Raises over $1.5B of Capital during 2016 and Continues to Benefit from Operating
Cost Efficiencies
HONG KONG, China, Oct. 31, 2016 /CNW/ - Seaspan Corporation
("Seaspan") (NYSE: SSW) announced today its financial results for the three and nine months ended September
30, 2016. Below is a summary of Seaspan's key financial results:
Summary of Key Financial Results (in thousands of US dollars):
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Revenue
|
|
$
|
224,875
|
|
$
|
212,861
|
|
$
|
664,712
|
|
$
|
600,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net earnings (loss)
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized net earnings(1)
|
|
$
|
43,562
|
|
$
|
43,364
|
|
$
|
133,543
|
|
$
|
116,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share, basic and diluted
|
|
$
|
(1.86)
|
|
$
|
0.07
|
|
$
|
(1.77)
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized earnings per share, diluted(1)
|
|
$
|
0.29
|
|
$
|
0.30
|
|
$
|
0.92
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash available for distribution to
common Shareholders(1)
|
|
$
|
90,400
|
|
$
|
117,548
|
|
$
|
302,150
|
|
$
|
317,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
$
|
148,354
|
|
$
|
183,463
|
|
$
|
489,159
|
|
$
|
506,354
|
|
_____________________________
|
|
(1)
|
These are non-GAAP financial measures. Please read "Reconciliation of
Non-GAAP Financial Measures for the Three and Nine Months Ended September 30, 2016 and 2015—Description of Non-GAAP
Financial Measures" for (a) descriptions of Normalized net earnings and Normalized earnings per share, Cash available for
distribution to common shareholders, and Adjusted EBITDA and (b) reconciliations of these non-GAAP financial measures as
used in this release to the most directly comparable financial measures under United States generally accepted accounting
principles ("GAAP").
|
|
|
Summary of Key Highlights
- Raised over $1.5 billion from capital markets, sale-leaseback, and other financing transactions
during the first nine months of 2016.
- Achieved 8.9% reduction in ship operating expense per ownership day during the quarter ended September
30, 2016 compared to the same quarter in the prior year, primarily due to a continued focus on cost management
initiatives.
- Achieved vessel utilization of 95.6% and 97.0% for the three and nine months ended September 30,
2016, or 95.9% and 97.5% if the impact of scheduled off-hire days is excluded.
- Accepted delivery of one vessel on a five-year time charter to Maersk Line A/S ("Maersk") during the third quarter, bringing
Seaspan's operating fleet to a total of 89 vessels at September 30, 2016.
- Paid $8.4 million of quarterly dividends to preferred shareholders of record as of July 29, 2016.
- Paid a quarterly dividend for the 2016 second quarter of $0.375 per Class A common share to all
shareholders of record as of July 20, 2016.
Gerry Wang, Chief Executive Officer, Co-Chairman and Co-Founder of Seaspan, commented, "We
continued to enhance our liquidity position and fund our newbuild program by accessing over $400
million in capital during the third quarter, bringing total capital raised year-to-date to over $1.5
billion. Our continued ability to access diverse sources of capital on attractive terms, from multiple markets and
geographies, is one of the key factors that differentiates us from competitors."
Mr. Wang added, "During the third quarter, we continued to modernize our fleet with the delivery of our eleventh 10000 TEU SAVER
containership, which commenced a five-year fixed-rate time charter with Maersk Line. This represents the fifth newbuilding
vessel that has been delivered to Seaspan this year. We are also very pleased with the success of our cost control measures
that resulted in a decline in our ship operating expenses while our fleet ownership days continued to increase."
Mr. Wang concluded, "Seaspan has grown through periods of adversity to become the world's largest independent containership
owner and lessor. With future contracted revenue of over $5 billion and over $500 million
in liquidity, we believe that Seaspan is well positioned to capitalize on opportunities that may arise due to industry challenges.
Consistent with our past success, we intend to remain disciplined in pursuing opportunities with a focus on creating long-term
value."
Third Quarter Developments
Vessel Delivery
In September 2016, Seaspan accepted delivery of one 10000 TEU containership, the Maersk Genoa. The
Maersk Genoa was constructed at Jiangsu New Yangzi Shipbuilding Co., Ltd. and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. using our
fuel efficient SAVER design and commenced a five-year, fixed-rate time charter with Maersk upon delivery.
Vessel Disposal
In August 2016, Seaspan sold a 4600 TEU vessel, the Seaspan Excellence, to a ship recycler for net
sale proceeds of approximately $5.8 million, resulting in a loss on disposition of approximately
$16.5 million.
Equity Financings
In August 2016, Seaspan issued 9,000,000 of its 7.875% Series H preferred shares in a public
offering at a price of $25.00 per share, for net proceeds of approximately $217.7 million before expenses.
In August 2016, Seaspan issued 3,200,000 of its 8.2% Series G preferred shares in a follow-on
public offering at a price of $25.00 per share, for net proceeds of approximately $76.5 million before expenses.
Revolving Credit Facility
In August 2016, Seaspan increased its 364-day unsecured, revolving loan facility by $10.0 million to a total commitment of $160.0 million.
Lease Financing
In September 2016, Seaspan entered into a sale leaseback transaction with special purpose
companies ("SPCs") for the Maersk Genoa for gross proceeds of $100.0 million. Under the lease,
Seaspan sold the vessel to the SPCs and leased the vessel back over a nine-year term, with an option to purchase the vessel at the
end of the lease term for a pre-determined fair value purchase price. If the purchase option is not exercised, the lease term
may be extended for an additional two years, at the option of the SPCs.
Hanjin Shipping Bankruptcy
On August 31, 2016, Seaspan's customer Hanjin Shipping Co., Ltd. ("Hanjin") filed for bankruptcy
in Korea (the "Hanjin Proceeding"). Charters for three of Seaspan's 10000 TEU vessels and the Seaspan Efficiency have been
cancelled and all four vessels have been returned. Seaspan stopped recognizing revenue on these vessels on September 1, 2016 after Hanjin declared bankruptcy.
Vessel Impairments
During the quarter ended September 30, 2016, Seaspan recognized non-cash vessel impairments of
$202.8 million related to ten vessels under 5000 TEU in size.
Subsequent Events
Dividends
On October 11, 2016, Seaspan declared quarterly cash dividends on its common and preferred shares,
for total distributions of $55.2 million.
Vessel Sales
In October and November 2011, Seaspan entered into agreements to bareboat charter four 4800 TEU
vessels to MSC Mediterranean Shipping Company S.A. ("MSC"), each for a five-year term and MSC agreed to purchase the vessels
for $5.0 million each at the end of the bareboat charters. In October
2016, two of the 4800 TEU vessels, the MSC Manu and MSC Leanne, completed their five-year bareboat charter terms and were
sold to MSC for $5.0 million per vessel.
Sale of Seaspan Efficiency
In October 2016, Seaspan entered into an agreement for the sale of the Seaspan Efficiency, a
2003-built 4600 TEU class containership, to a ship recycler for gross sale proceeds of approximately $6.4
million.
