became a wholly-owned subsidiary of Teekay Tankers, and as a result, the stockpurchase warrants are valued at $nil at December 31, 2017. We recognized $0.6 million and $9.8 million of unrealized losses on the stock purchase warrants, respectively,during 2017 and 2016. Please read “Item 18 - Financial Statements: Note 15 — Derivative Instruments and Hedging Activities.”Foreign Exchange Loss. Foreign currency exchange losses were $26.5 million in 2017 compared to $6.5 million in 2016. Our foreign currency exchange losses,substantially all of which are unrealized, are due primarily to the relevant period-end revaluation of our NOK-denominated debt and our Euro-denominated term loans,capital leases and restricted cash for financial reporting purposes and the realized and unrealized gains (losses) on our cross currency swaps. Gains on NOK-denominated and Euro-denominated monetary liabilities reflect a stronger U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to therate in effect at the beginning of the period. Losses on NOK-denominated and Euro-denominated monetary liabilities reflect a weaker U.S. Dollar against the NOK and Euroon the date of revaluation or settlement compared to the rate in effect at the beginning of the period. For 2017, foreign currency exchange loss includes realized losses of$18.5 million (2016—$38.6 million) and unrealized gains of $82.7 million (2016 — $75.0 million) on our cross currency swaps, realized losses on maturity and termination ofNOK bonds of $25.7 million (2016 — $41.7 million) offset by the NOK bond gain, and unrealized losses of $23.3 million (2016—$6.8 million) on the revaluation of our NOK-denominated debt.Loss on deconsolidation of Teekay Offshore. Loss on deconsolidation of Teekay Offshore was $104.8 million in 2017. Please read "Item 18 - Financial Statements: Note 3- Deconsolidation of Teekay Offshore".Other Loss. Other Loss was $54.0 million in 2017 compared to $39.0 million in 2016. Other loss in 2017 includes a $50.0 million increase in the tax indemnificationguarantee liability related to the Teekay Nakilat capital lease (please read "Item 18 - Financial Statements: Note 16d — Commitments and Contingencies"), $4.5 millionrelated to a settlement agreement entered into between CeFront Technology AS and certain subsidiaries of Teekay Offshore, partially offset by a gain on sale of a cost-accounted investment. Other loss in 2016 includes the recognition of an expense relating to estimated potential damages of $38.0 million as a result of the cancellation bysubsidiaries of Teekay Offshore of the two UMS construction contracts, partially offset by a $14.5 million gain associated with the extinguishment of contingent liabilitiesrelating to the UMS newbuildings and a $2.1 million gain relating to the reassessment of a contingent liability fair value associated with the Arendal Spirit UMS in 2016. Otherloss in 2016 also includes a write-down of a cost-accounted investment of $19.0 million in 2016.Income Tax Expense. Income tax expense was $12.2 million in 2017 compared to $24.5 million in 2016. This decrease in income tax expense was primarily due tovaluation allowances relating to our Australian operations and Teekay Offshore in 2016, the deconsolidation of Teekay Offshore on September 25, 2017, and lower freighttaxes in Teekay Tankers in 2017.Year Ended December 31, 2016 versus Year Ended December 31, 2015Teekay LNGOperating Results – Teekay LNGThe following table compares Teekay LNG’s operating results and number of calendar-ship-days for its vessels for 2016 and 2015, and compares its net revenues (whichis a non-GAAP financial measure) for 2016 and 2015, to revenues, the most directly comparable GAAP financial measure, for the same periods.64Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Liquefied GasCarriers ConventionalTankers Teekay LNGTotal(in thousands of U.S. dollars, except calendar-ship-days) 2016 2015 2016 2015 2016 2015Revenues 336,530 305,056 59,914 92,935 396,444 397,991Voyage expenses (449) 203 (1,207) (1,349) (1,656) (1,146)Net revenues 336,081 305,259 58,707 91,586 394,788 396,845Vessel operating expenses (66,087) (63,344) (22,503) (30,757) (88,590) (94,101)Depreciation and amortization (80,084) (71,323) (15,458) (20,930) (95,542) (92,253)General and administrative expenses (1) (15,310) (19,392) (3,189) (5,726) (18,499) (25,118)Write-down and loss on sale of vessels — — (38,976) — (38,976) —Restructuring charges — — — (4,001) — (4,001)Income (loss) from vessel operations 174,600 151,200 (21,419) 30,172 153,181 181,372Equity income 62,307 84,171 — — 62,307 84,171Calendar-Ship-Days (2) Liquefied Gas Carriers 7,440 6,935 — — 7,440 6,935Conventional Tankers — — 2,439 2,920 2,439 2,920(1)Includes direct general and administrative expenses and indirect general and administrative expenses allocated to the liquefied gas carriers and conventional tankers basedon estimated use of corporate resources.(2)Calendar-ship-days presented relate to consolidated vessels.Teekay LNG – Liquefied Gas CarriersAs at December 31, 2016, Teekay LNG’s liquefied gas fleet, including newbuildings, included 50 LNG carriers and 29 LPG/Multigas carriers, in which its interests rangedfrom 20% to 100%. The number of calendar-ship-days for Teekay LNG’s liquefied gas carriers consolidated in its financial results increased to 7,440 days in 2016 from6,935 days in 2015, as a result of the deliveries to Teekay LNG of the Creole Spirit and Oak Spirit in February 2016 and July 2016, respectively. During 2016, one ofTeekay LNG's consolidated vessels in this segment was off-hire for a scheduled in-water survey, the Creole Spirit was off-hire for 32 days for repairs covered underwarranty, and the Creole Spirit and Oak Spirit's time-charter contracts commenced in February 2016 and August 2016, respectively, compared to one consolidated vesselin this segment being off-hire for 47 days in 2015. As a result, Teekay LNG's liquefied gas fleet utilization decreased to 99.1% in 2016, compared to 99.3% in 2015.Income from vessel operations increased to $174.6 million in 2016 compared to $151.2 million in 2015, primarily as a result of:•an increase of $19.9 million as a result of the deliveries of the Creole Spirit and Oak Spirit and the commencement of their charter contracts;•an increase of $4.1 million as a result of lower general and administrative expenses primarily due to reimbursement from the Bahrain Joint Venture in 2016 of TeekayLNG's proportionate costs, including pre-operation, engineering and financing-related expenses, upon the joint venture securing its financing in the fourth quarter of2016;•an increase of $3.8 million due to lower vessel operating expenses due to the charterer, Teekay, not being able to find employment for the Arctic Spirit and Polar Spiritfor a portion of 2016, which permitted Teekay LNG to operate the vessels with a reduced average number of crew on board and reduce the amount of repair andmaintenance activities performed; and•an increase of $2.2 million due to the Polar Spirit being off-hire for 47 days in 2015 for a scheduled dry docking;partially offset by•a decrease of $4.5 million due to a revenue deferral relating to Teekay LNG's six LPG carriers on charter to Skaugen; and•a decrease of $2.0 million for Teekay LNG's Spanish LNG carriers primarily due to a performance claim related to the Hispania Spirit recorded in the fourth quarter of2016 and the Catalunya Spirit being off-hire for six days in the first quarter of 2016 for a scheduled in-water survey.Equity income related to Teekay LNG’s liquefied gas carriers decreased to $62.3 million in 2016 compared to $84.2 million in 2015, as set forth in the table below:65Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(in thousands of U.S. Dollars)Year Ended December 31, AngolaLNGCarriersExmarLNGCarriersExmarLPGCarriersMALTLNGCarriersRasGas 3LNGCarriersOtherTotalEquityIncome201615,7139,03813,6744,50319,817(438)62,307201516,1449,33232,7334,62021,527(185)84,171Difference(431)(294)(19,059)(117)(1,710)(253)(21,864)Equity income from Teekay LNG's 50% ownership interest in Exmar LPG BVBA decreased by $19.1 million primarily due to more vessels trading in the spot market in2016 compared to higher fixed rates earned in 2015; the redelivery of the in-chartered vessel Odin back to its owner in November 2015; and the write-down of the BruggeVenture recorded in the fourth quarter of 2016, which was sold in January 2017. These decreases were partially offset by the deliveries to the joint venture of four LPGcarrier newbuildings between September 2015 and November 2016.The slight decrease in equity income from Teekay LNG's 52% investment in the MALT LNG carriers was primarily due to the deferral during 2016 (and which will continuethrough 2017) of a significant portion of the charter payments from YLNG for the Marib Spirit and Arwa Spirit LNG carriers chartered to support the LNG plant in Yemen,and a lower charter rate on the redeployment of the Methane Spirit after its original time-charter contract expired in March 2015. These decreases were partially offset bythe settlement payment awarded to Teekay LNG in 2016 for the disputed contract termination relating to the Magellan Spirit, and unscheduled off-hire relating to theWoodside Donaldson to repair a damaged propulsion motor in January 2015.The $1.7 million decrease in equity income from Teekay LNG's 40% investment in the three RasGas 3 LNG carriers was primarily due to the scheduled maturity of thejoint venture's interest rate swaps, which resulted in lower unrealized gain on non-designated derivative instruments, which was partially offset by lower combined interestexpense and realized loss on non-designated derivative instruments.Teekay LNG – Conventional TankersAs at December 31, 2016, Teekay LNG’s conventional tanker fleet included five Suezmax-class double-hulled conventional crude oil tankers and one Handymax producttanker, three of which it owns and two of which it leases under capital leases. All of Teekay LNG’s conventional tankers operate under fixed-rate charters. The number ofcalendar-ship-days for Teekay LNG’s conventional tankers decreased to 2,439 days in 2016 from 2,920 days in 2015, primarily as a result of the sales of the BermudaSpirit and Hamilton Spirit in April 2016 and May 2016, respectively. During 2016, none of Teekay LNG's vessels in this segment were off-hire for scheduled dockings,compared to two of its vessels in this segment being off-hire for a total of 24 days for scheduled dry-dockings and another vessel being off-hire for 12 days related to acrew work stoppage during 2015.Income (loss) from vessel operations decreased to a loss of $21.4 million during 2016 compared to income of $30.2 million in 2015, primarily as a result of:•decreases of $32.5 million due to the sales of the Bermuda Spirit and Hamilton Spirit in 2016, resulting in a loss on sale of vessels of $27.4 million and a decrease inoperating income;•a decrease of $11.5 million relating to the write-down of the Asian Spirit in 2016 as this vessel is classified as held for sale at December 31, 2016;•a decrease of $4.4 million due to lower revenues earned by the Teide Spirit relating to a profit sharing agreement between Teekay LNG and Compania Espanole dePetroleos, S.A. (or CEPSA);•a decrease of $3.6 million relating to the European Spirit, African Spirit and Asian Spirit upon the charterer exercising its one-year options in September 2015,November 2015 and January 2016, respectively, at lower charter rates than the original charter rates; and•a decrease of $2.8 million due to lower revenues earned by the Toledo Spirit in 2016 relating to a profit sharing agreement between Teekay LNG and CEPSA;partially offset by•an increase of $2.5 million due to lower general and administrative expenses relating primarily to a reduced amount of business development activities in 2016.66Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay TankersOperating Results – Teekay TankersThe following table compares Teekay Tankers’ operating results and number of calendar-ship-days for its vessels for 2016 and 2015, and compares its net revenues(which is a non-GAAP financial measure) for 2016 and 2015, to revenues, the most directly comparable GAAP financial measure, for the same periods. Year Ended December 31,(in thousands of U.S. dollars, except calendar-ship-days) 2016 2015Revenues 550,543 524,834Voyage expenses (53,604) (18,477)Net revenues 496,939 506,357Vessel operating expenses (182,598) (130,774)Time-charter hire expense (59,647) (77,799)Depreciation and amortization (104,149) (71,428)General and administrative expenses (33,199) (29,743)Asset impairments (20,462) —(Loss) gain on sale of vessels (132) 771Restructuring charges — (6,795)Income from vessel operations 96,752 190,589Equity income 7,680 11,528Calendar-Ship-Days (1) Conventional Tankers 19,303 16,636(1)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels.Teekay Tankers – Conventional TankersAs at December 31, 2016, Teekay Tankers owned 43 double-hulled conventional oil tankers and four ship-to-ship lightering support vessels, time-chartered in six Aframaxtankers and one LR2 product tanker from third parties and owned a 50% interest in one VLCC.The calendar ship days increased in 2016 compared to 2015 primarily due to the full year of operations of the 12 Suezmax tankers, two LR2 product tankers and threeAframax tanker that Teekay Tankers acquired during 2015, partially offset by the net movement of in-charter tankers during 2015 and 2016 and the sale of two MRproduct tankers in 2015 and 2016.Income from vessel operations decreased to $96.8 million in 2016 compared to $190.6 million in 2015, primarily as a result of:•a decrease of $99.8 million due to lower average realized rates earned by Suezmax, Aframax, LR2 and MR tankers trading in the spot tanker market in 2016compared to 2015;•a decrease of $20.5 million due to write-downs of two MR product tankers and two Suezmax tankers to their respective sales prices in 2016;•a decrease of $6.0 million due to increases in amortization of dry-docking costs during 2016 resulting from high dry-docking activity during the second half of 2015;and•a decrease of $3.6 million due to in-process revenue contract amortization that was recognized in revenue in late 2015 and fully amortized in the first quarter of 2016;partially offset by•an increase of $15.8 million due to increased revenue days during 2016 due to fewer net off-hire days in 2016 and an additional revenue day as 2016 is a leap year;•an increase of $9.6 million due to higher rates earned from out-chartered Aframax tankers during 2016;•an increase of $4.4 million due to higher commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs andbunker rebates;•a net increase of $4.4 million due to results from the ship-to-ship transfer business which Teekay Tankers acquired during the third quarter of 2015; and•a net increase of $3.8 million due to lower pool management fees, commissions, off-hire bunker and other expenses in 2016 compared to 2015, due primarily to loweraverage TCE rates.67Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEquity income decreased to $7.7 million in 2016 from $11.5 million for 2015 primarily due to:•a decrease of $3.8 million due to lower equity earnings from TIL resulting from overall lower realized average spot rates earned in 2016 compared to 2015, partiallyoffset by an increase resulting from our increased ownership interest in TIL to 11.3% in 2016 as compared to 10.2% in 2015; and•a decrease of $1.2 million due to the winding down of operations of the Gemini Tankers L.L.C. joint venture in 2015;partially offset by•an increase of $1.1 million due to higher equity earnings from our High-Q Investment Ltd (or High-Q) joint venture primarily resulting from profit share recognized inthe second quarter of 2016 as VLCC rates averaged above certain thresholds, triggering a profit sharing with the customer.Teekay ParentOperating Results – Teekay ParentThe following table compares Teekay Parent’s operating results and number of calendar-ship-days for its vessels for 2016 and 2015, and compares its net revenues(which is a non-GAAP financial measure) for 2016 and 2015, to revenues, the most directly comparable GAAP financial measure, for the same periods. OffshoreProduction ConventionalTankers Other andCorporate G&A Teekay ParentTotal(in thousands of U.S. dollars, except calendar-ship-days) 2016 2015 2016 2015 2016 2015 2016 2015Revenues 231,435 277,842 32,967 65,777 76,111 75,547 340,513 419,166Voyage expenses (269) (36) (287) (763) (2,879) (808) (3,435) (1,607)Net revenues 231,166 277,806 32,680 65,014 73,232 74,739 337,078 417,559Vessel operating expenses (159,084) (200,338) (10,468) (16,051) (26,576) (24,294) (196,128) (240,683)Time-charter hire expense (33,366) (29,978) (23,166) (38,991) (48,452) (44,448) (104,984) (113,417)Depreciation and amortization (70,855) (69,508) (1,717) (2,852) 449 451 (72,123) (71,909)General and administrative expenses (1) (14,099) (17,261) (809) (2,136) (10,707) 1,221 (25,615) (18,176)Net loss on sale of vessels andequipment (110) (948) (12,487) — — — (12,597) (948)Restructuring charges (1,962) — — — (20,165) (2,654) (22,127) (2,654)(Loss) income from vessel operations (48,310) (40,227) (15,967) 4,984 (32,219) 5,015 (96,496) (30,228)Equity (loss) income (575) (12,196) 132 12,797 (1,838) (1,101) (2,281) (500)Calendar-Ship-Days (2) FPSO Units 1,098 1,095 — — — — 1,098 1,095Conventional Tankers — — 1,278 2,516 — — 1,278 2,516Gas carriers — — — — 732 730 732 730FSO Units 366 365 — — 732 730 1,098 1,095Shuttle Tankers 732 730 — — — — 732 730Bunker Barges — — — — 672 200 672 200(1)Includes direct general and administrative expenses and indirect general and administrative expenses allocated to offshore production, conventional tankers and other andcorporate G&A based on estimated use of corporate resources.(2)Apart from three FPSO units and one conventional tanker, all remaining calendar-ship-days presented relate to in-chartered days.Teekay Parent – Offshore ProductionOffshore Production consists primarily of our FPSO units. As at December 31, 2016, we had a direct interest in three 100% owned FPSO units.The Hummingbird Spirit FPSO charter contract includes an incentive compensation component based on the oil price. In addition, the Petrojarl Foinaven FPSO unit’scharter contract includes incentives based on total oil production for the year, certain operational measures, and the average annual oil price. The decline in the price of oilhas negatively impacted our incentive compensation under these contracts.The number of Teekay Parent’s FPSO calendar-ship days for the year ended December 31, 2016 were consistent compared to the same period last year.68Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsLoss from vessel operations increased to $48.3 million during 2016 compared to $40.2 million in 2015, primarily as a result of:•an increase in loss of $13.7 million related to the Petrojarl Banff FPSO unit as a result of off-hire in the first quarter of 2016 and higher repairs and maintenance costsdue to the temporary loss of two mooring lines in the first quarter of 2016;•an increase in loss of $5.5 million related to the Hummingbird FPSO primarily due to the contract amendment described above that took effect on July 1, 2016, partiallyoffset by lower operating expenses in 2016; and•an increase in loss of $2.0 million due to restructuring charges primarily relating to the reorganization of the Company's FPSO business in 2016;partially offset by•a decrease in loss of $9.1 million primarily due to legal costs incurred in 2015 relating to repairs and upgrades to the Petrojarl Banff FPSO after the storm event inDecember 2011, and cost-saving initiatives in 2016; and•a decrease in loss of $4.8 million primarily related to the Petrojarl Foinaven FPSO, primarily due to the shutdown of the unit in 2015 for maintenance and loweroperating costs in 2016.Teekay Parent – Conventional TankersAs at December 31, 2016, Teekay Parent chartered-in two conventional tankers from third parties. The average fleet size (including in-chartered vessels), as measuredby calendar-ship-days, decreased in 2016 compared with 2015 due to the sale of one VLCC, redeliveries of three Aframax in-chartered vessels to Teekay Offshore andone Aframax in-chartered vessel to Teekay Tankers. The collective impact from the noted fleet changes are referred to below as the Net Fleet Reductions.Loss from vessel operations for Teekay Parent’s Conventional Tankers was $16.0 million in 2016 compared to income from vessel operations of $5.0 million in 2015,primarily as a result of:•a decrease in income of $12.5 million due to the write-down in 2016 of one VLCC to its agreed sales price;•a decrease in income of $5.8 million due to lower average realized TCE rates in 2016 compared to 2015;•a net decrease in income of $5.7 million due to cancellation fees paid by Teekay Parent to Teekay Offshore in 2016 and 2015 related to the termination of the time-charter contracts of two Aframax tankers, partially offset by cancellations paid to Teekay Parent from Teekay Offshore and Teekay Tankers in 2015 related to thetermination of bareboat contracts of two Aframax tankers; and•a decrease in income of $2.6 million due to a higher time-charter hire rate for an Aframax in-charter in the first quarter of 2016;partially offset by•a net increase in income of $4.0 million due to lower vessel operating expenses from the termination of bareboat contracts of two Aframax tankers that Teekay Parentin-chartered from Teekay Offshore and the sale of the VLCC and lower time-charter hire expense from the redeliveries of three in-chartered conventional tankers toTeekay Offshore and Teekay Tankers, partially offset by the loss of revenue due to the redeliveries and sale of those tankers; and•an increase in income of $2.0 million due to a distribution received from the Gemini Pool in 2016.Teekay Parent – Other and Corporate G&AAs at December 31, 2016, Teekay Parent had two chartered-in LNG carriers owned by Teekay LNG, two chartered-in FSO units owned by Teekay Offshore and onechartered-in bunker barge.Loss from vessel operations was $32.2 million for the year ended December 31, 2016 compared to income from vessel operations $5.0 million for the year endedDecember 31, 2015, primarily as a result of:•an increase in loss of $32.8 million primarily due to lower revenues earned as a result of the terminations of time charters and the lay-up of the Arctic Spirit and PolarSpirit LNG carriers in 2016;•an increase in loss of $13.9 million due to business development fees received from Teekay Offshore in 2015 in respect of the Petrojarl Knarr FPSO unit, the ArendalSpirit UMS and the six on-the-water, long distance towing and offshore installation vessels;•an increase in loss of $2.7 million primarily due to office closure costs and seafarers' severance amounts relating to tug businesses in Western Australia in 2016; and•an increase in loss of $1.6 million due to fees received from TIL in 2015 for our arrangement of the acquisition of certain of its vessels, partially offset by fees receivedrelating to the sale of two vessels in 2016;partially offset by69Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•a decrease in loss of $9.4 million primarily due to earnings generated on technical, crew and commercial management services provided for an increased fleet size in2016; and•a decrease in loss of $5.4 million primarily due to lower restructuring charges relating to the reorganization of our marine operations and corporate services in 2015,and lower general and administrative expenses as a result of cost saving initiatives in 2016.Equity loss was $2.3 million in 2016 compared to $0.5 million in 2015, primarily due to lower equity earnings from Petrotrans Holdings as a result of the gain on the sale ofTMS from the joint venture to Teekay Tankers in 2015, and lower equity earnings from TIL resulting from lower realized average spot rates in 2016, partially offset byhigher equity earnings due to a deferred tax asset write-down and unrealized foreign exchange losses relating to Teekay Parent’s 43% investment in Sevan in 2015.Teekay OffshoreOperating Results – Teekay OffshoreThe following table compares Teekay Offshore’s operating results and number of calendar-ship-days for its vessels for 2016 and 2015, and compares its net revenues(which is a non-GAAP financial measure) for 2016 and 2015, to revenues, the most directly comparable GAAP financial measure, for the same periods. Year ended December 31,(in thousands of U.S. dollars, except calendar-ship-days)2016 2015Revenues1,152,390 1,229,413Voyage expenses(80,750) (98,006)Net revenues1,071,640 1,131,407Vessel operating expenses(364,441) (378,480)Time-charter hire expense(75,485) (51,750)Depreciation and amortization(300,011) (274,599)General and administrative expenses(56,122) (72,613)Asset impairments and gain on sale ofvessels(40,079) (69,998)Restructuring charges(4,649) (568)Income from vessel operations230,853 283,399Equity income17,933 7,672Calendar-Ship-Days (1) FPSO units2,196 2,122Shuttle Tankers11,913 12,319FSO units2,562 2,395UMS366 318Towage vessels2,307 1,606Conventional Tankers732 1,432(1)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels.As of December 31, 2016, Teekay Offshore’s FPSO fleet consisted of the Petrojarl Knarr, the Petrojarl Varg, the Cidade de Rio das Ostras (or Rio das Ostras), thePiranema Spirit, the Voyageur Spirit, and the Petrojarl I FPSO units, all of which Teekay Offshore owns 100%, and the Itajai and Libra FPSO units, of which TeekayOffshore owns 50%. Teekay Offshore acquired the Petrojarl Knarr FPSO unit from Teekay in July 2015.In late-2015, Teekay Offshore received a termination notice for the Petrojarl Varg FPSO charter contract from Repsol S.A. (or Repsol), based on a termination right thatwas specific to the Petrojarl Varg FPSO contract. In accordance with the termination provision of the charter contract, the charterer ceased paying the capital componentof the charter hire six months prior to the redelivery date, which redelivery occurred at the end of July 2016.FPSO units provide production, processing and storage services to oil companies operating offshore oil field installations. These services are typically provided underlong-term, fixed-rate FPSO contracts, some of which also include certain incentive compensation or penalties based on the level of oil production and other operationalmeasures. Historically, the utilization of FPSO units and other vessels in the North Sea, where the Voyageur Spirit and Petrojarl Knarr operate, is higher in the wintermonths, as favorable weather conditions in the summer months provide opportunities for repairs and maintenance to vessels and the offshore oil platforms, whichgenerally reduces oil production. The strengthening or weakening of the U.S. Dollar relative to the Norwegian Kroner, Brazilian Real, and British Pound may result insignificant decreases or increases, respectively, in our revenues and vessel operating expenses.70Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe average number of Teekay Offshore’s FPSO units increased in 2016 compared to 2015, due to the acquisition of the Petrojarl Knarr on July 1, 2015.As at December 31, 2016, the shuttle tanker fleet consisted of 30 vessels that operate under fixed-rate CoAs, time charters and bareboat charters, three shuttle tankernewbuildings and the HiLoad DP unit. Of these 34 shuttle tankers, six are owned through 50% owned subsidiaries and three were chartered-in. The remaining vesselswere owned 100% by Teekay Offshore. In November 2016, Teekay Offshore sold a 1995-built shuttle tanker, the Navion Europa. In January 2016, Teekay Offshore solda 1992-built shuttle tanker, the Navion Torinita, which was in lay-up and classified as held for sale on Teekay's consolidated balance sheet as of December 31, 2015. InJuly 2016, Teekay Offshore agreed to in-charter a shuttle tanker, the Grena Knutsen, on a three-year charter contract for its North Sea fleet commencing in September2016. All of Teekay Offshore's operating shuttle tankers, with the exception of the HiLoad DP unit, provide transportation services to energy companies in the North Sea,Brazil and the East Coast of Canada. Teekay Offshore's shuttle tankers occasionally service the conventional spot tanker market. Teekay Offshore commenced the FSOconversion of the Randgrid shuttle tanker during the second quarter of 2015. During the first quarter of 2015, Teekay Offshore sold the Navion Svenita shuttle tanker. Thestrengthening or weakening of the U.S. Dollar relative to the Norwegian Kroner, Euro and Brazilian Real may result in significant decreases or increases, respectively, invessel operating expenses.The average size of Teekay Offshore’s owned shuttle tanker fleet decreased in 2016 compared to 2015, primarily due to the sales of the Navion Svenita, the NavionTorinita and the Navion Europa in March 2015, January 2016 and November 2016, respectively, and the commencement of the FSO conversion of the Randgrid in June2015. Three shuttle tanker newbuildings have been excluded from calendar-ship-days until they are delivered to Teekay Offshore. The average size of Teekay Offshore’schartered-in shuttle tanker fleet increased in 2016 compared to 2015 primarily due to the in-chartering of two shuttle tankers, the Jasmine Knutsen and the HeatherKnutsen, for the East Coast of Canada contract, which commenced in June 2015, the in-chartering of the Grena Knutsen for three years which commenced in September2016 and increased spot in-chartering of shuttle tankers, partially offset by redelivery of the Grena Knutsen and Aberdeen to their owners in June 2015 and December2016, respectively. The Grena Knutsen was subsequently rechartered in by Teekay Offshore in September 2016.As of December 31, 2016, Teekay Offshore’s FSO fleet consisted of five units that operate under fixed-rate time charters or fixed-rate bareboat charters in which TeekayOffshore’s ownership interest ranged from 89% to 100%, and one shuttle tanker, the Randgrid, currently undergoing conversion into an FSO unit, in which TeekayOffshore’s ownership interest increased from 67% to 100% during the third quarter of 2015. The Navion Saga FSO unit was held for sale as at December 31, 2016. FSOunits provide an on-site storage solution to oil field installations that have no oil storage facilities or that require supplemental storage. Teekay Offshore’s revenues andvessel operating expenses for the FSO segment are affected by fluctuations in currency exchange rates, as a significant component of revenues are earned and vesseloperating expenses are incurred in Norwegian Kroner and Australian Dollars for certain vessels. The strengthening or weakening of the U.S. Dollar relative to theNorwegian Kroner or Australian Dollar may result in significant decreases or increases, respectively, in revenues and vessel operating expenses.The average number of Teekay Offshore’s FSO units increased in 2016 compared to 2015, due to the commencement of the FSO conversion of the Randgrid on June 9,2015. The Navion Saga FSO unit was redelivered to Teekay Offshore in October 2016 and was classified as held for sale as at December 31, 2016, resulting in a $1.0million write-down of the unit.As at December 31, 2016, Teekay Offshore’s UMS fleet consisted of one unit, the Arendal Spirit, in which Teekay Offshore owns a 100% interest. During the secondquarter of 2016, Teekay Offshore canceled the UMS construction contracts for its two UMS newbuildings, resulting in a write-down of the UMS newbuildings to $nil. TheUMS unit is used primarily for offshore accommodation, storage and support for maintenance and modification projects on existing offshore installations, or during theinstallation and decommissioning of large floating exploration, production and storage units, including FPSO units, FLNG units and floating drill rigs. Teekay Offshore’s UMSunit is available for world-wide operations, excluding operations within the Norwegian Continental Shelf, and includes DP3 keeping systems that are capable of operating indeep water and harsh weather.As at December 31, 2016, Teekay Offshore’s towage vessel fleet consisted of seven long-distance towing and offshore installation vessels and three long-distance towingand offshore installation vessel newbuildings. Teekay Offshore owns a 100% interest in each of the vessels in its towage fleet. Long-distance towing and offshoreinstallation vessels are used for the towage, station-keeping, installation and decommissioning of large floating objects such as exploration, production and storage units,including FPSO units, floating liquefied natural gas (or FLNG) units and floating drill rigs.The average number of Teekay Offshore’s towing and offshore installation vessels increased in 2016 compared to 2015, due to the acquisition of three vessels during thefirst quarter of 2015, two vessels during the second quarter of 2015, one vessel during the third quarter of 2015, and the delivery of Teekay Offshore's first towagenewbuilding vessel in September 2016.As at December 31, 2016, Teekay Offshore's conventional tanker fleet consisted of two in-chartered conventional tankers. In March 2016, Teekay Offshore terminatedthe time-charter contract of the Kilimanjaro Spirit with a subsidiary of Teekay and received an early termination fee of $4.0 million from Teekay. Subsequently, TeekayOffshore sold the Kilimanjaro Spirit and the Fuji Spirit conventional tankers. The Kilimanjaro Spirit was renamed Blue Pride and the Fuji Spirit was renamed Blue Power. Aspart of the sales, Teekay Offshore is in-chartering these vessels for three years with additional one-year extension options. One vessel is trading on a fixed two-year time-charter-out contract which commenced during the second quarter of 2016 and the other vessel is trading in the spot conventional tanker market.In December 2015, Teekay Offshore sold its 100% interest in SPT Explorer L.L.C. and Navigator Spirit L.L.C., which own the SPT Explorer and the Navigator Spiritconventional tankers, respectively, to Teekay Tankers.71Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIncome from vessel operations for Teekay Offshore’s business decreased to $230.9 million in 2016 compared to $283.4 million in 2015, primarily as a result of:FPSO Fleet•a decrease of $46.6 million for the Petrojarl Varg FPSO unit, due to the termination of the charter contract by Repsol effective at the end of July 2016, partially offsetby lower vessel operating expenses as the unit is now in layup;•a decrease of $4.4 million relating to the restructuring costs associated with the reorganization of the FPSO business to create better alignment with the offshoreoperations and resulting in a lower cost organization going forward; and •a decrease of $2.9 million relating to the Voyageur Spirit FPSO unit due to a lower production bonus earned in 2016 compared to 2015, partially offset by lower repairand maintenance costs reimbursed by the charterer in 2016;partially offset by•an increase of $28.2 million due to the Petrojarl Knarr FPSO unit commencing operations on March 9, 2015; and•an increase of $1.9 million for the Rio das Ostras FPSO unit, primarily due to higher incentive compensation and a bonus earned from the charterer of the unit forunused maintenance days under the service contract during 2016.Shuttle Tanker Fleet•a decrease of $22.7 million due to the expiration in April 2015 of a long-term contract at the Heidrun field serviced by Teekay Offshore's CoA fleet;•a decrease of $19.5 million due to higher depreciation expense related to the change in the estimated useful life of the shuttle component for all shuttle tankers from 25to 20 years, the accelerated amortization of the tanker component for eight older shuttle tankers commencing the first quarter of 2016, partially offset by a write-downof the carrying values of seven shuttle tankers during 2015, and the Navion Europa shuttle tanker being fully amortized during the second quarter of 2015;•a decrease of $17.9 million due to the redelivery of two shuttle tankers to Teekay Offshore in April 2015 and June 2016, respectively, as they completed their time-charter-out agreement;•a decrease of $9.7 million due to fewer opportunities to trade excess shuttle tanker capacity in the conventional tanker spot market;•a decrease of $5.2 million due to the in-chartering of the Grena Knutsen starting September 2016; and•a decrease of $4.2 million related to higher repair and maintenance activities on the Navion Anglia shuttle tanker to prepare the vessel to trade in Teekay Offshore'sCoA fleet in the North Sea as the vessel was redelivered to Teekay Offshore in June 2016 due to the completion of its time-charter-out agreement in Brazil;partially offset by•an increase of $69.7 million due to a write-down of shuttle tankers of $66.7 million in 2015 and $6.7 million gains on the sales of vessels in 2016, partially offset by awrite-down of a shuttle tanker of $2.1 million in 2016 and a $1.6 million gain on the sale of a shuttle tanker in 2016;•an increase of $15.9 million due to an increase in rates as provided in certain contracts in Teekay Offshore's time-chartered-out fleet and an increase in revenues inTeekay Offshore's CoA fleet due to higher average rates and higher fleet utilization;•an increase of $10.8 million due to an increase in net revenues from the commencement of the East Coast of Canada contract in June 2015, partially offset by lowerreimbursable expenses in relation to this contract and the in-chartering of three shuttle tankers for this contract, one of which was redelivered by Teekay Offshore inAugust 2015 and was replaced by Teekay's own shuttle tanker, the Navion Hispania;•an increase of $4.0 million due to the redeliveries by Teekay Offshore of the Grena Knutsen and Aberdeen shuttle tankers in June 2015 and December 2016,respectively, partially offset by increased spot in-chartering of shuttle tankers in 2016; and•an increase of $3.2 million due to lower shuttle tanker operating expenses due to lower fleet and onshore overhead mainly related to lower crew training costs in 2016,and the strengthening of the U.S. Dollar against the Norwegian Kroner, Euro and Brazilian Real, partially offset by higher crew costs relating to a change in crewcomposition.FSO Fleet•an increase of $5.6 million due a reduction in operating expenses and amortization expense due to the commencement of the FSO conversion of the Randgrid in June2015;72Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•an increase of $4.0 million due to the Navion Europa shuttle tanker acting as a substitute vessel while the Apollo Spirit FSO unit was undergoing a dry dock in the thirdquarter of 2016; and•an increase of $2.5 million due to lower depreciation expense due to dry-dock costs for the Navion Saga shuttle tanker being fully depreciated during the fourthquarter of 2015.UMS Fleet•a decrease of $55.6 million relating to the UMS fleet, primarily due to the write-downs relating to the cancellation of the two UMS newbuilding contracts, an increase inspare parts and consumables in 2016 due to these costs being covered under warranty during 2015, and lower revenues due to the unit being off-hire from mid-April2016 until early-July 2016 due to damage suffered to the gangway and the suspension of charter hire payments since early-November 2016 due to an operationalreview being conducted by the charterer; and•a decrease of $2.9 million due to higher depreciation expense related to the commencement of the charter contract of the Arendal Spirit UMS in June 2015.Towage Fleet•a decrease of $8.7 million relating to the towage fleet primarily due to a decrease in rates and utilization of the towing and offshore installation vessels due to volatility inthe offshore market, an increase in operating expenses due to the delivery of the ALP Striker in September 2016, an increase in repairs and maintenance expensesdue to engine overhauls on the ALP Winger and ALP Centre during the first quarter of 2016, and an increase in crew costs compared to 2015 due to higher crewlevels, partially offset by a more cost-efficient crew composition in 2016; and•a decrease of $3.7 million due to higher depreciation expense related to the acquisition of the six towing and offshore installation vessels during 2015.Conventional Tanker Fleet•a net decrease of $10.7 million in 2016 due to the sale of the Kilimanjaro Spirit and Fuji Spirit in March 2016, and the subsequent in-chartering of the Blue Power andBlue Pride; and•a decrease of $5.4 million for 2016 due to the sale of the Explorer Spirit and Navigator Spirit in December 2015. partially offset by•an increase of $5.8 million relating to a $4.0 million termination fee received from Teekay due to the early termination of the time-charter-out contract for the KilimanjaroSpirit in March 2016 and net termination fees of $1.8 million paid to Teekay due to the early terminations of bareboat and time-charter contracts for the SPT Explorer,Navigator Spirit, and Fuji Spirit in December 2015; and•an increase of $3.9 million due to a write-down of two conventional tankers in 2015.General and administrative expenses•an increase of $13.2 million due to lower general and administrative expenses from lower management fees relating to Teekay Offshore's shuttle tanker and FSOfleets primarily from cost saving initiatives, and a decrease in development fees to Teekay of $4.2 million in connection with Teekay Offshore's acquisition of six long-distance towing and offshore installation vessels and the Arendal Spirit UMS in 2015, partially offset by an increase in management fees due to the commencement ofthe charter contract of the Arendal Spirit in June 2015; and•an increase of $2.6 million due to lower general and administrative expenses due to (a) a decrease in business development fees paid to Teekay in 2016 compared to2015 of $9.7 million in connection with the 2015 acquisition for the Petrojarl Knarr FPSO and (b) the redelivery and lay up of the Petrojarl Varg FPSO unit in 2016,partially offset by the increase in general and administration expenses as a result of the acquisition of the Petrojarl Knarr FPSO unit in July 2015.Equity income increased to $17.9 million for 2016 compared to $7.7 million for 2015, primarily due to increases in unrealized gains on derivative instruments relating toTeekay Offshore's investment in the Libra FPSO joint venture and the Itajai FPSO joint venture, lower repairs and maintenance expenses in 2016 due to turbine repairsmade during 2015 and an insurance claim payment received during 2016 relating to these turbine repairs for the Itajai FPSO unit.73Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOther Consolidated Operating ResultsThe following table compares our other consolidated operating results for 2016 and 2015: Year Ended December 31, (in thousands of U.S. dollars, except percentages) 2016 2015 % ChangeInterest expense (282,966) (242,469) 16.7Interest income 4,821 5,988 (19.5)Realized and unrealized loss on non-designated derivative instruments (35,091) (102,200) (65.7)Foreign exchange loss (6,548) (2,195) 198.3Other (loss) income (39,013) 1,566 (2,591.3)Income tax (expense) recovery (24,468) 16,767 (245.9)Interest expense. Interest expense increased to $283.0 million in 2016, compared to $242.5 million in 2015, primarily due to:•an increase of $12.4 million due to additional interest incurred by Teekay Tankers to finance the acquisition of the 12 modern Suezmax tankers which were acquiredin the third quarter of 2015;•an increase of $12.1 million relating to interest incurred on the obligations related to capital leases for the Creole Spirit and Oak Spirit commencing upon their deliveriesin February 2016 and July 2016, respectively;•an increase of $10.8 million primarily due to the additional issuance of $200 million of Teekay Parent's 8.5% senior unsecured notes in November 2015, partially offsetby reductions in Teekay Parent's equity margin revolving credit facility and loan facility secured by three FPSO units, and the maturity of Teekay Parent's NorwegianKroner (or NOK) bonds in October 2015;•an increase of $9.2 million due to the interest expense associated with the Petrojarl Knarr FPSO unit commencing operations in March 2015;•an increase of $3.4 million due to interest expense relating to Teekay Offshore's second UMS newbuilding up until its construction contract cancellation in late-June2016; and•an increase of $2.1 million due to an increase in LIBOR on floating-rate debt, net of debt repayments during 2016 and 2015;partially offset by•a decrease of $5.2 million due to an increase in capitalized interest on Teekay Offshore's newbuildings, conversion and upgrade projects; and•a decrease of $3.0 million due to the maturity of Teekay Offshore's NOK 500 million senior unsecured bond in January 2016.Realized and unrealized (losses) gains on non-designated derivative instruments. Realized and unrealized (losses) gains related to derivative instruments that are notdesignated as hedges for accounting purposes are included as a separate line item in the consolidated statements of income. Net realized and unrealized losses on non-designated derivatives were $35.1 million for 2016, compared to $102.2 million for 2015, as detailed in the table below: Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Realized (losses) gains relating to: Interest rate swap agreements(87,320) (108,036)Interest rate swap agreement terminations(8,140) (10,876)Foreign currency forward contracts(11,186) (21,607)Time charter swap agreement2,154 — (104,492) (140,519)Unrealized gains (losses) relating to: Interest rate swap agreements62,446 37,723Foreign currency forward contracts15,833 (418)Stock purchase warrants(9,753) 1,014Time charter swap agreement875 — 69,401 38,319Total realized and unrealized (losses) gains on derivative instruments(35,091) (102,200)74Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe realized losses relate to amounts we actually realized for settlements related to these derivative instruments in normal course, and amounts paid to terminate interestrate swap agreement terminations. The unrealized (losses) gains on interest rate swaps for 2016 and 2015 were primarily due to changes in the forward interest rates.During 2016 and 2015, we had interest rate swap agreements with aggregate average net outstanding notional amounts of approximately $3.3 billion and $3.5 billion,respectively, with average fixed rates of approximately 3.4%. Short-term variable benchmark interest rates during these periods were generally less than 2.0% and, assuch, we incurred realized losses of $87.3 million and $108.0 million during 2016 and 2015, respectively, under the interest rate swap agreements. We also incurredrealized losses of $8.1 million during 2016, compared to losses of $10.9 million during 2015, from the termination of interest rate swaps.We recognized realized losses of $11.2 million in 2016, compared to $21.6 million in 2015 under the foreign currency forward contracts.Effective June 1, 2016, Teekay Tankers entered into a time-charter swap for 55% of two Aframax equivalent vessels. Under such agreement, Teekay Tankers will receive$27,776 per day, less a 1.25% brokerage commission, and pay 55% of the net revenue distribution of two Aframax equivalent vessels employed in its Aframax revenuesharing pooling arrangement, less $500 per day, for a period of 11 months plus an additional two months at the counterparty's option. As at December 31, 2016, the time-charter swap had a fair value of $0.9 million which resulted in an unrealized gain of $0.9 million. Teekay Tankers also recognized realized gains of $2.2 million on the time-charter swap in the year ended December 31, 2016.Primarily as a result of significant changes in long-term benchmark interest rates during 2016 and 2015, we recognized unrealized gains of $62.4 million for 2016 comparedto $37.7 million for 2015 under the interest rate swap agreements. We recognized unrealized gains of $15.8 million for 2016 compared to unrealized losses of $0.4 millionfor 2015 under the foreign currency forward contracts.In 2014, we and Teekay Tankers formed TIL. We and Teekay Tankers invested a total of $50.0 million for an aggregate of 5.0 million shares of TIL's common stock,representing an initial aggregate 20% interest in TIL, as part of a $250.0 million private placement by TIL. In addition, we and Teekay Tankers received stock purchasewarrants entitling us and Teekay Tankers to purchase up to 1.5 million shares of common stock of TIL at a fixed price of $10 per share. During 2016, due mainly to adecrease in TIL's share price, we recognized a $9.8 million unrealized loss on the stock purchase warrants compared to an unrealized gain of $1.0 million for 2015, whichare included in our total unrealized derivative (losses) gains. Please read “Item 18. Financial Statements: Note 15—Derivative Instruments and Hedging Activities.”Foreign Exchange Loss. Foreign currency exchange losses were $6.5 million in 2016 compared to $2.2 million in 2015. Our foreign currency exchange losses,substantially all of which are unrealized, were due primarily to the relevant period-end revaluation of our NOK-denominated debt and our Euro-denominated term loans,capital leases and restricted cash for financial reporting purposes and the realized and unrealized gains (losses) on our cross currency swaps. Gains on NOK-denominated and Euro-denominated monetary liabilities reflect a stronger U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to therate in effect at the beginning of the period. Losses on NOK-denominated and Euro-denominated monetary liabilities reflect a weaker U.S. Dollar against the NOK and Euroon the date of revaluation or settlement compared to the rate in effect at the beginning of the period. For 2016, foreign currency exchange loss includes realized losses of$38.6 million (2015—$19.0 million) and unrealized gains of $75.0 million (2015 — losses of $89.2 million) on our cross currency swaps, and unrealized losses of $6.8 million(2015—$123.2 million) on the revaluation of our NOK-denominated debt.Other (Loss) Income. Other (loss) income was a loss of $(39.0) million in 2016 compared to income of $1.6 million in 2015. This decrease in results was primarily due tocontingent liabilities accrued related to Teekay Offshore's cancellation of the UMS construction contracts for its two remaining UMS newbuildings in 2016 ($25.2 million), aswell as a write-down of a cost-accounted investment of $19.0 million in 2016.Income Tax Recovery (Expense). Income tax (expense) recovery was an expense of $24.5 million in 2016 compared to a recovery of $16.8 million in 2015.The income tax expense for 2016 was mainly due to an increase in Teekay Offshore's deferred tax valuation allowance and deferred tax expense due to a decrease in theexpected utilization of Norwegian tax losses against anticipated earnings, an income tax accrual for the Voyageur Spirit FPSO unit during 2016 due to expected taxableincome and the utilization of prior year losses carried forward and an estimated tax liability relating to our Singapore and towage entities, as well as freight taxes in TeekayTankers and Teekay Parent.The income tax recovery for 2015 was primarily due to the acquisition of the Petrojarl Knarr FPSO unit by Teekay Offshore and the commencement of the East Coast ofCanada contract during 2015, and the expected commencement of the Gina Krog FSO unit contract in early-2017. Teekay Offshore expected to utilize more of itsNorwegian tax losses from the earnings anticipated from their contracts, as well as an expected increase in earnings from its existing fleet, which resulted in a decrease inTeekay Offshore’s deferred tax asset valuation allowance.75Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsLIQUIDITY AND CAPITAL RESOURCESLiquidity and Cash NeedsTeekay Corporation ConsolidatedOverall, our consolidated operations are capital intensive. We finance the purchase of our vessels primarily through a combination of borrowings from commercial banks orour joint venture partners, the issuance of equity and debt securities (primarily by our publicly-traded subsidiaries) and cash generated from operations. In addition, wemay use sale and leaseback arrangements as a source of long-term liquidity. We use certain of our revolving credit facilities to temporarily finance capital expendituresuntil longer-term financing is obtained, at which time we typically use all or a portion of the proceeds from the longer-term financings to prepay outstanding amounts underrevolving credit facilities. We have pre-arranged financing of approximately $1.7 billion, which mostly relates to Teekay LNG's remaining capital expenditure commitments.We are in the process of seeking to obtain additional debt financing from various sources for Teekay LNG's remaining capital commitments relating to its portion ofnewbuildings on order as at December 31, 2017. As at December 31, 2017, Teekay Corporation’s total consolidated cash and cash equivalents was $445.5 million,compared to $568.0 million at December 31, 2016. Teekay Corporation’s total consolidated liquidity, including cash, cash equivalents and undrawn credit facilities, was$906.9 million as at December 31, 2017, compared to $1.0 billion as at December 31, 2016. Teekay Corporation's total consolidated liquidity as at December 31, 2017excludes Teekay Offshore as a result of its deconsolidation on September 25, 2017.The completion of the Brookfield Transaction on September 25, 2017 improved Teekay Parent’s current liquidity and our estimate of Teekay Parent’s future liquidity. Aspart of the transaction, Teekay Parent received approximately $140 million in cash on a net basis, which included the $140 million of cash proceeds from the sale of the$200 million Teekay Offshore promissory note to Brookfield, the $25.7 million, including accrued and unpaid distributions, received from Teekay Offshore from itsrepurchase of the Series D preferred units and the $4 million received from the sale of 49% of the general partner of Teekay Offshore, partially offset by an investment of$30 million in additional common units and warrants of Teekay Offshore. We used $110 million of these proceeds to pay down our equity margin revolving credit facility andthe balance for general corporate purposes.We expect these transactions will have a positive impact on the amount of cash available to Teekay Parent on a quarterly basis going forward due to a reduction inborrowing costs on the equity margin revolving credit facility and as the interest on the $200 million Teekay Offshore promissory note and the distributions on the Series Dpreferred units were previously being paid in common units of Teekay Offshore, rather than cash. In addition, while Teekay Offshore concurrently reduced its quarterlycommon unit distribution from $0.11 to $0.01 upon completion of the Brookfield Transaction, such reduction did not have a material impact to Teekay Parent’s quarterlycash flow as the common unit distributions to Teekay were previously being paid in common units of Teekay Offshore rather than cash. Furthermore, as part of theBrookfield Transaction, certain financial institutions providing loans and interest rate swaps to Teekay Offshore, eliminated the financial guarantee and security packagepreviously provided by Teekay Parent, thus eliminating a potential risk to Teekay Parent’s liquidity position.Since early 2016, Teekay Parent and the Daughter Entities have been executing on a series of financing initiatives intended to contribute to the funding of our upcomingcapital expenditures and debt maturities, which are explained in the Teekay Parent and Daughter Entity sections that follow.Our revolving credit facilities and term loans are described in "Item 18 – Financial Statements: Note 8 — Long-Term Debt.” They contain covenants and other restrictionstypical of debt financing secured by vessels that restrict the ship-owning subsidiaries from, among other things: incurring or guaranteeing indebtedness; changingownership or structure, including mergers, consolidations, liquidations and dissolutions; making dividends or distributions if we are in default; making capital expenditures inexcess of specified levels; making certain negative pledges and granting certain liens; selling, transferring, assigning or conveying assets; making certain loans andinvestments; or entering into a new line of business. Among other matters, our long-term debt agreements generally provide for maintenance of minimum consolidatedfinancial covenants and five loan agreements require the maintenance of vessel market value to loan ratios. As at December 31, 2017, these vessel market value to loanratios ranged from 118.5% to 243.2% compared to their minimum required ratios of 105% to 135%. The vessel values used in these ratios are the appraised valuesprepared by us based on second hand sale and purchase market data. Certain loan agreements require that a minimum level of free cash be maintained and this amountwas $100.0 million as at December 31, 2017 and $50 million as at December 31, 2016 for the Company, excluding Teekay LNG. Most of the loan agreements also requirethat we maintain an aggregate minimum level of free liquidity and undrawn revolving credit lines with at least six months to maturity of 5.0% to 7.5% of total debt for eitherTeekay Parent or Teekay Tankers, which as at December 31, 2017 such amounts were $46.0 million and $55.1 million, respectively. In addition, certain loan agreementsrequire Teekay LNG to maintain a minimum level of tangible net worth and liquidity, and not exceed a maximum level of financial leverage. As at December 31, 2017, wewere in compliance with all covenants under our credit facilities and other long-term debt.The aggregate annual long-term debt principal repayments, excluding capital lease payments, required to be made by us (excluding Teekay Offshore) subsequent toDecember 31, 2017, including the impact of the revolving credit facility refinancing completed by Teekay LNG in February 2018, are $0.8 billion (2018), $0.2 billion (2019),$1.1 billion (2020), $0.7 billion (2021), $0.3 billion (2022) and $0.3 billion (thereafter).We conduct our funding and treasury activities based on corporate policies designed to minimize borrowing costs and maximize investment returns while maintaining thesafety of the funds and appropriate levels of liquidity for our purposes. We hold cash and cash equivalents primarily in U.S. Dollars, with some balances held in AustralianDollars, British Pounds, Canadian Dollars, Euros, Japanese Yen, Norwegian Kroner and Singapore Dollars.76Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe are exposed to market risk from foreign currency fluctuations and changes in interest rates, spot tanker market rates for vessels and bunker fuel prices. We useforward foreign currency contracts, cross currency and interest rate swaps, forward freight agreements and bunker fuel swap contracts to manage currency, interestrate, spot tanker rates and bunker fuel price risks. Please read "Item 11 - Quantitative and Qualitative Disclosures About Market Risk".Teekay ParentTeekay Parent primarily owns an equity ownership interest in its Daughter Entities and three FPSO units, provides management services to its Daughter Entities and third-parties, and in-charters a small number of vessels. Teekay Parent’s primary short-term liquidity needs are the payment of operating expenses, debt servicing costs,dividends on its shares of common stock and scheduled repayments of long-term debt, as well as funding its other working capital requirements. Teekay Parent’s primarysources of liquidity are cash and cash equivalents, cash flows provided by operations, dividends/distributions and management fees received from the Daughter Entitiesand other investments, its undrawn credit facilities and proceeds from the sale of vessels to external parties (and in the past, Teekay LNG, Teekay Tankers and TeekayOffshore). As at December 31, 2017, Teekay Parent’s total cash and cash equivalents was $129.8 million, compared to $146.4 million at December 31, 2016. TeekayParent’s total liquidity, including cash, cash equivalents and undrawn credit facilities, was $313.2 million as at December 31, 2017, compared to $279.5 million as atDecember 31, 2016.In December 2017 and January 2018, Teekay Parent sold an aggregate of 4.0 million shares of common stock as part of a continuous offering program, generating grossproceeds of $36.9 million, of which $25.7 million was received as of December 31, 2017. Teekay Parent currently has the ability to sell additional shares of common stockhaving an aggregate offering amount of up to $3.4 million under its existing continuous offering program.In January 2018, Teekay Parent completed a private offering of $125 million of aggregate principal amount of 5% Convertible Senior Notes due 2023 (Convertible Notes),raising net proceeds of approximately $120.9 million. The Convertible Notes will be convertible into Teekay’s common stock, initially at a rate of 85.4701 shares of commonstock per $1,000 principal amount of Convertible Notes. This represents an initial effective conversion price of $11.70 per share of common stock. The conversion rate issubject to customary adjustments for, among other things, payments of dividends by Teekay Parent beyond the current quarterly rate of $0.055 per share of