SOURCE: Euroseas

Euroseas

November 16, 2009 08:00 ET

Euroseas Ltd. Reports Results for the Nine Months and Quarter Ended September 30, 2009

MAROUSSI, ATHENS, GREECE--(Marketwire - November 16, 2009) - Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the three and nine month periods ended September 30, 2009.

Third Quarter 2009 Highlights:

--  Net income of $2.2 million or $0.07 per share basic and diluted on
    total net revenues of $17.2 million. Excluding the effect of unrealized
    gain on derivatives, unrealized loss on trading securities and amortization
    of the fair value of charters acquired, the net loss for the period would
    have been $0.3 million, or $0.01 loss per share basic and diluted.
    
--  Adjusted EBITDA was $5.0 million. Please refer to a subsequent section
    of this Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average of 16.79 vessels were owned and operated during the third
    quarter of 2009 earning an average time charter equivalent rate of $15,101
    per day.
    
--  Declared a quarterly dividend of $0.05 per share for the third quarter
    of 2009 payable on December 18, 2009 to shareholders of record on December
    11, 2009. This is the seventeenth consecutive quarterly dividend declared.
    

First Nine Months 2009 Highlights:

--  Net income of $0.7 million or $0.02 per share basic and diluted on
    total net revenues of $47.3 million. Excluding the effect of unrealized
    loss on derivatives, unrealized gain on trading securities and amortization
    of the fair value of charters acquired, the net income for the period would
    have been $2.1 million, or $0.07 per share basic and diluted.
    
--  Adjusted EBITDA was $17.0 million. Please refer to a subsequent
    section of this Press Release for a reconciliation of adjusted EBITDA to
    net income.
    
--  An average of 16.17 vessels were owned and operated during the first
    nine months of 2009 earning an average time charter equivalent rate of
    $13,632 per day.
    
--  Declared three quarterly dividends for a total of $0.25 per share
    during the first nine months of 2009.
    

Aristides Pittas, Chairman and CEO of Euroseas, commented: "During the third quarter of 2009 we took delivery of our third drybulk vessel for the year, The vessel came with a t/c attached at $25,200/day for 6 months and we subsequently re-chartered it for a further two years at $17,500 thus improving our earnings visibility. At the same time, we have been able to recharter all the containerships coming out of charter for varying firm periods of a few months to a year, albeit at rates slightly below operating costs. As a result our current charter coverage for 2010 is about 47%, without including optional periods, broken down as about 80% for our bulkers fleet and 29% for our containership fleet. Whilst we are skeptical about the outlook of the drybulk market for 2010 (hence our high charter coverage) we believe the container market has reached the bottom where it may stay for a while but eventually can only move upwards. Especially for vessels under 2000 teu, like ours, we expect the recovery to come sooner than for the larger vessels.

"We intend to continue taking advantage of low vessel prices in any sector we can find them to further renew and expand our fleet. As the opportunities we see emerging seem very attractive, we have decided to preserve cash for future investments and decrease our dividend towards the lowest level of the range the Board considers satisfactory. Thus, our Board elected to declare a dividend of $0.05/share which still yields about 5% p.a. based on the recent levels of our stock price."

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The results of the third quarter of 2009, as expected, reflect the lower level of the charter markets compared to the same period a year ago. Our results were positively influenced by non-cash gains mainly on FFA contracts despite some non-cash losses on interest rate swaps.

"Total daily vessel operating expenses, including management fees and general and administrative expenses, during the third quarter of 2009 reflect a decrease about 25% on a per vessel per day basis compared to the third quarter of 2008. Part of this decrease (about 11%) is due to the fact that three of our vessels were laid-up during the third quarter of 2009 and thus incurred significantly lower daily costs, but a significant part (about 14%) is associated with cost reductions. As always, cost control remains a key component of our strategy.

"As of September 30, 2009, our net debt position was about $26.4 million with our outstanding debt at $79.1 million versus restricted and unrestricted cash of about $52.7 million. We continue to enjoy our bankers' support and have been able to finance all three of our vessel purchases this year with about 50% debt."

