SOURCE: Danaos Corporation

Danaos Corporation

November 11, 2009 16:05 ET

Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2009

ATHENS, GREECE--(Marketwire - November 11, 2009) - Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the period ended September 30, 2009.

Highlights for the Third Quarter and Nine Months Ended September 30, 2009:

--  Net earnings of $16.4 million or $0.30 per share and $52.3 million or
    $0.96 per share for the quarter and the nine months ended September 30,
    2009, respectively.
--  Operating revenues of $79.8 million and $234.2 million for the quarter
    and the nine months ended September 30, 2009, respectively.
--  EBITDA of $51.2 million and $146.9 million for the quarter and the
    nine months ended September 30, 2009, respectively.
    

Danaos' CEO Dr. John Coustas commented:

We are happy to announce the third quarter results of 2009. Our net income was $16.4 million, or $0.30 per share while at the same time we managed to increase our fleet by adding one more newly built 6,500 TEU vessel, which immediately commenced its 12 year charter as planned.

On the operating cost side, we have once more managed to prove very effective. We reduced our average daily operating cost per vessel by 5.8% compared to that in the third quarter of 2008.

On the broader market front, we are getting signals of a visible recovery based on volumes traded, while some routes have reached capacity. However, the liner companies are still operating in the red, which has negatively affected the whole industry.

In this third quarter, we also engaged in a new round of negotiations with our shipyards. These negotiations are still in progress and aim to actively manage our cash flows from investing activities both for the rest of this year and the years that follow in order to defer capital expenditure requirements and ultimately allow for the arrangement of additional funding in a market that has given signs of gradual, albeit slow, recovery.

Among our efforts on the financing front, we are also considering to raise more capital in the form of additional equity and other forms of hybrid funding. Our strategy in this area, deal size and its potential structure, as well as the type of instruments we may utilize, are all closely linked to restructuring of the payment schedules for those newbuilding orders, which are still unfinanced.

Finally, last week we agreed with Zim the revisions to charterparties we have in place for six of our vessels in operation, which reflect significantly improved terms compared to the initial unilateral imposed reductions in payments and the revisions keep the original charter terms in place with deferred, interest bearing payment terms.

In closing, would like to once again stress our commitment as management and controlling shareholders to doing everything necessary to achieve our corporate goals and safeguard our investments and their returns in the near and long term horizon in the most challenging time in our industry's history.

Three months ended September 30, 2009 compared to the three months ended September 30, 2008

During the quarter ended September 30, 2009, Danaos had an average of 41.0 containerships compared to 38.1 containerships for the same period of 2008. During the third quarter of 2009, we took delivery of one new vessel, the CMA CGM Moliere. Our fleet utilization was 99.0% in the third quarter of 2009.

Our net income was $16.4 million, or $0.30 per share for the three months ended September 30, 2009 compared to $28.0 million, or $0.51 per share for the three months ended September 30, 2008, which represents a decrease of 41.4%, or $11.6 million compared to the three months ended September 30, 2008. This decrease is mainly attributable to increased realized losses on our interest rate swap contracts recorded in our Income Statement (representing net interest expense on our interest rate swap hedges) during the three months ended September 30, 2009 compared to the same period of 2008, as well as, increased interest expense on our credit facilities resulting from the increased average indebtedness in 2009 and increased margins over LIBOR on which our indebtedness is subject to, following our agreements with our lenders to temporarily waive certain covenant breaches as of December 31, 2008 and June 30, 2009, and up until October 1, 2010.

Furthermore, in September, Zim Integrated Shipping Services Ltd. reduced, unilaterally, all of its long-term charterhire payments to ship-owners by 35% commencing September 1, 2009. As a result, we did not recognize $1.4 million of revenue in the third quarter of 2009. Last week, we agreed with Zim the revisions to charterparties we have in place for six of our vessels in operation, which reflect significantly improved terms compared to the initial unilateral imposed reductions in payments and the revisions keep the original charter terms in place with deferred, interest bearing payment terms. Zim is not a charterer of any of our newbuilding containerships.