commonstock, other distributions of Teekay Parent’s common stock, other securities, assets or rights to Teekay Parent’s shareholders or a Teekay Parent tender or exchangeoffer. In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or following any notice of optional redemption given byTeekay Parent, Teekay Parent will, under certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such acorporate event or for Convertible Notes that are surrendered for conversion following such notice of redemption.Concurrently with the offering of Convertible Notes in January 2018, Teekay Parent completed a public offering through the issuance of 10.0 million common shares pricedat $9.75 per share, raising net proceeds of approximately $93.0 million.Teekay’s equity margin revolving credit facility is secured by common units of Teekay Offshore and Teekay LNG and shares of Class A common stock of TeekayTankers that are owned by Teekay. In June 2016, Teekay amended the facility by reducing its aggregate potential borrowings from $300 million to $150 million, extendingits maturity date from January 2018 to December 2018 and amending the formula which further limits the amount available to borrow based on the value of the commonunits of Teekay Offshore and Teekay LNG and the shares of Class A common stock of Teekay Tankers which are pledged as collateral. The amendment resulted in anincrease in the loan-to-value ratio which increased the availability under the facility from approximately $34 million to $150 million. In April 2017, Teekay further amended thefacility by increasing the aggregate potential borrowings from $150 million to $200 million. As of December 31, 2017, Teekay Parent did not have any amounts drawn onthis facility, and $183.4 million available to be drawn based on the value of the collateral.We believe that Teekay Parent’s existing cash and cash equivalents and undrawn long-term borrowings, in addition to all other sources of cash including cash fromoperations, and after considering initiatives described below that are planned by the Controlled Daughter Entities, will be sufficient to meet its existing liquidity needs for atleast the next 12 months. In the future, we believe we will need to pursue additional debt financings and asset sales in order to refinance our bond maturity in January 2020.We are considering, subject to market conditions, among other factors, appropriate debt instruments and asset sales to refinance this bond maturity.Teekay LNGTeekay LNG's business model is primarily to employ its vessels on fixed-rate contracts, mainly with large energy companies and their transportation subsidiaries. TeekayLNG's primary liquidity needs for 2018 through 2019 include payment of its quarterly distributions, including payments of distributions on its common units and Series A andSeries B Preferred Units, operating expenses, dry-docking expenditures, debt service costs, scheduled repayments of long-term debt, bank debt maturities, committedcapital expenditures and the funding of general working capital requirements. Teekay LNG anticipates that its primary sources of funds for its short-term liquidity needs willbe cash flows from operations, proceeds from debt and capital lease financings, proceeds from equity offerings, and dividends that it expects to receive from its equity-accounted joint ventures. For 2018 through 2019, Teekay LNG expects that its existing liquidity, combined with the cash flow Teekay LNG expects to generate from itsoperations and receive as dividends from its equity-accounted joint ventures, will be sufficient to finance a portion of its liquidity needs, including the equity portion of itscommitted capital expenditures.77Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay LNG's remaining liquidity needs include the requirement to secure financing for an adequate portion of its committed capital expenditures, to refinance its loanfacilities maturing in 2018 and 2019, to repay or refinance its NOK-denominated bonds due in 2018 and, possibly, to fund the potential tax exposure relating to the leasearrangements that the Teekay Nakilat Joint Venture had previously entered into (please read "Item 18 - Financial Statements: Note 16d — Commitments andContingencies"). Teekay LNG already has committed debt financing in place for the following vessels and projects: all three of Teekay LNG's wholly-owned LNG carriersunder construction (of which one was delivered to Teekay LNG in February 2018) that will be chartered to a wholly-owned subsidiary of Shell; its wholly-owned LNGcarrier under conversion to a FSU for the Bahrain LNG Joint Venture; its wholly-owned LNG carrier newbuilding to be chartered on a 13-year charter contract with BP; thethree vessels under construction in the Pan Union Joint Venture, of which one was delivered in January 2018; two of the three LPG carrier newbuildings in the Exmar LPGJoint Venture of which one was delivered in March 2018; the six LNG carriers under construction for the Yamal LNG Joint Venture, of which one was delivered in January2018; and the assets of the Bahrain LNG Joint Venture formed for the development of an LNG receiving and regasification terminal in Bahrain. Teekay LNG is in theprocess of securing debt financing for one wholly-owned LNG carrier under construction which delivers in 2019, one LPG carrier newbuilding in the Exmar LPG JointVenture which delivers in 2018, and for the other requirements described above.Teekay LNG's annual liquidity needs beyond 2018 are currently expected to decline compared to 2018, as a majority of its capital expenditure commitments relate to 2018.Teekay LNG's ability to continue to expand the size of its fleet over the long-term is dependent upon its ability to generate operating cash flow, obtain long-term bankborrowings and other debt, as well as its ability to raise debt or equity financing through public or private offerings.As at December 31, 2017, Teekay LNG's consolidated cash and cash equivalents were $244.2 million, compared to $126.1 million at December 31, 2016. Teekay LNG'stotal liquidity, which consists of cash, cash equivalents and undrawn credit facilities, was $433.6 million as at December 31, 2017, compared to $369.8 million as atDecember 31, 2016. The increase in total consolidated liquidity was primarily due to proceeds from Teekay LNG's NOK bond issuance in January 2017, proceeds fromTeekay LNG's sale-leaseback transactions completed during 2017, the issuance of Teekay LNG's Series B Preferred Units in October 2017, and dividends and return ofcapital received from Teekay LNG's equity-accounted joint ventures. These cash proceeds were partially offset by the repayment of NOK bonds in May 2017; funding ofTeekay LNG's committed projects, including advances and capital contributions in the Bahrain LNG Joint Venture, Yamal LNG Joint Venture and the Pan Union JointVenture; and an equity contribution into the Teekay LNG-Marubeni Joint Venture upon completion of its debt refinancing in 2017.As at December 31, 2017, Teekay LNG had a working capital deficit of $484.6 million, which is primarily the result of: an aggregate amount of $236.9 million of TeekayLNG's credit facilities being classified as current portion of long-term debt due to their maturity dates in mid-2018; $109.7 million of Teekay LNG's NOK bonds beingclassified as current due to their maturity dates in September 2018; and $49.9 million of current obligations related to capital leases relating to two Suezmax tankers, underwhich the owner has the option to require Teekay LNG to purchase the vessels. In February 2018, the owner sold the first vessel to a third party and concurrentlyterminated the charter contract with Teekay LNG. Similarly, Teekay LNG believes that the owner will not exercise its options to require Teekay LNG to purchase thesecond vessel, but rather Teekay LNG expects that the owner will cancel the charter contract relating to the second vessel when the cancellation right is first exercisablein August 2018 and sell the second vessel to a third party, upon which the remaining lease obligations would be extinguished without any expected cash flow impactdirectly relating to such extinguishment. Teekay LNG expects to manage its working capital deficit primarily with net operating cash flow and dividends from its equity-accounted joint ventures, potential bond or equity issuances such as its recent issuance of its preferred units in 2017, debt refinancings, sale-leaseback financings, and, toa lesser extent, existing undrawn revolving credit facilities. Teekay LNG does not have control over the operations, nor does it have any legal claim to the revenue andexpenses of its equity-accounted investments; consequently, the cash flow generated by Teekay LNG’s equity-accounted investments may not be available for use byTeekay LNG in the period generated.Teekay LNG believes that its existing cash and cash equivalents and undrawn long-term borrowings, in addition to other sources of cash including cash from operationsand the initiatives described above, will be sufficient to meet its existing liquidity needs for at least the next 12 months.Teekay TankersTeekay Tankers' primary sources of liquidity are cash and cash equivalents, cash flows provided by its operations, its undrawn credit facilities, proceeds from sales ofvessels, and capital raised through financing transactions. As at December 31, 2017, Teekay Tankers' total cash and cash equivalents were $71.4 million, compared to$94.2 million at December 31, 2016. Teekay Tankers' cash balance at December 31, 2017 decreased primarily as a result of repayments of its long-term debt anddividends paid on its shares of common stock, which were partially offset by cash flow from its operations, proceeds received from the sales of the two Suezmax tankersand three Aframax tankers, net proceeds received from the sale and leaseback of four Suezmax tankers, cash acquired in the TIL merger and proceeds Teekay Tankersreceived from the sale of its common stock through the continuous offering program and a private placement to Teekay.Teekay Tankers' total liquidity, including cash and undrawn credit facilities, was $160.0 million as at December 31, 2017, compared to $102.4 million as at December 31,2016. Teekay Tankers' 2017 liquidity increased, in part, as a result of the TIL merger. Teekay Tankers anticipates that its primary sources of funds for its short-termliquidity needs will be cash flows from operations, existing cash and cash equivalents and undrawn long-term borrowings, refinancing existing loans, and proceeds of newfinancings or equity issuances, which Teekay Tankers believes will be sufficient to meet its existing liquidity needs for at least the next 12 months; however, such financingmay not be available on acceptable terms, if at all.78Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTeekay Tankers' short-term liquidity requirements are for the payment of operating expenses, dry-docking expenditures, debt servicing costs, dividends on its shares ofcommon stock, scheduled repayments and prepayments of long-term debt and obligations related to capital leases, as well as funding its other working capitalrequirements. Teekay Tankers' short-term charters and spot market tanker operations contribute to the volatility of its net operating cash flow, and thus impact TeekayTankers' ability to generate sufficient cash flows to meet its short-term liquidity needs. Historically, the tanker industry has been cyclical, experiencing volatility inprofitability and asset values resulting from changes in the supply of, and demand for, vessel capacity. In addition, tanker spot markets historically have exhibited seasonalvariations in-charter rates. Tanker spot markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere andunpredictable weather patterns that tend to disrupt vessel scheduling.Commencing with the dividend paid in the first quarter of 2016, Teekay Tankers adopted a dividend policy under which quarterly dividends are expected to range from 30%to 50% of its quarterly adjusted net income, subject to the discretion of Teekay Tankers' Board of Directors, with a minimum quarterly dividend of $0.03 per share under itscurrent dividend policy, which is subject to change. Adjusted net income is a non-GAAP measure which excludes specific items affecting net income that are typicallyexcluded by securities analysts in their published estimates of Teekay Tankers' financial results. Specific items affecting net income include foreign exchange gain orlosses, unrealized gains or losses on derivative instruments, gain or losses on sales of vessels and debt issuance costs which were written off in connection with therefinancing of Teekay Tankers' debt facilities.Teekay Tankers' long-term capital needs are primarily for capital expenditures and debt repayment. Generally, Teekay Tankers expects that its long-term sources offunds will primarily be cash balances, cash flow from operations, long-term bank borrowings and other debt or equity financings, which may include equity issuances.Teekay Tankers expects that it will rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions andexpansion capital expenditures, including opportunities Teekay Tankers may pursue to purchase additional vessels.In December 2017, Teekay Tankers entered into a new $270 million revolving credit facility which is scheduled to mature in December 2022, of which $215.8 million wasused to refinance two of its revolvers which Teekay Tankers assumed in the merger with TIL. As at December 31, 2017, the $270 million revolving credit facility had anoutstanding balance of $220.0 million and $50.0 million available to be drawn.In November 2017, Teekay Tankers completed a merger with TIL by acquiring all of the remaining 27.0 million issued and outstanding common shares of TIL, by way of ashare-for-share exchange of 3.3 shares of its Class A common stock for each share of TIL common stock and as a result TIL became a wholly-owned subsidiary. Asconsideration for the merger, Teekay Tankers issued 88,977,544 Class A common shares to the TIL shareholders, including 8,250,000 shares to Teekay. The transactionincreased Teekay Tankers' liquidity by $93.8 million based on TIL's cash balances and amounts available to be drawn on the TIL revolving credit facilities at the time of themerger.In July 2017, Teekay Tankers completed a $153 million sale-leaseback financing transaction relating to four of its Suezmax tankers. The transaction was structured as a12-year bareboat charter at an average rate of approximately $11,100 per day, with purchase options for all four vessels throughout the lease term beginning in July 2020.Teekay Tankers used the proceeds from this transaction to repay a portion of one of its corporate revolving credit facilities.In June, September and November 2017, Teekay Tankers completed the sales of three Aframax tankers for an aggregate sales price of $20.2 million. Teekay Tankersused the proceeds from these sales to repay a portion of one of its corporate revolving credit facilities. In January and March 2017, Teekay Tankers completed the salesof two Suezmax tankers for an aggregate sales price of $32.6 million. Teekay Tankers used the proceeds from these sales to repay a portion of one of its corporaterevolving credit facilities.Teekay Tankers believes that its existing cash and cash equivalents and undrawn long-term borrowings, in addition to other expected sources of cash including cash fromoperations and the initiatives described above, will be sufficient to meet its existing liquidity needs for at least the next 12 months.Teekay OffshoreAs of September 25, 2017, as a result of the Brookfield Transaction, Teekay deconsolidated Teekay Offshore. Teekay retains ownership of approximately 14% of TeekayOffshore's outstanding common units and a 51% interest in Teekay Offshore's general partner, but no longer has in place any financial guarantees with respect to TeekayOffshore's long-term debt and interest rate swap and cross currency swap agreements. As at December 31, 2017, Teekay has recorded $65.6 million in net advances toTeekay Offshore, of which $50.0 million was repaid in January 2018.On March 31, 2018, Teekay Offshore entered into a loan agreement for a $125.0 million senior unsecured revolving credit facility, of which up to $25.0 million is providedby Teekay Parent and up to $100.0 million is provided by Brookfield. The facility is scheduled to mature in October 2019.79Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCash FlowsThe following table summarizes our consolidated cash and cash equivalents provided by (used for) operating, financing and investing activities for the periods presented: Year Ended December 31, 2017 2016 2015Net operating cash flows 513,745 620,783 775,832Net financing cash flows 417,884 (200,662) 918,934Net investing cash flows (1,054,171) (530,519) (1,823,278)Operating Cash FlowsOur consolidated net cash flow from operating activities fluctuates primarily as a result of changes in vessel utilization and TCE rates, changes in interest rates,fluctuations in working capital balances, the timing and amount of dry-docking expenditures, repairs and maintenance activities, vessel additions and dispositions, andforeign currency rates. Our exposure to the spot tanker market has contributed significantly to fluctuations in operating cash flows historically as a result of highly cyclicalspot tanker rates. In addition, the production performance of certain of our FPSO units that operate under contracts with a production-based compensation component hascontributed to fluctuations in operating cash flows. As the charter contracts of some of our FPSO units include incentives based on average annual oil prices, the reductionin global oil prices during recent years has negatively impacted our operating cash flows.Net consolidated cash flow from operating activities decreased to $513.7 million for the year ended December 31, 2017, from $620.8 million for the year endedDecember 31, 2016. This decrease was primarily due to a $288.1 million increase in net loss mainly from operations (before depreciation, amortization, asset impairments,loss on sale of vessels, equipment and other operating assets, and the amortization of in-process revenue contracts) of our businesses. This decrease was also due toan increase of $4.9 million in dry-dock expenditures for the year ended December 31, 2017, compared to 2016. These decreases were partially offset by an increase fromchanges to non-cash working capital items of $68.2 million primarily due to the deconsolidation of Teekay Offshore in September 2017, a decrease in interest expense,including realized losses on interest rate swaps and cross currency swaps, of $94.5 million, a decrease in realized losses in foreign currency forward contracts and timecharter swap agreements of $11.1 million and an increase in dividends from joint ventures of $12.2 million.Net consolidated cash flow from operating activities decreased to $620.8 million for the year ended December 31, 2016, from $775.8 million for the yearended December 31, 2015. This decrease was primarily due to a $134.5 million decrease in income from vessel operations before depreciation, amortization, assetimpairments and loan loss recoveries, net gain on sale of vessels, equipment and other assets and the amortization of in-process revenue contracts of our businesses,primarily as a result of lower average spot TCE rates earned by our conventional tanker fleet in 2016 compared to 2015 and the termination of time charters and resultinglay-up of the Polar Spirit and Arctic Spirit LNG carriers. We received dividends from our joint ventures of $38.1 million for the year ended December 31, 2016, compared to$106.1 million in 2015. The decreases in cash flow were partially offset by an increase in changes to non-cash working capital items of $50.6 million, and an increase incash flow of $22.4 million from lower expenditures for dry docking. There was also an increase in interest expense of $18.2 million in 2016 compared to 2015.For further discussion of changes in income from vessel operations before depreciation, amortization, asset impairments, net loss (gain) on sale of vessels and equipmentand the amortization of in-process revenue contracts of our businesses, please read “Results of Operations.”Financing Cash FlowsThe Controlled Daughter Entities hold most of our liquefied gas carriers (Teekay LNG) and our conventional tanker assets (Teekay Tankers). From and including therespective initial public offerings of these subsidiaries, Teekay has been selling assets that are a part of these businesses to the Daughter Entities. Historically, theDaughter Entities have distributed operating cash flows to their owners in the form of distributions or dividends. The Daughter Entities raised net proceeds from issuancesof new equity to the public and to third-party investors of $172.9 million for the year ended December 31, 2017, compared to $327.4 million in 2016 and $575.4 million in2015. Teekay Parent raised net proceeds from issuances of new equity to the public and to third party investors and two entities established by our founder (includingResolute, our largest shareholder) of $25.6 million in 2017, compared to $105.5 million in 2016 and $nil in 2015. There was a decrease in restricted cash of $104.1 million in2017, primarily due to the deconsolidation of Teekay Offshore in September 2017, compared to an increase of $49.1 million and $21.0 million in 2016 and 2015,respectively.We use our credit facilities to partially finance capital expenditures. Occasionally, we will use revolving credit facilities to finance these expenditures until longer-termfinancing is obtained, at which time we typically use all or a portion of the proceeds from the longer-term financings to prepay outstanding amounts under the revolvingcredit facilities. We actively manage the maturity profile of our outstanding financing arrangements. Our net proceeds from the issuance of long-term debt, which is theproceeds from the issuances of long-term debt, net of issuance costs and prepayments of long-term debt, was $175.1 million in 2017, $202.4 million in 2016 and $1.9 billionin 2015. Scheduled repayments decreased by $279.6 million in 2017 compared to 2016. We received proceeds of $809.9 million and $355.3 million in 2017 and 2016,respectively, from financing related to the sales and leaseback of certain vessels.80Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsInvesting Cash FlowsDuring 2017, we incurred capital expenditures for vessels and equipment of $1.1 billion, primarily for capitalized vessel modifications and shipyard construction installmentpayments relating to the Gina Krog FSO conversion, the Petrojarl I FPSO unit, the newbuilding towing and offshore installation vessels, and the LNG carrier newbuildings.We received proceeds of $73.7 million as a result of Teekay LNG's sale of the Asian Spirit and Teekay Tankers' sales of two Suezmax tankers, two Aframax tankers andone lightering support vessel during 2017. Teekay LNG contributed $183.9 million to its equity-accounted joint ventures and loans to joint ventures for the year endedDecember 31, 2017, primarily to fund newbuilding installments in the Yamal LNG Joint Venture and project expenditures for the Bahrain LNG project. Teekay LNG received$40.3 million and $52.0 million as returns of capital from its joint venture with QGTC Nakilat (1643-6) Holdings Corporation (or the RasGas 3 Joint Venture) and the YamalLNG Joint Venture, respectively, upon completion of their debt refinancings. Teekay LNG has a 40% ownership interest in the Ras Gas 3 Joint Venture and 50%ownership in the Yamal Joint Venture. Teekay incurred a net $18.0 million cash outflow as a result of the Brookfield Transaction (please read "Item 18 - FinancialStatements: Note 3 - Deconsolidation of Teekay Offshore"). Teekay Tankers acquired $30.8 million of cash through its merger with TIL, net of costs.During 2016, we incurred capital expenditures for vessels and equipment of $648.3 million, primarily for capitalized vessel modifications and shipyard constructioninstallment payments. Teekay Offshore incurred capitalized expenditures of $294.6 million for vessels and equipment, including conversion costs on the Gina Krog FSOconversion, upgrade costs on the Petrojarl I FPSO unit, installment payments on the newbuilding towing and offshore installation vessels, partially offset by credits receivedrelating to the Petrojarl Knarr FPSO unit, Teekay LNG incurred capital expenditures of $345.8 million, primarily for newbuilding installment payments and shipbuildingsupervision costs for its LNG carrier newbuildings, contributed $120.9 million to its equity accounted joint ventures, and received a $5.5 million repayment of a shareholderloan from the Exmar LPG Joint Venture. In addition, Teekay Offshore made a $54.9 million investment in its joint ventures and received proceeds of $69.8 million from thesale of the Navion Torinita and Navion Europa shuttle tankers and the Fuji Spirit and Kilimanjaro Spirit conventional tankers. Teekay LNG received proceeds of $94.3million from the sales of the Bermuda Spirit and Hamilton Spirit in April 2016 and May 2016.During 2015, we incurred capital expenditures for vessels and equipment of $1.8 billion, primarily for capitalized vessel modifications and shipyard construction installmentpayments. Teekay Parent incurred $91.0 million of capital expenditures mainly for the installment payments and conversion costs of the Petrojarl Knarr FPSO unit. TeekayOffshore incurred capitalized expenditures of $664.7 million, including the six towing and offshore installation vessels delivered during 2015, the final installment on theArendal Spirit UMS, FSO conversion costs, upgrade costs on the Petrojarl I FPSO unit, costs on the three newbuilding shuttle tankers, the four newbuilding towing andoffshore installation vessels and various other vessel additions and installments. Teekay LNG incurred capital expenditures of $192.0 million primarily relating tonewbuilding installments for six of its 11 LNG carrier newbuildings. Teekay Tankers incurred capital expenditures of $848.2 million relating to the acquisition of 12 Suezmaxtankers from Principal Maritime Tankers, the acquisition of four LR2 product tankers and one Aframax tanker and other capital expenditures. In addition, we invested $40.6million in our equity-accounted investees, primarily related to Teekay Offshore’s Libra FPSO joint venture and provided capital to Teekay LNG’s equity accountedinvestment primarily to prepay debt within the Teekay LNG-Marubeni Joint Venture and we were repaid $53.2 million from our loans to equity-accounted investees. During2015, Teekay Offshore received proceeds of $8.9 million from the sale of a 1997-built shuttle tanker and Teekay Tankers received proceeds of $11.1 million from the saleof one MR tanker. In addition, Teekay Tankers invested $47.3 million related to the acquisition of TMS during 2015.81Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCOMMITMENTS AND CONTINGENCIESThe following table summarizes our long-term contractual obligations as at December 31, 2017 (excluding Teekay Offshore): Total 2018 2019 2020 2021 2022 Beyond2022 In millions of U.S. DollarsTeekay LNG Bond repayments (1) (2) 377.9 109.7 — 121.9 146.3 — —Scheduled repayments of long-term debt (1) (3) 508.6 114.0 83.9 78.8 45.1 64.8 122.0Repayments on maturity of long-term debt (1) (3) 923.9 331.7 — 158.8 155.3 80.0 198.1Scheduled repayments of obligations related to capital leases (4) 1,442.8 162.7 119.6 118.9 117.9 117.1 806.6Commitments under operating leases (5) 268.7 23.8 23.9 23.9 23.9 23.9 149.3Newbuildings installments/shipbuilding supervision (6) 1,891.0 1,125.0 566.8 199.2 — — — 5,412.9 1,866.9 794.2 701.5 488.5 285.8 1,276.0Teekay Tankers Scheduled repayments of long-term debt (7) 435.7 103.4 105.7 131.9 72.1 22.6 —Repayments on maturity of long-term debt (7) 527.5 63.8 — — 330.8 132.9 —Scheduled repayments of obligations related to capital leases (8) 148.9 7.2 7.7 8.2 8.7 9.3 107.8Chartered-in vessels (operating leases) 29.7 11.7 8.3 8.3 1.4 — — 1,141.8 186.1 121.7 148.4 413.0 164.8 107.8Teekay Parent Bond repayments (9) 592.7 — — 592.7 — —Scheduled repayments of long-term debt (9) 53.3 53.3 — — — — —Repayments on maturity of long-term debt (9) 30.0 30.0 — — — — —Chartered-in vessels (operating leases) (10) 248.2 57.0 54.4 49.0 53.1 20.0 14.7Asset retirement obligation 27.1 27.1 — — — — — 951.3 167.4 54.4 641.7 53.1 20.0 14.7Total 7,506.0 2,220.4 970.3 1,491.6 954.6 470.6 1,398.5(1)Euro-denominated and NOK-denominated obligations are presented in U.S. Dollars and have been converted using the prevailing exchange rate as of December 31, 2017.(2)Excludes expected interest payments of $18.3 million (2018), $15.5 million (2019), $12.7 million (2020) and $5.0 million (2021). Expected interest payments are based onNIBOR at December 31, 2017, plus margins that range up to 7.72%, as well as the prevailing U.S. Dollar/NOK exchange rate as of December 31, 2017. The expectedinterest payments do not reflect the effect of the related cross currency swaps that Teekay LNG has used as an economic hedge of its foreign exchange and interest rateexposure associated with its NOK-denominated long-term debt.(3)Excludes expected interest payments of $33.6 million (2018), $26.8 million (2019), $21.8 million (2020), $15.4 million (2021), $11.4 million (2022) and $28.3 million (beyond2022). Expected interest payments give effect to the refinancing completed in November 2017 of one of Teekay LNG's revolving credit facilities and are based on LIBOR orEURIBOR at December 31, 2017, plus margins on debt that has been drawn that range up to 3.25% (variable-rate loans), as well as the prevailing U.S. Dollar/Euro exchangerate as of December 31, 2017. The expected interest payments do not reflect the effect of related interest rate swaps or swaptions that Teekay LNG has used as aneconomic hedge of certain of its variable-rate debt. The repayment amounts reflect the November 2017 refinancing.(4)Includes, in addition to lease payments, amounts Teekay LNG may be or is required to pay to purchase the leased vessels at the end of their respective lease terms. For twoof Teekay LNG's 10 obligations related to capital leases, the lessor has the option to sell two Suezmax tankers to Teekay LNG at any time during the remaining lease terms;however, in this table Teekay LNG has assumed the lessor will not exercise its right to sell the two Suezmax tankers to it until after the lease terms expire, which is during2018. The purchase price for any Suezmax tanker Teekay LNG is required to purchase would be based on the unamortized portion of the vessel construction financing costsfor the vessels, which are included in the table above. We expect Teekay LNG to satisfy any such purchase price by assuming the existing vessel financing, although it maybe required to obtain separate debt or equity financing to complete any purchases if the lenders do not consent to its assuming the financing obligations.(5)Teekay LNG has corresponding leases whereby it is the lessor and expects to receive approximately $239.1 million under those leases from 2018 to 2029.(6)As of December 31, 2017, Teekay LNG has agreements for the construction of six wholly-owned LNG carrier newbuildings, of which the estimated remaining costs for thesenewbuildings totaled $804.5 million, including estimated interest and construction supervision fees. Teekay LNG has secured $681 million of financing related to thecommitments for five of the six LNG carrier newbuildings included in the table above.82Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs part of the acquisition of an ownership interest in the Pan Union Joint Venture, Teekay LNG agreed to assume Shell’s obligation to provide shipbuilding supervision andcrew training services for the four LNG carrier newbuildings and to fund its proportionate share of the remaining newbuilding installments. The estimated remaining costs forthe shipbuilding supervision and crew training services and Teekay LNG's proportionate share of newbuilding installments totaled $116.6 million as of December 31, 2017.However, as part of this agreement with Shell, Teekay LNG expects to recover $3.5 million of the shipbuilding supervision and crew training costs from Shell between 2018and 2020 and the Pan Union Joint Venture has secured financing of $87.0 million based on Teekay LNG's proportionate share of newbuilding installments as ofDecember 31, 2017.In July 2014, the Yamal LNG Joint Venture, in which Teekay LNG has a 50% ownership interest, entered into agreements for the construction of six LNG carriernewbuildings. As at December 31, 2017, Teekay LNG's 50% share of the estimated remaining costs for these six newbuildings totaled $781.3 million. The Yamal LNG JointVenture has secured debt financing of $816 million related to Teekay LNG's proportionate share of the remaining newbuilding installments as of December 31, 2017.The Bahrain LNG Joint Venture, in which Teekay LNG has a 30% ownership interest, is developing an LNG receiving and regasification terminal in Bahrain. The project willbe owned and operated under a 20-year agreement commencing in early-2019 with a fully-built-up cost of approximately $960.0 million. As at December 31, 2017, TeekayLNG's 30% share of the estimated remaining costs is $134.0 million. The Bahrain LNG Joint Venture has secured debt financing of $134 million related to Teekay LNG'sproportionate share of the estimated remaining construction costs as of December 31, 2017.The table above includes Teekay LNG's proportionate share of the newbuilding costs for three LPG carrier newbuildings scheduled for delivery in 2018 in the Exmar LPGJoint Venture. As at December 31, 2017, Teekay LNG's 50% share of the estimated remaining costs for these three newbuildings totaled $54.6 million, including estimatedinterest and construction supervision fees. The Exmar LPG Joint Venture has secured $56 million of financing for two of three LPG carrier newbuildings.(7)Excludes all expected interest payments of $31.7 million (2018), $27.5 million (2019), $23.3 million (2020), $13.9 million (2021) and $3.4 million (2022). Expected interestpayments are based on the existing interest rates for fixed-rate loans of 5.4% and existing interest rates for variable-rate loans at LIBOR plus margins that range from 0.30%to 2.75% at December 31, 2017. The expected interest payments do not reflect the effect of related interest rate swaps that we have used to hedge certain of our floating-rate debt.(8)Excludes imputed interest payments of $9.0 million (2018), $8.5 million (2019), $8.1 million (2020), $7.5 million (2021), $7.0 million (2022) and $29.1 million (thereafter).(9)Excludes expected interest payments of $52.7 million (2018), $50.4 million (2019), and $25.2 million (2020). Expected interest payments are based on the existing interestrate for a fixed-rate loan at 8.5% and existing interest rates for variable-rate loans that are based on LIBOR plus margins which ranged between 3.95% and 4.0% as atDecember 31, 2017. The expected interest payments do not reflect the effect of related interest rate swaps that Teekay Parent uses as an economic hedge of certain of itsvariable rate debt.(10)Excludes internal time-charter-in commitments between Teekay Parent and its subsidiary, Teekay LNG.OFF-BALANCE SHEET ARRANGEMENTSWe have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financialcondition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Our equity-accounted investments are described in “Item 18 –Financial Statements: Note 22 — Equity-Accounted Investments.”CRITICAL ACCOUNTING ESTIMATESWe prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates in the application of our accounting policies based on ourbest assumptions, judgments and opinions. On a regular basis, management reviews our accounting policies, assumptions, estimates and judgments to ensure that ourconsolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined withcertainty, actual results could differ from our assumptions and estimates, and such differences could be material. Accounting estimates and assumptions discussed in thissection are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments anduncertainties. For a further description of our material accounting policies, please read “Item 18. Financial Statements: Note 1 — Summary of Significant AccountingPolicies.”Revenue RecognitionDescription. We recognize revenue from voyage charters on either a load-to-discharge or discharge-to-discharge basis. Voyage revenues are recognized ratably from thebeginning of when product is loaded to when it is discharged if using a load-to-discharge basis, or from when product is discharged (unloaded) at the end of the priorvoyage to when it is discharged after the current voyage, if using a discharge-to-discharge basis. However, we do not begin recognizing voyage revenue for any of ourvessels until a charter has been agreed to by the customer and us, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage.Judgments and Uncertainties. Whether to use the load-to-discharge basis or the discharge-to-discharge basis depends on whether the customer directs the use of thevessel throughout the period of use, pursuant to the terms of the voyage charter. This is a matter of judgement. However, we believe that if the customer has the right todirect the vessel to different load and discharge ports, among other things, a voyage charter contract contains a lease, and the lease term begins on the later of thevessel’s last discharge or inception of the voyage charter contract. As such, in this case revenue is recognized on a discharge-to-discharge basis. Otherwise, it isrecognized on a load-to-discharge basis.Effect if Actual Results Differ from Assumptions. If our assessment of whether the customer directs the use of the vessel throughout the period of use is not consistentwith actual results, then the period over which voyage revenue is recognized would be different and as such our revenues could be overstated or understated for anygiven period by the amount of such difference.83Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsContingenciesDescription. We may, from time to time, be involved in legal proceedings, claims or other situations involving uncertainty as to a possible loss that will ultimately be resolvedwhen one or more future events occur or fail to occur. We accrue a provision for such loss contingencies if it is probable as of the reporting date, that an asset had beenimpaired or a liability incurred, based in information available prior to the issuance of the consolidated financial statements, and if the amount of the loss can be reasonablyestimated.Judgments and Uncertainties. The amount of loss contingencies recognized as a liability in our consolidated financial statements requires management to make significantestimates that may at times be inherently difficult to make given the uncertainties involved, including estimates of whether it is probable an asset had been impaired or aliability incurred, the amount of possible losses, the ability to recover some or all of the possible loss through insurance coverage, amongst others. Our loss contingenciesare disclosed in more detail in "Item 18 - Financial Statements: Note 16d — Commitments and Contingencies".Effect if Actual Results Differ from Assumptions. Our net (loss) income could be overstated or understated for any given period to the extent actual losses incurred,following resolution of our contingencies, are different than our prior estimates of recognized loss contingencies.Vessel Lives and ImpairmentDescription. The carrying value of each of our vessels represents its original cost at the time of delivery or purchase less depreciation and impairment charges. Wedepreciate the original cost, less an estimated residual value, of our vessels on a straight-line basis over each vessel’s estimated useful life. The carrying values of ourvessels may not represent their market value at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates andthe cost of newbuildings. Both charter rates and newbuilding costs tend to be cyclical in nature.We review vessels and equipment for impairment whenever events or circumstances indicate the carrying value of an asset, including the carrying value of the chartercontract, if any, under which the vessel is employed, may not be recoverable. This occurs when the asset’s carrying value is greater than the future undiscounted cashflows the asset is expected to generate over its remaining useful life. If the estimated future undiscounted cash flows of an asset exceed the asset’s carrying value, noimpairment is recognized even though the fair value of the asset may be lower than its carrying value. If the estimated future undiscounted cash flows of an asset are lessthan the asset’s carrying value and the fair value of the asset is less than its carrying value, the asset is written down to its fair value. Fair value is calculated as the netpresent value of estimated future cash flows, which, in certain circumstances, will approximate the estimated market value of the vessel. For a vessel under charter, thediscounted cash flows from that vessel may exceed its market value, as market values may assume the vessel is not employed on an existing charter.The following table presents, by type of vessel, the aggregate market values and carrying values of certain of our vessels that we have determined have a market valuethat is less than their carrying value as of December 31, 2017. Specifically, the table below reflects all such vessels, except those operating on contracts where theremaining term is significant and the estimated future undiscounted cash flows relating to such contracts are sufficiently greater than the carrying value of the vessels suchthat we consider it unlikely that an impairment would be recognized in 2018. While the market values of these vessels are below their carrying values, no impairment hasbeen recognized on any of these vessels as the estimated future undiscounted cash flows relating to such vessels are greater than their carrying values.The vessels included in the following table generally include those vessels employed on single-voyage, or “spot” charters, as well as those vessels near the end of existingcharters. In addition, the following table also includes vessels on operational contracts with impairment indicators that are unique to those vessels.In estimating the future undiscounted cash flows for the above-mentioned FPSO units, we made assumptions and used estimates regarding the following factors: operatingcosts of the units, level of oil production, average annual oil price, oil field reserves, redeployment of vessels and redeployment rates, amount of capital investmentsrequired before deployment to a new field, any idle time before redeployment. Should actual results differ significantly from our estimates and assumptions, we may berequired to recognize impairments of the carrying values of the units.We would consider the vessels reflected in the following table to be at a higher risk of future impairment than our vessels not reflected in the table. The table isdisaggregated for vessels which have estimated future undiscounted cash flows that are marginally or significantly greater than their respective carrying values. Vesselswith estimated future cash flows significantly greater than their respective carrying values would not likely be impaired in the next 12 months unless they are disposed of. Indeciding whether to dispose of a vessel, we determine whether it is economically preferable to sell the vessel or continue to operate it. This assessment includes anestimate of the net proceeds expected to be received if the vessel is sold in its existing condition compared to the present value of the vessel’s estimated future revenue,net of operating costs. Such estimates are based on the terms of the existing charter, charter market outlook and estimated operating costs, given a vessel’s type,condition and age. In addition, we typically do not dispose of a vessel that is servicing an existing customer contract. The recognition of an impairment in the future may bemore likely for those vessels that have estimated future undiscounted cash marginally greater than their respective carrying value.84Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(in thousands of U.S. dollars, except number of vessels)Type of Vessel Number ofVessels MarketValues (1)$ CarryingValues$FPSO Unit (1) 1 179,000 195,854Conventional Tanker Segment (2) 11 153,500 293,088Conventional Tanker Segment (3) 28 717,076 1,222,499Liquefied Gas Segment (3) 8 226,402 325,125(1)Market values are based on second-hand market comparable values or using a depreciated replacement cost approach as at December 31, 2017. Since vessel values canbe volatile, our estimates of market value may not be indicative of either the current or future prices we could obtain if we sold any of the vessels. In addition, thedetermination of estimated market values for our FPSO units may involve considerable judgment, given the illiquidity of the second-hand market for these types of vessels.(2)Undiscounted cash flows for these vessels are marginally greater than their carrying values.(3)Undiscounted cash flows for these vessels are significantly greater than their carrying values.Judgments and Uncertainties. Depreciation is calculated on a straight-line basis over a vessel’s estimated useful life, less an estimated residual value. Depreciation iscalculated using an estimated useful life of 25 years for tankers carrying crude oil and refined product, 30 years for LPG carriers and 35 years for LNG carriers,commencing the date the vessel is delivered from the shipyard, or a shorter period if regulations prevent us from operating the vessels for those periods of time. Weconsider shuttle tankers to be comprised of two components: (i) a conventional tanker (or the tanker component) and (ii) specialized shuttle equipment (or the shuttlecomponent). We differentiate these two components on the principle that a shuttle tanker can also operate as a conventional tanker without the use of the shuttlecomponent. The economics of this alternate use depend on the supply and demand fundamentals in the two segments. We have assessed the useful life of the tankercomponent as being 25 years and the shuttle component as being 20 years. FPSO units are depreciated using an estimated useful life of 20 to 25 years commencing thedate the unit is installed at the oil field and is in a condition that is ready to operate. FSO units are depreciated over the estimated term of the contract. UMS are depreciatedover an estimated useful life of 35 years commencing the date the unit arrives at the oil field and is in a condition that is ready to operate. Long-distance towing and offshoreinstallation vessels are depreciated over an estimated useful life of 25 years commencing the date the vessel is delivered from the shipyard.However, the actual life of a vessel may be different than the estimated useful life, with a shorter actual useful life resulting in an increase in quarterly depreciation andpotentially resulting in an impairment loss. The estimated useful life of our vessels takes into account design life, commercial considerations and regulatory restrictions. Ourestimates of future cash flows involve assumptions about future charter rates, vessel utilization, operating expenses, dry-docking expenditures, vessel residual values,redeployment assumptions for vessels on long-term charter and the remaining estimated life of our vessels. Our estimated charter rates are based on rates under existingvessel contracts and market rates at which we expect we can re-charter our vessels. Our estimates of vessel utilization, including estimated off-hire time and theestimated amount of time our shuttle tankers may spend operating in the spot tanker market when not being used in their capacity as shuttle tankers, are based onhistorical experience and our projections of the number of future shuttle tanker voyages. Our estimates of operating expenses and dry-docking expenditures are based onhistorical operating and dry-docking costs and our expectations of future inflation and operating requirements. Vessel residual values are a product of a vessel’s lightweighttonnage and an estimated scrap rate. The remaining estimated lives of our vessels used in our estimates of future cash flows are consistent with those used in thecalculations of depreciation.In our experience, certain assumptions relating to our estimates of future cash flows are more predictable by their nature, including estimated revenue under existingcontract terms, ongoing operating costs and remaining vessel life. Certain assumptions relating to our estimates of future cash flows require more discretion and areinherently less predictable, such as future charter rates beyond the firm period of existing contracts and vessel residual values, due to factors such as the volatility invessel charter rates and vessel values. We believe that the assumptions used to estimate future cash flows of our vessels are reasonable at the time they are made. Wecan make no assurances, however, as to whether our estimates of future cash flows, particularly future vessel charter rates or vessel values, will be accurate.Effect if Actual Results Differ from Assumptions. If we conclude that a vessel or equipment is impaired, we recognize a loss in an amount equal to the excess of thecarrying value of the asset over its fair value at the date of impairment. The written-down amount becomes the new lower cost basis and will result in a lower annualdepreciation expense than for periods before the vessel impairment.Dry dockingDescription. We capitalize a substantial portion of the costs we incur during dry docking and amortize those costs on a straight-line basis over the useful life of the drydock. We expense costs related to routine repairs and maintenance incurred during dry docking that do not improve operating efficiency or extend the useful lives of theassets and for annual class survey costs on our FPSO units. When significant dry-docking expenditures occur prior to the expiration of the original amortization period, theremaining unamortized balance of the original dry-docking cost and any unamortized intermediate survey costs are expensed in the period of the subsequent drydockings.Judgments and Uncertainties. Amortization of capitalized dry-dock expenditures requires us to estimate the period of the next dry-docking and useful life of dry-dockexpenditures. While we typically dry dock each vessel every two and a half to five years and have a shipping society classification intermediate survey performed on ourLNG and LPG carriers between the second and third year of the five-year dry-docking period, we may dry dock the vessels at an earlier date, with a shorter life resultingin an increase in the depreciation.85Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsEffect if Actual Results Differ from Assumptions. If we change our estimate of the next dry-dock date for a vessel, we will adjust our annual amortization of dry-dockingexpenditures.Goodwill and Intangible AssetsDescription. We allocate the cost of acquired businesses to the identifiable tangible and intangible assets and liabilities acquired, with the remaining amount being classifiedas goodwill. Certain intangible assets, such as time-charter contracts, are being amortized over time. Our future operating performance will be affected by the amortizationof intangible assets and potential impairment charges related to goodwill or intangible assets. Accordingly, the allocation of the purchase price to intangible assets andgoodwill may significantly affect our future operating results. Goodwill and indefinite-lived assets are not amortized, but reviewed for impairment annually, or more frequentlyif impairment indicators arise. The process of evaluating the potential impairment of goodwill and intangible assets is highly subjective and requires significant judgment atmany points during the analysis.Goodwill is not amortized, but reviewed for impairment at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change thatwould more likely than not reduce the fair value of a reporting unit to below its carrying value. When goodwill is reviewed for impairment, we may elect to assess qualitativefactors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, we may bypassthis step and use a fair value approach to identify potential goodwill impairment and, when necessary, measure the amount of impairment. We use a discounted cash flowmodel to determine the fair value of reporting units, unless there is a readily determinable fair market value. Intangible assets are assessed for impairment when and ifimpairment indicators exist. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value.Judgments and Uncertainties. The allocation of the purchase price of acquired companies requires management to make significant estimates and assumptions, includingestimates of future cash flows expected to be generated by the acquired assets and the appropriate discount rate to value these cash flows. In addition, the process ofevaluating the potential impairment of goodwill and intangible assets is highly subjective and requires significant judgment at many points during the analysis. The fair valueof our reporting units was estimated based on discounted expected future cash flows using a weighted-average cost of capital rate. The estimates and assumptionsregarding expected cash flows and the appropriate discount rates require considerable judgment and are based upon existing contracts, historical experience, financialforecasts and industry trends and conditions.Effect if Actual Results Differ from Assumptions. As of December 31, 2017, we had four reporting units with goodwill attributable to them. As of the date of this AnnualReport, we do not believe that there is a reasonable possibility that the goodwill attributable to our four reporting units with goodwill attributable to them might be impairedwithin the next year. However, certain factors that impact our goodwill impairment tests are inherently difficult to forecast and as such we cannot provide any assurancesthat an impairment will or will not occur in the future. An assessment for impairment involves a number of assumptions and estimates that are based on factors that arebeyond our control. Please read “Part I—Forward-Looking Statements.”Valuation of Derivative Financial InstrumentsDescription. Our risk management policies permit the use of derivative financial instruments to manage foreign currency fluctuation, interest rate, bunker fuel price andspot tanker market rate risk. In addition, we have stock purchase warrants, a type of option agreement, to acquire up to an additional 16.3 million shares of TeekayOffshore’s common units at a fixed price. See “Item 18 – Financial Statements: Note 15 — Derivative Instruments and Hedging Activities”. Changes in fair value ofderivative financial instruments that are not designated as cash flow hedges for accounting purposes are recognized in earnings in the consolidated statement of income.Changes in fair value of derivative financial instruments that are designated as cash flow hedges for accounting purposes are recorded in other comprehensive incomeand are reclassified to earnings in the consolidated statement of income when the hedged transaction is reflected in earnings. Ineffective portions of the hedges arerecognized in earnings as they occur. During the life of the hedge, we formally assess whether each derivative designated as a hedging instrument continues to be highlyeffective in offsetting changes in the fair value or cash flows of hedged items. If we determine that a hedge has ceased to be highly effective, we will discontinue hedgeaccounting prospectively.Judgments and Uncertainties. A substantial majority of the fair value of our derivative instruments and the change in fair value of our derivative instruments from period toperiod result from our use of interest rate swap agreements and our holding of stock purchase warrants. The fair value of our derivative instruments is the estimatedamount that we would receive or pay to terminate the agreements in an arm’s length transaction under normal business conditions at the reporting date, taking into accountcurrent interest rates, foreign exchange rates and the current credit worthiness of us and the swap counterparties. The estimated amount for interest rate swaps is thepresent value of estimated future cash flows, being equal to the difference between the benchmark interest rate and the fixed rate in the interest rate swap agreement,multiplied by the notional principal amount of the interest rate swap agreement at each interest reset date. For the stock purchase warrants, we take into account the stockprice of Teekay Offshore, the expected volatility of the Teekay Offshore stock price and an estimate of the risk-free rate over the term of the warrants.The fair value of our interest rate swap agreements at the end of each period is most significantly impacted by the interest rate implied by the benchmark interest rate yieldcurve, including its relative steepness. Interest rates have experienced significant volatility in recent years in both the short and long term. While the fair value of ourinterest rate swap agreements is typically more sensitive to changes in short-term rates, significant changes in the long-term benchmark interest rate also materiallyimpact our interest rate swap agreements.86Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe fair value of our interest rate swap agreements is also impacted by changes in our specific credit risk included in the discount factor. We discount our interest rateswap agreements with reference to the credit default swap spreads of similarly rated global industrial companies and by considering any underlying collateral. The processof determining credit worthiness requires significant judgment in determining which source of credit risk information most closely matches our risk profile.The benchmark interest rate yield curve and our specific credit risk are expected to vary over the life of the interest rate swap agreements. The larger the notional amountof the interest rate swap agreements outstanding and the longer the remaining duration of the interest rate swap agreements, the larger the impact of any variability inthese factors will be on the fair value of our interest rate swaps. We economically hedge the interest rate exposure on a significant amount of our long-term debt and forlong durations. As such, we have historically experienced, and we expect to continue to experience, material variations in the period-to-period fair value of our derivativeinstruments.The fair value of our Teekay Offshore stock purchase warrants at the end of each period is most significantly impacted by the stock price of Teekay Offshore and theexpected future volatility of the Teekay Offshore stock price. The cyclical nature of the offshore industry may cause significant increases or decreases in the value ofTeekay Offshore’s vessels, Teekay Offshore’s stock price and the value of the stock purchase warrants we hold.Effect if Actual Results Differ from Assumptions. Although we measure the fair value of our derivative instruments utilizing the inputs and assumptions described above, ifwe were to terminate the agreements or sell the stock purchase warrants at the reporting date, the amount we would pay or receive to terminate the derivative instrumentsand the amount we would receive upon sale of the stock purchase warrants may differ from our estimate of fair value. If the estimated fair value differs from the actualtermination amount, an adjustment to the carrying amount of the applicable derivative asset or liability would be recognized in earnings for the current period. Suchadjustments could be material. See “Item 18 – Financial Statements: Note 15 — Derivative Instruments and Hedging Activities” for the effects on the change in fair value ofour derivative instruments on our consolidated statements of (loss) income.Item 6.Directors, Senior Management and EmployeesDirectors and Senior ManagementOur directors and executive officers as of the date of this Annual Report and their ages as of December 31, 2017 are listed below:Name Age PositionC. Sean Day 68 Chairman Emeritus, Director (1)Peter S. Janson 70 DirectorRudolph Krediet 40 Director (2)Heidi Locke Simon 50 Director (2)Bjorn Moller 60 DirectorTore I. Sandvold 70 DirectorAlan Semple 58 DirectorDavid Schellenberg 54 Director (2)Bill Utt 60 Director (3)Arthur Bensler 60 Executive Vice President, Secretary and General CounselWilliam Hung 46 Executive Vice President, Strategic DevelopmentKenneth Hvid 49 President and Chief Executive OfficerMark Kremin 47 President and Chief Executive Officer, Teekay Gas Group Ltd.Vincent Lok 49 Executive Vice President and Chief Financial OfficerKevin Mackay 49 President and Chief Executive Officer, Teekay Tankers Ltd.Ingvild Saether 49 President and Chief Executive Officer, Teekay Offshore Group Ltd.(1) Retired as Chair on June 15, 2017; remains on Board of Directors.(2) Appointed on September 12, 2017.