Sea Containers Annual Report 2004

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Sea Containers Ltd. Annual Report 2004

Sea Containers Ltd.
22 Victoria Street
Sea Containers Ltd.
P.O. Box HM 1179
Hamilton HM EX
Annual Report 2004
Bermuda
Tel: +1 (441) 295 2244

Fax: +1 (441) 292 8666
Correspondence:
Sea Containers Services Ltd.
Sea Containers House
20 Upper Ground
London SE1 9PF
England
Tel: +44 (0)20 7805 5000

Fax: +44 (0)20 7805 5900
www.seacontainers.com
2860-AR-04
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Sea Containers Ltd. Hoverspeed’s English Channel

services are benefiting from a
second linkspan at the port of
Calais opened in 2004 by the
local Chamber of Commerce.
This bridge offers two lanes for
Contents Sea Containers Ltd. is a Bermuda company with regional offices in vehicles, speeding up the
London, Genoa, New York, Rio de Janeiro, Bangkok and Sydney. It is process of loading and
Company description 2
owned primarily by U.S. shareholders and its common shares are listed on unloading. It is in addition to
Financial highlights 3 the New York Stock Exchange under the trading symbols SCRA and SCRB. the existing linkspan, providing
Hoverspeed with the option
Directors and officers 4 The company is engaged in three main activities: ferry services, rail of using both berths if traffic
operations and marine container leasing. Within each activity are a is backed up.
President’s letter to shareholders 6
number of operating units. Ferries consists of fast ferry services in the
Discussion by division: English Channel under the brand “Hoverspeed”; fast ferry services in
New York City under the brand “SeaStreak”; fast and conventional ferry
Ferry services 12 services in the Baltic under the brand “Silja Line”; and in the Adriatic under
the brand “SNAV-Hoverspeed” (50% owned).
Rail 16
Containers 18 Rail operations in the U.K. are conducted by the Great North Eastern
Railway (GNER).
Finance 22
Marine container leasing is conducted primarily through GE SeaCo SRL, a
Financial review 25
Barbados company owned 50% by Sea Containers and 50% by General
Shareholder and investor information 56 Electric Capital Corporation. GE SeaCo operates one of the largest marine
container fleets in the world, nearly one million units. Sea Containers also
owns or partly owns five container service depots, four container
manufacturing facilities, a forwarding and logistics business in Australasia
and a refrigerated container service business.
The company also owns 25% of the equity of Orient-Express Hotels Ltd.,
the common shares of which are listed on the New York Stock Exchange
under OEH. This company has 49 de luxe leisure properties in 25 countries.
Most of the properties are owned but some are partly owned. Its hotels,
Front cover: GNER has won a new 10-year franchise to restaurants, river cruise ships and tourist trains compete in the top end
operate passenger train services on the U.K.’s East Coast of the market.
Main Line between London and Scotland, and London and
Leeds. Under the agreement with the Strategic Rail Authority, Other lesser Sea Containers activities include port interests in the U.K. and
GNER plans to generate more passengers by offering Greece, property development, publishing, fruit farming in the Ivory Coast
attractive off-peak fares and using innovative revenue and Brazil, and a U.K.-based travel agency.
management techniques. It also plans to provide three extra
diesel powered trains and more train services, including 13
extra departures daily on the busy Leeds-London route.
2 S EA CONTAI N E RS LTD .
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Financial highlights
(See note 22 to the Financial Statements on page 48)
2004 2003 Change

$000 $000 %
Revenue 1,742,717 1,646,099 5.9
EBITDA*
Ferry operations 44,350 81,823 (45.8 )
Rail operations 64,409 97,435 (33.9 )
Container operations 90,929 83,349 9.1
Leisure operations 11,867 10,887 9.0
Other operations 5,505 7,750 (29.0 )
Gain on sale of ferry assets and non-recurring charges – 54,000 (100.0 )

Corporate costs (18,998 ) (15,798 ) 20.3
Total 198,062 319,446 (38.0 )
Net earnings before finance costs 61,085 194,469 (68.6 )
Net (losses)/earnings on common shares (5,368 ) 111,370 (104.8 )
Total assets at book value 2,736,100 2,765,841 (1.1 )
Debt and capital lease obligations 1,530,575 1,596,282 (4.1 )
Total shareholders’ equity 773,763 716,813 7.9
$ $ %
Net (losses)/earnings per common share:
Class A (Basic) (0.23 ) 5.32 (104.3 )

Class A (Diluted) (0.23 ) 5.25 (104.4 )
Class B (Basic) (0.23 ) 4.79 (104.8 )
Class B (Diluted) (0.23 ) 4.72 (104.9 )
Cash dividends per class A common share 0.10 0.05 100.0
Cash dividends per class B common share 0.09 0.05 100.0
* EBITDA means earnings

‘000 ‘000 % before interest, tax,
depreciation and amortization.
Number of class A common shares 23,655 20,933 13.0 See page 52 regarding a
reconciliation of EBITDA to
Number of class B common shares 14,388 14,414 (0.2 )
earnings before finance costs
and net earnings.
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Directors and officers
Above: The board of Standing from left to right: Seated from left to right:
Sea Containers photographed Robert M. Riggs* John D. Campbell
at Maroma Resort and Spa, an Senior Counsel of Carter Ledyard & Milburn LLP (attorneys) Senior Counsel (retired) of Appleby Spurling Hunter (attorneys)
Orient-Express Hotels property
on the Riviera Maya, Mexico. James B. Sherwood Michael J.L. Stracey*
Sea Containers is a major President of the company Executive Vice President and Chief Financial Officer (retired)
investor in Orient-Express of the company
Hotels Ltd. W. Murray Grindrod*
Chairman of Grindrod Ltd. (a shipping, transport and Charles N.C. Sherwood
financial services company) Partner of Permira Advisors Ltd. (a private equity investment firm)
* member of the Audit Committee
4 Sea Containers Ltd.

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Officers other than the President Regional

managers
Franco delle Piane

Regional Manager,
Mediterranean
Chresten Bjerrum
Regional Manager,
Asia
Robert Alagna
Regional Manager,
Australasia
Standing from left to right: Seated from left to right:

James A. Beveridge Edwin S. Hetherington
Vice President, Administration and Property, Vice President, General Counsel and Secretary
Plantations and Publishing
Robin Lynch
Ian C. Durant
Regional Manager,
David G. Benson Senior Vice President and Chief Financial Officer
North America
Senior Vice President, Chief Executive Ferries
Christopher W.M. Garnett
Angus R. Frew Senior Vice President, Rail
Senior Vice President, Containers
Left:
Guy N. Sanders Nicolas J. Novasic
Vice President, Funding Vice President, Corporate Finance –
North America Luis Freitas
Duncan J.C. Scott Regional Manager,
Vice President, Information Services South America
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President’s letter to shareholders
April 15, 2005 the winter when it was unable to operate.

This litany of problems should not obscure
Dear Shareholder the good news of earnings from our container
leasing business, which rose from $35.8 million
2004 was an unsatisfactory year for your in 2003 to $46.1 million in 2004; improved
company. We reported a net loss of results from our investment in Orient-Express
$5.4 million (loss of $0.23 per common share Hotels Ltd. of $11.9 million compared with
diluted) on revenue of $1.74 billion, compared $10.9 million in 2003; a reduction of $66 million
with net earnings in 2003 of $111.4 million in group debt, and the sale in March, 2005 of
($4.72 per common share diluted) on revenue 4.5 million shares in Orient-Express Hotels Ltd.
of $1.65 billion. The 2003 earnings included a for $108 million which will be used for further
special gain on sale of a ferry asset of debt reduction. The gain on sale was
$54 million net of non-recurring charges while approximately $40 million which will be recorded
the 2004 earnings included non-recurring in the first quarter of 2005. These funds will
charges of $22.3 million. These special be used, among other things, to retire $20
charges related to payments to the U.K. million of 13% public debt which can be called
government in connection with the company’s without premium from July 1, 2005. Other
GNER rail franchise and asset impairment expensive public debt will be callable without
charges arising from the shut down of the premium from that date or later in the year.
company’s Irish Sea ferry service. We believe that Orient-Express Hotels’
We encountered a number of adverse share price will continue to rise as its earnings
situations in the year that contributed to lower improve and we expect to sell our remaining
operating results. The principal ones were a 25% interest in the company for more than
settlement of a dispute with the Strategic Rail $300 million.
Authority in the U.K. which arose because it
sought a participation in our settlement with Marine container leasing
Network Rail arising out of the Hatfield rail Both our investment in GE SeaCo and our other
disaster. While your board felt this claim was container activities generated good results in
unjustified it also felt that unless it was settled 2004. GE SeaCo’s owned fleet enjoyed 99%
the company would be barred from obtaining a utilization at the end of 2004 while our pool
Facing page: Despite being hit new rail franchise. In the event, we succeeded fleet, which is largely managed by GE SeaCo,
by heavy ice conditions early in in obtaining a new 10-year franchise in direct had a year-end utilization of 91%. GE SeaCo
the year, commuter ferry continuation of our existing franchise which bought $304 million of new containers in 2004
operator SeaStreak enjoyed a would have expired on April 30, 2005. Second, and expects to purchase between $100 million
19% overall rise in passenger our Silja subsidiary badly misjudged the likely and $200 million more in 2005. Although U.S.
numbers during 2004. Total success of a new ferry service which it dollar interest rates on its floating rate debt
ridership rose from 803,000 introduced on the Germany-Estonia-Russia have been steadily rising, causing a reduction in
in 2003 to 994,000 as the route, causing a reduction of $17 million in profit margins, GE SeaCo has been financing
company introduced its new earnings from the ship compared with the prior new containers with fixed rate five-year debt
141ft, 400-passenger vessel, year. Third, discount airlines, hostile British since mid-2004. GE SeaCo is insisting that
SeaStreak Highlands, and a customs officers and failure of a French lease rates reflect the increasing cost of
floating terminal facility at government body to honor contracts resulted in container debt.
Highlands, New Jersey. On losses on our U.K. fast ferry routes. Higher Sea Containers’ factories, depots, service
the South Amboy-Manhattan than expected fuel costs impacted all our ferry and logistics operations, which are conducted
route, launched in 2002, traffic operations, particularly SeaStreak in New York separately from GE SeaCo, had a satisfactory
rose by more than 30%. which also encountered heavy ice conditions in year in 2004. Sea Containers also owns and

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manages containers which GE Capital does

not wish to be included in the GE SeaCo
fleet and conducts a small amount of lease
purchase activity.
Despite the excellent results of GE SeaCo,
GE Capital commenced a pattern of behavior in
February, 2005 towards Sea Containers that
seeks to transfer costs of the joint venture from
GE SeaCo to Sea Containers, in an attempt to
enhance the value of GE Capital’s shareholding
in GE SeaCo at Sea Containers’ expense.
GE Capital is seeking to terminate the Services
Agreement between Sea Containers and
GE SeaCo by alleging a number of violations
Below: GNER has been of the Agreement. We intend to defend
shortlisted to bid for the new vigorously Sea Containers’ rights. 2. We have withdrawn our Hoverspeed fast
Integrated Kent rail franchise in ferry fleet from U.K. waters except for a two-
the U.K., which includes some Ferry transportation vessel Dover-Calais service which is operated
of Britain’s busiest routes. The In order to make a substantial improvement in on a seasonal basis. The two ships will have
company will bid in a joint results from this activity we are taking the the same capacity as three ships did in 2004.
venture with MTR, owner and following steps:
operator of the Hong Kong 3. We are deploying our surplus U.K. fast
Metro, under the name Great 1. The Finnjet service will be continued in ferries to the Mediterranean where we already
South Eastern Railway (GSER). 2005 but hopefully with improved results. At operate services between Italy and Croatia in
Chief Executive Christopher time of writing bookings for the 2005 season partnership with SNAV, the fast ferry unit of
Garnett is pictured shaking are well ahead of this time last year. We will Mediterranean Shipping Company. We are
hands with Phil Gaffney of not be able to recover entirely the $17 million opening a new fast ferry route in Greece in
MTR at the signing of the decline experienced in 2004 from 2003 but May, 2005 in partnership with the highly
joint venture agreement. there should be gains. respected Eugenides Group.
4. Fares are being increased in our SeaStreak

operations in New York and the market
continues to grow to absorb the new capacity
that was added in 2004. The winter of
2004/2005 was milder than the previous
one, which has allowed us to operate more
dependably during this period.
Rail services
The reduction in profits from rail operations
from $84.1 million in 2003 to $42.9 million in
2004 was largely due to special payments made
to the Strategic Rail Authority as I mentioned at
the beginning of this letter. Passenger volumes
rose from 15.1 million in 2003 to 16.9 million in
2004 and revenue increased 7% to £469 million

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Left: Sea Containers Australia

has acquired seven businesses
from New Zealand-based
logistics and supply chain
solutions provider, the Owens
Group. Three container
depots are included in the
NZ$12.5 million deal, which
will strengthen the company’s
position in the refrigerated and
tank container service and
transport sectors. Among them
is the Hyde Park depot near
Melbourne, left, which
specializes in cleaning and
repairing tank containers.
($858 million) from £441 million ($723 million) partnership with Laing Plc, has been denied.
in 2003. GNER’s new franchise assumes that However, other franchise opportunities will
revenue will grow at 8.7% per annum over the arise in future years.
10-year period. (Average growth over the last GNER’s rail ambitions are not limited to the
three years has been 9% per annum.) Payments U.K. Opportunities in other countries will be
to the government are expected to total considered once the Integrated Kent franchise
$2.5 billion over the next 10 years. Such decision has been taken.
payments are forecast to be about the same on
average in each of the first three years of the Property, plantations and publishing
new franchise as they would have been on a Earnings from these other activities were
pro-forma basis in the 12 months preceding $4.1 million in 2004 compared with
the end of the old franchise, and then will $6.6 million in 2003. The reduction was largely
rise steeply in step with capacity increases. due to poor weather in Brazil which affected the
A “cap and collar” revenue protection Brasiluvas table grape crops, and political
arrangement comes into effect in the fourth unrest in the Ivory Coast which affected SBM
year, affording GNER protection against banana exports. Our SBM operation underpins
revenue declines below target levels and giving the lease of several thousand refrigerated
it extra profit in the event revenue is greater containers to West African ship operators so
than expected. reduced profitability there is not of great
GNER is also bidding for the Integrated concern. Earnings of the Corinth Canal in
Kent rail franchise in the U.K. together with Greece were improved in 2004 over 2003 and
MTR, the Hong Kong commuter railway. This we are now waiting for approval of our
franchise is currently operated by the U.K. applications to build a large marina and tourist
government’s Strategic Rail Authority. We are village on land we control in the isthmus.
hoping that MTR’s reputation for punctuality The expected sale of our remaining port
(99.9% in Hong Kong) plus GNER’s reputation interest in Newhaven, England was not
for quality of service will be a winning concluded in 2004 but we are hopeful
combination. A decision on the Integrated Kent of completion in 2005. Several parties
franchise is expected before the end of 2005. have expressed serious interest in our
GNER’s request to be included in the holdings there. We expect to realize a
bidders for the Greater Western franchise, in good profit on sale.
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Right: New GE SeaCo 40ft hi-cube refrigerated containers

being manufactured in Shanghai, China. Flexible contracts
with Chinese manufacturers enable the company to build to
demand, while most containers are on lease when leaving
the factory. The industry outlook for 2005 remains positive
across all major container types.
results but there will be non-recurring

restructuring charges.
If fuel costs remain high this will adversely
impact ferry results.
Rail operations are expected to have a
satisfactory year, as are property, plantations
and publishing.
Orient-Express Hotels Ltd. is expecting
improved results in 2005 of which we will
equity account our 25% interest. Group
capital expenditure in existing businesses in
2005, excluding GE SeaCo’s expenditure, is
expected to be about $50 million.
Management and staff

The company’s staff totalled 8,700 at the end of
2004 and there was no lack of dedication
despite the poor results.
Daniel J. O’Sullivan, our Senior Vice President
– Finance and Chief Financial Officer, retired at
the end of 2004 and was replaced in those
Above: Charleston Marine Our Illustrated London News publishing group positions by Ian C. Durant. Our thanks go to
Containers (CMCI) has won a had a satisfactory year and won a number of “Danny” for his 30 years of service to the group.
competitive contract (shared awards for its travel and lifestyle magazines. Philip J.R. Schlee, a founder and director
with another manufacturer) to They are very active in the creation of high for 40 years, has been forced to resign as a
supply specialized units to the standard websites for the many business director for health reasons. He has been
U.S. Army up to a total value units within Sea Containers and for outside appointed Director Emeritus and has agreed
of $552 million over five clients as well. to provide advice as requested by the board.
years. It is the largest single We intend to propose to the shareholders a
container purchase contract Outlook replacement director when a suitable person
ever awarded by the Gains from share sales in the first quarter of is located.
U.S. Department of Defense. 2005 will enhance results in what is normally a An executive search has commenced for my
CMCI has already provided the loss-making period. It is impossible to predict own replacement as President and Chief
U.S. military with more than at this time the outcome of the dispute with Executive, although I expect to remain as
30,000 quadcons and tricons. GE Capital but we feel that there is a huge Chairman for some time.
These modular units are value in our 50% shareholding in GE SeaCo.
designed for ease of movement Other container activities should have a Sincerely,
in combat zones and can be satisfactory year.
seen here (in the foreground) Silja’s recovery will be largely dependent
in Iraq. on results of the Finnjet operation in 2005
compared with 2004, although reduction
of debt in that business and reduced James B. Sherwood
overhead expense should also contribute to Founder, President and Chief Executive Officer
improved results.
The redeployment of fast ferries to more
profitable operations should enhance their

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Below: The 203 meter Silja to be introduced in early 2006

Serenade and her sister ship that will provide on-board
Silja Symphony, each carry up crews with more customer
to 2,850 passengers between travel data, enabling them to
Helsinki and Stockholm daily. target customer service and
Silja is working on a new sales efforts more effectively
“SeaWare” reservations system during each trip.

