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Seaspan Reports Financial Results for the Quarter and Year Ended December 31, 2009

Expands Fleet and Contracted Revenue Stream; Fully Time Chartered Fleet Performed as Expected

HONG KONG, CHINA - March 15, 2010 /CNW/ - Seaspan Corporation (NYSE:SSW) announced today the financial results for the quarter and year ended December 31, 2009. Below is a summary of our key financial results.

Summary of Key Financial Results and Highlights (dollars in thousands):
 



                                   Quarter Ended
                                    December 31,            Change
                               -------------------  -----------------
                                  2009        2008         $        %
                               -------   ---------  --------    -----
Reported net earnings (loss)   $74,690   $(241,913) $316,603    130.9%
Normalized net earnings(1)     $21,062     $20,363  $    699      3.4%
Earnings (loss) per share,
 basic                         $  1.01   $   (3.63) $   4.64    127.8%
Earnings (loss) per share,
 diluted                       $  0.78   $   (3.63) $   4.41    121.5%
Normalized earnings per share,
 basic(1)                      $  0.22   $    0.31  $  (0.09)  (29.0)%
Normalized earnings per share,
 diluted(1)                    $  0.22   $    0.31  $  (0.09)  (29.0)%
Cash available for
 distribution(2)               $42,106   $  36,837  $  5,269     14.3%



                                    Year Ended
                                    December 31,            Change
                               -------------------  -----------------
                                  2009        2008         $        %
                               -------   ---------  --------    -----
Reported net earnings (loss)  $145,252   $(199,346) $344,598    172.9%
Normalized net earnings(1)    $ 78,529   $  76,166  $  2,363      3.1%
Earnings (loss) per share,
 basic                        $   1.94   $   (3.12) $   5.06    162.2%
Earnings (loss) per share,
 diluted                      $   1.58   $   (3.12) $   4.70    150.6%
Normalized earnings per share,
 basic(1)                     $   0.95   $    1.19  $  (0.24)  (20.2)%
Normalized earnings per share,
 diluted(1)                   $   0.85   $    1.19  $  (0.34)  (28.6)%
Cash available for
 distribution(2)              $154,542   $ 136,153  $ 18,389     13.5%



- Achieved utilization of 99.7% for the quarter and year;

- Accepted delivery of seven newbuild vessels in 2009 and three vessels to date in 2010 to increase the operating fleet to 45 vessels. With the delivery of an additional 23 vessels, Seaspan is expected to grow its contracted revenue stream to approximately $7 billion;

- Strengthened our capital structure and financial flexibility through completion of the $200 million aggregate issuance of the Company's Series A Preferred Stock;

- Reduced our equity capital needs by up to 80% to $180 to $240 million from $900 million at the beginning of 2009. Deferred some of our equity needs by a year to second quarter 2012 from second quarter 2011;

- Paid a third quarter dividend of $0.10 per share on November 19, 2009;

- Paid a fourth quarter dividend of $0.10 per share on February 12, 2010, increasing cumulative dividends to $6.49 per share;

Gerry Wang, Chief Executive Officer of Seaspan, stated, "2009 was a year in which Seaspan continued its successful operations despite unprecedented conditions in the container shipping industry, credit markets and economy in general. With a focus on high-quality counterparties, our fully time chartered fleet continued to perform as expected. During the year, we also achieved progress in the execution of our growth strategy, expanding both our fleet and contracted revenue stream. We now have an operating fleet of 45 modern containerships with an average age of five years, which are all secured on long-term charters with an average duration of approximately seven years. We look forward to taking delivery of the remaining 23 newbuilds over the next 26 months, positioning the Company to substantially grow its annual revenue and cash flow. For each of the remaining 23 newbuilds, we entered into fixed rate charter parties in 2007 with an average duration of 11 years."

Mr. Wang concluded, "We have continued to take proactive steps to strengthen our capital structure and financial flexibility. Based upon cash retained from operations, combined with our committed debt and equity financing, we believe we are well positioned to meet our capital needs to finance our contracted fleet growth."

Vessel Delivery Deferral:

During 2009, the Company exercised options to defer the delivery date for 11 of the vessels that it had contracted to purchase. The deferrals are for periods ranging from two to 15 months from the dates agreed to under the original shipbuilding contracts. The shipbuilding contracts and time charters have been amended to provide for the new delivery dates.

The Company also deferred the delivery date for five additional vessels that the Company has contracted to purchase. The deferrals are for a period of approximately nine months from the dates that were agreed to under the original shipbuilding contracts. The shipbuilding contracts and time charters have been amended to provide for the new delivery dates.

