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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Commission file number 1-7560

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

Indicate by check mark whether the registrant is an accelerated filer (under Rule 12b-2 of the Exchange Act). Yes ý    No o

As of April 30, 2004, 21,413,729 Class A common shares and 14,413,295 Class B common shares of Sea Containers Ltd. were outstanding including 12,900,000 Class B shares owned by a subsidiary of the registrant.

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements

Sea Containers Ltd. and Subsidiaries

Consolidated Balance Sheets

See notes to consolidated financial statements.

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Sea Containers Ltd. and Subsidiaries

Consolidated Balance Sheets (continued)

See notes to consolidated financial statements.

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Sea Containers Ltd. and Subsidiaries

Statements of Consolidated Operations (unaudited)

See notes to consolidated financial statements.

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Sea Containers Ltd. and Subsidiaries

Statements of Consolidated Cash Flows (unaudited)

See notes to consolidated financial statements.

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Sea Containers Ltd. and Subsidiaries

Statement of Consolidated Shareholders' Equity (unaudited)

See notes to consolidated financial statements

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Sea Containers Ltd. and Subsidiaries

Notes to Consolidated Financial Statements

1. Basis of financial statement presentation

(a) Accounting policies

        For a description of significant accounting policies, see the Notes to the consolidated financial statements in the Company's 2003 Form 10-K annual report. As of March 31, 2004, these significant accounting policies have not changed from December 31, 2003. "SFAS" means a Statement of Financial Accounting Standards and "FIN" means an accounting interpretation, both of the Financial Accounting Standards Board.

        Certain reclassifications have been made to the 2003 financial statements to conform to the classifications in the 2004 financial statements. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2004 and 2003, which are all of a normal recurring nature, have been reflected in the information provided. Due to the seasonal nature of SCL's business, operating results of the interim period are not indicative of a full year's operating results.

        For purposes of these Notes, the "Company" refers to Sea Containers Ltd., and "SCL" refers to Sea Containers Ltd. and its subsidiaries. "OEH" refers to Orient-Express Hotels Ltd., a 42% equity investment of the Company engaged in the hotel and leisure business. "GE SeaCo" refers to GE SeaCo SRL, a 50%/50% container leasing joint venture company between the Company and General Electric Capital Corporation accounted for under the equity method. "GNER" refers to Great North Eastern Railway Ltd., a wholly-owned subsidiary of the Company and operator of SCL's passenger rail franchise in Great Britain. "Silja" refers to Silja Oy Ab, a wholly-owned subsidiary of the Company based in Finland engaged in ferry operations in the Baltic Sea.

(b) Losses per share

        The number of shares used in computing basic and diluted losses per share was as follows (in thousands):

        The anti-dilutive effect of stock options on 136,538 and 13,941 shares for the three months ended March 31, 2004 and 2003, respectively, has been excluded from the computation of diluted losses per share. In addition, 478,622 common shares to be issued upon conversion of convertible preferred shares were excluded from the three months ended March 31, 2004 and 2003 computation of diluted losses per share because to do so would be anti-dilutive.

(c) Other

        Other in the statements of consolidated operations comprises gains/(losses) on asset sales and earnings from unconsolidated companies.

        For the three months ended March 31, 2004, there were no gains/(losses) on asset sales (2003—$81,000). The 2003 gains related to container asset disposals.

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        Earnings from unconsolidated companies include SCL's share of the net earnings of its equity investments as well as interest income related to loans and advances to the equity investees.

(d) Stock-based compensation

        SCL's compensation cost for share options is measured as the excess, if any, of the quoted market price of the Company's shares at the date of the grant over the amount an employee must pay to acquire the shares, in accordance with the intrinsic value method under Accounting Principles Board Opinion No. 25. If compensation cost for the Company's stock option plans had been determined based on fair values as of the date of grant, SCL's net earnings and earnings per share would have been reported as follows (dollars in thousands, except per share amounts):

        The pro forma figures in the preceding table may not be representative of pro forma amounts in future years.

(e) Recent Accounting Pronouncements

        In January 2003, the Financial Accounting Standards Board issued FIN No. 46 "Consolidation of Variable Interest Entities," as amended by FIN No. 46R which applied immediately to variable interest entities created after January 31, 2003, and with respect to variable interests held before February 1, 2003, applied beginning with SCL's quarter ended March 31, 2004. SCL has evaluated all of its existing joint venture agreements and has determined that none of its joint ventures are within the scope of FIN No. 46R.

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(f) Pensions

        Components of net periodic pension benefit cost are as follows (dollars in thousands):

        As reported in Note 12 to the financial statements in the 2003 Form 10-K annual report, SCL expected to contribute $7,961,000 to its pension plans in 2004. As of March 31, 2004, $2,079,000 of contributions have been made. SCL anticipates contributing an additional $7,009,000 to fund its pension plans in 2004 for a total of $9,088,000.

