Teekay LNG Partners L.P.
NYSE : TGP

Teekay LNG Partners L.P.

February 24, 2011 08:36 ET

Teekay LNG Partners Reports Fourth Quarter and Annual Results

HAMILTON, BERMUDA--(Marketwire - Feb. 24, 2011) - Teekay LNG Partners L.P. (NYSE:TGP) -

Highlights



-- Generated distributable cash flow of $39.3 million in the fourth quarter
of 2010, an increase of 17 percent from the fourth quarter of 2009.
-- Increased cash distribution to $0.63 per unit for the fourth quarter of
2010, an increase of five percent from the previous quarter.
-- On November 4, 2010, completed acquisition of a 50 percent interest in
two LNG carriers, including one with re-gasification capability, on
long-term fixed-rate charters.
-- During February 2011, received offer from Teekay Corporation to acquire
a 33 percent interest in the four newbuilding Angola LNG carriers.


Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today reported its results for the quarter ended December 31, 2010. During the fourth quarter of 2010, the Partnership generated distributable cash flow(1) of $39.3 million, compared to $33.5 million in the same quarter of the previous year. The increase primarily reflects the incremental distributable cash flow resulting from the Partnership's November 2010 acquisition of a 50 percent interest in two LNG carriers under long-term, fixed-rate charters with Excelerate Energy LP, reduced off-hire days relating to scheduled drydocks and higher profit sharing revenue from certain of the Partnership's vessels.

On January 26, 2011, the Partnership declared a cash distribution of $0.63 per unit for the quarter ended December 31, 2010, an increase of $0.03 per unit, or five percent, from the previous quarter. The cash distribution was paid on February 14, 2011 to all unitholders of record on February 7, 2011.

"The increase in distributable cash flow in the fourth quarter of 2010 compared to the fourth quarter of 2009 reflects another year of steady growth for the Partnership," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "Fiscal 2010 included some firsts for Teekay LNG, including the Partnership's first investment in third party LNG carriers through our transaction with Exmar, which was also our first step into the promising growth area of floating LNG regasification. Importantly, the five vessels added to the Partnership's fleet in 2010 all came with fixed-rate, long-term time-charter contracts and provided incremental cash flows which has enabled us to increase our distribution by five percent in the fourth quarter."

Mr. Evensen continued, "The Partnership will continue to benefit in the near-term from built-in growth opportunities from our sponsor, Teekay Corporation, including three Skaugen LPG carriers scheduled for delivery in 2011 as well as the possible acquisition of a one-third interest in the four Angola LNG newbuildings. With over $450 million of available liquidity, the Partnership is also actively seeking further opportunities to grow its distributable cash flow through the acquisition of quality assets with long-term contracts from third parties."

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

Teekay LNG's Fleet

The following table summarizes the Partnership's fleet as of February 24, 2011:



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Number of Vessels
---------------------------------------------
Delivered
Vessels Committed Vessels Total
---------------------------------------------
LNG Carrier Fleet(1) 17 - 17
LPG/Multigas Carrier Fleet 2 3(2) 5
Conventional Tanker Fleet 11 - 11
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Total 30 3 33
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(1) Excludes Teekay Corporations's 33 percent interest in the four Angola
LNG newbuildings.
(2) Represents the three Skaugen LPG/Multigas carriers currently under
construction, as described below.


Exmar Acquisition

On November 4, 2010, the Partnership acquired a 50 percent interest in the 2005-built Excelsior (Excelsior Joint Venture), a specialized gas carrier which can both transport and regasify LNG onboard, and a 50 percent interest in the 2002-built Excalibur (Excalibur Joint Venture), a conventional LNG carrier, from Exmar NV (Exmar) for a total purchase price of approximately $72.5 million net of assumed debt. The Partnership financed $37.3 million of the purchase price by issuing to Exmar NV approximately 1.1 million new common units with the balance financed by drawing on one of the Partnership's revolving credit facilities. As part of the transaction, the Partnership agreed to guarantee 50 percent of the $206 million of debt secured by the Excelsior and Excalibur Joint Ventures.

