Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2012

Marketwired

ATHENS, GREECE--(Marketwire -05/09/12)- Danaos Corporation ("Danaos") (DAC), a leading international owner of containerships, today reported unaudited results for the quarter ended March 31, 2012.

Highlights for the First Quarter Ended March 31, 2012:

  • Operating revenues of $134.2 million for the three months ended March 31, 2012 compared to $99.0 million for the three months ended March 31, 2011, an increase of 35.6%.

  • Adjusted EBITDA(1) of $96.4 million for the three months ended March 31, 2012 compared to $65.2 million for the three months ended March 31, 2011, an increase of 47.9%.

  • Adjusted net income(1) of $17.6 million, or $0.16 per share, for the three months ended March 31, 2012 compared to $11.4 million, or $0.10 per share, for the three months ended March 31, 2011.

  • During the first quarter of 2012, we took delivery of three newly built containerships with an aggregate carrying capacity of 34,730 TEU, which have been all deployed on 12-year time charters.

  • The remaining average charter duration of our fleet was 10.0 years as of March 31, 2012 (weighted by aggregate contracted charter hire).

  • Total contracted operating revenues were $5.4 billion as of March 31, 2012, through 2028.

  • Charter coverage of 88% for the remainder of 2012 in terms of contracted operating days and 95% in terms of operating revenues.

 


Three Months Ended March 31, 2012
Financial Summary
(Expressed in thousands of United States dollars, except per share amounts):

Three months Three months
ended ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------
(unaudited) (unaudited)
Operating revenues $ 134,237 $ 98,989
Net income $ 9,342 $ 5,443
Adjusted net income1 $ 17,587 $ 11,354
Earnings per share $ 0.09 $ 0.05
Adjusted earnings per share1 $ 0.16 $ 0.10
Weighted average number of shares (in thousands) 109,605 108,611
Adjusted EBITDA1 $ 96,438 $ 65,178

Danaos' CEO Dr. John Coustas commented:

During this first quarter, we evidenced the seeds of the container market recovery. The Liner companies were aligned in box rate hikes which, until now, have been pretty successful. The charter market became more active with rates on some post-panamax vessels almost doubling and we evidence a trickle down effect on the large panamaxes. This development will put most liner companies back in the black for 2012 and will greatly reduce the counterparty risk that was troubling the market.

On the supply front, we continue to experience restraint in new orders with the notable exception of the much awaited Evergreen contract for 10 large post-panamaxes.

On the Company front, we continue with the delivery of our fleet. As of today, we have taken delivery of all but two 13,100 TEU vessels, which are scheduled to be delivered until the end of June 2012.

Our financial performance continues to improve. We recorded for the quarter an adjusted EBITDA of $96.4 million and adjusted net income of $17.6 million and 16 cents per share compared to $11.4 million and 10 cents per share for the 1st quarter of 2011.

Our charter coverage for the remainder of 2012 stands at 95% in terms of operating revenues. We still have three vessels in cold layup and we are evaluating their employment possibilities.

We are getting very close to the successful completion of one of the most ambitious new building programs within the next quarter to maximize the cash generating capacity of our company.

Three months ended March 31, 2012 compared to the three months ended March 31, 2011

During the quarter ended March 31, 2012, Danaos had an average of 60.1 containerships compared to 51.0 containerships for the same period in 2011. During the first quarter of 2012, we took delivery of three vessels, the Hyundai Together, on February 16, 2012, the CMA CGM Melisande, on February 28, 2012 and the Hyundai Tenacity, on March 8, 2012. Our fleet utilization was reduced to 94.5% in the three months ended March 31, 2012 compared to 96.7% in the same period of 2011, mainly due to the 246 days for which three of our vessels were off-charter and laid-up by us in the first quarter of 2012.

Our adjusted net income was $17.6 million, or $0.16 per share, for the three months ended March 31, 2012 compared to $11.4 million, or $0.10 per share, for the three months ended March 31, 2011. We have adjusted our net income in the first quarter of 2012 for unrealized gain on derivatives of $2.3 million, realized losses on swaps of $6.9 million attributable to our over-hedging position (as described below), as well as a non-cash expense of $3.7 million for fees related to our comprehensive financing plan (related to non-cash, amortizing and accrued finance fees). Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of 54.4%, or $6.2 million, in adjusted net income for the three months ended March 31, 2012 compared to the three months ended March 31, 2011, was attributable to the increased Income from Operations, which was partially off-set by an increase in realized losses on our interest rate swap contracts (after the adjustment of the over-hedging portion), as well as increased interest expense (mainly due to the higher average indebtedness) during the three months ended March 31, 2012 compared to the same period in 2011.