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Analysis of division:
Ferry services
Hoverspeed, Silja, SeaStreak, SNAV-Hoverspeed, Hart Fenton & Co.
The results of our ferry division, with EBITDA purchased in France, thus reducing the price
down 45% on 2003, suffered amid some of differential between the U.K. and France.
the worst trading conditions in years. In order to reduce winter losses and reflect
Competition from low-cost airlines, hefty changes in shopping patterns, our Dover-Calais
increases in fuel prices, aggressive pricing from route became seasonal in 2004, with services
other operators and over-capacity in certain commencing in March. The service was
markets contributed to the downturn. operated by two SeaCats, one 81 meter and one
The priority has been to address the 74 meter, with an additional 74 meter SeaCat
loss-making situation in those parts of the for an eight-week period in peak season.
business most badly affected. This has involved The Belfast-Troon service was also reduced
taking a hard look at the portfolio, leading to to seasonal operation in 2004 and, after a poor
the closure of non-performing routes, the season, has now been terminated as continuing
redeployment of our fast craft fleet from pressure from budget airlines made future
loss-making routes to other services, prospects financially unviable. Total gross
restructuring the Hoverspeed operation and the revenue for the route was $14.6 million
potential divestment of non-performing assets. (2003 – $15.3 million). A non-recurring asset
We have also continued to concentrate efforts impairment charge of $2.9 million was reported
on joint ventures, which offer an opportunity to
deploy fast ferries released from unprofitable Left: Silja was named “Best
northern European routes. Cruise/Ferry Travel Retailer”
Fuel prices rose steadily throughout 2004 in the world in the inaugural
and had a significant adverse effect on margins Raven Fox Travel Retail Awards
throughout the businesses. held in early 2005. Retail sales
from a wide range of
Ferry services – British Isles on-board shops account for
Our U.K. operations were particularly more than one third of Silja’s
vulnerable in the tough market conditions of total revenue. The company
2004, resulting in low yields across the sector. benefits from continued
Hoverspeed’s passenger volumes were reduced duty-free sales on all its
to 1.19 million passengers (2003 – 1.53 million) Finland-Sweden services
and vehicles to 353,000 (2003 – 441,000) on traveling via the Åland Islands,
cross-Channel routes between Dover-Calais and and on its St Petersburg cruises.
Newhaven-Dieppe.
The disappointing passenger and vehicle
yields, particularly on the Dover-Calais service,
reflected the intense competition as Eurotunnel
fought to maintain market share by lowering
prices and a new entrant to the cross-Channel
market sparked a price war. The decline in
shopping outside peak seasons was also a
contributing factor to reduced volumes.
However, improved margins in cross-Channel
retail sales were achieved through a
rationalization of product lines. Retail sales
over the year were adversely affected by French
government action to increase duty on tobacco
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in quarter 4 and there will be a further consolidate Silja’s strong position in the fast
$2.6 million cash charge for close-down costs ferry market. On the adverse side, retail yields
in quarter 1, 2005. were reduced as a result of the Baltic States
Similarly, after marginally improved but joining the E.U., losing their duty-free status.
unsustainable performance over 2003 The Finnjet service on the Rostock/Tallinn/
(passenger yields increased by 2% and vehicle St Petersburg route performed poorly in 2004,
yields decreased by 1%), the Newhaven-Dieppe its first year, resulting in a negative earnings
route has also been discontinued and the impact of $17.0 million, compared with the
SuperSeaCat redeployed to Silja Line. prior year, but an improved out-turn is
expected for 2005.
Silja Line Volumes of cargo carried by Silja, including
Although the total market for passenger ferry its SeaWind Line subsidiary, performed relatively
services between Finland and Sweden, and robustly, increasing by 8% from 2003 on the
Finland and Estonia grew (17 million routes from Finland and Sweden, together with
passengers in 2004 compared with 16.3 million an improvement of unit yields. The company had
in 2003), Silja’s earnings declined in 2004. a 36% market share in cargo service between
This was mainly due to increased capacity of Finland and Sweden and an 18% share between
competitors and the redeployment of Finnjet Finland and Estonia. Gross revenue from freight
on a new route to Russia which performed increased by $2.5 million year on year.
below expectations. Silja carried a total of 2004 saw the introduction of a central
5.1 million passengers during 2004 overhead reduction program at Silja Line,
(2003 – 5.4 million), the reduction being underpinned by a computer-based procurement
caused by the extended docking period and system and a web-friendly reservation system.
re-routing of Finnjet. These should bring substantial savings by the
The day trip market on the Helsinki-Tallinn end of 2005.
route, where Silja Line employed two
SuperSeaCats, grew when Estonia joined the Ferry services – U.S.A.
E.U. in May 2004. This service achieved 29% Increased passenger carryings in the
growth in volumes and 7% increase in ticket SeaStreak operation, (995,000 passengers, 24%
prices, delivering $1.7 million EBITDA. A third higher than 2003) and improved gross revenue,
SuperSeaCat has been placed on this route to which increased by 15% to $14.2 million

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Above: Launched in 2004,

(2003 – $12.3 million), reflect the continuing Outlook
Pescara Jet (formerly SeaCat
growth of this U.S. market. A seventh craft, Market conditions are expected to remain
SeaStreak Highlands, joined the fleet in challenging for 2005. Key factors will be
Danmark) is the company’s
second joint venture fast ferry
2004 and a floating terminal was opened at volatility in gas oil prices and maintaining a
service between Italy and
Highlands during April. competitive cost structure. The operations will
Croatia. Operated by SNAV,
However, higher fuel prices and the increased maintain their emphasis on innovative customer
the service carried 42,000
capacity took a direct toll on profitability in offers, structural cost reduction and portfolio
passengers and vehicles in its
2004 and will continue to put pressure on optimization; one of the principal challenges
first summer season between
margins. Moreover, winter activity was adversely will be to ensure that the deployment of ferries
Split, Croatia and Pescara, Italy,
affected by severe ice conditions in 2004. in each part of the operation can be realigned
calling at the popular holiday
Revenue growth in 2004 was insufficient to quickly to match changing market conditions.
island of Hvar. The vessel’s
cover the increased costs of the additional craft The company’s wide experience and track
unique side door was specially
added to the fleet. record of quality service in the ferry
designed to deal with the tight
transportation sector globally, both passenger
docking space at Pescara.
Ferry services – Mediterranean and freight, puts the company in a favorable
Our joint venture with SNAV, with two fast position for making a positive impact in new
craft operating on a seasonal basis between markets. We have the challenge to find
Ancona and Pescara in Italy and Split and Hvar profitable employment for the two 74 meter
in Croatia, has performed well and is being SeaCats currently in lay up. We are committed
expanded. With 110,000 units (a unit being to reducing operating costs in order to help
defined as one passenger or vehicle), the offset cost pressures from rising fuel prices and
gross total revenue for these operations was aggressive pricing by competitors in certain
$10 million in 2004. In the coming year our markets, but we expect further erosion of
74 meter SeaCat will be operated on the new margin in the short term.
Ancona/Zadar route.
In Greece, in our new joint venture with
Eugenides, a 74 meter SeaCat will operate
between Piraeus/Milos/Serifos/Sifnos. The
lifting of Greek cabotage restrictions has
offered opportunities to operate E.U. flag David G. Benson
vessels on Greek island services. Senior Vice President, Chief Executive Ferries
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Rail
Great North Eastern Railway
In 2004, GNER achieved record revenues of stations will be improved, ticket purchase will
£469 million ($858 million), up 7% on the be made easier and more services between
year before. This was largely driven by London and West Yorkshire are planned.
record passenger carryings of 16.9 million, In November, 2004 a joint venture was
representing almost 12% growth on 2003 signed with the MTR Corporation, owners and
volumes. managers of the widely respected Hong Kong
Passenger numbers rose as a result of a Metro system, with MTR taking a 29% stake in
stable economy, improving train performance Great South Eastern Railway, a new partnership
and a more simplified and attractive pricing created to secure the Integrated Kent franchise.
structure, supported by innovative revenue- The new alliance was well received by the
management techniques similar to those media, which particularly highlighted MTR’s
deployed by airlines. This helped to fill excellent reliability record.
quieter, off-peak trains and to spread demand GNER was shortlisted for the Integrated
more effectively. Kent franchise earlier in 2004. The competition
There was also an encouraging shift is due to conclude by late 2005 and includes
towards greater use of self-service retailing, plans to run high speed domestic passenger rail
such as the website and FastTicket machines services on part of the Channel Tunnel Rail
at stations. Link, as well as operating high density
commuter services in and out of London.
New franchise The political and regulatory environment in
The year was dominated by the competition which GNER operates continued to undergo
for a new East Coast rail franchise and further transition, following the conclusions of
progress to support GNER’s expansionist a government rail review. This will simplify the
ambitions elsewhere on the U.K. network. regulatory structure of the rail industry and
In March, 2005 the U.K. government’s aims to reduce costs and improve performance.
Strategic Rail Authority awarded GNER a new Many of GNER’s proposals during the
10-year East Coast franchise, starting from government’s consultation were subsequently
May 1, 2005. The new franchise has a break adopted. The changes, which see the gradual
clause after seven years if GNER fails to meet demise of the Strategic Rail Authority by
certain performance criteria. the end of 2005, have now been turned
In TV interviews on the day of the into legislation.
announcement the government’s Secretary of
State for Transport praised the company’s Investment program
ability to attract extra passengers through the On more operational matters during 2004,
quality of its service and via innovative GNER completed a substantial investment
marketing. During the course of the program as part of its contractual
competition, GNER received unprecedented commitments under the two-year franchise
public and political support as a result of extension to the end of April 2005.
substantial goodwill established during the first The £30 million ($56 million) rebuild of
nine years of its tenure. all the electric train sets, known as “Mallard” by
Under the new franchise GNER plans to the lessors, remains on schedule for completion
create a bigger and more reliable railway, in autumn 2005. The new-look sets are very
retaining its high service standards and popular with passengers and have won
restaurant cars. Passenger volumes are widespread acclaim for their design features,
predicted to grow at the same rate as historical comfort, ride quality and reliability.
levels. The diesel train fleet will be rebuilt, Ten of the Mallard trains are equipped with

48816_p16_17.rev2 7/5/05 1:20 pm Page 17
an on-board wireless internet service, allowing

passengers to stay connected online while
traveling at high speed. In partnership with
solution provider Icomera, GNER remains
the only U.K. train operator to have achieved
this technological breakthrough and has more
wi-fi sets in service than any other train
operator in the world. GNER believes that this
innovation can help to transform the nature of
some of its markets, by turning train travel into
productive time, increasing competitiveness
versus long-distance car or domestic air travel.
In the new franchise this new facility will be
rolled out to all GNER trains by May 2007.
A major station modernization program was
completed, including new travel centers,
refurbished lounges and toilets, new customer
information systems and a new footbridge
at York, opened in time for a national rail
festival to celebrate the railway’s bicentenary.
Further improvements will be delivered
under the new franchise, including 900 extra
car-parking spaces.
Improved reliability
Fleet reliability continued to improve steadily
following earlier major overhauls. In particular,
the electric locomotives reached 40,000 miles
per failure from 9,000 a few years ago. station facilities, and was chosen as Best Above: One of the first
National independent figures show that GNER Passenger Transport Operator by the U.K.’s milestones of the new franchise
operates the most reliable long-distance train Chartered Institute of Logistics & Transport. will come in October, 2005
fleet in Britain. However, route reliability The company was also re-accredited with the when GNER completes the £30
continues to require further attention. prestigious Investors in People award after million ($56 million) rebuild of
Encouragingly, infrastructure owner Network becoming the first train operator to receive the its 30-strong electric train fleet.
Rail is beginning to address problems with the accolade across its entire business. As well as delivering greater
reliability of overhead power lines and there are Independent assessors said GNER was a reliability, the new-look “Mallard”
signs of steady overall improvement following “beacon of excellence” for the way it manages trains offer greater comfort
Network Rail’s decision to take all its track and motivates its employees. with extra legroom in Standard
maintenance in-house. Further reliability Class, new contoured seats,
improvements are planned under the new power points and a café bar.
10-year franchise. This also includes the roll-out
Passenger satisfaction ratings for GNER of its innovative wireless
continue to be the best in the U.K.’s long- internet (wi-fi) service to all
distance rail market, according to independent trains by 2007.
surveys. GNER won several awards for its Christopher W.M. Garnett
people management, service innovation and Senior Vice President, Rail
17
48816_p18_21 .rev2 6/5/05 3:01 pm Page 18
Containers
GE SeaCo, Container Manufacturing, Container Depots, Container Logistics
Facing page: 40ft hi-cube Container leasing GE SeaCo has been able to renegotiate
SeaCells being loaded in 2004 was an excellent year for container up the rates on many expired or expiring
China for shipment by Great leasing with global containerized trade leases on existing equipment in the fleet,
Western Steamship Company estimated to have grown by more than 13%, thereby reversing the long-term trend of
to the U.S. West Coast. making it the third year in succession of falling lease rates.
Great Western is among a double-digit growth since the upturn in demand GE SeaCo’s refrigerated container leasing
growing number of shipping at the beginning of 2002. This exceptionally business has also had an excellent year,
lines using hi-cube SeaCells strong demand has driven utilization to record experiencing strong demand, which pushed
for the carriage of general highs across our industry. utilization of the operating fleet of 40ft hi-cube
cargo, as the extra 2.7 cubic GE SeaCo’s total operating fleet of standard reefers, the workhorse of our fleet, to 92.5% at
meters (95 cubic feet) of dry freight containers, including those owned the end of December, 2004, this being
cargo space in each container by Sea Containers and GE Capital, recorded 3.5 percentage points higher than a year ago.
gives a cost advantage to extraordinarily high utilization of 97.5% at Our fleet of specialized containers also
shippers and consignees. the end of December, 2004, this being performed well. In particular, our open top and
6.2 percentage points ahead of 2003. flatrack containers have been in demand as a
Throughout 2004 we have witnessed result of the reconstruction efforts in
spiraling steel prices, which have driven up the Afghanistan and Iraq, and the hurricane
price of standard dry freight containers by well damage in the Caribbean Islands. Our fleet of
over 50%. A 20ft dry freight container costing tank containers also benefited from a strong
less than $1,400 in December, 2003 is market with utilization of the operating fleet
currently being quoted at over $2,300 by the improving four percentage points over the year
major Chinese factories. With such strong to 92% at the end of December, 2004.
demand, GE SeaCo has been more than able to With strong demand being seen across all
cover the increased container prices in its lease major container types, utilization of the total
rates for these containers. At the same time, GE SeaCo operating fleet, including Sea
Containers and GE Capital owned containers,
rose from 87% at the end of 2003 to over 93%
Right: Among the businesses
at December 31, 2004.
acquired from the Owens
GE SeaCo invested a record $304 million
Group of New Zealand is the
in new equipment delivered to lessees in
Cooltainer refrigerated
2004 (2003 – $204 million). This included
container service on the Tasman
over 100,000 TEU (twenty foot equivalent
Sea and in the Pacific Islands.
units) of new dry freight containers and, for the
As part of the same purchase,
second year in a row, over $100 million of new
the company acquired full
refrigerated containers.
ownership of the IRS New
Zealand reefer servicing
Factories, depots and other container
business, already partly owned
businesses
by Sea Containers, including
In July, 2004 Sea Containers completed the
IRS operations in the four
acquisition of a number of businesses located in
major centers in New Zealand,
Australia and New Zealand from the Owens
and the QCM reefer servicing
Group. They are now fully integrated into
business in Australia, which
Sea Containers’ Container Division and
has been amalgamated
generally performing in line with expectations.
with IRS Australia.
The largest of these businesses is
Cooltainer, a refrigerated cargo logistics

48816_p18_21 .rev 6/5/05 10:10 am Page 19
19
48816_p18_21 .rev 6/5/05 10:11 am Page 20
GE SeaCo 40ft hi-cube

refrigerated containers carrying
Chiquita bananas from Panama
being unloaded at Antwerp.
GE SeaCo is the world’s largest
lessor of refrigerated
containers. Its extensive fleet
offers a comprehensive range
of machinery types and unit
sizes with worldwide coverage
and availability, as well as
unrivaled technical back-up.

