Danaos Corporation Reports Fourth Quarter and Full Year Results for the Year Ended December 31, 2012

Danaos Corporation Reports Fourth Quarter and Full Year Results for the Year 
Ended December 31, 2012 
ATHENS, GREECE -- (Marketwire) -- 02/11/13 --  Danaos Corporation
("Danaos") (NYSE: DAC), a leading international owner of
containerships, today reported unaudited results for the quarter and
full year ended December 31, 2012. 
Highlights for the Fourth Quarter and Full Year Ended December 31,
2012: 


 
--  Operating revenues of $151.8 million for the three months ended
    December 31, 2012 compared to $128.3 million for the three months
    ended December 31, 2011, an increase of 18.3%. Operating revenues of
    $589.0 million for the year ended December 31, 2012 compared to $468.1
    million for the year ended December 31, 2011, an increase of 25.8%.
--  Adjusted EBITDA(1)of $112.4 million for the three months ended
    December 31, 2012 compared to $88.8 million for the three months ended
    December 31, 2011, an increase of 26.6%. Adjusted EBITDA(1)of $431.7
    million for the year ended December 31, 2012 compared to $318.6
    million for the year ended December 31, 2011, an increase of 35.5%.
--  Adjusted net income(1)of $11.7 million, or $0.11 per share, for the
    three months ended December 31, 2012 compared to $16.1 million, or
    $0.15 per share, for the three months ended December 31, 2011.
    Adjusted net income(1)of $60.5 million, or $0.55 per share, for the
    year ended December 31, 2012 compared to $61.2 million, or $0.56 per
    share, for the year ended December 31, 2011.
--  We recorded an impairment loss of $129.6 million for thirteen of our
    older vessels, which are currently either on lay-up or on short-term
    charters expiring in 2013.
--  We managed to improve our daily vessel operating cost by 7.3%, to
    $5,857 per day for the three months ended December 31, 2012 compared
    to $6,318 per day for the three months ended December 31, 2011.
--  The remaining average charter duration of our fleet was 9.7 years as
    of December 31, 2012 (weighted by aggregate contracted charter hire).
--  Total contracted operating revenues were $4.9 billion as of December
    31, 2012, through 2028.
--  Charter coverage of 81% for the next 12 months in terms of contracted
    operating days and 97% in terms of operating revenues.

 
                                                                            
                                                                            
                                                                            
               Three and Twelve Months Ended December 31, 2012              
                              Financial Summary                             
(Expressed in thousands of United States dollars, except per share amounts):
                                                                            
                    Three months   Three months Twelve months  Twelve months
                       ended          ended         ended          ended    
                    December 31,   December 31,  December 31,   December 31,
                   -------------  ------------- -------------  -------------
                        2012           2011          2012           2011    
                   -------------  ------------- -------------  -------------
                                          (unaudited)                       
Operating revenues $     151,826  $     128,344 $     589,009  $     468,101
Net (loss)/income  $    (116,478) $       9,058 $    (105,204) $      13,437
Adjusted net                                                                
 income(1)         $      11,699  $      16,129 $      60,453  $      61,164
(Losses)/earnings                                                           
 per share         $       (1.06) $        0.08 $       (0.96) $        0.12
Adjusted earnings                                                           
 per share(1)      $        0.11  $        0.15 $        0.55  $        0.56
Weighted average                                                            
 number of shares                                                           
 (in thousands)          109,622        109,142       109,613        109,045
Adjusted EBITDA(1) $     112,368  $      88,810 $     431,690  $     318,607

