Seaspan Reports Financial Results for the Quarter Ended March 31, 2014

HONG KONG, CHINA – April 28, 2014 /CNW/ – Seaspan Corporation ("Seaspan") (NYSE:SSW) announced today its financial results for the quarter ended March 31, 2014. Below is a summary of Seaspan's key financial results:

Summary of Key Financial Results (in thousands of USD):

	Quarter Ended March 31,		Change
	2014	2013	$	%
Reported net earnings	$ 18,028	$ 55,606	$ (37,578)	(67.6)	%
Normalized net earnings(1)	$ 28,792	$ 28,350	$ 442	1.6	%
Earnings per share, basic	$ 0.03	$ 0.57	$ (0.54)	(94.7)	%
Earnings per share, diluted	$ 0.03	$ 0.53	$ (0.50)	(94.3)	%
Normalized earnings per share, converted(1) (Series A preferred shares converted at $15)	$ 0.18	$ 0.21	$ (0.03)	(14.3)	%
Cash available for distribution to common shareholders(2)	$ 67,908	$ 66,815	$ 1,093	1.6	%
Adjusted EBITDA(3)	$ 123,815	$ 124,035	$ (220)	(0.2)	%

(1) Normalized net earnings and normalized earnings per share are non-GAAP measures that are adjusted for items such as interest expense, change in fair value of financial instruments, interest expense at the hedged rate and certain other items that Seaspan believes are not representative of its operating performance. Normalized earnings per share, converted, reflects normalized earnings per share on a pro-forma basis on the assumption that Seaspan's outstanding Series A preferred shares are converted at $15.00 per share. Please read "Reconciliation of Non-GAAP Financial Measures for the Quarters Ended March 31, 2014 and 2013 – Description of Non-GAAP Financial Measures – B. Normalized Net Earnings and Normalized Earnings per Share" for a description of normalized net earnings and normalized earnings per share, converted, and for reconciliations of these measures to net earnings and earnings per share, respectively.

(2) Cash available for distribution to common shareholders is a non-GAAP measure that represents net earnings adjusted for depreciation and amortization, interest expense, amortization of deferred charges, share-based compensation, change in fair value of financial instruments, bareboat charter adjustment, 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. Please read "Reconciliation of Non-GAAP Financial Measures for the Quarters Ended March 31, 2014 and 2013 – Description of Non-GAAP Financial Measures – A. Cash Available for Distribution to Common Shareholders" for a description of cash available for distribution to common shareholders and a reconciliation of cash available for distribution to net earnings.

(3) Adjusted EBITDA is a non-GAAP measure that represents net earnings before interest expense and other debt-related expenses, income tax expense, interest income, depreciation and amortization, share-based compensation, bareboat charter adjustment, change in fair value of financial instruments, and certain other items that Seaspan believes are not representative of its operating performance. Please read "Reconciliation of Non-GAAP Financial Measures for the Quarters Ended March 31, 2014 and 2013 – Description of Non-GAAP Financial Measures – C. Adjusted EBITDA" for a description of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net earnings.

Summary of Key Highlights

• Achieved vessel utilization of 98.9% for the quarter ended March 31, 2014, or 99.7% if the impact of off-charter days is excluded. 
   
• Accepted delivery of one vessel during the quarter, bringing Seaspan's operating fleet to a total of 72 vessels at March 31, 2014. 
   
• Paid regular quarterly dividends of $0.59375 and $0.496875 per Series C (NYSE: SSW PR C) and Series D (NYSE: SSW PR D) preferred share, respectively, for a total distribution of $10.7 million to preferred shareholders of record as of January 29, 2014. 
   
• Paid a quarterly dividend for the 2013 fourth quarter of $0.3125 per Class A common share to all shareholders of record as of February 18, 2014. 
   
