SOURCE: Danaos Corporation

November 07, 2006 16:19 ET

Danaos Corporation Reports Third Quarter and Nine Month Results for Period Ended September 30, 2006

ATHENS, GREECE -- (MARKET WIRE) -- November 7, 2006 --Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the third quarter and the nine month period ended September 30, 2006.

Highlights:

--  Reported net earnings of $26.1 million or $0.59 per share and $70.5
    million or $1.59 per share respectively for the third quarter 2006 and nine
    months ended September 30, 2006
--  Operating Revenues of $61.8 million and $176.4 million respectively
    for the third quarter 2006 and nine months ended September 30, 2006
--  EBITDA(1)of $42.8 million and $116.7 million respectively for the
    third quarter 2006 and nine months ended September 30, 2006
--  On September 8, 2006 Danaos took delivery of its 27th container
    vessel, the 9,580 TEU CSCL Pusan, which is under a 12-year charter to China
    Shipping
--  On October 6, 2006, the shares of Danaos commenced trading on the New
    York Stock Exchange under the ticker symbol "DAC"
--  In October 2006, Danaos repaid $200 million under its credit
    facilities
    
Danaos' CEO Dr. John Coustas commented: "On October 6, 2006 we listed of our shares on the New York Stock Exchange. Our initial public offering marks a strategic milestone in the development of our company. The very positive response of the investment community allowed us to successfully price our initial public offering at $21.00 per share representing the mid point of the filing range and raising approximately $215 million.

In the third quarter of 2006 we took delivery of the CSCL Pusan, a 9,580 TEU newbuilding vessel chartered to China Shipping for 12 years. As we prepare to take delivery of its sister vessel later this month, which will represent our 28th vessel in our containership fleet and one out of 15 more new deliveries to follow in the next three years. We shall continue to be in close touch with our shareholders and the broader investment community to keep them informed on the performance of our company and the new growth opportunities as they come along.

In the container market we had positive developments this quarter as we have seen liner companies increasing box rates on the back of strong demand and also all liner company executives planning increases in box rates for next year, which currently points to continued healthy demand for containerships. Demand for the medium and larger size vessels remains healthy. Further, we do not have any vessels up for re-chartering during the 4th quarter."

Three months ended September 30, 2006 compared to the three months ended September 30, 2005

During the quarter ended September 30, 2006, Danaos had an average of 26.3 containerships and 6.0 drybulk carriers in its fleet as opposed to 25.0 containerships and 7.0 drybulk carriers for the same period of 2005. In August 2006, Danaos entered into an agreement to sell its entire fleet of 6 drybulk vessels to an unaffiliated purchaser with deliveries scheduled upon expiration of each charter into early 2007.

Our net income was $26.1 million or $0.59 per share of for the third quarter 2006 compared to net income of $27.1 million for the third quarter of 2005, a decrease of 3.4%.

Operating Revenue

Operating revenue increased 2.5%, or $1.5 million, to $61.8 million in the quarter ended September 30, 2006, from $60.3 million in the quarter ended September 30, 2005. The increase was the result of a $5.4 million increase in revenues generated by escalations in contractual charter rates in accordance with the terms of existing charters for certain of our containerships as well as the additions to our fleet of two vessels, the MOL Confidence, a 4,651 TEU containership, on March 23, 2006 and the CSCL Pusan, a 9,580 TEU vessel on September 8, 2006. This was offset in part by a $3.9 million decrease in revenues generated by our drybulk carriers, reflecting lower rates in the short term charter market in which they operated during the period, coupled with the reduced drybulk fleet size due to the sale of Sofia, which was sold on May 12, 2006.

Vessel Operating Expenses

Vessel operating expenses increased 4.0%, or $0.5 million, to $15.1 million in the quarter ended September 30, 2006, from $14.6 million in the quarter ended September 30, 2005. This increase was due to an increase in lubricant costs per vessel experienced by the overall industry, the enhanced maintenance related to the drydockings in the third quarter of 2006 as well as the increase in the number of vessels in our fleet during the quarter ended September 30, 2006.