(g) Container assets

        During the second half of 2003, management implemented a plan to sell certain specifically identified container assets and applied the provisions of SFAS No. 144. This indicated that the carrying value of certain container assets exceeded the expected future cash flows attributable to these assets, resulting in impairment. The total impairment charge recognized during 2003 was approximately $16,000,000 determined by taking the excess of the carrying value over the estimated fair values. This required that these assets be valued at the lower of their respective carrying amount or fair value less costs to sell. The carrying value of container assets held for sale at March 31, 2004, after disposing of containers having net book value of $3,000,000 in the first quarter of 2004, was approximately $12,000,000.

2. Investments

        Investments represent equity interests of 20% to 50% in any unconsolidated company. SCL does not have effective control of these unconsolidated companies and, therefore, accounts for these investments using the equity method. SCL's principal equity investees are GE SeaCo engaged in the container leasing business and OEH engaged in the hotel and leisure business. See Note 13 regarding transactions between SCL and GE SeaCo and between SCL and OEH.

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        Summarized financial data of SCL's unconsolidated companies for the periods during which the investments were held by SCL are as follows (dollars in thousands):

3. Real estate and other fixed assets

       The major classes of real estate and other fixed assets are as follows (dollars in thousands):

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4. Intangible assets

       Intangible assets consist of the following (dollars in thousands):

        Amortization expense related to intangible assets subject to amortization was $899,000 and $854,000 for the three month period ended March 31, 2004 and 2003, respectively. Amortization for the next five years is expected to be approximately $3,500,000 annually. The changes in the carrying amount of goodwill for the three months ended March 31, 2004 are as follows (dollars in thousands):

5. Long-term debt (other than senior notes and senior subordinated debentures)

       Long-term debt consists of the following (dollars in thousands):

        Several credit agreements of SCL have restrictive financial covenants. At March 31, 2004, SCL was in compliance with its covenants.

        Included in long-term debt is a revolving credit facility with a group of banks secured by container equipment, a securitization facility with a nine-year term secured by other container equipment, and a revolving credit and term loan facility secured on Silja ship assets. At March 31, 2004, an aggregate of $791,018,000 (December 31, 2003—$749,567,000) was outstanding under these and related facilities.

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        The following is a summary of the aggregate maturities of long-term debt at March 31, 2004. The 2004 amount includes $161,000,000 due under a bank-syndicated facility that SCL expects to refinance (dollars in thousands):

        The interest rates on substantially all SCL's long-term debt are adjusted regularly to reflect current market rates. Accordingly, the carrying value of SCL's long-term debt at March 31, 2004 and December 31, 2003 was a reasonable estimate of its fair value.

        In addition, syndicates of banks have provided GE SeaCo with $169,600,000 of credit facilities to fund new container purchases. Also, a bankruptcy-remote subsidiary of GE SeaCo formed to facilitate asset securitization has a $410,000,000 container securitization facility. At March 31, 2004, GE SeaCo had borrowed $548,000,000 (December 31, 2003—$511,000,000) under these facilities, none of which is guaranteed by SCL.

        Also, SCL has guaranteed through 2010 one half of a $8,491,000 (December 31, 2003—$9,026,000) bank loan to Speedinvest Ltd., owner of the Adriatic fast ferry in which SCL has a 50% interest. This guarantee existed prior to December 31, 2002 and has not been modified.

6. Senior notes and subordinated debentures

        The maturities relating to the senior notes and senior subordinated debentures of SCL are disclosed in Note 11 to the financial statements in the Company's 2003 Form 10-K annual report. See also Note 14.

7. Income taxes

        Income taxes provided by SCL relate principally to its foreign subsidiaries as pre-tax income is primarily foreign. The provision for (benefit from) income taxes consists of the following (dollars in thousands):

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        SCL 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.

        The net deferred tax assets recorded in other assets in the consolidated balance sheets are comprised of the following (dollars in thousands):

        The gross deferred tax assets relate primarily to operating loss carryforwards and future tax benefits of accrued pension costs. The deferred tax liabilities are temporary differences substantially caused by tax depreciation in excess of book depreciation.

8. Supplemental cash flow information

9. Derivative financial instruments and other comprehensive loss

(a) Derivative financial instruments

        At March 31, 2004, SCL had a fixed rate interest rate swap, which has been designated as a cash flow hedge. Changes in fair value that represent the effective portion of the swap are accumulated in other comprehensive loss. No ineffectiveness was recognized in losses for the three months ended March 31, 2004 and 2003. Amounts accumulated in other comprehensive loss will be reclassified into earnings as the hedged interest cash flows are accrued. The fair value of the swap at March 31, 2004 was a $13,584,000 liability (December 31, 2003—$12,570,000 liability). SCL had no other interest rate swap agreements at March 31, 2004.

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        The components of other comprehensive loss are as follows (dollars in thousands):

(b) Accumulated other comprehensive loss

        The accumulated balances for each component of other comprehensive loss are as follows (dollars in thousands):

10. Commitments

       Outstanding contracts to purchase fixed assets were approximately $25,000,000 at March 31, 2004 (December 31, 2003—$16,000,000).

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11. Information concerning financial reporting for segments and operations in different geographical areas

        Financial information regarding SCL's business segments is as follows (dollars in thousands):

        The identifiable assets of SCL's business segments are as follows (dollars in thousands):

        Transactions between reportable segments are not material. The main factor SCL uses to identify its main segments is similarity of the products and services provided.

