DANAOS CORP, 20-F filed on 3/15/2016
Annual and Transition Report (foreign private issuer)
Document and Entity Information
12 Months Ended
Dec. 31, 2015
Document and Entity Information
 
Entity Registrant Name
Danaos Corp 
Entity Central Index Key
0001369241 
Document Type
20-F 
Document Period End Date
Dec. 31, 2015 
Amendment Flag
false 
Current Fiscal Year End Date
--12-31 
Entity Well-known Seasoned Issuer
No 
Entity Voluntary Filers
No 
Entity Current Reporting Status
Yes 
Entity Filer Category
Accelerated Filer 
Entity Common Stock, Shares Outstanding
109,781,744 
Document Fiscal Year Focus
2015 
Document Fiscal Period Focus
FY 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
CURRENT ASSETS
 
 
Cash and cash equivalents
$ 72,253 
$ 57,730 
Restricted cash
2,818 
2,824 
Accounts receivable, net
10,652 
7,904 
Inventories
11,040 
11,665 
Prepaid expenses
1,079 
713 
Due from related parties
19,007 
10,597 
Vessels held for sale
6,264 
 
Other current assets
4,457 
11,640 
Total current assets
127,570 
103,073 
NON-CURRENT ASSETS
 
 
Fixed assets at cost net of accumulated depreciation of $690,794 (2014: $669,394)
3,446,323 
3,624,338 
Deferred charges, net
39,733 
55,275 
Investments in affiliates
11,289 
 
Other non-current assets
72,188 
68,506 
Total non-current assets
3,569,533 
3,748,119 
Total assets
3,697,103 
3,851,192 
CURRENT LIABILITIES
 
 
Accounts payable
12,971 
12,510 
Accrued liabilities
14,014 
24,705 
Current portion of long-term debt
269,979 
178,116 
Current portion of vendor financing
 
46,530 
Unearned revenue
9,853 
13,719 
Other current liabilities
5,328 
52,502 
Total current liabilities
312,145 
328,082 
LONG-TERM LIABILITIES
 
 
Long-term debt, net of current portion
2,505,399 
2,773,004 
Vendor financing, net of current portion
 
17,837 
Unearned revenue, net of current portion
24,426 
30,412 
Other long-term liabilities
13,219 
13,708 
Total long-term liabilities
2,543,044 
2,834,961 
Total liabilities
2,855,189 
3,163,043 
Commitments and Contingencies
   
   
STOCKHOLDERS' EQUITY
 
 
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of December 31, 2015 and 2014)
   
   
Common stock (par value $0.01, 750,000,000 common shares authorized as of December 31, 2015 and 2014. 109,781,744 and 109,669,429 issued and outstanding as of December 31, 2015 and 2014, respectively)
1,098 
1,097 
Additional paid-in capital
546,822 
546,735 
Accumulated other comprehensive loss
(103,081)
(139,742)
Retained earnings
397,075 
280,059 
Total stockholders' equity
841,914 
688,149 
Total liabilities and stockholders' equity
$ 3,697,103 
$ 3,851,192 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS
 
 
Accumulated Depreciation
$ 690,794 
$ 669,394 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
100,000,000 
100,000,000 
Preferred stock, shares issued
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
750,000,000 
750,000,000 
Common stock, shares issued
109,781,744 
109,669,429 
Common stock, shares outstanding
109,781,744 
109,669,429 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
OPERATING REVENUES
$ 567,936 
$ 552,091 
$ 588,117 
OPERATING EXPENSES:
 
 
 
Voyage expenses
(12,284)
(12,974)
(11,770)
Vessel operating expenses
(112,736)
(113,755)
(122,074)
Depreciation
(131,783)
(137,061)
(137,414)
Amortization of deferred drydocking and special survey costs
(3,845)
(4,387)
(5,482)
Impairment loss
(41,080)
(75,776)
(19,004)
General and administrative expenses
(21,831)
(21,442)
(19,458)
Gain / (loss) on sale of vessels
 
5,709 
(449)
Income From operations
244,377 
192,405 
272,466 
OTHER INCOME (EXPENSE):
 
 
 
Interest income
3,419 
1,703 
2,210 
Interest expense
(70,397)
(79,980)
(91,185)
Other finance expenses
(18,696)
(19,757)
(20,120)
Equity loss on investments
(1,941)
 
 
Other income/(expenses), net
111 
422 
302 
Net unrealized and realized losses on derivatives
(39,857)
(98,713)
(126,150)
Total Other Expenses, net
(127,361)
(196,325)
(234,943)
Net Income / (Loss)
$ 117,016 
$ (3,920)
$ 37,523 
EARNINGS/(LOSS) PER SHARE
 
 
 
Basic and diluted net income/(loss) per share
$ 1.07 
$ (0.04)
$ 0.34 
Basic and diluted weighted average number of shares
109,785,484 
109,676,056 
109,654,199 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
Net Income / (Loss)
$ 117,016 
$ (3,920)
$ 37,523 
Other Comprehensive Income
 
 
 
Amortization of deferred realized losses on cash flow hedges
4,017 
4,016 
4,017 
Reclassification of unrealized losses to earnings
32,644 
88,939 
116,557 
Total Other Comprehensive Income
36,661 
92,955 
120,574 
Comprehensive Income
$ 153,677 
$ 89,035 
$ 158,097 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified
Common Stock
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total
Balance at Dec. 31, 2012
$ 1,096 
$ 546,023 
$ (353,271)
$ 246,456 
$ 440,304 
Balance (in shares) at Dec. 31, 2012
109,604,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net Income / (Loss)
 
 
 
37,523 
37,523 
Net movement in other comprehensive income
 
 
120,574 
 
120,574 
Issuance of common stock
(1)
 
 
 
Issuance of common stock (in shares)
49,000 
 
 
 
 
Stock compensation
 
75 
 
 
75 
Balance at Dec. 31, 2013
1,097 
546,097 
(232,697)
283,979 
598,476 
Balance (in shares) at Dec. 31, 2013
109,653,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net Income / (Loss)
 
 
 
(3,920)
(3,920)
Net movement in other comprehensive income
 
 
92,955 
 
92,955 
Issuance of common stock (in shares)
16,000 
 
 
 
 
Stock compensation
 
638 
 
 
638 
Balance at Dec. 31, 2014
1,097 
546,735 
(139,742)
280,059 
688,149 
Balance (in shares) at Dec. 31, 2014
109,669,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net Income / (Loss)
 
 
 
117,016 
117,016 
Net movement in other comprehensive income
 
 
36,661 
 
36,661 
Issuance of common stock
(1)
 
 
 
Issuance of common stock (in shares)
113,000 
 
 
 
 
Stock compensation
 
88 
 
 
88 
Balance at Dec. 31, 2015
$ 1,098 
$ 546,822 
$ (103,081)
$ 397,075 
$ 841,914 
Balance (in shares) at Dec. 31, 2015
109,782,000 
 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash Flows from Operating Activities
 
 
 
Net Income / (Loss)
$ 117,016 
$ (3,920)
$ 37,523 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities
 
 
 
Depreciation
131,783 
137,061 
137,414 
Amortization of deferred drydocking and special survey costs
3,845 
4,387 
5,482 
Impairment loss
41,080 
75,776 
19,004 
Amortization of finance costs and written-off finance costs
14,038 
15,070 
15,431 
Exit fees accrued on debt
3,639 
3,745 
3,763 
Payments for drydocking and special survey costs deferred
(2,341)
(6,887)
(283)
(Gain)/loss on sale of vessels
 
(5,709)
449 
Stock based compensation
88 
638 
75 
Amortization of deferred realized losses on interest rate swaps
4,017 
4,016 
4,017 
Unrealized gains on derivatives
(16,285)
(24,915)
(22,121)
Equity loss on investments
1,941 
 
 
(Increase)/decrease in:
 
 
 
Accounts receivable
(2,748)
134 
(4,297)
Inventories
625 
2,831 
3,235 
Prepaid expenses
16 
106 
(113)
Due from related parties
(8,410)
3,862 
(1,795)
Other assets, current and non-current
2,975 
(7,518)
(11,379)
Increase/(decrease) in:
 
 
 
Accounts payable
(971)
(614)
(858)
Accrued liabilities
(10,691)
(6,206)
(1,983)
Unearned revenue, current and long term
(9,852)
(2,306)
1,858 
Other liabilities, current and long-term
1,911 
2,630 
3,603 
Net cash provided by operating activities
271,676 
192,181 
189,025 
Cash flows from investing activities:
 
 
 
Vessels additions
(1,112)
(39,165)
(46,839)
Investments in affiliates
(13,230)
 
 
Net proceeds from sale of vessels
1,050 
50,602 
52,926 
Net cash (used in)/provided by investing activities
(13,292)
11,437 
6,087 
Cash flows from financing activities:
 
 
 
Payments on long-term debt
(178,808)
(164,154)
(113,634)
Payments on Vendor financing
(64,367)
(57,388)
(57,387)
Deferred finance costs
(692)
(4,392)
(100)
Decrease/(increase) in restricted cash
11,893 
(11,466)
Net cash used in financing activities
(243,861)
(214,041)
(182,587)
Net increase/(decrease) in cash and cash equivalents
14,523 
(10,423)
12,525 
Cash and cash equivalents, beginning of year
57,730 
68,153 
55,628 
Cash and cash equivalents, end of year
72,253 
57,730 
68,153 
Supplementary Cash Flow information
 
 
 
Cash paid for interest
71,795 
82,957 
92,887 
Non-cash investing and financing activities
 
 
 
Acquisition of debt securities and equity investment
 
64,896 
 
Non-cash deferred financing fees
 
$ 90 
$ 87 
Basis of Presentation and General Information
Basis of Presentation and General Information

 

1. Basis of Presentation and General Information

        The accompanying financial statements 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"), 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 21, "Stockholders' Equity".

        The Company's vessels operate worldwide, carrying containers for many established charterers.

        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 (refer to Note 2, "Significant Accounting Policies") that are under the exclusive management of a related party of the Company (refer to Note 13, "Related Party Transactions").

        The consolidated financial statements 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 consolidated balance sheets and consolidated statements of operations, consolidated statements of comprehensive 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."

        As of December 31, 2015, Danaos consolidated the vessel owning companies (the "Danaos Subsidiaries") listed below. All vessels are container vessels:

                                                                                                                                                                                    

Company

 

Date of Incorporation

 

Vessel Name

 

Year Built

 

TEU(2)

 

Megacarrier (No. 1) Corp. 

 

September 10, 2007

 

Hyundai Together

 

 

2012 

 

 

13,100 

 

Megacarrier (No. 2) Corp. 

 

September 10, 2007

 

Hyundai Tenacity

 

 

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

 

Hanjin Germany

 

 

2011 

 

 

10,100 

 

CellContainer (No. 7) Corp. 

 

October 31, 2007

 

Hanjin Italy

 

 

2011 

 

 

10,100 

 

CellContainer (No. 8) Corp. 

 

October 31, 2007

 

Hanjin Greece

 

 

2011 

 

 

10,100 

 

Karlita Shipping Co. Ltd. 

 

February 27, 2003

 

CSCL Pusan

 

 

2006 

 

 

9,580 

 

Ramona Marine Co. Ltd. 

 

February 27, 2003

 

CSCL Le Havre

 

 

2006 

 

 

9,580 

 

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

 

CSCL Europe

 

 

2004 

 

 

8,468 

 

Oceanprize Navigation Ltd. 

 

January 21, 2003

 

CSCL America

 

 

2004 

 

 

8,468 

 

Boxcarrier (No. 2) Corp. 

 

June 27, 2006

 

CMA CGM Musset(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 3) Corp. 

 

June 27, 2006

 

CMA CGM Nerval(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 4) Corp. 

 

June 27, 2006

 

CMA CGM Rabelais(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 5) Corp. 

 

June 27, 2006

 

CMA CGM Racine(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 1) Corp. 

 

June 27, 2006

 

CMA CGM Moliere(1)

 

 

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 

 

Actaea Company Limited

 

October 14, 2014

 

Performance

 

 

2002 

 

 

6,402 

 

Asteria Shipping Company Limited

 

October 14, 2014

 

Priority

 

 

2002 

 

 

6,402 

 

Federal Marine Inc. 

 

February 14, 2006

 

Federal

 

 

1994 

 

 

4,651 

 

Auckland Marine Inc. 

 

January 27, 2005

 

SNL Colombo

 

 

2004 

 

 

4,300 

 

Wellington Marine Inc. 

 

January 27, 2005

 

YM Singapore

 

 

2004 

 

 

4,300 

 

Continent Marine Inc. 

 

March 22, 2006

 

Zim Monaco

 

 

2009 

 

 

4,253 

 

Medsea Marine Inc. 

 

May 8, 2006

 

OOCL Novorossiysk

 

 

2009 

 

 

4,253 

 

Blacksea Marine Inc. 

 

May 8, 2006

 

Zim Luanda

 

 

2009 

 

 

4,253 

 

Bayview Shipping Inc. 

 

March 22, 2006

 

Zim Rio Grande

 

 

2008 

 

 

4,253 

 

Channelview Marine Inc. 

 

March 22, 2006

 

Zim Sao Paolo

 

 

2008 

 

 

4,253 

 

Balticsea Marine Inc. 

 

March 22, 2006

 

OOCL Istanbul

 

 

2008 

 

 

4,253 

 

Seacarriers Services Inc. 

 

June 28, 2005

 

YM Seattle

 

 

2007 

 

 

4,253 

 

Seacarriers Lines Inc. 

 

June 28, 2005

 

YM Vancouver

 

 

2007 

 

 

4,253 

 

Containers Services Inc. 

 

May 30, 2002

 

Deva

 

 

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

 

Hanjin Algeciras

 

 

2011 

 

 

3,400 

 

CellContainer (No. 5) Corp. 

 

March 23, 2007

 

Hanjin Constantza

 

 

2011 

 

 

3,400 

 

CellContainer (No. 1) Corp. 

 

March 23, 2007

 

Hanjin Buenos Aires

 

 

2010 

 

 

3,400 

 

CellContainer (No. 2) Corp. 

 

March 23, 2007

 

Hanjin Santos

 

 

2010 

 

 

3,400 

 

CellContainer (No. 3) Corp. 

 

March 23, 2007

 

Hanjin Versailles

 

 

2010 

 

 

3,400 

 

Vilos Navigation Company Ltd. 

 

May 30, 2013

 

MSC Zebra

 

 

2001 

 

 

2,602 

 

Trindade Maritime Company

 

April 10, 2013

 

Amalia C

 

 

1998 

 

 

2,452 

 

Sarond Shipping Inc. 

 

January 18, 2013

 

Danae C (ex Niledutch Palanca)

 

 

2001 

 

 

2,524 

 

Speedcarrier (No. 7) Corp. 

 

December 6, 2007

 

Hyundai Highway

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 6) Corp. 

 

December 6, 2007

 

Hyundai Progress

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 8) Corp. 

 

December 6, 2007

 

Hyundai Bridge

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 1) Corp. 

 

June 28, 2007

 

Hyundai Vladivostok

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 2) Corp. 

 

June 28, 2007

 

Hyundai Advance

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 3) Corp. 

 

June 28, 2007

 

Hyundai Stride

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 5) Corp. 

 

June 28, 2007

 

Hyundai Future

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 4) Corp. 

 

June 28, 2007

 

Hyundai Sprinter

 

 

1997 

 

 

2,200 

 

Vessels sold during 2014

 

 

 

 

 

 

 

 

 

 

 

Boxcarrier (No. 6) Corp. 

 

June 27, 2006

 

Marathonas

 

 

1991 

 

 

4,814 

 

Boxcarrier (No. 7) Corp. 

 

June 27, 2006

 

Messologi

 

 

1991 

 

 

4,814 

 

Boxcarrier (No. 8) Corp. 

 

November 16, 2006

 

Mytilini

 

 

1991 

 

 

4,814 

 

Duke Marine Inc. 

 

April 14, 2003

 

Duka

 

 

1992 

 

 

4,651 

 

Commodore Marine Inc. 

 

April 14, 2003

 

Commodore

 

 

1992 

 

 

4,651 

 


 

 

 

(1)          

Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.

(2)          

Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.

 

Significant Accounting Policies
Significant Accounting Policies

 

2. Significant Accounting Policies

        Principles of Consolidation:    The accompanying consolidated financial statements 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 obtained by the Company.

        The Company also consolidates entities that are determined to be variable interest entities, of which the Company is the primary beneficiary, as defined in the accounting guidance, if it determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity's residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Refer to Note 12, "Long-Term Debt", which describes an arrangement under the credit facility with ABN Amro, Lloyds TSB and National Bank of Greece for a variable interest entity.

        Inter-company transaction balances and unrealized gains/(losses) on transactions between the companies are eliminated.

        Investments in affiliates:    The Company's investments in affiliates are accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Company's proportionate share of earnings or losses and distributions. The Company evaluates its investments in affiliates for impairment when events or circumstances indicate that the carrying value of such investments may have experienced other than temporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered an other than temporary decline, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated Statements of Operations.

        Use of Estimates:    The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to future drydock dates, the selection of useful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes, and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.

        Reclassifications in Other Comprehensive Income:    The Company had the following reclassifications out of Accumulated Other Comprehensive Loss as of December 31, 2015, 2014 and 2013, respectively (in thousands):

                                                                                                                                                                                    

 

 

 

 

Year ended December 31,

 

 

 

Location of Reclassification into Income

 

 

 

2015

 

2014

 

2013

 

Amortization of deferred realized losses on cash flow hedges

 

Net unrealized and realized losses on derivatives

 

 

4,017 

 

 

4,016 

 

 

4,017 

 

Reclassification of unrealized losses to earnings

 

Net unrealized and realized losses on derivatives

 

 

32,644 

 

 

88,939 

 

 

116,557 

 

​  

​  

​  

​  

​  

​  

Total Reclassifications

 

 

 

$

36,661 

 

$

92,955 

 

$

120,574 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

        Foreign Currency Translation:    The functional currency of the Company is the U.S. dollar. The Company engages in worldwide commerce with a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollar denominated. Additionally, the Company's wholly-owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however, all of the subsidiaries' primary cash flows are U.S. dollar denominated. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized in the consolidated Statements of Operations. The foreign currency exchange gains recognized in the accompanying consolidated Statements of Operations for each of the years ended December 31, 2015, 2014 and 2013 were $0.1 million, $0.3 million and $0.04 million, respectively.

        Cash and Cash Equivalents:    Cash and cash equivalents consist of interest bearing call deposits, where the Company has instant access to its funds and withdrawals and deposits can be made at any time, as well as time deposits with original maturities of three months or less which are not restricted for use or withdrawal. Cash and cash equivalents of $72.3 million as of December 31, 2015 (December 31, 2014: $57.7 million) comprised cash balances and short-term deposits.

        Restricted Cash:    Cash restricted accounts include retention accounts. Certain of the Company's loan agreements require the Company to deposit one- third of quarterly and one-sixth of the semi-annual principal installments and interest installments, respectively, due on the outstanding loan balance monthly in a retention account. On the rollover settlement date, both principal and interest are paid from the retention account. Refer to Note 3, "Restricted Cash".

        Accounts Receivable, Net:    The amount shown as Accounts Receivable, net, at each balance sheet date includes estimated recoveries from charterers for hire and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts based on the Company's history of write-offs, level of past due accounts based on the contractual term of the receivables and its relationships with and economic status of its customers. Bad debts are written off in the period in which they are identified.

        Insurance Claims:    Insurance claims represent the claimable expenses, net of deductibles, which are expected to be recovered from insurance companies. Any costs to complete the claims are included in accrued liabilities. The Company accounts for the cost of possible additional call amounts under its insurance arrangements in accordance with the accounting guidance for contingencies based on the Company's historical experience and the shipping industry practices. Insurance claims are included in the consolidated balance sheet line item "Other current assets".

        Prepaid Expenses and Inventories:    Prepaid expenses consist mainly of insurance expenses, and inventories consist of bunkers, lubricants and provisions remaining on board the vessels at each period end, which are valued at cost as determined using the first-in, first-out method. Costs of spare parts are expensed as incurred.

        Financing Costs:    Fees incurred for obtaining new loans and loans that have been accounted for as modified are deferred and amortized over the loans' respective repayment periods using the effective interest rate method. These charges are included in the consolidated balance sheet line item "Deferred Charges, net". The amortization expense associated with deferred financing fees is included under "Other finance expense" in the consolidated Statements of Operations.

        Fixed Assets:    Fixed assets consist of vessels. Vessels are stated at cost, less accumulated depreciation. The cost of vessels consists of the contract purchase price and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise, these expenditures are charged to expense as incurred. Interest costs while under construction are included in vessels' cost.

        Vessels acquired in the secondhand market are treated as a business combination to the extent that such acquisitions include continuing operations and business characteristics such as management agreements, employees and customer base. Otherwise, these are treated as purchase of assets. Where the Company identifies any intangible assets or liabilities associated with the acquisition of a vessel purchased in the secondhand market, the Company records all identified tangible and intangible assets or liabilities at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. The Company has acquired certain vessels in the secondhand market, all of which were considered to be acquisitions of assets.

        Depreciation:    The cost of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful lives after considering the estimated residual value (refer to Note 4, "Fixed Assets, net"). Management has estimated the useful life of the Company's vessels to be 30 years from the year built.

        Vessels held for sale:    Vessels are classified as "Vessels held for sale" when all of the following criteria are met: management has committed to a plan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels; an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; the sale of the vessel is probable and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These vessels are not depreciated once they meet the criteria to be held for sale. As of December 31, 2015, the Company recorded an impairment loss of $2.1 million for the vessel held for sale, which is included under "Impairment loss" in the consolidated Statements of Operations.

        Accounting for Special Survey and Drydocking Costs:    The Company follows the accounting guidance for planned major maintenance activities. Drydocking and special survey costs, which are reported in the balance sheet within "Deferred charges, net", include planned major maintenance and overhaul activities for ongoing certification including the inspection, refurbishment and replacement of steel, engine components, electrical, pipes and valves, and other parts of the vessel. The Company follows the deferral method of accounting for special survey and drydocking costs, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey and drydocking, 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.

        The amortization periods reflect the estimated useful economic life of the deferred charge, which is the period between each special survey and drydocking.

        Costs incurred during the drydocking period relating to routine repairs and maintenance are expensed. The unamortized portion of special survey and drydocking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain/(loss) on sale of the vessel.

        Impairment of Long-lived Assets:    The accounting standard for impairment of long-lived assets requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the case of long-lived assets held and used, if the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.

        As of December 31, 2015, December 31, 2014 and December 31, 2013, the Company concluded that events and circumstances triggered the existence of potential impairment of its long-lived assets. These indicators included volatility in the spot market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on its future operations. As a result, the Company performed step one of the impairment assessment of the Company's long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. The Company's strategy is to charter its vessels under multi-year, fixed rate period charters that range from less than 1 to 18 years for vessels in its fleet, providing the Company with contracted stable cash flows. The significant factors and assumptions the Company used in its undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, drydocking costs, operating expenses and management fees estimates. Revenue assumptions were based on contracted time charter rates up to the end of life of the current contract of each vessel as well as the estimated average time charter equivalent rates for the remaining life of the vessel after the completion of its current contract. The estimated daily time charter equivalent rates used for non-contracted revenue days are based on a combination of (i) recent charter market rates, (ii) conditions existing in the containership market as of December 31, 2015, December 31, 2014 and December 31, 2013 in relation to laid up vessels; (iii) historical average time charter rates, based on publications by independent third party maritime research services, and (iv) estimated future time charter rates, based on publications by independent third party maritime research services that provide such forecasts. Recognizing that the container transportation is cyclical and subject to significant volatility based on factors beyond the Company's control, management believes the use of revenue estimates, based on the combination of factors (i) to (iv) above, to be reasonable as of the reporting date. In addition, the Company used an annual operating expenses escalation factor and estimates of scheduled and unscheduled off-hire revenues based on historical experience. All estimates used and assumptions made were in accordance with the Company's internal budgets and historical experience of the shipping industry.

        As of December 31, 2015 and December 31, 2014, the Company's assessment concluded that step two of the impairment analysis was required for certain of its vessels, as undiscounted projected net operating cash flows of certain vessels did not exceed the carrying value of the respective vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers (on the basis of a commercial transaction between a willing buyer and a willing seller). As of December 31, 2015 and December 31, 2014, the Company recorded an impairment loss of $39.0 million and $75.8 million, respectively for its older vessels mainly due to the decrease in the estimated average time charter equivalent rates for the remaining life of the vessels, after the completion of their current contracts. The impairment loss is included under "Impairment loss" in the consolidated Statements of Operations.

        No impairment of vessels existed as of December 31, 2013, as the undiscounted projected net operating cash flows per vessel exceeded the carrying value of each vessel.

        Investments in Debt Securities:    The Company classifies its debt securities as held-to-maturity based on management's positive intent and ability to hold to maturity. These securities are reported at amortized cost, subject to impairment. Management evaluates securities for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its amortized cost. Consideration is given to: 1) if the Company intends to sell the security (that is, it has decided to sell the security); 2) it is more likely than not that the Company will be required to sell the security before the recovery of its (entire) amortized cost basis; or 3) a credit loss exists—that is, the Company does not expect to recover the entire amortized cost basis of the security (the present value of cash flows expected to be collected is less than the amortized cost basis of the security).

        Investments in Equity Securities:    The Company classifies its equity securities at cost as the Company does not have the ability to exercise significant influence. Management evaluates the equity security for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its cost. Consideration is given to significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, significant adverse change in the regulatory, economic, or technological environment of the investee, significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates, as well as factors that raise significant concerns about the investee's ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.

        Pension and Retirement Benefit Obligations-Crew:    The crew on board the companies' vessels serve in such capacity under short-term contracts (usually up to seven months) and accordingly, the vessel-owning companies are not liable for any pension or post-retirement benefits.

        Accounting for Revenue and Expenses:    Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenue over the rental periods of such charter agreements, as service is performed. The Company earns revenue from bareboat and time charters. Bareboat and time charters involve placing a vessel at the charterers' disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under a time charter, the daily hire rate includes the crew, lubricants, insurance, spares and stores. Under a bareboat charter, the charterer is provided only with the vessel.

        Voyage Expenses:    Voyage expenses include port and canal charges, bunker (fuel) expenses (bunker costs are normally covered by the Company's charterers, except in certain cases such as vessel re-positioning), address commissions and brokerage commissions. Under multi-year time charters and bareboat charters, such as those on which the Company charters its containerships and under short-term time charters, the charterers bear the voyage expenses other than brokerage and address commissions. As such, voyage expenses represent a relatively small portion of the vessels' overall expenses.

        Vessel Operating Expenses:    Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Aggregate expenses increase as the size of the Company's fleet increases. Under multi-year time charters, the Company pays for vessel operating expenses. Under bareboat charters, such as those on which the Company chartered two of the containerships in its fleet as of December 31, 2015, 2014 and 2013, respectively, the Company's charterers bear most vessel operating expenses, including the costs of crewing, insurance, surveys, drydockings, maintenance and repairs.

