-- We took delivery of one 3,400 TEU containership in October 2010, and
two more newly built vessels with an aggregate carrying capacity of
13,500 TEU during 2011.
-- Operating revenues of $100.5 million and $359.7 million for the three
months and year ended December 31, 2010, respectively.
-- Adjusted net income(1) of $1.5 million or $0.01 per share and
$27.9 million or $0.37 per share for the three months and year ended
December 31, 2010, respectively.
-- Adjusted EBITDA(1) of $65.0 million and $243.8 million for the three
months and year ended December 31, 2010, respectively.
Three and Twelve Months Ended December 31, 2010
Financial Summary
(Expressed in thousands of United States dollars,
except per share amounts):
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- -----------
2010 2009 2010 2009
---------- ---------- ---------- -----------
(unaudited)
Operating revenues $ 100,485 $ 85,339 $ 359,677 $ 319,511
Net (loss)/income $ (8,889) $ (16,182) $ (102,341) $ 36,089
Adjusted net income(1) $ 1,548 $ 14,759 $ 27,857 $ 65,586
(Losses)/Earnings per share $ (0.08) $ (0.30) $ (1.36) $ 0.66
Adjusted earnings per
share(1) $ 0.01 $ 0.27 $ 0.37 $ 1.20
Weighted average number of
shares (thousands) 108,611 54,551 75,436 54,550
Adjusted EBITDA(1) $ 64,997 $ 56,025 $ 243,849 $ 204,019
(1) Adjusted net income, adjusted earnings per share and adjusted EBITDA
are non-GAAP measures. Refer to the reconciliation of net income/(loss) to
adjusted net income and net income/(loss) to adjusted EBITDA.
Danaos' CEO Dr. John Coustas commented:
We finished the fourth quarter of 2010 with a fleet of 50 containerships.
Since then we have taken delivery of two more ships, which immediately
commenced their long-term charters. We therefore operate today a fleet of
52 large size containerships with an average age (weighted by TEU) of 8.3
years and further expect to take delivery of 13 more vessels for which we
have secured long-term charters at highly accretive rates.
More importantly, the vast majority of our fleet has been re-financed, we
have secured financing for the remaining 13 vessels of our orderbook and we
have extended maturity of our loans until end of 2018, with favourable
terms and covenants. We have further received government approval for a
loan financing three vessels being built in China.
This Agreement paves the way for the continued growth of Danaos and
indicates the trust and support from all our banks to the Company and its
management.
In the fourth quarter of 2010, we recorded revenues of $101 million,
adjusted EBITDA of $65 million and $1.5 million adjusted net income,
adjusted for certain non-cash charges, as well as costs related to the
execution of our financing plan. The year ended with total revenues of $360
million, adjusted EBITDA of $244 million and adjusted net income of $27.9
million, again, adjusted for certain non-cash charges, other one-off items
and costs related to the execution of our financing plan.
During 2010, the container industry showed strong recovery from 2009 with
liner companies reporting strong profits and continued optimistic outlook.
Demand increased by over 12% while the majority of the idle capacity in
2009 was reactivated to cope with rapidly increasing trading volumes. At
the same time, and with oil prices remaining strong, the slow-steaming
strategies followed by the liner industry will absorb several new ship
deliveries and thereby help maintain the supply-demand balance.
The weakness experienced in the last quarter of 2010 quickly reversed in
2011 and today we are further up from the 2010 highs. As values move up
driven by demand/supply disparities there seems to be a decreasing number
of willing sellers, especially for quality tonnage and larger vessels.
Adding to that, the global order-book has decreased to decade-long low
levels while a number of recently placed orders for new buildings are just
enough to support liner operations with older fleets, which had not
participated in the ordering activity of the last five years.
On the demand side, the 2011 spring and summer seasons are expected to be
strong as recovery in the US and the rest of the world continues. However,
as the expectation for oil prices is to remain high, slow steaming should
not be expected to be abandoned as the asset market becomes tighter and
starts pushing charter rates higher. All this is supportive of expectations
for a continued strong asset and charter market which should benefit the
containerships and allow the industry to continue building healthier
balance sheets.
Three months ended December 31, 2010 compared to the three months ended
December 31, 2009
During the quarter ended December 31, 2010, Danaos had an average of 49.9
containerships compared to 42.0 containerships for the same period in 2009.
During the fourth quarter of 2010, we took delivery of one vessel, the
Hanjin Versailles on October 11, 2010. Our fleet utilization was 98.5% in
the fourth quarter of 2010.
Our adjusted net income was $1.5 million, or $0.01 per share, for the three
months ended December 31, 2010 compared to $14.8 million, or $0.27 per
share, for the three months ended December 31, 2009, adjusted for non-cash
gain in fair value of derivatives of $8.3 million recorded in 2010 compared
to $30.9 million loss recorded in 2009, as well as an expense of $18.7
million for fees related to our Comprehensive Financing Plan. Adjusted net
income for the fourth quarter of 2010 decreased by $13.3 million, compared
to the three months ended December 31, 2009. This decrease is mainly
attributed to increased realized loss on our interest rate swap contracts
and interest expense on our credit facilities recorded in our Statement of
Income during the three months ended December 31, 2010 compared to the same
period of 2009, which was partially offset by increased Income from
Operations. On a non-adjusted basis, our net loss was $8.9 million, or a
loss of $0.08 per share, for the fourth quarter of 2010, compared to net
loss of $16.2 million, or a loss of $0.30 per share, for the fourth quarter
of 2009. Please refer to the Adjusted Net Income reconciliation table,
which appears later in this earnings release.
Operating Revenue
Operating revenue increased 17.8%, or $15.2 million, to $100.5 million in
the three months ended December 31, 2010, from $85.3 million in the three
months ended December 31, 2009. The increase was primarily attributed to
the addition of nine vessels to our fleet, as follows:
Vessel Size
Vessel Name (TEU) Date Delivered
---------------------- ---------------------- ----------------------
CMA CGM Musset 6,500 March 12, 2010
CMA CGM Nerval 6,500 May 17, 2010
YM Mandate 6,500 May 19, 2010
Hanjin Buenos Aires 3,400 May 27, 2010
CMA CGM Rabelais 6,500 July 2, 2010
Hanjin Santos 3,400 July 6, 2010
CMA CGM Racine 6,500 August 16, 2010
YM Maturity 6,500 August 18, 2010
Hanjin Versailles 3,400 October 11, 2010
These additions to our fleet contributed revenues of $23.4 million during
the three months ended December 31, 2010. These revenues were offset in
part by the sale of one 1,704 TEU containership, the MSC Eagle, on January
22, 2010, which had contributed revenues of $1.0 million for the three
months ended December 31, 2009.
