Danaos Corporation Reports Second Quarter and Half Year Results for the Period Ended June 30, 2018

ATHENS, Greece, Sept. 24, 2018 /PRNewswire/ -- Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended June 30, 2018.

Highlights for the Second Quarter and Half Year Ended June 30, 2018:

    --  On August 10, 2018, we consummated the agreement reached with certain of
        our lenders on June 19, 2018 for the refinancing of approximately $2.2
        billion of our debt maturing on December 31, 2018, reducing our debt by
        approximately $551 million, resetting financial and other covenants,
        modifying interest rates and amortization profiles and extending debt
        maturities by approximately five years to December 31, 2023. In
        connection with this refinancing, we issued approximately 99.3 million
        shares of common stock to certain of our lenders. See "Debt
        Refinancing".
    --  Adjusted net income[1] of $29.2 million, or $0.27 per share, for the
        three months ended June 30, 2018 compared to $29.0 million, or $0.26 per
        share, for the three months ended June 30, 2017, an increase of 0.7%.
        Adjusted net income(1) of $57.1 million, or $0.52 per share, for the six
        months ended June 30, 2018 compared to $53.6 million, or $0.49 per
        share, for the six months ended June 30, 2017, an increase of 6.5%.
    --  Operating revenues of $113.5 million for the three months ended June 30,
        2018 compared to $113.9 million for the three months ended June 30,
        2017, a decrease of 0.4%. Operating revenues of $225.3 million for the
        six months ended June 30, 2018 compared to $224.0 million for the six
        months ended June 30, 2017, an increase of 0.6%.
    --  Adjusted EBITDA(1) of $78.3 million for the three months ended June 30,
        2018 compared to $78.1 million for the three months ended June 30, 2017,
        an increase of 0.3%. Adjusted EBITDA(1) of $154.9 million for the six
        months ended June 30, 2018 compared to $150.6 million for the six months
        ended June 30, 2017, an increase of 2.9%.
    --  Total contracted operating revenues were $1.6 billion as of June 30,
        2018, with charters extending through 2028 and remaining average
        contracted charter duration of 5.3 years, weighted by aggregate
        contracted charter hire.
    --  Charter coverage of 87% for the next 12 months based on current
        operating revenues and 77% in terms of contracted operating days.


                                                                                                      
            
              Three and Six Months Ended June 30, 2018

                                                                                                            
            
              Financial Summary - Unaudited

                                                                          
            
              (
              Expressed in thousands of United States dollars, except per share amounts
              )




                                                                                                
            
              Three months                 
            
              Three months               
            
              Six months           
       
             Six months
                                                                                                              ended                                            ended                                         ended                               ended


                                                                                                  
            
              June 30,                     
            
              June 30,                  
            
              June 30,              
       
             June 30,

                                                                                                                                                                                                                                                               ---

                                                                                                                              2018                                              2017                                        2018                                 2017






            Operating revenues                                                                                           $113,466                                          $113,888                                    $225,320                             $223,975



            Net income                                                                                                     $5,838                                           $20,229                                     $20,830                              $38,672



            Adjusted net income(1)                                                                                        $29,178                                           $29,037                                     $57,129                              $53,559



            Earnings per share                                                                                              $0.05                                             $0.18                                       $0.19                                $0.35



            Adjusted earnings per share(1)                                                                                  $0.27                                             $0.26                                       $0.52                                $0.49



            Weighted average number of shares (in                                                                         109,799                                           109,825                                     109,799                              109,825
    thousands)



            Adjusted EBITDA(1)                                                                                            $78,294                                           $78,063                                    $154,932                             $150,609







            
              
                (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:

"Following the successful completion of our debt re-financing, the Company's capital structure has been strengthened by a significant debt reduction of approximately $551 million, while financial covenants have been amended and the maturities have been extended by more than 5 years until the end of 2023. We are currently fully compliant with all terms of our debt agreements and the Company is now free to resume its pursuit of growth opportunities with the goal of creating value for its shareholders.

The Company continued to achieve strong financial results in the second quarter of 2018. Adjusted net income of $29.2 million for the quarter was slightly higher when compared to $29 million for the second quarter of 2017.