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12. Contingencies

Strategic Rail Authority

        There has been no material development in the claim by the Strategic Rail Authority ("SRA") against GNER as reported in Note 18(b) to the financial statements in the Company's 2003 Form 10-K annual report. Settlement discussions between the parties to resolve the dispute are continuing.

GNER performance bond

        GNER has undertaken since 1996 to reimburse the SRA its costs in the event GNER breaches its franchise agreement to the extent that the SRA must award the franchise to another operator. This undertaking is secured by a surety bond issued by an insurance company in the amount of $60,080,000 which the Company has guaranteed and which is partly cash collateralized.

13. Related party transactions

        For the three months ended March 31, 2004, SCL earned revenue in connection with the lease and management agreements relating to SCL-owned containers provided to the GE SeaCo joint venture of $5,584,000 (2003—$8,815,000). Also in 2004, SCL incurred expenses under the services agreement with GE SeaCo by which SCL provides management and administration services to the joint venture and for which GE SeaCo recognized and paid to SCL net amounts of $8,246,000 (2003—$7,928,000). For the three months ended March 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 $1,426,000 (2003—$2,711,000). At March 31, 2004, SCL had a loan balance of $3,000,000 due from GE SeaCo (December 31, 2003—$3,000,000). At March 31, 2004, a receivable of $29,938,000 (December 31, 2003—$30,342,000) remains outstanding from GE SeaCo in respect of all the above, which is included in accounts receivable on SCL's consolidated balance sheet and significantly all of which is settled during the period ended June 30, 2004.

        For the three months ended March 31, 2004, subsidiaries of SCL received from OEH $1,369,000 (2003—$1,527,000) for the provision of various administrative services under a shared 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. In March 2004, the last guarantee by SCL of an OEH bank loan (December 31, 2003—$19,088,000 principal amount) that predated OEH's initial public offering in August 2000 was released and cancelled.

14. Subsequent event

        On May 4, 2004, the Company issued and sold $103,000,000 aggregate principal amount of unsecured 10¹/2% senior notes due 2012 in an underwritten public offering. The notes bear interest at 10¹/2% per annum but were sold at a discounted price of $100,290,070 to yield 11% per annum. The $2,709,930 original issue discount will be amortized over the life of the notes, which have no sinking fund requirement and come due on May 15, 2012. The notes are redeemable, in whole or in part, at the option of the Company at a price of 105.25% of the principal amount on or after May 15, 2008, 102.625% on or after May 15, 2009, and 100% on or after May 15, 2010. The notes may also be redeemed by the Company in the event of certain tax law changes. In the event 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 proceeds of the sale of the notes will be used in part to redeem on June 7, 2004 the $79,729,000 aggregate principal amount of the Company's 12¹/2% senior subordinated debentures due 2004.

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Three months ended March 31, 2004 compared
with the three months ended March 31, 2003

Revenue and Other

        Changes in revenue are analyzed as follows (dollars in thousands):

        The decrease in ferry operations revenue of $20,399,000, excluding the favorable effect of the strengthening of the euro and the British pound against the U.S. dollar of $18,707,000 and $1,854,000, respectively, included a decrease of $13,009,000 from Hoverspeed's cross-Channel services which was due to the effect of the seasonal closing for most of the first quarter of 2004 compared with operating for a full quarter in 2003 and a decrease of $11,953,000 resulting from the absence of revenue from the Irish Sea operations of the Isle of Man Steam Packet business, which was sold effective July 1, 2003, together with reduced revenue relating to the remaining Irish Sea services of $375,000, partly offset by an increase in revenue from Silja operations of $4,519,000.

        The increase in rail revenue of $2,891,000, excluding the favorable effect of the strengthening of the British pound against the U.S. dollar, mainly related to increased revenue from passenger carryings, partly offset by the effect of compensation from Network Rail of $15,000,000 received in the first quarter of 2003 in the settlement negotiations for disruption to GNER's rail services following the U.K. Rail Regulator's ruling in GNER's favor.

        The decrease in container revenue of $2,454,000 mainly related to decreased revenue from leasing operations, excluding GE SeaCo-owned containers (reflecting the reduced size of SCL's owned fleet partly offset by improved utilization).

        The decrease in other operations revenue of $133,000 mainly related to reduced revenue from property activities of $831,000, reflecting the effect of the sale of Newhaven land in 2003, partly offset

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by increased revenue of $325,000 from publishing activities and $262,000 from the Corinth Canal concession.

        Other in the statements of consolidated operations comprises gains/(losses) on asset sales and earnings/(losses) from unconsolidated companies and is not shown in the revenue analysis above.

        Earnings from unconsolidated companies increased by $1,743,000, of which $2,474,000 related to GE SeaCo offset by an increased loss of $711,000 relating to OEH. The increased earnings from SCL's investment in GE SeaCo were mainly due to GE SeaCo's increased ontake and leasing of containers and the beneficial effect of reduced interest rates on the financing of its existing fleet.

Depreciation, Amortization and Operating Expenses

        Changes in depreciation, amortization and operating costs, in aggregate, are analyzed as follows (dollars in thousands):