(Exact name of Registrant as specified in its charter)

4^th Floor, Belvedere Building
69 Pitts Bay Road
Hamilton, HM 08 Bermuda
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ Form 40- F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes o No þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes o No þ

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                     

 

 

EXPLANATORY NOTE

Teekay Corporation (generally referred to herein as the Company, we, our or us) is filing this Quarterly Report on Form 6-K/A for the three months ended March 31, 2008 (this Amendment or this First Quarter 2008 Form 6-K/A Report) to amend our Quarterly Report on Form 6-K for the period ended March 31, 2008 (the Original Filing) that was filed with the Securities and Exchange Commission (or SEC) on May 28, 2008.

a.		Derivative Instruments and Hedging Activities
		In August 2008, we commenced a review of our application of Statement of Financial Accounting Standards (or SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Although we believe that our applicable derivative transactions were consistent with our risk management policies and that our overall risk management policies continue to be sound, based on our review we concluded that certain of our derivative instruments did not qualify for hedge accounting treatment under SFAS No. 133 for the three months ended March 31, 2008 and 2007. Certain of our hedge documentation, in respect of our assessment of effectiveness and measurement of ineffectiveness of our derivative instruments for accounting purposes, was not in accordance with the technical requirements of SFAS No. 133.
		Accordingly, although we believe each of these derivative instruments were and continue to be effective economic hedges, for accounting purposes we should have reflected changes in fair value of these derivative instruments as increases or decreases to our net income (loss) on our consolidated statements of income, instead of being reflected as increases or decreases to accumulated other comprehensive income (loss), a component of stockholders’ equity on our consolidated balance sheets and statements of changes in stockholders’ equity.
		The change in accounting for these transactions does not affect the economics of the derivative transactions or our cash flows or liquidity.
b.		Non-Routine, Complex Financial Structures and Arrangements, and Other
		Subsequent to the release of its preliminary second quarter financial results, we reviewed and revised our financial statement presentation of debt and interest rate swap agreements related to our joint venture interests in the RasGas 3 LNG carriers. As a result, certain of our assets and liabilities have been grossed up for accounting presentation purposes. These adjustments, which do not affect our net income, cash flow, liquidity, cash distributions or stockholders’ equity in any period, are described below.

•

Through a wholly-owned subsidiary, we own a 40 percent interest in the four RasGas 3 LNG carriers. The joint venture partner, a wholly-owned subsidiary of Qatar Gas Transport Company, owns the remaining 60 percent interest. Both wholly-owned subsidiaries are joint and several co-borrowers with respect to the RasGas 3 term loan and related interest rate swap agreements. Previously, we recorded 40 percent of the RasGas 3 term loan and interest rate swap obligations in our financial statements. We have now made adjustments to our balance sheet to reflect 100 percent of the RasGas 3 term loan (March 31, 2008 and December 31, 2007 — $360.6 million) and interest rate swap obligations (March 31, 2008 — $21.4 million; December 31, 2007 — $9.6 million), as well as offsetting increases in assets, for the fourth quarter of 2006 through the first quarter of 2008. We have also made adjustments to our statement of income to reflect 100 percent of the interest expense (three months ended March 31, 2008 — $4.6 million; three months ended March 31, 2007 — $2.8 million) on the RasGas 3 term loan with an offsetting amount to interest income from our advances to the joint venture. These adjustments do not result in any increase to our net exposure in this joint venture.

		In 2005, we adopted a long-term share-based incentive plan (the Vision Incentive Plan or VIP) for senior management. During 2005, we recognized the VIP expense when incurred instead of over the vesting period. Upon transition to SFAS 123R on January 1, 2006, we were required to account for the VIP based on the fair value of the award as the VIP has a share-based component in determining the amount of the ultimate grant. However, we continued to calculate compensation expense for the VIP under the methodology we had followed in 2005, as we did not identify the VIP as within the scope of SFAS 123R. We have now made adjustments to our statements of income (loss) to increase (decrease) general and administrative expenses for the three months ended March 31, 2008 and 2007 — ($1.5) million and $2.1 million, respectively). We have also made adjustments to our balance sheets to decrease other long-term liabilities (March 31, 2008 — $4.7 million; and December 31, 2007 — $8.1 million) and to increase (decrease) accrued liabilities (March 31, 2008 — ($1.3) million; and December 31, 2007 — $3.6 million). These accounting adjustments associated with the VIP do not impact amounts paid out under the plan.
		We have also restated certain other items primarily relating to amounts attributable to minority interests and the measurement of the fair value of certain derivative instruments.

As a result of the conclusions described above, we are restating in this First Quarter 2008 Form 6-K/A Report our historical balance sheets as of March 31, 2008 and December 31, 2007, and our statements of income and cash flows for the three months ended March 31, 2008 and 2007.

Note 17 of the notes to the consolidated financial statements included in this First Quarter 2008 Form 6-K/A Report reflects the changes to our unaudited consolidated financial statements as a result of our restatement and provides additional information about the restatement.

To restate results for certain prior fiscal years based on the conclusions of the assessments described above, we have also filed a 2007 Annual Report on Form 20-F/A to amend our Annual Report on Form 20-F for the year ended December 31, 2007 that was filed with the SEC on April 11, 2008. The 2007 Annual Report on Form 20-F/A restates certain financial information, including: historical balance sheets as of December 31, 2007 and 2006; statements of income, cash flows and changes in stockholders’ equity for the years ended December 31, 2007, 2006, and 2005; and selected financial data as of and for the years ended December 31, 2007, 2006, 2005, 2004 and 2003.

For the convenience of the reader, this First Quarter 2008 Form 6-K/A Report sets forth the Original Filing in its entirety, although we are only restating portions of “Part I. Financial Information” affected by the amended financial information. The changes we have made are a result of and reflect the restatement described herein; no other information in the Original Filing has been updated.

Except for the amended or restated information described above, this First Quarter 2008 Form 6-K/A Report continues to speak as of the date of the Original Filing. Other events occurring after the filing of the Original Filing or other disclosures necessary to reflect subsequent events have been or will be addressed in other reports filed with or furnished to the SEC subsequent to the date of the Original Filing.

We do not intend to amend previously-filed Quarterly Reports on Form 6-K for quarterly periods ending prior to December 31, 2007. As a result, the reader should not rely on our prior filings, but should rely upon the restated financial statements and the report of our independent registered public accounting firm for affected periods contained in this First Quarter 2008 Form 6-K/A Report.

		PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Unaudited Consolidated Statements of Income (Loss) (restated) for the three months ended March 31, 2008 and 2007			4
Unaudited Consolidated Balance Sheets (restated) as at March 31, 2008 and December 31, 2007			5
Unaudited Consolidated Statements of Cash Flows (restated) for the three months ended March 31, 2008 and 2007			6
Notes to the Unaudited Consolidated Financial Statements (restated)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (restated)			25
Item 3. Quantitative and Qualitative Disclosures about Market Risk (restated)			38
PART II: OTHER INFORMATION			41
SIGNATURES			42

		Restated - Note 17
		Three Months Ended March 31
		2008				2007
		$				$
REVENUES (note 14)			743,372				578,248
OPERATING EXPENSES
Voyage expenses			169,461				117,479
Vessel operating expenses (note 14)			143,049				95,190
Time-charter hire expense (note 14)			144,484				98,357
Depreciation and amortization (note 16)			97,707				79,263
General and administrative (note 14)			64,639				58,980
Gain on sale of vessels and equipment (note 11)			(496	)			—
Restructuring charge (note 12)			1,500				—
Total operating expenses			620,344				449,269
Income from vessel operations			123,028				128,979
OTHER ITEMS
Interest expense (note 14)			(282,248	)			(55,905	)
Interest income (note 14)			60,609				14,954
Foreign exchange loss (note 6)			(31,992	)			(1,676	)
Minority interest income (expense)			26,560				(7,755	)
Other — net (note 12)			(1,086	)			6,386
Total other items			(228,157	)			(43,996	)
Net (loss) income			(105,129	)			84,983
Per common share amounts
• Basic earnings (note 15)			(1.45	)			1.16
• Diluted earnings (note 15)			(1.45	)			1.14
• Cash dividends declared			0.2750				0.2375
Weighted average number of common shares (note 15)
• Basic			72,644,397				73,129,585
• Diluted			72,644,397				74,545,165