The charter market, showed signs of improvement in the second quarter, but has softened by about 10 - 15% on average across all segments since June. Larger vessels have recorded slightly higher percentage reductions as they had outpaced the market average. The market is very skeptical of trade developments and the recently announced new tariffs on Chinese imports. At the same time uncertainty discourages new ordering, which is positive for the medium to long-term health of the charter market as liner companies are refraining from making substantial commitments until the outlook becomes clearer. There is interest on the new regulations and the question of scrubbers and we expect this to play out over the next few months.

We are of course largely insulated from the softening charter market since we maintain high charter contract coverage of 87% for the next 12 months based on current operating revenues and 77% in terms of contracted operating days.

Danaos continues to be a leader in the container shipping industry as a result of our intense focus on continuously enhancing our operations and leveraging technical innovation to provide the highest quality service to our customers. Our industry has undergone significant changes during the past few years, and with the improved capital structure contemplated by our comprehensive re-financing agreement, we are well positioned to take advantage of the growth opportunities in the container sector and create value for our shareholders."

Three months ended June 30, 2018 compared to the three months ended June 30, 2017

During the three months ended June 30, 2018 and June 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended June 30, 2018 was 96.1% compared to 97.9% for the three months ended June 30, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin") was 98.8% in the three months ended June 30, 2017.

Our adjusted net income amounted to $29.2 million, or $0.27 per share, for the three months ended June 30, 2018 compared to $29.0 million, or $0.26 per share, for the three months ended June 30, 2017. We have adjusted our net income in the three months ended June 30, 2018 for refinancing related professional fees of $20.1 million and a non-cash amortization charge of $3.2 million for fees related to our 2011 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 increase of $0.2 million in adjusted net income for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 is attributable to a $1.8 million decrease in total operating expenses, a $0.5 million increase in other income and a $0.1 million operating performance improvement on equity investments, which were partially offset by a $0.4 million decrease in operating revenues and a $1.8 million increase in net finance expenses.

On a non-adjusted basis, our net income amounted to $5.8 million, or $0.05 per share, for the three months ended June 30, 2018 compared to net income of $20.2 million, or $0.18 per share, for the three months ended June 30, 2017.

Operating Revenues
Operating revenues decreased by 0.4%, or $0.4 million, to $113.5 million in the three months ended June 30, 2018 from $113.9 million in the three months ended June 30, 2017.

Operating revenues for the three months ended June 30, 2018 reflect:

    --  $3.0 million increase in revenues in the three months ended June 30,
        2018 compared to the three months ended June 30, 2017 due to the
        re-chartering of certain of our vessels at higher rates.
    --  $3.4 million decrease in revenues due to lower fleet utilization of our
        vessels in the three months ended June 30, 2018 compared to the three
        months ended June 30, 2017 (other than three vessels previously
        chartered to Hanjin which were less utilized in the three months ended
        June 30, 2017).

Vessel Operating Expenses
Vessel operating expenses decreased by 1.8%, or $0.5 million, to $26.7 million in the three months ended June 30, 2018 from $27.2 million in the three months ended June 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,762 per day for the three months ended June 30, 2018 compared to $5,734 per day for the three months ended June 30, 2017. Management believes that our daily operating cost ranks as one of the most competitive in the industry.

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

Depreciation
Depreciation expense decreased by 8.6%, or $2.5 million, to $26.7 million in the three months ended June 30, 2018 from $29.2 million in the three months ended June 30, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.7 million, to $2.4 million in the three months ended June 30, 2018 from $1.7 million in the three months ended June 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last six months.

General and Administrative Expenses
General and administrative expenses increased by $0.5 million to $5.8 million in the three months ended June 30, 2018, from $5.3 million in the three months ended June 30, 2017. The increase was mainly due to increased professional fees.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses remained stable, amounting to $3.2 million in the three months ended June 30, 2018 and in the three months ended June 30, 2017.

Interest Expense and Interest Income
Interest expense increased by 7.5%, or $1.6 million, to $23.0 million in the three months ended June 30, 2018 from $21.4 million in the three months ended June 30, 2017. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor between the two periods, which was partially offset by a decrease in our average debt by $152.5 million, to $2,275.1 million in the three months ended June 30, 2018, from $2,427.6 million in the three months ended June 30, 2017 and a $0.3 million decrease in the amortization of deferred finance costs.

