News Release

News Release Danaos Corporation (Head Office) May 5, 2011

Athens, Greece, May 4, 2011 - Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the period ended March 31, 2011.

Highlights for the First Quarter Ended March 31, 2011:

During the first quarter of 2011, we took delivery and deployed two newly built containership vessels with an aggregate carrying capacity of 13,500 TEU.
Operating revenues of $99.0 million for the quarter ended March 31, 2011.
Adjusted net income of $11.4 million or $0.10 per share for the quarter ended March 31, 2011.
Adjusted EBITDA1 of $65.2 million for the quarter ended March 31, 2011.


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:

This quarter epitomizes the conclusion of our financing arrangements and sets the framework for the continued growth of Danaos. Without any financing overhang, the company can now conclude the ambitious newbuilding program which was instituted from 2007 and deliver the benefits of all these projects into the bottom line.

In terms of financial results, we still see the numbers influenced by one-off items, which relate to restructuring costs and over-hedging of our debt. These items will gradually disappear and from the 2nd quarter of 2012 we can see our results free of such encumbrances.

In the first quarter of 2011, we recorded revenues of $99 million, adjusted EBITDA of $65 million and $11.4 million adjusted net income, adjusted for certain non-cash charges, as well as costs related to the execution of our financing plan.

During this quarter, we experienced strengthening of the container charter market at the same time as box rates reversed some of the gains of 2010. The strengthening of the market came in the back of increasing competition for tonnage among liner companies who lost market share during the downturn.

The competition for market share added to the influx of a number of post panamax vessels, which were already waiting for delivery in the new year and resulted in the box rate drop particularly in the Fareast-Europe trade. However, demand is strong and therefore we expect that through the high season utilization will increase and eventually restore box rates.

We have noticed significant speculative ordering of newbuildings this quarter, which although not alarming at the moment, should be closely observed. However, we remain quite optimistic for the next 24 months as the demand supply balance will be in the owners' favor.

Three months ended March 31, 2011 compared to the three months ended March 31, 2010

On January 24, 2011, we entered into a definitive agreement (the "Bank Agreement") with our lenders to restructure our existing debt obligations, other than our KEXIM and KEXIM-ABN Amro credit facilities, and to provide us approximately $425 million of new debt financing. We agreed to issue to the lenders under our Bank Agreement 15 million warrants to purchase, solely on a cashless exercise basis, shares of our common stock for an exercise price of $7.00 per share. We have issued 14,925,130 warrants and will issue the remaining 74,870 warrants upon the request of the applicable lender. All warrants issued, or to be issued, will expire on January 31, 2019. We have also agreed to register the warrants and underlying shares of common stock for resale under the Securities Act.

On February 21, 2011, we entered into a bank syndicate agreement, arranged by Citibank and led by the Export Import Bank of China ("CEXIM"), for financing of the remaining three vessels, Hull No. Z00002, Hull No. Z00003 and Hull No. Z00004, in our newbuilding program. CEXIM will provide the majority of the loan amount, with Citibank acting as an agent. The China Export & Credit Insurance Corporation, or Sinosure, has agreed to cover a number of risks associated with the credit facility.

In accordance with our Comprehensive Financing Plan, we are currently in an over-hedged position under our cash flow interest rate swaps, which is due to deferred progress payments to shipyards, cancellation of three newbuildings in 2010, replacements of variable interest rate debt with a fixed interest rate seller's financing and equity proceeds from our private placement in 2010, all of which reduced initial forecasted variable interest rate debt and resulted in notional cash flow interest rate swaps being above our variable interest rate debt eligible for hedging.

During the quarter ended March 31, 2011, Danaos had an average of 51.0 containerships compared to 41.5 containerships for the same period in 2010. Our fleet utilization was 96.7% in the first quarter of 2011.

Our adjusted net income was $11.4 million, or $0.10 per share, for the three months ended March 31, 2011 compared, to $17.6 million, or $0.32 per share, for the three months ended March 31, 2010, adjusted for a non-cash gain in fair value of derivatives of $9.8 million recorded in 2011 and a $22.5 million loss recorded in 2010, realized losses on swaps of $9.8 million attributable to our over-hedging position (as described above) recorded in 2011 compared to a $4.0 million loss in 2010, non-cash loss in fair value of warrants of $2.3 million recorded in 2011, as well as an expense of $3.7 million for fees related to our Comprehensive Financing Plan ($1.3 million amortization of bank fees, which were deferred and will be amortized over the life of the facilities, $0.3 million of finance fees accrued and $2.1 million of legal and advisory fees) recorded in 2011 compared to fees related to our Comprehensive Financing Plan of $1.0 million and amortization of bank fees of $0.3 million recorded in 2010, an impairment loss of $71.5 million in relation to the cancellation of three 6,500 TEU newbuilding containerships recorded in 2010 and a gain on sale of vessels of $1.9 million recorded in 2010.

