-- Adjusted net income(1) from continuing operations of $14.8 million or $0.27 per share and $65.6 million or $1.20 per share for the quarter and the year ended December 31, 2009, respectively, compared to $23.7 million or $0.43 per share and $99.4 million or $1.82 per share for the respective periods of 2008. -- Operating revenues of $85.3 million and $319.5 million for the quarter and the year ended December 31, 2009, respectively, compared to $78.7 million and $298.9 million for the respective periods of 2008. -- Adjusted EBITDA from continuing operations of $42.0 million and $168.6 million for the quarter and the year ended December 31, 2009, respectively, compared to $48.5 million and $185.9 million for the respective periods of 2008. -- Net (loss)/income from continuing operations of $(16.2) million or $(0.30) per share and $36.1 million or $0.66 per share for the quarter and the year ended December 31, 2009, respectively, compared to $23.8 million or $0.44 per share and $117.1 million or $2.15 per share for the respective periods of 2008. -- EBITDA from continuing operations of $42.0 million and $168.6 million for the quarter and the year ended December 31, 2009, respectively, compared to $48.8 million and $201.2 million for the respective periods of 2008.(1) Adjusted net income and adjusted earnings per share are non-GAAP measures, adjusted for non-cash changes in fair value of derivatives, gain on sale of vessels and exceptional items. Refer to page 16 for reconciliation of net income to adjusted net income and net income to EBITDA.
Three and Twelve Months Ended December 31, 2009
Financial Summary - continuing operations (unaudited)
(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,
---------- ---------- ---------- -----------
2009 2008 2009 2008
---------- ---------- ---------- -----------
Net (loss) / income $ (16,182) $ 23,830 $ 36,089 $ 117,060
Adjusted net income 14,759 23,663 65,586 99,404
(Losses) / earnings per share (0.30) 0.44 0.66 2.15
Adjusted earnings per share 0.27 0.43 1.20 1.82
Danaos' CEO, Dr. John Coustas, commented:
The year of 2009 was one of the toughest in the history of container
shipping and the liner business. Both demand and supply were severely
imbalanced. On the one hand, consumer demand fell sharply immediately after
the third quarter of 2008 and continued to retreat for the most part of
2009, and on the other, the supply of shipping tonnage kept increasing
with, deliveries of vessels ordered in previous years. Importantly though,
there was not a single addition to the containership order-book in 2009
which should help the balance of supply and demand on a going forward
basis.
During the second half of 2008, box freight rates dropped even more steeply
than demand, and the result was a prolonged cash crunch across all liner
companies throughout 2009, which in certain cases raised solvency concerns.
In 2009 a number of impacted liner companies successfully restructured
their balance sheets. Consequently, charterer owners like Danaos which
enjoyed long term fixed time charters were able to avoid revenue volatility
insofar they had little re-chartering exposure.
The gradual stabilization of the world economy has resolved a large portion
of the uncertainty, and while so far there has been a jobless recovery,
cargo volumes across the globe have started to show strong recovery trends
also on the back of re-stocking. Approximately 10% of the world
containership fleet is still idle. However, three months into 2010, we see
an increasing demand for larger versus smaller vessels which indicates that
the major east-west routes are picking up and that the underlying demand is
further firming up. Liner companies have been able to significantly
increase box rates from their lows.
As a result of the market imbalances prevalent in 2009, asset values were
significantly reduced, interest rates were kept very low and we suffered
from non-cash losses in the fair value of our interest rate swaps.
Consequently we breached certain loan covenants, for which we received and
continue to request temporary waivers. This waiver process has led to
increases in the margin over LIBOR that we pay on our debt.
Our fourth quarter and year end 2009 adjusted net income, adjusted for
non-cash losses of fair value changes of our swaps, were $14.8
million ($0.27 per share) and $65.6 million ($1.20 per share),
respectively. In 2009, we took delivery of four large size new-building
containerships which we deployed immediately under their long term, fixed
rate time charters. In comparison to the state of the entire industry,
and despite a heavily battered banking sector that was able to provide only
already committed financing, we managed to keep a profitable operation and
have focused on our future funding needs.
We have been in discussions with our current lenders, export credit
agencies and the shipyards constructing the 26 new containerships, which
are scheduled to be delivered to us between this spring and mid-2012.
In our discussions with the credit institutions and the shipyards, we have
focused on developing a comprehensive financial plan for our company that
would include all feasible means to address those new-buildings for which
we do not have financing already arranged, but for each of which we do have
multi-year charters from reputable charterers.
On a positive note, our charterers continue to perform and we remain
current in payments of our scheduled debt service.
We are, however, facing significant new-building installment payments
during 2010 and 2011, for which we do not currently have finalized relevant
financing. Addressing these cash requirements is a principal focus of our
discussions with the banks, the yards and the export credit agencies.
Three months ended December 31, 2009 compared to the three months ended
December 31, 2008
During the quarter ended December 31, 2009, Danaos had an average of 42.0
containerships compared to 38.7 containerships for the same period in 2008.