CSCL Hamburg Update:

On December 31, 2009, the CSCL Hamburg went aground in the Gulf of Aqaba en route to Singapore. There were no personnel or pollution issues as a result of the incident. Any repair costs are expected to be covered by insurance, net of the insurance deductible. The vessel is expected to be off-hire for approximately 100 days. Although the vessel was not expected to undergo its next scheduled 5-year survey until 2013, the Company chose to combine the repairs with an earlier dry-docking to achieve savings and defer the next scheduled dry-dock to 2015.

Equity Capital Requirements:

As of December 31, 2009, the estimated remaining installments of the 26 vessels that we have contracted to purchase but have not yet been delivered amounted to approximately $1.7 billion. Seaspan has secured long term credit facilities to fund the newbuild vessels and does not have any credit facilities maturing until 2015. To fund the remaining portion of the price of the vessels the Company has contracted to purchase, we need to raise in the range of approximately $180 million to $240 million in common or other equity and or other forms of capital beginning no later than approximately the fourth quarter of 2010 or first quarter of 2011 and ending in approximately second quarter 2012. The current state of the global financial markets and current economic conditions may adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all. We are actively pursuing alternatives which will allow us to defer or eliminate some or all of our current equity needs.

Our credit facilities do not contain traditional vessel market value covenants that require us to repay our facilities solely because the market value of our vessels declined below a certain level. Our $1.3 billion credit facility agreement contains a loan to market value ratio requirement that must be met before we can borrow funds under that facility. Based on a valuation obtained in December of 2009, we are currently unable to borrow the remaining $267 million under our $1.3 billion credit facility; however, we do not require this amount to fund the remaining installments for our newbuild fleet.

Results for the Quarter and Year Ended December 31, 2009:

The following tables summarize vessel utilization and the impact of off-hire incurred on our revenues for the quarter and year ended December 31, 2009:
 



                          Fourth Quarter   Third Quarter   Second Quarter
                          --------------   -------------   --------------
                            2009    2008    2009    2008     2009    2008
                          ------   -----   -----   -----    -----   -----
Vessel Utilization:
Ownership Days             3,814   3,107   3,632   2,844    3,445   2,687
Less Off-hire Days:
 Scheduled 5-Year Survey     (11)      -     (14)      -        -     (10)
 Unscheduled off-hire         (2)     (2)     (6)    (22)      (4)    (21)
                          ------   -----   -----   -----    -----   -----


Operating Days             3,801   3,105   3,612   2,822    3,441   2,656
                          ------   -----   -----   -----    -----   -----
                          ------   -----   -----   -----    -----   -----


Vessel Utilization          99.7%   99.9%   99.4%   99.2%    99.9%   98.8%
                          ------   -----   -----   -----    -----   -----
                          ------   -----   -----   -----    -----   -----



                            First Quarter       Year to Date
                            -------------    ---------------
                             2009    2008      2009     2008
                            -----   -----    ------   ------
Vessel Utilization:
Ownership Days              3,150   2,639    14,041   11,277
Less Off-hire Days:
 Scheduled 5-Year Survey        -       -       (25)     (10)
 Unscheduled off-hire          (1)    (27)      (13)     (72)
                            -----   -----    ------   ------


Operating Days              3,149   2,612    14,003   11,195
                            -----   -----    ------   ------
                            -----   -----    ------   ------


Vessel Utilization           99.9%   99.0%     99.7%    99.3%
                            -----   -----    ------   ------
                            -----   -----    ------   ------



                        Fourth Quarter     Third Quarter     Second Quarter
                     ----------------- -----------------  -----------------
                        2009      2008    2009      2008     2009      2008
                     -------   ------- -------   -------  -------   -------
Revenue - Impact of
 Off-Hire (in '000s):
100% Utilization     $78,929   $62,691 $74,581   $58,101  $69,904   $55,507
Less Off-hire:
 Scheduled 5-Year
  Survey                (315)        -    (427)        -        -      (186)
 Unscheduled
  off-hire(3)            (35)      (37)    (97)     (497)     (73)     (389)
                     -------   ------- -------   -------  -------   -------
Actual Revenue
 Earned              $78,579   $62,654 $74,057   $57,604  $69,831   $54,932
                     -------   ------- -------   -------  -------   -------
                     -------   ------- -------   -------  -------   -------



                              First Quarter        Year to Date
                         ------------------  --------------------
                            2009       2008      2009        2008
                         -------    -------  --------    --------
Revenue - Impact of
 Off-Hire (in '000s):
100% Utilization         $63,147    $54,703  $286,561    $231,002
Less Off-hire:
 Scheduled 5-Year
  Survey                       -          -      (742)       (186)
 Unscheduled
  off-hire(3)                (20)      (488)     (225)     (1,411)
                         -------    -------  --------    --------
Actual Revenue
 Earned                  $63,127    $54,215  $285,594    $229,405
                         -------    -------  --------    --------
                         -------    -------  --------    --------



In 2008, we accepted delivery of six vessels. We began 2009 with 35 vessels in operation and accepted delivery of seven vessels for a total of 42 vessels in operation as at December 31, 2009. We also completed the dry-docking for the CSCL Oceania and CSCL Africa resulting in 25 days of scheduled off-hire. Operating days are the primary driver of revenue while ownership days are the driver for ship operating costs.
 