Adjusted net income for the first quarter of 2011 decreased by 35.2%, or $6.2 million, compared to the three months ended March 31, 2010. The decrease is mainly attributable to increased realized losses on our interest rate swap contracts recorded during the three months ended March 31, 2011 compared to the same period of 2010, as well as increased interest expense due to higher average indebtedness in the first quarter of 2011 compared to the same period of 2010, which was partially offset by a reduced margin over LIBOR applicable to borrowings following our Bank Agreement (which was reset going forward to 1.85% for all our credit facilities under our Bank Agreement). On a non-adjusted basis our net income was $5.4 million, or $0.05 per share, for the first quarter of 2011, compared to net loss of $79.8 million, or $1.46 loss per share, for the first quarter of 2010. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

Operating Revenue

Operating revenue increased 24.2%, or $19.3 million, to $99.0 million in the three months ended March 31, 2011, from $79.7 million in the three months ended March 31, 2010. The increase was primarily attributable to the addition of ten vessels to our fleet, as follows:



These additions to our fleet contributed revenues of $23.2 million during the three months ended March 31, 2011. Moreover, a 6,500 TEU containership, the CMA CGM Musset, which was added to our fleet on March 12, 2010, contributed incremental revenues of $2.5 million during the three months ended March 31, 2011 compared to 2010. These revenues were offset in part by the sale of one 1,704 TEU containership, the MSC Eagle, on January 22, 2010, that had contributed revenues of $0.1 million for the three months ended March 31, 2010 compared to nil revenues in the three months ended March 31, 2011.

We also had a reduction in revenues of $6.3 million during the three months ended March 31, 2011, mainly attributable to re-chartering of vessels at reduced charter hire, as well as increased scheduled off-hire revenues in the three months ended March 31, 2011 compared to 2010, which was partially offset by fewer vessels being laid up by our charterers (90 days and 614 days in the first quarter of 2011 and 2010, respectively).

Vessel Operating Expenses

Vessel operating expenses increased 52.0%, or $9.1 million, to $26.6 million in the three months ended March 31, 2011, from $17.5 million in the three months ended March 31, 2010. The increase is mainly attributable to an increased average number of vessels in our fleet during the three months ended March 31, 2011 compared to the same period of 2010, as well as increased costs of certain vessels, which were on lay-up for 90 days in aggregate during the first quarter of 2011 compared to 614 days in the same period of 2010. The average daily operating cost per vessel increased to $6,162 for the three months ended March 31, 2011, from $5,627 for the three months ended March 31, 2010 (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 39.1%, or $6.3 million, to $22.4 million in the three months ended March 31, 2011, from $16.1 million in the three months ended March 31, 2010. The increase in depreciation expense was due to the increased average number of vessels in our fleet during the three months ended March 31, 2011 compared to the same period of 2010.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs decreased 11.8%, or $0.2 million, to $1.5 million in the three months ended March 31, 2011, from $1.7 million in the three months ended March 31, 2010.

General and Administrative Expenses

General and administrative expenses decreased 14.8%, or $0.8 million, to $4.6 million in the three months ended March 31, 2011, from $5.4 million in the same period of 2010. The decrease was mainly the result of legal and advisory fees of $1.4 million recorded in 2010, which partially was offset by increased fees of $0.5 million to our Manager in the first quarter of 2011 compared to the same period of 2010, due to the increase in the average number of our vessels in our fleet.

Other Operating Expenses

Other Operating Expenses includes Voyage Expenses

Voyage Expenses

Voyage expenses increased 37.5%, or $0.6 million, to $2.2 million in the three months ended March 31, 2011, from $1.6 million in the three months ended March 31, 2010. The increase was the result of increased various voyage expenses, such as port, commission and other expenses due to the increased number of vessels in our fleet in the first quarter of 2011 compared to the same period of 2010.

Interest Expense and Interest Income

Interest expense increased by 34.1%, or $3.0 million, to $11.8 million in the three months ended March 31, 2011, from $8.8 million in the three months ended March 31, 2010. The change in interest expense was due to the increase in our average debt by $257.0 million, to $2,599.3 million in the quarter ended March 31, 2011, from $2,342.3 million in the quarter ended March 31, 2010, which was partially offset by the decrease in the margin over LIBOR payable on interest under our credit facilities in the three months ended March 31, 2011 compared to the three months ended March 31, 2010, in accordance with our Comprehensive Financing Plan, which sets the margin at 1.85% (in relation to our credit facilities under our Bank Agreement). Furthermore, the financing of our extensive newbuilding program resulted in interest capitalization, rather than such interest being recognized as an expense, of $5.9 million for the three months ended March 31, 2011 compared to $7.2 million of capitalized interest for the three months ended March 31, 2010.