Results for the Three and Nine Months Ended September 30, 2016
At the beginning of 2016, Seaspan had 85 vessels in operation. Seaspan accepted delivery of three newbuilding vessels, leased in
two vessels and sold one 4600 TEU class vessel during the nine months ended September 30, 2016,
bringing its operating fleet to a total of 89 vessels as at September 30, 2016. Revenue from time
charters is determined primarily by the number of operating days, and ship operating expense is determined primarily by the number
of ownership days.
|
|
Three Months Ended
September 30,
|
|
Increase
|
|
Nine Months Ended
September 30,
|
|
Increase
|
|
|
2016
|
|
2015
|
|
Days
|
|
%
|
|
2016
|
|
2015
|
|
Days
|
|
%
|
|
Operating days(1)..............
|
|
|
7,451
|
|
|
7,176
|
|
|
275
|
|
|
3.8%
|
|
|
22,091
|
|
|
20,438
|
|
|
1,653
|
|
|
8.1%
|
|
Ownership days(1)............
|
|
|
7,794
|
|
|
7,225
|
|
|
569
|
|
|
7.9%
|
|
|
22,781
|
|
|
20,696
|
|
|
2,085
|
|
|
10.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes Seaspan's vessel utilization by quarter and for the nine months ended September 30, 2016 and 2015:
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Year To Date-
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Vessel Utilization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership Days(1).............
|
|
|
7,375
|
|
|
6,570
|
|
|
7,612
|
|
|
6,901
|
|
|
7,794
|
|
|
7,225
|
|
|
22,781
|
|
|
20,696
|
|
|
Less Off-hire Days:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled 5-Year
Survey...........................
|
|
|
(75)
|
|
|
(49)
|
|
|
(19)
|
|
|
(66)
|
|
|
(25)
|
|
|
(39)
|
|
|
(119)
|
|
|
(154)
|
|
|
Unscheduled Off-hire(2)
|
|
|
(128)
|
|
|
(21)
|
|
|
(125)
|
|
|
(73)
|
|
|
(318)
|
|
|
(10)
|
|
|
(571)
|
|
|
(104)
|
|
|
Operating Days(1).............
|
|
|
7,172
|
|
|
6,500
|
|
|
7,468
|
|
|
6,762
|
|
|
7,451
|
|
|
7,176
|
|
|
22,091
|
|
|
20,438
|
|
|
Vessel Utilization.............
|
|
|
97.2
|
%
|
|
98.9
|
%
|
|
98.1
|
%
|
|
98.0
|
%
|
|
95.6
|
%
|
|
99.3
|
%
|
|
97.0
|
%
|
|
98.8
|
%
|
|
___________________________
|
|
(1)
|
Operating and ownership days include leased vessels and exclude vessels under
bareboat charter.
|
|
(2)
|
Unscheduled off-hire includes days related to vessels off-charter.
|
|
|
The following table summarizes Seaspan's consolidated financial results for the three and nine months ended September 30, 2016 and 2015:
|
Financial Summary
(in millions of US dollars)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue.............................................................
|
|
$
|
224.9
|
|
$
|
212.9
|
|
$
|
664.7
|
|
$
|
600.6
|
|
Ship operating expense......................................
|
|
|
48.6
|
|
|
49.4
|
|
|
145.4
|
|
|
143.3
|
|
Depreciation and amortization expense..............
|
|
|
52.7
|
|
|
51.5
|
|
|
166.1
|
|
|
150.5
|
|
General and administrative expense...................
|
|
|
8.1
|
|
|
7.0
|
|
|
25.0
|
|
|
20.1
|
|
Operating lease expense....................................
|
|
|
23.8
|
|
|
11.2
|
|
|
59.3
|
|
|
25.9
|
|
Interest expense and amortization of deferred
financing fees....................................................
|
|
|
30.0
|
|
|
29.0
|
|
|
90.2
|
|
|
82.2
|
|
Loss on disposal................................................
|
|
|
16.5
|
|
|
-
|
|
|
16.5
|
|
|
-
|
|
Expenses related to customer bankruptcy........
|
|
|
18.9
|
|
|
-
|
|
|
18.9
|
|
|
-
|
|
Vessel impairments............................................
|
|
|
202.8
|
|
|
-
|
|
|
202.8
|
|
|
-
|
|
Change in fair value of financial instruments.....
|
|
|
(0.7)
|
|
|
44.8
|
|
|
75.1
|
|
|
64.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Revenue increased by 5.6% to $224.9 million and 10.7% to $664.7
million for the three and nine months ended September 30, 2016, respectively, over the same
periods in 2015, primarily due to the delivery of newbuilding vessels in 2015 and 2016 and the addition of two leased in vessels in
2016. These increases were partially offset by lower average charter rates for vessels that were on short-term charters, an
increase in unscheduled off-hire, primarily relating to vessels being off-charter, and a reduction in revenue on three 10000 TEU
vessels as Seaspan stopped recognizing revenue on these vessels on September 1, 2016 after Hanjin
declared bankruptcy. Any future revenue relating to these Hanjin charters will be recognized on a cash basis.
The increases in operating days and the related financial impact thereof for the three and nine months ended September 30, 2016, respectively, relative to the same periods in 2015, are attributable to the following:
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
Operating
Days Impact
|
|
$ Impact
(in millions)
|
|
Operating
Days Impact
|
|
$ Impact
(in millions)
|
|
2016 vessel deliveries.............................
|
|
|
387
|
|
|
15.6
|
|
|
632
|
|
|
25.2
|
|
Full period contribution for 2015
vessel deliveries.....................................
|
|
|
227
|
|
|
9.8
|
|
|
1,417
|
|
|
62.5
|
|
Change in daily charter hire rate and
re-charters...............................................
|
|
-
|
|
|
(7.1)
|
|
-
|
|
|
(19.8)
|
|
Additional days due to leap year.............
|
|
|
-
|
|
|
-
|
|
|
81
|
|
|
2.1
|
|
Unscheduled off-hire................................
|
|
|
(308)
|
|
|
(4.9)
|
|
|
(467)
|
|
|
(7.7)
|
|
Scheduled off-hire....................................
|
|
|
14
|
|
|
0.6
|
|
|
35
|
|
|
(1.2)
|
|
Supervision fee revenue..........................
|
|
-
|
|
|
2.6
|
|
-
|
|
|
6.5
|
|
Vessel management revenue..................
|
|
-
|
|
|
0.1
|
|
-
|
|
|
1.1
|
|
Customer bankruptcy..............................
|
|
-
|
|
|
(3.9)
|
|
-
|
|
|
(3.9)
|
|
Vessel disposal.......................................
|
|
|
(45)
|
|
|
(0.7)
|
|
|
(45)
|
|
|
(0.7)
|
|
Other........................................................
|
|
-
|
|
|
(0.1)
|
|
-
|
|
|
0.1
|
|
Total
|
|
|
275
|
|
$
|
12.0
|
|
|
1,653
|
|
$
|
64.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel utilization was 95.6% and 97.0% for the three and nine months ended September 30, 2016,
respectively, compared to 99.3% and 98.8% for the same periods in 2015.