• In February 2014, Seaspan's board of directors approved a 10.4% increase in the 2014 quarterly Class A common share dividend to $0.345 per share. This $0.0325 per share increase to Seaspan's quarterly Class A common share dividend represents the fifth increase since March 31, 2010 for an aggregate increase of 245.0%.
• Recently raised a total of approximately $470.0 million through capital market transactions, including Seaspan's first issuance of unsecured notes.

Gerry Wang, Chief Executive Officer, Co-Chairman and Co-Founder of Seaspan, commented, "During the first quarter, we continued to generate stable results and achieved a number of milestones for shareholders. First, we received the delivery of our first SAVER design containership, and realized further fleet growth by exercising options for the construction of four additional 10,000 TEU class ships. We also took important steps to strengthen and diversify Seaspan's capital structure. In addition to our $135 million perpetual preferred offering, we successfully completed a $345 million unsecured notes offering, both of which expanded our investor base and improved our financial flexibility."

Mr. Wang continued, "Seaspan remains in a strong position to draw upon the Company's financial flexibility and further implement its disciplined growth strategy while continuing to distribute dividends to shareholders. We are pleased to have declared a $0.345 per share common dividend for the first quarter, representing a 10% increase over the fourth quarter 2013 dividend and a 245% increase since March 2010."

First Quarter Developments

Vessel Delivery

In March 2014, Seaspan accepted delivery of the Hanjin Buddha which was constructed by Jiangsu New Yangzi Shipbuilding Co., Ltd, using Seaspan's fuel-efficient SAVER design. This is the first SAVER design vessel in Seaspan's operating fleet. The Hanjin Buddha commenced a ten-year, fixed-rate time charter with Hanjin Shipping Co. Ltd. ("Hanjin") on March 25, 2014 and is the first of a total of three vessels to be chartered to Hanjin. This vessel expands Seaspan's operating fleet to 72 vessels with another 17 vessels to be delivered in the next two years as part of its current newbuild growth program.

Newbuilding Containership Order and Time Charters

In February 2014, Seaspan signed long-term, fixed-rate time charter contracts with Mitsui O.S.K Lines Ltd. ("MOL") for six fuel-efficient SAVER design 10000 TEU vessels to be constructed at Jiangsu New Yangzi Shipbuilding Co., Ltd. and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. (collectively "YZJ"). The six previously announced newbuilding 10000 TEU vessels to be constructed at YZJ will be used for these MOL time charters. Pursuant to Seaspan's right of first refusal agreement with Greater China Intermodal Investment LLC ("GCI"), Seaspan retained three of the 10000 TEU newbuilding containerships. The remaining three vessels remain subject to allocation under a right of first refusal agreement with GCI and Blue Water Commerce, LLC ("Blue Water").

In March 2014, Seaspan exercised options for the construction of four 10000 TEU newbuilding containerships at YZJ. These vessels are scheduled for delivery in 2016 and will be constructed using Seaspan's fuel-efficient SAVER design. Pursuant to Seaspan's right of first refusal agreement with GCI, Seaspan retained two of the 10000 TEU newbuilding containerships. The remaining two vessels remain subject to allocation under a right of first refusal agreement with GCI and Blue Water.

Vessel Re-delivery

In the first quarter of 2014, the Madinah was re-delivered to Seaspan. In April 2014, the Madinah commenced a short-term time charter for a minimum term of 80 days.

Issuance of Series E Preferred Shares

In February 2014, Seaspan issued in a registered public offering 5,400,000 Series E preferred shares at a price of $25.00 per share for total net proceeds of approximately $130.4 million. Dividends are payable on the Series E preferred shares at a rate of 8.25% per annum of the stated liquidation preference of $25.00 per share. Seaspan intends to use the net proceeds for general corporate purposes, which may include funding vessel acquisitions.

Loan Facility Transaction

Effective January 31, 2014, the maturity date of Seaspan's $1.0 billion credit facility (the "Facility") was extended from May 2015 to May 2019, and the outstanding amount of the Facility was reduced to $433.8 million and now bears interest at current market rates. In January 2014, Seaspan funded this reduction in principal by drawing under existing credit facilities, one of which is secured by certain vessels that were pledged as collateral under the Facility, and using excess cash on hand.