We also had a further decrease in revenues of $7.2 million during the three
months ended December 31, 2010, mainly attributed to re-chartering of
certain vessels at reduced charter rates.
Vessel Operating Expenses
Vessel operating expenses increased 16.7%, or $3.9 million, to $27.2
million in the three months ended December 31, 2010, from $23.3 million in
the three months ended December 31, 2009. The increase is mainly attributed
to the increased average number of vessels under time charter in our fleet
during the three months ended December 31, 2010 compared to the same period
of 2009, as well as increased costs of certain vessels which were on
charterers' directed lay-up for 92 days only during the fourth quarter of
2010 compared to 283 days in the same period of 2009.
Although the average number of vessels in our fleet increased during the
three months ended December 31, 2010 compared to the same period of 2009,
the average daily operating cost per vessel (under time charter) was
reduced to $6,310 for the three months ended December 31, 2010, from $6,518
for the three months ended December 31, 2009 (excluding those vessels on
lay-up).
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of
Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense increased 36.8%, or $6.0 million, to $22.3 million in
the three months ended December 31, 2010, from $16.3 million in the three
months ended December 31, 2009. The increase in depreciation expense was
due to the increased average number of vessels in our fleet during the
three months ended December 31, 2010 compared to the same period of 2009.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased
40.0%, or $0.8 million, to $1.2 million in the three months ended December
31, 2010, from $2.0 million in the three months ended December 31, 2009.
The decrease reflects lower drydocking costs amortized during the three
months ended December 31, 2010 compared to the same period of 2009.
General and Administrative Expenses
General and administrative expenses increased by $2.7 million, to $6.9
million in the three months ended December 31, 2010, from $4.2 million in
the same period of 2009. The increase was mainly the result of a non-cash
stock based compensation of the Manager's employees of $1.6 million and
increased fees of $0.8 million to our Manager in the three months ended
December 31, 2010 compared to the same period of 2009, due to the increase
in the average number of vessels in our fleet and an increase in the per
day fee payable to our Manager since January 1, 2010.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $1.2 million, to $3.1 million in the three
months ended December 31, 2010, from $1.9 million in the three months ended
December 31, 2009. The increase was mainly the result of increased various
voyage expenses, such as port, commission and other expenses due to the
increased number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense increased by 18.3%, or $1.7 million, to $11.0 million in
the three months ended December 31, 2010, from $9.3 million in the three
months ended December 31, 2009. The change in interest expense was
partially due to the increase in our average debt by $247.1 million, to
$2,558.5 million in the quarter ended December 31, 2010, from $2,311.4
million in the quarter ended December 31, 2009. In addition, the delivery
of newbuild vessels has resulted in a reduction in the amount of interest
capitalized, rather than such interest being recognized as an expense, by
$3.7 million, to $4.2 million in the three months ended December 31, 2010,
from $7.9 million in the three months ended December 31, 2009.
Interest income decreased by $0.1 million, to $0.3 million in the three
months ended December 31, 2010, from $0.4 million in the three months ended
December 31, 2009. The decrease in interest income is mainly attributed to
lower average cash balances during the three months ended December 31, 2010
compared to the three months ended December 31, 2009.
Other income/(expenses), net
Other income/(expenses), net, reduced by $18.3 million, to a loss of $17.7
million in the three months ended December 31, 2010, from income of $0.6
million in the three months ended December 31, 2009. This was mainly the
result of legal and advisory fees of $18.0 million attributed to fees
related to preparing and structuring the Comprehensive Financing Plan,
which were recorded during the three months ended December 31, 2010.
Other finance costs, net
Other finance costs, net, increased by $0.4 million, to $1.2 million in the
three months ended December 31, 2010, from $0.8 million in the three months
ended December 31, 2009. The increase was mainly the result of fees related
to the Comprehensive Financing Plan of the Company, which were recorded
during the three months ended December 31, 2010.
Loss on fair value of derivatives
Loss on fair value of derivatives, decreased by $25.6 million, to a loss of
$19.0 million in the three months ended December 31, 2010, from a loss of
$44.6 million in the same period of 2009. The decrease is mainly attributed
to non-cash changes in fair value of interest rate swaps of $8.3 million
gain recorded in our Statement of Income in the three months ended December
31, 2010, due to hedge accounting ineffectiveness, compared to $30.9
million loss in the three months ended December 31, 2009, as well as
realized loss on interest rate swap hedges of $27.3 million recorded in our
Statement of Income during the three months ended December 31, 2010, which
is mainly attributed to higher average notional amount of swaps and reduced
LIBOR payable on our credit facilities against LIBOR fixed through such
swaps, compared to $13.7 million loss in the three months ended December
31, 2009.
In addition, realized losses on cash flow hedges of $8.7 million and $11.2
million in the three months ended December 31, 2010 and 2009, respectively,
were deferred in "Accumulated Other Comprehensive Loss", rather than such
realized losses being recognized as expenses, and will be reclassified into
earnings over the depreciable lives of these vessels under construction,
which are financed by loans for which their interest rates have been hedged
by our interest rate swap contracts. The table below provides an analysis
of the items discussed above, and were recorded in the three months ended
December 31, 2010 and 2009:
Three months Three months
ended ended
December 31, December 31,
------------ ------------
2010 2009
------------ ------------
(in millions)
Gain/(loss) of non-cash changes in fair value
of swaps $ 8.3 $ (30.9)
Total realized losses of swaps (36.0) (24.9)
Realized losses of swaps deferred in OCI 8.7 11.2
------------ ------------
Realized losses of swaps expensed in P&L (27.3) (13.7)
------------ ------------
Loss on fair value of derivatives $ (19.0) $ (44.6)
============ ============
Adjusted EBITDA
Adjusted EBITDA increased by $9.0 million, or 16.1%, to $65.0 million in
the three months ended December 31, 2010, from $56.0 million in the three
months ended December 31, 2009, adjusted for non-cash gain in fair value of
derivatives of $8.3 million in the three months ended December 31, 2010
compared to $30.9 million loss in the three months ended December 31, 2009,
realized loss on derivatives of $27.3 million in the three months ended
December 31, 2010 compared to a $13.7 million realized loss in the three
months ended December 31, 2009, as well as non-cash stock based
compensation of $1.6 million and an expense of $18.7 million of fees
related to our Comprehensive Financing Plan recorded in the three months
ended December 31, 2010. A table reconciling Adjusted EBITDA to Net
Income/(Loss) can be found at the end of this earnings release.