As of June 30, 2018, the debt outstanding gross of deferred finance costs was $2,293.9 million compared to $2,425.3 million as of June 30, 2017.

Interest income increased by $0.1 million to $1.4 million in the three months ended June 30, 2018 compared to $1.3 million in the three months ended June 30, 2017.

Other finance costs, net
Other finance costs, net remained stable, amounting to $1.0 million in the three months ended June 30, 2018 and 2017.

Equity income on investments
Equity income on investments amounted to $0.2 million in the three months ended June 30, 2018 compared to $0.1 million in the three months ended June 30, 2017 and relates to the improved operating performance of Gemini Shipholdings Corporation ("Gemini"), in which the Company has a 49% shareholding interest.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in the three months ended June 30, 2018 and 2017.

Other income/(expenses), net
Other income/(expenses), net was $19.5 million in expenses in the three months ended June 30, 2018 compared to $5.1 million in expenses in the three months ended June 30, 2017 mainly due to a $14.9 million increase in refinancing-related professional fees, which were partially offset by a $0.5 million increase in other income.

Adjusted EBITDA
Adjusted EBITDA increased by 0.3%, or $0.2 million, to $78.3 million in the three months ended June 30, 2018 from $78.1 million in the three months ended June 30, 2017. As outlined above, this increase is attributable to a $0.5 million increase in other income and a $0.1 million operating performance improvement on equity investments, which were partially offset by a $0.4 million decrease in operating revenues. Adjusted EBITDA for the three months ended June 30, 2018 is adjusted for refinancing-related professional fees of $20.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Six months ended June 30, 2018 compared to the six months ended June 30, 2017

During the six months ended June 30, 2018 and June 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the six months ended June 30, 2018 was 95.9% compared to 95.3% for the six months ended June 30, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin was 98.5% in the six months ended June 30, 2017.

Our adjusted net income amounted to $57.1 million, or $0.52 per share, for the six months ended June 30, 2018 compared to $53.6 million, or $0.49 per share, for the six months ended June 30, 2017. We have adjusted our net income in the six months ended June 30, 2018 for refinancing related professional fees of $29.7 million and a non-cash amortization charge of $6.6 million for fees related to our 2011 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 increase of $3.5 million in adjusted net income for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is attributable to a $5.7 million decrease in total operating expenses, a $1.3 million increase in operating revenues and a $0.8 million increase in other income, which were partially offset by a $4.1 million increase in net finance expenses and a $0.2 million decrease in the operating performance of our equity investment in Gemini.

On a non-adjusted basis, our net income amounted to $20.8 million, or $0.19 per share, for the six months ended June 30, 2018 compared to net income of $38.7 million, or $0.35 per share, for the six months ended June 30, 2017.

Operating Revenues
Operating revenues increased by 0.6%, or $1.3 million, to $225.3 million in the six months ended June 30, 2018 from $224.0 million in the six months ended June 30, 2017.

Operating revenues for the six months ended June 30, 2018 reflect:

    --  $6.2 million increase in revenues in the six months ended June 30, 2018
        compared to the six months ended June 30, 2017 due to the re-chartering
        of certain of our vessels at higher rates.
    --  $4.9 million decrease in revenues due to lower fleet utilization of our
        vessels in the six months ended June 30, 2018 compared to the six months
        ended June 30, 2017 (other than three vessels previously chartered to
        Hanjin which were less utilized in the six months ended June 30, 2017).

Vessel Operating Expenses
Vessel operating expenses decreased by 2.0%, or $1.1 million, to $53.6 million in the six months ended June 30, 2018 from $54.7 million in the six months ended June 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,806 per day for the six months ended June 30, 2018 compared to $5,745 per day for the six months ended June 30, 2017. Management believes that our daily operating cost ranks as one of the most competitive in the industry.

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

Depreciation
Depreciation expense decreased by 7.2%, or $4.2 million, to $53.8 million in the six months ended June 30, 2018 from $58.0 million in the six months ended June 30, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.9 million, to $4.3 million in the six months ended June 30, 2018 from $3.4 million in the six months ended June 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last six months.