 
(1) Adjusted net income, adjusted earnings per share and adjusted
EBITDA are non-GAAP measures. Refer to the reconciliation of net
income/(loss) to adjusted net income and net income to adjusted
EBITDA. 
Danaos' CEO Dr. John Coustas commented:  
Despite the challenging container market environment, in 2012 we
managed to maintain the Company's profitability at the 2011 levels.
Adjusted Net Income for 2012 came in at $60.5 million or 55 cents per
share, compared to $61.2 million or 56 cents per share for 2011,
effectively remaining stable, while Adjusted EBITDA increased by
35.5% to $431.7 million for 2012 compared to $318.6 million in 2011
as a result of our fleet expansion program that was concluded this
year. 
Demand & supply fundamentals for 2012 confirm that this has been a
sluggish year, with supply outpacing demand by almost 3%. Although
there are signs that this disparity may be somehow moderated in the
coming quarters, we still expect supply to outpace demand in 2013.  
Mainlane trade volumes in 2012 expanded by a mere 1% on average,
while the Asia - Europe trade contracted by almost 3.5%, mainly due
to the ongoing weakness in European consumer demand. At the same
time, this is the route that has faced the biggest inflow of new
tonnage with deliveries of the large post 10,000 TEU containerships.
We expect this trend will continue in 2013 as vessels ordered during
the early 2011 "mini-boom" are being delivered. 
On the other hand, it was non-mainlane trade volumes that to a
certain extent "saved the day" expanding by around 6.5% mainly on the
back of strong intra-Asia and North-South trade growth. This growth
facilitated cascading that helped ease the supply pressure in the
mainlane trades but at the expense of the charter market as liner
operators have been increasingly utilizing their own tonnage and are
generally less inclined to renew expiring charters. It has to be
noted that almost 85% of idle capacity, which currently stands at
around 5% of the world fleet is now charter owned tonnage. This of
course also reflects on us, as we currently have 7 vessels on cold
lay-up. 
In summary, the combined effect of the above is that the weakness of
growth on the longer haul mainlanes has resulted in global TEU-mile
growth increasing by just 4% in 2012, with supply increasing by
almost 7% for the same period, while this imbalance has mostly
affected asset values, time-charter earnings and employment potential
of the mid-size vessels. In this context we are currently
investigating to make selective acquisitions within 2013 to renew
part of our older fleet. 
The good news is that liner operators have so far managed the
situation effectively with a variety of cost reduction initiatives as
well as supply control strategies such as service rationalization,
idling of tonnage, scrapping and extra slow steaming through which
they have managed to maintain freight rates at decent levels. This is
positive, as the financial health of the liner companies is important
for containership lessors like us, since the majority of our tonnage
is deployed under long-term time charters.  
With a strong 97% contract coverage and only 3% of our current
r
evenue stream at stake through re-chartering over the next 12
months, we are largely insulated from the effects of the weak charter
market while expect our EBITDA and free cash flow generation to be
safeguarded. 
At the same time, we continue to be one of the most cost competitive
operators in the market. Our daily vessel operating expenses actually
came down by 5.4% year-on-year to $5,907 per day for 2012 from $6,246
per day in 2011. 
With a resilient business model both from an operating and financial
standpoint, we will continue to manage our fleet efficiently, while
in 2013 we will focus on rapidly de-leveraging the company and
creating value for our shareholders. 
Three months ended December 31, 2012 compared to the three months
ended December 31, 2011 
During the three months ended December 31, 2012, Danaos had an
average of 64.0 containerships compared to 57.9 containerships for
the same period in 2011. Our fleet utilization declined to 90.4% in
the three months ended December 31, 2012 compared to 96.9% in the
same period of 2011, mainly due to the 501 days for which seven of
our vessels were off-charter and laid-up in the fourth quarter of
2012 compared to 138 days for which two of our vessels were
off-charter and laid-up in the fourth quarter of 2011. During the
three months ended December 31, 2012, our fleet utilization for the
fleet under employment was 98.8% (which excludes the vessels on lay
up). 
Our adjusted net income was $11.7 million, or $0.11 per share, for
the three months ended December 31, 2012 compared to $16.1 million,
or $0.15 per share, for the three months ended December 31, 2011. We
have adjusted our net income in the fourth quarter of 2012 for an
impairment loss on certain of our older vessels of $129.6 million,
unrealized gains on derivatives of $7.6 million, realized losses on
swaps of $1.4 million attributable to our over-hedging position (as
described below), as well as a non-cash expense of $4.8 million for
fees related to our comprehensive financing plan (comprised of
non-cash, amortizing and accrued finance fees). Please refer to the
Adjusted Net Income reconciliation table, which appears later in this
earnings release. 
The decrease of 27.3%, or $4.4 million, in adjusted net income for
the three months ended December 31, 2012 compared to the three months
ended December 31, 2011, was mainly attributable to the softening of
the charter market during the last year. Although the vessel
additions, with associated contracted long-term charters, to our
fleet over the course of the last year were accretive to the bottom
line, the soft charter market has resulted in the cold lay-up of 7
vessels until the end of 2012 (one of which we subsequently agreed to
sell) and has also affected the re-chartering of certain vessels in
2012 that currently run at operating break even levels, while they
had a positive contribution to operating income during the 4th
quarter of 2011.  
On a non-adjusted basis our net loss was $116.5 million, or $1.06 per
share, for the fourth quarter of 2012, compared to net income of $9.1
million, or $0.08 per share, for the fourth quarter of 2011, which is
mainly attributable to the impairment loss we incurred in the current
quarter on certain of our older vessels.  
As a result of our comprehensive financing plan, we were in an
over-hedged position under
 our cash flow interest rate swaps, which
was 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 was
eliminated during the fourth quarter of 2012. 
As of December 31, 2012, we recorded an impairment loss of $129.6
million for thirteen of our older vessels. The indicators of
potential impairment of these vessels included volatility in the spot
market and decline in the vessels' market values, as well as the
potential impact the current charter marketplace may have on the
future operation of the older vessels in our fleet, which are either
laid up, or on short-term charters. 
Operating Revenue
 Operating revenue increased 18.3%, or $23.5
million, to $151.8 million in the three months ended December 31,
2012, from $128.3 million in the three months ended December 31,
2011. The increase was primarily attributable to the addition of six
vessels to our fleet, as follows: 


 
                                                                            
Vessel Name                   Vessel Size (TEU)     Date Delivered          
------------------------  ------------------------  ------------------------
HyundaiTogether                    13,100           February 16, 2012       
CMA CGM Melisande                   8,530           February 28, 2012       
Hyundai Tenacity                   13,100           March 8, 2012           
Hyundai Smart                      13,100           May 3, 2012             
Hyundai Speed                      13,100           June 7, 2012            
Hyundai Ambition                   13,100           June 29, 2012           

 
These additions to our fleet contributed revenues of $31.8 million
during the three months ended December 31, 2012 (552 operating days
in total).  
Furthermore, operating revenues for the three months ended December
31, 2012, reflect: 


 
--  $4.5 million of incremental revenues in the three months ended
    December 31, 2012 compared to the same period of 2011, related to two
    8,530 TEU containerships (the CMA CGM Bianca and the CMA CGM Samson,
    which were added to our fleet on October 26, 2011 and December 15,
    2011, respectively).
    
    
--  $1.2 million decrease in revenues in the three months ended December
    31, 2012 compared to the same period of 2011, related to the sale of
    one 2,130 TEU containership, the Montreal, on April 27, 2012.
    
    
--  $11.6 million decrease in revenues in the three months ended December
    31, 2012 compared to the same period of 2011. This was mainly
    attributable to an increase in off-hire days of 398 days, to 565 days
    in the three months ended December 31, 2012, from 167 days in the
    three months ended December 31, 2011 ($6.3 million reduction in
    revenue in relation to the vessels that were off-charter and laid up
    for 501 days during the fourth quarter of 2012 compared to 138 days
    during the fourth quarter of 2011), as well as re-chartering of
    certain vessels in 2012 at lower charter rates compared to what these
    vessels were earning during the 4th quarter of 2011.

