21.

2012 Acquired Business

The following are condensed combining financial statements of the Company. These financial statements present the financial position of the Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the three years in the period ended December 31, 2011. The column titled “Historical Teekay Tankers” represents this information before being retroactively adjusted to include the 2012 Acquired Business between (a) the date that the Company and the acquired vessels were both under the common control of Teekay and had begun operations and (b) the date the Company acquired the vessels from Teekay Corporation in June 2012.


	Teekay Tankers Ltd.
	Condensed Combined Statement of (Loss) Income (in thousands of U.S. dollars)
	Year Ended December 31, 2011									Year Ended December 31, 2010									Year Ended December 31, 2009
	Historical Teekay Tankers $			2012 Acquired Business $			Total $			Historical Teekay Tankers $			2012 Acquired Business $			Total $			Historical Teekay Tankers $			2012 Acquired Business $			Total $
REVENUES
Time charter revenues		78,780			76,811			155,591			86,244			71,351			157,595			88,057			52,472			140,529
Net pool revenues		30,894			17,264			48,158			47,914			26,673			74,587			69,851			47,727			117,578
Voyage charter revenues		—			—			—			24			2,847			2,871			1,782			4,420			6,202
Interest income from investment in term loans		11,323			—			11,323			5,297			—			5,297			—			—			—

Total revenues		120,997			94,075			215,072			139,479			100,871			240,350			159,690			104,619			264,309


OPERATING EXPENSES
Voyage expenses		2,697			752			3,449			2,544			2,757			5,301			5,452			2,051			7,503
Vessel operating expenses		42,056			42,033			84,089			44,453			37,197			81,650			46,644			32,816			79,460
Time-charter hire expense		4,046			—			4,046			—			—			—			—			—			—
Depreciation and amortization		43,185			31,297			74,482			45,455			31,862			77,317			45,158			31,043			76,201
General and administrative		8,609			7,516			16,125			9,789			6,831			16,620			11,800			8,075			19,875
Vessel impairments and net loss on sale of vessels		—			58,034			58,034			1,864			—			1,864			—			—			—
Goodwill impairment charge		13,310			5,984			19,294			—			—			—			—			—			—

Total operating expenses		113,903			145,616			259,519			104,105			78,647			182,752			109,054			73,985			183,039

Income from operations		7,094			(51,541	)		(44,447	)		35,374			22,224			57,598			50,636			30,634			81,270


OTHER ITEMS
Interest expense		(4,185	)		(36,354	)		(40,539	)		(7,513	)		(43,627	)		(51,140	)		(12,082	)		(24,133	)		(36,215	)
Interest income		57			14			71			97			3			100			70			—			70
Realized and unrealized (loss) gain on derivative instruments		(11,444	)		(16,339	)		(27,783	)		(10,536	)		(18,148	)		(28,684	)		4,310			7,648			11,958
Other expenses		(587	)		210			(377	)		(1,113	)		97			(1,016	)		(850	)		(773	)		(1,623	)

Total other items		(16,159	)		(52,469	)		(68,628	)		(19,065	)		(61,675	)		(80,740	)		(8,552	)		(17,258	)		(25,810	)

Net (loss) income		(9,065	)		(104,010	)		(113,075	)		16,309			(39,451	)		(23,142	)		42,084			13,376			55,460


	Teekay Tankers Ltd.
	Condensed Combined Balance Sheet
	(in thousands of U.S. dollars)
	As at December 31, 2011								As at December 31, 2010
	Historical Teekay Tankers $			2012 Acquired Business $		Total $			Historical Teekay Tankers $			2012 Acquired Business $			Total $
ASSETS
Current
Cash and cash equivalents		15,859			2,707		18,566			12,450			2,439			14,889
Pool receivables from affiliates, net		2,664			1,696		4,360			8,606			2,451			11,057
Accounts receivable		157			2,028		2,185			175			2,167			2,342
Interest receivable on investment in term loans		1,754			—		1,754			1,811			—			1,811
Due from affiliates		12,610			153,736		166,346			12,357			45,311			57,668
Prepaid expenses		3,395			2,864		6,259			2,492			2,520			5,012
Other current assets		308			—		308			146			—			146

Total current assets		36,747			163,031		199,778			38,037			54,888			92,925

Vessels and equipment
At cost, less accumulated depreciation		716,567			593,929		1,310,496			757,437			678,041			1,435,478
Investment in term loans		116,844			—		116,844			116,014			—			116,014
Loan to joint venture		9,830			—		9,830			9,830			—			9,830
Other non-current assets		1,938			2,583		4,521			1,889			2,993			4,882
Goodwill		—			—		—			13,310			5,984			19,294

Total assets		881,926			759,543		1,641,469			936,517			741,906			1,678,423


LIABILITIES AND EQUITY
Current
Accounts payable		1,935			2,429		4,364			2,124			1,870			3,994
Accrued liabilities		7,423			7,104		14,527			7,949			8,574			16,523
Current portion of long-term debt		1,800			24,468		26,268			1,800			18,565			20,365
Current portion of derivative instruments		4,027			2,625		6,652			4,509			6,954			11,463
Deferred revenue		1,777			1,932		3,709			2,028			4,373			6,401
Due to affiliates		4,999			86,201		91,200			5,841			264,877			270,718
Other current liabilities		115			—		115			277			—			277

Total current liabilities		22,076			124,759		146,835			24,528			305,213			329,741

Long-term debt		347,100			535,362		882,462			452,228			415,490			867,718
Derivative instruments		20,151			8,408		28,559			14,339			20,647			34,986
Other long-term liabilities		3,228			2,221		5,449			2,733			2,454			5,187