Conversion of Series A Preferred Shares

In January 2014, Seaspan's then outstanding 200,000 Series A preferred shares automatically converted into a total of 23,177,175 Class A common shares pursuant to the rights and restrictions attached to the Series A preferred shares. At January 31, 2014 there were 92,755,818 Class A common shares issued and outstanding. The conversion of the preferred shares increased Seaspan's market capitalization by approximately $500.0 million, for an aggregate Class A common share market capitalization of over $2.0 billion at January 31, 2014.

Results of Special Meeting of Shareholders

Seaspan held a special meeting of shareholders on January 28, 2014 to vote on separate proposals to amend its articles of incorporation to (a) increase the number of its authorized shares of preferred stock from 65,000,000 to 150,000,000, with a corresponding increase in the number of authorized shares of capital stock from 290,000,100 to 375,000,100, and (b) declassify the board of directors and provide for the annual election of all directors. The proposal to increase the number of its authorized shares of preferred stock and capital stock was approved by shareholders at the meeting; the proposal to declassify the board of directors was not approved by shareholders.

Subsequent Events

On April 3, 2014, Seaspan issued in a registered public offering 13,800,000 senior unsecured notes (the "Notes") at a price of $25.00 per note for net proceeds of approximately $340.4 million, including the exercise in full of the underwriters' option to purchase an additional 1,800,000 Notes. The Notes mature on April 30, 2019 and bear interest at a rate of 6.375% per year, payable quarterly. Seaspan used a portion of the net proceeds from the offering to repay its $125.0 million credit facility, and intends to use the remaining net proceeds from the offering for general corporate purposes, which may include funding vessel acquisitions and repaying indebtedness under other outstanding credit facilities.

On April 9, 2014, Seaspan declared a cash dividend of $0.59375, $0.496875 and $0.441146 per Series C, Series D and Series E preferred share, respectively, for a total distribution of $13.0 million. The dividends will be paid on April 30, 2014 to all Series C, Series D and Series E preferred shareholders of record as of April 29, 2014.

On April 9, 2014, Seaspan declared quarterly dividends of $0.345 per Class A common share. The dividend is payable on April 30, 2014 to all shareholders of record as of April 21, 2014.

Results for the Quarter Ended March 31, 2014

The following table summarizes vessel utilization for the quarter ended March 31, 2014:

			First Quarter
			2014		2013
Vessel Utilization:
	Ownership Days		6,037		5,850
	Less Off-hire Days:
		Scheduled 5-Year Survey	(10)		–
		Unscheduled Off-hire(1)	(58)		(230)
	Operating Days		5,969		5,620
	Vessel Utilization		98.9	%	96.1	%

(1) Unscheduled off-hire includes days related to vessels off-charter.

At the beginning of 2014, Seaspan had 71 vessels in operation. Seaspan accepted delivery of one newbuilding vessel during the quarter ended March 31, 2014, bringing its fleet to a total of 72 vessels in operation as at March 31, 2014. Revenue from time charters is determined primarily by the number of operating days, and ship operating expense is determined primarily by the number of ownership days.

The following table summarizes Seaspan's consolidated financial results for the quarters ended March 31, 2014 and 2013:

		Quarter Ended  March 31,		Increase
		2014	2013	Days	%
	Operating days	5,969	5,620	349	6.2%
	Ownership days	6,037	5,850	187	3.2%

Financial Summary  (in millions of USD)		Quarter Ended  March 31,		Change
		2014	2013	$	%
	Revenue	$ 168.0	$ 164.9	$ 3.1	1.9	%
	Ship operating expense	41.3	37.5	3.7	9.9	%
	Depreciation and amortization expense	43.7	42.8	1.0	2.3	%
	General and administrative expense	8.0	7.8	0.3	3.2	%
	Operating lease expense	1.1	1.1	–	1.6	%
	Interest expense	17.6	15.5	2.1	13.4	%
	Change in fair value of financial instruments	36.3	2.7	33.7	1263.2	%