The decrease in vessel utilization for the three and nine months ended September 30, 2016,
compared to the same periods in 2015, was primarily due to increases in unscheduled off-hire of 308 and 467 days, respectively.
Seaspan completed dry-dockings for the following 15 vessels during the three and nine months ended September 30, 2016:
|
Vessel Class (TEU)
|
|
First Quarter
|
|
|
Second Quarter
|
|
|
Third Quarter
|
|
|
Year To Date-
September 30, 2016
|
|
2500..................................
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
3500..................................
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
4250..................................
|
|
2
|
(1)
|
|
1
|
(1)
|
|
1
|
(1)
|
|
4
|
|
4500..................................
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
8500..................................
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
13100................................
|
|
5
|
|
|
2
|
|
|
—
|
|
|
7
|
|
|
9
|
|
|
3
|
|
|
3
|
|
|
15
|
|
_______________________
|
|
(1)
|
Dry-docking for these vessels was completed between their time
charters.
|
|
|
Ship Operating Expense
Ship operating expense decreased by 1.7% to $48.6 million for the three months ended September 30, 2016, compared to the same period in 2015, primarily due to cost management initiatives. This
decrease was achieved while ownership days increased by 7.9% due to the delivery of newbuilding vessels in 2015 and 2016, and the
additional two leased in vessels in 2016. As a result, ship operating expense per ownership day declined by 8.9% for the three
months ended September 30, 2016, compared to the same period in 2015.
Ship operating expense per ownership day declined by 7.8% in the nine months ended September 30,
2016 compared to the same period in 2015. While ship ownership days increased by 10.1% due to the delivery of newbuilding
vessels in 2015 and 2016, ship operating expenses were held to an increase of only 1.5% during the period, primarily due to cost
management initiatives.
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 2.3% to $52.7 million and by 10.4% to
$166.1 million for the three and nine months ended September 30, 2016,
respectively, compared to the same periods in 2015, primarily due to an increase in fleet size from vessels delivered in 2015 and
an increase in dry-dock amortization from an increase in the number of vessels dry-docked. The increases were partially offset by a
reduction in write-offs of replaced vessel equipment.
General and Administrative Expense
General and administrative expense increased by 16.3% to $8.1 million and by 23.9% to $25.0 million for the three and nine months ended September 30, 2016, respectively,
compared to the same periods in 2015. The increases were primarily due to an increase in non-cash stock-based compensation,
professional fees and other corporate expenses incurred.
Operating Lease Expense
Operating lease expense increased to $23.8 million and $59.3 million
for the three and nine months ended September 30, 2016, respectively, from $11.2 million and $25.9 million in the same periods in 2015. The increases were
primarily due to the delivery of four vessels in 2015 and three vessels in 2016 that were financed through sale-leaseback
transactions and due to the two leases entered into with third parties in April and May 2016 for a
10000 TEU vessel, the MOL Beyond and a 14000 TEU vessel, the YM Window, respectively.
Interest Expense and Amortization of Deferred Financing Fees
The following table summarizes Seaspan's borrowings:
|
(in millions of US dollars)
|
|
As at September 30,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Long-term debt, excluding deferred financing
fees......................
|
|
$
|
3,104.4
|
|
$
|
3,347.3
|
|
Other long-term liabilities, excluding deferred
gains, deferred financing fees and other....................................
|
|
|
505.1
|
|
|
348.7
|
|
Total
borrowings...........................................................................
|
|
|
3,609.5
|
|
|
3,696.0
|
|
Less: Vessels under
construction................................................
|
|
|
(300.7)
|
|
|
(154.1)
|
|
Operating
borrowings...................................................................
|
|
$
|
3,308.8
|
|
$
|
3,541.9
|
|
|
|
|
|
|
|
Interest expense and amortization of deferred financing fees increased by $1.0 million to
$30.0 million and by $8.0 million to $90.2
million for the three and nine months ended September 30, 2016, respectively, compared to the
same periods in 2015. The increases in interest expense were due to an increase in operating borrowings primarily related to
certain vessels that delivered in 2015 and an increase in LIBOR, partially offset by repayments made on existing operating
borrowings and lower amortization of deferred financing fees. For the nine months ended September 30,
2016, the increase was also due to the full period impact of three 4500 TEU vessels which were refinanced in March 2015.
Loss on Disposal
Loss on disposal was $16.5 million for the three and nine months ended September 30, 2016 due to the sale of the Seaspan Excellence to a ship recycler for net sale proceeds of
approximately $5.8 million.
Expenses Related to Customer Bankruptcy
Expenses related to customer bankruptcy were $18.9 million for the three and nine months ended
September 30, 2016 due to the recognition of a full reserve for past due accounts receivable as a
result of the Hanjin Proceeding.
Vessel Impairments
During the quarter ended September 30, 2016, Seaspan recognized non-cash vessel impairments of
$202.8 million related to ten vessels under 5000 TEU in size. Seaspan reviews its vessels for
impairment whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable.
Seaspan performed an impairment test of its vessels at September 30, 2016 due to the continued
weakness in current market rates and declines in the vessels' market values. Including the $202.8
million non-cash impairment charge Seaspan recognized during the quarter ended September 30,
2016, the aggregate non-cash impairment charge for fiscal 2016 is expected to be in the range of $260.0 million to $290.0 million.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a gain of $0.7 million and a loss of
$75.1 million for the three and nine months ended September 30, 2016,
respectively, compared to losses of $44.8 million and $64.6 million for
the same periods in 2015. The gain of $0.7 million for the three months ended September 30, 2016 was primarily due to increases in the forward LIBOR curve, offset by swap settlements. The
loss of $75.1 million for the nine months ended September 30, 2016 was
primarily due to decreases in the forward LIBOR curve and the effect of the passage of time.
About Seaspan
Seaspan provides many of the world's major shipping lines with creative outsourcing alternatives to vessel ownership by offering
long-term leases on large, modern containerships combined with industry-leading ship management services. Seaspan's managed fleet
consists of 113 containerships representing a total capacity of over 915,000 TEU, including 12 newbuilding containerships on order
scheduled for delivery to Seaspan and third parties by the end of 2017. Seaspan's current operating fleet of 87 vessels has an
average age of approximately six years and an average remaining lease period of approximately five years, on a TEU weighted
basis.