Dania Sprit Sale

The Partnership sold the 2000-built LPG carrier Dania Spirit for proceeds of $21.5 million, which resulted in a gain of approximately $4.3 million. The transaction was completed on November 5, 2010.

Future Projects

Below is a summary of LNG and LPG/Multigas newbuildings that the Partnership has agreed to, or has the right to, acquire:

Skaugen LPG/Multigas

The Partnership has agreed to acquire one LPG carrier from a subsidiary of IM Skaugen ASA (Skaugen) and two Multigas carriers from Teekay Corporation (Teekay). The three LPG/Multigas carriers are currently under construction and are expected to be delivered in 2011. Upon delivery, the vessels will commence service under 15-year fixed-rate charters to Skaugen.

Angola LNG

A consortium in which Teekay has a one-third interest, has agreed to charter four newbuilding LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron, Sonangol, BP, Total and ENI. The vessels will be chartered at fixed rates, with inflation adjustments, following their deliveries. The vessels are currently under construction and are expected to deliver in 2011 and 2012. Pursuant to an omnibus agreement between the Partnership and Teekay, in February 2011, the Partnership received an offer from Teekay to acquire its interest in these vessels and related charter contracts. The offer is currently being reviewed by the Board of Directors of the Partnership's general partner and its Conflicts Committee.

Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $26.2 million for the quarter ended December 31, 2010, compared to $18.5 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of increasing net income by $50.2 million and $22.8 million for the three months ended December 31, 2010 and 2009, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $76.4 million and $41.3 million for the three months ended December 31, 2010 and 2009, respectively.

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $95.8 million for the year ended December 31, 2010, compared to $78.3 million in the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $8.1 million and $31.0 million for the years ended December 31, 2010 and 2009, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $87.6 million and $47.3 million for the year ended December 31, 2010 and 2009, respectively.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on the consolidated statements of income (loss). This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the consolidated statements of income (loss) as detailed in footnote 3 of the Summary Consolidated Statements of Income (Loss).

The Partnership's financial statements for the prior periods include historical results of vessels acquired by the Partnership from Teekay, referred to herein as the Dropdown Predecessor, for the period when these vessels were owned and operated by Teekay.

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

Operating Results

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



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Three Months Ended Three Months Ended
December 31, 2010 December 31, 2009
(unaudited) (unaudited)
------------------------------------------------------------
Lique- Lique-
(in thousands fied Conventional fied Conventional
of U.S. Gas Tanker Gas Tanker
dollars) Segment Segment Total Segment Segment (i) Total
---------------------------------------------------------------------------
Net voyage
revenues(ii) 66,661 30,170 96,831 67,563 27,715 95,278
Vessel
operating
expenses 10,914 9,631 20,545 13,426 11,344 24,770
Depreciation
and
amortization 15,173 7,485 22,658 15,428 6,866 22,294
Cash flow from
vessel
operations
(iii) 53,343 15,002 68,345 52,190 7,540 59,730
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(i) Cash flow from vessel operations for the Conventional Tanker segment
only reflects the cash flows generated by the Alexander Spirit,
Hamilton Spirit and Bermuda Spirit subsequent to their acquisition by
the Partnership on March 17, 2010. Results for the Alexander Spirit,
Hamilton Spirit and Bermuda Spirit for the periods prior to their
acquisition by the Partnership when they were owned and operated by
Teekay are referred to as the Dropdown Predecessor.
(ii) Net voyage revenues represents voyage revenues less voyage expenses,
which comprise all expenses relating to certain voyages, including
bunker fuel expenses, port fees, canal tolls and brokerage
commissions. Net voyage revenues is a non-GAAP financial measure used
by certain investors to measure the financial performance of shipping
companies. Please see the Partnership's web site at www.teekaylng.com
for a reconciliation of this non-GAAP measure as used in this release
to the most directly comparable GAAP financial measure.
(iii) Cash flow from vessel operations represents income from vessel
operations before (a) depreciation and amortization expense, (b)
Dropdown Predecessors income from vessel operations, (c) adjusting
for direct financing leases to a cash basis, (d) adjusting for the
effect of the Toledo Spirit derivative contract and (e) gain on sale
of vessel and equipment. However, the Partnership's cash flow from
vessel operations does not include the Partnership's equity accounted
investee's cash flow from vessel operations. Cash flow from vessel
operations is included because certain investors use this data to
measure a company's financial performance. Cash flow from vessel
operations is not required by accounting principles generally
accepted in the United States and should not be considered as an
alternative to net income (loss) or any other indicator of the
Partnership's performance required by accounting principles generally
accepted in the United States.