Operating Revenue

Operating revenue increased 4.5%, or $3.4 million, to $79.8 million in the three months ended September 30, 2009, from $76.4 million in the three months ended September 30, 2008. The increase was primarily attributable to the addition of five vessels to our fleet, as follows:

Vessel Name               Vessel Size (TEU)    Date Delivered
                          ------------------ ------------------
Zim Kingston                     4,253       November 3, 2008
Zim Monaco                       4,253       January 2, 2009
Zim Dalian                       4,253       March 31, 2009
Zim Luanda                       4,253       June 26, 2009
CMA CGM Moliere                  6,500       September 28, 2009

These additions to our fleet contributed revenues of $7.4 million during the three months ended September 30, 2009. These revenues were offset in part by the sale of two 3,101 TEU containerships, the Asia Express and the Sederberg, on October 26, 2008 and December 10, 2008, respectively, that contributed revenues of $2.8 million for the three months ended September 30, 2008 compared to no revenues in the three months ended September 30, 2009. Moreover, two 2,200 TEU containerships, the Zim Rio Grande and the Zim Sao Paolo, which were added to our fleet on July 4, 2008 and September 22, 2008 contributed incremental revenues of $1.6 million during the three months ended September 30, 2009 compared to the same period of 2008.

We also had a further decrease in revenues of $2.8 million during the three months ended September 30, 2009, mainly attributable to the re-chartering of two of our vessels at reduced charter rates.

Vessel Operating Expenses

Vessel operating expenses increased 1.3%, or $0.3 million, to $23.1 million in the three months ended September 30, 2009, from $22.8 million in the three months ended September 30, 2008. The increase was due to the increase in the average number of vessels in our fleet during the three months ended September 30, 2009 compared to the same period of 2008.

This overall increase was offset in part by the lower average daily operating cost per vessel of $6,122 for the three months ended September 30, 2009 compared to $6,502 for the three months ended September 30, 2008.

Depreciation & Amortization

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

Depreciation

Depreciation expense increased 19.2%, or $2.5 million, to $15.5 million in the three months ended September 30, 2009, from $13.0 million in the three months ended September 30, 2008. The increase in depreciation expense was due to the increased average number of vessels in our fleet during the three months ended September 30, 2009 compared to the same period of 2008.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased 10.0%, or $0.2 million, to $2.2 million in the three months ended September 30, 2009, from $2.0 million in the three months ended September 30, 2008. The increase reflects higher drydocking costs incurred, which were subject to amortization during the three months ended September 30, 2009 as compared to the same period of 2008.

General and Administrative Expenses

General and administrative expenses increased 35.7%, or $1.0 million, to $3.8 million in the three months ended September 30, 2009, from $2.8 million in the same period of 2008. The increase was mainly the result of increased fees of $0.4 million paid to our Manager in the third quarter of 2009 compared to the same period of 2008, due to the increase in the average number of our vessels in our fleet and an increase in the fees paid to our Manager since January 1, 2009. Furthermore, various other general and administrative expenses, were increased by $0.6 million in the third quarter of 2009 compared to the same period of 2008.

Other Operating Expenses

Other Operating Expenses includes Voyage Expenses

Voyage Expenses

Voyage expenses decreased 11.1%, or $0.2 million, to $1.6 million in the three months ended September 30, 2009, from $1.8 million in the three months ended September 30, 2008.

Interest Expense and Interest Income

Interest expense increased by 10.7%, or $0.9 million, to $9.3 million in the three months ended September 30, 2009, from $8.4 million in the three months ended September 30, 2008. The change in interest expense was due to the increase in our average debt by $421.4 million to $2,277.7 million in the quarter ended September 30, 2009, from $1,856.3 million in the quarter ended September 30, 2008, as well as the increased margins over LIBOR on which our indebtedness is subject to, following our agreements with our lenders to waive certain covenant breaches through October 1, 2010. The financing of our extensive newbuilding program resulted in interest capitalization, rather than such interest being recognized as an expense, of $8.5 million for the three months ended September 30, 2009 compared to $8.6 million of capitalized interest for the three months ended September 30, 2008. The weighted average interest rate margin over LIBOR payable under our credit facilities has increased by approximately 1.5% per annum, following our agreements with our lenders to waive certain covenant breaches as of December 31, 2008 and June 30, 2009, and up until October 1, 2010.

Interest income decreased by $1.5 million, to $0.4 million in the three months ended September 30, 2009, from $1.9 million in the three months ended September 30, 2008. The decrease in interest income is attributable to lower interest rates to which our cash balances were subject during the three months ended September 30, 2009 compared to the three months ended September 30, 2008, partially offset by higher average cash balances.

Other income/(expenses), net

Other income/(expenses), net, decreased by $0.7 million, to a gain of $0.1 million in the three months ended September 30, 2009, from a gain of $0.8 million in the same period of 2008. The decrease is mainly attributable to a gain of $0.5 million related to the early termination of forward contracts during the three months ended September 30, 2008.