Our fleet utilization was 99.8% in the fourth quarter of 2009.
Our adjusted net income was $14.8 million, or $0.27 per share for the three
months ended December 31, 2009 compared to $23.7 million, or $0.43 per
share for the three months ended December 31, 2008, which represents a
decrease of 37.6%, or $8.9 million compared to the three months ended
December 31, 2008. This decrease is mainly attributable to increased
realized losses on our interest rate swap contracts recorded in our Income
Statement during the three months ended December 31, 2009 compared to the
same period of 2008, as well as, increased margins over LIBOR on which our
indebtedness is subject to, following our agreements with our lenders to
temporarily waive certain covenant breaches as of December 31, 2008 and
June 30, 2009. Our net loss was $16.2 million or $0.30 loss per share for
the fourth quarter of 2009, compared to net income of $23.8 million or
$0.44 per share for the fourth quarter of 2008. Adjusted net income is
adjusted for non-cash changes in fair value of derivatives, gain on sale of
vessels and exceptional expenses. Refer to Adjusted Net Income
reconciliation table below.
Operating Revenue
Operating revenue increased 8.4%, or $6.6 million, to $85.3 million in the
three months ended December 31, 2009, from $78.7 million in the three
months ended December 31, 2008. The increase was primarily attributable to
the addition of four vessels to our fleet, as follows:
Vessel Name Vessel Size (TEU) Date Delivered
----------------- ------------------
Zim Monaco 4,253 January 2, 2009
Zim Dalian 4,253 March 31, 2009
Zim Luanda 4,253 June 26, 2009
CMA CGM Moliere 6,500 September 28, 2009
These additions to our fleet contributed revenues of $10.1 million during
the three months ended December 31, 2009. These revenues were offset in
part by the sale of one 3,101 TEU containership, the Sederberg, on December
10, 2008, that contributed revenues of $1.7 million for the three months
ended December 31, 2008 compared to no revenues in the three months ended
December 31, 2009. Moreover, one 4,253 TEU containership, the Zim Kingston,
which was added to our fleet on November 3, 2008, contributed incremental
revenues of $1.0 million during the three months ended December 31, 2009
compared to the same period of 2008.
We also had a further decrease in revenues of $2.8 million during the three
months ended December 31, 2009, mainly attributable to the re-chartering of
the Hanjin Montreal on March 31, 2009 and the Bunga Raya Tiga on April 28,
2009 at reduced daily charter rates of $10,000 and $6,950, respectively.
Vessel Operating Expenses
Vessel operating expenses decreased 3.3%, or $0.8 million, to $23.3 million
in the three months ended December 31, 2009, from $24.1 million in the
three months ended December 31, 2008. Although the average number of
vessels in our fleet increased during the three months ended December 31,
2009 compared to the same period of 2008, the average daily operating cost
per vessel was reduced to $6,041 for the three months ended December 31,
2009, from $6,773 for the three months ended December 31, 2008.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of
Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense increased 18.1%, or $2.5 million, to $16.3 million in
the three months ended December 31, 2009, from $13.8 million in the three
months ended December 31, 2008. The increase in depreciation expense was
due to the increased average number of vessels in our fleet during the
three months ended December 31, 2009 compared to the same period of 2008.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs remained
stable at $2.0 million in the three months ended December 31, 2009 and
2008.
General and Administrative Expenses
General and administrative expenses increased 40.0%, or $1.2 million, to
$4.2 million in the three months ended December 31, 2009, from $3.0 million
in the same period of 2008. The increase was mainly the result of increased
fees of $0.4 million paid to our Manager in the fourth quarter of 2009
compared to the same period of 2008, due to the increase in the average
number of our vessels in our fleet and an increase in the fees paid to our
Manager since January 1, 2009. Furthermore, various other general and
administrative expenses related to legal and other advisory fees were
increased by $0.8 million in the fourth quarter of 2009 compared to the
same period of 2008.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses
Voyage Expenses
Voyage expenses increased 18.8%, or $0.3 million, to $1.9 million in the
three months ended December 31, 2009, from $1.6 million in the three months
ended December 31, 2008.
Interest Expense and Interest Income
Interest expense decreased by 19.8%, or $2.3 million, to $9.3 million in
the three months ended December 31, 2009, from $11.6 million in the three
months ended December 31, 2008. The change in interest expense was due to
the decrease of LIBOR payable under our credit facilities in the three
months ended December 31, 2009 compared to the three months ended December
31, 2008, which was partially offset by the increase in our average debt by
$233.8 million, to $2,311.4 million in the quarter ended December 31, 2009,
from $2,077.6 million in the quarter ended December 31, 2008, as well as
the increased margins over LIBOR on which our indebtedness is subject to,
following our agreements with our lenders to waive certain covenant
breaches temporarily. The financing of our extensive newbuilding program
resulted in interest capitalization, rather than such interest being
recognized as an expense, of $7.9 million for the three months ended
December 31, 2009 compared to $10.3 million of capitalized interest for the
three months ended December 31, 2008. The weighted average interest rate
margin over LIBOR payable under our credit facilities has increased by
approximately 1.5% per annum, following our agreements with our lenders to
waive certain covenant breaches as of December 31, 2008 and June 30, 2009.