Interest income increased by $0.1 million, to $0.3 million in the three months ended March 31, 2011, from $0.2 million in the three months ended March 31, 2010. The increase in interest income is attributable to increased interest rates to which our cash balances were subject during the three months ended March 31, 2011 compared to the three months ended March 31, 2010, which was partially offset by lower average cash balances in the three months ended March 31, 2011 compared to 2010.

Other income/(expenses), net

Other income/(expenses), net, was an expense of $1.9 million in the three months ended March 31, 2011, from nil in the three months ended March 31, 2010. The increase of expense is mainly attributable to legal and advisory fees of $2.1 million directly related to our Comprehensive Financing Plan, which were recorded during the three months ended March 31, 2011.

Other finance costs, net

Other finance costs, net, increased by $3.9 million, to $4.4 million in the three months ended March 31, 2011, from $0.5 million in the three months ended March 31, 2010. The increase is mainly attributable to amortization of finance fees of $1.3 million (which were deferred and will be amortized over the life of the respective credit facilities) and $0.3 million of finance fees accrued for the first quarter of 2011 related to our Comprehensive Financing Plan, as well as an expense of $2.3 million recorded in the first quarter of 2011 due to non-cash changes in fair value of warrants, (for the period up to March 29, 2011 when the exercise price of the warrants was increased to $7.00 per share from the initial exercise price of $6.00 per share).

Loss on fair value of derivatives

Loss on fair value of derivatives, decreased by $ 20.2 million, to a loss of $18.3 million in the three months ended March 31, 2011, from a loss of $38.5 million in the same period of 2010. The decrease is mainly attributed to non-cash gain in fair value of interest rate swaps of $9.8 million recorded in the three months ended March 31, 2011, due to hedge accounting ineffectiveness, compared to $22.5 million loss in the three months ended March 31, 2010. There was also a realized loss on interest rate swap hedges of $28.1 million recorded during the three months ended March 31, 2011, which is mainly attributed to the higher average notional amount of swaps and the reduced LIBOR payable on our credit facilities (subject to variable interest rates) against the LIBOR fixed through such swaps, compared to a $16.0 million realized loss in the three months ended March 31, 2010.

In addition, realized losses on cash flow hedges of $9.9 million and $11.7 million in the three months ended March 31, 2011 and 2010, 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 March 31, 2011 and 2010:



Adjusted EBITDA

Adjusted EBITDA increased by $9.2 million, or 16.4%, to $65.2 million in the three months ended March 31, 2011, from $56.0 million in the three months ended March 31, 2010. Adjusted EBITDA mainly excludes a non-cash gain in fair value of derivatives of $9.8 million recorded in 2011 and a $22.5 million loss recorded in 2010, realized losses on derivatives of $28.1 million recorded in 2011 compared to $16.0 million in 2010, non-cash loss in fair value of warrants of $2.3 million loss recorded in 2011, as well as an expense of $3.7 million for fees related to our Comprehensive Financing Plan ($1.3 million of amortization of bank fees, which were deferred and will be amortized over the life of the facilities, $0.3 million of finance fees accrued and $2.1 million of other legal and advisory fees) recorded in 2011 compared to $1.0 million recorded in 2010, impairment loss of $71.5 million in relation to the cancellation of three 6,500 TEU newbuilding containerships recorded in 2010 and a gain on sale of vessels of $1.9 million recorded in 2010. Tables reconciling Adjusted EBITDA to Net (Loss) / Income can be found at the end of this earnings release.

Recent News

On April 6, 2011, the Company took delivery of the newbuilding 10,100 TEU vessel, the Hanjin Italy. The vessel has been deployed on a 12-year time charter with one of the world's major liner companies.

On April 15, 2011, the Company took delivery of the newbuilding 3,400 TEU vessel, the Hanjin Constantza. The vessel has been deployed on a 10-year time charter with the same major liner company as Hanjin Italy.

On May 4, 2011, the Company took delivery of the newbuilding 10,100 TEU vessel, the Hanjin Greece. The vessel has been deployed on a 12-year time charter with one of the world's major liner companies.

Conference Call and Webcast

On Thursday, May 5, 2011 at 9:00 A.M. EDT, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452 542 301 (Standard International Dial In). Please quote "Danaos" to the operator.

A telephonic replay of the conference call will be available until May 12, 2011 by dialing 1 866 247 4222 (US Toll Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452 550 000 (Standard International Dial In). Access Code: 1186615#

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