General and Administrative Expenses
General and administrative expenses decreased by $0.5 million, to $11.0 million in the six months ended June 30, 2018, from $11.5 million in the six months ended June 30, 2017.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses decreased by $0.8 million, to $6.3 million in the six months ended June 30, 2018 from $7.1 million in the six months ended June 30, 2017.

Interest Expense and Interest Income
Interest expense increased by 8.5%, or $3.6 million, to $45.9 million in the six months ended June 30, 2018 from $42.3 million in the six months ended June 30, 2017. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor between the two periods, which was partially offset by a decrease in our average debt by $167.5 million, to $2,288.2 million in the six months ended June 30, 2018, from $2,455.6 million in the six months ended June 30, 2017 and a $0.6 million decrease in the amortization of deferred finance costs.

As of June 30, 2018, the debt outstanding gross of deferred finance costs was $2,293.9 million compared to $2,425.3 million as of June 30, 2017.

Interest income remained stable, amounting to $2.8 million in the six months ended June 30, 2018 and 2017.

Other finance costs, net
Other finance costs, net decreased by $0.2 million, to $1.9 million in the six months ended June 30, 2018 from $2.1 million in the six months ended June 30, 2017.

Equity income on investments
Equity income on investments amounted to $0.2 million in the six months ended June 30, 2018 compared to $0.4 million in the six months ended June 30, 2017 and relates to the operating performance of Gemini, in which the Company has a 49% shareholding interest.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $1.8 million in the six months ended June 30, 2018 and 2017.

Other income/(expenses), net
Other income/(expenses), net was $28.9 million in expenses in the six months ended June 30, 2018 compared to $7.6 million in expenses in the six months ended June 30, 2017 mainly due to a $24.5 million increase in refinancing-related professional fees, which were partially offset by a $0.8 million increase in other income and a $2.4 million realized loss on sale of HMM securities in the six months ended June 30, 2017 that did not recur in the 2018 period.

Adjusted EBITDA
Adjusted EBITDA increased by 2.9%, or $4.3 million, to $154.9 million in the six months ended June 30, 2018 from $150.6 million in the six months ended June 30, 2017. As outlined above, this increase is mainly attributable to a $2.3 million decrease in operating expenses, a $1.3 million increase in operating revenues and a $0.8 million increase in other income, which were partially offset by a $0.2 million decrease in operating performance on our equity investments. Adjusted EBITDA for the six months ended June 30, 2018 is adjusted for refinancing-related professional fees of $29.7 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Debt Refinancing
On August 10, 2018, we consummated the agreement reached with certain of our lenders on June 19, 2018 for the refinancing of approximately $2.2 billion of our debt maturing on December 31, 2018, reducing our debt by approximately $551 million. This agreement significantly strengthened our capital structure and financial position through this significant debt reduction, resetting financial and certain other covenants in our credit facilities, modifying interest rates and amortization profiles and extending debt maturities by approximately five years to December 31, 2023. In connection with this debt refinancing, we issued 99,342,271 new shares of Danaos common stock to certain of our lenders, which represent 47.5% of our outstanding common stock after giving effect to this issuance and diluting existing shareholders ratably. For additional information regarding the debt refinancing, see the Company's Reports on Form 6-K filed with the SEC on June 25, 2018 and August 14, 2018.

Conference Call and Webcast
On Tuesday, September 25, 2018 at 9:00 A.M. ET, 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: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until October 2, 2018 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard International Dial In) and using 10124356# as the access code.

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

About Danaos Corporation
Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 59 containerships aggregating 351,614 TEUs, including four vessels owned by Gemini Shipholdings Corporation, a joint venture, ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Our fleet is chartered to many of the world's largest liner companies on fixed-rate charters. Our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. Danaos Corporation's shares trade on the New York Stock Exchange under the symbol "DAC".

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements about the expected benefits of the refinancing and other statements that are forward looking. 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. 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 effects of the refinancing transactions; Danaos' ability to achieve the expected benefits of the refinancing and comply with the terms of its new credit facilities and other agreements entered into in connection with the refinancing; 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 dry-docking, 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 84 unscheduled off-hire days in the three months ended June 30, 2018. The following table summarizes vessel utilization and the impact of the off-hire days on the Company's revenue.