Twelve months ended December 31, 2010 compared to the twelve months ended
December 31, 2009
On August 6, 2010, we entered into a commitment letter with our lenders for
the restructuring of our existing debt obligations, and approximately $426
million of new debt financing. The agreed terms, contemplate that, under
our existing bank debt facilities, the amortization and maturities will be
rescheduled, the interest rate margin will be reduced from current levels,
and the financial covenants, events of default, and guarantee and security
packages will be revised. In connection with this arrangement, we had also
agreed to issue to our lenders warrants to purchase an aggregate of 15
million shares of our common stock for an initial exercise price of $6.00
per share (refer to "Recent News" section). We have also reached an
agreement for $203.4 million credit facility with CEXIM for which we are in
the process of finalizing, after having received approvals from all related
government agencies. Furthermore, we issued and sold to several investors,
including our largest stockholder, on August 12, 2010, 54,054,055 shares of
our Common Stock for an aggregate purchase price of $200.0 million in cash.
Following the transaction, the shares issued and outstanding as of December
31, 2010, were 108,610,921. On September 27, 2010, we entered into a $190
million financing facility with Hyundai Samho Heavy Industries ("Hyundai
Samho") in respect of eight of our newbuilding containerships on order from
Hyundai Samho, in the form of delayed payment schedule of a portion of the
final installment for each such newbuilding.
During the twelve months ended December 31, 2010, Danaos had an average of
45.7 containerships compared to 40.5 containerships for the same period of
2009. During 2010, we took delivery of nine vessels, which are all on
long-term charterers, the CMA CGM Musset on March 12, 2010, the CMA CGM
Nerval on May 17, 2010, the YM Mandate on May 19, 2010, the Hanjin Buenos
Aires on May 27, 2010, the CMA CGM Rabelais on July 2, 2010, the Hanjin
Santos on July 6, 2010, the CMA CGM Racine on August 16, 2010, the YM
Maturity on August 18, 2010 and the Hanjin Versailles on October 11, 2010
and we sold the MSC Eagle on January 22, 2010, a vessel over 30 years old.
Our fleet utilization was 98.3% in the twelve months ended December 31,
2010.
Our adjusted net income was $27.9 million, or $0.37 per share, for the
twelve months ended December 31, 2010 compared to $65.6 million, or $1.20
per share, for the twelve months ended December 31, 2009, adjusted for
non-cash changes in fair value of derivatives of a $48.9 million loss
recorded in the twelve months ended December 31, 2010 compared to a $29.5
million loss recorded in the twelve months ended December 31, 2009, as well
as an impairment loss of $71.5 million in relation to the cancellation of
three 6,500 TEU newbuilding containerships, a gain of $12.6 million in
relation to an agreement entered into with the charterer of the three
newbuildings cancelled in consideration for the termination of the
respective charter parties, an expense of $24.3 million for fees related to
our Comprehensive Financing Plan and a gain on sale of vessels of $1.9
million recorded in the twelve months ended December 31, 2010. Adjusted net
income for the twelve months ended December 31, 2010 decreased by 57.5%, or
$37.7 million, compared to the twelve months ended December 31, 2009. This
decrease is mainly attributed to an increase in the realized loss on our
interest rate swap contracts and interest expense on our credit facilities
recorded in our Statement of Income during the twelve months ended December
31, 2010 compared to 2009, which was partially offset by increased Income
from Operations. On a non-adjusted basis, our net loss was $102.3 million,
or a loss of $1.36 per share, for the twelve months ended December 31,
2010, compared to net income of $36.1 million, or $0.66 per share, for the
twelve months ended December 31, 2009. Please refer to the Adjusted Net
Income reconciliation table, which appears later in this earnings release.
Operating Revenue
Operating revenue increased 12.6%, or $40.2 million, to $359.7 million in
the twelve months ended December 31, 2010, from $319.5 million in the
twelve months ended December 31, 2009. The increase was primarily
attributed to the addition to our fleet of nine vessels, as follows:
Vessel Size
Vessel Name (TEU) Date Delivered
---------------------- ---------------------- ----------------------
CMA CGM Musset 6,500 March 12, 2010
CMA CGM Nerval 6,500 May 17, 2010
YM Mandate 6,500 May 19, 2010
Hanjin Buenos Aires 3,400 May 27, 2010
CMA CGM Rabelais 6,500 July 2, 2010
Hanjin Santos 3,400 July 6, 2010
CMA CGM Racine 6,500 August 16, 2010
YM Maturity 6,500 August 18, 2010
Hanjin Versailles 3,400 October 11, 2010
These additions to our fleet contributed revenues of $48.9 million during
the twelve months ended December 31, 2010. Moreover, two 4,253 TEU
containerships, the Zim Dalian and the Zim Luanda, which were added to our
fleet on March 31, 2009 and June 26, 2009, as well as a 6,500 TEU
containership, the CMA CGM Moliere, which was added to our fleet on
September 28, 2009, contributed incremental revenues of $15.5 million
during the twelve months ended December 31, 2010 compared to 2009. These
revenues were offset in part by the sale of one 1,704 TEU containership,
the MSC Eagle, on January 22, 2010, that contributed revenues of $3.8
million for the twelve months ended December 31, 2009 compared to revenues
of $0.1 million in the twelve months ended December 31, 2010.
