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Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2013


Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2013

ATHENS, GREECE -- (Marketwired) -- 04/29/13 -- Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the quarter ended March 31, 2013.

Highlights for the First Quarter Ended March 31, 2013:


 
--  Operating revenues of $146.1 million for the three months ended March
    31, 2013 compared to $134.2 million for the three months ended March
    31, 2012, an increase of 8.9%.
--  Adjusted EBITDA(1)of $108.6 million for the three months ended March
    31, 2013 compared to $96.4 million for the three months ended March
    31, 2012, an increase of 12.7%.
--  Adjusted net income(1)of $13.9 million, or $0.13 per share, for the
    three months ended March 31, 2013 compared to $16.9 million, or $0.15
    per share, for the three months ended March 31, 2012.
--  We managed to maintain our daily vessel operating cost at low levels,
    of $5,912 per day for the three months ended March 31, 2013 compared
    to $5,945 per day for the three months ended March 31, 2012.
--  The remaining average charter duration of our fleet was 9.5 years as
    of March 31, 2013 (weighted by aggregate contracted charter hire).
--  Total contracted operating revenues were $4.8 billion as of March 31,
    2013, through 2028.
--  Charter coverage of 90% for the next 12 months in terms of contracted
    operating days and 98% in terms of operating revenues.

 
                                                                            
                                                                            
                      Three Months Ended March 31, 2013                     
                              Financial Summary                             
 (Expressed in thousands of United States dollars, except per share amounts)
                                                                            
                                                  Three months  Three months
                                                     ended         ended    
                                                   March 31,     March 31,  
                                                 ------------- -------------
   
                                                   2013          2012    
                                                 ------------- -------------
                                                         (unaudited)        
Operating revenues                               $     146,088 $     134,237
Net income                                       $      13,432 $       9,342
Adjusted net income(1)                           $      13,884 $      16,938
Earnings per share                               $        0.12 $        0.09
Adjusted earnings per share(1)                   $        0.13 $        0.15
Weighted average number of shares (in thousands)       109,653       109,605
Adjusted EBITDA(1)                               $     108,584 $      96,438

(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.

Danaos' CEO Dr. John Coustas commented:

The fundamentals of the containership market still remain weak as the Far-East Europe trade volumes remain flat having difficulty supporting the inflow of large containerships. This is also evidenced by lower freight rates in these routes compared to one year ago, while the liner companies are making yet another attempt to restore rates at healthier levels with announced General Rate Increases in May. The Pacific lanes show a much better picture which is the effect of the recovery in the US economy. Non-mainlane trade growth remains healthy and helps absorb capacity that is cascaded down from the mainlane routes but this adds pressure to the charter market, particularly on the mid-size containerships. As we enter into the peak season we expect some improvement in the market fundamentals, but all-in-all we do not anticipate spectacular changes.

Despite this challenging container market environment, we are reporting yet another solid quarter. Adjusted Net Income for this quarter came in at $13.9 million or 13 cents per share, $3 million lower than the first quarter of 2012 due to the weaker charter market today when compared to 1 year ago. However, as our vessels on the spot market are currently running at operating break-even levels, an improving market going forward is a one way option to improving our results.

Adjusted EBITDA increased by 12.7% to $108.6 million in the current quarter compared to $96.4 million in the first quarter of 2012 as a result of our fleet expansion program that was concluded in 2012.

Out of the 7 vessels we had on cold lay-up at the end of 2012, we only had 2 vessels on lay-up at the end of the first quarter. During this quarter, we re-activated one vessel, while we sold 4 of our older vessels and we intend to use the sale proceeds to make accretive acquisitions of younger containerships.

With a strong 98% contract coverage and only 2% of our current revenue stream at stake through re-chartering over the next 12 months, we are largely insulated from the effects of the weak charter market while we 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 with our daily operating expenses being consistently below $6,000 per day.