     
                Vessel Utilization (No. of Days)                       First          Second
                                                               Quarter          Quarter


                                                                           2018             2018    Total




     Ownership Days                                                      4,950            5,005    9,955



     Less Off-hire Days:



     Scheduled Off-hire Days                                             (125)           (111)   (236)



     Other Off-hire Days                                                  (91)            (84)   (175)




     
                Operating Days                                         4,734            4,810    9,544




     
                Vessel Utilization                                     95.6%           96.1%   95.9%





     
                Operating Revenues (in '000s of US Dollars)         $111,854         $113,466 $225,320



     
                Average Gross Daily Charter Rate                     $23,628          $23,590  $23,609







     
                Vessel Utilization (No. of Days)                       First          Second
                                                               Quarter          Quarter


                                                                           2017             2017    Total




     Ownership Days                                                      4,950            5,005    9,955



     Less Off-hire Days:



     Scheduled Off-hire Days                                              (15)             (6)    (21)



     Other Off-hire Days                                                 (347)            (99)   (446)




     
                Operating Days                                         4,588            4,900    9,488




     
                Vessel Utilization                                     92.7%           97.9%   95.3%





     
                Operating Revenues (in '000s of US Dollars)         $110,087         $113,888 $223,975



     
                Average Gross Daily Charter Rate                     $23,995          $23,242  $23,606

Fleet List

The following table describes in detail our fleet deployment profile as of September 21, 2018:



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

    ---                                                                                                                                                                       ---


       
         Containerships

    ---




       
         MSC Ambition                                                                                     13,100        2012 
       June 2024



       
         Maersk Exeter                                                                                    13,100        2012 
       June 2024



       
         Maersk Enping                                                                                    13,100        2012 
       May 2024



       
         Hyundai Respect                                                                                  13,100        2012 
       March 2024



       
         Hyundai Honour                                                                                   13,100        2012 
       February 2024



       
         Express Rome                                                                                     10,100        2011 
       January 2019



       
         Express Berlin                                                                                   10,100        2011 
       September 2019



       
         Express Athens                                                                                   10,100        2011 
       January 2019



       
         CSCL Le Havre                                                                                     9,580        2006 
       September 2018



       
         Pusan C (ex CSCL Pusan)                                                                           9,580        2006 
       October 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



       
         America (ex CSCL America)                                                                         8,468        2004 
       June 2019



       
         Europe                                                                                            8,468        2004 
       January 2019



       
         CMA CGM
                 Moliere                                                                      6,500        2009 
       August 2021



       
         CMA CGM Musset                                                                                    6,500        2010 
       February 2022



       
         CMA CGM Nerval                                                                                    6,500        2010 
       April 2022



       
         CMA CGM Rabelais                                                                                  6,500        2010 
       June 2022



       
         CMA CGM Racine                                                                                    6,500        2010 
       July 2022



       
         YM Mandate                                                                                        6,500        2010 
       January 2028



       
         YM Maturity                                                                                       6,500        2010 
       April 2028



       
         Performance                                                                                       6,402        2002 
       May 2019



       
         Priority                                                                                          6,402        2002 
       December 2018



       
         YM Seattle                                                                                        4,253        2007 
       July 2019



       
         YM Vancouver                                                                                      4,253        2007 
       September 2019



       
         Derby D                                                                                           4,253        2004 
       March 2019



       
         ANL Tongala (ex Deva)                                                                             4,253        2004 
       March 2019



       
         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



       
         Dimitris C                                                                                        3,430        2001 
       June 2019



       
         Express Black Sea                                                                                 3,400        2011 
       November 2018



       
         Express Spain                                                                                     3,400        2011 
       November 2018



       
         Express Argentina                                                                                 3,400        2010 
       May 2019



       
         Express Brazil                                                                                    3,400        2010 
       July 2019



       
         Express France                                                                                    3,400        2010 
       October 2018



       
         Singapore                                                                                         3,314        2004 
       October 2019



       
         Colombo                                                                                           3,314        2004 
       March 2019



       
         MSC Zebra                                                                                         2,602        2001 
       August 2020



       
         Amalia C                                                                                          2,452        1998 
       August 2019



       
         Danae C                                                                                           2,524        2001 
       January 2020



       
         Advance                                                                                           2,200        1997 
       December 2018



       
         Future                                                                                            2,200        1997 
       November 2018