Other finance costs, net

Other finance cost, net, decreased by $0.1 million, to $0.3 million in the three months ended September 30, 2009, from $0.4 million in the same period of 2008.

(Loss)/gain on fair value of derivatives

(Loss)/gain on fair value of derivatives, increased by $8.1 million, to an expense of $8.2 million in the three months ended September 30, 2009, from an expense of $0.1 million in the same period of 2008. The increase is mainly attributable to realized losses on interest rate swap hedges of $8.5 million recorded in our Income Statement during the three months ended September 30, 2009 compared to $1.6 million in the three months ended September 30, 2008 (representing net interest expense on our interest rate swap hedges following our hedging strategy). In addition, realized losses on cash flow hedges of $10.3 million and $4.0 million in the three months ended September 30, 2009 and 2008, respectively, were deferred in "Accumulated Other Comprehensive Loss," rather than such realized losses being recognized as an expense, and will be reclassified into earnings over the depreciable life of these vessels under construction, which are financed by loans for which their interest rate has been hedged by our interest rate swap contracts.

EBITDA

EBITDA increased by $1.6 million, or 3.2%, to $51.2 million in the three months ended September 30, 2009, from $49.6 million in the three months ended September 30, 2008. A table reconciling EBITDA to net income can be found at the end of this earnings release.

Nine months ended September 30, 2009 compared to the nine months ended September 30, 2008

During the nine months ended September 30, 2009, Danaos had an average of 40.0 containerships as compared to 37.3 containerships for the same period of 2008. During the first nine months of 2009, we took delivery of four vessels, the Zim Monaco on January 2, 2009, the Zim Dalian on March 31, 2009, the Zim Luanda on June 26, 2009 and the CMA CGM Moliere on September 28, 2009.

Our net income on a comparable basis from continuing operations was $52.3 million or $0.96 per share for the nine months ended September 30, 2009 compared to $78.3 million or $1.44 per share for the respective period of 2008, excluding a gain on sale of vessels of $14.9 million recorded during the nine months of 2008. This represents a decrease of 33.2%, or $26.0 million, which is mainly attributable to increased realized losses on our interest rate swaps (representing net interest expense on our interest rate swap hedges) in the nine months ended September 30, 2009 compared to the same period of 2008, as well as, increased interest expense due to higher average indebtedness in 2009 and increased margins over LIBOR on which our indebtedness is subject to, following our agreements with our lenders to waive certain covenant breaches as of December 31, 2008 and June 30, 2009. Our net income on a reported basis from continuing operations was $52.3 million or $0.96 per share for the nine months ended September 30, 2009 compared to $93.2 million or $1.71 per share for the nine months ended September 30, 2008.

Operating Revenue

Operating revenue increased 6.4%, or $14.0 million, to $234.2 million in the nine months ended September 30, 2009, from $220.2 million in the nine months ended September 30, 2008. The increase was primarily attributed to the addition to our fleet of five vessels, as follows:

Vessel Name               Vessel Size (TEU)    Date Delivered
                          ------------------ ------------------
Zim Kingston                     4,253       November 3, 2008
Zim Monaco                       4,253       January 2, 2009
Zim Dalian                       4,253       March 31, 2009
Zim Luanda                       4,253       June 26, 2009
CMA CGM Moliere                  6,500       September 28, 2009

These additions to our fleet contributed revenues of $17.8 million during the nine months ended September 30, 2009. Moreover, three 2,200 TEU containerships, the Hyundai Progress, the Hyundai Highway and the Hyundai Bridge, as well as, two 4,253 TEU containerships, the Zim Rio Grande and the Zim Sao Paolo, which were added to our fleet on February 11, 2008, March 18, 2008 and March 20, 2008, July 4, 2008 and September 22, 2008, contributed incremental revenues of $13.0 million during the nine months ended September 30, 2009 compared to the same period in 2008.

In addition, the Company sold five vessels as follows:

Vessel Name               Vessel Size (TEU)     Date Sold
                          ----------------- -----------------
APL Belgium                      5,506      January 15, 2008
Winterberg                       3,101      January 25, 2008
Maersk Constantia                3,101      May 20, 2008
Asia Express                     3,101      October 26, 2008
Sederberg                        3,101      December 10, 2008

These sales contributed operating revenues of $10.4 million during the nine months ended September 30, 2008 compared to no revenues in the nine months ended September 30, 2009. The balance of $6.4 million is attributable to revenue lost due to off-hire days, as well as, re-chartering of two of our vessels at reduced charter rates.