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 March 31, 2013 compared to the three months ended March 31, 2012

During the three months ended March 31, 2013, Danaos had an average of 63.1 containerships compared to 60.1 containerships for the three months ended March 31, 2012. Our fleet utilization declined to 89.6% in the three months ended March 31, 2013 compared to 94.5% in the three months ended March 31, 2012, mainly due to the 546 days for which 7 of our vessels were off-charter and laid-up in the three months ended March 31, 2013 compared to 246 days for which 3 of our vessels were off-charter and laid-up in the three months ended March 31, 2012. During the three months ended March 31, 2013, our fleet utilization for the fleet under employment was 99.1% (which excludes the vessels on lay up). During the first quarter of 2013, we sold three vessels, the Henry, the Pride and the Independence for an amount of $18.8 million, which represents the gross sale proceeds less commissions.

Our adjusted net income was $13.9 million, or $0.13 per share, for the three months ended March 31, 2013 compared to $16.9 million, or $0.15 per share, for the three months ended March 31, 2012. We have adjusted our net income in the three months ended March 31, 2013 mainly for unrealized gains on derivatives of $4.4 million, 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 17.8%, or $3.0 million, in adjusted net income for the three months ended March 31, 2013 compared to the three months ended March 31, 2012, w as mainly the result of the softening of the charter market during the last year that led to the cold lay-up of 7 vessels up to the end of 2012 and to the lower re-chartering of certain vessels that currently run at operating break-even levels while they had a positive contribution to operating income during the first quarter of 2012. The above was partially offset by the new vessel additions to our fleet (all under long-term charters) over the course of the last year that were accretive both to operating income and the bottom line. As of March 31, 2013, we only had 2 vessels on cold lay-up as we have sold, or have agreed to sell, 4 vessels and have re-activated 1 further vessel.

On a non-adjusted basis our net income was $13.4 million, or $0.12 per share, for the three months ended March 31, 2013, compared to net income of $9.3 million, or $0.09 per share, for the three months ended March 31, 2012.

On March 27, 2013, we entered into an agreement with the lenders under the HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank credit facility. The agreement provides us the option to sell, for cash, up to 9 mortgaged vessels (the Henry, the Pride, the Independence, the Honour, the Elbe, the Hope, the Lotus, the Kalamata and the Komodo), with the sale proceeds less sale commissions from such vessels' sales to be deposited in a restricted cash account for use in financing the acquisition of new containership vessels no later than December 31, 2013. Any funds remaining in this restricted cash account after that date will be applied towards prepayment of the respective credit facility. During the first quarter of 2013, we concluded the sales of the Henry, the Pride and the Independence; accordingly, an amount of $18.8 million, representing the gross sale proceeds less commissions from the sale of the Henry, the Pride and the Independence, was recorded as non-current restricted cash on March 31, 2013. We have also entered into an agreement on April 2, 2013 to sell the Honour.

Operating Revenues Operating revenues increased 8.9%, or $11.9 million, to $146.1 million in the three months ended March 31, 2013, from $134.2 million in the three months ended March 31, 2012. The increase was primarily attributable to the addition of three vessels to our fleet, as follows:


 
                                                                       
Vessel Name                Vessel Size (TEU)    Date Delivered         
----------------------- ----------------------- -----------------------
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 $16.3 million during the three months ended March 31, 2013 (270 operating days in total).

Furthermore, operating revenues for the three months ended March 31, 2013 reflect:


 
--  $9.4 million of incremental revenues in the three months ended March
    31, 2013 compared to the three months ended March 31, 2012, related to
    one 8,530 TEU containership (the CMA CGM Melisande, which was added to
    our fleet on February 28, 2012), and two 13,100 TEU containerships
    (the Hyundai Together and the Hyundai Tenacity, which were added to
    our fleet on February 16, 2012 and March 8, 2012, respectively).
    
    
--  $1.1 million decrease in revenues in the three months ended March 31,
    2013 compared to the three months ended March 31, 2012, related to one
    2,130 TEU containership, the Montreal, which was sold on April 27,
    2012.
    
    
--  $12.7 million decrease in revenues in the three months ended March 31,
    2013 compared to the three months ended March 31, 2012. This was
    mainly attributable to an increase in off-hire days of 290 days, to
    593 days in the three months ended March 31, 2013, from 303 days in
    the three months ended March 31, 2012, re-chartering of certain
    vessels during 2012 at lower charter rates compared to what these
    vessels were earning in the three months ended March 31, 2012, as well
    as reduced revenue of our fleet in the three months ended March 31,
    2013 compared to the three months ended March 31, 2012 due to the one
    additional operating day in February 2012 compared to February 2013.

