Danaos Corporation Reports Results for the Fourth Quarter and Year Ended December 31, 2017

Athens, Greece - Feb. 12, 2017

Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2017.

Highlights for the Fourth Quarter and Year Ended December 31, 2017:

• Adjusted net income1 of $31.2 million, or $0.28 per share, for the three months ended December 31, 2017 compared to $23.2 million, or $0.21 per share, for the three months ended December 31, 2016, an increase of 34.5%. Adjusted net income1 of $114.9 million, or $1.05 per share, for the year ended December 31, 2017 compared to $140.9 million, or $1.28 per share, for the year ended December 31, 2016, a decrease of 18.5%.

• Operating revenues of $114.2 million for the three months ended December 31, 2017 compared to $112.1 million for the three months ended December 31, 2016, an increase of 1.9%. Operating revenues of $451.7 million for the year ended December 31, 2017 compared to $498.3 million for the year ended December 31, 2016, a decrease of 9.4%.

• Adjusted EBITDA1 of $80.0 million for the three months ended December 31, 2017 compared to $75.9 million for the three months ended December 31, 2016, an increase of 5.4%. Adjusted EBITDA1 of $310.4 million for the year ended December 31, 2017 compared to $350.6 million for the year ended December 31, 2016, a decrease of 11.5%.

• Total contracted operating revenues were $1.7 billion as of December 31, 2017, with charters extending through 2028 and remaining average contracted charter duration of 5.7 years, weighted by aggregate contracted charter hire.

• Charter coverage of 86% for the next 12 months based on current operating revenues and 69% in terms of contracted operating days.

Three Months and Year Ended December 31, 2017

Financial Summary - Unaudited

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



Danaos' CEO Dr. John Coustas commented:
Our earnings for the fourth quarter of 2017 improved markedly when compared to the earnings of the fourth quarter of 2016 which had been negatively impacted in the aftermath of the Hanjin bankruptcy. This is mainly the result of our high charter contract coverage which remains at 86% for the next 12 months based on current operating revenues and 69% in terms of contracted operating days.

Adjusted net income of $31.2 million for the quarter represented an increase of $8.0 million, or 34.5%, compared to $23.2 million for the fourth quarter of 2016. This increase was attributable to a $5.2 million increase in the operating revenues of the vessels that were previously chartered to Hanjin compared to the fourth quarter of 2016, and improved operating performance of $2.8 million.

As previously reported, the Company is in breach of certain financial covenants as a result of the Hanjin bankruptcy. We are currently engaged in discussions with our lenders regarding restructuring our debt, substantially all of which matures on December 31, 2018. In the meantime, we continue to generate positive cash flows from our operations and currently have sufficient liquidity to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements leading up to the December 2018 maturity date.

The charter market in general has stabilized at slightly better levels compared to the lows of 2016. However, although the size segment above 10,000 TEU has recently seen some improvement, the size segment between 5,000 to 10,000 TEU has retracted from the charter rate levels achieved within 2017. For panamax vessels between 4,000 to 5,000 TEU the market is stagnant however comfortably above operating costs. For the smaller feeder sector there is a firming market however the lack of long term fixtures shows that there is no faith in the sustainability. We do not expect a material improvement in the market environment within 2018, given the large number of scheduled vessel deliveries. Danaos continues to have low near term exposure to the weak spot market as a result of the aforementioned charter coverage.

During this extended period of market weakness which has presented many challenges, we remain focused on taking necessary actions to preserve the value of our company.

Three months ended December 31, 2017 compared to the three months ended December 31, 2016
During the three months ended December 31, 2017 and December 31, 2016, Danaos had an average of 55 containerships. Our fleet utilization for the fourth quarter of 2017 was 97.8%, while fleet utilization for the vessels under employment, excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin"), was 97.8% in the three months ended December 31, 2017 compared to 99.5% in the three months ended December 31, 2016.

Our adjusted net income amounted to $31.2 million, or $0.28 per share, for the three months ended December 31, 2017 compared to $23.2 million, or $0.21 per share, for the three months ended December 31, 2016. We have adjusted our net income in the three months ended December 31, 2017 for refinancing related professional fees of $5.0 million and a non-cash amortization charge of $3.4 million for fees related to our 2011 comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees). Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $8.0 million in adjusted net income for the three months ended December 31, 2017 compared to the three months ended December 31, 2016 is attributable to a $2.1 million increase in operating revenues, a $5.1 million decrease in total operating expenses, a $1.0 million decrease in realized loss on derivatives, a $0.5 million increase in other income and a $0.3 million improvement in the operating performance of our equity investment in Gemini Shipholdings Corporation ("Gemini"), which were partially offset by a $1.0 million increase in net finance expenses.