Vessel Operating Expenses

Vessel operating expenses increased 6.0%, or $3.9 million, to $69.0 million in the nine months ended September 30, 2009, from $65.1 million in the nine months ended September 30, 2008. The increase was due to the increase in the average number of our vessels in our fleet during the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008.

This overall increase was offset in part by the lower average daily operating cost per vessel of $6,312 for the nine months ended September 30, 2009 compared to $6,503 for the nine months ended September 30, 2008.

Depreciation & Amortization

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

Depreciation

Depreciation expense increased 20.2%, or $7.5 million, to $44.7 million in the nine months ended September 30, 2009, from $37.2 million in the nine months ended September 30, 2008. The increase in depreciation expense was due to the increased average number of vessels in our fleet during the nine months ended September 30, 2009, compared to the same period of 2008.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased 17.0%, or $0.9 million, to $6.2 million in the nine months ended September 30, 2009, from $5.3 million in the nine months ended September 30, 2008. The increase reflects higher drydocking costs incurred, which were subject to amortization during the nine months ended September 30, 2009 compared to the same period of 2008.

General and Administrative Expenses

General and administrative expenses increased 20.9%, or $1.8 million, to $10.4 million in the nine months ended September 30, 2009, from $8.6 million in the same period of 2008. The increase was mainly a result of increased fees paid to our Manager in the nine months ended September 30, 2009 compared to the same period of 2008 due to the increase in the average number of our vessels in our fleet and an increase of the fees paid to our manager since January 1, 2009.

Other Operating Expenses

Other Operating Expenses includes Voyage Expenses

Voyage Expenses

Voyage expenses decreased 8.5%, or $0.5 million, to $5.4 million in the nine months ended September 30, 2009, from $5.9 million for the nine months ended September 30, 2008.

Interest Expense and Interest Income

Interest expense increased 16.5%, or $3.8 million, to $26.9 million in the nine months ended September 30, 2009, from $23.1 million in the nine months ended September 30, 2008. The change in interest expense was due to the increase in our average debt by $594.8 million to $2,198.0 million in the nine months ended September 30, 2009 from $1,603.2 million in the nine months ended September 30, 2008, as well as, the increased margins over LIBOR on which our indebtedness is subject to, following our agreements with our lenders to waive certain covenant breaches as of December 31, 2008 and June 30, 2009. The financing of our extensive new-building program resulted in interest capitalization, rather than such interest being recognized as an expense, of $25.2 million for the nine months ended September 30, 2009 compared to $26.7 million of capitalized interest for the nine months ended September 30, 2008.

Interest income decreased by $1.8 million, to $2.1 million in the nine months ended September 30, 2009, from $3.9 million in the nine months ended September 30, 2008. The decrease in interest income is mainly attributed to lower interest rates on which our cash balances were subject to, partially offset by higher average bank deposits during the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008.

Other income/(expenses), net

Other income/(expenses), net, decreased by $1.6 million, to an expense of $0.9 million in the nine months ended September 30, 2009, from a gain of $0.7 million in the same period of 2008. The decrease is mainly attributable to foreign currency revaluations of $1.4 million recorded during the nine months ended September 30, 2009.

Other finance costs, net

Other finance cost, net, decreased by $0.1 million, to $1.5 million in the nine months ended September 30, 2009, from $1.6 million in the same period of 2008.

(Loss)/gain on fair value of derivatives

(Loss)/gain on fair value of derivatives, decreased by $19.6 million, to an expense of $19.0 million in the nine months ended September 30, 2009, from a gain of $0.6 million in the same period of 2008. The increase is mainly attributable to realized losses on interest rate swap hedges of $20.4 million recorded in our Income Statement during the nine months ended September 30, 2009 compared to $2.0 million in the nine months ended September 30, 2008 (representing net interest expense on our interest rate swap hedges following our hedging strategy). In addition, realized losses on cash flow hedges of $25.1 million and $8.7 million in the nine months ended September 30, 2009 and 2008, respectively, were deferred in "Accumulated Other Comprehensive Loss," rather than such realized losses being recognized as an expense, and will be reclassified into earnings over the depreciable life of these vessels under construction, which are financed by loans for which their interest rate has been hedged by our interest rate swap contracts.