48816_p18_21 .rev2 6/5/05 2:59 pm Page 21
provider across the Tasman Sea and to and Outlook for 2005 Above: Flatracks being
from the Pacific Islands. Cooltainer The outlook for container leasing in 2005 is manufactured at Yorkshire
experienced strong growth in 2004 and leased another year of strong growth. Industry Marine Containers in the U.K.
a significant number of 20ft refrigerated commentators believe that the global container YMCL, which celebrated 30
containers from GE SeaCo to cater for this trade will continue to expand by around 10% years in business in 2004,
expansion. At the same time Cooltainer per annum in 2005 and 2006. builds highly specialized units
off-hired many refrigerated containers from As a result of this tremendous growth, we for GE SeaCo and a wide
competitor leasing companies. are seeing considerable congestion at ports range of third-party clients.
Charleston Marine Containers (CMCI) is our and in the land-side infrastructure around the These units for Pal-Line are
container manufacturing business located in world. It is estimated that this congestion fixed-post flatracks, designed
Charleston, South Carolina. Its tricon and may absorb up to 2% of the capacity of the for carrying steel coils from
quadcon containers supplied to the U.S. containership fleet as port congestion increases Sweden to the U.K.
military continue to perform well in the field. journey time. This will tie up additional
At the end of 2004 CMCI was awarded a new containers and is another positive factor for
five-year contract by the U.S. Army to provide the container leasing industry.
tricon and quadcon containers as well as GE SeaCo has had a policy of funding new
various types of 20ft ISO containers. To date, equipment purchases with floating rate debt,
this contract is the largest to be awarded by a therefore steadily rising U.S. dollar interest
U.S. Department of Defense agency for the rates cause a temporary reduction in profit
purchase of containers and will serve to margins until leases are renewed, at which time
underpin the company’s core business for the the higher interest rates are incorporated in the
next few years. new leases. Since mid-2004, GE SeaCo has
The new tank container cleaning facility at been financing new containers with fixed rate
our factory Paulista Containers Maritimos in five-year debt.
Santos, Brazil, continues to perform well. The outlook for Sea Containers’ other
During 2004, Paulista took over management container businesses is that they are expected
of a competitor tank-cleaning business called to have a satisfactory year in 2005. The
Tecnitank in anticipation of purchasing it. The factories have reasonable forward order books
completion of the purchase is expected in in hand and the other businesses are generally
2005, and this will make us the number-one performing well.
tank container cleaning business in Brazil.
Sea Containers also owns two container
factories in the U.K. Yorkshire Marine Containers
LTD. (YMCL) produces a wide range of specialized
containers. In 2004, it mainly produced swapbody
containers for leasing to European logistics
companies, flatracks and various types of waste-
disposal containers. In 2005, YMCL has won a Angus R. Frew
number of contracts for the manufacture of Senior Vice President, Containers and
containers for the offshore oil industry. President, GE SeaCo SRL
21
48816_p22_24.rev2 6/5/05 3:11 pm Page 22
Finance
Corporate Finance, Information Services, Insurance, Pensions
Results logistics businesses from the Owens Group.

2004’s results were a significant deterioration Debt repayments totaled $273.7 million. There
compared with 2003. 2003’s results included was a net cash outflow of $76.2 million.
a gain on sale of a business and non-recurring
charges which together amounted to a net gain Tax
of $54 million. 2004’s results also included The company reported a tax credit in 2004 of
several non-recurring charges: an impairment $2.6 million compared with a charge in 2003
related to the closure of the Irish Sea ferry of $8.2 million. During 2004 Silja claimed a
route and a number of charges to the earnings non-recurring tax deduction relating to prior
of the rail division. These charges totaled year losses. The tax benefit relating to this
$22.3 million for the year 2004. claim amounted to $15.1 million.
EBITDA fell from $319.4 million in 2003 The company’s rail and ferry operations are
to $198.1 million in 2004 reflecting the non- mainly taxable in high-tax jurisdictions such
recurring gain in 2003, a poor year in 2004 as the U.K. or Finland. Available tax shelter is
for ferry operations and lower earnings for the diminishing and the tax charge is likely to
rail division, partly offset by continued strong increase in future years.
performance from the container division.
Orient-Express Hotels Ltd., in which the Financing
company held a 42.6% shareholding, Debt fell by $66 million in 2004, including
performed well. the effect of movements in the values of
Net operating cash flow fell to $74.4 million currencies which increased the debt level
from $105.4 million. There were proceeds of by some $55 million.
$30.4 million from the sale of assets and In 2004 the company raised $96.1 million
$180.6 million from the issuance of shares and from the issue of 10.5% senior notes due 2012.
long-term debt. $86 million was invested in In addition, $39.1 million was raised from
capital expenditure and a further $7 million on bank borrowings and $45.4 million from the
the acquisition of container servicing and issuance of common shares. The company
2004 Revenue by division 2004 EBITDA by division
Containers Other operations

7% 1%
$m
Ferries
Rail 42%
50%
er
es
re
on i l
er
C Ra
th
sts
isu
rri
in
O
Fe
co
Le
ta
te
ra
po
or
C

48816_p22_24.rev3 7/5/05 10:40 am Page 23
used these proceeds to redeem all of the can be repaid in 2005. These are $22 million
outstanding $79.7 million of 12.5% senior 13% senior notes and $19 million 12.5% senior
subordinated debentures. In November, 2004 notes which can be repaid without premium
a revolving credit loan facility of $100 million from July 1, 2005.
was increased to $120 million. There are no material facility maturities in
Tabulated overleaf is the company’s debt 2005, but debt service payments amount to
profile which shows that the debt structure is approximately $160 million.
principally denominated in U.S. dollars and
euros. 36% of the total debt is at fixed interest Sarbanes-Oxley Section 404 Report
rates, all of which is in U.S. dollars. In its report on internal control over financial
During 2004 the company’s cash balance reporting, the company has identified a
fell from $205 million to $129 million. material weakness by concluding that there
Together with committed undrawn bank lines of were insufficient personnel resources and
$112 million, the total cash availability was technical accounting expertise to resolve and
$241 million. Since the year end, the company report non-routine or complex accounting
has increased liquidity by $108 million matters in a timely fashion under U.S. GAAP.
through the sale of 4.5 million shares in A remedial plan is being executed, and
Orient-Express Hotels Ltd. there was no effect on the 2004 or previously
The remaining interest in Orient-Express reported financial results. The remedial plan
Hotels is a holding of 9.9 million shares involves the recruitment of suitably qualified
representing 25%. The company has staff, the improvement of the company’s central
announced its intention to reduce further this accounting systems and a strong emphasis
investment over time. The surplus cash on financial control and speed and transparency
generated by this asset disposal will be of internal reporting. This plan is progressing.
primarily applied to reducing high-cost debt
and strengthening the balance sheet. GE SeaCo
There are two tranches of public debt that GE SeaCo, the equity accounted joint venture,
Cash flow 2004 Assets by division

$ million 2004 2003
Leisure Other operations
Cash flow from operations 74.4 105.4 1%
Sale of assets 30.4 228.6 9%
Capital expenditure (86.5 ) (37.6 )
Cash flow before financing 18.3 296.4

Acquisitions (7.3 ) -
Issue of shares 45.4 24.6 Containers Ferries
Issue of debt & senior notes 135.2 52.7 29% 54%
Repayment of debt & senior notes (273.7 ) (388.2 )
Dividends paid (3.4 ) (2.1 )
Effect of exchange rate 9.3 18.9
Net cash flow (76.2 ) 2.3

Cash availability at end of year 241.0 343.3 Rail 7%
23
48816_p22_24.rev3 7/5/05 10:41 am Page 24
Debt profile (December 31, 2004)

Denomination Total Fixed Floating
$ million $ million $ million
US dollar 761 561 200
Euro 738 - 738
Other 32 - 32
Total debt 1,531 561 970
is 50% owned by Sea Containers and 50% by Similarly, Silja’s IT program will enable
GE Capital. business transformation, in particular, cost
GE SeaCo’s outstanding debt at December reduction, through a streamlining of business
31, 2004 was $694 million. Since July, 2004 all processes underpinned by up-to-date IT
new capital expenditure has been interest rate systems.
hedged through five-year interest rate swaps, Finally, GNER will be embarking on a
and the fixed rate debt amounted to $70 million program to upgrade its IT systems to support
at December 31, 2004. the drive towards revenue and cost efficiencies
The disputes between the shareholders are in the new franchise.
described in the financial statements. No
provision has been recorded as the outcome of Pensions
these disputes is not determinable. The company offers all new employees the
opportunity to join a pension plan. GNER
GNER – new franchise participates in a multi-employer U.K. rail
GNER’s new 10-year franchise to operate industry plan. Other new employees have the
the Intercity East Coast Main Line in Britain opportunity to join a defined contribution plan.
from May 1, 2005 will be supported by There are several U.K. defined benefit plans
Sea Containers’ contribution of $9 million that are closed to new members and whose
additional share capital in GNER and a assets and liabilities are included in the
$55 million standby credit facility. company’s financial statements on an actuarial
basis in accordance with SFAS 87. The
Information technology company is currently funding these plans
In 2005 there are three significant programs on a cash basis to the U.K. government’s
being implemented in order to improve the minimum requirement.
efficiency and effectiveness of the systems in
the company’s operating divisions, and to
replace obsolete and unsupported systems.
GE SeaCo has embarked on a business
transformation program using SAP software.
This program will re-engineer all GE SeaCo’s
business processes and should result in a Ian C. Durant
leaner, more effective business. Senior Vice President and Chief Financial Officer

48816_p25_56.rev3 7/5/05 11:03 am Page 25
Financial Review
Contents
Report of independent registered

public accounting firm 26
Consolidated balance sheets 27
Statements of consolidated operations 28
Statements of consolidated cash flows 30
Statements of consolidated shareholders’ equity 31
Notes to consolidated financial statements 32
Five year performance 51
Price range of common shares and dividends 52
Earnings before interest, tax, depreciation
and amortization 52
Summary of quarterly earnings 53
Corporate governance 55
Shareholder and investor information 56
This report contains, in addition to historical information, forward- of negotiating, financing and completing proposed acquisition,
looking statements that involve risks and uncertainties. These include disposal or capital expenditure transactions, inadequate sources of
statements regarding earnings growth, investment plans and similar capital and unacceptability of finance terms and inability to reduce
matters that are not historical facts. These statements are based on debt, global, regional and industry economic conditions, shifting
management’s current expectations and are subject to a number of patterns and levels of world trade and regional passenger travel,
uncertainties and risks that could cause actual results to differ seasonality and adverse weather conditions, changes in ferry service
materially from those described in the forward-looking statements. and ship deployment plans, possible start-up losses on new ferry
Factors that may cause a difference include, but are not limited to, services, inability of Network Rail to maintain properly the U.K. rail
those mentioned in the report, unknown effects on the transport, infrastructure, uncertainty of the timing or amount of any recovery in
leasing and leisure markets in which the company operates of the Hoverspeed litigation against U.K. Customs and Excise, and
terrorist activity and any police or military response, varying customer legislative, regulatory and political developments including the
demand and competitive considerations, inability to sustain price uncertainty of obtaining other U.K. rail franchises. Further
increases or to reduce costs, fluctuations in interest rates, currency information regarding these and other factors is included in the
values and public securities prices, variable fuel prices, variable filings by the Company and Orient-Express Hotels Ltd. with the
container prices and container lease and utilization rates, uncertainty U.S. Securities and Exchange Commission.
25
48816_p25_56.rev 4/5/05 8:55 am Page 26
Report of Independent Registered Public Accounting Firm
March 30, 2005
Board of Directors and Shareholders

Sea Containers Ltd.
Hamilton, Bermuda
We have audited the accompanying consolidated balance sheets of In our opinion, such consolidated financial statements present fairly, in
Sea Containers Ltd. and subsidiaries (the “Company”) as of December all material respects, the financial position of Sea Containers Ltd. and
31, 2004 and 2003, and the related consolidated statements of subsidiaries as of December 31, 2004 and 2003, and the results of
operations, shareholders’ equity, and cash flows for each of the three their operations and their cash flows for each of the three years in
years in the period ended December 31, 2004. The consolidated the period ended December 31, 2004, in conformity with accounting
financial statements are the responsibility of the Company’s principles generally accepted in the United States of America.
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the
We conducted our audits in accordance with the standards of the effectiveness of the Company’s internal control over financial reporting
Public Company Accounting Oversight Board (United States). Those as of December 31, 2004, based on the criteria established in Internal
standards require that we plan and perform the audit to obtain Control-Integrated Framework issued by the Committee of Sponsoring
reasonable assurance about whether the consolidated financial Organizations of the Treadway Commission, and our report (not
statements are free of material misstatement. An audit includes presented herein) dated March 30, 2005 expressed an unqualified
examining, on a test basis, evidence supporting the amounts and opinion on management’s assessment of the effectiveness of the
disclosures in the consolidated financial statements. An audit also Company’s internal control over financial reporting and expressed an
includes assessing the accounting principles used and significant adverse opinion on the effectiveness of the Company’s internal control
estimates made by management, as well as evaluating the overall over financial reporting because of a material weakness.
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
Deloitte & Touche LLP

Two World Financial Center
New York, New York
26 Sea Containers Ltd. & subsidiaries

48816_p25_56.rev 4/5/05 8:55 am Page 27
Consolidated Balance Sheets
December 31, 2004 2003

$000 $000
Assets
Cash and cash equivalents 129,079 205,313
Restricted cash 17,056 14,656
Accounts receivable, net of allowances of 4,942 and 9,790 117,531 129,669
Due from related parties 38,030 36,576
Prepaid expenses and other 27,604 42,930
Inventories 43,001 45,991
Current portion of equipment sale receivables, net 8,448 11,730
Total current assets 380,749 486,865
Long-term equipment sale receivables, net 7,641 15,397

Advances on asset purchase contracts 13,586 6,539
Property plant and equipment, net of accumulated
depreciation of 793,153 and 748,736 1,815,527 1,796,496
Investments 397,755 356,024
Goodwill 18,725 12,054
Other intangible assets, net 57,351 64,347
Other assets 44,766 28,119
Total assets 2,736,100 2,765,841
Liabilities and Shareholders’ Equity

Credit facilities 305 2,235
Accounts payable 145,733 125,799
Accrued liabilities 254,533 297,130
Deferred revenue 14,545 10,799
Current portion of long-term debt and capital leases 165,825 282,808
Total current liabilities 580,941 718,771
Long-term debt and obligations under capital leases 958,237 928,097

Senior notes 406,513 305,806
Senior subordinated debentures – 79,571
Total liabilities 1,945,691 2,032,245
Minority interest 1,646 1,783
Preferred shares $.01 par value (15,000,000 shares authorized): Issued - 150,000
$7.25 convertible cumulative preferred shares (liquidation value of $100 per share) 15,000 15,000
Shareholders’ equity:
Class A common shares $.01 par value (60,000,000 shares authorized):
Issued – 23,655,054 shares (2003 – 20,932,548) 236 209
Class B common shares $.01 par value (60,000,000 shares authorized):
Issued – 14,388,295 shares (2003 – 14,413,595) 144 144
Paid-in capital 460,433 415,107
Retained earnings 863,983 871,691
Accumulated other comprehensive loss (159,772) (179,077)
Less: reduction due to class B common shares acquired with voting rights by a
subsidiary – 12,900,000 shares at cost (391,261) (391,261)
Total shareholders’ equity 773,763 716,813
Commitments and contingencies – –
2,736,100 2,765,841
See notes to consolidated financial statements.
27
48816_p25_56.rev 4/5/05 8:56 am Page 28
Statements of Consolidated Operations
Year ended December 31, 2004 2003 2002

$000 $000 $000
Revenue:
Passenger transport 1,592,859 1,509,820 1,272,360
Container operations 125,646 110,611 107,448
Leisure operations – – 209,016
Other operations 24,212 25,668 21,623
Total revenue 1,742,717 1,646,099 1,610,447
Expenses:
Depreciation and amortization:
Passenger transport 77,829 64,920 44,580
Total depreciation and amortization 124,022 113,471 113,710
Operating:
Passenger transport 1,273,453 1,137,660 960,266
Total operating 1,350,796 1,199,513 1,118,005
Selling, general and administrative:

Passenger transport 211,654 193,319 146,480
Container operations 2,813 (506) (2,432)
Total selling, general and administrative 245,905 219,739 224,170
Non-recurring charges – 46,000 –
Total expenses 1,720,723 1,578,723 1,455,885
Earnings from investment in GE SeaCo 32,803 22,093 15,434

Gains on asset sales 6,288 105,000 2,883
Earnings from operations before net finance costs 61,085 194,469 172,879
Interest expense, net of capitalized interest (84,383) (95,319) (124,993)

Interest and related income 3,441 10,026 10,323
Net finance costs (80,942) (85,293) (114,670)

48816_p25_56.rev 4/5/05 8:56 am Page 29
Statements of Consolidated Operations (continued)
2004 2003 2002

$000 $000 $000
(Losses)/earnings from operations before minority interest and
income taxes (19,857) 109,176 58,209
Minority interest – – (10,958)
(Losses)/earnings from operations before income taxes (19,857) 109,176 47,251

