UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2022

Commission File Number 001-33060

DANAOS CORPORATION
(Translation of registrant’s name into English)

Danaos Corporation
c/o Danaos Shipping Co. Ltd.
14 Akti Kondyli
185 45 Piraeus
Greece
Attention: Secretary
011 030 210 419 6480
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   ⌧        Form 40-F  ◻

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ◻

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ◻

AGM Results

On July 29, 2022, at our annual meeting of stockholders, Mr. William Repko was re-elected as a Class III director and Mr. Richard Sadler was elected as a Class III director, each for a three-year term expiring at the annual meeting of our stockholders in 2025. Mr. Miklos Konkoly-Thege did not stand for reelection at the annual meeting of stockholders. Our stockholders also ratified the appointment of Deloitte Certified Public Accountants, S.A. as our independent auditors.

EXHIBIT INDEX

99.1	Operating and Financial Review and Prospects and Condensed Consolidated Financial Statements (Unaudited) for the Three and Six Months Ended June 30, 2022.	

*****

This report on Form 6-K is hereby incorporated by reference into the Company’s (i) Registration Statement on Form F-3 (Reg. No. 333-237284) filed with the SEC on March 19, 2020, (ii) the post-effective Amendment to Form F-1 in the Registration Statement on Form F-3 (Reg. No. 333-226096) filed with the SEC on March 6, 2019, (iii) Registration Statement on Form F-3 (Reg. No. 333-174494) filed with the SEC on May 25, 2011, (iv) Registration Statement on Form F-3 (Reg. No. 333-147099), the related prospectus supplements filed with the SEC on December 17, 2007, January 16, 2009 and March 27, 2009, (v) Registration Statement on Form S-8 (Reg. No. 333-233128) filed with the SEC on August 8, 2019 and the reoffer prospectus, dated August 8, 2019, contained therein, (vi) Registration Statement on Form S-8 (Reg. No. 333-138449) filed with the SEC on November 6, 2006 and the reoffer prospectus, dated November 6, 2006, contained therein, (vii) Registration Statement on Form F-3 (Reg. No. 333-169101) filed with the SEC on October 8, 2010, (viii) Registration Statement on Form F-3 (Reg. No. 333-255984) filed with the SEC on May 10, 2021 and (ix) Registration Statement on Form F-3 (Reg. No. 333-263299) filed with the SEC on March 4, 2022.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 2, 2022

 	DANAOS CORPORATION	
 	 	
	By:	/s/ Evangelos Chatzis	
 	Name:	Evangelos Chatzis	
 	Title:	Chief Financial Officer	

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EXHIBIT 99.1
DANAOS CORPORATION
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis should be read in conjunction with our interim condensed consolidated financial statements (unaudited) and the notes thereto included elsewhere in this report.
Results of Operations
Three months ended June 30, 2022 compared to three months ended June 30, 2021
During the three months ended June 30, 2022, Danaos had an average of 71.0 containerships compared to 60.0 containerships during the three months ended June 30, 2021. Our fleet utilization for the three months ended June 30, 2022 was 99.9% compared to 99.1% for the three months ended June 30, 2021.
Operating Revenues
Operating revenues increased by 71.4%, or $104.5 million, to $250.9 million in the three months ended June 30, 2022 from $146.4 million in the three months ended June 30, 2021.
Operating revenues for the three months ended June 30, 2022 reflect:

	●	a $62.0 million increase in revenues in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 mainly as a result of higher charter rates;	
	●	a $23.9 million increase in revenues in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due to the incremental revenue generated by newly acquired vessels;	
	●	a $2.9 million increase in revenue in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due to higher non-cash revenue recognition in accordance with US GAAP; and	
	●	a $15.7 million increase in revenues in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due to amortization of assumed time charters.	

Voyage Expenses
Voyage expenses increased by $4.4 million to $9.4 million in the three months ended June 30, 2022 from $5.0 million in the three months ended June 30, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.
Vessel Operating Expenses
Vessel operating expenses increased by $7.7 million to $40.6 million in the three months ended June 30, 2022 from $32.9 million in the three months ended June 30, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,463 per vessel per day for the three months ended June 30, 2022 compared to $6,241 per vessel per day for the three months ended June 30, 2021. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration and insurance expenses mainly due to increased insurance premiums in the three months ended June 30, 2022. Management believes that our daily operating costs remain among the most competitive in the industry.
Depreciation
Depreciation expense increased by 29.5%, or $7.7 million, to $33.8 million in the three months ended June 30, 2022 from $26.1 million in the three months ended June 30, 2021 due to recent acquisitions of eleven vessels.
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Amortization of Deferred Drydocking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.7 million to $3.2 million in the three months ended June 30, 2022 from $2.5 million in the three months ended June 30, 2021.
General and Administrative Expenses
General and administrative expenses remained stable at $7.1 million in each of the three months ended June 30, 2022 and June 30, 2021.
Gain on debt extinguishment
The gain on debt extinguishment of $22.9 million in the three months ended June 30, 2022 related to our early extinguishment of debt compared to $111.6 million in the three months ended June 30, 2021 related to our debt refinancing on April 12, 2021.
Interest Expense and Interest Income
Interest expense decreased by 11.5%, or $2.1 million, to $16.1 million in the three months ended June 30, 2022 from $18.2 million in the three months ended June 30, 2021. The decrease in interest expense is a combined result of:

	●	a $2.2 million decrease in interest expense due to a decrease in our average indebtedness by $311.1 million between the two periods (average indebtedness of $1,154.2 million in the three months ended June 30, 2022, compared to average indebtedness of $1,465.3 million in the three months ended June 30, 2021), which was partially offset by an increase in our debt service cost by 0.44%, mainly as a result of increased Libor rates;	
	●	a $0.7 million decrease in the amortization of deferred finance costs and debt discount;	
	●	a $0.7 million decrease in interest expense due to capitalized interest on our vessels under construction in the three months ended June 30, 2022 compared to none in the three months ended June 30, 2021; and	
	●	a $1.5 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has decreased. In May 2022, we fully repaid the facility related to the 2018 accumulated accrued interest. The remaining accumulated accrued interest of $26.9 million was recognized in gain on debt extinguishment on the repayment date.	

During the three months ended June 30, 2022, we reduced debt and lease indebtedness by $467.8 million mainly as a result of $434.1 million of early debt and lease repayments and recognized a $22.9 million gain related to this early debt extinguishment. On the other hand, our indebtedness increased by $130 million following consummation of the loan agreement to finance our six 5,466 TEU vessels that were acquired in 2021.
As of June 30, 2022, our outstanding debt, gross of deferred finance costs, was $885.1 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $105.8 million. These balances compare to debt of $1,165.9 million and a leaseback obligation of $237.2 million, gross of deferred finance costs, as of June 30, 2021. See “Liquidity and Capital Resources”.
Interest income decreased by $9.4 million to $0.1 million in the three months ended June 30, 2022 compared to $9.5 million in the three months ended June 30, 2021 mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof, in the year 2021.
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Gain/(loss) on investments
The loss on investments of $168.6 million was recognized in the three months ended June 30, 2022 compared to a gain of $196.3 million in the three months ended June 30, 2021 relating to the change in fair value of our investment in ZIM Integrated Shipping Services Ltd. (“ZIM”). In April 2022, we sold 1,500,000 of these ZIM ordinary shares resulting in proceeds to us of $85.3 million. Our remaining shareholding interest in ZIM of 5,686,950 ordinary shares of ZIM has been fair valued at $268.6 million as of June 30, 2022 based on the closing price of ZIM’s ordinary shares on the NYSE on that date.
Dividend income
Dividend income of $16.2 million was recognized on ZIM ordinary shares in the three months ended June 30, 2022 compared to none in the three months ended June 30, 2021.
Equity Income on Investments
Equity income on investments in Gemini decreased to nil in the three months ended June 30, 2022 compared to $2.2 million in the three months ended June 30, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.
Other Finance Expenses
Other finance expenses decreased by $0.3 million to $0.3 million in the three months ended June 30, 2022 compared to $0.6 million in the three months ended June 30, 2021.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended June 30, 2022 and June 30, 2021.
Other income, net
Other income, net was $0.4 million in the three months ended June 30, 2022 compared to $0.2 million in the three months ended June 30, 2021.
Income taxes
Income taxes were $2.3 million in the three months ended June 30, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares compared to no income tax in the three months ended June 30, 2021.
Six months ended June 30, 2022 compared to six months ended June 30, 2021
During the six months ended June 30, 2022, Danaos had an average of 71.0 containerships compared to 60.0 containerships during the six months ended June 30, 2021. Our fleet utilization for the six months ended June 30, 2022 was 98.7% compared to 98.9% for the six months ended June 30, 2021.
Operating Revenues
Operating revenues increased by 72.6%, or $202.3 million, to $480.8 million in the six months ended June 30, 2022 from $278.5 million in the six months ended June 30, 2021.
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Operating revenues for the six months ended June 30, 2022 reflect:

	●	a $110.9 million increase in revenues in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 mainly as a result of higher charter rates;	
	●	a $44.7 million increase in revenues in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 due to the incremental revenue generated by newly acquired vessels	
	●	a $14.3 million increase in revenue in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 due to higher non-cash revenue recognition in accordance with US GAAP; and	
	●	a $32.4 million increase in revenues in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 due to amortization of assumed time charters.	

Voyage Expenses
Voyage expenses increased by $7.4 million to $16.6 million in the six months ended June 30, 2022 from $9.2 million in the six months ended June 30, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.
Vessel Operating Expenses
Vessel operating expenses increased by $15.7 million to $79.7 million in the six months ended June 30, 2022 from $64.0 million in the six months ended June 30, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,385 per vessel per day for the six months ended June 30, 2022 compared to $6,098 per vessel per day for the six months ended June 30, 2021. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration and insurance expenses mainly due to increased insurance premiums in the six months ended June 30, 2022. Management believes that our daily operating costs remain among the most competitive in the industry.
Depreciation
Depreciation expense increased by 29.3%, or $15.2 million, to $67.1 million in the six months ended June 30, 2022 from $51.9 million in the six months ended June 30, 2021 due to recent acquisitions of eleven vessels.
Amortization of Deferred Drydocking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.9 million to $5.9 million in the six months ended June 30, 2022 from $5.0 million in the six months ended June 30, 2021.
General and Administrative Expenses
General and administrative expenses decreased by $3.5 million to $14.5 million in the six months ended June 30, 2022, from $18.0 million in the six months ended June 30, 2021. The decrease was mainly attributable to decreased stock-based compensation.
Gain on debt extinguishment
The gain on debt extinguishment of $22.9 million in the six months ended June 30, 2022 related to our early extinguishment of debt compared to $111.6 million in the six months ended June 30, 2021 related to our debt refinancing on April 12, 2021.
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Interest Expense and Interest Income
Interest expense decreased by 0.3%, or $0.1 million, to $33.2 million in the six months ended June 30, 2022 from $33.3 million in the six months ended June 30, 2021. The decrease in interest expense is a combined result of:

	●	a $4.3 million decrease in interest expense due to a decrease in our average indebtedness by $284.6 million between the two periods (average indebtedness of $1,254.9 million in the six months ended June 30, 2022, compared to average indebtedness of $1,539.5 million in the six months ended June 30, 2021), which was partially offset by an increase in our debt service cost by 0.31%, mainly as a result of increased Libor rates;	
	●	a $2.3 million decrease in the amortization of deferred finance costs and debt discount;	
	●	a $0.7 million decrease in interest expense due to capitalized interest on our vessels under construction in the six months ended June 30, 2022 compared to none in the six months ended June 30, 2021; and	
	●	a $7.2 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has decreased. In May 2022, we fully repaid the facility related to the 2018 accumulated accrued interest. The remaining accumulated accrued interest of $26.9 million was recognized in gain on debt extinguishment on the repayment date.	