On a non-adjusted basis our net income was $9.3 million, or $0.09 per share, for the first quarter of 2012, compared to net income of $5.4 million, or $0.05 per share, for the first quarter of 2011.

As a result of our comprehensive financing plan, we are in an over-hedged position under our cash flow interest rate swaps, which is due to deferred progress payments to shipyards, cancellation of three newbuildings in 2011, the replacement of variable interest rate debt with fixed interest rate Vendor Financing and equity proceeds from our private placement in 2010, all of which reduced initially forecasted variable interest rate debt and resulted in notional cash flow interest rate swaps being above our variable interest rate debt eligible for hedging. The over-hedged position described above will be gradually reduced and ultimately eliminated during the second half of 2012, following the delivery of all of our remaining newbuildings and the full drawdown of our committed debt.

Operating Revenue
Operating revenue increased 35.6%, or $35.2 million, to $134.2 million in the three months ended March 31, 2012, from $99.0 million in the three months ended March 31, 2011. The increase was primarily attributable to the addition of ten vessels to our fleet, as follows:

 

Vessel Name Vessel Size (TEU) Date Delivered
------------------------- ----------------- -----------------
Hanjin Italy 10,100 April 6, 2011
Hanjin Constantza 3,400 April 15, 2011
Hanjin Greece 10,100 May 4, 2011
CMA CGM Attila 8,530 July 8, 2011
CMA CGM Tancredi 8,530 August 22, 2011
CMA CGM Bianca 8,530 October 26, 2011
CMA CGM Samson 8,530 December 15, 2011
Hyundai Together 13,100 February 16, 2012
CMA CGM Melisande 8,530 February 28, 2012
Hyundai Tenacity 13,100 March 8, 2012

These additions to our fleet contributed revenues of $32.6 million during the three months ended March 31, 2012 (739 operating days in total).

Furthermore, operating revenues for the three months ended March 31, 2012, reflect:

  • $4.0 million of incremental revenues in the three months ended March 31, 2012 compared to the same period of 2011, related to one 3,400 TEU containership (the Hanjin Algeciras, which was added to our fleet on January 26, 2011) and one 10,100 TEU containership (the Hanjin Germany, which was added to our fleet on March 10, 2011).

  • $1.4 million decrease in revenues in the three months ended March 31, 2012 compared to the same period of 2011. This was mainly attributable to increased off-hire days by 153 days, to 303 days (mainly due to the three vessels that were off-charter and laid up) in the three months ended March 31, 2012, from 150 days in the three months ended March 31, 2011, which was partially offset by the increased revenue of our fleet in the first quarter of 2012 compared to the same period of 2011, due to the one additional operating day in February 2012 compared to February 2011.

Vessel Operating Expenses
Vessel operating expenses increased 13.2%, or $3.5 million, to $30.1 million in the three months ended March 31, 2012, from $26.6 million in the three months ended March 31, 2011. The increase is mainly attributable to the increased average number of vessels in our fleet during the three months ended March 31, 2012 compared to the same period of 2011. The average daily operating cost per vessel decreased to $5,945 for the three months ended March 31, 2012, from $6,162 for the three months ended March 31, 2011 (excluding vessels on lay-up).

Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation
Depreciation expense increased 41.5%, or $9.3 million, to $31.7 million in the three months ended March 31, 2012, from $22.4 million in the three months ended March 31, 2011. The increase in depreciation expense was due to the increased average number of vessels in our fleet (with higher cost base) during the three months ended March 31, 2012 compared to the same period of 2011.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased 20.0%, or $0.3 million, to $1.2 million in the three months ended March 31, 2012, from $1.5 million in the three months ended March 31, 2011.

General and Administrative Expenses
General and administrative expenses increased 4.3%, or $0.2 million, to $4.8 million in the three months ended March 31, 2012, from $4.6 million in the same period of 2011. The increase was the result of increased fees of $0.6 million to our Manager, due to the increase in the average number of vessels in our fleet, which were partially offset by a $0.4 million reduction mainly in legal and advisory fees recorded in the three months ended March 31, 2012 compared to the same period of 2011.

