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