EBITDA

EBITDA on a comparable basis from continuing operations increased by $7.5 million, or 5.4%, to $146.9 million in the nine months ended September 30, 2009, from $139.4 million in the nine months ended September 30, 2008, excluding a gain on sale of vessels of $14.9 million recorded during the first nine months of 2008. EBITDA on a reported basis from continuing operations decreased by $7.5 million, or 4.9%, to $146.9 million in the nine months ended September 30, 2009, from $154.4 million in the nine months ended September 30, 2008. A table reconciling EBITDA to net income can be found at the end of this earnings release.

Fair value of financial instruments

As of December 31, 2008, the low prevailing interest rates led to significant declines in the fair value of our interest rate swaps accounted for such cash flow hedges. As of September 30, 2009, prevailing interest rates increased from such historical low levels resulting in an unrealized gain of $114.3 million, which was recorded in "Accumulated Other Comprehensive Loss" and increased our "Total Shareholders' Equity."

Conference Call and Webcast

On Thursday, November 12, 2009 at 9:30 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 November 19, 2009 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#. Audio webcast: 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 42 containerships aggregating 172,433 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Danaos is the largest US listed containership company based on fleet size. Furthermore, the company has a contracted fleet of 27 additional containerships aggregating 211,450 TEU with scheduled deliveries up to the second quarter of 2012. The company's shares trade on the New York Stock Exchange under the symbol "DAC."

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements within the meaning of the 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 37 off-hire days in total in the third quarter of 2009. 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.


Vessel Utilization         Fourth     First    Second    Third
(No. of Days)              Quarter   Quarter   Quarter   Quarter
                            2008      2009      2009      2009      Total
                          --------  --------  --------  --------  --------
Ownership Days               3,560     3,510     3,645     3,775    14,490
Less Off-hire Days:
Scheduled Off-hire Days        (29)     (125)      (27)      (29)     (210)
Other Off-hire Days            (23)       (4)       (4)       (8)      (39)
                          --------  --------  --------  --------  --------
Operating Days               3,508     3,381     3,614     3,738    14,241
                          ========  ========  ========  ========  ========
Vessel Utilization            98.5%     96.3%     99.1%     99.0%     98.3%


Revenue - Impact          Fourth     First    Second    Third
 of Off-hire              Quarter   Quarter   Quarter   Quarter
(in '000s of US Dollars)   2008      2009      2009      2009      Total
                          --------  --------  --------  --------  --------
100% Fleet Utilization    $ 79,866  $ 77,931  $ 79,229  $ 80,694  $317,720
Less Off-hire Days:
Scheduled Off-hire Days       (563)   (2,512)       (6)     (721)   (3,802)
Other Off-hire Days           (600)     (167)      (95)     (181)   (1,043)
                          --------  --------  --------  --------  --------

Actual Revenue Earned     $ 78,703  $ 75,252  $ 79,128  $ 79,792  $312,875
                          ========  ========  ========  ========  ========


Fleet List

The following table describes in detail our fleet deployment profile as of November 11, 2009.

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

CSCL Le Havre                   9,580       2006 September 2018
CSCL Pusan                      9,580       2006      July 2018
CSCL America(2)                 8,468       2004 September 2016
CSCL Europe                     8,468       2004      June 2016
CMA CGM Moliere(3)              6,500       2009    August 2021
MSC Marathon (4)                4,814       1991 September 2011
Maersk Messologi                4,814       1991 September 2011
Maersk Mytilini                 4,814       1991 September 2011
Hyundai Commodore (5)           4,651       1992     March 2011
Hyundai Duke                    4,651       1992  February 2011
Hyundai Federal (6)             4,651       1994 September 2012
YM Colombo                      4,300       2004     March 2019
YM Singapore                    4,300       2004   October 2019
YM Seattle                      4,253       2007      July 2019
YM Vancouver                    4,253       2007 September 2019
Bunga Raya Tiga (7)             4,253       2004     March 2010
Bunga Raya Tujuh (8)            4,253       2004  February 2011
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
Al Rayyan                       3,908       1989   January 2011
YM Yantian                      3,908       1989      July 2011
YM Milano                       3,129       1988       May 2011
CMA CGM Lotus                   3,098       1988      July 2010
CMA CGM Vanille                 3,045       1986      July 2010
CMA CGM Passiflore              3,039       1986       May 2010
CMA CGM Elbe                    2,917       1991      June 2010
CMA CGM Kalamata                2,917       1991      June 2010
CMA CGM Komodo                  2,917       1991      June 2010
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
Hanjin Montreal (9)             2,130       1984       May 2010
MSC Eagle                       1,704       1978   January 2010

(1) Earliest date charters could expire. Some charters include options to extend their term.