Seaspan has the following securities listed on The New York Stock Exchange:
|
Symbol:
|
|
|
|
Description:
|
|
|
|
|
|
|
SSW
|
|
|
|
Class A common shares
|
|
SSW PR D
|
|
|
|
Series D preferred shares
|
|
SSW PR E
|
|
|
|
Series E preferred shares
|
|
SSW PR G
|
|
|
|
Series G preferred shares
|
|
SSW PR H
|
|
|
|
Series H preferred shares
|
|
SSWN
|
|
|
|
6.375% senior unsecured notes due 2019
|
|
|
|
|
|
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for investors and analysts to discuss its results for the three and
nine months ended September 30, 2016 on November 1, 2016 at
6:30 a.m. PT / 9:30 a.m. ET. Participants should call 1-877-246-9875
(US/Canada) or 1-707-287-9353 (International) and request the Seaspan call. A telephonic replay
will be available for anyone unable to participate in the live call. To access the replay, call 1-855-859-2056 or 1-404-537-3406
and enter the replay passcode: 4748443. The recording will be available from November 1, 2016 at
9:30 a.m. PT / 12:30 p.m. ET through 8:59 p.m.
PT / 11:59 p.m. ET on November 15, 2016. The conference call
will also be broadcast live over the Internet and will include a slide presentation. To access the live webcast of the conference
call, go to www.seaspancorp.com and click on "News & Events" then
"Events & Presentations" for the link. The webcast will be archived on the site for one year.
|
SEASPAN CORPORATION
|
|
UNAUDITED CONSOLIDATED BALANCE SHEET
|
|
AS OF SEPTEMBER 30, 2016
|
|
(IN THOUSANDS OF US DOLLARS)
|
|
|
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents...............................................
|
|
$
|
538,476
|
|
$
|
215,520
|
|
Short-term
investments......................................................
|
|
|
2,341
|
|
|
3,415
|
|
Accounts
receivable..........................................................
|
|
|
27,143
|
|
|
24,065
|
|
Loans to
affiliate................................................................
|
|
|
75,041
|
|
|
219,649
|
|
Prepaid
expenses..............................................................
|
|
|
39,021
|
|
|
39,731
|
|
Gross investment in lease.................................................
|
|
|
21,891
|
|
|
37,783
|
|
Fair value of financial
instruments.....................................
|
|
|
11,451
|
|
|
—
|
|
|
|
715,364
|
|
|
540,163
|
|
|
|
|
|
|
|
|
Vessels...................................................................................
|
|
|
4,712,510
|
|
|
5,069,229
|
|
Vessels under
construction....................................................
|
|
|
300,679
|
|
|
209,119
|
|
Deferred
charges.....................................................................
|
|
|
71,898
|
|
|
57,299
|
|
Goodwill...................................................................................
|
|
|
75,321
|
|
|
75,321
|
|
Other
assets.............................................................................
|
|
|
114,970
|
|
|
89,056
|
|
Fair value of financial
instruments...........................................
|
|
|
—
|
|
|
33,632
|
|
|
$
|
5,990,742
|
|
$
|
6,073,819
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities...........................
|
|
$
|
74,024
|
|
$
|
76,386
|
|
Current portion of deferred
revenue...................................
|
|
|
28,184
|
|
|
22,199
|
|
Current portion of long-term
debt........................................
|
|
|
428,245
|
|
|
285,783
|
|
Current portion of other long-term
liabilities..........................
|
|
|
46,834
|
|
|
38,173
|
|
Fair value of financial
instruments........................................
|
|
|
28,754
|
|
|
1,260
|
|
|
|
606,041
|
|
|
423,801
|
|
|
|
|
|
|
|
|
Deferred
revenue.......................................................................
|
|
|
1,918
|
|
|
2,730
|
|
Long-term
debt...........................................................................
|
|
|
2,653,745
|
|
|
3,072,058
|
|
Other long-term
liabilities............................................................
|
|
|
662,823
|
|
|
462,161
|
|
Fair value of financial
instruments.............................................
|
|
|
269,024
|
|
|
336,886
|
|
|
|
4,193,551
|
|
|
4,297,636
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Share
capital........................................................................
|
|
|
1,384
|
|
|
1,223
|
|
Treasury
shares..................................................................
|
|
|
(367)
|
|
|
(356)
|
|
Additional paid in
capital......................................................
|
|
|
2,577,357
|
|
|
2,266,661
|
|
Deficit..................................................................................
|
|
|
(753,785)
|
|
|
(460,425)
|
|
Accumulated other comprehensive loss............................
|
|
|
(27,398)
|
|
|
(30,920)
|
|
|
|
1,797,191
|
|
|
1,776,183
|
|
|
$
|
5,990,742
|
|
$
|
6,073,819
|
|
|
|
|
|
|
|
|
SEASPAN CORPORATION
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
|
|
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue..........................................................................
|
|
$
|
224,875
|
|
$
|
212,861
|
|
$
|
664,712
|
|
$
|
600,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ship
operating.........................................................
|
|
|
48,590
|
|
|
49,429
|
|
|
145,430
|
|
|
143,295
|
|
Cost of services, supervision fees.........................
|
|
|
2,600
|
|
—
|
|
|
7,800
|
|
|
1,300
|
|
Depreciation and amortization.................................
|
|
|
52,701
|
|
|
51,528
|
|
|
166,053
|
|
|
150,478
|
|
General and administrative......................................
|
|
|
8,094
|
|
|
6,959
|
|
|
24,951
|
|
|
20,141
|
|
Operating
leases......................................................
|
|
|
23,817
|
|
|
11,155
|
|
|
59,330
|
|
|
25,889
|
|
Loss on
disposal......................................................
|
|
|
16,487
|
|
—
|
|
|
16,487
|
|
—
|
|
Expenses related to customer bankruptcy..............
|
|
|
18,883
|
|
—
|
|
|
18,883
|
|
—
|
|
Vessel
impairments..................................................
|
|
|
202,775
|
|
—
|
|
|
202,775
|
|
—
|
|
|
|
373,947
|
|
|
119,071
|
|
|
641,709
|
|
|
341,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
(loss)...............................................
|
|
|
(149,072)
|
|
|
93,790
|
|
|
23,003
|
|
|
259,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of deferred
financing fees...........................................................
|
|
|
29,952
|
|
|
28,950
|
|
|
90,190
|
|
|
82,207
|
|
Interest
income..........................................................
|
|
|
(1,231)
|
|
|
(1,611)
|
|
|
(7,076)
|
|
|
(8,270)
|
|
Undrawn credit facility fees......................................
|
|
|
810
|
|
|
758
|
|
|
1,963
|
|
|
2,465
|
|
Refinancing
expenses...............................................
|
|
|
1,190
|
|
|
1,616
|
|
|
1,962
|
|
|
3,920
|
|
Change in fair value of financial instruments............
|
|
|
(684)
|
|
|
44,774
|
|
|
75,081
|
|
|
64,629
|
|
Equity loss (income) on investment...........................
|
|
|
4,562
|
|
|
(1,683)
|
|
|
594
|
|
|
(3,017)
|
|
Other expenses (income).........................................
|
|
|
363
|
|
|
496
|
|
|
770
|
|
|
(5,656)
|
|
|
|
34,962
|
|
|
73,300
|
|
|
163,484
|
|
|
136,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)......................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit, beginning of
period..............................................