During the six months ended June 30, 2022, we reduced debt and lease indebtedness by $507.6 million mainly as a result of $434.1 million of early debt and lease repayments and recognized a $22.9 million gain related to this early debt extinguishment. On the other hand, our indebtedness increased by $130 million following consummation of the loan agreement to finance our six 5,466 TEU vessels that were acquired in 2021.
As of June 30, 2022, our outstanding bank debt, gross of deferred finance costs, was $885.1 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $105.8 million. These balances compare to bank debt of $1,165.9 million and a leaseback obligation of $237.2 million, gross of deferred finance costs, as of June 30, 2021.
Interest income decreased by $11.4 million to $0.1 million in the six months ended June 30, 2022 compared to $11.5 million in the six months ended June 30, 2021, mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in the year 2021.
Gain/(loss) on investments
The loss on investments of $69.1 million was recognized in the six months ended June 30, 2022 compared to a gain of $444.2 million in the six months ended June 30, 2021 relating to the change in fair value of our investment in ZIM. In April 2022, we sold 1,500,000 of these ZIM ordinary shares resulting in proceeds to us of $85.3 million. Our remaining shareholding interest in ZIM of 5,686,950 ordinary shares of ZIM has been fair valued at $268.6 million as of June 30, 2022 based on the closing price of ZIM’s ordinary shares on the NYSE on that date.
Dividend income
Dividend income of $138.4 million was recognized on ZIM ordinary shares in the six months ended June 30, 2022 compared to none in the six months ended June 30, 2021.
Other finance expenses
Other finance expenses decreased by $0.1 million to $0.9 million in the six months ended June 30, 2022 compared to $1.0 million in the six months ended June 30, 2021.
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Equity income on investments
Equity income on investments in Gemini decreased to nil in the six months ended June 30, 2022 compared to $4.0 million in the six months ended June 30, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $1.8 million in each of the six months ended June 30, 2022 and June 30, 2021.
Other income, net
Other income, net was $0.9 million in the six months ended June 30, 2022 compared to $4.1 million in the six months ended June 30, 2021. The decrease was mainly due to the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest in the six months ended June 30, 2021.
Income taxes
Income taxes were $14.5 million in the six months ended June 30, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares compared to no income tax in the six months ended June 30, 2021.
Liquidity and Capital Resources
Our principal source of funds has been operating cash flows, vessel sales, and long-term bank borrowings, as well as equity provided by our stockholders from our initial public offering in October 2006; common stock sales in August 2010 and the fourth quarter of 2019; and the capital contribution of Danaos Investment Limited as Trustee of the 883 Trust (“DIL”) on August 10, 2018. In February 2021, we sold $300 million of 8.500% senior unsecured notes due 2028 (the “Senior Notes”). We used the net proceeds from the offering of Senior Notes, together with proceeds from a new $815 million senior secured credit facility with a four-year term (the “$815 Million Senior Secured Credit Facility”) and a new $135 million sale and leaseback arrangement (the “2021 Leaseback Agreement”), to implement a $1.25 billion refinancing of a substantial majority of our outstanding senior secured indebtedness consummated on April 12, 2021 (the “2021 Debt Refinancing”). Our principal uses of funds have been capital expenditures to establish, grow and maintain our fleet, comply with international shipping standards, environmental laws and regulations and to fund working capital requirements and repayment of debt.
Our short-term liquidity needs primarily relate to the funding of our vessel operating expenses, installment payments for our six contracted newbuildings, debt interest payments and servicing our debt obligations. Our long-term liquidity needs primarily relate to installment payments for our six contracted newbuildings and any additional vessel acquisitions in the containership sector and debt repayment. We anticipate that our primary sources of funds will be cash from operations and equity or debt financings, as well as any sales of or dividends from our existing investment in ZIM ordinary shares. We currently expect that sources of funds available to us will be sufficient to meet our short-term liquidity and long-term liquidity requirements.
Under our existing multi-year charters as of June 30, 2022, we had $2.3 billion of total contracted cash revenues, or $442.7 million for the remainder of 2022, $697.4 million for 2023 and thereafter $1.17 billion. Although these contracted cash revenues are based on contracted charter rates, we are dependent on the ability and willingness of our charterers to meet their obligations under these charters. On May 5, 2022, we received $238.9 million of charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable during the period from May 2022 through January 2027. This prepayment is recorded as unearned revenue on our balance sheet and recognized as revenue in our income statement over the term of the applicable charters.
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As of June 30, 2022, we had cash and cash equivalents of $319.6 million. As of June 30, 2022, we had no remaining borrowing availability under our credit facilities. As of June 30, 2022, we had $885.1 million of outstanding indebtedness (gross of deferred finance costs), including $300 million relating to our Senior Notes, and $105.8 million of outstanding leaseback obligations (gross of deferred finance costs) with respect to four of our vessels. As of June 30, 2022, we were obligated to make quarterly fixed amortization payments, totaling $71.5 million to June 30, 2023, related to the long-term bank debt and aggregate payments of $46.3 million ($50.5 million including imputed interest) under our leaseback obligations to June 30, 2023 (gross of deferred finance costs).
On May 12, 2022, we early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly instalments of the remaining facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, the reference to LIBOR was replaced with daily non-cumulative compounded secured overnight financing rate administered and published by the Federal Reserve Bank of New York (“SOFR”) plus credit spread adjustment. On May 12, 2022, we also early terminated our leaseback obligation related to the 2021 Leaseback Agreement and repaid an aggregate outstanding amount of $94.2 million, together with additional fees amounting to $2.8 million. Additionally, in the three months ended June 30, 2022, we early repaid in full to our lenders the: (i) $43 million loan outstanding with the Macquarie Bank, (ii) $20.55 million loan outstanding with Eurobank and (iii) $9.8 million loan outstanding with SinoPac. We may also at any time and from time to time, seek to retire or purchase our outstanding debt securities through cash purchases, in open-market purchases, privately negotiated transactions or otherwise.
In June 2022, we drew down $130.0 million under a new senior secured term loan facility from BNP Paribas and Credit Agricole with five-year term, which is secured by six 5,466 TEU sister vessels acquired in 2021.
On March 11, 2022, we entered into contracts for the construction of two 7,100 TEU container vessels for an aggregate purchase price of $156.0 million, out of which $31.2 million was advanced in April 2022, $31.2 million is expected to be paid in 2023 and $93.6 million at vessels delivery expected in 2024. On April 1, 2022, as amended on April 21, 2022, we entered into contracts for the construction of four 8,000 TEU container vessels for an aggregate purchase price of $372.7 million, out of which $49.2 million was advanced before June 30, 2022, an amount of $96.7 million is expected to be paid in 2022 and $226.8 million is expected to be paid at vessels delivery in 2024. Additionally, a supervision fee of $725,000 per newbuilding vessel will be payable to Danaos Shipping Company Limited.
We have declared a dividend of $0.75 per share of common stock, which is expected to amount to approximately $15.2 million in the aggregate, payable on August 29, 2022, to holders of record on August 17, 2022. We intend to pay a regular quarterly dividend on our common stock, which will have an impact on our liquidity. Payments of dividends are subject to the discretion of our board of directors, provisions of Marshall Islands law affecting the payment of distributions to stockholders and the terms of our credit facilities, which permit the payment of dividends so long as there has been no event of default thereunder nor would occur as a result of such dividend payment, and will be subject to conditions in the container shipping industry, our financial performance and us having sufficient available excess cash and distributable reserves.
In June 2022, we announced a share repurchase program of up to $100 million of our common stock. We repurchased 177,900 shares of our common stock in the open market for $11.2 million in June 2022, out of which 77,600 shares valued at $4.9 million remained unsettled as of June 30, 2022. Additionally, we repurchased 231,300 shares in the open market for $13.9 million in July 2022. All purchases have been made on the open market within the safe harbor provisions of Regulation 10b-18 under the Exchange Act. Under the share repurchase program, shares of our common stock may be purchased in open market or privately negotiated transactions, at times and prices that are considered to be appropriate by the Company, and the program may be suspended or discontinued at any time.
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ZIM Equity Securities
On January 27, 2021, ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares. Following this offering the Company owned 10,186,950 ordinary shares of ZIM. These shares were recorded at a book value of $75 thousands as of December 31, 2020. In 2021, we sold 3,000,000 ZIM ordinary shares resulting in net proceeds to us of $120.7 million and in April 2022, we sold 1,500,000 ZIM ordinary shares resulting in net proceeds to us of $85.3 million. The remaining shareholding interest of 5,686,950 ordinary shares has been fair valued at $268.6 million as of June 30, 2022, based on the closing price of ZIM ordinary shares on the NYSE on that date. For the six months ended June 30, 2022, we recognized a total loss of $69.1 million on these shares. Τhe change in fair value is reflected under “Gain/(loss) on investments” in the condensed consolidated statement of income. The unrealized gain related to the ZIM ordinary shares still held on June 30, 2022 amounted to $268.6 million. Additionally, we recognized a dividend on our ZIM ordinary shares amounting to $138.4 million in the six months ended June 30, 2022 gross of withholding taxes of $14.5 million. See Note 6, “Other Current and Non-current Assets” to our unaudited condensed consolidated financial statements included in this report.
Impact of the War in Ukraine on our Business
As disclosed in our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 3, 2022, the current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, could adversely affect the crewing operations of our Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol, and trade patterns involving ports in the Black Sea or Russia. The extent of the impact will depend largely on future developments.
Impact of COVID-19 on our Business
The spread of the COVID-19 virus, which was declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets. The duration and full effects of this global health emergency and related disruptions are uncertain. The pandemic had severe impacts on the global economic activity. These trends may continue for the near future as, while the availability of effective vaccines has led to a developing economic recovery in parts of the world, the success and timing of COVID-19 containment strategies are uncertain, including due to the emergence of new variants, and negative impacts are expected to reverberate beyond the duration of the pandemic itself. However, the container shipping industry, in contrast with other sectors, has already reversed many of the negative impacts suffered in the first half of 2020.
In particular as it pertains to our business, the COVID-19 pandemic initially negatively affected global demand for the seaborne transportation of containerized cargoes. Global seaborne container trade declined in 2020, with an estimated impact of around 1% in TEU terms. Liner companies initially responded to these circumstances by reducing service and cutting sailings, which increased idle containership fleet capacity in the first half of 2020 to a peak of 12%. As a result, container freight rates were volatile and containership charter market rates declined significantly in the first half of 2020. However, the ability of the liner companies to consistently manage capacity addressed the drop in volumes at the onset of the pandemic, which alleviated pressure on our customers’ cash flows, many of whom have since reported strong profitability, and stabilized and increased freight rates. The second half of 2020 through June 30, 2022 saw robust demand for seaborne transportation of containerized cargo, with freight volumes and freight rates rebounding sharply. The growth of e-commerce, together with the temporary grounding of aircraft resulting from travel restrictions, has shifted significant shipping volume to seaborne containers. The resulting demand for containerships has resulted in negligible vessel capacity available in certain size segments as of June 30, 2022, increasing charter rates for all segments and enabled us to recharter many of our smaller vessels which had charters expiring during this year at higher rates. Many liner operators and containership owners reported improved results in the second half of 2020, in 2021 and the first half of 2022, due in part to improving container shipping industry market conditions. Our operating revenues increased to $480.8 million in the six months ended June 30, 2022 compared to $278.6 million in the six months ended June 30, 2021.
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COVID-19 related travel restrictions imposed on a global level also caused disruptions in scheduled crew changes on our vessels, caused an increase in remuneration of our crew on the vessels and delays in carrying out of certain hull repairs and maintenance in 2020, which disruptions could continue to affect our operations. During the first quarter of 2020, we experienced delays in Chinese shipyards related to the scheduled installations of the scrubbers on certain of our vessels and delays in carrying out dry-docking repairs, which resulted in incremental 188 off-hire days of our vessels ultimately leading to decreased operating revenue by approximately $3.2 million compared to our expectations. The average daily operating cost per vessel per day for vessels on time charter for the year ended December 31, 2021 increased to $5,986 compared to $5,586 per vessel per day for the year ended December 31, 2020, mainly due to the COVID-19 related increase in crew remuneration in the year ended December 31, 2021. The average daily operating cost per vessel per day for vessels on time charter for the six months ended June 30, 2022 increased to $6,385 compared to $6,098 per vessel per day for the six months ended June 30, 2021, mainly due to the COVID-19 related increase in crew remuneration and insurance expenses due to increased insured values of the vessels in the six months ended June 30, 2022.
In response to the pandemic, we have instituted enhanced safety protocols such as having a substantial portion of our on-shore staff working remotely, more frequent disinfection of our on-shore facilities, temperature readings, limitation of on-site visitors and travel, vaccination, mandatory self-isolation of personnel returning from travel and replacing physical meetings with virtual meetings. We expect to continue such measures, which have not had a significant impact on our expenses, to some degree until the pandemic abates. In addition, the prevailing low interest rates, in part due to actions taken by central banks to stimulate economic activity in the face of the pandemic, has also reduced our interest expense, while lower fuel prices during 2020, which is a substantial expense borne by our customers, helped to bolster their financial position. Recently, fuel costs for our charterers have increased significantly along with the price of oil, and prevailing interest rates have begun to increase and are expected to increase further.
The COVID-19 pandemic continues to unfold and may negatively affect our business, financial performance and results of our operations in the future, as it did in the first half of 2020. The extent of any such effects depends on factors beyond our control and cannot be predicted with certainty. Any prolonged slowdown in the global economy, or the effects of containment strategies such as recent lockdowns imposed in China, may again negatively impact worldwide demand for products transported by containerships, adversely affect the liquidity and financial position of our charterers and may decrease rechartering hire rates for our vessels, as could any decrease in demand for consumer products and other containerized cargo as the pandemic abates or otherwise. This could result in reductions in our revenue and the market value of our vessels, which could materially adversely affect our business and results of operations, as well as our ability to service or refinance our debt and comply with financial covenants of our credit facilities.
Cash Flows

		Six Months		Six Months	
		ended		ended	
	    	June 30, 2022	    	June 30, 2021	
	
		(In thousands)	
Net cash provided by operating activities		$	620,478		$	192,743	
Net cash provided by investing activities		$	14,286		$	144,066	
Net cash used in financing activities		$	(431,947)		$	(108,054)	