(2) On August 21, 2009, the MSC Baltic was renamed to CSCL America at the request of the charterer of this vessel.

(3) Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.

(4) On August 22, 2008, the Maersk Marathon was renamed to MSC Marathon at the request of the charterer of this vessel.

(5) On April 2, 2009, the MOL Affinity was renamed to Hyundai Commodore at the request of the charterer of this vessel.

(6) On May 12, 2009, the APL Confidence was renamed to Hyundai Federal at the request of the charterer of this vessel.

(7) On April 29, 2009, the Derby was renamed to Bunga Raya Tiga at the request of the charterer of this vessel.

(8) On October 12, 2009, the Maersk Deva was renamed to Bunga Raya Tujuh at the request of the charterer of this vessel.

(9) On May 14, 2009, the Montreal Senator was renamed to Hanjin Montreal at the request of the charterer of this vessel.


New Deliveries

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

Vessel Name          Vessel Size      Expected     Time Charter
                        (TEU)        Delivery(2)       Term
                     ------------ ---------------- ------------

HNS4002(1) (2)              6,500 4th Quarter 2009     12 years
HNS4003(1) (2)              6,500 4th Quarter 2009     12 years
HN N-219(2)                 3,400 4th Quarter 2009     10 years
HNS4004(1) (2)              6,500 1st Quarter 2010     12 years
HNS4005(1) (2)              6,500 1st Quarter 2010     12 years
HN N-214(2)                 6,500 1st Quarter 2010     18 years
HN N-215(2)                 6,500 1st Quarter 2010     18 years
HN N-220(2)                 3,400 2nd Quarter 2010     10 years
HN N-216(2)                 6,500 2nd Quarter 2010     15 years
HN N-217(2)                 6,500 3rd Quarter 2010     15 years
HN N-221(2)                 3,400 3rd Quarter 2010     10 years
HN N-218(2)                 6,500 4th Quarter 2010     15 years
HN N-222(2)                 3,400 4th Quarter 2010     10 years
HN N-223(2)                 3,400 4th Quarter 2010     10 years
Hull No S-461(2)           10,100 1st Quarter 2011     12 years
Hull No S-462(2)           10,100 1st Quarter 2011     12 years
HN Z00001(2)                8,530 1st Quarter 2011     12 years
Hull No S-463(2)           10,100 2nd Quarter 2011     12 years
HN Z00002(2)                8,530 2nd Quarter 2011     12 years
HN Z00003(2)                8,530 2nd Quarter 2011     12 years
HN Z00004(2)                8,530 2nd Quarter 2011     12 years
HN H 1022A(2)               8,530 3rd Quarter 2011     12 years
Hull No S-456(2)           12,600 1st Quarter 2012     12 years
Hull No S-457(2)           12,600 1st Quarter 2012     12 years
Hull No S-458(2)           12,600 2nd Quarter 2012     12 years
Hull No S-459(2)           12,600 2nd Quarter 2012     12 years
Hull No S-460(2)           12,600 2nd Quarter 2012     12 years

(1) Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.

(2) Delivery date represents most recent update regarding respective event, which in certain cases may change significantly as a result of further negotiations with shipyards.


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

                                  Three      Three      Nine       Nine
                                  months     months     months     months
                                  ended      ended      ended      ended
                                September  September  September  September
                                   30,        30,        30,        30,
                                ---------  ---------  ---------  ---------
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

OPERATING REVENUES              $  79,792  $  76,416  $ 234,172  $ 220,202

OPERATING EXPENSES
  Vessel operating expenses       (23,109)   (22,771)   (68,986)   (65,135)
  Depreciation & amortization     (17,691)   (14,992)   (50,917)   (42,484)
  General & administrative         (3,767)    (2,781)   (10,355)    (8,614)
  Gain on sale of vessels              --         --         --     14,928
  Other operating expenses         (1,562)    (1,759)    (5,413)    (6,099)
                                ---------  ---------  ---------  ---------
Income From Operations             33,663     34,113     98,501    112,798
                                ---------  ---------  ---------  ---------