On a non-adjusted basis, our net income amounted to $22.8 million, or $0.21 per share, for the three months ended December 31, 2017 compared to a loss of $446.6 million, or $4.07 loss per share, for the three months ended December 31, 2016, which includes $466.9 million of impairment related expenses.

Operating Revenues
Operating revenues increased by 1.9%, or $2.1 million, to $114.2 million in the three months ended December 31, 2017 from $112.1 million in the three months ended December 31, 2016.

Operating revenues for the three months ended December 31, 2017 reflect:

• $5.2 million increase in revenues in the three months ended December 31, 2017 compared to the three months ended December 31, 2016 due to the recorded charter income of $6.7 million from eight of our vessels previously chartered to Hanjin Shipping ("Hanjin") that had recorded operating revenues of $1.5 million during the fourth quarter of 2016.

• $2.7 million decrease in revenues in the three months ended December 31, 2017 compared to the three months ended December 31, 2016 due to the re-chartering of certain of our vessels at lower rates.

• $0.4 million decrease in revenues attributed to fleet utilization in the three months ended December 31, 2017 compared to the three months ended December 31, 2016.

Vessel Operating Expenses
Vessel operating expenses increased by 1.2%, or $0.3 million, to $26.2 million in the three months ended December 31, 2017 from $25.9 million in the three months ended December 31, 2016. The average daily operating cost per vessel for vessels on time charter was $5,583 per day for the three months ended December 31, 2017 compared to $5,303 per day for the three months ended December 31, 2016. Management believes that our daily operating cost ranks as one of the most competitive in the industry.

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

Depreciation
Depreciation expense decreased by 13.8%, or $4.5 million, to $28.0 million in the three months ended December 31, 2017 from $32.5 million in the three months ended December 31, 2016, mainly due to decreased depreciation expense for twenty-five vessels for which we recorded an impairment charge on December 31, 2016.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.1 million, to $1.7 million in the three months ended December 31, 2017 from $1.6 million in the three months ended December 31, 2016.

General and Administrative Expenses
General and administrative expenses decreased by $0.2 million to $5.8 million in the three months ended December 31, 2017, from $6.0 million in the three months ended December 31, 2016.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses decreased by $0.9 million to $3.0 million in the three months ended December 31, 2017 compared to $3.9 million in the three months ended December 31, 2016. The decrease is mainly due to decreased bunkering expenses.

Impairment Loss
We have recognized an impairment loss of $415.1 million in relation to 25 of our vessels as of December 31, 2016 compared to nil in the three months ended December 31, 2017.

Interest Expense and Interest Income
Interest expense increased by 4.7%, or $1.0 million, to $22.2 million in the three months ended December 31, 2017 from $21.2 million in the three months ended December 31, 2016. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor by about 50 bps between the two periods, which was partially offset by a decrease in our average debt by $212.3 million, to $2,340.8 million in the three months ended December 31, 2017, from $2,553.1 million in the three months ended December 31, 2016 and a $0.4 million decrease in the amortization of deferred finance costs.

As of December 31, 2017, the debt outstanding gross of deferred finance costs was $2,340.8 million compared to $2,527.3 million as of December 31, 2016.

Interest income decreased by $0.1 million, to $1.4 million in the three months ended December 31, 2017 from $1.5 million in the three months ended December 31, 2016.

Other Finance Expenses, net
Other finance expenses, net decreased by $0.6 million, to $1.0 million in the three months ended December 31, 2017 from $1.6 million in the three months ended December 31, 2016.

Equity Income/(Loss) on Investments
Equity income on investments amounted to $0.3 million in the three months ended December 31, 2017 compared to the equity loss on investments of $14.6 million (mainly attributed to our share of impairment loss for Gemini vessels) in the three months ended December 31, 2016 and relates to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.

Unrealized Loss on Derivatives
Unrealized loss on interest rate swaps amounted to nil in the three months ended December 31, 2017 compared to an unrealized loss of $6.8 million in the three months ended December 31, 2016. The unrealized loss in the three months ended December 31, 2016 was mainly attributed to the accelerated amortization of accumulated other comprehensive loss of $7.7 million.

Realized Loss on Derivatives
Realized loss on interest rate swaps decreased to $0.9 million in the three months ended December 31, 2017 from a loss of $1.9 million in the three months ended December 31, 2016. This decrease is attributable to swap expirations. As of December 31, 2016, all of our interest rate swaps have expired.

Other Income/(Expenses), net
Other expenses, net amounted to $4.3 million and related mainly to the professional fees of $5.0 million due to refinancing discussions with our lenders in the three months ended December 31, 2017 compared to other expenses, net of $29.2 million incurred mainly due to a $29.4 million impairment loss on Zim equity and debt securities recognized in the three months ended December 31, 2016.