Third Quarter 2009 Results:

For the third quarter of 2009, the Company reported total net revenues of $17.2 million representing a 51.6% decrease over total net revenues of $35.5 million during the third quarter of 2008. The Company reported net income for the period of $2.2 million as compared to net income of $14.5 million for the third quarter of 2008. The results for the third quarter of 2009 include a $2.0 million net unrealized gain on derivatives and trading securities as compared to $1.1 million unrealized loss on derivatives and trading securities for the same period of 2008. Depreciation expenses for the third quarter of 2009 were $5.1 million compared to $7.8 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $2.0 million to the depreciation expenses in the third quarter of 2008, partly balanced by the depreciation of three vessels purchased in 2009. On average, 16.79 vessels were owned and operated during the third quarter of 2009 earning an average time charter equivalent rate of $15,101 per day compared to 16 vessels in the same period of 2008 earning on average $25,951 per day. Three of the Company's containerships were laid-up throughout the third quarter of 2009.

Adjusted EBITDA for the third quarter of 2009 was $5.0 million, a 76.3% decrease from $21.2 million achieved during the third quarter of 2008. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.

Basic and diluted earnings per share for the third quarter of 2009 was $0.07, calculated on 30,628,410 and 30,700,820, respectively weighted average number of shares outstanding, respectively, compared to basic and diluted earnings per share of $0.47 for the third quarter of 2008, calculated on 30,476,135 and 30,551,315 weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings for the quarter of the unrealized gain on derivatives, unrealized loss on trading securities and amortization of the fair value of time charter contracts acquired, the loss per share for the quarter ended September 30, 2009 would have been $0.01 per share basic and diluted, and for the quarter ended September 30, 2008 the earnings would have been $0.47 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First nine months 2009 Results:

For the first nine months of 2009, the Company reported total net revenues of $47.3 million representing a 53.9% decrease over total net revenues of $102.7 million during the first nine months of 2008. The Company reported net income for the period of $0.7 million as compared to net income of $43.7 million for the first nine months of 2008. The results for the first nine months of 2009 include a $2.5 million net unrealized loss on derivatives and trading securities as compared to a $0.7 million unrealized loss on derivatives and trading securities for the same period of 2008. Depreciation expenses for the first nine months of 2009 were $14.4 million compared to $22.6 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $6.0 million to the depreciation expenses in the first nine months of 2008, partly balanced by the depreciation of three of the vessels purchased in 2009 that contributed to the depreciation expense for the first nine months. On average, 16.17 vessels were owned and operated during the first nine months of 2009 earning an average time charter equivalent rate of $13,632 per day compared to 15.48 vessels in the same period of 2008 earning on average $25,868 per day. One of the Company's vessels was laid-up during the entire first nine months of 2009 and two more vessels were laid up for the second and third quarter of 2009.

Adjusted EBITDA for the first nine months of 2009 was $17.0 million, a 71.9% decrease from $60.6 million achieved during the first nine months of 2008. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.

Basic and diluted earnings per share for the first nine months of 2009 was $0.02, calculated on 30,593,401 basic and 30,642,954 diluted weighted average number of shares outstanding, respectively, compared to basic and diluted earnings per share of $1.44 and $1.43 per share, respectively, for the first nine months of 2008, calculated on 30,409,078 and 30,555,095 weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings for the first nine months of 2009 of the unrealized loss on derivatives, unrealized gain on trading securities and amortization of the fair value of time charter contracts acquired, the earnings per share for the nine-month period ended September 30, 2009 would have been $0.07 per share basic and diluted, and, for the same period in 2008, would have been $1.27 and $1.26 per share basic and diluted, respectively. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Change in accounting principle and change in estimates:

Beginning with the first quarter of 2009, the Company changed its accounting policy of drydocking costs from the deferral method, under which the Company amortized drydocking costs over the estimated period of benefit between drydockings, to the direct expense method, under which the Company expenses all drydocking costs as incurred. The Company believes that the direct expense method is preferable as it eliminates the significant amount of time and subjectivity involved in determining which costs and activities related to drydocking qualify for the deferral method. When the accounting principle was retrospectively applied, net income for the three month and for the nine month periods ended September 30, 2008 decreased by $0.9 and $2.5 million, respectively, or, $0.03 and $0.08 per share, respectively, basic and diluted.