Vessel Operating Expenses Vessel operating expenses decreased 2.7%, or $0.8 million, to $29.3 million in the three months ended March 31, 2013, from $30.1 million in the three months ended March 31, 2012. The reduction is mainly attributable to the reduced costs of 6.1 vessels on average which were laid up during the three months ended March 31, 2013 compared to 2.7 vessels on average during the three months ended March 31, 2012. The overall decrease in vessel operating expenses was offset in part by the increased average number of vessels in our fleet during the three months ended March 31, 2013 compared to the three months ended March 31, 2012.

The average daily operating cost per vessel was reduced to $5,912 for the three months ended March 31, 2013, from $5,945 for the three months ended March 31, 2012 (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 7.3%, or $2.3 million, to $34.0 million in the three months ended March 31, 2013, from $31.7 million in the three months ended March 31, 2012. The increase in depreciation expense was due to the increased average number of vessels in our fleet during the three months ended March 31, 2013 compared to the three months ended March 31, 2012.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased 41.7%, or $0.5 million, to $1.7 million in the three months ended March 31, 2013, from $1.2 million in the three months ended March 31, 2012. The increase reflects increased dry-docking and special survey costs incurred within the year and amortized during the three months ended March 31, 2013 compared to the three months ended March 31, 2012.

General and Administrative Expenses General and administrative expenses increased 2.1%, or $0.1 million, to $4.9 million in the three months ended March 31, 2013, from $4.8 million in the three months ended March 31, 2012. The increase was mainly the result of increased fees paid to our Manager in the three months ended March 31, 2013 compared to the three months ended March 31, 2012, 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 $0.2 million, to $3.1 million in the three months ended March 31, 2013, from $2.9 million in the three months ended March 31, 2012. The increase was mainly the result of increased voyage expenses, due to the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income Interest expense increased by 24.5%, or $4.5 million, to $22.9 million in the three months ended March 31, 2013, from $18.4 million in the three months ended M arch 31, 2012. The change in interest expense was due to the increase in our average debt by $263.7 million, to $3,388.8 million in the three months ended March 31, 2013, from $3,125.1 million in the three months ended March 31, 2012. Furthermore, the financing of our newbuilding program resulted in $2.6 million of interest being capitalized, rather than such interest being recognized as an expense, for the three months ended March 31, 2012 compared to nil interest being capitalized for the three months ended March 31, 2013, following the completion of our newbuilding program in June 2012.

Interest income was $0.5 million in the three months ended March 31, 2013 compared to $0.4 million in the three months ended March 31, 2012.

Other finance costs, net Other finance costs, net, increased by $1.2 million, to $5.1 million in the three months ended March 31, 2013, from $3.9 million in the three months ended March 31, 2012. This increase was 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 March 31, 2013 compared to the three months ended March 31, 2012.

Other income/(expenses), net Other income/(expenses), net, was negligible in the three months ended March 31, 2013 compared to an expense of $0.2 million in the three months ended March 31, 2012.

Unrealized gain/(loss) on derivatives Unrealized gain/(loss) on interest rate swap hedges was a gain of $4.4 million in the three months ended March 31, 2013 compared to a gain of $2.9 million in the three months ended March 31, 2012. The unrealized gains were attributable to mark to market valuation of our swaps and hedge accounting ineffectiveness. 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 $1.2 million, to $36.6 million in the three months ended March 31, 2013, from $35.4 million in the three months ended March 31, 2012. This increase is mainly attributable to $4.8 million of realized losses that had been deferred during the three months ended March 31, 2012 (as discussed below) and were not deferred in the three months ended March 31, 2013, partially offset by the lower average notional amount of swaps during the three months ended March 31, 2013 compared to the three months ended March 31, 2012, which resulted in lower realized losses on derivatives of $3.6 million during the three months ended March 31, 2013.