Revenue

Revenue increased by 1.9% for the quarter ended March 31, 2014 over the same period for 2013. This is due primarily to the impact of a full quarter of revenue contribution from the two 4600 TEU secondhand vessels delivered in mid-2013, a decrease in unscheduled off-hire and the delivery of one vessel in March 2014. These increases were partially offset by lower charter rates for three vessels which were on short-term charters during the quarter ended March 31, 2014 and an increase in scheduled off-hire. The increase in operating days and the related financial impact thereof for the quarter ended March 31, 2014 relative to the corresponding period in 2013, is attributable to the following:

			Quarter Ended  March 31, 2014
			Operating Days Impact	$ Impact (in millions of USD)
	2014 vessel delivery		7	$ 0.3
	Full period contribution for 2013 vessel deliveries		180	3.5
		Change in daily charterhire rate and re-charters	–	(1.8)
		Scheduled off-hire	(10)	(0.3)
		Unscheduled off-hire	172	1.4
		Vessel management revenue	–	0.1
		Other	–	(0.1)
	Total		349	$ 3.1

Vessel utilization was 98.9% for the quarter ended March 31, 2014, compared to 96.1% for the same period in 2013.

The increase in vessel utilization for the quarter ended March 31, 2014, compared to the same period in 2013, was primarily due to a 172-day decrease in unscheduled off-hire. In the first quarter of 2014, there were 58 days of unscheduled off-hire which included 51 off-charter days for one of Seaspan's 4250 TEU vessels compared to 230 days of unscheduled off-hire in the first quarter of 2013, which included 221 off-charter days for four of Seaspan's 4250 TEU vessels. During the quarter ended March 31, 2014, there was one scheduled dry-docking that resulted in 10 days of scheduled off-hire, compared to no scheduled dry-dockings during the quarter ended March 31, 2013.

Seaspan's cumulative vessel utilization since its initial public offering in August 2005 through March 31, 2014 is approximately 98.9% or 99.3% if the impact of off-charter days is excluded.

Ship Operating Expense

Ship operating expense for the quarter ended March 31, 2014 increased by $3.7 million, or 9.9%, to $41.3 million compared to the same period in 2013, due primarily to an increase in crew wages, spares expense and ownership and managed days. Ownership and managed days increased by 3.1% in the first quarter of 2014, compared to the same period in 2013, which contributed to the increase in ship operating expense. Crew wages increased due to an increase in number of crew as well as the earlier timing of wage increases that occurred in the first quarter of 2014 compared to the third quarter in the prior year. In addition, the purchase of stores and spare parts expense occurred earlier in 2014 than in 2013. Seaspan expects ship operating expense to increase as its fleet ages and as the average size of its vessels increases.

Depreciation and Amortization Expense

The increase in depreciation and amortization expense for the quarter ended March 31, 2014 was due to the increase in the size of the fleet. Two vessels were delivered in mid-2013 and a full quarter of depreciation for these vessels was expensed in the first quarter of 2014.

General and Administrative Expense

General and administrative expense for the quarter ended March 31, 2014 increased by $0.3 million, or 3.2%, to $8.0 million, compared to the same period in 2013. There were no significant changes in Seaspan's general and administrative expenses compared to the same period in 2013.

Interest Expense

As at March 31, 2014, Seaspan had total borrowings of $3.6 billion, which consisted of long-term debt of $3.0 billion and other long-term liabilities of $0.6 billion. As at March 31, 2014, Seaspan's operating borrowings were $3.3 billion. Interest expense is comprised primarily of interest incurred on long-term debt and other long-term liabilities relating to operating vessels at either the variable rate calculated by reference to LIBOR plus the applicable margin or at fixed rates. Although Seaspan has entered into fixed interest rate swaps for much of its variable rate debt, the difference between the variable interest rate and the swapped fixed-rate on operating debt is recorded in Seaspan's change in fair value of financial instruments. Interest expense also includes a non-cash reclassification of amounts from accumulated other comprehensive loss related to previously designated hedging relationships. Interest incurred on Seaspan's borrowings related to vessels under construction is capitalized to the cost of the respective vessels under construction.

