Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a loss of $2.7 million for the quarter ended March 31, 2013, compared to a loss of $4.7 million for the comparable period in 2012. The decrease in change in fair value for the quarter was primarily due to the effect of the passage of time and less discounting of expected future settlements. The fair value of interest rate swap and swaption agreements is subject to change based on the counterparty and Seaspan's company-specific credit risk included in the discount factor and the interest rate implied by the current swap curve, including its relative steepness. In determining the fair value, these factors are based on current information available to Seaspan. These factors are expected to change through the life of the instruments, causing the fair value to fluctuate significantly due to the large notional amounts and long-term nature of Seaspan's derivative instruments. Because these factors may change, the fair value of the instruments is an estimate and may deviate significantly from the actual cash settlements realized over the term of the instruments. Seaspan's valuation techniques have not changed and remain consistent with those followed by other valuation practitioners.
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 and a reputation for safety, quality and innovation. Seaspan's managed fleet consists of 89 containerships representing a total capacity of approximately 600,000 TEU, including 16 newbuilding containerships on order scheduled for delivery by the end of 2015. Seaspan's current operating fleet of 69 vessels has an average age of approximately six years and an average remaining lease period of approximately six years.
Seaspan's common shares, Series C Preferred Shares and Series D Preferred Shares are listed on The New York Stock Exchange under the symbols "SSW", "SSW PR C" and "SSW PR D", respectively.
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for investors and analysts to discuss its results for the quarter ended March 31, 2013 on April 30, 2013 at 5:00 a.m. PT / 8:00 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: 46179747. The recording will be available from April 30, 2013 at 10:00 a.m. PT / 1:00 p.m. ET through 8:59 p.m. PT / 11:59 p.m. ET on May 14, 2013. The conference call will also be broadcast live over the Internet and will include a slide presentation. To access the live webcast and slide presentation, go to www.seaspancorp.com and click on "News & Events" and then "Events & Presentations" for the link. The webcast and slides will be archived on the site for one year.
SEASPAN CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2013 (IN THOUSANDS OF US DOLLARS) March 31, 2013 December 31, 2012 ---------------- -----------------AssetsCurrent assets: Cash and cash equivalents $ 286,018 $ 393,478 Short-term investments 66,373 36,100 Accounts receivable 33,880 9,573 Prepaid expenses 24,479 20,902 Gross investment in lease 17,597 15,977 ---------------- ----------------- 428,347 476,030Vessels 4,744,607 4,785,968Vessels under construction 154,842 77,305Deferred charges 53,390 43,816Gross investment in lease 74,601 79,821Goodwill 75,321 75,321Other assets 71,050 71,561Fair value of financial instruments 43,137 41,031 ---------------- ----------------- $ 5,645,295 $ 5,650,853 ---------------- ----------------- ---------------- -----------------Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable and accrued liabilities $ 48,301 $ 49,997 Current portion of deferred revenue 11,828 25,111 Current portion of long-term debt 95,106 66,656 Current portion of other long-term liabilities 38,906 38,542 ---------------- ----------------- 194,141 180,306Deferred revenue 6,869 7,903Long-term debt 3,000,431 3,024,288Other long-term liabilities 602,612 613,049Fair value of financial instruments 579,796 606,740 ---------------- ----------------- 4,383,849 4,432,286Share capital 809 804Treasury shares (395) (312)Additional paid in capital 1,869,840 1,859,068Deficit (563,770) (594,153)Accumulated other comprehensive loss (45,038) (46,840) ---------------- -----------------Total shareholders' equity 1,261,446 1,218,567 ---------------- ----------------- $ 5,645,295 $ 5,650,853 ---------------- ----------------- ---------------- ----------------- SEASPAN CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT FOR THE QUARTERS ENDED MARCH 31, 2013 AND 2012 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS) Quarter Ended March 31, ----------------------------- 2013 2012 -------------- --------------Revenue $ 164,924 $ 153,432Operating expenses: Ship operating 37,546 34,550 Depreciation and amortization 42,753 37,931 General and administrative 7,791 5,850 Operating lease 1,086 - -------------- -------------- 89,176 78,331 -------------- --------------Operating earnings 75,748 75,101Other expenses (income): Interest expense 15,484 16,975 Interest income (187) (308) Undrawn credit facility fees 397 805 Amortization of deferred charges 2,110 1,561 Change in fair value of financial instruments 2,666 4,676 Equity loss on investment 34 134 Other income (362) - -------------- -------------- 20,142 23,843 -------------- --------------Net earnings $ 55,606 $ 51,258Deficit, beginning of period (594,153) (622,406)Dividends - common shares (15,794) (11,735)Dividends - preferred shares (9,119) (8,313)Amortization of Series C issuance costs (310) (219) -------------- --------------Deficit, end of period $ (563,770) $ (591,415) -------------- -------------- -------------- --------------Weighted average number of shares, basic 63,767 63,696Weighted average number of shares, diluted 85,990 83,566Earnings per share, basic $ 0.57 $ 0.54 -------------- -------------- -------------- --------------Earnings per share, diluted $ 0.53 $ 0.51 -------------- -------------- -------------- -------------- SEASPAN CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE QUARTERS ENDED MARCH 31, 2013 AND 2012 (IN THOUSANDS OF US DOLLARS) Quarter Ended March 31, ------------------------------ 2013 2012 -------------- --------------Net earnings $ 55,606 $ 51,258Other comprehensive income: Amounts reclassified to earnings during the period, relating to cash flow hedging instruments 1,802 2,708 -------------- --------------Comprehensive income $ 57,408 $ 53,966 -------------- -------------- -------------- -------------- SEASPAN CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE QUARTERS ENDED MARCH 31, 2013 AND 2012 (IN THOUSANDS OF US DOLLARS) Quarter Ended March 31, --------------------------- 2013 2012 ------------- ------------- Cash from (used in): Operating activities: Net earnings $ 55,606 $ 51,258 Items not involving cash: Depreciation and amortization 42,753 37,931 Share-based compensation 2,811 586 Amortization of deferred charges 2,110 1,561 Amounts reclassified from other comprehensive loss to interest expense 1,579 2,542 Unrealized change in fair value of financial instruments (28,869) (25,783) Equity loss on investment 34 134 Changes in assets and liabilities (41,741) (18,471) ------------- ------------- Cash from operating activities 34,283 49,758 ------------- ------------- Financing activities: Draws on credit facilities 9,000 45,490 Repayment of credit facilities (21,007) (10,042) Repayment of other long-term liabilities (10,073) (24,649) Shares repurchased, including related expenses - (170,609) Financing fees (11,877) (16) Dividends on common shares (9,172) (7,367) Dividends on preferred shares (9,119) (8,313) ------------- ------------- Cash used in financing activities (52,248) (175,506) ------------- ------------- Investing activities: Expenditures for vessels (59,229) (86,635) Short-term investments (30,273) (10,214) Cash acquired on acquisition of Manager - 23,911 Intangible assets 1,118 7,041 Investment in affiliate (1,111) - ------------- ------------- Cash used in investing activities (89,495) (65,897) ------------- ------------- Decrease in cash and cash equivalents (107,460) (191,645) Cash and cash equivalents, beginning of period 393,478 481,123 ------------- ------------- Cash and cash equivalents, end of period $ 286,018 $ 289,478 ------------- ------------- ------------- ------------- SEASPAN CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE QUARTERS ENDED MARCH 31, 2013 AND 2012 (IN THOUSANDS OF US DOLLARS)