       
         Sprinter                                                                                          2,200        1997 
       October 2018



       
         Stride                                                                                            2,200        1997 
       October 2018



       
         Progress C (ex Hyundai Progress)                                                                  2,200        1998 
       October 2018



       
         Bridge                                                                                            2,200        1998 
       November 2018



       
         Highway                                                                                           2,200        1998 
       November 2018



       
         Vladivostok                                                                                       2,200        1997 
       October 2018





       
         Lodestar (ex NYK Lodestar)(2)                                                                     6,422        2001 
       October 2018



       
         NYK Leo(2)                                                                                        6,422        2002 
       February 2019



       
         Suez Canal(2)                                                                                     5,610        2002 
       November 2018



       
         Genoa?2)                                                                                          5,544        2002 
       July 2019







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



       (2) Vessels acquired by Gemini Shipholdings Corporation, in which Danaos holds a 49% equity interest.



                                                                                                                                     
              
                DANAOS CORPORATION

                                                                                                                   
              
                Condensed Consolidated Statements of Income-Unaudited

                                                                                                        
              
                (Expressed in thousands of United States dollars, except per share amounts)




                                                                                        
              
                Three months                                                    
              
                Three months                                            Six months                        Six months
                                                                                                       ended                                                                                    ended                                                  ended                                ended


                                                                                          
              
                June 30,                                                        
              
                June 30,                                               June 30,                          June 30,



                                                                                                                                                                       2018                                                     2017                                                 2018                           2017






              
                OPERATING REVENUES                                                                                                                     $113,466                                                 $113,888                                             $225,320                       $223,975





              
                OPERATING EXPENSES


                                                       
              Vessel operating expenses                                                                          (26,742)                                                (27,216)                                            (53,591)                      (54,671)


                                                       
              Depreciation & amortization                                                                        (29,106)                                                (30,857)                                            (58,009)                      (61,449)


                                                       
              General & administrative                                                                            (5,777)                                                 (5,340)                                            (10,959)                      (11,469)


                                                       
              Other operating expenses                                                                            (3,186)                                                 (3,216)                                             (6,347)                       (7,055)



              
                Income From Operations                                                                                                                   48,655                                                   47,259                                               96,414                         89,331

                                                                                                                                                                                                                                                                                                                  ---




              
                OTHER INCOME/(EXPENSES)


                                                       
              Interest income                                                                                       1,418                                                    1,344                                                2,793                          2,815


                                                       
              Interest expense                                                                                   (23,020)                                                (21,413)                                            (45,869)                      (42,313)


                                                       
              Other finance expenses                                                                                (961)                                                 (1,040)                                             (1,932)                       (2,087)


                                                       
              Equity income on investments                                                                            210                                                      149                                                  184                            355


                                                       
              Other income/(expenses), net                                                                       (19,543)                                                 (5,149)                                            (28,928)                       (7,597)


                                                       
              Realized loss on derivatives                                                                          (921)                                                   (921)                                             (1,832)                       (1,832)



              
                Total Other Expenses, net                                                                                                              (42,817)                                                (27,030)                                            (75,584)                      (50,659)

                                                                                                                                                                                                                                                                                                                  ---




              
                Net Income                                                                                                                               $5,838                                                  $20,229                                              $20,830                        $38,672

                                                                                                                                                                                                                                                                                                                  ===




              
                EARNINGS PER SHARE



              Basic & diluted earnings per share                                                                                                                     $0.05                                                    $0.18                                                $0.19                          $0.35

                                                                                                                                                                                                                                                                                                                  ===


              Basic & diluted weighted average number of common                                                                                                    109,799                                                  109,825                                              109,799                        109,825
    shares (in thousands of shares)






                                                                                                                                     
              
                Non-GAAP Measures*

                                                                                                              
              
                Reconciliation of Net Income to Adjusted Net Income - Unaudited




                                                                                        
              
                Three months                                                    
              
                Three months                                            Six months                        Six months
                                                                                                       ended                                                                                    ended                                                  ended                                ended


                                                                                          
              
                June 30,                                                        
              
                June 30,                                               June 30,                          June 30,



                                                                                                                                                                       2018                                                     2017                                                 2018                           2017