Net Cash Provided by Operating Activities
Net cash flows provided by operating activities increased by $427.8 million, to $620.5 million provided by operating activities in the six months ended June 30, 2022 compared to $192.7 million provided by operating activities in the six months ended June 30, 2021. The increase was the result mainly of a $169.9 million increase in operating revenues (net of $32.4 million amortization of assumed time charters in the six months ended June 30, 2022), a collection of $123.9 million in dividends from ZIM (net of withholding taxes) and a $185.0 million change in working capital in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 mainly caused by the charter hire prepayment, which were partially offset by a $24.2 million increase in operating expenses, a $8.6 million increase in dry-docking expenses, a $14.3 million increase in net finance cost and a partial collection of common benefit claim of $3.9 million from Hanjin Shipping in the six months ended June 30, 2021 compared to none in the six months ended June 30, 2022.
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Net Cash Provided by Investing Activities
Net cash flows provided by investing activities decreased by $129.8 million, to $14.3 million provided by investing activities in the six months ended June 30, 2022 compared to $144.1 million provided by investing activities in the six months ended June 30, 2021. The decrease was mainly due to a $82.2 million increase in advances for vessels under construction and vessels additions and a $60.6 million decreased inflow from investments in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, which was partially offset by a $13.0 million advance payment received for the sale of vessels in the six months ended June 30, 2022 compared to no such payments received in the six months ended June 30, 2021.
Net Cash Used in Financing Activities
Net cash flows used in financing activities increased by $323.9 million, to $431.9 million used in financing activities in the six months ended June 30, 2022 compared to $108.0 million used in financing activities in the six months ended June 30, 2021 mainly due to a $296.8 million increase in net debt and finance costs payments related to early debt extinguishment described above, a $20.8 million increase in dividend payments on our common stock and a $6.3 million increase in repurchases of our common stock in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
Non-GAAP Financial Measures
We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes, however, 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 our performance. See the table below for supplemental financial data and corresponding reconciliation to GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.
EBITDA and Adjusted EBITDA
EBITDA represents net income before interest income and expense, taxes, depreciation, as well as amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs and finance costs accrued. Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividends received, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs and finance costs accrued, gain/loss on investments, equity income on investments, gain on debt extinguishment and stock-based compensation. We believe that EBITDA and Adjusted EBITDA assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA are also used: (i) by prospective and current customers as well as potential lenders to evaluate potential transactions; and (ii) to evaluate and price potential acquisition candidates. Our EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
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EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA/Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA/Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. 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. Because of these limitations, EBITDA/Adjusted EBITDA should not be considered as principal indicators of our performance.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA

		Six Months	    	Six Months	
		ended		ended	
	    	June 30, 2022	    	June 30, 2021	
	
		(In thousands)	
Net income		$	339,689		$	669,617	
Depreciation and amortization of right-of-use assets		 	67,112		 	51,898	
Amortization of deferred drydocking & special survey costs		 	5,922		 	5,054	
Amortization of assumed time charters		 	(32,364)		 	—	
Amortization of deferred realized losses of cash flow interest rate swaps		 	1,796		 	1,796	
Amortization of finance costs and debt discount		 	6,561		 	8,808	
Finance costs accrued (Exit Fees under our Bank Agreements)		 	—		 	149	
Interest income		 	(121)		 	(11,509)	
Interest expense		 	26,632		 	24,507	
Income taxes		 	14,480		 	—	
EBITDA		 	429,707		 	750,320	
(Gain)/loss on investments and dividend withholding taxes		 	54,616		 	(444,165)	
Gain on debt extinguishment		 	(22,939)		 	(111,616)	
Stock based compensation		 	248		 	5,479	
Adjusted EBITDA		$	461,632		$	200,018	

EBITDA decreased by $320.6 million, to $429.7 million in the six months ended June 30, 2022 from $750.3 million in the six months ended June 30, 2021. This decrease was mainly attributed to a change in fair value of investment and dividends from ZIM of $374.9 million, a $88.7 million decrease in gain on debt extinguishment, a $19.0 million increase in total operating expenses, a partial collection of common benefit claim of $3.9 million from Hanjin Shipping in the six months ended June 30, 2021, a $4.0 million decrease in our equity income from our investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021, which were partially offset by a $169.9 million increase in operating revenues (net of $32.4 million amortization of assumed time charters recognized in the six months ended June 30, 2022).
Adjusted EBITDA increased by $261.6 million, to $461.6 million in the six months ended June 30, 2022 from $200.0 million in the six months ended June 30, 2021. This increase was mainly attributed to a $169.9 million increase in operating revenues (net of $32.4 million amortization of assumed time charters recognized in the six months ended June 30, 2022) and a recognition of a $123.9 million dividend from ZIM (net of withholding taxes) in the six months ended June 30, 2022, which were partially offset by a $24.3 million increase in total operating expenses, a $4.0 million decrease in our equity income from our investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021 and a partial collection of common benefit claim of $3.9 million from Hanjin Shipping in the six months ended June 30, 2021. Adjusted EBITDA for the six months ended June 30, 2022 is adjusted for a $54.6 million change in fair value of the investment in ZIM and dividend withholding taxes, a gain on debt extinguishment of $22.9 million and $0.2 million of stock-based compensation.
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Credit Facilities
We, as borrower or guarantor, and certain of our subsidiaries, as borrowers or guarantors, have entered into a number of credit facilities in connection with financing the acquisition of certain vessels in our fleet and the 2021 Debt Refinancing, which are described in Note 8 “Long-term Debt, net” in the unaudited condensed consolidated financial statements included in this report. Our existing credit facilities are secured by, among other things, our vessels (as described below). We do not have any additional amounts available for borrowing under our existing credit facilities. The following summarizes certain terms of our credit facilities and our Senior Notes:

		Outstanding 	    		
		Principal 			
		Amount 			
Credit Facility	    	(in millions) (1)	    	Collateral Vessels	
Citibank/Natwest $815 mil. Facility(2)		$	463.5	 	The Progress C, the Highway, the Bridge, the Zim Monaco, the Express Argentina, the Express France, the Express Spain, the CMA CGM Racine, the America, the Hyundai Smart, the Express Berlin, the Le Havre, the Derby D, the Vladivostok, the Advance, the Stride, the Future, the Sprinter, the Amalia C, the Zebra, the Artotina, the Dimitris C, the Zim Savannah, the Europe, the Dimitra C, the Hyundai Speed, the Express Rome, the CMA CGM Rabelais, the Pusan C, the Tongala, the CMA CGM Moliere, the CMA CGM Musset, the Rio Grande, the Zim Sao Paolo, the Zim Kingston, the Colombo, the Seattle C, the Vancouver, the Singapore, the Express Athens, the Hyundai Ambition, the Dalian, the Express Brazil, the YM Maturity, the Express Black Sea, the Zim Luanda, the CMA CGM Nerval and the YM Mandate	
BNP Paribas/Credit Agricole $130 mil. Facility		$	130.0	 	The Wide Alpha, the Stephanie C (ex Wide Bravo), the Maersk Euphrates, the Wide Hotel, the Wide India and the Wide Juliet	
Senior Notes		$	300.0	 	None	

	(1)	As of June 30, 2022.	
	(2)	Danaos Corporation is the borrower, and its subsidiaries owning the 48 collateral vessels set forth opposite the name of the facility in the table, are guarantors, under this credit facility.	

As of June 30, 2022, there was no remaining borrowing availability under any of our credit facilities. We were in compliance with the financial covenants of the credit facilities as of June 30, 2022 and December 31, 2021. As of June 30, 2022 thirteen of our vessels were unencumbered. For additional information regarding the credit facilities and related repayment schedule, please refer to Note 8 “Long-term Debt, net” in the unaudited condensed consolidated financial statements included in this report.
In May 2020, we refinanced two of our 13,100 TEU vessels, the Hyundai Honour and the Hyundai Respect, through a sale and leaseback arrangement with a four-year term at the end of which we will reacquire the vessels for an aggregate amount of $36.0 million, or earlier, at our option. Additionally, on July 1, 2021, the Company acquired a finance
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lease liability related to the Gemini’s vessels Suez Canal and Kota Lima, which expired in July 2022, at which time the Company reacquired legal title to these two vessels for an aggregate amount of $19.5 million. As of June 30, 2022, we had a total of $105.8 million of outstanding leasing obligations, which relate to all these four vessels.
On May 12, 2022, we early repaid our leaseback obligation related to the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson. Following the repayment of the leaseback obligation on May 12, 2022, the Company acquired the legal title of these vessels.
On May 12, 2022, we early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility. The future quarterly instalments of the remaining facility were reduced to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, the reference to LIBOR was replaced with daily non-cumulative compounded secured overnight financing rate administered and published by the Federal Reserve Bank of New York (“SOFR”) plus credit spread adjustment
Additionally, in the three months ended June 30, 2022, we early repaid in full to our lenders the (i) $43 million loan outstanding with Macquarie Bank, (ii) $20.6 million loan outstanding with Eurobank and (iii) $9.8 million loan outstanding with SinoPac.
In June 2022, we drew down $130.0 million under a senior secured term loan facility from BNP Paribas and Credit Agricole with a five-year term, which is secured by six 5,466 TEU sister vessels acquired in 2021.
See Note 4 “Fixed Assets, net and Right-of-use Assets” and Note 8 “Long-term Debt, net” to our unaudited condensed consolidated financial statements included in this report.
Senior Notes
On February 11, 2021, we consummated an offering of $300 million aggregate principal amount of 8.500% Senior Notes due 2028 of Danaos Corporation, which we refer to as the Senior Notes. The net proceeds from the offering were initially placed into an escrow account, with Citibank, N.A., as escrow agent, and subsequently released in April 2021 for use in connection with the 2021 Debt Refinancing.
The Senior Notes were issued pursuant to an Indenture, dated as of February 11, 2021, between the Company and Citibank, N.A., London Branch, as trustee, paying agent, registrar and transfer agent. The Senior Notes bear interest at a rate of 8.500% per year, payable in cash on March 1 and September 1 of each year, commencing September 1, 2021. The Senior Notes will mature on March 1, 2028. The Senior Notes are general senior unsecured obligations of Danaos Corporation.
For additional details regarding the Senior Notes please refer to Note 8, “Long-term Debt, net” in the unaudited condensed consolidated financial statements included elsewhere in this report and “Item 5. Operating and Financial Review and Prospects –Senior Notes” in our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 3, 2022.
Qualitative and Quantitative Disclosures about Market Risk
Interest Rate Swaps
In the past, we entered into interest rate swap agreements converting floating interest rate exposure into fixed interest rates in order to hedge our exposure to fluctuations in prevailing market interest rates, as well as interest rate swap agreements converting the fixed rate we paid in connection with certain of our credit facilities into floating interest rates in order to economically hedge the fair value of the fixed rate credit facilities against fluctuations in prevailing market interest rates. All of these interest rate swap agreements have expired and we do not currently have any outstanding interest rate swap agreements. Refer to Note 9, “Financial Instruments”, to our unaudited condensed consolidated financial statements included in this report.
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Foreign Currency Exchange Risk
We did not enter into derivative instruments to hedge the foreign currency translation of assets or liabilities or foreign currency transactions during the six months ended June 30, 2022 and 2021.
Capitalization and Indebtedness
The table below sets forth our consolidated capitalization as of June 30, 2022.

	●	on an actual basis; and	
	●	on an as adjusted basis to reflect, in the period from July 1, 2022 to August 1, 2022, the scheduled debt repayment under the Citibank/Natwest $815 million Senior Secured Credit Facility amounting to $12.9 million and scheduled $21.8 million repayments related to our leasing obligations.	

Other than these adjustments, there have been no other material changes to our capitalization from debt or equity issuances, re-capitalizations, special dividends, or debt repayments as adjusted in the table below between July 1, 2022 and August 1, 2022.