|
|
|
(521,404)
|
|
|
(454,078)
|
|
|
(460,425)
|
|
|
(459,161)
|
|
Dividends - common
shares............................................
|
|
|
(39,532)
|
|
|
(37,183)
|
|
|
(113,287)
|
|
|
(107,284)
|
|
Dividends - preferred shares..........................................
|
|
|
(8,370)
|
|
|
(13,435)
|
|
|
(38,523)
|
|
|
(40,305)
|
|
Amortization of Series C issuance costs........................
|
|
|
—
|
|
|
(333)
|
|
|
(116)
|
|
|
(968)
|
|
Other................................................................................
|
|
|
(445)
|
|
|
(22)
|
|
|
(953)
|
|
|
(22)
|
|
Deficit, end of period.......................................................
|
|
$
|
(753,785)
|
|
$
|
(484,561)
|
|
$
|
(753,785)
|
|
$
|
(484,561)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares, basic..................
|
|
|
106,000
|
|
99,769
|
|
|
101,763
|
|
98,998
|
|
Weighted average number of shares, diluted................
|
|
|
106,046
|
|
99,828
|
|
|
101,836
|
|
99,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share, basic and diluted.................
|
|
$
|
(1.86)
|
|
$
|
0.07
|
|
$
|
(1.77)
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEASPAN CORPORATION
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
|
|
(IN THOUSANDS OF US DOLLARS)
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)....................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified to net earnings (loss)
during the period relating to cash
flow hedging instruments.....................................
|
|
|
1,414
|
|
|
1,045
|
|
|
3,522
|
|
|
3,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)..............................
|
|
$
|
(182,620)
|
|
$
|
21,535
|
|
$
|
(136,959)
|
|
$
|
126,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEASPAN CORPORATION
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
|
|
(IN THOUSANDS OF US DOLLARS)
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Cash from (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss).........................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
Items not involving cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization..................................
|
|
|
52,701
|
|
|
51,528
|
|
|
166,053
|
|
|
150,478
|
|
|
Share-based compensation.....................................
|
|
|
1,986
|
|
|
947
|
|
|
4,404
|
|
|
2,961
|
|
|
Amortization of deferred financing fees...................
|
|
|
3,385
|
|
|
3,799
|
|
|
9,751
|
|
|
10,390
|
|
|
Amounts reclassified from other comprehensive
loss to interest expense...........................................
|
|
|
1,166
|
|
|
786
|
|
|
2,761
|
|
|
2,503
|
|
|
Unrealized change in fair value of financial
instruments...............................................................
|
|
|
(20,921)
|
|
|
17,017
|
|
|
9,429
|
|
|
(18,390)
|
|
|
Refinancing expenses.............................................
|
|
|
905
|
|
|
1,616
|
|
|
1,677
|
|
|
3,920
|
|
|
Equity loss (income) on investment.........................
|
|
|
4,562
|
|
|
(1,683)
|
|
|
594
|
|
|
(3,017)
|
|
|
Operating
leases.....................................................
|
|
|
(5,472)
|
|
|
(2,733)
|
|
|
(13,788)
|
|
|
(6,086)
|
|
|
Vessel
impairments.................................................
|
|
|
202,775
|
|
—
|
|
|
202,775
|
|
—
|
|
|
Expenses related to customer bankruptcy.............
|
|
|
18,883
|
|
—
|
|
|
18,883
|
|
—
|
|
|
Loss on
disposal.....................................................
|
|
|
16,487
|
|
—
|
|
|
16,487
|
|
—
|
|
|
Other
income...........................................................
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(6,600)
|
|
|
Other.......................................................................
|
|
|
7
|
|
|
1,771
|
|
|
51
|
|
|
6,145
|
|
Changes in assets and
liabilities...........................................
|
|
|
(25,514)
|
|
|
(10,665)
|
|
|
(46,094)
|
|
|
(26,247)
|
|
Cash from operating
activities..............................................
|
|
|
66,916
|
|
|
82,873
|
|
|
232,502
|
|
|
239,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued, net of issuance costs......
|
|
|
—
|
|
|
—
|
|
|
96,034
|
|
|
—
|
|
|
Preferred shares issued, net of issuance costs.....
|
|
|
294,073
|
|
—
|
|
|
541,736
|
|
—
|
|
|
Draws on credit
facilities.........................................
|
|
|
—
|
|
|
142,500
|
|
|
220,485
|
|
|
338,075
|
|
|
Repayment of credit facilities...................................
|
|
|
(212,144)
|
|
|
(145,972)
|
|
|
(503,260)
|
|
|
(450,825)
|
|
|
Draws on other long-term liabilities..........................
|
|
|
99,600
|
|
—
|
|
|
180,750
|
|
|
150,000
|
|
|
Repayment of other long-term liabilities....................
|
|
|
(6,225)
|
|
|
(5,869)
|
|
|
(18,408)
|
|
|
(15,723)
|
|
|
Common shares repurchased, including related
expenses..................................................................
|
|
|
—
|
|
|
—
|
|
|
(8,269)
|
|
—
|
|
|
Preferred shares redeemed, including related
expenses..................................................................
|
|
|
(13)
|
|
|
—
|
|
|
(333,074)
|
|
—
|
|
|
Preferred shares repurchased................................
|
|
|
—
|
|
|
(1,020)
|
|
|
—
|
|
|
(1,020)
|
|
|
Financing
fees..........................................................
|
|
|
(1,550)
|
|
|
(2,607)
|
|
|
(12,568)
|
|
|
(15,025)
|
|
|
Dividends on common shares..................................
|
|
|
(38,284)
|
|
|
(36,105)
|
|
|
(109,347)
|
|
|
(69,533)
|
|
|
Dividends on preferred shares...............................
|
|
|
(8,371)
|
|
|
(13,435)
|
|
|
(38,524)
|
|
|
(40,305)
|
|
|
Proceeds from sale-leaseback of vessels..............
|
|
|
100,000
|
|
|
144,000
|
|
|
354,000
|
|
|
398,000
|
|
Cash from financing
activities................................................
|
|
|
227,086
|
|
|
81,492
|
|
|
369,555
|
|
|
293,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for vessels........................................
|
|
|
(106,755)
|
|
|
(148,297)
|
|
|
(322,291)
|
|
|
(540,626)
|
|
|
Short-term investments...........................................
|
|
|
24
|
|
|
9,549
|
|
|
1,074
|
|
|
(2,274)
|
|
|
Net proceeds from vessel disposal........................
|
|
|
5,843
|
|
—
|
|
|
5,843
|
|
—
|
|
|
Loans to
affiliate.....................................................
|
|
|
(978)
|
|
|
(48,771)
|
|
|
(17,198)
|
|
|
(134,232)
|
|
|
Repayment of loans to affiliate...............................
|
|
|
—
|
|
|
9,127
|
|
|
54,306
|
|
|
192,574
|
|
|
Other
assets..........................................................