Depreciation & Amortization

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

Depreciation

Depreciation expense increased 14.9%, or $1.0 million, to $7.8 million in the quarter ended September 30, 2006, from $6.8 million for the quarter ended September 30, 2005. The increase in depreciation expense was due to the increase in the average number of vessels in our fleet during the quarter ended September 30, 2006.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs expense increased 20.4%, or $0.2 million, to $1.4 million in the quarter ended September 30, 2006, from $1.2 million in quarter ended September 30, 2005. This was attributed to the costs of dry-docking and special surveys conducted for three of our vessels in the quarter ended September 30, 2006 as compared to one of our vessels in 2005.

General and Administrative Expenses

General and administrative expenses increased 25%, or $0.4 million, to $1.8 million in the quarter ended September 30, 2006 from $1.4 million in the same quarter of 2005, reflecting $0.1 million of technical management fees we paid for vessels in our fleet during the quarter ended September 30, 2006 and $0.3 million of directors and officers' remuneration expense which was not applicable in the quarter ended September 30, 2005.

Other Operating Expenses

Other Operating Expenses include Voyage Expenses

Voyage Expenses

Voyage expenses were $1.6 million in the quarter ended September 30, 2006, representing a decrease of $0.2 million, or 2.5%, from $1.8 million in the quarter ended September 30, 2005. Commissions charged in the quarter ended September 30, 2006 amounted to $1.5 million, a decrease of $0.2 million, or 12.5%, compared to $1.7 million in the quarter ended September 30, 2005.

Interest Expense and Interest Income

Interest expense increased $1.5 million, or 23.8%, to $7.9 million in the quarter ended September 30, 2006, from $6.4 million in the quarter ended September 30, 2005. Interest income was $0.4 million for the quarter ended September 30, 2006, a decrease of $1.5 million, from $1.9 million for the quarter ended September 30, 2005. The increase in interest expense was primarily due to the increase in our average indebtedness resulting from our debt refinancing in 2005 coupled with higher interest rates. The decrease in interest income was due to the decreased daily average bank deposits on which we earned interest, offset in part by higher interest rates for deposits.

EBITDA

EBITDA for the quarter ended September 30, 2006 increased $3.3 million, or 8.4%, to $42.8 million in the quarter ended September 30, 2006, from $39.5 million in the quarter ended September 30, 2005.

Nine months ended September 30, 2006 compared to the nine months ended September 30, 2005

During the nine months ended September 30, 2006, we had an average of 25.6 containerships and 6.5 drybulk carriers in our fleet. During the nine months ended September 30, 2005, we had an average of 25.0 containerships and 7.0 drybulk carriers in our fleet. We took delivery of one 4,651 TEU containership on March 23, 2006 and one 9,580 TEU on September 8, 2006 and sold one drybulk carrier on May 12, 2006.

Operating Revenue

Operating revenue decreased 4.5%, or $8.3 million, to $176.4 million in the nine months ended September 30, 2006, from $184.7 million in the nine months ended September 30, 2005. The decrease was a result of a $17.2 million increase in revenues generated by escalations in contractual charter rates in accordance with the terms of existing charters for certain of our containerships as well as the additions of two vessels the MOL Confidence, a 4,651 TEU containership, to our fleet on March 23, 2006 and CSCL Pusan a 9,580 TEU vessel on September 8, 2006 which was offset by $25.5 million decrease in revenue generated by our drybulk carriers, which are deployed on short-term time charters, and the effect of the sale of Sofia a drybulk carrier sold on May 12, 2006.

Vessel Operating Expenses

Vessel operating expenses increased 14.3%, or $5.5 million, to $44.5 million in the nine months ended September 30, 2006, from $39.0 million in the nine months ended September 30, 2005. This increase was due to a general increase in running costs per vessel experienced by the industry, and the increase in the average number of vessels in our fleet during the nine months ended September 30, 2006. This increase was also partly due to the enhanced maintenance related to the increased number of vessels which had drydockings in the first nine months of 2006 as opposed to the same period in 2005, as well as the increase in the number of vessels in our fleet during the quarter ended September 30, 2006

Depreciation & Amortization

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

Depreciation

Depreciation expense increased 8.3%, or $1.7 million, to $22.0 million in the nine months ended September 30, 2006, from $20.3 million for the nine months ended September 30, 2005. The increase in depreciation expense was due to the increase in the average number of vessels in our fleet during the six months ended September 30, 2006.

