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Seaspan Reports Results for the Quarter and Year Ended December 31, 2006

HONG KONG, CHINA - March 1, 2007 /CNW/ - Seaspan Corporation ("Seaspan") (NYSE:SSW) announced today the financial results for the quarter and year ended December 31, 2006.

"During the fourth quarter of 2006, Seaspan passed a number of important milestones in its development," said Gerry Wang, Chief Executive Officer. "During the quarter, we took delivery of two vessels from our originally contracted fleet and purchased our first second-hand vessels when we completed a sale and charter-back transaction for four ships with A.P. Moller-Maersk A/S ("APM"). These acquisitions brought the total number of Seaspan vessels in operation to 23."

"We completed our first follow-on equity offering during the quarter, raising $235.1 million in net proceeds to fund the growth of our company," continued Mr. Wang. "In recognition of the significant growth in our business during 2006, our Board of Directors approved a 5% increase in our regular quarterly dividend from $0.425 to $0.44625 per share for the fourth quarter of 2006.

"We arranged to purchase a total of 18 vessels at an estimated cost of $950.0 million during 2006, nearly doubling the size of our contracted fleet and increasing our steady state EBITDA by approximately $105.0 million annually. We also executed two new credit facilities totaling $583.4 million and completed our follow-on equity offering to finance our growth. We are very proud of our many achievements for our first full year of operations as a public company and look forward to continuing with our strategic growth plan in 2007."

Financial Highlights for the Quarter And Year Ended December 31, 2006

- Reported net earnings of $10.1 million and earnings per share of $0.24 for the quarter and $35.6 million and earnings per share of $0.94 for the year ended December 31, 2006.

- Generated $19.9 million of cash available for distribution during the quarter and $66.0 million for the year ended December 31, 2006.

- Paid a quarterly dividend of $0.425 per share on November 10, 2006 for the third quarter ended September 30, 2006.

- Paid a quarterly dividend of $0.44625 per share on February 13, 2007 for the fourth quarter ended December 31, 2006.

- Took delivery of six of the company's contracted vessels and four second-hand ships, bringing the Seaspan fleet to a total of 23 vessels in operation as at December 31, 2006.

Results for the Quarter and Year Ended December 31, 2006

Seaspan reported revenue of $35.7 million for the quarter and $118.5 for the year ended December 31, 2006. Net earnings for the quarter were $10.1 million, and net earnings for the year ended were $35.6 million. Total operating expenses were $18.9 million for the quarter ended December 31, 2006, and were comprised of ship operating costs of $8.7 million, depreciation of $8.3 million and general and administrative costs of $1.9 million. Total operating expenses for the year ended December 31, 2006 were $61.2 million, and were comprised of ship operating costs of $29.4 million, depreciation of $26.9 million and general and administrative costs of $4.9 million.

Seaspan reported basic and fully diluted earnings per share of $0.24 for the quarter and $0.94 per share for the year ended December 31, 2006.

During the quarter ended December 31, 2006, Seaspan generated $19.9 million of cash available for distribution, a non-GAAP measure. During the year ended December 31, 2006, Seaspan generated $66.0 million of cash available for distribution, a non-GAAP measure. Please read Reconciliation of Non-GAAP Financial Measures - Description of Non-GAAP Financial Measures - Cash Available for Distribution for a description of cash available for distribution and a reconciliation of net earnings to cash available for distribution.

Seaspan declared an increased quarterly cash dividend of $0.44625, representing a total cash distribution of $21.2 million. The cash dividend was paid on February 13, 2007 to all shareholders of record on January 29, 2007.

Operational Highlights for the Quarter and Year Ended December 31, 2006

- During the fourth quarter, Seaspan took delivery of two additional vessels in its initial contracted fleet of 23 vessels;

- On October 20, 2006, Seaspan took delivery of the 4250 TEU Rio Grande Express, approximately three weeks ahead of the contractual delivery date. This ship is the sixth of nine vessels chartered to Hapag-Lloyd, USA ("HL USA"), a subsidiary of TUI AG.

- On November 13, 2006, Seaspan took delivery of the 4250 TEU Santos Express, approximately seven weeks ahead of the contractual delivery date. This ship is the seventh of nine vessels chartered to HL USA.

- During the fourth quarter, we also took delivery of four second hand 4800 TEU vessels from APM, the world's largest container shipping line. These four vessels are chartered to APM, increasing our current customer base to three charterers. The MSC Sweden, Maersk Matane, Maersk Marystown and Maersk Moncton were delivered on November 6, 2006, November 20, 2006, December 6, 2006 and December 22, 2006 respectively.