Liquefied Gas Segment

Cash flow from vessel operations from the Partnership's Liquefied Gas segment increased to $53.3 million in the fourth quarter of 2010 from $52.2 million in the same quarter of the prior year. This increase is primarily due to a decrease in vessel operating expenses due to the timing of maintenance expenditures, partially offset by reduced operating cash flow resulting from the sale of the Dania Spirit in November 2010. The cash flow from vessel operations, as reported in the above table, does not include the cash flow from the Partnership's equity accounted joint ventures (40 percent interest in four Ras Gas 3 LNG carriers and 50 percent interest in two LNG carriers jointly owned with Exmar).

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership's Conventional Tanker segment was $15.0 million for the fourth quarter of 2010 compared to $7.5 million in the same quarter of the prior year. The increase is primarily due to the acquisition of two Suezmax tankers and one Handymax tanker from Teekay in the first quarter of 2010, higher profit sharing revenue of $1.7 million from certain of the Partnership's Suezmax tankers and lower vessel operating expenses.

Liquidity

As of December 31, 2010, the Partnership had total liquidity of $459.7 million, comprised of $81.1 million in cash and cash equivalents and $378.6 million in undrawn credit facilities.

Conference Call

The Partnership plans to host a conference call on February 25, 2011 at 11:00 a.m. (ET) to discuss the results for the fourth quarter and fiscal year 2010. An accompanying investor presentation will be available on the Partnership's Web site at www.teekaylng.com prior to the start of the call. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:



-- By dialing (800) 820-0231 or (416) 640-5926, if outside North America,
and quoting conference ID code 2084604.
-- By accessing the webcast, which will be available on Teekay LNG's Web
site at www.teekaylng.com (the archive will remain on the web site for a
period of 30 days).


The conference call will be recorded and available until Friday, March 4, 2011. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 2084604.

About Teekay LNG Partners L.P.

Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 17 LNG carriers, which includes a 50 percent ownership interest in one LNG regasification unit, five LPG/Multigas carriers and 11 conventional oil tankers. Three of the five LPG/Multigas carriers are newbuildings scheduled for delivery in 2011.

Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".



TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. dollars, except unit data)

Three Months Ended Year Ended

December September December December December
31, 30, 31, 31, 31,
2010 2010 2009(1) 2010(1) 2009(1)
(unaudited) (unaudited)(unaudited) (unaudited) (unaudited)
---------------------------------------------------------------------------
VOYAGE REVENUES 97,516 92,154 95,817 374,008 343,048
---------------------------------------------------------------------------
OPERATING EXPENSES
Voyage expenses 685 723 539 2,042 2,034
Vessel
operating
expenses 20,545 20,963 24,770 84,577 82,374
Depreciation
and
amortization 22,658 22,126 22,294 89,347 82,686
General and
administrative 7,566 5,252 6,417 23,247 19,764
Gain on sale of
vessel (4,340) - - (4,340) -
Restructuring
charge(2) - - 197 175 3,250
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47,114 49,064 54,217 195,048 190,108
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Income from
vessel operations 50,402 43,090 41,600 178,960 152,940
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OTHER ITEMS
Interest
expense (12,217) (12,708) (13,257) (49,019) (60,457)
Interest income 1,805 2,083 3,015 7,190 13,873
Realized and
unrealized gain
(loss) on
derivative
instruments(3) 27,064 (33,423) 526 (78,720) (40,950)
Foreign
exchange gain
(loss)(4) 7,528 (39,839) 8,721 27,545 (10,806)
Equity income
(loss)(5) 10,526 (870) 7,286 8,043 27,639
Other (expense)
income - net (1,435) 26 (541) (1,055) (302)
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Net income
(loss) 83,673 (41,641) 47,350 92,944 81,937
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income
(loss)
attributable to:
Non-controlling
interest(6) 7,301 (1,665) 3,912 3,062 29,310
Dropdown
Predecessor(1) - - 2,185 2,258 5,302
Partners 76,372 (39,976) 41,253 87,624 47,325
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Limited partners'
units outstanding:

Weighted-average
number of
common units
outstanding
- Basic and
diluted 54,705,598 53,755,351 42,801,009 51,481,035 40,912,100

Weighted-average
number of
subordinated
units
outstanding
- Basic and
diluted - - 7,367,286 1,816,591 8,760,006

Weighted-average
number of total
units
outstanding
- Basic and
diluted 54,705,598 53,755,351 50,168,295 53,297,626 49,672,106

Total number
of units
outstanding 55,106,100 54,053,351 52,339,849 55,106,100 52,339,849
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---------------------------------------------------------------------------

(1) Results for the Alexander Spirit, Hamilton Spirit and Bermuda Spirit for
the periods prior to their acquisition by the Partnership when they were
owned and operated by Teekay Corporation are referred to as the Dropdown
Predecessor.
(2) The total cost incurred in 2010 and 2009 in connection with the
Partnership's restructuring plans to move certain ship management
functions from the Partnership's office in Spain to a subsidiary of
Teekay Corporation and the change of the nationality of some of the
seafarers was approximately $3.4 million.
(3) The realized losses relate to the amounts the Partnership actually paid
to settle such derivative instruments and the unrealized gains (losses)
relate to the change in fair value of such derivative instruments as
detailed in the table below.

Three Months Ended Year Ended

December September December December December
31, 2010 30, 2010 31, 2009 31, 2010 31, 2009

Realized losses
relating to:
Interest rate
swaps (10,394) (10,306) (11,094) (42,495) (36,222)
Toledo Spirit
time-charter
derivative
contract (1,919) - (940) (1,919) (940)
--------------------------------------------------
(12,313) (10,306) (12,034) (44,414) (37,162)
--------------------------------------------------
Unrealized
gains (losses)
relating to:
Interest rate
swaps 37,277 (23,917) 11,960 (34,906) (11,143)
Toledo Spirit
time-charter
derivative
contract 2,100 800 600 600 7,355
--------------------------------------------------
39,377 (23,117) 12,560 (34,306) (3,788)
--------------------------------------------------
Total realized
and unrealized
gains (losses)
on derivative
instruments 27,064 (33,423) 526 (78,720) (40,950)
--------------------------------------------------
--------------------------------------------------

(4) For accounting purposes, the Partnership is required to revalue all
foreign currency-denominated monetary assets and liabilities based on
the prevailing exchange rate at the end of each reporting period. This
revaluation does not affect the Partnership's cash flows or the
calculation of distributable cash flow, but results in the recognition
of unrealized foreign currency translation gains or losses in the
statements of income (loss).
(5) Equity income (loss) includes unrealized gains (losses) on derivative
instruments of $6.4 million, ($4.3) million and $3.9 million for the
three months ended December 31, 2010, September 30, 2010 and December
31, 2009, respectively, and ($6.5) million and $10.9 million for the
year ended December 31, 2010 and 2009, respectively.


TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED BALANCE SHEETS (1)
(in thousands of U.S. dollars)

As at As at As at
December September December
31, 2010 30, 2010 31, 2009(2)

ASSETS
Cash and cash equivalents 81,055 73,085 108,350
Restricted cash - current 82,576 35,231 32,427
Other current assets 25,273 27,210 19,136
Advances to affiliates and to
joint venture 6,133 5,702 22,361
Restricted cash - long-term 489,562 574,107 579,093
Vessels and equipment 1,940,041 1,976,290 2,020,174
Advances on newbuilding
contracts 79,535 60,277 57,430
Net investments in direct
financing leases 415,695 417,246 421,441
Derivative assets 62,283 120,462 32,131
Investments in joint ventures 172,898 88,930 91,674
Other assets 33,167 24,231 25,888
Intangible assets 123,546 125,828 132,675
Goodwill 35,631 35,631 35,631
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Total Assets 3,547,395 3,564,230 3,578,411
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LIABILITIES AND EQUITY
Accounts payable, accrued
liabilities and unearned
revenue 56,971 61,131 58,675
Current portion of long-term
debt and capital leases 343,790 122,040 116,663
Advances from affiliates and
joint venture partners 133,410 106,037 105,559
Long-term debt and capital
leases 1,793,459 2,051,130 2,140,941
Derivative liabilities 199,965 296,021 134,007
Other long-term liabilities 106,477 99,629 105,528
Equity
Dropdown Predecessor
equity(2) - - 43,013
Non-controlling
interest(3) 17,123 9,568 13,807
Partners' equity 896,200 818,674 860,218
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Total Liabilities and Total
Equity 3,547,395 3,564,230 3,578,411
---------------------------------------------------------------------------

(1) Due to the Partnership's agreement to acquire Teekay Corporation's 100
percent interest in the two Skaugen Multigas Carriers, it is required to
consolidate these vessels prior to the actual acquisition date under
U.S. GAAP.
(2) In accordance with GAAP, the balance sheet at December 31, 2009 includes
the Dropdown Predecessor for the Alexander Spirit, Hamilton Spirit and
Bermuda Spirit, which were acquired by the Partnership on March 17,
2010, to reflect ownership of the vessels from the time they were
acquired by Teekay on September 3, 2009, June 24, 2009 and May 27, 2009,
respectively.
(3) Non-controlling interest includes the 30 percent portion of the RasGasII
Project, 31 percent of the equity interest in the Tangguh project and 1
percent of the equity interest in both the Kenai LNG Carriers and the
Excalibur Joint Venture, which in each case the Partnership does not
own.


TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)

Year Ended December 31,
2010(1) 2009(1)
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
---------------------------------------------------------------------------
Net operating cash flow 174,970 171,384
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FINANCING ACTIVITIES
Proceeds on sale of 1% interest in Kenai LNG
Carriers - 2,300
Distribution to Teekay Corporation for the
acquisition of the Bermuda Spirit,
Hamilton Spirit and Alexander Spirit (33,997) -
Proceeds from issuance of long-term debt 100,945 220,050
Scheduled repayments of long-term debt (76,018) (80,301)
Prepayments of long-term debt (72,000) (185,900)
Scheduled repayments of capital lease
obligations and other long-term liabilities (39,147) (37,437)
Advances from affiliates 16,545 24,041
Advances to joint venture partners (10,200) -
Repayment of joint venture partners' advances (1,235) -
Equity contribution from Teekay Corporation
to Dropdown Predecessor 466 1,567
Proceeds from equity offerings, net of
offering costs 50,921 162,559
Cash distributions paid (135,514) (114,539)
Decrease in restricted cash 30,741 30,710
Debt issuance costs (137) (1,281)
Excess of purchase price over the contributed
basis of Teekay Tangguh Borrower LLC - (31,829)
Other 884 -
---------------------------------------------------------------------------
Net financing cash flow (167,746) (10,060)
---------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of Excelsior and Excalibur Joint
Ventures (35,169) -
Proceeds received from the sale of vessel and
equipment 21,556 -
Receipts from direct financing leases 5,746 4,426
Expenditures for vessels and equipment (26,652) (134,926)
Advances to joint venture - (2,856)
Purchase of Teekay Tangguh Borrower LLC - (37,259)
---------------------------------------------------------------------------
Net investing cash flow (34,519) (170,615)
---------------------------------------------------------------------------

Decrease in cash and cash equivalents (27,295) (9,291)
Cash and cash equivalents, beginning of the
year 108,350 117,641
---------------------------------------------------------------------------
Cash and cash equivalents, end of the year 81,055 108,350
---------------------------------------------------------------------------
---------------------------------------------------------------------------

(1) In accordance with GAAP, the Consolidated Statements of Cash Flows
includes the cash flows relating to the Dropdown Predecessor for the
Alexander Spirit, Hamilton Spirit and Bermuda Spirit, for the period
from September 3, 2009, June 24, 2009 and May 27, 2009, respectively to
March 17, 2010, when the vessels were under the common control of
Teekay, but prior to their acquisition by the Partnership.