                  Quarter Ended                    Year Ended
                    December 31,    Increase      December 31,    Increase
                ---------------   ----------   --------------  -----------
                 2009      2008   Days     %     2009    2008   Days     %
                ----      -----   ----  ----   ------  ------  -----  ----
Operating days  3,801     3,105    696  22.4%  14,003  11,195  2,808  25.1%
Ownership days  3,814     3,107    707  22.8%  14,041  11,277  2,764  24.5%



Financial             Quarter
 Summary                Ended                    Year Ended
(in millions)     December 31,         Change   December 31,         Change
                 ------------ --------------- ------------- ---------------
                  2009   2008      $        %   2009   2008      $        %
                 ----- ------ ------ -------- ------ ------ ------ --------



Revenue          $78.6  $62.7  $15.9    25.4% $285.6 $229.4  $56.2    24.5%


Ship operating
 expense          22.4   15.0    7.5    49.8%   80.2   54.4   25.7    47.3%


Depreciation      19.0   15.4    3.6    23.6%   70.0   57.4   12.5    21.8%


General and
 administrative    1.9    2.6   (0.7)  (26.3%)   8.0    8.9   (0.9)  (10.4%)


Interest expense   5.4    9.0   (3.6)  (40.0%)  21.2   33.0  (11.8)  (35.8%)


Change in fair
 value of
 financial
 instruments     (46.5) 261.1 (307.6) (117.8%) (46.5) 268.6 (315.0) (117.3%)


Other expenses       -      -      -     0.0%    1.1      -    1.1   100.0%



Revenue

The increase in revenue is due to an increase in operating days and the dollar impact thereof, for the quarter and year ended, respectively, was due to the following:
 



                                  Quarter ended                  Year ended
                              December 31, 2009           December 31, 2009
                      -------------------------   -------------------------
                        Operating      $ impact     Operating      $ impact
                      Days impact  (in millions)  Days impact  (in millions)
                      -----------   -----------   -----------   -----------


2009 vessel deliveries        594         $14.4         1,259         $30.5
Full year contribution
 for 2008 vessel
 deliveries                   113           1.8         1,534          25.7
Scheduled off-hire            (11)         (0.3)          (15)         (0.6)
Other (4)                       -             -            30           0.6
                      -----------   -----------   -----------   -----------
Total                         696         $15.9         2,808         $56.2
                      -----------   -----------   -----------   -----------
                      -----------   -----------   -----------   -----------



Vessel utilization was 99.7% for both the quarter and year ended December 31, 2009 compared to 99.9% and 99.3%, respectively, for the comparable periods in the prior year. Our vessel utilization since our initial public offering is 99.3%.

Ship Operating Expense

The increase in ship operating expense was partially due to the adjustment of technical services fees for the period commencing January 1, 2009 which increased the fees by approximately 23% from the initial technical services fees.

The increase in ownership days, and the dollar impact thereof, for the quarter and year ended, respectively, was due to the following:
 



                                  Quarter ended                  Year ended
                              December 31, 2009           December 31, 2009
                      -------------------------   -------------------------
                        Ownership      $ impact     Ownership      $ impact
                      Days impact  (in millions)  Days impact  (in millions)
                      -----------   -----------   -----------   -----------
Adjustment of
 technical services
 fees(5)                        -         $ 2.9           (29)        $11.5
Full year contribution
 for 2008 vessel
 deliveries                   113           1.0         1,522           8.2
2009 vessel deliveries        594           3.3         1,271           6.9
Additional (fewer)
 extraordinary(6)
 costs & expenses not
 covered by the fixed
 fee                            -           0.3             -          (0.9)
                      -----------   -----------   -----------   -----------
Total                         707         $ 7.5         2,764         $25.7
                      -----------   -----------   -----------   -----------
                      -----------   -----------   -----------   -----------



Depreciation

The increase in depreciation expense was due to the additional ownership days from the seven deliveries in 2009 and a full year for the 2008 deliveries.

General and Administrative Expenses

General and administrative expenses for the quarter ended December 31, 2009 is comparable with the prior year. Overall cost reductions in the current year have resulted in decreased general and administrative expenses in the current year. The decrease is primarily due to lower share based compensation and a reduction in discretionary activities.