With all our newbuildings having been delivered, no realized losses on cash flow hedges were deferred during the three months ended March 31, 2013. During the three months ended March 31, 2012, realized losses on cash flow hedges of $4.8 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 March 31, 2013 and 2012:


 
                                                                            
                                                 Three months  Three months 
                                                     ended         ended    
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                        (in millions)       
Total realized losses of swaps                   $      (36.6) $      (40.2)
Realized losses of swaps deferred in OCL                   --           4.8 
                                                 ------------  ------------ 
  Realized losses of swaps expensed in P&L              (36.6)        (35.4)
Realized losses attributable to overhedging                --           6.9 
                                                 ------------  ------------ 
  Adjusted realized losses attributable to                                  
   hedged debt                                   $      (36.6) $      (28.5)
                                                 ============  ============ 

Adjusted EBITDA Adjusted EBITDA increased 12.7%, or $12.1 million, to $108.6 million in the three months ended March 31, 2013, from $96.4 million in the three months ended March 31, 2012. Adjusted EBITDA for the three months ended March 31, 2013, is adjusted for unrealized gain on derivatives of $4.4 million and realized losses on derivatives of $35.6 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Recent news On April 2, 2013, we entered into an agreement to sell the Honour, for a gross sale consideration of $9.1 million. The Honour was built in 1989 and was laid up as of March 31, 2013. We expect to deliver the vessel in May 2013.

Conference Call and Webcast On Tuesday, April 30th, 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 5, 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 61 containerships aggregating 353,836 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 un certainties 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, 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 593 unscheduled off-hire days in the three months ended March 31, 2013 (including 546 days related to the Marathonas, the Duka, the Messologi and the Honour, which have been off-charter and laid up, as well as the Independence, the Henry and the Pride (which have been off-charter and laid up until the date they were sold during the current quarter)). 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     First  
Vessel Utilization          Quarter   Quarter   Quarter   Quarter   Quarter 
(No. of Days)                2012      2012      2012      2012      2013   
-------------------------- --------  --------  --------  --------  -------- 
Ownership Days                5,471     5,663     5,888     5,888     5,677 
Less Off-hire Days:                                                         
  Scheduled Off-hire Days       (49)      (45)      (58)      (57)       -- 
  Other Off-hire Days          (254)     (266)     (376)     (508)     (593)
                           --------  --------  --------  --------  -------- 
Operating Days                5,168     5,352     5,454     5,323     5,084 
                           ========  ========  ========  ========  ======== 
Vessel Utilization             94.5%     94.5%     92.6%     90.4%     89.6%
                                                                            
Operating Revenues (in                                                      
 '000s of US Dollars)      $134,237  $146,657  $156,289  $151,826  $146,088 
Average Gross Daily                                                         
 Charter Rate              $ 25,975  $ 27,402  $ 28,656  $ 28,523  $ 28,735 

Fleet List

The following table describes in detail our fleet deployment profile as of April 29, 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                
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               
CMA CGM Racine(2)             6,500        2010     July 2022               
YM Mandate                    6,500        2010     January 2028            
YM Maturity                   6,500        2010     April 2028              
Marathonas                    4,814        1991     Laid-up                 
Messologi                     4,814        1991     March 2014              
Mytilini                      4,814        1991     February 2014           
Commodore(3)                  4,651        1992     February 2014           
Duka(4)                       4,651        1992     Laid-up                 
Federal(5)                    4,651        1994     March 2014              
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(8)                     3,908        1989     --                      
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             
Lotus                         3,098        1988     July 2013               
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) The charters with respect to the CMA CGM Moliere, the CMA CGM Musset, the CMA CGM Nerval, the CMA CGM Rabelais and the CMA CGM Racine include an option for the charterer, CMA-CGM, to purchase the vessels eight years after the commencement of the respective charters, which will fall in September 2017, March 2018, May 2018, July 2018 and August 2018, respectively, each for $78.0 million.

(3) On February 6, 2013, the Hyundai Commodore was renamed to Commodore at the request of the charterer of this vessel.

(4) On October 25, 2012, the Hyundai Duke was renamed to Duka.

(5) On April 6, 2013, the Hyundai Federal was renamed to 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 April 2, 2013, we entered into an agreement to sell the Honour. We expect to deliver the vessel to her buyers in May 2013.