                                                                                                                                                                                                                                                                                                                  ---


              Net income                                                                                                                                            $5,838                                                  $20,229                                              $20,830                        $38,672



              Amortization of financing fees & finance fees accrued                                                                                                  3,247                                                    3,622                                                6,598                          7,344



              Refinancing professional fees                                                                                                                         20,093                                                    5,186                                               29,701                          5,186



              Loss on sale of securities                                                                                                                                                                                                                                                              2,357




              
                Adjusted Net Income                                                                                                                     $29,178                                                  $29,037                                              $57,129                        $53,559

                                                                                                                                                                                                                                                                                                                  ===


              
                Adjusted Earnings Per Share                                                                                                               $0.27                                                    $0.26                                                $0.52                          $0.49

                                                                                                                                                                                                                                                                                                                  ===


              Weighted average number of shares (in thousands)                                                                                                     109,799                                                  109,825                                              109,799                        109,825




               * The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial
                information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because
                they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's
                performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and six months ended June 30, 2018 and 2017. 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 Consolidated Balance Sheets - Unaudited

                                                                             
              
                (Expressed in thousands of United States dollars)




                                                                                                                                                       
     
       As of                  
       
         As of


                                                                                                                                                           June 30,               
       
       December 31,



                                                                                                                                                                           2018                               2017




     
     ASSETS



     
     CURRENT ASSETS


                                                
      Cash and cash equivalents                                                                                              $72,423                            $66,895


                                                
      Restricted cash                                                                                                          2,812                              2,812


                                                
      Accounts receivable, net                                                                                                15,794                              6,502


                                                
      Other current assets                                                                                                    51,669                             49,790



                                                                                                                                                                        142,698                            125,999




     
     NON-CURRENT ASSETS


                                                
      Fixed assets, net                                                                                                    2,743,897                          2,795,971


                                                
      Deferred charges, net                                                                                                   15,061                              8,962


                                                
      Investments in affiliates                                                                                                6,182                              5,998


                                                
      Other non-current assets                                                                                                58,924                             49,466



                                                                                                                                                                      2,824,064                          2,860,397




     
     TOTAL ASSETS                                                                                                                                                $2,966,762                         $2,986,396






     
     LIABILITIES AND STOCKHOLDERS' EQUITY



     
     CURRENT LIABILITIES


                                                
      Long-term debt, current portion                                                                                       $134,861                         $2,329,601


                                                
      Accounts payable, accrued liabilities & other current liabilities                                                       54,733                             50,238



                                                                                                                                                                        189,594                          2,379,839




     
     LONG-TERM LIABILITIES


                                                
      Long-term debt, net                                                                                                  2,152,957


                                                
      Other long-term liabilities                                                                                             50,335                             57,852



                                                                                                                                                                      2,203,292                             57,852






     
     STOCKHOLDERS' EQUITY


                                                
      Common stock                                                                                                             1,098                              1,098


                                                
      Additional paid-in capital                                                                                             546,898                            546,898


                                                
      Accumulated other comprehensive loss                                                                                 (109,735)                         (114,076)


                                                
      Retained earnings                                                                                                      135,615                            114,785



                                                                                                                                                                        573,876                            548,705




     
     Total liabilities and stockholders' equity                                                                                                                  $2,966,762                         $2,986,396


                                                                                                                                           
             
                DANAOS CORPORATION

                                                                                                                            
              
         Condensed Consolidated Statements of Cash Flows - Unaudited

                                                                                                                                 
           
            (Expressed in thousands of United States dollars)




                                                                                                  
              
                Three months                                                          
            
             Three months                   Six months                    Six months
                                                                                                                  ended                                                                                      ended                          ended                         ended


                                                                                                    
              
                June 30,                                                              
            
             June 30,                      June 30,                      June 30,



                                                                                                                                                                                       2018                                          2017                          2018                            2017




              
                Operating Activities:


                                                     
              Net income                                                                                                             $5,838                                       $20,229                       $20,830                         $38,672


                                                     
              
                Adjustments to reconcile net income to net cash provided
                                                     by operating activities:


                                                     
              Depreciation                                                                                                           26,697                                        29,195                        53,757                          58,046


                                                     
              Amortization of deferred drydocking & special survey costs,                                                             5,656                                         5,284                        10,850                          10,747
                                                     finance cost and other finance fees accrued