(3) Appointed Chair on June 15, 2017.Certain biographical information about each of these individuals is set forth below:87Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsC. Sean Day has served as director of Teekay Corporation since 1998, taking on the role as Chair of the Board from 1999 until June 2017. He continues to serve on theBoard as Chair Emeritus. He currently also serves as director of Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P., where he also served as Chairuntil 2015. In addition, he served as the Chair of Teekay Offshore GP L.L.C., the general partner of Teekay Offshore Partners L.P. from 2006 to 2017, and as Chair ofTeekay Tankers Ltd from 2007 to 2013. From 1989 to 1999, Mr. Day was President and Chief Executive Officer of Navios Corporation, a large bulk shipping companybased in Stamford, Connecticut. Prior to Navios, Mr. Day held a number of senior management positions in the shipping and finance industries. He currently serves as adirector of Kirby Corporation and is Chair of Compass Diversified Holdings. Mr. Day is engaged as a consultant to Kattegat Limited, the parent company of ResoluteInvestments, Ltd., our largest shareholder, to oversee its investments, including that in the Teekay group of companies.Peter S. Janson has served as a Teekay director since 2005. From 1999 to 2002, Mr. Janson was the Chief Executive Officer of Amec Inc. (formerly Agra Inc.), apublicly traded engineering and construction company. From 1986 to 1994, he served as the President and Chief Executive Officer of Canadian operations for Asea BrownBoveri Inc., a company for which he also served as Chief Executive Officer for U.S. operations from 1996 to 1999. Mr. Janson has also served as a member of theBusiness Round Table in the United States, and as a member of the National Advisory Board on Sciences and Technology in Canada.Rudolph Krediet joined the Teekay Board on September 12, 2017. Mr. Krediet brings over 15 years of experience as a financial investment professional. He has servedas a Partner at Anholt Services (USA), a wholly owned subsidiary of Kattegat Trust, which oversees the trust’s globally diverse investment portfolio, since 2013. Mr.Krediet has acted as Principal at Compass Group Management L.L.C., the manager of Compass Diversified Holdings, a publicly traded investment holding company, from2010 to 2013, and as Vice President from 2006 to 2009. He acted as Vice President at CPM Roskamp Champion, a global leader in the design of manufacturing of oil seedprocessing equipment, from 2003 to 2004. Heidi Locke Simon joined the Teekay Board on September 12, 2017. Ms. Locke Simon brings over 20 years of strategic management experience to the Teekay Board. She was formerly a Partner at Bain & Company, a global management consulting organization, where she worked from 1993 to 2012. Prior to this, Ms. Locke Simon wasan Investment Banking Analyst at Goldman, Sachs & Co. She has contributed to HBS Community Partners, a volunteer consulting organization, from 2013 to 2106. Shehas served as a Board Observer with Teekay since 2016, a director of KQED Public Media from 2008 to 2014 and director of Turning Green from 2004 to present. Bjorn Moller has served as a Teekay director since 1998. Mr. Moller also served as Teekay's President and Chief Executive Officer from 1998 until 2011. Mr. Moller alsoserved as Vice Chair of Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P., Vice Chair of Teekay Offshore GP L.L.C., the general partner of TeekayOffshore Partners L.P. and as a director and the Chief Executive Officer of Teekay Tankers Ltd. Mr. Moller remains a director of Teekay Tankers Ltd. Mr. Moller has over35 years of experience in the shipping industry, and served as Chairman of the International Tanker Owners Pollution Federation from 2006 to 2013. He served in seniormanagement positions with Teekay for more than 20 years and headed our overall operations beginning in 1997, following his promotion to the position of Chief OperatingOfficer. Prior to this, Mr. Moller headed our global chartering operations and business development activities. Mr. Moller is also a director of Kattegat Limited, the parentcompany of Resolute Investments, Ltd., the largest shareholder of Teekay Corporation.Tore I. Sandvold has served as a Teekay director since 2003. He has over 35 years of experience in the oil and energy industry. From 1973 to 1987, he served in theNorwegian Ministry of Industry, Oil & Energy in a variety of positions in the areas of domestic and international energy policy. From 1987 to 1990, he served as theCounselor for Energy in the Norwegian Embassy in Washington, D.C. From 1990 to 2001, Mr. Sandvold served as Director General of the Norwegian Ministry of Oil &Energy, with overall responsibility for Norway's national and international oil and gas policy. From 2001 to 2002, he served as Chair of the Board of Petoro, the Norwegianstate-owned oil company that is the largest oil asset manager on the Norwegian continental shelf. From 2002 to the present, Mr. Sandvold, through his company, SandvoldEnergy AS, has acted as advisor to companies and advisory bodies in the energy industry. Mr. Sandvold serves on other boards, including those of Schlumberger Limited,Lambert Energy Advisory Ltd., Energy Policy Foundation of Norway, Rowan Companies plc and Njord Gas Infrastructure.Alan Semple has served as a Teekay director since 2015. Mr. Semple brings over 30 years of finance experience primarily in the energy industry, to the Teekay Board.He was formerly Director and Chief Financial Officer at John Wood Group PLC (Wood Group), a provider of engineering, production support and maintenancemanagement services to the oil and gas and power generation industries, a role he held from 2000 until his retirement in May 2015. Prior to this, he held a number of seniorfinance roles in the Wood Group from 1996. Mr. Semple currently serves on the Board of Cactus, Inc. (NYSE) where he is Chair of the Audit Committee. He serves on theBoard of Cobham PLC (LSE), where he is the Chair of the Audit Committee.David Schellenberg joined the Teekay Board on September 12, 2017. Mr. Schellenberg brings over 25 years of financial and operating leadership to the Teekay Boardand is currently a Managing Director and Principal with Highland West Capital, a Private Equity firm in Vancouver. Prior to that, he was with Conair Group and its subsidiaryCascade Aerospace, specialty aviation and aerospace businesses, from 2000 to 2013 and was President and CEO from 2007 to 2013. Mr. Schellenberg also acted as aManaging Director in the Corporate Office of the Jim Pattison Group, Canada’s second largest private company, from 1991 to 2000. Mr. Schellenberg is a member of theYoung Presidents’ Organization.88Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsBill Utt has served as a Teekay director since 2015 and was appointed Chair on June 15, 2017. He was also appointed Chair and director of Teekay Offshore GPL.L.C., the general partner of Teekay Offshore Partners L.P. on June 15, 2017. Mr. Utt brings over 30 years of engineering and energy industry experience to the TeekayBoard. From 2006 until his retirement in 2014, he served as Chair, President and Chief Executive Officer of KBR Inc., a global engineering, construction and servicescompany. From 1995 to 2006, Mr. Utt served as the President and CEO of SUEZ Energy North America and President and CEO of Tractebel’s North American energybusinesses. Prior to 1995, he held senior management positions with CRSS, Inc., which was a developer and operator of independent power and industrial energy facilitiesprior to its merger with Tractebel in 1995. Mr. Utt also currently serves as Chair on the Board of Directors at Cobalt International Energy and is a member of the Board ofDirectors for Brand Energy & Infrastructure Services, a Clayton, Dubilier & Rice, L.L.C. portfolio company.Arthur Bensler joined Teekay in 1998 as General Counsel. He was promoted to the position of Vice President in 2002 and became Corporate Secretary in 2003. He wasappointed Senior Vice President in 2004 and Executive Vice President in 2006. In June 2013, Mr. Bensler was appointed Director and Chair of Teekay Tankers Ltd. havingserved as Secretary from 2007 to September 2014. Prior to joining Teekay, Mr. Bensler was a partner in a large Vancouver, Canada law firm, where he practicedcorporate, commercial and maritime law from 1987 until joining Teekay.William Hung joined Teekay in 1995 and has served as Executive Vice President, Strategic Development since February 2016. Prior to this position, Mr. Hung hadworked in a variety of roles at Teekay including Chartering, Business Development, Finance and Accounting, Commercial and Strategic Development. Additionally, Mr.Hung served as Chief Executive Officer of Tanker Investments Ltd. from January 2014 until its merger with Teekay Tankers Ltd. in November 2017.Kenneth Hvid was appointed President and CEO of Teekay on February 1, 2017 and has served as a director of Teekay Offshore GP L.L.C., the general partner ofTeekay Offshore Partners L.P. since 2011 and as director of Teekay Tankers Ltd. since February 2017. He joined Teekay in 2000 and was responsible for leading ourglobal procurement activities until he was promoted in 2004 to Senior Vice President, Teekay Gas Services. During this time, Mr. Hvid was involved in leading Teekaythrough its entry and growth in the LNG business. He held this position until the beginning of 2006, when he was appointed President of our Teekay Navion Shuttle Tankersand Offshore division. In that role, he was responsible for our global shuttle tanker business as well as initiatives in the floating storage and offtake business and relatedoffshore activities. Mr. Hvid served as Chief Strategy Officer and Executive Vice President from 2011 to 2015, as director of Teekay GP L.L.C. from 2011 to 2015 and asPresident and CEO of Teekay Offshore Group Ltd., from 2015 until January 2017. Mr. Hvid has 28 years of global shipping experience, 12 of which were spent with A.P.Moller in Copenhagen, San Francisco and Hong Kong. In 2007, Mr. Hvid joined the board of Gard P.& I. (Bermuda) Ltd.Mark Kremin was appointed President & CEO of Teekay Gas Group Ltd., a company that provides services to Teekay LNG Partners L.P. and its subsidiaries, inFebruary 2017. He was appointed President of Teekay Gas Services in 2015 having acted as its Vice President since 2006. Mr. Kremin has over 20 years of experiencein shipping. In 2000, he joined Teekay as in-house counsel. He subsequently held commercial roles within Teekay Gas Services. He represents Teekay on the boards ofjoint ventures with partners in Asia, Europe and the Middle East. Prior to joining Teekay, he was an attorney in an admiralty law firm in Manhattan. Prior to attending lawschool in New York City, he worked for a leading owner and operator of containerships.Vincent Lok has served as Teekay’s Executive Vice President and Chief Financial Officer since 2007. He has held a number of finance and accounting positions withTeekay, including Controller from 1997 until his promotions to the positions of Vice President, Finance in 2002, Senior Vice President and Treasurer in 2004, and SeniorVice President and Chief Financial Officer in 2006. Mr. Lok was appointed director of Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. in June 2015. Healso served as the Chief Financial Officer of Teekay Tankers Ltd. from 2007 to 2017. Prior to joining Teekay, Mr. Lok worked as a Chartered Professional Accountant withDeloitte & Touche LLP. Mr. Lok is also a Chartered Financial Analyst.Kevin Mackay was appointed as President and Chief Executive Officer of Teekay Tankers Ltd in 2014 and leads a global network of commercial offices in Asia, Europeand North America, with the responsibility of marketing Teekay's fleet of conventional tankers. Mr. Mackay joined Teekay from Phillips 66, where he headed the globalmarine business unit and held a similar role as the General Manager, Commercial Marine at ConocoPhillips from 2009 to 2012 before the formation of Phillips 66. Mr.Mackay started his career working for Neptune Orient Lines in Singapore from 1991 to 1995. He then joined AET Inc. Limited (AET) (formerly American Eagle TankersInc.) in Houston, becoming the Regional Director - Americas, Senior Vice President.Ingvild Sæther was appointed President and CEO of Teekay Offshore Group Ltd., a company that provides services to Teekay Offshore Partners L.P. and itssubsidiaries, in February 2017. Ms. Sæther joined Teekay in 2002 as a result of Teekay’s acquisition of Navion AS from Statoil ASA. Since joining Teekay, Ms. Sæther hasheld management positions in Teekay’s conventional tanker business until 2007, when she assumed the commercial responsibility for Teekay’s shuttle tanker activities inthe North Sea and in 2011, Ms. Sæther assumed the position of President, Teekay Offshore Logistics. Ms. Sæther has over 25 years of experience in the shipping andoffshore sector and has been engaged in a number of boards and associations related to the industry.89Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCompensation of Directors and Senior ManagementDirector CompensationThe aggregate cash fees received by the nine non-employee directors listed above under Directors and Senior Management, two individuals who were non-employeedirectors during 2017 and who retired in September 2017 and the individual who served as a non-employee director in 2017 and retired in March 2018, for their service asdirectors, plus reimbursement of their out-of-pocket expenses, was approximately $1.2 million. Each non-employee director receives an annual cash retainer of $90,000.The Chair of the Board also receives an annual cash retainer of $325,000, $187,500 of which was paid to Sean Day, the Chair of the Board from January 1, 2017 to June15, 2017 and the remaining $137,500 of which was paid to Bill Utt, the Chair of the Board from June 15, 2017 to December 31, 2017. Members of the Audit Committee,Compensation and Human Resources Committee, and Nominating and Governance Committee each receive an annual cash fee of $10,000. The Chairs of the AuditCommittee, Compensation and Human Resources Committee, and Nominating and Governance Committee each receive an annual cash fee of $20,000, $17,500 and$15,000, respectively.Each non-employee director also receives a $110,000 annual retainer to be paid by way of a grant of, at the director’s election, restricted stock or stock options under our2013 Equity Incentive Plan (or the 2013 Plan). Pursuant to this annual retainer, during 2017 we granted stock options to purchase an aggregate of 72,576 shares of ourcommon stock at an exercise price of $10.18 per share and 54,023 shares of restricted stock.The Chair of the Board also receives a $360,000 annual retainer to be paid by way of a grant of, at the Chair’s election, restricted stock or stock options under our 2013Equity Incentive Plan. Pursuant to this annual retainer, during 2017, we paid $247,500 in the form of 24,313 restricted stock to Sean Day, the Chair of the Board fromJanuary 1, 2017 to June 15, 2017 and we paid the remaining $112,500 in the form of 11,051 shares of restricted stock to Bill Utt, the Chair of the Board from June 15, 2017to December 31, 2017.The stock options described in this section expire March 6, 2027, ten years after the date of their grant. The stock options and restricted stock vest as to one-third of theshares on each of the first three anniversaries of their respective grant dates.Annual Executive CompensationThe aggregate compensation earned in 2017 by Teekay’s seven executive officers listed above under Directors and Senior Management (or the Executive Officers), andone additional individual who was an executive officer in 2017 and is now retired, excluding equity-based compensation described below, was $6.4 million. This iscomprised of base salary ($3.0 million), annual bonus ($2.7 million) and pension and other benefits ($0.7 million). These amounts were paid primarily in Canadian Dollars,but are reported here in U.S. Dollars using an average exchange rate of 1.30 Canadian Dollars for each U.S. Dollar for 2017. Teekay’s annual bonus plan considers bothcompany performance and team performance.Long-Term Incentive ProgramTeekay’s long-term incentive program focuses on the returns realized by our shareholders and is intended to acknowledge and retain those executives who can influenceour long-term performance. The long-term incentive plan provides a balance against short-term decisions and encourages a longer time horizon for decisions. Thisprogram consists of grants of stock option and restricted stock units. All grants in 2017 were made under our 2013 Plan.During March 2017, we granted stock options to purchase an aggregate of 448,669 shares of our common stock at an exercise price of $10.18 and 83,653 shares ofrestricted stock to Teekay's Executive Officers under our 2013 Plan. The stock options expire March 6, 2027, ten years after the date of grant. The stock options andrestricted stock units vest as to one-third of the shares on each of the first three anniversaries of their grant dates.Options to Purchase Securities from Registrant or SubsidiariesIn March 2013, we adopted the 2013 Plan and suspended the 1995 Stock Option Plan and the 2003 Equity Incentive Plan (collectively referred to as the Plans). As atDecember 31, 2017, we had reserved pursuant to our 2013 Plan 5,115,308 shares (December 2016 – 4,780,371) of common stock.During 2017, 2016 and 2015, we granted options under the 2013 Plan to acquire up to 732,314, 916,015 and 265,135 shares of Common Stock, respectively, to eligibleofficers, employees and directors. Each option under the Plans has a 10-year term and vests equally over three years from the grant date. The outstanding options underthe Plans as at December 31, 2017 are exercisable at prices ranging from $9.44 to $56.76 per share, with a weighted-average exercise price of $22.96 per share, andexpire between March 7, 2018 and March 6, 2027.Starting in 2013, employees who provide services to our publicly-traded subsidiaries (Teekay LNG and Teekay Tankers) and our equity-accounted investee (TeekayOffshore) (collectively, the Daughter Entities), received a proportion of their annual equity compensation award under the equity compensation plan of the applicableDaughter Entity (the Teekay LNG Partners L.P. 2005 Long-Term Incentive Plan, the Teekay Tankers Ltd. 2007 Long-Term Incentive Plan or the Teekay OffshorePartners L.P. 2006 Long-Term Incentive Plan), depending on their level of contribution towards the applicable subsidiary. These awards generally took the form ofRestricted Stock Units (or RSUs), which are described as Phantom Units under the Teekay Offshore Partners L.P. 2006 Long-Term Incentive Plan and the Teekay LNGPartners L.P.90Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents2005 Long-Term Incentive Plan, but we refer to all of these awards as RSUs for purposes of this disclosure. Teekay Tankers also granted stock options starting in 2014 tocertain senior employees. The RSUs vest and become payable with respect to one-third of the shares on each of the first three years following the grant date and accruedistributions or dividends from the date of the grant to the date of vesting. Stock options vest one-third on each of the first three years and expire ten years after the date oftheir grant.Board PracticesAs at December 31, 2017, the Board of Directors consisted of ten members as listed above under Directors and Senior Management, including one individual who servedas a non-employee director in 2017 and retired in March 2018. The Board of Directors is divided into three classes, with members of each class elected to hold office for aterm of three years in accordance with the classification indicated below or until his or her successor is elected and qualified.Directors Alan Semple, Bill Utt, and C. Sean Day have terms expiring in 2018. Directors Peter S. Janson, David Schellenberg and Tore I. Sandvold have terms expiring in2019.There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.The Board of Directors has determined that each of the current members of the Board has no material relationship with Teekay (either directly or as a partner, shareholderor officer of an organization that has a relationship with Teekay), and is independent within the meaning of our director independence standards, which reflect the New YorkStock Exchange (or NYSE) director independence standards as currently in effect and as they may be changed from time to time. In making this determination, the Boardconsidered the relationships of C. Sean Day and Bjorn Moller with our largest shareholder and concluded these relationships do not materially affect their independence asdirectors. Please read “Item 7 - Major Shareholders and Certain Relationships and Related Party Transactions.”The Board of Directors has three committees: Audit Committee, Compensation and Human Resources Committee, and Nominating and Governance Committee. Themembership of these committees during 2017 and the function of each of the committees are described below. Each of the committees is currently comprised ofindependent members and operates under a written charter adopted by the Board. All of the committee charters are available under “Corporate Governance” in theInvestor Centre of our website at www.teekay.com. During 2017, the Board held ten meetings. Each director attended all Board meetings, with the exception of fourdirectors, three of whom missed one meeting each and one of whom missed two meetings. Each director who was a member of a committee attended all applicablecommittee meetings, except for one committee member who missed one meeting.Our Audit Committee is composed entirely of directors who satisfy applicable NYSE and SEC audit committee independence standards. Our Audit Committee is currentlycomprised of Alan Semple (Chairman), Heidi Locke Simon and David Schellenberg. All members of the committee are financially literate and the Board has determined thatMr. Semple qualifies as an audit committee financial expert.The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of:•the integrity of our consolidated financial statements;•our compliance with legal and regulatory requirements;•the independent auditors’ qualifications and independence; and•the performance of our internal audit function and independent auditors.Our Compensation and Human Resources Committee is composed entirely of directors who satisfy applicable NYSE compensation committee independence standards.This committee is currently comprised of Peter S. Janson (Chairman), C. Sean Day, Rudolph Krediet and David Schellenberg.The Compensation and Human Resources Committee:•reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance inlight of these goals and objectives, and determines the Chief Executive Officer’s compensation;•reviews and approves the evaluation process and compensation structure for executive officers, other than the Chief Executive Officer, evaluates their performanceand sets their compensation based on this evaluation;•reviews and makes recommendations to the Board regarding compensation for directors;•establishes and administers long-term incentive compensation and equity-based plans; and•oversees our other compensation plans, policies and programs.Our Nominating and Governance Committee is currently comprised of Bjorn Moller (Chairman), Tore I. Sandvold, Bill Utt, and Heidi Locke Simon.The Nominating and Governance Committee:91Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents•identifies individuals qualified to become Board members;•selects and recommends to the Board director and committee member candidates;•develops and recommends to the Board corporate governance principles and policies applicable to us, monitors compliance with these principles and policies andrecommends to the Board appropriate changes; and•oversees the evaluation of the Board and management.Crewing and StaffAs at December 31, 2017, we employed approximately 7,200 seagoing staff serving on our consolidated and equity-accounted vessels managed by us, and 1,100 shore-based personnel, compared to approximately 6,800 seagoing and 1,100 shore-based personnel as at December 31, 2016, and approximately 6,500 seagoing and 1,100shore-based personnel as at December 31, 2015.We regard attracting and retaining motivated seagoing personnel as a top priority. Through our global manning organization comprised of offices in Glasgow, Scotland;Manila, Philippines; Mumbai, India; Sydney, Australia; and Madrid, Spain, we offer seafarers what we believe are competitive employment packages and comprehensivebenefits. We also intend to provide opportunities for personal and career development, which relate to our philosophy of promoting internally.During fiscal 1996, we entered into a collective bargaining agreement with the Philippine Seafarers’ Union, an affiliate of the International Transport Workers’ Federation (orITF), and an agreement with ITF London that cover substantially all of our junior officers and seamen that operate our Bahamian-flagged vessels. We are also party tocollective bargaining agreements with various Australian maritime unions that cover officers and seamen employed through our Australian operations. Our officers andseamen for our Spanish-flagged vessels are covered by a collective bargaining agreement with Spain’s Union General de Trabajadores and Comisiones Obreras.Substantially all of the officers and seamen for our Norwegian, Brazilian and Canadian-flagged vessels in our equity-accounted investment Teekay Offshore are coveredby collective bargaining agreements. Substantially all officers and seamen for the Norway-flagged vessels are covered by a collective bargaining agreement withNorwegian unions (Norwegian Maritime Officers’ Association, Norwegian Union of Marine Engineers and the Norwegian Seafarers’ Union). In addition, we have entered intoa collective bargaining agreement with Sindicato dos Trabalhadores Offshore do Brasil (or SINDITOB), which covers substantially all Brazilian resident offshore employeeson board the FPSO units Rio das Ostras and Piranema Spirit. We have entered into a collective bargaining agreement with Norwegian offshore unions (SAFE, IndustryEnergi and DSO), through its membership in Norwegian Shipowners Association (or NSA). The agreement covers substantially all of the offshore employees on board ourFPSOs on the Norwegian Continental Shelf. We have entered into a collective bargaining agreement with the Fish, Food and Allied Workers Union of Newfoundland andLabrador and the Canadian Merchant Service Guild in Canada. The agreement covers substantially all of the offshore employees on board Teekay Offshore’s shuttletankers operating in the East Coast of Canada. We believe our relationships with these labor unions are good, with long-term collective bargaining agreements thatdemonstrate commitment from both parties.Our commitment to training is fundamental to the development of the highest caliber seafarers for our marine operations. Our cadet training program is designed to balanceacademic learning with hands-on training at sea. We have relationships with training institutions in Canada, Croatia, India, Norway, Philippines, Turkey and the UnitedKingdom. After receiving formal instruction at one of these institutions, the cadets’ training continues on board a Teekay vessel. We also have an accredited Teekay-specific competence management system that is designed to ensure a continuous flow of qualified officers who are trained on our vessels and are familiar with ouroperational standards, systems and policies. We believe that high-quality manning and training policies will play an increasingly important role in distinguishing largerindependent tanker companies that have in-house, or affiliate, capabilities from smaller companies that must rely on outside ship managers and crewing agents.92Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsShare OwnershipThe following table sets forth certain information regarding beneficial ownership, as of December 31, 2017, of our common stock by the ten directors, including oneindividual that retired from the Board in March 2018, and seven Executive Officers as a group, described above under Directors and Senior Management. The informationis not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules a person or entity beneficially owns any shares that the person or entity(a) has or shares voting or investment power over or (b) has the right to acquire as of March 1, 2018 (60 days after December 31, 2017) through the exercise of anycommon stock option or other right. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such powers with his or herspouse) with respect to the shares set forth in the following table. Information for certain holders is based on information delivered to us.Identity of Person or Group Shares Owned Percent of ClassAll directors and executive officers as a group (17 persons) (1) 1,643,9552) 1.8% (3) ____________________________(1)Includes 1,037,486 shares of common stock subject to stock options exercisable as of March 1, 2018 under our equity incentive plans with a weighted-average exercise priceof $31.27 that expire between March 7, 2018 and March 6, 2027. Excludes 693,101 shares of common stock subject to stock options that may become exercisable afterMarch 1, 2018 under the plans with a weighted average exercise price of $11.20, that expire between March 9, 2025 and March 6, 2027. Excludes shares held by ourlargest shareholder, Resolute, whose ultimate parent is Path Spirit Limited (or Path), which is the trust protector for the trust that indirectly owns all of Resolute’s outstandingequity. Our Chairman, C. Sean Day, is engaged as a consultant to Kattegat Limited, the parent company of Resolute, to oversee its investments, including those in theTeekay group of companies. Another of our directors, Bjorn Moller, is a director of Kattegat Limited. Also excludes shares beneficially owned by our former Chief ExecutiveOfficer and an Executive Committee Member of Teekay Offshore Group Ltd., both whom retired on January 31, 2017.(2)Each director is expected to have acquired shares having a value of at least four times the value of the annual cash retainer paid to them for their Board service (excludingfees for Chair or Committee service) no later than March 1, 2018 or the fifth anniversary of the date on which the director joined the Board, whichever is later. In addition,each Executive Officer is expected to acquire shares of Teekay’s common stock equivalent in value to one to three times their annual base salary by 2018 or, for executiveofficers subsequently joining Teekay or achieving a position covered by the guidelines, within five years after the guidelines become applicable to them.(3)Based on a total of 89.1 million outstanding shares of our common stock as of December 31, 2017. Each director and Executive Officer beneficially owns less than 1% of theoutstanding shares of common stock.Item 7.Major Shareholders and Certain Relationships and Related Party TransactionsMajor ShareholdersThe following table sets forth information regarding beneficial ownership, as of March 1, 2018, of Teekay’s common stock by each person we know to beneficially ownmore than 5% of the common stock. Information for certain holders is based on their latest filings with the SEC or information delivered to us. The number of sharesbeneficially owned by each person or entity is determined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose.Under SEC rules, a person or entity beneficially owns any shares as to which the person or entity has or shares voting or investment power. In addition, a person or entitybeneficially owns any shares that the person or entity has the right to acquire as of April 30, 2018 (60 days after March 1, 2018) through the exercise of any stock optionor other right. Unless otherwise indicated, each person or entity has sole voting and investment power with respect to the shares set forth in the following table.Identity of Person or Group Shares Owned Percent of Class (3)Resolute Investments, Ltd. (1) 31,936,012 31.9%FMR L.L.C. (2) 8,606,135 8.6% ____________________________(1)Includes shared voting and shared dispositive power. The ultimate controlling person of Resolute is Path, which is the trust protector for the trust that indirectly owns all ofResolute’s outstanding equity. This information is based in part on the Schedule 13D/A (Amendment No. 8) filed by Resolute and Path with the SEC on January 29, 2018.Resolute’s beneficial ownership was 31.9% on March 1, 2018, and 37.1% on March 1, 2017. One of our directors, C. Sean Day, is engaged as a consultant to KattegatLimited, the parent company of Resolute, to oversee its investments, including those in the Teekay group of companies. Another of our directors, Bjorn Moller, is a director ofKattegat Limited.(2)Includes sole voting power and sole dispositive power. This information is based on the Schedule 13G filed by this investor with the SEC on February 13, 2018.(3)Based on a total of 100.3 million outstanding shares of our common stock as of March 1, 2018.Our major shareholders have the same voting rights as our other shareholders. No corporation or foreign government or other natural or legal person owns more than50% of our outstanding common stock. We are not aware of any arrangements, the operation of which may at a subsequent date result in a change in control of Teekay.Teekay and certain of its subsidiaries have relationships or are parties to transactions with other Teekay subsidiaries, including Teekay’s publicly-traded subsidiariesTeekay LNG and Teekay Tankers and Teekay's publicly-traded equity-accounted investee, Teekay Offshore. Certain of these relationships and transactions aredescribed below.93Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAs of March 1, 2018, we had 30 common shareholders of record located in the United States, one of which is Cede & Co., a nominee of The Depository Trust Company,which held an aggregate of 100,232,610 shares of our common stock, representing approximately 99.98% of our outstanding common shares. We believe that thecommon stock held by Cede & Co. include shares beneficially owned by both holders in the United States and non-U.S. beneficial owners.Our Major ShareholderAs of March 1, 2018, Resolute owned approximately 31.9% of our outstanding common stock. The ultimate controlling person of Resolute is Path, which is the trustprotector for the trust that indirectly owns all of Resolute’s outstanding equity. One of our directors, C. Sean Day, is engaged as a consultant to Kattegat Limited, the parentcompany of Resolute, to oversee its investments, including that in the Teekay group of companies. Another of our directors, Bjorn Moller, is a director of Kattegat Limited.Please read “Item 18. Financial Statements: Note 13 — Related Party Transactions.”Our Directors and Executive OfficersC. Sean Day, the former Chairman of Teekay’s board of directors, is also a director of Teekay GP L.L.C. (the general partner of Teekay LNG). He retired as Chairmanfrom Teekay Corporation and Teekay Offshore GP L.L.C. effective June 15, 2017, but continues as a director of Teekay Corporation. On June 15, 2017, Bill Uttsucceeded Sean Day as Chairman of Teekay and was appointed a director of Teekay Offshore GP L.L.C. and became Chairman of its board of directors. Mr. Day alsoserved as Chairman of Teekay GP L.L.C from 2004 until 2015. He was also the Chairman of Teekay Tankers Ltd. from 2007 until 2013. Bjorn Moller is one of Teekay’scurrent directors and is also a director of Teekay Tankers Ltd. Arthur Bensler, Teekay’s Executive Vice President, Secretary and General Counsel, has served as theChairman of Teekay Tankers Ltd. since June 2013.Vincent Lok, Teekay’s Executive Vice President and Chief Financial Officer, is also a director of Teekay GP L.L.C. Kenneth Hvid was appointed President and ChiefExecutive Officer of Teekay effective January 31, 2017 and was previously Teekay’s Executive Vice President and Chief Strategy Officer until December 2015. Mr. Hvidis currently a director of Teekay Offshore GP L.L.C. and was also a director of Teekay GP L.L.C until June 2015. Kevin Mackay is the President and Chief ExecutiveOfficer of Teekay Tankers Ltd. and Chief Executive Officer of Teekay Tanker Services, a division of Teekay. Mark Kremin is President and Chief Executive Officer ofTeekay Gas Group Ltd., which provides services to Teekay LNG pursuant to a services agreement. Ingvild Sæther is President and Chief Executive Officer of TeekayOffshore Group Ltd., which provides services to Teekay Offshore pursuant to a services agreement.Because each of the executive officers of Teekay Tankers, two executive officers of Teekay Gas Group Ltd., a company that provides services to Teekay LNG PartnersL.P. effective from February 1, 2017, an executive officer of Teekay Offshore Group Ltd., a company that provides services to Teekay Offshore Partners L.P. effectivefrom February 1, 2017, and an executive officer of the general partners of Teekay LNG and Teekay Offshore who is now retired, were employees of Teekay or other of itssubsidiaries, their compensation (other than any awards under the respective long-term incentive plans of Teekay Tankers, Teekay LNG and Teekay Offshore) is paid byTeekay or such other applicable entities. Pursuant to agreements with Teekay, each of Teekay Tankers, Teekay LNG and Teekay Offshore have agreed to reimburseTeekay or its applicable subsidiaries for time spent by the executive officers on providing services to such public entities and their subsidiaries. For 2017, thesereimbursement obligations totaled approximately $1.3 million, $0.9 million, and $0.4 million, respectively, for Teekay Tankers, Teekay LNG, and Teekay Offshore and areincluded in amounts paid as strategic management fees under the management agreement for Teekay Tankers and the services agreements for Teekay LNG andTeekay Offshore.Relationships with Our Public Entity Subsidiaries and Equity-accounted InvesteeTeekay TankersTeekay Tankers is a NYSE-listed, Marshall Islands corporation which we formed to acquire from us a fleet of double-hull oil tankers in connection with Teekay Tankers’initial public offering in December 2007. Teekay Tankers’ business is to own oil tankers and employ a chartering strategy that seeks to capture upside opportunities in thespot market while using fixed-rate time charters to reduce downside risks. Its operations are managed by our subsidiary, Teekay Tankers Management Services Ltd.As of March 1, 2018, we owned shares of Teekay Tankers’ Class A and Class B common stock that represented an ownership interest of 28.8% and voting power of54.1% of Teekay Tankers’ outstanding common stock.Until December 31, 2012, Teekay Tankers distributed to its shareholders on a quarterly basis all of its Cash Available for Distribution, subject to any reserves its board ofdirectors may from time to time determine are required for the prudent conduct of the business. Cash Available for Distribution represented Teekay Tankers’ net income(loss) plus depreciation and amortization, unrealized losses from derivatives, non-cash items and any write-offs or other non-recurring items less unrealized gains fromderivatives and net income attributable to the historical results of vessels acquired by Teekay Tankers from us, prior to their acquisition by Teekay Tankers, for the periodwhen these vessels were owned and operated by us. Effective January 1, 2013, Teekay Tankers changed to a fixed dividend policy of $0.12 per share per annum.Effective December 14, 2015, Teekay Tankers changed its dividend policy, under which Teekay Tankers intends to pay out 30% to 50% of its quarterly adjusted netincome, with a minimum quarterly dividend of $0.03 per share, subject to any reserves determined to be required by its Board of Directors. Adjusted net income is a non-GAAP measure which excludes specific items affecting net income that are typically excluded by securities analysts in their published estimates of our financial results. Wereceived distributions from Teekay Tankers of $5.9 million, $12.1 million and $3.9 million in 2017, 2016, and 2015, respectively.94Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPlease see “Item 5. Operating and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition and Results of Operations—RecentDevelopments and Results of Operations—Recent Developments in Teekay Tankers” for additional information.Please see “Item 4. Information on the Company—A. Overview, History and Development—Our Ownership of the Daughter Entities and Recent Equity Offerings andTransactions by Daughter Entities” for information about Class A and Class B common stock issuances by Teekay Tankers to Teekay in 2015 and 2017.Teekay LNG and Teekay OffshoreTeekay LNG is a NYSE-listed, Marshall Islands limited partnership which we formed to expand our operations in the LNG shipping sector. Teekay LNG is an internationalprovider of marine transportation services for LNG, LPG and crude oil. We own and control Teekay LNG’s general partner, and as of March 1, 2018, we owned a 31.7%limited partner interest and a 2% general partner interest in Teekay LNG.Teekay Offshore is a NYSE-listed, Marshall Islands limited partnership which we formed to further develop our operations in the offshore market. Teekay Offshore is aninternational provider of marine transportation and storage services to the offshore oil industry. We owned and controlled Teekay Offshore’s general partner, TeekayOffshore GP LLC (or TOO GP) by virtue of our 100% ownership interest in TOO GP until September 25, 2017, when Brookfield acquired a 49% interest in TOO GP.Teekay and Brookfield entered into an amended limited liability company agreement whereby Brookfield obtained certain participatory rights in the management of TOOGP, which resulted in Teekay deconsolidating Teekay Offshore for accounting purposes on September 25, 2017. Subsequent to September 25, 2017, we have significantinfluence over Teekay Offshore and account for our investment in Teekay Offshore using the equity method. As of March 1, 2018, we owned a 14.1% combined generaland limited partner interest in Teekay Offshore.Please see “Item 4. Information on the Company—A. Overview, History and Development—Our Ownership of the Daughter Entities and Recent Equity Offerings andTransactions by Daughter Entities” for information about common stock, preferred units and common unit warrant issuances by Teekay Offshore to Teekay in 2015, 2016and 2017.Quarterly Cash DistributionsWe are entitled to distributions on our general and limited partner interests in each of Teekay LNG and Teekay Offshore. The general partner of each of Teekay LNG andTeekay Offshore is also entitled to distributions payable with respect to incentive distribution rights. Incentive distribution rights represent the right to receive an increasingpercentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved.In general, if for any quarter Teekay LNG or Teekay Offshore, as applicable, has distributed available cash from operating surplus to its common unitholders in an amountequal to the applicable minimum quarterly distribution for the common units, then Teekay LNG or Teekay Offshore will distribute any additional available cash fromoperating surplus for that quarter among the common unitholders and its general partner in the following manner:Teekay LNG:•first, 98% to all unitholders, pro rata, and 2% to the general partner, until each unitholder has received a total of $0.4625 per unit for that quarter;•second, 85% to all unitholders, and 15% to the general partner, until each unitholder has received a total of $0.5375 per unit for that quarter;•third, 75% to all unitholders, and 25% to the general partner, until each unitholder has received a total of $0.65; and•thereafter, 50% to all unitholders and 50% to the general partner. Teekay Offshore:•first, 99.24% to all unitholders, pro rata, and 0.76%(i) to the general partner, until each unitholder has received a total of $0.4025 per unit for that quarter;•second, 86.24% to all unitholders, and 13.76% to the general partner, until each unitholder has received a total of $0.4375 per unit for that quarter;•third, 76.24% to all unitholders, and 23.76% to the general partner, until each unitholder has received a total of $0.525 per unit for that quarter; and•thereafter, 51.24% to all unitholders and 48.76% to the general partner.(i) The general partner had a 2% interest in Teekay Offshore until September 25, 2017, when its interest decreased to 0.76%.Teekay received total distributions, including incentive distributions, from Teekay LNG of $15.0 million, $15.0 million, and $105.3 million, respectively, with respect to 2017,2016, and 2015.Teekay received total distributions, including incentive distributions, from Teekay Offshore of $10.8 million, $18.0 million, and $84.1 million, respectively, with respect to2017, 2016, and 2015.95Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn June 2016, Teekay Offshore agreed with Teekay that, until Teekay Offshore's NOK bonds maturing in 2018 have been repaid, all cash distributions (other than withrespect to any incentive distribution rights) to be paid by Teekay Offshore to Teekay or its affiliates, including Teekay Offshore's general partner, would instead be paid inTeekay Offshore common units or from the proceeds of the sale of Teekay Offshore common units. During 2017 and 2016, Teekay Offshore issued Teekay 2.4 millionand 2.5 million common units, respectively, in lieu of cash for the distributions on Teekay Offshore's Series D Preferred Units, common units and general partner interestheld by Teekay and its subsidiaries.Competition with Teekay Tankers, Teekay LNG and Teekay OffshoreWe have entered into an omnibus agreement with Teekay LNG, Teekay Offshore and related parties governing, among other things, when Teekay, Teekay LNG, andTeekay Offshore may compete with each other and providing for rights of first offer on the transfer or rechartering of certain LNG carriers, oil tankers, shuttle tankers,FSO units and FPSO units. Subject to applicable exceptions, the omnibus agreement generally provides that (a) neither Teekay nor Teekay LNG will own or operateoffshore vessels (i.e. dynamically positioned shuttle tankers, FSO units and FPSO units) that are subject to contracts with a duration of three years or more, excludingextension options, (b) neither Teekay nor Teekay Offshore will own or operate LNG carriers and (c) neither Teekay LNG nor Teekay Offshore will own or operate crudeoil tankers, other than crude oil tankers included in their respective fleets as of the dates of their respective initial public offerings.In addition, Teekay Tankers’ organization documents provide that Teekay may pursue business opportunities attractive to both parties and of which either party becomesaware. These business opportunities may include, among other things, opportunities to charter out, charter in or acquire oil tankers or to acquire tanker businesses.Sales of Vessels and Project Interests by Teekay to Teekay Tankers, Teekay LNG and Teekay OffshoreFrom time to time Teekay has sold to Teekay Tankers, Teekay LNG and Teekay Offshore vessels or interests in vessel owning subsidiaries or joint ventures. Thesetransactions include those described under “Item 5. Operating and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition andResults of Operations.”Teekay currently has committed to the following vessel transactions with its Daughter Entities:•Teekay Parent is obligated to offer to sell the Petrojarl Foinaven FPSO unit to Teekay Offshore, subject to approvals required from the charterer. The purchase pricefor the Foinaven FPSO unit would be its fair market value plus any additional tax or other similar costs to Teekay Petrojarl that would be required to transfer the FPSOunit to Teekay Offshore.•Teekay Parent owns the Petrojarl Banff and the Hummingbird Spirit FPSO units, which we will be obligated to offer to Teekay Offshore in the future under the omnibusagreement following the commencement of a charter contract with a firm period of greater than three years' duration (which is not currently the case).Time Chartering and Bareboat Chartering ArrangementsTeekay charters in from or out to its Daughter Entities certain vessels, including the following charter arrangements:•During 2016 and 2015, one and four, respectively, of Teekay Offshore’s conventional tankers were chartered out to Teekay subsidiaries under long-term timecharters. Two of Teekay Offshore’s shuttle tankers were chartered out to Teekay subsidiaries until March 31, 2017, under long-term bareboat charters, and as fromApril 1, 2017, have been chartered out to Teekay subsidiaries under long-term time charters. Pursuant to these charter contracts, Teekay Offshore earned revenuesof $33.3 million, $30.6 million, and $53.8 million, respectively, for 2017, 2016, and 2015.•During 2017, three (three in 2016 and 2015) of Teekay Offshore’s FSO units were chartered out to Teekay subsidiaries under long-term bareboat charters. Pursuantto these charter contracts, Teekay Offshore earned revenues of $16.2 million, $15.1 million, and $13.6 million, respectively, for 2017, 2016, and 2015.•Since April 2008, Teekay has chartered in from Teekay LNG the LNG carriers Arctic Spirit and Polar Spirit under a fixed-rate time charter for a period of ten years,plus options exercisable by Teekay to extend up to an additional 15 years. During 2017, 2016, and 2015, Teekay LNG earned revenues of $36.4 million, $37.3 million,and $35.9 million, respectively, under these time-charter contracts.Services, Management and Pooling ArrangementsServices Agreements. In connection with their initial public offerings in May 2005 and December 2006, respectively, and subsequent thereto, Teekay LNG and TeekayOffshore and certain of their subsidiaries have entered into services agreements with certain other subsidiaries of Teekay, pursuant to which the other Teekaysubsidiaries provide to Teekay LNG, Teekay Offshore and their operating subsidiaries administrative, crew training, strategic consulting services, business development,advisory, technical and ship management services. These services are provided in a commercially reasonable manner and upon the reasonable request of the generalpartner or subsidiaries of Teekay LNG or Teekay Offshore, as applicable. The other Teekay subsidiaries that are parties to the services agreements provide theseservices directly or subcontract for certain of these services with other entities, including other Teekay subsidiaries. Teekay LNG and Teekay Offshore pay arm’s-lengthfees for the services that include reimbursement of any direct and indirect expenses the other Teekay subsidiaries incur in providing these services. During 2017, 2016,and 2015, Teekay LNG and Teekay Offshore incurred expenses of $33.9 million, $32.9 million, and $34.4 million; and $63.7 million, $65.6 million, and $92.0 million,respectively, for these services.96Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn connection with the Brookfield Transaction, Teekay entered into a master services agreement (or Master Services Agreement) with Teekay Offshore. The primarypurpose of the Master Services Agreement was to provide for the transfer, following the closing of the Brookfield Transaction, of Teekay subsidiaries (or the assets ofsuch subsidiaries) that had been devoted exclusively or nearly exclusively to providing services to Teekay Offshore and its subsidiaries pursuant to the servicesagreement. The transfer of these certain Teekay subsidiaries to Teekay Offshore was effective on January 1, 2018. As a result of the transfer of these subsidiaries,certain services, which Teekay previously provided to Teekay Offshore will now be provided to Teekay by Teekay Offshore.In addition, for a one-year period following the closing of the Brookfield Transaction, other Teekay subsidiaries will continue to provide services to Teekay Offshore and itssubsidiaries under existing service agreements. During this period, Teekay and Teekay Offshore will evaluate which remaining services Teekay Offshore will continue toreceive from Teekay subsidiaries, and which remaining services will be transitioned to Teekay Offshore. Teekay and Teekay Offshore will enter into new or amendedservice agreements as needed to provide for any such continued services.Management Agreement. In connection with its initial public offering, Teekay Tankers entered into the long-term management agreement with Teekay TankersManagement Services Ltd., a subsidiary of Teekay (the Manager). Subject to certain limited termination rights, the initial term of the management agreement will expire onDecember 31, 2022. If not terminated, the agreement will automatically renew for five-year periods. Termination fees are required for early termination by Teekay Tankersunder certain circumstances. Pursuant to the management agreement, the Manager provides to Teekay Tankers the following types of services: commercial (primarilyvessel chartering), technical (primarily vessel maintenance and crewing), administrative (primarily accounting, legal and financial) and strategic (primarily advising onacquisitions, strategic planning and general management of the business). The Manager has agreed to use its best efforts to provide these services upon TeekayTankers’ request in a commercially reasonable manner and may provide these services directly to Teekay Tankers or subcontract for certain of these services with otherentities, primarily other Teekay subsidiaries.In return for services under the management agreement, Teekay Tankers pays the Manager an agreed-upon fee for commercial services (other than for Teekay Tankersvessels participating in pooling arrangements), a technical services fee equal to the average rate Teekay charges third parties to technically manage their vessels of asimilar size, and fees for administrative and strategic services that reimburse the Manager for its related direct and indirect expenses in providing such services and whichincludes a profit margin. During 2017, 2016, and 2015, Teekay Tankers incurred $30.0 million, $19.3 million, and $15.4 million, respectively, for these services.The management agreement also provides for the payment of a performance fee in order to provide the Manager an incentive to increase cash available for distribution toTeekay Tankers’ shareholders. Teekay Tankers did not incur any performance fees for 2017, 2016, or 2015.Pooling Arrangements. Certain Aframax tankers, Suezmax tankers and LR2 product tankers of Teekay Tankers participate in vessel pooling arrangements managed byother Teekay subsidiaries. The pool managers provide commercial services to the pool participants and administer the pools in exchange for a fee currently equal to1.25% of the gross revenues attributable to each pool participant’s vessels and a fixed amount per vessel per day which ranges from $275 (for the LR2 product tankerpool) to $325 (for the Suezmax tanker pool) to $350 (for the Aframax tanker pool). Voyage revenues and voyage expenses of Teekay Tankers’ vessels operating in thesepool arrangements are pooled with the voyage revenues and voyage expenses of other pool participants. The resulting net pool revenues, calculated on a time-charterequivalent basis, are allocated to the pool participants according to an agreed formula. Teekay Tankers incurred pool management fees during 2017, 2016, and 2015 of$2.8 million, $9.8 million, and $10.4 million, respectively.Teekay Tanker Operations Ltd. (or TTOL)On May 31, 2017, Teekay Tankers acquired from Teekay Holdings Ltd., a wholly-owned subsidiary of Teekay, the remaining 50% interest in TTOL for $39.0 million, whichincluded $13.1 million for assumed working capital. Teekay Tankers issued approximately 13.8 million shares of its Class B common stock to Teekay as consideration inaddition to the working capital consideration of $13.1 million. Prior to May 31, 2017, Teekay Tankers owned 50% of TTOL and accounted for this investment using theequity method of accounting. Since Teekay Tankers acquired the remaining 50% of TTOL on May 31, 2017, it owns 100% of TTOL and now consolidates TTOL.Teekay Tankers Acquisition of Ship-to-Ship Transfer BusinessIn July 2015, Teekay Tankers acquired TMS from a company jointly-owned by Teekay and Skaugen, for an aggregate purchase price of approximately $47.3 million(including $1.8 million for working capital). TMS provides a full suite of ship-to-ship transfer services in the oil, gas and dry bulk industries. In addition to full servicelightering and lightering support, it also provides consultancy, terminal management and project development services. TMS owns a fleet of four STS support vessels andhas two in-chartered Aframax tankers. In connection with the TMS acquisition, in July 2015, Teekay Tankers issued approximately 6.5 million shares of Class B commonstock to Teekay for net proceeds of $45.5 million. These shares of Class B common stock were priced at $6.99 per share.Relationship with Tanker Investments Ltd. (or TIL)In January 2014, Teekay and Teekay Tankers formed TIL. On November 27, 2017, Teekay Tankers completed a merger with TIL acquiring all of the remaining 27.0million issued and outstanding common shares of TIL, in a share-for-share exchange at a ratio of 3.3 shares of Teekay Tankers’ Class A common stock for each share ofTIL common stock, and as a result TIL became a wholly-owned subsidiary. As consideration for the merger, Teekay Tankers issued 88,977,544 Class A common sharesto the TIL shareholders, including 8,250,000 shares to Teekay. Commencing on November 27, 2017, Teekay Tankers consolidates the results of TIL.97Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFor further information regarding TIL, please read “Item 18. Financial Statements: Note 4(a)–Investments.”Item 8.Financial InformationConsolidated Financial Statements and NotesPlease see Item 18 below for additional information required to be disclosed under this Item.Legal ProceedingsFrom time to time we have been, and we expect to continue to be, subject to legal proceedings and claims in the ordinary course of our business, principally personal injuryand property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We believe that anyadverse outcome of existing claims, other than with respect to the items noted in “Item 18. Financial Statements: Note 16d — Legal Proceedings and Claims”, individuallyor in the aggregate, would not have a material effect on our financial position, results of operations or cash flows, when taking into account our insurance coverage andrights to seek indemnification from charterers. For information about recent legal proceedings, please read “Item 18. Financial Statements: Note 16d — Legal Proceedingsand Claims.”Dividend PolicySince our initial public offering in 1995, we have declared and paid a regular cash dividend. The amount of the quarterly dividend increased from the quarter endedSeptember 30, 1995 to the quarter ended September 30, 2015. Effective for the quarterly distribution for the fourth quarter of 2015, we decreased our quarterly cashdistribution from $0.55 per common share to $0.055 per common share.Our quarterly dividend payment is primarily based on the cash flow contributions from our general partner and limited partner interests in Teekay LNG, together with otherdividends received, after deductions for parent company level corporate general and administrative expenses and any reserves determined to be required by our Board ofDirectors. Based on the equity capital requirements for committed growth projects, coupled with weakness in energy and capital markets, we believe that it is in the bestinterests of our shareholders to conserve more of our internally generated cash flows to fund future growth projects and to reduce debt levels. Consequently, effective forthe quarterly distribution for the fourth quarter of 2015, Teekay LNG reduced its quarterly cash distribution per common unit to $0.14 from $0.70, Teekay Offshore reducedits quarterly cash distribution per common unit to $0.11 from $0.56, and we reduced our quarterly cash distribution per common share to $0.055 from $0.55. In September2017, Teekay Offshore further reduced its distribution to $0.01.Pursuant to our dividend reinvestment program, holders of common stock are permitted to choose, in lieu of receiving cash dividends, to reinvest any dividends inadditional shares of common stock at then-prevailing market prices, but without brokerage commissions or service charges.The timing and amount of dividends, if any, will depend, among other things, on our results of operations, financial condition, cash requirements, restrictions in financingagreements and other factors deemed relevant by our Board of Directors. Because we are a holding company with no material assets other than the stock of oursubsidiaries, equity-accounted investees, and investments in joint ventures, our ability to pay dividends on the common stock depends on the earnings and cash flow ofour subsidiaries and distributions from our equity-accounted investees and joint ventures.Significant ChangesPlease read “Item 18. Financial Statements: Note 23 — Subsequent Events.”Item 9.The Offer and ListingOur common stock is traded on the NYSE under the symbol “TK”. The following table sets forth the high and low prices for our common stock on the NYSE for each of theperiods indicated.98Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsYears Ended Dec. 31,2017 Dec. 31,2016 Dec. 31,2015 Dec. 31,2014 Dec. 31,2013 High $11.77 $11.85 $51.39 $67.98 $48.13 Low $5.14 $4.37 $6.65 $44.01 $32.49 Quarters Ended Mar. 31,2018 Dec. 31,2017 Sept. 30,2017 Jun. 30,2017 Mar. 31,2017 Dec. 31,2016 Sept. 30,2016 Jun. 30,2016 Mar. 31,2016High $10.90 $9.55 $10.25 $10.12 $11.77 $8.95 $8.22 $11.85 $10.23Low $7.37 $7.80 $6.35 $5.14 $8.21 $5.76 $5.45 $6.69 $4.37Months Ended Mar. 31,2018 Feb. 28,2018 Jan. 31,2018 Dec. 31,2017 Nov. 30,2017 Oct. 31,2017 High $8.74 $8.38 $10.90 $9.55 $9.30 $9.25 Low $7.52 $7.37 $8.15 $7.98 $7.93 $7.80 Item 10.Additional InformationMemorandum and Articles of AssociationOur Amended and Restated Articles of Incorporation, as amended, have been filed as exhibits 1.1 and 1.2 to our Annual Report on Form 20-F (File No. 1-12874), filed withthe SEC on April 7, 2009, and are hereby incorporated by reference into this Annual Report. Our Bylaws have previously been filed as exhibit 1.3 to our Report on Form 6-K (File No. 1-12874), filed with the SEC on August 31, 2011, and are hereby incorporated by reference into this Annual Report.The rights, preferences and restrictions attaching to each class of our capital stock are described in the section entitled “Description of Capital Stock” of our Rule 424(b)prospectus (Registration No. 333-52513), filed with the SEC on June 10, 1998, and hereby incorporated by reference into this Annual Report, provided that since the dateof such prospectus (1) the par value of our capital stock has been changed to $0.001 per share, (2) our authorized capital stock has been increased to 725,000,000shares of common stock and 25,000,000 shares of Preferred Stock, (3) we have been domesticated in the Republic of The Marshall Islands and (4) we have adopted astaggered Board of Directors, with directors serving three-year terms.The necessary actions required to change the rights of holders of our capital stock and the conditions governing the manner in which annual and special meetings ofshareholders are convened are described in our Bylaws filed as exhibit 1.3 to our Report on Form 6-K (File No. 1-12874), filed with the SEC on August 31, 2011, andhereby incorporated by reference into this Annual Report.We have in place a rights agreement that would have the effect of delaying, deferring or preventing a change in control of Teekay. The amended and restated rightsagreement has been filed as part of our Form 8-A/A (File No. 1-12874), filed with the SEC on July 2, 2010, and hereby incorporated by reference into this Annual Report.There are no limitations on the rights to own securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securitiesimposed by the laws of the Republic of The Marshall Islands or by our Articles of Incorporation or Bylaws.Material ContractsThe following is a summary of each material contract, other than material contracts entered into in the ordinary course of business, to which we or any of our subsidiariesis a party, for the two years immediately preceding the date of this Annual Report:(a)Agreement, dated August 23, 2006 for a $330,000,000 Secured Reducing Revolving Loan Facility among Teekay LNG Partners L.P., ING Bank N.V. and variousother banks. Please read Note 7 to the Consolidated Financial Statements of Teekay Corporation included herein for a summary of certain contract terms relating toour loan facilities.