  
Vessel Operating Expenses
 Vessel operating expenses decreased 3.8%, or
$1.2 million, to $30.5 million in the three months ended December 31,
2012, from $31.7 million in the three months ended December 31, 2011.
The reduction is mainly attributable to the reduced costs of 5.3
vessels on average which were on lay-up during the fourth quarter of
2012 compared to 1.4 vessels on average during the fourth quarter of
2011. The overall decrease in v
essel operating expenses was offset in
part by the increased average number of vessels in our fleet during
the three months ended December 31, 2012 compared to the same period
of 2011. 
The average daily operating cost per vessel was reduced to $5,857 for
the three months ended December 31, 2012, from $6,318 for the three
months ended December 31, 2011 (excluding those vessels on lay-up). 
Depreciation & Amortization
 Depreciation & Amortization includes
Depreciation and Amortization of Deferred Dry-docking and Special
Survey Costs.  
Depreciation
 Depreciation expense increased 30.1%,
or $8.9 million, to $38.5 million in the three months ended December
31, 2012, from $29.6 million in the three months ended December 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 December 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
increased 58.3%, or $0.7 million, to $1.9 million in the three months
ended December 31, 2012, from $1.2 million in the three months ended
December 31, 2011. The increase reflects increased dry-docking and
special survey costs incurred within the year and amortized during
the three months ended December 31, 2012 compared to the same period
of 2011. 
General and Administrative Expenses
 General and administrative
expenses decreased 25.7%, or $1.8 million, to $5.2 million in the
three months ended December 31, 2012, from $7.0 million in the same
period of 2011. The decrease was mainly the result of a non-cash
stock based compensation expense of $2.1 million recorded in the
fourth quarter of 2011 compared to $0.1 million in the fourth quarter
of 2012. Furthermore, fees to our Manager increased by $0.4 million
in the three months ended December 31, 2012 compared to the same
period of 2011, due to the increase in the average number of vessels
in our fleet. 
Other Operating Expenses
 Other Operating Expenses includes Voyage
Expenses 
Voyage Expenses
 Voyage expenses increased by $0.6 million, to $3.5
million in the three months ended December 31, 2012, from $2.9
million in the three months ended December 31, 2011. The increase was
mainly 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
45.6%, or $7.3 million, to $23.3 million in the three months ended
December 31, 2012, from $16.0 million in the three months ended
December 31, 2011. The change in interest expense was due to the
increase in our average debt by $420.4 million, to $3,402.8 million
in the three months ended December 31, 2012, from $2,982.4 million in
the three months ended December 31, 2011
. Furthermore, the financing
of our newbuilding program resulted in $3.2 million of interest being
capitalized, rather than such interest being recognized as an
expense, for the three months ended December 31, 2011 compared to nil
interest being capitalized for the three months ended December 31,
2012, following the completion of our newbuilding program in June
2012. 
Interest income was $0.4 million in the three months ended December
31, 2012 compared to $0.3 million in the three months ended December
31, 2011.  
Other finance costs, net
 Other finance costs, net, increased by $1.4
million, to $5.1 million in the three months ended December 31, 2012,
from $3.7 million in the three months ended December 31, 2011. This
increase was mainly due to the $0.7 million increase in amortizing
finance fees (which were deferred and are amortized over the term of
the respective credit facilities), as well as increased accrued
finance fees of $0.5 million (which accrete in our Statement of
Income over the term of the respective facilities) in the three
months ended December 31, 2012 compared to the three months ended
December 31, 2011. 
Other income/(expenses), net
 Other income/(expenses), net, was
negligible in the three months ended December 31, 2012 and 2011,
respectively. 
Unrealized gain/(loss) on derivatives
 Unrealized gain/(loss) on
interest rate swap hedges was a gain of $7.6 million in the three
months ended December 31, 2012 compared to a gain of $7.1 million in
the three months ended December 31, 2011. The unrealized gains were
attributable to hedge accounting ineffectiveness, mark to market
valuation of our swaps. Furthermore, we reclassified unrealized
losses from Accumulated Other Comprehensive Loss to our earnings due
to the discontinuation of hedge accounting since July 1, 2012.  
Realized (loss)/gain on derivatives
 Realized loss on interest rate
swap hedges, increased by $3.8 million, to $38.7 million in the three
months ended December 31, 2012, from $34.9 million in the three
months ended December 31, 2011. This increase is mainly attributable
to $6.4 million of realized losses that had been deferred during the
4th quarter of 2011 (as discussed below) and were not deferred in the
current quarter, partially offset by the lower average notional
amount of swaps during the three months ended December 31, 2012
compared to the same period in 2011 which resulted in lower realized
losses on derivatives of $2.6 million during the 4th quarter of 2012. 
Following the delivery of all our newbuildings, no realized losses on
cash flow hedges were deferred during the three months ended December
31, 2012. During the three months ended December 31, 2011, realized
losses on cash flow hedges of $6.4 million were deferred in
"Accumulated Other Comprehensive Loss", rather than being recognized
as expenses, and are being reclassified into earnings over the
depreciable lives of these vessels that were under construction and
financed by loans with interest rates that were 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 December 31, 2012 and 2011: 


 
                                                                            
                                                Three months   Three months 
                                                   ended          ended     
                                                December 31,   December 31, 
                                               -------------  ------------- 
                                                    2012           2011     
                                               -------------  ------------- 
                                                       (in millions)        
Total realized losses of swaps                 $       (38.7) $       (41.3)
Realized losses of swaps deferred in OCL                  --            6.4 
                                               -------------  ------------- 
  Realized losses of swaps expensed in P&L             (38.7)         (34.9)
Realized losses attributable to overhedging              1.4            8.7 
                                               -------------  ------------- 
  Adjusted realized losses attributable to                                  
   hedged debt                                 $       (37.3) $       (26.2)
                                               =============  ============= 