We also had a further decrease in revenues of $20.5 million during the
twelve months ended December 31, 2010, mainly attributed to re-chartering
of vessels at reduced charter hire, as well as reduced charter hire, in
relation to vessels laid up by our charterers, representing operating
expenses not being incurred during the lay-up period.
Vessel Operating Expenses
Vessel operating expenses decreased 4.3%, or $4.0 million, to $88.3 million
in the twelve months ended December 31, 2010, from $92.3 million in the
twelve months ended December 31, 2009. The reduction is mainly attributed
to reduced costs of certain vessels which were on charterers' directed
lay-up for 1,311 days in aggregate during 2010 compared to 307 days in the
same period of 2009. Although the average number of vessels in our fleet
under time charter increased during the twelve months ended December 31,
2010 compared to the same period of 2009, the average daily operating cost
per vessel (under time charter) was reduced to $5,884 for the twelve months
ended December 31, 2010, from $6,373 for the twelve months ended December
31, 2009 (excluding those vessels on lay-up).
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of
Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense increased 26.4%, or $16.1 million, to $77.0 million in
the twelve months ended December 31, 2010, from $60.9 million in the twelve
months ended December 31, 2009. The increase in depreciation expense was
due to the increased average number of vessels in our fleet during the
twelve months ended December 31, 2010, compared to 2009.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased
10.8%, or $0.9 million, to $7.4 million in the twelve months ended December
31, 2010, from $8.3 million in the twelve months ended December 31, 2009.
The decrease reflects reduced drydocking costs amortized during the twelve
months ended December 31, 2010 compared to 2009.
Impairment Loss
On May 25, 2010, we signed an agreement, which forms part of the overall
Comprehensive Financing Plan, with Hanjin Heavy Industries & Construction
Co. Ltd. to cancel three 6,500 TEU newbuilding containerships, the HN
N-216, the HN N-217 and the HN N-218, initially expected to be delivered in
the first half of 2012, and recorded impairment loss of $71.5 million,
which consisted of cash advances of $64.35 million paid to the shipyard and
$7.16 million of interest capitalized and other predelivery capital
expenditures paid in relation to the construction of the respective
newbuildings.
General and Administrative Expenses
General and administrative expenses increased by $8.8 million, to $23.3
million in the twelve months ended December 31, 2010, from $14.5 million in
the same period of 2009. The increase was mainly the result of legal and
advisory fees of $2.5 million (attributed to fees related to preparing and
structuring the Comprehensive Financing Plan), as well as non-cash stock
based compensation of the Manager's 130 employees of $1.6 million recorded
in 2010 and increased fees of $2.7 million to our Manager in the twelve
months ended December 31, 2010 compared to 2009, due to the increase in the
average number of our vessels in our fleet and an increase in the per day
fee payable to our Manager since January 1, 2010.
Sale of Vessels
On January 22, 2010, we sold and delivered the MSC Eagle. The sale
consideration was $4.6 million. We realized a net gain on this sale of $1.9
million. The MSC Eagle was over 30-years old and was generating revenue
under its time charter, which expired in January 2010.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses.
Voyage Expenses
Voyage expenses increased 8.2%, or $0.6 million, to $7.9 million in the
twelve months ended December 31, 2010, from $7.3 million for the twelve
months ended December 31, 2009. The increase was mainly the result of
increased various voyage expenses, such as port, commission and other
expenses due to the increased number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense increased 13.8%, or $5.0 million, to $41.2 million in the
twelve months ended December 31, 2010, from $36.2 million in the twelve
months ended December 31, 2009. The change in interest expense was
partially due to the increase in our average debt by $179.8 million to
$2,406.4 million in the twelve months ended December 31, 2010, from
$2,226.6 million in the twelve months ended December 31, 2009, as well as
increased margins over LIBOR following our agreements in connection with
covenant waivers obtained during 2009, which was partially offset by the
decrease of LIBOR payable under our credit facilities in the twelve months
ended December 31, 2010 compared to the twelve months ended December 31,
2009. In addition, the delivery of newbuild vessels has resulted in
reduction in the amount of interest capitalized, rather than such interest
being recognized as an expense, by $9.2 million, to $23.9 million in the
twelve months ended December 31, 2010, from $33.1 million in the twelve
months ended December 31, 2009.
Interest income decreased by $1.4 million, to $1.0 million in the twelve
months ended December 31, 2010, from $2.4 million in the twelve months
ended December 31, 2009. The decrease in interest income is attributed to
lower average cash balances, as well as reduced interest rates to which our
cash balances were subject during the twelve months ended December 31, 2010
compared to the twelve months ended December 31, 2009.
Other income/(expenses), net
Other income/(expenses), net, decreased by $4.8 million, to an expense of
$5.1 million in the twelve months ended December 31, 2010, from an expense
of $0.3 million in 2009. The reduction was mainly the result of legal and
advisory fees of $18.0 million (attributed to fees related to preparing and
structuring the Comprehensive Financing Plan), which were partially offset
by income of $12.6 million in relation to an agreement entered into with
the charterer of the three newbuildings cancelled on May 25, 2010 in
consideration for the termination of the respective charter parties,
recorded during the twelve months ended December 31, 2010.
Other finance costs, net
Other finance cost, net, increased by $3.8 million, to $6.1 million in the
twelve months ended December 31, 2010, from $2.3 million in the twelve
months ended December 31, 2009. The increase was the result of $3.8 million
of fees related to the Comprehensive Financing Plan of the Company, which
were recorded during the twelve months ended December 31, 2010.
Loss on fair value of derivatives
Loss on fair value of derivatives, increased by $73.6 million, to a loss of
$137.2 million in the twelve months ended December 31, 2010, from a loss of
$63.6 million in 2009. The increase is mainly attributable to non-cash
changes in fair value of interest rate swaps of $44.7 million loss recorded
in our Statement of Income in the twelve months ended December 31, 2010,
due to hedge accounting ineffectiveness and changes in forecasted debt,
compared to a $29.5 million loss in the twelve months ended December 31,
2009, as well as a non-cash loss of $4.2 million in relation to deferred
realized loss on cash flow hedges for the HN N-216, the HN N-217 and the HN
N-218 following their cancellation being reclassified from "Accumulated
other comprehensive loss" in the consolidated balance sheet to condensed
consolidated statement of income in the twelve months ended December 31,
2010. Furthermore, the increased loss on fair value of derivatives is
attributable to realized loss on interest rate swap hedges of $88.3 million
recorded in our Statement of Income during the twelve months ended December
31, 2010, due to higher average notional amount of swaps and reduced LIBOR
payable on our credit facilities against LIBOR fixed through such swaps,
compared to a $34.1 million loss in the twelve months ended December 31,
2009.