The Company reflected this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with FASB ASC 250-10 Accounting Changes and Error Corrections. The new accounting principle will be applied retrospectively to all periods presented in earnings releases and filings.

During the fourth quarter of 2008, the Company also changed its estimates of the scrap price and useful life of its containerships to better reflect the present market environment, industry practice and intended use. The effect of these changes increased net income for the three and nine month periods ended September 30, 2009 by $1.6 and $4.8 million, respectively, or $0.05 and $0.16 per share, respectively, basic and diluted.


Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:

                                           Year                   TCE
Name               Type       Dwt    TEU   Built  Employment   Rate($/day)
                ----------- -------- ----- ------ ----------  -------------
Dry Bulk Vessels
                ----------- -------- ----- ------ ----------  -------------
                                                   TC 'til
                                                   Dec-09
                                                  Then until     $25,200
PANTELIS          Panamax    74,020         2000  Nov. 2011      $17,500
                ----------- -------- ----- ------ ----------  -------------
                                                   TC 'til
ELENI P           Panamax    72,119         1997   May-10        $15,350
                ----------- -------- ----- ------ ----------  -------------
                                                  Baumarine
IRINI (*)         Panamax    69,734         1988    Pool
                ----------- -------- ----- ------ ----------  -------------
                                                   TC 'til
ARISTIDES N.P.    Panamax    69,268         1993   Jan-10        $12,350
                ----------- -------- ----- ------ ----------  -------------
                                                 Bulkhandling
MONICA P (**)     Handymax   46,667         1998     Pool
                ----------- -------- ----- ------ ----------  -------------
GREGOS           Handysize   38,691         1984     Spot
                ----------- -------- ----- ------ ----------  -------------
Total Dry Bulk
 Vessels             6      370,499
                ----------- -------- ----- ------ ----------  -------------
Multipurpose
 Dry Cargo
 Vessels
                ----------- -------- ----- ------ ----------  -------------
                                                               $9,500 'til
                                                                 Dec-10,
                                                   TC 'til     $9,000 'til
TASMAN TRADER        1       22,568   950   1990   Mar-12        Mar-12
                ----------- -------- ----- ------ ----------  -------------
Container
 Carriers
                ----------- -------- ----- ------ ----------  -------------
                                                               $16,800 'til
                                                                  Aug-11
                                                    TC 'til    $18,735 'til
                                                    Aug-11        Aug-12
                                                  (3 annual    $19,240 'til
                                                   options        Aug-13
MAERSK NOUMEA   Intermediate 34,677  2,556   2001   'til       $19,750 'til
                                                    Aug-14)       Aug-14
                ----------- -------- ----- ------ ----------  -------------
                                                    TC 'til
TIGER BRIDGE    Intermediate 31,627  2,228  1990    Mar-10        $7,500
                ----------- -------- ----- ------ ----------  -------------
ARTEMIS         Intermediate 29,693  2,098  1987    Laid-up
                ----------- -------- ----- ------ ----------  -------------
DESPINA P        Handy size  33,667  1,932  1990    Laid-up
                ----------- -------- ----- ------ ----------  -------------
JONATHAN P
(ex-OEL
 INTEGRITY)      Handy size  33,667  1,932  1990   Laid-up
                ----------- -------- ----- ------ ----------  -------------
                                                    TC Til
                                                    Nov-09
                                                 (3 monthly
CAPTAIN COSTAS                                     options
 (ex-OEL                                             til
 TRANSWORLD)     Handy size  30,007  1,742  1992   Feb-10)        $4,000
                ----------- -------- ----- ------ ----------  -------------
                                                    TC 'til
YM PORT KLANG                                       Nov-10     $3,750 'til
(ex-MASTRO                                         (option        Nov-10
 NICOS, ex-                                          'til     ($5,900 'til
 YM XINGANG I)   Handy size  23,596  1,599  1993    Nov-11)       Nov-11)
                ----------- -------- ----- ------ ----------  -------------
                                                               $3,850 'til
                                                    TC 'til       Jan-10
                                                    Jan-10     $4,000 'til
                                                 (option til      Jun-10
                                                    Jun-10)       CONTEX
                                                 (option til  less 10% 'til
MANOLIS P        Handy size  20,346  1,452  1995    Jun-11)       Jun-11
                ----------- -------- ----- ------ ----------  -------------
NINOS (ex-YM
 QINGDAO I)        Feeder    18,253  1,169  1990    Jan-10        $3,900
                ----------- -------- ----- ------ ----------  -------------
                                                    TC 'til
                                                    Dec-09
                                                 (option 'til
KUO HSIUNG         Feeder    18,154  1,169  1993    Jun-10)       $3,850
                ----------- -------- ----- ------ ----------  -------------