(b)Agreement, dated November 28, 2007 for a $845,000,000 Secured Reducing Revolving Loan Facility among Teekay Corporation, Teekay Tankers Ltd., Nordea BankFinland PLC and various other banks.(c)Annual Executive Bonus Plan.(d)Amended 2003 Equity Incentive Plan.(e)Amended 1995 Stock Option Plan.(f)Amended and Restated Rights Agreement, dated as of July 2, 2010, between Teekay Corporation and The Bank of New York, as Rights Agent.(g)Amended and Restated Omnibus Agreement dated as of December 19, 2006, among Teekay Corporation, Teekay GP L.L.C., Teekay LNG Partners L.P., TeekayLNG Operating L.L.C., Teekay Offshore GP L.L.C., Teekay Offshore Partners L.P., Teekay Offshore Operating GP. L.L.C. and Teekay Offshore Operating L.P.govern, among other things, when Teekay Corporation, Teekay LNG L.P. and Teekay99Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOffshore L.P. may compete with each other and to provide the applicable parties certain rights of first offer on LNG carriers, oil tankers, shuttle tankers, FSO unitsand FPSO units.(h)Indenture dated January 27, 2010 among Teekay Corporation and The Bank of New York Mellon Trust Company, N.A. for $450,000,000 8.5% Senior UnsecuredNotes due 2020.(i)2013 Equity Incentive Plan.(j)Agreement, dated December 21, 2012 for a $200,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. and others.(k)Amendment Agreement, dated December 18, 2013 for a $300,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. and others.(l)Agreement, dated February 24, 2014 for a $815,000,000 Secure Term Loan Facility Agreement among Knarr L.L.C., Citibank, N.A. and others.(m)Agreement dated July 7, 2014; between Teekay LNG Operating L.L.C. and China LNG Shipping (Holdings) Limited to form TC LNG Shipping L.L.C. in connection withthe Yamal LNG Project.(n)Agreement dated December 17, 2014, for a $450,000,000 secured loan facility between Nakilat Holdco L.L.C. and Qatar National Bank SAQ. The loan bears interestat LIBOR plus a margin of 1.85%. The facility requires quarterly repayments, with a bullet payment in 2026.(o)Amendment Agreement No. 2, dated December 19, 2014 for a $500,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. and others.(p)Amendment Agreement No. 3, dated October 5, 2015 for a $500,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. and others.(q)Amendment Agreement No. 4, dated December 17, 2015 for a $300,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. and others.(r)First Supplemental Indenture dated November 16, 2015 among Teekay Corporation and The Bank of New York Mellon Trust Company, N.A. for $200,000,000 8.5%Senior Unsecured Notes due 2021.(s)Agreement, dated July 31, 2015, among OOGTK Libra GmbH & Co KG, ABN AMRO Bank N.V. and various other banks for a $803,711,786.92 term loan due 2027.(t)Purchase Agreement, dated as of November 10, 2015, between Teekay Corporation and J.P. Morgan Securities LLC, for itself and on behalf of the several initialpurchasers listed in Schedule 1 thereto.(u)Registration Rights Agreement, dated November 16, 2015 by and among Teekay Corporation and J.P. Morgan Securities LLC, for itself and as representative of theseveral initial purchasers listed in Schedule 1 thereto.(v)Secured Term Loan and Revolving Credit Facility Agreement dated January 8, 2016 between Teekay Tankers Ltd., Nordea Bank Finland PLC and various otherbanks, for a $894.4 million long-term debt facility, consisting of both a term loan and a revolving credit facility, which is scheduled to mature in January 2021.(w)Share Purchase Agreement, dated May 18, 2016, by and among Teekay Corporation and the purchasers named therein.(x)Registration Rights Agreement, dated June 29, 2016, by and among Teekay Corporation and the investors named therein.(y)Equity Distribution Agreement, dated September 9, 2016, between Teekay Corporation and Citigroup Global Markets Inc.(z)Warrant Agreement dated September 25, 2017, between Teekay Offshore Partners L.P. and Teekay Shipping Limited(aa)Second Amended and Restated Limited Liability Company Agreement of Teekay Offshore GP L.L.C., dated September 25, 2017, by and between Teekay HoldingsLimited and Brookfield TK TOGP L.P.(ab)Registration Rights Agreement, dated September 25, 2017, by and between Teekay Offshore Partners L.P., Teekay Corporation and Brookfield TK TOLP L.P.(ac)Investment Agreement, dated July 26, 2017, between Teekay Offshore Partners L.P. and Teekay Holdings Limited(ad)Purchase Agreement, dated July 26, 2017, between Teekay Holdings Limited and Brookfield TK TOGP L.P.(ae)Amended and Restated Subordinate Promissory Note, dated July 26, 2017, by and between Teekay Offshore Partners L.P., Teekay Corporation and Brookfield TKTOLP L.P.(af)Master Services Agreement, dated September 25, 2017, by and between Teekay Corporation, Teekay Offshore Partners L.P. and Brookfield TK TOLP L.P.(ag)Trademark License Agreement, dated September 25, 2017, by and between Teekay Corporation and Teekay Offshore Partners L.P.(ah)Indenture dated as of January 26, 2018 between Teekay Corporation and The Bank of New York Mellon, as Trustee.(ai)Underwriting Agreement, dated January 24, 2018, by and between Teekay Corporation, Morgan Stanley & Co. LLC, and J.P. Morgan Securities LLC, acting on behalfof themselves and on behalf of the several purchases listed on Schedule I thereto.100Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(aj)Purchase Agreement, dated January 24, 2018, by and between Teekay Corporation, Morgan Stanley & Co. LLC, and J.P. Morgan Securities LLC, acting on behalf ofthemselves and on behalf of the several purchases listed on Schedule I thereto.Exchange Controls and Other Limitations Affecting Security HoldersWe are not aware of any governmental laws, decrees or regulations, including foreign exchange controls, in the Republic of The Marshall Islands that restrict the export orimport of capital or that affect the remittance of dividends, interest or other payments to holders of our securities that are non-resident and not citizens.We are not aware of any limitations on the right of non-resident or foreign owners to hold or vote our securities imposed by the laws of the Republic of The Marshall Islandsor our Articles of Incorporation and Bylaws.TaxationTeekay Corporation was incorporated in the Republic of Liberia on February 9, 1979 and was domesticated in the Republic of The Marshall Islands on December 20, 1999.Its principal executive offices are located in Bermuda. The following provides information regarding taxes to which a U.S. Holder of our common stock may be subject.Material U.S. Federal Income Tax ConsiderationsThe following is a discussion of certain material U.S. federal income tax considerations that may be relevant to shareholders. This discussion is based upon the provisionsof the Internal Revenue Code of 1986, as amended (or the Code), legislative history, applicable U.S. Treasury Regulations (or Treasury Regulations), judicial authority andadministrative interpretations, all as in effect on the date of this Annual Report and which are subject to change, possibly with retroactive effect, or are subject to differentinterpretations. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the contextotherwise requires, references in this section to “we,” “our” or “us” are references to Teekay Corporation.This discussion is limited to shareholders who hold their common stock as a capital asset for tax purposes. This discussion does not address all tax considerations thatmay be important to a particular shareholder in light of the shareholder’s circumstances, or to certain categories of shareholders that may be subject to special tax rules,such as:•dealers in securities or currencies,•traders in securities that have elected the mark-to-market method of accounting for their securities,•persons whose functional currency is not the U.S. dollar,•persons holding our common stock as part of a hedge, straddle, conversion or other “synthetic security” or integrated transaction,•certain U.S. expatriates,•financial institutions,•insurance companies,•persons subject to the alternative minimum tax,•persons that actually or under applicable constructive ownership rules own 10% or more of our common stock (by vote or value); and•entities that are tax-exempt for U.S. federal income tax purposes.If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partnergenerally will depend upon the status of the partner and the activities of the partnership. Partners in partnerships holding our common stock should consult their taxadvisors to determine the appropriate tax treatment of the partnership’s ownership of our common stock.This discussion does not address any U.S. estate tax considerations or tax considerations arising under the laws of any state, local or non-U.S. jurisdiction. Eachshareholder is urged to consult its tax advisor regarding the U.S. federal, state, local, non-U.S. and other tax consequences of the ownership or disposition of our commonstock.United States Federal Income Taxation of U.S. HoldersAs used herein, the term U.S. Holder means a beneficial owner of our common stock that is, for U.S. federal income tax purposes: (i) a U.S. citizen or U.S. resident alien(or a U.S. Individual Holder), (ii) a corporation or other entity taxable as a corporation, that was created or organized under the laws of the United States, any state thereofor the District of Columbia, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source, or (iv) a trust that either is subject to thesupervision of a court within the United States and has one or more U.S. persons with authority to control all of its substantial decisions or has a valid election in effectunder applicable Treasury Regulations to be treated as a U.S. person.101Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDistributionsSubject to the discussion of passive foreign investment companies (or PFICs) below, any distributions made by us to a U.S. Holder generally will constitute dividends,which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current and accumulated earnings andprofits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will be treated first as anontaxable return of capital to the extent of the U.S. Holder’s tax basis in our common stock and thereafter as capital gain, which will be either long term or short-termcapital gain depending upon whether the U.S. Holder has held the common stock for more than one year. U.S. Holders that are corporations for U.S. federal income taxpurposes generally will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. For purposes of computing allowableforeign tax credits for U.S. federal income tax purposes, dividends received with respect to our common stock will be treated as foreign source income.Subject to holding period requirements and certain other limitations, dividends received with respect to our common stock by a U.S. Holder who is an individual, trust orestate (or a Non-Corporate U.S. Holder) will be treated as “qualified dividend income” that is taxable to such Non-Corporate U.S. Holder at preferential capital gain tax ratesprovided that we are not classified as a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (we intend to take the positionthat we are not now and have never been classified as a PFIC, as discussed below). Any dividends received with respect to our common stock not eligible for thesepreferential rates will be taxed as ordinary income to a Non-Corporate U.S. Holder.Special rules may apply to any “extraordinary dividend” paid by us. Generally, an extraordinary dividend is, a dividend with respect to a share of common stock if theamount of the dividend is equal to or in excess of 10% of a common stockholder’s adjusted tax basis (or fair market value in certain circumstances) in such commonstock. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20% of a stockholder’s adjusted taxbasis (or fair market value in certain circumstances). If we pay an “extraordinary dividend” on our common stock that is treated as “qualified dividend income,” then anyloss recognized by a Non-Corporate U.S. Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of the amount ofsuch dividend.Certain Non-Corporate U.S. Holders are subject to a 3.8% tax on certain investment income, including dividends. Non-Corporate U.S. Holders should consult their taxadvisors regarding the effect, if any, of this tax on their ownership of our common stock.Sale, Exchange or Other Disposition of Common StockSubject to the discussion of PFICs below, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or other disposition of our common stock in anamount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in suchstock. Subject to the discussion of extraordinary dividends above, such gain or loss generally will be treated as (a) long-term capital gain or loss if the U.S. Holder’s holdingperiod is greater than one year at the time of the sale, exchange or other disposition, or short -term capital gain or loss otherwise and (b) U.S.-source gain or loss, asapplicable, for foreign tax credit purposes. Non-Corporate U.S. Holders may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains.A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.Certain Non-Corporate U.S. Holders are subject to a 3.8% tax on certain investment income, including capital gains from the sale or other disposition of stock. Non-Corporate U.S. Holders should consult their tax advisors regarding the effect, if any, of this tax on their disposition of our common stock.Consequences of Possible PFIC ClassificationA non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a PFIC in any taxable year in which, after taking into account the incomeand assets of the corporation and certain subsidiaries pursuant to a “look through” rule, either: (i) at least 75% of its gross income is “passive” income; or (ii) at least 50%of the average value of its assets is attributable to assets that produce, or are held for the production of, passive income. For purposes of these tests, “passive income”includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelatedparties in connection with the active conduct of a trade or business. By contrast, income derived from the performance of services does not constitute “passive income.”102Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThere are legal uncertainties involved in determining whether the income derived from our time-chartering activities constitutes rental income or income derived from theperformance of services, including legal uncertainties arising from the decision in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), which held that incomederived from certain time-chartering activities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of theCode. However, the Internal Revenue Service (or IRS) stated in an Action on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to, the way that therental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated that the time charters at issue in Tidewater would betreated as producing services income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or otherwise cited as precedent bytaxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory provisions governing PFICs, there can be no assurance that theIRS or a court would not follow the Tidewater decision in interpreting the PFIC provisions of the Code. Moreover, the market value of our common stock and our publiclytraded subsidiaries may be treated as reflecting the value of our assets, and our publicly traded subsidiaries’ assets, respectively, at any given time. Therefore, a decline inthe market value of our common stock, or our publicly traded subsidiaries (which is not within our control) may impact the determination of whether we are a PFIC.Nevertheless, based on our and our subsidiaries’ current assets and operations, we intend to take the position that we are not now and have never been a PFIC. Noassurance can be given, however, that the IRS, or a court of law, will accept our position or that we would not constitute a PFIC for any future taxable year if there were tobe changes in our or our subsidiaries assets, income or operations.As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder generally would be subject to different taxation rules depending onwhether the U.S. Holder makes a timely and effective election to treat us as a “Qualified Electing Fund” (a QEF election). As an alternative to making a QEF election, a U.S.Holder should be able to make a “mark-to-market” election with respect to our common stock, as discussed below.Taxation of U.S. Holders Making a Timely QEF Election. A U.S. Holder who makes a timely QEF election (an Electing Holder) must report the Electing Holder’s pro ratashare of our ordinary earnings and net capital gain, if any, for each taxable year for which we are a PFIC that ends with or within the Electing Holder’s taxable year,regardless of whether or not the Electing Holder received distributions from us in that year. Such income inclusions would not be eligible for the preferential tax ratesapplicable to qualified dividend income. The Electing Holder’s adjusted tax basis in our common stock will be increased to reflect taxed but undistributed earnings andprofits. Distributions of earnings and profits that were previously taxed will result in a corresponding reduction in the Electing Holder’s adjusted tax basis in our commonstock and will not be taxed again once distributed. An Electing Holder generally will recognize capital gain or loss on the sale, exchange or other disposition of our commonstock. A U.S. Holder makes a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with the U.S. Holder’s timely filed U.S. federal income taxreturn (including extensions).If a U.S. Holder has not made a timely QEF election with respect to the first year in the U.S. Holder’s holding period of our common stock during which we qualified as aPFIC, the U.S. Holder may be treated as having made a timely QEF election by filing a QEF election with the U.S. Holder’s timely filed U.S. federal income tax return(including extensions) and, under the rules of Section 1291 of the Code, a “deemed sale election” to include in income as an “excess distribution” (described below) theamount of any gain that the U.S. Holder would otherwise recognize if the U.S. Holder sold the U.S. Holder’s common stock on the “qualification date.” The qualification dateis the first day of our taxable year in which we qualified as a “qualified electing fund” with respect to such U.S. Holder. In addition to the above rules, under very limitedcircumstances, a U.S. Holder may make a retroactive QEF election if the U.S. Holder failed to file the QEF election documents in a timely manner. If a U.S. Holder makes atimely QEF election for one of our taxable years, but did not make such election with respect to the first year in the U.S. Holder’s holding period of our common stockduring which we qualified as a PFIC and the U.S. Holder did not make the deemed sale election described above, the U.S. Holder also will be subject to the more adverserules described below.A U.S. Holder’s QEF election will not be effective unless we annually provide the U.S. Holder with certain information concerning our income and gain, calculated inaccordance with the Code, to be included with the U.S. Holder’s U.S. federal income tax return. We have not provided our U.S. Holders with such information in priortaxable years and do not intend to provide such information in the current taxable year. Accordingly, U.S. Holders will not be able to make an effective QEF election at thistime. If, contrary to our expectations, we determine that we are or will be a PFIC for any taxable year, we will provide U.S. Holders with the information necessary to makean effective QEF election with respect to our common stock.Taxation of U.S. Holders Making a Mark-to-Market Election. If we were to be treated as a PFIC for any taxable year and, as we anticipate, our common stock was treatedas “marketable stock”, then, as an alternative to making a QEF election, a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our commonstock, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is madefor the first year a U.S. Holder holds or is deemed to hold our common stock and for which we are a PFIC, the U.S. Holder generally would include as ordinary income ineach taxable year that we are a PFIC the excess, if any, of the fair market value of the U.S. Holder’s common stock at the end of the taxable year over the U.S. Holder’sadjusted tax basis in the common stock. The U.S. Holder also would be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basisin the common stock over the fair market value thereof at the end of the taxable year that we are a PFIC, but only to the extent of the net amount previously included inincome as a result of the mark-to-market election. A U.S. Holder’s tax basis in our common stock would be adjusted to reflect any such income or loss recognized. Gainrecognized on the sale, exchange or other disposition of our common stock in taxable years that we are a PFIC would be treated as ordinary income, and any lossrecognized on the sale, exchange or other disposition of our common stock in taxable years that we are a PFIC would be treated as ordinary loss to the extent that suchloss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. Because the mark-to-market election only applies to marketablestock, however, it would not apply to a U.S. Holder’s indirect interest in any of our subsidiaries that were also determined to be PFICs.103Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIf a U.S. Holder makes a mark-to-market election for one of our taxable years and we were a PFIC for a prior taxable year during which such U.S. Holder held ourcommon stock and for which (i) we were not a QEF with respect to such U.S. Holder and (ii) such U.S. Holder did not make a timely mark-to-market election, such U.S.Holder would also be subject to the more adverse rules described below in the first taxable year for which the mark-to-market election is in effect and also to the extent thefair market value of the U.S. Holder’s common stock exceeds the U.S. Holder’s adjusted tax basis in the common stock at the end of the first taxable year for which themark-to-market election is in effect.Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election. If we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not makeeither a QEF election or a “mark-to-market” election for that year (a Non-Electing Holder) would be subject to special rules resulting in increased tax liability with respect to(i) any excess distribution (i.e., the portion of any distribution received by the Non-Electing Holder on our common stock in a taxable year in excess of 125% of theaverage annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for ourcommon stock), and (ii) any gain realized on the sale, exchange or other disposition of our common stock. Under these special rules:•the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for our common stock;•the amount allocated to the current taxable year and any taxable year prior to the taxable year we were first treated as a PFIC with respect to the Non-Electing Holderwould be taxed as ordinary income in the current taxable year;•the amount allocated to each of the other taxable years would be subject to U.S. federal income tax at the highest rate of tax in effect for the applicable class oftaxpayer for that year; and•an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.Additionally, for each year during which a U.S. Holder owns our common stock, we are a PFIC, and the total value of all PFIC stock that such U.S. Holder directly orindirectly owns exceeds certain thresholds, such U.S. Holder will be required to file IRS Form 8621 with its annual U.S. federal income tax return to report its ownership ofour common stock. In addition, if a Non-Electing Holder who is an individual dies while owning our common stock, such Non-Electing Holder’s successor generally wouldnot receive a step-up in tax basis with respect to such common stock.U.S. Holders are urged to consult their tax advisors regarding the PFIC rules, including the PFIC annual reporting requirements, as well as the applicability,availability and advisability of, and procedure for, making QEF, Mark-to-Market and other available elections with respect to us and our subsidiaries, and theU.S. federal income tax consequences of making such elections.U.S. Return Disclosure Requirements for U.S. Individual HoldersU.S. Individual Holders who hold certain specified foreign financial assets, including stock in a foreign corporation that is not held in an account maintained by a financialinstitution, with an aggregate value in excess of $50,000 on the last day of a taxable year, or $75,000 at any time during that taxable year, may be required to report suchassets on IRS Form 8938 with their U.S. federal income tax return for that taxable year. This reporting requirement does not apply to U.S. Individual Holders who reporttheir ownership of our common stock under the PFIC annual reporting rules described above. Penalties apply for failure to properly complete and file IRS Form 8938. U.S.Individual Holders are encouraged to consult with their tax advisors regarding the possible application of this disclosure requirement.United States Federal Income Taxation of Non-U.S. HoldersA beneficial owner of our common stock (other than a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) thatis not a U.S. Holder is a Non-U.S. Holder.DistributionsIn general, a Non-U.S. Holder will not be subject to U.S. federal income tax on distributions received from us with respect to our common stock unless the distributions areeffectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributableto a permanent establishment that the Non-U.S. Holder maintains in the United States). If a Non-U.S. Holder is engaged in a trade or business within the United States andthe distributions are deemed to be effectively connected to that trade or business, the Non-U.S. Holder generally will be subject to U.S. federal income tax on thosedistributions in the same manner as if it were a U.S. Holder.Sale, Exchange or Other Disposition of Common StockIn general, a Non-U.S. Holder is not subject to U.S. federal income tax on any gain resulting from the disposition of our common stock unless (a) such gain is effectivelyconnected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to apermanent establishment that the Non-U.S. Holder maintains in the United States) or (b) the Non-U.S. Holder is an individual who is present in the United States for 183days or more during the taxable year in which such disposition occurs and meets certain other requirements. If a Non-U.S. Holder is engaged in a trade or business withinthe United States and the disposition of our common stock is deemed to be effectively connected to that trade or business, the Non-U.S. Holder generally will be subject toU.S. federal income tax on the resulting gain in the same manner as if it were a U.S. Holder.104Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsInformation Reporting and Backup WithholdingIn general, payments of distributions with respect to, or the proceeds of a disposition of, our common stock to a Non-Corporate U.S. Holder will be subject to informationreporting requirements. These payments to a Non-Corporate U.S. Holder also may be subject to backup withholding if the Non-Corporate U.S. Holder:•fails to timely provide an accurate taxpayer identification number;•is notified by the IRS that it has failed to report all interest or distributions required to be shown on its U.S. federal income tax returns; or•in certain circumstances, fails to comply with applicable certification requirements.Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding on payments made to them within the United States, orthrough a U.S. payor by certifying their status on IRS Form W-8BEN, W-8BEN-E, W-8ECI, W-8EXP or W-8IMY, as applicable.Backup withholding is not an additional tax. Rather, a shareholder generally may obtain a credit for any amount withheld against its liability for U.S. federal income tax (andobtain a refund of any amounts withheld in excess of such liability) by accurately completing and timely filing a U.S. federal income tax return with the IRS.Non-United States Tax ConsiderationsMarshall Islands Tax Considerations. Because Teekay and our subsidiaries do not, and do not expect that we or they will, conduct business, operations, ortransactions in the Republic of The Marshall Islands, and because all documentation related to issuances of shares of our common stock was executed outside of theRepublic of The Marshall Islands, under current Marshall Islands law, no taxes or withholdings will be imposed by the Republic of The Marshall Islands on distributionsmade to holders of shares of our common stock, so long as such persons are not citizens of and do not reside in, maintain offices in, or engage in business, operations, ortransactions in the Republic of The Marshall Islands. Furthermore, no stamp, capital gains or other taxes will be imposed by the Republic of The Marshall Islands on thepurchase, ownership or disposition by such persons of shares of our common stock.Documents on DisplayDocuments concerning us that are referred to herein may be inspected at our principal executive offices at 4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM08, Bermuda. Those documents electronically filed via the Electronic Data Gathering, Analysis, and Retrieval (or EDGAR) system may also be obtained from the SEC’swebsite at www.sec.gov, free of charge, or from the Public Reference Section of the SEC at 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. Furtherinformation on the operation of the SEC public reference rooms may be obtained by calling the SEC at 1-800-SEC-0330.Item 11.Quantitative and Qualitative Disclosures About Market RiskWe, as in Teekay Corporation and its subsidiaries, are exposed to market risk from foreign currency fluctuations and changes in interest rates, bunker fuel prices and spottanker market rates for vessels. We use foreign currency forward contracts, cross currency and interest rate swaps, bunker fuel swap contracts and forward freightagreements to manage currency, interest rate, bunker fuel price and spot tanker market rate risks but we do not use these financial instruments for trading or speculativepurposes. Please read “Item 18. Financial Statements: Note 15 — Derivative Instruments and Hedging Activities.”Foreign Currency Fluctuation RiskOur primary economic environment is the international shipping market. Transactions in this market generally utilize the U.S. Dollar. Consequently, a substantial majority ofour revenues and most of our operating costs are in U.S. Dollars. We incur certain voyage expenses, vessel operating expenses, dry docking and overhead costs inforeign currencies, the most significant of which are the Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Euro, Norwegian Kroner and Singapore Dollar.There is a risk that currency fluctuations will have a negative effect on the value of cash flows.We reduce our exposure by entering into foreign currency forward contracts. In most cases, we hedge a portion of our net foreign currency exposure for the following nineto 12 months. We generally do not hedge our net foreign currency exposure beyond three years forward.As at December 31, 2017, we had the following foreign currency forward contracts: Contract Amountin ForeignCurrency AverageForward Rate (1) Fair Value /Carrying Amountof Asset$ ExpectedMaturity 2018$Norwegian Kroner 100,000 8.23 81 12,153105Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(1)Average forward rate represents the contractual amount of foreign currency one U.S. Dollar will buy.Although the majority of our transactions, assets and liabilities are denominated in U.S. Dollars, certain of our subsidiaries have foreign currency-denominated liabilities.There is a risk that currency fluctuations will have a negative effect on the value of our cash flows. We have not entered into any forward contracts to protect against thetranslation risk of our foreign currency-denominated liabilities. As at December 31, 2017, we had Euro-denominated term loans of 194.1 million Euros ($233.0 million). Wereceive Euro-denominated revenue from certain of our time charters. These Euro cash receipts generally are sufficient to pay the principal and interest payments on ourEuro-denominated term loans. Consequently, we have not entered into any foreign currency forward contracts with respect to our Euro-denominated term loans, althoughthere is no assurance that our net exposure to fluctuations in the Euro will not increase in the future.We enter into cross currency swaps in connection with our NOK bond issuances, and pursuant to these swaps we receive the principal amount in NOK on the maturitydate of the swap, in exchange for payment of a fixed U.S. Dollar amount. In addition, the cross currency swaps exchange a receipt of floating interest in NOK based onNIBOR plus a margin for a payment of U.S. Dollar fixed interest. The purpose of the cross currency swaps is to economically hedge the foreign currency exposure on thepayment of interest and principal of our NOK-denominated bonds due in 2018, 2020 and 2021. In addition, the cross currency swaps economically hedge the interest rateexposure on the NOK bonds due in 2018, 2020 and 2021. We have not designated, for accounting purposes, these cross currency swaps as cash flow hedges of ourNOK-denominated bonds due in 2018, 2020 and 2021. As at December 31, 2017, we were committed to the following cross currency swaps:NotionalAmountNOK (1) NotionalAmountUSD (1) Floating Rate Receivable FixedRatePayable ReferenceRate Margin Fair Value (1)$ RemainingTerm (years)900,000 150,000 NIBOR 4.35% 6.43% (41,664) 0.71,000,000 134,000 NIBOR 3.70% 5.92% (12,553) 2.41,200,000 146,500 NIBOR 6.00% 7.72% 3,758 3.8 (50,459) (1)In thousands of Norwegian Kroner and U.S. Dollars.Interest Rate RiskWe are exposed to the impact of interest rate changes primarily through our borrowings that require us to make interest payments based on LIBOR, NIBOR or EURIBOR.Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to service our debt. We use interest rate swaps toreduce our exposure to market risk from changes in interest rates. Generally, our approach is to economically hedge a substantial majority of floating-rate debt associatedwith our vessels that are operating on long-term fixed-rate contracts. We manage the rest of our debt based on our outlook for interest rates and other factors.We are exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. In order to minimize counterparty risk, we onlyenter into derivative transactions with counterparties that are rated A- or better by Standard & Poor’s or A3 or better by Moody’s at the time of the transaction. In addition,to the extent possible and practical, interest rate swaps are entered into with different counterparties to reduce concentration risk.The table below provides information about our financial instruments at December 31, 2017, that are sensitive to changes in interest rates, including our debt andobligations related to capital leases and interest rate swaps. For long-term debt and obligations related to capital leases, the table presents principal cash flows and relatedweighted-average interest rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and weighted-average interest rates byexpected contractual maturity dates. ` 106Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Expected Maturity Date 2018 2019 2020 2021 2022 Thereafter Total Fair ValueAsset /(Liability) Rate (1) (in millions of U.S. dollars)Long-Term Debt: Variable Rate ($U.S.) (2) 543.8 169.3 338.6 554.3 287.8 275.0 2,168.8 (2,128.9) 3.3%Variable Rate (Euro) (3) (4) 142.4 10.2 11.0 11.7 12.6 45.1 233.0 (226.2) 1.2%Variable Rate (NOK) (4) (5) 109.7 — 121.9 146.3 — — 377.9 (384.8) 5.6%Fixed-Rate Debt ($U.S.) 10.0 10.0 602.6 37.3 — — 659.9 (661.1) 8.2%Average Interest Rate 5.4% 5.4% 8.4% 5.4% —% —% 8.2% Obligations Related to CapitalLeases: Variable-Rate ($U.S.) (6) 73.4 26.1 26.6 27.1 27.7 243.3 424.2 (421.6) 5.2%Fixed-Rate ($U.S.) (6) 42.1 39.6 43.7 42.9 45.1 522.8 736.2 (727.4) 4.5%Average Interest Rate (7) 4.6% 4.6% 4.6% 4.6% 4.6% 4.4% 4.5% Interest Rate Swaps: Contract Amount ($U.S.) (8) 309.2 226.9 244.4 275.9 25.9 215.4 1,297.7 (43.2) 2.9%Average Fixed Pay Rate (2) 3.3% 2.6% 3.0% 2.1% 3.7% 3.4% 2.9% Contract Amount (Euro) (4) (9) 142.4 10.2 11.0 11.7 12.6 45.1 233.0 (29.2) 3.1%Average Fixed Pay Rate (3) 2.6% 3.7% 3.7% 3.7% 3.7% 3.9% 3.1% (1)Rate refers to the weighted-average effective interest rate for our long-term debt and obligations related to capital leases, including the margin we pay on our floating-ratedebt, which, as of December 31, 2017, ranged from 0.3% to 4.0% for U.S. Dollar denominated debt. The average interest rate for our obligations related to capital leases isthe weighted-average interest rate implicit in our obligations related to capital leases at the inception of the leases.(2)Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR. The repayment amounts exclude a non-interest bearing loan of $10.0million and reflect the refinancing completed in February 2018 of one of Teekay LNG's revolving facilities scheduled to mature in 2018 with a new $197 million revolving creditfacility maturing in 2022.(3)Interest payments on Euro-denominated debt and interest rate swaps are based on EURIBOR.(4)Euro-denominated and NOK-denominated amounts have been converted to U.S. Dollars using the prevailing exchange rate as of December 31, 2017.(5)Interest payments on our NOK-denominated debt and on our cross currency swaps are based on NIBOR. Our NOK-denominated debt has been economically hedged withcross currency swaps, to swap all interest and principal payments at maturity into U.S. Dollars, with the interest payments fixed at rates between 5.92% to 7.72%, and thetransfer of principal fixed at $430.5 million upon maturities.(6)The amount of obligations related to capital leases represents the present value of minimum lease payments together with our purchase obligation, as applicable.(7)The average interest rate is the weighted-average interest rate implicit in the obligations related to fixed-rate capital leases at the inception of the leases.(8)The average variable receive rate for our interest rate swaps is set quarterly at the 3-month LIBOR or semi-annually at the 6-month LIBOR. The table above does not reflectTeekay LNG's interest rate swaption agreements, whereby Teekay LNG has a one-time option to enter into an interest rate swap at a fixed rate with a third party, and thethird party has a one-time option to require Teekay LNG to enter into an interest rate swap at a fixed rate. If Teekay LNG or the third party exercises its option, there will becash settlements for the fair value of the interest rate swap in lieu of taking delivery of the actual interest rate swap. The net fair value of the interest rate swaptionagreements as at December 31, 2017 was nominal. Please read “Item 18 – Financial Statements: Note 15 — Derivative Instruments and Hedging Activities”.(9)The average variable receive rate for our Euro-denominated interest rate swaps is set at 1-month EURIBOR.Equity Price RiskWe are exposed to the changes in the unit price of Teekay Offshore. We have stock purchase warrants entitling us to purchase an aggregate of 14.5 million common unitsof Teekay Offshore for an exercise price of $0.01 per common unit, which warrants become exercisable when Teekay Offshore's common unit volume-weighted averageprice is equal to or greater than $4.00 per common unit for 10 consecutive trading days until September 25, 2024. In addition, we hold 1.8 million warrants to purchasecommon units of Teekay Offshore that were issued in connection with Teekay Offshore's private placement of Series D Preferred Units in June 2016 with an exerciseprice of $4.55, which have a seven-year term and are exercisable any time and will be net settled in either cash or common units at Teekay Offshore’s option.Commodity Price RiskFrom time to time we may use bunker fuel swap contracts relating to a portion of our bunker fuel expenditures. As at December 31, 2017, we were not committed to anybunker fuel swap contracts.107Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSpot Tanker Market Rate RiskWe are exposed to fluctuations in spot tanker market rates which can adversely affect our revenues. To reduce its exposure, Teekay Tankers uses forward freightagreements (or FFAs) in non-hedge-related transactions to increase or decrease its exposure to spot market rates, within defined limits. Net gains and losses from FFAsare recorded within realized and unrealized losses on non-designated derivative instruments in our consolidated statements of (loss) income. As at December 31, 2017,we were not committed to any FFAs.Item 12.Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13.Defaults, Dividend Arrearages and DelinquenciesNone.Item 14.Material Modifications to the Rights of Security Holders and Use of ProceedsNot applicable.Item 15.Controls and ProceduresWe maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that (i) informationrequired to be disclosed in our reports that are filed or submitted under the Exchange Act, are recorded, processed, summarized, and reported within the time periodsspecified in the SEC’s rules and forms, and (ii) information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated andcommunicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure.We conducted an evaluation of our disclosure controls and procedures under the supervision and with the participation of the Chief Executive Officer and Chief FinancialOfficer. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as ofDecember 31, 2017.The Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although ourdisclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived andoperated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact thatthere are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations includethe realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can becircumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controlsalso is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goalsunder all potential future conditions.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining for us adequate internal control over financial reporting.Our internal controls are designed to provide reasonable assurance as to the reliability of our financial reporting and the preparation and presentation of the consolidatedfinancial statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control over financial reportingincludes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordancewith generally accepted accounting principles, and that our receipts and expenditures are being made in accordance with authorizations of management and the directors;and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a materialeffect on the financial statements.We conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control – Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation ofthe design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements even when determined to be effective and can onlyprovide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods aresubject to the risk that controls may become inadequate because of changes in108Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsconditions, or that the degree of compliance with the policies and procedures may deteriorate. However, based on the evaluation, management believes that we maintainedeffective internal control over financial reporting as of December 31, 2017.Our independent auditors, KPMG LLP, an independent registered public accounting firm, have audited the accompanying consolidated financial statements and our internalcontrol over financial reporting. Their attestation report on the effectiveness of our internal control over financial reporting can be found on page F-2 of this Annual Report.There were no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (asdefined in Rule 13a – 15 (f) under the Exchange Act) that occurred during the year ended December 31, 2017.Item 16A.Audit Committee Financial ExpertThe Board has determined that director and Chair of the Audit Committee, Alan Semple, qualifies as an audit committee financial expert and is independent under applicableNYSE and SEC standards.Item 16B.Code of EthicsWe have adopted a Standards of Business Conduct that applies to all employees and directors. This document is available under “Investors – Teekay Corporation –Governance” from the home page of our website (www.teekay.com). We also intend to disclose under “Investors – Teekay Corporation – Governance” in the Investorssection of our web site any waivers to or amendments of our Standards of Business Conduct that benefit our directors and executive officers.Item 16C.Principal Accountant Fees and ServicesOur principal accountant for 2017 and 2016 was KPMG LLP, Chartered Professional Accountants. The following table shows the fees Teekay and our subsidiaries paid oraccrued for audit and other services provided by KPMG LLP for 2017 and 2016. Fees(1) (in thousands of U.S. dollars) 2017 2016Audit Fees (2) $3,547 $3,542Audit-Related Fees (3) 64 20Tax Fees (4) 57 61Total $3,668$3,623___________________________(1)The fees for the period include the fees of Teekay Offshore Partners L.P. for the period from January 1, 2017 to September 25, 2017.(2)Audit fees represent fees for professional services provided in connection with the audits of our consolidated financial statements and effectiveness of internal controls overfinancial reporting, reviews of our quarterly consolidated financial statements and audit services provided in connection with other statutory or regulatory filings for Teekay orour subsidiaries including professional services in connection with the review of our regulatory filings for public offerings of our subsidiaries. Audit fees for 2017 and 2016include approximately $930,000 and $745,000, respectively, of fees paid to KPMG LLP by Teekay LNG that were approved by the Audit Committee of the Board of Directorsof the general partner of Teekay LNG. Audit fees for 2017 and 2016 include approximately $437,000 and $1,136,000, respectively, of fees paid to KPMG LLP by our equity-accounted investee, Teekay Offshore, that were approved by the Audit Committee of the Board of Directors of the general partner of Teekay Offshore. Audit fees for 2017and 2016 include approximately $545,000 and $408,000, respectively, of fees paid to KPMG LLP by our subsidiary Teekay Tankers that were approved by the AuditCommittee of the Board of Directors of Teekay Tankers.(3)Audit-related fees consisted primarily of accounting consultations, employee benefit plan audits, services related to business acquisitions, divestitures and other attestationservices.(4)For 2017 and 2016, tax fees principally included corporate tax compliance fees.The Audit Committee has the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by our independent auditors andassociated fees. Engagements for proposed services either may be separately pre-approved by the Audit Committee or entered into pursuant to detailed pre-approvalpolicies and procedures established by the Audit Committee, as long as the Audit Committee is informed on a timely basis of any engagement entered into on that basis.The Audit Committee separately pre-approved all engagements and fees paid to our principal accountants in 2017 and 2016.Item 16D.Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E.Purchases of Equity Securities by the Issuer and Affiliated PurchasersIn October 2008, we announced that our Board of Directors had authorized the repurchase of up to $200 million of shares of our common stock. As at December 31, 2016,Teekay had repurchased 5.2 million shares of Common Stock for $162.3 million pursuant to such109Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsauthorizations. The total remaining share repurchase authorization at December 31, 2017, was $37.7 million. Neither Teekay nor any “affiliated purchaser,” as defined inRule 10b-18(a)(3) of the Exchange Act, purchased any shares of our common stock during 2016 and 2017.Item 16F.Change in Registrant’s Certifying AccountantNot applicable.Item 16G.Corporate GovernanceThe following are the significant ways in which our corporate governance practices differ from those followed by domestic companies:•In lieu of obtaining shareholder approval prior to the adoption of equity compensation plans, the board of directors approves such adoption, as permitted by New YorkStock Exchange rules for foreign private issuers.There are no other significant ways in which our corporate governance practices differ from those followed by U.S. domestic companies under the listing requirements ofthe New York Stock Exchange.Item 16H.Mine Safety DisclosureNot applicablePART IIIItem 17.Financial StatementsNot applicable.Item 18.Financial StatementsThe following consolidated financial statements and schedule, together with the related reports of KPMG LLP, Independent Registered Public Accounting Firm thereon, arefiled as part of this Annual Report: PageReports of Independent Registered Public Accounting FirmF - 1 to F - 2Consolidated Financial Statements Consolidated Statements of (Loss) IncomeF - 3Consolidated Statements of Comprehensive (Loss) IncomeF - 4Consolidated Balance SheetsF - 5Consolidated Statements of Cash FlowsF - 6Consolidated Statements of Changes in Total EquityF - 7Notes to the Consolidated Financial StatementsF - 8Schedule I - Condensed Non-Consolidated Financial Information of RegistrantF - 52All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required, are inapplicable or have been disclosed in the Notes tothe Consolidated Financial Statements and therefore have been omitted.Item 19.ExhibitsThe following exhibits are filed as part of this Annual Report:1.1Amended and Restated Articles of Incorporation of Teekay Corporation. (10)1.2Articles of Amendment of Articles of Incorporation of Teekay Corporation. (10)1.3Amended and Restated Bylaws of Teekay Corporation. (1)2.1Registration Rights Agreement among Teekay Corporation, Tradewinds Trust Co. Ltd., as Trustee for the Cirrus Trust, and WorldwideTrust Services Ltd., as Trustee for the JTK Trust. (2)2.2Specimen of Teekay Corporation Common Stock Certificate. (2)2.8Indenture dated as of January 27, 2010 among Teekay Corporation and The Bank of New York Mellon Trust Company, N.A. for$450,000,000 8.5% Senior Notes due 2020. (11)110Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents2.10First Supplemental Indenture dated November 16, 2015 among Teekay Corporation and The Bank of New York Mellon Trust Company,N.A. for $200,000,000 8.5% Senior Unsecured Notes due 2021. (18)2.11Underwriting Agreement, dated January 24, 2018, by and between Teekay Corporation, Morgan Stanley & Co. LLC, and J.P. MorganSecurities LLC, acting on behalf of themselves and on behalf of the several purchases listed on Schedule I thereto. (23)2.12Indenture dated as of January 26, 2018, between Teekay Corporation and The Bank of New York Mellon, as Trustee. (23)2.13Purchase Agreement, dated January 24, 2018, between Teekay Corporation and J.P. Morgan Securities LLC, for itself and on behalf ofthe several initial purchasers listed in Schedule 1 thereto. (23) 4.11995 Stock Option Plan. (2)4.2Amendment to 1995 Stock Option Plan. (3)4.3Amended 1995 Stock Option Plan. (4)4.4Amended 2003 Equity Incentive Plan. (13)4.5Annual Executive Bonus Plan. (5)4.7Form of Indemnification Agreement between Teekay and each of its officers and directors. (2)4.8Amended Rights Agreement, dated as of July 2, 2010 between Teekay Corporation and The Bank of New York, as Rights Agent. (6)4.14Agreement dated August 23, 2006, for a $330,000,000 Secured Reducing Revolving Loan Facility among Teekay LNG Partners L.P.,ING Bank N.V. and various other banks. (7)4.15Agreement, dated November 28, 2007 for a $845,000,000 Secured Reducing Revolving Loan Facility among Teekay Corporation,Teekay Tankers Ltd., Nordea Bank Finland PLC and various other banks. (8)4.17Amended and Restated Omnibus Agreement dated as of December 19, 2006, among Teekay Corporation, Teekay GP L.L.C., TeekayLNG Partners L.P., Teekay LNG Operating L.L.C., Teekay Offshore GP L.L.C., Teekay Offshore Partners L.P., Teekay OffshoreOperating GP. L.L.C. and Teekay Offshore Operating L.P. (9)4.182013 Equity Incentive Plan. (12)4.19Agreement, dated December 21, 2012 for a $200,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank, N.A. andothers. (14)4.20Amendment Agreement, dated December 18, 2013 for a $300,000,000 Margin Loan Agreement among Teekay Finance Limited, Citibank,N.A. and others. (15)4.21Agreement, dated February 24, 2014 for a $815,000,000 Secure Term Loan Facility Agreement among Knarr L.L.C., Citibank, N.A. andothers. (16)4.22Agreement dated July 7, 2014; Teekay LNG Operating L.L.C. entered into a shareholder agreement with China LNG Shipping (Holdings)Limited to form TC LNG Shipping L.L.C in connection with the Yamal LNG Project. (17)4.23Agreement dated December 17, 2014, for a $450,000,000 secured loan facility between Nakilat Holdco L.L.C. and Qatar National BankSAQ. (17)4.24Amendment Agreement No. 2, dated December 19, 2014 for a $500,000,000 Margin Loan Agreement among Teekay Finance Limited,Citibank, N.A. and others. (17)4.25Amendment Agreement No. 3, dated October 5, 2015 for a $500,000,000 Margin Loan Agreement among Teekay Finance Limited,Citibank, N.A. and others. (18)4.26Amendment Agreement No. 4, dated December 17, 2015 for a $300,000,000 Margin Loan Agreement among Teekay Finance Limited,Citibank, N.A. and others. (18)4.27Agreement, dated July 31, 2015, among OOGTK Libra GmbH & Co KG, ABN AMRO Bank N.V. and various other banks for a$803,711,786.92 term loan due 2027. (18)4.28Purchase Agreement, dated November 10, 2015, between Teekay Corporation and J.P. Morgan Securities LLC, for itself and on behalf ofthe several initial purchasers listed in Schedule 1 thereto. (18)4.29Registration Rights Agreement, dated November 16, 2015 by and among Teekay Corporation and J.P. Morgan Securities LLC, for itselfand as representative of the several initial purchasers listed in Schedule 1 thereto. (18)4.30Secured Term Loan and Revolving Credit Facility Agreement dated January 8, 2016 between Teekay Tankers Ltd., Nordea Bank FinlandPLC and various other banks, for a $894.4 million long-term debt facility. (18)4.31Share Purchase Agreement, dated May 18, 2016, by and among Teekay Corporation and the purchasers named therein.(19)4.32Registration Rights Agreement, dated June 29, 2016, by and among Teekay Corporation and the investors named therein.(19)4.33Equity Distribution Agreement, dated September 9, 2016, between Teekay Corporation and Citigroup Global Markets Inc.(20)4.34Warrant Agreement dated as of September 25, 2017, between Teekay Offshore Partners L.P. and Teekay Shipping Limited. (21)4.35Second Amended and Restated Limited Liability Company Agreement of Teekay Offshore GP L.L.C., dated as of September 25, 2017, byand between Teekay Holdings Limited and Brookfield TK TOGP L.P. (21)111Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents4.36Registration Rights Agreement, dated as of September 25, 2017, by and between Teekay Offshore Partners L.P., Teekay Corporationand Brookfield TK TOLP L.P. (21)4.37Investment Agreement, dated as of July 26, 2017, between Teekay Offshore Partners L.P. and Teekay Holdings Limited (22)4.38Purchase Agreement, dated as of July 26, 2017, between Teekay Holdings Limited and Brookfield TK TOGP L.P. (22)4.39Amended and Restated Subordinate Promissory Note, dated as of July 26, 2017, by and between Teekay Offshore Partners L.P.,Teekay Corporation and Brookfield TK TOLP L.P. (22)4.40Master Services Agreement, dated as of September 25, 2017, by and between Teekay Corporation, Teekay Offshore Partners L.P. andBrookfield TK TOLP L.P. (21)4.41Trademark License Agreement, dated as of September 25, 2017, by and between Teekay Corporation and Teekay Offshore PartnersL.P. (21)8.1List of Subsidiaries.12.1Rule 13a-14(a)/15d-14(a) Certification of Teekay’s Chief Executive Officer.12.2Rule 13a-14(a)/15d-14(a) Certification of Teekay’s Chief Financial Officer.13.1Teekay Corporation Certification of Kenneth Hvid, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.13.2Teekay Corporation Certification of Vincent Lok, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.23.1Consent of KPMG LLP, as independent registered public accounting firm.101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema101.CALXBRL Taxonomy Extension Calculation Linkbase101.DEFXBRL Taxonomy Extension Definition Linkbase101.LABXBRL Taxonomy Extension Label Linkbase101.PREXBRL Taxonomy Extension Presentation Linkbase_________________________(1)Previously filed as an exhibit to the Company’s Report on Form 6-K (File No.1-12874), filed with the SEC on August 31, 2011, and hereby incorporated by reference to suchReport.(2)Previously filed as an exhibit to the Company’s Registration Statement on Form F-1 (Registration No. 33-7573-4), filed with the SEC on July 14, 1995, and herebyincorporated by reference to such Registration Statement.(3)Previously filed as an exhibit to the Company’s Form 6-K (File No.1-12874), filed with the SEC on May 2, 2000, and hereby incorporated by reference to such Report.(4)Previously filed as an exhibit to the Company’s Annual Report on Form 20-F (File No.1-12874), filed with the SEC on April 2, 2001, and hereby incorporated by reference tosuch Report.(5)Previously filed as exhibit 4.28 to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 8, 2005, and hereby incorporated by reference to suchReport.(6)Previously filed as exhibit 1.2 to the Company’s Form 8-A/A (File No.1-12874), filed with the SEC on July 2, 2010, and hereby incorporated by reference to such Report.