		As at				As at
		March 31,				December 31,
		2008				2007
		$				$
		(Restated - Note 17)
ASSETS
Current
Cash and cash equivalents (note 6)			555,673				442,673
Restricted cash — current (note 7)			36,343				33,479
Accounts receivable			289,324				262,420
Vessels held for sale (note 11)			42,704				79,689
Net investment in direct financing leases — current			21,851				22,268
Prepaid expenses			119,834				126,761
Other assets			65,317				57,609
Total current assets			1,131,046				1,024,899
Restricted cash — long term (note 7)			663,471				652,717
Vessels and equipment (note 6)
At cost, less accumulated depreciation of $1,104,651 (2007 — $1,061,619)			5,463,227				5,295,751
Vessels under capital lease, at cost, less accumulated amortization of $82,293 (2007 — $74,442) (note 7)			926,338				934,058
Advances on newbuilding contracts (note 9)			682,178				617,066
Total vessels and equipment			7,071,743				6,846,875
Net investment in direct financing leases — non-current			73,520				78,908
Investment in joint ventures (note 9)			136,508				135,515
Derivative instruments (note 14)			51,930				39,381
Loans to joint ventures			725,462				729,429
Other non-current assets			209,352				219,923
Intangible assets — net (note 4)			267,769				259,952
Goodwill (note 4)			447,323				434,590
Total assets			10,778,124				10,422,189
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current
Accounts payable			95,019				89,691
Accrued liabilities			335,251				278,587
Current portion of long-term debt (note 6)			395,063				331,594
Current obligation under capital leases (note 7)			154,257				150,791
Current portion of in-process revenue contracts (note 4)			78,242				82,704
Total current liabilities			1,057,832				933,367
Long-term debt (note 6)			5,215,558				4,931,990
Long-term obligation under capital leases (note 7)			717,631				706,489
Derivative instruments (note 14)			299,162				164,769
Deferred income tax			82,301				78,623
Asset retirement obligation			25,028				24,549
In-process revenue contracts (note 4)			188,191				205,429
Other long-term liabilities			178,793				176,680
Total liabilities			7,764,496				7,221,896
Commitments and contingencies (notes 7, 9 and 14)
Minority interest			504,075				544,339
Stockholders’ equity
Common stock and additional paid-in capital ($0.001 par value; 725,000,000 shares authorized; 72,303,163 shares outstanding (2007 - 72,772,529); 72,802,363 shares issued (2007 - 95,327,329)) (note 8)			628,221				628,786
Retained earnings			1,881,398				2,022,601
Accumulated other comprehensive (loss) income (note 13)			(66	)			4,567
Total stockholders’ equity			2,509,553				2,655,954
Total liabilities and stockholders’ equity			10,778,124				10,422,189

		Restated - Note 17
		Three Months Ended March 31,
		2008				2007
		$				$
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net (loss) income			(105,129	)			84,983
Non-cash items:
Depreciation and amortization			97,707				79,263
Amortization of in-process revenue contracts			(21,158	)			(23,484	)
Gain on sale of marketable securities			(2,708	)			(1,817	)
Gain on sale of vessels and equipment			(496	)			—
Loss on repurchase of bonds			598				—
Equity income (net of dividends received: March 31, 2008 and 2007 — $nil)			3,609				1,595
Income taxes expense (recovery)			2,483				(3,886	)
Employee stock option compensation			2,606				2,225
Foreign exchange loss and other — net			3,444				25,199
Unrealized losses (gains) on derivative instruments (note 14)			155,171				(13,674	)
Change in non-cash working capital items related to operating activities			(43,784	)			(50,890	)
Expenditures for drydocking			(6,240	)			(12,567	)
Distribution from subsidiaries to minority owners			(13,110	)			(5,724	)
Net operating cash flow			72,993				81,223
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt			565,324				591,329
Debt issuance costs			(3,406	)			(2,547	)
Repayments of long-term debt			(253,773	)			(227,549	)
Repayments of capital lease obligations			(2,241	)			(2,185	)
Repayment of loans from joint venture partner			(535	)			(3,653	)
Decrease / (increase) in restricted cash			2,651				(81,078	)
Net proceeds from sale of Teekay Offshore Partners L.P. units			—				(1,449	)
Net proceeds from sale of Teekay Tankers Ltd. shares			(892	)			—
Issuance of Common Stock upon exercise of stock options			326				16,750
Repurchase of Common Stock (note 8)			(20,512	)			(3,035	)
Cash dividends paid			(20,013	)			(17,344	)
Net financing cash flow			266,929				269,239
INVESTING ACTIVITIES
Expenditures for vessels and equipment			(292,917	)			(187,883	)
Proceeds from sale of vessels and equipment			36,630				—
Purchases of marketable securities			(520	)			(88,233	)
Proceeds from sale of marketable securities			7,283				12,782
Investment in joint ventures			(1,258	)			(1,253	)
Loans to joint ventures			(3,085	)			(61,601	)
Investment in direct financing lease assets			(17	)			(1,725	)
Direct financing lease payments received			5,822				5,056
Other investing activities			21,140				(805	)
Net investing cash flow			(226,922	)			(323,662	)
Increase in cash and cash equivalents			113,000				26,800
Cash and cash equivalents, beginning of the period			442,673				343,914
Cash and cash equivalents, end of the period			555,673				370,714

Supplemental cash flow information (note 5)

The unaudited interim consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles. They include the accounts of Teekay 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 information and footnote disclosures required by United States generally accepted accounting principles for complete annual financial statements have been omitted and, therefore, it is suggested that these interim financial statements be read in conjunction with the Company’s restated audited financial statements for the year ended December 31, 2007 included in Form 20-F/A filed April 6, 2009. In the opinion of management, these financial statements reflect all adjustments, of a normal recurring nature, necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, and cash flows for the interim periods presented. The results of operations for the three months ended March 31, 2008 are not necessarily indicative of those for a full fiscal year.

The accompanying consolidated financial statements have been restated. The nature of the restatements and the effect on the consolidated financial statement line items are discussed in Note 17 of the Notes to the Unaudited Consolidated Financial Statements. In addition, certain disclosures in the following notes have been restated to be consistent with the consolidated financial statements.

The Company has four reportable segments: its offshore segment, its fixed-rate tanker segment, its liquefied gas segment, and its spot tanker segment. The Company’s offshore segment consists of shuttle tankers, floating production storage and offloading (or FPSO) units and floating storage and offtake (or FSO) units. The Company’s fixed-rate tanker segment consists of conventional crude oil and product tankers subject to long-term, fixed-rate time-charter contracts. The Company’s liquefied gas segment consists of liquefied natural gas (or LNG) carriers and liquefied petroleum gas (or LPG) carriers. The Company’s spot tanker segment consists of conventional crude oil tankers and product carriers operating in the spot market or subject to time-charters or contracts of affreightment that are priced on a spot-market basis or are short-term, fixed-rate contracts. The Company considers contracts that have an original term of less than three years in duration to be short-term. Segment results are evaluated based on income from vessel operations. The accounting policies applied to the reportable segments are the same as those used in the preparation of the Company’s consolidated financial statements.