Adjusted EBITDA
Adjusted EBITDA increased by 5.4%, or $4.1 million, to $80.0 million in the three months ended December 31, 2017 from $75.9 million in the three months ended December 31, 2016. As outlined earlier, this increase is attributable to a $2.1 million increase in operating revenues, by a $0.7 million decrease in operating expenses, a $0.3 million operating performance improvement on equity investments and a $1.0 million decrease in other expenses. Adjusted EBITDA for the three months ended December 31, 2017 is adjusted for refinancing professional fees of $5.0 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Year ended December 31, 2017 compared to the year ended December 31, 2016
During the year ended December 31, 2017 and December 31, 2016, Danaos had an average of 55 containerships. Our fleet utilization in the year ended December 31, 2017 was 96.4%, while fleet utilization for the vessels under employment, excluding the off charter days of the vessels that were previously chartered to Hanjin, increased to 97.9% in the year ended December 31, 2017 compared to 97.3% in the year ended December 31, 2016.

Our adjusted net income amounted to $114.9 million, or $1.05 per share, for the year ended December 31, 2017 compared to $140.9 million, or $1.28 per share, for the year ended December 31, 2016. We have adjusted our net income in the year ended December 31, 2017 for refinancing related professional fees of $14.3 million, a non-cash amortization charge of $14.3 million for fees related to our 2011 comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a loss on sale of Hyundai Merchant Marine ("HMM") securities of $2.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The decrease of $26.0 million in adjusted net income for the year ended December 31, 2017 compared to the year ended December 31, 2016 is attributable to a $41.3 million decrease in operating revenues during the first half of the year as a result of the Hanjin bankruptcy partially offset by $11.2 million increase in operating revenues earned by the ex Hanjin vessels that earned operating revenues of $1.5 million during the second half of 2016, a decline in operating revenues of $15.5 million as a result of weaker charter market conditions that were prevailing when expiring charters were entered into, and a $1.0 million decrease in operating revenues attributed to fleet utilization, which were partially offset by a $15.8 million decrease in total operating expenses, a $2.0 million decrease in net finance expenses mainly due to interest rate swap expirations and increased interest income, a $2.6 million improvement in the operating performance of our equity investment in Gemini and a $0.2 million increase in other income.

On a non-adjusted basis, our net income amounted to $83.9 million, or $0.76 per share, for the year ended December 31, 2017 compared to net loss of $366.2 million, or $3.34 loss per share, for the year ended December 31, 2016, which includes $466.9 million of impairment related expenses.

Operating Revenues
Operating revenues decreased by 9.4%, or $46.6 million, to $451.7 million in the year ended December 31, 2017 from $498.3 million in the year ended December 31, 2016.

Operating revenues for the year ended December 31, 2017 reflect:

• $41.3 million decrease in revenues during the first half of the year due to loss of revenue from cancelled charters with Hanjin for eight of our vessels due to Hanjin's bankruptcy. These vessels were re-chartered at lower rates and in some cases experienced off hire time in the 2017 period.

• $11.2 million increase in revenues during the second half of 2017 due to the recorded charter income of $12.7 million from eight of our vessels previously chartered to Hanjin that earned operating revenues of $1.5 million during the second half of 2016.

• $15.5 million decrease in revenues in the year ended December 31, 2017 compared to the year ended December 31, 2016 due to the re-chartering of certain of our vessels at lower rates.

• $1.0 million decrease in revenues due to lower fleet utilization in the year ended December 31, 2017 compared to the year ended December 31, 2016.

Vessel Operating Expenses
Vessel operating expenses decreased by 2.2%, or $2.4 million, to $107.0 million in the year ended December 31, 2017 from $109.4 million in the year ended December 31, 2016. The average daily operating cost per vessel for vessels on time charter was $5,661 per day for the year ended December 31, 2017 compared to $5,637 per day for the year ended December 31, 2016. Management believes that our daily operating cost ranks as one of the most competitive in the industry.

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

Depreciation
Depreciation expense decreased by 10.7%, or $13.8 million, to $115.2 million in the year ended December 31, 2017 from $129.0 million in the year ended December 31, 2016, mainly due to decreased depreciation expense for twenty-five vessels for which we recorded an impairment charge on December 31, 2016.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.2 million, to $6.7 million in the year ended December 31, 2017 from $5.5 million in the year ended December 31, 2016. The increase was mainly due to the increased payments for dry-docking and special survey costs related to certain vessels over the last year.

General and Administrative Expenses
General and administrative expenses increased by $0.6 million, to $22.7 million in the year ended December 31, 2017, from $22.1 million in the year ended December 31, 2016.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses and Bad Debt Expense.