		As of June 30, 2022	
	    	Actual	    	As adjusted	
	
		(US Dollars in thousands)	
Debt:	 		  	 		  	
Citibank/Natwest $815 mil. facility		$	463,500		$	450,625	
Senior unsecured notes		 	300,000		 	300,000	
Other loan facilities		 	130,000		 	130,000	
Leasing obligations		 	105,783		 	83,982	
Total debt (1)(2)		$	999,283		$	964,607	
Stockholders’ equity:		 	  		 	  	
Preferred stock, par value $0.01 per share; 100,000,000 preferred shares authorized and none issued; actual and as adjusted		 	—		 	—	
Common stock, par value $0.01 per share; 750,000,000 shares authorized; 25,055,841 shares issued and 20,538,670 shares outstanding; actual and as adjusted (3)		 	205		 	205	
Additional paid-in capital (3)		 	759,723		 	759,723	
Accumulated other comprehensive loss		 	(69,659)		 	(69,659)	
Retained earnings (4)		 	1,697,209		 	1,697,209	
Total stockholders’ equity		 	2,387,478		 	2,387,478	
Total capitalization		$	3,386,761		$	3,352,085	

	(1)	All of the indebtedness reflected in the table, other than our Senior Notes due 2028 ($300.0 million on an actual basis), is secured and is guaranteed by Danaos Corporation, in the case of indebtedness of our subsidiaries ($130.0 million on an actual basis) and leasing obligations of our subsidiaries ($105.8 million on an actual basis), or by our subsidiaries, in the case of indebtedness of Danaos Corporation ($463.5 million on an actual basis). See Note 4 “Fixed Assets, net and Right-of-use Assets” and Note 8 “Long-Term Debt, net” to our unaudited condensed consolidated financial statements included elsewhere in this report.	
	(2)	Total debt is presented gross of the fair value adjustment and deferred finance costs, which amount to $8.4 million and $24.8 million, respectively.	
	(3)	Actual and as adjusted issued and outstanding common stock include 19,076 shares of restricted stock, which are scheduled to vest on December 31, 2022, subject to satisfaction of the vesting terms. Additionally, as adjusted common stock and additional paid-in capital do not reflect our common stock repurchase, from the open market, of 231,300 shares for $13.9 million in July 2022.	
	(4)	Does not reflect dividend of $0.75 per share of common stock declared by the Company payable on August 29, 2022 to holders of record as of August 17, 2022.	

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Our Fleet
The following table describes in detail our fleet deployment profile as of August 1, 2022:

		Year		Size 		Expiration of 				Contracted Employment		Charter 		Extension Options (4)		
Vessel Name	    	 Built	    	(TEU)	    	Charter (1)	    	Charterer	    	 through (2)	    	Rate (3)	    	Period	    	Charter Rate		
Hyundai Ambition	 	2012	 	13,100	 	June 2024	 	HMM	 	June 2024		$	64,918	 	+ 3 years		$	60,418		
Hyundai Speed	 	2012	 	13,100	 	June 2024	 	HMM	 	June 2024		$	64,918	 	+ 3 years		$	60,418		
Hyundai Smart	 	2012	 	13,100	 	May 2024	 	HMM	 	May 2024		$	64,918	 	+ 3 years		$	60,418		
Hyundai Respect (5)	 	2012	 	13,100	 	March 2024	 	HMM	 	March 2024		$	64,918	 	+ 3 years		$	60,418		
Hyundai Honour (5)	 	2012	 	13,100	 	February 2024	 	HMM	 	February 2024		$	64,918	 	+ 3 years		$	60,418		
Express Rome	 	2011	 	10,100	 	March 2023	 	Hapag Lloyd	 	March 2023		$	29,000	 	+ 10 up to 14 months		$	30,000		
Express Berlin	 	2011	 	10,100	 	June 2023	 	Yang Ming	 	June 2023		$	27,750	 	+ 3 months		$	27,750		
Express Athens	 	2011	 	10,100	 	March 2023	 	Hapag Lloyd	 	March 2023		$	29,000	 	+ 10 up to 14 months		$	30,000		
Le Havre	 	2006	 	9,580	 	June 2028	 	MSC	 	August 2023		$	23,000	 	  		 	  		
							 	Confidential	(10)	June 2028		$	58,500	 	+4 months		$	58,500		
Pusan C	 	2006	 	9,580	 	May 2028	 	MSC	 	July 2023		$	23,000	 	  		 			
							 	Confidential	(10)	May 2028		$	58,500	 	+4 months		$	58,500		
Bremen	 	2009	 	9,012	 	January 2028	 	MSC	 	March 2023		$	23,000	 	  		 			
							 	Confidential	(10)	January 2028		$	56,000	 	+4 months		$	56,000		
C Hamburg	 	2009	 	9,012	 	January 2028	 	MSC	 	March 2023		$	23,000	 	  		 			
							 	Confidential	(10)	January 2028		$	56,000	 	+4 months		$	56,000		
Niledutch Lion	 	2008	 	8,626	 	May 2026	 	Niledutch	 	May 2026		$	47,500	 	+ 4 months		$	47,500		
Belita (8)	 	2006	 	8,533	 	July 2026	 	CMA CGM	 	July 2026		$	45,000	 	+ 6 months		$	45,000		
Kota Manzanillo (ex Charleston)	 	2005	 	8,533	 	February 2026	 	PIL	 	February 2026		$	47,500	 	+ 4 months		$	47,500		
CMA CGM Melisande	 	2012	 	8,530	 	June 2024	 	CMA CGM	 	December 2023		$	43,000	 	+ 6 months		$	43,000		
									 	June 2024 / December 2024		 	at market	(6)	+ 6 months		 	at market	(6)	
CMA CGM Attila	 	2011	 	8,530	 	October 2023	 	CMA CGM	 	April 2023		$	43,000	 	+ 6 months		$	43,000		
									 	October 2023 / April 2024		 	at market	(6)	+ 6 months		 	at market	(6)	
CMA CGM Tancredi	 	2011	 	8,530	 	November 2023	 	CMA CGM	 	May 2023		$	43,000	 	+ 6 months		$	43,000		
									 	November 2023 / May 2024		 	at market	(6)	+ 6 months		 	at market	(6)	
CMA CGM Bianca	 	2011	 	8,530	 	January 2024	 	CMA CGM	 	July 2023		$	43,000	 	+ 6 months		$	43,000		
									 	January 2024 / July 2024		 	at market	(6)	+ 6 months		 	at market	(6)	
CMA CGM Samson	 	2011	 	8,530	 	March 2024	 	CMA CGM	 	September 2023		$	43,000	 	+ 6 months		$	43,000		
									 	March 2024 / September 2024		 	at market	(6)	+ 6 months		 	at market	(6)	
America	 	2004	 	8,468	 	April 2028	 	MSC	 	June 2023		$	22,000	 	  		 	  		
							 	Confidential	(10)	April 2028		$	56,000	 	+ 4 months		$	56,000		
Europe	 	2004	 	8,468	 	May 2028	 	MSC	 	July 2023		$	22,000	 	  		 			
							 	Confidential	(10)	May 2028		$	56,000	 	+ 4 months		$	56,000		
Phoebe	 	2005	 	8,463	 	August 2026	 	ONE	 	August 2022		$	24,000	 	  		 			
							 	PIL	 	August 2023		$	60,000							
									 	August 2025		$	55,000							
									 	August 2026		$	50,000	 	+ 4 months		$	55,000		
CMA CGM Moliere	 	2009	 	6,500	 	March 2027	 	Confidential	(10)	March 2027		$	55,000	 	+ 2 months		$	55,000		
CMA CGM Musset	 	2010	 	6,500	 	September 2025	 	CMA CGM		October 2022		$	152,500	 						
								Confidential	(10)	September 2025		$	60,000		+ 24 months		$	55,000		
CMA CGM Nerval	 	2010	 	6,500	 	December 2022	 	CMA CGM	 	December 2022		$	149,167		+ 6 months		$	149,167		
									 											
CMA CGM Rabelais	 	2010	 	6,500	 	February 2023	 	CMA CGM	 	August 2022		$	34,350	 	  		 	  		
									 	February 2023		$	144,167		+ 6 months		$	144,167		
CMA CGM Racine	 	2010	 	6,500	 	March 2023	 	CMA CGM	 	September 2022		$	34,350	 	  		 	  		
									 	March 2023		 	at market	(6)	+ 6 months		 	at market	(6)	
YM Mandate	 	2010	 	6,500	 	January 2028	 	Yang Ming	 	January 2028		$	26,890	(7)	+ 8 months		$	26,890	(7)	
YM Maturity	 	2010	 	6,500	 	April 2028	 	Yang Ming	 	April 2028		$	26,890	(7)	+ 8 months		$	26,890	(7)	
Leo C (8)(11)	 	2002	 	6,422	 	November 2022	 	MSC	 	November 2022		$	18,000	 	  		 	  		
Catherine C (8)(11)	 	2001	 	6,422	 	November 2022	 	MSC	 	November 2022		$	18,000	 	  		 	  		
Dimitra C	 	2002	 	6,402	 	January 2023	 	Hapag Lloyd	 	January 2023		$	20,000	 	+ 3 months		$	20,000		
														 	+ 12 months		$	21,500		
Zim Savannah	 	2002	 	6,402	 	May 2024	 	ZIM	 	May 2024		$	36,000	 	+ 6 months		$	36,000		
Kota Lima (8)	 	2002	 	5,544	 	November 2024	 	PIL	 	November 2024		$	39,999	 	+ 4 months		$	39,999		
														 	+ 10 up to 14 months		$	27,500		
														 	+ 10 up to 12 months		$	24,000		
Suez Canal (8)	 	2002	 	5,610	 	March 2023	 	TS Lines	 	March 2023		$	30,000	 	+ 4 months		$	30,000		
Wide Alpha (9)	 	2014	 	5,466	 	March 2024	 	ONE	 	March 2024		$	18,500	 	+ 3 months		$	18,500		
Stephanie C (ex Wide Bravo) (9)	 	2014	 	5,466	 	June 2025	 	Confidential	(10)	June 2025		$	55,500	 	+ 4 months		$	55,500		
Maersk Euphrates (9)	 	2014	 	5,466	 	April 2024	 	Maersk	 	April 2024		$	17,500	 	+ 4 months		$	17,500		

15

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		Year		Size 		Expiration of 				Contracted Employment		Charter 		Extension Options (4)	
Vessel Name	    	 Built	    	(TEU)	    	Charter (1)	    	Charterer	    	 through (2)	    	Rate (3)	    	Period	    	Charter Rate	
Wide Hotel (9)	 	2015	 	5,466	 	May 2024	 	ONE	 	May 2024		$	18,500	 	+ 3 months		$	18,500	
Wide India (9)	 	2015	 	5,466	 	September 2025	 	Maersk	 	October 2022		$	19,500	 	  		 		
							 	Confidential	(10)	September 2025		$	53,500	 	+4 months		$	53,500	
Wide Juliet (9)	 	2015	 	5,466	 	June 2023	 	ONE	 	June 2023		$	19,950	 	+ 3 months		$	19,950	
Rio Grande	 	2008	 	4,253	 	November 2024	 	OOCL	 	January 2023		$	68,000	 	  		 		
									 	December 2023		$	50,000						
									 	November 2024		$	17,000	 	+ 2 months		$	45,000	
ZIM Sao Paolo	 	2008	 	4,253	 	February 2023	 	ZIM	 	February 2023		$	21,150	 	+ 4 months		$	21,150	
														 	+ 13 months		$	25,000	
ZIM Kingston	 	2008	 	4,253	 	April 2023	 	ZIM	 	April 2023		$	25,500	 	+ 4 months		$	25,500	
ZIM Monaco	 	2009	 	4,253	 	February 2023	 	ZIM	 	September 2022		$	20,000	 	  		 		
									 	February 2023		$	22,000	 	+ 2 months		$	22,000	
Dalian	 	2009	 	4,253	 	November 2022	 	KMTC	 	November 2022		$	30,750	 	+ 4 months		$	30,750	
ZIM Luanda	 	2009	 	4,253	 	August 2025	 	ZIM	 	August 2025		$	30,000	 	+ 4 months		$	30,000	
Seattle C	 	2007	 	4,253	 	October 2024	 	OOCL	 	December 2022		$	68,000	 	  		 		
									 	November 2023		$	50,000						
									 	October 2024		$	17,000	 	+ 2 months		$	45,000	
Vancouver	 	2007	 	4,253	 	November 2024	 	OOCL	 	January 2023		$	68,000	 	  		 		
									 	December 2023		$	50,000						
									 	November 2024		$	17,000	 	+ 2 months		$	45,000	
Derby D	 	2004	 	4,253	 	January 2027	 	CMA CGM	 	January 2027		$	36,275	 	+ 3 months		$	36,275	
Tongala	 	2004	 	4,253	 	January 2023	 	ZIM	 	January 2023		$	30,750	 	+ 4 months		$	30,750	
Dimitris C	 	2001	 	3,430	 	November 2025	 	CMA CGM	 	November 2025		$	40,000	 	+ 4 months		$	40,000	
Express Argentina	 	2010	 	3,400	 	May 2023	 	Maersk	 	May 2023		$	26,500	 	+ 4 months		$	26,500	
Express Brazil	 	2010	 	3,400	 	June 2025	 	CMA CGM	 	June 2025		$	37,750	 	+ 2 months		$	37,750	
Express France	 	2010	 	3,400	 	September 2025	 	CMA CGM	 	September 2025		$	37,750	 	+ 2 months		$	37,750	
Express Spain	 	2011	 	3,400	 	January 2025	 	Cosco	 	January 2025		$	40,000	 	+ 2 months		$	40,000	
Express Black Sea	 	2011	 	3,400	 	January 2025	 	Cosco	 	January 2025		$	40,000	 	+ 2 months		$	40,000	
Singapore	 	2004	 	3,314	 	May 2024	 	OOCL	 	November 2022		$	44,000	 	  		 		
									 	November 2023		$	38,450						
									 	May 2024		$	21,000	 	+ 6 months		$	37,000	
Colombo	 	2004	 	3,314	 	January 2025	 	Cosco	 	January 2025		$	40,000	 	+ 2 months		$	40,000	
Zebra	 	2001	 	2,602	 	November 2024	 	Maersk	 	November 2024		$	32,000	 	+ 4 months		$	32,000	
Artotina	 	2001	 	2,524	 	May 2025	 	Confidential	(10)	May 2025		$	28,000	 	+2 months		$	28,000	
Amalia C	 	1998	 	2,452	 	January 2023	 	OOCL	 	January 2023		$	24,000	 	+ 2 months		$	24,000	
Vladivostok	 	1997	 	2,200	 	March 2025	 	Maersk	 	March 2025		$	28,000	 	+ 6 months		$	28,000	
Stride	 	1997	 	2,200	 	January 2025	 	Cosco	 	January 2025		$	26,250	 	+ 2 months		$	26,250	
Sprinter	 	1997	 	2,200	 	December 2024	 	Cosco	 	December 2024		$	26,250	 	+ 2 months		$	26,250	
Future	 	1997	 	2,200	 	December 2024	 	Cosco	 	December 2024		$	26,250	 	+ 2 months		$	26,250	
Advance	 	1997	 	2,200	 	January 2025	 	Cosco	 	January 2025		$	26,250	 	+ 2 months		$	26,250	
Bridge	 	1998	 	2,200	 	December 2024	 	Samudera	 	December 2024		$	23,000	 	+ 6 months		$	23,000	
Highway	 	1998	 	2,200	 	August 2022	 	Cosco	 	August 2022		$	17,000	 	+ 4 months		$	17,000	
Progress C	 	1998	 	2,200	 	November 2024	 	Cosco	 	November 2024		$	26,250	 	+ 2 months		$	26,250	