In addition, realized losses on cash flow hedges of $38.5 million and $36.3
million in the twelve months ended December 31, 2010 and 2009,
respectively, were deferred in "Accumulated Other Comprehensive Loss",
rather than such realized losses being recognized as expenses, and will be
reclassified into earnings over the depreciable lives of these vessels
under construction, which are financed by loans for which their interest
rates have been hedged by our interest rate swap contracts. The table below
provides an analysis of the items discussed above, and were recorded in the
twelve months ended December 31, 2010 and 2009:
Twelve Twelve
months ended months ended
December 31, December 31,
------------ ------------
2010 2009
------------ ------------
(in millions)
Gain/(loss) of non-cash changes in fair value
of swaps $ (44.7) $ (29.5)
Total realized losses of swaps (126.8) (70.4)
Realized losses of swaps deferred in OCI 38.5 36.3
------------ ------------
Realized losses of swaps expensed in P&L (88.3) (34.1)
Impairment of deferred realized losses (4.2) --
------------ ------------
Loss on fair value of derivatives $ (137.2) $ (63.6)
============ ============
Adjusted EBITDA
Adjusted EBITDA increased by $39.8 million, or 19.5%, to $243.8 million in
the twelve months ended December 31, 2010, from $204.0 million in the
twelve months ended December 31, 2009, adjusted for a gain of $12.6 million
in relation to an agreement entered into with the charterer of the three
newbuildings cancelled in consideration for the termination of the
respective charter parties, an expense of $24.3 million of fees related to
our Comprehensive Financing Plan, a non-cash stock based compensation of
$1.7 million, a gain on sale of vessel of $1.9 million, impairment loss of
$71.5 million, non-cash changes in fair value of derivatives of $48.9
million loss recorded in the twelve months ended December 31, 2010 compared
to $29.5 million loss recorded in the twelve months ended December 31, 2009
and realized loss on derivatives of $88.3 million recorded in the twelve
months ended December 31, 2010 compared to $34.1 million recorded in the
twelve months ended December 31, 2009. Table reconciling Adjusted EBITDA to
Net Income/(Loss) can be found at the end of this earnings release.
Recent News
On January 26, 2011, the Company took delivery of the newbuilding 3,400 TEU
vessel, the Hanjin Algeciras. The vessel has been deployed on a 10-year
time charter with one of the world's major liner companies.
On March 10, 2011, the Company took delivery of the newbuilding 10,100 TEU
vessel, the Hanjin Germany. The vessel has been deployed on a 12-year time
charter with one of the world's major liner companies.
On March 17, 2011, we are issuing 11.2 million warrants to purchase our
common stock to certain of the banks which are parties to our Comprehensive
Financing Plan. The warrants which will expire in January 2019 have an
initial exercise price of $6.00 per share. The warrants may only be
exercised on a cashless basis, which reduces the dilutive effects to our
common stock. We expect to issue later this year, an additional 3.8 million
warrants, with the same terms to the remaining banks participating in our
Comprehensive Financing Plan. As of March 17, 2011, a total of 108.6
million shares of the company's common stock were outstanding.
About Danaos Corporation
Danaos Corporation is an international owner of containerships, chartering
its vessels to many of the world's largest liner companies. Our current
fleet of 52 containerships aggregating 233,429 TEUs ranks Danaos among the
largest containership charter owners in the world based on total TEU
capacity. Danaos is one of the largest US listed containership companies
based on fleet size. Furthermore, the company has a contracted fleet of 13
additional containerships aggregating 129,250 TEU with scheduled deliveries
up to the second quarter of 2012. The company's shares trade on the New
York Stock Exchange under the symbol "DAC".
Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements
within the meaning of the safeharbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements reflect our current views with respect to
future events and financial performance and may include statements
concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and other statements, which are
other than statements of historical facts. The forward-looking statements
in this release are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without limitation,
management's examination of historical operating trends, data contained in
our records and other data available from third parties. Although Danaos
Corporation believes that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to
predict and are beyond our control, Danaos Corporation cannot assure you
that it will achieve or accomplish these expectations, beliefs or
projections. Important factors that, in our view, could cause actual
results to differ materially from those discussed in the forward-looking
statements include the strength of world economies and currencies, general
market conditions, including changes in charter hire rates and vessel
values, charter counterparty performance, shipyard performance, changes in
demand that may affect attitudes of time charterers to scheduled and
unscheduled drydocking, changes in Danaos Corporation's operating expenses,
including bunker prices, dry-docking and insurance costs, ability to obtain
financing and comply with covenants in our financing arrangements, actions
taken by regulatory authorities, potential liability from pending or future
litigation, domestic and international political conditions, potential
disruption of shipping routes due to accidents and political events or acts
by terrorists.
Risks and uncertainties are further described in reports filed by Danaos
Corporation with the U.S. Securities and Exchange Commission.
Visit our website at www.danaos.com
Appendix
Fleet Utilization
Danaos had 67 off-hire days in total in the fourth quarter of 2010. The
following table summarizes vessel utilization and the impact of the
off-hire days on the company's revenue relating to the last four quarters.