Interest Expense

Interest expense is composed of interest at the variable rate plus margin incurred on debt for operating vessels and a non-cash reclassification of amounts from accumulated other comprehensive income related to previously designated hedging relationships. Although the average operating debt balance was higher for the quarter and the year compared to the same periods in the prior year, interest expense decreased due to a decrease in LIBOR. The average LIBOR for the quarter and year ended December 31, 2009 was 0.2% and 0.4%, respectively, compared to 2.9% and 3.0%, respectively, for the prior year. Although we enter into fixed interest rate swaps, the difference between the variable interest rate and the swapped fixed rate on operating debt is recorded in our change in fair value of financial instruments caption as required by financial reporting standards. The interest incurred on our long-term debt for our vessels under construction is capitalized to the respective vessels under construction.

Change in Fair Value of Financial Instruments

The change in fair value of financial instruments resulted in a gain of $46.5 million for the quarter ended December 31, 2009 compared to a loss of $261.1 million for the comparable quarter last year. The change in fair value of financial instruments resulted in a gain of $46.5 million for the year ended December 31, 2009 compared to a loss of $268.6 million for the prior year. The change in fair value gain for the quarter and year is due to increases in the forward LIBOR curve and overall market changes in credit risk.

On September 30, 2008, due to the compliance and expense burden associated with applying hedge accounting, we elected to prospectively de-designate all interest rate swaps for which we were applying hedge accounting treatment. As a result, from October 1, 2008, all of our interest rate swap agreements and our swaption agreement are marked to market with all changes in the fair value of these instruments recorded in "Change in fair value of financial instruments" in the Statement of Operations. Prior to de-designation on September 30, 2008, approximately 30% of the change in fair value was recorded in "Accumulated other comprehensive loss" in the equity section of our balance sheet for our designated swaps with the change in fair value of our non-designated swaps recorded in "Change in fair value of financial instruments" in the statement of operations.

Change in fair value of derivative financial instruments is a required accounting adjustment under financial reporting standards. At the end of each reporting period, we must record a mark-to-market adjustment for our interest rate swap agreements and swaption as though the instruments were realized as of the reporting date.

The accounting adjustments appear in the following locations in the financial statements:

1) Other Comprehensive Income - For interest rate swaps that the Company had designated as hedges under the technical accounting requirements for hedge accounting, an amount was included in "Other comprehensive income" that approximated the adjustment in fair value. Since we have elected to prospectively de-designate the interest rate swaps for which we applied hedge accounting, no further fair value changes are recorded to "Other comprehensive income". Following the de-designations, the amounts in "Other comprehensive income" will be reclassified to earnings when and where the interest payments are reflected in earnings.

2) Statement of Operations - For interest rate swaps that are not designated as hedges under the accounting requirements for hedge accounting, mark-to-market adjustments and periodic cash interest settlements are recorded in "Change in fair value of financial instruments".

Other expenses

Additional charges of $1.1 million were accrued for in the quarter ended June 30, 2009. This amount is due to the shipyards in connection with the 11 options, of $0.1 million per ship, exercised to defer delivery dates. These amounts are due at the deferred delivery date of each vessel and are considered to represent the cost of entering into the delivery deferral options in accordance with financial reporting standards and therefore were accrued for.

Dividends:

We announced on April 28, 2009 that our board of directors decided to reduce our quarterly dividends from $0.475 to $0.10 per share to retain a higher portion of our distributable cash to fund future capital expenditures due to the uncertainties associated with the global recession and the capital markets. Our board of directors cannot determine how long this reduction will be in effect. This reduction will enable us to retain an approximate additional amount of $100 million per year that can be redeployed to fund our newbuilding program. Based on a dividend of $0.10 per quarter, our annualized dividend on the current number of shares outstanding would be approximately $27 million.

For the quarter ended December 31, 2009, we declared a quarterly dividend of $0.10, representing a total distribution of $6.8 million. The dividend was paid on February 12, 2010 to all shareholders of record as of February 1, 2010.

Since our initial public offering in August 2005, we have declared cumulative dividends of $6.49 per share. Because we adopted a dividend reinvestment plan, or DRIP, the actual amount of cash dividend paid was $5.1 million based on shareholder participation in the DRIP. Cumulatively, since we adopted the DRIP in May 2008, an additional 1.5 million shares were issued through the participation in the DRIP. As of today's date and based on a discount of 3%, participating shareholders invested $16.5 million in the DRIP since we adopted the plan in May 2008.

About Seaspan

Seaspan owns containerships and charters them pursuant to long-term fixed-rate charters. Seaspan's contracted fleet of 68 containerships consists of 45 containerships in operation and 23 containerships to be delivered over approximately the next 26 months. Seaspan's operating fleet of 45 vessels has an average age of approximately five years and an average remaining charter period of approximately seven years. All of the 23 vessels to be delivered to Seaspan are already committed to long-term time charters averaging approximately 11 years in duration from delivery. Seaspan's customer base consists of seven of the world's largest liner companies, including China Shipping Container Lines, A.P. Moller-Maersk, Mitsui O.S.K. Lines, Hapag-Lloyd, COSCO Container Lines, K-Line and CSAV.