 
Adjusted EBITDA
 Adjusted EBITDA increased 26.6%, or $23.6 million, to
$112.4 million in the three months ended December 31, 2012, from
$88.8 million in the three months ended December 31, 2011. Adjusted
EBITDA for the fourth quarter of 2012, is adjusted for an impairment
loss of $129.6 million, unrealized gain on derivatives of $7.6
million and realized losses on derivatives of $37.7 million. Tables
reconciling Adjusted EBITDA t
o Net Income can be found at the end of
this earnings release.  
Twelve months ended December 31, 2012 compared to the twelve months
ended December 31, 2011 
During the twelve months ended December 31, 2012, Danaos had an
average of 62.6 containerships compared to 54.9 containerships for
the same period in 2011. Our fleet utilization declined to 93.0% in
the twelve months ended December 31, 2012 compared to 97.6% in the
same period in 2011, mainly due to the 1,349 days for which certain
of our vessels were off-charter and laid-up by us in the twelve
months ended December 31, 2012 compared to 155 days in the twelve
months ended December 31, 2011. During the twelve months ended
December 31, 2012, our fleet utilization for the fleet under
employment was 98.8% (which excludes the laid up vessels). 
Our adjusted net income was $60.5 million, or $0.55 per share, for
the twelve months ended December 31, 2012 compared to $61.2 million,
or $0.56 per share, for the twelve months ended December 31, 2011. We
have adjusted our net income in the twelve months ended December 31,
2012, for an impairment loss of $129.6 million, unrealized losses on
derivatives of $0.7 million, realized losses on swaps of $19.0
million attributable to our over-hedging position, as well as a
non-cash expense of $17.1 million for fees related to our
comprehensive financing plan (comprised of non-cash, amortizing and
accrued finance fees) and a gain on sale of vessel of $0.8 million.
Please refer to the Adjusted Net Income reconciliation table, which
appears later in this earnings release. 
Adjusted net income decreased by 1.1%, or $0.7 million, in the twelve
months ended December 31, 2012 compared to the twelve months ended
December 31, 2011. Although the vessel additions to our fleet over
the course of the last year was accretive to the bottom line, the
soft charter market has resulted in the cold lay-up of 7 vessels
until the end of 2012 (one of which we subsequently agreed to sell)
and has also affected the re-chartering of certain vessels that
currently run at operating breakeven levels, while they had a
positive contribution to earnings during 2011.  
Furthermore, the decrease was attributable to an increase in realized
losses on our interest rate swap contracts (after the adjustment for
the over-hedging portion), as well as increased interest expense
(mainly due to the higher average indebtedness and the reduced
interest being capitalized in 2012 following the completion of our
newbuilding program in June 2012) during the twelve months ended
December 31, 2012 compared to the same period in 2011, which was
partially off-set by increased Income from Operations.  
On a non-adjusted basis our net loss was $105.2 million, or $0.96 per
share, for the twelve months ended December 31, 2012, compared to net
income of $13.4 million, or $0.12 per share, for the twelve months
ended December 31, 2011, which is mainly attributable to the
impairment loss we incurred in the 4th quarter of 2012 on certain of
our older vessels.  
On July 1, 2012, we elected to prospectively de-designate interest
rate swaps for which we were applying hedge accounting treatment due
to the compliance burden associated with this accounting policy. As a
result, all changes in the fair value of our interest rate swaps will
be recorded in earnings under "Unrealized (Losses)/Gains on
Derivatives" from the de-designation date forward. In addition,
unrealized losses in Accumulated Other Comprehensive Loss associated
with the previously designated cash flow interest rate swaps will be
reclassified to earnings as the respective interest payments are
recognized in earnings. 
Discontinuation of hedge accounting increases the potential
volatility in our reported earnings due to the recognition of
non-cash fair value movements of our interest rate swaps directly to
our earnings, however our adjusted earnings will not be affected. 
Operating Revenue
 Operating revenue increased 25.8%, or $120.9
million, to $589.0 million in the t
welve months ended December 31,
2012, from $468.1 million in the twelve months ended December 31,
2011. The increase was primarily attributable to the addition of six
vessels to our fleet, as follows: 


 
                                                                            
Vessel Name                   Vessel Size (TEU)     Date Delivered          
------------------------  ------------------------  ------------------------
Hyundai Together                   13,100           February 16, 2012       
CMA CGM Melisande                   8,530           February 28, 2012       
Hyundai Tenacity                   13,100           March 8, 2012           
Hyundai Smart                      13,100           May 3, 2012             
Hyundai Speed                      13,100           June 7, 2012            
Hyundai Ambition                   13,100           June 29, 2012           

 
These additions to our fleet contributed revenues of $88.8 million
during the twelve months ended December 31, 2012 (1,564 operating
days in total).  
Furthermore, operating revenues for the twelve months ended December
31, 2012, reflect: 


 
--  $64.0 million of incremental revenues in the twelve months ended
    December 31, 2012 compared to the same period of 2011, related to two
    3,400 TEU containerships (the Hanjin Algeciras and the Hanjin
    Constantza, which were added to our fleet on January 26, 2011 and
    April 15, 2011, respectively), three 10,100 TEU containerships (the
    Hanjin Germany, the Hanjin Italy and the Hanjin Greece, which were
    added to our fleet on March 10, 2011, April 6, 2011 and May 4, 2011,
    respectively) and four 8,530 TEU containerships (the CMA CGM Attila,
    the CMA CGM Tancredi, the CMA CGM Bianca and the CMA CGM Samson, which
    were added to our fleet on July 8, 2011, August 22, 2011, October 26,
    2011 and December 15, 2011, respectively).
    
    
--  $2.4 million decrease in revenues in the twelve months ended December
    31, 2012 compared to the same period in 2011, related to the sale of
    one 2,130 TEU containership, the Montreal, on April 27, 2012.
    
    
--  $29.5 million decrease in revenues in the twelve months ended December
    31, 2012 compared to the same period of 2011. This was mainly
    attributable to increased off-hire days by 1,136 days, to 1,613 days
    in the twelve months ended December 31, 2012, from 477 days in the
    twelve months ended December 31, 2011 ($18.5 million reduction in
    revenue in relation to certain vessels that were off-charter and laid
    up for 1,349 days during the twelve months ended December 31, 2012
    compared to 155 days during the twelve months ended December 31,
    2011).