First Second Third Fourth
Vessel Utilization Quarter Quarter Quarter Quarter
(No. of Days) 2010 2010 2010 2010 Total
--------- --------- --------- --------- ---------
Ownership Days 3,732 3,945 4,408 4,590 16,675
Less Off-hire Days:
Scheduled Off-hire
Days (12) -- (138) (41) (191)
Other Off-hire Days (1) (64) -- (26) (91)
--------- --------- --------- --------- ---------
Operating Days 3,719 3,881 4,270 4,523 16,393
========= ========= ========= ========= =========
Vessel Utilization 99.7% 98.4% 96.9% 98.5% 98.3%
Revenue - Impact of First Second Third Fourth
Off-hire (in '000s Quarter Quarter Quarter Quarter
of US Dollars) 2010 2010 2010 2010 Total
--------- --------- --------- --------- ---------
100% Fleet
Utilization $ 80,002 $ 86,009 $ 94,758 $ 101,051 $ 361,820
Less Off-hire Days:
Scheduled Off-hire
Days (328) -- (171) -- (499)
Other Off-hire Days (15) (1,063) -- (566) (1,644)
--------- --------- --------- --------- ---------
Actual Revenue
Earned $ 79,659 $ 84,946 $ 94,587 $ 100,485 $ 359,677
========= ========= ========= ========= =========
Fleet List
The following table describes in detail our fleet deployment profile as of
March 17, 2011.
Vessel Size Expiration of
Vessel Name (TEU) Year Built Charter(1)
---------------- -------------- -------------- --------------------
Containerships
----------------
Hanjin Germany 10,100 2011 December 2022
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
CSCL America(2) 8,468 2004 September 2016
CSCL Europe 8,468 2004 June 2016
CMA CGM Moliere(3) 6,500 2009 August 2021
CMA CGM Musset(3) 6,500 2010 February 2022
CMA CGM Nerval(3) 6,500 2010 April 2022
CMA CGM Rabelais(3) 6,500 2010 June 2022
YM Mandate 6,500 2010 January 2028
CMA CGM Racine(3) 6,500 2010 July 2022
YM Maturity 6,500 2010 April 2028
Marathonas(4) 4,814 1991 September 2011
Maersk Messologi 4,814 1991 September 2011
Maersk Mytilini 4,814 1991 September 2011
Hyundai Commodore(5) 4,651 1992 March 2013
Hyundai Duke 4,651 1992 February 2013
Hyundai Federal(6) 4,651 1994 September 2012
YM Colombo 4,300 2004 March 2019
YM Singapore 4,300 2004 October 2019
YM Seattle 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Bunga Raya Tiga(7) 4,253 2004 February 2014
Deva(8) 4,253 2004 December 2013
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
ZIM Kingston 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
ZIM Dalian 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Al Rayyan(9) 3,908 1989 January 2012
YM Yantian 3,908 1989 July 2011
Hanjin Buenos Aires 3,400 2010 March 2020
Hanjin Santos 3,400 2010 May 2020
Hanjin Versailles 3,400 2010 August 2020
Hanjin Algeciras 3,400 2011 November 2020
SCI Pride(10) 3,129 1988 July 2012
Lotus(11) 3,098 1988 June 2011
Independence(12) 3,045 1986 October 2011
Henry(13) 3,039 1986 July 2011
Jiangsu Dragon(14) 2,917 1991 June 2011
California Dragon(15) 2,917 1991 June 2011
Shenzhen Dragon(16) 2,917 1991 June 2011
Hyundai Advance 2,200 1997 June 2017
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Hyundai Stride 2,200 1997 July 2017
Hyundai Progress 2,200 1998 February 2018
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Hyundai Vladivostok 2,200 1997 May 2017
Hanjin Montreal(17) 2,130 1984 June 2011
(1) Earliest date charters could expire. Some charters include options to
extend their term.
(2) On August 21, 2009, the MSC Baltic was renamed to CSCL America at the
request of the charterer of this vessel.
(3) Vessel subject to charterer's option to purchase vessel after first
eight years of time charter term for $78.0 million.
(4) On January 21, 2010, the MSC Marathon was renamed to Marathonas at the
request of the charterer of this vessel.
(5) On April 2, 2009, the MOL Affinity was renamed to Hyundai Commodore at
the request of the charterer of this vessel.
(6) On May 12, 2009, the APL Confidence was renamed to Hyundai Federal at
the request of the charterer of this vessel.
(7) On April 29, 2009, the Derby was renamed to Bunga Raya Tiga at the
request of the charterer of this vessel.
(8) On October 7, 2010, the Bunga Raya Tujuh was renamed to Deva at the
request of the charterer of this vessel.
(9) On January 31, 2011, the Al Rayan was renamed to Honour at the request
of the charterer of this vessel.
(10) On August 18, 2010, the YM Milano was renamed to SCI Pride at the
request of the charterer of this vessel.
(11) On July 24, 2010, the CMA CGM Lotus was renamed to Lotus at the
request of the charterer of this vessel.
(12) On October 18, 2010, the CMA CGM Vanille was renamed to Independence
at the request of the charterer of this vessel
(13) On May 13, 2010, the CMA CGM Passiflore was renamed to Henry at the
request of the charterer of this vessel.
(14) On July 7, 2010, the CMA CGM Elbe was renamed to Jiangsu Dragon at the
request of the charterer of this vessel.
(15) On July 20, 2010, the CMA CGM Kalamata was renamed to California
Dragon at the request of the charterer of this vessel.
(16) On June 26, 2010, the CMA CGM Komodo was renamed to Shenzhen Dragon at
the request of the charterer of this vessel.
(17) On May 14, 2009, the Montreal Senator was renamed to Hanjin Montreal
at the request of the charterer of this vessel.
New Deliveries
The following table describes the expected additions to our fleet as a
result of our new building containership program.
Vessel Size Expected
Vessel Name (TEU) Delivery(*) Charter Term
--------------- ---------------- ---------------- ----------------
HN N-223 3,400 2nd Quarter 2011 10 years
HN Z00001 8,530 2nd Quarter 2011 12 years
Hull No S-462 10,100 2nd Quarter 2011 12 years
HN Z00002 8,530 3rd Quarter 2011 12 years
HN Z00003 8,530 3rd Quarter 2011 12 years
HN Z00004 8,530 3rd Quarter 2011 12 years
Hull No S-463 10,100 2nd Quarter 2011 12 years
HN H 1022A 8,530 4th Quarter 2011 12 years
Hull No S-456 12,600 1st Quarter 2012 12 years
Hull No S-457 12,600 1st Quarter 2012 12 years
Hull No S-458 12,600 2nd Quarter 2012 12 years
Hull No S-459 12,600 2nd Quarter 2012 12 years
Hull No S-460 12,600 2nd Quarter 2012 12 years
(*) Delivery date represents most recent update regarding respective event,
which in certain cases may change significantly as a result of further
negotiations with shipyards.