Other Operating Expenses
Other Operating Expenses includes Voyage Expenses

Voyage Expenses
Voyage expenses increased by $0.7 million, to $2.9 million in the three months ended March 31, 2012, from $2.2 million in the three months ended March 31, 2011. The increase was the result of increased commissions to our Manager, due to the increase in the average number of vessels in our fleet and the increase in the commission on gross charter hires to our Manager, to 1.0% from 0.75%, effective January 1, 2012.

Interest Expense and Interest Income
Interest expense increased by 55.9%, or $6.6 million, to $18.4 million in the three months ended March 31, 2012, from $11.8 million in the three months ended March 31, 2011. The change in interest expense was due to the increase in our average debt by $525.8 million, to $3,125.1 million in the quarter ended March 31, 2012, from $2,599.3 million in the quarter ended March 31, 2011, as well as the increased average LIBOR payable on interest under our credit facilities in the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Furthermore, the financing of our newbuilding program resulted in interest being capitalized, rather than such interest being recognized as an expense, of $2.6 million for the three months ended March 31, 2012 compared to $5.9 million of capitalized interest for the three months ended March 31, 2011.

Interest income was $0.4 million in each of the three months ended March 31, 2012 and 2011, respectively.

Other finance costs, net
Other finance costs, net, decreased by $0.5 million, to $3.9 million in the three months ended March 31, 2012, from $4.4 million in the three months ended March 31, 2011. This decrease was primarily because in the first quarter of 2011, we had recorded an expense of $2.3 million due to non-cash changes in fair value of warrants. This was offset in part by increased amortization of $1.9 million in relation to finance fees (which were deferred and are amortized over the life of the respective credit facilities) in the first quarter of 2012 compared to the same period in 2011.

Other income/(expenses), net
Other income/(expenses), net, was an income of $0.2 million in the three months ended March 31, 2012, compared to an expense of $1.9 million in the three months ended March 31, 2011. This was mainly the result of legal and advisory fees of $2.1 million attributable to fees related to preparing and structuring the comprehensive financing plan, which were recorded during the three months ended March 31, 2011.

Unrealized (loss)/gain on derivatives
Unrealized gain on interest rate swap hedges decreased by $7.5 million, to $2.3 million in the three months ended March 31, 2012, from $9.8 million in the three months ended March 31, 2011, which is attributable to hedge accounting ineffectiveness and mark to market valuation of two of our swaps not qualifying for hedge accounting.

Realized (loss)/gain on derivatives
Realized loss on interest rate swap hedges, increased by $6.7 million, to $34.8 million in the three months ended March 31, 2012, from $28.1 million in the three months ended March 31, 2011, which is attributable to the higher average notional amount of swaps during the three months ended March 31, 2012 compared to the same period of 2011, as well as the reduction in the realized losses being deferred for the respective periods (as discussed below) following the gradual delivery of our vessels under construction, which is partially offset by the higher floating LIBOR rates during the three months ended March 31, 2012 compared to the same period of 2011.

In addition, realized losses on cash flow hedges of $4.8 million and $9.9 million in the three months ended March 31, 2012 and 2011, respectively, were deferred in "Accumulated Other Comprehensive Loss", rather than such realized losses being recognized as expenses, and will be reclassified into earnings over the depreciable lives of these vessels under construction, which are financed by loans with interest rates that have been hedged by our interest rate swap contracts. The table below provides an analysis of the items discussed above, and which were recorded in the three months ended March 31, 2012 and 2011:

 

Three months Three months
ended ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------
(in millions)
Total realized losses of swaps $ (39.6) $ (38.0)
Realized losses of swaps deferred in OCL 4.8 9.9
------------- -------------
Realized losses of swaps expensed in P&L (34.8) (28.1)
Realized losses attributable to overhedging 6.9 9.8
------------- -------------
Adjusted realized losses attributable to
hedged debt $ (27.9) $ (18.3)
============= =============

Adjusted EBITDA
Adjusted EBITDA increased 47.9%, or $31.2 million, to $96.4 million in the three months ended March 31, 2012, from $65.2 million in the three months ended March 31, 2011. Adjusted EBITDA for the first quarter of 2012, is adjusted for an unrealized gain on derivatives of $3.0 million and realized losses on derivatives of $34.8 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Recent News
On April 27, 2012, we sold and delivered the Montreal. The net sale consideration was $6.6 million. The Montreal was 28 years old and was generating revenue under its time charter, which expired on March 31, 2012.