(7)Previously filed as an exhibit to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on December 21, 2006, and hereby incorporated by reference tosuch Report.(8)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 11, 2008, and hereby incorporated by reference to suchReport.(9)Previously filed as exhibit 4.15 to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 19, 2007, and hereby incorporated by reference to suchReport.(10)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 7, 2009, and hereby incorporated by reference to suchReport.(11)Previously filed as exhibit 1.1 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on January 27, 2010, and hereby incorporated by reference tosuch Report.(12)Previously filed as exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Registration No. 333-187142), filed with the SEC on March 8, 2013, and herebyincorporated by reference to such Registration Statement.(13)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 25, 2012, and hereby incorporated by reference to suchReport.112Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(14)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 29, 2013, and hereby incorporated by reference to suchReport.(15)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 28, 2014, and hereby incorporated by reference to suchReport.(16)Previously filed as exhibit 4.1 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on September 2, 2014, and hereby incorporated by reference tosuch Report.(17)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 29, 2015, and hereby incorporated by reference to suchReport.(18)Previously filed as an exhibit to the Company’s Report on Form 20-F (File No. 1-12874), filed with the SEC on April 26, 2016, and hereby incorporated by reference to suchReport.(19)Previously filed as exhibits 10.1 and 4.1 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on June 30, 2016, and hereby incorporated byreference to such Report.(20)Previously filed as exhibit 1.1 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on September 9, 2016, and hereby incorporated by reference tosuch Report.(21)Previously filed as exhibits 4.1, 4.2, 4.3, 10.4 and 10.5 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on November 22, 2017, and herebyincorporated by reference to such Report.(22)Previously filed as exhibits 10.1, 10.2 and 10.3 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on August 1, 2017, and hereby incorporated byreference to such Report.(23)Previously filed as exhibits 1.1, 4.1 and 10.1 to the Company’s Report on Form 6-K (File No. 1-12874), filed with the SEC on January 26, 2018, and hereby incorporated byreference to such Report.113Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSIGNATUREThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this AnnualReport on its behalf.TEEKAY CORPORATIONBy: /s/ Vincent LokVincent LokExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)Dated: April 30, 2018114Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and ShareholdersTEEKAY CORPORATIONOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Teekay Corporation and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the relatedconsolidated statements of (loss) income, comprehensive (loss) income, cash flows, and changes in total equity for each of the years in the three‑year period endedDecember 31, 2017, and the related notes and financial statement schedule I (collectively, the “consolidated financial statements”).In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, andthe results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally acceptedaccounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control overfinancial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission, and our report dated April 30, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal controlover financial reporting.Change in Accounting PrincipleAs discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for Business Combinations as of October 1, 2017,due to the adoption of Accounting Standards Update 2017-01 Clarifying the Definition of a Business.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financialstatements based on our audits.We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securitieslaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB and in accordance with the ethical requirements that arerelevant to our audit of the consolidated financial statements in Canada.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assessthe risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financialstatements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLPChartered Professional AccountantsWe have served as the Company’s auditor since 2011.Vancouver, CanadaApril 30, 2018F - 1Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and ShareholdersTEEKAY CORPORATIONOpinion on Internal Control Over Financial ReportingWe have audited Teekay Corporation and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2017, based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets ofthe Company as of December 31, 2017 and 2016, the related consolidated statements of (loss) income, comprehensive (loss) income, cash flows, and changes in totalequity for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”), and our reportdated April 30, 2018 expressed an unqualified opinion on those consolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal controlover financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on theCompany’s internal control over financial reporting based on our audit.We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securitieslaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB and in accordance with the ethical requirements that arerelevant to our audit of the consolidated financial statements in Canada.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate. /s/ KPMG LLPChartered Professional AccountantsVancouver, CanadaApril 30, 2018F - 2Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF (LOSS) INCOME(in thousands of U.S. dollars, except share and per share amounts)Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Revenues (note 13)1,880,332 2,328,569 2,450,382Voyage expenses(153,766) (138,339) (115,787)Vessel operating expenses (note 13)(731,150) (825,024) (844,039)Time-charter hire expense(120,893) (150,145) (138,548)Depreciation and amortization(485,829) (571,825) (509,500)General and administrative expenses (note 13)(106,150) (119,889) (133,184)Asset impairments (note 18a)(232,659) (45,796) (67,744)Net loss on sale of vessels, equipment and other operating assets (note 18b)(38,084) (66,450) (2,431)Restructuring charges (note 20)(5,101) (26,811) (14,017)Income from vessel operations6,700384,290625,132Interest expense(268,400) (282,966) (242,469)Interest income6,290 4,821 5,988Realized and unrealized loss on non-designated derivative instruments (note 15)(38,854) (35,091) (102,200)Equity (loss) income (notes 4a and 22)(37,344) 85,639 102,871Foreign exchange loss (notes 8 and 15)(26,463) (6,548) (2,195)Loss on deconsolidation of Teekay Offshore (note 3)(104,788) — —Other (loss) income (note 14)(53,981) (39,013) 1,566Net (loss) income before income taxes(516,840)111,132388,693Income tax (expense) recovery (note 21)(12,232) (24,468) 16,767Net (loss) income(529,072)86,664405,460Less: Net loss (income) attributable to non-controlling interests (note 1)365,796 (209,846) (323,309)Net (loss) income attributable to shareholders of Teekay Corporation(163,276)(123,182)82,151Per common share of Teekay Corporation (note 19) • Basic (loss) earnings attributable to shareholders of Teekay Corporation(1.89) (1.62) 1.13• Diluted (loss) earnings attributable to shareholders of Teekay Corporation(1.89) (1.62) 1.12• Cash dividends declared0.2200 0.2200 1.7325Weighted average number of common shares outstanding (note 19) • Basic86,335,473 79,211,154 72,665,783• Diluted86,335,473 79,211,154 73,190,564The accompanying notes are an integral part of the consolidated financial statements.F - 3Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(in thousands of U.S. dollars) Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Net (loss) income (529,072) 86,664 405,460Other comprehensive income (loss): Other comprehensive income (loss) before reclassifications Unrealized gain (loss) on marketable securities 438 47 (463)Unrealized loss on qualifying cash flow hedging instruments (1,895) (2,183) (2,564)Pension adjustments, net of taxes 1,463 7,594 14,178Foreign exchange gain (loss) on currency translation 1,279 179 (217)Amounts reclassified from accumulated other comprehensive loss To other income: Sale of marketable securities (22) — —To general and administrative expenses: Settlement of defined benefit pension plan — (3,905) (140)To interest expense: Realized loss on qualifying cash flow hedging instruments 1,614 — —To equity income: Realized loss on qualifying cash flow hedging instruments 2,470 3,486 2,613Other comprehensive income 5,3475,21813,407Comprehensive (loss) income (523,725) 91,882 418,867Less: Comprehensive loss (income) attributable to non-controlling interests 364,422 (211,823) (323,309)Comprehensive (loss) income attributable to shareholders of Teekay Corporation (159,303)(119,941)95,558The accompanying notes are an integral part of the consolidated financial statements.F - 4Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(in thousands of U.S. dollars) As atDecember 31, 2017$ As atDecember 31, 2016$ASSETS Current Cash and cash equivalents (note 8) 445,452 567,994Restricted cash (notes 10 and 15) 38,179 107,672Accounts receivable, including non-trade of $15,273 (2016 - $33,924) and related party balances of$16,068 (2016 - $26,471) 159,859 295,357Assets held for sale (note 18) 33,671 61,282Net investment in direct financing leases (note 9) 9,884 154,759Prepaid expenses and other (note 15) 38,180 84,899Current portion of loans to equity-accounted investees (note 22) 107,486 9,471Total current assets 832,7111,281,434Restricted cash - non-current (note 16d) 68,543 129,576Vessels and equipment (note 8) At cost, less accumulated depreciation of $1,293,447 (2016 - $3,294,021) 3,491,491 7,666,975Vessels related to capital leases, at cost, less accumulated amortization of $51,290 (2016 – $69,072)(note 10) 1,272,560 484,253Advances on newbuilding contracts and conversion costs (note 16a) 444,493 987,658Total vessels and equipment 5,208,5449,138,886Net investment in direct financing leases - non-current (note 9) 486,106 505,835Loans to equity-accounted investees and joint venture partners, bearing interest between nil and LIBORplus margins up to 1.25% (note 22) 146,420 292,209Equity-accounted investments (notes 16b and 22) 1,130,198 1,010,308Other non-current assets 83,211 190,699Intangible assets – net (note 6) 93,014 89,175Goodwill (note 6) 43,690 176,630Total assets 8,092,437 12,814,752LIABILITIES AND EQUITY Current Accounts payable 24,107 53,507Accrued liabilities and other (notes 7, 15 and 20) 282,352 391,900Advances from affiliates 49,100 11,785Current portion of derivative liabilities (note 15) 80,423 115,813Current portion of long-term debt (note 8) 800,897 998,591Current obligation related to capital leases (note 10) 114,173 40,353Current portion of in-process revenue contracts (note 6) 13,880 34,511Total current liabilities 1,364,9321,646,460Long-term debt (note 8) 2,616,808 5,640,955Long-term obligation related to capital leases (note 10) 1,046,284 352,486Derivative liabilities (note 15) 48,388 415,041In-process revenue contracts (note 6) 24,313 88,179Other long-term liabilities (note 7) 112,056 333,236Total liabilities 5,212,7818,476,357Commitments and contingencies (notes 4, 8, 9, 10, 15 and 16) Redeemable non-controlling interest (note 16e) — 249,102Equity Common stock and additional paid-in capital ($0.001 par value; 725,000,000 shares authorized;89,127,041 shares outstanding and issued (2016 – 86,149,975)) (note 12) 919,078 887,075(Accumulated deficit) retained earnings (135,892) 22,893Non-controlling interest 2,102,465 3,189,928Accumulated other comprehensive loss (note 1) (5,995) (10,603)Total equity 2,879,6564,089,293Total liabilities and equity 8,092,43712,814,752Subsequent events (note 23)The accompanying notes are an integral part of the consolidated financial statements.Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.F - 5Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of U.S. dollars) Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net (loss) income (529,072) 86,664 405,460Non-cash items: Depreciation and amortization 485,829 571,825 509,500Amortization of in-process revenue contracts (26,958) (28,109) (30,085)Unrealized (gain) loss on derivative instruments (95,556) (145,116) 51,910Asset impairments 232,659 45,796 67,744Loss on sale of vessels and equipment 38,084 66,450 2,431Loss on deconsolidation of Teekay Offshore (note 3) 104,788 — —Equity loss (income), net of dividends received 87,602 (47,563) 3,203Income tax expense (recovery) 12,232 24,468 (16,767)Unrealized foreign exchange loss (gain) and other 148,469 53,999 (136,893)Change in operating assets and liabilities (note 17) 106,567 38,333 (12,291)Expenditures for dry docking (50,899) (45,964) (68,380)Net operating cash flow 513,745 620,783 775,832FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net of issuance costs 1,007,010 2,075,014 2,452,878Prepayments of long-term debt (831,901) (1,872,573) (554,831)Scheduled repayments of long-term debt (687,544) (967,146) (1,040,292)Proceeds from financing related to sales and leaseback of vessels 809,935 355,306 —Repayments of obligations related to capital leases (46,090) (21,595) (4,423)Decrease (increase) in restricted cash 104,142 (49,079) (21,005)Net proceeds from equity issuances of subsidiaries (note 5) 172,930 327,419 575,368Net proceeds from equity issuances of Teekay Corporation 25,636 105,462 —Acquisition of shares in Teekay Tankers (19,444) — —Distribution from subsidiaries to non-controlling interests (103,150) (136,151) (360,392)Cash dividends paid (18,977) (17,406) (125,881)Other financing activities 5,337 87 (2,488)Net financing cash flow 417,884 (200,662) 918,934INVESTING ACTIVITIES Expenditures for vessels and equipment (1,054,052) (648,326) (1,795,901)Proceeds from sale of vessels and equipment 73,712 252,656 20,472Investment in equity-accounted investees (98,774) (61,885) (40,595)(Advances to) loan repayments from equity-accounted investees (12,946) (96,823) 53,173Increase in restricted cash — — (34,290)Cash of Tankers Investments Ltd. upon acquisition, net of transaction costs (note 4a) 30,831 — —Cash of Teekay Offshore upon deconsolidation, net of proceeds received (17,977) — —Purchase of SPT (net of cash acquired $377) — — (46,961)Direct financing lease payments received 17,422 23,535 20,824Other investing activities 7,613 324 —Net investing cash flow (1,054,171) (530,519) (1,823,278)Decrease in cash and cash equivalents (122,542) (110,398) (128,512)Cash and cash equivalents, beginning of the year 567,994 678,392 806,904Cash and cash equivalents, end of the year 445,452 567,994 678,392Supplemental cash flow information (note 17) The accompanying notes are an integral part of the consolidated financial statements.F - 6Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY(in thousands of U.S. dollars and shares) TOTAL EQUITY Thousandsof Sharesof Common StockOutstanding# CommonStock andAdditionalPaid-in Capital$ RetainedEarnings(Accu-mulatedDeficit) Accumul-ated OtherCompre-hensiveLoss$ Non-controllingInterest$ Total $ RedeemableNon-controllingInterest$Balance at December 31, 201472,501 770,759 355,867 (28,298) 2,290,305 3,388,633 12,842Net income 82,151 323,309 405,460 Reclassification of redeemable non-controllinginterest in net income (13,280) (13,280) 13,280Other comprehensive income 13,407 — 13,407 Dividends declared (126,391) (354,069) (480,460) (20,201)Reinvested dividends1 10 10 Exercise of stock options and other (note 12)209 1,217 1,217 Employee stock compensation (note 12) 3,032 3,032 Dilution loss on equity issuances of subsidiaries(note 5) (152,729) (152,729) Changes to non-controlling interest from equitycontributions and other 535,784 535,784 249,750Balance at December 31, 201572,711 775,018 158,898 (14,891) 2,782,049 3,701,074 255,671Net (loss) income (123,182) 209,846 86,664 Reclassification of redeemable non-controllinginterest in net income (25,342) (25,342) 25,342Other comprehensive income 3,241 1,977 5,218 Dividends declared (17,562) (120,801) (138,363) (27,058)Reinvested dividends1 4 4 Employee stock compensation and other (note 12)102 6,591 6,591 Equity offerings (note 12)13,336 105,462 105,462 Dilution gains on equity issuances of subsidiaries(note 5) 9,732 9,732 Changes to non-controlling interest from equitycontributions and other (4,993) 1,047 342,199 338,253 (4,853)Balance at December 31, 201686,150 887,075 22,893 (10,603) 3,189,928 4,089,293 249,102Net loss (163,276) (365,796) (529,072) Reclassification of redeemable non-controllinginterest in net income (18,610) (18,610) 18,610Other comprehensive income 3,973 1,374 5,347 Dividends declared (19,039) (107,609) (126,648) (13,699)Reinvested dividends1 4 4 Employee stock compensation and other (note 12)112 6,363 6,363 Equity offerings (note 12)2,864 25,636 25,636 Dilution gains on equity issuances of subsidiaries(note 5) 23,530 23,530 Impact of deconsolidation of Teekay Offshore (note3) 643 (882,473) (881,830) (255,802)Changes to non-controlling interest from equitycontributions and other (8) 285,651 285,643 1,789Balance at December 31, 201789,127 919,078 (135,892) (5,995) 2,102,465 2,879,656 —The accompanying notes are an integral part of the consolidated financial statements.F - 7Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)1. Summary of Significant Accounting PoliciesBasis of presentationThese consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (or GAAP). They include the accounts ofTeekay Corporation (or Teekay), which is incorporated under the laws of the Republic of The Marshall Islands, and its wholly-owned or controlled subsidiaries (collectively,the Company). Certain of Teekay’s significant non-wholly owned subsidiaries are consolidated in these financial statements even though Teekay owns less than a 50%ownership interest in the subsidiaries. These significant subsidiaries include the following publicly traded subsidiaries (collectively, the Public Subsidiaries): Teekay LNGPartners L.P. (or Teekay LNG); Teekay Tankers Ltd. (or Teekay Tankers); and until September 25, 2017, Teekay Offshore Partners L.P. (or Teekay Offshore).On September 25, 2017, Teekay, Teekay Offshore and Brookfield Business Partners L.P. together with its institutional partners (collectively, Brookfield) finalized astrategic partnership (or the Brookfield Transaction) which resulted in the deconsolidation of Teekay Offshore as of that date (see Note 3). Although Teekay owned lessthan 50% of Teekay Offshore, Teekay maintained control of Teekay Offshore until September 25, 2017, by virtue of its 100% ownership interest in the general partner ofTeekay Offshore, which is a master limited partnership. In connection with Brookfield's acquisition of a 49% interest in Teekay Offshore's general partner, TeekayOffshore GP LLC (or TOO GP), Teekay and Brookfield entered into an amended limited liability company agreement whereby Brookfield obtained certain participatoryrights in the management of TOO GP, which resulted in Teekay deconsolidating Teekay Offshore for accounting purposes on September 25, 2017. Subsequent to theclosing of the Brookfield Transaction, Teekay has significant influence over Teekay Offshore and accounts for its investment in Teekay Offshore using the equity method.As of December 31, 2017, Teekay owned a 13.8% interest in the common units of Teekay Offshore (27.5% - December 31, 2016).As of December 31, 2017, Teekay owned a 33.0% interest in Teekay LNG (33.1% - December 31, 2016), including common units and its 2% general partner interest, and28.8% of the capital stock of Teekay Tankers (25.4% - December 31, 2016), including Teekay Tankers’ outstanding shares of Class B common stock, which entitle theholders to five votes per share, subject to a 49% aggregate Class B Common Stock voting power maximum. While Teekay owns less than 50% of Teekay LNG andTeekay Tankers, Teekay maintains control of Teekay LNG by virtue of its 100% ownership interest in the general partner of Teekay LNG , which is a master limitedpartnership, and maintains control of Teekay Tankers through its ownership of a sufficient number of Class A common shares and Class B common shares, which provideincreased voting rights, to maintain a majority voting interest in Teekay Tankers and thus consolidates these subsidiaries.Teekay has entered into an omnibus agreement with Teekay LNG and Teekay Offshore to govern, among other things, when Teekay, Teekay LNG and Teekay Offshoremay compete with each other and to provide the applicable parties certain rights of first offer on liquefied natural gas (or LNG) carriers, oil tankers, shuttle tankers, floatingstorage and off-take (or FSO) units and floating, production, storage and offloading (or FPSO) units.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financialstatements and accompanying notes. Actual results may differ from those estimates. Given the current condition of the credit markets, it is possible that the amountsrecorded as derivative assets and liabilities could vary by material amounts prior to their settlement.Significant intercompany balances and transactions have been eliminated upon consolidation. Certain of the comparative figures have been reclassified to conform to thepresentation adopted in the current period relating to certain operating activities in the Company's consolidated statements of cash flows. In addition, as the Company hasdetermined that the entities that have financed certain of Teekay LNG's LNG carriers or LNG carrier newbuildings through sale-leaseback transactions are variableinterest entities that should be consolidated, the presentation of the sale-leaseback transactions in the consolidated statements of cash flows has been adjusted to reflectthese transactions as financing activities instead of investing activities in the current and comparative period. This has resulted in a decrease in net investing cash flow of$355 million and an increase in net financing cash flow of $355 million for the year ended December 31, 2016.Non-Controlling InterestsWhere Teekay’s ownership interest in a consolidated subsidiary is less than 100%, the non-controlling interests’ share of these non-wholly- owned subsidiaries is reportedin the Company’s consolidated balance sheets as a separate component of equity. The non-controlling interests’ share of the net income of these non-wholly ownedsubsidiaries is reported in the Company’s consolidated statements of (loss) income as a deduction from the Company’s net (loss) income to arrive at net (loss) incomeattributable to shareholders of Teekay.The basis for attributing net income or loss of each non-wholly owned subsidiary to the controlling interest and the non-controlling interests, with the exception of TeekayLNG and Teekay Offshore, until its deconsolidation on September 25, 2017, was based on the relative ownership interests of the non-controlling interests compared to thecontrolling interest, which is consistent with how dividends and distributions were paid or were payable for these non-wholly owned subsidiaries.F - 8Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Teekay LNG and Teekay Offshore each have limited partners and one general partner. Teekay LNG's general partner is wholly-owned by Teekay, and until September25, 2017, Teekay Offshore's general partner was wholly owned by Teekay. For both Teekay LNG and Teekay Offshore, the limited partners hold common units andpreferred units. For each quarterly period (with regards to Teekay Offshore, until its deconsolidation on September 25, 2017), the method of attributing Teekay LNG’s andTeekay Offshore’s net income (loss) of that period to the non-controlling interests of Teekay LNG and Teekay Offshore began by attributing net income (loss) of TeekayOffshore and Teekay LNG to the non-controlling interests which hold 100% of the preferred units of Teekay Offshore, except for Series D Preferred Units, of which theyheld 74% until redemption in September 2017, and 100% of the preferred units of Teekay LNG based on the amount of preferred unit distributions declared for the quarterlyperiod. The remaining net income (loss) to be attributed to the controlling interest and the non-controlling interests of Teekay LNG and Teekay Offshore was then dividedinto two components. The first component consists of the cash distribution that Teekay LNG or Teekay Offshore will declare and pay to limited and general partners forthat quarterly period (or the Distributed Earnings). The second component consists of the difference between (a) the net income (loss) of Teekay LNG or Teekay Offshorethat is available to be allocated to the common unitholders and the general partner of such entity and (b) the amount of the first component cash distribution (or theUndistributed Earnings). The portion of the Distributed Earnings that is allocated to the non-controlling interests is the amount of the cash distribution that Teekay LNG orTeekay Offshore will declare and pay to the non-controlling interests for that quarterly period. The portion of the Undistributed Earnings that is allocated to the non-controlling interests is based on the relative ownership percentages of the non-controlling interests of Teekay LNG and Teekay Offshore compared to the controllinginterest. The controlling interests include both limited partner common units and the general partner interests.The total net income of Teekay’s consolidated partially-owned entities and the attribution of that net income to controlling and non-controlling interests is as follows: Net income (loss) attributable to non-controlling interests Controlling Interest Net income (loss) ofconsolidatedpartially-ownedentities (1) Non-publicpartially-ownedsubsidiaries Preferredunitholders Distri-butedEarnings(2) Undistri-butedEarnings Total Netincome (loss)attributable Distri-butedEarnings Undistri-butedEarnings TotalControllingInterest (Teekay) Teekay Offshore8,262 36,339 16,312 (398,185)(3 ) (337,272) 5,981 334,033(3 ) 340,014 2,742Teekay LNG(54) 13,979 30,474 (41,520) 2,879 15,027 (18,995) (3,968) (1,089)Teekay Tankers— — — (28,893) (28,893) — (30,434) (30,434) (59,327)Other entities andeliminations— — — — (2,510) For the Year EndedDecember 31, 20178,208 50,318 46,786 (468,598) (365,796) Teekay Offshore11,858 45,835 41,688 (46,155) 53,226 18,378 (27,129) (8,751) 44,475Teekay LNG17,514 2,719 30,444 60,545 111,222 15,026 31,717 46,743 157,965Teekay Tankers— — — 47,459 47,459 — 15,396 15,396 62,855Other entities andeliminations— — — — (2,061) For the Year EndedDecember 31, 201629,372 48,554 72,132 61,849 209,846 Teekay Offshore13,911 28,609 119,971 (103,949) 58,542 70,414 (38,913) 31,501 90,043Teekay LNG16,627 — 120,482 (1,510) 135,599 82,791 (880) 81,911 217,510Teekay Tankers— — — 129,725 129,725 — 47,202 47,202 176,927Other entities andeliminations— — — — (557) For the Year EndedDecember 31, 201530,538 28,609 240,453 24,266 323,309 (1)Includes earnings from common shares and preferred shares.(2)Excludes the results of the acquisition of interests in vessels between Teekay Corporation, Teekay Offshore and Teekay Tankers during the periods the vessels were undercommon control and had begun operations.(3)Subsequent to the formation of Teekay Offshore, Teekay sold certain vessels to Teekay Offshore. As Teekay Offshore was a non-wholly-owned consolidated subsidiary ofTeekay at the date of the sales, all of the gain or loss on sales of these vessels was fully eliminated upon consolidation. Consequently, the portion of the gain or lossattributable to Teekay’s reduced interest in the vessels was deferred. The total unrecognized net deferred gain relating to the vessels previously sold from Teekay to TeekayOffshore was $349.6 million. Upon deconsolidation of Teekay Offshore, such amount was recognized as an increase to net loss attributable to non-controlling interests forthe year ended December 31, 2017. When Teekay’s non-wholly-owned subsidiaries declare dividends or distributions to their owners, or require all of their owners to contribute capital to the non-wholly-ownedsubsidiaries, such amounts are paid to, or received from, each of the owners of the non-wholly-owned subsidiaries based on the relative ownership interests in the non-wholly-owned subsidiary. As such, any dividends or distributions paid to, or capital contributions received from, the non-controlling interests are reflected as a reduction(dividends or distributions) or an increase (capital contributions) in non-controlling interest in the Company’s consolidated balance sheets.F - 9Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)When Teekay’s non-wholly-owned subsidiaries issue additional equity interests to non-controlling interests, Teekay is effectively selling a portion of the non-wholly-ownedsubsidiaries. Consequently, the proceeds received by the subsidiaries from their issuance of additional equity interests are allocated between non-controlling interest andretained earnings in the Company’s consolidated balance sheets. The portion allocated to non-controlling interest on the Company’s consolidated balance sheets consistsof the carrying value of the portion of the non-wholly-owned subsidiary that is effectively disposed of, with the remaining amount attributable to the controlling interest, whichconsists of the Company’s dilution gain or loss that is reflected in retained earnings.Reporting currencyThe consolidated financial statements are stated in U.S. Dollars. The functional currency of the Company is the U.S. Dollar because the Company operates in theinternational shipping market, which typically utilizes the U.S. Dollar as the functional currency. Transactions involving other currencies during the year are converted intoU.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in currenciesother than the U.S. Dollar are translated to reflect the year-end exchange rates. Resulting gains or losses are reflected in the accompanying consolidated statements of(loss) income.Operating revenues and expensesContracts of Affreightment and Voyage ChartersRevenues from contracts of affreightment and voyage charters are recognized on a proportionate performance method. The Company uses a discharge-to-dischargebasis in determining proportionate performance for all voyage charters, whereby it recognizes revenue ratably from when product is discharged (unloaded) at the end ofone voyage to when it is discharged after the next voyage. Shuttle tanker voyages servicing contracts of affreightment with offshore oil fields commence with tendering ofnotice of readiness at a field, within the agreed lifting range, and ends with tendering of notice of readiness at a field for the next lifting. The Company does not beginrecognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated loadport on its next voyage.Time Charters, Bareboat Charters and FPSO ContractsOperating Leases - The Company recognizes revenues from time charters, bareboat charters and FPSO contracts accounted for as operating leases on a straight-linebasis daily over the term of the charter as the applicable vessel operates under the charter. Receipt of incentive-based revenue from the Company’s FPSO units isdependent upon its operating performance and such revenue is recognized when earned by fulfillment of the applicable performance criteria. The Company does notrecognize revenue during days that the vessel is off hire unless the contract provides for compensation while off hire.Direct Financing Leases - Charter contracts that are accounted for as direct financing leases are reflected on the consolidated balance sheets as net investments in directfinancing leases. The lease revenue is recognized on an effective interest rate method over the lease term so as to produce a constant periodic rate of return over thelease terms and is included in revenues. Revenue from rendering of services is recognized as the service is performed. Revenues are not recognized during days that thevessel is off hire unless the contract provides for compensation while off hire.The Company employs four LNG carriers, and until September 2017, employed an FSO unit and volatile organic compound emissions (or VOC) equipment relating toTeekay Offshore, on long-term time charters which are accounted for as direct financing leases. The lease payments received by the Company under these leasearrangements are allocated between the net investments in the leases and revenues or other income using the effective interest method so as to produce a constantperiodic rate of return over the lease terms.Pooling ArrangementsRevenues and voyage expenses of the vessels operating in pool arrangements are pooled and the resulting net pool revenues, calculated on a time-charter equivalentbasis, are allocated to the pool participants according to an agreed formula. The agreed formula used to allocate net pool revenues varies between pools; however, theformula generally allocates revenues to pool participants on the basis of the number of days a vessel operates in the pool with weighting adjustments made to reflectvessels’ differing capacities and performance capabilities. The same revenue and expense recognition principles stated above for voyage charters are applied indetermining the net pool revenues of the pool. The pools are responsible for paying voyage expenses and distributing net pool revenues to the participants. The Companyaccounts for the net allocation from the pool as revenues and amounts due from the pool are included in accounts receivable.Other RevenueOther revenues are earned from the offshore ship-to-ship transfer of commodities, primarily crude oil and refined oil products, but also liquid gases and various otherproducts which are referred to as support operations. In addition, other revenues are also earned from other technical activities such as terminal management,consultancy, procurement and equipment rental, and from services provided such as commercial, technical, crew training, strategic, business development,administrative, project management and engineering. Other revenues from short-term contracts are recognized as services are completed based on percentage ofcompletion or in the case of long-term contracts, are recognized over the duration of the contract period.F - 10Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Operating ExpensesVoyage expenses are all expenses unique to a particular voyage, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agencyfees and commissions. Vessel operating expenses include crewing, ship management services, repairs and maintenance, insurance, stores, lube oils and communicationexpenses. Voyage expenses and vessel operating expenses are recognized when incurred.Cash and cash equivalentsThe Company classifies all highly liquid investments with a maturity date of three months or less at their inception as cash equivalents.Restricted CashThe Company maintains restricted cash deposits relating to certain term loans, collateral for derivatives, project tenders, leasing arrangements, amounts received fromcharterers to be used only for dry-docking expenditures and emergency repairs and other obligations.Accounts receivable and allowance for doubtful accountsAccounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount ofprobable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer economic data. TheCompany reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectability. Account balances are charged off against theallowance when the Company believes that the receivable will not be recovered. There were no significant amounts recorded as allowance for doubtful accounts as atDecember 31, 2017 and 2016.Vessels and equipmentAll pre-delivery costs incurred during the construction of newbuildings, including interest, supervision and technical costs, are capitalized. The acquisition cost and all costsincurred to restore used vessels purchased by the Company to the standard required to properly service the Company’s customers are capitalized.Vessel capital modifications include the addition of new equipment or certain modifications to the vessel that are aimed at improving or increasing the operational efficiencyand functionality of the asset. This type of expenditure is amortized over the estimated useful life of the modification. Expenditures covering recurring routine repairs andmaintenance are expensed as incurred.Interest costs capitalized to vessels and equipment for the years ended December 31, 2017, 2016, and 2015, aggregated $36.3 million, $36.9 million and $22.0 million,respectively.Depreciation is calculated on a straight-line basis over a vessel’s estimated useful life, less an estimated residual value. Depreciation is calculated using an estimateduseful life of 25 years for tankers carrying crude oil and refined product, 30 years for liquefied petroleum gas (or LPG) carriers and 35 years for LNG carriers,commencing the date the vessel is delivered from the shipyard, or a shorter period if regulations prevent the Company from operating the vessels for those periods of time.The Company considers shuttle tankers to be comprised of two components: (i) a conventional tanker (or the tanker component) and (ii) specialized shuttle equipment (orthe shuttle component). The Company differentiates these two components on the principle that a shuttle tanker can also operate as a conventional tanker without the useof the shuttle component. The economics of this alternate use depend on the supply and demand fundamentals in the two segments. The Company has assessed theuseful life of the tanker component as being 25 years and the shuttle component as being 20 years. FPSO units are depreciated using an estimated useful life of 20 to 25years commencing the date the unit is installed at the oil field and is in a condition that is ready to operate. FSO units are depreciated over the estimated term of thecontract. Units for maintenance and safety (or UMS) are depreciated over an estimated useful life of 35 years commencing the date the unit arrives at the oil field and is ina condition that is ready to operate. Long-distance towing and offshore installation vessels are depreciated over an estimated useful life of 25 years commencing the datethe vessel is delivered from the shipyard. Depreciation includes depreciation on all owned vessels and amortization of vessels accounted for as capital leases.Depreciation of vessels and equipment, excluding amortization of dry-docking expenditures, for the years ended December 31, 2017, 2016, and 2015 aggregated $397.6million, $492.0 million and $445.2 million, respectively. Amortization of vessels related to capital leases was $28.0 million, $12.8 million and $5.4 million for the years endedDecember 31, 2017, 2016, and 2015, respectively.Generally, the Company dry docks each conventional oil tanker and gas carrier every two and a half to five years. FPSO units are generally not dry docked andmaintenance is performed on these units while at sea. The Company capitalizes a substantial portion of the costs incurred during dry docking and amortizes those costson a straight-line basis over their estimated useful life, which typically is from the completion of a dry docking or intermediate survey to the estimated completion of the nextdry docking. The Company includes in capitalized dry-docking costs those costs incurred as part of the dry docking to meet classification and regulatory requirements.The Company expenses costs related to routine repairs and maintenance performed during dry docking, and for annual class survey costs on the Company’s FPSOunits.F - 11Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The continuity of capitalized dry-docking costs for the years ended December 31, 2017, 2016, and 2015, is summarized as follows: Year Ended December 31, 2017$ 2016$ 2015$Balance at the beginning of the year135,700 150,702 135,331Costs incurred for dry dockings52,677 47,980 69,927Dry-dock amortization(49,686) (55,026) (47,271)Write-down / sales of vessels(49,319) (7,956) (7,285)Balance at the end of the year89,372 135,700 150,702Vessels and equipment that are intended to be held and used in the Company's business are assessed for impairment when events or circumstances indicate the carryingamount of the asset may not be recoverable. If the asset’s net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining usefullife, the carrying amount of the asset is reduced to its estimated fair value. The estimated fair value for the Company’s impaired vessels is determined using discountedcash flows or appraised values. In cases where an active second hand sale and purchase market does not exist, the Company uses a discounted cash flow approach toestimate the fair value of an impaired vessel. In cases where an active second hand sale and purchase market exists, an appraised value is used to estimate the fair valueof an impaired vessel. An appraised value is generally the amount the Company would expect to receive if it were to sell the vessel. Such appraisal is normally completedby the Company and is based on second-hand sale and purchase data.Vessels and equipment that are “held for sale” are measured at the lower of their carrying amount or fair value less costs to sell and are not depreciated while classified asheld for sale. Interest and other expenses attributable to vessels and equipment classified as held for sale, or to their related liabilities, continue to be recognized asincurred.Gains on vessels sold and leased back under capital leases are deferred and amortized over the remaining term of the capital lease. Losses on vessels sold and leasedback under capital leases are recognized immediately when the fair value of the vessel at the time of a sale-leaseback transaction is less than its book value. In suchcase, the Company would recognize a loss in the amount by which book value exceeds fair value.Other loan receivablesThe Company’s investments in loan receivables are recorded at cost. The Company analyzes its loans for collectability during each reporting period. A loan is impairedwhen, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loanagreement. Factors the Company considers in determining that a loan is impaired include, among other things, an assessment of the financial condition of the debtor,payment history of the debtor, general economic conditions, the credit rating of the debtor (when available) any information provided by the debtor regarding its ability torepay the loan and the fair value of the underlying collateral. When a loan is impaired, the Company measures the amount of the impairment based on the present value ofexpected future cash flows discounted at the loan’s effective interest rate and recognizes the resulting impairment in the consolidated statements of (loss) income. Thecarrying value of the loans will be adjusted each subsequent reporting period to reflect any changes in the present value of estimated future cash flows.The following table contains a summary of the Company’s financing receivables by type of borrower, the method by which the Company monitors the credit quality of itsfinancing receivables on a quarterly basis, and the grade as of December 31, 2017. December 31,Class of Financing ReceivableCredit Quality Indicator Grade 2017$ 2016$Direct financing leasesPayment activity Performing 495,990 660,594Other loan receivables Loans to equity-accounted investees and joint venture partnersOther internal metrics Performing 253,906 304,030Long-term receivable included in other assetsPayment activity Performing 12,175 17,712 762,071 982,336Joint venturesThe Company’s investments in joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated atinitial cost and are adjusted for subsequent additional investments and the Company’s proportionate share of earnings or losses and distributions. The Company evaluatesits investments in joint ventures for impairment when events or circumstances indicate that the carrying value of such investments may have experienced an other thantemporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered an other than temporary decline, thecarrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated statements of (loss) income.F - 12Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Debt issuance costsDebt issuance costs related to a recognized debt liability, including fees, commissions and legal expenses, are deferred and presented as a direct reduction from thecarrying amount of that debt liability and amortized on an effective interest rate method over the term of the relevant loan. Debt issuance costs related to loan facilitieswithout a recognized debt liability or where the debt issuance costs exceed the carrying value of the related debt liability are deferred and presented as non-current assetsin the consolidated balance sheets. Amortization of debt issuance costs is included in interest expense.Fees paid to amend a non-revolving credit facility shall be associated with the extinguishment of the old debt instrument and included in determining the debt extinguishmentgain or loss to be recognized. Any unamortized debt issuance costs would be written off. If the amendment is considered not to be a substantial amendment, then the feeswould be associated with the replacement or modified debt instrument and, along with any existing unamortized premium or discount, would be amortized as an adjustmentof interest expense over the remaining term of the replacement or modified debt instrument using the effective interest method. Other related costs incurred with thirdparties directly related to the modification, other than the loan amendment fee, are expensed as incurred.Fees paid to amend revolving credit facilities are deferred and amortized over the term of the modified credit facility. If the borrowing capacity under the credit facility isincreased as a result of the amendment, unamortized loan costs of the original facility would be deferred and amortized over the term of the modified credit facility. If theborrowing capacity is decreased as a result of the amendment, a proportionate amount, based on the reduction in borrowing capacity, of the unamortized debt issuancecosts of the original facility would be written off and the remaining amount would be deferred and amortized over the term of the modified credit facility.Derivative instrumentsAll derivative instruments are initially recorded at fair value as either assets or liabilities in the accompanying consolidated balance sheets and subsequently remeasured tofair value, regardless of the purpose or intent for holding the derivative. The method of recognizing the resulting gain or loss is dependent on whether the derivativecontract is designed to hedge a specific risk and whether the contract qualifies for hedge accounting. The Company does not apply hedge accounting to its derivativeinstruments, except for certain types of interest rate swaps (See Note 15).When a derivative is designated as a cash flow hedge, the Company formally documents the relationship between the derivative and the hedged item. This documentationincludes the strategy and risk management objective for undertaking the hedge and the method that will be used to assess the effectiveness of the hedge. Any hedgeineffectiveness is recognized immediately in earnings, as are any gains and losses on the derivative that are excluded from the assessment of hedge effectiveness. TheCompany does not apply hedge accounting if it is determined that the hedge was not effective or will no longer be effective, the derivative was sold or exercised, or thehedged item was sold, or repaid.For derivative financial instruments designated and qualifying as cash flow hedges, changes in the fair value of the effective portion of the derivative financial instrumentsare initially recorded as a component of accumulated other comprehensive loss in total equity. In the periods when the hedged items affect earnings, the associated fairvalue changes on the hedging derivatives are transferred from total equity to the corresponding earnings line item (e.g. interest expense) in the consolidated statements of(loss) income. The ineffective portion of the change in fair value of the derivative financial instruments is immediately recognized in the corresponding earnings line item(e.g. interest expense) in the consolidated statements of (loss) income. If a cash flow hedge is terminated and the originally hedged item is still considered possible ofoccurring, the gains and losses initially recognized in total equity remain there until the hedged item impacts earnings, at which point they are transferred to thecorresponding earnings line item (e.g. interest expense) in the consolidated statements of (loss) income. If the hedged items are no longer possible of occurring, amountsrecognized in total equity are immediately transferred to the corresponding earnings line item (e.g. interest expense) in the consolidated statements of (loss) income.For derivative financial instruments that are not designated or that do not qualify as hedges under Financial Accounting Standards Board (or FASB) Accounting StandardsCodification (or ASC) 815, Derivatives and Hedging, the changes in the fair value of the derivative financial instruments are recognized in earnings. Gains and losses fromthe Company’s non-designated interest rate swaps related to long-term debt, non-designated bunker fuel swap contracts and forward freight agreements, and non-designated foreign currency forward contracts are recorded in realized and unrealized loss on non-designated derivative instruments. Gains and losses from theCompany’s non-designated cross currency swaps are recorded in foreign exchange loss in the consolidated statements of (loss) income.Goodwill and intangible assetsGoodwill is not amortized, but is reviewed for impairment at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change thatwould more likely than not reduce the fair value of a reporting unit below its carrying value. When goodwill is reviewed for impairment, the Company may elect to assessqualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, theCompany may bypass this step and use a fair value approach to identify potential goodwill impairment and, when necessary, measure the amount of impairment. TheCompany uses a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value. Intangible assets areassessed for impairment when and if impairment indicators exist. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and itscarrying amount exceeds its fair value.F - 13Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The Company’s intangible assets consist primarily of acquired time-charter contracts, contracts of affreightment, and customer relationships. The value ascribed to theacquired time-charter contracts and contracts of affreightment is amortized over the life of the associated contract, with the amount amortized each year being weightedbased on the projected revenue to be earned under the contracts. The value ascribed to customer relationships intangible assets is amortized over the expected life of acustomer contract or the expected duration that the customer relationships are estimated to contribute to the cash flows of the Company. The amount amortized each yearis weighted based on the projected revenue to be earned under the contracts or projected revenue to be earned as a result of the customer relationships.Asset retirement obligationThe Company has an asset retirement obligation (or ARO) relating to the sub-sea production facility associated with the Petrojarl Banff FPSO unit operating in the NorthSea. This obligation generally involves the costs associated with the restoration of the environment surrounding the facility and removal and disposal of all productionequipment. This obligation is expected to be settled at the end of the contract under which the FPSO unit currently operates. The ARO will be covered in part bycontractual payments to be received from FPSO contract counterparties.The Company records the fair value of an ARO as a liability in the period when the obligation arises. The fair value of the ARO is measured using expected future cashoutflows discounted at the Company’s credit-adjusted risk-free interest rate. When the liability is recorded, the Company capitalizes the cost by increasing the carryingamount of the related equipment. Each period, the liability is increased for the change in its present value, and the capitalized cost is depreciated over the useful life of therelated asset. Changes in the amount or timing of the estimated ARO are recorded as an adjustment to the related asset and liability. As at December 31, 2017, the AROand associated receivable, which is recorded in other non-current assets, were $27.3 million and $7.4 million, respectively (2016 - $44.7 million and $27.9 million,respectively). Teekay Offshore was deconsolidated on September 25, 2017. As of December 31, 2016, the ARO of $44.7 million included $21.7 million related to TeekayOffshore and the associated receivable of $27.9 million included $21.7 million related to Teekay Offshore.Repurchase of common stockThe Company accounts for repurchases of common stock by decreasing common stock by the par value of the stock repurchased. In addition, the excess of therepurchase price over the par value is allocated between additional paid in capital and retained earnings. The amount allocated to additional paid in capital is the pro-ratashare of the capital paid in and the balance is allocated to retained earnings.Share-based compensationThe Company grants stock options, restricted stock units, performance share units and restricted stock awards as incentive-based compensation to certain employeesand directors. The Company measures the cost of such awards using the grant date fair value of the award and recognizes that cost, net of estimated forfeitures, over therequisite service period, which generally equals the vesting period. For stock-based compensation awards subject to graded vesting, the Company calculates the value forthe award as if it was one single award with one expected life and amortizes the calculated expense for the entire award on a straight-line basis over the vesting period ofthe award.Compensation cost for awards with performance conditions is recognized when it is probable that the performance condition will be achieved. The compensation cost ofthe Company’s stock-based compensation awards is substantially reflected in general and administrative expense.Income taxesThe Company accounts for income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for the anticipated future taxeffects of temporary differences between the consolidated financial statement basis and the tax basis of the Company’s assets and liabilities using the applicablejurisdictional tax rates. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset willnot be realized.Recognition of uncertain tax positions is dependent upon whether it is more-likely-than-not that a tax position taken or expected to be taken in a tax return will be sustainedupon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements. The Company recognizes interest and penaltiesrelated to uncertain tax positions in income tax (expense) recovery.The Company believes that it and its subsidiaries are not subject to income taxation under the laws of the Republic of The Marshall Islands or Bermuda, or that distributionsby its subsidiaries to the Company will be subject to any income taxes under the laws of such countries, and that it qualifies for the Section 883 exemption under U.S.federal income tax purposes.Accumulated other comprehensive income (loss)The following table contains the changes in the balances of each component of accumulated other comprehensive income (loss) attributable to shareholders of Teekay forthe periods presented.F - 14Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) Qualifying CashFlow HedgingInstruments $ PensionAdjustments $ Unrealized (Loss)Gain on Availablefor Sale MarketableSecurities$ Foreign ExchangeGain (Loss) onCurrencyTranslation$ Total$Balance as of December 31, 2014(468) (29,888) — 2,058 (28,298) Other comprehensive income (loss)49 14,038 (463) (217) 13,407Balance as of December 31, 2015(419) (15,850) (463) 1,841 (14,891) Other comprehensive income and other378 3,690 47 173 4,288Balance as of December 31, 2016(41) (12,160) (416) 2,014 (10,603) Other comprehensive income and other1,450 1,463 416 1,279 4,608Balance as of December 31, 20171,409 (10,697) — 3,293 (5,995)Employee pension plansThe Company has defined contribution pension plans covering the majority of its employees. Pension costs associated with the Company’s required contributions under itsdefined contribution pension plans are based on a percentage of employees’ salaries and are charged to earnings in the year incurred. With the exception of certain of theCompany’s employees in Australia and Norway, the Company’s employees are generally eligible to participate in defined contribution plans. These plans allow for theemployees to contribute a certain percentage of their base salaries into the plans. The Company matches all or a portion of the employees’ contributions, depending onhow much each employee contributes. During the years ended December 31, 2017, 2016, and 2015, the amount of cost recognized for the Company’s defined contributionpension plans was $11.8 million, $13.5 million and $15.2 million, respectively.The Company also has defined benefit pension plans (or the Benefit Plans) covering certain of its employees in Norway and Australia. The Company accrues the costsand related obligations associated with its defined benefit pension plans based on actuarial computations using the projected benefits obligation method and management’sbest estimates of expected plan investment performance, salary escalation, and other relevant factors. For the purpose of calculating the expected return on plan assets,those assets are valued at fair value. The overfunded or underfunded status of the defined benefit pension plans is recognized as assets or liabilities in the consolidatedbalance sheets. The Company recognizes as a component of other comprehensive loss, the gains or losses that arise during a period but that are not recognized as partof net periodic benefit costs. As at December 31, 2017, approximately 65% of the defined benefit pension assets were held by the Norwegian plans and approximately 35%were held by the Australian plan. The pension assets in the Norwegian plans have been guaranteed a minimum rate of return by the provider, thus reducing potentialexposure to the Company to the extent the provider honors its obligations. The Company's funded status deficiency was $1.5 million and $2.5 million at December 31, 2017and 2016, respectively.