The following tables present results for these segments for the three months ended March 31, 2008 and 2007:

						Fixed-Rate				Liquefied				Spot
		Offshore				Tanker				Gas				Tanker
		Segment				Segment				Segment				Segment				Total
Three months ended March 31, 2008		(restated)				(restated)				(restated)				(restated)				(restated)
Revenues			258,788				60,815				56,132				367,637				743,372
Voyage expenses			38,901				680				150				129,730				169,461
Vessel operating expenses			83,820				16,370				11,623				31,236				143,049
Time-charter hire expense			35,038				11,720				—				97,726				144,484
Depreciation and amortization			46,074				9,673				14,195				27,765				97,707
General and administrative (1)			27,062				5,290				5,485				26,802				64,639
Gain on sale of vessels and equipment			—				—				—				(496	)			(496	)
Restructuring charge			—				1,500				—				—				1,500
Income from vessel operations			27,893				15,582				24,679				54,874				123,028

						Fixed-Rate				Liquefied				Spot
		Offshore				Tanker				Gas				Tanker
		Segment				Segment				Segment				Segment				Total
Three months ended March 31, 2007		(restated)				(restated)				(restated)				(restated)				(restated)
Revenues			248,875				44,589				37,477				247,307				578,248
Voyage expenses			28,726				560				5				88,188				117,479
Vessel operating expenses			60,290				11,690				6,458				16,752				95,190
Time-charter hire expense			41,173				3,837				—				53,347				98,357
Depreciation and amortization			45,722				8,468				10,794				14,279				79,263
General and administrative (1)			24,904				4,633				5,000				24,443				58,980
Income from vessel operations			48,060				15,401				15,220				50,298				128,979

A reconciliation of total segment assets to amounts presented in the consolidated balance sheets is as follows:

		March 31,				December 31,
		2008				2007
		$				$
		(restated)
Offshore segment			3,238,875				3,187,635
Fixed-rate tanker segment			834,829				795,775
Liquefied gas segment			3,476,123				3,366,049
Spot tanker segment			2,045,484				1,966,166
Cash and restricted cash			558,927				446,102
Accounts receivable and other assets			623,886				660,462
Consolidated total assets			10,778,124				10,422,189

On June 8, 2007, the Company and A/S Dampskibsselskabet TORM (or TORM) acquired, through a jointly-owned subsidiary all of the outstanding shares of OMI Corporation (or OMI). The Company and TORM divided most of OMI’s assets equally between the two companies in August 2007. The price of the OMI assets acquired or to be acquired by the Company was approximately $1.1 billion, including approximately $0.2 billion of assumed indebtedness. The Company funded its portion of the acquisition with a combination of cash and borrowings under existing revolving credit facilities and a new $700 million credit facility.

The Company believes that this acquisition further enhances its position as a leading operator of medium-size tankers and the Company expects that the acquisition will improve the utilization of its existing vessels. This has contributed to the recognition of goodwill.

The Company acquired seven Suezmax tankers, three Medium-Range product tankers and three Handysize product tankers from OMI. Teekay also assumed OMI’s in-charters of an additional six Suezmax tankers and OMI’s third-party asset management business (principally the Gemini pool). The Company and TORM continue to hold two Medium-Range product tankers jointly in OMI, as well as two Handysize product tanker newbuildings scheduled to deliver in 2009. The parties intend to divide these remaining assets equally in due course.

The assets acquired from OMI on August 1, 2007 are reflected in the Company’s consolidated financial statements from that date. The acquisition of OMI has been accounted for using the purchase method of accounting, based upon estimates of fair value. The estimated fair values of certain assets and liabilities are being determined with the assistance of third-party valuation specialists. The Company expects this work to be completed during the second quarter of 2008. As such, certain estimates of fair value are preliminary and are subject to further adjustment.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed by the Company at August 1, 2007:

		Original at								Revised at
		August 1, 2007				Revisions				August 1, 2007
		$				$				$
ASSETS
Cash, cash equivalents and short-term restricted cash			577				—				577
Other current assets			67,159				(40,331	)			26,828
Vessels and equipment			923,670				—				923,670
Other assets — long-term			6,820				31,680				38,500
Investment in joint venture			64,244				5,785				70,029
Intangible assets subject to amortization			60,540				8,407				68,947
Goodwill (spot tanker segment)			31,961				16,852				48,813
Total assets acquired			1,154,971				22,393				1,177,364
LIABILITIES
Current liabilities			21,006				(1,429	)			19,577
Other long-term liabilities			—				15,873				15,873
In-process revenue contracts			25,402				(3,811	)			21,591
Total liabilities assumed			46,408				10,633				57,041
Net assets acquired (cash consideration)			1,108,563				11,760				1,120,323

TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)

4. Goodwill, Intangible Assets and In-Process Revenue Contracts

Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2008 for the Company’s reporting segments are as follows:

						Fixed-Rate				Liquefied
		Offshore				Tanker				Gas				Spot Tanker
		Segment				Segment				Segment				Segment				Total
		$				$				$				$				$
Balance as of December 31, 2007			359,231				3,648				35,631				36,080				434,590
Adjustment to goodwill acquired (note 3)			—				—				—				12,733				12,733
Reallocation of goodwill acquired between segments			—				7,163				—				(7,163	)			—
Balance as of March 31, 2008			359,231				10,811				35,631				41,650				447,323

Intangible Assets

As at March 31, 2008, the Company’s intangible assets consisted of:

		Weighted-Average				Gross Carrying				Accumulated				Net Carrying
		Amortization Period				Amount				Amortization				Amount
		(years)				$				$				$
Contracts of affreightment			10.2				124,250				(71,411	)			52,839
Time-charter contracts			15.5				243,427				(43,250	)			200,177
Other intangible assets			2.8				20,097				(5,344	)			14,753
			13.1				387,774				(120,005	)			267,769

As at December 31, 2007, the Company’s intangible assets consisted of:

		Weighted-Average				Gross Carrying				Accumulated				Net Carrying
		Amortization Period				Amount				Amortization				Amount
		(years)				$				$				$
Contracts of affreightment			10.2				124,250				(68,895	)			55,355
Time-charter contracts			16.0				232,049				(37,374	)			194,675
Other intangible assets			5.0				10,797				(875	)			9,922
			13.7				367,096				(107,144	)			259,952

Aggregate amortization expense of intangible assets for the three months ended March 31, 2008 and 2007 was $12.9 million and $6.5 million, respectively. Amortization of intangible assets for the next five years is expected to be $32.1 million (remainder of 2008), $34.7 million (2009), $27.7 million (2010), $26.6 million (2011), $22.5 million (2012), and $124.2 million (thereafter).

In-Process Revenue Contracts

As part of the Company’s acquisitions of Petrojarl ASA (or Petrojarl) in 2006 and 50% of OMI in 2007, the Company assumed certain FPSO service contracts and charter-out contracts with terms that are less favorable than prevailing market terms at the time of acquisition. The Company has recognized a liability based on the estimated fair value of these contracts. The Company is amortizing this liability over the remaining term of the contracts on a weighted basis based on the projected revenue to be earned under the contracts.

Amortization of these in-process revenue contracts for the three months ended March 31, 2008 and 2007 was $21.2 million and $23.5 million, respectively. Amortization for the next five years is expected to be $61.0 million (remainder of 2008), $66.6 million (2009), $58.3 million (2010), $34.7 million (2011), $20.4 million (2012) and $25.4 million (thereafter).

5. Supplemental Cash Flow Information

Upon delivery of the last two RasGas II LNG Carriers (as defined in Note 7) in the first quarter of 2007, the remaining vessel costs and related lease obligations amounting to $15.3 million were recorded. These transactions were treated as non-cash transactions in the Company’s consolidated statements of cash flows.

		March 31,				December 31,
		2008				2007
		$				$
		(restated)
Revolving Credit Facilities			2,501,712				2,393,967
Senior Notes (8.875%) due July 15, 2011			236,488				246,059
USD-denominated Term Loans due through 2021			2,379,261				2,162,420
Euro-denominated Term Loans due through 2023			476,392				443,992
USD-denominated Unsecured Demand Loan			16,768				17,146
			5,610,621				5,263,584
Less current portion			395,063				331,594
			5,215,558				4,931,990

As of March 31, 2008, the Company had twelve long-term revolving credit facilities (or the Revolvers) available, which, as at such date, provided for borrowings of up to $3,633.5 million, of which $1,131.8 million was undrawn. Interest payments are based on LIBOR plus margins; at March 31, 2008 and December 31, 2007, the margins ranged between 0.50% and 0.75% and the three-month LIBOR was 2.69% and 4.70%, respectively. The total amount available under the Revolvers reduces by $163.2 million (remainder of 2008), $188.5 million (2009), $196.0 million (2010), $781.6 million (2011), $214.1 million (2012) and $2,090.1 million (thereafter). All of the Revolvers are collateralized by first-priority mortgages granted on 62 of the Company’s vessels, together with other related security, and include a guarantee from Teekay or its subsidiaries for all outstanding amounts.