|
|
|
(317)
|
|
|
(510)
|
|
|
(634)
|
|
|
(417)
|
|
|
Restricted
cash......................................................
|
|
|
—
|
|
—
|
|
|
(201)
|
|
—
|
|
Cash used in investing
activities..........................................
|
|
|
(102,183)
|
|
|
(178,902)
|
|
|
(279,101)
|
|
|
(484,975)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents............
|
|
|
191,819
|
|
|
(14,537)
|
|
|
322,956
|
|
|
47,905
|
|
Cash and cash equivalents, beginning of period.................
|
|
|
346,657
|
|
|
264,197
|
|
|
215,520
|
|
|
201,755
|
|
Cash and cash equivalents, end of period..........................
|
|
$
|
538,476
|
|
$
|
249,660
|
|
$
|
538,476
|
|
$
|
249,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEASPAN CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(IN THOUSANDS OF US DOLLARS)
Description of Non-GAAP Financial Measures
A. Cash Available for Distribution to Common Shareholders
Cash available for distribution to common shareholders is defined as net earnings (loss) adjusted for depreciation and
amortization, interest expense and amortization of deferred financing fees, refinancing expenses, share-based compensation, change
in fair value of financial instruments, bareboat charter adjustment, gain on sales, loss on disposal, expenses related to customer
bankruptcy, adjustments to equity loss (income) on investment, vessel impairments, amortization of deferred gain, foreign exchange
gain, dry-dock reserve adjustment, cash dividends paid on preferred shares, interest expense at the hedged rate and certain other
items that Seaspan believes are not representative of its operating performance.
Cash available for distribution to common shareholders is a non-GAAP measure used to assist in evaluating Seaspan's ability to
make quarterly cash dividends before reserves for replacement capital expenditures. Cash available for distribution to common
shareholders is not defined by United States generally accepted accounting principles ("GAAP") and
should not be considered as an alternative to net earnings or any other indicator of Seaspan's performance required to be reported
by GAAP.
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)........................................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization.................................................
|
|
|
52,701
|
|
|
51,528
|
|
|
166,053
|
|
|
150,478
|
|
Interest expense and amortization of deferred
financing
fees..........................................................................
|
|
|
29,952
|
|
|
28,950
|
|
|
90,190
|
|
|
82,207
|
|
Refinancing
expenses.............................................................
|
|
|
905
|
|
|
1,616
|
|
|
1,677
|
|
|
3,920
|
|
Share-based
compensation.....................................................
|
|
|
1,986
|
|
|
947
|
|
|
4,404
|
|
|
2,961
|
|
Change in fair value of financial
instruments(1).......................
|
|
|
(563)
|
|
|
44,342
|
|
|
74,794
|
|
|
63,720
|
|
Bareboat charter adjustment,
net(2)........................................
|
|
|
4,971
|
|
|
4,691
|
|
|
14,579
|
|
|
13,693
|
|
Gain on
sales(3).......................................................................
|
|
|
3,720
|
|
|
34,485
|
|
|
52,235
|
|
|
84,687
|
|
Loss on
disposal(4)..................................................................
|
|
|
16,487
|
|
|
—
|
|
|
16,487
|
|
|
—
|
|
Expenses related to customer
bankruptcy(5)..........................
|
|
|
18,883
|
|
|
—
|
|
|
18,883
|
|
|
—
|
|
Adjustments to equity loss (income) on
investment(6).............
|
|
|
5,880
|
|
|
—
|
|
|
5,880
|
|
|
—
|
|
Vessel
impairments(7)..............................................................
|
|
|
202,775
|
|
|
—
|
|
|
202,775
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred
gain(8)..............................................
|
|
|
(4,888)
|
|
|
(2,733)
|
|
|
(13,204)
|
|
|
(6,086)
|
|
Foreign exchange
gain(9).........................................................
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,600)
|
|
Dry-dock reserve
adjustment...................................................
|
|
|
(6,381)
|
|
|
(4,339)
|
|
|
(17,362)
|
|
|
(12,321)
|
|
Cash dividends paid on preferred shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
C.....................................................................................
|
|
|
—
|
|
|
(8,114)
|
|
|
(19,665)
|
|
|
(24,342)
|
|
Series
D.....................................................................................
|
|
|
(2,475)
|
|
|
(2,537)
|
|
|
(7,425)
|
|
|
(7,611)
|
|
Series
E......................................................................................
|
|
|
(2,770)
|
|
|
(2,784)
|
|
|
(8,308)
|
|
|
(8,352)
|
|
Series
F......................................................................................
|
|
|
(1,973)
|
|
|
—
|
|
|
(1,973)
|
|
|
—
|
|
Series
G......................................................................................
|
|
|
(1,153)
|
|
|
—
|
|
|
(1,153)
|
|
|
—
|
|
Net cash flows before interest
payments.........................................
|
|
|
134,023
|
|
|
166,542
|
|
|
438,386
|
|
|
459,533
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense at the hedged
rate(10)......................................
|
|
|
(43,623)
|
|
|
(48,994)
|
|
|
(136,236)
|
|
|
(142,395)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash available for distribution to common shareholders.....
|
|
$
|
90,400
|
|
$
|
117,548
|
|
$
|
302,150
|
|
$
|
317,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Normalized Net Earnings and Normalized Earnings per Share
Normalized net earnings is defined as net earnings (loss) adjusted for interest expense, excluding amortization of deferred
financing fees, refinancing expenses, loss on disposal, expenses related to customer bankruptcy, adjustments to equity loss
(income) on investment, vessel impairments, foreign exchange gain, change in fair value of financial instruments, interest expense
at the hedged rate, write-off of vessel equipment and certain other items Seaspan believes affect the comparability of operating
results. Normalized net earnings is a useful measure because it excludes those items that Seaspan believes are not representative
of its operating performance.
Normalized net earnings and normalized earnings per share are not defined by GAAP and should not be considered as an alternative
to net earnings, earnings per share or any other indicator of Seaspan's performance required to be reported by GAAP.
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss).......................................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
Adjust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, excluding amortization of deferred
financing fees........................................................................
|
|
|
26,567
|
|
|
25,151
|
|
|
80,439
|
|
|
71,817
|
|
Refinancing
expenses...........................................................
|
|
|
1,190
|
|
|
1,616
|
|
|
1,962
|
|
|
3,920
|
|
Loss on
disposal(4)................................................................
|
|
|
16,487
|
|
|
—
|
|
|
16,487
|
|
|
—
|
|
Expenses related to customer
bankruptcy(5).........................
|
|
|
18,883
|
|
|
—
|
|
|
18,883
|
|
|
—
|
|
Adjustments to equity loss (income) on
investment(6)...........
|
|
|
5,880
|
|
|
—
|
|
|
5,880
|
|
|
—
|
|
Vessel
impairments(7)............................................................
|
|
|
202,775
|
|
|
—
|
|
|
202,775
|
|
|
—
|
|
Foreign exchange
gain(9).......................................................