On May 3, 2012, we took delivery of the newbuilding 13,100 TEU vessel, the Hyundai Smart. The vessel has been deployed on a 12-year time charter with one of the world's major liner companies.

Conference Call and Webcast
On Thursday, May 10, 2012, at 9:00 A.M. EDT, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452 542 301 (Standard International Dial In). Please quote "Danaos" to the operator.

A telephonic replay of the conference call will be available until May 17, 2012 by dialing 1 866 247 4222 (US Toll Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452 550 000 (Standard International Dial In). Access Code: 1186615#

There will also be a live and then archived webcast of the conference call through the Danaos website (www.danaos.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Danaos Corporation
Danaos Corporation is an international owner of containerships, chartering its vessels to many of the world's largest liner companies. Our current fleet of 62 containerships aggregating 336,849 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Danaos is one of the largest US listed containership companies based on fleet size. Furthermore, the company has a contracted fleet of 2 additional containerships aggregating 26,200 TEU with scheduled deliveries in June 2012. The company's shares trade on the New York Stock Exchange under the symbol "DAC".

Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, shipyard performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.

Visit our website at www.danaos.com

Appendix

Fleet Utilization

Danaos had 303 off-hire days in the first quarter of 2012 (including 246 days related to Marathonas, Independence and Honour, which have been off-charter and laid up). The following table summarizes vessel utilization and the impact of the off-hire days on the company's revenue relating to the last four quarters.

 

Second Third Fourth First
Vessel Utilization (No. of Quarter Quarter Quarter Quarter
Days) 2011 2011 2011 2012 Total
-------- -------- -------- -------- --------
Ownership Days 4,953 5,185 5,328 5,471 20,937
Less Off-hire Days:
Scheduled Off-hire Days (86) -- (4) (49) (139)
Other Off-hire Days (42) (32) (163) (254) (491)
-------- -------- -------- -------- --------
Operating Days 4,825 5,153 5,161 5,168 20,307
======== ======== ======== ======== ========
Vessel Utilization 97.4% 99.4% 96.9% 94.5% 97.0%

Operating Revenues(in
'000s of US Dollars) $114,764 $126,004 $128,344 $134,237 $503,349
Average Daily Charter Rate $ 23,785 $ 24,453 $ 24,868 $ 25,975 $ 24,787

Fleet List

The following table describes in detail our fleet deployment profile as of May 9, 2012.

 

Vessel Size
Vessel Name (TEU) Year Built Expiration of Charter(1)
----------- ---------- ------------------------
Containerships

Hyundai Smart 13,100 2012 May 2024
Hyundai Tenacity 13,100 2012 March 2024
Hyundai Together 13,100 2012 February 2024
Hanjin Italy 10,100 2011 April 2023
Hanjin Germany 10,100 2011 March 2023
Hanjin Greece 10,100 2011 May 2023
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
CMA CGM Melisande 8,530 2012 November 2023
CMA CGM Attila 8,530 2011 April 2023
CMA CGM Tancredi 8,530 2011 May 2023
CMA CGM Bianca 8,530 2011 July 2023
CMA CGM Samson 8,530 2011 September 2023
CSCL America 8,468 2004 September 2016
CSCL Europe 8,468 2004 June 2016
CMA CGM Moliere(2) 6,500 2009 August 2021
CMA CGM Musset(2) 6,500 2010 February 2022
CMA CGM Nerval(2) 6,500 2010 April 2022
CMA CGM Rabelais(2) 6,500 2010 June 2022
YM Mandate 6,500 2010 January 2028
CMA CGM Racine(2) 6,500 2010 July 2022
YM Maturity 6,500 2010 April 2028
Marathonas 4,814 1991 Laid-up
Messologi 4,814 1991 September 2012
Mytilini 4,814 1991 October 2012
Hyundai Commodore(3) 4,651 1992 March 2013
Hyundai Duke(4) 4,651 1992 February 2013
Hyundai Federal(5) 4,651 1994 September 2012
SNL Colombo(6) 4,300 2004 March 2019
YM Singapore 4,300 2004 October 2019
YM Seattle(7) 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Derby D 4,253 2004 February 2014
Deva 4,253 2004 December 2013
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
ZIM Kingston 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
ZIM Dalian 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Honour 3,908 1989 Laid-up
Hope 3,908 1989 June 2012
Hanjin Constantza 3,400 2011 February 2021
Hanjin Algeciras 3,400 2011 November 2020
Hanjin Buenos Aires 3,400 2010 March 2020
Hanjin Santos 3,400 2010 May 2020
Hanjin Versailles 3,400 2010 August 2020
SCI Pride 3,129 1988 July 2012
Lotus 3,098 1988 July 2012
Independence 3,045 1986 Laid-up
Henry 3,039 1986 July 2012
Elbe 2,917 1991 May 2012
Kalamata 2,917 1991 August 2012
Komodo 2,917 1991 April 2013
Hyundai Advance 2,200 1997 June 2017
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Hyundai Stride 2,200 1997 July 2017
Hyundai Progress 2,200 1998 December 2017
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Hyundai Vladivostok 2,200 1997 May 2017