OTHER EARNINGS (EXPENSES)
  Interest income                     368      1,921      2,073      3,861
  Interest expense                 (9,299)    (8,408)   (26,863)   (23,106)
  Other finance cost, net            (318)      (372)    (1,535)    (1,648)
  Other income / (expenses),
   net                                123        822       (936)       740
  (Loss)/gain on fair value of
   derivatives                     (8,165)      (105)   (18,969)       585
                                ---------  ---------  ---------  ---------
Total Other Income (Expenses),
 net                              (17,291)    (6,142)   (46,230)   (19,568)
                                ---------  ---------  ---------  ---------

Net income from continuing
 operations                     $  16,372  $  27,971  $  52,271  $  93,230
                                ---------  ---------  ---------  ---------
Net loss from discontinued
 operations                            --        (38)        --     (1,560)
                                ---------  ---------  ---------  ---------
Net Income                      $  16,372  $  27,933  $  52,271  $  91,670
                                =========  =========  =========  =========

EARNINGS PER SHARE (from
 continuing operations)
Basic and diluted net income
 per share                      $    0.30  $    0.51  $    0.96  $    1.71
                                =========  =========  =========  =========

EARNINGS PER SHARE
Basic and diluted net income
 per share                      $    0.30  $    0.51  $    0.96  $    1.68
                                =========  =========  =========  =========
Basic and diluted weighted
 average number of common
 shares (in thousands of
 shares)                           54,551     54,558     54,549     54,558
                                =========  =========  =========  =========





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

                                                   As of         As of
                                                September 30, December 31,
                                                ------------  ------------
                                                    2009          2008
                                                ------------  ------------
ASSETS                                           (Unaudited)

CURRENT ASSETS
   Cash and cash equivalents                    $    125,373  $    120,720
   Restricted cash, current portion                  144,877       104,401
   Accounts receivable, net                            2,695         1,119
   Other current assets                               19,323        23,954
                                                ------------  ------------
                                                     292,268       250,194
NON-CURRENT ASSETS
   Fixed assets, net                               1,589,999     1,339,645
   Advances for vessels under construction         1,101,759     1,067,825
   Restricted cash, net of current portion            67,041       147,141
   Deferred charges, net                              22,711        16,098
   Fair value of financial instruments                 4,542         6,691
   Other non-current assets                            1,090           870
                                                ------------  ------------
                                                   2,787,142     2,578,270

                                                ------------  ------------
TOTAL ASSETS                                       3,079,410     2,828,464
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Long-term debt, current portion                    65,846        42,219
   Accounts payable, accrued liabilities &
    other current liabilities                         46,647        31,779
   Fair value of financial instruments, current
    portion                                           85,319        48,217
                                                ------------  ------------
                                                     197,812       122,215
LONG-TERM LIABILITIES
   Long-term debt, net of current portion          2,251,716     2,065,459
   Fair value of financial instruments, net of
    current portion                                  263,245       414,668
   Other long-term liabilities                         5,990         7,088
                                                ------------  ------------
                                                   2,520,951     2,487,215

STOCKHOLDERS' EQUITY
   Common stock                                          546           546
   Additional paid-in capital                        288,605       288,615
   Treasury stock                                        (39)          (88)
   Accumulated other comprehensive loss             (385,211)     (474,514)
   Retained earnings                                 456,746       404,475
                                                ------------  ------------
                                                     360,647       219,034

                                                ------------  ------------
Total liabilities and stockholders' equity      $  3,079,410  $  2,828,464
                                                ============  ============





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

                                  Three      Three      Nine       Nine
                                  months     months     months     months
                                  ended      ended      ended      ended
                                September  September  September  September
                                   30,        30,        30,        30,
                                ---------  ---------  ---------  ---------
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Operating Activities:
   Net income                   $  16,372  $  27,933  $  52,271  $  91,670
   Adjustments to reconcile net
    income to net cash provided
    by operating activities:
   Depreciation                    15,522     13,043     44,654     37,168
   Amortization of deferred
    charges                         2,460      2,018      6,859      5,452
   Written off amount of
    deferred charges                   --         --        412        309
   Stock based compensation             7         24         39         47
   Payments for drydocking /
    special survey                 (1,322)    (2,509)    (7,075)    (8,765)
   Change in fair value of
    financial instruments         (10,653)    (5,483)   (26,501)   (12,585)
   Gain on sale of vessels             --         --         --    (14,928)
   Accounts receivable             (1,241)      (227)    (1,576)     1,817
   Other assets, current and
    non-current                       (29)    (2,039)     4,411     (2,669)
   Accounts payable and accrued
    liabilities                    (2,472)    (2,577)     5,104      4,668
   Other liabilities, current
    and non-current                (1,421)      (338)    (1,749)      (968)
                                ---------  ---------  ---------  ---------
Net Cash provided by Operating
 Activities                        17,223     29,845     76,849    101,216
                                ---------  ---------  ---------  ---------