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,600)
|
|
Change in fair value of financial
instruments(1)......................
|
|
|
(563)
|
|
|
44,342
|
|
|
74,794
|
|
|
63,720
|
|
Interest expense at the hedged
rate(10).................................
|
|
|
(43,623)
|
|
|
(48,994)
|
|
|
(136,236)
|
|
|
(142,395)
|
|
Write-off of vessel
equipment(11)...........................................
|
|
|
—
|
|
|
759
|
|
|
9,040
|
|
|
3,242
|
|
Normalized net
earnings..........................................................
|
|
$
|
43,562
|
|
$
|
43,364
|
|
$
|
133,543
|
|
$
|
116,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: preferred share dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C (including amortization of issuance costs)...............
|
|
|
—
|
|
|
8,444
|
|
|
14,420
|
|
|
25,307
|
|
Series
D...................................................................................
|
|
|
2,475
|
|
|
2,537
|
|
|
7,425
|
|
|
7,611
|
|
Series
E...................................................................................
|
|
|
2,769
|
|
|
2,784
|
|
|
8,307
|
|
|
8,352
|
|
Series
F...................................................................................
|
|
|
2,433
|
|
|
—
|
|
|
3,622
|
|
|
—
|
|
Series
G..................................................................................
|
|
|
3,014
|
|
|
—
|
|
|
3,407
|
|
|
—
|
|
Series
H...................................................................................
|
|
|
2,412
|
|
|
—
|
|
|
2,412
|
|
|
—
|
|
|
|
13,103
|
|
|
13,765
|
|
|
39,593
|
|
|
41,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized net earnings attributable to common
shareholders..............................................................................
|
|
$
|
30,459
|
|
$
|
29,599
|
|
$
|
93,950
|
|
$
|
75,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to compute
earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported,
basic...........................................................................
|
|
|
106,000
|
|
|
99,769
|
|
|
101,763
|
|
|
98,998
|
|
Share-based compensation....................................................
|
|
|
46
|
|
|
59
|
|
|
73
|
|
|
57
|
|
Reported and normalized,
diluted(12).....................................
|
|
|
106,046
|
|
|
99,828
|
|
|
101,836
|
|
|
99,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported, basic and
diluted..............................................
|
|
$
|
(1.86)
|
|
$
|
0.07
|
|
$
|
(1.77)
|
|
$
|
0.83
|
|
Normalized,
diluted(13)........................................................
|
|
$
|
0.29
|
|
$
|
0.30
|
|
$
|
0.92
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Adjusted EBITDA
Adjusted EBITDA is defined as net earnings (loss) adjusted for interest expense and amortization of deferred financing fees,
interest income, undrawn credit facility fees, depreciation and amortization, refinancing expenses, share-based compensation, gain
on sales, loss on disposal, expenses related to customer bankruptcy, adjustments to equity loss (income) on investment, vessel
impairments, amortization of deferred gain, foreign exchange gain, bareboat charter adjustment, change in fair value of financial
instruments and certain other items that Seaspan believes are not representative of its operating performance.
Adjusted EBITDA provides useful information to investors in assessing Seaspan's results of operations. Seaspan believes that
this measure is useful in assessing performance and highlighting trends on an overall basis. Seaspan also believes that this
measure can be useful in comparing its results with those of other companies, even though other companies may not calculate this
measure in the same way as Seaspan. The GAAP measure most directly comparable to Adjusted EBITDA is net earnings. Adjusted EBITDA
is not defined by GAAP and should not be considered as an alternative to net earnings or any other indicator of Seaspan's
performance required to be reported by GAAP.
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss).................................................................
|
|
$
|
(184,034)
|
|
$
|
20,490
|
|
$
|
(140,481)
|
|
$
|
123,179
|
|
Adjust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and amortization of deferred
financing fees..................................................................
|
|
|
29,952
|
|
|
28,950
|
|
|
90,190
|
|
|
82,207
|
|
Interest
income.................................................................
|
|
|
(1,231)
|
|
|
(1,611)
|
|
|
(7,076)
|
|
|
(8,270)
|
|
Undrawn credit facility
fees.............................................
|
|
|
810
|
|
|
758
|
|
|
1,963
|
|
|
2,465
|
|
Depreciation and
amortization...........................................
|
|
|
52,701
|
|
|
51,528
|
|
|
166,053
|
|
|
150,478
|
|
Refinancing
expenses.......................................................
|
|
|
905
|
|
|
1,616
|
|
|
1,677
|
|
|
3,920
|
|
Share-based
compensation...............................................
|
|
|
1,986
|
|
|
947
|
|
|
4,404
|
|
|
2,961
|
|
Gain on
sales(3)..................................................................
|
|
|
3,720
|
|
|
34,485
|
|
|
52,235
|
|
|
84,687
|
|
Loss on
disposal(4)............................................................
|
|
|
16,487
|
|
|
—
|
|
|
16,487
|
|
|
—
|
|
Expenses related to customer
bankruptcy(5).....................
|
|
|
18,883
|
|
|
—
|
|
|
18,883
|
|
|
—
|
|
Adjustments to equity loss (income) on
investment(6).......
|
|
|
5,880
|
|
|
—
|
|
|
5,880
|
|
|
—
|
|
Vessel
impairments(7)........................................................
|
|
|
202,775
|
|
|
—
|
|
|
202,775
|
|
|
—
|
|
Amortization of deferred
gain(8)........................................
|
|
|
(4,888)
|
|
|
(2,733)
|
|
|
(13,204)
|
|
|
(6,086)
|
|
Foreign exchange
gain(9)..................................................
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,600)
|
|
Bareboat charter adjustment,
net(2)..................................
|
|
|
4,971
|
|
|
4,691
|
|
|
14,579
|
|
|
13,693
|
|
Change in fair value of financial
instruments(1)................
|
|
|
(563)
|
|
|
44,342
|
|
|
74,794
|
|
|
63,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA...................................................................
|
|
$
|
148,354
|
|
$
|
183,463
|
|
$
|
489,159
|
|
$
|
506,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Non-GAAP Financial Measures
(1) Change in fair value of financial instruments includes realized and unrealized losses (gains) on
Seaspan's interest rate swaps, unrealized losses (gains) on Seaspan's foreign currency forward contracts and unrealized losses
(gains) on interest rate swaps included in equity loss (income) on investment.
(2) In the second half of 2011, Seaspan entered into agreements to bareboat charter four 4800 TEU vessels
to MSC for a five-year term, beginning from vessel delivery dates that occurred in 2011. Upon delivery of the vessels to MSC, the
transactions were accounted for as sales-type leases. The vessels were disposed of and a gross investment in lease was recorded,
which is being amortized to income through revenue. The bareboat charter adjustment in the applicable non-GAAP measures is included
to reverse the GAAP accounting treatment and reflect the transaction as if the vessels had not been disposed of. Therefore, the
bareboat charter fees are added back and the interest income from leasing, which is recorded in revenue, is deducted resulting in a
net bareboat charter adjustment.