Amortization of Deferred Drydocking and Special Survey Costs

Amortization of deferred drydocking and special survey costs expense increased 39.5%, or $1.1 million, to $3.9 million in the nine months ended September 30, 2006, from $2.8 million in the nine months ended September 30, 2005. This was due to the costs of drydocking and special surveys conducted for eight of our vessels in the nine months ended September 30, 2006 in comparison with in the nine months ended September 30, 2005 drydocking and special surveys conducted for three of our vessels.

General and Administrative Expenses

General and administrative expenses increased 50.7%, or $1.8 million, to $5.3 million in the nine months ended September 30, 2006 from $3.5 million in the nine months ended September 30, 2005, reflecting $0.8 million of technical management fees we paid in respect of the vessels in our fleet during the nine months ended September 30, 2006 pursuant to our new management agreement, which was not in effect fully during the nine months ended September 30, 2005, and $1.0 million of additional directors and officers' remuneration expense which was not applicable in the nine months ended September 30, 2005.

Gain/(loss) on sale of vessels

Gain/(loss) on sale of vessels of $15.0 million for the nine months ended September 30, 2006 reflects the sale of the Sofia III to a third party drybulk operator for $27.5 million, representing a gain on sale of $15.0 million.

Other Operating Expenses

Other Operating Expenses include Voyage Expenses

Voyage Expenses

Voyage expenses were $4.9 million in the nine months ended September 30, 2006, representing a decrease of $0.3 million, or 5.3%, from $5.2 million in the nine months ended September 30, 2005. Commissions charged in the nine months ended September 30, 2006 amounted to $4.6 million, an increase of $0.2 million, or 4.4%, compared to $4.4 million in the nine months ended September 30, 2005.

Interest Expense and Interest Income

Interest expense increased $6.2 million, or 37.8%, to $22.8 million in the nine months ended September 30, 2006, from $16.5 million in the nine months ended September 30, 2005.

The change in interest expense was primarily due to the increase in interest rates to which our indebtedness, on which we paid interest, was subject and the increase in average indebtedness resulting from our debt refinancing in 2005, which impacted the full nine months ended September 30, 2006 while it only impacted part of the nine months ended September 30, 2005.

Interest income was $2.5 million for the nine months ended September 30, 2006, a decrease of $2.7 million, from $5.2 million for the nine months ended September 30, 2005.

The decrease in interest income was due to the decreased daily average bank deposits on which we earned interest, offset in part by higher interest rates.

Other income/(expense)

Other expense, net of $(15.3) million for the nine months ended September 30, 2006 included a non recurring expense of approximately $(13) million related to the expected increase in the put option price we expect to pay under the leasing arrangements for the CSCL Europe, the CSCL America, the Maersk Derby, the Vancouver Express, the CSCL Pusan and the HN 1561, if the put option is exercised 6-1/2 years into the lease terms as a result of a change in the United Kingdom tax leasing legislation enacted in 2006.

loss on derivatives

Gain (loss) on derivatives decreased $9.1 million to $(6.6) million in the nine months ended September 30, 2006, from $2.5 million in the nine months ended September 30, 2005. This decrease is a result of our interest rate swaps and the change in the fair value of foreign exchange forward transactions related to our leasing arrangements in respect to the CSCL Europe, the CSCL America, the Maersk Derby, the Vancouver Express, the CSCL Pusan and the HN 1561. Since the end of the second quarter of 2006, pursuant to the adoption of a formal hedge accounting policy we expect such fluctuations to be minimal in the future.

EBITDA

EBITDA for the nine months ended September 30, 2006 decreased $17.3 million, or 13.0%, to $116.7 million in the quarter ended September 30, 2006, from $134.0 million in the quarter ended September 30, 2005.

Dividend Payment

We intend to pay quarterly dividends of $0.44 per share, or $1.76 per share, per year. We expect to pay our first dividend in February 2007.