                                                     
              Payments for drydocking/special survey                                                                                (3,958)                                        (422)                     (10,351)                        (4,516)


                                                     
              Amortization of deferred realized losses on cash flow                                                                     921                                           921                         1,832                           1,832
                                                     interest rate swaps


                                                     
              Equity income on investments                                                                                            (210)                                        (149)                        (184)                          (355)


                                                     
              Loss on sale of securities                                                                                                                                                                                                       2,357


                                                     
              Accounts receivable                                                                                                   (9,053)                                      (2,486)                      (9,292)                        (3,816)


                                                     
              Other assets, current and non-current                                                                                 (2,116)                                        1,426                       (8,828)                          1,636


                                                     
              Accounts payable and accrued liabilities                                                                                1,457                                           576                         8,093                           2,618


                                                     
              Other liabilities, current and long-term                                                                              (5,229)                                      (8,856)                     (11,115)                       (17,170)



              
                Net Cash provided by Operating Activities                                                                                                                20,003                                        45,718                        55,592                          90,051

                                                                                                                                                                                                                                                                                                 ---




              
                Investing Activities:


                                                     
                 Vessel additions                                                                                                     (967)                                      (1,085)                      (1,683)                        (2,612)


                                                     
                 Net proceeds from sale of securities                                                                                                                              6,236                                                        6,236



              
                Net Cash provided by/(used in) Investing Activities                                                                                                       (967)                                        5,151                       (1,683)                          3,624

                                                                                                                                                                                                                                                                                                 ---




              
                Financing Activities:


                                                     
                 Debt  repayment                                                                                                    (6,780)                                     (49,614)                     (48,381)                      (103,572)



              
                Net Cash used in Financing Activities                                                                                                                   (6,780)                                     (49,614)                     (48,381)                      (103,572)

                                                                                                                                                                                                                                                                                                 ---


              Net Increase/(Decrease) in cash, cash equivalents and                                                                                                                 12,256                                         1,255                         5,528                         (9,897)
    restricted cash



              Cash, cash equivalents and restricted cash, beginning of                                                                                                              62,979                                        65,377                        69,707                          76,529
    period

                                                                                                                                                                                                                                                                                                 ---


              
                Cash, cash equivalents and restricted cash, end of period                                                                                               $75,235                                       $66,632                       $75,235                         $66,632

                                                                                                                                                                                                                                                                                                 ===


                                                                                   
            
                DANAOS CORPORATION

                                                                         
       
           Reconciliation of Net Income to Adjusted EBITDA - Unaudited

                                                                           
       
              (Expressed in thousands of United States dollars)




                                                                                
            
                Three months               
              
              Three months        Six months         Six months
                                                                                              ended                                              ended               ended              ended


                                                                                  
            
                June 30,                   
              
              June 30,           June 30,           June 30,

                                                                                                                                                                                                     ---

                                                                                                              2018                                              2017               2018                2017




              Net income                                                                                   $5,838                                           $20,229            $20,830             $38,672



              Depreciation                                                                                 26,697                                            29,195             53,757              58,046



              Amortization of deferred drydocking& special survey                                           2,409                                             1,662              4,252               3,403
    costs



              Amortization of deferred finance costs and other                                              3,247                                             3,622              6,598               7,344
    finance fees accrued



              Amortization of deferred realized losses on interest rate                                       921                                               921              1,832               1,832
    swaps



              Interest income                                                                             (1,418)                                          (1,344)           (2,793)            (2,815)



              Interest expense                                                                             20,507                                            18,592             40,755              36,584



              Refinancing professional fees                                                                20,093                                             5,186             29,701               5,186



              Loss on sale of securities                                                                        -                                                                                 2,357



              
                Adjusted EBITDA(1)                                                             $78,294                                           $78,063           $154,932            $150,609



               1)               Adjusted EBITDA represents net
                                 income before interest income and
                                 expense, depreciation,
                                 amortization of deferred
                                 drydocking& special survey costs
                                 and deferred finance costs,
                                 amortization of deferred realized
                                 losses on interest rate swaps,
                                 loss on sale of securities and
                                 refinancing professional fees.
                                 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 operating
                                 performance 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. 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

    ---

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SOURCE Danaos Corporation