Total
 Container
 Carriers           10      273,687 17,877
                ----------- -------- ----- ------ ----------  -------------
Fleet Grand
 Total              17      666,754 18,827
                ----------- -------- ----- ------ ----------  -------------

Note: TC denotes time charter. All dates listed are the earliest redelivery dates under each TC. All extension option are in favour of the charterers.

(*) "Irini" is employed in the Baumarine spot pool that is managed by Klaveness, a major global charterer in the drybulk market.

(**) "Monica P" is employed in the Bulkhandling spot pool that is also managed by Klaveness.

New charter arrangements:

"YM Port Klang" (ex-"Mastro Nicos," ex-"YM Xingang I") entered into an approximately one year time charter agreement at a gross daily rate of $3,750 per day. The charterer has the option to extend the charter for one additional year at a gross daily rate of $5,900 per day. Upon delivery to new charterers the vessel was renamed "YM Port Klang."

"Manolis P" entered into a time charter agreement ranging from a three to six month period at a gross daily rate of $3,850 per day with an option of the charterer to extend it for another five to seven months at a gross daily rate of $4,000 per day and upon completion of that optional period the charterer has another option to further extend the charter for one more year at a rate based on the 1,700 teu Container Index (CONTEX) minus 10%.

"Ninos" was re-delivered early from its previous charter and was chartered at the rate shown.

Approximately 80% of Euroseas' total fleet days for the remaining days of 2009 and approximately 47% in 2010 are secured under period charters or Forward Freight Agreements (FFAs) not including the extension options held by charterers.

Summary Fleet Data:


                                3 months,  3 months,  9 months,  9 months,
                                  ended      ended      ended      ended
                                September  September  September  September
                                30, 2008   30, 2009   30, 2008   30, 2009
                                ---------  ---------  ---------  ---------
FLEET DATA
Average number of vessels (1)       16.00      16.79      15.48      16.17
Calendar days for fleet (2)       1,472.0    1,545.0    4,242.0    4,414.0
Scheduled off-hire days incl.
 laid-up (3)                         40.1      331.5      138.9      704.5
Available days for fleet (4) =
 (2) - (3)                        1,431.9    1,213.5    4,103.1    3,709.5
Commercial off-hire days (5)          0.0       43.7        7.7      156.1
Operational off-hire days (6)        29.3        1.9       46.6       23.2
Voyage days for fleet (7) = (4)
 - (5) - (6)                      1,402.6    1,167.9    4,048.8    3,530.2
Fleet utilization (8) = (7) /
 (4)                                 98.0%      96.2%      98.7%      95.2%
Fleet utilization, commercial
 (9) = ((4) - (5)) / (4)            100.0%      96.4%      99.8%      95.8%
Fleet utilization, operational
 (10) = ((4) - (6)) / (4)            98.0%      99.8%      98.9%      99.4%

AVERAGE DAILY RESULTS
Time charter equivalent rate
 (11)                              25,951     15,101     25,868     13,632
Vessel operating expenses excl.
 drydocking expenses (12)           5,674      4,251      5,770      4,790
General and administrative
 expenses (13)                        671        504        774        645
Total vessel operating expenses
 excl. dd expenses (14)             6,345      4,755      6,544      5,435
Drydocking expenses (15)            1,316      1,238      1,229        433
                                ---------  ---------  ---------  ---------

(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

(2) Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.

(3) The scheduled off-hire days, including vessels laid-up, are days associated with scheduled repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.

(4) Available days. We define available days as the total number of days in a period during which each vessel in our fleet was in our possession net of scheduled off-hire days including days of vessels laid-up.