(Loss) earnings per common shareThe computation of basic earnings (loss) per share is based on the weighted average number of common shares outstanding during the period. The computation of dilutedearnings per share assumes the exercise of all dilutive stock options and restricted stock awards using the treasury stock method. The computation of diluted loss pershare does not assume such exercises.Accounting pronouncements not yet adoptedIn May 2014, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (or ASU 2014-09). ASU 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration towhich the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment whenconsidering the terms of the contract(s) which includes (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract,(iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performanceobligation is satisfied. ASU 2014-09 is effective for the Company January 1, 2018 and shall be applied, at the Company’s option, retrospectively to each period presentedor as a cumulative-effect adjustment as of the date of adoption. The Company has elected to apply ASU 2014-09 only to those contracts that are not completed as ofJanuary 1, 2018. The Company will adopt ASU 2014-09 as a cumulative-effect adjustment as of the date of adoption. The Company has identified the following differencesbased on the work performed to date:•The Company currently presents the net allocation for its vessels participating in revenue sharing arrangements as revenues. The Company has determined that it isthe principal in voyages its vessels perform that are included in the revenue sharing arrangements. As such, the revenue from those voyages will be presented invoyage revenues and the difference between this amount and the Company's net allocation from the revenue sharing arrangement will be presented as voyageexpenses. There will be no cumulative impact to opening equity as at January 1, 2018.F - 15Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)•The Company manages vessels owned by its equity accounted investments and third parties. Upon the adoption of ASU 2014-09, costs incurred by the Company forits seafarers will be presented as vessel operating expenses and the reimbursement of such expenses will be presented as revenue, instead of such amounts beingpresented on a net basis. The Company is in the process of finalizing which vessels this applies to. There will be no cumulative impact to opening equity as at January1, 2018.In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (or ASU 2016-02). ASU 2016-02 establishes a right-of-use model that requires alessee to record a right of use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For lessees, leases will be classified aseither finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 requires lessors to classify leases as asales-type, direct financing, or operating lease. A lease is a sales-type lease if any one of five criteria are met, each of which indicate that the lease, in effect, transferscontrol of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating that the lessor has transferredsubstantially all of the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type leasesor direct financing leases are operating leases. ASU 2016-02 is effective January 1, 2019, with early adoption permitted. The Company currently intends to adopt ASU2016-02 effective January 1, 2018 using a transition approach whereby a cumulative effect adjustment is made as of the effective date of January 1, 2018, with noretrospective effect. To determine the cumulative effect adjustment, the Company has not reassessed whether any expired or existing contracts are, or contain leases,has not reassessed lease classification, and has not reassessed initial direct costs for any existing leases. The quarter in which the Company adopts ASU 2016-02 andthe estimated impact from adoption contained below is based upon the expectation that FASB will issue an additional ASU prior to the filing of our consolidated financialstatements for the first quarter of 2018. The Company is currently considering the potential impact of a delay in the finalization of this additional ASU on its adoption date.The Company has identified the following differences based on the work performed to date:•The adoption of ASU 2016-02 will result in a change in the accounting method for the Company's office leases and the lease portion of the daily charter hire for thechartered-in vessels by the Company and the Company's equity-accounted joint ventures accounted for as operating leases with firm periods of greater than oneyear. Under ASU 2016-02, the Company and the Company's equity accounted joint ventures will recognize a right-of-use asset and a lease liability on the balancesheet for these charters and office leases based on the present value of future minimum lease payments, whereas currently no right-of-use asset or lease liability isrecognized. This will have the result of increasing the Company and its equity-accounted joint venture’s assets and liabilities. The pattern of expense recognition ofchartered-in vessels is expected to remain substantially unchanged, unless the right of use asset becomes impaired.•The adoption of ASU 2016-02 will result in the Company completing its lease classification assessment when a lease commences instead of when the lease is enteredinto. The Company has entered into charters in prior periods for certain of its vessels currently under construction and which are expected to deliver over the periodfrom 2018 to 2020. Historically, for charters that were negotiated concurrently with the construction of the related vessels, the fair value of the constructed asset waspresumed to be its newbuilding cost and no gain or loss was recognized on commencement of the charter if such charters were classified as direct finance leases.On the adoption of ASU 2016-02, the fair value of the vessel is determined based on information available at the lease commencement date and any difference in thefair value of the ship upon commencement of the charter and its carrying value is recognized as a gain or loss upon commencement of the charter.•The adoption of ASU 2016-02 will result in the recognition of revenue from the reimbursement of scheduled dry-dock expenditures, where such charter contract isaccounted for as an operating lease, occurring upon completion of the scheduled dry-dock, instead of ratably over the period between the previous scheduled dry-dock and the next scheduled dry-dock. The Company is in the process of determining which vessels this applies to and the cumulative impact to opening equity as atJanuary 1, 2018.•The Company expects that certain pre-operational costs it currently expenses as incurred will be deferred and amortized over the contract term of a customercontract that the costs relate to. The Company is in the process of determining which pre-operational costs this applies to and the cumulative impact to opening equityas at January 1, 2018.•In addition, direct financing lease payments received will be presented as an operating cash inflow instead of an investing cash inflow in the statement of cash flows.In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (or ASU 2016-09). ASU 2016-09simplifies aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities andclassification on the statement of cash flows. ASU 2016-09 became effective for the Company January 1, 2017. The impact of adopting this new accounting guidanceresulted in a change in presentation of cash payments for tax withholdings on share-settled equity awards from an operating cash outflow to financing cash outflow on theCompany's statement of cash flows.In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (orASU 2016-13). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of abroader range of reasonable and supportable information to inform credit loss estimates. This update is effective for the Company on January 1, 2020, with a modified-retrospective approach. The Company is currently evaluating the effect of adopting this new guidance.In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (or ASU2016-15), which, among other things, provides guidance on two acceptable approaches of classifying distributions received from equity method investees in the statementof cash flows. ASU 2016-15 is effective for the Company on January 1, 2018, with a retrospective approach. The Company is currently evaluating the effect of adoptingthis new guidance.F - 16Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows: Restricted Cash (or ASU 2016-18). ASU 2016-18 requires that thestatements of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cashequivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18 is effective forthe Company on January 1, 2018. Adoption of ASU 2016-18 will require the Company’s statements of cash flows being modified to include changes in restricted cash inaddition to changes in cash and cash equivalents.In January 2017, the FASB issued Accounting Standards Update 2017-01, Clarifying the Definition of a Business, (or ASU 2017-01). ASU 2017-01 changes the definition ofa business to assist entities with evaluating when a set of transferred assets and activities is a business. ASU 2017-01 requires an entity to evaluate if substantially all ofthe fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets andactivities is not a business. ASU 2017-01 also requires a business to include at least one substantive process and narrows the definition of outputs by more closelyaligning it with how outputs are described in ASC 606. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, and for interim periodswithin those years. The Company adopted this standard effective October 1, 2017, and this standard was applied to the acquisition of Tanker Investment Ltd (or TIL) (SeeNote 4a).In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities (or ASU2017-12). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire changein the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also modifies the accounting for componentsexcluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12will be effective for the Company January 1, 2019. The Company is currently evaluating the effect of adopting this new guidance.2. Segment ReportingThe Company allocates capital and assesses performance from the separate perspectives of its two publicly-traded subsidiaries Teekay LNG and Teekay Tankers(together, the Controlled Daughter Entities), Teekay and its remaining subsidiaries (or Teekay Parent), and its equity-accounted investee, Teekay Offshore, (collectivelywith the Controlled Daughter Entities, the Daughter Entities), as well as from the perspective of the Company's lines of business. The primary focus of the Company’sorganizational structure, internal reporting and allocation of resources by the chief operating decision maker is on the Controlled Daughter Entities, Teekay Parent and itsequity-accounted investee, Teekay Offshore, (the Legal Entity approach) and its segments are presented accordingly on this basis. The Company (excluding TeekayOffshore) has three primary lines of business: (1) offshore production (floating production, storage and off-loading (or FPSO) units), (2) liquefied gas carriers (liquefiednatural gas (or LNG) and liquefied petroleum gas (or LPG) carriers), and (3) conventional tankers. The Company manages these businesses for the benefit of allstakeholders. The Company incorporates the primary lines of business within its segments, as in certain cases there is more than one line of business in each ControlledDaughter Entity and the Company believes this information allows a better understanding of the Company’s performance and prospects for future net cash flows.Prior to the Brookfield Transaction on September 25, 2017, the Company's operating segments reflected further disaggregation within TeekayOffshore including three individual lines of business: (1) offshore production (FPSO units), (2) offshore logistics (shuttle tankers, the HiLoadDP unit, floating storage and offtake (or FSO) units, units for maintenance and safety (or UMS) and long-distance towing and offshore installation vessels), and (3)conventional tankers. Subsequent to September 25, 2017, the Company has determined that its investment in Teekay Offshore represents a single operating segment.The following table includes results for the Company’s revenue and income from vessel operations by segment for the periods presented in these financial statements.F - 17Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) Revenues (1) Income from Vessel Operations (2) Year EndedDecember 31, Year EndedDecember 31, 2017 2016 2015 2017 2016 2015Teekay Offshore (3)796,711 1,152,390 1,229,413 147,060 230,853 283,399 Teekay LNG Liquefied Gas Carriers385,683 336,530 305,056 188,676 174,600 151,200Conventional Tankers46,993 59,914 92,935 (40,027) (21,419) 30,172 432,676 396,444 397,991 148,649 153,181 181,372Teekay Tankers (4) Conventional Tankers431,178 550,543 524,834 1,416 96,752 190,589Teekay Parent Offshore Production209,394 231,435 277,842 (256,758) (48,310) (40,227)Conventional Tankers5,065 32,967 65,777 (13,390) (15,967) 4,984Other89,107 76,111 75,547 (20,277) (32,219) 5,015 303,566 340,513 419,166 (290,425) (96,496) (30,228)Eliminations and other(83,799) (111,321) (121,022) — — — 1,880,332 2,328,569 2,450,382 6,700 384,290 625,132 (1)Certain vessels are chartered between the Daughter Entities and Teekay Parent. The amounts in the table below represent revenue earned by each segment from othersegments within the group. Such intersegment revenue for the year ended 2017, 2016 and 2015 is as follows: Year EndedDecember 31, 2017 2016 2015Teekay Offshore34,232 49,514 67,993Teekay LNG - Liquefied Gas Carriers36,358 37,336 35,887Teekay Tankers - Conventional Tankers— 5,404 1,380Teekay Parent - Conventional Tankers— — 3,080 70,590 92,254 108,340(2)Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporateresources).(3)On September 25, 2017, the Company deconsolidated Teekay Offshore (see Note 3). The figures above include those of Teekay Offshore until the date of deconsolidation.(4)Financial information for Teekay Tankers includes operations of the Explorer Spirit, formerly known as the SPT Explorer, and Navigator Spirit from December 18, 2015, thedate Teekay Tankers acquired the vessels from Teekay Offshore.The following table presents revenues and percentage of consolidated revenues for customers that accounted for more than 10% of the Company’s consolidatedrevenues during the periods presented. All of these customers are international oil companies. Year EndedDecember 31, Year EndedDecember 31, Year EndedDecember 31,(U.S. dollars in millions)2017 2016 2015Royal Dutch Shell Plc (1) (2) (3)$259.4 or 14% $429.9 or 19% (7) BG Group (1) (2) (3)(2) (2) $263.4 or 11%Petroleo Brasileiro SA (1) (4)(7) $223.7 or 10% $231.8 or 10%Statoil ASA (1) (5)(7) (7) (7) BP Exploration Operating Co. Ltd. (1) (6)$183.0 or 10% (7) (7) F - 18Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)(1)On September 25, 2017, the Company deconsolidated Teekay Offshore (see Note 3). The figures above include those of Teekay Offshore until the date of deconsolidation.(2)In February 2016, Royal Dutch Shell Plc acquired BG Group Plc and therefore includes revenues from both Royal Dutch Shell Plc and BG Group Plc for 2016.(3)Teekay Offshore Segment, Teekay LNG Segment — Liquefied Gas Carriers, Teekay Tankers Segment — Conventional Tankers, and Teekay Parent Segment —Conventional Tankers(4)Teekay Offshore Segment, and Teekay Tankers Segment — Conventional Tankers(5)Teekay Offshore Segment, Teekay Tankers Segment — Conventional Tankers, and Teekay Parent Segment — Conventional Tankers(6)Teekay Offshore Segment, Teekay LNG Segment — Liquefied Gas Carriers, Teekay Tankers Segment — Conventional Tankers, Teekay Parent Segment — OffshoreProduction, and Teekay Parent Segment — Conventional Tankers(7)Less than 10%.The following table includes other income statement items by segment for the periods presented in these financial statements. Depreciation and Amortization Asset Impairments and Net Loss onSale of Vessels, Equipment and OtherOperating Assets Equity (Loss) Income Year EndedDecember 31, Year EndedDecember 31, Year EndedDecember 31, 2017 2016 2015 2017 2016 2015 2017 2016 2015Teekay Offshore (1)(219,406) (300,011) (274,599) (1,500) (40,079) (69,998) 12,028 17,933 7,672 Teekay Offshore (2) (2,461) — — Teekay LNG Liquefied Gas Carriers(95,025) (80,084) (71,323) — — — 9,789 62,307 84,171Conventional Tankers(10,520) (15,458) (20,930) (50,600) (38,976) — — — — (105,545) (95,542) (92,253) (50,600) (38,976) — 9,789 62,307 84,171Teekay Tankers (3) Conventional Tankers(100,481) (104,149) (71,429) (12,984) (20,594) 771 (25,370) 7,680 11,528Teekay Parent Offshore Production(60,560) (70,855) (69,508) (205,659) (110) (948) (7,861) (575) (12,196)Conventional Tankers— (1,717) (2,852) — (12,487) — (20,677) 132 12,797Other163 449 451 — — — (2,792) (1,838) (1,101) (60,397) (72,123) (71,909) (205,659) (12,597) (948) (31,330) (2,281) (500)Eliminations and other— — 690 — — — — — — (485,829) (571,825) (509,500) (270,743) (112,246) (70,175) (37,344) 85,639 102,871(1)On September 25, 2017, the Company deconsolidated Teekay Offshore (see Note 3). The figures above include those of Teekay Offshore until the date of deconsolidation.(2)Commencing on September 25, 2017, the Company accounts for its investment in Teekay Offshore using the equity method, and recognized an equity loss of $2.5 million forthe post-deconsolidation period ended December 31, 2017.(3)Financial information for Teekay Tankers includes operations of the Explorer Spirit, formerly known as the SPT Explorer and Navigator Spirit from December 18, 2015, thedate Teekay Tankers acquired the vessels from Teekay Offshore.A reconciliation of total segment assets to total assets presented in the accompanying consolidated balance sheets is as follows:F - 19Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) December 31, 2017$ December 31, 2016$Teekay Offshore280,774 5,354,702Teekay LNG - Liquefied Gas Carriers4,624,321 3,957,088Teekay LNG - Conventional Tankers112,844 193,553Teekay Tankers - Conventional Tankers2,125,909 1,870,211Teekay Parent - Offshore Production366,229 635,364Teekay Parent - Conventional Tankers13,620 55,937Teekay Parent - Other26,527 13,208Cash and cash equivalents445,452 567,994Other assets not allocated118,493 281,244Eliminations(21,732) (114,549)Consolidated total assets8,092,437 12,814,752 The following table includes capital expenditures by segment for the periods presented in these financial statements. December 31, 2017$ December 31, 2016$Teekay Offshore340,705 294,581Teekay LNG - Liquefied Gas Carriers708,608 344,924Teekay LNG - Conventional Tankers— 63Teekay Tankers - Conventional Tankers4,732 9,226Teekay Parent - Other7 88 1,054,052 648,8823. Deconsolidation of Teekay OffshoreOn September 25, 2017, Teekay, Teekay Offshore and Brookfield finalized the Brookfield Transaction, which included, among other things, the following:•Brookfield and Teekay invested $610.0 million and $30.0 million, respectively, in exchange for 244.0 million and 12.0 million common units of Teekay Offshore,respectively, and 62.4 million and 3.1 million common unit warrants (or the Brookfield Transaction Warrants), with an exercise price of $0.01 per unit, a term of sevenyears, and which are exercisable when Teekay Offshore's common unit volume-weighted average price is equal to or greater than $4.00 per common unit for 10consecutive trading days until September 25, 2024;•Brookfield acquired from Teekay a 49% interest in Teekay Offshore's general partner in exchange for $4.0 million and an option to purchase an additional 2.0%interest in Teekay Offshore's general partner from Teekay in exchange for 1.0 million of the Brookfield Transaction Warrants initially issued to Brookfield;•Teekay Offshore repurchased and cancelled all of its outstanding Series C-1 and Series D Preferred Units at a per unit redemption value of $18.20 and $23.75 perunit, plus accrued and unpaid distributions, respectively, which included Teekay's investment in 1,040,000 Series D Preferred Units. The Series D tranche B Warrantsto purchase Teekay Offshore common units, which were issued as part of the Series D Preferred Units on June 29, 2016, were amended to reduce the exerciseprice from $6.05 to $4.55 per unit; and•Brookfield acquired from a subsidiary of Teekay the $200 million subordinated promissory note issued by Teekay Offshore on July 1, 2016, the maturity of whichBrookfield extended from 2019 to 2022, in consideration for $140.0 million in cash on a net basis and 11.4 million of the Brookfield Transaction Warrants initially issuedto Brookfield.In connection with the acquisition of the 49% interest in Teekay Offshore's general partner, TOO GP, Teekay and Brookfield entered into an amended limited liabilitycompany agreement whereby Brookfield obtained certain participatory rights in the management of TOO GP, which resulted in Teekay deconsolidating Teekay Offshorefor accounting purposes on September 25, 2017. Subsequent to the closing of the Brookfield Transaction, Teekay has significant influence over Teekay Offshore andaccounts for its investment in Teekay Offshore using the equity method. Teekay Offshore is a related party of Teekay, and Brookfield is not a related party of Teekay (seeNote 13).The following table shows the accounting impact from the deconsolidation of Teekay Offshore on September 25, 2017. On such date, the Company recognized both thenet cash proceeds it received from Brookfield and the fair value of its retained interests in Teekay Offshore, including common units, warrants, and vessel charters withTeekay Offshore, and derecognized the carrying value of both Teekay Offshore’s net assets and the non-controlling interest in Teekay Offshore, with the differencebetween the amounts recognized and derecognized being the loss on deconsolidation.F - 20Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) As of September 25, 2017Net cash proceeds received by Teekay139,693Fair value of common units and general partner interest of Teekay Offshore (note 22)150,132Fair value of warrants (note 15)36,596Fair value of vessel charters with Teekay Offshore (notes 6 and 7)14,812Carrying value of the non-controlling interest in Teekay Offshore1,138,275Subtotal1,479,508Less: Carrying value of Teekay Offshore's net assets on deconsolidation(1,584,296)Loss on deconsolidation of Teekay Offshore(104,788)The $150.1 million fair value of Teekay's retained investment in Teekay Offshore, consisting of approximately 14% in its outstanding common units and a 51% interest inTOO GP, was determined with reference to the market price of Teekay Offshore's common units on September 25, 2017. The $14.8 million fair value of vessel charterswas determined using an income approach and with reference to market rates, contract term, and a discount rate of 10%.Subsequent to the formation of Teekay Offshore, Teekay sold certain vessels to Teekay Offshore. As Teekay Offshore was a non-wholly owned consolidated subsidiaryof Teekay at the date of the sales, all of the gain or loss on sales of these vessels was fully eliminated upon consolidation. Consequently, the portion of the gain or lossattributable to Teekay’s reduced interest in the vessels was deferred. The total unrecognized net deferred gain relating to the vessels previously sold from Teekay toTeekay Offshore was $349.6 million. Upon deconsolidation of Teekay Offshore, such amount was recognized as an increase to net loss attributable to non-controllinginterests for the year ended December 31, 2017. 4. Investmentsa)Tanker Investments Ltd.In January 2014, Teekay and Teekay Tankers formed Tanker Investments Ltd. (or TIL), which sought to own and operate modern second-hand tankers. Teekay andTeekay Tankers in the aggregate purchased 5.0 million shares of common stock, representing an initial 20% interest in TIL, as part of a $250 million private placement byTIL, which represented a total investment by Teekay and Teekay Tankers of $50.0 million. In October 2014, Teekay Tankers acquired an additional 0.9 million commonshares in TIL, representing 2.43% of the then outstanding share capital of TIL.On May 31, 2017, Teekay Tankers entered into a merger agreement (or the Merger Agreement) to acquire the remaining 27.0 million issued and outstanding commonshares of TIL, by way of a share-for-share exchange of 3.3 shares of Teekay Tankers Class A common stock for each outstanding share of TIL common stock (or theTIL merger). Teekay Tankers and Teekay then owned approximately 3.4 million and 2.5 million common shares, or 11.3% and 8.2% of TIL, respectively. As the Companythen accounted for its investment in TIL under the equity method, the Company was required to remeasure its previously held equity investment to fair value at theacquisition date. Based on the then pending transaction, the Company recognized an other than temporary impairment and remeasured its investment in TIL to fair valueduring the second quarter of 2017 based on the TIL share price at June 30, 2017, resulting in a write-down of $48.6 million presented in equity (loss) income on theconsolidated statements of (loss) income. On November 27, 2017, Teekay Tankers completed the merger with TIL and the Company remeasured its equity investment inTIL to fair value based on the relative share exchange value at the date of the acquisition, which resulted in the recognition of a gain of $2.4 million presented in equity(loss) income on the consolidated statements of (loss) income.On completion of the TIL merger, TIL became a wholly-owned subsidiary of Teekay Tankers. As consideration for the merger, Teekay Tankers issued 88,977,544 ClassA common shares (including 8,250,000 Class A common shares to Teekay) to the TIL shareholders (other than Teekay Tankers) for $151.3 million, or $1.70 per share.The merger with TIL was accounted for as an acquisition of assets. The purchase price was determined based on the value of Teekay Tankers shares issued on themerger date and transaction costs associated with the merger, which amounted to $6.8 million. Together with the fair value of the Company's 8.2% and Teekay Tankers'11.3% ownership in TIL and the total number of Class A common shares issued at the close of the merger, the total acquisition cost was $177.3 million. The assetsacquired and liabilities assumed were recognized at their fair values on November 27, 2017, with the difference between the purchase price and the net fair value of the netassets acquired allocated on a relative fair value basis to the vessels acquired. Net working capital and long-term debt assumed were recognized at their fair values onNovember 27, 2017, of $47.1 million and $337.1 million, respectively. The remaining amount of the purchase price was allocated to vessels ($467.1 million) and existingtime-charter contracts ($0.2 million), on a relative fair value basis.F - 21Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)b)Teekay LNG – Bahrain LNG Joint VentureIn December 2015, Teekay LNG entered into an agreement with National Oil & Gas Authority (or Nogaholding), Samsung C&T (or Samsung) and Gulf InvestmentCorporation (or GIC) to form a joint venture, Bahrain LNG W.L.L. (or the Bahrain LNG Joint Venture), for the development of an LNG receiving and regasification terminal inBahrain. The Bahrain LNG Joint Venture is a joint venture between Nogaholding (30%), Teekay LNG (30%), Samsung (16%) and GIC (24%). The project will include anoffshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and anonshore nitrogen production facility with a total LNG terminal capacity of 800 million standard cubic feet per day and will be owned and operated under a 20-year agreementcommencing in early-2019. In addition, Teekay LNG will supply a FSU in connection with this project, which will be modified specifically from one of the Teekay LNG’s fourM-type, Electronically Controlled, Gas Injection (or MEGI) LNG carrier newbuildings ordered from Daewoo Shipbuilding & Marine Engineering Co. (or DSME), through a 20-year time-charter contract with the Bahrain LNG Joint Venture.As at December 31, 2017, Teekay LNG had advanced $79.1 million (December 31, 2016 – 62.9 million) to the Bahrain LNG Joint Venture. These advances bear interest atLIBOR plus 1.25% and as at December 31, 2017, the interest accrued on these advances was $0.1 million (December 31, 2016 – $0.1 million).c)Teekay Tankers – Principal MaritimeIn August 2015, Teekay Tankers agreed to acquire 12 modern Suezmax tankers from Principal Maritime Tankers Corporation (or Principal Maritime). All 12 of the vesselswere delivered in 2015 for a total purchase price of $661.3 million, consisting of $612.0 million in cash and approximately 7.2 million shares of Teekay Tankers’ Class Acommon stock with a value of $49.3 million. To finance the cash portion of the acquisition price, Teekay Tankers secured a $397.2 million loan facility which matured inJanuary 2016, and which was refinanced as part of a comprehensive Teekay Tankers refinancing in January 2016 (see Note 8). In addition, in August 2015 TeekayTankers issued in a public offering and concurrent private placement approximately 13.6 million shares of its Class A common stock for net proceeds of $90.6 million,including approximately 4.5 million shares which were issued to Teekay Parent. Teekay Tankers financed the remainder of the cash purchase price with existing liquidity.d)Teekay Tankers – Ship-to-Ship Transfer BusinessIn July 2015, Teekay Tankers acquired a ship-to-ship transfer business (or SPT) from a company jointly-owned by Teekay and a Norway-based marine transportationcompany, I.M. Skaugen SE (or Skaugen), for a cash purchase price of $47.3 million (including $1.8 million for working capital). To finance this acquisition, Teekaysubscribed for approximately 6.5 million shares of Teekay Tankers’ Class B common stock at a subscription price of approximately $6.99 per share. SPT provides a fullsuite of ship-to-ship (or STS) transfer services in the oil, gas and dry bulk industries. In addition to full service lightering and lightering support, it also provides consultancyand terminal management services. This acquisition established Teekay Tankers as a global company in the STS transfer business, which is expected to increaseTeekay Tankers’ fee-based revenue and its overall fleet utilization. On the transaction closing date of July 31, 2015, SPT owned and operated a fleet of six STS supportvessels and one chartered-in Aframax Tanker.The acquisition of SPT was accounted for as a business acquisition using the acquisition method of accounting.Operating results of SPT are reflected in the Company’s consolidated financial statements commencing July 31, 2015, the effective date of acquisition. Pro forma revenuesand net income as if the acquisition of SPT had occurred at the beginning of 2015 would not be materially different than actual operating results reported. The Company’sprior 50% interest in SPT was remeasured to its estimated fair value on the acquisition date and the resulting gain of $8.7 million was recognized in equity income in 2015.F - 22Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)5. Equity Financing Transactions of the Daughter EntitiesDuring the years ended December 31, 2017, 2016, and 2015, the Company’s publicly-traded subsidiaries, Teekay Tankers and Teekay LNG, and Teekay Offshore, priorto the Brookfield Transaction on September 25, 2017, completed the following public offerings and private placements of equity securities: Number ofshares / units # TotalProceedsReceived$ Less:TeekayCorporationPortion$ OfferingExpenses$ Net ProceedsReceived$2017 Teekay Tankers Continuous Offering Program3,800,000 8,826 — (305) 8,521Teekay Tankers Private Placement2,155,172 5,000 (5,000) — —Teekay Tankers Direct Equity Placement (1)13,775,224 25,897 (25,897) — —Teekay Offshore Private Placements (2)6,521,518 29,817 (17,160) (212) 12,445Teekay Tankers Direct Equity Placement (3)88,977,544 151,262 (14,025) — 137,237Teekay LNG Preferred B Units Offering6,800,000 170,000 — (5,589) 164,4112016 Teekay Offshore Preferred D Units Offering(4) 100,000 (26,000) (2,750) 71,250Teekay Offshore Common Units Offering21,978,022 102,041 (2,041) (2,550) 97,450Teekay Offshore Continuous Offering Program5,525,310 31,819 (636) (792) 30,391Teekay Offshore Private Placement(5) 24,874 (13,167) — 11,707Teekay LNG Preferred A Units Offering5,000,000 125,000 — (4,293) 120,707Teekay Tankers Continuous Offering Program3,020,000 7,747 — (189) 7,5582015 (6) Teekay Offshore Preferred B Units Offering5,000,000 125,000 — (4,210) 120,790Teekay Offshore Preferred C Units Offering10,400,000 250,000 — (250) 249,750Teekay Offshore Continuous Offering Program211,077 3,551 (71) (66) 3,414Teekay LNG Continuous Offering Program1,173,428 36,274 (725) (900) 34,649Teekay Tankers Public Offering3,000,000 13,716 — (31) 13,685Teekay Tankers Continuous Offering Program13,391,100 94,595 — (2,155) 92,440Teekay Tankers Private Placement13,310,158 109,907 — — 109,907(1)In May 2017, Teekay Tankers issued Class B common stock to the Company as consideration for its acquisition of the remaining 50% interest in TTOL.(2)During 2017, Teekay Offshore issued common units (including the general partner's 2% proportionate capital contribution) as a payment-in-kind for the distributions on TeekayOffshore's 8.60% Series C-1 Cumulative Convertible Perpetual Preferred Units (or the Series C-1 Preferred Units) and 10.50% Series D Cumulative Convertible PerpetualPreferred Units (or the Series D Preferred Units) and on Teekay Offshore's common units and general partner interest held by subsidiaries of Teekay.In June 2016, Teekay Offshore agreed with Teekay that, until the Teekay Offshore's Norwegian Kroner (or NOK) bonds maturing in 2018 had been repaid, all cashdistributions (other than with respect to distributions, if any, on incentive distribution rights) to be paid by Teekay Offshore to Teekay or its affiliates, including Teekay Offshore'sgeneral partner, would instead be paid in common units or from the proceeds of the sale of common units. During 2017, Teekay Offshore issued Teekay 2.4 million commonunits (including the general partner's 2% proportionate capital contribution) as a payment-in-kind for the distributions on Teekay Offshore's Series D Preferred Units, commonunits and general partner interest held by subsidiaries of Teekay. During 2017, Teekay Offshore issued common units (including the general partner's 2% proportionate capitalcontribution) as a payment-in-kind for the interest due on Teekay Offshore's $200 million loan due to Teekay. Teekay Offshore issued Teekay 1.7 million common units(including the general partner's 2% proportionate capital contribution) as a payment-in-kind for the loan interest.(3)In November 2017, Teekay Tankers issued Class A common shares to the shareholders of TIL as consideration for the Teekay Tankers' acquisition of the remaining 88.7%interest (including Teekay Parent's 8.2% interest) in TIL. The shares had an approximate value of $151.3 million, or $1.70 per share, when the purchase price was agreedbetween the parties.(4)In June 2016, Teekay Offshore issued 4,000,000 of its Series D Preferred Units and 4,500,000 warrants exercisable to acquire up to 4,500,000 common units at an exerciseprice equal to the closing price of Teekay Offshore's common units on June 16, 2016, or $4.55 per unit (or the $4.55 Warrants) and 2,250,000 warrants exercisable to acquireup to 2,250,000 common units with an exercise price at a 33% premium to the closing price of Teekay Offshore's common units on June 16, 2016, or $6.05 per unit (or the$6.05 Warrants) (together, the Warrants). The Warrants have a seven-year term and became exercisable any time six months following their issuance date. The Warrants areto be net settled in either cash or common units at Teekay Offshore's option. The gross proceeds from the sale of these securities were $100.0 million ($97.2 million net ofoffering costs). Also in June 2016, Teekay Offshore exchanged approximately 1.9 million of the Series C Preferred Units for approximately 8.3 million common units of TeekayOffshore and also exchanged the remaining approximately 8.5 million Series C Preferred Units for approximately 8.5 million Series C-1 Preferred Units. In connection with therepurchase of the Series C-1 and Series D Preferred Units on September 25, 2017, the exercise price of the $6.05 Warrants was reduced to $4.55 per unit.Teekay purchased for $26.0 million a total of 1,040,000 of Teekay Offshore's Series D Preferred Units. Teekay also received 1,170,000 of the $4.55 Warrants and 585,000 ofthe $6.05 Warrants. The purchase of Teekay Offshore Series D Preferred Units has been accounted for as an equity transaction. Therefore, no gains or losses wererecognized in the Company’s consolidated statements of (loss) income as a result of this purchase.F - 23Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Net cash proceeds from the sale of these securities of $71.3 million, which excludes Teekay's investment, was allocated on a relative fair value basis to the Series D PreferredUnits ($61.1 million), to the $4.55 Warrants ($7.0 million) and to the $6.05 Warrants ($3.1 million). The Warrants qualify as freestanding financial instruments and are accountedfor separately from the Series D Preferred Units. The Series D Preferred Units were presented in the Company's consolidated balance sheets as redeemable non-controllinginterest in temporary equity which is above the equity section but below the liabilities section as they were not mandatorily redeemable and the prospect of a forced redemptionpaid with cash due to a change of control event was not probable. The Warrants were recorded as non-controlling interests in the Company's consolidated balance sheets.The Series D Preferred Units were redeemed in September 2017 upon the deconsolidation of Teekay Offshore (see Note 3).(5)In 2016, Teekay Offshore issued 4.7 million common units for a total value of $24.9 million (including the general partner's 2% proportionate capital contribution of $0.5 million)as a payment-in-kind for the distributions on Teekay Offshore's Series C-1 Preferred Units and Series D Preferred Units and Teekay Offshore's common units and generalpartner interest held by subsidiaries of Teekay. In June 2016, Teekay Offshore agreed with Teekay that, until the Teekay Offshore's Norwegian Kroner bonds maturing in 2018have been repaid, all cash distributions (other than with respect to incentive distribution rights) to be paid by Teekay Offshore to Teekay or its affiliates, including TeekayOffshore's general partner, would instead be paid in Teekay Offshore common units or from the proceeds of the sale of common units. During 2016, Teekay Offshore issuedTeekay 2.5 million common units (including the general partner's 2% proportionate capital contribution) as a payment-in-kind for the distribution on Teekay Offshore's Series DPreferred Units, common units and general partner interest held by Teekay and its subsidiaries. The Series C-1 Preferred Units and Series D Preferred Units were redeemed inSeptember 2017 upon the deconsolidation of Teekay Offshore (see Note 3).(6)In 2015, in addition to the issuances of equity to third parties noted in the table above, Teekay purchased $30.0 million or 4.5 million shares of Class A common stock ofTeekay Tankers for Teekay Tankers to partially finance the acquisition of 12 modern Suezmax tankers from Principal Maritime (See Note 4c), $300.0 million or 14.4 millioncommon units of Teekay Offshore for Teekay Offshore to partially finance the July 1, 2015 acquisition of the Petrojarl Knarr FPSO from Teekay, and $45.5 million or 6.5 millionshares of Class B common stock of Teekay Tankers to finance the acquisition of SPT (see Note 4d). These increases in Teekay’s ownership interests in Teekay Tankers andTeekay Offshore have been accounted for as equity transactions. Therefore, no gains or losses were recognized in the Company’s consolidated statements of (loss) income asa result of these purchases. However, the carrying amount of the non-controlling interests’ share of Teekay Offshore and Teekay Tankers increased by an aggregate of$168.1 million and retained earnings decreased by $168.1 million to reflect the increase in Teekay’s ownership interest in Teekay Offshore and Teekay Tankers and theincrease in the carrying value of Teekay Offshore’s and Teekay Tankers’ total equity. This adjustment to non-controlling interest and retained earnings was primarily the resultof Teekay Offshore’s 14.4 million common units being issued to Teekay at fair value, which was significantly greater than the carrying value.As a result of the public offerings and equity placements of Teekay Tankers and Teekay LNG, and Teekay Offshore prior to the Brookfield Transaction on September 25,2017, the Company recorded increases (decreases) to retained earnings of $23.5 million (2017), $9.7 million (2016) and $(152.7) million (2015). These amounts representTeekay’s dilution gains (losses) from the issuance of units and shares by these consolidated subsidiaries.6. Goodwill, Intangible Assets and In-Process Revenue ContractsGoodwillThe carrying amount of goodwill for the years ended December 31, 2017 and 2016, for the Company’s reportable segments are as follows: Teekay Offshore$ Teekay LNG -Liquefied GasSegment$ Conventional TankerSegment$ Total$Balance as of December 31, 2016132,940 35,631 8,059 176,630Decrease due to deconsolidation of TeekayOffshore (Note 3)(132,940) — — (132,940)Balance as of December 31, 2017— 35,631 8,059 43,690Intangible AssetsAs at December 31, 2017, the Company’s intangible assets consisted of: Gross CarryingAmount$ AccumulatedAmortization$ Net Carrying Amount$Customer contracts193,194 (131,647) 61,547Customer relationships22,500 (8,005) 14,495Off-market in-charter contracts (1)17,900 (928) 16,972 233,594 (140,580) 93,014(1) Represents the off-market in-charter contracts between the Company and Teekay Offshore for two Floating Storage and Offloading (or FSO) units.F - 24Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)As at December 31, 2016, the Company’s intangible assets consisted of: Gross CarryingAmount$ AccumulatedAmortization$ Net Carrying Amount$Customer contracts317,222 (245,705) 71,517Customer relationships22,500 (4,842) 17,658Other intangible assets1,000 (1,000) — 340,722 (251,547) 89,175In July 2015, as part of Teekay Tankers’ acquisition of SPT (see Note 4d), Teekay Tankers ascribed a value of $30.9 million to the customer relationships assumed aspart of the acquisition of the STS transfer business. The Company is amortizing those customer relationships over a period of 10 years. The estimates of fair value werefinalized in the first quarter of 2016 and resulted in a decrease in intangible assets of $8.4 million from preliminary estimates. Amortization expense relating to thisacquisition for the years ended December 31, 2017 and 2016 were $3.2 million and $3.6 million, respectively, which is included in depreciation and amortization expenses.Aggregate amortization expense of intangible assets for the year ended December 31, 2017, was $14.0 million (2016 - $14.9 million, 2015 - $13.6 million), including $13.1million presented in depreciation and amortization (2016 - $14.9 million, 2015 - $13.6 million) and $0.9 million presented in time-charter hire expenses (2016 - $nil, 2015 -$nil). Amortization of intangible assets following 2017 is expected to be $15.3 million (2018), $13.8 million (2019), $13.3 million (2020), $13.1 million (2021), $12.9 million(2022) and $24.6 million (thereafter).In-Process Revenue ContractsAs part of the Company’s previous acquisition of FPSO units from Sevan Marine ASA (or Sevan) and Petrojarl ASA (subsequently renamed Teekay Petrojarl AS, orTeekay Petrojarl), and Teekay LNG’s acquisition of BG’s ownership interests in four LNG carrier newbuildings, the Company assumed certain FPSO contracts and time-charter-out contracts with terms that were less favorable than the then prevailing market terms, and a service obligation for shipbuilding supervision and crew trainingservices for the four LNG carrier newbuildings. At the time of the acquisitions, the Company recognized liabilities based on the estimated fair value of these contracts andservice obligations. One FPSO contract as at December 31, 2016 of $63.0 million related to Teekay Offshore, which was deconsolidated in September 2017. TheCompany is amortizing the remaining liabilities over the estimated remaining terms of their associated contracts on a weighted basis, based on the projected revenue to beearned under the contracts.Amortization of in-process revenue contracts for the year ended December 31, 2017 was $27.2 million (2016 - $28.1 million, 2015 - $30.1 million), which is included inrevenues on the consolidated statements of (loss) income. Amortization of in-process revenue contracts following 2017 is expected to be $14.1 million (2018), $6.3 million(2019), $5.9 million (2020), $5.9 million (2021), and $5.9 million (2022).7. Accrued Liabilities and Other and Other Long-Term LiabilitiesAccrued Liabilities and Other December 31, 2017$ December 31, 2016 (1)$Voyage and vessel expenses69,544 177,868Interest42,028 64,362Payroll and benefits and other137,659 70,904Deferred revenues and gains - current33,121 78,766 282,352 391,900(1)Accrued liabilities related to Teekay Offshore as of December 31, 2016 totaled $207.7 million. Teekay Offshore was deconsolidated on September 25, 2017. This balancewas comprised of $118.6 million of voyage and vessel expenses, $22.4 million of interest, $9.3 million of payroll and benefits and other, and $57.4 million of deferredrevenues and gains - current.Other Long-Term Liabilities December 31, 2017$ December 31, 2016 (2)$Deferred revenues and gains33,363 210,434Guarantee liability10,633 24,373Asset retirement obligation27,302 44,675Pension liabilities6,529 8,599Unrecognized tax benefits and deferred income tax31,061 24,340Other3,168 20,815 112,056 333,236F - 25Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)(2)Other long-term liabilities related to Teekay Offshore as of December 31, 2016 totaled $211.6 million. Teekay Offshore was deconsolidated on September 25, 2017. Thisbalance was comprised of $162.7 million of deferred revenues and gains, $21.7 million of asset retirement obligation, $7.0 million of unrecognized tax benefits and deferredincome tax and $20.2 million of other.8. Long-Term Debt December 31, 2017$ December 31, 2016$Revolving Credit Facilities877,343 1,119,808Senior Notes (8.5%) due January 15, 2020592,657 592,657Norwegian Kroner-denominated Bonds due through October 2021377,856 628,257U.S. Dollar-denominated Term Loans due through 20311,358,798 3,702,997U.S. Dollar Bonds due through 2024— 466,680Euro-denominated Term Loans due through 2023232,957 219,733Other U.S. Dollar-denominated loan10,000 —Total principal3,449,611 6,730,132Less unamortized discount and debt issuance costs(31,906) (90,586)Total debt3,417,705 6,639,546Less current portion(800,897) (998,591)Long-term portion2,616,808 5,640,955As of December 31, 2017, the Company had 8 revolving credit facilities (or the Revolvers) available, which, as at such date, provided for aggregate borrowings of up to$1.3 billion, of which $461.4 million was undrawn. Interest payments are based on LIBOR plus margins; at December 31, 2017 and December 31, 2016, the marginsranged between 0.45% and 4.00%. The aggregate amount available under the Revolvers is scheduled to decrease by $624.3 million (2018), $52.6 million (2019), $53.6million (2020), $347.3 million (2021), and $261.0 million (thereafter). The Revolvers are collateralized by first-priority mortgages granted on 52 of the Company’s vessels,together with other related security, and include a guarantee from Teekay or its subsidiaries for all outstanding amounts. Included in other related security are 38.2 millioncommon units in Teekay Offshore, 25.2 million common units in Teekay LNG and 16.8 million Class A common shares in Teekay Tankers, which secure a $200 millioncredit facility. Five other revolving credit facilities totaling $291.8 million as of December 31, 2016, related to Teekay Offshore, which was deconsolidated on September25, 2017.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 OriginalNotes 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 November2015, 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) at99.01% 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 the8.5% 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 isaccreted through the maturity date of the notes using the effective interest rate of 8.67% per year.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, 2017,the unamortized balance of the capitalized issuance cost was $3.8 million which is recorded in long-term debt in the consolidated balance sheet. The 8.5% Notes rankequally 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 notguaranteed 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 principalamount 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 beredeemed (excluding accrued interest), discounted to the redemption date on a semi-annual basis, at the treasury yield plus 50 basis points, plus accrued and unpaidinterest to the redemption date.Teekay LNG has a total of NOK 3.1 billion in senior unsecured bonds issued in the Norwegian bond market at December 31, 2017 that mature through October 2021. Asat December 31, 2017, the total carrying amount of the senior unsecured bonds was $377.9 million. The bonds are listed on the Oslo Stock Exchange. The interestpayments on the bonds are based on NIBOR plus a margin, which ranges from 3.70% to 6.00%. The Company entered into cross currency rate swaps to swap allinterest and principal payments of the bonds into U.S. Dollars, with the interest payments fixed at rates ranging from 5.92% to 7.72%, and the transfer of principal amountfixed at $430.5 million upon maturity in exchange for NOK 3.1 billion (see Note 15). Three other senior unsecured NOK bonds with a total carrying amount of $256.9million as of December 31, 2016, related to Teekay Offshore, which was deconsolidated in September 2017.F - 26Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)As of December 31, 2017, the Company had 10 U.S. Dollar-denominated term loans outstanding, which totaled $1.4 billion in aggregate principal amount (December 31,2016 – $3.7 billion). Interest payments on the term loans are based on LIBOR plus a margin, of which one of the term loans has an additional tranche based on a fixedrate of 5.37%. At December 31, 2017 and December 31, 2016, the margins ranged between 0.30% and 3.25%. The term loan payments are made in quarterly or semi-annual payments commencing three or six months after delivery of each newbuilding vessel financed thereby, and nine of the term loans have balloon or bulletrepayments due at maturity. The term loans are collateralized by first-priority mortgages on 22 (December 31, 2016 – 46) of the Company’s vessels, together with certainother security. In addition, at December 31, 2016, all but $56.2 million of the outstanding term loans were guaranteed by Teekay or one of its subsidiaries. Fifteen termloans totaling $2.2 billion as of December 31, 2016, related to Teekay Offshore, which was deconsolidated in September 2017.During May 2014, Teekay Offshore issued $300 million in five-year senior unsecured bonds that mature in July 2019 in the U.S. bond market. In September 2013 andNovember 2013, Teekay Offshore issued $174.2 million of ten-year senior bonds that mature in December 2023 in a U.S. private placement. In February 2015, TeekayOffshore issued $30.0 million in senior bonds that mature in June 2024 in a U.S. private placement. These three senior U.S. Dollar bonds with a total carrying value of$466.7 million as of December 31, 2016, related to Teekay Offshore, which was deconsolidated in September 2017.Teekay LNG has two Euro-denominated term loans outstanding, which, as at December 31, 2017, totaled 194.1 million Euros ($233.0 million) (December 31, 2016 –208.9 million Euros ($219.7 million)). Teekay LNG is repaying the loans with funds generated by two Euro-denominated, long-term time-charter contracts. Interestpayments on the loans are based on EURIBOR plus a margin. At December 31, 2017 and December 31, 2016, the margins ranged between 0.6% and 2.25%. The Euro-denominated term loans reduce in monthly payments with varying maturities through 2023, are collateralized by first-priority mortgages on two of Teekay LNG’s vessels,together with certain other security, and are guaranteed by Teekay LNG and one of its subsidiaries.Both Euro-denominated term loans and NOK-denominated bonds are revalued at the end of each period using the then-prevailing U.S. Dollar exchange rate. Dueprimarily to the revaluation of the Company’s NOK-denominated bonds, the Company’s Euro-denominated term loans, capital leases and restricted cash, and the changein the valuation of the Company’s cross currency swaps, the Company recognized a foreign exchange loss during 2017 of $26.5 million (2016 – $6.5 million, 2015 – $2.2million).The weighted-average interest rate on the Company’s aggregate long-term debt as at December 31, 2017 was 4.3% (December 31, 2016 – 4.0%). This rate does notinclude the effect of the Company’s interest rate swap agreements (see Note 15).Teekay Corporation has guaranteed obligations pursuant to credit facilities of Teekay Tankers. As at December 31, 2017, the aggregate outstanding balance on suchcredit facilities was $252.7 million. In September 2017, as part of the Brookfield Transaction (see Note 3), Teekay was released from all of its previous guaranteesrelating to Teekay Offshore's long-term debt and interest rate swap and cross currency swap agreements.The aggregate annual long-term debt principal repayments required to be made by the Company subsequent to December 31, 2017, after giving effect to the impact ofthe revolving credit facility refinancing completed by Teekay LNG in February 2018, are $0.8 billion (2018), $0.2 billion (2019), $1.1 billion (2020), $0.7 billion (2021), $0.3billion (2022) and $0.3 billion (thereafter).Among other matters, the Company’s long-term debt agreements generally provide for maintenance of minimum consolidated financial covenants and five loanagreements require the maintenance of vessel market value to loan ratios. As at December 31, 2017, these ratios ranged from 118.5% to 243.2% compared to theirminimum required ratios of 105% to 135%. The vessel values used in these ratios are the appraised values prepared by the Company based on second hand sale andpurchase market data. Changes in the LNG/LPG and conventional tanker markets could negatively affect the Company’s compliance with these ratios. Certain loanagreements require that a minimum level of free cash be maintained, which minimum level was $100.0 million as at December 31, 2017 and $50 million as atDecember 31, 2016 for the Company, excluding Teekay LNG. Most of the loan agreements also require that the Company maintain an aggregate minimum level of freeliquidity and undrawn revolving credit lines with at least six months to maturity of 5.0% to 7.5% of total debt for Teekay Parent and Teekay Tankers. As at December 31,2017, such amounts for Teekay Parent and Teekay Tankers were $46.0 million and $55.1 million, respectively. In addition, certain loan agreements require Teekay LNGto maintain a minimum level of tangible net worth and liquidity, and not exceed a maximum level of financial leverage. As at December 31, 2017, the Company was incompliance with all covenants under its credit facilities and other long-term debt.9. Operating and Direct Financing LeasesCharters-inAs at December 31, 2017, minimum commitments to be incurred by the Company under vessel operating leases by which the Company charters-in vessels wereapproximately $277.9 million, comprised of $68.7 million (2018), $62.7 million (2019), $57.4 million (2020), $54.4 million (2021), $20.0 million (2022) and $14.7 million(thereafter). The Company recognizes the expense from these charters, which is included in time-charter hire expense, on a straight-line basis over the firm period of thecharters.F - 27Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Charters-outTime charters and bareboat charters of the Company’s vessels to third parties (except as noted below) are accounted for as operating leases. Certain of these chartersprovide the charterer with the option to acquire the vessel or the option to extend the charter. As at December 31, 2017, minimum scheduled future revenues to bereceived by the Company on time charters and bareboat charters then in place were approximately $2.4 billion, comprised of $517.7 million (2018), $404.7 million (2019),$361.9 million (2020), $295.8 million (2021), $273.7 million (2022) and $582.1 million (thereafter). The minimum scheduled future revenues should not be construed toreflect total charter hire revenues for any of the years. Minimum scheduled future revenues do not include revenue generated from new contracts entered into afterDecember 31, 2017, revenue from unexercised option periods of contracts that existed on December 31, 2017, revenue from vessels in the Company’s equity accountedinvestments, or variable or contingent revenues. In addition, minimum scheduled future operating lease revenues presented in this paragraph have been reduced byestimated off-hire time for any periodic maintenance. The amounts may vary given unscheduled future events such as vessel maintenance.The carrying amount of the vessels accounted for as operating leases at December 31, 2017, was $3.1 billion (2016 - $6.6 billion). The cost and accumulated depreciationof the vessels employed on operating leases as at December 31, 2017 were $4.1 billion (2016 - $9.1 billion) and $1.0 billion (2016 - $2.5 billion), respectively. The carryingamount, cost and accumulated depreciation of the vessels employed on operating leases as at December 31, 2016, related to Teekay Offshore, which was deconsolidatedon September 25, 2017, was $3.5 billion, $4.7 billion and $1.2 billion, respectively.Operating Lease ObligationsTeekay Tangguh Joint VentureAs at December 31, 2017, the Teekay BLT Corporation (or the Teekay Tangguh Joint Venture) was a party to operating leases (or Head Leases) whereby it is leasing itstwo LNG carriers (or the Tangguh LNG Carriers) to a third party company. The Teekay Tangguh Joint Venture is then leasing back the LNG carriers from the same third-party company (or the Subleases). Under the terms of these leases, the third-party company claims tax depreciation on the capital expenditures it incurred to lease thevessels. As is typical in these leasing arrangements, tax and change of law risks are assumed by the Teekay Tangguh Joint Venture. Lease payments under theSubleases are based on certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lease payments areincreased or decreased under the Sublease to maintain the agreed after-tax margin. The Teekay Tangguh Joint Venture’s carrying amounts of this tax indemnificationguarantee as at December 31, 2017 and December 31, 2016 were $7.1 million and $7.5 million, respectively, and are included as part of other long-term liabilities in theconsolidated balance sheets of the Company. The tax indemnification is for the duration of the lease contract with the third party plus the years it would take for the leasepayments to be statute barred, and ends in 2033. Although there is no maximum potential amount of future payments, the Teekay Tangguh Joint Venture may terminatethe lease arrangements on a voluntary basis at any time. If the lease arrangements terminate, the Teekay Tangguh Joint Venture will be required to make terminationpayments to the third-party company sufficient to repay the third-party company’s investment in the vessels and to compensate it for the tax effect of the terminations,including recapture of any tax depreciation. The Head Leases and the Subleases have 20 year terms and are classified as operating leases. The Head Lease and theSublease for the two Tangguh LNG Carriers commenced in November 2008 and March 2009, respectively.As at December 31, 2017, the total estimated future minimum rental payments to be received and paid under the lease contracts are as follows:YearHead LeaseReceipts(1)$ SubleasePayments(1)(2)$201821,242 23,875201921,242 23,875202021,242 23,875202121,242 23,875202221,242 23,875Thereafter132,853 149,360Total239,063 268,735(1)The Head Leases are fixed-rate operating leases while the Subleases have a small variable-rate component. As at December 31, 2017, Teekay LNG had received $271.3million of aggregate Head Lease receipts and had paid $212.1 million of aggregate Sublease payments. The portion of the Head Lease receipts that has not beenrecognized into earnings, are deferred and amortized on a straight-line basis over the lease terms and, as at December 31, 2017, $3.7 million (December 31, 2016 - $3.7million) and $33.0 million (December 31, 2016 - $36.7 million) of Head Lease receipts had been deferred and included in accrued liabilities and other and other long-termliabilities, respectively, in the Company’s consolidated balance sheets.