----------------------------

(1) Earliest date charters could expire. Some charters include options to extend their terms.
(2) Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.
(3) On April 20, 2012, the APL Commodore was renamed to Hyundai Commodore at the request of the charterer of this vessel.
(4) On January 29, 2012, the APL Duke was renamed to Hyundai Duke at the request of the charterer of this vessel.
(5) On January 31, 2012, the APL Federal was renamed to Hyundai Federal at the request of the charterer of this vessel.
(6) On March 18, 2012, the YM Colombo was renamed to SNL Colombo at the request of the charterer of this vessel.
(7) On April 9, 2012, the Taiwan Express was renamed to YM Seattle at the request of the charterer of this vessel.

New Deliveries

The following table describes the expected additions to our fleet as a result of our new building containership program.

 

Vessel Size
Vessel Name (TEU) Expected Delivery Charter Term
----------- ------------------ ------------

Hull No S-459 13,100 June 2012 12 years
Hull No S-460 13,100 June 2012 12 years


DANAOS CORPORATION
Condensed Statements of Income- Unaudited
(Expressed in thousands of United States dollars, except per share amounts)

Three Three
months ended months ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------

OPERATING REVENUES $ 134,237 $ 98,989

OPERATING EXPENSES
Vessel operating expenses (30,095) (26,602)
Depreciation & amortization (32,883) (23,966)
General & administrative (4,837) (4,629)
Other operating expenses (2,890) (2,218)
------------- -------------
Income From Operations 63,532 41,574
------------- -------------

OTHER EARNINGS (EXPENSES)
Interest income 353 353
Interest expense (18,390) (11,848)
Other finance cost, net (3,857) (4,427)
Other income/(expenses), net 196 (1,920)
Realized (loss)/gain on derivatives (34,794) (28,109)
Unrealized gain/(loss) on derivatives 2,302 9,820
------------- -------------
Total Other Income (Expenses), net (54,190) (36,131)
------------- -------------

Net Income $ 9,342 $ 5,443
============= =============

EARNINGS PER SHARE
Basic & diluted net income per share $ 0.09 $ 0.05
============= =============
Basic & diluted weighted average number of
common shares (in thousands of shares) 109,605 108,611
============= =============


Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income - Unaudited

Three Three
months ended months ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------
Net income $ 9,342 $ 5,443
Unrealized gain on derivatives (2,302) (9,820)
Realized losses on over-hedging portion of
derivatives 6,886 9,769
Comprehensive Financing Plan related fees -- 2,089
Amortization of financing fees & finance fees
accrued 3,661 1,620
Non-cash change in fair value of warrants -- 2,253
------------- -------------
Adjusted Net Income $ 17,587 $ 11,354
============= =============
Adjusted Earnings Per Share $ 0.16 $ 0.10
============= =============
Weighted average number of shares 109,605 108,611

* The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2012 and 2011. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

 
DANAOS CORPORATION
Condensed Balance Sheets
(Expressed in thousands of United States dollars)