The 8.875% Senior Notes due July 15, 2011 (or the 8.875% Notes) rank equally in right of payment with all of Teekay’s existing and future senior unsecured debt and senior to Teekay’s existing and future subordinated debt. The 8.875% Notes are not guaranteed by any of Teekay’s subsidiaries and effectively rank behind all existing and future secured debt of Teekay and other liabilities, secured and unsecured, of its subsidiaries. During the three months ended March 31, 2008, the Company repurchased $9.5 million principal amount of the 8.875% Notes (see also Note 12).

The Company has sixteen U.S. Dollar-denominated term loans outstanding, which, as at March 31, 2008, totaled $2,379.3 million. Certain of the term loans with a total outstanding principal balance of $512.7 million as at March 31, 2008, bear interest at a weighted-average fixed rate of 5.10%. Interest payments on the remaining term loans are based on LIBOR plus a margin. At March 31, 2008 the margins ranged between 0.3% and 1.0% and the three-month LIBOR was 2.69%. The term loans reduce in quarterly or semi-annual payments commencing three or six months after delivery of newbuilding vessels financed with the loans, and fourteen of the term loans also have balloon or bullet repayments due at maturity. The term loans are collateralized by first-preferred mortgages on 35 of the Company’s vessels, together with certain other security. In addition, all but $100.9 million (December 31, 2007 — $103.8 million) of the outstanding term loans are guaranteed by Teekay or its subsidiaries. Included in the total of $2,379.3 million (December 31, 2007 — $2,162.4 million) is a loan for $601.0 million (December 31, 2007 — $601.0 million) which is in place to fund the RasGas 3 joint venture project and for which the Company is liable on a joint and several basis together with its unrelated project partner (see Note 9(b)). The Company has reported 100% of the obligation under this borrowing agreement. The funds received have been advanced to the RasGas 3 joint venture, which is accounted for using the equity method and the entire amount advanced is included in Loans to Joint Ventures.

The Company has two Euro-denominated term loans outstanding, which, as at March 31, 2008 totaled 302.4 million Euros ($476.4 million). The Company repays the loans with funds generated by two Euro-denominated long-term time-charter contracts. Interest payments on the loans are based on EURIBOR plus a margin. At March 31, 2008, the margins ranged between 0.6% and 0.66% and the one-month EURIBOR was 4.4%. The Euro-denominated term loans reduce in monthly payments with varying maturities through 2023 and are collateralized by first-priority mortgages on two of the Company’s vessels, together with certain other security, and are guaranteed by a subsidiary of Teekay.

Both Euro-denominated term loans are revalued at the end of each period using the then prevailing Euro/U.S. Dollar exchange rate. Due substantially to this revaluation, the Company recognized unrealized foreign exchange losses of $32.0 million and $1.7 million during the three months ended March 31, 2008 and 2007, respectively.

The Company has two U.S. Dollar-denominated loans outstanding owing to joint venture partners, which, as at March 31, 2008, totaled $15.6 million and $1.1 million, respectively, including accrued interest. Interest payments on the first loan, which are based on a fixed interest rate of 4.84%, commenced in February 2008. This loan is repayable on demand no earlier than February 27, 2027.

Among other matters, the Company’s long-term debt agreements generally provide for maintenance of certain vessel market value-to-loan ratios and minimum consolidated financial covenants. Certain loan agreements require that a minimum level of free cash be maintained. As at March 31, 2008 and December 31, 2007, this amount was $100.0 million. Certain of the loan agreements also require that the Company maintain an aggregate level of free liquidity and undrawn revolving credit lines with at least six months to maturity, of at least 7.5% of total debt. As at March 31, 2008 and December 31, 2007, this amount was $349.8 million and $326.0 million, respectively.

Suezmax Tankers. As at March 31, 2008, the Company was a party, as lessee, to capital leases on five Suezmax tankers. Under the terms of the lease arrangements, the Company is required to purchase these vessels after the end of their respective lease terms for fixed prices. At their inception, the weighted-average interest rate implicit in these leases was 7.4%. These capital leases are variable-rate capital leases; however, any change in our lease payments resulting from changes in interest rates is offset by a corresponding change in the charter hire payments received by the Company. As at March 31, 2008, the remaining commitments under these capital leases, including the purchase obligations, approximated $230.6 million, including imputed interest of $19.4 million, repayable as follows:

Year		Commitment
2008		$129.7 million
2009		$8.5 million
2010		$8.4 million
2011		$84.0 million

RasGas II LNG Carriers. As at March 31, 2008, the Company was a party, as lessee, to 30-year capital lease arrangements for the three LNG carriers (or the RasGas II LNG Carriers) that operate under time-charter contracts with Ras Laffan Liquefied Natural Gas Co. Limited (II) (or RasGas II), a joint venture between Qatar Petroleum and ExxonMobil RasGas Inc., a subsidiary of ExxonMobil Corporation. All amounts below relating to the RasGas II LNG Carriers capital leases include the Company’s joint venture partner’s 30% share.

Under the terms of the RasGas II LNG Carriers capital lease arrangements, the lessor claims tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leasing arrangements, tax and change of law risks are assumed by the lessee. Payments under the lease arrangements are based on tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lessor is entitled to increase the lease payments to maintain its agreed after-tax margin. However, the Company may terminate the lease arrangements at any time. If the lease arrangements terminate, the Company would be required to pay termination sums to the lessor sufficient to repay the lessor’s investment in the vessels and to compensate it for the tax-effect of the terminations, including recapture of any tax depreciation.

At their inception, the weighted-average interest rate implicit in these leases was 5.2%. These capital leases are variable-rate capital leases. As at March 31, 2008, the commitments under these capital leases approximated $1.1 billion, including imputed interest of $622.1 million, repayable as follows:

Year		Commitment
2008		$18.0 million
2009		$24.0 million
2010		$24.0 million
2011		$24.0 million
2012		$24.0 million
Thereafter		$977.1 million

Spanish-Flagged LNG Carrier. As at March 31, 2008, the Company was a party, as lessee, to a capital lease on one Spanish-flagged LNG carrier, which is structured as a “Spanish tax lease.” Under the terms of the Spanish tax lease, the Company will purchase the vessel at the end of the lease term in 2011. The purchase obligation has been fully funded with restricted cash deposits described below. At its inception, the implicit interest rate was 5.8%. As at March 31, 2008, the commitments under this capital lease, including the purchase obligation, approximated 141.7 million Euros ($223.4 million), including imputed interest of 20.1 million Euros ($31.7 million), repayable as follows:

Year		Commitment
2008		24.4 million Euros ($38.5 million)
2009		25.6 million Euros ($40.4 million)
2010		26.9 million Euros ($42.4 million)
2011		64.8 million Euros ($102.1million)

FPSO Units. As at March 31, 2008, the Company was a party, as lessee, to capital leases on one FPSO unit, the Petrojarl Foinaven, and the topside production equipment for another FPSO unit, the Petrojarl Banff. However, Teekay Petrojarl has legally defeased its future charter obligations for these assets by making up-front, lump-sum payments to unrelated banks, which have assumed Teekay Petrojarl’s liability for making the remaining periodic payments due under the long-term charters (or Defeased Rental Payments) and termination payments under the leases.

TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)

The Defeased Rental Payments for the Petrojarl Foinaven are based on assumed Sterling LIBOR of 8% per annum. If actual interest rates are greater than 8% per annum, the Company receives rental rebates; if actual interest rates are less than 8% per annum, the Company is required to pay rentals in excess of the Defeased Rental Payments. For accounting purposes, this embedded derivative has been separated from the host contract and is accounted for as a derivative instrument.