TEEKAY LNG PARTNERS L.P.
APPENDIX A - SPECIFIC ITEMS AFFECTING NET INCOME
(in thousands of U.S. dollars, except per share data)


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



---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three Months Ended Year Ended

December December
31, 2010 31, 2010
(unaudited) (unaudited)
---------------------------------------------------------------------------
Net income - GAAP basis 83,673 92,944
Less:
Net (income) attributable to Dropdown
Predecessor - (2,258)
Net (income) attributable to non-
controlling interest (7,301) (3,062)
---------------------------------------------------------------------------
Net income attributable to the partners 76,372 87,624
Add (subtract) specific items affecting net
income:
Foreign exchange gain(1) (7,528) (27,420)
Unrealized (gains) losses from
derivative instruments(2) (39,377) 34,306
Unrealized (gains) losses from
derivative instruments from
equity accounted investees(2) (6,384) 6,453
Gain on sale of vessel and equipment (4,340) (4,340)
Restructuring charge(3) - 175
Additional crew training charges
relating to prior periods - 1,961
Acquisition costs relating to the
purchase of Excelsior and
Excalibur Joint Ventures 2,000 2,000
Non-controlling interests' share of
items above 5,424 (4,990)
---------------------------------------------------------------------------
Total adjustments (50,205) 8,145
---------------------------------------------------------------------------
Adjusted net income attributable to the
partners 26,167 95,769
---------------------------------------------------------------------------
---------------------------------------------------------------------------

---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three Months Ended Year Ended

December December
31, 2009 31, 2009
(unaudited) (unaudited)
---------------------------------------------------------------------------
Net income - GAAP basis 47,350 81,937
Less:
Net (income) attributable to Dropdown
Predecessor (2,185) (5,302)
Net (income) attributable to non-
controlling interest (3,912) (29,310)
---------------------------------------------------------------------------
Net income attributable to the partners 41,253 47,325
Add (subtract) specific items affecting net
income:
Foreign currency exchange (gain) loss(1) (8,675) 10,835
Unrealized (gains) losses from
derivative instruments(2) (12,560) 3,788
Unrealized (gains) losses from
derivative instruments from
equity accounted investees(2) (3,853) (10,936)
Restructuring charge(3) 197 3,250
Non-controlling interests' share of
items above 2,119 24,039
---------------------------------------------------------------------------
Total adjustments (22,772) 30,976
---------------------------------------------------------------------------
Adjusted net income attributable to the
partners 18,481 78,301
---------------------------------------------------------------------------
---------------------------------------------------------------------------

(1) Foreign exchange gains primarily relate to the revaluation of the
Partnership's debt, capital leases and restricted cash denominated in
Euros.
(2) Reflects the unrealized gain due to changes in the mark-to-market value
of derivative instruments that are not designated as hedges for
accounting purposes.
(3) Restructuring charges were incurred in connection with the Partnership's
restructuring plans to move certain ship management functions from the
Partnership's office in Spain to a subsidiary of Teekay and the change
of the nationality of some of the seafarers.



TEEKAY LNG PARTNERS L.P.
APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in thousands of U.S. dollars)


Description of Non-GAAP Financial Measure - Distributable Cash Flow (DCF)

Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, income from variable interest entity, deferred income taxes, foreign exchange related items and net income attributable to the Dropdown Predecessor before depreciation. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Distributable cash flow is not required by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by accounting principles generally accepted in the United States. The table below reconciles distributable cash flow to net income.