As of As of
March 31, December 31,
------------- -------------
2012 2011
------------- -------------
(Unaudited)
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 41,732 $ 51,362
Restricted cash 97 2,909
Accounts receivable, net 6,020 4,176
Other current assets 24,755 34,844
------------- -------------
72,604 93,291
------------- -------------
NON-CURRENT ASSETS
Fixed assets, net 3,688,152 3,241,951
Advances for vessels under construction 275,697 524,286
Deferred charges, net 97,447 99,711
Vessel held for sale 4,805 --
Fair value of financial instruments 3,765 3,964
Other non-current assets 27,436 24,901
------------- -------------
4,097,302 3,894,813
------------- -------------
TOTAL ASSETS 4,169,906 3,988,104
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion 41,958 41,959
Vendor Financing, current portion 21,618 10,857
Accounts payable, accrued liabilities &
other current liabilities 81,541 58,254
Fair value of financial instruments, current
portion 118,388 120,623
------------- -------------
263,505 231,693
------------- -------------
LONG-TERM LIABILITIES
Long-term debt, net of current portion 3,065,967 2,960,288
Vendor financing, net of current portion 93,514 54,288
Fair value of financial instruments, net of
current portion 275,796 291,829
Other long-term liabilities 7,818 7,471
------------- -------------
3,443,095 3,313,876
------------- -------------

STOCKHOLDERS' EQUITY
Common stock 1,096 1,096
Additional paid-in capital 545,907 545,884
Accumulated other comprehensive loss (444,699) (456,105)
Retained earnings 361,002 351,660
------------- -------------
463,306 442,535
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,169,906 $ 3,988,104
============= =============


DANAOS CORPORATION
Condensed Statements of Cash Flows - (Unaudited)
(Expressed in thousands of United States dollars)

Three months Three months
ended ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------
Operating Activities:
Net income $ 9,342 $ 5,443
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 31,681 22,436
Amortization of deferred drydocking &
special survey costs, finance cost and
other finance fees accrued 4,863 3,150
Stock-based compensation 23 23
Payments for drydocking/special survey (2,035) (4,902)
Non-cash change in fair value of warrants -- 2,253
Amortization of deferred realized losses on
cash flow interest rate swaps 649 227
Unrealized gain on derivatives (2,951) (10,047)
Realized losses on derivatives deferred in
Other Comprehensive Loss (4,839) (9,910)
Changes in operating assets/liabilities:
Accounts receivable (1,844) 612
Other assets, current and non-current 7,554 (4,129)
Accounts payable and accrued liabilities 5,498 (19,278)
Other liabilities, current and non-current 17,878 (1,407)
------------- -------------
Net Cash provided by/(used in) Operating
Activities 65,819 (15,529)
------------- -------------

Investing Activities:
Vessels under construction and vessels
additions (183,874) (121,322)
------------- -------------
Net Cash used in Investing Activities (183,874) (121,322)
------------- -------------

Financing Activities:
Debt draw downs 117,320 98,238
Debt repayment (11,607) (31,967)
Deferred costs (100) (30,217)
Decrease in restricted cash 2,812 2,812
------------- -------------
Net Cash provided by Financing Activities 108,425 38,866
------------- -------------
Net Decrease in cash and cash equivalents (9,630) (97,985)
Cash and cash equivalents, beginning of period 51,362 229,835
------------- -------------
Cash and cash equivalents, end of period $ 41,732 $ 131,850
============= =============


Reconciliation of Net Income to Adjusted EBITDA
(Expressed in thousands of United States dollars)

Three Three
months ended months ended
March 31, March 31,
------------- -------------
2012 2011
------------- -------------
Net income $ 9,342 $ 5,443
Depreciation 31,681 22,436
Amortization of deferred drydocking & special
survey costs 1,202 1,530
Amortization of deferred finance costs and
other finance fees accrued 3,661 1,620
Amortization of deferred realized losses on
cash flow interest rate swaps 649 227
Interest income (353) (353)
Interest expense 18,390 11,848
Unrealized gain on derivatives (2,951) (10,047)
Realized loss on derivatives 34,794 28,109
Stock based compensation 23 23
Comprehensive Financing Plan related fees -- 2,089
Non-cash changes in fair value of warrants -- 2,253
------------- -------------
Adjusted EBITDA(1) $ 96,438 $ 65,178
============= =============

(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs and deferred finance costs, non-cash changes in fair value of derivatives and warrants, realized gain/(loss) on derivatives, stock based compensation and other items in relation to the Company's comprehensive financing plan. However, Adjusted EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or "GAAP." We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted EBITDA is useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that Adjusted EBITDA is useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance and liquidity. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Note: Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2012 and 2011. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

(1) Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.

Contact:
For further information please contact:
Company
Evangelos Chatzis
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com
Investor Relations and Financial Media
Nicolas Bornozis
President
Capital Link, Inc.
New York
Tel. 212-661-7566
E-Mail: danaos@capitallink.com
Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com

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