        General and administrative expenses:    General and administrative expenses include management fees paid to the vessels' manager (refer to Note 13, "Related Party Transactions"), audit fees, legal fees, board remuneration, executive officers compensation, directors & officers insurance and stock exchange fees.

        Repairs and Maintenance:    All repair and maintenance expenses are charged against income when incurred and are included in vessel operating expenses in the accompanying consolidated Statements of Operations.

        Dividends:    Dividends, if any, are recorded in the Company's financial statements in the period in which they are declared by the Company's board of directors.

        Segment Reporting:    The Company reports financial information and evaluates its operations by total charter revenues. Although revenue can be identified for different types of charters, management does not identify expenses, profitability or other financial information for different charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it has only one operating and reportable segment.

        Derivative Instruments:    The Company entered into interest rate swap contracts to create economic hedges for its interest rate risks. The Company recorded these financial instruments at their fair value. When such derivatives do not qualify for hedge accounting, changes in their fair value are recorded in the consolidated Statement of Operations. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in the fair value of derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income (effective portion) and are reclassified to earnings when the hedged transaction is reflected in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in income.

        At the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its risk management objective and the strategy for undertaking various hedging transactions. The Company also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

        On July 1, 2012, the Company elected to prospectively de-designate fair value and cash flow interest rate swaps for which it was obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of the Company's cash flow interest rate swap agreements were recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.

        The Company evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain frozen in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.

        The Company does not use financial instruments for trading or other speculative purposes.

        Earnings/(Loss) Per Share:    The Company has presented net income/(loss) per share for all years presented based on the weighted average number of outstanding shares of common stock of Danaos Corporation at the reported periods. The warrants issued in 2011 were excluded from the diluted (loss)/income per share for the year ended December 31, 2015, 2014 and 2013, because they were antidilutive. There are no other dilutive or potentially dilutive securities, accordingly there is no difference between basic and diluted net income per share.

        Equity Compensation Plan:    The Company has adopted an equity compensation plan (the "Plan"), which is generally administered by the compensation committee of the Board of Directors. The Plan allows the plan administrator to grant awards of shares of common stock or the right to receive or purchase shares of common stock to employees, directors or other persons or entities providing significant services to the Company or its subsidiaries. The actual terms of an award will be determined by the plan administrator and set forth in written award agreement with the participant. Any options granted under the Plan will be accounted for in accordance with the accounting guidance for share-based compensation arrangements.

        The aggregate number of shares of common stock for which awards may be granted under the Plan cannot exceed 6% of the number of shares of common stock issued and outstanding at the time any award is granted. 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. Unless otherwise set forth in an award agreement, any awards outstanding under the Plan will vest immediately upon a "change of control", as defined in the Plan. The Plan will automatically terminate ten years after it has been most recently approved by the Company's stockholders. Refer to Note 20, "Stock Based Compensation".

        As of April 18, 2008, the Company established the Directors Share Payment Plan ("Directors Plan") under the Plan. The purpose of the Directors 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. Each member of the Board of Directors of the Company may participate in the Directors Plan. Pursuant to the terms of the Directors Plan, Directors may elect to receive in Common Stock all or a portion of their compensation. On the last business day of each quarter, the rights of common stock are credited to each Director's Share Payment Account. Following December 31st of each year, the Company will deliver to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. Refer to Note 20, "Stock Based Compensation".

        As of April 18, 2008, the Board of Directors and the Compensation Committee approved the Company's ability to provide, from time to time, incentive compensation to the employees of Danaos Shipping Company Limited (the "Manager"), in the form of free shares of the Company's common stock under the Plan. Prior approval is required by the Compensation Committee and the Board of Directors. The plan was effective since 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 stock will have no vesting period and the employee will own the stock immediately after grant. 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. Refer to Note 20, "Stock Based Compensation".

Recent Accounting Pronouncements:

        In May 2014, the FASB issued Accounting Standards Update No. 2014-9 "Revenue from Contracts with Customers" ("ASU 2014-09"), which will supersede the current revenue recognition guidance and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The ASU 2014-09 was amended by ASU 2015-14 "Revenue from Contracts with Customers: Deferral of the Effective Date" ("ASU 2015-014"), which was issued in August 2015. Public entities can now elect to defer implementation of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. Additionally, ASU 2015-14 permits early adoption of the standard but not before the original effective date, i.e. annual period beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and associated disclosures, and have not yet selected a transition method.

        In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810)—Amendments to the Consolidation Analysis", ("ASU 2015-02"). ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities ("VIEs"), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early application is permitted. The Company does not expect the adoption of this ASU to have a material impact on the Company's results of operations, financial position or cash flows.

        In April 2015, the FASB issued Accounting Standards Update No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs", ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments are effective for annual periods ending after December 15, 2015, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted. The Company is not early adopting this standard. After its adoption in 2016, this change will result in a reclassification of $35.0 million from Deferred charges, net to Long-term debt in the consolidated balance sheet as of December 31, 2015. Additionally, amortization of deferred finance costs amounting to $14.0 million will be reclassified from Other finance expenses to Interest expense in the consolidated Statements of Operations for the year ended December 31, 2015.

        In January 2016, the FASB issued Accounting Standards Update No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this Update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this Update eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement for to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities.The amendments are effective for annual periods ending after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and notes disclosures.

        In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 will apply to both types of leases—capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and notes disclosures.

Restricted Cash
Restricted Cash

 

3. Restricted Cash

        The Company was required to maintain cash of $2.8 million as of December 31, 2015 and December 31, 2014 in a retention bank accounts as collateral for the upcoming scheduled debt payments of its KEXIM and KEXIM-ABN Amro credit facilities, which were recorded under current assets in the Company's Balance Sheets.

 

Fixed Assets, Net
Fixed Assets, Net

 

4. Fixed Assets, Net

        On December 23, 2015, the Company entered into an agreement to sell the vessel Federal for gross sale consideration of $7.2 million, of which $1.4 million was received in advance during the year ended December 31, 2015. As of December 31, 2015, the vessel Federal is classified as vessel held for sale in the consolidated Balance Sheet, (refer to Note 24, "Subsequent Events") and is analyzed as follows (in thousands):

                                                                                                                                                                                    

 

 

2015

 

Carrying value

 

$

8,364

 

Impairment loss

 

 

(2,100

)

​  

​  

Fair value less cost to sell

 

$

6,264

 

​  

​  

        During the year ended December 31, 2014, the Company sold and delivered five vessels: Marathonas, Commodore, Duka, Mytilini and Messologi for total gross sale consideration of $57.7 million. Refer to Note 19, "Sale of Vessels".

        On November 5, 2014, the Company acquired two 6,402 TEU containerships, Performance and Priority, both built in 2002 for total contract price of $36.5 million.

        As of December 31, 2015, the Company recorded an impairment loss of $39.0 million in relation to its twelve of the older vessels that are held and used. As of December 31, 2014, the Company recorded an impairment loss of $75.8 million in relation to eight of its older vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. The Company's assessment concluded that no impairment of vessels existed as of December 31, 2013. Refer to Note 23 "Impairment Loss".

        The residual value (estimated scrap value at the end of the vessels' useful lives) of the fleet was estimated at $386.4 million as of December 31, 2015 and December 31, 2014. 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. 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.

Deferred Charges, Net
Deferred Charges, Net

 

5. Deferred Charges, Net

        Deferred charges consisted of the following (in thousands):

                                                                                                                                                                                    

 

 

Drydocking and
Special Survey
Costs

 

Finance
and Other
Costs

 

Total
Deferred
Charges

 

As of January 1, 2014

 

$

4,041

 

$

63,908

 

$

67,949

 

Additions

 

 

6,887

 

 

182

 

 

7,069

 

Written-off amounts

 

 

(286

)

 

(55

)

 

(341

)

Amortization

 

 

(4,387

)

 

(15,015

)

 

(19,402

)

​  

​  

​  

​  

​  

​  

As of December 31, 2014

 

$

6,255

 

$

49,020

 

$

55,275

 

Additions

 

 

2,341

 

 

 

 

2,341

 

Amortization

 

 

(3,845

)

 

(14,038

)

 

(17,883

)

​  

​  

​  

​  

​  

​  

As of December 31, 2015

 

$

4,751

 

$

34,982

 

$

39,733

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

        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.

Other Current Assets
Other Current Assets

 

6. Other Current Assets

        Other current assets consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

$

138 

 

 

 

Claims receivable

 

 

954 

 

$

7,856 

 

Advances to suppliers and other assets

 

 

3,365 

 

 

3,784 

 

​  

​  

​  

​  

Total

 

$

4,457 

 

$

11,640 

 

​  

​  

​  

​  

​  

​  

​  

​  

        As of December 31, 2015 and December 31, 2014, claims receivable consist of insurance and other claims. As of December 31, 2015 and December 31, 2014, the claim receivable related to a collision incident of the Hanjin Italy outside Singapore amounted to $0.7 million and $7.0 million, respectively.

Investments in Affiliates
Investments in Affiliates

 

7. Investments in affiliates

        In August 2015, an affiliated company Gemini Shipholdings Corporation ("Gemini") was formed by the Company and Virage International Ltd. ("Virage"), a company controlled by the Company's largest shareholder. Gemini acquired a 100% interest in entities with capital leases for the Suez Canal and Genoa and that own the container vessel NYK Lodestar. Additionally, Gemini has agreed to acquire the container vessel NYK Leo, which was delivered on February 4, 2016. Gemini financed these acquisitions with the assumption of capital lease obligations of $35.4 million, $9.0 million of borrowings under a secured loan facility and an aggregate of $27.0 million from equity contributions from the Company and Virage, which subscribed in cash for 49% and 51%, respectively, of Gemini's issued and outstanding share capital. As of December 31, 2015, Gemini consolidated its wholly owned subsidiaries listed below:

                                                                                                                                                                                    

Company

 

Vessel Name

 

Year Built

 

TEU(1)

 

Date of vessel delivery

Averto Shipping S.A. 

 

Suez Canal

 

 

2002 

 

 

5,610 

 

July 20, 2015

Sinoi Marine Ltd. 

 

Genoa

 

 

2002 

 

 

5,544 

 

August 2, 2015

Kingsland International Shipping Limited

 

NYK Lodestar

 

 

2001 

 

 

6,422 

 

September 21, 2015

Leo Shipping and Trading S.A. 

 

NYK Leo

 

 

2002 

 

 

6,422 

 

February 4, 2016


 

 

 

(1)          

Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.

        The Company has determined that Gemini is a variable interest entity of which the Company is not the primary beneficiary, and as such, this affiliated company is accounted for under the equity method and recorded under "Equity loss on investments" in the consolidated Statements of Operations. The Company does not guarantee the debt of Gemini and its subsidiaries and has the right to purchase all of the beneficial interest in Gemini that it does not own for fair market value at any time after December 31, 2018, or earlier if permitted under its credit facilities.The net assets of Gemini total $23.0 million as of December 31, 2015. The Company's exposure is limited to its share of the net assets of Gemini proportionate to its 49% equity interest in Gemini.

        A condensed summary of the financial information for equity accounted investments 49% owned by the Company shown on a 100% basis are as follows (in thousands):

                                                                                                                                                                                    

 

 

2015

 

Current assets

 

$

12,578 

 

Non-current assets

 

$

54,771 

 

Current liabilities

 

$

5,552 

 

Non-current liabilities

 

$

38,758 

 

Net operating revenues

 

$

1,775 

 

Net loss

 

$

3,961 

 

 

Other Non-current Assets
Other Non-current Assets

 

8. Other Non-current Assets

        Other non-current assets consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

 

 

$

664 

 

Series 1 ZIM notes, net

 

$

6,587 

 

 

6,274 

 

Series 2 ZIM notes, net

 

 

32,507 

 

 

30,923 

 

Equity participation ZIM

 

 

28,693 

 

 

28,693 

 

Other assets

 

 

4,401 

 

 

1,952 

 

​  

​  

​  

​  

Total

 

$

72,188 

 

$

68,506 

 

​  

​  

​  

​  

​  

​  

​  

​  

        As of July 16, 2014, ZIM and its creditors entered into definitive documentation effecting ZIM's restructuring with its creditors. The terms of the restructuring include a reduction in the charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of the Company's vessels, which had already been implemented beginning in January 2014. The terms also include the receipt of approximately $49.9 million aggregate principal amount of unsecured, interest bearing ZIM notes maturing in 2023 (consisting of $8.8 million of 3% Series 1 Notes due 2023 amortizing subject to available cash flow in accordance with a corporate cash sweep mechanism, and $41.1 million of 5% Series 2 Notes due 2023 non-amortizing (of the 5% interest rate, 3% is payable quarterly in cash and 2% is accrued quarterly with deferred cash payment on maturity)) and ZIM shares representing approximately 7.4% of the outstanding ZIM shares immediately after the restructuring, in exchange for such charter rate reductions and cancellation of ZIM's other obligations to the Company which related to the outstanding long term receivable as of December 31, 2013.

        As of July 16, 2014, the Company calculated the fair value of the instruments received from ZIM based on the agreement discussed above, other available information on ZIM, other contracts with similar terms, remaining maturities and interest rates and recorded at fair value an amount of $6.1 million in relation to the Series 1 Notes, $30.1 million in relation to the Series 2 Notes and $28.7 million in relation to its equity participation in ZIM. On a quarterly basis, the Company accounts for the fair value unwinding of the Series 1 Notes and Series 2 Notes until the value of the instruments equals their face values on maturity. As of December 31, 2015 and December 31, 2014, the Company recorded $6.6 million and $6.3 million in relation to the Series 1 Notes and $32.5 million and $30.9 million in relation to the Series 2 Notes, respectively and recognized $1.1 million and $0.6 million in relation to their fair value unwinding in the consolidated Statements of Operations in "Interest income" for the years ended December 31, 2015 and December 31, 2014, respectively. Furthermore, for the year ended December 31, 2015 and December 31, 2014, the Company recognized in the consolidated Statements of Operations in "Interest income", a non-cash interest income of $0.8 million and $0.4 million, respectively, in relation to the 2% interest of Series 2 Notes, which is accrued quarterly with deferred cash payment on maturity. The Company will test periodically for impairment of these investments based on the existence of triggering events that indicate ZIM's debt instruments and interest in equity may have been impaired.

        Furthermore, as of July 16, 2014, an amount of $39.1 million, which represents the additional compensation received from ZIM, was recorded as unearned revenue representing compensation to the Company for the future reductions in the daily charter rates payable by ZIM under its time charters, expiring in 2020 or 2021, for six of the Company's vessels. This amount is recognized in the consolidated Statements of Operations in "Operating revenues" over the remaining life of the respective time charters. For the years ended December 31, 2015 and December 31, 2014, the Company recognized $6.0 million and $2.7 million, respectively, of unearned revenue amortization in "Operating revenues". As of December 31, 2015, the outstanding balances of the current and non-current portion of unearned revenue in relation to ZIM amounted to $6 million and $24.4 million, respectively. As of December 31, 2014, the corresponding outstanding balance of the current and non-current portion of unearned revenue amounted to $6.0 million and $30.4 million, respectively. Refer to Notes 15c, Financial Instruments—Fair value of Financial Instruments and Note 23, "Impairment Loss".

        In respect to the fair value of swaps, refer to Note 15b, Financial Instruments—Fair Value Interest Rate Swap Hedges.

Accrued Liabilities
Accrued Liabilities

 

9. Accrued Liabilities

        Accrued liabilities consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Accrued payroll

 

$

1,162 

 

$

1,175 

 

Accrued interest

 

 

8,059 

 

 

9,457 

 

Accrued expenses

 

 

4,793 

 

 

14,073 

 

​  

​  

​  

​  

Total

 

$

14,014 

 

$

24,705 

 

​  

​  

​  

​  

​  

​  

​  

​  

        Accrued expenses mainly consisted of accrued realized losses on cash flow interest rate swaps of $1.2 million and $10.4 million as of December 31, 2015 and December 31, 2014, respectively, as well as other accruals related to the operation of the Company's fleet of $3.6 million and $3.7 million as of December 31, 2015 and 2014, respectively.

Other Current and Long-term Liabilities
Other Current and Long-term Liabilities

 

10. Other Current and Long-term Liabilities

        Other current liabilities consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

$

4,538 

 

$

51,022 

 

Other current liabilities

 

 

790 

 

 

1,480 

 

​  

​  

​  

​  

Total

 

$

5,328 

 

$

52,502 

 

​  

​  

​  

​  

​  

​  

​  

​  

        As of December 31, 2014, other current liabilities include an amount of $0.7 million related to deferred fees accrued in accordance with the Bank Agreement (refer to Note 12, "Long-Term Debt"), which are recorded at amortized cost.

        Other long-term liabilities consisted of the following at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

 

 

$

2,398 

 

Other long-term liabilities

 

$

13,219 

 

 

11,310 

 

​  

​  

​  

​  

Total

 

$

13,219 

 

$

13,708 

 

​  

​  

​  

​  

​  

​  

​  

​  

        In respect to the fair value of swaps, refer to Note 15a, Financial Instruments—Cash Flow Interest Rate Swap Hedges.

Lease Arrangements
Lease Arrangements

 

11. Lease Arrangements

Charters-out

        The future minimum revenue, expected to be earned on non-cancellable time charters consisted of the following as at December 31, 2015 (in thousands):

                                                                                                                                                                                    

2016

 

$

524,682 

 

2017

 

 

490,984 

 

2018

 

 

445,471 

 

2019

 

 

410,944 

 

2020

 

 

374,903 

 

2021 and thereafter

 

 

913,111 

 

​  

​  

Total future revenue

 

$

3,160,095 

 

​  

​  

​  

​  

        Revenues 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 minimum future charter revenues, 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. The off-hire assumptions used relate mainly to drydocking and special survey maintenance carried out approximately every 2.5 years per vessel, or every 5 years for vessels less than 15-years old, and which may last approximately 10 to 15 days.

Long-Term Debt
Long-Term Debt

 

12. Long-Term Debt

        Long-term debt as of December 31, 2015 and 2014 consisted of the following (in thousands):

                                                                                                                                                                                    

Lender

 

As of
December 31,
2015

 

Current
portion

 

Long-term
portion

 

As of
December 31,
2014

 

Current
portion

 

Long-term
portion

 

The Royal Bank of Scotland

 

$

667,134 

 

$

24,327 

 

$

642,807 

 

$

678,954 

 

$

12,657 

 

$

666,297 

 

HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank

 

 

627,818 

 

 

50 

 

 

627,768 

 

 

628,513 

 

 

 

 

628,513 

 

HSH Nordbank

 

 

21,208 

 

 

9,006 

 

 

12,202 

 

 

28,843 

 

 

7,633 

 

 

21,210 

 

The Export-Import Bank of Korea ("KEXIM")

 

 

8,204 

 

 

8,204 

 

 

 

 

18,573 

 

 

10,369 

 

 

8,204 

 

The Export-Import Bank of Korea & ABN Amro

 

 

45,609 

 

 

11,250 

 

 

34,359 

 

 

56,859 

 

 

11,250 

 

 

45,609 

 

Deutsche Bank

 

 

169,921 

 

 

5,338 

 

 

164,583 

 

 

174,709 

 

 

4,786 

 

 

169,923 

 

Canyon Capital Finance

 

 

136,719 

 

 

11,425 

 

 

125,294 

 

 

144,467 

 

 

8,228 

 

 

136,239 

 

Credit Suisse

 

 

199,373 

 

 

11,978 

 

 

187,395 

 

 

208,585 

 

 

9,328 

 

 

199,257 

 

ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia

 

 

228,999 

 

 

13,509 

 

 

215,490 

 

 

239,896 

 

 

11,422 

 

 

228,474 

 

Commerzbank-Credit Suisse-Golden Tree

 

 

258,089 

 

 

20,139 

 

 

237,950 

 

 

274,984 

 

 

17,327 

 

 

257,657 

 

The Royal Bank of Scotland (January 2011 Credit Facility)

 

 

69,948 

 

 

30,990 

 

 

38,958 

 

 

85,017 

 

 

15,326 

 

 

69,691 

 

HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank (January 2011 Credit Facility)

 

 

69,562 

 

 

37,901 

 

 

31,661 

 

 

94,812 

 

 

22,476 

 

 

72,336 

 

ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management -National Bank of Greece (January 2011 Credit Facility)

 

 

20,582 

 

 

14,244 

 

 

6,338 

 

 

26,444 

 

 

6,371 

 

 

20,073 

 

Sinosure CEXIM-Citi-ABN Amro Credit Facility

 

 

122,040 

 

 

20,340 

 

 

101,700 

 

 

142,380 

 

 

20,340 

 

 

122,040 

 

Club Facility (January 2011 Credit Facility)

 

 

50,404 

 

 

32,665 

 

 

17,739 

 

 

65,457 

 

 

14,773 

 

 

50,684 

 

Citi-Eurobank Credit Facility (January 2011 Credit Facility)

 

 

63,834 

 

 

18,180 

 

 

45,654 

 

 

69,759 

 

 

5,830 

 

 

63,929 

 

Comprehensive Financing Plan exit fees accrued

 

 

15,501 

 

 

 

 

15,501 

 

 

11,862 

 

 

 

 

11,862 

 

Fair value hedged debt

 

 

433 

 

 

433 

 

 

 

 

1,006 

 

 

 

 

1,006 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total long-term debt

 

$

2,775,378 

 

$

269,979 

 

$

2,505,399 

 

$

2,951,120 

 

$

178,116 

 

$

2,773,004 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Hyundai Samho Vendor Financing

 

 

 

 

 

 

 

$

64,367 

 

$

46,530 

 

$

17,837 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

        All floating rate loans discussed above are collateralized by first and second 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 and the corporate guarantee of Danaos Corporation.

        Maturities of long-term debt subsequent to December 31, 2015 are as follows (in thousands):

                                                                                                                                                                                    

 

 

Fixed
principal
repayments

 

Variable
principal
payments

 

Final Payment
due on
December 31,
2018*

 

Total
principal
payments

 

2016

 

$

183,173 

 

$

86,373 

 

$

 

$

269,546 

 

2017

 

 

180,430 

 

 

133,032 

 

 

 

 

313,462 

 

2018

 

 

204,919 

 

 

77,048 

 

 

1,833,449 

 

 

2,115,416 

 

2019

 

 

20,340 

 

 

 

 

 

 

20,340 

 

2020

 

 

20,340 

 

 

 

 

 

 

20,340 

 

2021

 

 

20,340 

 

 

 

 

 

 

20,340 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total long-term debt

 

$

629,542 

 

$

296,453 

 

$

1,833,449 

 

$

2,759,444 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  


 

 

 

*          

The last payment due on December 31, 2018, includes the unamortized remaining principal debt balances under the Bank Agreement, as such amount will be determinable following the fixed and variable amortization.

        The maturities of long term debt for the twelve month periods subsequent to December 31, 2015 are based on the terms of the Bank Agreement, under which the Company was not required to repay any outstanding principal amounts under its credit facilities, other than the KEXIM and KEXIM ABN Amro credit facilities which are not covered by the Bank Agreement, until May 15, 2013; thereafter until December 31, 2018 it is required to make quarterly principal payments in fixed amounts. In addition, the Company is required to make an additional payment in such amount that, together with the fixed principal payment, equals a certain percentage of its Actual Free Cash Flow of the preceding financial quarter. The table above includes both the fixed payments for which the Company has a contractual obligation, as well as the Company's estimate of the future Actual Free Cash Flows and resulting variable amortization. The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amount will be determinable following the fixed and variable amortization.

        On September 12, 2013, the Company signed a supplemental letter extending the terms of the February 9, 2012 supplemental letter through November 20, 2018 (the maturity of the respective credit facility), which amended the interest rate margin and the financial covenants of its KEXIM ABN Amro credit facility. More specifically, under the February 9, 2012 supplemental letter the financial covenants were aligned with those set forth in the Bank Agreement (see below), and the interest rate margin was increased by 0.5 percentage points.

Bank Agreement

        On January 24, 2011, the Company entered into a definitive agreement, which became effective on March 4, 2011, referred to as the Bank Agreement, that superseded, amended and supplemented the terms of each of the Company's then existing credit facilities (other than its credit facilities with KEXIM and KEXIM ABN Amro which are not covered thereby), and provided for, among other things, revised amortization schedules, maturities, interest rates, financial covenants, events of defaults, guarantee and security packages and approximately $425 million of new debt financing. Subject to the terms of the Bank Agreement and the intercreditor agreement (the "Intercreditor Agreement"), which the Company entered into with each of the lenders participating under the Bank Agreement to govern the relationships between the lenders thereunder, under the January 2011 Credit Facilities (as described and defined below) and under the Hyundai Samho Vendor Financing described below, the lenders participating thereunder continued to provide the Company's then outstanding credit facilities and amended the covenants under such credit facilities in accordance with the terms of the Bank Agreement.

        In accordance with the accounting guidance for troubled debt restructuring, the Company's debt did not meet the conditions of troubled debt restructuring as the lenders have not granted a concession. The effective borrowing rate of the restructured debt was higher than the effective borrowing rate of the old debt.

Interest and Fees

        Under the terms of the Bank Agreement, borrowings under each of the Company's existing credit facilities, other than the KEXIM and KEXIM-ABN Amro credit facilities which are not covered by the Bank Agreement, bear interest at an annual interest rate of LIBOR plus a margin of 1.85%.

        The Company was required to pay an amendment fee equal to 0.5% of the outstanding commitments under each existing financing arrangement, or $12.5 million in the aggregate, of which 20% was paid and deferred on the signing of a commitment letter for the Bank Agreement in August 2010, 40% was paid in January 2011 upon the signing of the Bank Agreement and the remaining 40% was due on December 31, 2014. The Company settled in full this amendment fee by paying $4.3 million on December 23, 2014 and $0.7 million on January 7, 2015. This amendment fee is deferred and amortized over the life of the respective credit facilities with the effective interest method. In addition, the Company is required to pay exit fees, which are discussed in detail below.

        The Company was also required to pay a fee of 0.25% of the total committed amount contemplated by the August 6, 2010 commitment letter for the Bank Agreement for the period starting from August 6, 2010 up until March 4, 2011 (the effective date of the agreement) and which commitment fee was amended to 0.75% for the period after March 4, 2011, which fees were capitalized in cost of vessels under construction as it related to undrawn committed debt designated for specific newbuildings, and a $4.38 million amendment fee (of which $1.22 million was paid in December 2010 and $3.16 million was paid in January 2011) relating to conditions in respect of the Sinosure-CEXIM credit facility. This amendment fee was deferred and is being amortized over the life of the new debt using the effective interest rate method.

Principal Payments

        Under the terms of the Bank Agreement (other than the KEXIM and KEXIM ABN Amro credit facilities, which are not covered by the Bank Agreement), the Company is required to make quarterly principal payments in fixed amounts, in relation to the Company's total debt commitments from the Company's lenders under the Bank Agreement and the January 2011 Credit Facilities, as specified in the table below (in thousands):

                                                                                                                                                                                    

 

 

February 15,

 

May 15,

 

August 15,

 

November 15,

 

December 31,

 

Total

 

2016

 

 

30,973 

 

 

36,278 

 

 

32,276 

 

 

43,852 

 

 

 

 

143,379 

 

2017

 

 

44,939 

 

 

36,691 

 

 

35,338 

 

 

31,872 

 

 

 

 

148,840 

 

2018

 

 

34,152 

 

 

37,585 

 

 

44,399 

 

 

45,334 

 

 

65,969 

 

 

227,439 

 

​  

​  

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

519,658 

 

​  

​  

​  

​  


 

 

 

*          

The Company may elect to make the scheduled payments shown in the above table three months earlier.