  
Vessel Operating Expenses
 Vessel operating expenses increased 3.6%, or
$4.3 million, to $123.4 million in the twelve months ended December
31, 2012, from $119.1 million in the twelve months ended December 31,
2011. The increase is mainly attributable to the increased average
number of vessels in our fleet during the twelve months ended
December 31, 2012 compared to the same period of 2011. This overall
increase was offset in part by the lower average daily operating cost
per vessel of $5,907 for the twelve months ended December 31, 2012
compared to $6,246 for the twelve months ended December 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 35.5%,
or $37.7 million, to $143.9 million in the twelve months ended
December 31, 2012, from $106.2 million in the twelve months ended
December 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 twelve months ended December 31, 2012 compared
to the same period of 20
11. 
Amortization of Deferred Dry-docking and Special Survey Costs 
Amortization of deferred dry-docking and special survey costs
increased 5.2%, or $0.3 million, to $6.1 million in the twelve months
ended December 31, 2012, from $5.8 million in the twelve months ended
December 31, 2011. The increase reflects increased dry-docking and
special survey costs incurred and amortized during the twelve months
ended December 31, 2012 compared to the same period of 2011. 
General and Administrative Expenses
 General and administrative
expenses decreased 2.9%, or $0.6 million, to $20.4 million in the
twelve months ended December 31, 2012, from $21.0 million in the same
period of 2011. The decrease was mainly the result of a non-cash
stock based compensation expense of $2.2 million recorded in the
twelve months ended December 31, 2011 compared to $0.1 million in the
same period of 2012. Furthermore, fees to our Manager increased by
$1.9 million, due to the increase in the average number of vessels in
our fleet. 
Other Operating Expenses
 Other Operating Expenses includes Voyage
Expenses 
Voyage Expenses
 Voyage expenses increased by $2.7 million, to $13.5
million in the twelve months ended December 31, 2012, from $10.8
million in the twelve months ended December 31, 2011. The increase
was the result of increased commissions to our Manager by $2.4
million, 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, as well
as increased other voyage expenses due to the increase in the average
number of vessels in the twelve months ended December 31, 2012
compared to the same period of 2011. 
Interest Expense and Interest Income 
 Interest expense increased by
58.4%, or $32.2 million, to $87.3 million in the twelve months ended
December 31, 2012, from $55.1 million in the twelve months ended
December 31, 2011. The change in interest expense was due to the
increase in our average debt by $495.3 million, to $3,308.3 million
in the twelve months ended December 31, 2012, from $2,813.0 million
in the twelve months ended December 31, 2011, as well as the
increased average LIBOR payable on interest under our credit
facilities in the twelve months ended December 31, 2012 compared to
the twelve months ended December 31, 2011. Furthermore, the financing
of our newbuilding program resulted in $3.7 million of interest being
capitalized, rather than such interest being recognized as an
expense, for the twelve months ended December 31, 2012 compared to
$16.1 million of capitalized interest for the twelve months ended
December 31, 2011. 
Interest income was $1.6 million in the twelve months ended December
31, 2012 compared to $1.3 million in the twelve months ended December
31, 2011.  
Other finance costs, net
 Other finance costs, net, increased by $3.5
million, to $18.1 million in the twelve months ended December 31,
2012, from $14.6 million in the twelve mo
nths ended December 31,
2011. This increase was due to a $4.6 million increase in
amortization in relation to finance fees (which were deferred and are
amortized over the term of the respective credit facilities) in the
twelve months ended December 31, 2012 compared to the same period in
2011, as well as a $1.2 million increase in accrued finance fees
(which accrete in our Statement of Income over the term of the
respective facilities) in the twelve months ended December 31, 2012
compared to the same period in 2011, which was partially offset by an
expense of $2.3 million recorded in the twelve months ended December
31, 2011, in relation to non-cash changes in fair value of warrants,
which did not recur in the twelve months ended December 31, 2012. 
Other income/(expenses), net
 Other income/(expenses), net, was
income of $0.8 million in the twelve months ended December 31, 2012,
compared to an expense of $2.0 million in the twelve months ended
December 31, 2011. This was mainly the result of legal and advisory
fees of $2.3 million related to preparing and structuring the
comprehensive financing plan, which were recorded during the twelve
months ended December 31, 2011 and did not recur in the twelve months
ended December 31, 2012. 
Unrealized (loss)/gain on derivatives
 Unrealized (loss)/gain on
interest rate swap hedges was a loss of $0.7 million in the twelve
months ended December 31, 2012, compared to a gain of $9.0 million in
the twelve months ended December 31, 2011, which is attributable to
hedge accounting ineffectiveness, mark to market valuation of our
swaps and reclassification of unrealized losses from Accumulated
Other Comprehensive Loss to our earnings (due to the discontinuation
of hedge accounting from July 1, 2012). 
As discussed above, on July 1, 2012, we elected to prospectively
de-designate interest rate swaps for which we were applying hedge
accounting treatment due to the compliance burden associated with
this accounting policy.  
Realized (loss)/gain on derivatives
 Realized loss on interest rate
swap hedges, increased by $24.1 million, to $154.4 million in the
twelve months ended December 31, 2012, from $130.3 million in the
twelve months ended December 31, 2011. The increase is attributable
to the realized losses being deferred for the respective periods (as
discussed below), which is partially offset by the higher floating
LIBOR rates during the twelve months ended December 31, 2012 compared
to the same period of 2011. 
Realized losses on cash flow hedges of $7.0 million and $31.3 million
in the twelve months ended December 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 the vessels
under construction which were financed by loans with interest rates
that have been hedged by our interest rate swap contracts. The
reduction of the deferred realized losses is attributable to the
gradual delivery of all our vessels under construction through June
2012, when our newbuilding program was completed. The table below
provides an analysis of the items discussed above, and which were
recorded in the twelve months ended December 31, 2012 and 2011: 


 
                                                                            