(3) During the three months ended September 30, 2016, the gain on sale
relates to the proceeds received in excess of vessel cost upon the sale of one 10000 TEU vessel that was sold and leased back
through a sale-leaseback transaction. During the nine months ended September 30, 2016, the gain on
sales relates to the proceeds received in excess of vessel cost upon the sale of two 10000 TEU vessels and one 14000 TEU vessel
that were sold and leased back through sale-leaseback transactions. Under these transactions, Seaspan sold the vessels to the SPCs
and is leasing the vessels back. For accounting purposes, the gain is deferred and amortized as a reduction of operating lease
expense over the term of the lease.
(4) The loss on disposal relates to the sale of one 4600 TEU vessel to a ship recycler for net sale proceeds of
approximately $5.8 million.
(5) Expenses related to customer bankruptcy relates to reserves made on past due accounts receivables from
Hanjin. Of the $18.9 million, a majority relates to amounts recognized prior to July 2016 and the remainder relates to amounts recognized in July and August 2016.
As of September 1, 2016, after Hanjin declared bankruptcy, no revenue was recognized on the Hanjin
charters.
(6) Adjustments to equity loss (income) on investment excludes Seaspan's proportionate interest in the
impact of the sale of GCI's two 4600 TEU vessels and the reserves for past due accounts receivables relating to GCI's four 10000
TEU vessels previously chartered to Hanjin.
(7) During the three and nine months ended September 30, 2016, Seaspan
recognized vessel impairments of $202.8 million related to ten vessels less than 5000 TEU in size
held for use.
(8) As of September 30, 2016, ten vessels have been sold and leased back by
Seaspan. For GAAP accounting purposes, the gain on sales was deferred and is being amortized as a reduction of operating lease
expense over the term of the lease.
(9) Seaspan entered into contracts for the construction of five 14000 TEU newbuilding containerships. The
contracts included a foreign exchange adjustment to adjust the US dollar denominated purchase price of the vessels. In connection
with the allocation of two of the vessels to GCI, Seaspan recognized a foreign exchange gain of $6.6
million which has been included in other income.
(10) Interest expense at the hedged rate is calculated as the interest incurred on operating debt at
the fixed rate on the related interest rate swaps plus the applicable margin on the related variable rate credit facilities and
leases, on an accrual basis. Interest expense on fixed rate borrowings is calculated using the effective interest rate.
(11) Commencing in May 2015, Seaspan installed upgrades on certain of its
vessels to enhance fuel efficiency. As a result, Seaspan incurred non-cash write-offs related to the original vessel equipment of
nil and $9.0 million for the three and nine months ended September 30,
2016. These write-offs are included in depreciation and amortization expense. The costs of the vessel upgrades are
recoverable from the charterer.
(12) The convertible Series F preferred shares are not included in the computation of diluted EPS because
their effect is anti-dilutive for the period.
(13) The changes in normalized earnings per share for the three and nine months ended September 30, 2016 as detailed in the table below:
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
|
|
|
|
|
Normalized earnings per share, diluted- September 30, 2015....
|
|
$
|
0.30
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
Excluding share count changes:
|
|
|
|
|
|
|
|
Increase in normalized
earnings(a).....................................................
|
|
|
—
|
|
|
0.17
|
|
Increase from impact of preferred
shares.........................................
|
|
|
0.01
|
|
|
0.02
|
|
|
|
|
|
|
|
|
Share count changes:
|
|
|
|
|
|
|
|
Increase in diluted share count (from 99,828 shares to
106,046 shares and from 99,055 to 101,836 for the three and
nine months ended,
respectively).......................................................
|
|
|
(0.02)
|
|
|
(0.03)
|
|
|
|
|
|
|
|
|
Normalized earnings per share, diluted- September 30,
2016......
|
|
$
|
0.29
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
_____________________________________
|
|
(a)
|
The change in normalized earnings for the three months ended September 30,
2016 is primarily due to increases in operating lease expense of $12.7 million, depreciation and amortization expense of
$1.9 million and general and administrative expense of $1.1 million over the same period in 2015. The decreases to
normalized earnings were offset by an increase in revenue of $12.0 million and a decrease in interest at the hedged rate of
$5.4 million.
|
|
|
|
The increase in normalized earnings for the nine months ended September 30,
2016 is primarily due to an increase in revenue of $64.2 million and a decrease in interest at the hedged rate of $6.2
million over the same period in 2015. These increases to normalized earnings were partially offset by increases in
operating lease expense of $33.4 million, depreciation and amortization expense of $9.8 million, general and administrative
expense of $4.8 million and ship operating expense of $2.1 million over the same period in 2015. Please read "Results for
the Three and Nine Months Ended September 30, 2016" for a description of these changes.
|
|
|
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements (as such term is 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, in
particular, statements regarding: future operating results; time charters; ship operating expense; vessel dry-docking schedules;
future contracted revenues; Seaspan's access to capital and financial strength and flexibility; Seaspan's ability to take advantage
of opportunities in a challenging industry period; vessel deliveries and dividends, including the amount and timing of payment
thereof for 2016. Although these statements are based upon assumptions Seaspan believes to be reasonable, they are subject to risks
and uncertainties. These risks and uncertainties include, but are not limited to: the availability to Seaspan of containership
acquisition or construction opportunities; the availability and cost to Seaspan of financing to pursue growth opportunities; the
number of additional vessels managed by the Manager in the future; the availability of crew, number of off-hire days and
dry-docking requirements, general market conditions and shipping market trends, including chartering rates; increased operating
expenses; the number of off-hire days; dry-docking requirements; Seaspan's ability to borrow funds under its credit facilities and
to obtain additional financing in the future; Seaspan's future cash flows and its ability to make dividend and other payments; the
time that it may take to construct new ships; Seaspan's continued ability to enter into primarily long-term, fixed-rate time
charters with customers; changes in governmental rules and regulations or actions taken by regulatory authorities; the financial
condition of shipyards, charterers, customers, lenders, refund guarantors and other counterparties and their ability to perform
their obligations under their agreements with Seaspan; the potential for early termination of long-term contracts and Seaspan's
potential inability to enter into, renew or replace long-term contracts; conditions in the public capital markets and the price of
Seaspan's shares; the declaration of dividends and related payment dates by Seaspan's board of directors; and other factors
detailed from time-to-time in Seaspan's periodic reports and filings with the Securities and Exchange Commission, including
Seaspan's Annual Report on Form 20-F for the year ended December 31, 2015. Seaspan expressly
disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new
information, a change in Seaspan's views or expectations, or otherwise.
For Investor Relations Inquiries:
Mr. David Spivak
Chief Financial Officer
Seaspan Corporation
Tel. 604-638-2580
Mr. Michael Sieffert
Associate Director, Corporate Finance
Seaspan Corporation
Tel. 778-328-6490
For Media Inquiries:
Mr. Leon Berman
The IGB Group
Tel. 212-477-8438
SOURCE Seaspan Corporation