        Furthermore, an additional variable payment in such amount that, together with the fixed principal payment (as disclosed above), equals 92.5% of Actual Free Cash Flow for such quarter until the earlier of (x) the date on which the Company's consolidated net leverage is below 6:1 and (y) May 15, 2015; and thereafter through maturity, which will be December 31, 2018 for each covered credit facility, it will be required to make fixed quarterly principal payments in fixed amounts as specified in the Bank Agreement and described above plus an additional payment in such amount that, together with the fixed principal payment, equals 89.5% of Actual Free Cash Flow for such quarter. In addition, any additional amounts of cash and cash equivalents from January 1, 2015 until maturity in excess of the greater of (1) $50 million of accumulated unrestricted cash and cash equivalents and (2) 2% of the Company's consolidated debt, would be applied first to the prepayment of the January 2011 Credit Facilities and after the January 2011 Credit Facilities are repaid, to the outstanding credit facilities covered by the Bank Agreement. The last payment due on December 31, 2018, will also include the unamortized remaining principal debt balances, as such amount will be determinable following the fixed and variable amortization.

        Under the Bank Agreement, "Actual Free Cash Flow" with respect to each credit facility covered thereby is equal to revenue from the vessels collateralizing such facility, less the sum of (a) interest expense under such credit facility, (b) pro rata portion of payments under its interest rate swap arrangements, (c) interest expense and scheduled amortization under the Hyundai Samho Vendor Financing and (d) per vessel operating expenses and pro rata per vessel allocation of general and administrative expenses (which are not permitted to exceed the relevant budget by more than 20%), plus (e) the pro rata share of operating cash flow of any Applicable Second Lien Vessel (which will mean, with respect to an existing facility, a vessel with respect to which the participating lenders under such facility have a second lien security interest and the first lien credit facility has been repaid in full).

        Under the terms of the Bank Agreement, the Company continues to be required to make any mandatory prepayments provided for under the terms of its existing credit facilities and is required to make additional prepayments as follows:

 

 

 

           

•          

50% of the first $300 million of net equity proceeds (including convertible debt and hybrid instruments), after entering into the Bank Agreement and 25% of any additional net equity proceeds; and

           

•          

any debt proceeds (after repayment of any underlying secured debt covered by vessels collateralizing the new borrowings) (excluding the January 2011 Credit Facilities, the Sinosure CEXIM Credit Facility and the Hyundai Samho Vendor Financing),

which amounts would first be applied to repayment of amounts outstanding under the January 2011 Credit Facilities and then to the existing credit facilities. Any equity proceeds retained by the Company and not used within 12 months for certain specified purposes would be applied for prepayment of the January 2011 Credit Facilities and then to the credit facilities covered by the Bank Agreement. The Company would also be required to prepay the portion of a credit facility attributable to a particular vessel upon the sale or total loss of such vessel; the termination or loss of an existing charter for a vessel, unless replaced within a specified period by a similar charter acceptable to the lenders; or the termination of a newbuilding contract. The Company's respective lenders under its credit facilities covered by the Bank Agreement and the January 2011 Credit Facilities may, at their option, require the Company to repay in full amounts outstanding under such respective credit facilities, upon a "Change of Control" of the Company, which for these purposes is defined as (i) Dr. Coustas ceasing to be its Chief Executive Officer, (ii) its common stock ceasing to be listed on the NYSE (or Nasdaq or other recognized stock exchange), (iii) whilst an event of default is continuing, a change in the ultimate beneficial ownership of the capital stock of any of its subsidiaries or ultimate control of the voting rights of those shares, (iv) Dr. Coustas and members of his family ceasing to collectively own over one third of the voting interest in its outstanding capital stock or (v) any other person or group controlling more than 20% of the voting power of its outstanding capital stock.

Covenants and Events of Defaults

        On January 24, 2011, the Company entered into the Bank Agreement that superseded, amended and supplemented the terms of each of its existing credit facilities (other than its credit facilities with KEXIM and KEXIM-ABN Amro) and provided for, among other things, revised financial covenant levels under such existing credit facilities as described below, with which the Company was in compliance as of December 31, 2015 and 2014.

        Under the Bank Agreement, the financial covenants under each of the Company's existing credit facilities (other than under the KEXIM-ABN Amro credit facility which is not covered thereby, but which has been aligned with those covenants until maturity of the respective facility under the supplemental letter dated September 12, 2013 and our KEXIM credit facility, which contains only a collateral coverage covenant of 130%), have been reset to require the Company to:

 

 

 

           

•          

maintain a ratio of (i) the market value of all of the vessels in the Company's fleet, on a charter-inclusive basis, plus the net realizable value of any additional collateral, to (ii) the Company's consolidated total debt above specified minimum levels gradually increasing from 90% through December 31, 2011 to 130% from September 30, 2017 through September 30, 2018; 

           

•          

maintain a minimum ratio of (i) the market value of the nine vessels (Hyundai Smart, Hyundai Speed, Hyundai Ambition, Hyundai Together, Hyundai Tenacity, Hanjin Greece, Hanjin Italy, Hanjin Germany and CMA CGM Rabelais) collateralizing the New Credit Facilities, calculated on a charter-free basis, plus the net realizable value of any additional collateral, to (ii) the Company's aggregate debt outstanding under the New Credit Facilities of 100% from September 30, 2012 through September 30, 2018;

           

•          

maintain minimum free consolidated unrestricted cash and cash equivalents, less the amount of the aggregate variable principal amortization amounts, described above, of $30.0 million at the end of each calendar quarter; 

           

•          

ensure that the Company's (i) consolidated total debt less unrestricted cash and cash equivalents to (ii) consolidated EBITDA (defined as net income before interest, gains or losses under any hedging arrangements, tax, depreciation, amortization and any other non-cash item, capital gains or losses realized from the sale of any vessel, finance charges and capital losses on vessel cancellations and before any non-recurring items and excluding any accrued interest due to us but not received on or before the end of the relevant period; provided that non-recurring items excluded from this calculation shall not exceed 5% of EBITDA calculated in this manner) for the last twelve months does not exceed a maximum ratio gradually decreasing from 12:1 on December 31, 2010 to 4.75:1 on September 30, 2018; 

           

•          

ensure that the ratio of the Company's (i) consolidated EBITDA for the last twelve months to (ii) net interest expense (defined as interest expense (excluding capitalized interest), less interest income, less realized gains on interest rate swaps (excluding capitalized gains) and plus realized losses on interest rate swaps (excluding capitalized losses)) exceeds a minimum level of 1.50:1 through September 30, 2013 and thereafter gradually increasing to 2.80:1 by September 30, 2018; and 

           

•          

maintain a consolidated market value adjusted net worth (defined as the amount by which the Company's total consolidated assets adjusted for the market value of the Company's vessels in the water less cash and cash equivalents in excess of the Company's debt service requirements exceeds the Company's total consolidated liabilities after excluding the net asset or liability relating to the fair value of derivatives as reflected in the Company's financial statements for the relevant period) of at least $400 million.

        For the purpose of these covenants, the market value of the Company's vessels will be calculated, except as otherwise indicated above, on a charter-inclusive basis (using the present value of the "bareboat-equivalent" time charter income from such charter) so long as a vessel's charter has a remaining duration at the time of valuation of more than 12 months plus the present value of the residual value of the relevant vessel (generally equivalent to the charter free value of such a vessel at the age such vessel would be at the expiration of the existing time charter). The market value for newbuilding vessels, all of which currently have multi-year charters, would equal the lesser of such amount and the newbuilding vessel's book value.

        Under the terms of the Bank Agreement, the covered credit facilities also contain customary events of default, including those relating to cross-defaults to other indebtedness, defaults under its swap agreements, non-compliance with security documents, material adverse changes to its business, a Change of Control as described above, a change in its Chief Executive Officer, its common stock ceasing to be listed on the NYSE (or Nasdaq or another recognized stock exchange), a breach of the management agreement for the vessels securing the respective credit facilities and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the vessels securing the respective credit facilities.

        Under the terms of the Bank Agreement, the Company generally will not be permitted to incur any further financial indebtedness or provide any new liens or security interests, unless such security is provided for the equal and ratable benefit of each of the lenders party to the Intercreditor Agreement, other than security arising by operation of law or in connection with the refinancing of outstanding indebtedness, with the consent, not to be unreasonably withheld, of all lenders with a lien on the security pledged against such outstanding indebtedness. In addition, the Company would not be permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and the Company is not, and after giving effect to the payment of the dividend, in breach of any covenant.

Collateral and Guarantees

        Each of the Company's existing credit facilities and swap arrangements, to the extent applicable, continue to be secured by their previous collateral on the same basis, and received, to the extent not previously provided, pledges of the shares of the Company's subsidiaries owning the vessels collateralizing the applicable facilities, cross-guarantees from each subsidiary owning the vessels collateralizing such facilities, assignment of the refund guarantees in relation to any newbuildings funded by such facilities and other customary shipping industry collateral.

January 2011 Credit Facilities (Aegean Baltic Bank-HSH Nordbank-Piraeus Bank, RBS, ABN Amro Club facility, Club Facility and Citi-Eurobank)

        On January 24, 2011, the Company entered into agreements for the following new term loan credit facilities ("January 2011 Credit Facilities"):

 

 

 

           

(i)          

a $123.8 million credit facility provided by HSH, which is secured by the Hyundai Speed, the Hanjin Italy and the CMA CGM Rabelais and customary shipping industry collateral related thereto (the $123.8 million amount includes principal commitment of $23.75 million under the Aegean Baltic Bank—HSH Nordbank—Piraeus Bank credit facility already drawn as of December 31, 2010, which was transferred to the new facility upon finalization of the agreement in 2011);

           

(ii)          

a $100.0 million credit facility provided by RBS, which is secured by the Hyundai Smart and the Hanjin Germany and customary shipping industry collateral related thereto;

           

(iii)          

a $37.1 million credit facility with ABN Amro and lenders participating under the Bank Agreement which is secured by Hanjin Greece and customary shipping industry collateral related thereto;

           

(iv)          

a $83.9 million new club credit facility to be provided, on a pro rata basis, by the other existing lenders participating under the Bank Agreement, which is secured by Hyundai Together and Hyundai Tenacity and customary shipping industry collateral related thereto; and

           

(v)          

a $80.0 million credit facility with Citibank and Eurobank, which is secured by the Hyundai Ambition and customary shipping industry collateral related thereto ((i)-(v), collectively, the "January 2011 Credit Facilities").

        As of December 31, 2015, $274.3 million was outstanding under the above January 2011 Facilities and there was no remaining borrowing availability under these credit facilities.

Interest and Fees

        Borrowings under each of the January 2011 Credit Facilities bear interest at an annual interest rate of LIBOR plus a margin of 1.85%, subject, on and after January 1, 2013, to increases in the applicable margin to: (i) 2.50% if the outstanding indebtedness thereunder exceeds $276 million, (ii) 3.00% if the outstanding indebtedness thereunder exceeds $326 million and (iii) 3.50% if the outstanding indebtedness thereunder exceeds $376 million.

        The Company paid an arrangement fee of 2.00%, or $8.5 million in the aggregate, $3.3 million of which was paid in August 2010 (the date the commitment letter was entered into) and $5.2 million paid in January 2011, which was deferred and is being amortized through the Statement of Operations over the life of the respective facilities with the effective interest rate method. Furthermore, the Company paid a commitment fee of 0.75% per annum payable quarterly in arrears on the committed but undrawn portion of the respective loan.

        On October 22, 2014, the Company entered into a supplemental agreement with the lenders under the HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank credit facility in relation to the use of proceeds from the sale of 5 mortgaged vessels (the Marathonas, the Commodore, the Duka, the Mytilini and the Messologi), all of which were sold during the year ended December 31, 2014 for an aggregate of $55.2 million gross sale proceeds less sale commissions, of which $18.2 million was applied against prepayment of the respective facility on August 18, 2014. The remaining $37.0 million were used to finance the acquisition of two secondhand containership vessels delivered on November 5, 2014. Refer to Note 4, "Fixed Assets, net". The Company paid the lenders a fee of $0.09 million for fully utilizing the remaining $37.0 million. This fee is deferred and amortized over the life of the respective credit facility with the effective interest method.

Principal Payments

        Under the Bank Agreement, the Company was not required to repay any outstanding principal amounts under its January 2011 Credit Facilities until May 15, 2013 and thereafter it is required to make quarterly principal payments in fixed amounts as specified in the Bank Agreement plus an additional quarterly variable amortization payment, all as described above under "—Bank Agreement—Principal Payments."

Covenants, Events of Default and Other Terms

        The January 2011 Credit Facilities contain substantially the same financial and operating covenants, events of default, dividend restrictions and other terms and conditions as applicable to the Company's then outstanding credit facilities as revised under the Bank Agreement described above.

Collateral and Guarantees

        The collateral described above relating to the newbuildings financed by the respective credit facilities, was (other than in respect of the CMA CGM Rabelais) subject to a limited participation by Hyundai Samho in any enforcement thereof until repayment of the related Hyundai Samho Vendor financing (described below) for such vessels. In addition lenders participating in the $83.9 million club credit facility described above received a lien on Hyundai Together and Hyundai Tenacity as additional security in respect of the pre-existing credit facilities the Company had with such lenders. The lenders under the other January 2011 Credit Facilities also received a lien on the respective vessels securing such January 2011 Credit Facilities as additional collateral in respect of its pre-existing credit facilities and interest rate swap arrangements with such lenders and Citibank and Eurobank also received a second lien on Hyundai Ambition as collateral in respect of its previously unsecured interest rate arrangements with them.

        In addition, Aegean Baltic—HSH Nordbank—Piraeus Bank also received a second lien on the Deva, the CSCL Europe and the CSCL Pusan as collateral in respect of all borrowings from Aegean Baltic—HSH Nordbank—Piraeus Bank and RBS also received a second lien on the Derby D, CSCL America and the CSCL Le Havre as collateral in respect of all borrowings from RBS.

        The Company's obligations under the January 2011 Credit Facilities are guaranteed by its subsidiaries owning the vessels collateralizing the respective credit facilities. The Company's Manager has also provided an undertaking to continue to provide the Company with management services and to subordinate its rights to the rights of its lenders, the security trustee and applicable hedge counterparties.

Sinosure-CEXIM-Citi-ABN Amro Credit Facility

        On February 21, 2011, the Company entered into a bank agreement with Citibank, acting as agent, ABN Amro and the Export-Import Bank of China ("CEXIM") for a senior secured credit facility (the "Sinosure-CEXIM Credit Facility") of up to $203.4 million, in three tranches each in an amount equal to the lesser of $67.8 million and 60.0% of the contract price for the newbuilding vessels, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson, securing such tranche for post-delivery financing of these vessels. The Company took delivery of the respective vessels in 2011. The China Export & Credit Insurance Corporation, or Sinosure, covers a number of political and commercial risks associated with each tranche of the credit facility.

        Borrowings under the Sinosure-CEXIM Credit Facility bear interest at an annual interest rate of LIBOR plus a margin of 2.85% payable semi-annually in arrears. The Company is required to repay principal amounts drawn under each tranche of the Sinosure-CEXIM Credit Facility in consecutive semi-annual installments over a ten-year period commencing after the delivery of the respective newbuilding being financed by such amount through the final maturity date of the respective tranches and repay the respective tranche in full upon the loss of the respective newbuilding.

        As of December 31, 2015, $122.0 million was outstanding under the credit facility and there was no remaining borrowing availability under the credit facility.

Covenants, Events of Default and Other Terms

        The Sinosure-CEXIM credit facility was amended and restated, effective on June 30, 2013, to align its financial covenants with the Company's Bank Agreement (except for the minimum ratio of the charter free market value of certain vessels, as described in the Bank Agreement, which is not applicable) described above and continues to require the Company to maintain a minimum ratio of the market value of the vessel collateralizing a tranche of the facility to debt outstanding under such tranche of 125%.

        The Sinosure-CEXIM credit facility also contains customary events of default, including those relating to cross-defaults to other indebtedness, defaults under its swap agreements, non-compliance with security documents, material adverse changes to its business, a Change of Control as described above, a change in its Chief Executive Officer, its common stock ceasing to be listed on the NYSE (or Nasdaq or another recognized stock exchange), a breach of the management agreement for the mortgaged vessels and cancellation or amendment of the time charters (unless replaced with a similar time charter with a charterer acceptable to the lenders) for the mortgaged vessels.

        The Company will not be permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and the Company is not, and after giving effect to the payment of the dividend is not, in breach of any covenant.

Collateral

        The Sinosure-CEXIM Credit Facility is secured by customary post-delivery shipping industry collateral with respect to the vessels, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson, securing the respective tranche.

Hyundai Samho Vendor Financing

        The Company entered into an agreement with Hyundai Samho Heavy Industries ("Hyundai Samho") for a financing facility of $190.0 million in respect of eight of its newbuilding containerships built by Hyundai Samho, the Hyundai Speed, the Hyundai Smart, the Hyundai Ambition, the Hyundai Together, the Hyundai Tenacity, the Hanjin Greece, the Hanjin Italy and the Hanjin Germany, in the form of delayed payment of a portion of the final installment for each such newbuilding. As of December 31, 2015, the outstanding balance of this credit facility was nil.

        Borrowings under this facility bore interest at a fixed interest rate of 8%. The Company was required to repay principal amounts under this financing facility in six consecutive semi-annual installments commencing one and a half years, in the case of three of the newbuilding vessels being financed, and in seven consecutive semi-annual installments commencing one year, in the case of the other five newbuilding vessels, after the delivery of the respective newbuilding being financed. This financing facility was secured by second priority collateral related to the newbuilding vessels being financed.

Exit Fees

        The Company is required to pay Exit Fees of $25.0 million and, in the respective proportion to facilities covered by the Bank Agreement and the January 2011 Credit Facilities, are payable the earlier of (a) December 31, 2018 and (b) the date on which the respective facilities are repaid in full. The Exit Fees will accrete in the consolidated Statement of Operations over the life of the respective facilities (with the effective interest rate method) and are reported under "Long-term debt, net of current portion" in the consolidated Balance Sheets. The Company has recognized an amount of $15.5 million and $11.9 million as of December 31, 2015 and December 31, 2014, respectively.

Credit Facilities Summary Table

                                                                                                                                                                                    

Lender

 

Outstanding
Principal
Amount
(in millions)(1)

 

Collateral Vessels

The Royal Bank of Scotland(2)

 

$

667.1 

 

The Hyundai Progress, the Hyundai Highway, the Hyundai Bridge, the Federal, the Zim Monaco, the Hanjin Buenos Aires, the Hanjin Versailles, the Hanjin Algeciras, the CMA CGM Racine and the CMA CGM Melisande

Aegean Baltic Bank—HSH Nordbank—Piraeus Bank(3)

 

$

627.8 

 

The Hyundai Vladivostok, the Hyundai Advance, the Hyundai Stride, the Hyundai Future, the Hyundai Sprinter, the Amalia C, the MSC Zebra, the Danae C (ex Niledutch Palanca), the Dimitris C, the Performance and the Priority

Canyon Capital Finance

 

$

136.7 

 

The CMA CGM Moliere and the CMA CGM Musset

Deutsche Bank

 

$

169.9 

 

The Zim Rio Grande, the Zim Sao Paolo and the OOCL Istanbul

Credit Suisse

 

$

199.4 

 

The Zim Luanda, the CMA CGM Nerval and the YM Mandate

ABN Amro-Bank of America Merrill Lynch-Burlington-Sequoia-National Bank of Greece

 

$

229.0 

 

The SNL Colombo, the YM Seattle, the YM Vancouver and the YM Singapore

Commerzbank-Credit Suisse-Golden Tree

 

$

258.1 

 

The OOCL Novorossiysk, the Hanjin Santos, the YM Maturity, the Hanjin Constantza and the CMA CGM Attila

HSH Nordbank

 

$

21.2 

 

The Deva and the Derby D

KEXIM

 

$

8.2 

 

The CSCL Europe and the CSCL America

KEXIM-ABN Amro

 

$

45.6 

 

The CSCL Pusan and the CSCL Le Havre

January 2011 Credit Facilities

Aegean Baltic—HSH Nordbank—Piraeus Bank(3)

 

$

69.6 

 

The Hyundai Speed, the Hanjin Italy and the CMA CGM Rabelais

RBS(2)

 

$

69.9 

 

The Hyundai Smart and the Hanjin Germany

ABN Amro Club Facility

 

$

20.6 

 

The Hanjin Greece

Club Facility

 

$

50.4 

 

The Hyundai Together and the Hyundai Tenacity

Citi-Eurobank

 

$

63.8 

 

The Hyundai Ambition

Sinosure-CEXIM-Citi-ABN Amro

 

$

122.0 

 

The CMA CGM Tancredi, the CMA CGM Bianca and the CMA CGM Samson


 

 

 

(1)          

As of December 31, 2015.

(2)          

Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Derby D, the CSCL America and the CSCL Le Havre.

(3)          

Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Deva, the CSCL Europe and the CSCL Pusan.

        As of December 31, 2015, there was no remaining borrowing availability under any of the Company's credit facilities.

        In 2008, the Company entered into a credit facility of $253.2 million with ABN Amro (acting as agent), Lloyds TSB and National Bank of Greece in relation to the financing of vessels SNL Colombo, YM Seattle, YM Vancouver and YM Singapore. The structure of this credit facility is such that the group of banks loaned funds of $253.2 million to the Company, which the Company then re-loaned to a newly created entity of the group of banks ("Investor Bank"). With the proceeds, Investor Bank then subscribed for preference shares in Auckland Marine Inc., Seacarriers Services Inc., Seacarriers Lines Inc. and Wellington Marine Inc. (subsidiaries of Danaos Corporation). In addition, four of the Companies' subsidiaries issued a put option in respect of the preference shares. The effect of these transactions is that the Company's subsidiaries were required to pay out fixed preference dividends to the Investor Bank, the Investor Bank was required to pay fixed interest due on the loan from the Company to Investor Bank and finally the Investor Bank is required to pay put option premium on the put options issued in respect of the preference shares.

        The interest payments to the Company by Investor Bank were contingent upon receipt of these preference dividends. In the event these dividends were not paid, the preference dividends would accumulate until such time as there were sufficient cash proceeds to settle all outstanding arrearages. Applying variable interest accounting to this arrangement, the Company concluded that the Company was the primary beneficiary of Investor Bank and accordingly has consolidated it into the Company's group. On May 4, 2015, the preference shares of Auckland Marine Inc., Seacarriers Services Inc., Seacarriers Lines Inc. and Wellington Marine Inc. were redeemed and all agreements related to the arrangement with ABN Amro and Investor Bank were terminated at that date. Accordingly, as at December 31, 2015 and December 31, 2014, the Consolidated Balance Sheet and Consolidated Statement of Operations include Investor Bank's net assets of $nil and net income of $nil, respectively, due to elimination on consolidation, of accounts and transactions arising between the Company and the Investor Bank.

        As of December 31, 2015, the Company was in compliance with the covenants under its Bank Agreement and its other credit facilities.

        The weighted average interest rate on long-term borrowings for the years ended December 31, 2015, 2014 and 2013 was 2.4%, 2.5% and 2.7%, respectively.

        Total interest paid during the years ended December 31, 2015, 2014 and 2013 was $71.8 million, $83.0 million and $92.9 million, respectively.

        The total amount of interest cost incurred and expensed in 2015 was $70.4 million (2014: $80.0 million, 2013: $91.2 million).

Related Party Transactions
Related Party Transactions

 

13. Related Party Transactions

        Management Services:    Pursuant to a ship management agreement between each of the vessel owning companies and Danaos Shipping Company Limited (the "Manager"), the Manager acts as the fleet's technical manager responsible for (i) recruiting qualified officers and crews, (ii) managing day to day vessel operations and relationships with charterers, (iii) purchasing of stores, supplies and new equipment for the vessels, (iv) performing general vessel maintenance, reconditioning and repair, including commissioning and supervision of shipyards and subcontractors of drydock facilities required for such work, (v) ensuring regulatory and classification society compliance, (vi) performing operational budgeting and evaluation, (vii) arranging financing for vessels, (viii) providing accounting, treasury and finance services and (ix) providing information technology software and hardware in the support of the Company's processes. The Company's controlling shareholder also controls the Manager.

        On February 8, 2010, the Company signed an addendum to the management contract adjusting the management fees, effective January 1, 2010, to a fee of $675 per day, a fee of $340 per vessel per day for vessels on bareboat charter and $675 per vessel per day for vessels on time charter. During 2012, the management fee levels remained the same as the 2010 fee levels. Furthermore, the Manager received a flat fee of $0.725 million per newbuilding vessel for the supervision of newbuilding contracts in 2012. The Manager also receives a fee on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet.

        On December 16, 2011, the Company signed an addendum to the management contract adjusting the fee of 0.75% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet, effective January 1, 2012, to a fee of 1.0%. In addition, the Manager receives a fee of 0.5% based on the contract price of any vessel bought or sold by the manager on its behalf (excluding newbuildings).

        On December 31, 2012, the Company signed an addendum to the management contract providing that from January 1, 2013, the Manager also provides the Company with the services of its executive officers for a fee of € 1.4 million per year. This fee was increased to €1.5 million for the year ended December 31, 2014 and amounted to €0.5 million for the period from January 1, 2015 to April 30, 2015, after which date the Company directly employed the executive officers. The executive officers received an aggregate €1.0 million in compensation for the period from May 1, 2015 to December 31, 2015.

        On December 16, 2013, the Company signed an addendum to the management contract adjusting the management fees, effective January 1, 2014, to a fee of $800 per day, a fee of $400 per vessel per day for vessels on bareboat charter and $800 per vessel per day for vessels on time charter, as well as adjusting the fee of 1.0% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet, to a fee of 1.25%.

        On December 31, 2014, the Company signed an amended and restated management agreement to supersede the initial agreement signed in 2005 and incorporate all prior amendments. Pursuant to this agreement, effective January 1, 2015, the management fees are adjusted to a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and $850 per vessel per day for vessels on time charter. The fee of 1.25% on gross freight, charter hire, ballast bonus and demurrage with respect to each vessel in the fleet and the fee of 0.5% based on the contract price of any vessel bought and sold by the manager on the Company's behalf remains the same as per addendum signed in 2013.

        Management fees in 2015 amounted to approximately $17.4 million (2014: $16.3 million, 2013: $15.0 million), which are presented under "General and administrative expenses" on the consolidated Statements of Operations. Commissions to the Manager in 2015 amounted to approximately $6.9 million (2014: $7.0 million, 2013: $5.8 million), which are shown under "Voyage expenses" on the consolidated Statements of Operations.