                                               Twelve months  Twelve months 
                                                   ended          ended     
                                                December 31,   December 31, 
                                               -------------  ------------- 
                                                    2012           2011     
                                               -------------  ------------- 
                                                       (in millions)        
Total realized losses of swaps                 $      (161.4) $      (161.6)
Realized losses of swaps deferred in
 OCL                 7.0           31.3 
                                               -------------  ------------- 
  Realized losses of swaps expensed in P&L            (154.4)        (130.3)
Realized losses attributable to overhedging             19.0           38.9 
                                               -------------  ------------- 
  Adjusted realized losses attributable to                                  
   hedged debt                                 $      (135.4) $       (91.4)
                                               =============  ============= 

 
Adjusted EBITDA
 Adjusted EBITDA increased 35.5%, or $113.1 million,
to $431.7 million in the twelve months ended December 31, 2012, from
$318.6 million in the twelve months ended December 31, 2011. Adjusted
EBITDA for the twelve months ended December 31, 2012, is adjusted for
an impairment loss of $129.6 million, unrealized loss on derivatives
of $0.7 million, realized losses on derivatives of $150.9 million and
a gain on sale of vessel of $0.8 million. Tables reconciling Adjusted
EBITDA to Net Income can be found at the end of this earnings
release. 
Recent news
 On January 17, 2013, we entered into an agreement to
sell the Independence for a gross sale consideration of $7.0 million.
We expect the vessel to be delivered to its buyers in the second half
of February 2013. The Independence is 26 years old and has been on
cold lay-up since November 13, 2011. 
Conference Call and Webcast 
 On Tuesday, February 12, 2013, at 9:00
A.M. EST, 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
February 19, 2013 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 64
containerships aggregating 363,049 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. 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
safeharbor 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 508 unscheduled off-hire days in the fourth quarter of
2012 (including 501 days related to the Marathonas, the Independence,
the Henry, the Pride, the Duka, the Messologi and the 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.  


 
                                                                            
                             First    Second     Third    Fourth            
Vessel Utilization          Quarter   Quarter   Quarter   Quarter           
(No. of Days)                2012      2012      2012      2012      Total  
                           --------  --------  --------  --------  -------- 
Ownership Days                5,471     5,663     5,888     5,888    22,910 
Less Off-hire Days:                                                         
  Scheduled Off-hire Days       (49)      (45)      (58)      (57)     (209)
  Other Off-hire Days          (254)     (266)     (376)     (508)   (1,404)
                           --------  --------  --------  --------  -------- 
Operating Days                5,168     5,352     5,454     5,323    21,297 
                           ========  ========  ========  ========  ======== 
Vessel Utilization             94.5%     94.5%     92.6%     90.4%     93.0%
                                                                            
Operating Revenues(in                                                       
 '000s of US Dollars)      $134,237  $146,657  $156,289  $151,826  $589,009 
Average Gross Daily                                                         
 Charter Rate              $ 25,975  $ 27,402  $ 28,656  $ 28,523  $ 27,657 

 
Fleet List 
The following table describes in detail our fleet deployment profile
as of February 11, 2013. 


 
                                                                            
                           Vessel Size                                      
Vessel Name                   (TEU)     Year Built  Expiration of Charter(1)
------------------------- ------------ ------------ ------------------------
Containerships                                                              
-------------------------                                                   
                                                                            
Hyundai Ambition             13,100        2012     June 2024               
Hyundai Speed                13,100        2012     June 2024               
Hyundai Smart                13,100        2012     May 2024                
Hyunda
i 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     Laid-up                 
Mytilini                      4,814        1991     March 2013              
Hyundai Commodore(3)          4,651        1992     February 2013           
Duka(4)                       4,651        1992     Laid-up                 
Hyundai Federal(5)            4,651        1994     April 2013              
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     July 2013               
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             
Pride(8)                      3,129        1988     Laid-up                 
Lotus                         3,098        1988     July 2013               
Independence(9)               3,045        1986     Laid-up                 
Henry                         3,039        1986     Laid-up                 
Elbe                          2,917        1991     May 2013                
Kalamata                      2,917        1991     August 2013             
Komodo                        2,917        1991     August 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 October 25, 2012, the Hyundai Duke was renamed to Duka. 
 (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. 
 (8) On July 21, 2012, the SCI Pride was renamed to Pride.  
(9) On January 17, 2013, we entered into an agreement to sell the
Independence.  


 
                                                                            
                                                                            
                                                                            
                             DANAOS CORPORATION                             
                 Condensed Statements of Income - Unaudited                 
(Expressed in thousands of United States dollars, except per share amounts) 
                                                                            
                      Three months  Three months    Twelve        Twelve    
                          ended         ended    months ended  months ended 
                      December 31,  December 31, December 31,  December 31, 
                      ------------  ------------ ------------  ------------ 
                          2012          2011         2012          2011     
                      ------------  ------------ ------------  ------------ 
                                                                            
OPERATING REVENUES    $    151,826  $    128,344 $    589,009  $    468,101 
                                                                            
OPERATING EXPENSES                                                          
  Vessel operating                                                          
   expenses                (30,525)      (31,679)    (123,356)     (119,127)
  Depreciation &                                                            
   amortization            (40,396)      (30,750)    (150,008)     (111,978)
  Impairment loss         (129,630)           --     (129,630)           -- 
  General &                                                                 
   administrative           (5,202)       (6,982)     (20,379)      (21,028)
  Gain on sale of                                                           
   vessels                      --            --          830            -- 
  Other operating                                                           
   expenses                 (3,543)       (2,850)     (13,503)      (10,765)
                      ------------  ------------ ------------  ------------ 
Income From                                                                 
 Operations                (57,470)       56,083      152,963       205,203 
                      ------------  ------------ ------------  ------------ 
                                                                            