	1.	Earliest date charters could expire. Most charters include options for the charterers to extend their terms as described in the “Extension Options” column.	
	2.	This column indicates the date through which the charter rate set forth in the column to the immediate right of such date is payable. For charters with the same charter rate throughout the fixed term of the charter, this date is the same as the charter expiration date set forth in the “Expiration of Charter” column.	
	3.	Gross charter rate, which does not include charter commissions.	
	4.	At the option of the charterer.	
	5.	A subsidiary of Danaos Corporation holds a leasehold bareboat charter interest in such vessel, pursuant to which such subsidiary will acquire all rights to such vessel at the end of such lease.	
	6.	Daily charter rate for the contracted period of minimum 6 months – maximum 12 months will be the prevailing market rate at that time for such period.	
	7.	Bareboat charter rate.	
	8.	Vessels previously owned by Gemini Shipholdings Corporation, in which Danaos Corporation held a 49% equity interest through the end of the second quarter of 2021. On July 1, 2021, Danaos Corporation exercised its option to acquire the remaining 51% equity interests in Gemini Shipholdings Corporation and now holds 100%.	
16

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	9.	We took delivery of: (i) ‘Maersk Euphrates’ on August 25, 2021, (ii) ‘Wide India’ on September 20, 2021, (iii) ‘Stephanie C (ex Wide Bravo)’ on September 23, 2021, (iv) ‘Wide Juliet’ on September 27, 2021, (v) ‘Wide Alpha’ on September 28, 2021, and (vi) ‘Wide Hotel’ on October 6, 2021.	
	10.	Charterer not disclosed due to confidentiality arrangements.	
	11.	We have agreed to sell two of our vessels, Catherine C and Leo C, for gross proceeds of $130 million, which are expected to be delivered to the buyer in November 2022.	

The specifications of our 6 contracted vessels under construction as of August 1, 2022 are as follows:

Name	    	Year Built	    	Size (TEU)	    	Shipyard	    	Expected Delivery Period	
Hull No. C7100-7	 	2024	 	7,100	 	Dalian Shipbuilding Industry	 	2nd Quarter 2024	
Hull No. C7100-8	 	2024	 	7,100	 	Dalian Shipbuilding Industry	 	3rd Quarter 2024	
Hull No. HN4009	 	2024	 	8,000	 	Daehan Shipbuilding	 	1st Quarter 2024	
Hull No. HN4010	 	2024	 	8,000	 	Daehan Shipbuilding	 	2nd Quarter 2024	
Hull No. HN4011	 	2024	 	8,000	 	Daehan Shipbuilding	 	2nd Quarter 2024	
Hull No. HN4012	 	2024	 	8,000	 	Daehan Shipbuilding	 	3rd Quarter 2024	

Forward Looking Statements
Matters discussed in this report may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning our operations, cash flows, financial position, including with respect to vessel and other asset values, plans, objectives, goals, strategies, future events, performance or business prospects, changes and trends in our business and the markets in which we operate, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to fulfill their obligations to us, charter rates for containerships, shipyards constructing our contracted newbuilding vessels, performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, Danaos’ ability to achieve the expected benefits of the 2021 Debt Refinancing and comply with the terms of its new credit facilities and other financing agreements entered into in connection with the 2021 Debt Refinancing, the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our 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, including the conflict in Ukraine and related sanctions, or acts by terrorists.
Risks and uncertainties are further described in reports filed by us with the U.S. Securities and Exchange Commission.

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INDEX TO FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)	F-2	
		
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	F-3	
		
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	F-4	
		
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2022 and 2021 (unaudited)	F-5	
		
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)	F-6	
		
Notes to the Unaudited Condensed Consolidated Financial Statements	F-7	

F-1

Table of Contents
DANAOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(Expressed in thousands of United States Dollars, except share and per share amounts)

				As of	
	    		    	June 30, 		December 31, 	
	    	Notes	    	2022	    	2021	
				(unaudited)				
ASSETS									
CURRENT ASSETS									
Cash and cash equivalents		3		$	319,573		$	129,410	
Restricted cash		3		$	13,000		$	346	
Accounts receivable, net				 	5,540		 	7,118	
Inventories				 	14,442		 	12,579	
Prepaid expenses				 	3,211		 	2,032	
Due from related parties		14		 	32,118		 	21,875	
Other current assets		6		 	313,909		 	459,132	
Total current assets				 	701,793		 	632,492	
NON-CURRENT ASSETS									
Fixed assets at cost, net of accumulated depreciation of $1,119,847 (2021: $1,055,792)		4			2,800,286			2,861,651	
Right-of-use assets, net of accumulated amortization of $6,142 (2021: $3,085)		4		 	76,580		 	79,442	
Advances for vessels under construction		4			81,162			—	
Deferred charges, net		5		 	15,605		 	11,801	
Other non-current assets		6		 	62,677		 	41,739	
Total non-current assets				 	3,036,310		 	2,994,633	
Total assets				$	3,738,103		$	3,627,125	
									
LIABILITIES AND STOCKHOLDERS’ EQUITY									
CURRENT LIABILITIES									
Accounts payable				$	18,559		$	18,925	
Accrued liabilities		7		 	26,743		 	20,846	
Current portion of long-term debt, net		8			71,500			95,750	
Current portion of long-term leaseback obligation, net		4		 	46,285		 	85,815	
Accumulated accrued interest, current portion					—			6,146	
Unearned revenue				 	154,111		 	83,180	
Other current liabilities				 	18,878		 	8,645	
Total current liabilities				 	336,076		 	319,307	
									
LONG-TERM LIABILITIES									
Long-term debt, net		8		 	790,270		 	1,017,916	
Long-term leaseback obligation, net of current portion		4			58,093			136,513	
Accumulated accrued interest, net of current portion					—			24,155	
Unearned revenue, net of current portion					152,564			37,977	
Other long-term liabilities				 	13,622		 	3,234	
Total long-term liabilities				 	1,014,549		 	1,219,795	
Total liabilities				 	1,350,625		 	1,539,102	
									
Commitments and Contingencies		10		 			 		
									
STOCKHOLDERS’ EQUITY									
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of June 30, 2022 and December 31, 2021)		11		 	—		 	—	
Common stock (par value $0.01, 750,000,000 common shares authorized as of June 30, 2022 and December 31, 2021. 25,055,841 and 25,056,009 shares issued as of June 30, 2022 and December 31, 2021; and 20,538,670 and 20,716,738 shares outstanding as of June 30, 2022 and December 31, 2021)		11		 	205		 	207	
Additional paid-in capital				 	759,723		 	770,676	
Accumulated other comprehensive loss		9		 	(69,659)		 	(71,455)	
Retained earnings				 	1,697,209		 	1,388,595	
Total stockholders’ equity				 	2,387,478		 	2,088,023	
Total liabilities and stockholders’ equity				$	3,738,103		$	3,627,125	

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DANAOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Expressed in thousands of United States Dollars, except share and per share amounts)

				Three months ended		Six months ended	
				June 30, 		June 30, 	
	    	Notes	    	2022	    	2021	    	2022	    	2021	
															
OPERATING REVENUES		12		$	250,923		$	146,434		$	480,824		$	278,552	
															
OPERATING EXPENSES															
Voyage expenses		14			(9,443)		 	(4,966)			(16,632)		 	(9,194)	
Vessel operating expenses					(40,579)		 	(32,940)			(79,743)		 	(64,018)	
Depreciation and amortization of right-of-use assets	 				(33,753)		 	(26,099)			(67,112)		 	(51,898)	
Amortization of deferred drydocking and special survey costs	 	5			(3,202)		 	(2,545)			(5,922)		 	(5,054)	
General and administrative expenses		14			(7,136)		 	(7,130)			(14,527)		 	(18,025)	
Income From Operations					156,810		 	72,754			296,888		 	130,363	
															
OTHER INCOME (EXPENSES):															
Interest income					120		 	9,531			121		 	11,509	
Interest expense					(16,079)		 	(18,204)			(33,193)		 	(33,315)	
Gain/(loss) on investments		6			(168,635)		 	196,290			(69,096)		 	444,165	
Dividend income		6			16,208			—			138,386			—	
Gain on debt extinguishment		8			22,939			111,616			22,939			111,616	
Equity income on investments					—			2,162			—			3,965	
Other finance expenses					(336)			(582)			(941)			(1,034)	
Other income/(expenses), net		10			362		 	173			861		 	4,144	
Loss on derivatives	 	9			(903)		 	(903)			(1,796)		 	(1,796)	
Total Other Income/(Expenses), net					(146,324)		 	300,083			57,281		 	539,254	
															
Income before income taxes					10,486			372,837			354,169			669,617	
Income taxes		6			(2,262)			—			(14,480)			—	
Net Income				$	8,224		$	372,837		$	339,689		$	669,617	
															
EARNINGS PER SHARE															
Basic earnings per share				$	0.40		$	18.32		$	16.42		$	32.95	
Diluted earnings per share				$	0.40		$	18.10		$	16.40		$	32.57	
Basic weighted average number of common shares (in thousands)		13			20,689			20,354			20,693			20,323	
Diluted weighted average number of common shares (in thousands)		13			20,708		 	20,599			20,712		 	20,557	

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

Table of Contents
DANAOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(Expressed in thousands of United States Dollars)

				Three months ended		Six months ended	
				June 30, 		June 30, 	
	    	Notes	    	2022	    	2021	    	2022	    	2021	
															
Net income for the period				$	8,224		$	372,837		$	339,689		$	669,617	
Other comprehensive income:															
Unrealized gain on available for sale securities					—			130			—			19,717	
Reclassification to interest income					—			(8,695)			—			(8,695)	
Amortization of deferred realized losses on cash flow hedges		9		 	903		 	903		 	1,796		 	1,796	
Total Other Comprehensive Income/(Loss)				 	903		 	(7,662)		 	1,796		 	12,818	
Comprehensive Income				$	9,127		$	365,175		$	341,485		$	682,435	

The accompanying notes are an integral part of these condensed consolidated financial statements

F-4

Table of Contents
DANAOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
(Expressed in thousands of United States Dollars)

		Common Stock	    			    	Accumulated	    			    			
		Number					Additional		other							
		of		Par		paid‑in		comprehensive		Retained				
	    	shares	    	value	    	capital	    	loss	    	earnings	    	Total	
As of December 31, 2020	 	20,449		$	204		$	755,390		$	(86,669)		$	366,652		$	1,035,577	
Net Income	 	—		 	—		 	—		 	—		 	296,780		 	296,780	
Stock compensation	 	150		 	2		 	4,907		 	—		 	—		 	4,909	
Net movement in other comprehensive income	 	—		 	—		 	—		 	20,480		 	—		 	20,480	
As of March 31, 2021		20,599		$	206		$	760,297		$	(66,189)		$	663,432		$	1,357,746	
Net Income		—			—			—			—			372,837			372,837	
Dividends		—			—			—			—			(10,300)			(10,300)	
Stock compensation		—			—			570			—			—			570	
Issuance of common stock		—			—			2			—			—			2	
Net movement in other comprehensive income		—			—			—			(7,662)			—			(7,662)	
As of June 30, 2021	 	20,599		$	206		$	760,869		$	(73,851)		$	1,025,969		$	1,713,193	