(2)The amount of payments under the Subleases is updated annually to reflect any changes in the lease payments due to changes in tax law.F - 28Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Net Investment in Direct Financing LeasesThe time charters for the two Tangguh LNG carriers are accounted for as direct financing leases. The Tangguh LNG Carriers commenced their time-charters with theircharterers in 2009. In addition, in 2013, Teekay LNG acquired two 155,900-cubic meter LNG carriers (or Awilco LNG Carriers) from Norway-based Awilco LNG ASA (orAwilco) and chartered them back to Awilco on a five- and four-year fixed-rate bareboat charter contract (plus a one-year extension option), respectively, with Awilcoholding a fixed-price purchase obligation at the end of the charter. The bareboat charters with Awilco were accounted for as direct financing leases. However, in June2017, Teekay LNG agreed to amend the charter contracts with Awilco to defer a portion of charter hire and extend the bareboat charter contracts and related purchaseobligations on both vessels to December 2019. The amendments have the effect of deferring between $10,600 per day and $20,600 per day per vessel from July 1, 2017until December 2019, with such deferred amounts added to the purchase obligation amounts. As a result of the contract amendments, one of the charter contracts withAwilco has been reclassified as an operating lease upon the expiry of its original contract terms in November 2017. The second charter contract with Awilco will bereclassified as an operating lease upon the expiry of its original contract terms in August 2018, and at that time, approximately $131 million will be recorded as part ofvessels and equipment. The following table lists the components of the net investments in direct financing leases: December 31, 2017$ December 31, 2016(1)$Total minimum lease payments to be received568,710 777,334Estimated unguaranteed residual value of leased properties194,965 203,465Initial direct costs and other361 393Less unearned revenue(268,046) (320,598)Total495,990 660,594Less current portion(9,884) (154,759)Long-term portion486,106 505,835(1) The direct financing leases for one FSO unit and certain VOC equipment as at December 31, 2016 totaling $17.6 million as of that date related to Teekay Offshore, which wasdeconsolidated on September 25, 2017.As at December 31, 2017, estimated minimum lease payments to be received by Teekay LNG under the Tangguh LNG Carrier leases in each of the next five succeedingfiscal years are approximately $39.1 million per year from 2018 through 2022. Both leases are scheduled to end in 2029. In addition, the estimated minimum leasepayments to be received by Teekay LNG in 2018 under the Awilco LNG Carrier lease, up to its original contract terms in August 2018, were approximately $6.8 million.10. Obligations Related to Capital Leases December 31, 2017$ December 31, 2016$LNG Carriers961,711 338,257Suezmax Tankers198,746 54,582Total obligations related to capital leases1,160,457 392,839Less current portion(114,173) (40,353)Long-term obligations related to capital leases1,046,284 352,486LNG Carriers. As at December 31, 2017, Teekay LNG was a party to capital leases on five LNG carriers, the Creole Spirit, the Oak Spirit, the Torben Spirit, the Macoma,and the Murex. Upon delivery of the Creole Spirit in February 2016, the Oak Spirit in July 2016, the Torben Spirit in March 2017, the Macoma in October 2017, and theMurex in November 2017, Teekay LNG sold these vessels to third parties (or Lessors) and leased them back under 10-year bareboat charter contracts ending in 2026and 2027. Four of the bareboat charter contracts are fixed-rate capital leases and one is a variable-rate capital lease, and all with a fixed-price purchase obligation at theend of the lease terms. At inception of these leases, the weighted-average interest rate implicit in these leases was 5.2%.In addition, as at December 31, 2017, Teekay LNG had sale-leaseback agreements in place for three LNG carrier newbuildings scheduled to deliver during 2018, and atsuch dates, the buyers will take delivery and charter each respective vessel back to Teekay LNG. As at December 31, 2017, Teekay LNG had received $193 million fromthe buyers, which has been recorded as current and long-term obligations related to capital lease in Teekay LNG's consolidated balance sheets, and Teekay LNG hassecured a further $375 million in capital lease financing to be received in 2018 upon delivery of the vessels.Teekay LNG understands that these vessels and lease operations are the only assets and operations of the Lessors. Teekay LNG operates the vessels during the leaseterm and as a result, is considered to be, under U.S. GAAP, the Lessor's primary beneficiary; therefore, Teekay LNG consolidates the Lessors for financial reportingpurposes as VIEs.The liabilities of the Lessors are loans and are non-recourse to Teekay LNG. The amounts funded to the Lessors in order to purchase the vessels materially match thefunding to be paid by Teekay LNG's subsidiaries under the sale-leaseback transaction. As a result, the amounts due by Teekay LNG's subsidiaries to the Lessors havebeen included in obligations related to capital lease as representing the Lessors' loans.F - 29Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Teekay LNG guarantees the obligations of the bareboat charter contracts. In addition, the guarantee agreements require Teekay LNG to maintain minimum levels oftangible net worth and aggregate liquidity, and not to exceed a maximum amount of leverage. As at December 31, 2017, Teekay LNG was in compliance with all covenantsin respect of the obligations related to its capital leases.As at December 31, 2017, the remaining commitments related to the eight capital leases for Teekay LNG's LNG carriers and LNG carrier newbuildings, including therelated purchase obligations, approximated $1.4 billion, including imputed interest of $429.9 million, repayable from 2018 through 2027, as indicated below:YearCommitment2018$111,6782019$119,5642020$118,9012021$117,9042022$117,109Thereafter$806,458Suezmax Tankers. As at December 31, 2017, Teekay LNG was a party to capital leases on two Suezmax tankers, the Teide Spirit and the Toledo Spirit. Under thesecapital leases, the owner has the option to require Teekay LNG to purchase the two vessels. The charterer, who is also the owner, also has the option to cancel thecharter contracts and the cancellation options are first exercisable in October 2017 and July 2018, respectively.The amounts in the table below assume the owner will not exercise its options to require Teekay LNG to purchase either of the two remaining vessels, but rather itassumes the owner will cancel the charter contracts when the cancellation right is first exercisable (in February 2018 and July 2018, respectively), and sell the vessels tothird parties, upon which the lease obligations will be extinguished. In December 2017, the owner agreed to sell one of the Suezmax tankers to a third party. At the inceptionof these leases, the weighted-average interest rate implicit in these leases was 5.5%. These capital leases are variable-rate capital leases. However, any change in thelease payments resulting from changes in interest rates is offset by a corresponding change in the charter hire payments received by Teekay LNG.In July 2017, Teekay Tankers completed a $153.0 million sale-leaseback financing transaction with a financial institution relating to four of Teekay Tankers' Suezmaxtankers, the Athens Spirit, Beijing Spirit, Moscow Spirit and Sydney Spirit. Under this arrangement, Teekay Tankers transferred the vessels to subsidiaries of the financialinstitution (or collectively the Lessors) and leased the vessels back from the Lessors on bareboat charters for a 12-year term. Teekay Tankers has the option to purchaseeach of the four vessels at any point between July 2020 and July 2029.Teekay Tankers understands that these vessels and lease operations are the only assets and operations of the Lessors. Teekay Tankers operates the vessels duringthe lease term and as a result, is considered to be, under U.S. GAAP, the Lessor's primary beneficiary and therefore Teekay Tankers consolidates the Lessors forfinancial reporting purposes.The liabilities of the Lessors are loans and are non-recourse to Teekay Tankers. The amounts funded to the Lessors in order to purchase the vessels materially match thefunding to be paid by Teekay Tankers' subsidiaries under the lease-back transaction. As a result, the amounts due by Teekay Tankers' subsidiaries to the Lessors havebeen included in obligations related to capital leases as representing the Lessor's loans.The bareboat charters also require that Teekay Tankers maintain a minimum liquidity (cash, cash equivalents and undrawn committed revolving credit lines with at least 6months to maturity) of $35.0 million and at least 5.0% of Teekay Tankers' consolidated debt and obligations related to capital leases (excluding applicable security depositsreflected in restricted cash - long-term on Teekay Tankers' consolidated balance sheets). In addition, Teekay Tankers is required for each vessel to maintain a hullcoverage ratio of 90% of the total outstanding principal balance during the first three years of the lease period and 100% of the total outstanding principal balancethereafter. Such requirement is assessed annually with reference to vessel valuations compiled by one or more agreed upon third parties. As at December 31, 2017, thisratio was approximately 105%. As at December 31, 2017, Teekay Tankers was in compliance with all covenants in respect of its obligations related to capital leases.As at December 31, 2017, the remaining commitments related to the six capital leases for Suezmax tankers, including the related purchase obligations, approximated$269.0 million, including imputed interest of $70.3 million, repayable from 2018 through 2029, as indicated below:YearCommitment2018$67,2142019$16,2362020$16,2792021$16,2332022$16,232Thereafter$136,846Teekay Tankers maintains restricted cash deposits relating to leasing arrangements which cash totaled $2.7 million as at December 31, 2017.F - 30Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)11. Fair Value MeasurementsThe following methods and assumptions were used to estimate the fair value of each class of financial instruments and other non-financial assets.Cash and cash equivalents and restricted cash - The fair value of the Company’s cash and cash equivalents and restricted cash approximates their carrying amountsreported in the accompanying consolidated balance sheets.Vessels and equipment and assets held for sale – The estimated fair value of the Company’s vessels and equipment and assets held for sale was determined basedon discounted cash flows or appraised values. In cases where an active second-hand sale and purchase market does not exist, the Company uses a discounted cashflow approach to estimate the fair value of an impaired vessel. In cases where an active second-hand sale and purchase market exists, an appraised value is generally theamount the Company would expect to receive if it were to sell the vessel. Such appraisal is normally completed by the Company. Other assets held for sale includeworking capital balances and the fair value of such amounts generally approximate their carrying value.Long-term investments included in non-current assets - The estimated fair value of the Company’s long-term investments was determined based on discounted cashflows or appraised values. As an active second-hand sale and purchase market exists, the appraised value is the amount the Company would expect to receive if it wereto sell the vessel. Such appraisal is normally completed by the Company. Long-term investments include variable-rate long-term debt balances and the fair value of suchamounts is estimated using discounted cash flow analyses, based on rates currently available for debt with similar terms and remaining maturities and the current creditworthiness of the Company. Long-term investments also include working capital balances and the fair value of such amounts generally approximate their carrying value.Loans to equity-accounted investees and joint venture partners – The fair value of the Company’s loans to joint ventures and joint venture partners approximatestheir carrying amounts reported in the accompanying consolidated balance sheets.Long-term receivable included in accounts receivable and other assets – The fair value of the Company’s long-term loan receivable is estimated using discountedcash flow analysis based on rates currently available for debt with similar terms and remaining maturities and the current credit worthiness of the counterparty.Long-term debt – The fair value of the Company’s fixed-rate and variable-rate long-term debt is either based on quoted market prices or estimated using discounted cashflow analyses, based on rates currently available for debt with similar terms and remaining maturities and the current credit worthiness of the Company. Alternatively, if thefixed-rate and variable-rate long-term debt is held for sale the fair value is based on the estimated sales price.Long-term obligation related to capital leases - The fair value of the Company's long-term obligation related to capital leases is estimated using discounted cash flowanalyses, based on rates currently available for debt with similar terms and remaining maturities.Derivative instruments – The fair value of the Company’s derivative instruments is the estimated amount that the Company would receive or pay to terminate theagreements at the reporting date, taking into account, as applicable, fixed interest rates on interest rate swaps, current interest rates, foreign exchange rates, and thecurrent credit worthiness of both the Company and the derivative counterparties. The estimated amount is the present value of future cash flows. The Company transactsall of its derivative instruments through investment-grade rated financial institutions at the time of the transaction and requires no collateral from these institutions. Given thecurrent volatility in the credit markets, it is reasonably possible that the amounts recorded as derivative assets and liabilities could vary by material amounts in the nearterm.The Company categorizes its fair value estimates using a fair value hierarchy based on the inputs used to measure fair value. The fair value hierarchy has three levelsbased on the reliability of the inputs used to determine fair value as follows:Level 1.Observable inputs such as quoted prices in active markets;Level 2.Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; andLevel 3.Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis,as well as the estimated fair value of the Company’s financial instruments that are not accounted for at a fair value on a recurring basis.F - 31Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) December 31, 2017 December 31, 2016 Fair ValueHierarchyLevel CarryingAmountAsset(Liability)$ FairValueAsset(Liability)$ CarryingAmountAsset(Liability)$ FairValueAsset(Liability)$ Recurring Cash and cash equivalents, restricted cash, andmarketable securitiesLevel 1 552,186 552,186 805,567 805,567 Derivative instruments (note 15) Interest rate swap agreements - assets (1)Level 2 6,081 6,081 7,943 7,943 Interest rate swap agreements - liabilities (1)Level 2 (78,560) (78,560) (302,935) (302,935) Cross currency interest swap agreement (1)Level 2 (50,459) (50,459) (237,165) (237,165) Foreign currency contractsLevel 2 81 81 (2,993) (2,993) Stock purchase warrantsLevel 3 30,749 30,749 575 575 Time-charter swap agreementLevel 3 — — 208 208 Non-recurring Vessels and equipmentLevel 2 — — 11,300 11,300 Vessels held for sale (note 18b)Level 2 16,671 16,671 61,282 61,282 Long-term investmentsLevel 2 — — 6,000 6,000 Other Loans to equity-accounted investees and joint venture partners - Current(2) 107,486 (2) 11,821 (2) Loans to equity-accounted investees and joint venture partners - Long-term(2) 146,420 (2) 292,209 (2) Long-term receivable included in accounts receivable and other assets(3)Level 3 3,476 3,459 10,985 10,944 Long-term debt - public (note 8)Level 1 (963,563) (979,773) (1,503,472) (1,409,996) Long-term debt - non-public (note 8)Level 2 (2,454,142) (2,421,273) (5,136,074) (5,009,900) Obligations related to capital leases, including current portionLevel 2 (1,160,457) (1,148,989) (392,839) (400,072) (1)The fair value of the Company’s interest rate swap and cross currency swap agreements at December 31, 2017 includes $5.7 million (December 31, 2016 - $15.8 million)accrued interest expense which is recorded in accrued liabilities on the consolidated balance sheets.(2)In the consolidated financial statements, the Company’s loans to and equity investments in equity-accounted investees constitute the aggregate carrying value of theCompany’s interests in entities accounted for by the equity method. The fair value of the individual components of such aggregate interests is not determinable.(3)As at December 31, 2017, the estimated fair value of the non-interest bearing receivable from Royal Dutch Shell Plc (or Shell) is based on the remaining future fixedpayments as well as an estimated discount rate. The estimated fair value of this receivable as of December 31, 2017 was $3.5 million (December 31, 2016 - $10.9 million)using a discount rate of 8.0%. As there is no market rate for the equivalent of an unsecured non-interest bearing receivable from Shell, the discount rate was based onunsecured debt instruments of similar maturity held by the Company, adjusted for a liquidity premium. A higher or lower discount rate would result in a lower or higher fairvalue asset.Time-charter swap agreement - Changes in fair value during the years ended December 31, 2017 and 2016 for Teekay Tankers' time-charter swap agreement, which isdescribed in Note 15 below and is measured at fair value on the recurring basis using significant unobservable inputs (Level 3), are as follows: Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$Fair value asset - beginning of the year208 —Settlements(1,106) (2,154)Realized and unrealized gain898 2,362Fair value asset - at the end of the year— 208The estimated fair value of the time-charter swap agreement was based in part upon the Company’s projection of future Aframax spot market tanker rates, which werederived from current Aframax spot market tanker rates and estimated future rates, as well as an estimated discount rate. The time-charter swap agreement ended on April30, 2017.F - 32Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Stock purchase warrants – As at December 31, 2017, Teekay held 14.5 million Brookfield Transaction Warrants (see Note 3). The Brookfield Transaction Warrants allowthe holders to acquire one common unit of Teekay Offshore for each Brookfield Transaction Warrant for an exercise price of $0.01 per common unit, which warrantsbecome exercisable when Teekay Offshore's common unit volume-weighted average price is equal to or greater than $4.00 per common unit for 10 consecutive tradingdays until September 25, 2024. The fair value of the Brookfield Transaction Warrants was $29.4 million on December 31, 2017.As of December 31, 2017, in addition to the Brookfield Transaction Warrants, Teekay held a total of 1,755,000 warrants to purchase common units of Teekay Offshore thatwere issued in connection with Teekay Offshore's private placement of Series D Preferred Units in June 2016 (or the Series D Warrants) with an exercise price of $4.55,which have a seven-year term. The Series D Warrants will be net settled in either cash or common units at Teekay Offshore’s option. The fair value of the Series DWarrants was $1.3 million on December 31, 2017.The estimated fair value of the Brookfield Transaction Warrants and the Series D Warrants was determined using a Black-Scholes pricing model and is based, in part, onthe historical price of common units of Teekay Offshore, the risk-free rate, vesting conditions and the historical volatility of Teekay Offshore. The estimated fair value ofthese Brookfield Transaction Warrants and Series D Warrants as of December 31, 2017 was based on the historical volatility of Teekay Offshore's common units of74.9%. A higher or lower volatility would result in a higher or lower fair value of this derivative asset.During January 2014, the Company received from TIL stock purchase warrants entitling it to purchase up to 1.5 million shares of the common stock of TIL (see Note 15).In May 2017, Teekay Tankers entered into the Merger Agreement with TIL (see Note 4a). Under the terms of the Merger Agreement, warrants to purchase or acquireshares of common stock of TIL that had not been exercised as of the effective time of the merger, were cancelled. As a result, no value is recorded for these warrants inthe Company's balance sheet at December 31, 2017.Changes in fair value during the years ended December 31, 2017 and 2016 for the Company's Brookfield Transaction Warrants, Series D Warrants and the TIL stockpurchase warrants, which are described above and are measured at fair value on the recurring basis using significant unobservable inputs (Level 3), are as follows: Year Ended December 31, 2017$ 2016$Fair value at the beginning of the year575 10,328Fair value on issuance36,596 —Unrealized loss included in earnings(6,422) (9,753)Fair value at the end of the year30,749 575Contingent consideration liability – In August 2014, Teekay Offshore acquired 100% of the outstanding shares of Logitel, a Norway-based company focused on high-end UMS, from CeFront Technology AS (or CeFront) for $4.0 million, which was paid in cash at closing, plus a commitment to pay an additional amount of up to $27.6million, depending upon certain performance criteria. During the second quarter of 2016, Teekay Offshore canceled the UMS construction contracts for its two remainingUMS newbuildings. This eliminated any future purchase price contingent consideration payments. Consequently, the contingent liability was reversed in the second quarterof 2016. The gain associated with this reversal is included in Other (loss) income on the Company's consolidated statement of (loss) income for the year endedDecember 31, 2016.12. Capital StockThe authorized capital stock of Teekay at December 31, 2017, 2016, and 2015, was 25,000,000 shares of Preferred Stock, with a par value of $1 per share, and725,000,000 shares of Common Stock, with a par value of $0.001 per share. As at December 31, 2017, 89,127,041 shares of Common Stock (2016 - 86,149,975) wereissued and outstanding and no shares of Preferred Stock issued.During 2017, Teekay issued 0.1 million shares of common stock upon the exercise or issuance of stock options, restricted stock units and restricted stock awards. During2016, Teekay issued 0.1 million shares of common stock upon the exercise or issuance of stock options, restricted stock units and restricted stock awards and issuedapproximately 12.0 million shares of common stock in a private placement for net proceeds of approximately $96.2 million.In 2016, Teekay implemented a continuous offering program (or COP) under which Teekay may issue new common stock, at market prices up to a maximum aggregateamount of $50.0 million. During 2017, Teekay sold an aggregate of 2.9 million shares of common stock under the COP, generating net proceeds of $25.6 million. During2016, Teekay sold an aggregate of 1.3 million shares of common stock under the COP, generating net proceeds of approximately $9.3 million (net of approximately $0.4million of offering costs). Teekay used the net proceeds from the issuance of these shares of common stock for general corporate purposes.Dividends may be declared and paid out of surplus, but if there is no surplus, dividends may be declared or paid out of the net profits for the fiscal year in which thedividend is declared and for the preceding fiscal year. Surplus is the excess of the net assets of the Company over the aggregated par value of the issued shares of theTeekay. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to share equally in anydividends that the Board of Directors may declare from time to time out of funds legally available for dividends.F - 33Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)During 2008, Teekay announced that its Board of Directors had authorized the repurchase of up to $200 million of shares of its Common Stock in the open market, subjectto cancellation upon approval by the Board of Directors. As at December 31, 2017, Teekay had repurchased approximately 5.2 million shares of Common Stock for $162.3million pursuant to such authorization. The total remaining share repurchase authorization at December 31, 2017, was $37.7 million.On July 2, 2010, the Company amended and restated its Shareholder Rights Agreement (the Rights Agreement), which was originally adopted by the Board of Directors inSeptember 2000. In September 2000, the Board of Directors declared a dividend of one common share purchase right (or a Right) for each outstanding share of theCompany’s common stock. These Rights continue to remain outstanding and will not be exercisable and will trade with the shares of the Company’s common stock untilafter such time, if any, as a person or group becomes an “acquiring person” as set forth in the amended Rights Agreement. A person or group will be deemed to be an“acquiring person,” and the Rights generally will become exercisable, if a person or group acquires 20% or more of the Company’s common stock, or if a person or groupcommences a tender offer that could result in that person or group owning more than 20% of the Company’s common stock, subject to certain higher thresholds forexisting shareholders that owned in excess of 15% of the Company’s common stock when the Rights Agreement was amended. Once exercisable, each Right held by aperson other than the “acquiring person” would entitle the holder to purchase, at the then-current exercise price, a number of shares of common stock of the Companyhaving a value of twice the exercise price of the Right. In addition, if the Company is acquired in a merger or other business combination transaction after any such event,each holder of a Right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s common stock having a value of twice theexercise price of the Right. The amended Rights Agreement will expire on July 1, 2020, unless the expiry date is extended or the Rights are earlier redeemed orexchanged by the Company.Stock-based compensationIn March 2013, the Company adopted the 2013 Equity Incentive Plan (or the 2013 Plan) and suspended the 1995 Stock Option Plan and the 2003 Equity Incentive Plan(collectively referred to as the Plans). As at December 31, 2017, the Company had reserved 5,115,308 (2016 - 4,780,371) shares of Common Stock pursuant to the 2013Plan, for issuance upon the exercise of options or equity awards granted or to be granted.During the years ended December 31, 2017, 2016 and 2015, the Company granted options under the 2013 Plan to acquire up to 732,314, 916,015 and 265,135 shares ofCommon Stock, respectively, to certain eligible officers, employees and directors of the Company. The options under the Plans have ten-year terms and vest equally overthree years from the grant date. All options outstanding as of December 31, 2017, expire between March 10, 2018 and March 6, 2027, ten years after the date of eachrespective grant.A summary of the Company’s stock option activity and related information for the years ended December 31, 2017, 2016, and 2015, are as follows: December 31, 2017 December 31, 2016 December 31, 2015 Options(000’s)# Weighted-AverageExercise Price$ Options(000’s)# Weighted-AverageExercise Price$ Options(000’s)# Weighted-AverageExercise Price$Outstanding - beginning of year3,367 29.16 2,800 36.84 2,710 36.61Granted732 10.18 916 9.44 265 43.99Exercised(3) 9.44 — — (36) 33.79Forfeited / expired(496) 46.27 (349) 38.97 (139) 46.80Outstanding - end of year3,600 22.96 3,367 29.16 2,800 36.84Exercisable - end of year2,221 29.76 2,271 35.89 2,500 36.03A summary of the Company’s non-vested stock option activity and related information for the years ended December 31, 2017, 2016 and 2015, are as follows: December 31, 2017 December 31, 2016 December 31, 2015 Options(000’s)# Weighted-AverageGrant DateFair Value $ Options(000’s)# Weighted-AverageGrant DateFair Value$ Options(000’s)# Weighted-AverageGrant DateFair Value$Outstanding non-vested stock options - beginning ofyear1,096 4.30 300 8.09 202 9.37Granted732 4.71 916 3.60 265 7.74Vested(399) 4.62 (118) 8.48 (167) 9.07Forfeited(50) 3.94 (2) 3.60 — —Outstanding non-vested stock options - end of year1,379 4.44 1,096 4.30 300 8.09F - 34Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The weighted average grant date fair value for non-vested options forfeited in 2017 was $0.2 million (2016 - $0.0 million, 2015 - $0.0 million).As of December 31, 2017, there was $2.3 million of total unrecognized compensation cost related to non-vested stock options granted under the Plans. Recognition of thiscompensation cost over the next three years is expected to be $1.3 million (2018), $0.9 million (2019) and $0.1 million (2020). During the years ended December 31, 2017,2016, and 2015, the Company recognized $1.7 million, $1.5 million and $1.7 million, respectively, of compensation cost relating to stock options granted under the Plans.No options were exercised during 2016. The intrinsic value of options exercised during 2017 was $0.03 million, during 2016 was $nil and during 2015 was $0.5 million.As at December 31, 2017, the intrinsic value of outstanding and exercisable stock options was $nil (2016 - $nil). As at December 31, 2017, the weighted-averageremaining life of options vested and expected to vest was 5.1 years (2016 – 4.5 years).Further details regarding the Company’s outstanding and exercisable stock options at December 31, 2017 are as follows: Outstanding Options Exercisable OptionsRange of Exercise PricesOptions(000’s)# Weighted-AverageRemainingLife(Years) Weighted-AverageExercise Price$ Options(000’s)# Weighted-AverageRemainingLife(Years) Weighted-AverageExercise Price$$5.00 – $9.99869 8.2 9.44 299 8.2 9.44$10.00 – $19.99910 7.5 10.52 188 1.2 11.84$20.00 – $24.99287 2.2 24.42 287 2.2 24.42$25.00 – $29.99364 4.2 27.69 364 4.2 27.69$30.00 – $34.99113 4.4 34.42 113 4.4 34.42$35.00 – $39.9925 0.6 39.99 25 0.6 39.99$40.00 – $49.991,017 2.0 41.34 930 1.5 41.09$50.00 – $59.9915 6.2 56.76 15 6.2 56.76 3,600 5.2 22.96 2,221 3.1 29.76The weighted-average grant-date fair value of options granted during 2017 was $4.71 per option (2016 - $3.60, 2015 - $7.74). The fair value of each option granted wasestimated on the date of the grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in computing the fair value of theoptions granted: expected volatility of 62.4% in 2017, 55.1% in 2016 and 31.1% in 2015; expected life of 6 years in 2017 and 2016 and 5 years in 2015; dividend yield of2.5% in 2017, 3.2% in 2016 and 4.4% in 2015; risk-free interest rate of 2.0% in 2017, 1.3% in 2016, and 1.4% in 2015; and estimated forfeiture rate of 7% in 2017, 7% in2016 and 8% 2015. The expected life of the options granted was estimated using the historical exercise behavior of employees. The expected volatility was generallybased on historical volatility as calculated using historical data during the five years prior to the grant date.The Company grants restricted stock units and performance share units to certain eligible officers and employees of the Company. Each restricted stock unit andperformance share unit is equivalent in value to one share of the Company’s common stock plus reinvested dividends from the grant date to the vesting date. Therestricted stock units vest equally over three years from the grant date and the performance share units vest three years from the grant date. Upon vesting, the value ofthe restricted stock units, restricted stock awards and performance shares are paid to each grantee in the form of shares. The number of performance share units thatvest will range from zero to a multiple of the original number granted, based on certain performance and market conditions.During 2017, the Company granted 349,175 restricted stock units with a fair value of $3.6 million to certain of the Company’s employees. During 2017, a total of 129,106restricted stock units with a market value of $3.2 million vested and that amount, net of withholding taxes, was paid to grantees by issuing 73,078 shares of common stock.During 2016, the Company granted 238,609 restricted stock units with a fair value of $2.3 million and 311,691 performance share units with a fair value of $3.6 million,based on the quoted market price and a Monte Carlo valuation model, to certain of the Company’s employees. During 2016, a total of 98,844 restricted stock units with amarket value of $4.3 million vested and that amount, net of withholding taxes, was paid to grantees by issuing 59,518 shares of common stock. During 2015, the Companygranted 63,912 restricted stock units with a fair value of $2.8 million and 61,774 performance share units with a fair value of $3.4 million, based on the quoted market priceand a Monte Carlo valuation model, to certain of the Company’s employees. During 2015, a total of 101,419 restricted stock units with a market value of $4.3 million vestedand that amount, net of withholding taxes, was paid to grantees by issuing 98,381 shares of common stock. For the year ended December 31, 2017, the Companyrecorded an expense of $4.0 million (2016 - $4.2 million, 2015 - $4.5 million) related to the restricted stock units and performance share units.During 2017, the Company also granted 89,387 (2016 – 67,000 and 2015 – 22,502) shares as restricted stock awards with a fair value of $0.9 million (2016 – $0.6 millionand 2015 – $1.0 million), based on the quoted market price, to certain of the Company’s directors. The shares of restricted stock are issued when granted.Share-based Compensation of SubsidiariesF - 35Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)During the years ended December 31, 2017, 2016 and 2015, 56,950, 76,084 and 14,603 common units of Teekay Offshore, 17,345, 32,723 and 10,447 common units ofTeekay LNG and nil, 9,358 and 51,948 shares of Class A common stock of Teekay Tankers, with aggregate values of $0.6 million, $0.7 million, and $1.0 million,respectively, were granted and issued to the non-management directors of the general partners of Teekay Offshore and Teekay LNG and the non-management directorsof Teekay Tankers as part of their annual compensation for 2017, 2016 and 2015.Teekay Offshore, Teekay LNG and Teekay Tankers grant equity-based compensation awards as incentive-based compensation to certain employees of Teekay’ssubsidiaries that provide services to Teekay Offshore, Teekay LNG and Teekay Tankers. During March 2017, 2016 and 2015, Teekay Offshore and Teekay LNGgranted phantom unit awards and Teekay Tankers granted restricted stock-based compensation awards with respect to 321,318, 601,368 and 102,843 units of TeekayOffshore, 60,809, 132,582 and 32,054 units of Teekay LNG and 382,437, 279,980 and 192,387 Class A common shares of Teekay Tankers, respectively, with aggregategrant date fair values of $3.5 million, $4.9 million and $4.2 million, respectively, based on Teekay Offshore, Teekay LNG and Teekay Tankers’ closing unit or stock priceson the grant dates. Each phantom unit or restricted stock unit is equal in value to one of Teekay Offshore’s, Teekay LNG’s or Teekay Tankers’ common units or commonshares plus reinvested distributions or dividends from the grant date to the vesting date. The awards vest equally over three years from the grant date. Any portion of anaward that is not vested on the date of a recipient’s termination of service is cancelled, unless their termination arises as a result of the recipient’s retirement, in which casethe award will continue to vest in accordance with the vesting schedule. Upon vesting, the awards are paid to a substantial majority of the grantees in the form of commonunits or common shares, net of withholding tax.During March 2017, 2016 and 2015, respectively, Teekay Tankers granted 486,329, 216,043 and 58,434 stock options with an exercise price of $2.23, $3.74 and $5.39per share that have a ten-year term and vest equally over three years from the grant date to an officer of Teekay Tankers and to certain employees at Teekay thatprovide services to Teekay Tankers. During March 2017 and 2016, respectively, Teekay Tankers also granted 396,412 and 284,693 stock options with an exercise priceof $2.23 and $3.74 per share that have a ten-year term and vest immediately to non-management directors of Teekay Tankers.13. Related Party TransactionsTeekay Offshore is a related party of Teekay. As at December 31, 2017, Teekay has recorded $102.8 million in advances to Teekay Offshore and $37.2 million inadvances from Teekay Offshore in current portion of loans to equity-accounted investees and advances from affiliates, respectively, on the consolidated balance sheets.On March 31, 2018, Teekay Offshore entered into a loan agreement for a $125.0 million senior unsecured revolving credit facility, of which up to $25.0 million is providedby Teekay Parent and up to $100.0 million is provided by Brookfield. The facility is scheduled to mature in October 2019.Teekay Corporation and its wholly-owned subsidiaries directly and indirectly provide substantially all of Teekay Offshore’s commercial, technical, crew training, strategic,business development and administrative service needs. Revenues received by the Company for such related party transactions for the period from deconsolidation onSeptember 25, 2017 to December 31, 2017 were $17.8 million. In connection with the Brookfield Transaction, Teekay transferred to Teekay Offshore certain of Teekay’ssubsidiaries that provide certain of these services and certain related personnel, effective January 1, 2018.During the fourth quarter of 2017, Teekay Offshore received $0.8 million in fees from the Company for technical services rendered to the Company's conventional tankerfleet. As at December 31, 2017, two shuttle tankers and three FSO units of Teekay Offshore were employed on long-term time-charter-out or bareboat contracts withsubsidiaries of Teekay. Time-charter hire expense paid by the Company to Teekay Offshore for such related party transactions for the post-consolidation period were$14.3 million.As at December 31, 2017, Resolute Investments, Ltd. (or Resolute) owned 31.9% (2016 – 37.1%, 2015 – 39.1%) of the Company’s outstanding Common Stock. One ofthe Company’s directors, C. Sean Day, is engaged as a consultant to Kattegat Limited, the parent company of Resolute, to oversee its investments, including those in theTeekay group of companies. Another of the Company’s directors, Bjorn Moller, is a director of Kattegat Limited.14. Other (Loss) Income Year EndedDecember 31,2017$ Year EndedDecember 31,2016$ Year EndedDecember 31,2015$Tax indemnification guarantee liability (1)(50,000) — —Write-off of contingent consideration (2)— 36,630 —Contingent liability (3)(4,500) (61,862) —Gain on sale / (write-down) of cost-accounted investment (4)1,250 (19,000) —Miscellaneous (loss) income(731) 5,219 1,566Other (loss) income(53,981) (39,013) 1,566F - 36Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)(1)Related to the Teekay Nakilat capital lease (see Note 16d).(2)Related to reversals of contingent liabilities as a result of the cancellation of units for maintenance and safety (or UMS) construction contracts in Teekay Offshore, which wasdeconsolidated in September 2017 (see Note 3).(3)Related to settlements and accruals made prior to September 2017 as a result of claims and potential claims made against Logitel Offshore Holding AS (or Logitel), acompany acquired by Teekay Offshore in 2014. Teekay Offshore was deconsolidated in September 2017 (see Note 3).(4)The Company holds cost-accounted investments at cost. During the year ended December 31, 2016, the Company recorded a write-down of an investment of $19.0 million.This investment was subsequently sold in 2017, resulting in a gain on sale of cost-accounted investment of $1.3 million.15. Derivative Instruments and Hedging ActivitiesThe Company uses derivatives to manage certain risks in accordance with its overall risk management policies.Foreign Exchange RiskThe Company economically hedges portions of its forecasted expenditures denominated in foreign currencies with foreign currency forward contracts.As at December 31, 2017, the Company was committed to the following foreign currency forward contracts: Contract Amount inForeign Currency Average ForwardRate (1) Fair Value /Carrying AmountOf Asset$ Expected Maturity 2018 $Norwegian Kroner100,000 8.23 81 12,153(1)Average contractual exchange rate represents the contracted amount of foreign currency one U.S. Dollar will buy.The Company enters into cross currency swaps and pursuant to these swaps the Company receives the principal amount in NOK on the maturity date of the swap, inexchange for payment of a fixed U.S. Dollar amount. In addition, the cross currency swaps exchange a receipt of floating interest in NOK based on NIBOR plus a marginfor a payment of U.S. Dollar fixed interest. The purpose of the cross currency swaps is to economically hedge the foreign currency exposure on the payment of interestand principal at maturity of the Company’s NOK-denominated bonds due in 2018, 2020 and 2021. In addition, the cross currency swaps economically hedge the interestrate exposure on the NOK bonds due in 2018, 2020 and 2021. The Company has not designated, for accounting purposes, these cross currency swaps as cash flowhedges of its NOK-denominated bonds due in 2018, 2020 and 2021. As at December 31, 2017, the Company was committed to the following cross currency swaps:NotionalAmountNOK Notional AmountUSD Fair Value / CarryingAmount of (Liability) /Asset Remaining Term (years)Floating Rate Receivable Reference Rate Margin Fixed Rate Payable 900,000 150,000 NIBOR 4.35% 6.43% (41,664) 0.71,000,000 134,000 NIBOR 3.70% 5.92% (12,553) 2.41,200,000 146,500 NIBOR 6.00% 7.72% 3,758 3.8 (50,459) Interest Rate RiskThe Company enters into interest rate swap agreements, which exchange a receipt of floating interest for a payment of fixed interest, to reduce the Company’s exposureto interest rate variability on its outstanding floating-rate debt. The Company designates certain of its interest rate swap agreements as cash flow hedges for accountingpurposes.As at December 31, 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 obligations were swapped with fixed-rate obligations:F - 37Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) InterestRateIndex PrincipalAmount$ Fair Value /CarryingAmount ofAsset /(Liability)$ Weighted-AverageRemainingTerm(years) FixedInterestRate(%) (1)LIBOR-Based Debt: U.S. Dollar-denominated interest rate swaps (2)LIBOR 1,137,671 (33,882) 4.8 2.8U.S. Dollar-denominated interest rate swaps (3)LIBOR 160,000 (9,360) 0.3 3.5U.S. Dollar-denominated interest rate swaption (4)LIBOR 160,000 (2) 0.1 2.0U.S. Dollar-denominated interest rate swaption (4)LIBOR 160,000 — 0.1 3.1EURIBOR-Based Debt: Euro-denominated interest rate swaps (5) (6)EURIBOR 232,957 (29,235) 3.0 3.1 (72,479) (1)Excludes the margins the Company pays on its variable-rate debt, which, as of December 31, 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 swap with inception date in April 2018. This interest rate swap is being used to economically hedge expected interest payments on new debt that is plannedto be outstanding from 2018 to 2024. This interest rate swap is subject to mandatory early termination in 2018 whereby the swap will be settled based on its fair value at thattime.(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 enterinto 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 interestswap 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. Neither party exercised their option in January 2018.(5)Principal amount reduces monthly to 70.1 million Euros ($84.2 million) by the maturity dates of the swap agreements.(6)Principal amount is the U.S. dollar equivalent of 194.1 million Euros.Stock Purchase WarrantsAs at December 31, 2017, Teekay held 14.5 million Brookfield Transaction Warrants (see Notes 3 and 11). The fair value of the Brookfield Transaction Warrants was$29.4 million as at December 31, 2017.As of December 31, 2017, Teekay held 1,755,000 Series D Warrants (see Notes 3 and 11). The fair value of the Series D Warrants was $1.3 million as at December 31,2017. Upon completion of the TIL merger, TIL stock purchase warrants previously held by the Company were cancelled. As a result, no value is recorded for these warrants onthe Company's consolidated balance sheet as at December 31, 2017 (see Note 11).Time-charter SwapEffective June 1, 2016, Teekay Tankers entered into a time-charter swap agreement for 55% of two Aframax-equivalent vessels. Under such agreement, Teekay Tankersreceived $27,776 per day, net of a 1.25% brokerage commission, and paid 55% of the net revenue distribution of two Aframax-equivalent vessels employed in TeekayTankers' Aframax revenue sharing arrangement, less $500 per day, for a period of 11 months plus an additional two months at the counterparty's option. The purpose ofthe agreement was to reduce Teekay Tankers’ exposure to spot tanker market rate variability for certain of its vessels that are employed in the Aframax revenue sharingpooling arrangement. Teekay Tankers had not designated, for accounting purposes, the time-charter swap as a cash flow hedge. As of May 1, 2017, the time-charterswap counter-party did not exercise the two-month option and the agreement expired during May 2017. The fair value of the time-charter swap agreement at December31, 2016 was an asset of $0.2 million.Forward Freight AgreementsTeekay Tankers uses forward freight agreements (or FFAs) in non-hedge-related transactions to increase or decrease its exposure to spot market rates, within definedlimits. Net gains and losses from FFAs are recorded within realized and unrealized loss on non-designated derivative instruments in the Company's unaudited consolidatedstatements of (loss) income. The fair value of the forward freight agreement at December 31, 2017 was $nil.F - 38Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Tabular DisclosureThe following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Company’s consolidated balance sheets. PrepaidExpenses andOther Other Non-Current Assets AccruedLiabilities andOther Current Portion ofDerivativeLiabilities DerivativeLiabilitiesAs at December 31, 2017 Derivatives designated as a cash flow hedge: Interest rate swap agreements— 1,037 (18) (751) (7)Derivatives not designated as a cash flow hedge: Foreign currency contracts96 — — (15) —Interest rate swap agreements1,124 4,319 (4,836) (35,134) (38,213)Cross currency swap agreements— 5,042 (810) (44,523) (10,168)Stock purchase warrants— 30,749 — — — 1,220 41,147 (5,664) (80,423) (48,388)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 contracts119 — — (2,601) (511)Interest rate swap agreements212 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 agreement875 — (667) — — 1,206 11,754 (16,473) (115,813) (415,041)As at December 31, 2017, the Company had multiple interest rate swaps, cross currency swaps and foreign currency forward contracts with the same counterparty thatare subject to the same master agreements. Each of these master agreements provides for the net settlement of all derivatives subject to that master agreement through asingle payment in the event of default or termination of any one derivative. The fair value of these derivatives is presented on a gross basis in the Company’s consolidatedbalance sheets. As at December 31, 2017, these derivatives had an aggregate fair value asset amount of $9.8 million (December 31, 2016 - $7.2 million) and an aggregatefair value liability amount of $86.1 million (December 31, 2016 - $398.7 million). As at December 31, 2017, the Company had $22.3 million on deposit with the relevantcounterparties as security for swap liabilities under certain master agreements (December 31, 2016 - $68.0 million). The deposit is presented in restricted cash on theconsolidated balance sheets.During 2017, as part of the Brookfield Transaction (see Note 3), Teekay was released from all of its previous guarantees relating to Teekay Offshore's interest rate swapand cross currency swap agreements.For the periods indicated, the following table presents the effective portion of (losses) gains on consolidated interest rate swap agreements designated and qualifying ascash flow hedges:Year Ended December 31, 2017Effective Portion Effective Portion Ineffective Recognized in AOCI (1) Reclassified from AOCI (2) Portion $ $ $ (31) (1,614) (746) Interest expense(31) (1,614) (746) F - 39Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Year Ended December 31, 2016Effective Portion Effective Portion Ineffective Recognized in AOCI (1) Reclassified from AOCI (2) Portion $ $ $ 691 (68) 682 Interest expense691 (68) 682 (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 (losses) gains on derivative instruments designated and qualifying as cash flow hedges.As at December 31, 2017, the Company estimated, based on then current interest rates, that it would reclassify approximately $0.6 million of net losses on interest rateswaps from accumulated other comprehensive loss to earnings during the next 12 months.Realized and unrealized (losses) and gains from derivative instruments that are not designated for accounting purposes as cash flow hedges, are recognized in earningsand reported in realized and unrealized losses on non-designated derivatives in the consolidated statements of (loss) income. The effect of the (losses) and gains onderivatives not designated as hedging instruments in the consolidated statements of (loss) income are as follows: Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Realized (losses) gains relating to: Interest rate swap agreements(53,921) (87,320) (108,036)Interest rate swap agreement terminations(610) (8,140) (10,876)Foreign currency forward contracts667 (11,186) (21,607)Time charter swap agreement1,106 2,154 —Forward freight agreements270 — — (52,488) (104,492) (140,519)Unrealized gains (losses) relating to: Interest rate swap agreements17,005 62,446 37,723Foreign currency forward contracts3,925 15,833 (418)Stock purchase warrants(6,421) (9,753) 1,014Time-charter swap agreement(875) 875 — 13,634 69,401 38,319Total realized and unrealized losses on derivative instruments(38,854) (35,091) (102,200)Realized and unrealized losses of the cross currency swaps are recognized in earnings and reported in foreign exchange (loss) gain in the consolidated statements of(loss) income. The effect of the gains (losses) on cross currency swaps on the consolidated statements of (loss) income is as follows: Year Ended December 31, 2017$ 2016$ 2015$Realized losses on maturity and/or partial termination of cross currency swap(25,733) (41,707) (36,155)Realized losses(18,494) (38,564) (18,973)Unrealized gains (losses)82,668 75,033 (89,178)Total realized and unrealized gains (losses) on cross currency swaps38,441 (5,238) (144,306)The Company is exposed to credit loss to the extent the fair value represents an asset in the event of non-performance by the counterparties to the foreign currencyforward contracts, and cross currency and interest rate swap agreements; however, the Company does not anticipate non-performance by any of the counterparties. Inorder to minimize counterparty risk, the Company only enters into derivative transactions with counterparties that are rated A- or better by Standard & Poor’s or A3 orbetter by Moody’s at the time of the transaction. In addition, to the extent possible and practical, interest rate swaps are entered into with different counterparties to reduceconcentration risk.F - 40Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)16. Commitments and Contingenciesa)Vessels under ConstructionAs at December 31, 2017, the Company was committed to the construction of six LNG carriers for a total cost of approximately $1.2 billion, including capitalized interestand other miscellaneous construction costs. Vessels in which the Company holds an interest through non-consolidated joint ventures are excluded from the aboveamounts and are described in Note 16b. Four LNG carriers are scheduled for delivery in 2018 and two LNG carriers are scheduled for delivery in 2019. As atDecember 31, 2017, payments made towards these commitments totaled $444.5 million. As at December 31, 2017, the remaining payments required to be made underthese newbuilding and conversion capital commitments were $552.4 million (2018) and $252.1 million (2019).b)Joint VenturesTeekay LNG’s share of commitments to fund newbuilding and other construction contract costs of its non-consolidated joint ventures as at December 31, 2017 are asfollows: Total$2018$2019$2020$Yamal LNG Joint Venture (i)781,300350,100232,000199,200Pan Union Joint Venture (ii)116,62987,10229,527—Bahrain LNG Joint Venture (iii)133,93680,73353,203—Exmar LPG Joint Venture (iv)54,57054,570—— 1,086,435572,505314,730199,200(i)Teekay LNG, through the Yamal LNG Joint Venture, has a 50% ownership interest in six 172,000-cubic meter ARC7 LNG carrier newbuildings that have an estimatedtotal fully built-up cost of approximately $2.1 billion. As at December 31, 2017, Teekay LNG’s proportionate costs incurred under these newbuilding contracts totaled$240.1 million. The Yamal LNG Joint Venture had secured debt financing of $816.0 million for the six LNG carrier newbuildings, of which $751.5 million was undrawn atDecember 31, 2017, related to Teekay LNG's proportionate share of the commitments included in the table above.(ii)Through the Pan Union Joint Venture, Teekay LNG has an ownership interest ranging from 20% to 30% in three LNG carrier newbuildings scheduled for delivery in2018 and 2019. The Pan Union Joint Venture had secured financing of $87.0 million related to Teekay LNG's proportionate share of the commitments included in thetable above and Teekay LNG is scheduled to receive $3.5 million of reimbursement directly from Shell.(iii)Teekay LNG has a 30% ownership interest in the Bahrain LNG Joint Venture for the development of an LNG receiving and regasification terminal in Bahrain. Theproject will include a FSU, which will be modified from one of the Teekay LNG’s existing MEGI LNG carrier newbuildings, an offshore gas receiving facility, and anonshore nitrogen production facility. The terminal will have a capacity of 800 million standard cubic feet per day and will be owned and operated under a 20-yearagreement commencing early-2019. The receiving and regasification terminal is expected to have a fully-built up cost of approximately $960.0 million. The BahrainLNG Joint Venture has secured debt financing for approximately 75% of the estimated fully built-up cost of the LNG receiving and regasification terminal in Bahrain.