Seaspan's common shares are listed on the New York Stock Exchange under the symbol "SSW".

Conference Call and Webcast

Seaspan will host a conference call and webcast presentation for investors and analysts to discuss its results for the quarter and year ended December 31, 2009 on March 16, 2010 at 5:30 a.m. PT / 8:30 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 1-800-642-1687 or 1-706-645-9291 and enter replay passcode: 60701742. The recording will be available from March 16, 2010 at 8:30 a.m. PT / 11:30 a.m. ET through to 8:59 p.m. PT / 11:59 p.m. ET on March 30, 2010. 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" 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 DECEMBER 31, 2009
(IN THOUSANDS OF US DOLLARS)


                                                   December 31, December 31,
                                                          2009         2008
                                                   -----------  -----------
Assets
Current assets:
 Cash and cash equivalents                          $  133,400   $  136,285
 Accounts receivable                                       164          172
 Prepaid expenses                                       12,489        5,254
                                                    ----------   ----------
                                                       146,053      141,711


Vessels                                              2,088,690    1,698,053
Vessels under construction                           1,396,660    1,428,436
Deferred charges                                        21,667       20,306
Other assets                                            11,377        8,366
                                                    ----------   ----------
                                                    $3,664,447   $3,296,872
                                                    ----------   ----------
                                                    ----------   ----------
Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable and accrued liabilities           $   20,905   $   15,211
 Deferred revenue                                        9,787        8,443
                                                    ----------   ----------
                                                        30,692       23,654


Long-term debt (operating vessels)                     936,794      703,835
Long-term debt (vessels under construction)            946,352    1,017,323
Other long-term liabilities                            410,598      390,931
Fair value of financial instruments                    280,445      414,769
                                                    ----------   ----------
                                                     2,604,881    2,550,512


Share capital                                              679          668
Additional paid-in capital                           1,489,936    1,282,189
Deficit                                               (349,802)    (443,081)
Accumulated other comprehensive loss                   (81,247)     (93,416)
                                                    ----------   ----------
Total shareholders' equity                           1,059,566      746,360


                                                    ----------   ----------
                                                    $3,664,447   $3,296,872
                                                    ----------   ----------
                                                    ----------   ----------



SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT FOR THE QUARTER
AND YEAR ENDED DECEMBER 31, 2009 AND 2008
(IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)


                                   Quarter    Quarter       Year       Year
                                     ended      ended      ended      ended
                                  December   December   December   December
                                  31, 2009   31, 2008   31, 2009   31, 2008
                                 ---------  ---------  ---------  ---------


Revenue                          $  78,579  $  62,654  $ 285,594  $ 229,405


Operating expenses:
 Ship operating                     22,432     14,976     80,162     54,416
 Depreciation                       19,027     15,394     69,996     57,448
 General and administrative          1,910      2,590      7,968      8,895
                                 ---------  ---------  ---------  ---------
                                    43,369     32,960    158,126    120,759
                                 ---------  ---------  ---------  ---------


Operating earnings                  35,210     29,694    127,468    108,646


Other expenses (earnings):
 Interest expense                    5,392      8,994     21,194     33,035
 Interest income                       (41)      (123)      (311)      (694)
 Undrawn credit facility fees        1,129      1,203      4,641      5,251
 Amortization of deferred charges      566        451      2,042      1,825
 Change in fair value of
  financial instruments            (46,526)   261,082    (46,450)   268,575
 Other expenses                          -          -      1,100          -
                                 ---------  ---------  ---------  ---------
                                   (39,480)   271,607    (17,784)   307,992
                                 ---------  ---------  ---------  ---------


Net earnings (loss)                 74,690   (241,913)   145,252   (199,346)


Deficit, beginning of period      (417,736)  (169,608)  (443,081)  (122,317)
Dividends on common shares          (6,756)   (31,560)   (51,973)  (121,418)
                                 ---------  ---------  ---------  ---------
Deficit, end of period            (349,802)  (443,081)  (349,802)  (443,081)
                                 ---------  ---------  ---------  ---------
                                 ---------  ---------  ---------  ---------
Weighted average number of
 shares, basic                      67,641     66,610     67,340     63,802
Weighted average number of
 shares, diluted                    95,570     66,610     92,015     63,802


Earnings (loss) per share, basic $    1.01  $   (3.63) $    1.94  $   (3.12)
                                 ---------  ---------  ---------  ---------
                                 ---------  ---------  ---------  ---------
Earnings (loss) per share,
 diluted                         $    0.78  $   (3.63) $    1.58  $   (3.12)
                                 ---------  ---------  ---------  ---------
                                 ---------  ---------  ---------  ---------



SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE QUARTER
AND YEAR ENDED DECEMBER 31, 2009 AND 2008
(IN THOUSANDS OF US DOLLARS)