OTHER EARNINGS                                                              
 (EXPENSES)                                                                 
  Interest income              462           335        1,642         1,304 
  Interest expense         (23,288)      (15,958)     (87,340)      (55,124)
  Other finance cost,                                                       
   net                      (5,114)       (3,665)     (18,107)      (14,581)
  Other                                                                     
   income/(expenses),                                                       
   net                          48            (5)         811        (1,986)
  Realized                                                                  
   (loss)/gain on                                                           
   derivativ
es             (38,709)      (34,879)    (154,434)     (130,341)
  Unrealized                                                                
   gain/(loss) on                                                           
   derivatives               7,593         7,147         (739)        8,962 
                      ------------  ------------ ------------  ------------ 
Total Other Income                                                          
 (Expenses), net           (59,008)      (47,025)    (258,167)     (191,766)
                      ------------  ------------ ------------  ------------ 
                                                                            
Net (Loss)/Income     $   (116,478) $      9,058 $   (105,204) $     13,437 
                      ============  ============ ============  ============ 
                                                                            
(LOSS)/EARNINGS PER                                                         
 SHARE                                                                      
Basic & diluted net                                                         
 (loss)/ income per                                                         
 share                $      (1.06) $       0.08 $      (0.96) $       0.12 
                      ============  ============ ============  ============ 
Basic & diluted                                                             
 weighted average                                                           
 number of common                                                           
 shares (in thousands                                                       
 of shares)                109,622       109,142      109,613       109,045 
                      ============  ============ ============  ============ 
                                                                            
                                                                            
                                                                            
                             Non-GAAP Measures*                             
      Reconciliation of Net Income to Adjusted Net Income - Unaudited       
                                                                            
                      Three months  Three months    Twelve        Twelve    
                          ended         ended    months ended  months ended 
                      December 31,  December 31, December 31,  December 31, 
                      ------------  ------------ ------------  ------------ 
                          2012          2011         2012          2011     
                      ------------  ------------ ------------  ------------ 
Net (loss)/income     $   (116,478) $      9,058 $   (105,204) $     13,437 
Unrealized                                                                  
 (gain)/loss on                                                             
 derivatives                (7,593)       (7,147)         739        (8,962)
Realized loss on                                                            
 over-hedging portion                                                       
 of derivatives              1,362         8,663       19,042        38,858 
Comprehensive                                                               
 Financing Plan                                                             
 related fees                   --            --           --         2,266 
Amortization of                                                             
 financing fees &                                                           
 finance fees accrued        4,778         3,535       17,076        11,292 
Impairment loss            129,630            --      129,630            -- 
Loss on fair value of                                                       
 warrants                       --            --           --         2,253 
Stock based                                         
                        
 compensation                   --         2,020           --         2,020 
Gain on sale of                                                             
 vessels                        --            --         (830)           -- 
                      ------------  ------------ ------------  ------------ 
Adjusted Net Income   $     11,699  $     16,129 $     60,453  $     61,164 
                      ============  ============ ============  ============ 
Adjusted Earnings Per                                                       
 Share                $       0.11  $       0.15 $       0.55  $       0.56 
                      ============  ============ ============  ============ 
Weighted average                                                            
 number of shares          109,622       109,142      109,613       109,045 

 
* 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 and twelve months ended December 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     
                                                December 31,   December 31, 
                                               -------------  ------------- 
                                                    2012           2011     
                                               -------------  ------------- 
ASSETS                                          (Unaudited)    (Unaudited)  
                                                                            
CURRENT ASSETS                                                              
  Cash and cash equivalents                    $      55,628  $      51,362 
  Restricted cash                                      2,821          2,909 
  Accounts receivable, net                             3,741          4,176 
  Other current assets                                36,483         34,844 
                                               -------------  ------------- 
                                                      98,673         93,291 
                                               -------------  ------------- 
NON-CURRENT ASSETS                                                          
  Fixed assets, net                                3,986,138      3,241,951 
  Advances for vessels under construction                 --        524,286 
  Restricted cash, net of curre
nt portion                430             -- 
  Deferred charges, net                               88,821         99,711 
  Fair value of financial instruments                  2,908          3,964 
  Other non-current assets                            35,075         24,901 
                                               -------------  ------------- 
                                                   4,113,372      3,894,813 
                                               -------------  ------------- 
TOTAL ASSETS                                   $   4,212,045  $   3,988,104 
                                               =============  ============= 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES                                                         
  Long-term debt, current portion              $     125,076  $      41,959 
  Vendor Financing, current portion                   57,388         10,857 
  Accounts payable, accrued liabilities &                                   
   other current liabilities                          52,688         58,254 
  Fair value of financial instruments, current                              
   portion                                           130,100        120,623 
                                               -------------  ------------- 
                                                     365,252        231,693 
                                               -------------  ------------- 
LONG-TERM LIABILITIES                                                       
  Long-term debt, net of current portion           3,097,472      2,960,288 
  Vendor financing, net of current portion           121,754         54,288 
  Fair value of financial instruments, net of                               
   current portion                                   176,948        291,829 
  Other long-term liabilities                         10,315          7,471 
                                               -------------  ------------- 
                                                   3,406,489      3,313,876 
                                               -------------  ------------- 
                                                                            
STOCKHOLDERS' EQUITY                                                        
  Common stock                                         1,096          1,096 
  Additional paid-in capital                         546,023        545,884 
  Accumulated other comprehensive loss              (353,271)      (456,105)
  Retained earnings                                  246,456        351,660 
                                               -------------  ------------- 
                                                     440,304        442,535 
                                               -------------  ------------- 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $   4,212,045  $   3,988,104 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                             DANAOS CORPORATION                             
              Condensed Statements of Cash Flows - (Unaudited)              
             (Expressed in thousands of United States dollars)              
                                                                            