Benefit from/(provision for) income taxes 2,622 (8,224) (5,860)
(Losses)/earnings from operations before earnings from investment

in Orient-Express Hotels Ltd. and other equity investments (17,235) 100,952 41,391
Earnings from investment in Orient-Express Hotels Ltd., net of tax 11,867 10,887 2,248
Earnings/(losses) from other equity investments, net of tax 1,088 619 (623)
Net (losses)/earnings (4,280) 112,458 43,016
Preferred share dividends (1,088) (1,088) (1,088)

Net (losses)/earnings on class A and class B common shares (5,368) 111,370 41,928
$ $ $
(Losses)/earnings per class A common share:
Basic (0.23) 5.32 2.10
Diluted (0.23) 5.25 2.10
(Losses)/earnings per class B common share:

Basic (0.23) 4.79 1.90
Diluted (0.23) 4.72 1.90
29
48816_p25_56.rev 4/5/05 8:56 am Page 30
Statements of Consolidated Cash Flows

$000 $000 $000
Cash flows from operating activities:
Adjustments to reconcile net (losses)/earnings to net cash
provided by operating activities:
Depreciation and amortization 124,022 113,471 113,710
(Gain)/loss on sale of assets (5,820) (101,391) 139
Undistributed (earnings)/losses of affiliates (44,060) (33,241) (18,612)
Non-cash items (3,258) 3,044 11,062
Non-recurring charges relating to asset writedowns – 31,000 –
Change in assets and liabilities net of effects from acquisition
of subsidiaries:
Decrease in receivables 43,055 3,171 35,292
Decrease/(increase) in inventories 7,341 (5,910) 487
(Decrease)/increase in accounts payable, accrued
liabilities and other liabilities (42,610) (17,178) 8,638
Total adjustments 78,670 ( 7,034) 150,716
Net cash provided by operating activities 74,390 105,424 193,732
Cash flows from investing activities:

Capital expenditures (86,523) (37,625) (123,718)
Acquisitions and investments, net of cash acquired (7,311) – (85,503)
Net proceeds on sale of fixed assets and other 30,430 228,562 8,834
Net cash (used in)/provided by investing activities (63,404) 190,937 (200,387)
Cash flows from financing activities:

Issuance of common shares 45,353 24,655 127
Issuance of long-term debt, net 39,052 52,701 202,201
Issuance of senior notes, net 96,147 – –
Sale of OEH shares by SCL – – 68,650
Cash reduction from deconsolidation of OEH – – (56,355)
Principal payments under long-term debt (190 759) (123,670) (163,345)
Payment of loans upon disposal of assets (5,044) (109,698) –
Purchase and retirement of notes and debentures (79,729) (136,323) (9,700)
Payment of preferred share dividends (1,088) (1,088) (1,088)
Payment of common share dividends (2,340) (1,043) (4,326)
Net borrowings/(repayments) under credit facilities and
revolving credit facilities 1,899 (18,542) (41,824)
Net cash used in financing activities (96,509) (313,008) (5,660)
Effect of exchange rate changes on cash and cash equivalents 9,289 18,938 13,401
Net (decrease)/increase in cash and cash equivalents (76,234) 2,291 1,086
Cash and cash equivalents at beginning of year 205,313 203,022 201,936
Cash and cash equivalents at end of year 129,079 205,313 203,022


48816_p25_56.rev2 6/5/05 3:28 pm Page 31
Statements of Consolidated Shareholders’ Equity
Class A Class B Accumulated Common Total

Common Common Other Shares Held Comprehensive
Shares at Shares at Paid-in Retained Comprehensive by a Income
Par Value Par Value Capital Earnings Loss Subsidiary (Loss)
$000 $000 $000 $000 $000 $000 $000
Balance, January 1, 2002 169 145 351,637 723,762 (206,547) (391,261)
Issuance of class A common shares
under dividend reinvestment plan – – 79 – – –
Issuance of common shares under
employee stock option plan – – 48 – – –
to acquire a subsidiary 25 – 37,929 – – –
Conversion of class B common shares 1 (1) – – – –
Dividends on common and preferred shares – – – (5,414) – –
Comprehensive income:
Net earnings – – – 43,016 – – 43,016
Other comprehensive income/(loss) for the year – – – – 18,244 – 18,244
61,260
Balance, December 31, 2002 195 144 389,693 761,364 (188,303) (391,261)
in public offering, net of issuance costs 14 – 24,614 – – –
Gain on sale of OEH common shares
by OEH, net of costs – – 773 – – –
Net earnings – – – 112,458 – – 112,458
Other comprehensive income/(loss) for the year – – – – 9,226 9,226
121,684
Issuance of class A common shares in
public offering, net of issuance costs 27 – 45,091 – – –
Net losses – – – (4,280) – – (4,280)
Other comprehensive income/(loss) for the year – – – – 19,305 – 19,305
15,025
31
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Notes to Consolidated Financial Statements salvage value, are depreciated over their estimated useful lives by
the straight-line method. The estimated useful life and salvage value
1. Business activities and summary of significant for containers are generally 20 years and 20%, respectively, and for
accounting policies ships generally 30 to 35 years and 15% to 5%, respectively.
SCL is engaged in four main businesses. The first is ferry operations Real estate and other fixed assets are recorded at cost and are
mainly involving passenger and vehicle ferry services in the Baltic Sea depreciated over their estimated useful lives by the straight-line
and English Channel. The second is passenger rail services in Britain method. The depreciation rates on freehold buildings range from
between London and Scotland. The third is the leasing of cargo 25 to 50 years and on machinery and other remaining assets from
containers, principally through SCL's unconsolidated 50%/50% 5 to 25 years. Leasehold improvements are depreciated over the
GE SeaCo SRL joint venture with General Electric Capital shorter of the estimated useful life or the respective lease term.
Corporation, to a diversified customer base of liner ship operators
and others throughout the world, and the manufacture and repair of (d) Foreign currency translation
container equipment. The fourth business is ownership of and/or The functional currency for each of the Company’s foreign
investment in hotels, restaurants, tourist trains and river cruise subsidiaries is the applicable local currency. Foreign subsidiary
businesses located throughout the world through Orient-Express income and expenses are translated into U.S. dollars, SCL’s reporting
Hotels Ltd., an unconsolidated company in which SCL owns a 25% currency, at the average rates of exchange prevailing during the
equity interest. In addition, SCL engages in property development, year. The assets and liabilities are translated into U.S. dollars at the
perishable commodity production and sales, and publishing. rates of exchange on the balance sheet date and the related
translation adjustments are included in accumulated other
(a) Principles of consolidation comprehensive income/(loss). Foreign currency transaction gains and
For purposes of these Notes, the “Company” refers to Sea Containers losses are recognized in operations as they occur.
Ltd., and “SCL” refers to Sea Containers Ltd. and its subsidiaries.
“OEH” refers to Orient-Express Hotels Ltd., an equity investment of (e) Intangible assets and goodwill
the Company engaged in the hotel and leisure business (see Notes 2 Intangible assets classified as goodwill and trademark with indefinite
and 6). “GE SeaCo” refers to GE SeaCo SRL, a container leasing lives are not amortized. Intangible assets with finite lives, primarily
joint venture company between the Company and General Electric rail operations franchise rights, are amortized using the straight-line
Capital Corporation accounted for under the equity method (see method over their estimated useful lives. See Note 9.
Note 6). “GNER” refers to Great North Eastern Railway Ltd., a
wholly-owned subsidiary of the Company and operator of SCL’s (f) Revenue recognition
passenger rail franchise in Great Britain. “Silja” refers to Silja Oy Ab, Significantly all of SCL’s revenue is attributable to passenger transport
a wholly-owned subsidiary of the Company based in Finland services provided in the rail and ferry operations. Revenues are
engaged in ferry operations in the Baltic Sea (see Note 5). recognized when the transportation is provided rather than when a
The consolidated financial statements include the accounts of Sea ticket is sold. Amounts paid by a customer prior to transportation are
Containers Ltd. and all majority-owned subsidiaries. All significant recorded on the balance sheet as deferred revenue. Retail sales and
intercompany balances and transactions have been eliminated. other customer services provided during transit are recognized at
Unconsolidated companies that are 20% to 50% owned are point of sale. SCL’s container assets are revenue-earning under
accounted for on an equity basis as these companies are not operating leases and, accordingly, the financial statements reflect such
controlled by the Company. operating lease rentals as revenue. Revenues from container
Certain items in 2003 and 2002 have been reclassified to conform management contracts are recognized as earned pursuant to terms in
with the current year's presentation. the related contract.
“FASB” means Financial Accounting Standards Board and “APB”
means Accounting Principles Board, the FASB’s predecessor. “SFAS” (g) Inventories
means Statement of Financial Accounting Standards of the FASB. Inventories include ship and container related items, food and
“FIN” means an accounting interpretation of the FASB. “EITF” means beverages, and certain retail goods. Inventories are valued at the
Emerging Issues Task Force, of the FASB. lower of cost or market value under the first-in, first-out method.
(b) Cash and cash equivalents (h) Earnings/(losses) per share

Cash and cash equivalents include all cash balances and highly-liquid The Company follows the provisions of SFAS No. 128, “Earnings Per
investments having original maturities of three months or less. Share”, which requires companies with complex capital structures,
There are restricted deposits at GNER and in other subsidiaries of common stock equivalents, or two classes of participating securities to
approximately $17,056,000 (2003 – $14,656,000) that have been present both basic and diluted earnings per share on the face of the
classified as restricted cash on the balance sheets. statement of operations. Diluted earnings per share is calculated
using the “if converted” and “treasury stock” methods for common
(c) Property, plant and equipment, net stock equivalents. Basic and diluted earnings per share for the years
Containers and ships are recorded at cost and, after allowance for ended December 31, 2003 and 2002 are allocated to each class of

48816_p25_56.rev 4/5/05 8:59 am Page 33
common shares according to dividends declared and participating (m) Income taxes
rights on undistributed earnings in accordance with the two class Deferred income taxes result from temporary differences between the
method. financial reporting and tax bases of assets and liabilities. Deferred
Options to purchase 9,414 class A common shares at prices greater taxes are recorded at enacted statutory rates and are adjusted as
than the average market price of these shares were excluded from enacted rates change. Classification of deferred tax assets and
the computation of diluted earnings per share for the year ended liabilities corresponds with the classification of the underlying assets
December 31, 2004, because to do so would have been anti-dilutive and liabilities giving rise to the temporary differences or the period of
for the period presented. In addition, for the years ended December expected reversal, as applicable. A valuation allowance is established,
31, 2004 and 2002, 478,622 class B common shares issuable on when necessary, to reduce deferred tax assets to the amount that is
conversion of convertible preferred shares were excluded from the more likely than not to be realized based on available evidence.
computation of diluted earnings per share because to do so would
have been anti-dilutive for the periods presented. (n) Concentration of credit risk
The number of shares used in computing basic and diluted earnings Concentration of credit risk with respect to trade receivables is limited
per class A and per class B common share at year end was as to container operations. The Company does not believe there to be
follows: a concentration of credit risk because of the large number of
customers comprising SCL’s customer base and their dispersion across
December 31, 2004 2003 2002 different businesses and geographic areas. Management routinely
’000 ’000 ’000 assesses the financial strength of SCL’s container customers as part of
Class A shares: its credit risk analysis.
Basic 22,082 19,564 18,633
Effect of dilution – 77 23 (o) Stock-based compensation
Diluted 22,082 19,641 18,656 SFAS No. 123, “Accounting for Stock-Based Compensation“, as
amended by SFAS No. 148, ”Accounting for Stock-Based
Class B shares: Compensation – Transition and Disclosure – An Amendment of FASB
Basic 1,511 1,517 1,566 Statement No. 123”, encourages, but does not require, companies to
Effect of dilution – 479 – record compensation cost for stock-based employee compensation
Diluted 1,511 1,996 1,566 plans at fair value. The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
(i) Interest expense, net APB Opinion No. 25, “Accounting for Stock Issued to Employees”, as
SCL capitalizes interest during the construction of assets. Interest amended, and related interpretations. Accordingly, compensation cost
expense is net of capitalized interest of $nil in 2004 (2003 – $nil, for share options is measured as the excess, if any, of the quoted
2002 – $1,168,000). market price of the Company’s shares at the date of the grant over the
amount an employee must pay to acquire the shares.
(j) Marketing costs If compensation cost for the Company’s stock-based compensation
Marketing costs are expensed as incurred and are reported in selling, had been determined based on fair values as of the date of grant,
general and administrative expenses. Marketing costs include costs of SCL’s net earnings and earnings per share would have been reported
advertising and other marketing activities. These costs were as follows:
$83,130,000 in 2004 (2003 – $74,454,000, 2002 – $56,906,000).
(k) Interest and related income $000 $000 $000
Interest and related income in 2004 includes foreign exchange gains Net (losses)/earnings on class
of $1,497,000 (2003 – $8,099,000, 2002 – $7,236,000). Also included A and class B common shares:
is interest on receivables related to container leases of $1,944,000 As reported (5,368 ) 111,370 41,928
(2003 – $1,927,000, 2002 – $1,977,000). In addition, interest and Add: Stock-based compensation
related income in 2002 included a gain of $1,000,000 on redemption expense included in reported net
of Silja convertible bonds. (losses)/earnings, net of related
tax effects – – –
(l) Estimates Deduct: Total stock-based employee
The preparation of financial statements in conformity with accounting compensation expense determined
principles generally accepted in the United States requires under fair value based method,
management to make estimates and assumptions that affect the net of related tax (477 ) (323 ) (368 )
reported amounts of assets and liabilities and the disclosure of Pro forma (5,845 ) 111,047 41,560
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
33
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Notes to Consolidated Financial Statements (continued) as appropriate in the consolidated statement of operations.
SCL management formally documents all relationships between hedging
Basic and diluted (losses)/earnings per share: instruments and hedged items, as well as its risk management objectives
2004 2003 2002 and strategies for undertaking various hedge transactions. SCL links all
As reported: $ $ $ hedges that are designated as fair value hedges to specific assets or
Class A: liabilities on the balance sheet or to specific firm commitments. SCL links all
Basic (0.23 ) 5.32 2.10 hedges that are designated as cash flow hedges to forecasted transactions
Diluted (0.23 ) 5.25 2.10 or to floating rate liabilities on the balance sheet. Management also
Class B: assesses, both at the inception of the hedge and on an ongoing basis,
Basic (0.21 ) 4.79 1.90 whether the derivatives that are used in hedging transactions are highly
Diluted (0.21 ) 4.72 1.90 effective in offsetting changes in fair values or cash flows of hedged items.
Pro forma: Should it be determined that a derivative is not highly effective as a hedge,
Class A: SCL will discontinue hedge accounting prospectively.
Basic (0.22 ) 5.28 2.08
Diluted (0.22 ) 5.23 2.08 (r) Recent accounting pronouncements
Class B: In December 2004, the FASB issued SFAS No 123R, “Share-Based
Basic (0.20 ) 4.75 1.89 Payment”, requiring employee stock options and rights to purchase
Diluted (0.20 ) 4.71 1.89 shares under stock participation plans to be accounted for under the
fair value method, and eliminates the ability to account for these
The pro forma figures in the preceding table may not be instruments under the intrinsic value method prescribed by APB
representative of amounts in future years. Opinion No. 25 and allowed under the original provisions of SFAS
No. 123. SFAS No. 123R requires the use of an option pricing model
(p) Impairment of long-lived assets and goodwill for estimating fair value, which is amortized to expense over the
In accordance with SFAS No. 144, “Accounting for the Impairment or service periods. The requirements of SFAS No. 123R are effective for
Disposal of Long-Lived Assets”, the Company reviews its long-lived assets fiscal periods beginning after June 15, 2005. SFAS No. 123R allows
and finite-lived intangible assets whenever events or changes in for either prospective recognition of compensation expense or
circumstances indicate that the carrying amount of the assets may not be retrospective recognition, which may be back to the original issuance
recoverable. An impairment would be recognized when expected future of SFAS No. 123 or only to interim periods in the year of adoption.
undiscounted operating cash flows are lower than the carrying value. In The Company is currently evaluating these transition methods.
the event that an impairment occurs, the fair value of the related asset is
estimated, and SCL records a charge to earnings calculated as the excess 2. Sales of OEH shares
of the asset's carrying value over the estimated fair value. In November and December 2003, OEH sold 3,450,000 newly-issued OEH
In accordance with SFAS No. 142, “Goodwill and Other Intangible class A common shares in a public offering at $16.00 per share, thereby
Assets”, indefinite-lived intangible assets and goodwill must be evaluated reducing the Company’s economic interest in OEH to approximately 42%.
annually for impairment. The impairment testing under SFAS No. 142 is As a result, SCL recognized a gain in 2003 of $773,000, which was
performed in two steps, first, the determination of impairment based recorded directly to shareholders’ equity in respect of the offering in
upon the fair value of a reporting unit as compared with its carrying accordance with the provisions of SEC Staff Accounting Bulletin No. 51.
value and, second, if there is an impairment, the measurement of the During 2002, the Company sold 4,921,500 existing OEH class A
amount of impairment loss by comparing the implied fair value of common shares at an average price of $13.96 per share, including
goodwill with the carrying amount of that goodwill. 3,100,000 shares on November 14, 2002. SCL recognized in 2002 a
gain of $2,883,000 relating to its sale of the shares. Effective
(q) Derivative financial instruments November 14, 2002, because the Company’s economic interest in
If a derivative is designated as a fair value hedge, the changes in the fair OEH dropped below 50% to approximately 47% and the Company
value of the derivative and of the hedged item attributable to the hedged does not otherwise have control over OEH, the Company began to
risk are recognized in operating expense in the consolidated statement of account for its investment in OEH under the equity method of accounting.
operations. If a derivative is designated as a cash flow hedge, the
effective portions of changes in the fair value of the derivative are 3. Sales of assets
recorded as a component of accumulated other comprehensive loss in Included in gains on sale of assets in 2004 is a gain of $5,659,000 arising
shareholders’ equity and are recognized in interest expense in the from the sale of property in the port of Folkestone, England in August. The
statement of consolidated operations when the hedged item affects sale price was approximately $20,000,000 paid in cash.
earnings. The ineffective portion of a hedging derivative’s change in the The gain on sale of assets in 2003 included $5,000,000 from the sale of
fair value will be immediately recognized in either operating or interest property in the port of Newhaven, England in September. The sale price
expense as appropriate in the consolidated statement of operations. If was approximately $14,000,000 paid in cash.
the derivative is not designated as a hedge for accounting purposes, the In July 2003, the Company completed the sale of its indirect wholly-owned
change in its fair value is recorded in either operating or interest expense subsidiary Sea Containers Isle of Man Ltd., which was the holding company