 
                                                                            
                                                                            
                             DANAOS CORPORATION                             
                 Condensed Statements of Income - Unaudited                 
(Expressed in thousands of United States dollars, except per share amounts) 
                                                                            
                                                 Three months  Three months 
                                                     ended         ended    
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
OPERATING REVENUES                               $    146,088  $    134,237 
                                                                            
OPERATING EXPENSES                                                          
  Vessel operating expenses                           (29,293)      (30,095)
  Depreciation & amortization                         (35,713)      (32,883)
  General & administrative                             (4,917)       (4,837)
  Loss on sale of vessels                                 (15)           -- 
  Other operating expenses                             (3,057)       (2,890)
                                                 ------------  ------------ 
Income From Operations                                 73,093        63,532 
                                                 ------------  ------------ 
                                                                            
OTHER EARNINGS (EXPENSES)                                                   
  Interest income                                         492           353 
  Interest expense                                    (22,864)      (18,390)
  Other finance cost                                   (5,077)       (3,857)
  Other income/(expenses), net                             (1)          196 
  Realized (loss)/gain on derivatives                 (36,615)      (35,443)
  Unrealized gain/(loss) on derivatives                 4,404         2,951 
                                                 ------------  ------------ 
Total Other Income (Expenses), net                    (59,661)      (54,190)
                                                 ------------  ------------ 
                                                                            
Net Income                                       $     13,432  $      9,342 
                                                 ============  ============ 
                                                                            
EARNINGS PER SHARE                                                          
Basic & diluted net income per share             $       0.12  $       0.09 
                                                 ============  ============ 
Basic & diluted weighted average number of                                  
 common shares (in thousands of shares)               109,653       109,605 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                             Non-GAAP Measures*                             
      Reconciliation of Net Income to Adjusted Net Income - Unaudited       
                                                                            
                                                 Three months  Three months 
                                                     ended         ended    
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
Net income                                       $     13,432  $      9,342 
  Unrealized (gain)/loss on derivatives                (4,404)       (2,951)
  Realized loss on over-hedging portion of                                  
   derivatives                                             --         6,886 
  Amortization of financing fees & finance fees                             
   accrued                                              4,841         3,661 
  Loss on sale of vessels                                  15            -- 
                                                 ------------  ------------ 
Adjusted Net Income                              $     13,884  $     16,938 
                                                 ============  ============ 
Adjusted Earnings Per Share                      $       0.13  $       0.15 
                                                 ============  ============ 
Weighted average number of shares                     109,653       109,605 

* 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, 2013 and 2012. 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 - Unaudited                    
             (Expressed in thousands of United States dollars)              
                                                                            
                                                     As of         As of    
                                                   March 31,   December 31, 
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
ASSETS                                                                      
CURRENT ASSETS                                                              
  Cash and cash equivalents                      $     81,804  $     55,628 
  Restricted cash                                           9         2,821 
  Accounts receivable, net                             13,096         3,741 
  Other current assets                                 31,349        36,483 
                                                 ------------  ------------ 
                                                      126,258        98,673 
                                                 ------------  ------------ 
NON-CURRENT ASSETS                                                          
  Fixed assets, net                                 3,928,668     3,986,138 
  Restricted cash, net of current portion              19,240           430 
  Deferred charges, net                                82,686        88,821 
  Vessel held for sale                                  7,884            -- 
  Fair value of financial instruments                   2,553         2,908 
  Other non-current assets                             35,461        35,075 
                                                 ------------  ------------ 
                                                    4,076,492     4,113,372 
                                                 ------------  ------------ 
TOTAL ASSETS                                     $  4,202,750  $  4,212,045 
                                                 ============  ============ 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES                                                         
  Long-term debt, current portion                $    139,464  $    125,076 
  Vendor Financing, current portion                    57,388        57,388 
  Accounts payable, accrued liabilities & other                             
   current liabilities                                 54,247        52,688 
  Fair value of financial instruments, current                              
   portion                                            126,705       130,100 
                                                 ------------  ------------ 
                                                      377,804       365,252 
                                                 ------------  ------------ 
LONG-TERM LIABILITIES                                                       
  Long-term debt, net of current portion            3,072,276     3,097,472 
  Vendor financing, net of current portion            110,994       121,754 
  Fair value of financial instruments, net of                               
   current portion                                    146,407       176,948 
  Other long-term liabilities                          11,225        10,315 
                                                 ------------  ------------ 
                                                    3,340,902     3,406,489 
                                                 ------------  ------------ 
                                                                            