                                   Quarter    Quarter       Year       Year
                                     ended      ended      ended      ended
                                  December   December   December   December
                                  31, 2009   31, 2008   31, 2009   31, 2008
                                 ---------  ---------  ---------  ---------


Net earnings (loss)              $  74,690  $(241,913) $ 145,252  $(199,346)


Other comprehensive income
 (loss):
 Change in fair value of
  financial instruments
  designated as cash flow hedging
  instruments                            -          -          -    (40,156)
 Amounts reclassified to earnings
  during the period                  3,177      2,167     12,169      9,084
                                 ---------  ---------  ---------  ---------
 Other comprehensive income
  (loss)                             3,177      2,167     12,169    (31,072)
                                 ---------  ---------  ---------  ---------
Comprehensive income
 (loss)                          $  77,867  $(239,746) $ 157,421  $(230,418)
                                 ---------  ---------  ---------  ---------
                                 ---------  ---------  ---------  ---------



SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2009 AND 2008
(IN THOUSANDS OF US DOLLARS)


                             Quarter      Quarter
                               ended        ended   Year ended   Year ended
                         December 31, December 31, December 31, December 31,
                                2009         2008         2009         2008
                         --------------------------------------------------


Cash provided by
 (used in):


Operating activities:
 Net earnings (loss)        $ 74,690    $(241,913)   $ 145,252    $(199,346)
 Items not involving
  cash:
  Depreciation                19,027       15,394       69,996       57,448
  Share-based
   compensation                  601          642        2,184        2,555
  Amortization of
   deferred charges              566          451        2,042        1,825
  Amounts reclassified
   from other
   comprehensive loss          3,138        2,155       12,068        2,155
  Unrealized change
   in fair value of
   financial instruments     (71,656)     250,689     (134,324)     253,037
 Change in assets
  and liabilities              3,430        7,339       (2,642)       7,078
                            -----------------------------------------------
Cash provided by
 operating activities         29,796       34,757       94,576      124,752
                            -----------------------------------------------


Financing activities:
 Preferred shares
  issued, net of share
  issue costs                 19,657            -      198,442            -
 Common shares issued,
  net of share issue
   costs                           -         (154)           -      227,474
  Draws on credit
   facilities                 58,846      252,392      161,988      764,720
  Other long-term
   liabilities                     -            -            -       35,405
  Repayment of credit
   facility                        -      (40,000)           -     (383,000)
  Financing fees incurred       (158)          (1)      (3,530)      (5,841)
   Dividends on common
    shares(i)                 (5,153)     (28,653)     (44,841)    (115,577)
                            -----------------------------------------------
Cash provided by
 financing activities         73,192      183,584      312,059      523,181
                            -----------------------------------------------


Investing activities:
 Expenditures for vessels    (73,585)    (105,658)    (408,557)    (626,783)
 Cash payments on
  interest rate swaps              -            -            -       (7,124)
 Intangible assets               (32)        (468)        (963)        (875)
                            -----------------------------------------------
Cash used in investing
 activities                  (73,617)    (106,126)    (409,520)    (634,782)
                            -----------------------------------------------


Increase (decrease) in
 cash and cash equivalents    29,371      112,215       (2,885)      13,151



Cash and cash
 equivalents, beginning of
 period                      104,029       24,070      136,285      123,134
                            -----------------------------------------------


Cash and cash equivalents,
 end of period               133,400    $ 136,285     $ 133,400   $ 136,285
                            -----------------------------------------------
                            -----------------------------------------------


(i) During the quarter and year ended December 31, 2009, non-cash dividends
    of $1.4 million and $6.9 million were paid through the dividend
    reinvestment program. Including the dividend paid in February of 2010,
    shareholders have invested $16.5 million in the dividend reinvestment
    program since its adoption in May 2008.



SEASPAN CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2009 AND 2008
(IN THOUSANDS OF US DOLLARS)



Description of Non-GAAP Financial Measures

A. Cash Available for Distribution

Cash available for distribution represents net earnings adjusted for depreciation, amortization of deferred charges, non-cash undrawn credit facility fees, write-off of deferred financing fees on debt refinancing, non-cash share-based compensation, dry-dock adjustment, non-cash interest income, change in fair value of financial instruments, interest expense(7), cash interest paid at the hedged rate(9) and other items that the Company believes are not representative of its operating performance. Cash available for distribution is a non-GAAP quantitative standard used to assist in evaluating a company's ability to make quarterly cash dividends before reserves. Cash available for distribution is not defined by accounting principles generally accepted in the United States and should not be considered as an alternative to net earnings or any other indicator of Seaspan's performance required by accounting principles generally accepted in the United States. Cash available for distribution is a non-GAAP measure used to assist in evaluating a company's overall operating performance because cash available for distribution eliminates the effects of non-cash items and items that do not impact our operating performance or our ability to distribute cash to our shareholders.