(5) Commercial off-hire days. We define commercial off-hire days as days waiting to find employment.

(6) Operational off-hire days. We define operational off-hire days as days associated with unscheduled repairs or other off-hire time related to the operation of the vessels.

(7) Voyage days. We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of commercial and operational off-hire days. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues.

(8) Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs or days waiting to find employment.

(9) Fleet utilization, commercial. We calculate commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period.

(10) Fleet utilization, operational. We calculate operational fleet utilization by dividing our available net of operational off-hire days during a period by our available days during that period.

(11) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing revenue generated from voyage charters net of voyage expenses by available days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot voyage charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

(12) Daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and management fees, are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. Drydocking expenses are reported separately.

(13) Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

(14) Total vessel operating expenses, or TVOE, is a measure of our total expenses associated with operating our vessels excluding drydocking expenses. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

(15) Drydocking expenses, which include expenses during drydockings that would have been capitalized and amortized under the deferral method divided by the fleet calendar days for the relevant period. Drydocking expenses could vary substantially from period to period depending on how many vessels underwent drydocking during the period.

Conference Call and Webcast:

Today, Monday, November 16, 2009 at 11:00 a.m. EST, the company's management will host a conference call to discuss the results.

Conference Call Details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (from the US), 0800 953 0329 (from the UK) or +44 (0)1452 542 301 (international standard dial in). Please quote "Euroseas."

In case of any problems with the above numbers, please dial 1 866 223 0615 (from the US), 0800 694 1503 (from the UK) or +44 (0)1452 586 513 (international standard dial in). Quote "Euroseas."

A recording of the conference call will be available until November 23, 2009 by dialing 1 866 247 4222 (from the US), 0800 953 1533 (from the UK) or +44 (0)1452 550 000 (international standard dial in). Access Code: 6973591#

Audio -- Slides Presentation:

There will be a live and then archived audio webcast of the conference call, via the internet through the Euroseas website (www.euroseas.gr). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. A slide presentation on the third quarter and first nine months 2009 results in PDF format will also be available 30 minutes prior to the conference call and webcast accessible on the company's website (www.euroseas.gr) on the webcast page. Participants to the webcast can download the PDF presentation.


                              Euroseas Ltd.
                Consolidated Condensed Statements of Income
      (All amounts expressed in U.S. Dollars - except share amounts)

                                     Nine Months  Nine Months  Nine Months
                                        Ended        Ended        Ended
                                      September    September    September
                                         30,          30,          30,
                                        2008         2008         2009
                                  (as originally (as adjusted
                                      reported    under the
                                     under the      direct
                                      deferral     expense
                                       method)      method)
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
Revenues
  Voyage revenue                     107,564,775  107,564,775   49,098,531
  Commissions                         (4,827,793)  (4,827,793)  (1,774,961)
Net revenues                         102,736,982  102,736,982   47,323,570

Operating expenses
  Voyage expenses                      2,829,862    2,829,862      975,038
  Vessel operating expenses           20,352,597   20,352,597   17,435,904
  Drydocking expenses                          -    5,212,057    1,912,474
  Amortization and depreciation       25,344,198   22,604,142   14,390,828
  Management fees                      4,121,655    4,121,655    3,707,350
  Other general and administrative
   expenses                            3,285,175    3,285,175    2,848,467
  Charter termination fees                     -            -     (103,577)
Total operating expenses              55,933,487   58,405,488   41,166,484

Operating income                      46,803,495   44,331,494    6,157,086

Other income/(expenses)
  Interest and finance cost           (2,311,660)  (2,311,660)  (1,028,217)
  Change in fair value of derivatives   (110,206)    (110,206)  (5,950,582)
  Realized & unrealized gain / (loss)
    on trading securities               (834,767)    (834,767)     521,870
  Foreign exchange (loss) gain           (16,276)     (16,276)      23,902
  Interest income                      2,385,342    2,385,342      952,512
  Dividend income                        273,756      273,756            -
  Other expenses, net                   (613,811)    (613,811)  (5,480,515)

                                     -----------  -----------  -----------

Net income                            46,189,684   43,717,683      676,571
                                     -----------  -----------  -----------