        The Company pays monthly advances on account of the vessels' operating expenses. These prepaid amounts are presented in the consolidated balance sheet under "Due from related parties" totaling $19.0 million and $10.6 million as of December 31, 2015 and 2014, respectively.

        Dr. John Coustas, the Chief Executive Officer of the Company, is a member of the Board of Directors of The Swedish Club, the primary provider of insurance for the Company, including a substantial portion of its hull & machinery, war risk and protection and indemnity insurance. During the years ended December 31, 2015, 2014 and 2013 the Company paid premiums to The Swedish Club of $6.3 million, $8.5 million and $9.6 million, respectively, which are presented under Vessel operating expenses in the consolidated Statements of Operations. As of December 31, 2015 and 2014, the Company did not have any outstanding balance to The Swedish Club.

Taxes
Taxes

 

14. Taxes

        Under the laws of the countries of the Company's ship owning subsidiaries' incorporation and/or vessels' registration, the Company's ship operating subsidiaries are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in Vessel Operating Expenses in the accompanying consolidated Statements of Operations.

        Pursuant to the U.S. Internal Revenue Code (the "Code"), U.S.-source income from the international operation of ships is generally exempt from U.S. tax if the company operating the ships meets certain requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country which grants an equivalent exemption from income taxes to U.S. corporations.

        All of the Company's ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must be more than 50% owned by individuals who are residents, as defined, in the countries of incorporation or another foreign country that grants an equivalent exemption to U.S. corporations. These companies also currently satisfy the more than 50% beneficial ownership requirement. In addition, should the beneficial ownership requirement not be met, the management of the Company believes that by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like the Company, the more than 50% beneficial ownership requirement can also be satisfied based on the trading volume and the anticipated widely-held ownership of the Company's shares, but no assurance can be given that this will remain so in the future, since continued compliance with this rule is subject to factors outside of the Company's control.

Financial Instruments
Financial Instruments

 

15. Financial Instruments

        The principal financial assets of the Company consist of cash and cash equivalents, trade receivables and other assets. The principal financial liabilities of the Company consist of long-term bank loans, accounts payable and derivatives.

        Derivative Financial Instruments:    The Company only uses derivatives for economic hedging purposes. The following is a summary of the Company's risk management strategies and the effect of these strategies on the Company's 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. The interest rates relating to the long-term loans are disclosed in Note 12, "Long-term Debt".

        Concentration of Credit Risk:    Financial instruments that are potentially subject the Company to significant concentrations of credit risk consist principally of cash, trade accounts receivable and derivatives. 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 to derivative instruments, 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. Refer to Note 16, "Operating Revenue", for further details on revenue from significant clients. 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. The Company's maximum exposure to credit risk is mainly limited to the carrying value of its derivative instruments. The Company is not a party to master netting arrangements.

        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 the swap agreements equals the amount that would be paid by the Company to cancel the swaps.

        Interest Rate Swaps:    The off-balance sheet risk in outstanding swap agreements involves both the risk of a counter-party not performing under the terms of the contract and the risk associated with changes in market value. The Company monitors its positions, the credit ratings of counterparties and the level of contracts it enters into with any one party. The counterparties to these contracts are major financial institutions. The Company has a policy of entering into contracts with parties that meet stringent qualifications and, given the high level of credit quality of its derivative counter-parties, the Company does not believe it is necessary to obtain collateral arrangements.

a. Cash Flow Interest Rate Swap Hedges

        The Company, according to its long-term strategic plan to maintain relative stability in its interest rate exposure, has decided to swap part of its interest expenses from floating to fixed. To this effect, the Company has entered into interest rate swap transactions with varying start and maturity dates, in order to pro-actively and efficiently manage its floating rate exposure.

        These interest rate swaps are designed to economically hedge the variability of interest cash flows arising from floating rate debt, attributable to movements in three-month USD$ LIBOR. According to the Company's Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as from their inception, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, only hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in the Company's earnings. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps were performed on a quarterly basis. For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge was recognized initially in stockholders' equity, and recognized to the Statement of Operations in the periods when the hedged item affects profit or loss.

        On July 1, 2012, the Company elected to prospectively de-designate cash flow interest rate swaps for which it was obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of the Company's cash flow interest rate swap agreements are recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward. The Company evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.

        The interest rate swap agreements converting floating interest rate exposure into fixed, as of December 31, 2015 and 2014 were as follows (in thousands):

                                                                                                                                                                                    

Counter-party

 

Contract
Trade
Date

 

Effective
Date

 

Termination
Date

 

Notional
Amount on
Effective Date

 

Fixed Rate
(Danaos
pays)

 

Floating Rate
(Danaos receives)

 

Fair Value
December 31,
2015

 

Fair Value
December 31,
2014

 

RBS

 

 

03/09/2007

 

 

3/15/2010

 

 

3/15/2015

 

$

200,000

 

 

5.07% p.a.

 

USD LIBOR 3M BBA

 

 

 

$

(2,011

)

RBS

 

 

11/15/2007

 

 

11/19/2010

 

 

11/19/2015

 

$

100,000

 

 

5.12% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,246

)

RBS

 

 

11/16/2007

 

 

11/22/2010

 

 

11/22/2015

 

$

100,000

 

 

5.07% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,248

)

CITI

 

 

04/17/2007

 

 

4/17/2008

 

 

4/17/2015

 

$

200,000

 

 

5.124% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(2,895

)

CITI

 

 

04/20/2007

 

 

4/20/2010

 

 

4/20/2015

 

$

200,000

 

 

5.1775% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(3,008

)

CITI

 

 

11/02/2007

 

 

11/6/2010

 

 

11/6/2015

 

$

250,000

 

 

5.1% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(10,167

)

CITI

 

 

11/26/2007

 

 

11/29/2010

 

 

11/30/2015

 

$

100,000

 

 

4.98% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,249

)

CITI

 

 

02/07/2008

 

 

2/11/2011

 

 

2/11/2016

 

$

200,000

 

 

4.695% p.a.

 

USD LIBOR 3M BBA

 

$

(1,012

)

 

(9,524

)

Eurobank

 

 

12/06/2007

 

 

12/10/2010

 

 

12/10/2015

 

$

200,000

 

 

4.8125% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(8,428

)

Eurobank

 

 

02/11/2008

 

 

5/31/2011

 

 

5/31/2015

 

$

200,000

 

 

4.755% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(3,763

)

​  

​  

​  

​  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,012

)

$

(52,539

)

​  

​  

​  

​  

​  

​  

​  

​  

ABN Amro

 

 

06/06/2013

 

 

1/4/2016

 

 

12/31/2016

 

$

325,000

 

 

1.4975% p.a.

 

USD LIBOR 3M BBA

 

$

(2,113

)

$

(617

)

ABN Amro

 

 

05/31/2013

 

 

1/4/2016

 

 

12/31/2016

 

$

250,000

 

 

1.4125% p.a.

 

USD LIBOR 3M BBA

 

 

(1,413

)

 

(264

)

​  

​  

​  

​  

Total fair value of swap liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(4,538

)

$

(53,420

)

​  

​  

​  

​  

​  

​  

​  

​  

        The Company recorded in the consolidated Statements of Operations unrealized gains of $48.9 million, $114.2 million and $139.4 million in relation to fair value changes of interest rate swaps for the years ended December 31, 2015, 2014 and 2013, respectively. Furthermore, unrealized losses of $32.6 million, $88.9 million and $116.6 million were reclassified from Accumulated Other Comprehensive Loss to earnings for the years ended December 31, 2015, 2014 and 2013, respectively.

        The variable-rate interest on specific borrowings that was associated with vessels under construction was capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts in accumulated other comprehensive income related to realized gains or losses on cash flow hedges that have been entered into and qualify for hedge accounting, in order to hedge the variability of that interest, were classified under other comprehensive income 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 $4.0 million, $4.0 million and $4.0 million was reclassified into earnings for the years ended December 31, 2015, 2014 and 2013, respectively, representing amortization over the depreciable life of the vessels.

                                                                                                                                                                                    

 

 

Year ended
December 31,
2015

 

Year ended
December 31,
2014

 

Year ended
December 31,
2013

 

 

 

(in millions)

 

Total realized losses

 

$

(52.7

)

$

(120.6

)

$

(145.6

)

Amortization of deferred realized losses

 

 

(4.0

)

 

(4.0

)

 

(4.0

)

Unrealized gains

 

 

16.2

 

 

25.2

 

 

22.8

 

​  

​  

​  

​  

​  

​  

Unrealized and realized losses on cash flow interest rate swaps

 

$

(40.5

)

$

(99.4

)

$

(126.8

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

b. Fair Value Interest Rate Swap Hedges

        These interest rate swaps are designed to economically hedge the fair value of the fixed rate loan facilities against fluctuations in the market interest rates by converting the Company's fixed rate loan facilities to floating rate debt. Pursuant to the adoption of the Company's Risk Management Accounting Policy, and after putting in place the formal documentation required by hedge accounting in order to designate these swaps as hedging instruments, as of June 15, 2006, these interest rate swaps qualified for hedge accounting, and, accordingly, from that time until June 30, 2012, hedge ineffectiveness amounts arising from the differences in the change in fair value of the hedging instrument and the hedged item were recognized in the Company's earnings. The Company considered its strategic use of interest rate swaps to be a prudent method of managing interest rate sensitivity, as it prevented earnings from being exposed to undue risk posed by changes in interest rates. Assessment and measurement of prospective and retrospective effectiveness for these interest rate swaps was performed on a quarterly basis, on the financial statement and earnings reporting dates.

        On July 1, 2012, the Company elected to prospectively de-designate fair value interest rate swaps for which it was applying hedge accounting treatment due to the compliance burden associated with this accounting policy. All changes in the fair value of the Company's fair value interest rate swap agreements continue to be recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.

        The Company evaluated whether it is probable that the previously hedged forecasted interest payments will not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments continue to be probable of occurring. Therefore, the fair value of the hedged item associated with the previously designated fair value interest rate swaps will be frozen and recognized in earnings when the interest payments are recognized. If such interest payments were to be identified as being probable of not occurring, the fair value of hedged debt balance pertaining to these amounts would be reversed through earnings immediately.

        The interest rate swap agreements converting fixed interest rate exposure into floating, as of December 31, 2015 and 2014, were as follows (in thousands):

                                                                                                                                                                                    

Counter party

 

Contract
trade
Date

 

Effective
Date

 

Termination
Date

 

Notional
Amount
on
Effective
Date

 

Fixed Rate
(Danaos receives)

 

Floating Rate
(Danaos pays)

 

Fair Value
December 31,
2015

 

Fair Value
December 31,
2014

 

RBS

 

 

11/15/2004

 

 

12/15/2004

 

 

8/27/2016

 

$

60,528 

 

 

5.0125% p.a.

 

USD LIBOR 3M BBA + 0.835% p.a.

 

$

55 

 

$

302 

 

RBS

 

 

11/15/2004

 

 

11/17/2004

 

 

11/2/2016

 

$

62,342 

 

 

5.0125% p.a.

 

USD LIBOR 3M BBA + 0.855% p.a.

 

 

83 

 

 

362 

 

​  

​  

​  

​  

Total fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

138 

 

$

664 

 

​  

​  

​  

​  

​  

​  

​  

​  

        The total fair value change of the interest rate swaps for the years ended December 31, 2015, 2014 and 2013, amounted to $(0.5) million, $(0.9) million and $(1.3) million, respectively, and is included in the consolidated Statement of Operations in "Unrealized and realized losses on derivatives". The related assets of $0.1 million and $0.7 million are presented under "Other current assets" and under "Other non-current assets" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.

        The Company reclassified from "Long-term debt, net of current portion", where its fair value of hedged item is recorded, to its earnings unrealized losses of an amount of $0.6 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively. The related liability of the fair value hedged debt of $0.4 million and $1.0 million is shown under "Long-term Debt" in the consolidated balance sheet as of December 31, 2015 and 2014, respectively.

                                                                                                                                                                                    

 

 

Year ended
December 31,
2015

 

Year ended
December 31,
2014

 

Year ended
December 31,
2013

 

 

 

(in millions)

 

Unrealized losses on swap asset

 

$

(0.5

)

$

(0.9

)

$

(1.3

)

Reclassification of fair value of hedged debt to Statement of Operations

 

 

0.6

 

 

0.6

 

 

0.6

 

Realized gains

 

 

0.5

 

 

1.0

 

 

1.4

 

​  

​  

​  

​  

​  

​  

Unrealized and realized gains on fair value interest rate swaps

 

$

0.6

 

$

0.7

 

$

0.7

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

c. Fair Value of Financial Instruments

        The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2015

 

 

 

Total

 

Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

 

 

(in thousands of $)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

138 

 

$

 

$

138 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

4,538 

 

$

 

$

4,538 

 

$

 

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2014

 

 

 

Total

 

Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

 

 

(in thousands of $)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

664 

 

$

 

$

664 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

53,420 

 

$

 

$

53,420 

 

$

 

        Interest rate swap contracts are measured at fair value on a recurring basis. Fair value is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Such instruments are typically classified within Level 2 of the fair value hierarchy. The fair values of the interest rate swap contracts have been calculated by discounting the projected future cash flows of both the fixed rate and variable rate interest payments. Projected interest payments are calculated using the appropriate prevailing market forward rates and are discounted using the zero-coupon curve derived from the swap yield curve. Refer to Note 15(a)-(b) above for further information on the Company's interest rate swap contracts.

        The Company is exposed to credit-related losses in the event of nonperformance of its counterparties in relation to these financial instruments. As of December 31, 2015 and 2014, these financial instruments are in the counterparties' favor. The Company has considered its risk of non-performance and of its counterparties in accordance with the relevant guidance of fair value accounting. The Company performs evaluations of its counterparties for credit risk through ongoing monitoring of their financial health and risk profiles to identify risk or changes in their credit ratings.

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

                                                                                                                                                                                    

 

 

As of December 31, 2015

 

As of December 31, 2014

 

 

 

Book Value

 

Fair Value

 

Book Value

 

Fair Value

 

 

 

(in thousands of $)

 

Cash and cash equivalents

 

$

72,253 

 

$

72,253 

 

$

57,730 

 

$

57,730 

 

Restricted cash

 

$

2,818 

 

$

2,818 

 

$

2,824 

 

$

2,824 

 

Accounts receivable, net

 

$

10,652 

 

$

10,652 

 

$

7,904 

 

$

7,904 

 

Due from related parties

 

$

19,007 

 

$

19,007 

 

$

10,597 

 

$

10,597 

 

Series 1 ZIM notes

 

$

6,587 

 

$

6,587 

 

$

6,274 

 

$

6,274 

 

Series 2 ZIM notes

 

$

32,507 

 

$

32,507 

 

$

30,923 

 

$

30,923 

 

Equity investment in ZIM

 

$

28,693 

 

$

35,831 

 

$

28,693 

 

$

32,873 

 

Accounts payable

 

$

12,971 

 

$

12,971 

 

$

12,510 

 

$

12,510 

 

Accrued liabilities

 

$

14,014 

 

$

14,014 

 

$

24,705 

 

$

24,705 

 

Long-term debt, including current portion

 

$

2,775,378 

 

$

2,776,739 

 

$

2,951,120 

 

$

2,953,327 

 

Vendor financing, including current portion

 

$

 

$

 

$

64,367 

 

$

64,026 

 

        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 (in thousands):

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2015

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in thousands of $)

 

Series 1 ZIM notes(1)

 

$

6,587 

 

$

 

$

6,587 

 

$

 

Series 2 ZIM notes(1)

 

$

32,507 

 

$

 

$

32,507 

 

$

 

Equity investment in ZIM(1)

 

$

35,831 

 

$

 

$

35,831 

 

$

 

Long-term debt, including current portion(2)

 

$

2,776,739 

 

$

 

$

2,776,739 

 

$

 

Accrued liabilities(4)

 

$

14,014 

 

$

 

$

14,014 

 

$

 

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2014

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in thousands of $)

 

Series 1 ZIM notes(1)

 

$

6,274 

 

$

 

$

6,274 

 

$

 

Series 2 ZIM notes(1)

 

$

30,923 

 

$

 

$

30,923 

 

$

 

Equity investment in ZIM(1)

 

$

32,873 

 

$

 

$

32,873 

 

$

 

Long-term debt, including current portion(2)

 

$

2,953,327 

 

$

 

$

2,953,327 

 

$

 

Vendor financing, including current portion(3)

 

$

64,026 

 

$

 

$

64,026 

 

$

 

Accrued liabilities(4)

 

$

24,705 

 

$

 

$

24,705 

 

$

 


 

 

 

(1)          

The fair value is estimated based on currently available information on the Company's counterparty, other contracts with similar terms, remaining maturities and interest rates.

(2)          

The fair value of the Company's debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.

(3)          

The fair value of the Company's Vendor financing is estimated based on currently available financing with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.

(4)          

The fair value of the Company's accrued liabilities, which mainly consists of accrued interest on its credit facilities and accrued realized losses on its cash flow interest rate swaps, is estimated based on currently available debt and swap agreements with similar contract terms, interest rates and remaining maturities, as well as taking into account its creditworthiness.

        As of December 31, 2013, the Company has written down the value of its long-term receivables from ZIM and recognized a $19.0 million impairment charge with respect to the agreement in principle for a restructuring of ZIM's obligations. This agreement includes a significant reduction in the charter rates payable by ZIM for the remaining life of its time charters, expiring in 2020 or 2021, for six of the Company's vessels and receipt of unsecured, interest bearing ZIM notes maturing in nine years and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations to the Company. Refer to Note 23 "Impairment Loss" and Note 8"Other Non-Current Assets".

        The Company's nonfinancial items measured at fair value on a non-recurring basis were:

                                                                                                                                                                                    

 

 

Fair Value Measurements as of
December 31, 2015

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in millions of $)

 

Fixed Assets, net

 

$

90.8 

 

$

 

$

90.8 

 

$

 

Vessels held for sale

 

$

6.3 

 

$

 

$

6.3 

 

$

 

        The Company recorded an impairment loss of $39.0 million on twelve of its older vessels as of December 31, 2015, thus reducing the vessels' carrying value at December 31, 2015 from $129.8 million to $90.8 million. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. Additionally, impairment loss of $2.1 million was recorded for the vessel held for sale as of December 31, 2015. The vessel held for sale is presented at its selling price less cost to sell. Refer to Note 23, "Impairment Loss" and Note 24 "Subsequent Events".

                                                                                                                                                                                    

 

 

Fair Value Measurements as of
December 31, 2014

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in millions of $)

 

Fixed Assets, net

 

$

92.0 

 

$

 

$

92.0 

 

$

 

        The Company recorded an impairment loss of $75.8 million on eight of its older vessels as of December 31, 2014, thus reducing the vessels' carrying value at December 31, 2014 from $167.8 million to $92.0 million. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. Refer to Note 23, "Impairment Loss".

Operating Revenue
Operating Revenue

 

16. Operating Revenue

        Operating revenue from significant customers (constituting more than 10% of total revenue) for the years ended December 31, were as follows:

                                                                                                                                                                                    

Charterer

 

2015

 

2014

 

2013

 

HMM Korea

 

 

28 

%

 

28 

%

 

27 

%

CMA CGM

 

 

26 

%

 

27 

%

 

24 

%

Hanjin

 

 

17 

%

 

18 

%

 

17 

%

YML

 

 

13 

%

 

11 

%

 

10 

%

 

Operating Revenue by Geographic Location
Operating Revenue by Geographic Location

 

17. Operating Revenue by Geographic Location

        Operating revenue by geographic location for the years ended December 31, was as follows (in thousands):

                                                                                                                                                                                    

Continent

 

2015

 

2014

 

2013

 

Australia—Asia

 

$

410,827 

 

$

389,098 

 

$

413,662 

 

Europe

 

 

157,109 

 

 

162,993 

 

 

174,455 

 

​  

​  

​  

​  

​  

​  

Total Revenue

 

$

567,936 

 

$

552,091 

 

$

588,117 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

Commitments and Contingencies
Commitments and Contingencies

 

18. 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. Furthermore, the Company does not have any commitments outstanding.

Sale of Vessels
Sale of Vessels

 

19. Sale of Vessels

        During the year ended December 31, 2014, the Company sold five containerships Marathonas, Commodore, Duka, Mytilini and Messologi for gross sale consideration of $57.7 million. The Company realized a net gain on the sale of these vessels of $5.7 million and net sale proceeds of $50.6 million.

        During the year ended December 31, 2013, the Company sold nine containerships Komodo, Lotus, Kalamata, Hope, Elbe, Honour, Pride, Henry and Independence for gross sale consideration of $60.5 million. The Company realized a net loss on the sale of these vessels of $0.4 million and net sale proceeds of $52.9 million.

        The net gain/(loss) on sale of the vessels is separately reflected in the accompanying consolidated Statements of Operations. There were no vessel sales during the year ended December 31, 2015.

Stock Based Compensation
Stock Based Compensation

 

20. Stock Based Compensation

        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 stock will have no vesting period and the employee will own the stock immediately after grant. 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.

        As of December 11, 2015, the Company granted 15,879 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.1 million representing the fair value of the stock granted as at the date of grant. As of December 10, 2014, the Company granted 115,185 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.6 million representing the fair value of the stock granted as at the date of grant. In settlement of the shares granted in 2014, 112,315 shares were issued and distributed to the employees of the Manager in 2015. As of December 12, 2013, the Company granted 16,066 shares to certain employees of the Manager and recorded in "General and Administrative Expenses" an expense of $0.1 million representing the fair value of the stock granted as at the date of grant, which were issued in 2014 and distributed to the employees of the Manager in settlement of the shares granted in 2013.

        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. During2015, 2014 and 2013, none of the directors elected to receive in Company shares his compensation.

Stockholders' Equity
Stockholders' Equity

 

21. Stockholders' Equity

        As of December 31, 2015 and 2014, the shares issued and outstanding were 109,781,744 and 109,669,429, respectively. Under the Articles of Incorporation as amended on September 18, 2009, the Company's authorized capital stock consists of 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.

        During 2015, the Company issued 112,315 shares of common stock, all of which were newly issued shares, to the employees of the Manager (refer to Note 20, "Stock Based Compensation") in settlement of 2014 grants. During 2014, the Company issued 16,066 shares of common stock, all of which were newly issued shares, to the employees of the Manager of the Company (refer to Note 20, Stock Based Compensation).

        During 2015 and 2014, the Company did not declare any dividends. In addition, under the terms of the Bank Agreement (Refer to Note 12, "Long-term Debt") the Company is not permitted to pay cash dividends or repurchase shares of its capital stock unless (i) its consolidated net leverage is below 6:1 for four consecutive quarters and (ii) the ratio of the aggregate market value of its vessels to its outstanding indebtedness exceeds 125% for four consecutive quarters and provided that an event of default has not occurred and the Company is not, and after giving effect to the payment of the dividend, in breach of any covenant.

        In 2011, the Company issued an aggregate of 15,000,000 warrants to its lenders under the Bank Agreement and the January 2011 Credit Facilities to purchase, solely on a cashless exercise basis, an aggregate of 15,000,000 shares of its common stock, which warrants have an exercise price of $7.00 per share. All of these warrants will expire on January 31, 2019.

Earnings/(Loss) per Share
Earnings/(Loss) per Share

 

22. Earnings/(Loss) per Share

        The following table sets forth the computation of basic and diluted earnings/(losses) per share for the years ended December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

2013

 

Numerator:

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

117,016

 

$

(3,920

)

$

37,523

 

Denominator (number of shares):

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average ordinary shares outstanding

 

 

109,785.5

 

 

109,676.1

 

 

109,654.2

 

        The warrants issued and outstanding amounting to 15,000,000 were excluded from the diluted earnings/(loss) per share for the years ended December 31, 2015, 2014 and 2013, because they were antidilutive.

Impairment Loss
Impairment Loss

 

23. Impairment Loss

        As of December 31, 2015, December 31, 2014 and December 31, 2013 the Company concluded that events and circumstances triggered the existence of potential impairment of its long-lived assets. These indicators included volatility in the spot market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on its future operations. As a result, the Company performed step one of the impairment assessment of the Company's long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. As at December 31, 2015 and December 31, 2014, the Company's assessment concluded that step two of the impairment analysis was required for certain of its vessels, as the undiscounted projected net operating cash flows of certain vessels did not exceed the carrying value of the respective vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers. As of December 31, 2015 and December 31, 2014, the Company recorded an impairment loss of $39.0 million and $75.8 million, respectively for its older vessels that are held and used. Additionally, impairment loss of $2.1 million was recorded for the vessel held for sale as of December 31, 2015. No impairment loss of vessels was recorded in 2013.

        Israel Corporation Ltd., the parent company of ZIM Integrated Shipping Services Ltd. ("ZIM"), announced that ZIM reached an agreement in principle with its creditors, including the Company, for a restructuring of its obligations. This agreement included a significant reduction in the charter rates payable by ZIM for the remaining life of its time charters, expiring in 2020 or 2021, for six of the Company's vessels and the Company's receipt of unsecured, interest bearing ZIM notes maturing in nine years and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations to the Company. Based on these anticipated terms, the Company wrote down the value of its long-term receivables from ZIM as of December 31, 2013 and recognized a $19.0 million impairment charge with respect thereto, resulting in an outstanding long-term receivable of $25.8 million as of December 31, 2013 (also refer to Note 8, "Other non-current assets").

Subsequent Events
Subsequent Events

 

24. Subsequent Events

        On January 8, 2016, the Company completed the sale of the vessel Federal, which was held for sale as of December 31, 2015 (also refer to Note 4, "Fixed assets, net"). The gross proceeds amounted to $7.2 million, of which $1.4 million was received in advance during the year ended December 31, 2015.

        Gemini, in which Danaos holds a 49% equity interest, acquired a 6,422 TEU vessel built in 2002, which was delivered on February 4, 2016. On March 3, 2016, the Company subscribed 49% of newly issued share capital of Gemini for $1.47 million.

Significant Accounting Policies (Policies)

 

        Principles of Consolidation:    The accompanying consolidated financial statements 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 obtained by the Company.

        The Company also consolidates entities that are determined to be variable interest entities, of which the Company is the primary beneficiary, as defined in the accounting guidance, if it determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity's residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Refer to Note 12, "Long-Term Debt", which describes an arrangement under the credit facility with ABN Amro, Lloyds TSB and National Bank of Greece for a variable interest entity.

        Inter-company transaction balances and unrealized gains/(losses) on transactions between the companies are eliminated.

 

        Investments in affiliates:    The Company's investments in affiliates are accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Company's proportionate share of earnings or losses and distributions. The Company evaluates its investments in affiliates for impairment when events or circumstances indicate that the carrying value of such investments may have experienced other than temporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered an other than temporary decline, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated Statements of Operations.

 

        Use of Estimates:    The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to future drydock dates, the selection of useful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes, and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.