48816_p25_56.rev 4/5/05 9:00 am Page 35
of SCL’s Isle of Man Steam Packet ferry business in the Irish Sea (collectively December 31, 2004
“Steam Packet”). The sale price was approximately $242,000,000, paid in $000
cash, which resulted in a gain on sale of approximately $100,000,000. Cash 176
Under separate contractual agreements, SCL agreed to continue to charter Other current assets 2,497
a vessel and provide certain administrative services to Steam Packet. Property, plant and equipment 1,759
During 2002, the Company sold 4,921,500 shares of OEH realizing Goodwill 6,353
a gain of $2,883,000 (see Note 2). 10,785
Purchase price, including the carrying value
4. Non-recurring charges of the existing investments 9,179
During 2003, as a result of the sale of Steam Packet and SCL’s Liabilities assumed 1,606
concurrent restructuring of its fast ferry business, an impairment
evaluation was performed in accordance with the guidelines of SFAS Since the date of acquisition, the results of operations have been
No. 144. This indicated that the carrying value of certain ship and ship- included in the consolidated results of SCL. The pro forma impact on
related assets exceeded the expected future cash flows attributable to results, had this acquisition occurred on January 1, 2004, is not material.
these assets, resulting in an impairment. The total impairment charge
recognized during the third quarter of 2003 was approximately 2002 Acquisition
$15,000,000 determined by taking the excess of the carrying value over During 2002, SCL purchased additional shares in Silja at a total price of
the estimated fair value. Fair value was determined using estimated $37,954,000, paid in newly-issued class A common shares of the Company.
future discounted cash flows and external valuations where applicable. Because this purchase raised SCL’s shareholding above 66%, it was
In connection with the restructuring of some of SCL’s ferry routes, required under Finnish law to make a redemption offer for the remaining
SCL recorded a severance charge for approximately 400 employees shares in Silja and for Silja’s outstanding convertible subordinated bonds.
of approximately $10,000,000, all of which was paid in 2003. Under SCL’s offer, SCL acquired additional Silja shares, bringing its total
Also in 2003, other non-recurring charges of approximately shareholding to 97.2%, and a portion of the Silja bonds for an
$5,000,000 were incurred including $3,700,000 relating to the aggregate price of $42,654,000 paid in cash. Any shares not tendered in
Company's exchange offers for a portion of its publicly-traded debt the offer have been compulsorily acquired as permitted by Finnish law.
(see Note 12). These costs consisted of legal and other professional fees. Prior to May 2002, SCL had accounted for its initial investment in
In addition, during the third quarter of 2003 management Silja under the equity method. As a result of these acquisitions, the
implemented a plan to sell certain specifically identified container assets results of operations have been included in the consolidated financial
and applied the provisions of SFAS No. 144. This indicated that the results of SCL from May 1, 2002.
carrying value of certain container assets exceeded their realizable
value resulting in an impairment. The total impairment charge 6. Investments
recognized during 2003 was approximately $16,000,000. Fair value Investments represent equity interests of 20% to 50% in any
was determined by using estimated future discounted cash flows. unconsolidated companies. SCL does not have effective control of these
unconsolidated companies and, therefore, accounts for these investments
5. Acquisitions using the equity method. SCL’s principal equity investees are as follows:
2004 Acquisition
In July 2004, SCL acquired container depot and service operations GE SeaCo SRL
and logistics operations (primarily refrigerated container forwarding) GE SeaCo and its subsidiaries are engaged in the container leasing
in Australia and New Zealand from the Owens Group for the business. The Company and General Electric Capital Corporation
purpose of expanding SCL’s existing container activities in that region. each have a 50% interest in GE SeaCo. The retained earnings in
The purchase price was approximately $9,179,000. The price was GE SeaCo at December 31, 2004 were $155,949,000. See Note 23
financed partly with a bank loan. regarding transactions between SCL and GE SeaCo.
This acquisition was accounted for using the purchase method of
accounting in accordance with SFAS No. 141, “Business Orient-Express Hotels Ltd.
Combinations”. The purchase price has been allocated to the assets OEH and its subsidiaries are engaged in the hotel and leisure business.
and liabilities using estimated fair values at the date of acquisition Effective November 14, 2002, because the Company's economic interest
and goodwill of $6,353,000 has been recognized on a preliminary in OEH dropped below 50% and the Company does not otherwise have
basis. Management is in the process of finalizing the allocation of the control over OEH, the Company began to account for its investment in
purchase price to intangible assets. As a result, certain amounts OEH under the equity method of accounting (see Note 2). The value of
currently classified in goodwill could be reclassified as separately SCL’s investment based on the quoted market price of OEH shares at
identifiable intangible assets that are finite in nature and subject to December 31, 2004 was $295,268,000 (2003 – $236,214,000). The
amortization. In addition, the preliminary amounts assigned to retained earnings in OEH at December 31, 2004 were $277,281,000.
certain assets and liabilities may be adjusted upon final valuation. See Note 23 regarding transactions between SCL and OEH.
Management plans to finalize the allocation during the first half of SCL’s interest income related to loans and advances to its equity
2005. The following table shows the allocation of the purchase price: investees amounted to $nil in 2004 (2003 – $nil, 2002 – $5,197,000).
35
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Notes to Consolidated Financial Statements (continued)

Summarized financial data of the companies for which SCL has equity-method investments for the periods during which the investments were
held are as follows:
December 31, 2004 2003
$000 $000
Current assets 285,555 252,339
Property, plant and equipment, net 1,903,775 1,527,154
Other assets 197,246 218,902
Total assets 2,386,576 1,998,395
Current liabilities 506,768 397,067

Long-term debt 1,037,050 877,267
Other liabilities 78,267 24,402
Total shareholders’ equity 764,491 699,659
Total liabilities and shareholders’ equity 2,386,576 1,998,395

$000 $000 $000
Revenue 509,239 419,683 337,336
Earnings from operations before net finance costs 121,731 90,113 57,796
Net earnings 93,827 67,795 30,879
7. Property, plant and equipment, net

The major classes of property, plant and equipment are as follows:
December 31, 2004 2003
$000 $000
Containers 900,992 957,568
Ships 1,413,959 1,322,098
Freehold and leased land and buildings 91,315 103,299
Machinery and equipment 64,567 64,593
Fixtures, fittings and office equipment 137,847 97,674
2,608,680 2,545,232
Less: accumulated depreciation (793,153) (748,736)
1,815,527 1,796,496
The major classes of assets under capital leases are as follows:

December 31, 2004 2003
$000 $000
Leased land and buildings 18 18
Machinery and equipment 9,176 8,887
Fixtures, fittings and office equipment 36,798 22,758
45,992 31,663
Less: accumulated depreciation (28,011) (19,169)
17,981 12,494
Depreciation expenses for the years ended December 31, 2004, 2003 and 2002 were $105,526,000, $99,618,000 and $102,988,000, respectively.
8. Equipment sale receivables

The components of equipment sale receivables are as follows at year end:
December 31, 2004 2003

$000 $000
Gross asset sale receivable 17,582 30,320
Unearned income (1,493) (3,193)
Asset sale receivables 16,089 27,127

48816_p25_56.rev 4/5/05 9:01 am Page 37
Contractual maturities of SCL’s gross equipment sale receivables subsequent to December 31, 2004 are as follows:
Year ending December 31, $000
2005 8,812
2006 5,431
2007 2,372
2008 936
2009 31
17,582
9. Intangible assets and goodwill
As of December 31, 2004 , SCL determined the carrying values of all its reporting units were less than their respective derived fair values,
indicating that there was no impairment of the recorded goodwill.
As of December 31, 2004, SCL determined the carrying value of its trademark which is not subject to amortization was less than its fair value,
indicating that there was no impairment of the recorded trademark.
Intangible assets and goodwill consist of the following:
December 31, 2004 2003

$000 $000
Intangible assets and goodwill not subject to
amortization:
Goodwill 18,725 12,054
Trademark 33,450 36,554
52,175 48,608
Intangible assets subject to amortization:
Other intangibles at cost 53,644 54,246
Less: accumulated amortization (29,743) (26,453)
23,901 27,793
Total 76,076 76,401
During 2004, amortization expense was approximately $3,290,000 (2003 – $3,473,000, 2002 – $3,501,000). Amortization for the succeeding
five years is expected to be approximately $3,500,000 annually.
The changes in the carrying amount of goodwill for the years ended December 31, 2004 and 2003 are as follows:
Ferry Rail Container Other

Segment Segment Segment Segment Total
$000 $000 $000 $000 $000
Balance as of January 1, 2003 22,091 – 5,665 4,111 31,867
Sale of ferry assets (20,145) – – – (20,145)
Foreign currency translation – – – 332 332
Balance as of December 31, 2003 1,946 – 5,665 4,443 12,054
Acquisition of subsidiary companies – – 6,429 – 6,429
Foreign currency translation – – – 242 242
Balance as of December 31, 2004 1,946 – 12,094 4,685 18,725
10. Credit facilities

Credit facilities at year end are comprised of the following, all repayable within one year:
2004 2003
December 31, $000 $000
Unsecured working capital facilities, with a weighted average interest

rate of 4.25% and 6.04%, respectively 305 2,235
37
48816_p25_56.rev 4/5/05 9:02 am Page 38

At December 31, 2004, $2,394,000 (2003 – $825,000) was undrawn under these facilities. Also, included in long-term debt are additional lines
of credit in place but not drawn amounting to $109,000,000 (2003 – $60,700,000) under secured revolving credit facilities (see Note 11). The
credit facilities are issued by various financial institutions and have various expiration dates.
11. Long-term debt and obligations under capital leases (other than senior notes and subordinated debentures)
(a) Long-term debt
Long-term debt at year end consists of the following:
December 31, 2004 2003

$000 $000
Notes and loans on containers payable over periods of 1 to 8 years, with a
weighted average interest rate of 5.30% and 3.39%, respectively 250,735 353,910
Mortgage loans on ships payable over periods of 1 to 13 years, with a
weighted average interest rate of 3.69% and 3.40%, respectively 800,150 704,979
Bank loans on real estate and other fixed assets payable over periods of
1 to 9 years, with a weighted average interest rate of 5.74% and 5.39%, respectively 61,847 143,756
Obligations under capital leases (see Note 11(b)) 11,330 8,260
1,124,062 1,210,905
Less current portion 165,825 282,808
958,237 928,097
Notes and loans on containers Company loan is also repayable in installments with interest at
Containers are secured to financial institutions as collateral for debt EURIBOR plus 2.125% maturing in October 2008. The primary
obligations. security for both facilities are mortgages on certain of Silja’s ships, with
Included in long-term debt is a facility secured on container the Company loan subordinated to the Silja loan. The loans are cross-
equipment. A bankruptcy-remote subsidiary of the Company formed guaranteed by Silja and SCL. At December 31, 2004, $511,077,000
to facilitate asset securitization issued a senior note which is non- (2003 – $397,300,000) was outstanding under these credit facilities.
recourse to the Company and its other subsidiaries. The senior note
began its nine-year amortization schedule in October 2002 and, in Bank loans on real estate and other fixed assets
January 2004, began early amortization requiring all net cash flow In November, 2004, SCL entered into a $120,000,000 revolving credit
of the subsidiary to be used to pay down principal. In addition, the facility with a syndicate of banks, principally secured by the
Company issued an effectively subordinated note which began its Company’s shares in OEH. This facility is available for general
five-year amortization period in October 2001. The overall interest corporate purposes and carries an interest rate of 2.5% above
rate is approximately 1.10% to 1.31% over LIBOR, and a significant LIBOR. The final maturity of any amounts borrowed is in July 2007,
portion of the facility has been hedged at a rate of 5.45%. At and $20,000,000 was outstanding at December 31, 2004.
December 31, 2004, $168,400,000 (2003 – $223,200,000) was
outstanding under this facility. At December 31, 2004, SCL was in compliance with all credit and
In October 2004, SCL entered into a maximum $85,000,000 financing agreements evidencing its long-term debt. These
revolving credit facility with a group of banks secured by container requirements included financial covenants to maintain specified
equipment. The facility reduces as the container security depreciates. minimum debt service coverage, minimum interest coverage and
SCL may borrow on a revolving basis until October 2007, including minimum net worth and not to exceed specified leverage. The
with additions of new collateral, and must repay the balance carrying value of the long-term debt approximated its fair value due
outstanding at that date. Interest on the facility ranges from 2.25% to the variable-rate nature of the respective borrowings.
to 2.75% over LIBOR. At December 31, 2004, $81,500,000 was The following is a summary of the aggregate maturities of long-
outstanding under this facility term debt at December 31, 2004:
Mortgage loans on ships Year ending December 31, $000

Ship loans are secured by mortgages on the respective vessels. 2005 165,825
In November 2003, Silja entered into a $463,500,000 term loan and 2006 179,176
revolving credit facility agreement with a syndicate of banks, and the 2007 206,090
Company entered into a related $73,400,000 loan facility agreement 2008 120,113
with the same syndicate. The non-revolving credit portion of the Silja 2009 101,912
loan is repayable in installments with interest on both portions at 2010 and thereafter 350,946
EURIBOR plus 1.625% and a final maturity in October 2010. The $1,124,062

48816_p25_56.rev 4/5/05 9:02 am Page 39
The Company has guaranteed through 2010 one half of a $7,777,000 (b) 10 3/4% senior notes due 2006
bank loan of Speedinvest Ltd., owner of an Adriatic Sea fast ferry in The aggregate principal amount of these notes is $115,000,000
which SCL has a 50% interest. This guarantee existed prior to (including approximately $400,000 of unamortized original issue
December 31, 2002. discount). They bear interest at 10 3/4% per annum, payable semi-
annually, and were originally issued at a discount to yield 11% per
(b) Obligations under capital leases annum. They are redeemable, in whole or in part, at the option of
The following is a schedule of future minimum lease payments under the Company, at a price of 102.688% of the principal amount on
capital leases together with the present value of the minimum lease and after October 15, 2004, and 100% on and after October 15,
payments at December 31, 2004: 2005. The notes may also be redeemed by the Company in the
event of certain tax law changes. The notes have no sinking fund
Year ending December 31, $000 requirement and come due on October 15, 2006. In the event a
2005 6,225 change in control of the Company occurs, it is obligated to make an
2006 3,826 offer to purchase the notes at a price of 101% of the principal
2007 1,965 amount. The fair value of these notes as of December 31, 2004 was
2008 9 approximately $120,500,000 based upon available market quotes.
Minimum lease payments 12,025
Less: amount of interest contained in above payments 695 (c) 7 7/8% senior notes due 2008
Present value of minimum lease payments 11,330 These notes bear interest at 7 7/8% per annum, payable semi-annually.
They are redeemable, in whole or in part, at the option of the
The amount of interest deducted from minimum lease payments to Company at a price of 100% of the principal amount on and after
arrive at the present value is the interest contained in each of the February 15, 2005. The notes may also be redeemed by the Company
leases. In the normal course of business, SCL has an option to in the event of certain tax law changes. The notes have no sinking
purchase certain leases at a bargain purchase option. In other fund requirement and come due on February 15, 2008. In the event
cases, the leases will be renewed upon expiration. a change in control of the Company occurs, it is obligated to make
an offer to purchase the notes at a price of 101% of the principal
amount. The fair value of these notes as of December 31, 2004 was
12. Senior notes and subordinated debentures
approximately $149,900,000 based upon available market quotes.
Publicly-traded unsecured senior notes and subordinated debentures
at year end are comprised the following: (d) 12 1/2% senior notes due 2009
These notes were issued in July 2003 in exchange for an equal principal
Year ended December 31, 2004 2003 amount of 121/2% senior subordinated debentures due 2004 of the
$000 $000 Company. They bear interest at 121/2% per annum, payable semi-
13% senior notes due 2006 22,475 22,475 annually and are redeemable, in whole or in part, at the option of
10 3/4% senior notes due 2006 114,618 114,427 the Company at a price of 100% of the principal amount on or after
7 7/8% senior notes due 2008 149,750 149,750 July 1, 2005. The notes may also be redeemed by the Company in
12 1/2% senior notes due 2009 19,154 19,154 the event of certain tax law changes. The notes have no sinking fund
101/2% senior notes due 2012 100,516 – requirement and come due on December 1, 2009. In the event a
121/2% senior subordinated debentures change in control of the Company occurs, it is obligated to make an
due 2004 – 79,571 offer to purchase the notes at a price of 101% of the principal
406,513 385,377 amount. The fair value of these notes as of December 31, 2004 was
approximately $21,500,000 based on available market quotes.
(a) 13% senior notes due 2006
These notes were issued in June 2003 in exchange for an equal (e) 10 1/2% senior notes due 2012
principal amount of 91/2% and 101/2% senior notes due 2003 of On May 4, 2004, the Company issued and sold $103,000,000
the Company. They bear interest at 13% per annum, payable aggregate principal amount of these notes in an underwritten public
semi-annually, and are redeemable, in whole or in part, at the offering. The notes bear interest at 101/2% per annum but were sold
option of the Company at a price of 100% of the principal amount at a discounted price of $100,300,000 to yield 11% per annum. The
on or after July 1, 2005. The notes may also be redeemed by the $2,500,000 original issue discount is being amortized over the life of
Company in the event of certain tax law changes. The notes have the notes, which have no sinking fund requirement and come due on
no sinking fund requirement and come due on July 1, 2006. In the May 15, 2012. The notes are redeemable, in whole or in part, at the
event a change in control of the Company occurs, it is obligated to option of the Company at a price of 105.25% of the principal
make an offer to purchase the notes at a price of 101% of the amount on or after May 15, 2008, 102.625% on or after May 15,
principal amount. The fair value of these notes as of December 31, 2009, and 100% on or after May 15, 2010. The notes may also be
2004 was approximately $23,500,000 based on available market redeemed by the Company in the event of certain tax law changes.
quotes. In the event a change in control of the Company occurs, it is
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48816_p25_56.rev 4/5/05 9:03 am Page 40