Earnings per share, basic                   1.52         1.44         0.02
Weighted average number of shares,
 basic                                30,409,078   30,409,078   30,593,401
                                     -----------  -----------  -----------

Earnings per share, diluted                 1.51         1.43         0.02
                                     -----------  -----------  -----------
Weighted average number of shares,
 diluted                              30,555,095   30,555,095   30,642,954
                                     -----------  -----------  -----------


                                    Three Months Three Months  Three Months
                                        Ended        Ended        Ended
                                      September    September    September
                                         30,          30,          30,
                                        2008         2008         2009
                                  (as originally (as adjusted
                                      reported    under the
                                     under the      direct
                                      deferral     expense
                                       method)      method)
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)

Revenues
  Voyage revenue                      37,111,568   37,111,568   17,753,656
  Commissions                         (1,660,638)  (1,660,638)    (586,301)
Net revenues                          35,450,930   35,450,930   17,167,355

Operating expenses
  Voyage expenses                        712,403      712,403      117,462
  Vessel operating expenses            6,944,686    6,944,686    5,235,285
  Drydocking expenses                          -    1,937,341    1,912,474
  Amortization and depreciation        8,887,717    7,816,294    5,106,899
  Management fees                      1,407,120    1,407,120    1,332,991
  Other general and administrative
   expenses                              987,746      987,746      777,609
Total operating expenses              18,939,672   19,805,590   14,482,720

Operating income                      16,511,258   15,645,340    2,684,635

Other income/(expenses)
  Interest and finance cost             (610,924)    (610,924)    (339,764)
  Change in fair value of derivatives   (110,206)    (110,206)    (171,634)
  Realized and unrealized loss on
   trading securities                 (1,091,462)  (1,091,462)    (138,835)
  Foreign exchange loss                   (2,894)      (2,894)        (945)
  Interest income                        525,123      525,123      144,430
  Dividend income                         98,756       98,756            -
  Other expenses, net                 (1,191,607)  (1,191,607)    (506,748)

                                     -----------  -----------  -----------

Net income                            15,319,652   14,453,733    2,177,887
                                     -----------  -----------  -----------

Earnings per share, basic                   0.50         0.47         0.07
Weighted average number of shares,
 basic                                30,476,135   30,476,135   30,628,410
                                     -----------  -----------  -----------

Earnings per share, diluted                 0.50         0.47         0.07
                                     -----------  -----------  -----------
Weighted average number of shares,
 diluted                              30,551,315   30,551,315   30,700,820
                                     -----------  -----------  -----------





                              Euroseas Ltd.
                  Consolidated Condensed Balance Sheets
      (All amounts expressed in U.S. Dollars - except share amounts)

                                    December 31, December 31, September 30,
                                       2008           2008        2009
                                   (as originally (as adjusted
                                      reported      under the
                                      under the      direct
                                       deferral      expense
                                       method)       method)
                                     ------------ ------------ ------------
                                     (unaudited)  (unaudited)  (unaudited)
ASSETS
Current Assets:
  Cash and cash equivalents            73,851,191   73,851,191   42,725,914
  Trade accounts receivable             1,233,895    1,233,895    1,518,975
  Other receivables, net                1,439,628    1,439,628      727,574
  Due from related company              4,678,750    4,678,750    5,926,177
  Inventories                           2,011,973    2,011,973    2,137,895
  Restricted cash                       2,181,264    2,181,264    3,440,758
  Vessels held for sale                 6,067,020    6,067,020            -
  Trading securities                      771,727      771,727      552,349
  Derivatives                              61,670       61,670       69,606
  Prepaid expenses                        241,102      241,102      388,711
Total current assets                   92,538,220   92,538,220   57,487,959