Recent News

On October 5, 2006, Danaos successfully priced its initial public offering of 10,250,000 shares of common stock at $21.00 per share representing the mid point of the filing range and raising approximately $198.2 million net of underwriting discounts and commissions and the estimated offering expenses. Merrill Lynch & Co. and Citigroup Corporate and Investment Banking served as joint book-running managers of the offering. Dahlman Rose & Company, Jefferies & Company, Fortis Securities LLC and Nomura International served as co-managers.

On October 18, 2006, the company paid down debt of $100 million under its credit facility with The Royal Bank of Scotland and on October 31, 2006, the company paid down debt of $100 million under its credit facility with Aegean Baltic Bank/HSH Nordbank in compliance to the disclosure in its prospectus about the use of the proceeds from its initial public offering.

Conference Call and Webcast

On Wednesday, November 8, 2006 at 11:00 a.m. EST, the company's management will host a conference call to discuss the results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (from the US), 0800 953 0329 (from the UK) or +44 (0) 1452 542 301 (from outside the U.S.). Please quote "Danaos".

In case of any problem with the above numbers, please dial 1 866 869 2352 (from the US), 800 694 1449 (from the UK) or +44 (0) 1452 560 304 (from outside the US). Quote "Danaos".

A telephonic replay of the conference call will be available until November 16, 2006 by dialing 1866 247 4222 (from the US), 0800 953 1533 (from the UK) or +44 1452 550 000 (from outside the US). 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. Its current fleet of 27 containerships aggregating 116,115 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Danaos is the largest U.S.-listed containership company based on fleet size and market capitalization. Furthermore, the company has contracted for 16 additional containerships aggregating 84,704 with scheduled deliveries up to the end of 2009. The company's shares trade on the New York Stock Exchange under the symbol "DAC".

Forward-Looking Statement

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 charterhire rates and vessel values, 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, 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

(1) EBITDA is a NON-GAAP financial measure. Please see below for the reconciliation of EBITDA to Net Income.

Appendix

Fleet Utilization

Danaos had 49 off-hire days due to scheduled dry-docking & special survey operations and 2 unscheduled off-hire days in the third quarter. The following tables summarize vessel utilization and the impact of the off-hire days relating to the last three quarters including this quarter.

                                  First      Second      Third
                                 Quarter     Quarter    Quarter
                                   2006       2006       2006     YTD 2006
                                ---------  ---------  ---------  ---------
                                  No. of      No. of    No. of     No. of
Vessel utilization                Days         Days      Days       Days
                                ---------  ---------  ---------  ---------
Ownership days                      2,889      2,953      2,967      8,809
Less Off-hire Days:
      Scheduled Dry-docking           (74)                  (49)      (123)
      Other Off-hire Days              (2)        (1)        (2)        (5)
Operating Days                      2,813      2,953      2,915      8,681
                                ---------  ---------  ---------  ---------
Vessel Utilization                   97.4%     100.0%      98.2%      98.5%


                                  First      Second      Third
                                 Quarter     Quarter    Quarter
                                   2006       2006       2006     YTD 2006
Revenue - Impact of Off-hire    ---------  ---------  ---------  ---------
(in '000s of US dollars)         Revenue    Revenue    Revenue    Revenue
                                ---------  ---------  ---------  ---------
100% fleet utilization          $  56,416  $  60,034  $  62,940  $ 179,390
Less Off-hire:
      Scheduled Dry-docking        (1,821)               (1,066)    (2,886)
      Other Off- hire Days            (59)       (35)       (48)      (143)
                                ---------  ---------  ---------  ---------
Actual Revenue Earned           $  54,536  $  59,999  $  61,826  $ 176,361
Fleet List

The following table describes in detail our fleet deployment and current employment profile as of November 3, 2006.