Interest income decreased by $2.3 million, to $0.4 million in the three
months ended December 31, 2009, from $2.7 million in the three months ended
December 31, 2008. The decrease in interest income is attributable to lower
average cash balances, as well as, reduced interest rates to which our cash
balances were subject during the three months ended December 31, 2009
compared to the three months ended December 31, 2008.
Other income/(expenses), net
Other income/(expenses), net, increased by $2.4 million, to a gain of $0.6
million in the three months ended December 31, 2009, from an expense of
$1.8 million in the same period of 2008. The increase is mainly
attributable to an exceptional expense of $1.6 million recorded in the
fourth quarter of 2008 in relation to insurance cost for the years of 2006
and 2007, which have been recorded in 2008, reflecting the contribution of
our insurer to the exposure of the International Group of Protection &
Indemnity ("P&I") Clubs.
Other finance costs, net
Other finance cost, net, increased by $0.4 million, to $0.8 million in the
three months ended December 31, 2009, from $0.4 million in the same period
of 2008.
Loss on fair value of derivatives
Loss on fair value of derivatives, increased by $43.4 million, to a loss of
$44.6 million in the three months ended December 31, 2009, from a loss of
$1.2 million in the same period of 2008. The increase is mainly
attributable to non-cash changes in fair value losses of interest rate
swaps of $30.9 million recorded in our income statement in the fourth
quarter of 2009, due to hedge accounting ineffectiveness, compared to $0.2
million in the fourth quarter of 2008. Furthermore, realized losses on
interest rate swap hedges of $13.7 million recorded in our Income Statement
during the three months ended December 31, 2009, were mainly attributed to
reduced LIBOR payable on our credit facilities against LIBOR fixed through
our interest rate swaps, compared to $1.0 million in the three months ended
December 31, 2008. In addition, realized losses on cash flow hedges of
$11.2 million and $2.9 million in the three months ended December 31, 2009
and 2008, respectively, were deferred in "Accumulated Other Comprehensive
Loss," rather than such realized losses being recognized as an expense, and
will be reclassified into earnings over the depreciable life of these
vessels under construction, which are financed by loans for which their
interest rate has been hedged by our interest rate swap contracts.
EBITDA
Adjusted EBITDA decreased by $6.5 million, or 13.4%, to $42.0 million in
the three months ended December 31, 2009, from $48.5 million in the three
months ended December 31, 2008, adjusted for an exceptional insurance
expense of $1.6 million for prior years recorded in the fourth quarter of
2008 and a gain on sale of vessel of $2.0 million recorded in the fourth
quarter of 2008. EBITDA decreased by $6.8 million, or 13.9%, to
$42.0 million in the quarter ended December 31, 2009, from $48.8 million in
the quarter ended December 31, 2008. Tables reconciling EBITDA and Adjusted
EBITDA to net income can be found at the end of this earnings release.
Twelve months ended December 31, 2009 compared to the twelve months ended
December 31, 2008
During the twelve months ended December 31, 2009, Danaos had an average of
40.5 containerships as compared to 37.7 containerships for the same period
of 2008. During the twelve months of 2009, we took delivery of four
vessels, the Zim Monaco on January 2, 2009, the Zim Dalian on March 31,
2009, the Zim Luanda on June 26, 2009 and the CMA CGM Moliere on September
28, 2009. Our fleet utilization was 98.6% in 2009.
Our adjusted net income from continuing operations was $65.6 million or
$1.20 per share for the twelve months ended December 31, 2009 compared to
$99.4 million or $1.82 per share for the respective period of 2008,
excluding non-cash changes in fair value of derivatives of $29.5 million
loss recorded in 2009 and $2.4 million gain recorded in 2008, a gain on
sale of vessels of $16.9 million recorded in 2008 and an exceptional
insurance expense of $1.6 million recorded in 2008. This represents a
decrease of 34.0%, or $33.8 million, which is mainly attributable to
increased realized losses on our interest rate swaps in the twelve months
ended December 31, 2009 compared to the same period of 2008, as well as,
increased interest expense due to higher average indebtedness in 2009 and
increased margins over LIBOR on which our indebtedness is subject to,
following our agreements with our lenders to waive certain covenant
breaches as of December 31, 2008 and June 30, 2009. Our net income from
continuing operations was $36.1 million or $0.66 per share for the twelve
months ended December 31, 2009 compared to $117.1 million or $2.15 per
share for the twelve months ended December 31, 2008.