- During the year, Seaspan increased its contracted fleet to 41 vessels from its initial contracted IPO fleet of 23 vessels with the signing of agreements to acquire the following new and second-hand vessels:

- Two 3500 TEU vessels under construction from affiliates of Conti Holding GmbH & Co. KG of Germany. The total delivered cost is expected to be approximately $50.0 million per vessel. Seaspan expects to take delivery of the two 3500 TEU vessels in March and July 2007, respectively, from Zhejiang Shipbuilding Co. Ltd. in China.

- Eight 2500 TEU vessels from Jiangsu Yangzijiang Shipbuilding in China. The eight newbuilding vessels will be delivered between August 2008 and August 2009. The total delivered cost is expected to be approximately $44.5 million to $44.7 million per vessel.

- Four 5100 TEU vessels at Hyundai Heavy Industries Co., Ltd. in South Korea ("HHI"). The four newbuilding vessels will be delivered between April and December 2009. The total delivered cost is expected to be approximately $83.4 million per vessel.

- Four 4800 TEU vessels from APM at a cost of approximately $40.0 million per vessel were delivered to Seaspan during the fourth quarter. These vessels, the MSC Sweden, Maersk Matane, Maersk Marystown and Maersk Moncton, were delivered to APM from Odense Steel Shipyard between 1988 and 1989.

- During the year, Seaspan diversified its customers by adding charters with three leading liner companies:

- Twelve-year charter agreements for the two 3500 TEU vessels with Cosco Container Lines Co., Ltd., a subsidiary of China Cosco Holdings Co. Ltd. at a rate of $19,000 per vessel per day.

- Twelve-year charter agreements for the four 5100 TEU vessels with Mitusi O.S.K. Lines, Ltd. at a rate of $28,880 per vessel per day.

- Five-year charter agreements for four vessels with APM at a rate of $23,450 per vessel per day. After the initial five-year charter periods, APM will have two consecutive one year options to recharter each ship for $22,400 per day and $21,400 per day, respectively. They will have a further option to charter each ship for two final years at $20,400 per day.

- Twelve-year charter agreements for the eight 2500 TEU vessels with one of our existing customers, China Shipping Container Lines (Asia) Co. Ltd. at an initial rate of $16,750 per day, increasing to $16,900 per day after six years.

- During the year, Seaspan took delivery of 10 vessels to bring its fleet to 23 vessels in operations, an increase of 77% from the 13 vessels in operation at the end of last year.

- During the year, Seaspan added two new credit facilities and successfully completed a follow-on offering to finance its 18 new vessel acquisitions as follows:

- A $218.4 million loan facility with Sumitomo Mitsui Banking Corporation. The proceeds of this loan will be used to partially finance the construction of the four 5100 TEU vessels.

- A $365.0 million revolving credit facility with DnB Nor Bank ASA. The proceeds of this loan will be used to partially finance the delivery of the two 3500 TEU vessels and the construction of the eight 2500 TEU vessels.

- A follow on offering of 11.5 million common shares for net proceeds of $235.1 million.

- During the year, the CSCL Chiwan and CSCL Hamburg completed their regularly scheduled five-year special surveys and drydockings.

- Seaspan's fleet was utilized 100% and 99%, respectively, for the quarter and the year ended December 31, 2006.

The following tables summarize vessel utilization and the impact of the off-hire time incurred for special surveys and vessel repairs on Seaspan's revenues for the year ended December 31, 2006:
 



                        First     Second      Third     Fourth
                      Quarter    Quarter    Quarter    Quarter        YTD
                         2006       2006       2006       2006       2006
                    ---------  ---------  ---------  ---------  ---------
Vessel Utilization: # of Days  # of Days  # of Days  # of Days  # of Days
------------------  ---------  ---------  ---------  ---------  ---------
Ownership Days          1,296      1,450      1,553      1,820      6,119
Less Off-hire
 Days:
 Scheduled 5-Year
  Survey                  (20)         -          -          1(1)     (19)
 Incremental
  Due to
  Rudder Horn
  Repair                  (17)         -          -          -        (17)
 Grounding                  -        (24)         -          -        (24)
 Other                      -          -         (2)         -         (2)
                    ---------  ---------  ---------  ---------  ---------
Operating Days          1,259      1,426      1,551      1,821      6,057
                    ---------  ---------  ---------  ---------  ---------
                    ---------  ---------  ---------  ---------  ---------
Vessel Utilization       97.1%      98.3%      99.9%     100.1%      99.0%
                    ---------  ---------  ---------  ---------  ---------
                    ---------  ---------  ---------  ---------  ---------