principal amount on June 7, 2004.
obligated to make an offer to purchase the notes at a price of 101% At December 31, 2004, SCL was in full compliance with all the
of the principal amount. The fair value of these notes as of December 31, requirements of the senior notes. The indentures under which the senior
2004 was approximately $108,400,000 based on available market quotes notes are issued include financial covenants restricting debt incurrence,
dividend payments, affiliate transactions, material subsidiaries, asset
(f) 121/2% senior subordinated debentures due 2004 sale proceeds, unrelated lines of business, amalgamations and
These debentures were redeemed at a price of 100% of their mergers, incurrence of liens, and sale/leaseback transactions.
13. Pension plans

SCL sponsors defined contribution and defined benefit pension plans covering substantially all of its employees. There are five significant
defined benefit plans which are all closed to new entrants. In addition, employees of GNER participate in the U.K. rail industry’s defined
benefit plan which includes a financially distinct sub-plan attributable to SCL employees. It is SCL’s policy to fund its plans in accordance with
applicable laws and income tax regulations. Plan assets consist primarily of common stocks, mutual funds, government securities and corporate
debt securities held through separate trustee-administered funds.
The significant weighted-average assumptions used to determine net periodic costs are as follows:
Discount rate 5.4% 5.4% 5.6%

Assumed rates of compensation increases 3.0% 3.0% 2.7%
Expected long-term rate of return on plan assets 6.8% 6.9% 6.4%
The significant weighted-average assumptions used to determine benefit obligations at year end are as follows:
December 31, 2004 2003
Discount rate 5.3% 5.4%

Assumed rate of compensation increase 3.3% 3.0%
The discount rate essentially represents the risk-free rate of return on high-quality corporate bonds at the end of the year in the country in
which the assets are held.
In determining the expected long-term rate of return on assets, management has evaluated input from SCL’s actuaries and financial advisors,
including their review of anticipated future long-term performance of individual asset classes and the consideration of the appropriate asset
allocation strategy given the anticipated requirements of the respective plans to determine the average rate of earnings expected on the funds
invested. The projected returns by these consultants are based on broad equity and bond indices, including fixed interest rate gilts of long-term
duration since the plans are predominantly in the U.K. SCL’s expected long-term rate of return is based on a planned asset allocation of 57% in
equity investments, with an expected long-term rate of return of 8.2%, and 43% in fixed income investments, with an expected long-term rate
of return of 4.8%.
The changes in the benefit obligation, the plan assets and the funded status for the five plans were as follows:
Year ended December 31, 2004 2003

$000 $000
Change in benefit obligation:
Benefit obligation at beginning of year 261,666 192,008
Benefit obligations transferred in – 4,977
Service cost 5,040 4,363
Interest cost on projected benefit obligation 14,161 11,057
Plan participants’ contributions 1,497 1,607
Actuarial gain/(loss) 8,507 31,197
Benefits paid (9,368) (9,967)
Curtailment gain (154) 341
Foreign currency translation 19,699 26,083
Benefit obligation at end of year 301,048 261,666
Continued on next page

48816_p25_56.rev 4/5/05 9:03 am Page 41

$000 $000
Change in plan assets:
Fair value of plan assets at beginning of year 181,166 138,410
Plan assets transferred in – 4,165
Actual return on plan assets 14,800 19,579
Employer contributions 9,407 8,843
Plan participants’ contributions 1,497 1,607
Benefits paid (9,368) (9,967)
Foreign currency translation 13,787 18,529
Fair value of plan assets at end of year 211,289 181,166
Funded status (89,759) (80,500)
Unrecognized net actuarial loss 101,655 94,103

Unrecognized prior service cost (60) 424
Unrecognized transition amount 890 985
Net amount recognized 12,726 15,012
The amounts recognized in the consolidated balance sheets consist of the following:
December 31, 2004 2003

$000 $000
Prepaid benefit cost 3,130 2,506
Accrued benefit cost (61,040) (54,383)
Intangible assets 830 1,409
Accumulated other comprehensive loss 69,806 65,480
Net amount recognized 12,726 15,012
The components of net periodic benefit cost consist of the following:

$000 $000 $000
Service cost 5,040 4,363 4,507
Interest cost on projected benefit obligation 14,161 11,057 9,642
Expected return on assets (12,573) (9,337) (9,386)
Net amortization and deferrals 5,480 3,985 1,473
Net periodic benefit cost 12,108 10,068 6,236
The weighted-average asset allocations of SCL’s plans as of December 31, 2004 and 2003 by asset category as a percentage of plan assets
are as follows:
December 31, 2004 2003
Equity investments 59.2% 61.4%

Fixed income investments 40.1% 38.6%
Other 0.7% –
100.0% 100.0%
Additional information about SCL's pension plans is as follows:

$000 $000
Increase in minimum pension liability 4,325 15,939
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SCL expects to contribute $10,406,000 to its pension plans in 2005.

The following benefit payments, which reflect assumed future service, are expected to be paid:
Year ending December 31, $000
2005 9,355
2006 10,346
2007 12,034
2008 12,960
2009 15,575
2010 to 2013 95,504
155,774
The accumulated benefit obligation for all pension plans was $269,469,000 as of December 31, 2004 (2003 – $230,049,000).
Four pension plans included in 2004 and 2003 above had accumulated benefit obligations in excess of plan assets at December 31, 2004
and 2003. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets of these plans, in aggregate,
were as follows:

$000 $000
Projected benefit obligation 284,649 247,101
Accumulated benefit obligation 253,932 219,816
Fair value of plan assets 192,893 165,433
SCL is responsible for providing pension benefits for GNER employees who participate in a multi-employer plan covering many British rail
franchises. SCL's net periodic benefit cost under this pension plan for 2004 was $8,702,000 (2003 – $5,081,000, 2002 – $2,088,000).
14. Income taxes

The benefit from/(provision for) income taxes consists of the following:
Year ended December 31, 2004 Year ended December 31, 2003 Year ended December 31, 2002
Current Deferred Total Current Deferred Total Current Deferred Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
United States (80) (317) (397) (469) 721 252 (1,006) 1,648 642
Other foreign (1,318) 4,337 3,019 (5,244) (3,232) (8,476) (7,054) 552 (6,502)
(1,398) 4,020 2,622 (5,713) (2,511) (8,224) (8,060) 2,200 (5,860)
The Company is incorporated in Bermuda which does not impose an income tax. SCL’s effective tax rate is entirely due to income taxes
imposed by jurisdictions in which SCL conducts business other than Bermuda.

48816_p25_56.rev 4/5/05 9:04 am Page 43
The net deferred tax assets/liabilities recognized in the consolidated balance sheets at year end are comprised of the following:
December 31, 2004 2003

$000 $000
Gross deferred tax assets 94,651 94,776
Less: Valuation allowance (31,687) (58,834)
Net deferred tax assets 62,964 35,942
Deferred tax liabilities (53,913) (44,210)
Net deferred tax asset/(liability) 9,051 (8,268)
The gross deferred tax assets consist primarily of tax loss associated with these assets will not be realized.
carryforwards and future tax benefits of accrued pension costs. The decrease in the valuation allowance from December 31, 2003
The gross amount of tax loss carryforwards is $261,865,000. Of this to December 31, 2004 is primarily due to the completion of a tax
amount, $36,288,000 will expire in the five years ending December examination by the tax authorities in Finland during the fourth
31, 2009 and a further $121,517,000 will expire in the five years quarter of 2004. A portion of this reduction related to valuation
ending December 31, 2014. The remaining losses of $104,060,000 will allowances established in a prior acquisition and accordingly no
expire after December 31, 2014 or have no expiry date. benefit is recognized in respect of this item.
At December 31, 2004, deferred tax assets resulting from future tax The deferred tax liabilities are temporary differences substantially
benefits of accrued pension costs of $20,942,000 (2003 – caused by tax depreciation in excess of book depreciation.
$19,663,000) are recognized in other comprehensive income pursuant The net deferred tax assets at December 31, 2004 are included in
to SFAS No. 87, “Employers Accounting for Pensions”. other assets. The net deferred tax liability at December 31, 2003 is
A valuation allowance has been provided against gross deferred included in accrued liabilities.
tax assets where it is thought more likely than not that the benefits
15. Supplemental cash flow information

$000 $000 $000
Cash paid for:
Interest 86,447 104,477 117,692
Income taxes 9,397 2,610 5,534
Non-cash investing and financing activities:
In conjunction with acquisitions (see Note 5), liabilities were assumed as follows:
Year ended December 31 2004 2003 2002

$000 $000 $000
Fair value of assets acquired 10,785 – 814,814
Cash paid and class A common shares issued (7,311) – (129,775)
Carrying value of existing investments (1,868) – (137,061)
Liabilities assumed 1,606 – 547,978
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16. Employee stock option plans and dividend reinvestment plan

(a) Stock option plans
Under the Company’s 1997 stock option plan, options to purchase up to 500,000 class A or B common shares of the Company may be
awarded to employees of SCL at fair market value at the date of grant. Options are exercisable three years after award and must be
exercised ten years from the date of grant. At December 31, 2004, 335,300 class A common shares were reserved for issuance pursuant to
options awarded to 76 persons. The 1986 stock option plan of the Company terminated in 1996 and the last outstanding options lapsed
in 2004. In June 2004, shareholders of the Company approved a 2004 stock option plan under which options to purchase up to 500,000
class A or B common shares of the Company may be awarded, but no awards under that plan have been made.
No charges or credits are made to income with respect to options awarded or exercised under the plans since all options to employees are
awarded at market value at date of grant.
Transactions under the Company’s plans have been as follows:
Year ended December 31, 2004 Shares Option Price

Outstanding at beginning of period 260,050 $6.30 - $30.00
Granted 110,000 $15.70
Terminated (9,000) $16.00
Exercised (25,750) $6.30 - $8.55
Outstanding at end of period 335,300 $6.30 - $30.00
Exercisable at end of period 61,300 $8.55 - $30.00

Granted 172,250 $6.30 - $15.60
Terminated (163,500) $6.30 - $30.00
Exercised (1,000) $8.55

Granted 49,000 $9.00 - $16.20
Terminated (10,000) $21.75 - $30.00
Exercised (5,600) $8.55

48816_p25_56.rev 4/5/05 9:05 am Page 45
The options outstanding under the Company's plans at December 31, 2004 were as follows:
Number of Shares Weighted Average of
Range of Exercise Outstanding at Exercisable at Remaining Exercise Prices for Exercise Prices for
Prices 12/31/2004 12/31/2004 Contractual Lives Outstanding Options Exercisable Options
000 000
$6.30 129.0 – 8.1 $6.30 –
$8.55 26.3 26.3 6.8 $8.55 $8.55
$9.00 10.0 10.0 6.7 $9.00 $9.00
$11.00 10.0 10.0 7.8 $11.00 $11.00
$15.60 35.0 – 8.8 $15.60 –
$15.70 110.0 – 9.6 $15.70 –
$25.125 5.0 5.0 3.8 $25.125 $25.125
$30.00 10.0 10.0 4.6 $30.00 $30.00
335.3 61.3
As discussed in Note 1(o), these plans are accounted for under APB Opinion No. 25. Accordingly, no compensation cost has been recognized
for the stock options with exercise prices equal to the market price of the shares on the date of grant. Estimates of fair values of stock options
on the grant dates in the Black-Scholes option-pricing model were based on the following assumptions:
Expected price volatility range 45.0% 39.53% 39.69%

Risk-free interest rate range 3.96% 3.05% 2.78%
Expected dividends 0.45% 0.42% 1.76%
Expected life of stock options 5 years 5 years 5 years
Weighted average fair value $4.25 $2.47 $3.92
(b) Dividend reinvestment plan

SCL offers a dividend reinvestment and share purchase plan to owners of its common shares as a convenient and economical method of
investing their cash dividends in class A common shares at a 3% discount from the market price and without payment of any brokerage
commission or service charge. A common shareholder under the plan may also make optional cash deposits to purchase class A common
shares at market price without payment of commissions or other charges. During the years ended December 31, 2004, 2003 and 2002,
the Company issued 1,300, 1,600 and 6,500 class A common shares, respectively, under the plan for aggregate cash amounts of $20,800,
$17,900 and $77,900, respectively.
17. Shareholders’ equity (b) Dual common share capitalization

Effective June 23, 1992, following shareholder approval, the existing
(a) Redeemable preferred shares common shares of the Company were classified as class B common
The $7.25 convertible cumulative preferred shares are convertible at shares, each of which is convertible at any time into one class A
the option of the holder at any time, unless previously redeemed, into common share of the Company. Cash dividends on the class A
class B common shares of the Company at a conversion price of common shares, if any, must be at least 10% higher than any cash
$31.34 per share (equivalent to a conversion rate of approximately dividends on the class B common shares. In general, holders of class
3.19 class B common shares for each preferred share), subject to A and class B common shares vote together as a single class, with
adjustment under certain conditions. They provide for cumulative holders of class B shares having one vote per share and holders of
dividends at the annual rate of $7.25 per share payable quarterly class A shares having one-tenth of one vote per share. In all other
and are redeemable at the option of the Company, in whole or in substantial respects, the class A and B shares are the same.
part, at a redemption price of $100.00 per share. Any preferred
shares outstanding on May 6, 2005 must be redeemed at $100.00 (c) Shareholder rights agreement
per share plus any accrued and unpaid dividends. This redemption The Company has in place a shareholder rights agreement, as
feature is contingent upon the holders not having previously amended and restated as of June 1, 1998, which will be implemented
exercised their conversion rights. Accordingly, these securities are not not earlier than the tenth day following the first to occur of (i) the
considered mandatorily redeemable securities in accordance with public announcement of the acquisition by a person (other than a
SFAS No. 150. subsidiary of the Company) of shares carrying 20% or more of the
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48816_p25_56.rev 4/5/05 9:05 am Page 46
Notes to Consolidated Financial Statements (continued) (g) Certain restrictions on payment of dividends
SCL is party to certain credit agreements which restrict the payment
total voting rights which may be cast at any general meeting of the of dividends and the purchase of common shares. Under these
Company and (ii) the commencement or announcement of a tender agreements, approximately $101,000,000 was available at December
offer or exchange offer by a person for shares carrying 30% or 31, 2004 (2003 – $199,000,000) for the payment of cash dividends
more of the total voting rights which may be cast at any general and the purchase of shares.
meeting of the Company. At that time, the rights will detach from the
class A and class B common shares, and the holders of the rights will (h) Shares issued
be entitled to purchase, for each right held, one two-hundredth of a During 2004, the Company sold 2,776,200 newly-issued class A
series A junior participating preferred share of the Company at an common shares in SEC-registered public shelf offerings raising net
exercise price of $180 (the “Purchase Price”) for each one two- proceeds of about $45,500,000.
hundredth of such junior preferred share, subject to adjustment in
certain events. From and after the date on which any person 18. Rental income under operating leases and charters
acquires beneficial ownership of shares carrying 20% or more of the
total voting rights which may be cast at any general meeting of the The following are the minimum future rentals at December 31, 2004
Company, each holder of a right (other than the acquiring person) due SCL under operating leases of containers and leases of property
will be entitled upon exercise to receive, at the then current Purchase and other fixed assets:
Price and in lieu of the junior preferred shares, that number of class A
or class B common shares (depending on whether the right was Year ending December 31, $000
previously attached to a class A or B share) having a market value of
twice the Purchase Price. If the Company is acquired or 50% or more 2005 48,352
of its consolidated assets or earning power is sold, each holder of a 2006 32,395
right will be entitled to receive, upon exercise at the then current 2007 20,407
Purchase Price, that amount of common equity of the acquiring 2008 11,501
company which at the time of such transaction would have a market 2009 5,372
value of two times the Purchase Price. The rights will expire on June 2010 and thereafter 6,206
19, 2008 but may be redeemed at a price of $0.025 per right at any 124,233
time prior to the tenth day following the date on which a person acquires
beneficial ownership of shares carrying 20% or more of the total Of the total above, related party rental payments due from
voting rights which may be cast at any general meeting of the Company. GE SeaCo amounted to $74,579,000 (2003 – $76,867,000).
(d) Reserved shares 19. Commitments and contingencies