Although operating borrowings decreased for the quarter ended March 31, 2014, the increase in interest expense was primarily due to certain of Seaspan's term loans which have higher margins and fixed interest rates.

Change in Fair Value of Financial Instruments

The change in fair value of financial instruments resulted in a loss of $36.3 million for the quarter ended March 31, 2014, compared to a loss of $2.7 million for the same period in 2013. The change in fair value for the quarter was primarily due to decreases in the forward LIBOR curve, the early termination of one of Seaspan's swaps and the effect of the passage of time.

The fair value of interest rate swap and swaption agreements is subject to change based on the company-specific credit risk of Seaspan and of the counterparty 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 services. Seaspan's managed fleet consists of 109 containerships representing a total capacity of over 840,000 TEU, including 35 newbuilding containerships on order scheduled for delivery to Seaspan and third parties by the end of 2016. Seaspan's current operating fleet of 72 vessels has an average age of approximately seven years and an average remaining lease period of approximately five years.

Seaspan has the following securities listed on The New York Stock Exchange:

Symbol:	Description:
SSW	Class A common shares
SSW PR C	Series C preferred shares
SSW PR D	Series D preferred shares
SSW PR E	Series E preferred shares
SSWN	2019 senior unsecured notes

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, 2014 on April 29, 2014 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 1-855-859-2056 or 1-404-537-3406 and enter the replay passcode: 32220321. The recording will be available from April 29, 2014 at 8:00 a.m. PT / 11:00 a.m. ET through 8:59 p.m. PT / 11:59 p.m. ET on May 13, 2014. 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, 2014
(IN THOUSANDS OF US DOLLARS)
			March 31, 2014	December 31, 2013
Assets
Current assets:
		Cash and cash equivalents	$ 287,350	$ 476,380
		Short-term investments	1,752	11,675
		Accounts receivable	68,203	68,217
		Prepaid expenses	30,556	22,671
		Gross investment in lease	21,170	21,170
			409,031	600,113
Vessels			4,733,500	4,670,899
Vessels under construction			359,144	321,372
Deferred charges			51,068	53,971
Gross investment in lease			53,733	58,953
Goodwill			75,321	75,321
Other assets			100,314	106,944
Fair value of financial instruments			53,202	60,188
			$ 5,835,313	$ 5,947,761
Liabilities and Shareholders' Equity
Current liabilities:
		Accounts payable and accrued liabilities	$ 60,664	$ 65,634
		Current portion of deferred revenue	25,572	27,683
		Current portion of long-term debt debt	143,303	388,159
		Current portion of other long-term liabilities	40,452	38,930
			269,991	520,406
Deferred revenue			4,502	4,143
Long-term debt			2,872,698	2,853,459
Other long-term liabilities			560,907	572,673
Fair value of financial instruments			426,745	425,375
			4,134,843	4,376,056
Share capital			1,177	882
Treasury shares			(379)	(379)
Additional paid in capital			2,172,471	2,023,622
Deficit			(433,576)	(411,792)
Accumulated other comprehensive loss			(39,223)	(40,628)
Total shareholders' equity			1,700,470	1,571,705
			$ 5,835,313	$ 5,947,761

SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
				Quarter Ended March 31,
				2014	2013
	Revenue			$ 167,983	$ 164,924
	Operating expenses:
			Ship operating	41,252	37,546
			Depreciation and amortization	43,732	42,753
			General and administrative	8,043	7,791
			Operating lease	1,103	1,086
				94,130	89,176
	Operating earnings			73,853	75,748
	Other expenses (income):
			Interest expense	17,561	15,484
			Interest income	(1,106)	(187)
			Undrawn credit facility fees	566	397
			Amortization of deferred charges	2,003	2,110
			Change in fair value of financial instruments	36,343	2,666
			Equity loss on investment	232	34
			Other expenses (income)	226	(362)
				55,825	20,142
	Net earnings			$ 18,028	$ 55,606
	Deficit, beginning of period			(411,792)	(594,153)
	Dividends – common shares			(28,993)	(15,794)
	Dividends – preferred shares			(10,540)	(9,119)
	Amortization of Series C issuance costs			(279)	(310)
	Deficit, end of period			$ (433,576)	$ (563,770)
	Weighted average number of shares, basic			85,844	63,767
	Weighted average number of shares, diluted			86,409	85,990
	Earnings per share, basic			$ 0.03	$ 0.57
	Earnings per share, diluted			$ 0.03	$ 0.53

SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013
(IN THOUSANDS OF US DOLLARS)
		Quarter Ended March 31,
		2014	2013
Net earnings		$ 18,028	$ 55,606
Other comprehensive income:
	Amounts reclassified to earnings during the period, relating to cash flow hedging instruments	1,405	1,802
Comprehensive income		$ 19,433	$ 57,408

SEASPAN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013
(IN THOUSANDS OF US DOLLARS)
					Quarter Ended March 31,
					2014	2013
Cash from (used in):
Operating activities:
		Net earnings			$ 18,028	$ 55,606
		Items not involving cash:
			Depreciation and amortization		43,732	42,753
			Share-based compensation		2,303	2,811
			Amortization of deferred charges		2,003	2,110
			Amounts reclassified from other comprehensive loss to interest expense		1,192	1,579
			Unrealized change in fair value of financial instruments		2,921	(28,869)
			Equity loss on investment		232	34
			Other		266	–
Changes in assets and liabilities					3,491	(41,741)
Cash from operating activities					74,168	34,283
Financing activities:
				Preferred shares issued, net of issuance costs	130,401	–
				Draws on credit facilities	340,000	9,000
				Repayment of credit facilities	(627,637)	(21,007)
				Repayment of other long-term liabilities	(10,244)	(10,073)
				Financing fees	(525)	(11,877)
				Dividends on common shares	(14,318)	(9,172)
				Dividends on preferred shares	(10,540)	(9,119)
Cash used in financing activities					(192,863)	(52,248)
Investing activities:
				Expenditures for vessels	(79,581)	(59,229)
				Short-term investments	9,923	(30,273)
				Intangible assets	(625)	1,118
				Recoverable from affiliate	(52)	–
				Investment in affiliate	–	(1,111)
Cash used in investing activities					(70,335)	(89,495)
Decrease in cash and cash equivalents					(189,030)	(107,460)
Cash and cash equivalents, beginning of period					476,380	393,478
Cash and cash equivalents, end of period					$ 287,350	$ 286,018

SEASPAN CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013

(IN THOUSANDS OF US DOLLARS)

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, share-based compensation, change in fair value of financial instruments, bareboat charter adjustment, 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,
		2014	2013
Net earnings		$ 18,028	$ 55,606
Add:
	Depreciation and amortization	43,732	42,753
	Interest expense	17,561	15,484
	Amortization of deferred charges	2,003	2,110
	Share-based compensation	2,303	2,811
	Change in fair value of financial instruments	36,343	2,666
	Change in fair value of financial instruments included in equity loss	199	–
	Bareboat charter adjustment, net (1)	4,186	2,395
Less:
	Amounts paid for dry-dock adjustment	(2,457)	(2,485)
	Series C preferred share dividends paid and accumulated	(8,114)	(8,313)
	Series D preferred share dividends paid and accumulated	(2,537)	(806)
Net cash flows before interest payments		111,247	112,221
Less:
Interest expense at the hedged rate(2)		(43,339)	(45,406)
Cash available for distribution to common shareholders		$ 67,908	$ 66,815

SEASPAN CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013

(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 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.