Operating Revenue
Operating revenue increased 6.9%, or $20.6 million, to $319.5 million in
the twelve months ended December 31, 2009, from $298.9 million in the
twelve months ended December 31, 2008. The increase was primarily
attributed to the addition to our fleet of four vessels, as follows:
Vessel Name Vessel Size (TEU) Date Delivered
----------------- ------------------
Zim Monaco 4,253 January 2, 2009
Zim Dalian 4,253 March 31, 2009
Zim Luanda 4,253 June 26, 2009
CMA CGM Moliere 6,500 September 28, 2009
These additions to our fleet contributed revenues of $22.0 million during
the twelve months ended December 31, 2009. Moreover, three 2,200 TEU
containerships, the Hyundai Progress, the Hyundai Highway and the Hyundai
Bridge, as well as, three 4,253 TEU containerships, the Zim Rio Grande, the
Zim Sao Paolo and the ZIM Kingston, which were added to our fleet on
February 11, 2008, March 18, 2008 and March 20, 2008, July 4, 2008,
September 22, 2008 and November 3, 2008, contributed incremental revenues
of $20.4 million during the twelve months ended December 31, 2009 compared
to the same period in 2008.
In addition, the Company sold five vessels as follows:
Vessel Name Vessel Size (TEU) Date Sold
----------------- ------------------
APL Belgium 5,506 January 15, 2008
Winterberg 3,101 January 25, 2008
Maersk Constantia 3,101 May 20, 2008
Asia Express 3,101 October 26, 2008
Sederberg 3,101 December 10, 2008
These sales contributed operating revenues of $12.4 million during the
twelve months ended December 31, 2008 compared to no revenues in the twelve
months ended December 31, 2009. The balance of $9.4 million is attributable
to revenue lost due to off-hire days, as well as, re-chartering of two of
our vessels at reduced charter rates.
Vessel Operating Expenses
Vessel operating expenses increased 3.5%, or $3.1 million, to $92.3 million
in the twelve months ended December 31, 2009, from $89.2 million in the
twelve months ended December 31, 2008. The increase was due to the increase
in the average number of our vessels in our fleet during the twelve months
ended December 31, 2009 compared to the twelve months ended December 31,
2008.
This overall increase was offset in part by the lower average daily
operating cost per vessel of $6,241 for the twelve months ended December
31, 2009 compared to $6,574 for the twelve months ended December 31, 2008.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of
Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense increased 19.4%, or $9.9 million, to $60.9 million in
the twelve months ended December 31, 2009, from $51.0 million in the twelve
months ended December 31, 2008. The increase in depreciation expense was
due to the increased average number of vessels in our fleet during the
twelve months ended December 31, 2009, compared to the same period of 2008.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased
13.7%, or $1.0 million, to $8.3 million in the twelve months ended December
31, 2009, from $7.3 million in the twelve months ended December 31, 2008.
The increase reflects higher dry-docking costs incurred, which were subject
to amortization during the twelve months ended December 31, 2009 compared
to the same period of 2008.
General and Administrative Expenses
General and administrative expenses increased 25.0%, or $2.9 million, to
$14.5 million in the twelve months ended December 31, 2009, from $11.6
million in the same period of 2008. The increase was mainly a result of
increased fees of $1.7 million paid to our Manager in the twelve months
ended December 31, 2009 compared to the same period of 2008 due to the
increase in the average number of our vessels in our fleet and an increase
of the fees paid to our manager since January 1, 2009. Furthermore, various
other general and administrative expenses related to legal and other
advisory fees were increased by $1.2 million in the twelve months ended
December 31, 2009 compared to the same period of 2008.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses
Voyage Expenses
Voyage expenses decreased 2.7%, or $0.2 million, to $7.3 million in the
twelve months ended December 31, 2009, from $7.5 million for the twelve
months ended December 31, 2008.
Interest Expense and Interest Income
Interest expense increased 4.3%, or $1.5 million, to $36.2 million in the
twelve months ended December 31, 2009, from $34.7 million in the twelve
months ended December 31, 2008. The change in interest expense was due to
the increase in our average debt by $511.2 million, to $2,226.6 million in
the twelve months ended December 31, 2009, from $1,715.4 million in the
twelve months ended December 31, 2008, as well as, the increased margins
over LIBOR on which our indebtedness is subject to, following our
agreements with our lenders to waive certain covenant breaches as of
December 31, 2008 and June 30, 2009, partially offset by decrease of LIBOR
payable under our credit facilities in the twelve months ended December 31,
2009 compared to the twelve months ended December 31, 2008. The financing
of our extensive newbuilding program resulted in interest capitalization,
rather than such interest being recognized as an expense, of $33.1 million
for the twelve months ended December 31, 2009 compared to $36.9 million of
capitalized interest for the twelve months ended December 31, 2008.
Interest income decreased by $4.1 million, to $2.4 million in the twelve
months ended December 31, 2009, from $6.5 million in the twelve months
ended December 31, 2008. The decrease in interest income is mainly
attributed to lower interest rates on which our cash balances were subject
to, partially offset by higher average bank deposits during the twelve
months ended December 31, 2009 compared to the twelve months ended December
31, 2008.