At December 31, 2004, 1,000,000 common shares have been
reserved for options granted or available under the 1997 and 2004 (a) Commitments
stock option plans of the Company (see Note 16(a)), 478,622 class B Outstanding contracts to purchase fixed assets were approximately
common shares have been reserved for issuance upon conversion of $6,000,000 at December 31, 2004 (2003 – $16,000,000).
the $7.25 convertible cumulative preferred shares (see Note 17(a)), Future rental payments under operating leases in respect of
and 14,500,000 class A common shares have been reserved for equipment rentals and leased premises are payable by SCL as
conversions of class B common shares (see Note 17(b)). Out of follows:
authorized preferred shares, 300,000 have been reserved for
issuance as series A junior participating preferred shares upon Year ending December 31, $000
exercise of preferred share purchase rights held by class A and B
common shareholders (see Note 17(c)). 2005 129,929
2006 9,813
(e) Acquired shares 2007 9,286
A total of 12,900,000 class B common shares were owned by a 2008 8,554
subsidiary of the Company at December 31, 2004. Under applicable 2009 8,257
law, these shares are outstanding and may be voted by the 2010 and thereafter 66,977
subsidiary, although in computing earnings per share these shares are 232,816
treated as a reduction to outstanding shares.
Of the total above, $119,745,000 in 2005 relates to rental payments
(f) Dividends by GNER in respect of leases of rolling stock and access charges for
On January 20, April 20, July 20 and October 20, 2004, the railway infrastructure. These commitments represent payments under
Company declared a quarterly cash dividend of $0.025 per class A the current franchise which expires in April 2005. Commitments for
common share and $0.0225 per class B common share. the new franchise that commences on May 1, 2005 have not been

48816_p25_56.rev 4/5/05 9:05 am Page 47
finalized, but rental payments and access charges are expected to be to GE SeaCo for office space have been correctly computed; and
on similar terms to those in the current franchise. Accordingly, there (iii) whether GE SeaCo is obligated to pay for certain container
will be future rental payments under operating leases for rolling stock equipment purchased from or through SCL’s subsidiary, Yorkshire
and access charges for railway infrastructure in excess of the amounts Marine Containers Ltd. With respect to the dispute relating to the
presented above. funding of the pension plan, GE Capital seeks to have SCL indemnify
Rental expense for the year ended December 31, 2004 amounted GE SeaCo for any amounts which might be required to be contributed
to $323,122,000 (2003 – $215,664,000, 2002 – $169,706,000). in the future, as a result of any underfunding which might be found
to have existed in 1998. In the case of the other disputes, GE Capital
(b) Contingencies (including litigation) seeks compensation from SCL. SCL believes that the aggregate net
Strategic Rail Authority effect on SCL of the disputes as to which compensation is sought
GNER experienced disruption of its services following an accident in would not exceed approximately $5,000,000.
October 2000, for which Network Rail and its predecessor were If SCL and GE Capital are unable to resolve these disputes between
required to pay compensation under the track access agreement. themselves, either of them has the right to submit any or all of the
Network Rail owns and maintains substantially all of the railway disputes to arbitration, as contemplated by the dispute resolution
infrastructure in Britain. GNER has contracted with Network Rail for provisions of the 1998 joint venture agreements establishing
track access based on the level of service GNER provides. Because of GE SeaCo. The outcome of these disputes is not determinable and,
disputes, both GNER and Network Rail withheld contractual therefore, no provision has been recorded at December 31, 2004.
payments due during 2001 through March 2002, when payments GE Capital, acting on behalf of GE SeaCo, has taken steps purporting to
resumed. As a result of separate arbitration awards under different terminate the 1998 Services Agreement, pursuant to which SCL provides
parts of the track access agreement, Network Rail's liability to corporate and administrative services and office space to GE SeaCo, and
compensate GNER was confirmed and proceedings continued as to certain related agreements. Unless agreement can be reached as to the
the amounts due. In December 2003, GNER and Network Rail terms of the termination of these agreements, the purported termination by
reached agreement settling GNER's claims arising from the service GE Capital is likely to be contested by SCL in arbitration.
disruption and relieving GNER from the obligation to repay certain
amounts previously withheld. The Strategic Rail Authority (“SRA”) GNER Performance Bond
which is the franchisor under GNER's passenger rail franchise GNER has undertaken since 1996 to reimburse the U.K. Strategic Rail
agreement had also separately claimed a portion of the Authority its costs in the event GNER breaches its franchise
compensation recognized by GNER in its settlement with Network agreement to the extent that the authority must award the franchise
Rail. The SRA’s claim amounted to about £25,000,000 ($45,000,000). to another operator. This undertaking at December 31, 2004 is
SCL recorded a provision at December 31, 2003 based on its covered by a surety bond issued by an insurance company in the
estimate of the settlement of this matter. For the year ended amount of $34,000,000 which the Company has guaranteed.
December 31, 2003, the settlement with Network Rail and GNER’s
provision for the separate SRA claim resulted in SCL’s recognition of 20. Derivative financial instruments
an approximate $6,000,000 gain, which was recorded as a reduction
in operating expenses consistent with SCL’s classification of contract (a) Interest rate swap agreements
payments with Network Rail and the SRA. SCL is exposed to interest rate risk on its floating rate debt and tries
During 2004, GNER and the SRA reached agreement to settle the to manage the impact of interest rate changes on earnings and cash
claim by the SRA noted above. GNER paid to the SRA £17,000,000 flows. SCL’s policy is to enter into interest rate swap agreements from
(approximately $30,000,000), which was consistent with the amount time to time to hedge the variability in cash flows due to movements
provided for by SCL at December 31, 2003. As a result, the SRA in interest rates at December 31, 2004 and 2003, SCL had interest
withdrew its claim relating to GNER’s December 2003 settlement with rate swaps that had been designated as cash flow hedges. Since their
Network Rail. Also in 2004 GNER and the SRA separately amended designation as cash flow hedges, changes in fair value that represent
GNER’s existing franchise agreement, which resulted in GNER the effective portion of the swaps are accumulated in other comprehensive
agreeing to pay the SRA an amount of £8,000,000 (approximately income/(loss). Amounts accumulated in other comprehensive
$14,000,000) in exchange for certain benefits to be realized over the income/(loss) will be reclassified into earnings as the hedged interest
remaining life of the existing franchise. cash flows are accrued. During the year ended December 31, 2004,
approximately $900,000 was recognized in earnings as a result of
General Electric Capital Corporation ineffectiveness. The fair value of the swaps at December 31, 2004
There are a number of pending disputes between SCL and General was a $6,360,000 liability (2003 – $12,570,000 liability).
Electric Capital Corporation (“GE Capital”) relating to the
management and operation of GE SeaCo, the outcome of which (b) Fuel swap agreements
might affect SCL’s financial results. In particular, these disputes relate SCL uses commodity futures contracts from time to time to procure a
to: (i) the level of funding required in one of SCL’s pension plans, as portion of its fuel requirements and to hedge its exposure to volatility
of May 1, 1998, when certain employees of SCL’s container division in fuel market prices. SCL has, when considered appropriate, entered
became employees of GE SeaCo; (ii) whether the charges by SCL into swap agreements to fix the price of fuel. At December 31, 2004,
47
48816_p25_56.rev 4/5/05 9:06 am Page 48
Notes to Consolidated Financial Statements (continued) (c) Foreign exchange risk management
From time to time, SCL utilizes foreign currency forward contracts to
SCL had a fuel swap in place, which was entered on December 30, reduce exposure to exchange rate risks primarily associated with
2004, matures over the next two months and had an immaterial fair SCL's international transactions. These contracts establish the
value at December 31, 2004. The hedge was against a portion of exchange rates at which SCL will purchase or sell at a future date the
fuel requirements of Silja ships in January and February 2005. This contracted amount of currencies for specified foreign currencies. SCL
swap has not been designated as a hedge. SCL had no other fuel utilizes forward contracts which are short-term in nature and receives
swap agreements at December 31, 2004. or pays the difference between the contracted forward rate and the
exchange rate at the settlement date. No contracts were outstanding
at December 31, 2004.
21. Accumulated other comprehensive income/(loss)

The accumulated balances for each component of other comprehensive income/(loss) are as follows:
December 31, 2004 2003

$000 $000
Foreign currency translation adjustments (111,624) (131,584)

Derivative financial instruments 716 (1,614)
Minimum pension liability, net of tax (48,864) (45,879)
(159,772) (179,077)
The components of other comprehensive income/(loss) are as follows:

$000 $000 $000

Foreign currency translation adjustments 19,960 21,014 46,082
Change in fair value of derivatives 2,330 (590) 6,843
Additional minimum pension liability, net of tax (2,985) (11,198) (34,681)
Comprehensive income 15,025 121,684 61,260
During 2004, the net amount of $3,880,000 (2003 – $2,315,000 and 2002 – $5,294,000) was reclassified from other comprehensive income to
net (losses)/earnings related to derivative financial instruments (see Note 20).
22. Information concerning financial reporting for segments and operations in different geographical areas
SCL’s business activities are managed through four main reporting interest in OEH dropped below 50% and the Company began to
segments. The first segment is the operation of ferry transport account for its investment in OEH under the equity method of
services primarily in the Baltic Sea, English Channel and New York accounting (see Note 2). This change is reflected in the 2002
harbor. This business is referred to as “Ferry operations”. The second segment information from the date OEH was deconsolidated
segment is the operation of passenger rail transport services through (November 14, 2002). “Other operations” include the Corinth Canal,
GNER in Great Britain. This business is referred to as “Rail real estate development, perishable commodity production and sales,
operations”. The third segment is leasing of cargo containers and publishing activities. Transactions between reportable segments
(principally through the GE SeaCo joint venture) to liner ship are not material.
operators, road and rail operators, forwarders and exporters located SCL’s segment information has been prepared in accordance with
throughout the world and the services which support these activities, SFAS No. 131, “Disclosures about Segments of an Enterprise and
including the manufacture and repair of container equipment. This Related Information”. The main factor SCL uses to identify its four
business is referred to as “Container operations”. The fourth segment main segments is the similarity of the products and services provided.
was ownership and/or management of hotels, restaurants, tourist Segment performance is evaluated based upon net (losses)/earnings
trains and cruises located worldwide through OEH. This business is from operations before net finance costs, gains on asset sales, non-
referred to as “Leisure operations”. During 2002, SCL’s economic recurring charges, corporate costs and taxes. Segment information is

48816_p25_56.rev 4/5/05 9:06 am Page 49
presented in accordance with the accounting policies described in follows, with net finance costs being net of capitalized interest and
Note 1. interest and related income:
Financial information regarding these business segments is as
2004 2003 2002

Year ended December 31, $000 $000 $000
Revenue:
Ferry operations 734,949 786,601 576,585
Rail operations 857,910 723,219 695,775
1,742,717 1,646,099 1,610,447
Depreciation and amortization:
Rail operations 21,541 13,352 9,243
124,022 113,471 113,710
(Losses)/earnings from operations before net finance costs:
Ferry operations (12,945) 29,838 52,141
Rail operations 42,868 84,083 68,893
Other operations (1,557) 1,563 1,569
Non-recurring charges – (46,000) –
Gains from sale of assets 6,288 105,000 2,883
Corporate costs (18,998) (15,798) (15,038)
61,085 194,469 172,879
Net finance costs (80,942) (85,293) (114,670)
(Losses)/earnings from operations before minority interest

and income taxes (19,857) 109,176 58,209
Capital expenditure:
Rail operations 21,243 2,654 2,971
Other operations 4,951 3,541 526
86,523 37,625 123,718
December 31, 2004 2003

$000 $000
Identifiable assets:
Ferry operations 1,477,879 1,420,807
Rail operations 196,536 252,081
Container operations 787,775 816,838
Leisure operations 234,018 223,592
Other operations 39,892 52,523
2,736,100 2,765,841
49
48816_p25_56.rev 4/5/05 9:07 am Page 50
Notes to Consolidated Financial Statements (continued) charters from Silja a floating passenger terminal located at Liverpool
for which $56,000 was paid to Silja in 2002. The amounts paid in
Non-U.S. domestic operations accounted for more than 97% of 2002 relate to the period prior to acquisition.
revenue and for 100% of earnings before net finance costs in 2004
(2003 – 97% and 100%, 2002 – 96% and 94%). Containers are
24. Subsequent events (unaudited)
regularly moving between countries in international commerce over
hundreds of trade routes. SCL has no knowledge of, or control over, On January 20, 2005, the Company declared a quarterly dividend
the movement of containers under lease or the location of leased of $0.025 per class A common share and $0.0225 per class B
containers at any moment in time. Based on container leases in force common share.
at December 31, 2004, containers may touch ports in more than 100 In January and February 2005, the Company issued and sold in the
different countries worldwide. It is therefore impossible to assign U.S. in a registered public offering 2,400,000 newly-issued class A
revenues or assets of container operations by geographical areas. common shares in the Company, realizing net proceeds of
Ferry operations and identifiable assets are mainly carried on and approximately $40,960,000.
held in north Europe and Scandinavia. Rail operations and assets are In March 2005, the Company sold in the U.S. in a registered public
based in Britain. Leisure operations are spread throughout the world offering 4,500,000 existing OEH class A common shares owned by
with no one country representing more than 10% of the revenue or the Company, realizing net proceeds of approximately $108,500,000.
identifiable assets in 2002. After this sale, the Company's remaining equity interest in OEH is
approximately 25%.
Also in March 2005, the U.K. Strategic Rail Authority awarded
23. Related party transactions
GNER a renewal of its passenger rail franchise in Britain with an
For the year ended December 31, 2004, SCL earned revenue in initial term to April 2012, automatically extendable to April 2015 if
connection with the lease and management agreements relating to GNER meets prescribed performance targets.
SCL-owned containers provided to the GE SeaCo joint venture of
$26,646,000 (2003 – $26,213,000, 2002 – $33,101,000). Also in
2004, SCL incurred expenses under the services agreement with
GE SeaCo by which SCL provides corporate and administrative
services to the joint venture and for which GE SeaCo recognized and
paid to SCL net amounts of $31,813,000 (2003 – $32,936,000, 2002 –
$30,690,000). For the year ended December 31, 2004, SCL sold
containers from its factories and provided use of SCL’s depots for
container repair and storage services, for which GE SeaCo paid
$11,569,000 (2003 – $17,434,000, 2002 – $23,713,000). In addition,
in 2004, GE SeaCo paid interest of $nil on loans from SCL (2003 –
$nil, 2002 – $50,000) and at year end, SCL had a loan balance of
$nil due from GE SeaCo (2003 – $3,000,000). At December 31, 2004,
a receivable of $30,718,000 (2003 – a receivable of $30,342,000)
remains outstanding for GE SeaCo in respect of all the above, which
is included in accounts receivable on SCL’s consolidated balance sheet
and most of which is settled in the following quarter.
For the year ended December 31, 2004, SCL received from OEH
$5,330,000 (2003 – $4,631,000, 2002 – $5,899,000) for the provision
of various services, including financial, legal, accounting, corporate
executive, public company, human resources administration, insurance,
office facilities, and system and computer services. These were
provided under a services agreement between SCL and OEH on the
basis of a fee plus reimbursements equivalent to the direct and
indirect costs of providing the services. The agreement had an initial
term of one year and is automatically renewed annually unless it is
terminated by SCL or OEH.
SCL received from Silja, prior to its acquisition in May 2002, fees for
the provision of various services which amounted to $400,000 in
2002. These services were provided on the basis of reimbursement
of SCL’s costs as approved by the board of directors of Silja. SCL
also charters a SuperSeaCat to Silja to operate on the Helsinki-Tallinn
route for which $1,260,000 was paid to SCL in 2002, and SCL

48816_p25_56.rev 4/5/05 9:07 am Page 51
Five-year performance
Year ended December 31, 2004 2003 2002 2001 2000

$000 $000 $000 $000 $000
Revenue 1,742,717 1,646,099 1,610,447 1,215,828 1,296,143
Net (losses)/earnings on class A and

class B common shares (5,368) 111,370* 41,928 4,546 44,873
Net earnings per common share: $ $ $ $ $