Voyage Expenses
Voyage expenses decreased by $1.3 million to $12.6 million in the year ended December 31, 2017 compared to $13.9 million in the year ended December 31, 2016. The decrease is mainly due to decreased commissions.

Bad Debt Expense
Bad debt expense of $15.8 million in the year ended December 31, 2016 compared to nil in the year ended December 31, 2017 relates to receivables from Hanjin, which were written-off.

Impairment Loss
We have recognized an impairment loss of $415.1 million in relation to 25 of our vessels as of December 31, 2016 compared to nil in the year ended December 31, 2017.

Interest Expense and Interest Income
Interest expense increased by 4.3%, or $3.6 million, to $86.6 million in the year ended December 31, 2017 from $83.0 million in the year ended December 31, 2016. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor by about 50 bps between the two periods, which was partially offset by a decrease in our average debt by $243.1 million, to $2,409.1 million in the year ended December 31, 2017, from $2,652.2 million in the year ended December 31, 2016 and a $1.8 million decrease in the amortization of deferred finance costs.

As of December 31, 2017, the debt outstanding gross of deferred finance costs was $2,340.8 million compared to $2,527.3 million as of December 31, 2016.

Interest income increased by $0.9 million to $5.6 million in the year ended December 31, 2017 compared to $4.7 million in the year ended December 31, 2016. The increase was mainly attributed to the interest income recognized on HMM notes receivable.

Other Finance Expenses, net
Other finance expenses, net decreased by $0.8 million, to $4.1 million in the year ended December 31, 2017 from $4.9 million in the year ended December 31, 2016.

Equity Income/(Loss) on Investments
Equity income on investments amounted to $1.0 million in the year ended December 31, 2017 compared to the equity loss on investments of $16.2 million (mainly attributed to our share of impairment loss for Gemini vessels amounting to $14.6 million) in the year ended December 31, 2016 and relates to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.

Unrealized Loss on Derivatives
Unrealized loss on interest rate swaps amounted to nil in the year ended December 31, 2017 compared to a loss of $3.1 million in the year ended December 31, 2016. The unrealized loss in the year ended December 31, 2016 was attributable to the accelerated amortization of accumulated other comprehensive loss of $7.7 million, which was partially offset by the unrealized gains of $4.6 million attributable to mark to market valuation of our swaps, which all expired by December 31, 2016.

Realized Loss on Derivatives
Realized loss on interest rate swaps decreased to $3.7 million in the year ended December 31, 2017 from a loss of $9.4 million in the year ended December 31, 2016. This decrease is attributable to swap expirations. As of December 31, 2016, all of our interest rate swaps have expired.

Other Income/(Expenses), net
Other expenses, net amounted to $15.8 million related mainly to a $14.3 million increase in professional fees due to the refinancing discussions with our lenders and a $2.4 million realized loss on sale of HMM securities in the year ended December 31, 2017 compared to other expenses, net of $41.6 million mainly due to a $29.4 million impairment loss in Zim equity and debt securities and a $12.9 million loss on sale of HMM equity securities recognized in the year ended December 31, 2016.

Adjusted EBITDA
Adjusted EBITDA decreased by 11.5%, or $40.2 million, to $310.4 million in the year ended December 31, 2017 from $350.6 million in the year ended December 31, 2016. As outlined earlier, this decrease is mainly attributable to a $46.6 million decrease in operating revenues, which was partially offset by a $3.1 million decrease in operating expenses, a $2.6 million operating performance improvement on equity investments, and a $0.7 million decrease in other expenses. Adjusted EBITDA for the year ended December 31, 2017 is adjusted for refinancing related professional fees of $14.3 million and a loss on sale of HMM securities of $2.4 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Credit Facilities
As a result of a decrease in our operating income and the charter-attached market value of certain of our vessels caused principally by the cancellation of eight charters with Hanjin Shipping, which is currently under bankruptcy proceedings with the Seoul Central District Court, we were in breach of the minimum security cover, consolidated net leverage and consolidated net worth financial covenants contained in our Bank Agreement and our other credit facilities as of December 31, 2017 and December 31, 2016. We are currently in discussions with our lenders regarding our non-compliance with these covenants and restructuring our debt, which substantially exceeds the market value of our fleet and matures in December 2018. Accordingly, we will need to reach an agreement with our lenders by December 31, 2018.

Conference Call and Webcast
On Tuesday, February 13, 2018 at 9:00 A.M. ET, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until February 20, 2018 by dialing 1 877 344 7529 (US Toll Free Dial In) or +1 412 317 0088 (Standard International Dial In) and using 10117035# as the access code.

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

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

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