As is typical for these types of leasing arrangements, the Company has indemnified the lessors for the tax consequence resulting from changes in tax laws or interpretation of such laws or adverse rulings by authorities and for fluctuations in actual interest rates from those assumed in the leases.

Restricted Cash

Under the terms of the capital leases for the four LNG carriers described above in this Note 7, the Company is required to have on deposit with financial institutions an amount of cash that, together with interest earned on the deposits, will equal the remaining amounts owing under the leases, including the obligations to purchase the LNG carriers at the end of the lease periods, where applicable. These cash deposits are restricted to being used for capital lease payments and have been fully funded with term loans and, for one vessel, a loan from the Company’s joint venture partner (see Note 6). The interest rates earned on the deposits approximate the interest rates implicit in the applicable leases.

As at March 31, 2008 and December 31, 2007, the amount of restricted cash on deposit for the three RasGas II LNG Carriers was $489.8 million and $492.2 million, respectively. As at March 31, 2008 and December 31, 2007, the weighted-average interest rate earned on the deposits was 5.3%.

As at March 31, 2008 and December 31, 2007, the amount of restricted cash on deposit for the Spanish-flagged LNG carrier was 124.4 million Euros ($196.0 million) and 122.8 million Euros ($179.2 million), respectively. As at March 31, 2008 and December 31, 2007, the weighted-average interest rate earned on these deposits was 5.0%.

The Company also maintains restricted cash deposits relating to certain term loans and other obligations, which cash totaled $14.0 million and $14.8 million as at March 31, 2008 and December 31, 2007, respectively.

8. Capital Stock

The authorized capital stock of Teekay at March 31, 2008 was 25,000,000 shares of Preferred Stock, with a par value of $1 per share, and 725,000,000 shares of Common Stock, with a par value of $0.001 per share. During the three months ended March 31, 2008, the Company issued 0.01 million shares upon exercise of stock options, and repurchased 0.5 million shares for a total cost of $20.5 million. At March 31, 2008 there was no remaining share repurchase authorization. As at March 31, 2008, Teekay had 72,802,363 shares of Common Stock (December 31, 2007 — 95,327,329) and no shares of Preferred Stock issued. As at March 31, 2008, Teekay had 72,303,163 shares of Common Stock outstanding (December 31, 2007 — 72,772,529).

As at March 31, 2008, the Company had reserved pursuant to its 1995 Stock Option Plan and 2003 Equity Incentive Plan (collectively referred to as the Plans) 6,422,206 shares of Common Stock for issuance upon exercise of options or equity awards granted or to be granted. During the three months ended March 31, 2008, the Company granted options under the Plans to acquire up to 1,443,900 shares of Common Stock to certain eligible officers, employees and directors of the Company. The options under the Plans have ten-year terms and vest equally over three years from the grant date. All outstanding options expire between June 13, 2008 and March 7, 2018, ten years after the date of each respective grant.

During March 2008, the Company granted 10,500 shares of restricted stock awards with a fair value of $0.4 million, based on the quoted market price, to certain of the Company’s directors. The shares of restricted stock are issued when granted and are subject to potential forfeiture. If at any time during the three-year period after the date of grant a recipient of these shares ceases to be a director of the Company, the shares of restricted stock that remain subject to forfeiture must be returned to the Company. These shares of restricted stock are released from this forfeiture provision equally over three years.

9. Commitments and Contingencies

a) Vessels Under Construction

As at March 31, 2008, the Company was committed to the construction of ten Suezmax tankers, three LPG carriers, one product tanker and four shuttle tankers scheduled for delivery between May 2008 and July 2011, at a total cost of approximately $1.3 billion, excluding capitalized interest. As at March 31, 2008, payments made towards these commitments totaled $328.1 million (excluding $30.9 million of capitalized interest and other miscellaneous construction costs), and long-term financing arrangements existed for $843.2 million of the unpaid cost of these vessels. The Company intends to finance the remaining amount of $151.9 million through incremental debt or surplus cash balances, or a combination thereof. As at March 31, 2008, the remaining payments required to be made under these newbuilding contracts were $313.3 million (2008), $287.8 million (2009), $230.8 million (2010) and $163.2 million (2011).

TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)

As at March 31, 2008, the Company was committed to the construction of two LNG carriers scheduled for delivery in November 2008 and March 2009. The Company has entered into these transactions with a joint venture partner who has taken a 30% interest in the vessels and related long-term, fixed-rate time-charter contracts. All amounts below include the joint venture partner’s 30% share. The total cost of these LNG carriers is approximately $376.9 million, excluding capitalized interest. As at March 31, 2008, payments made towards these commitments totaled $303.3 million (excluding $28.2 million of capitalized interest and other miscellaneous construction costs), and long-term financing arrangements existed for the remaining $73.6 million unpaid cost of these LNG carriers. As at March 31, 2008, the remaining payments required to be made under these contracts were $37.6 million (2008) and $36.0 million (2009). Upon delivery, these two LNG carriers will be subject to 20-year, fixed-rate time-charters to The Tangguh Production Sharing Contractors, a consortium led by BP Berau, a subsidiary of BP plc. Pursuant to existing agreements, on November 1, 2006, Teekay LNG agreed to acquire the Company’s ownership interest in these two vessels and related charter contracts upon delivery of the first LNG carrier.

b) Joint Ventures

In August 2005, the Company announced that it had been awarded long-term, fixed-rate contracts to charter four LNG carriers to Ras Laffan Liquefied Natural Gas Co. Limited (3) (or RasGas 3), a joint venture company between a subsidiary of ExxonMobil Corporation and Qatar Petroleum. The vessels will be chartered to RasGas 3 at fixed rates, with inflation adjustments, for a period of 25 years (with options to extend up to an additional 10 years), scheduled to commence in the second quarter of 2008. The Company has entered into these transactions with its joint venture partner, Qatar Petroleum, which has taken a 60% interest in the vessels and time-charters. In connection with this award, the joint venture has entered into agreements with Samsung Heavy Industries Co. Ltd. to construct four 217,000-cubic meter LNG carriers at a total cost of approximately $1.0 billion (of which the Company’s 40% portion is $400.7 million), excluding capitalized interest. As at March 31, 2008, payments made towards these commitments by the joint venture company totaled $801.3 million (of which the Company’s 40% contribution was $320.5 million), excluding capitalized interest and other miscellaneous construction costs. Long-term financing arrangements existed for all of the remaining $200.3 million unpaid cost of these LNG carriers (including the joint venture partner’s 60% share). These remaining payments are due in 2008. Pursuant to existing agreements, on November 1, 2006, Teekay LNG agreed to acquire the Company’s ownership interest in these four vessels and related charter contracts upon delivery of the first LNG carrier, which occurred on May 6, 2008.

The Company has a 33% interest in a consortium that will charter four newbuilding 160,400-cubic meter LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron Corporation, Sociedade Nacional de Combustiveis de Angola EP, BP Plc, Total S.A. and ENI SpA. Final award of the charter was made in December 2007. The vessels will be chartered at fixed rates, with inflation adjustments, commencing in 2011. The remaining members of the consortium are Mitsui & Co., Ltd. and NYK Bulkship (Europe) Ltd., which hold 34% and 33% interests in the consortium, respectively. In connection with this award, the consortium has entered into agreements with Samsung Heavy Industries Co. Ltd. to construct the four LNG carriers at a total cost of approximately $921.4 million (of which the Company’s 33% portion is $304.1 million), excluding capitalized interest. As at March 31, 2008, payments made towards these commitments by the joint venture company totaled $106.0 million (of which the Company’s 33% contribution was $35.0 million), excluding capitalized interest and other miscellaneous construction costs. As at March 31, 2008, the remaining payments required to be made under these contracts were $90.6 million (2009), $113.2 million (2010), $475.6 million (2011) and $135.9 million (2012). In accordance with existing agreements, the Company is required to offer to Teekay LNG its 33% interest in these vessels and related charter contracts no later than 180 days before the scheduled delivery dates of the vessels.

c) Long-Term Incentive Program

In 2005, the Company adopted the Vision Incentive Plan (or the VIP) to reward exceptional corporate performance and shareholder returns. This plan will result in an award pool for senior management based on the following two measures: (a) economic profit from 2005 to 2010 (or the Economic Profit); and (b) market value added from 2001 to 2010 (or the MVA). The Plan terminates on December 31, 2010. Under the VIP, the Economic Profit is the difference between the Company’s annual return on invested capital and its weighted-average cost of capital multiplied by its average invested capital employed during the year, and the increase in MVA from January 1, 2001 to December 31, 2010, where the MVA is the amount by which the average market value of the Company for the preceding 18 months exceeds the average book value of the Company for the same period.