                  Vessel
                   Size  Year   Charter    Expiration of
Vessel Name       (TEU)  Built  Term(1)     Charter(1)        Charterer
-----------       ------ ------ --------- ---------------- ----------------
Containerships
CSCL Pusan         9,580   2006  12 years   September 2018   China Shipping
CSCL America       8,468   2004  12 years    November 2016   China Shipping
CSCL Europe        8,468   2004  12 years      August 2016   China Shipping
APL Belgium        5,506   2002   6 years     January 2008          APL-NOL
APL England        5,506   2001   6 years    February 2007          APL-NOL
APL Holland        5,506   2001   6 years        July 2007          APL-NOL
APL Scotland       5,506   2001   6 years        June 2007          APL-NOL
Hyundai Commodore  4,651   1992   8 years         May 2011          Hyundai
Hyundai Duke       4,651   1992   8 years       April 2011          Hyundai
MOL Confidence     4,651   1994 6.5 years    November 2012          Hyundai
Maersk Derby       4,253   2004   5 years       April 2009           Maersk
Vancouver Express  4,253   2004   5 years       March 2009           Maersk
Norasia Hamburg    3,908   1989   5 years    February 2007            COSCO
YM Yantian         3,908   1989   8 years   September 2011        Yang Ming
YM Milano          3,129   1988   3 years    January  2007        Yang Ming
Victory I          3,098   1988   3 years        July 2007          Norasia
Independence       3,045   1986   3 years        June 2007          Wan Hai
Henry              3,039   1986   3 years         May 2007          Wan Hai
CMA CGM Elbe       2,917   1991   5 years      August 2010          CMA-CGM
CMA CGM Kalamata   2,917   1991   5 years      August 2010          CMA-CGM
CMA CGM  Komodo    2,917   1991   5 years      August 2010          CMA-CGM
Pacific Bridge     2,130   1984   3 years       March 2008      Hapag-Lloyd
Eagle Express      1,704   1978 2.5 years     October 2007      Hapag-Lloyd
Bareboat
 Containerships
Maersk Constantia  3,101   1979 2.0 years       April 2008           Maersk
S.A.  Helderberg   3,101   1977 2.0 years    December 2007           Maersk
S.A.  Sederberg    3,101   1978 2.0 years     January 2008           Maersk
S.A.  Winterberg   3,101   1978 2.0 years       March 2008           Maersk
Drybulk
 Carriers(2)       (DWT)
Dimitris C        43,814   1994  6 months     January 2007       OBC London
Roberto C         45,210   1994  6 months       March 2007     STX Panocean
Maria C           45,205   1994  6 months    February 2007              KLC
MV Achilleas      69,180   1994    1 year       April 2007 Baumarine (pool)
Alexandra I       69,090   1994   2 years     January 2006 Baumarine (pool)
Fivos             69,659   1994    1 year     January 2006          Cargill



(1) Earliest date charters could expire. Most charters include options to
    extend their term.
(2) As noted we have agreed to sell each of the dry bulk carriers to a
    single purchaser upon expiration of the current charter for each
    vessel. Under the leading "Expiration of Charter" we include the
    expected month of delivery of each vessel to its new owner.
New Deliveries

The following table describes the expected additions to our fleet as a result of our new building program as well as two expected second hand acquisition, as of November 3, 2006.

                                               Expiration
                   Vessel    Expected   Time      of
                    Size     Delivery  Charter  Charter
Vessel Name         (TEU)     Date(1)    Term     (1)      Charterer
-----------        -------- ---------- -------- ------ --------------
Newbuildings
HN 1561               9,580  Nov. 2006 12 years   2018 China Shipping
HN 1639               4,253 Sept. 2007 12 years   2019      Yang Ming
HN 1640               4,253  Nov. 2007 12 years   2019      Yang Ming
HN 1670               4,253  July 2008 12 years   2020            Zim
HN 1671               4,253 Sept. 2008 12 years   2020            Zim
HN 1672               4,253  Nov. 2008 12 years   2020            Zim
HN 1673               4,253  Dec. 2008 12 years   2020            Zim
HN 1698               4,253  Mar. 2009 12 years   2021            Zim
HN 1699               4,253  June 2009 12 years   2021            Zim
HN  S4001(2)          6,500 April 2009 12 years   2021        CMA-CGM
HN  S4002(2)          6,500  June 2009 12 years   2021        CMA-CGM
HN  S4003(2)          6,500  Aug. 2009 12 years   2021        CMA-CGM
HN S4004(2)           6,500  Oct. 2009 12 years   2021        CMA-CGM
HN S4005(2)           6,500  Dec. 2009 12 years   2021        CMA-CGM
Secondhand
E.R. Auckland         4,300  Mar. 2007 12 years   2019      Yang Ming
E.R. Wellington       4,300 Sept. 2007 12 years   2019      Yang Ming