                        First     Second      Third     Fourth
                      Quarter    Quarter    Quarter    Quarter        YTD
                         2006       2006       2006       2006       2006
                    ---------  ---------  ---------  ---------  ---------
Revenue - Impact
 of Off-hire:         Revenue    Revenue    Revenue    Revenue    Revenue
----------------    ---------  ---------  ---------  ---------  ---------
                (in thousands)
100% fleet
 utilization         $ 25,470   $ 28,267   $ 30,174   $ 35,698   $119,609
Less Off-hire:
 Scheduled 5-Year
  Survey                 (360)         -          -         30       (330)
 Incremental
  Due to
  Rudder Horn
  Repair                 (303)         -          -          -       (303)
 Grounding                  -       (438)         -          -       (438)
 Other                      -          -        (41)        (8)       (49)
                    ---------  ---------  ---------  ---------  ---------
Actual Revenue
 Earned              $ 24,807   $ 27,829   $ 30,133   $ 35,720   $118,489
                    ---------  ---------  ---------  ---------  ---------
                    ---------  ---------  ---------  ---------  ---------


(1) We recovered 1.5 days of charter-hire revenue from the Charterer for
    drydocking that was previously deducted as off-hire in the first
    quarter of 2006.



The following table summarizes the number of vessels in Seaspan's fleet as it takes scheduled delivery:
 



                                                 Forecasted
                                        -------------------------
                                 As of    Year Ending December 31,
Vessel Size          December 31, 2006    2007      2008     2009
--------------       -----------------  ------  --------  -------
9600 TEU Class                       -       2         2        2
8500 TEU Class                       2       2         2        2
5100 TEU Class                       -      -          -        4
4800 TEU Class                       4       4         4        4
4250 TEU Class                      17      19        19       19
3500 TEU Class                       -       2         2        2
2500 TEU Class                       -       -         2        8
                     -----------------  ------  --------  -------
Operating Vessels                   23      29        31       41
                     -----------------  ------  --------  -------
                     -----------------  ------  --------  -------
Capacity (TEU)(1)              108,473  143,207  148,299  183,923


(1) Our 9600 TEU vessels, 8500 TEU vessels, 5100 TEU vessels, 4800 TEU
    vessels, 4250 TEU vessels, 3500 TEU vessels and 2500 TEU vessels have
    an actual capacity of 9580, TEU, 8468 TEU, 5087 TEU, 4809 TEU, 4253
    TEU, 3534 TEU and 2546 TEU respectively.



About Seaspan

Seaspan owns containerships and charters them pursuant to long-term fixed-rate charters. Seaspan's fleet of 41 containerships consists of 23 existing containerships and 18 to be delivered over approximately the next three years. The 18 vessels that Seaspan has contracted to purchase are already committed to long-term time charters ranging from 10 to 12 years. Seaspan's operating fleet of 23 vessels has an average age of five years with an average remaining charter period of eight years. Seaspan's customer base consists of five of the largest liner companies, including China Shipping Container Lines, A.P. Moller-Maersk, Mitsui O.S.K. Lines, Hapag-Lloyd and COSCO Container Lines.

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 for investors and analysts to discuss its results for the quarter on Thursday March 1, 2007, at 6:00 am PT / 9:00 am ET. Participants should call 800-946-0706 (US/Canada) or 719-457-2638 (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 888-203-1112 or 719-457-0820 and enter replay passcode 4494471. The recording will be available from March 1, 2007 at 9:00 am PT / 12:00 p.m. ET through to March 15, 2007 at 8:59 p.m. PT / 11:59 p.m. ET. A live broadcast of the earnings conference call will also be available via the Internet at www.seaspancorp.com in the Investor Relations section under Events and Presentations. The webcast will be archived on the site for one year.
 



SEASPAN CORPORATION
UNAUDITED BALANCE SHEET
AS AT DECEMBER 31, 2006 AND 2005
(IN THOUSANDS OF US DOLLARS)


                                     December 31, 2006  December 31, 2005
Assets
Current assets:
 Cash and cash equivalents                  $   92,227         $   15,718
 Accounts receivable                               641                  -
 Prepaid expenses                                3,787              2,352
                                            ----------         ----------
                                                96,655             18,070


Vessels                                      1,198,782            621,163


Deferred financing fees                          7,809              6,526


Intangible assets                                1,315                  -


Fair value of financial instruments             10,711              4,799
                                            ----------         ----------
                                            $1,315,272         $  650,558
                                            ----------         ----------
                                            ----------         ----------


Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable and accrued
  liabilities                               $    5,607         $    1,467
 Deferred revenue                                5,560              2,759
                                            ----------         ----------
                                                11,167              4,226


Long-term debt                                 563,203            122,893
Fair value of financial instruments             15,831                  -
                                            ----------         ----------
                                               590,201            127,119


Share Capital                                      475                360
Additional paid-in capital                     748,410            512,229
Retained earnings (deficit)                    (19,602)             6,051
Accumulated other
 comprehensive income (loss)                    (4,212)             4,799
                                            ----------         ----------
Total shareholders' equity                     725,071            523,439
                                            ----------         ----------
                                            $1,315,272         $  650,558
                                            ----------         ----------
                                            ----------         ----------



