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 adjusted for depreciation and amortization, interest expense, amortization of deferred charges, non-cash share-based compensation, change in fair value of financial instruments, bareboat charter adjustment, organizational development costs, amounts paid for dry-docking, cash dividends paid on preferred shares, losses (gains) on vessels, 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.
Quarter Ended Year Ended December 31, December 31, ----------------------- ----------------------- 2012 2011 2012 2011 ----------- ----------- ----------- -----------Net earnings (loss) $ 58,983 $ 23,517 $ 121,305 $ (83,400)Add: Depreciation and amortization 42,799 38,154 165,541 140,354 Interest expense 17,333 16,048 71,996 50,849 Amortization of deferred charges 2,931 853 8,574 3,421 Share-based compensation 1,349 1,012 4,779 3,278 Change in fair value of financial instruments 3,391 27,502 135,998 281,027 Bareboat charter adjustment, net (1) 2,446 1,490 9,472 1,490 Organizational development costs (2) 441 3,000 1,600 3,000Less: Amounts paid for dry-dock adjustment (2,311) (3,085) (9,265) (9,384) Series B preferred share dividends paid (3) - - - (972) Series C preferred share dividends paid and accumulated(3) (8,312) (8,313) (33,250) (27,668) Loss (gain) on vessels(4) - 7,347 (9,773) 16,237 ----------- ----------- ----------- -----------Net cash flows before interest payments 119,050 107,525 466,977 378,232Less:Interest expense at the hedged rate(5) (48,070) (41,961) (184,433) (144,306) ----------- ----------- ----------- -----------Cash available for distribution to common shareholders $ 70,980 $ 65,564 $ 282,544 $ 233,926 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- SEASPAN CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE QUARTER AND YEARS ENDED DECEMBER 31, 2012 AND 2011 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