 

        Reclassifications in Other Comprehensive Income:    The Company had the following reclassifications out of Accumulated Other Comprehensive Loss as of December 31, 2015, 2014 and 2013, respectively (in thousands):

                                                                                                                                                                                    

 

 

 

 

Year ended December 31,

 

 

 

Location of Reclassification into Income

 

 

 

2015

 

2014

 

2013

 

Amortization of deferred realized losses on cash flow hedges

 

Net unrealized and realized losses on derivatives

 

 

4,017 

 

 

4,016 

 

 

4,017 

 

Reclassification of unrealized losses to earnings

 

Net unrealized and realized losses on derivatives

 

 

32,644 

 

 

88,939 

 

 

116,557 

 

​  

​  

​  

​  

​  

​  

Total Reclassifications

 

 

 

$

36,661 

 

$

92,955 

 

$

120,574 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

        Foreign Currency Translation:    The functional currency of the Company is the U.S. dollar. The Company engages in worldwide commerce with a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollar denominated. Additionally, the Company's wholly-owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however, all of the subsidiaries' primary cash flows are U.S. dollar denominated. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized in the consolidated Statements of Operations. The foreign currency exchange gains recognized in the accompanying consolidated Statements of Operations for each of the years ended December 31, 2015, 2014 and 2013 were $0.1 million, $0.3 million and $0.04 million, respectively.

 

 

        Cash and Cash Equivalents:    Cash and cash equivalents consist of interest bearing call deposits, where the Company has instant access to its funds and withdrawals and deposits can be made at any time, as well as time deposits with original maturities of three months or less which are not restricted for use or withdrawal. Cash and cash equivalents of $72.3 million as of December 31, 2015 (December 31, 2014: $57.7 million) comprised cash balances and short-term deposits.

 

        Restricted Cash:    Cash restricted accounts include retention accounts. Certain of the Company's loan agreements require the Company to deposit one- third of quarterly and one-sixth of the semi-annual principal installments and interest installments, respectively, due on the outstanding loan balance monthly in a retention account. On the rollover settlement date, both principal and interest are paid from the retention account. Refer to Note 3, "Restricted Cash".

 

        Accounts Receivable, Net:    The amount shown as Accounts Receivable, net, at each balance sheet date includes estimated recoveries from charterers for hire and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts based on the Company's history of write-offs, level of past due accounts based on the contractual term of the receivables and its relationships with and economic status of its customers. Bad debts are written off in the period in which they are identified.

 

        Insurance Claims:    Insurance claims represent the claimable expenses, net of deductibles, which are expected to be recovered from insurance companies. Any costs to complete the claims are included in accrued liabilities. The Company accounts for the cost of possible additional call amounts under its insurance arrangements in accordance with the accounting guidance for contingencies based on the Company's historical experience and the shipping industry practices. Insurance claims are included in the consolidated balance sheet line item "Other current assets".

 

        Prepaid Expenses and Inventories:    Prepaid expenses consist mainly of insurance expenses, and inventories consist of bunkers, lubricants and provisions remaining on board the vessels at each period end, which are valued at cost as determined using the first-in, first-out method. Costs of spare parts are expensed as incurred.

 

        Financing Costs:    Fees incurred for obtaining new loans and loans that have been accounted for as modified are deferred and amortized over the loans' respective repayment periods using the effective interest rate method. These charges are included in the consolidated balance sheet line item "Deferred Charges, net". The amortization expense associated with deferred financing fees is included under "Other finance expense" in the consolidated Statements of Operations.

 

        Fixed Assets:    Fixed assets consist of vessels. Vessels are stated at cost, less accumulated depreciation. The cost of vessels consists of the contract purchase price and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise, these expenditures are charged to expense as incurred. Interest costs while under construction are included in vessels' cost.

        Vessels acquired in the secondhand market are treated as a business combination to the extent that such acquisitions include continuing operations and business characteristics such as management agreements, employees and customer base. Otherwise, these are treated as purchase of assets. Where the Company identifies any intangible assets or liabilities associated with the acquisition of a vessel purchased in the secondhand market, the Company records all identified tangible and intangible assets or liabilities at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. The Company has acquired certain vessels in the secondhand market, all of which were considered to be acquisitions of assets.

 

        Depreciation:    The cost of the Company's vessels is depreciated on a straight-line basis over the vessels' remaining economic useful lives after considering the estimated residual value (refer to Note 4, "Fixed Assets, net"). Management has estimated the useful life of the Company's vessels to be 30 years from the year built.

 

        Vessels held for sale:    Vessels are classified as "Vessels held for sale" when all of the following criteria are met: management has committed to a plan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels; an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; the sale of the vessel is probable and transfer of the vessel is expected to qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These vessels are not depreciated once they meet the criteria to be held for sale. As of December 31, 2015, the Company recorded an impairment loss of $2.1 million for the vessel held for sale, which is included under "Impairment loss" in the consolidated Statements of Operations.

 

        Accounting for Special Survey and Drydocking Costs:    The Company follows the accounting guidance for planned major maintenance activities. Drydocking and special survey costs, which are reported in the balance sheet within "Deferred charges, net", include planned major maintenance and overhaul activities for ongoing certification including the inspection, refurbishment and replacement of steel, engine components, electrical, pipes and valves, and other parts of the vessel. The Company follows the deferral method of accounting for special survey and drydocking costs, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey and drydocking, 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.

        The amortization periods reflect the estimated useful economic life of the deferred charge, which is the period between each special survey and drydocking.

        Costs incurred during the drydocking period relating to routine repairs and maintenance are expensed. The unamortized portion of special survey and drydocking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain/(loss) on sale of the vessel.

 

        Impairment of Long-lived Assets:    The accounting standard for impairment of long-lived assets requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the case of long-lived assets held and used, if the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value.

        As of December 31, 2015, December 31, 2014 and December 31, 2013, the Company concluded that events and circumstances triggered the existence of potential impairment of its long-lived assets. These indicators included volatility in the spot market and decline in the vessels' market values, as well as the potential impact the current marketplace may have on its future operations. As a result, the Company performed step one of the impairment assessment of the Company's long-lived assets by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. The Company's strategy is to charter its vessels under multi-year, fixed rate period charters that range from less than 1 to 18 years for vessels in its fleet, providing the Company with contracted stable cash flows. The significant factors and assumptions the Company used in its undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, drydocking costs, operating expenses and management fees estimates. Revenue assumptions were based on contracted time charter rates up to the end of life of the current contract of each vessel as well as the estimated average time charter equivalent rates for the remaining life of the vessel after the completion of its current contract. The estimated daily time charter equivalent rates used for non-contracted revenue days are based on a combination of (i) recent charter market rates, (ii) conditions existing in the containership market as of December 31, 2015, December 31, 2014 and December 31, 2013 in relation to laid up vessels; (iii) historical average time charter rates, based on publications by independent third party maritime research services, and (iv) estimated future time charter rates, based on publications by independent third party maritime research services that provide such forecasts. Recognizing that the container transportation is cyclical and subject to significant volatility based on factors beyond the Company's control, management believes the use of revenue estimates, based on the combination of factors (i) to (iv) above, to be reasonable as of the reporting date. In addition, the Company used an annual operating expenses escalation factor and estimates of scheduled and unscheduled off-hire revenues based on historical experience. All estimates used and assumptions made were in accordance with the Company's internal budgets and historical experience of the shipping industry.

        As of December 31, 2015 and December 31, 2014, the Company's assessment concluded that step two of the impairment analysis was required for certain of its vessels, as undiscounted projected net operating cash flows of certain vessels did not exceed the carrying value of the respective vessels. Fair value of each vessel was determined with the assistance from valuations obtained by third party independent shipbrokers (on the basis of a commercial transaction between a willing buyer and a willing seller). As of December 31, 2015 and December 31, 2014, the Company recorded an impairment loss of $39.0 million and $75.8 million, respectively for its older vessels mainly due to the decrease in the estimated average time charter equivalent rates for the remaining life of the vessels, after the completion of their current contracts. The impairment loss is included under "Impairment loss" in the consolidated Statements of Operations.

        No impairment of vessels existed as of December 31, 2013, as the undiscounted projected net operating cash flows per vessel exceeded the carrying value of each vessel.

 

        Investments in Debt Securities:    The Company classifies its debt securities as held-to-maturity based on management's positive intent and ability to hold to maturity. These securities are reported at amortized cost, subject to impairment. Management evaluates securities for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its amortized cost. Consideration is given to: 1) if the Company intends to sell the security (that is, it has decided to sell the security); 2) it is more likely than not that the Company will be required to sell the security before the recovery of its (entire) amortized cost basis; or 3) a credit loss exists—that is, the Company does not expect to recover the entire amortized cost basis of the security (the present value of cash flows expected to be collected is less than the amortized cost basis of the security).

 

        Investments in Equity Securities:    The Company classifies its equity securities at cost as the Company does not have the ability to exercise significant influence. Management evaluates the equity security for other than temporary impairment on a quarterly basis. An investment is considered impaired if the fair value of the investment is less than its cost. Consideration is given to significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, significant adverse change in the regulatory, economic, or technological environment of the investee, significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates, as well as factors that raise significant concerns about the investee's ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.

 

        Pension and Retirement Benefit Obligations-Crew:    The crew on board the companies' vessels serve in such capacity under short-term contracts (usually up to seven months) and accordingly, the vessel-owning companies are not liable for any pension or post-retirement benefits.

 

        Accounting for Revenue and Expenses:    Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenue over the rental periods of such charter agreements, as service is performed. The Company earns revenue from bareboat and time charters. Bareboat and time charters involve placing a vessel at the charterers' disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under a time charter, the daily hire rate includes the crew, lubricants, insurance, spares and stores. Under a bareboat charter, the charterer is provided only with the vessel.

 

        Voyage Expenses:    Voyage expenses include port and canal charges, bunker (fuel) expenses (bunker costs are normally covered by the Company's charterers, except in certain cases such as vessel re-positioning), address commissions and brokerage commissions. Under multi-year time charters and bareboat charters, such as those on which the Company charters its containerships and under short-term time charters, the charterers bear the voyage expenses other than brokerage and address commissions. As such, voyage expenses represent a relatively small portion of the vessels' overall expenses.

 

        Vessel Operating Expenses:    Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Aggregate expenses increase as the size of the Company's fleet increases. Under multi-year time charters, the Company pays for vessel operating expenses. Under bareboat charters, such as those on which the Company chartered two of the containerships in its fleet as of December 31, 2015, 2014 and 2013, respectively, the Company's charterers bear most vessel operating expenses, including the costs of crewing, insurance, surveys, drydockings, maintenance and repairs.

 

        General and administrative expenses:    General and administrative expenses include management fees paid to the vessels' manager (refer to Note 13, "Related Party Transactions"), audit fees, legal fees, board remuneration, executive officers compensation, directors & officers insurance and stock exchange fees.

 

        Repairs and Maintenance:    All repair and maintenance expenses are charged against income when incurred and are included in vessel operating expenses in the accompanying consolidated Statements of Operations.

 

        Dividends:    Dividends, if any, are recorded in the Company's financial statements in the period in which they are declared by the Company's board of directors.

 

        Segment Reporting:    The Company reports financial information and evaluates its operations by total charter revenues. Although revenue can be identified for different types of charters, management does not identify expenses, profitability or other financial information for different charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet, and thus the Company has determined that it has only one operating and reportable segment.

 

        Derivative Instruments:    The Company entered into interest rate swap contracts to create economic hedges for its interest rate risks. The Company recorded these financial instruments at their fair value. When such derivatives do not qualify for hedge accounting, changes in their fair value are recorded in the consolidated Statement of Operations. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in the fair value of derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income (effective portion) and are reclassified to earnings when the hedged transaction is reflected in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in income.

        At the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its risk management objective and the strategy for undertaking various hedging transactions. The Company also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

        On July 1, 2012, the Company elected to prospectively de-designate fair value and cash flow interest rate swaps for which it was obtaining hedge accounting treatment due to the compliance burden associated with this accounting policy. As a result, all changes in the fair value of the Company's cash flow interest rate swap agreements were recorded in earnings under "Unrealized and Realized Losses on Derivatives" from the de-designation date forward.

        The Company evaluated whether it is probable that the previously hedged forecasted interest payments are probable to not occur in the originally specified time period. The Company has concluded that the previously hedged forecasted interest payments are probable of occurring. Therefore, unrealized gains or losses in accumulated other comprehensive loss associated with the previously designated cash flow interest rate swaps will remain frozen in accumulated other comprehensive loss and recognized in earnings when the interest payments will be recognized. If such interest payments were to be identified as being probable of not occurring, the accumulated other comprehensive loss balance pertaining to these amounts would be reversed through earnings immediately.

        The Company does not use financial instruments for trading or other speculative purposes.

 

        Earnings/(Loss) Per Share:    The Company has presented net income/(loss) per share for all years presented based on the weighted average number of outstanding shares of common stock of Danaos Corporation at the reported periods. The warrants issued in 2011 were excluded from the diluted (loss)/income per share for the year ended December 31, 2015, 2014 and 2013, because they were antidilutive. There are no other dilutive or potentially dilutive securities, accordingly there is no difference between basic and diluted net income per share.

 

        Equity Compensation Plan:    The Company has adopted an equity compensation plan (the "Plan"), which is generally administered by the compensation committee of the Board of Directors. The Plan allows the plan administrator to grant awards of shares of common stock or the right to receive or purchase shares of common stock to employees, directors or other persons or entities providing significant services to the Company or its subsidiaries. The actual terms of an award will be determined by the plan administrator and set forth in written award agreement with the participant. Any options granted under the Plan will be accounted for in accordance with the accounting guidance for share-based compensation arrangements.

        The aggregate number of shares of common stock for which awards may be granted under the Plan cannot exceed 6% of the number of shares of common stock issued and outstanding at the time any award is granted. 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. Unless otherwise set forth in an award agreement, any awards outstanding under the Plan will vest immediately upon a "change of control", as defined in the Plan. The Plan will automatically terminate ten years after it has been most recently approved by the Company's stockholders. Refer to Note 20, "Stock Based Compensation".

        As of April 18, 2008, the Company established the Directors Share Payment Plan ("Directors Plan") under the Plan. The purpose of the Directors 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. Each member of the Board of Directors of the Company may participate in the Directors Plan. Pursuant to the terms of the Directors Plan, Directors may elect to receive in Common Stock all or a portion of their compensation. On the last business day of each quarter, the rights of common stock are credited to each Director's Share Payment Account. Following December 31st of each year, the Company will deliver to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. Refer to Note 20, "Stock Based Compensation".

        As of April 18, 2008, the Board of Directors and the Compensation Committee approved the Company's ability to provide, from time to time, incentive compensation to the employees of Danaos Shipping Company Limited (the "Manager"), in the form of free shares of the Company's common stock under the Plan. Prior approval is required by the Compensation Committee and the Board of Directors. The plan was effective since 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 stock will have no vesting period and the employee will own the stock immediately after grant. 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. Refer to Note 20, "Stock Based Compensation".

 

Recent Accounting Pronouncements:

        In May 2014, the FASB issued Accounting Standards Update No. 2014-9 "Revenue from Contracts with Customers" ("ASU 2014-09"), which will supersede the current revenue recognition guidance and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The ASU 2014-09 was amended by ASU 2015-14 "Revenue from Contracts with Customers: Deferral of the Effective Date" ("ASU 2015-014"), which was issued in August 2015. Public entities can now elect to defer implementation of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. Additionally, ASU 2015-14 permits early adoption of the standard but not before the original effective date, i.e. annual period beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and associated disclosures, and have not yet selected a transition method.

        In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810)—Amendments to the Consolidation Analysis", ("ASU 2015-02"). ASU 2015-02 amends the criteria for determining which entities are considered variable interest entities ("VIEs"), amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early application is permitted. The Company does not expect the adoption of this ASU to have a material impact on the Company's results of operations, financial position or cash flows.

        In April 2015, the FASB issued Accounting Standards Update No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs", ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments are effective for annual periods ending after December 15, 2015, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted. The Company is not early adopting this standard. After its adoption in 2016, this change will result in a reclassification of $35.0 million from Deferred charges, net to Long-term debt in the consolidated balance sheet as of December 31, 2015. Additionally, amortization of deferred finance costs amounting to $14.0 million will be reclassified from Other finance expenses to Interest expense in the consolidated Statements of Operations for the year ended December 31, 2015.

        In January 2016, the FASB issued Accounting Standards Update No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this Update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this Update eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement for to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities.The amendments are effective for annual periods ending after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and notes disclosures.

        In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 will apply to both types of leases—capital (or finance) leases and operating leases. According to the new Accounting Standard, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and notes disclosures.

Basis of Presentation and General Information (Tables)
Schedule of the vessel owning companies (the Danaos Subsidiaries)

 

As of December 31, 2015, Danaos consolidated the vessel owning companies (the "Danaos Subsidiaries") listed below. All vessels are container vessels:                                                                                                                                          

Company

 

Date of Incorporation

 

Vessel Name

 

Year Built

 

TEU(2)

 

Megacarrier (No. 1) Corp. 

 

September 10, 2007

 

Hyundai Together

 

 

2012 

 

 

13,100 

 

Megacarrier (No. 2) Corp. 

 

September 10, 2007

 

Hyundai Tenacity

 

 

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

 

Hanjin Germany

 

 

2011 

 

 

10,100 

 

CellContainer (No. 7) Corp. 

 

October 31, 2007

 

Hanjin Italy

 

 

2011 

 

 

10,100 

 

CellContainer (No. 8) Corp. 

 

October 31, 2007

 

Hanjin Greece

 

 

2011 

 

 

10,100 

 

Karlita Shipping Co. Ltd. 

 

February 27, 2003

 

CSCL Pusan

 

 

2006 

 

 

9,580 

 

Ramona Marine Co. Ltd. 

 

February 27, 2003

 

CSCL Le Havre

 

 

2006 

 

 

9,580 

 

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

 

CSCL Europe

 

 

2004 

 

 

8,468 

 

Oceanprize Navigation Ltd. 

 

January 21, 2003

 

CSCL America

 

 

2004 

 

 

8,468 

 

Boxcarrier (No. 2) Corp. 

 

June 27, 2006

 

CMA CGM Musset(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 3) Corp. 

 

June 27, 2006

 

CMA CGM Nerval(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 4) Corp. 

 

June 27, 2006

 

CMA CGM Rabelais(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 5) Corp. 

 

June 27, 2006

 

CMA CGM Racine(1)

 

 

2010 

 

 

6,500 

 

Boxcarrier (No. 1) Corp. 

 

June 27, 2006

 

CMA CGM Moliere(1)

 

 

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 

 

Actaea Company Limited

 

October 14, 2014

 

Performance

 

 

2002 

 

 

6,402 

 

Asteria Shipping Company Limited

 

October 14, 2014

 

Priority

 

 

2002 

 

 

6,402 

 

Federal Marine Inc. 

 

February 14, 2006

 

Federal

 

 

1994 

 

 

4,651 

 

Auckland Marine Inc. 

 

January 27, 2005

 

SNL Colombo

 

 

2004 

 

 

4,300 

 

Wellington Marine Inc. 

 

January 27, 2005

 

YM Singapore

 

 

2004 

 

 

4,300 

 

Continent Marine Inc. 

 

March 22, 2006

 

Zim Monaco

 

 

2009 

 

 

4,253 

 

Medsea Marine Inc. 

 

May 8, 2006

 

OOCL Novorossiysk

 

 

2009 

 

 

4,253 

 

Blacksea Marine Inc. 

 

May 8, 2006

 

Zim Luanda

 

 

2009 

 

 

4,253 

 

Bayview Shipping Inc. 

 

March 22, 2006

 

Zim Rio Grande

 

 

2008 

 

 

4,253 

 

Channelview Marine Inc. 

 

March 22, 2006

 

Zim Sao Paolo

 

 

2008 

 

 

4,253 

 

Balticsea Marine Inc. 

 

March 22, 2006

 

OOCL Istanbul

 

 

2008 

 

 

4,253 

 

Seacarriers Services Inc. 

 

June 28, 2005

 

YM Seattle

 

 

2007 

 

 

4,253 

 

Seacarriers Lines Inc. 

 

June 28, 2005

 

YM Vancouver

 

 

2007 

 

 

4,253 

 

Containers Services Inc. 

 

May 30, 2002

 

Deva

 

 

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

 

Hanjin Algeciras

 

 

2011 

 

 

3,400 

 

CellContainer (No. 5) Corp. 

 

March 23, 2007

 

Hanjin Constantza

 

 

2011 

 

 

3,400 

 

CellContainer (No. 1) Corp. 

 

March 23, 2007

 

Hanjin Buenos Aires

 

 

2010 

 

 

3,400 

 

CellContainer (No. 2) Corp. 

 

March 23, 2007

 

Hanjin Santos

 

 

2010 

 

 

3,400 

 

CellContainer (No. 3) Corp. 

 

March 23, 2007

 

Hanjin Versailles

 

 

2010 

 

 

3,400 

 

Vilos Navigation Company Ltd. 

 

May 30, 2013

 

MSC Zebra

 

 

2001 

 

 

2,602 

 

Trindade Maritime Company

 

April 10, 2013

 

Amalia C

 

 

1998 

 

 

2,452 

 

Sarond Shipping Inc. 

 

January 18, 2013

 

Danae C (ex Niledutch Palanca)

 

 

2001 

 

 

2,524 

 

Speedcarrier (No. 7) Corp. 

 

December 6, 2007

 

Hyundai Highway

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 6) Corp. 

 

December 6, 2007

 

Hyundai Progress

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 8) Corp. 

 

December 6, 2007

 

Hyundai Bridge

 

 

1998 

 

 

2,200 

 

Speedcarrier (No. 1) Corp. 

 

June 28, 2007

 

Hyundai Vladivostok

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 2) Corp. 

 

June 28, 2007

 

Hyundai Advance

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 3) Corp. 

 

June 28, 2007

 

Hyundai Stride

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 5) Corp. 

 

June 28, 2007

 

Hyundai Future

 

 

1997 

 

 

2,200 

 

Speedcarrier (No. 4) Corp. 

 

June 28, 2007

 

Hyundai Sprinter

 

 

1997 

 

 

2,200 

 

Vessels sold during 2014

 

 

 

 

 

 

 

 

 

 

 

Boxcarrier (No. 6) Corp. 

 

June 27, 2006

 

Marathonas

 

 

1991 

 

 

4,814 

 

Boxcarrier (No. 7) Corp. 

 

June 27, 2006

 

Messologi

 

 

1991 

 

 

4,814 

 

Boxcarrier (No. 8) Corp. 

 

November 16, 2006

 

Mytilini

 

 

1991 

 

 

4,814 

 

Duke Marine Inc. 

 

April 14, 2003

 

Duka

 

 

1992 

 

 

4,651 

 

Commodore Marine Inc. 

 

April 14, 2003

 

Commodore

 

 

1992 

 

 

4,651 

 


 

 

 

(1)          

Vessel subject to charterer's option to purchase vessel after first eight years of time charter term for $78.0 million.

(2)          

Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.

 

Significant Accounting Policies (Tables)
Schedule of reclassifications out of the accumulated other comprehensive loss

 

    The Company had the following reclassifications out of Accumulated Other Comprehensive Loss as of December 31, 2015, 2014 and 2013, respectively (in thousands):

                                                                                                                                                                                    

 

 

 

 

Year ended December 31,

 

 

 

Location of Reclassification into Income

 

 

 

2015

 

2014

 

2013

 

Amortization of deferred realized losses on cash flow hedges

 

Net unrealized and realized losses on derivatives

 

 

4,017 

 

 

4,016 

 

 

4,017 

 

Reclassification of unrealized losses to earnings

 

Net unrealized and realized losses on derivatives

 

 

32,644 

 

 

88,939 

 

 

116,557 

 

​  

​  

​  

​  

​  

​  

Total Reclassifications

 

 

 

$

36,661 

 

$

92,955 

 

$

120,574 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

Fixed Assets, Net (Tables)
Schedule of vessels held-for-sale

 

As of December 31, 2015, the vessel Federal is classified as vessel held for sale in the consolidated Balance Sheet, (refer to Note 24, "Subsequent Events") and is analyzed as follows (in thousands):

                                                                                                                                                                                    

 

 

2015

 

Carrying value

 

$

8,364

 

Impairment loss

 

 

(2,100

)

​  

​  

Fair value less cost to sell

 

$

6,264

 

​  

​  

 

Deferred Charges, Net (Tables)
Schedule of deferred charges, net

 

        Deferred charges consisted of the following (in thousands):

                                                                                                                                                                                    

 

 

Drydocking and
Special Survey
Costs

 

Finance
and Other
Costs

 

Total
Deferred
Charges

 

As of January 1, 2014

 

$

4,041

 

$

63,908

 

$

67,949

 

Additions

 

 

6,887

 

 

182

 

 

7,069

 

Written-off amounts

 

 

(286

)

 

(55

)

 

(341

)

Amortization

 

 

(4,387

)

 

(15,015

)

 

(19,402

)

​  

​  

​  

​  

​  

​  

As of December 31, 2014

 

$

6,255

 

$

49,020

 

$

55,275

 

Additions

 

 

2,341

 

 

 

 

2,341

 

Amortization

 

 

(3,845

)

 

(14,038

)

 

(17,883

)

​  

​  

​  

​  

​  

​  

As of December 31, 2015

 

$

4,751

 

$

34,982

 

$

39,733

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

Other Current Assets (Tables)
Schedule of other current assets

 

        Other current assets consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

$

138 

 

 

 

Claims receivable

 

 

954 

 

$

7,856 

 

Advances to suppliers and other assets

 

 

3,365 

 

 

3,784 

 

​  

​  

​  

​  

Total

 

$

4,457 

 

$

11,640 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

Investments in Affiliates (Tables) (Gemini)

 

As of December 31, 2015, Gemini consolidated its wholly owned subsidiaries listed below:

                                                                                                                                                                                    

Company

 

Vessel Name

 

Year Built

 

TEU(1)

 

Date of vessel delivery

Averto Shipping S.A. 

 

Suez Canal

 

 

2002 

 

 

5,610 

 

July 20, 2015

Sinoi Marine Ltd. 

 

Genoa

 

 

2002 

 

 

5,544 

 

August 2, 2015

Kingsland International Shipping Limited

 

NYK Lodestar

 

 

2001 

 

 

6,422 

 

September 21, 2015

Leo Shipping and Trading S.A. 

 

NYK Leo

 

 

2002 

 

 

6,422 

 

February 4, 2016


 

 

 

(1)          

Twenty-foot equivalent unit, the international standard measure for containers and containership capacity.