                      Three months  Three months    Twelve        Twelve    
                          ended         ended    months ended  months ended 
                      December 31,  December 31, December 31,  December 31, 
                      ------------  ------------ ------------  ------------ 
                          2012          2011         2012          2011     
                      ------------  ------------ ------------  ------------ 
Operating Activities:                                                       
  Net (loss)/income   $   (116,478) $      9,058 $   (105,204) $     13,437 
  Adjustments to                                                            
   reconcile net                                                            
   income to net cash                                                       
   provided by                                                              
   operating                                                                
   activities:                                                              
  Depreciation              38,514        29,598      143,938       106,178 
  Impairment loss          129,630            --      129,630            -- 
  Amortization of                                                           
   deferred                                                                 
   drydocking &                                                             
   special survey                                                           
   costs, finance                                                           
   cost and other                                                           
   finance fees                                                             
   accrued                   6,660         4,687       23,146        17,092 
  Stock based                                                               
   compensation                100         2,112          139         2,182 
  Payments for                                                              
   drydocking/special                                                       
   survey                   (2,968)         (210)      (9,308)       (7,218)
  Non-cash change in                                                        
   fair value of                                                            
   warrants                     --            --           --         2,253 
  Amortization of                                                           
   deferred realized                                                        
   losses on cash                                                           
   flow interest rate                                                       
   swaps                     1,013           529        3,524         1,575 
  Realized loss on                                                          
   cash flow interest                                                       
   rate swaps                                                               
   deferred in Other                                                        
   Comprehensive Loss           --        (6,413)      (7,035)      (31,320)
  Unrealized                                                                
   loss/(gain) on                                                           
   derivatives              (7,593)       (7,676)         739       (10,537)
  Gain on sale of                                                           
   vessels                      --            --         (830)           -- 
  Accounts receivable        6,020         1,621          435           (64)
  Other assets,                                                             
   current and non-                                                         
   current                 (11,641)         (441)     (11,813)      (14,530)
  Accounts payable                                                          
   and accrued                                                              
   liabilities              (4,665)          751       (2,380)      (15,457)
  Other liabilities,                                                        
   current and non-                                                         
   current                  (1,069)       (5,262)       1,577        (4,099)
                      -----------
-  ------------ ------------  ------------ 
Net Cash provided by                                                        
 Operating Activities       37,523        28,354      166,558        59,492 
                      ------------  ------------ ------------  ------------ 
                                                                            
Investing Activities:                                                       
  Vessels under                                                             
   construction and                                                         
   vessels additions           (46)     (190,473)    (375,424)     (644,593)
  Net proceeds from                                                         
   sale of vessel               --            --        5,635            -- 
                      ------------  ------------ ------------  ------------ 
Net Cash used in                                                            
 Investing Activities          (46)     (190,473)    (369,789)     (644,593)
                      ------------  ------------ ------------  ------------ 
                                                                            
Financing Activities:                                                       
  Debt draw downs               --       154,689      266,920       482,286 
  Debt repayment           (16,611)       (2,592)     (58,981)      (45,369)
  Deferred costs                --           (70)        (100)      (30,287)
  Increase in                                                               
   restricted cash          (2,813)       (2,813)        (342)           (2)
                      ------------  ------------ ------------  ------------ 
Net Cash (used                                                              
 in)/provided by                                                            
 Financing Activities      (19,424)      149,214      207,497       406,628 
                      ------------  ------------ ------------  ------------ 
Net                                                                         
 Increase/(Decrease)                                                        
 in cash and cash                                                           
 equivalents                18,053       (12,905)       4,266      (178,473)
Cash and cash                                                               
 equivalents,                                                               
 beginning of period        37,575        64,267       51,362       229,835 
                      ------------  ------------ ------------  ------------ 
Cash and cash                                                               
 equivalents, end of                                                        
 period               $     55,628  $     51,362 $     55,628  $     51,362 
                      ============  ============ ============  ============ 

 
                                                                            
                                                                            
                                                                            
              Reconciliation of Net Income to Adjusted EBITDA               
             (Expressed in thousands of United States dollars)              
                                                                            
                      Three months  Three months    Twelve        Twelve    
                          ended         ended    months ended  months ended 
                      December 31,  December 31, December 31,  December 31, 
                      ------------  ------------ ------------  ------------ 
                          2012          2011         2012          2011     
                      ------------  ------------ ------------  ------------ 
Net (loss)/income     $   (116,478) $      9,058 $   (105,204) $     13,437 
Depreciation                38,514        29,598      143,938       106,178 
Amortization of                                                             
 deferred drydocking                                                        
 & special survey                                                           
 costs                       1,882         1,152        6,070         5,800 
Amortization of                                                             
 deferred finance                                                           
 costs and other                                                            
 finance fees accrued        4,778         3,535       17,076        11,292 
Amortization of                                                             
 deferred realized                                                          
 losses on interest                                                         
 rate swaps                  1,013           529        3,524         1,575 
Interest income               (462)         (335)      (1,642)       (1,304)
Interest expense            23,288        15,958       87,340        55,124 
Impairment loss            129,630            --      129,630            -- 
Gain on sale of                                                             
 vessels                        --            --         (830)           -- 
Comprehensive                                                               
 Financing Plan                                                             
 related fees                   --            --           --         2,266 
Stock based                                                                 
 compensation                  100         2,112          139         2,182 
Realized loss on                                                            
 derivatives                37,696        34,879      150,910       130,341 
Unrealized                                                                  
 (gain)/loss on                                                             
 derivatives                (7,593)       (7,676)         739       (10,537)
Non-cash changes in                                                         
 fair value of                                                              
 warrants                       --            --           --         2,253 
                      ------------  ------------ ------------  ------------ 
Adjusted EBITDA(1)    $    112,368  $     88,810 $    431,690  $    318,607 
                      ============  ============ ============  ============ 

 
(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 warrants, unrealized (gain)/loss on derivatives, realized
gain/(loss) on derivatives, stock based compensation, gain/(loss) on
sale of vessel, impairment loss 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 and twelve months ended December 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.  
For further information please contact: 
Company Contact:
Evangelos Chatzis 
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com 
Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com 
Investor Relations and Financial Media
Nicolas Bornozis
President
Capital Link, Inc.
New York
Tel. 212-661-7566
E-Mail: danaos@capitallink.com