Other income/(expenses), net
Other income/(expenses), net, decreased by $0.8 million, to an expense of
$0.3 million in the twelve months ended December 31, 2009, from an expense
of $1.1 million in the same period of 2008.
Other finance costs, net
Other finance cost, net, increased by $0.3 million, to $2.3 million in the
twelve months ended December 31, 2009, from $2.0 million in the same period
of 2008.
Loss on fair value of derivatives
Loss on fair value of derivatives, increased by $63.0 million, to a loss of
$63.6 million in the twelve months ended December 31, 2009, from a loss of
$0.6 million in the same period of 2008. The increase is mainly
attributable to non-cash changes in fair value of interest rate swaps of
$29.5 million loss recorded in our income statement in 2009, due to hedge
accounting ineffectiveness, compared to $2.4 million gain in 2008.
Furthermore, realized losses on interest rate swap hedges of $34.1 million
recorded in our Income Statement during the twelve months ended December
31, 2009, mainly attributed to reduced LIBOR payable on our credit
facilities against LIBOR fixed through our interest rate swaps, compared to
$3.0 million loss in the twelve months ended December 31, 2008. In
addition, realized losses on cash flow hedges of $36.3 million and $11.6
million in the twelve months ended December 31, 2009 and 2008,
respectively, were deferred in "Accumulated Other Comprehensive Loss,"
rather than such realized losses being recognized as an expense, and will
be reclassified into earnings over the depreciable life of these vessels
under construction, which are financed by loans for which their interest
rate has been hedged by our interest rate swap contracts.
EBITDA
Adjusted EBITDA from continuing operations decreased by $17.3 million, or
9.3%, to $168.6 million in the twelve months ended December 31, 2009, from
$185.9 million in the twelve months ended December 31, 2008, excluding a
gain on sale of vessels of $16.9 million recorded during the twelve months
of 2008, as well as an exceptional insurance expense of $1.6 million for
the years of 2006 and 2007 recorded in 2008. EBITDA from continuing
operations decreased by $32.6 million, or 16.2%, to $168.6 million in the
twelve months ended December 31, 2009, from $201.2 million in the twelve
months ended December 31, 2008. A table reconciling EBITDA to net income
can be found at the end of this earnings release.
Fair value of financial instruments
As of December 31, 2008, the low prevailing interest rates led to
significant declines in the fair value of our interest rate swaps accounted
for such cash flow hedges. As of December 31, 2009, prevailing interest
rates increased from such historical low levels resulting in an unrealized
gain of $155.3 million, which was recorded in "Accumulated Other
Comprehensive Loss" and increased our "Total Shareholders' Equity."
Recent News
On January 22, 2010, we sold and delivered the vessel MSC Eagle. The sale
consideration was $4.6 million. The Company will realize a gain on this
sale of approximately $2.3 million. The MSC Eagle was over 30 years old and
was generating revenue under its time charter, which expired in early
January 2010.
On March 12, 2010, the Company took delivery of the new-building 6,500 TEU
vessel, the CMA CGM Musset. The vessel has been deployed on a 12-year time
charter with one of the world's major liner companies.
The accompanying financial data has not been audited and is presented on
the assumption that, prior to the completion of our audit for 2009, we will
be able to secure waivers of compliance with our financial covenants under
all of our loan facilities that will cover at least a prospective 12 month
period. If that proves not to be the case, we will have to reclassify our
long term indebtedness as current in our audited financial statements.
Conference Call and Webcast
Management will hold a conference call to discuss the fourth quarter and
2009 year end earnings together with the first quarter of 2010 earrings at
a date and time to be disclosed in due course.
About Danaos Corporation
Danaos Corporation is an international owner of containerships, chartering
its vessels to many of the world's largest liner companies. Our current
fleet of 42 containerships aggregating 177,229 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 company
based on fleet size. Furthermore, the company has a contracted fleet of 26
additional containerships aggregating 204,950 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 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.
Appendix
Fleet Utilization
Danaos had 8 off-hire days in total in the fourth quarter of 2009. The
following table summarizes vessel utilization and the impact of the
off-hire days on the company's revenue relating to the last four quarters.
First Second Third Fourth
Vessel Utilization (No. Quarter Quarter Quarter Quarter
of Days) 2009 2009 2009 2009 Total
-------- -------- -------- -------- ---------
Ownership Days 3,510 3,645 3,775 3,864 14,794
Less Off-hire Days:
Scheduled Off-hire Days (125) (27) (29) (1) (182)
Other Off-hire Days (4) (4) (8) (7) (23)
-------- -------- -------- -------- ---------
Operating Days 3,381 3,614 3,738 3,856 14,589
======== ======== ======== ======== =========
Vessel Utilization 96.3% 99.1% 99.0% 99.8% 98.6%
Revenue - Impact of First Second Third Fourth
Off-hire Quarter Quarter Quarter Quarter
(in '000s of US Dollars) 2009 2009 2009 2009 Total
-------- -------- -------- -------- ---------
100% Fleet Utilization $ 77,931 $ 79,229 $ 80,694 $ 85,532 $ 323,386
Less Off-hire Days:
Scheduled Off-hire Days (2,512) (6) (721) (42) (3,281)
Other Off-hire Days (167) (95) (181) (151) (594)
-------- -------- -------- -------- ---------
Actual Revenue Earned $ 75,252 $ 79,128 $ 79,792 $ 85,339 $ 319,511
======== ======== ======== ======== =========
Fleet List
The following table describes in detail our fleet deployment profile as of
March 29, 2010.