Seaspan has changed the definition of cash available for distribution in the current year to include other items the Company believes are not representative of its operating performance. The following item is now included as adjustments: Other expenses. Please refer to footnote(8) for a detailed description of Other expenses. This new definition of cash available for distribution used in the current period does not impact the cash available for distribution for the comparative periods.
 



                             Quarter      Quarter
                               ended        ended   Year ended   Year ended
                         December 31, December 31, December 31, December 31,
                                2009         2008         2009         2008
                         --------------------------------------------------


Net earnings (loss)         $ 74,690    $(241,913)    $145,252    $(199,346)
 Add:
  Depreciation                19,027       15,394       69,996       57,448
  Interest expense(7)          5,392        8,994       21,194       33,035
  Amortization of
   deferred charges              566          451        2,042        1,825
    Undrawn credit
     facility fees             1,129        1,203        4,641        5,251
  Share-based
   compensation                  601          642        2,184        2,555
  Change in fair value
   of financial
   instruments               (46,526)     261,082      (46,450)     268,575
  Other expenses(8)                -            -        1,100            -
 Less:
  Dry-dock adjustment         (1,334)        (809)      (3,914)      (2,945)
  Interest income                (41)        (123)        (311)        (694)
                          -------------------------------------------------
Net cash flows before
 cash interest payments       53,504       44,921      195,734      165,704
Less:
 Cash interest paid at
  the hedged rate(9)         (10,714)      (7,947)     (39,082)     (27,174)
 Cash paid for undrawn
  credit facility fees          (704)        (261)      (2,400)      (3,088)
Add:
 Cash interest received           20          124          290          711
                          -------------------------------------------------
Cash available for
 distribution               $ 42,106    $  36,837     $154,542     $136,153
                          -------------------------------------------------
                          -------------------------------------------------





SEASPAN CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2009 AND 2008
(IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)



Description of Non-GAAP Financial Measures

B. Normalized Net Earnings and Normalized Earnings per share

Normalized net earnings represent net earnings adjusted for items such as the non-cash change in fair value of financial instruments, write-off of deferred financing fees on debt refinancing, interest expense(7) and interest expense at the hedged rate(10). With these adjustments normalized net earnings reflect interest expense on our operating debt at the fixed rate on our interest rate swaps plus the applicable margin on the related credit facilities. We believe that this presentation of normalized net earnings is useful because investors and securities analysts frequently adjust net earnings for non-operating items, as described above, to evaluate companies in our industry. Normalized net earnings is a non-GAAP measure used to assist in evaluating a company's overall operating performance and liquidity because normalized net earnings eliminates the effects of non-cash items and items that do not impact our operating performance or our ability to distribute cash to our shareholders.

Normalized net earnings is not defined by accounting principles generally accepted in the United States and should not be considered as an alternative to net earnings or any other indicator of Seaspan's performance required by accounting principles generally accepted in the United States. Normalized earnings per share are calculated using the normalized net earnings and weighted average number of shares.
 



                             Quarter      Quarter
                               ended        ended   Year ended   Year ended
                         December 31, December 31, December 31, December 31,
                                2009         2008         2009         2008
                         --------------------------------------------------


Net earnings (loss)         $ 74,690    $(241,913)    $145,252    $(199,346)
 Adjust:
  Change in fair value
   of financial
   instruments               (46,526)     261,082      (46,450)     268,575
  Interest expense(7)          5,392        8,994       21,194       33,035
  Interest expense at
   the hedged rate(10)       (12,494)      (7,800)     (41,467)     (26,098)
                         --------------------------------------------------
Normalized net earnings     $ 21,062    $  20,363     $ 78,529    $  76,166
                         --------------------------------------------------
                         --------------------------------------------------


 Basic                        67,641       66,610       67,340       63,802
 Diluted                      95,570       66,610       92,015       63,802


Earnings (loss) per
 share, basic and diluted
 Reported, basic(ii)        $   1.01    $   (3.63)    $   1.94    $   (3.12)
                         --------------------------------------------------
                         --------------------------------------------------
 Reported, diluted(iii)     $   0.78    $   (3.63)    $   1.58    $   (3.12)
                         --------------------------------------------------
                         --------------------------------------------------
 Normalized, basic(ii)      $   0.22    $    0.31     $   0.95    $    1.19
                         --------------------------------------------------
                         --------------------------------------------------
 Normalized, diluted(iii)   $   0.22    $    0.31     $   0.85    $    1.19
                         --------------------------------------------------
                         --------------------------------------------------


(ii) Basic earnings per share (Reported and Normalized) are calculated as
     net earnings (loss) or normalized net earnings, less the dividends
     accrued for Series A preferred shares, divided by the basic number of
     shares outstanding for the period. During the quarter and year ended
     December 31, 2009, dividends of $6,264 and $14,464 were accrued for
     Series A preferred shares, respectively.


