Normalized net earnings 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.
Normalized earnings per share, converted, is calculated as normalized net earnings, less dividends on Series C and Series D preferred shares, divided by the "converted" number of shares outstanding for the period. The Series A preferred shares automatically convert to Class A common shares at a price of $15.00 per share at any time on or after January 31, 2014 if the trailing 30-day average trading price of the common shares is equal to or above $15.00. If the share price is less than $15.00, Seaspan can choose to not convert the preferred shares and to increase the annual increase in the liquidation preference to 15% per annum from 12%. The "converted" number of shares includes: basic weighted average number of shares, share-based compensation, contingent consideration, shares held in escrow and the impact of the Series A preferred shares converted at $15.00 per share. This method reflects Seaspan's ability to control the conversion if the share price is less than $15.00 and the per share impact of the preferred shares conversion at $15.00.
Normalized earnings per share, basic, can be computed as normalized net earnings attributable to common shareholders divided by the weighted-average number of shares used to compute reported earnings per share, basic.
Normalized earnings per share, converted, diluted, and basic are not defined by GAAP and should not be considered as an alternative to earnings per share or any other indicator of Seaspan's performance required to be reported by GAAP.
Quarter Ended March 31, ----------------------------- 2013 2012 -------------- --------------Net earnings $ 55,606 $ 51,258Adjust: Interest expense 15,484 16,975 Change in fair value of financial instruments 2,666 4,676 Organizational development costs (2) - 631 Interest expense at the hedged rate(4) (45,406) (40,312) -------------- --------------Normalized net earnings $ 28,350 $ 33,228 -------------- --------------Less: preferred share dividends Series A 9,050 8,128 Series C (including amortization of issuance costs) 8,620 8,534 Series D 1,543 - -------------- -------------- 19,213 16,662 -------------- --------------Normalized net earnings attributable to common shareholders $ 9,137 $ 16,566 -------------- -------------- -------------- --------------Weighted average number of shares used to compute earnings per shareReported and normalized, basic 63,767 63,696 Share-based compensation 364 198 Contingent consideration 977 703 Shares held in escrow 189 586 Series A preferred shares liquidation preference converted at $15 20,693 18,383 -------------- --------------Reported, diluted(5) 85,990 83,566 Series A preferred shares 115% premium (30- day trailing average) - - -------------- --------------Normalized, converted 85,990 83,566 -------------- --------------Earnings per share: Reported, basic $ 0.57 $ 0.54 -------------- -------------- -------------- -------------- Reported, diluted $ 0.53 $ 0.51 -------------- -------------- -------------- -------------- Normalized, converted - preferred shares converted at $15(6) $ 0.21 $ 0.30 -------------- -------------- -------------- -------------- SEASPAN CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE QUARTERS ENDED MARCH 31, 2013 AND 2012 (IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)
