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, 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 March 31, ----------------------------- 2013 2012 -------------- --------------Net earnings $ 55,606 $ 51,258Add: Depreciation and amortization 42,753 37,931 Interest expense 15,484 16,975 Amortization of deferred charges 2,110 1,561 Share-based compensation 2,811 586 Change in fair value of financial instruments 2,666 4,676 Bareboat charter adjustment, net (1) 2,395 2,297 Organizational development costs (2) - 631Less: Amounts paid for dry-dock adjustment (2,485) (1,946) Series C preferred share dividends paid and accumulated(3) (8,313) (8,313) Series D preferred share dividends paid and accumulated(3) (806) - -------------- --------------Net cash flows before interest payments 112,221 105,656Less:Interest expense at the hedged rate(4) (45,406) (40,312) -------------- --------------Cash available for distribution to common shareholders $ 66,815 $ 65,344 -------------- -------------- -------------- -------------- SEASPAN CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE QUARTERS ENDED MARCH 31, 2013 and 2012 (IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
B. Normalized Net Earnings and Normalized Earnings per Share
Normalized net earnings is defined as net earnings adjusted for items such as interest expense, change in fair value of financial instruments, interest expense at the hedged rate, organizational development costs 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.