 

 

        A condensed summary of the financial information for equity accounted investments 49% owned by the Company shown on a 100% basis are as follows (in thousands):

                                                                                                                                                                                    

 

 

2015

 

Current assets

 

$

12,578 

 

Non-current assets

 

$

54,771 

 

Current liabilities

 

$

5,552 

 

Non-current liabilities

 

$

38,758 

 

Net operating revenues

 

$

1,775 

 

Net loss

 

$

3,961 

 

 

Other Non-current Assets (Tables)
Schedule of other non-current assets

 

        Other non-current assets consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

 

 

$

664 

 

Series 1 ZIM notes, net

 

$

6,587 

 

 

6,274 

 

Series 2 ZIM notes, net

 

 

32,507 

 

 

30,923 

 

Equity participation ZIM

 

 

28,693 

 

 

28,693 

 

Other assets

 

 

4,401 

 

 

1,952 

 

​  

​  

​  

​  

Total

 

$

72,188 

 

$

68,506 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

Accrued Liabilities (Tables)
Schedule of accrued liabilities

 

        Accrued liabilities consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Accrued payroll

 

$

1,162 

 

$

1,175 

 

Accrued interest

 

 

8,059 

 

 

9,457 

 

Accrued expenses

 

 

4,793 

 

 

14,073 

 

​  

​  

​  

​  

Total

 

$

14,014 

 

$

24,705 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

Other Current and Long-term Liabilities (Tables)

 

        Other current liabilities consisted of the following as at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

$

4,538 

 

$

51,022 

 

Other current liabilities

 

 

790 

 

 

1,480 

 

​  

​  

​  

​  

Total

 

$

5,328 

 

$

52,502 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

 

        Other long-term liabilities consisted of the following at December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

Fair value of swaps

 

 

 

$

2,398 

 

Other long-term liabilities

 

$

13,219 

 

 

11,310 

 

​  

​  

​  

​  

Total

 

$

13,219 

 

$

13,708 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

Lease Arrangements (Tables)
Schedule of future minimum revenue, expected to be earned on non-cancelable time charters with initial terms of one year or more

 

        The future minimum revenue, expected to be earned on non-cancellable time charters consisted of the following as at December 31, 2015 (in thousands):

                                                                                                                                                                                    

2016

 

$

524,682 

 

2017

 

 

490,984 

 

2018

 

 

445,471 

 

2019

 

 

410,944 

 

2020

 

 

374,903 

 

2021 and thereafter

 

 

913,111 

 

​  

​  

Total future revenue

 

$

3,160,095 

 

​  

​  

​  

​  

 

Long-Term Debt (Tables)

 

        Long-term debt as of December 31, 2015 and 2014 consisted of the following (in thousands):

                                                                                                                                                                                    

Lender

 

As of
December 31,
2015

 

Current
portion

 

Long-term
portion

 

As of
December 31,
2014

 

Current
portion

 

Long-term
portion

 

The Royal Bank of Scotland

 

$

667,134 

 

$

24,327 

 

$

642,807 

 

$

678,954 

 

$

12,657 

 

$

666,297 

 

HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank

 

 

627,818 

 

 

50 

 

 

627,768 

 

 

628,513 

 

 

 

 

628,513 

 

HSH Nordbank

 

 

21,208 

 

 

9,006 

 

 

12,202 

 

 

28,843 

 

 

7,633 

 

 

21,210 

 

The Export-Import Bank of Korea ("KEXIM")

 

 

8,204 

 

 

8,204 

 

 

 

 

18,573 

 

 

10,369 

 

 

8,204 

 

The Export-Import Bank of Korea & ABN Amro

 

 

45,609 

 

 

11,250 

 

 

34,359 

 

 

56,859 

 

 

11,250 

 

 

45,609 

 

Deutsche Bank

 

 

169,921 

 

 

5,338 

 

 

164,583 

 

 

174,709 

 

 

4,786 

 

 

169,923 

 

Canyon Capital Finance

 

 

136,719 

 

 

11,425 

 

 

125,294 

 

 

144,467 

 

 

8,228 

 

 

136,239 

 

Credit Suisse

 

 

199,373 

 

 

11,978 

 

 

187,395 

 

 

208,585 

 

 

9,328 

 

 

199,257 

 

ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia

 

 

228,999 

 

 

13,509 

 

 

215,490 

 

 

239,896 

 

 

11,422 

 

 

228,474 

 

Commerzbank-Credit Suisse-Golden Tree

 

 

258,089 

 

 

20,139 

 

 

237,950 

 

 

274,984 

 

 

17,327 

 

 

257,657 

 

The Royal Bank of Scotland (January 2011 Credit Facility)

 

 

69,948 

 

 

30,990 

 

 

38,958 

 

 

85,017 

 

 

15,326 

 

 

69,691 

 

HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank (January 2011 Credit Facility)

 

 

69,562 

 

 

37,901 

 

 

31,661 

 

 

94,812 

 

 

22,476 

 

 

72,336 

 

ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management -National Bank of Greece (January 2011 Credit Facility)

 

 

20,582 

 

 

14,244 

 

 

6,338 

 

 

26,444 

 

 

6,371 

 

 

20,073 

 

Sinosure CEXIM-Citi-ABN Amro Credit Facility

 

 

122,040 

 

 

20,340 

 

 

101,700 

 

 

142,380 

 

 

20,340 

 

 

122,040 

 

Club Facility (January 2011 Credit Facility)

 

 

50,404 

 

 

32,665 

 

 

17,739 

 

 

65,457 

 

 

14,773 

 

 

50,684 

 

Citi-Eurobank Credit Facility (January 2011 Credit Facility)

 

 

63,834 

 

 

18,180 

 

 

45,654 

 

 

69,759 

 

 

5,830 

 

 

63,929 

 

Comprehensive Financing Plan exit fees accrued

 

 

15,501 

 

 

 

 

15,501 

 

 

11,862 

 

 

 

 

11,862 

 

Fair value hedged debt

 

 

433 

 

 

433 

 

 

 

 

1,006 

 

 

 

 

1,006 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total long-term debt

 

$

2,775,378 

 

$

269,979 

 

$

2,505,399 

 

$

2,951,120 

 

$

178,116 

 

$

2,773,004 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Hyundai Samho Vendor Financing

 

 

 

 

 

 

 

$

64,367 

 

$

46,530 

 

$

17,837 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

        Maturities of long-term debt subsequent to December 31, 2015 are as follows (in thousands):

                                                                                                                                                                                    

 

 

Fixed
principal
repayments

 

Variable
principal
payments

 

Final Payment
due on
December 31,
2018*

 

Total
principal
payments

 

2016

 

$

183,173 

 

$

86,373 

 

$

 

$

269,546 

 

2017

 

 

180,430 

 

 

133,032 

 

 

 

 

313,462 

 

2018

 

 

204,919 

 

 

77,048 

 

 

1,833,449 

 

 

2,115,416 

 

2019

 

 

20,340 

 

 

 

 

 

 

20,340 

 

2020

 

 

20,340 

 

 

 

 

 

 

20,340 

 

2021

 

 

20,340 

 

 

 

 

 

 

20,340 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total long-term debt

 

$

629,542 

 

$

296,453 

 

$

1,833,449 

 

$

2,759,444 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  


 

 

 

*          

The last payment due on December 31, 2018, includes the unamortized remaining principal debt balances under the Bank Agreement, as such amount will be determinable following the fixed and variable amortization.

 

 

Agreement and the January 2011 Credit Facilities, as specified in the table below (in thousands):

                                                                                                                                                                                    

 

 

February 15,

 

May 15,

 

August 15,

 

November 15,

 

December 31,

 

Total

 

2016

 

 

30,973 

 

 

36,278 

 

 

32,276 

 

 

43,852 

 

 

 

 

143,379 

 

2017

 

 

44,939 

 

 

36,691 

 

 

35,338 

 

 

31,872 

 

 

 

 

148,840 

 

2018

 

 

34,152 

 

 

37,585 

 

 

44,399 

 

 

45,334 

 

 

65,969 

 

 

227,439 

 

​  

​  

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

519,658 

 

​  

​  

​  

​  


 

 

 

*          

The Company may elect to make the scheduled payments shown in the above table three months earlier.

 

 

                                                                                                                                                                                    

Lender

 

Outstanding
Principal
Amount
(in millions)(1)

 

Collateral Vessels

The Royal Bank of Scotland(2)

 

$

667.1 

 

The Hyundai Progress, the Hyundai Highway, the Hyundai Bridge, the Federal, the Zim Monaco, the Hanjin Buenos Aires, the Hanjin Versailles, the Hanjin Algeciras, the CMA CGM Racine and the CMA CGM Melisande

Aegean Baltic Bank—HSH Nordbank—Piraeus Bank(3)

 

$

627.8 

 

The Hyundai Vladivostok, the Hyundai Advance, the Hyundai Stride, the Hyundai Future, the Hyundai Sprinter, the Amalia C, the MSC Zebra, the Danae C (ex Niledutch Palanca), the Dimitris C, the Performance and the Priority

Canyon Capital Finance

 

$

136.7 

 

The CMA CGM Moliere and the CMA CGM Musset

Deutsche Bank

 

$

169.9 

 

The Zim Rio Grande, the Zim Sao Paolo and the OOCL Istanbul

Credit Suisse

 

$

199.4 

 

The Zim Luanda, the CMA CGM Nerval and the YM Mandate

ABN Amro-Bank of America Merrill Lynch-Burlington-Sequoia-National Bank of Greece

 

$

229.0 

 

The SNL Colombo, the YM Seattle, the YM Vancouver and the YM Singapore

Commerzbank-Credit Suisse-Golden Tree

 

$

258.1 

 

The OOCL Novorossiysk, the Hanjin Santos, the YM Maturity, the Hanjin Constantza and the CMA CGM Attila

HSH Nordbank

 

$

21.2 

 

The Deva and the Derby D

KEXIM

 

$

8.2 

 

The CSCL Europe and the CSCL America

KEXIM-ABN Amro

 

$

45.6 

 

The CSCL Pusan and the CSCL Le Havre

January 2011 Credit Facilities

Aegean Baltic—HSH Nordbank—Piraeus Bank(3)

 

$

69.6 

 

The Hyundai Speed, the Hanjin Italy and the CMA CGM Rabelais

RBS(2)

 

$

69.9 

 

The Hyundai Smart and the Hanjin Germany

ABN Amro Club Facility

 

$

20.6 

 

The Hanjin Greece

Club Facility

 

$

50.4 

 

The Hyundai Together and the Hyundai Tenacity

Citi-Eurobank

 

$

63.8 

 

The Hyundai Ambition

Sinosure-CEXIM-Citi-ABN Amro

 

$

122.0 

 

The CMA CGM Tancredi, the CMA CGM Bianca and the CMA CGM Samson


 

 

 

(1)          

As of December 31, 2015.

(2)          

Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Derby D, the CSCL America and the CSCL Le Havre.

(3)          

Pursuant to the Bank Agreement, this credit facility is also secured by a second priority lien on the Deva, the CSCL Europe and the CSCL Pusan.

 

Financial Instruments (Tables)

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2015

 

 

 

Total

 

Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

 

 

(in thousands of $)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

138 

 

$

 

$

138 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

4,538 

 

$

 

$

4,538 

 

$

 

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2014

 

 

 

Total

 

Quoted Prices in
Active Markets for
Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

 

 

(in thousands of $)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

664 

 

$

 

$

664 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

53,420 

 

$

 

$

53,420 

 

$

 

 

 

                                                                                                                                                                                    

 

 

As of December 31, 2015

 

As of December 31, 2014

 

 

 

Book Value

 

Fair Value

 

Book Value

 

Fair Value

 

 

 

(in thousands of $)

 

Cash and cash equivalents

 

$

72,253 

 

$

72,253 

 

$

57,730 

 

$

57,730 

 

Restricted cash

 

$

2,818 

 

$

2,818 

 

$

2,824 

 

$

2,824 

 

Accounts receivable, net

 

$

10,652 

 

$

10,652 

 

$

7,904 

 

$

7,904 

 

Due from related parties

 

$

19,007 

 

$

19,007 

 

$

10,597 

 

$

10,597 

 

Series 1 ZIM notes

 

$

6,587 

 

$

6,587 

 

$

6,274 

 

$

6,274 

 

Series 2 ZIM notes

 

$

32,507 

 

$

32,507 

 

$

30,923 

 

$

30,923 

 

Equity investment in ZIM

 

$

28,693 

 

$

35,831 

 

$

28,693 

 

$

32,873 

 

Accounts payable

 

$

12,971 

 

$

12,971 

 

$

12,510 

 

$

12,510 

 

Accrued liabilities

 

$

14,014 

 

$

14,014 

 

$

24,705 

 

$

24,705 

 

Long-term debt, including current portion

 

$

2,775,378 

 

$

2,776,739 

 

$

2,951,120 

 

$

2,953,327 

 

Vendor financing, including current portion

 

$

 

$

 

$

64,367 

 

$

64,026 

 

 

 

        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 (in thousands):

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2015

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in thousands of $)

 

Series 1 ZIM notes(1)

 

$

6,587 

 

$

 

$

6,587 

 

$

 

Series 2 ZIM notes(1)

 

$

32,507 

 

$

 

$

32,507 

 

$

 

Equity investment in ZIM(1)

 

$

35,831 

 

$

 

$

35,831 

 

$

 

Long-term debt, including current portion(2)

 

$

2,776,739 

 

$

 

$

2,776,739 

 

$

 

Accrued liabilities(4)

 

$

14,014 

 

$

 

$

14,014 

 

$

 

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of December 31, 2014

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in thousands of $)

 

Series 1 ZIM notes(1)

 

$

6,274 

 

$

 

$

6,274 

 

$

 

Series 2 ZIM notes(1)

 

$

30,923 

 

$

 

$

30,923 

 

$

 

Equity investment in ZIM(1)

 

$

32,873 

 

$

 

$

32,873 

 

$

 

Long-term debt, including current portion(2)

 

$

2,953,327 

 

$

 

$

2,953,327 

 

$

 

Vendor financing, including current portion(3)

 

$

64,026 

 

$

 

$

64,026 

 

$

 

Accrued liabilities(4)

 

$

24,705 

 

$

 

$

24,705 

 

$

 


 

 

 

(1)          

The fair value is estimated based on currently available information on the Company's counterparty, other contracts with similar terms, remaining maturities and interest rates.

(2)          

The fair value of the Company's debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.

(3)          

The fair value of the Company's Vendor financing is estimated based on currently available financing with similar contract terms, interest rate and remaining maturities, as well as taking into account its creditworthiness.

(4)          

The fair value of the Company's accrued liabilities, which mainly consists of accrued interest on its credit facilities and accrued realized losses on its cash flow interest rate swaps, is estimated based on currently available debt and swap agreements with similar contract terms, interest rates and remaining maturities, as well as taking into account its creditworthiness.

 

 

                                                                                                                                                                                    

 

 

Fair Value Measurements as of
December 31, 2015

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in millions of $)

 

Fixed Assets, net

 

$

90.8 

 

$

 

$

90.8 

 

$

 

Vessels held for sale

 

$

6.3 

 

$

 

$

6.3 

 

$

 

        

                                                                                                                                                                                    

 

 

Fair Value Measurements as of
December 31, 2014

 

 

 

Total

 

(Level I)

 

(Level II)

 

(Level III)

 

 

 

(in millions of $)

 

Fixed Assets, net

 

$

92.0 

 

$

 

$

92.0 

 

$

 

 

 

        The interest rate swap agreements converting floating interest rate exposure into fixed, as of December 31, 2015 and 2014 were as follows (in thousands):

                                                                                                                                                                                    

Counter-party

 

Contract
Trade
Date

 

Effective
Date

 

Termination
Date

 

Notional
Amount on
Effective Date

 

Fixed Rate
(Danaos
pays)

 

Floating Rate
(Danaos receives)

 

Fair Value
December 31,
2015

 

Fair Value
December 31,
2014

 

RBS

 

 

03/09/2007

 

 

3/15/2010

 

 

3/15/2015

 

$

200,000

 

 

5.07% p.a.

 

USD LIBOR 3M BBA

 

 

 

$

(2,011

)

RBS

 

 

11/15/2007

 

 

11/19/2010

 

 

11/19/2015

 

$

100,000

 

 

5.12% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,246

)

RBS

 

 

11/16/2007

 

 

11/22/2010

 

 

11/22/2015

 

$

100,000

 

 

5.07% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,248

)

CITI

 

 

04/17/2007

 

 

4/17/2008

 

 

4/17/2015

 

$

200,000

 

 

5.124% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(2,895

)

CITI

 

 

04/20/2007

 

 

4/20/2010

 

 

4/20/2015

 

$

200,000

 

 

5.1775% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(3,008

)

CITI

 

 

11/02/2007

 

 

11/6/2010

 

 

11/6/2015

 

$

250,000

 

 

5.1% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(10,167

)

CITI

 

 

11/26/2007

 

 

11/29/2010

 

 

11/30/2015

 

$

100,000

 

 

4.98% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(4,249

)

CITI

 

 

02/07/2008

 

 

2/11/2011

 

 

2/11/2016

 

$

200,000

 

 

4.695% p.a.

 

USD LIBOR 3M BBA

 

$

(1,012

)

 

(9,524

)

Eurobank

 

 

12/06/2007

 

 

12/10/2010

 

 

12/10/2015

 

$

200,000

 

 

4.8125% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(8,428

)

Eurobank

 

 

02/11/2008

 

 

5/31/2011

 

 

5/31/2015

 

$

200,000

 

 

4.755% p.a.

 

USD LIBOR 3M BBA

 

 

 

 

(3,763

)

​  

​  

​  

​  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,012

)

$

(52,539

)

​  

​  

​  

​  

​  

​  

​  

​  

ABN Amro

 

 

06/06/2013

 

 

1/4/2016

 

 

12/31/2016

 

$

325,000

 

 

1.4975% p.a.

 

USD LIBOR 3M BBA

 

$

(2,113

)

$

(617

)

ABN Amro

 

 

05/31/2013

 

 

1/4/2016

 

 

12/31/2016

 

$

250,000

 

 

1.4125% p.a.

 

USD LIBOR 3M BBA

 

 

(1,413

)

 

(264

)

​  

​  

​  

​  

Total fair value of swap liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(4,538

)

$

(53,420

)

​  

​  

​  

​  

​  

​  

​  

​  

 

 

                                                                                                                                                                                    

 

 

Year ended
December 31,
2015

 

Year ended
December 31,
2014

 

Year ended
December 31,
2013

 

 

 

(in millions)

 

Total realized losses

 

$

(52.7

)

$

(120.6

)

$

(145.6

)

Amortization of deferred realized losses

 

 

(4.0

)

 

(4.0

)

 

(4.0

)

Unrealized gains

 

 

16.2

 

 

25.2

 

 

22.8

 

​  

​  

​  

​  

​  

​  

Unrealized and realized losses on cash flow interest rate swaps

 

$

(40.5

)

$

(99.4

)

$

(126.8

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

        The interest rate swap agreements converting fixed interest rate exposure into floating, as of December 31, 2015 and 2014, were as follows (in thousands):

                                                                                                                                                                                    

Counter party

 

Contract
trade
Date

 

Effective
Date

 

Termination
Date

 

Notional
Amount
on
Effective
Date

 

Fixed Rate
(Danaos receives)

 

Floating Rate
(Danaos pays)

 

Fair Value
December 31,
2015

 

Fair Value
December 31,
2014

 

RBS

 

 

11/15/2004

 

 

12/15/2004

 

 

8/27/2016

 

$

60,528 

 

 

5.0125% p.a.

 

USD LIBOR 3M BBA + 0.835% p.a.

 

$

55 

 

$

302 

 

RBS

 

 

11/15/2004

 

 

11/17/2004

 

 

11/2/2016

 

$

62,342 

 

 

5.0125% p.a.

 

USD LIBOR 3M BBA + 0.855% p.a.

 

 

83 

 

 

362 

 

​  

​  

​  

​  

Total fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

138 

 

$

664 

 

​  

​  

​  

​  

​  

​  

​  

​  

 

 

                                                                                                                                                                                    

 

 

Year ended
December 31,
2015

 

Year ended
December 31,
2014

 

Year ended
December 31,
2013

 

 

 

(in millions)

 

Unrealized losses on swap asset

 

$

(0.5

)

$

(0.9

)

$

(1.3

)

Reclassification of fair value of hedged debt to Statement of Operations

 

 

0.6

 

 

0.6

 

 

0.6

 

Realized gains

 

 

0.5

 

 

1.0

 

 

1.4

 

​  

​  

​  

​  

​  

​  

Unrealized and realized gains on fair value interest rate swaps

 

$

0.6

 

$

0.7

 

$

0.7

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

Operating Revenue (Tables)
Schedule of operating revenue from significant customers (constituting more than 10% of total revenue)

 

                                                                                                                                                                                    

Charterer

 

2015

 

2014

 

2013

 

HMM Korea

 

 

28 

%

 

28 

%

 

27 

%

CMA CGM

 

 

26 

%

 

27 

%

 

24 

%

Hanjin

 

 

17 

%

 

18 

%

 

17 

%

YML

 

 

13 

%

 

11 

%

 

10 

%

 

Operating Revenue by Geographic Location (Tables)
Schedule of operating revenue by geographic location

 

        Operating revenue by geographic location for the years ended December 31, was as follows (in thousands):

                                                                                                                                                                                    

Continent

 

2015

 

2014

 

2013

 

Australia—Asia

 

$

410,827 

 

$

389,098 

 

$

413,662 

 

Europe

 

 

157,109 

 

 

162,993 

 

 

174,455 

 

​  

​  

​  

​  

​  

​  

Total Revenue

 

$

567,936 

 

$

552,091 

 

$

588,117 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

Earnings/(Loss) per Share (Tables)
Schedule of computation of basic and diluted earnings per share

 

        The following table sets forth the computation of basic and diluted earnings/(losses) per share for the years ended December 31 (in thousands):

                                                                                                                                                                                    

 

 

2015

 

2014

 

2013

 

Numerator:

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

117,016

 

$

(3,920

)

$

37,523

 

Denominator (number of shares):

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average ordinary shares outstanding

 

 

109,785.5

 

 

109,676.1

 

 

109,654.2

 

 

Basis of Presentation and General Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Sep. 18, 2009
Dec. 31, 2015
Hyundai Together
item
Dec. 31, 2015
Hyundai Tenacity
item
Dec. 31, 2015
Hyundai Smart
item
Dec. 31, 2015
Hyundai Speed
item
Dec. 31, 2015
Hyundai Ambition
item
Dec. 31, 2015
Hanjin Germany
item
Dec. 31, 2015
Hanjin Italy
item
Dec. 31, 2015
Hanjin Greece
item
Dec. 31, 2015
CSCL Pusan
item
Dec. 31, 2015
CSCL Le Havre
item
Dec. 31, 2015
CMA CGM Melisande
item
Dec. 31, 2015
CMA CGM Attila
item
Dec. 31, 2015
CMA CGM Tancredi
item
Dec. 31, 2015
CMA CGM Bianca
item
Dec. 31, 2015
CMA CGM Samson
item
Dec. 31, 2015
CSCL Europe
item
Dec. 31, 2015
CSCL America
item
Dec. 31, 2015
CMA CGM Moliere, Musset, Nerval, Rabelais and Racine
Dec. 31, 2015
CMA CGM Musset
item
Dec. 31, 2015
CMA CGM Nerval
item
Dec. 31, 2015
CMA CGM Rabelais
item
Dec. 31, 2015
CMA CGM Racine
item
Dec. 31, 2015
CMA CGM Moliere
item
Dec. 31, 2015
YM Mandate
item
Dec. 31, 2015
YM Maturity
item
Dec. 31, 2015
Performance
item
Dec. 31, 2015
Priority
item
Dec. 31, 2015
Hyundai Federal
item
Dec. 31, 2015
SNL Colombo
item
Dec. 31, 2015
YM Singapore
item
Dec. 31, 2015
Zim Monaco
item
Dec. 31, 2015
OOCL Novorossiysk
item
Dec. 31, 2015
Zim Luanda
item
Dec. 31, 2015
Zim Rio Grande
item
Dec. 31, 2015
Zim Sao Paolo
item
Dec. 31, 2015
OOCL Istanbul
item
Dec. 31, 2015
YM Seattle
item
Dec. 31, 2015
YM Vancouver
item
Dec. 31, 2015
Deva
item
Dec. 31, 2015
Derby D
item
Dec. 31, 2015
Dimitris C
item
Dec. 31, 2015
Hanjin Algeciras
item
Dec. 31, 2015
Hanjin Constantza
item
Dec. 31, 2015
Hanjin Buenos Aires
item
Dec. 31, 2015
Hanjin Santos
item
Dec. 31, 2015
Hanjin Versailles
item
Dec. 31, 2015
MSC Zebra
item
Dec. 31, 2015
Amalia C
item
Dec. 31, 2015
Danae C (ex Niledutch Palanca)
item
Dec. 31, 2015
Hyundai Highway
item
Dec. 31, 2015
Hyundai Progress
item
Dec. 31, 2015
Hyundai Bridge
item
Dec. 31, 2015
Hyundai Vladivostok
item
Dec. 31, 2015
Hyundai Advance
item
Dec. 31, 2015
Hyundai Stride
item
Dec. 31, 2015
Hyundai Future
item
Dec. 31, 2015
Hyundai Sprinter
item
Dec. 31, 2015
Marathonas
item
Dec. 31, 2015
Messologi
item
Dec. 31, 2015
Mytilini
item
Dec. 31, 2015
Duka
item
Dec. 31, 2015
Commodore
item
Basis of Presentation and General Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, authorized capital stock (in shares)
750,000,000 
750,000,000 
750,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, authorized capital stock (in shares)
100,000,000 
100,000,000 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TEU
 
 
 
13,100 
13,100 
13,100 
13,100 
13,100 
10,100 
10,100 
10,100 
9,580 
9,580 
8,530 
8,530 
8,530 
8,530 
8,530 
8,468 
8,468 
 
6,500 
6,500 
6,500 
6,500 
6,500 
6,500 
6,500 
6,402 
6,402 
4,651 
4,300 
4,300 
4,253 
4,253 
4,253 
4,253 
4,253 
4,253 
4,253 
4,253 
4,253 
4,253 
3,430 
3,400 
3,400 
3,400 
3,400 
3,400 
2,602 
2,452 
2,524 
2,200 
2,200 
2,200 
2,200 
2,200 
2,200 
2,200 
2,200 
4,814 
4,814 
4,814 
4,651 
4,651 
Period of charter term after which option to purchase vessel is available to charterer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consideration for which vessel can be purchased by charterer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 78.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant Accounting Policies (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Reclassifications in Other Comprehensive Income/(Loss)
 
 
 
Net unrealized and realized losses on derivatives
$ (39,857)
$ (98,713)
$ (126,150)
Reclassification out of accumulated other comprehensive income
 
 
 
Reclassifications in Other Comprehensive Income/(Loss)
 
 
 
Net unrealized and realized losses on derivatives
36,661 
92,955 
120,574 
Amortization of deferred realized losses on cash flow hedges |
Reclassification out of accumulated other comprehensive income
 
 
 
Reclassifications in Other Comprehensive Income/(Loss)
 
 
 
Net unrealized and realized losses on derivatives
4,017 
4,016 
4,017 
Reclassification of unrealized losses to earnings |
Reclassification out of accumulated other comprehensive income
 
 
 
Reclassifications in Other Comprehensive Income/(Loss)
 
 
 
Net unrealized and realized losses on derivatives
$ 32,644 
$ 88,939 
$ 116,557 
Significant Accounting Policies (Details 2) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
item
Dec. 31, 2014
item
Dec. 31, 2013
item
Dec. 31, 2012
Vessels held for sale
 
 
 
 
Impairment loss of vessel held for sale
$ 2,100,000 
 
 
 
Foreign Currency Translation:
 
 
 