Under the terms of the VIP, an interim award may only be made to VIP participants in 2008 and the final award may only be made in 2011. During March 2008, the 2008 interim award, with a value of $13.3 million, was paid to participants in the form of 328,600 restricted stock units. These restricted stock units vest in three equal amounts in November 2008, November 2009 and November 2010. Each restricted stock unit is equal in value to one share of the Company’s Common Stock and reinvested dividends from the date of the grant to the vesting of the restricted stock unit. At least 50 percent of any distribution from the balance of the VIP award pool in 2011 must be paid in a form that is equity-based, with vesting on half of this percentage deferred for one year and vesting on the remaining half of this percentage deferred for two years.

During the three months ended March 31, 2008 and 2007, the Company recorded an expense related to the VIP of $0.5 million and $3.5 million, respectively, which are included in general and administrative expense.

d) Other

The Company enters into indemnification agreements with certain officers and directors. In addition, the Company enters into other indemnification agreements in the ordinary course of business. The maximum potential amount of future payments required under these indemnification agreements is unlimited. However, the Company maintains what it believes is appropriate liability insurance that reduces its exposure and enables the Company to recover future amounts paid up to the maximum amount of the insurance coverage, less any deductible amounts pursuant to the terms of the respective policies, the amounts of which are not considered material.

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (or SFAS) No. 157, Fair Value Measurements (or SFAS No. 157). In accordance with Financial Accounting Standards Board Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2), the Company will defer the adoption of SFAS No. 157 for its non-financial assets and non-financial liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until January 1, 2009. The adoption of SFAS No. 157 did not have a material impact on the Company’s fair value measurements.

SFAS No. 157 clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. The fair value hierarchy has three levels based 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; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its

own assumptions.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

		Fair Value at
		March 31, 2008
		Asset / (Liability)				Level 1				Level 2				Level 3
		$				$				$				$
Interest rate swap agreements (restated) (1)			(337,771	)			—				(337,771	)			—
Interest rate swap agreements (restated) (1)			47,992				—				47,992				—
Foreign currency forward contracts (1)			35,664				—				35,664				—
Interest rate swaptions (1)			(6,333	)			—				(6,333	)			—
Bunker fuel swap contracts (1)			(706	)			—				(706	)			—
Freight forward agreements (1)			6,715				—				6,715				—
Foinaven embedded derivative (1)			(19,164	)			—				(19,164	)			—
Marketable securities(2)			33,894				33,894				—				—

During March 2008, the Company sold one Handysize product tanker. During March 2008, the Company entered into an agreement to sell a second Handysize product tanker which was delivered in April 2008, and which is presented on the March 31, 2008 balance sheet as vessel held for sale. During March 2008, the Company also entered into an agreement to sell a third vessel upon the expiration of its current time-charter, which is expected to be during September 2008. All three vessels are part of the Company’s spot tanker segment.

		Three Months Ended March 31
		2008				2007
		$				$
		(restated)				(restated)
Equity loss from joint ventures			(3,609	)			(1,595	)
Gain on sale of marketable securities			2,708				1,817
Loss on bond repurchase			(598	)			—
Income tax (expense) recovery			(2,483	)			3,886
Volatile organic compound emission plant lease income			2,570				2,773
Miscellaneous income (expense)			326				(495	)
Other — net			(1,086	)			6,386

During the three months ended March 31, 2008, the Company incurred restructuring charges of $1.5 million relating to costs incurred to change the crew of the Samar Spirit from Australian crew to International crew. The Company does not expect to incur any additional restructuring cost relating to this change in operations.

		Three Months Ended March 31,
		2008				2007
		$				$
		(restated)				(restated)
Net (loss) income			(105,129	)			84,983
Other comprehensive (loss) income:
Unrealized (loss) gain on marketable securities			(5,833	)			7,853
Reclassification adjustment for gain on sale of marketable securities			(2,708	)			(1,759	)
Minimum pension liability			1,058				—
Net effect from qualifying cash flow hedging instruments			2,850				—
Comprehensive (loss) income			(109,762	)			91,077

As at March 31, 2008 and December 31, 2007, the Company’s accumulated other comprehensive (loss) income consisted of the following components:

		March 31, 2008				December 31, 2007
		$				$
		(restated)
Unrealized gain on derivative instruments			6,370				3,520
Minimum pension liability			(5,220	)			(6,278	)
Unrealized (loss) gain on marketable securities			(1,216	)			7,325
			(66	)			4,567

The Company uses derivatives in accordance with its overall risk management policies. The following summarizes the Company’s risk strategies with respect to market risk from foreign currency fluctuations, changes in interest rates, spot market rates for vessels and bunker fuel prices.

The Company hedges portions of its forecasted expenditures denominated in foreign currencies with foreign currency forward contracts. Certain of these foreign currency forward contracts are designated, for accounting purposes, as cash flow hedges of forecasted foreign currency expenditures. Where such instruments are designated and qualify as cash flow hedges, the effective portion of the changes in their fair value is recorded in accumulated other comprehensive loss, until the hedged item is recognized in earnings. At such time, the respective amount in accumulated other comprehensive loss is released to earnings and is recorded within operating expenses, based on the nature of the expense being hedged. The ineffective portion of these foreign currency forward contracts has also been reported in operating expenses, based on the nature of the expense being economically hedged. During the three months ended March 31, 2008, the Company recognized unrealized losses of $0.4 million in general and administrative expenses (2007 — $nil) and $0.6 million in vessel operating expenses (2007 — $nil), relating to the ineffective portion of its foreign currency forward contracts.

Changes in fair value of foreign currency forward contracts that are not designated, for accounting purposes, as cash flow hedges are recognized in earnings and are reported in operating expenses, based on the nature of the expense being economically hedged. During the three-month periods ended March 31, 2008 and 2007, the Company recognized unrealized (gains) losses, relating to foreign currency forward contracts that are not designated as cash flow hedges as follows:

		Three Months Ended March 31,
		2008				2007
		$				$
Vessel operating expenses			(425	)			(1,767	)
Time-charter hire expenses			(66	)			(144	)
General and administrative			(566	)			(1,807	)
Foreign currency exchange loss (gain)			2,472				(6,578	)
Total			1,415				(10,296	)

As at March 31, 2008, the Company was committed to the following foreign currency forward contracts for the forward purchase of foreign currency:

		Contract Amount in				Average Contractual				Expected Maturity
		Foreign Currency				Exchange Rate (1)				2008				2009				2010
		(millions)								(in millions of U.S. Dollars)
Norwegian Kroner:			1,280.7				6.04			$	132.6			$	74.6			$	5.0
Euro:			15.8				0.71			$	18.1			$	4.1				—
Canadian Dollar:			47.8				1.02			$	32.4			$	14.7				—
British Pounds:			30.0				0.51			$	37.6			$	18.9			$	1.9
Australian Dollar:			3.1				1.24			$	2.5				—				—
Singapore Dollar:			3.6				1.38			$	2.6				—				—

In addition, certain of the Company’s forward contracts obligate the Company to enter into forward purchase contracts for approximately Norwegian Kroner 90.0 million at a rate of 6.34 Norwegian Kroner per U.S. Dollar at the discretion of the counterparty during 2008.