(iii) Diluted earnings per share (Reported and Normalized) are calculated
      as net earnings or normalized net earnings divided by the diluted
      number of shares outstanding for the period. The diluted number of
      shares includes the impact of the convertible Series A preferred
      shares. In periods where there is a net loss, the convertible Series
      A preferred shares are not included for the diluted number of shares
      as the impact of the Series A preferred shares is anti-dilutive.



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) concerning future events and our operations, performance and financial condition, including, in particular, the likelihood of our success in developing and expanding our business. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "projects", "forecasts", "will", "may", "potential", "should", and similar expressions are forward-looking statements. These forward-looking statements reflect management's current views only as of the date of this presentation and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-looking statements. Forward-looking statements appear in a number of places in this release. Although these statements are based upon assumptions we believe to be reasonable based upon available information, including operating margins, earnings, cash flow, working capital and capital expenditures, they are subject to risks and uncertainties.
These risks and uncertainties include, but are not limited to: future operating or financial results; our expectations relating to dividend payments and our ability to make such payments; pending acquisitions, business strategy and expected capital spending; operating expenses, availability of crew, number of off-hire days, dry-docking requirements and insurance costs; general market conditions and shipping market trends, including charter rates and factors affecting supply and demand; our financial condition and liquidity, including our ability to borrow funds under our credit facilities and to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; estimated future capital expenditures needed to preserve our capital base; our expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of our ships; our continued ability to enter into long-term, fixed-rate time charters with our customers; our ability to leverage to our advantage Seaspan Management Services Limited's relationships and reputation in the containership industry; changes in governmental rules and regulations or actions taken by regulatory authorities; the financial condition of our shipyards, charterers, lenders, refund guarantors and other counterparties and their ability to perform their obligations under their agreements with us; changes in worldwide container demand; changes in trading patterns; competitive factors in the markets in which we operate; potential inability to implement our growth strategy; potential for early termination of long-term contracts and our potential inability to renew or replace long-term contracts; ability of our customers to make charter payments; potential liability from future litigation; conditions in the public equity markets; and other factors detailed from time to time in our periodic reports. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common shares.
 



(1) Normalized net earnings and normalized earnings per share are
    non-GAAP measures that are adjusted for non-cash items such as the
    non-cash change in fair value of financial instruments, write-off of
    deferred financing fees on debt refinancing, interest expense and
    interest expense at the hedged rate. Please read "Reconciliation
    of Non-GAAP Financial Measures for the Quarter and Year Ended
    December 31, 2009 and 2008 - Description of Non-GAAP Financial
    Measures - B. Normalized Net Earnings and Normalized Earnings per
    Share" for a description of normalized net earnings and a
    reconciliation of net earnings to normalized net earnings.


(2) Cash available for distribution is a non-GAAP measure that represents
    net earnings adjusted for depreciation, amortization of deferred
    charges, non-cash undrawn credit facility fees, write-off of deferred
    financing fees on debt refinancing, non-cash share-based compensation,
    dry-dock adjustment, non-cash interest income, change in fair value of
    financial instruments, interest expense, cash interest paid at the
    hedged rate and other items that the Company believes are not
    representative of its operating performance. Please read "Reconciliation
    of Non-GAAP Financial Measures for the Quarter and Year Ended
    December 31, 2009 and 2008 - Description of Non-GAAP Financial
    Measures - A. Cash Available for Distribution" for a description of cash
    available for distribution and a reconciliation of cash available for
    distribution to net earnings.


(3) Other includes the impact of: 59 fewer days of unscheduled off-hire
    off-set by the 29 day ownership impact due to the leap year in 2008
    for the 29 vessels in operation at that time.


(4) Includes charterer deductions that are not related to off-hire.


(5) The 29 day ownership impact is due to the leap year in 2008 for the 29
    vessels in operation at that time.


(6) Extraordinary costs and expenses are defined in our management
    agreements and do not relate to extraordinary items as defined by
    financial reporting standards.


(7) Interest expense as reported on the consolidated statement of
    operations.


(8) Other expenses represent additional payments of $1.1 million that were
    accrued for in the quarter ended June 30, 2009. This amount is due
    to the shipyards in connection with the 11 options of $0.1 million each
    that we exercised subsequent to the quarter end. These amounts are due
    at the deferred delivery date of each vessel and are considered to
    represent the cost of entering into the delivery deferral options in
    accordance with financial reporting standards and therefore were accrued
    for in the period.


(9) Cash interest paid 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 credit facilities,
    on a cash basis.


(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 credit facilities,
     on an accrual basis.
For further information: For Investor Relations Inquiries: Seaspan Corporation, Mr. Sai W. Chu, Chief Financial Officer, 604-638-2575 / For Media Inquiries: The IGB Group, Mr. Leon Berman, 212-477-8438