 
Foreign currency exchange gains
100,000 
300,000 
40,000 
 
Cash and Cash Equivalents:
 
 
 
 
Cash and cash equivalents
72,253,000 
57,730,000 
68,153,000 
55,628,000 
Restricted Cash:
 
 
 
 
Proportion of quarterly principal installments equal to the monthly deposit amount required for retention
0.3333 
 
 
 
Proportion of semi-annual interest installments equal to the monthly deposit amount required for retention
0.1667 
 
 
 
Impairment of Long-lived Assets:
 
 
 
 
Number of vessels sold
 
 
Vessel Operating Expenses:
 
 
 
 
Number of containerships chartered under bareboat charters for which charterers bear vessel operating expenses
 
Segment Reporting:
 
 
 
 
Number of operating segments
 
 
 
Number of reportable segments
 
 
 
Earnings/(Loss) Per Share:
 
 
 
 
Other dilutive or potentially dilutive securities
 
 
 
Difference between basic and diluted net income per share (in dollars per share)
$ 0.00 
 
 
 
Equity Compensation Plan:
 
 
 
 
Maximum number of shares that may be issued as a proportion of outstanding capital stock
6.00% 
 
 
 
Period of automatic termination from approval of plan by stockholders
10 years 
 
 
 
Vessels
 
 
 
 
Depreciation
 
 
 
 
Estimated useful life from the year built
30 years 
 
 
 
Accounting for Special Survey and Drydocking Costs
 
 
 
 
Deferral and amortization period of survey and drydocking costs
2 years 6 months 
 
 
 
Impairment of Long-lived Assets:
 
 
 
 
Impairment loss of vessels held and used
$ 39,000,000 
$ 75,800,000 
$ 0 
 
Vessels |
Minimum
 
 
 
 
Impairment of Long-lived Assets:
 
 
 
 
Term of multi-year fixed rate period charters for vessels in current fleet and contracted vessels
1 year 
 
 
 
Vessels |
Maximum
 
 
 
 
Pension and Retirement Benefit Obligations Crew:
 
 
 
 
On board period of crew under the short-term contracts
7 months 
 
 
 
Impairment of Long-lived Assets:
 
 
 
 
Term of multi-year fixed rate period charters for vessels in current fleet and contracted vessels
18 years 
 
 
 
Significant Accounting Policies (Details 3) (Manager's employees, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Manager's employees
 
Stockholders' equity
 
Vesting period
0 years 
Contractual obligation for any stock to be granted
$ 0 
Significant Accounting Policies (Details 4) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Recent Accounting Pronouncements
 
 
 
Deferred charges, net
$ 39,733 
$ 55,275 
$ 67,949 
Long-term debt
2,759,444 
 
 
Other finance expenses
18,696 
19,757 
20,120 
Interest expense
70,397 
79,980 
91,185 
Amortization of deferred finance costs
3,845 
4,387 
5,482 
Forecast adjustment |
Accounting Standards Update 2015-03 Simplifying the Presentation of Debt Issuance Costs
 
 
 
Recent Accounting Pronouncements
 
 
 
Deferred charges, net
(35,000)
 
 
Long-term debt
(35,000)
 
 
Other finance expenses
(14,000)
 
 
Interest expense
$ 14,000 
 
 
Restricted Cash (Details) (Retention account, USD $)
In Millions, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Retention account
 
 
Restricted cash
 
 
Restricted cash
$ 2.8 
$ 2.8 
Fixed Assets, Net (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
item
Dec. 31, 2013
item
Nov. 5, 2014
Vessels
item
Dec. 31, 2015
Vessels
item
Dec. 31, 2014
Vessels
item
Dec. 31, 2013
Vessels
item
Dec. 23, 2015
Federal
Dec. 31, 2015
Federal
Dec. 31, 2015
Amalia C
item
Dec. 31, 2015
MSC Zebra
item
Dec. 31, 2015
Dimitris C
item
Dec. 31, 2015
Marathonas
item
Dec. 31, 2015
Commodore
item
Dec. 31, 2015
Duka
item
Dec. 31, 2015
Mytilini
item
Dec. 31, 2015
Messologi
item
Dec. 31, 2015
Performance
item
Dec. 31, 2015
Priority
item
Nov. 5, 2014
Performance
Nov. 5, 2014
Performance
item
Dec. 31, 2015
Federal
Fixed assets, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross sale consideration
 
$ 57,700,000 
$ 60,500,000 
 
 
 
 
$ 7,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount received in advance
 
 
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,364,000 
Impairment loss
(2,100,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,100,000)
Fair value less cost to sell
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,264,000 
Number of vessels sold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of containerships acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36,500,000 
 
 
TEU
 
 
 
 
 
 
 
 
 
2,452 
2,602 
3,430 
4,814 
4,651 
4,651 
4,814 
4,814 
6,402 
6,402 
 
6,402 
 
Impairment loss of vessels held and used
 
 
 
 
39,000,000 
75,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of vessels on which impairment loss is recorded
 
 
 
 
12 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residual value of the fleet
 
 
 
 
$ 386,400,000 
$ 386,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average life of scrap considered to calculate residual value of vessel, one
 
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average life of scrap considered to calculate residual value of vessel, two
 
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Scrap value per ton (in dollars per ton)
 
 
 
 
300 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred Charges, Net (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Changes in deferred charges, net
 
 
Balance at the beginning of the period
$ 55,275 
$ 67,949 
Additions
2,341 
7,069 
Written-off amounts
 
(341)
Amortization
(17,883)
(19,402)
Balance at the end of the period
39,733 
55,275 
Drydocking and Special Survey Costs
 
 
Changes in deferred charges, net
 
 
Balance at the beginning of the period
6,255 
4,041 
Additions
2,341 
6,887 
Written-off amounts
 
(286)
Amortization
(3,845)
(4,387)
Balance at the end of the period
4,751 
6,255 
Period of amortization for deferred costs
2 years 6 months 
 
Finance and other Costs
 
 
Changes in deferred charges, net
 
 
Balance at the beginning of the period
49,020 
63,908 
Additions
 
182 
Written-off amounts
 
(55)
Amortization
(14,038)
(15,015)
Balance at the end of the period
$ 34,982 
$ 49,020 
Other Current Assets (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Other current assets
 
 
Fair value of swaps
$ 138 
 
Claims receivable
954 
7,856 
Advances to suppliers and other assets
3,365 
3,784 
Total
4,457 
11,640 
Hanjin Italy
 
 
Other current assets
 
 
Claims receivable
$ 700 
$ 7,000 
Investments in Affiliates (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended 12 Months Ended
Aug. 31, 2015
Dec. 31, 2015
Suez Canal
 
 
Schedule of Equity Method Investments [Line Items]
 
 
TEU
 
5,610 
Genoa
 
 
Schedule of Equity Method Investments [Line Items]
 
 
TEU
 
5,544 
NYK Lodestar
 
 
Schedule of Equity Method Investments [Line Items]
 
 
TEU
 
6,422 
NYK Leo
 
 
Schedule of Equity Method Investments [Line Items]
 
 
TEU
 
6,422 
Gemini
 
 
Schedule of Equity Method Investments [Line Items]
 
 
Ownership (as a percent)
49.00% 
49.00% 
Gemini
 
 
Schedule of Equity Method Investments [Line Items]
 
 
Capital lease obligations assumed
$ 35.4 
 
Borrowings under a secured loan facility
9.0 
 
Proceeds from equity contributions
27.0 
 
Net assets
 
$ 23.0 
Gemini |
Entities that leases Suez Canal and Genoa and owns NYK Lodestar
 
 
Schedule of Equity Method Investments [Line Items]
 
 
Acquired interest
100.00% 
 
Virage |
Gemini
 
 
Schedule of Equity Method Investments [Line Items]
 
 
Ownership (as a percent)
51.00% 
 
Investments in Affiliates (Details 2) (Gemini, USD $)
In Thousands, unless otherwise specified
1 Months Ended 12 Months Ended
Aug. 31, 2015
Dec. 31, 2015
Gemini
 
 
Summary of financial information
 
 
Ownership (as a percent)
49.00% 
49.00% 
Current assets
 
$ 12,578 
Non-current assets
 
54,771 
Current liabilities
 
5,552 
Non-current liabilities
 
38,758 
Net operating revenues
 
1,775 
Net loss
 
$ 3,961 
Other Non-current Assets (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Jul. 16, 2014
ZIM
item
Dec. 31, 2015
ZIM
item
Dec. 31, 2014
ZIM
Jul. 16, 2014
ZIM
Dec. 31, 2013
ZIM
Dec. 31, 2015
ZIM
Operating revenues
Dec. 31, 2014
ZIM
Operating revenues
Jul. 16, 2014
ZIM
Unsecured interest bearing notes maturing in 2023
Jul. 16, 2014
ZIM
Unsecured 3% Series 1 ZIM Notes due 2023
Dec. 31, 2015
ZIM
Unsecured 3% Series 1 ZIM Notes due 2023
Dec. 31, 2014
ZIM
Unsecured 3% Series 1 ZIM Notes due 2023
Jul. 16, 2014
ZIM
Unsecured 3% Series 1 ZIM Notes due 2023
Jul. 16, 2014
ZIM
Unsecured 5% Series 2 ZIM Notes due 2023
Dec. 31, 2015
ZIM
Unsecured 5% Series 2 ZIM Notes due 2023
Dec. 31, 2014
ZIM
Unsecured 5% Series 2 ZIM Notes due 2023
Jul. 16, 2014
ZIM
Unsecured 5% Series 2 ZIM Notes due 2023
Other Non-current Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of swaps
 
$ 664,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Receivable
 
 
 
 
 
 
25,800,000 
 
 
 
 
6,587,000 
6,274,000 
 
 
32,507,000 
30,923,000 
 
Equity participation ZIM
 
 
 
28,693,000 
28,693,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
4,401,000 
1,952,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
72,188,000 
68,506,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of vessels of which the charter rates payable was reduced
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of unsecured notes received
 
 
 
 
 
 
 
 
 
49,900,000 
8,800,000 
 
 
 
41,100,000 
 
 
 
Interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
 
 
 
5.00% 
Interest payable quarterly in cash (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
Interest payable in kind (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.00% 
Percent of outstanding shares after the restructuring, in exchange for charter rate reductions and cancellation
 
 
 
 
7.40% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of notes
 
 
 
 
 
 
 
 
 
 
 
6,600,000 
6,300,000 
6,100,000 
 
32,500,000 
30,900,000 
30,100,000 
Equity investment in ZIM
 
 
 
 
 
28,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income from fair value unwinding
1,100,000 
600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncash interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
800,000 
400,000 
 
Deferred revenue recorded
 
 
39,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognized unearned revenue
 
 
 
 
 
 
 
6,000,000 
2,700,000 
 
 
 
 
 
 
 
 
 
Current portion of unearned revenue
9,853,000 
13,719,000 
 
6,000,000 
6,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current portion of unearned revenue
$ 24,426,000 
$ 30,412,000 
 
$ 24,400,000 
$ 30,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Liabilities (Details) (USD $)
Dec. 31, 2015
Dec. 31, 2014
Accrued Liabilities
 
 
Accrued payroll
$ 1,162,000 
$ 1,175,000 
Accrued interest
8,059,000 
9,457,000 
Accrued expenses
4,793,000 
14,073,000 
Total
14,014,000 
24,705,000 
Accrued realized losses on cash flow interest rate swaps
1,200,000 
10,400,000 
Other accruals
$ 3,600,000 
$ 3,700,000 
Other Current and Long-term Liabilities (Details) (USD $)
Dec. 31, 2015
Dec. 31, 2014
Other current liabilities
 
 
Fair value of swaps
$ 4,538,000 
$ 51,022,000 
Other current liabilities
790,000 
1,480,000 
Total
5,328,000 
52,502,000 
Deferred fees accrued pursuant to the Bank Agreement included in other current liabilities
 
700,000 
Other long-term liabilities
 
 
Fair value of swaps
 
2,398,000 
Other long-term liabilities
13,219,000 
11,310,000 
Total
$ 13,219,000 
$ 13,708,000 
Lease Arrangements (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Future minimum revenue expected to be earned
 
2016
$ 524,682 
2017
490,984 
2018
445,471 
2019
410,944 
2020
374,903 
2021 and thereafter
913,111 
Total future revenue
$ 3,160,095 
Term of periodic drydocking and special survey maintenance per vessel
2 years 6 months 
Term of periodic drydocking and special survey maintenance per vessel for vessels less than 15 years old
5 years 
Minimum
 
Future minimum revenue expected to be earned
 
Period of drydocking and special survey maintenance carried out on vessels
10 days 
Maximum
 
Future minimum revenue expected to be earned
 
Age of vessels for which drydocking and special survey maintenance is carried out every 5 years
15 years 
Period of drydocking and special survey maintenance carried out on vessels
15 days 
Long-Term Debt (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Long-Term Debt
 
 
Long-term debt
$ 2,759,444 
 
Long-term debt, including Comprehensive Financing Plan exit fee accrual and fair value of hedged debt
2,775,378 
2,951,120 
Current portion
269,979 
178,116 
Long-term portion
2,505,399 
2,773,004 
Comprehensive Financing Plan exit fee accrued
15,501 
11,862 
Fair value hedged debt
433 
1,006 
Hyundai Samho Vendor Financing
 
 
Current portion
 
46,530 
Long-term portion
 
17,837 
Payment due by period ended
 
 
2016
269,546 
 
2017
313,462 
 
2018
2,115,416 
 
2019
20,340 
 
2020
20,340 
 
2021
20,340 
 
Total
2,759,444 
 
Fixed principal repayments
 
 
Long-Term Debt
 
 
Long-term debt
629,542 
 
Payment due by period ended
 
 
2016
183,173 
 
2017
180,430 
 
2018
204,919 
 
2019
20,340 
 
2020
20,340 
 
2021
20,340 
 
Total
629,542 
 
Variable principal payments
 
 
Long-Term Debt
 
 
Long-term debt
296,453 
 
Payment due by period ended
 
 
2016
86,373 
 
2017
133,032 
 
2018
77,048 
 
Total
296,453 
 
Final Payment due on December 31, 2018*[and other payments thereafter]
 
 
Long-Term Debt
 
 
Long-term debt
1,833,449 
 
Payment due by period ended
 
 
2018
1,833,449 
 
Total
1,833,449 
 
Hyundai Samho vendor financing
 
 
Hyundai Samho Vendor Financing
 
 
Balance at the end of the period
 
64,367 
Current portion
 
46,530 
Long-term portion
 
17,837 
RBS |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
667,134 
678,954 
Current portion
24,327 
12,657 
Long-term portion
642,807 
666,297 
Payment due by period ended
 
 
Total
667,134 
678,954 
RBS |
January 2011 Credit Facility
 
 
Long-Term Debt
 
 
Long-term debt
69,948 
85,017 
Current portion
30,990 
15,326 
Long-term portion
38,958 
69,691 
Payment due by period ended
 
 
Total
69,948 
85,017 
HSH Nordbank |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
21,208 
28,843 
Current portion
9,006 
7,633 
Long-term portion
12,202 
21,210 
Payment due by period ended
 
 
Total
21,208 
28,843 
The Export-Import Bank of Korea (KEXIM) |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
8,204 
18,573 
Current portion
8,204 
10,369 
Long-term portion
 
8,204 
Payment due by period ended
 
 
Total
8,204 
18,573 
The Export-Import Bank of Korea & ABN Amro |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
45,609 
56,859 
Current portion
11,250 
11,250 
Long-term portion
34,359 
45,609 
Payment due by period ended
 
 
Total
45,609 
56,859 
Deutsche Bank |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
169,921 
174,709 
Current portion
5,338 
4,786 
Long-term portion
164,583 
169,923 
Payment due by period ended
 
 
Total
169,921 
174,709 
Canyon Capital Finance |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
136,719 
144,467 
Current portion
11,425 
8,228 
Long-term portion
125,294 
136,239 
Payment due by period ended
 
 
Total
136,719 
144,467 
Aegean Baltic Bank HSH Nordbank Piraeus Bank |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
627,818 
628,513 
Current portion
50 
 
Long-term portion
627,768 
628,513 
Payment due by period ended
 
 
Total
627,818 
628,513 
Aegean Baltic Bank HSH Nordbank Piraeus Bank |
January 2011 Credit Facility
 
 
Long-Term Debt
 
 
Long-term debt
69,562 
94,812 
Current portion
37,901 
22,476 
Long-term portion
31,661 
72,336 
Payment due by period ended
 
 
Total
69,562 
94,812 
Credit Suisse |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
199,373 
208,585 
Current portion
11,978 
9,328 
Long-term portion
187,395 
199,257 
Payment due by period ended
 
 
Total
199,373 
208,585 
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
228,999 
239,896 
Current portion
13,509 
11,422 
Long-term portion
215,490 
228,474 
Payment due by period ended
 
 
Total
228,999 
239,896 
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia |
January 2011 Credit Facility
 
 
Long-Term Debt
 
 
Long-term debt
20,582 
26,444 
Current portion
14,244 
6,371 
Long-term portion
6,338 
20,073 
Payment due by period ended
 
 
Total
20,582 
26,444 
Commerzbank-Credit Suisse-Golden Tree |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
258,089 
274,984 
Current portion
20,139 
17,327 
Long-term portion
237,950 
257,657 
Payment due by period ended
 
 
Total
258,089 
274,984 
Sinosure CEXIM-Citi-ABN Amro Credit Facility |
Previously Existing Credit Facilities
 
 
Long-Term Debt
 
 
Long-term debt
122,040 
142,380 
Current portion
20,340 
20,340 
Long-term portion
101,700 
122,040 
Payment due by period ended
 
 
Total
122,040 
142,380 
Club Facility |
January 2011 Credit Facility
 
 
Long-Term Debt
 
 
Long-term debt
50,404 
65,457 
Current portion
32,665 
14,773 
Long-term portion
17,739 
50,684 
Payment due by period ended
 
 
Total
50,404 
65,457 
Citibank and Eurobank |
January 2011 Credit Facility
 
 
Long-Term Debt
 
 
Long-term debt
63,834 
69,759 
Current portion
18,180 
5,830 
Long-term portion
45,654 
63,929 
Payment due by period ended
 
 
Total
$ 63,834 
$ 69,759 
Long-Term Debt (Details 2) (USD $)
In Millions, unless otherwise specified
0 Months Ended 1 Months Ended 7 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Jan. 7, 2015
Dec. 23, 2014
Jan. 31, 2011
Bank agreement
Aug. 31, 2010
Bank agreement
Mar. 4, 2011
Bank agreement
Dec. 31, 2014
Bank agreement
Aug. 31, 2010
Previously Existing Credit Facilities
Dec. 31, 2015
January 2011 Credit Facility
Dec. 31, 2015
January 2011 Credit Facility
LIBOR
Dec. 31, 2015
The Export-Import Bank of Korea & ABN Amro
Previously Existing Credit Facilities
Jan. 31, 2011
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Dec. 31, 2010
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Aug. 31, 2010
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Dec. 31, 2015
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Jan. 24, 2011
Previously Existing Credit Facilities Except for KEXIM and KEXIM-ABN Amro
Long-Term Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase in interest rate margin (as a percent)
 
 
 
 
 
 
 
 
 
0.50% 
 
 
 
 
 
New debt financing subject to bank agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 425 
Variable rate basis
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
 
LIBOR 
 
Interest rate added to variable rate basis (as a percent)
 
 
 
 
 
 
 
1.85% 
1.85% 
 
 
 
 
2.85% 
 
Amendment fee as a percentage of outstanding commitments
 
 
 
 
 
 
0.50% 
 
 
 
 
 
 
 
 
Amendment fee accrued under other long-term liabilities
 
 
 
 
 
 
12.50 
 
 
 
 
 
4.38 
 
 
Percentage of amendment fee paid and deferred
 
 
40.00% 
20.00% 
 
 
 
 
 
 
 
 
 
 
 
Remaining percentage of amendment fee, which is due for payment on December 31, 2014
 
 
 
 
 
40.00% 
 
 
 
 
 
 
 
 
 
Commitment fee on undrawn committed debt designated for specific newbuildings (as a percent)
 
 
 
 
0.25% 
 
 
0.75% 
 
 
 
 
 
 
 
Amendment fee paid
$ 0.70 
$ 4.30 
 
 
 
 
 
 
 
 
$ 3.16 
$ 1.22 
 
 
 
Long-Term Debt (Details 3) (USD $)
12 Months Ended
Dec. 31, 2015
Quarterly principal payments in fixed amounts
 
Total
$ 2,759,444,000 
Period of early payment of fixed principal installments of which option is available
3 months 
Accumulated unrestricted cash and cash equivalents used in determining amount of additional variable payment
50,000,000 
Percentage of consolidated debt used in determining amount of additional variable payment
2.00% 
Percentage of relevant budget up to which operating expenses and allocated general and administrative expenses per vessel cannot exceed
20.00% 
Percentage of the first specified value of net equity proceeds equal to which additional prepayments are required
50.00% 
Net equity proceeds used for determining additional prepayments
300,000,000 
Percentage of additional net equity proceeds equal to which additional prepayments are required to be made
25.00% 
Minimum period considered for determining use of retained equity proceeds for prepayment
12 months 
Voting interest owned in outstanding capital stock by Dr. Coustas and his family members, qualified for change of control (as a Percent)
33.00% 
Voting interest owned by any person or group in outstanding capital stock, qualified for change of control (as a percent)
20.00% 
Percentage of actual free cash flow equal to variable payment and fixed principal payment until the earlier of May 15, 2015 and the maximum consolidated net leverage ratio
92.50% 
Maximum consolidated net leverage ratio
Percentage of actual free cash flow equal to variable payment and fixed principal payment after May 15, 2015, until maturity
89.50% 
Bank agreement |
January 2011 Credit Facility
 
Quarterly principal payments in fixed amounts
 
2016
143,379,000 
2017
148,840,000 
2018
227,439,000 
Total
519,658,000 
Bank agreement |
January 2011 Credit Facility |
February 15
 
Quarterly principal payments in fixed amounts
 
2016
30,973,000 
2017
44,939,000 
2018
34,152,000 
Bank agreement |
January 2011 Credit Facility |
May 15
 
Quarterly principal payments in fixed amounts
 
2016
36,278,000 
2017
36,691,000 
2018
37,585,000 
Bank agreement |
January 2011 Credit Facility |
August 15
 
Quarterly principal payments in fixed amounts
 
2016
32,276,000 
2017
35,338,000 
2018
44,399,000 
Bank agreement |
January 2011 Credit Facility |
November 15
 
Quarterly principal payments in fixed amounts
 
2016
43,852,000 
2017
31,872,000 
2018
45,334,000 
Bank agreement |
January 2011 Credit Facility |
December 31
 
Quarterly principal payments in fixed amounts
 
2018
$ 65,969,000 
Long-Term Debt (Details 4) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2015
item
Dec. 31, 2014
KEXIM
 
 
Long-Term Debt
 
 
Collateral coverage covenant (as a percent)
130.00% 
 
Bank agreement
 
 
Long-Term Debt
 
 
Number of vessels collateralizing new credit facilities
 
Period for which a ratio of consolidated indebtedness to consolidated EBITDA is required to be maintained under financial covenants
 
12 months 
Period for which a ratio of consolidated EBITDA to net interest expense is required to be maintained under financial covenants
12 months 
 
Period for which consolidated net leverage ratio is required to be maintained under financial covenants to pay cash dividends or repurchase shares
1 year 
 
Period for which a ratio of aggregate market value of vessels to outstanding indebtedness is required to be maintained under financial covenants to pay cash dividends or repurchase shares
1 year 
 
Bank agreement |
Minimum
 
 
Long-Term Debt
 
 
Ratio of market value of vessels, on a charter-inclusive basis, plus net realizable value of additional collateral to consolidated total debt through 2011 (as a percent)
90.00% 
 
Ratio of market value of vessels, on a charter-inclusive basis, plus net realizable value of additional collateral to consolidated total debt from September 2017 through September 2018 (as a percent)
130.00% 
 
Free consolidated unrestricted cash and cash equivalents after 2012
$ 30.0 
 
Ratio of market value of vessels collateralizing the credit facilities, plus net realizable value of additional collateral, to aggregate debt outstanding (as a percent)
100.00% 
 
Ratio of consolidated EBITDA to net interest expense
1.50 
 
Ratio of consolidated EBITDA to net interest expense after gradual increase
2.80 
 
Consolidated market value of adjusted net worth
$ 400 
 
Required duration of vessel's charter at the time of valuation
12 months 
 
Bank agreement |
Maximum
 
 
Long-Term Debt
 
 
Percentage of non-recurring items excluded from calculation of EBITDA, based on EBITDA calculated in the manner as prescribed
5.00% 
 
Ratio of consolidated total debt less unrestricted cash and cash equivalents to consolidated EBITDA
12 
 
Ratio of consolidated total debt less unrestricted cash and cash equivalents to consolidated EBITDA gradual decrease
4.75 
 
Consolidated net leverage ratio to pay cash dividends or repurchase shares
 
Ratio of aggregate market value of vessels to outstanding indebtedness required to pay cash dividends or repurchase shares (as a percent)
125.00% 
 
Long-Term Debt (Details 5) (USD $)
0 Months Ended 1 Months Ended 6 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended
Nov. 5, 2014
item
Aug. 31, 2010
Jan. 31, 2011
Dec. 31, 2015
Dec. 31, 2014
item
Dec. 31, 2013
item
Jan. 31, 2011
January 2011 Credit Facility
Dec. 31, 2015
January 2011 Credit Facility
Dec. 31, 2015
Hyundai Samho vendor financing
item
Oct. 22, 2014
Aegean Baltic Bank HSH Nordbank Piraeus Bank
item
Dec. 31, 2014
Aegean Baltic Bank HSH Nordbank Piraeus Bank
Dec. 31, 2015
Aegean Baltic Bank HSH Nordbank Piraeus Bank
January 2011 Credit Facility
Jan. 24, 2011
Aegean Baltic Bank HSH Nordbank Piraeus Bank
January 2011 Credit Facility
Dec. 31, 2015
RBS
January 2011 Credit Facility
Jan. 24, 2011
RBS
January 2011 Credit Facility
Dec. 31, 2008
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia
Jan. 24, 2011
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia
January 2011 Credit Facility
Dec. 31, 2015
Club Facility
January 2011 Credit Facility
Jan. 24, 2011
Club Facility
January 2011 Credit Facility
Dec. 31, 2015
Citibank and Eurobank
January 2011 Credit Facility
Jan. 24, 2011
Citibank and Eurobank
January 2011 Credit Facility
Dec. 31, 2015
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Feb. 21, 2011
Sinosure CEXIM-Citi-ABN Amro Credit Facility
item
Feb. 21, 2011
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Maximum
Dec. 31, 2015
Sinosure CEXIM-Citi-ABN Amro Credit Facility
January 2011 Credit Facility
Long-Term Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity under credit facility
 
 
 
 
 
 
 
 
$ 190,000,000 
 
 
 
$ 123,800,000 
 
$ 100,000,000 
$ 253,200,000 
$ 37,100,000 
 
$ 83,900,000 
 
$ 80,000,000 
 
$ 203,400,000 
 
 
Amount outstanding as of the balance sheet date
 
 
 