---------------------------------------------------------------------------
Three Months Ended
December
31, 2010
(unaudited)
---------------------------------------------------------------------------

Net income 83,673
Add:
Depreciation and amortization 22,658
Partnership's share of joint ventures DCF before estimated
maintenance capital expenditures 6,805
Deferred income tax expense 605
Less:
Unrealized gain from derivatives and other non-cash items (37,539)
Estimated maintenance capital expenditures (10,944)
Equity income from joint ventures (10,526)
Unrealized foreign exchange gain (7,528)
Gain on sale of vessel (4,340)

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Distributable Cash Flow before Non-controlling interest 42,864
Non-controlling interests' share of DCF before estimated
maintenance capital expenditures (3,522)
---------------------------------------------------------------------------
Distributable Cash Flow 39,342
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TEEKAY LNG PARTNERS L.P.
APPENDIX C - SUPPLEMENTAL SEGMENT INFORMATION
(in thousands of U.S. dollars)

Three Months Ended December 31, 2010
(unaudited)

Conventional
Liquefied Gas Tanker
Segment Segment Total
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Net voyage revenues(1) 66,661 30,170 96,831
Vessel operating expenses 10,914 9,631 20,545
Depreciation and amortization 15,173 7,485 22,658
General and administrative 3,948 3,618 7,566
Gain on sale of vessel (4,340) - (4,340)
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Income from vessel operations 40,966 9,436 50,402
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Three Months Ended December 31, 2009
(unaudited)

Conventional
Liquefied Gas Tanker
Segment Segment(2) Total
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Net voyage revenues(1) 67,563 27,715 95,278
Vessel operating expenses 13,426 11,344 24,770
Depreciation and amortization 15,428 6,866 22,294
General and administrative 3,383 3,034 6,417
Restructuring charge 24 173 197
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Income from vessel operations 35,302 6,298 41,600
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(1) Net voyage revenues represents voyage revenues less voyage expenses,
which comprise all expenses relating to certain voyages, including
bunker fuel expenses, port fees, canal tolls and brokerage commissions.
Net voyage revenues is a non-GAAP financial measure used by certain
investors to measure the financial performance of shipping companies.
Please see the Partnership's web site at www.teekaylng.com for a
reconciliation of this non-GAAP measure as used in this release to the
most directly comparable GAAP financial measure.
(2) Income from vessel operations for the Alexander Spirit, Hamilton Spirit
and Bermuda Spirit for the periods prior to their acquisition by the
Partnership when they were owned and operated by Teekay, are referred to
herein as the Dropdown Predecessor.


FORWARD LOOKING STATEMENTS

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the Partnership's future growth opportunities; the timing and certainty of the outcome of the reviews by the Partnership's Board of Directors and its Conflicts Committee regarding the offer to acquire from Teekay Corporation its interest in the Angola LNG project and the impact on future cash flows; the timing of LNG and LPG/Multigas newbuilding deliveries and incremental cash flows relating long-term, fixed-rate contracts serviced by these newbuildings; the growth opportunities in floating LNG regasification market; the Partnership's financial position, including available liquidity; and the potential for the Partnership to acquire additional vessels and long-term charters from third parties. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: the unit price of equity offerings to finance acquisitions; changes in production of LNG or LPG, either generally or in particular regions; required approvals by the Conflicts Committee of the Board of Directors of the Partnership's general partner to acquire any projects offered to the Partnership by Teekay Corporation; less than anticipated revenues or higher than anticipated costs or capital requirements; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts and inability of the Partnership to renew or replace long-term contracts; LNG and LPG/Multigas project delays or shipyard production delays which would change the expected timing and cost of newbuild vessel deliveries; the Partnership's ability to raise financing to purchase additional vessels or to pursue LNG or LPG/Multigas projects; changes to the amount or proportion of revenues, expenses, or debt service costs denominated in foreign currencies; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2009. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contact Information

  • Teekay LNG Partners L.P.
    Kent Alekson
    Investor Relations Enquiries
    +1 (604) 609-6442
    www.teekaylng.com