Fixed assets:
  Vessels, net                        231,963,606  231,963,606  281,619,215
  Advances for vessel acquisition       1,821,798    1,821,798            -
Long-term assets:
  Restricted cash                       4,800,000    4,800,000    6,518,295
  Deferred charges, net                 7,771,342      373,702      365,781
  Derivatives                              68,038       68,038      276,986
  Fair value of above market time
   charter acquired                     1,653,422    1,653,422            -
Total long-term assets                248,078,206  240,680,566  288,780,277
                                     ------------ ------------ ------------
Total assets                          340,616,426  333,218,786  346,268,236
                                     ------------ ------------ ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Long term debt, current portion      12,450,000   12,450,000   13,550,000
  Trade accounts payable                2,283,488    2,283,488    2,760,063
  Accrued expenses                      1,206,466    1,206,466    1,447,799
  Accrued dividends                       116,750      116,750       62,500
  Deferred revenue                      4,533,601    4,533,601    1,322,413
  Derivatives                             827,210      827,210    5,152,583
Total current liabilities              21,417,515   21,417,515   24,295,358

Long-term liabilities:
  Long term debt, net of current
   portion                             43,565,000   43,565,000   65,540,000
  Derivatives                           2,700,028    2,700,028    1,231,561
  Fair value of below market time
   charter acquired                     8,704,811    8,704,811    5,958,438
Total long-term liabilities            54,969,839   54,969,839   72,729,999
Total liabilities                      76,387,354   76,387,354   97,025,357

Shareholders' equity:
  Common stock (par value $0.03,
   100,000,000 shares authorized,
   30,575,611 and 30,779,711 issued
   and outstanding)
  Preferred shares (par value
   $0.01, 20,000,000 shares
   authorized, no shares issued and
   outstanding)                           917,269      917,269      923,392
  Additional paid-in capital          234,567,670  234,567,670  235,521,957
  Retained earnings                    28,744,133   21,346,493   12,797,530
Total shareholders' equity            264,229,072  256,831,432  249,242,879
                                     ------------ ------------ ------------
Total liabilities and shareholders'
 equity                               340,616,426  333,218,786  346,268,236
                                     ------------ ------------ ------------





                              Euroseas Ltd.
              Consolidated Condensed Statements of Cash Flows
                  (All amounts expressed in U.S. Dollars)

                                     Nine Months  Nine Months  Nine Months
                                        Ended        Ended        Ended
                                      September    September    September
                                         30,          30,          30,
                                        2008          2008        2009
                                   (as originally (as adjusted
                                      reported     under the
                                      under the     direct
                                       deferral     expense
                                       method)      method)
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
                                     -----------  -----------  -----------
Cash flows from operating
 activities:
Net income                            46,189,684   43,717,683      676,571
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
Depreciation of vessels               22,604,142   22,604,142   14,390,828
Amortization of deferred charges       2,804,537       64,481       72,417
Amortization of fair value of time
 charters                             (5,804,512)  (5,804,512)  (1,092,951)
Share-based compensation               1,392,823    1,392,823      709,714
Unrealized loss on derivatives, net      110,206      110,206    2,640,022
Purchase of trading securities          (922,656)    (922,656)           -
Sale of trading securities               860,611      860,611      741,248
Realized gain on trading securities            -            -     (411,444)
Unrealized loss / (gain) on trading
 securities                              834,768      834,768     (110,426)
Changes in operating assets and
 liabilities                          (7,476,078)  (2,264,021)  (6,120,457)
                                     -----------  -----------  -----------
Net cash provided by operating
 activities                           60,593,525   60,593,525   11,495,522
                                     -----------  -----------  -----------

Cash flows from investing
 activities:
Purchase of vessels including
 improvements                        (43,582,320) (43,582,320) (62,224,639)
Change in restricted cash               (919,902)    (919,902)    (613,129)
Proceeds from sale of vessels                  -            -    5,980,487
                                     -----------  -----------  -----------
Net cash (used in) investing
 activities                          (44,502,222) (44,502,222) (56,857,281)
                                     -----------  -----------  -----------

Cash flows from financing
 activities:
Issuance of share capital                  5,030        5,030        4,023
Net proceeds from shares issued        1,805,892    1,805,892      645,242
Dividends paid                       (28,370,052) (28,370,052)  (9,279,783)
Offering expenses paid                  (110,340)    (110,340)           -
Loan arrangements fees paid                    -            -     (208,000)
Proceeds from long-term debt                   -            -   33,000,000
Repayment of long-term debt          (19,260,000) (19,260,000)  (9,925,000)
                                     -----------  -----------  -----------
Net cash provided by (used in)
 financing activities                (45,929,470) (45,929,470)  14,236,482
                                     -----------  -----------  -----------