(iv)Teekay LNG has a 50% ownership interest in the Exmar LPG Joint Venture which has three LPG newbuilding vessels scheduled for delivery in 2018 and hassecured $56.0 million of financing for two of the three LPG carrier newbuildings related to the commitments included in the table above.c)LiquidityManagement is required to assess if the Company will have sufficient liquidity to continue as a going concern for the one-year period following the issuance of its financialstatements. The Company had $513.7 million of consolidated cash flows from operating activities during the year ended December 31, 2017, and ended the year with aworking capital deficit of $532.2 million. This working capital deficit is driven primarily from scheduled maturities in the next 12 months and repayment obligations ofapproximately $800.9 million of outstanding consolidated debt, which were classified as current liabilities as at December 31, 2017. In addition to these obligations, theCompany also anticipates that Teekay LNG will be required to make payments related to commitments to fund vessels under construction and may be required to make apayment under a tax lease indemnification (see Notes 16a, 16b and 16d).Based on these factors, over the one-year period following the issuance of their consolidated financial statements, the Company’s consolidated subsidiaries, TeekayTankers and Teekay LNG, will need to obtain additional sources of financing, in addition to amounts generated from operations, to meet their minimum liquidityrequirements under their financial covenants. These anticipated potential sources of financing include: refinancing various loan facilities of Teekay LNG and TeekayTankers; negotiating new secured debt financings related to vessels under construction or other unencumbered operating vessels for Teekay LNG; potentially raisingcapital through equity and/or bond issuances; and negotiating extensions or redeployments of existing assets. The success of these initiatives of the Controlled DaughterEntities may impact the liquidity of Teekay Parent through the payment of dividends/distributions by the Controlled Daughter Entities to Teekay Parent.F - 41Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The Company is actively pursuing the alternatives described above, which it considers probable of completion based on the Company’s history of being able to completeequity and bond issuances, refinance similar loan facilities and to obtain new debt financing for its vessels under construction, as well as the progress it has made on thefinancing process to-date. The Company is in various stages of completion on these matters.Based on the Company’s liquidity at the date these consolidated financial statements were issued, the liquidity the Company expects to generate from operations over thefollowing year, and by incorporating the Company’s plans to raise additional liquidity that it considers probable of completion, the Company expects that it will have sufficientliquidity to continue as a going concern for at least the one-year period following the issuance of these consolidated financial statements.d)Legal Proceedings and ClaimsThe Company may, from time to time, be involved in legal proceedings and claims that arise in the ordinary course of business. The Company believes that any adverseoutcome of existing claims, other than with respect to the items noted below, individually or in the aggregate, would not have a material effect on its financial position, resultsof operations or cash flows, when taking into account its insurance coverage and indemnifications from charterers.Teekay Nakilat Capital LeaseTeekay LNG owns a 70% interest in Teekay Nakilat Corporation (or Teekay Nakilat Joint Venture), a subsidiary of the lessee under three separate 30-year capital leasearrangements with a third party for three LNG carriers (or the RasGas II LNG Carriers). Under the terms of the leases in respect of the RasGas II LNG Carriers, thelessor claimed tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leases, tax and change of law risks were assumed bythe lessee, in this case the Teekay Nakilat Joint Venture. Lease payments under the leases were based on certain tax and financial assumptions at the commencement ofthe leases and subsequently adjusted to maintain its agreed after-tax margin. On December 22, 2014, the Teekay Nakilat Joint Venture terminated the leasing of theRasGas II LNG Carriers. However, the Teekay Nakilat Joint Venture remains obligated to the lessor to maintain the lessor’s agreed after-tax margin from thecommencement of the lease to the lease termination date and as at December 31, 2017, the Teekay Nakilat Joint Venture’s carrying amount of this estimated taxindemnification guarantee was $62.7 million or GBP 46.4 million (December 31, 2016 - $13.3 million or GBP 10.8 million) which is included as part of accrued liabilities andother in the Company's consolidated balance sheets. Additionally, as at December 31, 2017, the Teekay Nakilat Joint Venture had $7.0 million (December 31, 2016 – $6.8million) on deposit with the lessor as security against any future claims and recorded as part of restricted cash in the Company's consolidated balance sheets.The UK taxing authority (or HMRC) has been challenging the use of similar lease structures in the UK courts. One of those challenges was eventually decided in favor ofHMRC (Lloyds Bank Equipment Leasing No. 1 or LEL1), with the lessor and lessee choosing not to appeal further. The LEL1 tax case concluded that capital allowanceswere not available to the lessor. On the basis of this conclusion, HMRC is now asking lessees on other leases, including the Teekay Nakilat Joint Venture, to accept thatcapital allowances are not available to their lessor. Under the terms of the lease, the lessor is entitled to make a determination that additional rentals are due, even where acourt has not made a determination on whether capital allowances are available or where discussions are otherwise ongoing with HMRC on the matter. The TeekayNakilat Joint Venture now believes that it is probable that the lessor will make such a determination, and demand additional rentals. As a result, in the three months endedDecember 31, 2017, the Teekay Nakilat Joint Venture recognized an additional tax indemnification guarantee liability of $50.0 million (which is included in the afore-mentioned total accrued liability of $62.7 million as at December 31, 2017) as estimated primarily based on information received from the lessor and presented in other(loss) income on the consolidated statements of (loss) income for the year ended December 31, 2017.e)Redeemable Non-Controlling InterestIn July 2015, Teekay Offshore issued in a private placement 10.4 million of its 8.60% Series C Cumulative Convertible Perpetual Preferred Units (or Series C PreferredUnits). The terms of the Series C Preferred Units provided that at any time after the 18-month anniversary of the closing date, at the election of each holder, the Series CPreferred Units could be converted on a one-for-one basis into common units of Teekay Offshore. In addition, if after the three-year anniversary of the closing date, thevolume weighted average price of the common units exceeded $35.925, Teekay Offshore had the option to convert the Series C Preferred Units into common units. TheSeries C Preferred Units could be redeemed in cash if a change of control occurred in Teekay Offshore.In June 2016, Teekay Offshore and the unitholders of the Series C Preferred Units exchanged approximately 1.9 million of the Series C Preferred Units for approximately8.3 million common units of Teekay Offshore and also exchanged the remaining approximately 8.5 million Series C Preferred Units for approximately 8.5 million Series C-1Preferred Units. The terms of the Series C-1 Preferred Units were equivalent to the terms of the Series C Preferred Units, with the exception that at any time after the 18-month anniversary of the original Series C Preferred Units closing date, at the election of each holder, each Series C-1 Preferred Unit was convertible into 1.474 commonunits of Teekay Offshore. In addition, if a unitholder of the Series C-1 Preferred Units elected to convert their Series C-1 Preferred Units into common units of TeekayOffshore, Teekay Offshore had the option to redeem these Series C-1 Preferred Units for cash based on the closing market price of the common units of Teekay Offshoreinstead of issuing common units. Furthermore, if after the three-year anniversary of the closing date, the volume weighted average price of the common units exceeded150% of $16.25 per unit, Teekay Offshore had the option to convert the Series C-1 Preferred Units into common units. Consistent with the terms of the Series C PreferredUnits, the Series C-1 Preferred Units could have been redeemed in cash if a change of control occurred in Teekay Offshore. As a result, the Series C-1 Preferred Unitswere, prior to the deconsolidation of Teekay Offshore in September 2017, included on the Company’s unaudited consolidated balance sheet as part of temporary equitywhich is above the equity section but below the liabilities section.F - 42Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)In June 2016, Teekay Offshore issued 4.0 million of its 10.50% Series D Cumulative Convertible Perpetual Preferred Units (or Series D Preferred Units). The Series DPreferred Units had no mandatory redemption date, but they were redeemable at Teekay Offshore's option after June 29, 2021 for a 10% premium to the liquidation valueand for a 5% premium to the liquidation value any time after June 29, 2022. The Series D Preferred Units were exchangeable into common units of Teekay Offshore at theoption of the holder at any time after June 29, 2021, based on the 10-trading day volume weighted average price at the time of the notice of exchange or $4.00. A change ofcontrol event involving the purchase of all outstanding common units for consideration of at least 90% cash of a change in ownership of the general partner of TeekayOffshore by 50% or more would have resulted in the Series D Preferred Units being redeemable for cash. As a result, the Series D Preferred Units, net of Teekay's units,were, prior to the deconsolidation of Teekay Offshore in September 2017, included on the Company’s consolidated balance sheet as part of temporary equity which isabove the equity section but below the liabilities section.As part of the Brookfield Transaction (see Note 3), Teekay Offshore repurchased and cancelled all of its outstanding Series C-1 and Series D Preferred Units, and as aresult redeemable non-controlling interest is no longer included in the Company's consolidated balance sheet.f)OtherThe Company enters into indemnification agreements with certain Officers and Directors. In addition, the Company enters into other indemnification agreements in theordinary course of business. The maximum potential amount of future payments required under these indemnification agreements is unlimited. However, the Companymaintains what it believes is appropriate liability insurance that reduces its exposure and enables the Company to recover future amounts paid up to the maximum amountof the insurance coverage, less any deductible amounts pursuant to the terms of the respective policies, the amounts of which are not considered material.17. Supplemental Cash Flow Informationa)The changes in operating assets and liabilities for the years ended December 31, 2017, 2016, and 2015, are as follows: Year Ended December 31, 2017 2016 2015Accounts receivable(1,925) 96,497 (6,488)Prepaid expenses and other2,608 9,690 (10,607)Accounts payable(14,499) (10,705) (24,727)Accrued liabilities and other120,383 (57,149) 29,531 106,567 38,333 (12,291)b)Cash interest paid, including realized interest rate swap settlements, during the years ended December 31, 2017, 2016, and 2015, totaled $319.6 million, $341.0 millionand $318.1 million, respectively. In addition, during the years ended December 31, 2017, 2016, and 2015, cash interest paid relating to interest rate swap amendmentsand terminations totaled $0.6 million, $8.1 million and $10.9 million, respectively.c)As described in Note 4a, in November 2017, Teekay Tankers acquired the outstanding shares of TIL through issuing 89.0 million Class A common shares, which wastreated as a non-cash transaction in the Company's consolidated statement of cash flows. As a result of this transaction, Teekay Tankers acquired $37.6 million incash and paid $6.8 million in legal fees.d)In 2017 and 2016, the portion of the distributions paid in kind by Teekay Offshore to the unit holders of Series C-1 Preferred Units and Series D Preferred Units, of$12.7 million and $11.7 million, respectively, was treated as a non-cash transaction in the consolidated statements of cash flows.e)As described in Note 4c, in August 2015, Teekay Tankers agreed to acquire 12 modern Suezmax tankers from Principal Maritime. As of December 31, 2015, all 12 ofthe vessels had been delivered for a total purchase price of $661.3 million, consisting of $612.0 million in cash and approximately 7.2 million shares of TeekayTankers’ Class A common stock or $49.3 million, which was treated as a non-cash transaction in the consolidated statement of cash flows.F - 43Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)18. Asset Impairments and Loss on Sales of Vessels, Equipment and Other Operating Assetsa) Asset ImpairmentsIn September 2017, the estimated future cash flows and carrying value of the asset groups for the Petrojarl Foinaven FPSO unit and Petrojarl Banff FPSO unit, eachowned by Teekay Parent, changed upon the deconsolidation of Teekay Offshore. For the Petrojarl Foinaven FPSO, two shuttle tankers, which are owned by TeekayOffshore, were removed from the carrying value of the asset group and the estimated future cash flows of the asset group was changed to include the in-charter costs ofthese two vessels to be paid by Teekay Parent to Teekay Offshore. For the Petrojarl Banff FPSO, the carrying value of an FSO, which is owned by Teekay Offshore, wasremoved from the carrying value of the asset group and the estimated future cash flows of the asset group was changed to include the in-charter costs of the FSO unit tobe paid by Teekay Parent to Teekay Offshore. This change in asset groups and a re-evaluation of the estimated future net cash flows of the units resulted in a write downof the carrying values of the units to their estimated fair values, which in aggregate was approximately $113.0 million and resulted in impairment charges of $205.7 millionfor the Petrojarl Foinaven FPSO and Petrojarl Banff FPSO, for the year ended December 31, 2017. The impairment charges are included in the Company's Teekay ParentSegment - Offshore Production. The Company has determined the discounted cash flows using the current projected time charter rates and costs, discounted at anestimated market participant rate of 10%. For both units, the Company has included the existing contracted time charter rates and operating costs as well as projectedfuture use on another field. The projected future use of each of the FPSO units takes into consideration the Company’s estimated upgrade costs and projected timecharter rates that could be contracted in future periods. In establishing these estimates, the Company has considered current discussions with potential customers,available information regarding field expansions and historical experience redeploying FPSO units.Under Teekay LNG's charter contracts for the Teide Spirit and Toledo Spirit Suezmax tankers, the charterer, who is also the owner of the vessels, has the option tocancel the charter contracts 13 years following commencement of the respective charter contracts. In August 2017, the charterer of the Teide Spirit gave formalnotification to Teekay LNG of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. In October2017, the charterer notified Teekay LNG that it is marketing the Teide Spirit for sale and, upon sale of the vessel, it will concurrently terminate its existing charter contractwith Teekay LNG. The charterer’s cancellation option for the Toledo Spirit is first exercisable in August 2018. Given Teekay LNG's prior experience with this charterer,Teekay LNG expects it will also cancel the charter contract and sell the Toledo Spirit to a third party in 2018. Teekay LNG wrote-down the vessels to their estimated fairvalues based on their expected future discounted cash flows and recorded a $25.5 million write down on a combined basis of the Teide Spirit and Toledo Spirit. The write-downs are included in the Company's Teekay LNG Segment - Conventional Tankers.In 2016, the carrying value of the Navion Marita was written down to its estimated fair value, using an appraised value, as a result of fewer opportunities to trade the vesselin the spot conventional tanker market. The Company’s consolidated statement of (loss) income for the year ended December 31, 2016, includes a $2.1 million write-downrelated to this vessel. The write-down is included in the Company’s Teekay Offshore Segment.In 2016, Teekay Offshore canceled the UMS construction contracts for its two UMS newbuildings. As a result, the carrying values of these two UMS newbuildings werewritten down to $nil. The Company's consolidated statement of (loss) income for the year ended December 31, 2016 includes a $43.7 million write-down related to thesetwo UMS newbuildings. The write-down is included in the Company’s Teekay Offshore Segment.In 2015, seven of Teekay Offshore’s 1990s-built shuttle tankers were written down to their estimated fair value, using appraised values. Of the seven shuttle tankers,during the first quarter of 2015, one shuttle tanker was written down as a result of the expected sale of the vessel and the vessel was classified as held for sale on theCompany’s consolidated balance sheet as at December 31, 2015. An additional shuttle tanker was written down during the first quarter of 2015 as a result of a change inthe operating plan of the vessel. In the fourth quarter of 2015, the write-down of five shuttle tankers, which had an average age of 17.5 years, was the result of changes inTeekay Offshore’s expectations of their future opportunities, primarily due to their advanced age. The Company’s consolidated statements of (loss) income for the yearended December 31, 2015, includes total write-downs of $66.7 million related to these seven shuttle tankers. The write-downs are included in the Company’s TeekayOffshore Segment.b) Loss on Sales of Vessels, Equipment and Other Operating AssetsThe Company's sale of vessels generally consists of those vessels approaching the end of their useful lives as well as other vessels it strategically sells to reduceexposure to a certain vessel class.F - 44Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The following table shows the net (loss) gain on sale of vessels, equipment and other operating assets for the years ended December 31, 2017, 2016, and 2015: Net (Loss) Gain on Sales of Vessels,Equipment and Other Operating Assets Year Ended December 31,Segment Asset Type Completion ofSale Date 2017$ 2016$ 2015$Teekay Offshore Segment FSO unit Oct-2017 — (983) —Teekay Offshore Segment 2 ShuttleTankers Mar-2015/Nov-2016 — 6,817 1,643Teekay Offshore Segment 2 ConventionalTankers Mar-2016 — 65 (3,897)Teekay LNG Segment - Conventional Tankers 2 Suezmaxes (1) (25,100) — —Teekay LNG Segment - Conventional Tankers Suezmax Mar-2017 — (11,537) —Teekay LNG Segment - Conventional Tankers 2 Suezmaxes Apr/May-2016 — (27,439) —Teekay Tankers Segment - Conventional Tankers 3 Aframaxes June/Sept/Nov-2017 (11,158) Teekay Tankers Segment - Conventional Tankers 2 Suezmaxes Jan/Mar-2017 (1,797) (6,276) —Teekay Tankers Segment - Conventional Tankers 2 MR Tankers Aug/Nov-2016 — (14,650) —Teekay Parent Segment - Conventional Tankers VLCC Oct-2016 — (12,495) —Other (29) 48 (177)Total (38,084) (66,450) (2,431)(1)Teekay LNG has commenced marketing these vessels for sale and the vessels are classified as held for sale at December 31, 2017.See Note 2 — Segment Reporting for the asset impairments, loss on sales of vessels, equipment and other operating assets and write-down of equity investment, bysegment for 2017, 2016 and 2015.19. Net (Loss) Income Per Share Year Ended December 31, 2017$ 2016$ 2015$Net (loss) income attributable to shareholders of Teekay Corporation(163,276) (123,182) 82,151The Company's portion of the Inducement Premium and Exchange Contribution charged to retained earningsby Teekay Offshore (note 16e)— (4,993) —Net (loss) income attributable to shareholders of Teekay Corporation for basic income (loss) per share(163,276) (128,175) 82,151Reduction in net earnings due to dilutive impact of stock-based compensation in Teekay LNG, TeekayOffshore and Teekay Tankers and stock purchase warrants in Teekay Offshore(90) (25) (227)Net (loss) income attributable to shareholders of Teekay Corporation for diluted income (loss) per share(163,366) (128,200) 81,924Weighted average number of common shares86,335,473 79,211,154 72,665,783Dilutive effect of stock-based compensation— — 524,781Common stock and common stock equivalents86,335,473 79,211,154 73,190,564(Loss) Earnings per common share: - Basic(1.89) (1.62) 1.13 - Diluted(1.89) (1.62) 1.12Stock-based awards, which have an anti-dilutive effect on the calculation of diluted loss per common share, are excluded from this calculation. For the years endedDecember 31, 2017 and 2016, options to acquire 3.6 million shares and 3.8 million shares of Common Stock, respectively, had an anti-dilutive effect on the calculation ofdiluted earnings per common share. In periods where a loss attributable to shareholders has been incurred all stock-based awards are anti-dilutive.F - 45Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)20. Restructuring ChargesDuring 2017, the Company recorded restructuring charges of $5.1 million ($26.8 million – 2016, $14.0 million - 2015).The restructuring charges in 2017 primarily related to: severance costs resulting from the termination of the charter contract for the Arendal Spirit UMS in Teekay Offshoreand the resulting decommissioning of the unit; reorganization and realignment of resources of certain of the Company's strategic development function to better respond tothe changing business environment; and reorganization of the Company'sFPSO business to create better alignment with the Company's offshore operations.The restructuring charges in 2016 primarily relate to the closure of two offices and seafarers' severance amounts related to the tug business in Western Australia,reorganization of the Company’s FPSO business to create better alignment with the Company’s offshore operations, and reductions to charges previously accrued. Thecharges related to the seafarers' severance were partly recovered from customers and the recovery is included in revenues on the consolidated statements of (loss)income.The restructuring charges in 2015 relate to the termination of the employment of certain seafarers upon the expiration of a time-charter-out contract, the reorganization ofthe Company’s marine operations and corporate services, and the change in crew on a vessel as requested by a charterer. The actual restructuring charges relating tothe termination of the employment of certain seafarers upon the expiration of a time-charter-out contract and the change in crew on a vessel as requested by a charterer inthe amount of $8.4 million were fully reimbursed to the Company by the charterers and the net reimbursement is included in voyage revenues.At December 31, 2017 and 2016 $1.3 million and $5.6 million, respectively, of restructuring liabilities were recorded in accrued liabilities on the consolidated balance sheets.21. Income TaxesTeekay and a majority of its subsidiaries are not subject to income tax in the jurisdictions in which they are incorporated because they do not conduct business or operatein those jurisdictions. However, among others, the Company’s U.K. and Norwegian subsidiaries are subject to income taxes.The significant components of the Company’s deferred tax assets and liabilities are as follows: December 31,2017$ December 31,2016$Deferred tax assets: Vessels and equipment5,377 40,928 Tax losses carried forward (1)193,501 276,291 Other29,355 17,075Total deferred tax assets228,233 334,294Deferred tax liabilities: Vessels and equipment9,053 5,974 Provisions5,153 — Other8,417 13,317Total deferred tax liabilities22,623 19,291Net deferred tax assets205,610 315,003 Valuation allowance(202,513) (290,015)Net deferred tax assets3,097 24,988(1) Substantially all of the Company’s net operating loss carryforwards of $979.2 million relate primarily to its Norwegian, U.K., Spanish, and Luxembourg subsidiaries and, to alesser extent, to its Australian ship-owning subsidiaries. These net operating loss carryforwards are available to offset future taxable income in the respective jurisdictions, and canbe carried forward indefinitely, except for losses which arose during 2017 in Luxembourg, which losses can be carried forward for 17 years. The Company also has $30.2 million indisallowed finance costs that relate to its Spanish subsidiaries and are available to offset future taxable income in Spain and can also be carried forward indefinitely.Deferred tax balances are presented in other non-current assets and other long-term liabilities in the accompanying consolidated balance sheets. Certain of the balancesin the comparative columns above have been adjusted with no impact on the amount of the net deferred tax assets.F - 46Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)The components of the provision for income taxes are as follows: Year EndedDecember 31,2017$ Year EndedDecember 31,2016$ Year EndedDecember 31,2015$Current(11,997) (14,424) (10,440)Deferred(235) (10,044) 27,207Income tax (expense) recovery(12,232) (24,468) 16,767The Company operates in countries that have differing tax laws and rates. Consequently, a consolidated weighted average tax rate will vary from year to year according tothe source of earnings or losses by country and the change in applicable tax rates. Reconciliations of the tax charge related to the relevant year at the applicable statutoryincome tax rates and the actual tax charge related to the relevant year are as follows: Year EndedDecember 31,2017$ Year EndedDecember 31,2016$ Year EndedDecember 31,2015$Net (loss) income before taxes(516,840) 111,132 388,693Net (loss) income not subject to taxes(297,688) 57,862 252,604Net (loss) income subject to taxes(219,152) 53,270 136,089At applicable statutory tax rates(51,471) 5,996 32,750Permanent and currency differences, adjustments to valuation allowances anduncertain tax positions64,164 18,198 (49,789)Other(461) 274 272Tax expense (recovery) related to the year12,232 24,468 (16,767)The following is a roll-forward of the Company’s unrecognized tax benefits, recorded in other long-term liabilities, from January 1, 2015 to December 31, 2017: Year EndedDecember 31,2017$ Year EndedDecember 31,2016$ Year EndedDecember 31,2015$Balance of unrecognized tax benefits as at January 119,492 18,390 20,335 Increases for positions related to the current year2,631 6,422 4,578 Changes for positions taken in prior years3,475 (3,729) (2,965) Decreases related to statute of limitations(1,562) (1,591) (3,558) Increase due to acquisition of TIL8,528 — — Decrease due to deconsolidation of Teekay Offshore(1,503) — —Balance of unrecognized tax benefits as at December 3131,061 19,492 18,390The majority of the net increase for positions relates to the potential tax on freight income on an increased number of voyages for the year ended December 31, 2017.The Company does not presently anticipate such uncertain tax positions will significantly increase or decrease in the next 12 months; however, actual developments coulddiffer from those currently expected. The tax years 2008 through 2017 remain open to examination by some of the major jurisdictions in which the Company is subject totax.The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The interest and penalties on unrecognized tax benefits areincluded in the roll-forward schedule above and are approximately an increase of $3.1 million in 2017, net of statute barred liabilities, and an increase of $1.2 million in 2016and a reduction of $0.3 million in 2015.22. Equity-accounted InvestmentsOn September 25, 2017, Teekay, Teekay Offshore and Brookfield finalized the Brookfield Transaction (see Note 3). As a result, Teekay has included the results ofTeekay Offshore as an equity-accounted investment in its financial results as at December 31, 2017, and for the period from September 25, 2017 to December 31, 2017.At September 25, 2017, when the Company initially recorded its equity investment in Teekay Offshore, the difference between the Company's investment and thecarrying value of Teekay Offshore's net assets was substantially attributable to basis differences between the fair value and carrying amounts of the vessels. As atDecember 31, 2017, the excess of the carrying value of the Company's investment over the carrying value of Teekay Offshore's net assets was $3.8 million.F - 47Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)Prior to the Brookfield Transaction, Teekay Offshore was consolidated and the equity investees of Teekay Offshore were included in the financial results of Teekay,which include the following:•In October 2014, Teekay Offshore sold a 1995-built shuttle tanker, the Navion Norvegia, to OOG-TK Libra GmbH & Co KG (or Libra Joint Venture), a 50/50 jointventure of Teekay Offshore and Ocyan S.A. (or Ocyan) (formerly Odebrecht Oil & Gas S.A.), which vessel was converted to a new FPSO unit for the Libra field inBrazil. The FPSO unit commenced operations in late-2017. In conjunction with the conversion project, in late-2015, the Libra Joint Venture entered into a ten-year plusconstruction period term loan facility, which as at December 31, 2017 had an outstanding balance of $804 million.•In June 2013, Teekay Offshore acquired Teekay Corporation’s 50% interest in OOG-TKP FPSO GmbH & Co KG, a joint venture with Ocyan, which owns the ItajaiFPSO unit. Included in the joint venture is an eight-year loan facility, which as at December 31, 2017 had an outstanding balance of $169 million.•As at September 25, 2017, the investments in Libra and Itajai are no longer on the consolidated balance sheets as a result of Teekay Offshore now being accountedfor using the equity method.The equity investees of Teekay LNG include the following:•In December 2015, Teekay LNG entered into a joint venture agreement with Nogaholding, GIC, and Samsung to form a joint venture, the Bahrain LNG Joint Venture,for the development of an LNG receiving and regasification terminal in Bahrain and the supply of a FSU vessel (See Note 4b). Teekay LNG has a 30% ownershipinterest in the Bahrain LNG Joint Venture.•A 50/50 joint venture agreement with China LNG Shipping (Holdings) Limited (or the Yamal LNG Joint Venture) and the joint venture has ordered six internationally-flagged icebreaker LNG carriers for a project located on the Yamal Peninsula in Northern Russia (or the Yamal LNG Project). During the year ended December 31,2017, the Yamal LNG Joint Venture converted the $195 million advances from each joint venture partner, including accrued interest, into contributed capital of the jointventure. As at December 31, 2016, Teekay LNG had advanced $146.7 million to the Yamal LG Joint Venture and the interest accrued on these advances was $9.4million. In December 2017, the Yamal LNG Joint Venture secured a $1.6 billion long-term debt facility to finance all six of its ARC7 LNG carrier newbuildings. As part ofthe completed financing, the Yamal LNG Joint Venture returned a total of $104 million of capital back to the joint venture partners in December 2017, of which TeekayLNG's share was $52 million. Teekay LNG has guaranteed its 50% share of a $816 million secured loan facility in the Yamal LNG Joint Venture and, as a result, hasrecorded a guarantee liability. The carrying value of the guarantee liability as at December 31, 2017 was $0.6 million (December 31, 2016 –$nil) and is included as partof other long-term liabilities in the consolidated balance sheets.•In June 2014, Teekay LNG acquired from Shell its ownership interests in four LNG carrier newbuildings. As compensation for Shell’s ownership interests in these fourLNG carrier newbuildings, Teekay LNG assumed Shell’s obligation to provide the shipbuilding supervision and crew training services for the four LNG carriernewbuildings up to their delivery date pursuant to a ship construction support agreement. Teekay LNG estimates it would incur approximately $36.9 million of costs toprovide these services, of which Shell has agreed to pay a fixed amount of $20.3 million. Teekay LNG estimated that the fair value of the service obligation was $33.3million and the fair value of the amount due from Shell was $16.5 million. As at December 31, 2017, the carrying value of the service obligation of $8.2 million(December 31, 2016 – $22.6 million) is included in both the current portion of in-process contracts and in-process contracts and the carrying value of the receivablefrom Shell of $3.5 million (December 31, 2016 – $10.9 million) is included in accounts receivable in the Company’s consolidated balance sheets.As at December 31, 2017, Teekay LNG has a 30% ownership interest in one LNG carrier, the Pan Asia, and one LNG carrier newbuilding and a 20% ownershipinterest in the remaining two LNG carrier newbuildings (or collectively, the Pan Union Joint Venture). The Pan Asia was delivered on October 13, 2017 andconcurrently commenced its 20-year charter contract with Shell.On initial acquisition, the basis difference between Teekay LNG's investment and the carrying value of the Pan Union Joint Venture's net assets was substantiallyattributed to ship construction support agreements and the time-charter contracts. As at December 31, 2017, the excess of the carrying value of Teekay LNG'sinvestment over the carrying value of the Pan Union Joint Venture's net assets was $11.4 million (December 31, 2016 – $16.8 million).•A 50/50 joint venture agreement with Exmar NV (or Exmar) (or the Exmar LPG Joint Venture). Teekay LNG has guaranteed its 50% share of a secured loan facilityand four capital leases in the Exmar LPG Joint Venture and, as a result, has recorded a guarantee liability. The carrying value of the guarantee liability as atDecember 31, 2017 was $1.6 million (December 31, 2016 – $1.3 million) and is included as part of other long-term liabilities in the consolidated balance sheets.As at December 31, 2017, the Teekay LNG had advanced $52.3 million (December 31, 2016 – $52.3 million) to the Exmar LPG Joint Venture, which bears interest atLIBOR plus 0.50% and has no fixed repayment terms. As at December 31, 2017, the interest accrued on these advances was $0.2 million (December 31, 2016 –$1.1 million). These amounts are included in the table below.On initial acquisition, the basis difference between Teekay LNG's investment and the carrying value of the Exmar LPG Joint Venture's net assets was substantiallyattributed to the value of the vessels and charter agreements of the Exmar LPG Joint Venture and goodwill in accordance with the finalized purchase price allocation.At December 31, 2017, the unamortized amount of the basis difference was $25.5 million (December 31, 2016 – $30.2 million).F - 48Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)•A 50/50 joint venture with Exmar (or the Excalibur Joint Venture and the Excelsior Joint Ventures). Teekay LNG has guaranteed its 50% share of the secured loanfacilities of the Excalibur and Excelsior Joint Ventures and, as a result, has recorded a guarantee liability. The carrying value of the guarantee liability as ofDecember 31, 2017 was $0.2 million (December 31, 2016 – $0.2 million) and is included as part of other long-term liabilities in the consolidated balance sheets.On initial acquisition, the basis difference between Teekay LNG's investment and the carrying value of the Excalibur and Excelsior Joint Venture's net assets wassubstantially attributed to an increase to the carrying value of the vessels of the Excalibur and Excelsior Joint Ventures in accordance with the finalized purchaseprice allocation. At December 31, 2017, the unamortized amount of the basis difference was $35.6 million (December 31, 2016 – $37.2 million).•A 52% ownership interest in the joint venture between Marubeni Corporation and Teekay LNG (or the Teekay LNG-Marubeni Joint Venture). On March 31, 2017, theTeekay LNG-Marubeni Joint Venture completed the refinancing of its previous $396 million debt facility by entering into a new $335 million U.S. Dollar-denominatedterm loan maturing in September 2019. As part of the completed refinancing, Teekay LNG invested $57 million of additional equity, based on its proportionateownership interest, into the Teekay LNG-Marubeni Joint Venture. Teekay LNG has guaranteed its 52% share of the secured loan facilities of the Teekay LNG-Marubeni Joint Venture and, as a result, has recorded a guarantee liability. The carrying value of the guarantee liability as at December 31, 2017 was $0.5 million(December 31, 2016 – $0.1 million) and is included as part of other long-term liabilities in the consolidated balance sheets.•A 33% ownership interest in the Angola Joint Venture that owns four newbuilding 160,400-cubic meter LNG carriers (or the Angola LNG Carriers). The other partnersof the Angola Joint Venture are NYK Energy Transport (or NYK) (33%) and Mitsui & Co. Ltd. (34%).Teekay LNG has guaranteed its 33% share of the secured loan facilities and interest rate swaps of the Angola Joint Venture and, as a result, has recorded aguarantee liability. The carrying value of the guarantee liability as at December 31, 2017 was $0.7 million (December 31, 2016 – $1.0 million) and is included as part ofother long-term liabilities in the consolidated balance sheets.•A 40% interest in the RasGas 3 Joint Venture between Teekay LNG and QGTC Nakilat (1643-6) Holdings Corporation. The RasGas 3 Joint Venture owns four LNGcarriers and related long-term fixed-rate time charters to service the expansion of a LNG project in Qatar.In January 2014, Teekay and Teekay Tankers formed TIL, which sought to opportunistically acquire, operate and sell modern second-hand tankers to benefit from anexpected recovery in the current cyclical low of the tanker market. Teekay and Teekay Tankers in the aggregate purchased 5.0 million shares of common stock,representing an initial 20% interest in TIL, as part of a $250 million private placement by TIL, which represented a total investment by Teekay and Teekay Tankers of $50.0million. In October 2014, Teekay Tankers acquired an additional 0.9 million common shares in TIL, representing 2.43% of the then outstanding share capital of TIL. On May31, 2017, Teekay Tankers entered into a Merger Agreement to acquire the remaining 27.0 million issues and outstanding common shares of TIL. Teekay Tankers and TILcompleted the merger on November 27, 2017 and TIL became a wholly-owned subsidiary of Teekay Tankers (See Note 4a). As a result, Teekay has included the resultsof TIL as a part of equity (loss) income for the period up to November 27, 2017.Teekay Tankers also owns a 50% interest in a joint venture arrangement between Teekay Tankers and Wah Kwong Maritime Transport Holdings Limited (or Wah KwongJoint Venture) which owns a single VLCC tanker under a long-term contract.In November 2011, Teekay acquired a 40% interest in a recapitalized Sevan for approximately $25 million. Sevan owns an engineering and offshore project developmentbusiness and intellectual property rights, including offshore unit design patents. As of December 31, 2017, the aggregate value of the Company’s 43.5% interest (43.5%interest —December 31, 2016) in Sevan, based on the quoted market price of Sevan’s common stock on the Oslo Stock Exchange, was $40.4 million ($44.9 million –December 31, 2016).F - 49Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated)A condensed summary of the Company’s investments in equity-accounted investees by segment is as follows (in thousands of U.S. dollars, except percentages): As at December 31,Investments in Equity-accounted Investees (1)OwnershipPercentage 2017$ 2016$Teekay Offshore (2) Libra Joint Venture50% — 69,972Itajai50% — 71,827Teekay LNG - Liquefied Gas Angola LNG Carriers33% 73,316 63,673Pan Union Joint Venture20% - 30% 38,298 33,594Exmar LNG Joint Venture50% 79,915 79,577Exmar LPG Joint Venture50% 157,926 165,064RasGas3 Joint Venture40% 123,034 173,037Teekay LNG - Marubeni Joint Venture52% 335,897 294,764Yamal LNG Joint Venture50% 194,715 152,927Bahrain LNG Joint Venture30% 77,786 64,003Teekay Tanker - Conventional Tankers TIL11% — 47,710Wah Kwong Joint Venture50% 24,546 22,025Teekay Parent - Offshore Production Sevan44% 15,589 22,180Teekay Parent - Other Teekay Offshore (2) (note 3)14% 208,871 —TOO GP (2) (note 3)51% 4,061 —Teekay Parent - Conventional Tankers TIL8% — 36,699Other50% 1,169 2,802 1,335,123 1,299,854(1)Investments in equity-accounted investees is presented in current portion of loans to equity-accounted investees, loans to equity-accounted investees, equity-accountedinvestments and advances from affiliates in the Company’s consolidated balance sheets.(2)The results included for Teekay Offshore are from the date of deconsolidation on September 25, 2017. Itajai and Libra Joint Venture results were included up untilSeptember 25, 2017.A condensed summary of the Company’s financial information for equity-accounted investments (14% to 52%-owned) shown on a 100% basis are as follows: As at December 31, 2017 2016Cash and restricted cash555,566 500,355Other assets - current370,790 150,378Vessels and equipment, including vessels related to capital leases and advances on newbuilding contracts8,056,504 4,655,170Net investment in direct financing leases1,973,307 1,776,954Other assets - non-current500,108 74,096Current portion of long-term debt and obligations related to capital leases764,098 360,942Other liabilities - current593,968 160,312Long-term debt and obligations related to capital leases5,957,406 4,208,214Other liabilities - non-current751,416 213,060F - 50Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTEEKAY CORPORATION AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(all tabular amounts stated in thousands of U.S. dollars, other than share data and unless otherwise indicated) Year Ended December 31, 2017 2016 2015Revenues980,078 882,650 985,318Income from vessel operations258,006 365,472 433,023Realized and unrealized (loss) gain on non-designated derivative instruments(17,438) (10,900) (38,955)Net income38,646 239,766 275,259Certain of the comparative figures have been adjusted to conform to the presentation adopted in the current year. The results included for TIL are until its consolidation onNovember 27, 2017. The results included for Teekay Offshore are from the date of deconsolidation on September 25, 2017. Itajai and Libra Joint Venture results wereincluded up until September 25, 2017.For the year ended December 31, 2017, the Company recorded an equity loss of $37.3 million (2016 – income of $85.6 million, and 2015 - income of $102.9 million). Theequity loss in 2017 was primarily comprised of the write-down of the carrying value of the investment in TIL (note 4a) and the Company’s share of net (loss) income fromthe Teekay LNG-Marubeni Joint Venture, Exmar LPG Joint Venture, Sevan, Angola LNG Carriers, the RasGas3 Joint Venture, Itajai and the Exmar LNG Joint Venture.For the year ended December 31, 2017, equity (loss) income included $7.7 million related to the Company’s share of unrealized gains on interest rate swaps in the equity-accounted investees (2016 – $8.7 million and 2015 - $5.9 million).23. Subsequent Eventsa)In January 2018, Teekay Parent sold an aggregate of 1.1 million shares of common stock as part of a continuous offering program, generating gross proceeds of$11.2 million.b)In January 2018, Teekay Parent completed a private offering of $125 million of aggregate principal amount of 5.00% Convertible Senior Notes due 2023 (orConvertible Notes), raising net proceeds of approximately $120.9 million. The Convertible Notes will be convertible into Teekay’s common stock, initially at a rate of85.4701 shares of common stock per $1,000 principal amount of Convertible Notes. This represents an initial effective conversion price of $11.70 per share ofcommon stock. The initial conversion price represents a premium of 20 percent to the concurrent common stock offering price of $9.75 per share described below.The conversion rate is subject to customary adjustments for, among other things, payments of dividends by Teekay Parent beyond the current quarterly rate of$0.055 per share of common stock, other distributions of Teekay Parent’s common stock, other securities, assets or rights to Teekay Parent’s shareholders or aTeekay Parent tender or exchange offer. In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or following anynotice of optional redemption given by Teekay Parent, Teekay Parent will, under certain circumstances, increase the conversion rate for a holder who elects toconvert its notes in connection with such a corporate event or for Convertible Notes that are surrendered for conversion following such notice of redemption.c)In January 2018, concurrently with the offering of Convertible Notes, Teekay Parent completed a public offering of 10.0 million common shares priced at $9.75 pershare, raising net proceeds of approximately $93.0 million. Teekay Parent intends to use the net proceeds from the offerings for general corporate purposes, whichmay include, among other things, repaying a portion of its outstanding indebtedness and funding working capital.d)On January 12, 2018, the Yamal LNG Joint Venture took delivery of its first ARC7 LNG carrier newbuilding, the Eduard Toll, in which Teekay LNG has a 50%ownership interest. The vessel concurrently commenced its 28-year charter contract with Yamal Trade Pte. Ltd.e)On January 30, 2018, the Exmar LPG Joint Venture sold an LPG carrier, the Courcheville, to a third party for gross proceeds of $4.4 million.f)On January 31, 2018, the Pan Union Joint Venture took delivery of its second LNG carrier newbuilding, the Pan Americas, in which Teekay LNG has a 30%ownership interest. The vessel concurrently commenced its 20-year charter contract with Shell.g)On January 31, 2018, Teekay LNG sold its 50% ownership interest in the Excelsior Joint Venture for net proceeds of approximately $44 million after repayingoutstanding debt obligations.h)On February 8, 2018, CEPSA, the charterer (who is also the owner) of Teekay LNG's vessel related to capital lease, the Teide Spirit, sold the vessel to a third party.As a result of this sale, Teekay LNG returned the vessel to CEPSA and the full amount of the associated capital lease obligation was concurrently extinguished. Inaddition, Teekay LNG incurred seafarer severance payments of approximately $1.4 million upon the sale of the vessel.i)On February 8, 2018, Teekay LNG refinanced a loan maturing in 2018, with a new $197 million revolving credit facility maturing in 2022.j)On February 9, 2018, Teekay LNG took delivery of an LNG carrier newbuilding, the Magdala, which concurrently commenced its eight-year charter contract withShell. Upon delivery of the vessel, Teekay LNG sold and leased back the vessel under a sale-leaseback financing transaction which includes a purchase obligation atthe end of the 10-year bareboat charter contract.k)On March 5, 2018, Teekay LNG's 50%-owned joint venture Exmar LPG BVBA, took delivery of its seventh LPG carrier newbuilding, the Kapellen. In March 2018,Exmar LPG BVBA sold and leased back the vessel under a sale-leaseback financing transaction which includes purchase options throughout the 15-year bareboatcharter contract.F - 51Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TEEKAY CORPORATIONSCHEDULE ICONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANTCONDENSED BALANCE SHEETS (NOTE 1)(in thousands of U.S. dollars) As at December 31, 2017$ As at December 31, 2016$ASSETS Current Cash and cash equivalents 22,050 8,585Accounts receivable 699 3,241Prepaid expenses and other 175 49Due from affiliates 736,938 786,110Total current assets 759,862 797,985Investments in subsidiaries (note 1) 1,117,291 3,122,738Other assets 297 1,586Total assets 1,877,450 3,922,309LIABILITIES AND EQUITY Current Accounts payable 1,660 344Accrued liabilities 24,972 26,036Due to affiliates 254,983 1,951,901Other current liabilities 2,239 2,441Total current liabilities 283,854 1,980,722Long-term debt (note 2) 586,982 584,349Other long-term liabilities 10,783 11,981Total liabilities 881,619 2,577,052Equity Common stock and additional paid-in capital 919,078 887,075Retained earnings 76,753 458,182Total equity 995,831 1,345,257Total liabilities and equity 1,877,450 3,922,309The accompanying notes are an integral part of the condensed non-consolidated financial information.F - 52Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TEEKAY CORPORATIONSCHEDULE ICONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANTCONDENSED STATEMENTS OF LOSS (NOTE 1)(in thousands of U.S. dollars) Year endedDecember 31, 2017$ Year endedDecember 31, 2016$ Year endedDecember 31, 2015$Revenues 5,089 14,142 34,373Voyage expenses (242) (59) (499)Vessel operating expenses — (30) (652)Time-charter hire expense (17,765) (24,477) (43,013)General and administrative expenses (20,549) (20,583) (27,708)Loss from vessel operations (33,467) (31,007) (37,499)Interest expense (53,103) (53,164) (38,196)Interest income 422 18,430 7,781Impairments of investments (note 1) (338,749) — (1,360,705)Dividend income (note 1) 58,000 1,039 109Other 4,764 (981) (46,190)Net loss before income taxes (362,133) (65,683) (1,474,700)Income tax (expense) recovery (251) (525) 52Net loss (362,384) (66,208) (1,474,648)The accompanying notes are an integral part of the condensed non-consolidated financial information.F - 53Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TEEKAY CORPORATIONSCHEDULE ICONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANTCONDENSED STATEMENTS OF CASH FLOWS(in thousands of U.S. dollars) Year EndedDecember 31, 2017$ Year EndedDecember 31, 2016$ Year EndedDecember 31, 2015$Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net loss (362,384) (66,208) (1,474,648)Non-cash items: Unrealized (gain) loss on derivative instruments (2,336) 604 (34,871)Impairments of investments 338,749 — 1,360,705Income tax expense (recovery) 251 525 (52)Stock-based compensation 6,952 7,106 8,054Dividends-in-kind (58,000) (1,039) —Other 3,262 529 (6,907)Change in operating assets and liabilities 718 17,050 25,499Net operating cash flow (72,788) (41,433) (122,220)FINANCING ACTIVITIES Proceeds from issuance of long-term debt, net of issuance costs — — 194,358Scheduled repayments of long-term debt — — (86,645)Decrease in restricted cash — — 22,520Advances from (to) affiliates 103,400 (15,802) 179,095Net proceeds from equity issuances 25,636 105,462 —Cash dividends paid (18,967) (17,406) (125,881)Other financing activities (662) (666) (4,306)Net financing cash flow 109,407 71,588 179,141INVESTING ACTIVITIES Investments in subsidiaries (24,443) (62,714) (54,215)Other investing activities 1,289 660 1,250Net investing cash flow (23,154) (62,054) (52,965)Increase (decrease) in cash and cash equivalents 13,465 (31,899) 3,956Cash and cash equivalents, beginning of the year 8,585 40,484 36,528Cash and cash equivalents, end of the year 22,050 8,585 40,484Supplemental cash flow information (note 4) The accompanying notes are an integral part of the condensed non-consolidated financial information.F - 54Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TEEKAY CORPORATIONSCHEDULE INOTES TO CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION OF REGISTRANT1. Summary of Significant Accounting PoliciesBasis of presentationThe accompanying condensed non-consolidated financial information is required by SEC Regulation S-X 5-04 for Teekay Corporation (or Teekay), which requires theinclusion 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 asof 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 ismeasured 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 bythe 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 theinvestee as dividends. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded asreductions of cost of the investment. Teekay received dividends from its subsidiaries of $58.0 million (2017), $1.0 million (2016) and $0.1 million (2015), respectively.Teekay recognizes an impairment loss on its investments in its subsidiaries when a decline in fair value is considered to be other-than-temporary. During the years endedDecember 31, 2017, 2016 and 2015, Teekay recognized impairment losses of $338.7 million, nil and $1.4 billion, respectively, in relation to other-than-temporary declines inthe fair value of its investments.A substantial amount of Teekay’s operating, investing and financing activities are conducted by its affiliates and not reflected in this financial information. The condensednon-consolidated financial information should be read in conjunction with Teekay’s consolidated financial statements.2. Long-term debt December 31, 2017$ December 31, 2016$Senior Notes (8.5%) due January 15, 2020592,657 592,657Less unamortized discount and debt issuance costs(5,675) (8,308)Total debt586,982 584,349Long-term portion586,982 584,349The 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 OriginalNotes 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 November2015, 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) at99.01% 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 isaccreted through the maturity date of the notes using the effective interest rate of 8.67% per annum.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, 2017,the unamortized balance of the capitalized issuance cost was $3.8 million which is recorded in long-term debt in the condensed balance sheet. The 8.5% Notes rankequally 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 notguaranteed 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 principalamount 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 beredeemed (excluding accrued interest), discounted to the redemption date on a semi-annual basis, at the treasury yield plus 50 basis points, plus accrued and unpaidinterest to the redemption date.3. GuaranteesTeekay Corporation has guaranteed obligations pursuant to certain credit facilities of its subsidiaries. As at December 31, 2017, the aggregate outstanding balance onsuch credit facilities of Teekay Tankers was $252.7 million. As at December 31, 2016, the aggregate outstanding balance on such credit facilities of Teekay Tankers andTeekay Offshore was $150.0 million and $364.0 million, respectively. In September 2017, Teekay was released from all of its previous guarantees relating to TeekayOffshore's long-term debt and interest rate swap and cross currency swap agreements.F - 55Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.4. Supplemental Cash Flow InformationDuring 2017, one of the Company's subsidiaries returned capital in the amount of $1.7 billion, paid-in-kind, which was treated as a non-cash transaction in theCompany's condensed statement of cash flows.During 2017 and 2016, the Company received dividends of $58.0 million and $1.0 million, respectively, paid-in-kind, which were treated as non-cash transactions in theCompany's condensed statement of cash flowsF - 56Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 8.1LISTING OF SUBSIDIARIESThe following is a list of the Company’s subsidiaries as at December 31, 2017, excluding certain subsidiaries that in aggregate are not significant.Name of SubsidiaryState or Jurisdiction of IncorporationProportion of Ownership InterestAfrican Spirit L.L.C.Marshall Islands33.0%Al Areesh Inc.Marshall Islands23.1%Al Areesh L.L.C.Marshall Islands23.1%Al Daayen Inc.Marshall Islands23.1%Al Daayen L.L.C.Marshall Islands23.1%Al Marrouna Inc.Marshall Islands23.1%Al Marrouna L.L.C.Marshall Islands23.1%Alexander Spirit L.L.C.Marshall Islands33.0%Alliance Chartering Pty Ltd.Australia100.0%Americas Spirit L.L.C.Marshall Islands28.8%Arctic Spirit L.L.C.Marshall Islands33.7%Ashkini Spirit L.L.C.Marshall Islands28.8%Asian Spirit L.L.C.Marshall Islands33.0%Athens Spirit L.L.C.Marshall Islands28.8%Atlanta Spirit L.L.C.Marshall Islands28.8%Australian Spirit L.L.C.Marshall Islands28.8%Australian Tankship Agency Pty. Ltd.Australia100.0%Axel Spirit L.L.C.Marshall Islands28.8%Banff L.L.C.Marshall Islands100.0%Barcelona Spirit L.L.C.Marshall Islands28.8%Beijing Spirit L.L.C.Marshall Islands28.8%C VLCC L.L.C.Marshall Islands100.0%Conoco Shipping & Marine Development LLCMarshall Islands100.0%Creole Spirit L.L.C.Marshall Islands33.0%DHJS 2007-001 L.L.C.Marshall Islands33.7%DHJS 2007-002 L.L.C.Marshall Islands33.7%Dilong Spirit L.L.C.Marshall Islands28.8%DMSE Option Vessel No.1 L.L.C.Marshall Islands33.7%DMSE Option Vessel No.2 L.L.C.Marshall Islands33.7%DMSE Option Vessel No.3 L.L.C.Marshall Islands33.7%Donegal Spirit L.L.C.Marshall Islands28.8%DSME Hull No. 2411 L.L.C.Marshall Islands33.0%DSME Hull No. 2416 L.L.C.Marshall Islands33.7%DSME Hull No. 2417 L.L.C.Marshall Islands33.7%DSME Hull No. 2461 L.L.C.Marshall Islands33.0%Erik Spirit L.L.C.Marshall Islands28.8%Esther Spirit L.L.C.Marshall Islands28.8%European Spirit L.L.C.Marshall Islands33.0%Everest Spirit Holding L.L.C.Marshall Islands28.8%Explorer Spirit L.L.C.Marshall Islands28.8%Freeport Landholdings LLCUSA28.8%Galway Spirit L.L.C.Marshall Islands28.8%Ganges Spirit L.L.C.Marshall Islands28.8%Gemini Pool L.L.C.Marshall Islands100.0%Godavari Spirit L.L.C.Marshall Islands28.8%Golar-Nor (UK) LimitedUnited Kingdom100.0%H.H.I. Hull No. S856 LLCMarshall Islands33.0%H.H.I. Hull No. S857 LLCMarshall Islands33.0%Halo Fenders L.L.C.Marshall Islands28.8%Helga Spirit L.L.C.Marshall Islands28.8%Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Hugli Spirit L.L.C.Marshall Islands28.8%Hummingbird Holdings L.L.C.Marshall Islands100.0%Hummingbird Spirit L.L.C.Marshall Islands100.0%Iliad International ASNorway100.0%Iliad International Inc.Marshall Islands100.0%Iskmati Spirit L.L.C.Marshall Islands28.8%Jiaolong Spirit L.L.C.Marshall Islands28.8%Kanata Spirit Holding L.L.C.Marshall Islands28.8%Kareela Spirit Holding L.L.C.Marshall Islands28.8%Kaveri Spirit L.L.C.Marshall Islands28.8%Krepako Inc.Marshall Islands100.0%Krepanor ASNorway100.0%Kyeema Spirit Holding L.L.C.Marshall Islands28.8%Limerick Spirit L.L.C.Marshall Islands28.8%London Spirit L.L.C.Marshall Islands28.8%Los Angeles Spirit L.L.C.Marshall Islands28.8%Matterhorn Spirit L.L.C.Marshall Islands28.8%Montreal Spirit L.L.C.Marshall Islands28.8%Moscow Spirit L.L.C.Marshall Islands28.8%Nakilat Holdco L.L.C.Marshall Islands23.1%Narmada Spirit L.L.C.Marshall Islands28.8%Naviera Teekay Gas II, S.L.Spain33.0%Naviera Teekay Gas III, S.L.Spain33.0%Naviera Teekay Gas IV, S.L.Spain33.0%Naviera Teekay Gas, S.L.Spain33.0%Navigator Spirit L.L.C.Marshall Islands28.8%Oak Spirit L.L.C.Marshall Islands33.0%Petrojarl IV DANorway100.0%Pinnacle Spirit L.L.C.Marshall Islands28.8%Polar Spirit L.L.C.Marshall Islands33.7%Polarc L.L.C.Marshall Islands100.0%Remora ASNorway89.9%Remora Shipping Ltd.Cyprus89.9%Rio Spirit L.L.C.Marshall Islands28.8%Seoul Spirit L.L.C.Marshall Islands28.8%SGPC 1 Pte. Ltd.Singapore33.7%Shenlong Spirit L.L.C.Marshall Islands28.8%Skaugen Gulf Petchem Carriers B.S.C.Bahrain33.7%Sonoma L.L.C.Marshall Islands33.7%SPT Marine Transfer Services Ltd.Bermuda28.8%STX Hull No. S1672 L.L.C.Marshall Islands28.8%STX Hull No. S1673 L.L.C.Marshall Islands28.8%STX Hull No. S1674 L.L.C.Marshall Islands28.8%STX Hull No. S1675 L.L.C.Marshall Islands28.8%Summit Spirit L.L.C.Marshall Islands28.8%Sydney Spirit L.L.C.Marshall Islands28.8%T.I.L. Holdings Ltd.Marshall Islands28.8%T.I.L. I L.L.C.Marshall Islands28.8%T.I.L. II L.L.C.Marshall Islands28.8%T.I.L. III L.L.C.Marshall Islands28.8%T.I.L. IV L.L.C.Marshall Islands28.8%T.I.L. IX L.L.C.Marshall Islands28.8%T.I.L. V L.L.C.Marshall Islands28.8%T.I.L. VI L.L.C.Marshall Islands28.8%T.I.L. VII L.L.C.Marshall Islands28.8%T.I.L. VIII L.L.C.Marshall Islands28.8%T.I.L. X L.L.C.Marshall Islands28.8%T.I.L. XI L.L.C.Marshall Islands28.8%Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.T.I.L. XII L.L.C.Marshall Islands28.8%T.I.L. XIII L.L.C.Marshall Islands28.8%T.I.L. XIV L.L.C.Marshall Islands28.8%Taizhou Hull No. WZL 0501 L.L.C.Marshall Islands33.7%Taizhou Hull No. WZL 0502 L.L.C.Marshall Islands33.7%Taizhou Hull No. WZL 0503 L.L.C.Marshall Islands33.7%Tangguh Hiri Finance LimitedUnited Kingdom23.6%Tangguh Hiri Operating LimitedUnited Kingdom23.6%Tangguh Sago Finance LimitedUnited Kingdom23.6%Tangguh Sago Operating LimitedUnited Kingdom23.6%Tanker Investments Ltd.Marshall Islands28.8%Taurus Tankers L.L.C.Marshall Islands28.8%Taurus Tankers Ltd.United Kingdom100.0%Teekay Acquisition Holdings L.L.C.Marshall Islands100.0%Teekay BLT CorporationMarshall Islands23.6%Teekay BLT Finance CorporationMarshall Islands23.6%Teekay Bulkers Investments Ltd.Marshall Islands100.0%Teekay Bulkers Management Services Ltd.Marshall Islands100.0%Teekay Business Process Services, Inc.Philippines100.0%Teekay Chartering LimitedMarshall Islands28.8%Teekay Crewing Services Pty Ltd.Australia100.0%Teekay Cyprus LimitedCyprus100.0%Teekay Delaware Chartering Services L.L.C.USA100.0%Teekay Do Brasil Servicos Maritimos Ltda.Brazil100.0%Teekay Finance LimitedBermuda100.0%Teekay Gas Group Ltd.Marshall Islands33.0%Teekay GP L.L.C.Marshall Islands100.0%Teekay Guardian L.L.C.Marshall Islands28.8%Teekay Holdings Australia Pty Ltd.Australia100.0%Teekay Holdings LimitedBermuda100.0%Teekay Hummingbird Production LimitedUnited Kingdom100.0%Teekay II Iberia, S.L.Spain33.0%Teekay International Ship Chartering Services Inc.Barbados100.0%Teekay Lightering Services L.L.C.Marshall Islands100.0%Teekay LNG Bahrain Operations L.L.C.Bahrain33.0%Teekay LNG Finance Corp.Marshall Islands33.0%Teekay LNG Finco L.L.C.Marshall Islands33.0%Teekay LNG Holdco L.L.C.Marshall Islands33.7%Teekay LNG Holdings L.P.USA33.7%Teekay LNG Operating L.L.C.Marshall Islands33.0%Teekay LNG Partners L.P. (1)Marshall Islands33.0%Teekay LNG Project Services L.L.C.Marshall Islands33.0%Teekay LNG US G.P. L.L.C.Marshall Islands33.0%Teekay Luxembourg S.A.R.L.Luxembourg33.0%Teekay Marine (Singapore) Pte. Ltd.Singapore28.8%Teekay Marine Holdings Ltd.Marshall Islands28.8%Teekay Marine Ltd.Marshall Islands28.8%Teekay Marine Pty Ltd.Australia100.0%Teekay Marine Services (Shanghai) Co. Ltd.China100.0%Teekay Marine Solutions (Bermuda) Ltd.Bermuda28.8%Teekay Marine Solutions Inc.USA28.8%Teekay Marine Solutions Ltd.United Kingdom28.8%Teekay Multigas Malta LimitedMalta33.7%Teekay Multigas Pool L.L.C.Marshall Islands33.7%Teekay Nakilat (II) LimitedUnited Kingdom23.1%Teekay Nakilat (III) Holdings CorporationMarshall Islands33.0%Teekay Nakilat CorporationMarshall Islands23.1%Teekay Nakilat Holdings CorporationMarshall Islands33.0%Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Teekay Nakilat Replacement Purchaser L.L.C.Marshall Islands23.1%Teekay Norway (Marine HR) ASNorway100.0%Teekay Offshore Crewing ASNorway100.0%Teekay Petrojarl Crewing Services Pte. Ltd.Singapore100.0%Teekay Petrojarl Floating Production (UK) Ltd.United Kingdom100.0%Teekay Petrojarl Offshore Crew ASNorway100.0%Teekay Petrojarl Offshore L.L.C.Marshall Islands100.0%Teekay Petrojarl Production ASNorway100.0%Teekay Petrojarl UK LimitedUnited Kingdom100.0%Teekay Services Holdings Cooperatief UANetherlands100.0%Teekay Servicios Maritimos, S.L.Spain33.0%Teekay Shipbuilding Supervision Services L.L.C.Marshall Islands100.0%Teekay Shipping (Australia) Pty Ltd.Australia100.0%Teekay Shipping (Barbados) Ltd.Barbados100.0%Teekay Shipping (Canada) Ltd.Canada100.0%Teekay Shipping (Glasgow) Ltd.United Kingdom100.0%Teekay Shipping (India) Private LimitedIndia100.0%Teekay Shipping (Singapore) Pte. LtdSingapore100.0%Teekay Shipping (UK) Ltd.United Kingdom100.0%Teekay Shipping (USA) Inc.USA100.0%Teekay Shipping LimitedBermuda100.0%Teekay Shipping Norway ASNorway100.0%Teekay Shipping Philippines Inc.Philippines25.0%Teekay Shipping Services, IncUSA100.0%Teekay Shipping Spain, S.L.Spain33.0%Teekay Spain, S.L.Spain33.0%Teekay Tangguh Borrower L.L.C.Marshall Islands33.7%Teekay Tangguh Holdings CorporationMarshall Islands33.7%Teekay Tanker Operations Ltd.Marshall Islands28.8%Teekay Tankers Chartering L.L.C.Marshall Islands28.8%Teekay Tankers Holdings Ltd.Marshall Islands28.8%Teekay Tankers HZ Hull No. H 1586 L.L.C.Marshall Islands28.8%Teekay Tankers HZ Hull No. H 1587 L.L.C.Marshall Islands28.8%Teekay Tankers HZ Hull No. H 1592 L.L.C.Marshall Islands28.8%Teekay Tankers HZ Hull No. H 1593 L.L.C.Marshall Islands28.8%Teekay Tankers HZ Hull No. S-1415 L.L.C.Marshall Islands28.8%Teekay Tankers Ltd. (2)Marshall Islands28.8%Teekay Tankers Management Services Ltd.Marshall Islands100.0%Teekay Tankers TS Hull No. S-1415 L.L.C.Marshall Islands28.8%Teekay Workboats L.L.C.USA28.8%Teesta Spirit L.L.C.Marshall Islands28.8%Tianlong Spirit L.L.C.Marshall Islands28.8%Tokyo Spirit L.L.C.Marshall Islands28.8%TPO Investments ASNorway100.0%TPO Investments Inc.Marshall Islands100.0%Ugland Stena Storage ASNorway100.0%VLCC A Investment L.L.C.Marshall Islands28.8%VLCC B Investment L.L.C.Marshall Islands28.8%VLCC C Investment L.L.C.Marshall Islands100.0%VSSI Guaranty L.L.C.USA100.0%Wilforce L.L.C.Marshall Islands33.7%Wilpride L.L.C.Marshall Islands33.7%Yamuna Spirit L.L.C.Marshall Islands28.8%Zenith Spirit L.L.C.Marshall Islands28.8%Zhonghua Hull No. 451 L.L.C.Marshall Islands33.7%(1)The partnership is controlled by its general partner. Teekay Corporation has a 100% beneficial ownership in the general partner. In limited cases, approval of a majority orsupermajority of the common unitholders (in some cases excluding units held by the general partner and its affiliates) is required to approve certain actions.Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(2)Proportion of voting power held is 54.1%.Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 12.1CERTIFICATIONI, Kenneth Hvid, President and Chief Executive Officer of the company, certify that:1I have reviewed this report on Form 20-F of Teekay Corporation (the “company”);2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the company as of, and for, the periods presented in this report;4The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the company and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by theAnnual Report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;5The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’sauditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Dated: April 30, 2018 By: /s/ Kenneth Hvid Kenneth Hvid President and Chief Executive OfficerSource: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 12.2CERTIFICATIONI, Vincent Lok, Executive Vice President and Chief Financial Officer of the company, certify that:1I have reviewed this report on Form 20-F of Teekay Corporation (the “company”);2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the company as of, and for, the periods presented in this report;4The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the company and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by theAnnual Report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;5The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’sauditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Dated: April 30, 2018 By: /s/ Vincent Lok Vincent Lok Executive Vice President and Chief Financial OfficerSource: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 13.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Teekay Corporation (the “Company”) on Form 20-F for the year ended December 31, 2017, as filed with the Securities and ExchangeCommission on the date hereof (the “Form 20-F”), I, Kenneth Hvid, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906of the Sarbanes-Oxley Act of 2002, that:(1) The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2) The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: April 30, 2018 By: /s/ Kenneth Hvid Kenneth Hvid President and Chief Executive Officer Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 13.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Teekay Corporation (the “Company”) on Form 20-F for the year ended December 31, 2017, as filed with the Securities and ExchangeCommission on the date hereof (the “Form 20-F”), I, Vincent Lok, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 ofthe Sarbanes-Oxley Act of 2002, that:(1) The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2) The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: April 30, 2018 By: /s/ Vincent Lok Vincent Lok Executive Vice President and Chief Financial Officer Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statements (Nos. 333-42434, 333-119564, 333-147683, 333-166523 and 333-187142) on Form S-8; andRegistration Statements (Nos. 333-97746, 333-212787, 333-213213 and 333-221806) on Form F-3 of Teekay Corporation (the “Company”) of our reports dated April 30, 2018,with respect to the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the related consolidated statements of (loss) income, comprehensive(loss) income, cash flows and changes in total equity for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statementschedule I (collectively, the “consolidated financial statements”), and the effectiveness of internal control over financial reporting as of December 31, 2017, which reports appearin the December 31, 2017 Annual Report on Form 20-F of Teekay Corporation. Our report on the consolidated financial statements refers to the adoption of the new standardfor business combinations./s/ KPMG LLPChartered Professional AccountantsVancouver, CanadaApril 30, 2018Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: TEEKAY CORP, 20-F, April 30, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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