Total liabilities		392,555			670,750		1,063,305			493,828			743,804			1,237,632

Commitments and contingencies (notes 6,10 and 15)
Equity
Common stock and additional paid-in capital		588,441			—		588,441			481,336			—			481,336
Accumulated deficit		(99,070	)		—		(99,070	)		(38,647	)		—			(38,647	)
Dropdown Predecessor equity (deficit)		—			88,793		88,793			—			(1,898	)		(1,898	)

Total equity		489,371			88,793		578,164			442,689			(1,898	)		440,791

Total liabilities and equity		881,926			759,543		1,641,469			936,517			741,906			1,678,423


	Teekay Tankers Ltd.
	Condensed Combined Statement of Cash Flows (in thousands of U.S. dollars)
	Year Ended December 31, 2011									Year Ended December 31, 2010									Year Ended December 31, 2009
	Historical Teekay Tankers $			2012 Acquired Business $			Total $			Historical Teekay Tankers $			2012 Acquired Business $			Total $			Historical Teekay Tankers $			2012 Acquired Business $			Total $
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net (loss) income		(9,065	)		(104,010	)		(113,075	)		16,309			(39,451	)		(23,142	)		42,084			13,376			55,460
Non-cash items:
Depreciation and amortization		43,185			31,297			74,482			45,455			31,862			77,317			45,158			31,043			76,201
Unrealized loss (gain) on derivative instruments		5,330			(16,568	)		(11,238	)		4,955			8,870			13,825			(9,033	)		(13,820	)		(22,853	)
Vessel impairments and net loss on sale of vessels		—			58,034			58,034			1,864			—			1,864			—			—			—
Goodwill impairment charge		13,310			5,984			19,294			—			—			—			—			—			—
Other		143			410			553			(764	)		574			(190	)		423			426			849
Change in non-cash working capital items related to operating activities		2,202			(3,035	)		(833	)		(3,238	)		1,277			(1,961	)		24,678			10,652			35,330
Expenditures for dry docking		—			(3,197	)		(3,197	)		(6,190	)		(3,121	)		(9,311	)		(11,485	)		(4,305	)		(15,790	)

Net operating cash flow		55,105			(31,085	)		24,020			58,391			11			58,402			91,825			37,372			129,197


FINANCING ACTIVITIES
Proceeds from long-term debt		15,000			—			15,000			185,000			—			185,000			—			—			—
Repayments of long-term debt		(1,800	)		—			(1,800	)		(3,150	)		—			(3,150	)		(3,600	)		—			(3,600	)
Prepayment of long-term debt		(118,328	)		—			(118,328	)		(33,050	)		—			(33,050	)		(20,000	)		—			(20,000	)
Proceeds from long-term debt of Dropdown Predecessor		—			269, 874			269,874			37,222			18,382			55,604			257,121			248,106			505,227
Repayment of long-term debt of Dropdown Predecessor		—			(18,567	)		(18,567	)		—			(18,567	)		(18,567	)		—			(18,238	)		(18,238	)
Prepayment of long-term debt of Dropdown Predecessor		—			—			—			(306,169	)		132,705			(173,464	)		(366,719	)		(186,481	)		(553,200	)
Acquisition of Helga Spirit LLC, Yamuna Spirit LLC, Kaveri Spirit LLC, Esther Spirit, LLC and Iskmati Spirit LLC		—			—			—			(244,185	)		—			(244,185	)		—			—			—
Acquisition of Ashkini Spirit LLC from Teekay Corporation		—			—			—			—			—			—			(57,000	)		—			(57,000	)
Contribution of capital from Teekay Corporation to Dropdown Predecessor		—			69,169			69,169			128,900			(164,591	)		(35,691	)		99,649			(104,809	)		(5,160	)
Net advances from (to) affiliates		—			(287,101	)		(287,101	)		127,982			40,233			168,215			(27,605	)		27,321			(284	)
Proceeds from issuance of Class A common stock		112,054			—			112,054			211,978			—			211,978			68,600			—			68,600
Shares issuance costs		(4,949	)		—			(4,949	)		(9,395	)		—			(9,395	)		(3,092	)		—			(3,092	)
Cash dividends paid		(51,358	)		—			(51,358	)		(55,244	)		—			(55,244	)		(50,350	)		—			(50,350	)

Net financing cash flow		(49,381	)		33,375			(16,006	)		39,889			8,162			48,051			(102,996	)		(34,101	)		(137,097	)


INVESTING ACTIVITIES
Proceeds from the sale of vessels and equipment		—			—			—			35,396			—			35,396			—			—			—
Expenditures for vessels and equipment		(2,315	)		(2,022	)		(4,337	)		(6,253	)		(5,734	)		(11,987	)		(5,095	)		(3,271	)		(8,366	)
Advances to joint venture		—			—			—			(9,830	)		—			(9,830	)		—			—			—
Investment in term loans		—			—			—			(115,575	)		—			(115,575	)		—			—			—

Net investing cash flow		(2,315	)		(2,022	)		(4,337	)		(96,262	)		(5,734	)		(101,996	)		(5,095	)		(3,271	)		(8,366	)

Cash and cash equivalents:
Increase (decrease)		3,409			268			3,677			2,018			2,439			4,457			(16,266	)		—			(16,266	)
Beginning of the year		12,450			2,439			14,889			10,432			—			10,432			26,698			—			26,698

End of the year		15,859			2,707			18,566			12,450			2,439			14,889			10,432			—			10,432