		Common Stock	    			    	Accumulated	    			    			
		Number					Additional		other							
		of		Par		paid‑in		comprehensive		Retained				
	    	shares	    	value	    	capital	    	loss	    	earnings	    	Total	
As of December 31, 2021	 	20,717		$	207		$	770,676		$	(71,455)		$	1,388,595		$	2,088,023	
Net Income	 	—		 	—		 	—		 	—		 	331,465		 	331,465	
Dividends		—			—			—			—			(15,537)			(15,537)	
Stock compensation	 	—		 	—		 	124		 	—		 	—		 	124	
Net movement in other comprehensive income	 	—		 	—		 	—		 	893		 	—		 	893	
As of March 31, 2022		20,717		$	207		$	770,800		$	(70,562)		$	1,704,523		$	2,404,968	
Net Income		—			—			—			—			8,224			8,224	
Repurchase of common stock		(178)			(2)			(11,206)			—			—			(11,208)	
Dividends		—			—			—			—			(15,538)			(15,538)	
Stock compensation		—			—			124			—			—			124	
Issuance of common stock		—			—			5			—			—			5	
Net movement in other comprehensive income		—			—			—			903			—			903	
As of June 30, 2022	 	20,539		$	205		$	759,723		$	(69,659)		$	1,697,209		$	2,387,478	

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-5

Table of Contents
DANAOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Expressed in thousands of United States Dollars)

		Six months ended	
		June 30, 	
	    	2022	    	2021	
						
Cash Flows from Operating Activities							
Net income		$	339,689	 	$	669,617	
							
Adjustments to reconcile net income to net cash provided by operating activities							
Depreciation and amortization of right-of-use assets		 	67,112	 		51,898	
Amortization of deferred drydocking and special survey costs		 	5,922	 		5,054	
Amortization of assumed time charters			(32,364)			—	
Amortization of finance costs		 	4,922	 		6,218	
Exit fee accrued on debt		 	—	 		149	
Debt discount amortization			1,639			2,590	
Loss/ (gain) on investments			69,096			(444,165)	
Gain on debt extinguishment			(22,939)			(111,616)	
Equity income on investments			—			(3,965)	
PIK interest			—			726	
Payments for drydocking and special survey costs deferred		 	(9,726)	 		(1,155)	
Stock based compensation			248			5,479	
Amortization of deferred realized losses on interest rate swaps		 	1,796	 		1,796	
(Increase)/Decrease in							
Accounts receivable		 	1,578	 		444	
Inventories		 	(1,863)	 		(180)	
Prepaid expenses		 	(1,179)	 		(367)	
Due from related parties		 	(10,243)	 		(900)	
Other assets, current and non-current		 	(30,145)	 		3,093	
Increase/(Decrease) in							
Accounts payable		 	(1,061)	 		1,425	
Accrued liabilities		 	5,902	 		8,921	
Unearned revenue, current and long-term		 	217,882	 		(2,109)	
Other liabilities, current and long-term		 	14,212	 		(210)	
Net Cash provided by Operating Activities		 	620,478	 		192,743	
							
Cash Flows from Investing Activities							
Vessels additions and advances for vessels under construction		 	(84,047)	 		(1,811)	
Advances for sale of vessels			13,000			—	
Investments			85,333			145,877	
Net Cash provided by Investing Activities		 	14,286	 		144,066	
							
Cash Flows from Financing Activities							
Proceeds from long-term debt		 	127,725	 		1,105,311	
Payments of long-term debt			(383,125)			(1,295,025)	
Proceeds from sale-leaseback of vessels			—			135,000	
Payments of leaseback obligation			(120,687)			(21,175)	
Dividends paid			(31,070)			(10,298)	
Repurchase of common stock			(6,325)			—	
Payments of accumulated accrued interest			(3,373)			(7,358)	
Finance costs			(15,092)			(14,509)	
Net Cash used in Financing Activities		 	(431,947)	 		(108,054)	
							
Net Increase in cash, cash equivalents and restricted cash		 	202,817	 		228,755	
Cash, cash equivalents and restricted cash at beginning of period		 	129,756	 		65,663	
Cash, cash equivalents and restricted cash at end of period		$	332,573		$	294,418	

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1     Basis of Presentation and General Information

The accompanying condensed consolidated financial statements (unaudited) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The reporting and functional currency of the Company is the United States Dollar.

Danaos Corporation (“Danaos” or “Company”), formerly Danaos Holdings Limited, was formed on December 7, 1998 under the laws of Liberia and is presently the sole owner of all outstanding shares of the companies listed below. Danaos Holdings Limited was redomiciled in the Marshall Islands on October 7, 2005. In connection with the redomiciliation, the Company changed its name to Danaos Corporation. On October 14, 2005, the Company filed and the Marshall Islands accepted Amended and Restated Articles of Incorporation. The authorized capital stock of Danaos Corporation is 750,000,000 shares of common stock with a par value of $0.01 and 100,000,000 shares of preferred stock with a par value of $0.01. Refer to Note 11, “Stockholders’ Equity”. The Company’s principal business is the acquisition and operation of vessels. Danaos conducts its operations through the vessel owning companies whose principal activity is the ownership and operation of containerships that are under the exclusive management of a related party of the Company.

In the opinion of management, the accompanying condensed consolidated financial statements (unaudited) of Danaos and subsidiaries contain all adjustments necessary to state fairly, in all material respects, the Company’s condensed consolidated financial position as of June 30, 2022, the condensed consolidated results of operations for the three and six months ended June 30, 2022 and 2021 and the condensed consolidated cash flows for the six months ended June 30, 2022 and 2021. All such adjustments are deemed to be of a normal, recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Danaos’ Annual Report on Form 20-F for the year ended December 31, 2021. The results of operations for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year. The year-end condensed consolidated balance sheet data was derived from annual financial statements. These condensed consolidated financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America.
The accompanying condensed consolidated financial statements (unaudited) represent the consolidation of the accounts of the Company and its wholly owned subsidiaries. The subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. Inter-company transaction balances and unrealized gains on transactions between the companies are eliminated.

The condensed consolidated financial statements (unaudited) have been prepared to reflect the consolidation of the companies listed below. The historical balance sheets and results of operations of the companies listed below have been reflected in the condensed consolidated balance sheets and condensed consolidated statements of income, cash flows and stockholders’ equity at and for each period since their respective incorporation dates. The consolidated companies are referred to as “Danaos,” or “the Company.”
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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1     Basis of Presentation and General Information (Continued)

As of June 30, 2022, Danaos included the vessel owning companies (the “Danaos Subsidiaries”) listed below. All vessels are container vessels:

Company	    	Date of Incorporation	    	Vessel Name	    	Year Built	    	TEU (1)	
Megacarrier (No. 1) Corp.		September 10, 2007		Hyundai Honour		2012		13,100	
Megacarrier (No. 2) Corp.		September 10, 2007		Hyundai Respect		2012		13,100	
Megacarrier (No. 3) Corp.		September 10, 2007		Hyundai Smart		2012		13,100	
Megacarrier (No. 4) Corp.		September 10, 2007		Hyundai Speed		2012		13,100	
Megacarrier (No. 5) Corp.		September 10, 2007		Hyundai Ambition		2012		13,100	
CellContainer (No. 6) Corp.		October 31, 2007		Express Berlin		2011		10,100	
CellContainer (No. 7) Corp.		October 31, 2007		Express Rome		2011		10,100	
CellContainer (No. 8) Corp.		October 31, 2007		Express Athens		2011		10,100	
Karlita Shipping Co. Ltd.		February 27, 2003		Pusan C		2006		9,580	
Ramona Marine Co. Ltd.		February 27, 2003		Le Havre		2006		9,580	
Oceancarrier (No. 2) Corp.		October 15, 2020		Bremen		2009		9,012	
Oceancarrier (No. 3) Corp.		October 15, 2020		C Hamburg		2009		9,012	
Blackwell Seaways Inc.		January 9, 2020		Niledutch Lion		2008		8,626	
Oceancarrier (No.1) Corp.		February 19, 2020		Kota Manzanillo (ex Charleston)		2005		8,533	
Springer Shipping Co.		April 29, 2019		Belita		2006		8,533	
Teucarrier (No. 5) Corp.		September 17, 2007		CMA CGM Melisande		2012		8,530	
Teucarrier (No. 1) Corp.		January 31, 2007		CMA CGM Attila		2011		8,530	
Teucarrier (No. 2) Corp.		January 31, 2007		CMA CGM Tancredi		2011		8,530	
Teucarrier (No. 3) Corp.		January 31, 2007		CMA CGM Bianca		2011		8,530	
Teucarrier (No. 4) Corp.		January 31, 2007		CMA CGM Samson		2011		8,530	
Oceanew Shipping Ltd.		January 14, 2002		Europe		2004		8,468	
Oceanprize Navigation Ltd.		January 21, 2003		America		2004		8,468	
Rewarding International Shipping Inc.		October 1, 2019		Phoebe		2005		8,463	
Boxcarrier (No. 2) Corp.		June 27, 2006		CMA CGM Musset		2010		6,500	
Boxcarrier (No. 3) Corp.		June 27, 2006		CMA CGM Nerval		2010		6,500	
Boxcarrier (No. 4) Corp.		June 27, 2006		CMA CGM Rabelais		2010		6,500	
Boxcarrier (No. 5) Corp.		June 27, 2006		CMA CGM Racine		2010		6,500	
Boxcarrier (No. 1) Corp.		June 27, 2006		CMA CGM Moliere		2009		6,500	
Expresscarrier (No. 1) Corp.		March 5, 2007		YM Mandate		2010		6,500	
Expresscarrier (No. 2) Corp.		March 5, 2007		YM Maturity		2010		6,500	
Kingsland International Shipping Limited		June 26, 2015		Catherine C		2001		6,422	
Leo Shipping and Trading S.A.		October 29, 2015		Leo C		2002		6,422	
Actaea Company Limited		October 14, 2014		Zim Savannah		2002		6,402	
Asteria Shipping Company Limited		October 14, 2014		Dimitra C		2002		6,402	
Averto Shipping S.A.		June 12, 2015		Suez Canal		2002		5,610	
Sinoi Marine Ltd.		June 12, 2015		Kota Lima		2002		5,544	
Oceancarrier (No. 4) Corp.		July 6, 2021		Wide Alpha		2014		5,466	
Oceancarrier (No. 5) Corp.		July 6, 2021		Stephanie C (ex Wide Bravo)		2014		5,466	
Oceancarrier (No. 6) Corp.		July 6, 2021		Maersk Euphrates		2014		5,466	
Oceancarrier (No. 7) Corp.		July 6, 2021		Wide Hotel		2015		5,466	
Oceancarrier (No. 8) Corp.		July 6, 2021		Wide India		2015		5,466	
Oceancarrier (No. 9) Corp.		July 6, 2021		Wide Juliet		2015		5,466	
Continent Marine Inc.		March 22, 2006		Zim Monaco		2009		4,253	
Medsea Marine Inc.		May 8, 2006		Dalian		2009		4,253	
Blacksea Marine Inc.		May 8, 2006		Zim Luanda		2009		4,253	
Bayview Shipping Inc.		March 22, 2006		Rio Grande		2008		4,253	
Channelview Marine Inc.		March 22, 2006		Zim Sao Paolo		2008		4,253	
Balticsea Marine Inc.		March 22, 2006		Zim Kingston		2008		4,253	
Seacarriers Services Inc.		June 28, 2005		Seattle C		2007		4,253	
Seacarriers Lines Inc.		June 28, 2005		Vancouver		2007		4,253	
Containers Services Inc.		May 30, 2002		Tongala		2004		4,253	
Containers Lines Inc.		May 30, 2002		Derby D		2004		4,253	
Boulevard Shiptrade S.A		September 12, 2013		Dimitris C		2001		3,430	
CellContainer (No. 4) Corp.		March 23, 2007		Express Spain		2011		3,400	
CellContainer (No. 5) Corp.		March 23, 2007		Express Black Sea		2011		3,400	
CellContainer (No. 1) Corp.		March 23, 2007		Express Argentina		2010		3,400	
CellContainer (No. 2) Corp.		March 23, 2007		Express Brazil		2010		3,400	
CellContainer (No. 3) Corp.		March 23, 2007		Express France		2010		3,400	
Wellington Marine Inc.		January 27, 2005		Singapore		2004		3,314	
Auckland Marine Inc.		January 27, 2005		Colombo		2004		3,314	
Vilos Navigation Company Ltd.		May 30, 2013		Zebra		2001		2,602	
Trindade Maritime Company		April 10, 2013		Amalia C		1998		2,452	
Sarond Shipping Inc.		January 18, 2013		Artotina		2001		2,524	
Speedcarrier (No. 7) Corp.		December 6, 2007		Highway		1998		2,200	
Speedcarrier (No. 6) Corp.		December 6, 2007		Progress C		1998		2,200	
Speedcarrier (No. 8) Corp.		December 6, 2007		Bridge		1998		2,200	
Speedcarrier (No. 1) Corp.		June 28, 2007		Vladivostok		1997		2,200	
Speedcarrier (No. 2) Corp.		June 28, 2007		Advance		1997		2,200	
Speedcarrier (No. 3) Corp.		June 28, 2007		Stride		1997		2,200	
Speedcarrier (No. 5) Corp.		June 28, 2007		Future		1997		2,200	
Speedcarrier (No. 4) Corp.		June 28, 2007		Sprinter		1997		2,200	
Vessels under construction									
Boxsail (No. 1) Corp.		March 4, 2022		Hull No. C7100-7		2024		7,100	
Boxsail (No. 2) Corp.		March 4, 2022		Hull No. C7100-8		2024		7,100	
Teushipper (No. 1) Corp.		March 14, 2022		Hull No. HN4009		2024		8,000	
Teushipper (No. 2) Corp.		March 14, 2022		Hull No. HN4010		2024		8,000	
Teushipper (No. 3) Corp.		March 14, 2022		Hull No. HN4011		2024		8,000	
Teushipper (No. 4) Corp.		March 14, 2022		Hull No. HN4012		2024		8,000	

	(1)	Twenty-feet equivalent unit, the international standard measure for containers and containership capacity.	
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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1     Basis of Presentation and General Information (Continued)

Impact of COVID-19 on the Company’s Business

The spread of the COVID-19 virus, which has been declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets, the severity and duration of which remains uncertain.