STOCKHOLDERS' EQUITY                                                        
  Common stock                                          1,096         1,096 
  Additional paid-in capital                          546,023       546,023 
  Accumulated other comprehensive loss               (322,963)     (353,271)
  Retained earnings                                   259,888       246,456 
                                                 ------------  ------------ 
                                                      484,044       440,304 
                                                 ------------  ------------ 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  4,202,750  $  4,212,045 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                             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,  
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
Operating Activities:                                                       
  Net income                                     $     13,432  $      9,342 
  Adjustments to reconcile net income to net                                
   cash provided by operating activities:                                   
  Depreciation                                         33,983        31,681 
  Amortization of deferred drydocking & special                             
   survey costs, finance cost and other finance                             
   fees accrued                                         6,571         4,863 
  Stock based compensation                                 --            23 
  Payments for drydocking/special survey                  245        (2,035)
  Amortization of deferred realized losses on                               
   cash flow interest rate swaps                          990           649 
  Realized loss on cash flow interest rate swaps                            
   deferred in Other Comprehensive Loss                    --        (2,951)
  Unrealized (gain)/loss on derivatives                (4,404)       (4,839)
  Loss on sale of vessels                                  15            -- 
  Accounts receivable                                  (9,355)       (1,844)
  Other assets, current and non-current                 4,748         7,554 
  Accounts payable and accrued liabilities              1,857         5,498 
  Other liabilities, current and non-current              591        17,878 
                                                 ------------  ------------ 
Net Cash provided by Operating Activities              48,673        65,819 
                                                 ------------  ------------ 
                                                                            
Investing Activities:                                                       
  Vessels under construction and vessels                                    
   additions                                             (981)     (183,874)
  Net proceeds from sale of vessel                     16,850            -- 
                                                 ------------  ------------ 
Net Cash provided by/(used in) Investing                                    
 Activities                                            15,869      (183,874)
                                                 ------------  ------------ 
                                                                            
Financing Activities:                                                       
  Debt draw downs                                          --       117,320 
  Debt repayment                                      (22,368)      (11,607)
  Deferred costs                                           --          (100)
  Increase in restricted cash                         (15,998)        2,812 
                                                 ------------  ------------ 
Net Cash (used in)/provided by Financing                                    
 Activities                                           (38,366)      108,425 
                                                 ------------  ------------ 
Net Increase/(Decrease) in cash and cash                                    
 equivalents                                           26,176        (9,630)
Cash and cash equivalents, beginning of period         55,628        51,362 
                                                 ------------  ------------ 
Cash and cash equivalents, end of period         $     81,804  $     41,732 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
              Reconciliation of Net Income to Adjusted EBITDA               
             (Expressed in thousands of United States dollars)              
                                                                            
                                                 Three months  Three months 
                                                     ended         ended    
                                                   March 31,     March 31,  
                                                 ------------  ------------ 
                                                     2013          2012     
                                                 ------------  ------------ 
Net income                                       $     13,432  $      9,342 
Depreciation                                           33,983        31,681 
Amortization of deferred drydocking & special                               
 survey costs                                           1,730         1,202 
Amortization of deferred finance costs and other                            
 finance fees accrued                                   4,841         3,661 
Amortization of deferred realized losses on                                 
 interest rate swaps                                      990           649 
Interest income                                          (492)         (353)
Interest expense                                       22,864        18,390 
Loss on sale of vessels                                    15            -- 
Stock based compensation                                   --            23 
Realized loss on derivatives                           35,625        34,794 
Unrealized (gain)/loss on derivatives                  (4,404)       (2,951)
                                                 ------------  ------------ 
Adjusted EBITDA(1)                               $    108,584  $     96,438 
                                                 ============  ============ 

(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs and deferred finance costs, unrealized (gain)/loss on derivatives, realized gain/(loss) on derivatives, stock based compensation, gain/(loss) on sale of vessel 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, 2013 and 2012. 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

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