 
 
 
 
274,300,000 
 
 
69,600,000 
23,750,000 
69,900,000 
 
 
 
50,400,000 
 
63,800,000 
 
122,000,000 
 
 
122,000,000 
Variable rate basis
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
 
 
 
Interest rate margin (as a percent)
 
 
 
 
 
 
 
1.85% 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.85% 
 
 
 
Interest rate margin if aggregate outstanding indebtedness exceeds $276 million (as a percent)
 
 
 
 
 
 
 
2.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum aggregate outstanding indebtedness under credit facility for interest rate margin to be 2.50%
 
 
 
 
 
 
 
276,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate margin if aggregate outstanding indebtedness exceeds $326 million (as a percent)
 
 
 
 
 
 
 
3.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum aggregate outstanding indebtedness under credit facility for interest rate margin to be 3.00%
 
 
 
 
 
 
 
326,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate margin if aggregate outstanding indebtedness exceeds $376 million (as a percent)
 
 
 
 
 
 
 
3.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum aggregate outstanding indebtedness under credit facility for interest rate margin to be 3.50%
 
 
 
 
 
 
 
376,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arrangement fee (as a percent)
 
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arrangement fee paid
 
3,300,000 
8,500,000 
 
 
 
5,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment fee payable (as a percent)
 
 
 
 
 
 
 
0.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Vessels Sold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross sale consideration
 
 
 
1,050,000 
50,602,000 
52,926,000 
 
 
 
 
55,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commission paid on sale of mortgaged vessels
 
 
 
 
 
 
 
 
 
 
18,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
payments made to acquire vessels
 
 
 
37,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number Of Vessels Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lenders fees paid for utilizing sale proceeds
 
 
 
90,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of tranches which comprise the credit facility
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of each tranche, which comprises the credit facility, option one
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67,800,000 
 
Amount of each tranche equal to a percentage of contract price for newbuilding vessels securing such tranche
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60.00% 
 
 
Period of repayment of principal in semi-annual installments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
 
 
Remaining borrowing availability
 
 
 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0 
 
 
 
Ratio of market value of vessels collateralizing the credit facilities, to aggregate debt outstanding (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
125.00% 
 
 
 
Consolidated net leverage ratio to pay cash dividends or repurchase shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of newbuilding containerships financed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed interest rate (as a percent)
 
 
 
 
 
 
 
 
8.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of consecutive semi-annual installments in case of three newbuilding vessels
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of newbuilding vessels for which principal is to be repaid in six consecutive semi-annual installments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period of commencement of repayment of principal, in case of three newbuilding vessels
 
 
 
 
 
 
 
 
1 year 6 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of consecutive semi-annual installments in case of five newbuilding vessels
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period of commencement of repayment of principal, in case of five newbuilding vessels
 
 
 
 
 
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of newbuilding vessels for which principal is to be repaid in seven consecutive semi-annual installments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt (Details 6) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2015
January 2011 Credit Facility
Dec. 31, 2015
RBS
January 2011 Credit Facility
Jan. 24, 2011
RBS
January 2011 Credit Facility
Dec. 31, 2015
RBS
Previously Existing Credit Facilities
Dec. 31, 2015
Aegean Baltic Bank HSH Nordbank Piraeus Bank
January 2011 Credit Facility
Jan. 24, 2011
Aegean Baltic Bank HSH Nordbank Piraeus Bank
January 2011 Credit Facility
Dec. 31, 2015
Aegean Baltic Bank HSH Nordbank Piraeus Bank
Previously Existing Credit Facilities
Dec. 31, 2015
Credit Agricole
Previously Existing Credit Facilities
Dec. 31, 2015
Deutsche Bank
Previously Existing Credit Facilities
Dec. 31, 2015
Credit Suisse
Previously Existing Credit Facilities
Dec. 31, 2008
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia
item
Jan. 24, 2011
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia
January 2011 Credit Facility
Dec. 31, 2015
ABN Amro-Bank of America Merrill Lynch-Burlington Loan Management-National Bank of Greece-Sequoia
Previously Existing Credit Facilities
Dec. 31, 2015
Commerzbank-Credit Suisse-Golden Tree
Previously Existing Credit Facilities
Dec. 31, 2015
HSH Nordbank
Previously Existing Credit Facilities
Dec. 31, 2015
The Export-Import Bank of Korea (KEXIM)
Previously Existing Credit Facilities
Dec. 31, 2015
The Export-Import Bank of Korea & ABN Amro
Previously Existing Credit Facilities
Dec. 31, 2015
Club Facility
January 2011 Credit Facility
Jan. 24, 2011
Club Facility
January 2011 Credit Facility
Dec. 31, 2015
Citibank and Eurobank
January 2011 Credit Facility
Jan. 24, 2011
Citibank and Eurobank
January 2011 Credit Facility
Dec. 31, 2015
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Feb. 21, 2011
Sinosure CEXIM-Citi-ABN Amro Credit Facility
Dec. 31, 2015
Sinosure CEXIM-Citi-ABN Amro Credit Facility
January 2011 Credit Facility
Dec. 31, 2015
ABN Amro Club Facility
January 2011 Credit Facility
Dec. 31, 2015
Investor Bank
Credit Facilities Summary Table
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate exit fee payable on the common maturity date
 
 
 
$ 25,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding Principal Amount
 
 
 
274,300,000 
69,900,000 
 
667,100,000 
69,600,000 
23,750,000 
627,800,000 
136,700,000 
169,900,000 
199,400,000 
 
 
229,000,000 
258,100,000 
21,200,000 
8,200,000 
45,600,000 
50,400,000 
 
63,800,000 
 
122,000,000 
 
122,000,000 
20,600,000 
 
Remaining borrowing availability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity under credit facility
 
 
 
 
 
100,000,000 
 
 
123,800,000 
 
 
 
 
253,200,000 
37,100,000 
 
 
 
 
 
 
83,900,000 
 
80,000,000 
 
203,400,000 
 
 
 
Number of subsidiaries which issued put option in respect of preference shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
117,016,000 
(3,920,000)
37,523,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average interest rate on long-term borrowings (as a percent)
2.40% 
2.50% 
2.70% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest paid
71,800,000 
83,000,000 
92,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest cost incurred
70,400,000 
80,000,000 
91,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense recognized
$ 70,397,000 
$ 79,980,000 
$ 91,185,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related Party Transactions (Details)
0 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2015
USD ($)
Dec. 31, 2014
USD ($)
Jan. 1, 2015
Manager
USD ($)
Dec. 16, 2013
Manager
USD ($)
Jan. 2, 2012
Manager
Dec. 16, 2011
Manager
Feb. 8, 2010
Manager
USD ($)
Dec. 31, 2015
Manager
USD ($)
Dec. 31, 2014
Manager
USD ($)
Dec. 31, 2013
Manager
USD ($)
Dec. 31, 2015
Manager
EUR (€)
Apr. 30, 2015
Manager
EUR (€)
Dec. 31, 2014
Manager
EUR (€)
Jan. 1, 2013
Manager
EUR (€)
Dec. 31, 2015
The Swedish Club
USD ($)
Dec. 31, 2014
The Swedish Club
USD ($)
Dec. 31, 2013
The Swedish Club
USD ($)
Related Party Transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted management fees per day
 
 
$ 850 
$ 800 
 
 
$ 675 
 
 
 
 
 
 
 
 
 
 
Adjusted management fees per vessel per day for vessels on bareboat charter
 
 
425 
400 
 
 
340 
 
 
 
 
 
 
 
 
 
 
Adjusted management fees per vessel per day for vessels on time charter
 
 
850 
800 
 
 
675 
 
 
 
 
 
 
 
 
 
 
Flat management fees per newbuilding vessel for the supervision of newbuilding contracts
 
 
 
 
 
 
725,000 
 
 
 
 
 
 
 
 
 
 
Management fee on gross freight, charter hire, ballast bonus and demurrage before adjustment (as a percent)
 
 
1.25% 
1.00% 
 
0.75% 
 
 
 
 
 
 
 
 
 
 
 
Adjusted management fee on gross freight, charter hire, ballast bonus and demurrage (as a percent)
 
 
0.50% 
1.25% 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Fee for providing services of executive officers
 
 
 
 
 
 
 
 
 
 
1,000,000 
500,000 
1,500,000 
1,400,000 
 
 
 
Management fee based on the contract price of any vessel bought or sold (excluding newbuildings) (as a percent)
 
 
 
 
0.50% 
 
 
 
 
 
 
 
 
 
 
 
 
Management fees incurred shown under General and administrative expenses
 
 
 
 
 
 
 
17,400,000 
16,300,000 
15,000,000 
 
 
 
 
 
 
 
Management commissions incurred shown under Voyage expenses
 
 
 
 
 
 
 
6,900,000 
7,000,000 
5,800,000 
 
 
 
 
 
 
 
Monthly advances on account of the vessels' operating expenses
19,007,000 
10,597,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premiums paid
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 6,300,000 
$ 8,500,000 
$ 9,600,000 
Financial Instruments (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Effect of interest rate swap hedges on results
 
 
 
Unrealized gains
$ 16,285,000 
$ 24,915,000 
$ 22,121,000 
Unrealized and realized gains/(losses) on interest rate swaps
(39,857,000)
(98,713,000)
(126,150,000)
Interest rate swap contracts
 
 
 
Financial Instruments
 
 
 
Unrealized gains/(losses) related to fair value changes
48,900,000 
114,200,000 
139,400,000 
Interest rate swap contracts |
Cash Flow Hedges
 
 
 
Financial Instruments
 
 
 
Fair Value
(4,538,000)
(53,420,000)
 
Unrealized losses reclassified from accumulated OCI into earnings
32,600,000 
88,900,000 
116,600,000 
Effect of interest rate swap hedges on results
 
 
 
Total realized losses
(52,700,000)
(120,600,000)
(145,600,000)
Amortization of deferred realized losses
(4,000,000)
(4,000,000)
(4,000,000)
Unrealized gains
16,200,000 
25,200,000 
22,800,000 
Unrealized and realized gains/(losses) on interest rate swaps
(40,500,000)
(99,400,000)
(126,800,000)
RBS, CITI and Eurobank |
Interest rate swap contracts |
Cash Flow Hedges
 
 
 
Financial Instruments
 
 
 
Fair Value
(1,012,000)
(52,539,000)
 
LIBOR |
RBS |
Interest rate swap contracts |
5.07% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.07% 
 
 
Fair Value
 
(2,011,000)
 
LIBOR |
RBS |
Interest rate swap contracts |
5.12% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
100,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.12% 
 
 
Fair Value
 
(4,246,000)
 
LIBOR |
RBS |
Interest rate swap contracts |
5.07% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
100,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.07% 
 
 
Fair Value
 
(4,248,000)
 
LIBOR |
CITI |
Interest rate swap contracts |
5.124% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.124% 
 
 
Fair Value
 
(2,895,000)
 
LIBOR |
CITI |
Interest rate swap contracts |
5.1775% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.1775% 
 
 
Fair Value
 
(3,008,000)
 
LIBOR |
CITI |
Interest rate swap contracts |
5.1% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
250,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
5.10% 
 
 
Fair Value
 
(10,167,000)
 
LIBOR |
CITI |
Interest rate swap contracts |
4.98% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
100,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
4.98% 
 
 
Fair Value
 
(4,249,000)
 
LIBOR |
CITI |
Interest rate swap contracts |
4.695% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
4.695% 
 
 
Fair Value
(1,012,000)
(9,524,000)
 
LIBOR |
Eurobank |
Interest rate swap contracts |
4.8125% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
4.8125% 
 
 
Fair Value
 
(8,428,000)
 
LIBOR |
Eurobank |
Interest rate swap contracts |
4.755% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
200,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
4.755% 
 
 
Fair Value
 
(3,763,000)
 
LIBOR |
ABN Amro |
Interest rate swap contracts |
1.4975% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
325,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
1.4975% 
 
 
Fair Value
(2,113,000)
(617,000)
 
LIBOR |
ABN Amro |
Interest rate swap contracts |
1.4125% p.a.
 
 
 
Financial Instruments
 
 
 
Notional Amount on Effective Date
250,000,000 
 
 
Fixed Rate (Danaos pays) (as a percent)
1.4125% 
 
 
Fair Value
$ (1,413,000)
$ (264,000)
 
Financial Instruments (Details 2) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Effect of interest rate swap hedges on results
 
 
 
Unrealized and realized gains/(losses) on interest rate swaps
$ (39,857,000)
$ (98,713,000)
$ (126,150,000)
Unrealized gains/(losses)
16,285,000 
24,915,000 
22,121,000 
Interest rate swap contracts
 
 
 
Effect of interest rate swap hedges on results
 
 
 
Unrealized losses on swap asset
48,900,000 
114,200,000 
139,400,000 
Fair Value Hedges |
Interest rate swap contracts
 
 
 
Fair Value Interest Rate Swap Hedges
 
 
 
Fair value change of interest rate swaps
(500,000)
(900,000)
(1,300,000)
Effect of interest rate swap hedges on results
 
 
 
Unrealized losses on swap asset
(500,000)
(900,000)
(1,300,000)
Reclassification of fair value of hedged debt to Statement of Income
600,000 
600,000 
600,000 
Realized gains
500,000 
1,000,000 
1,400,000 
Unrealized and realized gains/(losses) on interest rate swaps
600,000 
700,000 
700,000 
Related liability of fair value hedged debt
400,000 
1,000,000 
 
Fair Value Hedges |
Interest rate swap contracts |
Other current assets
 
 
 
Effect of interest rate swap hedges on results
 
 
 
Related asset of fair value hedged debt
100,000 
 
 
Fair Value Hedges |
Interest rate swap contracts |
Other noncurrent assets
 
 
 
Effect of interest rate swap hedges on results
 
 
 
Related asset of fair value hedged debt
 
700,000 
 
Fair Value Hedges |
RBS |
Interest rate swap contracts
 
 
 
Fair Value Interest Rate Swap Hedges
 
 
 
Fair Value
138,000 
664,000 
 
LIBOR |
Fair Value Hedges |
RBS |
Interest rate swap contracts |
Effective Date 12/15/2004
 
 
 
Fair Value Interest Rate Swap Hedges
 
 
 
Notional Amount on Effective Date
60,528,000 
 
 
Fixed Rate (Danaos receives) (as a percent)
5.0125% 
 
 
Floating Rate (Danaos pays)
0.835% 
 
 
Fair Value
55,000 
302,000 
 
LIBOR |
Fair Value Hedges |
RBS |
Interest rate swap contracts |
Effective Date 11/17/2004
 
 
 
Fair Value Interest Rate Swap Hedges
 
 
 
Notional Amount on Effective Date
62,342,000 
 
 
Fixed Rate (Danaos receives) (as a percent)
5.0125% 
 
 
Floating Rate (Danaos pays)
0.855% 
 
 
Fair Value
$ 83,000 
$ 362,000 
 
Financial Instruments (Details 3) (Recurring basis, Interest rate swap contracts, USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Significant Other Observable Inputs (Level 2)
 
 
Assets
 
 
Fair value of assets
$ 138 
$ 664 
Liabilities
 
 
Fair value of liabilities
4,538 
53,420 
Fair Value
 
 
Assets
 
 
Fair value of assets
138 
664 
Liabilities
 
 
Fair value of liabilities
$ 4,538 
$ 53,420 
Financial Instruments (Details 4) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Financial Instruments
 
 
Restricted cash
$ 2,818 
$ 2,824 
Due from related parties
19,007 
10,597 
Carrying value
 
 
Financial Instruments
 
 
Cash and cash equivalents
72,253 
57,730 
Restricted cash
2,818 
2,824 
Accounts receivable, net
10,652 
7,904 
Due from related parties
19,007 
10,597 
Equity investment in ZIM
28,693 
28,693 
Accounts payable
12,971 
12,510 
Accrued liabilities
14,014 
24,705 
Long-term debt, including current portion
2,775,378 
2,951,120 
Vendor financing, including current portion
 
64,367 
Carrying value |
Unsecured 3% Series 1 ZIM Notes due 2023
 
 
Financial Instruments
 
 
Receivable from ZIM
6,587 
6,274 
Carrying value |
Unsecured 5% Series 2 ZIM Notes due 2023
 
 
Financial Instruments
 
 
Receivable from ZIM
32,507 
30,923 
Fair Value
 
 
Financial Instruments
 
 
Cash and cash equivalents
72,253 
57,730 
Restricted cash
2,818 
2,824 
Accounts receivable, net
10,652 
7,904 
Due from related parties
19,007 
10,597 
Equity investment in ZIM
35,831 
32,873 
Accounts payable
12,971 
12,510 
Accrued liabilities
14,014 
24,705 
Long-term debt, including current portion
2,776,739 
2,953,327 
Vendor financing, including current portion
 
64,026 
Fair Value |
Unsecured 3% Series 1 ZIM Notes due 2023
 
 
Financial Instruments
 
 
Receivable from ZIM
6,587 
6,274 
Fair Value |
Unsecured 5% Series 2 ZIM Notes due 2023
 
 
Financial Instruments
 
 
Receivable from ZIM
$ 32,507 
$ 30,923 
Financial Instruments (Details 5) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Financial instruments measured at fair value on a recurring basis
 
 
Accrued liabilities
$ 14,014 
$ 24,705 
Fair Value
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Equity investment in ZIM
35,831 
32,873 
Long-term debt, including current portion
2,776,739 
2,953,327 
Vendor financing, including current portion
 
64,026 
Fair Value |
Unsecured 3% Series 1 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
6,587 
6,274 
Fair Value |
Unsecured 5% Series 2 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
32,507 
30,923 
Non-recurring basis |
Significant Other Observable Inputs (Level 2)
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Equity investment in ZIM
35,831 
32,873 
Long-term debt, including current portion
2,776,739 
2,953,327 
Vendor financing, including current portion
 
64,026 
Accrued liabilities
14,014 
24,705 
Non-recurring basis |
Significant Other Observable Inputs (Level 2) |
Unsecured 3% Series 1 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
6,587 
6,274 
Non-recurring basis |
Significant Other Observable Inputs (Level 2) |
Unsecured 5% Series 2 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
32,507 
30,923 
Non-recurring basis |
Fair Value
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Equity investment in ZIM
35,831 
32,873 
Long-term debt, including current portion
2,776,739 
2,953,327 
Vendor financing, including current portion
 
64,026 
Accrued liabilities
14,014 
24,705 
Non-recurring basis |
Fair Value |
Unsecured 3% Series 1 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
6,587 
6,274 
Non-recurring basis |
Fair Value |
Unsecured 5% Series 2 ZIM Notes due 2023
 
 
Financial instruments measured at fair value on a recurring basis
 
 
Receivable from ZIM
$ 32,507 
$ 30,923 
Financial Instruments (Details 6) (USD $)
12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2015
Dec. 31, 2015
Non-recurring basis
Dec. 31, 2015
Non-recurring basis
Significant Other Observable Inputs (Level 2)
Dec. 31, 2015
Vessels
item
Dec. 31, 2014
Vessels
item
Dec. 31, 2013
Vessels
item
Dec. 31, 2015
Vessels
Carrying value
Dec. 31, 2014
Vessels
Carrying value
Dec. 31, 2015
Vessels
Non-recurring basis
Significant Other Observable Inputs (Level 2)
Dec. 31, 2014
Vessels
Non-recurring basis
Significant Other Observable Inputs (Level 2)
Dec. 31, 2014
Vessels
Non-recurring basis
Fair Value
Jul. 16, 2014
ZIM
item
Dec. 31, 2015
ZIM
item
Nonfinancial items measured at fair value on a non-recurring
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of vessels of which the charter rates payable was reduced
 
 
 
 
 
 
 
 
 
 
 
Unsecured notes maturity term
 
 
 
 
 
 
 
 
 
 
 
 
9 years 
Number of vessels on which impairment loss is recorded
 
 
 
12 
 
 
 
 
 
 
 
Impairment of Long-Lived Assets Held-for-use
 
 
 
$ 39,000,000 
$ 75,800,000 
$ 0 
 
 
 
 
 
 
 
Fixed assets, net
 
90,800,000 
90,800,000 
 
 
 
129,800,000 
167,800,000 
90,800,000 
92,000,000 
92,000,000 
 
 
Vessels held for sale
 
6,300,000 
6,300,000 
 
 
 
 
 
 
 
 
 
 
Impairment loss of vessel held for sale
$ 2,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenue (Details) (Operating revenues, Significant customers)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
HMM Korea
 
 
 
Operating Revenue
 
 
 
Percentage of operating revenue
28.00% 
28.00% 
27.00% 
CMA CGM
 
 
 
Operating Revenue
 
 
 
Percentage of operating revenue
26.00% 
27.00% 
24.00% 
Hanjin
 
 
 
Operating Revenue
 
 
 
Percentage of operating revenue
17.00% 
18.00% 
17.00% 
YML
 
 
 
Operating Revenue
 
 
 
Percentage of operating revenue
13.00% 
11.00% 
10.00% 
Operating Revenue by Geographic Location (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Operating revenue by geographic location
 
 
 
Revenue
$ 567,936 
$ 552,091 
$ 588,117 
Australia-Asia
 
 
 
Operating revenue by geographic location
 
 
 
Revenue
410,827 
389,098 
413,662 
Europe
 
 
 
Operating revenue by geographic location
 
 
 
Revenue
$ 157,109 
$ 162,993 
$ 174,455 
Sale of Vessels (Details) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
item
Dec. 31, 2013
item
Sale of Vessels
 
 
 
Number of Vessels Sold
 
Gross sale consideration
 
$ 57,700,000 
$ 60,500,000 
Net gain (loss) on sale of vessels
 
5,709,000 
(449,000)
Net proceeds from sale of vessels
$ 1,050,000 
$ 50,602,000 
$ 52,926,000 
Stock Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2015
director
Dec. 31, 2014
director
Dec. 31, 2013
director
Dec. 11, 2015
Manager's employees
Dec. 10, 2014
Manager's employees
Dec. 12, 2013
Manager's employees
Dec. 31, 2015
Manager's employees
Dec. 31, 2014
Manager's employees
Dec. 10, 2014
Manager's employees
General and Administrative Expense
Dec. 12, 2013
Manager's employees
General and Administrative Expense
Dec. 31, 2015
Manager's employees
General and Administrative Expense
Stockholders' equity
 
 
 
 
 
 
 
 
 
 
 
Vesting period
 
 
 
 
 
 
0 years 
 
 
 
 
Contractual obligation for any stock to be granted
 
 
 
 
 
 
$ 0 
 
 
 
 
Shares granted
 
 
 
15,879 
115,185 
16,066 
 
112,315 
 
 
 
Expenses representing fair value of the stock granted recognized in General and Administrative Expenses
 
 
 
 
 
 
 
 
$ 0.6 
$ 0.1 
$ 0.1 
Number of directors who elected to receive their compensation in shares
 
 
 
 
 
 
 
 
Stockholders' Equity (Details) (USD $)
12 Months Ended 12 Months Ended
Dec. 31, 2015
item
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2011
Sep. 18, 2009
Dec. 31, 2015
Manager's employees, directors and employees of the Company
Dec. 31, 2014
Manager's employees, directors and employees of the Company
Stockholders' equity
 
 
 
 
 
 
 
Shares issued
109,781,744 
109,669,429 
 
 
 
 
 
Shares outstanding
109,781,744 
109,669,429 
 
 
 
 
 
Authorized capital stock, common stock (in shares)
750,000,000 
750,000,000 
 
 
750,000,000 
 
 
Authorized capital stock, par value of common stock (in dollars per share)
$ 0.01 
$ 0.01 
 
 
$ 0.01 
 
 
Authorized capital stock, preferred stock (in shares)
100,000,000 
100,000,000 
 
 
100,000,000 
 
 
Authorized capital stock, par value of preferred stock (in dollars per share)
$ 0.01 
$ 0.01 
 
 
$ 0.01 
 
 
Newly issued shares
 
 
 
 
 
112,315 
16,066 
Maximum consolidated net leverage ratio set as condition for payment of cash dividends and repurchase of shares
 
 
 
 
 
 
Number of consecutive quarters considered for calculation of consolidated net leverage ratio
 
 
 
 
 
 
Ratio of aggregate market value of vessels to outstanding indebtedness (as a percent)
125.00% 
 
 
 
 
 
 
Number of consecutive quarters considered for calculation of ratio of aggregate market value of vessels to outstanding indebtedness
 
 
 
 
 
 
Number of warrants issued to lenders
15,000,000 
15,000,000 
15,000,000 
15,000,000 
 
 
 
Exercise price of warrant (in dollars per share)
 
 
 
$ 7.00 
 
 
 
Earnings/(Loss) per Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2011
Numerator:
 
 
 
 
Net Income / (Loss)
$ 117,016 
$ (3,920)
$ 37,523 
 
Denominator (number of shares in thousands):
 
 
 
 
Basic and diluted weighted average ordinary shares outstanding
109,785,484 
109,676,056 
109,654,199 
 
Class of Warrant or Right Number of Warrants Issued
15,000,000 
15,000,000 
15,000,000 
15,000,000 
Impairment Loss (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
item
Dec. 31, 2013
item
Dec. 31, 2015
Vessels
Dec. 31, 2014
Vessels
Dec. 31, 2013
Vessels
Jul. 16, 2014
ZIM
item
Dec. 31, 2015
ZIM
item
Dec. 31, 2013
ZIM
Impairment Loss
 
 
 
 
 
 
 
 
 
Impairment loss
$ 41,080,000 
$ 75,776,000 
$ 19,004,000 
 
 
 
 
 
$ 19,000,000 
Impairment loss of vessels held and used
 
 
 
39,000,000 
75,800,000 
 
 
 
Impairment loss of vessel held for sale
2,100,000 
 
 
 
 
 
 
 
 
Number of vessels of which the charter rates payable was reduced
 
 
 
 
 
 
 
Unsecured notes maturity term
 
 
 
 
 
 
 
9 years 
 
Receivable
 
 
 
 
 
 
 
 
$ 25,800,000 
Number of vessels sold
 
 
 
 
 
 
 
Subsequent Events (Details) (USD $)
12 Months Ended 0 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2015
Federal
Jan. 8, 2016
Subsequent event
Federal
Feb. 4, 2016
Subsequent event
Gemini
item
Mar. 3, 2016
Subsequent event
Gemini
Feb. 4, 2016
Subsequent event
Gemini
Subsequent events
 
 
 
 
 
 
 
 
Net proceeds from sale of vessels
$ 1,050,000 
$ 50,602,000 
$ 52,926,000 
 
$ 7,200,000 
 
 
 
Amount received in advance
 
 
 
1,400,000 
 
 
 
 
Equity Method Investment, Ownership Percentage
 
 
 
 
 
 
 
49.00% 
Overall Container Capacity Number of Twenty Foot Equivalent Units
 
 
 
 
 
6,422 
 
 
Subscription of newly issued share capital (as a percent)
 
 
 
 
 
 
49.00% 
 
Subscription of newly issued share capital
 
 
 
 
 
 
$ 1,470,000