Class A:
Basic (0.23) 5.32* 2.10 0.25 2.45
Diluted (0.23) 5.25* 2.10 0.25 2.45
Class B:
Basic (0.23) 4.79* 1.90 0.22 2.21
Diluted (0.23) 4.72* 1.90 0.22 2.21
Cash dividends per class A common share 0.10 0.05 0.225 0.30 0.975
Cash dividends per class B common share 0.09 0.045 0.204 0.272 0.878
$000 $000 $000 $000 $000
Total assets 2,736,100 2,752,876 2,807,121 2,653,569 2,610,113
Debt and capital lease obligations 1,530,575 1,596,282 1,790,930 1,674,926 1,629,227
Shareholders’ equity 773,763 712,116 569,994 477,905 509,557
*Year ended December 31, 2003 includes a gain on sale of ferry assets of $100,000,000 and non-recurring charges of $46,000,000.
51
48816_p25_56.rev 4/5/05 9:40 am Page 52
Price range of common shares and dividends (unaudited)

The principal market on which the class A and B common shares of the Company are traded is the New York Stock Exchange. Their trading
symbols are SCRA and SCRB, respectively. Both classes are also listed on the Pacific Exchange. The following table presents the quarterly high
and low sales price of a common share in 2004 and 2003 as reported for New York Stock Exchange composite transactions:
2004 2003
High Low High Low
Class A Common Shares $ $ $ $
First quarter 21.79 17.75 9.30 5.51
Second quarter 20.60 14.67 12.55 6.80
Third quarter 17.89 15.01 16.35 10.76
Fourth quarter 19.69 14.25 18.70 14.30
Class B Common Shares

First quarter 21.75 18.50 9.15 5.92
Second quarter 20.50 15.00 12.50 7.05
Third quarter 17.50 14.80 16.25 10.75
Fourth quarter 19.50 14.30 18.50 14.55
The Company paid cash dividends on its class A and B common shares in the third and fourth quarters of 2003 and in all four quarters of
2004 at the quarterly rates of $0.025 per class A share and $0.0225 per class B share.
Earnings before interest, tax, depreciation and amortization (unaudited)

Management believes that EBITDA (net earnings adjusted for net finance costs, tax, depreciation, amortization and minority interest) is a useful
measure of operating performance, to help determine the ability to incur capital expenditure or service indebtedness, because it is not affected
by non-operating factors such as leverage and the historic cost of assets. However, EBITDA does not represent cash flow from operations as
defined by U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund all cash flow needs and should
not be considered as an alternative to earnings from operations under U.S. generally accepted accounting principles for purposes of evaluating
results of operations. The following table reconciles EBITDA to net earnings:
Year ended December 31 2004 2003 2002

$000 $000 $000
EBITDA 198,062 319,446 288,214
Depreciation and amortization 124,022 113,471 113,710
Net finance costs 80,942 85,293 114,670
Minority interest – – 10,958
Taxation (2,622) 8,224 5,860
Net earnings (4,280) 112,458 43,016

48816_p25_56.rev 4/5/05 9:07 am Page 53
Summary of quarterly earnings (unaudited)

Quarter ended
December 31 September 30 June 30 March 31
$000 $000 $000 $000
2004
Revenue:
Ferry operations 175,480 225,880 191,623 141,966
Rail operations 224,499 224,945 208,261 200,205
Container operations 37,625 35,475 26,580 25,966
Other operations 7,839 5,307 5,925 5,141
445,443 491,607 432,389 373,278
(Losses)/earnings before net
finance costs:
Ferry operations (19,581) 17,145 3,659 (14,168)
Rail operations 8,847 10,588 12,450 10,983
Other operations 50 (630) 41 (1,018)
Gains from sale of assets (73) 6,361 – –
Corporate costs (5,527) (5,102) (4,668) (3,701)
Net finance costs (21,036) (19,303) (19,873) (20,730)
(Losses)/earnings before income taxes (24,648) 21,385 2,565 (19,159)

Benefit from/(provision for) income taxes 7,515 (8,393) (1,000) 4,500
(Losses)/earnings before earnings/(losses) from investment in
Orient-Express Hotels Ltd. (17,133) 12,992 1,565 (14,659)
Earnings/(losses) from investment in Orient-Express Hotels Ltd. 3,541 4,834 5,429 (1,937)
Earnings from other equity investments 433 568 69 18
Net (losses)/earnings (13,159) 18,394 7,063 (16,578)
Preferred share dividends (272) (272) (272) (272)
Net (losses)/earnings on class A and class B common shares (13,431) 18,122 6,791 (16,850)
$ $ $ $
(Losses)/earnings per common share:
Class A:
Basic (0.54) 0.78 0.30 (0.73)
Diluted (0.54) 0.77 0.30 (0.73)
Class B:
Basic (0.54) 0.70 0.27 (0.73)
Diluted (0.54) 0.69 0.27 (0.73)
Dividends per class A common share 0.025 0.025 0.025 0.025
Dividends per class B common share 0.0225 0.0225 0.0225 0.0225
53
48816_p25_56.rev 4/5/05 9:08 am Page 54
Summary of quarterly earnings (unaudited)

Quarter ended
December 31 September 30 June 30 March 31
$000 $000 $000 $000
2003
Revenue:
Ferry operations 192,184 236,606 216,007 141,804
Rail operations 196,272 197,364 156,933 172,650
Other operations 8,550 5,126 6,718 5,274
422,593 465,018 410,259 348,229
Earnings/(losses) before net finance costs:
Ferry operations 5,996 28,574 7,902 (12,634)
Rail operations 20,864 28,757 13,759 20,703
Other operations 784 (229) 835 173
Non-recurring charges (6,000) (40,000) – –
Gains from sale of assets – 105,000 – –
Corporate costs (4,039) (4,067) (3,604) (4,088)
Net finance costs (17,792) (19,577) (21,339) (26,585)
Earnings/(losses) before income taxes 9,054 107,140 6,885 (13,903)

(Provision for)/benefit from income taxes (1,192) (10,300) (1,767) 5,035
Earnings/(losses) before earnings/(losses) from investment in
Orient-Express Hotels Ltd. 7,862 96,840 5,118 (8,868)
Earnings/(losses) from investment in Orient-Express Hotels Ltd. 3,877 3,824 4,412 (1,226)
Earnings from other equity investments 165 352 64 38
Net earnings/(losses) 11,904 101,016 9,594 (10,056)
Preferred share dividends 272 272 272 272
Net earnings/(losses) on class A and class B common shares 11,632 100,744 9,322 (10,328)
$ $ $ $
Earnings/(losses) per common share:
Class A:
Basic 0.55 4.83 0.44 (0.49)
Diluted 0.55 4.72 0.44 (0.49)
Class B:
Basic 0.50 4.34 0.44 (0.49)
Diluted 0.50 4.25 0.44 (0.49)
Dividends per class A common share 0.025 0.0250 – –
Dividends per class B common share 0.0225 0.0225 – –

48816_p25_56.rev 4/5/05 9:08 am Page 55
Corporate Governance
The Board of Directors of the Company has established corporate
governance measures substantially in compliance with requirements
of the New York Stock Exchange (“NYSE”). These include a set of
Corporate Governance Guidelines, Charters for each of the Audit
Committee, Compensation Committee, and Nominating and
Governance Committee of the full Board, and a Code of Business
Conduct for Directors, Officers and Employees. The Board of
Directors has also adopted a Code of Business Practices for the
Company's Principal Executive, Financial and Accounting Officers.
These documents are published on the Company’s website
(www.seacontainers.com) or may be obtained by writing to the
Company's Secretary at its registered office address (Sea Containers
Ltd., 22 Victoria Street, P.O. Box HM 1179, Hamilton HM EX,
Bermuda).
Because the Company is a foreign private issuer as defined in rules
of the U.S. Securities and Exchange Commission, it is not required to
comply with all NYSE corporate governance requirements as they
apply to U.S. domestic companies listed on the NYSE. The
Company’s corporate governance measures differ in three significant
ways. First, the Charter of the Company’s Nominating and
Governance Committee generally mandates the same responsibilities
as NYSE rules require but authorizes the Committee to act only upon
the Board's request and in an advisory capacity. Second, the Charter
of the Company’s Compensation Committee authorizes the
Committee to recommend to the Board the compensation of the
Company’s chief executive officers but does not empower the
Committee itself to determine, approve or modify that compensation.
Third, unlike NYSE standards for determining when a director is not
deemed independent, a director of the Company is not deemed
independent under its Corporate Governance Guidelines if the
director works for a law firm paying compensation to the director
(other than normal retirement benefits) and the law firm provides
professional services in the current year to SCL amounting to more
than $1,000,000 or 2% of the law firm’s gross revenue.
55
48816_p25_56.rev 4/5/05 9:08 am Page 56
Shareholder and investor information

Registered office Independent registered public accounting firm
Sea Containers Ltd. Deloitte & Touche LLP
22 Victoria Street Two World Financial Center
P.O. Box HM 1179 New York, New York 10281
Hamilton HM EX
Bermuda Annual general meeting
Tel: +1 (441) 295 2244 The annual general meeting of shareholders will be held at the
Fax: +1 (441) 292 8666 registered office of the company at 22 Victoria Street, Hamilton,
Bermuda on Monday, June 6, 2005 at 2:30pm.
Correspondence
Sea Containers Services Ltd. Shareholder information
Sea Containers House Copies of SEC Form 10-K annual reports, SEC Form 10-Q quarterly
20 Upper Ground reports and other published financial information are available on the
London SE1 9PF Sea Containers website, or may be obtained upon request to:
England Sea Containers America Inc.
Tel: +44 (0)20 7805 5000 1114 Avenue of the Americas
Fax: +44 (0)20 7805 5900 New York, New York 10036
(delete (0) if dialling from outside the U.K.) Tel: +1 (212) 302-5066
Fax: +1 (212) 302-5073
Website
http://www.seacontainers.com Investor relations
Shareholders, securities analysts, portfolio managers and
Stock exchange listings representatives of financial institutions seeking financial
Sea Containers Ltd. class A and class B common shares information may contact:
are listed on the New York and Pacific Stock Exchanges. William W. Galvin III
Designed and produced by The Illustrated London News Group. Printed in the United Kingdom by GreenShires Group Ltd. © Sea Containers Ltd. 2005
The trading symbols are SCRA and SCRB. The Galvin Partnership
136 Maple Avenue
Share transfer agent and registrar P.O. Box 1248
EquiServe Trust Company N.A. Greenwich, CT 06830
P.O. Box 43010 Tel: +1 (203) 618-9800
Providence, Rhode Island 02940-3010 Fax: +1 (203) 618-1010
Tel: +1 (781) 575-3170 Email: wwg@galvinpartners.com
Website: http://www.equiserve.com
Dividend reinvestment and share purchase plan
Shareholders are encouraged to contact the Transfer Agent directly Sea Containers Ltd. offers this plan to owners of its common shares
regarding any change in certificate registration, change of mailing as a convenient and economical method of investing their cash
address, lost or stolen certificates, replacement of dividend checks, dividends in class A common shares at a discount from the market
consolidation of multiple accounts, elimination of duplicate mailings, price and without payment of any brokerage commission or service
replacement of Form 1099-DIV and related shareholder service charge. A common shareholder under the plan may also make
matters. Shareholders may also access their accounts and other optional cash deposits to purchase class A common shares at market
information directly through EquiServe’s website. price without payment of commissions or other charges. For further
information about the plan, please contact the share transfer agent
Co-registrar of shares and registrar, EquiServe, at the address left.
The Bank of Bermuda
6 Front Street
Hamilton HM 11
Bermuda

48816_COVER.REV2 6/5/05 1:12 pm Page 2
Sea Containers Ltd. Hoverspeed’s English Channel

services are benefiting from a
second linkspan at the port of
Calais opened in 2004 by the
local Chamber of Commerce.
This bridge offers two lanes for
Contents Sea Containers Ltd. is a Bermuda company with regional offices in vehicles, speeding up the
London, Genoa, New York, Rio de Janeiro, Bangkok and Sydney. It is process of loading and
Company description 2
owned primarily by U.S. shareholders and its common shares are listed on unloading. It is in addition to
Financial highlights 3 the New York Stock Exchange under the trading symbols SCRA and SCRB. the existing linkspan, providing
Hoverspeed with the option
Directors and officers 4 The company is engaged in three main activities: ferry services, rail of using both berths if traffic
operations and marine container leasing. Within each activity are a is backed up.
President’s letter to shareholders 6
number of operating units. Ferries consists of fast ferry services in the
Discussion by division: English Channel under the brand “Hoverspeed”; fast ferry services in
New York City under the brand “SeaStreak”; fast and conventional ferry
Ferry services 12 services in the Baltic under the brand “Silja Line”; and in the Adriatic under
the brand “SNAV-Hoverspeed” (50% owned).
Rail 16
Containers 18 Rail operations in the U.K. are conducted by the Great North Eastern
Railway (GNER).
Finance 22
Marine container leasing is conducted primarily through GE SeaCo SRL, a
Financial review 25
Barbados company owned 50% by Sea Containers and 50% by General
Shareholder and investor information 56 Electric Capital Corporation. GE SeaCo operates one of the largest marine
container fleets in the world, nearly one million units. Sea Containers also
owns or partly owns five container service depots, four container
manufacturing facilities, a forwarding and logistics business in Australasia
and a refrigerated container service business.
The company also owns 25% of the equity of Orient-Express Hotels Ltd.,
the common shares of which are listed on the New York Stock Exchange
under OEH. This company has 49 de luxe leisure properties in 25 countries.
Most of the properties are owned but some are partly owned. Its hotels,
Front cover: GNER has won a new 10-year franchise to restaurants, river cruise ships and tourist trains compete in the top end
operate passenger train services on the U.K.’s East Coast of the market.
Main Line between London and Scotland, and London and
Leeds. Under the agreement with the Strategic Rail Authority, Other lesser Sea Containers activities include port interests in the U.K. and
GNER plans to generate more passengers by offering Greece, property development, publishing, fruit farming in the Ivory Coast
attractive off-peak fares and using innovative revenue and Brazil, and a U.K.-based travel agency.
management techniques. It also plans to provide three extra
diesel powered trains and more train services, including 13
extra departures daily on the busy Leeds-London route.
2 S EA CONTAI N E RS LTD .
48816_COVER 6/5/05 11:47 am Page 1
Sea Containers Ltd. Annual Report 2004

Sea Containers Ltd.
22 Victoria Street
Sea Containers Ltd.
P.O. Box HM 1179
Hamilton HM EX
Annual Report 2004
Bermuda
Tel: +1 (441) 295 2244

Fax: +1 (441) 292 8666
Correspondence:
Sea Containers Services Ltd.
Sea Containers House
20 Upper Ground
London SE1 9PF
England
Tel: +44 (0)20 7805 5000

Fax: +44 (0)20 7805 5900
www.seacontainers.com
2860-AR-04

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48816_COVER 6/5/05 11:47 am Page 1

Sea Containers Ltd. Annual Report 2004

Tel: +1 (441) 295 2244

Tel: +44 (0)20 7805 5000

Sea Containers Ltd. Hoverspeed’s English Channel

2004 2003 Change

Revenue 1,742,717 1,646,099 5.9

Gain on sale of ferry assets and non-recurring charges – 54,000 (100.0 )

Net earnings before finance costs 61,085 194,469 (68.6 )

Net (losses)/earnings on common shares (5,368 ) 111,370 (104.8 )

Total assets at book value 2,736,100 2,765,841 (1.1 )

Debt and capital lease obligations 1,530,575 1,596,282 (4.1 )

Total shareholders’ equity 773,763 716,813 7.9

Net (losses)/earnings per common share:

Class A (Basic) (0.23 ) 5.32 (104.3 )

Cash dividends per class A common share 0.10 0.05 100.0

Cash dividends per class B common share 0.09 0.05 100.0

* EBITDA means earnings

Directors and officers

* member of the Audit Committee

4 Sea Containers Ltd.

Officers other than the President Regional

Franco delle Piane

Standing from left to right: Seated from left to right:

President’s letter to shareholders

April 15, 2005 the winter when it was unable to operate.

6 Sea Containers Ltd.

manages containers which GE Capital does

4. Fares are being increased in our SeaStreak

8 Sea Containers Ltd.

Left: Sea Containers Australia

Right: New GE SeaCo 40ft hi-cube refrigerated containers

results but there will be non-recurring

Management and staff

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Below: The 203 meter Silja to be introduced in early 2006

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Above: Launched in 2004,

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an on-board wireless internet service, allowing

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GE SeaCo 40ft hi-cube

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Results logistics businesses from the Owens Group.

2004 Revenue by division 2004 EBITDA by division

Containers Other operations

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Cash flow 2004 Assets by division

Cash flow before financing 18.3 296.4

Net cash flow (76.2 ) 2.3

Debt profile (December 31, 2004)

24 Sea Containers Ltd.

Report of independent registered

Report of Independent Registered Public Accounting Firm

March 30, 2005

Board of Directors and Shareholders

Deloitte & Touche LLP

26 Sea Containers Ltd. & subsidiaries