SEASPAN CORPORATION
UNAUDITED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2006
(in thousands of US dollars, except per share amounts)


                                         Quarter ended         Year ended
                                     December 31, 2006  December 31, 2006


Revenue                                     $   35,720         $  118,489
Operating expenses:
 Ship operating                                  8,735             29,407
 Depreciation                                    8,308             26,878
 General and administrative                      1,887              4,911
                                            ----------         ----------
                                                18,930             61,196
                                            ----------         ----------


Operating earnings                              16,790             57,293


Other expenses (earnings):
 Interest expense                                6,133             17,594
 Interest income                                (1,180)            (1,542)
 Undrawn credit facility fee                       744              2,803
 Amortization of deferred
  financing fees                                   499              1,966
 Change in fair value of financial
  instruments                                      544                908
                                            ----------         ----------
                                                 6,740             21,729
                                            ----------         ----------


Net earnings                                $   10,050         $   35,564
Retained earnings (deficit),
 beginning of period                           (14,344)             6,051
Dividends on common shares                     (15,308)           (61,217)
                                            ----------         ----------
Deficit, end of period                      $  (19,602)        $  (19,602)
                                            ----------         ----------
                                            ----------         ----------
Earnings per share, basic and diluted       $     0.24         $     0.94
                                            ----------         ----------
                                            ----------         ----------



SEASPAN CORPORATION
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2006
(IN THOUSANDS OF US DOLLARS)


                                         Quarter ended         Year ended
                                     December 31, 2006  December 31, 2006


Cash provided by (used in):
Operating activities:
 Net earnings                               $   10,050         $   35,564
 Items not involving cash:
  Depreciation                                   8,308             26,878
  Stock-based compensation                         955              1,182
  Amortization of deferred
   financing fees                                  499              1,966
  Change in fair value of financial
   instruments                                     544                908
  Change in non-cash operating
   working capital                               6,178              4,865
                                            ----------         ----------
Cash from operating activities                  26,534             71,363
                                            ----------         ----------


Investing activities:
 Expenditures for vessels                     (274,789)          (502,363)
 Deposits on vessels                            (2,124)          (101,974)
 Intangible assets                              (1,315)            (1,315)
                                            ----------         ----------
Cash used in investing activities             (278,228)          (605,652)
                                            ----------         ----------


Financing activities:
 Common shares issued, net of share
  issue costs                                  235,114            235,114
 Draws on credit facility                      115,856            440,310
 Financing fees incurred                        (1,498)            (3,409)
 Dividends on common shares                    (15,308)           (61,217)
                                            ----------         ----------
Cash from financing activities                 334,164            610,798
                                            ----------         ----------


Increase in cash and cash equivalents           82,470             76,509


Cash and cash equivalents, beginning
 of period                                       9,757             15,718
                                            ----------         ----------


Cash and cash equivalents, end of period    $   92,227         $   92,227
                                            ----------         ----------
                                            ----------         ----------



SEASPAN CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2006
(IN THOUSANDS OF US DOLLARS)



Description of Non-GAAP Financial Measures - Cash Available for Distribution

Cash available for distribution represents net earnings adjusted for depreciation, net interest expense, amortization of deferred financing fees, stock-based compensation and the change in fair value of financial instruments. Cash available for distribution is a non-GAAP quantitative standard used in the publicly-traded investment community to assist in evaluating a company's ability to make quarterly cash dividends. Cash available for distribution is not required 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.
 



                                         Quarter ended         Year ended
                                     December 31, 2006  December 31, 2006


Net earnings                                $   10,050         $   35,564
Add:
 Depreciation                                    8,308             26,878
 Interest expense                                6,133             17,594
 Amortization of deferred
  financing fees                                   499              1,966
 Stock-based compensation                          955              1,182
 Change in fair value of financial
  instruments                                      544                908
Less:
 Interest income                                (1,180)            (1,542)
                                            ----------         ----------
Net cash flows before cash
 interest payments                              25,309             82,550


Less:
 Cash interest paid                             (6,533)           (18,021)
Add:
 Cash interest received                          1,138              1,500
                                            ----------         ----------
Cash available for distribution             $   19,914         $   66,029
                                            ----------         ----------
                                            ----------         ----------



CAUTIONARY 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 forecasts of our ability to make such payments; pending acquisitions, business strategy and expected capital spending; operating expenses, availability of crew, number of off-hire days, drydocking 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 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 our Manager's relationships and reputation in the containership industry; changes in governmental rules and regulations or actions taken by regulatory authorities; 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 and subordinated shares.

For further information: For Investor Relations Inquiries: Seaspan Corporation, Mr. Kevin M. Kennedy, Chief Financial Officer, 604-638-2575 / For Media Inquiries: The IGB Group, Mr. Leon Berman, 212-477-8438