Investing Activities:
   Vessel acquisitions and
    additions including advances      (50)       (45)      (287)   (76,525)
   Vessels under construction    (111,470)  (151,318)  (318,240)  (397,188)
   Proceeds from sale of vessels       --         --         --     69,103
                                ---------  ---------  ---------  ---------
Net Cash used in Investing
 Activities                      (111,520)  (151,363)  (318,527)  (404,610)
                                ---------  ---------  ---------  ---------

Financing Activities:
   Debt draw downs                 57,600    399,760    238,843    715,213
   Debt repayment                  (9,217)    (9,217)   (25,327)   (53,026)
   Dividends paid                      --    (25,369)        --    (76,108)
   Deferred costs                  (3,138)    (1,265)    (6,809)    (2,843)
   Decrease/(increase) in
    restricted cash                17,704   (277,559)    39,624   (276,842)
                                ---------  ---------  ---------  ---------
Net Cash provided by Financing
 Activities                        62,949     86,350    246,331    306,394
                                ---------  ---------  ---------  ---------
Net (Decrease)/Increase in cash
 and cash equivalents             (31,348)   (35,168)     4,653      3,000
Cash and cash equivalents,
 beginning of period              156,721    101,663    120,720     63,495
                                ---------  ---------  ---------  ---------
Cash and cash equivalents, end
 of period                      $ 125,373  $  66,495  $ 125,373  $  66,495
                                =========  =========  =========  =========




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

                                  Three      Three      Nine       Nine
                                  months     months     months     months
                                  ended      ended      ended      ended
                                September  September  September  September
                                   30,        30,        30,        30,
                                ---------  ---------  ---------  ---------
                                   2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net income                      $  16,372  $  27,971  $  52,271  $  93,230
Depreciation                       15,522     13,043     44,654     37,168
Amortization of deferred
drydocking & special survey
costs                               2,169      1,949      6,263      5,316
Interest income                      (368)    (1,921)    (2,073)    (3,861)
Interest expense                    9,299      8,408     26,863     23,106
Fair value of derivatives           8,165        105     18,969       (585)
                                ---------  ---------  ---------  ---------
EBITDA(1) from continuing
 operations                     $  51,159  $  49,555  $ 146,947  $ 154,374
EBITDA(1) from discontinued
 operations                            --        (38)        --     (1,560)
                                ---------  ---------  ---------  ---------
EBITDA(1)                       $  51,159  $  49,517  $ 146,947  $ 152,814
                                =========  =========  =========  =========

(1) EBITDA represents net income before interest income and expense, depreciation, amortization and fair value of derivatives. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or "GAAP." We believe that the presentation of 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 EBITDA is useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that EBITDA is useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of 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.

Net Income and EBITDA on a comparable basis - (Continuing operations)
Unaudited

                                  Three      Three      Nine       Nine
                                  months     months     months     months
                                  ended      ended      ended      ended
                                September  September  September  September
                                   30,        30,        30,        30,
                                ---------- ----------  --------- ---------
                                   2009       2008       2009       2008
                                ---------- ----------  --------- ---------
Net Income                      $   16,372 $   27,971 $   52,271 $  93,230
Gain on sale of vessels                 --         --         --   (14,928)
                                ---------- ---------- ---------- ---------
Net Income on a comparable
 basis                          $   16,372 $   27,971 $   52,271 $  78,302
                                ========== ========== ========== =========
Earnings Per Share on a
 comparable basis               $     0.30 $     0.51 $     0.96 $    1.44
                                ========== ========== ========== =========

EBITDA (1)                      $   51,159 $   49,555 $  146,947 $ 154,374
Gain on sale of vessels                 --         --         --   (14,928)
                                ---------- ---------- ---------- ---------
EBITDA  on a comparable basis   $   51,159 $   49,555 $  146,947 $ 139,446
                                ========== ========== ========== =========

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 Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and the nine months ended September 30, 2009 and 2008. 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.

Contact Information

  • For further information please contact:

    Company Contact:

    Dimitri J. Andritsoyiannis
    Chief Financial Officer
    Danaos Corporation
    Athens, Greece
    Tel.: +30 210 419 6481
    E-Mail: cfo@danaos.com

    Iraklis Prokopakis
    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