Vessel Size Year Expiration of
Vessel Name (TEU) Built Charter(1)
----------- ------ --------------
Containerships
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
CSCL America(2) 8,468 2004 September 2016
CSCL Europe 8,468 2004 June 2016
CMA CGM Moliere(3) 6,500 2009 August 2021
CMA CGM Musset(3) 6,500 2010 February, 2022
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 2011
Hyundai Duke 4,651 1992 February 2011
Hyundai Federal (6) 4,651 1994 September 2012
YM Colombo 4,300 2004 March 2019
YM Singapore 4,300 2004 October 2019
YM Seattle 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Bunga Raya Tiga (7) 4,253 2004 March 2011
Bunga Raya Tujuh (8) 4,253 2004 February 2011
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
ZIM Kingston 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
ZIM Dalian 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Al Rayyan 3,908 1989 January 2011
YM Yantian 3,908 1989 July 2011
YM Milano 3,129 1988 May 2011
CMA CGM Lotus 3,098 1988 July 2010
CMA CGM Vanille 3,045 1986 July 2010
CMA CGM Passiflore 3,039 1986 May 2010
CMA CGM Elbe 2,917 1991 June 2010
CMA CGM Kalamata 2,917 1991 June 2010
CMA CGM Komodo 2,917 1991 June 2010
Hyundai Advance 2,200 1997 June 2017
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Hyundai Stride 2,200 1997 July 2017
Hyundai Progress 2,200 1998 December 2017
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Hyundai Vladivostok 2,200 1997 May 2017
Hanjin Montreal (9) 2,130 1984 May 2010
(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 12, 2009, the Maersk Deva was renamed to Bunga Raya Tujuh
at the request of the charterer of this vessel.
(9) On May 14, 2009, the Montreal Senator was renamed to Hanjin Montreal
at the request of the charterer of this vessel.
New Deliveries
The following table describes the expected additions to our fleet as a
result of our new building containership program.
Vessel Expected Time Charter
Vessel Name Size (TEU) Delivery(2) Term
---------- ---------------- ------------
HN N-219(2) 3,400 2nd Quarter 2010 10 years
HN S4003(1) (2) 6,500 2nd Quarter 2010 12 years
HN S4004(1) (2) 6,500 2nd Quarter 2010 12 years
HN N-214(2) 6,500 2nd Quarter 2010 18 years
HN N-220(2) 3,400 2nd Quarter 2010 10 years
HN S4005(1) (2) 6,500 3rd Quarter 2010 12 years
HN N-215(2) 6,500 3rd Quarter 2010 18 years
HN N-221(2) 3,400 3rd Quarter 2010 10 years
HN N-222(2) 3,400 4th Quarter 2010 10 years
HN N-223(2) 3,400 4th Quarter 2010 10 years
HN Z00001(2) 8,530 1st Quarter 2011 12 years
Hull No S-461(2) 10,100 1st Quarter 2011 12 years
Hull No S-462(2) 10,100 1st Quarter 2011 12 years
HN Z00002(2) 8,530 2nd Quarter 2011 12 years
HN Z00003(2) 8,530 2nd Quarter 2011 12 years
HN Z00004(2) 8,530 2nd Quarter 2011 12 years
Hull No S-463(2) 10,100 2nd Quarter 2011 12 years
HN H 1022A(2) 8,530 3rd Quarter 2011 12 years
HN N-216(2) 6,500 1st Quarter 2012 15 years
Hull No S-456(2) 12,600 1st Quarter 2012 12 years
Hull No S-457(2) 12,600 1st Quarter 2012 12 years
HN N-217(2) 6,500 2nd Quarter 2012 15 years
HN N-218(2) 6,500 2nd Quarter 2012 15 years
Hull No S-458(2) 12,600 2nd Quarter 2012 12 years
Hull No S-459(2) 12,600 2nd Quarter 2012 12 years
Hull No S-460(2) 12,600 2nd Quarter 2012 12 years
(1) Vessel subject to charterer's option to purchase vessel after first
eight years of time charter term for $78.0 million.
(2) Delivery date represents most recent update regarding respective
event, which in certain cases may change significantly as a result
of further negotiations with shipyards.