As at March 31, 2008, the Company’s accumulated other comprehensive income included $6.4 million of unrealized gains on foreign currency forward contracts designated as cash flow hedges.

The Company enters into interest rate swaps which exchange a receipt of floating interest for a payment of fixed interest to reduce the Company’s exposure to interest rate variability on its outstanding floating-rate debt. In addition, the Company holds interest rate swaps which exchange a payment of floating-rate interest for a receipt of fixed interest in order to reduce the Company’s exposure to the variability of interest income on its restricted cash deposits. The Company has not designated, for accounting purposes, its interest rate swaps as cash flow hedges. Unrealized gains or losses relating to changes in fair value of the Company’s interest rate swaps have been reported in interest expense or interest income in the consolidated statements of income (loss).

During the three months ended March 31, 2008, the Company recognized an unrealized loss in interest expense of $201.8 million (2007 — $6.1 million unrealized gain), and an unrealized gain in interest income of $37.6 million (2007 — $4.1 million unrealized loss) relating to the changes in fair value of its interest rate swaps

As at March 31, 2008, the Company was committed to the following interest rate swap agreements related to its LIBOR-based debt, restricted cash deposits and EURIBOR-based debt, whereby certain of the Company’s floating-rate debt and restricted cash deposits were swapped with fixed-rate obligations or fixed-rate deposits:

								Fair Value /				Weighted-
								Carrying Amount				Average				Fixed
				Principal				of Asset /				Remaining				Interest
				Amount				(Liability)				Term				Rate
		Interest Rate		$				$				(years)				(%)(1)
		Index		(restated)				(restated)				(restated)				(restated)
LIBOR-Based Debt:
U.S. Dollar-denominated interest rate swaps (2)		LIBOR			500,107				(26,029	)			28.8				4.9
U.S. Dollar-denominated interest rate swaps (restated)		LIBOR			3,278,989				(251,893	)			7.7				5.0
U.S. Dollar-denominated interest rate swaps (3)		LIBOR			938,536				(60,436	)			18.3				5.3
LIBOR-Based Restricted Cash Deposit:
U.S. Dollar-denominated interest rate swaps (2)		LIBOR			480,073				23,308				28.8				4.8
EURIBOR-Based Debt:
Euro-denominated interest rate swaps (4) (5)		EURIBOR			476,393				25,271				16.2				3.8

During May 2006, the Company sold two swaptions for $2.4 million. The Company has not applied hedge accounting to these instruments and they have been recorded at fair value. These options, if exercised, will obligate the Company to enter into interest rate swap agreements whereby certain of the Company’s floating-rate debt will be swapped with fixed-rate obligations. The terms of these swaptions are as follows:

Interest		Principal
Rate		Amount(1)				Remaining Term		Fixed Interest Rate
Index		$		Start date		(years)		(%)
LIBOR		150,000		August 31, 2009		12.0		4.3
LIBOR		117,188		May 15, 2008		11.0		4.0

(1)   Principal amount reduces $5.0 million semi-annually ($150.0 million) and $2.6 million quarterly ($117.2 million).

In order to reduce variability in revenues from fluctuations in certain spot tanker market rates, the Company has entered into forward freight agreements (FFAs) and synthetic time-charters (STCs). FFAs involve contracts to move a theoretical volume of freight at fixed-rates, thus attempting to reduce the Company’s exposure to the spot tanker market rates. STCs are a means of achieving the equivalent of a time-charter for a vessel that trades in the spot tanker market by taking the short position in a long-term FFA. As at March 31, 2008, the Company had six STCs which were equivalent to 3.5 Suezmax vessels. As at March 31, 2008, the FFAs, which include STCs, had an aggregate notional value of $65.7 million, which is an aggregate of both long and short positions, and a net fair value of $6.4 million. The FFAs, which include STCs, expire between April 2008 and September 2009. The Company has not designated these contracts as cash flow hedges. Net gains and losses from FFAs and STCs are recorded within revenues in the consolidated statements of income.

The Company hedges a portion of its bunker fuel expenditures with bunker fuel swap contracts. As at March 31, 2008, the Company was committed to contracts totalling 20,430 metric tonnes with a weighted-average price of $395.9 per tonne and a fair value of ($0.7) million. The bunker fuel swap contracts expire between April and December 2008.

The Company is exposed to credit loss in the event of non-performance by the counterparties to the foreign currency forward contracts, interest rate swap agreements, FFAs and bunker fuel swap contracts; however, the Company does not anticipate non-performance by any of the counterparties. In order to minimize counterparty risk, the Company only enters into derivative transactions with counterparties that are rated A or better by Standard & Poor’s or Aa3 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 Company also uses FFAs in non-hedge-related transactions to increase or decrease its exposure to spot market rates, within strictly defined limits. Historically, the Company has used a number of different tools, including the sale/purchase of vessels and the in-charter/out-charter of vessels, to increase or decrease this exposure. The Company believes that it can capture some of the value from the volatility of the spot tanker market and from market imbalances by utilizing FFAs. As at March 31, 2008, the Company was committed to non-hedge-related FFAs totaling 5.9 million metric tonnes with a notional principal amount of $65.2 million and a fair value of $0.3 million. These FFAs expire between April 2008 and December 2008.

		Three Months Ended March 31,
		2008				2007
		$				$
		(restated)				(restated)
Net (loss) income available for common stockholders			(105,129	)			84,983
Weighted average number of common shares			72,644,397				73,129,585
Dilutive effect of employee stock options and restricted stock awards			—				1,415,580
Common stock and common stock equivalents			72,644,397				74,545,165
Earnings per common share:
- Basic			(1.45	)			1.16
- Diluted			(1.45	)			1.14

For the three months ended March 31, 2007, the anti-dilutive effect of 1.4 million shares, attributable to outstanding stock options was excluded from the calculations of diluted earnings per share.

Effective January 1, 2008, the Company increased its estimate of the residual value of its vessels due to an increase in the estimated scrap rate per lightweight ton. The Company’s estimate of salvage values took into account the then current scrap prices and the historical scrap rates over the five years prior to December 31, 2007. As a result, depreciation and amortization expense has decreased by $3.3 million and net income has increased by $2.8 million, or $0.04 per share for the three months ended March 31, 2008.

17.

Restatement of Previously Issued Financial Statements

a.

Derivative Instruments and Hedging Activities

In August 2008, the Company commenced a review of its application of Statement of Financial Accounting Standards (or SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Based on its review the Company concluded that certain of its interest rate swap agreements, foreign currency forward contracts, bunker fuel swap contracts and forward freight agreements did not qualify for hedge accounting treatment under SFAS No. 133 for the three months ended March 31, 2008 and 2007. The Company’s findings were as follows:

	•		One of the requirements of SFAS No. 133 is that hedge accounting is appropriate only for those hedging relationships that a company expects will be highly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged. To determine whether transactions satisfy this requirement, entities must periodically assess the effectiveness of hedging relationships both prospectively and retrospectively. Based on the Company’s review, the Company concluded that the prospective hedge effectiveness assessment that was conducted for certain of the Company derivative instruments on the date of designation was not sufficient to conclude that the derivative instruments would be highly effective, in accordance with the technical requirements of SFAS No. 133, in achieving offsetting changes in cash flows attributable to the risk being hedged.
	•		To conclude that hedge accounting is appropriate, another requirement of SFAS No. 133 is that the applicable hedge documentation specifies the method that will be used to assess, retrospectively and prospectively, the hedging instrument’s effectiveness, and the method that will be used to measure hedge ineffectiveness. Documentation for certain of the Company’s derivative instruments did not clearly specify the method to be used to measure hedge ineffectiveness.
	•		Certain of the Company’s derivative instruments were designated as hedges when the derivative instruments had a non-zero fair value. However, this designation was not appropriate as the Company used certain methods of measuring ineffectiveness that are not allowed in the case of non-zero fair value derivatives.