The impact of the COVID-19 pandemic continues to unfold and may have a negative effect on the Company’s business, financial performance and the results of its operations, including due to decreased demand for global seaborne container trade and containership charter rates, which was mainly experienced in the first half of 2020. The extent of the impact will depend largely on future developments. As a result, many of the Company’s estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change in future periods.

Impact of the war in Ukraine on the Company’s Business

As disclosed in the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 3, 2022, the current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, could adversely affect the crewing operations of the Company’s Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol, and trade patterns involving ports in the Black Sea or Russia. The extent of the impact will depend largely on future developments.

2     Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2 “Significant Accounting Policies” in the Company’s consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 3, 2022. During the six months ended June 30, 2022, there were no significant changes made to the Company’s significant accounting policies.

3     Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following (in thousands):

	    	As of	    	As of	    	As of	
		June 30, 2022		December 31, 2021		December 31, 2020	
Cash and cash equivalents		$	319,573		$	129,410		$	65,663	
Restricted cash		 	13,000		 	346		 	—	
Total		$	332,573		$	129,756		$	65,663	

The Company received an advance payment for sale of the vessels of $13.0 million, which is held in an escrow account as of June 30, 2022. Additionally, the Company was required to maintain cash in a retention account as collateral for then upcoming scheduled debt payments related to the now repaid Eurobank $30 mil. facility, which was recorded in restricted cash under current assets as of December 31, 2021.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4     Fixed Assets, net & Right-of-use Assets

On April 1, 2022, the Company entered into contracts, as amended on April 21, 2022, for the construction of four 8,000 TEU container vessels for an aggregate purchase price of $372.7 million, out of which $49.2 million was advanced before June 30, 2022, an amount of $96.7 million is expected to be paid in 2022 and $226.8 million is expected to be paid at vessels delivery in 2024. On March 11, 2022, the Company entered into contracts for the construction of two 7,100 TEU container vessels for an aggregate purchase price of $156.0 million, out of which $31.2 million was advanced in April 2022, $31.2 million is expected to be paid in 2023 and $93.6 million at vessels delivery expected in 2024. Additionally, a supervision fee of $725 thousand per newbuilding vessel will be payable to Danaos Shipping Company Limited.

On January 17, 2022, the Company entered into agreements to sell its vessels Catherine C and Leo C for an aggregate gross consideration of $130.0 million, out of which $13.0 million was advanced by the buyer and is held in an escrow account as of June 30, 2022. The vessels are expected to be delivered to the buyer in November 2022.

The Company assumed time charter liabilities related to its acquisition of vessels in the second half of 2021. The amortization of these assumed time charters amounted to $32.4 million in the six months ended June 30, 2022 and is presented under “Operating revenues” in the condensed consolidated statement of income. The aggregate future amortization of the assumed time charters as of June 30, 2022 is as follows (in thousands):

Amortization by 12-months period ended:	    		    	
June 30, 2023		$	36,724	
June 30, 2024		 	13,366	
Total		 	50,090	
Less: Current portion		 	(36,724)	
Total non-current portion		$	13,366	

The amount of $36.7 million is presented under current “Unearned revenue” and $13.4 million under “Unearned revenue, net of current portion” in the condensed consolidated balance sheet as of June 30, 2022.

The residual value (estimated scrap value at the end of the vessels’ useful lives) of the fleet was estimated at $504.1 million as of June 30, 2022 and as of December 31, 2021. The Company has calculated the residual value of the vessels taking into consideration the 10 year average and the 5 year average of the scrap prices. The Company has applied uniformly the scrap value of $300 per ton for all vessels. The Company believes that $300 per ton is a reasonable estimate of future scrap prices, taking into consideration the cyclicality of the nature of future demand for scrap steel. Although the Company believes that the assumptions used to determine the scrap rate are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclical nature of future demand for scrap steel.

On May 12, 2020, the Company refinanced the existing leaseback obligation related to the vessels Hyundai Honour and Hyundai Respect with a new sale and leaseback arrangement amounting to $139.1 million with a four years term, at the end of which the Company will reacquire these vessels for an aggregate amount of $36.0 million or earlier, at the Company’s option, for a purchase price set forth in the agreement. This arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability.

On April 12, 2021, the Company entered into a sale and leaseback arrangement for the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson amounting to gross proceeds of $135.0 million with a five year term, at the end of which the Company will reacquire these vessels for an aggregate amount of $31.0 million or earlier, at the Company’s option, for a purchase price set forth in the agreement. This arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability. This leaseback liability was early repaid in full on May 12, 2022.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4     Fixed Assets, net & Right-of-use Assets (Continued)
On July 1, 2021, the Company acquired finance lease liability related to Gemini’s vessels Suez Canal and Kota Lima, which expired in July 2022.
Under these lease arrangements, the Company is required to be in compliance with the same financial covenants as required by the Citibank/Natwest $815 million senior secured facility – see Note 8 “Long-Term Debt, net”.

The carrying value of the four vessels subject to leasing obligations amounted to $330.6 million as of June 30, 2022.

The scheduled aggregate leasing instalments subsequent to June 30, 2022 are as follows (in thousands):

Instalments due by 12-months period ended:	    			
June 30, 2023		$	50,532	
Until May 2024		 	61,833	
Total leasing instalments		 	112,365	
Less: Imputed interest		 	(6,582)	
Total leasing obligation		 	105,783	
Less: Deferred finance costs, net			(1,405)	
Less: Current leasing obligation		 	(46,285)	
Leasing obligation, net of current portion		$	58,093	

5     Deferred Charges, net

Deferred charges, net consisted of the following (in thousands):

		Drydocking and	
	    	Special Survey Costs	
As of January 1, 2021		$	17,339	
Additions		 	4,643	
Amortization		 	(10,181)	
As of December 31, 2021			11,801	
Additions		 	9,726	
Amortization		 	(5,922)	
As of June 30, 2022		$	15,605	

The Company follows the deferral method of accounting for drydocking and special survey costs in accordance with accounting for planned major maintenance activities, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Furthermore, when a vessel is drydocked for more than one reporting period, the respective costs are identified and recorded in the period in which they were incurred and not at the conclusion of the drydocking.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6     Other Current and Non-current Assets

Other current and non-current assets consisted of the following (in thousands):

		As of		As of	
	    	June 30, 2022	    	December 31, 2021	
Equity participation ZIM		$	268,595		$	423,024	
Straight-lining of revenue			23,398			18,997	
Claims receivable			15,239			8,919	
Other assets			6,677			8,192	
Total current assets		$	313,909		$	459,132	
Other non-current assets			62,677			41,739	
Total non-current assets		$	62,677		$	41,739	

The Company’s shareholding interest in ZIM of 7,186,950 ordinary shares was fair valued at $423.0 million and presented under “Other current assets” in the condensed consolidated balance sheet as of December 31, 2021, based on the closing price of ZIM ordinary shares on the NYSE on that date. In April 2022, the Company sold 1,500,000 ordinary shares of ZIM resulting in net proceeds of $85.3 million. The remaining shareholding interest of 5,686,950 ordinary shares was fair valued at $268.6 million as of June 30, 2022. For the six months ended June 30, 2022 and June 30, 2021, the Company recognized $69.1 million loss and $444.2 million of gain on these shares, respectively. These gains/losses are reflected under “Gain/(loss) on investments” in the condensed consolidated statement of income. The unrealized gain related to the ZIM ordinary shares still held on June 30, 2022 amounts to $268.6 million. Additionally, the Company recognized dividend income on these shares amounting to $138.4 million in the six months ended June 30, 2022 gross of withholding taxes compared to none in the six months ended June 30, 2021. Withholding taxes amounting to $14.5 million were recognized on dividend income under “Income taxes” in the condensed consolidated statement of income in the six months ended June 30, 2022.

Other non-current assets mainly include non-current assets related to straight-lining of the Company’s revenue amounting to $60.9 million and $39.9 million as of June 30, 2022 and December 31, 2021, respectively.

7     Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	    	As of	    	As of	
		June 30, 2022		December 31, 2021	
Accrued payroll		$	6,804		$	1,001	
Accrued interest			11,026		 	11,873	
Accrued dry-docking expenses			435			280	
Accrued expenses			8,478		 	7,692	
Total		$	26,743		$	20,846	

Accrued expenses mainly consisted of accruals related to the operation of the Company’s fleet as of June 30, 2022 and December 31, 2021.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8     Long-Term Debt, net

Long-term debt, net consisted of the following (in thousands):

		Balance as of		Balance as of	
Credit Facility	    	June 30, 2022	    	December 31, 2021	
Citibank/Natwest $815 mil. Facility		$	463,500		$	774,250	
BNP Paribas/Credit Agricole $130 mil. Facility			130,000			—	
Senior unsecured notes			300,000			300,000	
Macquarie Bank $58 mil. Facility			—			45,600	
SinoPac $13.3 mil. Facility			—			10,800	
Eurobank $30.0 mil. Facility			—			21,375	
Fair value of debt adjustment			(8,351)			(9,990)	
Total long-term debt		$	885,149		$	1,142,035	
Less: Deferred finance costs, net			(23,379)			(28,369)	
Less: Current portion			(71,500)			(95,750)	
Total long-term debt net of current portion and deferred finance cost		$	790,270		$	1,017,916	

On May 12, 2022, the Company early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly instalments of the remaining Citibank facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, the reference to LIBOR was replaced with daily non-cumulative compounded secured overnight financing rate administered and published by the Federal Reserve Bank of New York (“SOFR”) plus credit spread adjustment. Additionally, the Company early repaid (i) $43.0 million loan outstanding with Macquarie Bank (ii) $20.6 million loan outstanding with Eurobank and (iii) $9.8 million loan outstanding with SinoPac in the three months ended June 30, 2022. These debt extinguishments resulted in a total net gain on debt extinguishment of $22.9 million in the six months ended June 30, 2022 compared to total net gain on debt extinguishment of $111.6 million related to the debt refinancing on April 12, 2021. The Company incurred interest expense amounting of $13.6 million (including interest on leaseback obligations), out of which $0.7 million was capitalized in the six months ended June 30, 2022 compared to $14.3 million of interest expense incurred (including interest on leaseback obligations) and none capitalized in the six months ended June 30, 2021.

In June 2022, the Company drew down $130.0 million of senior secured term loan facility from BNP Paribas and Credit Agricole, which is secured by six 5,466 TEU sister vessels acquired in 2021. This facility is repayable in eight quarterly instalments of $5.0 million, twelve quarterly instalments of $1.9 million together with a balloon payment of $67.2 million payable over five-year term. The facility bears interest at daily non-cumulative compounded RFR rate plus a margin of 2.16% as adjusted by the sustainability margin adjustment.

On February 11, 2021, the Company issued in a private placement, $300.0 million aggregate principal amount of senior unsecured notes, which bear interest at a fixed rate of 8.50% per annum and mature on March 1, 2028. At any time on or after March 1, 2024, March 1, 2025 and March 1, 2026 the Company may elect to redeem all or any portion of the notes, respectively, at a price equal to 104.25%, 102.125% and 100%, respectively, of the principal amount being redeemed. Prior to March 1, 2024 the Company may redeem up to 35% of the aggregate principal of the notes from equity offering proceeds at a price equal to 108.50% within 90 days after the equity offering closing. Interest payments on the notes are payable semi-annually commencing on September 1, 2021. $9.0 million of bond issuance costs were deferred over the life of the bond and recognized through the new effective interest method.