DANAOS CORPORATION
Condensed Statements of Income
(Expressed in thousands of United States dollars,
except per share amounts)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- ----------
2010 2009 2010 2009
---------- ---------- ---------- ----------
(Unaudited)
OPERATING REVENUES $ 100,485 $ 85,339 $ 359,677 $ 319,511
OPERATING EXPENSES
Vessel operating expenses (27,222) (23,341) (88,271) (92,327)
Depreciation & amortization (23,485) (18,284) (84,471) (69,201)
General & administrative (6,862) (4,186) (23,255) (14,541)
Gain on sale of vessels -- -- 1,916 --
Impairment loss -- -- (71,509) --
Other operating expenses (3,099) (1,933) (7,928) (7,346)
---------- ---------- ---------- ----------
Income From Operations 39,817 37,595 86,159 136,096
---------- ---------- ---------- ----------
OTHER EARNINGS (EXPENSES)
Interest income 272 355 964 2,428
Interest expense (10,996) (9,345) (41,158) (36,208)
Other finance cost, net (1,234) (755) (6,055) (2,290)
Other income/(expenses),
net (17,723) 600 (5,070) (336)
Loss on fair value of
derivatives (19,025) (44,632) (137,181) (63,601)
---------- ---------- ---------- ----------
Total Other Income
(Expenses), net (48,706) (53,777) (188,500) (100,007)
---------- ---------- ---------- ----------
Net (Loss)/Income $ (8,889) $ (16,182) $ (102,341) $ 36,089
========== ========== ========== ==========
(Losses)/Earnings per Share
Basic and diluted net
(loss)/income per share $ (0.08) $ (0.30) $ (1.36) $ 0.66
========== ========== ========== ==========
Basic and diluted weighted
average number of common
shares (in thousands of
shares) 108,611 54,551 75,436 54,550
========== ========== ========== ==========
Non-GAAP Measures*
Reconciliation of Net Income/(Loss) to Adjusted Net Income - Unaudited
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- ----------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net (Loss)/Income $ (8,889) $ (16,182) $ (102,341) $ 36,089
Loss in fair value of
derivatives 19,025 44,632 137,181 63,601
Realized loss on derivatives (27,277) (13,691) (88,302) (34,104)
Impairment loss -- -- 71,509 --
Gain on contract
termination -- -- (12,600) --
Comprehensive Financing
Plan related fees 18,689 -- 24,326 --
Gain on sale of vessels -- -- (1,916) --
---------- ---------- ---------- ----------
Adjusted Net Income $ 1,548 $ 14,759 $ 27,857 $ 65,586
========== ========== ========== ==========
Adjusted Earnings Per Share $ 0.01 $ 0.27 $ 0.37 $ 1.20
========== ========== ========== ==========
Weighted average number of
shares 108,611 54,551 75,436 54,550
* The Company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However, management
believes that certain non-GAAP financial measures used in managing the
business may provide users of these financial information additional
meaningful comparisons between current results and results in prior
operating periods. Management believes that these non-GAAP financial
measures can provide additional meaningful reflection of underlying trends
of the business because they provide a comparison of historical information
that excludes certain items that impact the overall comparability.
Management also uses these non-GAAP financial measures in making financial,
operating and planning decisions and in evaluating the Company's
performance. See the Table above for supplemental financial data and
corresponding reconciliations to GAAP financial measures for the three and
twelve months ended December 31, 2010 and 2009. Non-GAAP financial measures
should be viewed in addition to, and not as an alternative for, the
Company's reported results prepared in accordance with GAAP.
DANAOS CORPORATION
Condensed Balance Sheets
(Expressed in thousands of United States dollars)
As of As of
December 31, December 31,
------------ ------------
2010 2009
------------ ------------
(Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 229,835 $ 122,050
Restricted cash, current portion 2,907 154,078
Accounts receivable, net 4,112 3,732
Other current assets 29,976 20,644
------------ ------------
266,830 300,504
------------ ------------
NON-CURRENT ASSETS
Fixed assets, net 2,273,483 1,573,759
Advances for vessels under construction 904,421 1,194,088
Restricted cash, net of current portion -- 44,393
Deferred charges, net 24,692 20,583
Fair value of financial instruments 4,465 3,762
Other non-current assets 15,239 5,622
------------ ------------
3,222,300 2,842,207
------------ ------------
TOTAL ASSETS 3,489,130 3,142,711
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion 21,619 2,331,678
Accounts payable, accrued liabilities & other
current liabilities 95,131 86,264
Fair value of financial instruments, current
portion 129,747 100,065
------------ ------------
246,497 2,518,007
------------ ------------
LONG-TERM LIABILITIES
Long term-debt, net of current portion 2,543,907 --
Fair value of financial instruments, net of
current portion 302,162 213,493
Other long-term liabilities 4,152 5,620
------------ ------------
2,850,221 219,113
------------ ------------
STOCKHOLDERS' EQUITY
Common stock 1,086 546
Additional paid-in capital 489,672 288,613
Treasury stock (3) (39)
Accumulated other comprehensive loss (436,566) (324,093)
Retained earnings 338,223 440,564
------------ ------------
392,412 405,591
------------ ------------
Total liabilities and stockholders' equity $ 3,489,130 $ 3,142,711
============ ============
DANAOS CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
(Expressed in thousands of United States dollars)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- ----------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Operating Activities:
Net (loss)/income $ (8,889) $ (16,182) $ (102,341) $ 36,089
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 22,251 16,252 77,045 60,906
Impairment loss -- -- 71,509 --
Amortization of deferred
charges 1,572 2,325 8,766 9,184
Written off amount of
deferred charges -- -- 1,084 412
Stock based compensation 1,625 8 1,685 47
Payments for drydocking/
special survey (571) (184) (3,122) (7,259)
Change in fair value of
financial instruments (16,923) 19,700 10,375 (6,801)
Gain on sale of vessels -- -- (1,916) --
Accounts receivable 107 (1,037) (380) (2,613)
Other assets, current and
non-current (8,991) (5,853) (18,949) (1,442)
Accounts payable and
accrued liabilities 23,506 1,829 32,449 6,933
Other liabilities,
current and non-current 264 (541) 2,587 (2,290)
---------- ---------- ---------- ----------
Net Cash provided by
Operating Activities 13,951 16,317 78,792 93,166