		For accounting purposes the Company should have reflected changes in fair value of these derivative instruments as increases or decreases to the Company’s net income (loss) on its consolidated statements of income, instead of being reflected as increases or decreases to accumulated other comprehensive income (loss), a component of stockholders’ equity on the consolidated balance sheets and statements of changes in stockholders’ equity.
		The change in accounting for these transactions does not affect the Company’s cash flows or liquidity.

b.

Non-Routine, Complex Financial Structures and Arrangements, and Other

		Subsequent to the release of its preliminary second quarter financial results, the Company reviewed and revised its financial statement presentation of debt and interest rate swap agreements related to its joint venture interests in the RasGas 3 LNG carriers. As a result, certain of the Company’s assets and liabilities have been grossed up for accounting presentation purposes. These adjustments, which do not affect the Company’s net income, cash flow, liquidity, cash distributions or stockholder’s’ equity in any period, are described below.
		Through a wholly-owned subsidiary, the Company owns a 40 percent interest in the four RasGas 3 LNG carriers. The joint venture partner, a wholly-owned subsidiary of Qatar Gas Transport Company, owns the remaining 60 percent interest. Both wholly-owned subsidiaries are joint and several co-borrowers with respect to the RasGas 3 term loan and related interest rate swap agreements. Previously, the Company recorded 40 percent of the RasGas 3 term loan and interest rate swap obligations in its financial statements. The Company has now made adjustments to its balance sheet to reflect 100 percent of the RasGas 3 term loan (March 31, 2008 and December 31, 2007 — $360.6 million) and interest rate swap obligations (March 31, 2008 — $21.4 million; December 31, 2007 — $9.6 million), as well as offsetting increases in assets, for the fourth quarter of 2006 through the first quarter of 2008 (see Note 6). The Company has also made adjustments to its statement of income to reflect 100 percent of the interest expense (three months ended March 31, 2008 — $4.6 million; three months ended March 31, 2007 — $2.8 million) on the RasGas 3 term loan with an offsetting amount to interest income from its advances to the joint venture. These adjustments do not result in any increase to the Company’s net exposure in this joint venture.
		In 2005, the Company adopted the long-term share-based VIP for senior management (see Note 9(c)). During 2005, the Company recognized the VIP expense when incurred instead of over the vesting period. Upon transition to SFAS 123R on January 1, 2006, the Company was required to account for the VIP based on the fair value of the award as the VIP has a share-based component in determining the amount of the ultimate grant. However, the Company continued to calculate compensation expense for the VIP under the methodology it had followed in 2005, as it did not identify the VIP as within the scope of SFAS 123R. The Company has now made adjustments to its statements of income (loss) to increase (decrease) general and administrative expenses for the three months ended March 31, 2008 and 2007 — ($1.5) million and $2.1 million, respectively. The Company has also made adjustments to its balance sheets to decrease other long-term liabilities (March 31, 2008 — $4.7 million; and December 31, 2007 — $8.1 million) and to increase (decrease) accrued liabilities (March 31, 2008 — ($1.3) million; and December 31, 2007 — $3.6 million). These accounting adjustments associated with the VIP do not impact amounts paid out under the plan.
		The Company has also restated certain other items primarily relating to amounts attributable to minority interests (other assets: March 31, 2008 — $15.9 million, December 31, 2007 — $8.4 million; minority interest: March 31, 2008 — $18.7 million, December 31, 2007 — $18.8 million; minority interest expense: three months ended March 31, 2008 — $0.6 million; three months ended March 31, 2007 — $1.0 million) and the measurement of the fair value of certain derivative instruments (derivative instruments: December 31, 2007 — $6.2 million) and has reclassified an embedded derivative from long-term liabilities to derivative instruments (December 31, 2007 — $19.6 million).

TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)

As a result of the accounting treatment assessment conclusions described above in this Note 17, the Company is restating herein its historical balance sheets as of March 31, 2008 and December 31, 2007; and its statements of income and cash flows for the three months ended March 31, 2008 and 2007.

The following table sets forth a reconciliation of the Company’s previously reported and restated net income (loss) for the periods shown (in thousands of US dollars):

		Net Income (Loss)								Retained Earnings
		Three Months Ended March 31,								At December 31,
		2008				2007				2006
		$				$				$
As previously reported			15,178				76,375				1,943,397
Adjustments:
Derivative instruments, net of minority interest			(121,191	)			11,684				(26,785	)
Non-routine, complex financial structures and arrangements, and other			884				(3,076	)			223
As restated			(105,129	)			84,983				1,916,835

The following table presents the effect of the restatement on the Company’s unaudited consolidated statement of income for the three months ended March 31, 2008 (in thousands of U.S. dollars, except share and per share amounts):

		Three Months Ended March 31, 2008
						Adjustments
										Non-Routine,
										Complex
										Financial
										Structures and
						Derivative				Arrangements,
		As Reported				Instruments				and Other				As Restated
		$				$				$				$
REVENUES			736,391				6,981				—				743,372
OPERATING EXPENSES
Voyage expenses			168,723				738				—				169,461
Vessel operating expenses			145,443				(2,394	)			—				143,049
Time-charter hire expense			144,921				(437	)			—				144,484
Depreciation and amortization			97,707				—				—				97,707
General and administrative			67,671				(1,515	)			(1,517	)			64,639
Gain on sale of vessels and equipment			(496	)			—				—				(496	)
Restructuring charge			1,500				—				—				1,500
Total operating expenses			625,469				(3,608	)			(1,517	)			620,344
Income from vessel operations			110,922				10,589				1,517				123,028
OTHER ITEMS
Interest expense			(87,188	)			(190,429	)			(4,631	)			(282,248	)
Interest income			18,359				37,619				4,631				60,609
Foreign exchange loss			(29,483	)			(2,509	)			—				(31,992	)
Minority interest income (expense)			3,472				23,721				(633	)			26,560
Other — net			(904	)			(182	)			—				(1,086	)
Total other items			(95,744	)			(131,780	)			(633	)			(228,157	)
Net income (loss)			15,178				(121,191	)			884				(105,129	)
Per common share amounts
• Basic earnings			0.21												(1.45	)
• Diluted earnings			0.21												(1.45	)
• Cash dividends declared			0.2750												0.2750
Weighted average number of common shares
• Basic			72,644,397												72,644,397
• Diluted			73,435,167												72,644,397

TEEKAY CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except share data)

The following table presents the effect of the restatement on the Company’s unaudited consolidated statement of income for the three months ended March 31, 2007 (in thousands of U.S. dollars, except share and per share amounts):

		Three Months Ended March 31, 2007
						Adjustments
										Non-Routine,
										Complex
										Financial
										Structures and
						Derivative				Arrangements,
		As Reported				Instruments				and Other				As Restated
		$				$				$				$
REVENUES			578,395				(147	)			—				578,248
OPERATING EXPENSES
Voyage expenses			118,939				(1,460	)			—				117,479
Vessel operating expenses			97,441				(2,251	)			—				95,190
Time-charter hire expense			98,501				(144	)			—				98,357
Depreciation and amortization			79,263				—				—				79,263
General and administrative			58,797				(1,875	)			2,058				58,980
Total operating expenses			452,941				(5,730	)			2,058				449,269
Income from vessel operations			125,454				5,583				(2,058	)			128,979
OTHER ITEMS
Interest expense			(60,383	)			7,325				(2,847	)			(55,905	)
Interest income			16,168				(4,061	)			2,847				14,954
Foreign exchange loss			(5,888	)			4,212				—				(1,676	)
Minority interest income (expense)			(5,640	)			(1,097	)			(1,018	)			(7,755	)
Other — net			6,664				(278	)			—				6,386
Total other items			(49,079	)			6,101				(1,018	)			(43,996	)
Net income			76,375				11,684				(3,076	)			84,983
Per common share amounts
• Basic earnings			1.04												1.16
• Diluted earnings			1.02												1.14
• Cash dividends declared			0.2375												0.2375
Weighted average number of common shares
• Basic			73,129,585												73,129,585
• Diluted			74,545,165												74,545,165