(1) Although the expected delivery dates are as set forth in the table
    above, the contracted delivery dates for our contracted vessels are as
    follows: HN 1561-January 31, 2007; HN 1639-September 30, 2007;
    HN 1640-November 30, 2007; HN 1670-July 31, 2008; HN 1671-September 30,
    2008; HN 1672-November 30, 2008; HN 1673-December 31, 2008;
    HN 1698-March 31, 2009; HN 1699- June 30, 2009; E.R. Auckland-March
    2007; E.R. Wellington-September 15, 2007 to October 15, 2007; HN
    S4001-April 30, 2009; HN S4002-June 30, 2009; HN S4003-August 31,
    2009; HN S4004-October 31, 2009; HN S4005-December 31, 2009.
(2) Vessel subject to charterer's option to purchase vessel after first
    eight years of time charter term for $78.0 million.


                      DANAOS CORPORATION
               Interim Statement of Operations
                        (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, 2006   30, 2005   30, 2006   30, 2005
                                ---------  ---------  ---------  ---------
Operating Revenues              $  61,826  $  60,335  $ 176,361  $ 184,733

Operating Expenses:
Vessel operating expenses         (15,132)   (14,559)   (44,538)   (38,982)
Depreciation & amortization        (9,179)    (7,933)   (25,884)   (23,095)
General & administrative           (1,762)    (1,410)    (5,264)    (3,492)
Gain on sale of vessels                 -          -     14,954          -
Other operating expenses           (1,830)    (1,874)    (5,388)    (5,412)
                                ---------  ---------  ---------  ---------
Income from Operations             33,923     34,559    110,241    113,752
                                ---------  ---------  ---------  ---------

Other earnings (expenses):
Interest income                       449      1,902      2,536      5,221
Interest expense                   (7,957)    (6,430)   (22,798)   (16,549)
Other finance income (cost),
 net                                  (98)      (892)     2,395     (5,249)
Other income (expense)                 95       (116)   (15,251)      (100)
Gain (loss) on derivatives           (272)    (1,960)    (6,603)     2,541
                                ---------  ---------  ---------  ---------
                                   (7,783)    (7,496)   (39,721)   (14,136)
                                ---------  ---------  ---------  ---------

Net Income                      $  26,140  $  27,063  $  70,520  $  99,616
                                =========  =========  =========  =========

Earnings per share, basic and
 diluted                        $    0.59  $    0.61  $    1.59  $    2.25
                                =========  =========  =========  =========

Basic and diluted weighted
 average number of shares in
 '000                              44,308     44,308     44,308     44,308



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


                                                   September   December 31,
                                                    30, 2006       2005
                                                  -----------  ------------
Assets
Current Assets:
Cash and cash equivalents                         $    32,750  $     38,000
Restricted cash                                        18,765           724
Accounts receivable                                     1,783        14,107
Other current assets                                   15,452        11,181
                                                  -----------  ------------
                                                       68,750        64,012
Non-Current Assets:
Vessels                                               800,628       654,222
Advances for vessel acquisitions and vessels
 under construction                                   279,759       173,725
Deferred charges, net                                  12,117         7,758
Fair value of financial instruments                         -         1,422
Other assets                                                -        44,619
                                                  -----------  ------------
                                                    1,092,504       881,746

                                                  -----------  ------------
Total Assets                                      $ 1,161,254  $    945,758
                                                  ===========  ============

Liabilities and Stockholders' Equity
Current Liabilities:
Long term debt, current portion                   $   161,194  $     57,521
Accounts payable, accrued liabilities & other
 current liabilities                                   39,558        12,963
                                                  -----------  ------------
                                                      200,752        70,484
Long-Term Liabilities:
Long term debt                                        579,872       609,217
Fair value of financial instruments                     7,952         3,332
Other liabilities                                      39,526             -
                                                  -----------  ------------
                                                      627,350       612,549
Stockholders' Equity
Common Stock                                              443           443
Additional paid-in capital                             90,529        90,529
Other comprehensive income                                (93)            -
Retained earnings                                     242,273       171,753
                                                  -----------  ------------
                                                      333,152       262,725