---------- ---------- ---------- ----------
Investing Activities:
Vessel acquisitions
including advances -- (12) -- (299)
Vessels under construction (119,706) (56,681) (589,512) (374,921)
Proceeds from sale of
vessels -- 2,311 1,764 2,311
---------- ---------- ---------- ----------
Net Cash used in Investing
Activities (119,706) (54,382) (587,748) (372,909)
---------- ---------- ---------- ----------
Financing Activities:
Debt draw downs 41,580 28,200 437,399 267,043
Debt repayment (3,842) (6,892) (208,751) (32,219)
Issuance of common stock -- -- 200,000 --
Treasury stock purchased -- -- (50) --
Deferred costs (1,596) (13) (7,421) (6,822)
Decrease in restricted cash 10,808 13,447 195,564 53,071
---------- ---------- ---------- ----------
Net Cash provided by
Financing Activities 46,950 34,742 616,741 281,073
---------- ---------- ---------- ----------
Net (decrease)/increase in
cash and cash equivalents (58,805) (3,323) 107,785 1,330
Cash and cash equivalents,
beginning of period 288,640 125,373 122,050 120,720
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 229,835 $ 122,050 $ 229,835 $ 122,050
========== ========== ========== ==========
Reconciliation of Net Income/(Loss) to Adjusted EBITDA
(Expressed in thousands of United States dollars)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- ----------
2010 2009 2010 2009
---------- ---------- ---------- ----------
(Unaudited)
Net (loss)/income $ (8,889) $ (16,182) $ (102,341) 36,089
Depreciation 22,251 16,252 77,045 60,906
Amortization of deferred
drydocking & special
survey costs 1,234 2,032 7,426 8,295
Amortization of deferred
finance costs and write-offs 338 293 1,340 1,301
Interest income (272) (355) (964) (2,428)
Interest expense 10,996 9,345 41,158 36,208
Impairment loss -- -- 71,509 --
Gain on sale of vessels -- -- (1,916) --
Gain on contract
termination(2) -- -- (12,600) --
Comprehensive Financing
Plan related fees(3) 18,689 -- 24,326 --
Stock based compensation(4) 1,625 8 1,685 47
Realized loss on derivatives 27,277 13,691 88,302 34,104
Non-cash changes in fair
value of derivatives (8,252) 30,941 48,879 29,497
---------- ---------- ---------- ----------
Adjusted EBITDA(5) $ 64,997 $ 56,025 $ 243,849 $ 204,019
========== ========== ========== ==========
(2) Gain on contract termination relates to consideration of $12.6 million
received by the charterer of the three newbuildings cancelled on May 25,
2010 in relation to the termination of the respective charter parties.
(3) Fees related to our Comprehensive Financing Plan, of which $0.7 million
and $3.8 million for the three and twelve months ended December 31, 2010,
respectively, relate to financing fees and were recorded in "Other finance
costs". Furthermore, $18.0 million and $20.5 million for the three and
twelve months ended December 31, 2010, respectively, relate to legal and
other advisory fees recorded in "Other income/(expense)" and "General and
administrative expenses."
(4) Stock based compensation expense was recorded in "General and
administrative expenses."
(5) Adjusted EBITDA represents net income/(loss) before interest income and
expense, depreciation, amortization of deferred drydocking & special survey
costs and deferred finance costs, impairment loss, gain/(loss) on sale of
vessels, non-cash changes in fair value of derivatives, realized
gain/(loss) on derivatives, gain on contract termination, stock based
compensation and other items in relation to the Company's Comprehensive
Financing Plan. However, Adjusted EBITDA is not a recognized measurement
under U.S. generally accepted accounting principles, or "GAAP." We believe
that the presentation of Adjusted EBITDA is useful to investors because it
is frequently used by securities analysts, investors and other interested
parties in the evaluation of companies in our industry. We also believe
that Adjusted EBITDA is useful in evaluating our ability to service
additional debt and make capital expenditures. In addition, we believe that
Adjusted EBITDA is useful in evaluating our operating performance and
liquidity position compared to that of other companies in our industry
because the calculation of Adjusted EBITDA generally eliminates the effects
of financings, income taxes and the accounting effects of capital
expenditures and acquisitions, items which may vary for different companies
for reasons unrelated to overall operating performance and liquidity. In
evaluating Adjusted EBITDA, you should be aware that in the future we may
incur expenses that are the same as or similar to some of the adjustments
in this presentation. Our presentation of Adjusted EBITDA should not be
construed as an inference that our future results will be unaffected by
unusual or non-recurring items.
Note: Items to consider for comparability include gains and charges. Gains
positively impacting net income are reflected as deductions to net income.
Charges negatively impacting net income are reflected as increases to net
income.
The Company reports its financial results in accordance with U.S. generally
accepted accounting principles (GAAP). However, management believes that
certain non-GAAP financial measures used in managing the business may
provide users of these financial information additional meaningful
comparisons between current results and results in prior operating periods.
Management believes that these non-GAAP financial measures can provide
additional meaningful reflection of underlying trends of the business
because they provide a comparison of historical information that excludes
certain items that impact the overall comparability. Management also uses
these non-GAAP financial measures in making financial, operating and
planning decisions and in evaluating the Company's performance. See the
Tables above for supplemental financial data and corresponding
reconciliations to GAAP financial measures for the three and twelve months
ended December 31, 2010 and 2009. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the Company's
reported results prepared in accordance with GAAP.
Contact Information: For further information please contact: Company Contact: Dimitri J. Andritsoyiannis Chief Financial Officer Danaos Corporation Athens, Greece Tel.: +30 210 419 6481 E-Mail: cfo@danaos.com Iraklis Prokopakis Chief Operating Officer Danaos Corporation Athens, Greece Tel.: +30 210 419 6400 E-Mail: coo@danaos.com Investor Relations and Financial Media Nicolas Bornozis President Capital Link, Inc. New York Tel. 212-661-7566 E-Mail: danaos@capitallink.com