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 (excluding the retained earnings impact of any repurchases), Series D and Series E preferred shares, divided by the "converted" number of shares outstanding for the period. On January 30, 2014, Seaspan's outstanding 200,000 Series A preferred shares automatically converted into a total of 23,177,175 Class A common shares pursuant to Seaspan's articles of incorporation. The conversion provisions provided for automatic conversion to Class A common shares at a price of $15.00 per share (and based on the applicable liquidation preference of the Series A preferred shares), if the conversion occurred on or after January 30, 2014 and the trailing 30-day average trading price of the common shares was equal to or above $15.00. If the share price was less than $15.00, then Seaspan could 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 had been less than $15.00 and the per share impact of the preferred shares conversion at $15.00.

Normalized net earnings and normalized earnings per share, converted, are not defined by GAAP and should not be considered as an alternative to net earnings, earnings per share or any other indicator of Seaspan's performance required to be reported by GAAP.

SEASPAN CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013

(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

B. Normalized Net Earnings and Normalized Earnings per Share (continued)

			Quarter Ended March 31,
			2014	2013
Net earnings			$ 18,028	$ 55,606
Adjust:
		Interest expense	17,561	15,484
		Change in fair value of financial instruments	36,343	2,666
		Change in fair value of financial instruments included in equity loss	199	–
		Interest expense at the hedged rate(2)	(43,339)	(45,406)
Normalized net earnings			$ 28,792	$ 28,350
Less: preferred share dividends
		Series A	3,395	9,050
		Series C (including amortization of issuance costs)	8,393	8,620
		Series D	2,426	1,543
		Series E	1,423	–
			15,637	19,213
Normalized net earnings attributable to common shareholders			$ 13,155	$ 9,137
Weighted average number of shares used to compute earnings per share
Reported and normalized, basic			85,844	63,767
		Share-based compensation	96	364
		Contingent consideration	469	977
		Shares held in escrow	–	189
		Series A preferred shares liquidation preference converted at $15	7,604	20,693
Reported, diluted and normalized, converted			94,013	85,990
Earnings per share:
	Reported, basic		$ 0.03	$ 0.57
	Reported, diluted		$ 0.03	$ 0.53
	Normalized, converted – preferred shares converted at $15(3)		$ 0.18	$ 0.21

SEASPAN CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE QUARTERS ENDED MARCH 31, 2014 AND 2013

(IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)

C. Adjusted EBITDA

Adjusted EBITDA is defined as net earnings before interest expense and other debt-related expenses, income tax expense, interest income, depreciation and amortization, share-based compensation, bareboat charter adjustment, change in fair value of financial instruments, and certain other items that Seaspan believes are not representative of its operating performance.

In the third quarter of 2013, the definition of Adjusted EBITDA was revised to exclude share-based compensation expense and, accordingly, the comparative figures for the prior periods have been adjusted to reflect this change. The impact of this change resulted in an increase in Adjusted EBITDA for the quarter ended March 31, 2013 of approximately 2.3%.

Adjusted EBITDA provides useful information to investors in assessing Seaspan's results of operations. Seaspan believes that this measure is useful in assessing performance and highlighting trends on an overall basis. Seaspan also believes that this measure can be useful in comparing its results with those of other companies. The GAAP measure most directly comparable to Adjusted EBITDA is net earnings. Adjusted EBITDA 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.