As of June 30, 2022, there was no remaining borrowing availability under the Company’s credit facilities. The Company was in compliance with the financial covenants contained in the credit facilities agreements as of June 30, 2022 and December 31, 2021.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8     Long-Term Debt, net (Continued)
As of June 30, 2022, each of the secured credit facilities is collateralized by first preferred mortgages over the vessels financed, general assignment of all hire freights, income and earnings, the assignment of their insurance policies, as well as any proceeds from the sale of mortgaged vessels, stock pledges and benefits from corporate guarantees. As of June 30, 2022, fifty-four of the Company’s vessels having a net carrying value of $1,852.2 million, were subject to first preferred mortgages as collateral to the Company’s secured credit facilities.

The scheduled debt maturities of long-term debt subsequent to June 30, 2022 are as follows (in thousands):

		Principal	
Payments due by period ended	    	repayments	
June 30, 2023			71,500	
June 30, 2024			71,500	
June 30, 2025			368,100	
June 30, 2026			7,600	
June 30, 2027			74,800	
Thereafter			300,000	
Total long-term debt		$	893,500	

The Citibank/Natwest $815 million and BNP Paribas/Credit Agricole $130 million senior secured credit facilities contain a requirement to maintain minimum fair market value of collateral vessels to loan value coverage of 120% and 125%, respectively, and financial covenants requiring to maintain the following:

	(i)	minimum liquidity of $30.0 million;	
	(ii)	maximum consolidated debt (less cash and cash equivalents) to consolidated EBITDA ratio of 6.5x; and	
	(iii)	minimum consolidated EBITDA to net interest expense ratio of 2.5x.	

9     Financial Instruments

The following is a summary of the Company’s risk management strategies and the effect of these strategies on the Company’s condensed consolidated financial statements.

Interest Rate Risk: Interest rate risk arises on bank borrowings. The Company monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favorable rates.

Concentration of Credit Risk: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with established financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company is exposed to credit risk in the event of non-performance by counterparties, however, the Company limits this exposure by diversifying among counterparties with high credit ratings. The Company depends upon a limited number of customers for a large part of its revenues. Credit risk with respect to trade accounts receivable is generally managed by the selection of customers among the major liner companies in the world and their dispersion across many geographic areas.
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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9     Financial Instruments (Continued)
Fair Value: The carrying amounts reflected in the accompanying consolidated balance sheets of financial assets and liabilities (excluding long-term bank loans and certain other non-current assets) approximate their respective fair values due to the short maturity of these instruments. The fair values of long-term floating rate bank loans approximate the recorded values, generally due to their variable interest rates. The fair value of senior unsecured notes is measured based on quoted market prices. The fair value of the equity participation in ZIM is measured based on the closing price of ZIM ordinary shares on the NYSE.

a. Interest Rate Swap Hedges

The Company currently has no outstanding interest rate swaps agreements. However, in the past years, the Company entered into interest rate swap agreements with its lenders in order to manage its floating rate exposure. Certain variable-rate interests on specific borrowings were associated with vessels under construction and were capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts related to realized gains or losses on cash flow hedges that have been entered into and qualified for hedge accounting, in order to hedge the variability of that interest, were recognized in accumulated other comprehensive loss and are reclassified into earnings over the depreciable life of the constructed asset, since that depreciable life coincides with the amortization period for the capitalized interest cost on the debt. An amount of $1.8 million was reclassified into earnings for the six months ended June 30, 2022 and 2021, representing its amortization over the depreciable life of the vessels. An amount of $3.6 million is expected to be reclassified into earnings within the next 12 months.

b. Fair Value of Financial Instruments

The Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy.

Level I: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs that are unobservable. The Company did not use any Level 3 inputs as of June 30, 2022 and December 31, 2021.

The estimated fair values of the Company’s financial instruments are as follows:

		As of June 30, 2022		As of December 31, 2021	
	    	Book Value	    	Fair Value	    	Book Value	    	Fair Value	
	
		(in thousands of $)	
Cash and cash equivalents		$	319,573		$	319,573		$	129,410		$	129,410	
Restricted cash(2)		$	13,000		$	13,000		$	346		$	346	
Equity participation ZIM		$	268,595		$	268,595		$	423,024		$	423,024	
Secured long-term debt, including current portion		$	585,149		$	585,149		$	842,035		$	842,035	
Unsecured long-term debt		$	300,000		$	297,885		$	300,000		$	300,000	

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9     Financial Instruments (Continued)
The estimated fair value of the financial instruments that are measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of June 30, 2022:

		Fair Value Measurements as of June 30, 2022	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
		(in thousands of $)	
Equity participation ZIM		$	268,595		$	268,595		$	—		$	—	

The estimated fair value of the financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of June 30, 2022:

		Fair Value Measurements as of June 30, 2022	
	    	Total	    	(Level I)	    	 (Level II)	    	(Level III)	
	
			(in thousands of $)	
Secured long-term debt, including current portion(1)		$	585,149		$	—		$	585,149		$	—	
Unsecured long-term debt(1)		$	297,885		$	297,885		$	—		$	—	

The estimated fair value of the financial instruments that are measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of December 31, 2021:

		Fair Value Measurements as of December 31, 2021	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
		(in thousands of $)	
Equity participation ZIM		$	423,024		$	423,024		$	—		$	—	

The estimated fair value of the financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of December 31, 2021:

		Fair Value Measurements as of December 31, 2021	
	    	Total	    	(Level I)	    	(Level II)	    	(Level III)	
	
		(in thousands of $)	
Secured long-term debt, including current portion(1)		$	842,035		$	—		$	842,035		$	—	
Unsecured long-term debt(1)			300,000		$	—		$	300,000		$	—	

	(1)	Secured and unsecured long-term debt, including current portion is presented gross of deferred finance costs of $23.4 million and $28.4 million as of June 30, 2022 and December 31, 2021, respectively. The fair value of the Company’s secured debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities and does not include amounts related to the accumulated accrued interest.	
	(2)	The Company received an advance payment for sale of the vessels of $13.0 million, which is held in an escrow account as of June 30, 2022. Additionally, the Company was required to maintain cash of $0.3 million in a retention account as collateral for the upcoming scheduled debt payments related to the Eurobank $30 mil. Facility, which was recorded in restricted cash under current assets as of December 31, 2021.	

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10    Commitments and Contingencies

There are no material legal proceedings to which the Company is a party or to which any of its properties are the subject, or other contingencies that the Company is aware of, other than routine litigation incidental to the Company’s business. On January 20, 2021, the Company received $3.9 million from Hanjin Shipping as a partial payment of a common benefit claim plus interest. This payment is presented under Other income/(expenses), net in the condensed consolidated statements of income in the six months ended June 30, 2021.

The Company has outstanding commitments under vessel construction contracts and buyback obligations related to the sale and leaseback arrangements as of June 30, 2022, see the Note 4 “Fixed Assets, net & Right-of-use Assets”.

11    Stockholders’ Equity

In the six months ended June 30, 2022, the Company declared and paid dividends of $0.75 per share of common stock in February and May amounting to $31.1 million. The Company issued 56 shares of common stock pursuant to its dividends reinvestment plan in the six months ended June 30, 2022.

In June 2022, the Company announced a share repurchase program of up to $100 million of the Company’s common stock. The Company repurchased 177,900 shares of the Company’s common stock in the open market for $11.2 million in June 2022, out of which 77,600 shares valued at $4.9 million remain unsettled as of June 30, 2022. Additionally, the Company repurchased 231,300 shares in the open market for $13.9 million in July 2022. In October 2020, the Company repurchased 4,339,271 shares of the Company’s common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp.

As of April 18, 2008, the Board of Directors and the Compensation Committee approved incentive compensation of the Manager’s employees with its shares from time to time, after specific for each such time, decision by the compensation committee and the Board of Directors in order to provide a means of compensation in the form of free shares to certain employees of the Manager of the Company’s common stock. The plan was effective as of December 31, 2008. Pursuant to the terms of the plan, employees of the Manager may receive (from time to time) shares of the Company’s common stock as additional compensation for their services offered during the preceding period. The total amount of stock to be granted to employees of the Manager will be at the Company’s Board of Directors’ discretion only and there will be no contractual obligation for any stock to be granted as part of the employees’ compensation package in future periods.
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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11    Stockholders’ Equity (Continued)

On February 12, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members. On March 16, 2021, the Company granted 40,000 shares to certain employees of the Manager, out of which 10,000 fully vested on the grant date, 1,050 were forfeited in 2021 and 9,650 restricted shares vested on December 31, 2021. Additional 224 restricted shares forfeited in the six months period ended June 30, 2022 and the remaining 19,076 restricted shares are scheduled to vest on December 31, 2022. These restricted shares are subject to satisfaction of the vesting terms, under the Company’s 2006 Equity Compensation Plan, as amended. Additionally, on December 10, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members and on December 21, 2021, the Company granted 10,000 fully vested shares to certain employees of the Manager. The fair value of shares granted was calculated based on the closing trading price of the Company’s shares at the date of the issuance. Stock based compensation expenses of $0.2 million and $5.5 million were recognized under “General and administrative expenses” in the condensed consolidated statements of income in the six months period ended June 30, 2022 and 2021, respectively. 19,076 shares and 19,300 shares of restricted stock were issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.
The aggregate number of shares of common stock for which awards may be granted under the Plan shall not exceed 1,000,000 shares plus the number of unvested shares granted before August 2, 2019. The equity awards may be granted by the Company’s Compensation Committee or Board of Directors under its amended and restated 2006 equity compensation plan. Awards made under the Plan that have been forfeited, cancelled or have expired, will not be treated as having been granted for purposes of the preceding sentence.

The Company has also established the Directors Share Payment Plan under its 2006 equity compensation plan. The purpose of the plan is to provide a means of payment of all or a portion of compensation payable to directors of the Company in the form of Company’s Common Stock. The plan was effective as of April 18, 2008. Each member of the Board of Directors of the Company may participate in the plan. Pursuant to the terms of the plan, directors may elect to receive in Common Stock all or a portion of their compensation. Following December 31 of each year, the Company delivers to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. During the six months ended June 30, 2022 and June 30, 2021, none of the directors elected to receive their compensation in Company shares.

12    Lease Arrangements

Charters-out

As of June 30, 2022, the Company generated operating revenues from its 71 vessels on time charters or bareboat charter agreements, with remaining terms ranging from less than one year to June 2028. Under the terms of the charter party agreements, most charterers have options to extend the duration of contracts ranging from less than one year to five years after the expiration of the contract. The Company determines fair value of its vessels at the lease commencement date and at the end of lease term for lease classification with the assistance from valuations obtained by third party independent shipbrokers. The Company manages its risk associated with the residual value of its vessels after the expiration of the charter party agreements by seeking multi-year charter arrangements for its vessels.

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12    Lease Arrangements (Continued)

In May 2022, the Company received $238.9 million of charter hire prepayment related to charter contracts for 15 of the Company’s vessels, representing partial prepayment of charter hire payable up to January 2027. The future minimum payments, expected to be received on non-cancellable time charters and bareboat charters classified as operating leases consisted of the following as of June 30, 2022 (in thousands):

Remainder of 2022	    	$	442,720	
2023	 		697,369	
2024	 		523,363	
2025	 		286,004	
2026			183,272	
2027 and thereafter	 		179,561	
Total future rentals		$	2,312,289	

Rentals from time charters are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the future minimum rentals, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.

13    Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share:

		Three months ended	
	    	June 30, 2022	    	June 30, 2021	
	
		(in thousands)	
Numerator:							
Net income		$	8,224		$	372,837	
							
Denominator (number of shares in thousands):							
Basic weighted average common shares outstanding		 	20,689		 	20,354	
Effect of dilutive securities:		 			 		
Dilutive effect of non-vested shares		 	19		 	245	
Diluted weighted average common shares outstanding		 	20,708		 	20,599	

		Six months ended	
	    	June 30, 2022	    	June 30, 2021	
	
		(in thousands)	
Numerator:							
Net income		$	339,689		$	669,617	
							
Denominator (number of shares in thousands):		 			 		
Basic weighted average common shares outstanding			20,693			20,323	
Effect of dilutive securities:							
Dilutive effect of non-vested shares			19			234	
Diluted weighted average common shares outstanding			20,712			20,557	

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Table of Contents
DANAOS CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14    Related Party Transactions

Management fees to Danaos Shipping Company Limited (“the Manager”) amounted to $10.9 million and $9.2 million in the six months ended June 30, 2022 and 2021, respectively, and are presented under “General and administrative expenses” in the condensed consolidated statements of income.

Commissions to the Manager amounted to $6.3 million and $3.5 million in the six months ended June 30, 2022 and 2021, respectively and are presented under “Voyage expenses” in the condensed consolidated statements of income.

The balance “Due from related parties” in the condensed consolidated balance sheets totaling $32.1 million and $21.9 million as of June 30, 2022 and December 31, 2021, respectively, represents advances to the Manager on account of the vessels’ operating and other expenses. An amount of $0.2 million and $0.1 million as of June 30, 2022 and December 31, 2021, respectively, was due to executive officers and is presented under “Accounts payable” in the condensed consolidated balance sheets.

15    Subsequent Events

The Company has declared a dividend of $0.75 per share of common stock payable on August 29, 2022, to holders of record on August 17, 2022.

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