DANAOS CORPORATION
Statements of Income
(Unaudited)
(Expressed in thousands of United States dollars, except per share amounts)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- --------- --------- ----------
2009 2008 2009 2008
---------- --------- --------- ----------
OPERATING REVENUES $ 85,339 $ 78,703 $ 319,511 $ 298,905
OPERATING EXPENSES
Vessel operating expenses (23,341) (24,111) (92,327) (89,246)
Depreciation & amortization (18,284) (15,842) (69,201) (58,326)
General & administrative (4,186) (3,003) (14,541) (11,617)
Gain on sale of vessels -- 1,973 -- 16,901
Other operating expenses (1,933) (1,558) (7,346) (7,657)
---------- --------- --------- ----------
Income From Operations 37,595 36,162 136,096 148,960
---------- --------- --------- ----------
OTHER EARNINGS (EXPENSES)
Interest income 355 2,683 2,428 6,544
Interest expense (9,345) (11,634) (36,208) (34,740)
Other finance cost, net (755) (399) (2,290) (2,047)
Other income / (expenses),
net 600 (1,800) (336) (1,060)
Loss on fair value of
derivatives (44,632) (1,182) (63,601) (597)
---------- --------- --------- ----------
Total Other Income
(Expenses), net (53,777) (12,332) (100,007) (31,900)
---------- --------- --------- ----------
Net (loss) / income from
continuing operations $ (16,182) $ 23,830 $ 36,089 $ 117,060
---------- --------- --------- ----------
Net loss from discontinued
operations -- (262) -- (1,822)
---------- --------- --------- ----------
Net (loss) / Income $ (16,182) $ 23,568 $ 36,089 $ 115,238
========== ========= ========= ==========
EARNINGS PER SHARE (from
continuing operations)
Basic and diluted net (loss)
earnings per share $ (0.30) $ 0.44 $ 0.66 $ 2.15
========== ========= ========= ==========
EARNINGS PER SHARE
Basic and diluted net (loss)
earnings per share $ (0.30) $ 0.43 $ 0.66 $ 2.11
========== ========= ========= ==========
Basic and diluted weighted
average number of common
shares (in thousands of
shares) 54,551 54,556 54,550 54,557
========== ========= ========= ==========
DANAOS CORPORATION
Balance Sheets
(Expressed in thousands of United States dollars)
As of As of
December 31, December 31,
------------ ------------
2009 2008
------------ ------------
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 122,050 $ 120,720
Restricted cash, current portion 154,078 104,401
Accounts receivable, net 3,732 1,119
Other current assets 20,644 23,954
------------ ------------
300,504 250,194
------------ ------------
NON-CURRENT ASSETS
Fixed assets, net 1,573,759 1,339,645
Advances for vessels under construction 1,194,088 1,067,825
Restricted cash, net of current portion 44,393 147,141
Deferred charges, net 20,583 16,098
Fair value of financial instruments 3,762 6,691
Other non-current assets 5,622 870
------------ ------------
2,842,207 2,578,270
------------ ------------
TOTAL ASSETS 3,142,711 2,828,464
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion 79,021 42,219
Accounts payable, accrued liabilities &
other current liabilities 86,264 31,779
Fair value of financial instruments, current
portion 100,065 48,217
------------ ------------
265,350 122,215
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, net of current portion 2,258,657 2,065,459
Fair value of financial instruments, net of
current portion 207,493 414,668
Other long-term liabilities 5,620 7,088
------------ ------------
2,471,770 2,487,215
------------ ------------
STOCKHOLDERS' EQUITY
Common stock 546 546
Additional paid-in capital 288,613 288,615
Treasury stock (39) (88)
Accumulated other comprehensive loss (324,093) (474,514)
Retained earnings 440,564 404,475
------------ ------------
405,591 219,034
------------ ------------
Total liabilities and stockholders' equity $ 3,142,711 $ 2,828,464
============ ============
DANAOS CORPORATION
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,
---------- --------- --------- ----------
2009 2008 2009 2008
---------- --------- --------- ----------
Operating Activities:
Net (loss) / income $ (16,182) $ 23,568 $ 36,089 $ 115,238
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 16,252 13,857 60,906 51,025
Amortization of deferred
charges 2,325 2,069 9,184 7,521
Written off amount of
deferred charges -- -- 412 309
Stock based compensation 8 38 47 85
Payments for drydocking /
special survey (184) (1,860) (7,259) (10,625)
Change in fair value of
financial instruments 19,700 (2,747) (6,801) (15,332)
Gain on sale of vessels -- (1,973) -- (16,901)
Accounts receivable (1,037) 1,385 (2,613) 3,202
Other assets, current and
non-current (5,853) (2,829) (1,442) (5,498)
Accounts payable and
accrued liabilities 4,140 3,276 9,244 7,944
Other liabilities, current
and non-current (541) (511) (2,290) (1,479)
---------- --------- --------- ----------
Net Cash provided by
Operating Activities 18,628 34,273 95,477 135,489
---------- --------- --------- ----------
Investing Activities:
Vessel acquisitions and
additions including
advances (12) 19 (299) (76,506)
Vessels under construction (56,681) (121,324) (374,921) (518,512)
Proceeds from sale of
vessels -- 13,929 -- 83,032
---------- --------- --------- ----------
Net Cash used in Investing