			Quarter Ended March 31,
			2014	2013
Net earnings			$ 18,028	$ 55,606
Add:
		Interest expense	17,561	15,484
		Interest income	(1,106)	(187)
		Undrawn credit facility fees	566	397
		Depreciation and amortization	43,732	42,753
		Amortization of deferred charges	2,003	2,110
		Share-based compensation	2,303	2,811
		Bareboat charter adjustment, net (1)	4,186	2,395
		Change in fair value of financial instruments	36,343	2,666
		Change in fair value of financial instruments included in equity loss	199	–
Adjusted EBITDA			$ 123,815	$ 124,035

(1) In the second half of 2011, Seaspan entered into agreements to bareboat charter four 4800 TEU vessels to Mediterranean Shipping Company S.A. ("MSC") for a five year term, beginning from vessel delivery dates that occurred in 2011. Upon delivery of the vessels to MSC, the transactions were accounted for as sales-type leases. The vessels were disposed of and a gross investment in lease was recorded, which is being amortized to income through revenue. The bareboat charter adjustment is included to reverse the GAAP accounting treatment and reflect the transaction as if the vessels had not been disposed of. Therefore, the bareboat charter fees are added back and the interest income from leasing, which is recorded in revenue, is deducted resulting in a net bareboat charter adjustment.

(2) 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 and variable rate leases, on an accrual basis. Interest expense on fixed rate borrowings is calculated on the effective interest rate.

(3) Normalized earnings per share, converted, decreased for the quarter ended March 31, 2014 as detailed in the table below:

			Quarter Ended  March 31, 2014
Normalized earnings per share, converted- preferred shares converted at $15, March 31, 2013			$ 0.21
Excluding share count changes:
		Increase in normalized earnings(a)	0.02
		Decrease from impact of Series C, D and E preferred shares	(0.03)
Share count changes:
		Increase in converted share count (from 85,990 shares to 94,013 shares)	(0.02)
Normalized earnings per share, converted- preferred shares converted at $15, March 31, 2014			$ 0.18

(a) The increase in normalized net earnings for the quarter ended March 31, 2014 was primarily due to an increase in revenue of $3.1 million and a decrease in interest expense at the hedged rate of $2.1 million, offset by an increase in ship operating expenses of $3.7 million. Please read "Results for the Quarter Ended March 31, 2014" for a description of the increases in revenue and ship operating expenses. The decrease in interest expense at the hedged rate is primarily due to an increase in interest incurred on Seaspan's borrowings related to vessels under construction, which is capitalized to the cost of the respective vessels under construction.

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), which reflect management's current views with respect to certain future events and performance, including, in particular, statements regarding: future operating results; expansion of Seaspan's business; future time charters; future dividends; the effects of the acquisition of the Manager on Seaspan's ship operating expenses and general and administrative expenses; the effects of grants of stock appreciation rights on Seaspan's general and administrative expenses; vessel deliveries; vessel financing arrangements; use of public offering net proceeds and Seaspan's capital requirements. Although these statements are based upon assumptions Seaspan believes to be reasonable, they are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to: the availability to Seaspan of containership acquisition opportunities; the availability and cost to Seaspan of financing to pursue growth opportunities; the number of additional vessels managed by the Manager in the future; amounts of any payments to the former owners of Seaspan's Manager related to fleet growth; the timing of recognition of compensation expenses related to stock appreciation rights; general market conditions and shipping market trends, including, chartering rates; conditions in the containership market; increased operating expenses; the number of off-hire days; dry-docking requirements; Seaspan's ability to borrow funds under its credit facilities and to obtain additional financing in the future; Seaspan's future cash flows and its ability to make dividend and other payments; the time that it may take to construct new ships; Seaspan's continued ability to enter into primarily long-term, fixed-rate time charters with customers; changes in governmental rules and regulations or actions taken by regulatory authorities; the financial condition of shipyards, charterers, lenders, refund guarantors and other counterparties and their ability to perform their obligations under their agreements with Seaspan; the potential for early termination of long-term contracts and Seaspan's potential inability to renew or replace long-term contracts; conditions in the public equity markets and the price of Seaspan's shares; and other factors detailed from time to time in Seaspan's periodic reports and filings with the Securities and Exchange Commission, including Seaspan's Report on Form 20-F for the year ended December 31, 2013. Seaspan expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in Seaspan's views or expectations, or otherwise.