                                                  -----------  ------------
Total Liabilities and Stockholders' Equity        $ 1,161,254  $    945,758
                                                  ===========  ============



                     DANAOS CORPORATION
              Interim Statement 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, 2006    30, 2005    30, 2006    30, 2005
                            ----------  ----------  ----------  ----------
Cash provided by (used in):
Operating Activities:
Net earnings                $   26,140  $   27,063  $   70,520  $   99,616
Items not involving cash:
Depreciation                     7,809       6,795      22,023      20,327
Amortization of deferred
 charges                         1,370       1,138       3,861       2,768
Change in fair value of
 financial instruments              46       2,164       6,042      (1,747)
Loss (gain) on sale of
 vessels                             -           -     (14,954)          -
Other comprehensive income         (93)          -         (93)          -
Other non-cash items            (2,926)     (1,432)     (6,522)     (4,388)
Change in non-cash working
 capital:
   Accounts receivable              43         658      (2,647)      4,053
   Other current assets         (2,107)      4,933      (4,271)      9,589
   Accounts payable and
    accrued liabilities         21,135       1,049      23,250      (1,878)
   Other current
    liabilities                  1,315       2,987      28,455       1,118
                            ----------  ----------  ----------  ----------
Cash from operating
 activities                     52,732      45,355     125,664     129,458
                            ----------  ----------  ----------  ----------

Investing Activities:
Vessel acquisitions
 including advances                (63)          -     (40,647)    (12,350)
Vessels under construction    (127,299)    (14,017)   (166,182)    (14,038)
Proceeds from sale of
 vessels                             -           -      26,798           -
                            ----------  ----------  ----------  ----------
Cash used in investing
 activities                   (127,362)    (14,017)   (180,031)    (26,388)
                            ----------  ----------  ----------  ----------

Financing Activities:
Debt draw downs                107,704           -     138,079     400,000
Debt repayment                 (12,767)     (8,376)    (69,223)   (319,313)
Dividends on common shares           -    (158,160)          -    (244,593)
Deferred costs                    (420)          -      (1,698)       (791)
Decrease (increase) in
 restricted cash               (18,753)      4,284     (18,041)      5,741
                            ----------  ----------  ----------  ----------
Cash from financing
 activities                     75,764    (162,252)     49,117    (158,956)
                            ----------  ----------  ----------  ----------
Net change in cash and cash
 equivalents                     1,134    (130,914)     (5,250)    (55,886)
Cash and cash equivalents,
 at beginning                   31,616     172,036      38,000      97,008
                            ----------  ----------  ----------  ----------
Cash and cash equivalents,
 end of period              $   32,750  $   41,122  $   32,750  $   41,122
                            ==========  ==========  ==========  ==========

Cash paid for interest           7,319       5,676      22,401      17,044
Non-cash capitalized
 interest on vessels under
 construction                    1,905       1,429       5,472       3,738
Non-cash lease liability
 related to vessel
 acquisition                         -           -      14,416           -



                    DANAOS CORPORATION
            Reconciliation  of Non-GAAP Financial Measures
           (Expressed in thousands of United States dollars)

                                  Three      Three      Nine       Nine
                                  Months     Months     Months     Months
                                  Ended      Ended      Ended      Ended
                                September  September  September  September
                                30, 2006   30, 2005   30, 2006   30, 2005
                                ---------  ---------  ---------  ---------
Net Income                      $  26,140  $  27,063  $  70,520  $  99,616
Depreciation                        7,809      6,795     22,023     20,327
Amortization of deferred
 charges                            1,370      1,138      3,861      2,768
Interest income                      (449)    (1,902)    (2,536)    (5,221)
Interest expense                    7,957      6,430     22,798     16,549
                                ---------  ---------  ---------  ---------
EBITDA(1)                       $  42,827  $  39,524  $ 116,666  $ 134,039
                                =========  =========  =========  =========




(1) EBITDA represents net income before interest, income tax expense,
depreciation and amortization.  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.

Contact Information

  • For further information please contact:

    Company Contact:

    Dimitri 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: nbornozis@capitallink.com