Activities (56,693) (107,376) (375,220) (511,986)
---------- --------- --------- ----------
Financing Activities:
Debt draw downs 28,200 89,797 267,043 805,010
Debt repayment (6,892) (6,893) (32,219) (59,919)
Treasury stock -- (88) -- (88)
Dividends paid -- (25,369) -- (101,477)
Deferred costs (13) (1,598) (6,822) (4,441)
Decrease/(increase) in
restricted cash 13,447 71,479 53,071 (205,363)
---------- --------- --------- ----------
Net Cash provided by
Financing Activities 34,742 127,328 281,073 433,722
---------- --------- --------- ----------
Net (Decrease)/Increase in
cash and cash equivalents (3,323) 54,225 1,330 57,225
Cash and cash equivalents,
beginning of period 125,373 66,495 120,720 63,495
---------- --------- --------- ----------
Cash and cash equivalents,
end of period $ 122,050 $ 120,720 $ 122,050 $ 120,720
========== ========= ========= ==========
Reconciliation of Net Income to EBITDA - 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,
---------- --------- --------- ----------
2009 2008 2009 2008
---------- --------- --------- ----------
Net (loss) / income $ (16,182) $ 23,830 $ 36,089 $ 117,060
Depreciation 16,252 13,857 60,906 51,025
Amortization of deferred
drydocking & special survey
costs 2,032 1,985 8,295 7,301
Interest income (355) (2,683) (2,428) (6,544)
Interest expense 9,345 11,634 36,208 34,740
Non-cash changes in fair
value of derivatives 30,941 170 29,497 (2,391)
---------- --------- --------- ----------
EBITDA(2) from continuing
operations $ 42,033 $ 48,793 $ 168,567 $ 201,191
EBITDA(2) from discontinued
operations -- (262) -- (1,822)
---------- --------- --------- ----------
EBITDA(2) $ 42,033 $ 48,531 $ 168,567 $ 199,369
========== ========= ========= ==========
(2) EBITDA represents net income before interest income and expense,
depreciation, amortization and non-cash changes in fair value of
derivatives. However, EBITDA is not a recognized measurement under U.S.
generally accepted accounting principles, or "GAAP." We believe that the
presentation of EBITDA is useful to investors because it is frequently used
by securities analysts, investors and other interested parties in the
evaluation of companies in our industry. We also believe that EBITDA is
useful in evaluating our ability to service additional debt and make
capital expenditures. In addition, we believe that EBITDA is useful in
evaluating our operating performance and liquidity position compared to
that of other companies in our industry because the calculation of EBITDA
generally eliminates the effects of financings, income taxes and the
accounting effects of capital expenditures and acquisitions, items which
may vary for different companies for reasons unrelated to overall operating
performance and liquidity.
Adjusted Net Income and EBITDA - Unaudited
(Continuing operations)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- --------- --------- ----------
2009 2008 2009 2008
---------- --------- --------- ----------
Net (Loss) / Income $ (16,182) $ 23,830 $ 36,089 $ 117,060
Prior years insurance costs(3) -- 1,636 -- 1,636
Loss in fair value of
derivatives 44,632 1,182 63,601 597
Realized losses on
derivatives (13,691) (1,012) (34,104) (2,988)
Gain on sale of vessels -- (1,973) -- (16,901)
---------- --------- --------- ----------
Adjusted Net Income $ 14,759 $ 23,663 $ 65,586 $ 99,404
========== ========= ========= ==========
Adjusted Earnings Per Share $ 0.27 $ 0.43 $ 1.20 $ 1.82
========== ========= ========= ==========
Weighted average number of
shares 54,551 54,556 54,550 54,557
EBITDA (2) $ 42,033 $ 48,793 $ 168,567 $ 201,191
Prior years insurance costs(3) -- 1,636 -- 1,636
Gain on sale of vessels -- (1,973) -- (16,901)
---------- --------- --------- ----------
Adjusted EBITDA (2) $ 42,033 $ 48,456 $ 168,567 $ 185,926
========== ========= ========= ==========
(3) Adjustment represents exceptional insurance costs for the years of
2006 and 2007, which have been recorded in 2008 in "Other income/(expense),
net" in relation to the contribution of one of our insurers to the exposure
of the International Group of P&I Clubs.
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 this financial information additional meaningful
comparisons between current results and results in prior operating periods.
Management believes that these non-GAAP financial measures can provide
additional meaningful reflection of underlying trends of the business
because they provide a comparison of historical information that excludes
certain items that impact the overall comparability. Management also uses
these non-GAAP financial measures in making financial, operating and
planning decisions and in evaluating the Company's performance. See the
Tables above for supplemental financial data and corresponding
reconciliations to GAAP financial measures for the three and the twelve
months ended December 31, 2009 and 2008. Non-GAAP financial measures should
be viewed in addition to, and not as an alternative for, the Company's
reported results prepared in accordance with GAAP.
Contact Information: Visit our website at www.danaos.com 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