Net decrease in cash and cash
 equivalents                         (29,838,167) (29,838,167) (31,125,277)
Cash and cash equivalents at
 beginning of period                 104,135,320  104,135,320   73,851,191
                                     -----------  -----------  -----------
Cash and cash equivalents at end of
 period                               74,297,153   74,297,153   42,725,914
                                     -----------  -----------  -----------





                              Euroseas Ltd.
                   Reconciliation of Adjusted EBITDA to
        Net Income and Cash Flow Provided By Operating Activities
                  (All amounts expressed in U.S. Dollars)

                                  Three Months  Three Months  Three Months
                                      Ended        Ended         Ended
                                  September 30, September 30, September 30,
                                      2008          2008          2009
                                 (as originally (as adjusted
                                    reported      under the
                                    under the      direct
                                    deferral      expense
                                    method)       method)
                                  ------------  ------------  ------------

Net income                          15,319,652    14,453,733     2,177,887
                                  ------------  ------------  ------------
Interest and finance costs, net
 (incl. interest income)                85,801        85,801       195,334
                                  ------------  ------------  ------------

Depreciation and amortization        8,887,717     7,816,294     5,106,899
                                  ------------  ------------  ------------

Loss / (Gain) on derivatives, net      110,206       110,206    (1,965,954)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (2,025,674)   (2,025,674)     (669,136)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                              737,773       737,773       177,876
                                  ------------  ------------  ------------

 Adjusted EBITDA                    23,115,475    21,178,133     5,022,906
                                  ============  ============  ============


                                    Three Months  Three Months Three Months
                                       Ended        Ended         Ended
                                  September 30, September 30, September 30,
                                        2008          2008         2009
                                   (as originally (as adjusted
                                      reported     under the
                                      under the     direct
                                      deferral      expense
                                      method)       method)
                                     -----------  -----------  -----------
Net cash flow provided by operating
 activities                           20,638,993   20,638,993    4,522,485
                                     -----------  -----------  -----------

Changes in operating assets /
 liabilities                           3,673,539    1,736,197      446,942
                                     -----------  -----------  -----------

Loss on interest rate derivatives
 (realized)                                    -            -      180,499
                                     -----------  -----------  -----------

Loss on trading securities, net       (1,091,463)  (1,091,463)    (138,835)
                                     -----------  -----------  -----------

Investment in trading securities,
 net                                     344,691      344,691            -
                                     -----------  -----------  -----------

Share-based compensation                (515,425)    (515,425)    (157,713)
                                     -----------  -----------  -----------

Interest, net                             65,140       65,140      169,528
                                     -----------  -----------  -----------

Adjusted EBITDA                       23,115,475   21,178,133    5,022,906
                                     ===========  ===========  ===========


                                   Nine Months   Nine Months   Nine Months
                                      Ended        Ended          Ended
                                  September 30, September 30, September 30,
                                      2008          2008          2009
                                 (as originally (as adjusted
                                    reported      under the
                                    under the      direct
                                    deferral      expense
                                    method)       method)
                                  ------------  ------------  ------------

Net income                          46,189,684    43,717,683       676,571
                                  ------------  ------------  ------------
Interest and finance costs, net
 (incl. interest income)               (73,682)      (73,682)       75,705
                                  ------------  ------------  ------------

Depreciation and amortization       25,344,198    22,604,142    14,390,828
                                  ------------  ------------  ------------

Loss on derivatives, net               110,206       110,206     2,945,080
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (8,017,831)   (8,017,831)   (2,746,373)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                            2,213,319     2,213,319     1,653,422
                                  ------------  ------------  ------------

Adjusted EBITDA                     65,765,894    60,553,837    16,995,233
                                  ============  ============  ============


                                    Nine Months  Nine Months  Nine Months
                                       Ended        Ended        Ended
                                  September 30, September 30, September 30,
                                        2008          2008        2009
                                   (as originally (as adjusted
                                      reported     under the
                                      under the     direct
                                      deferral      expense
                                      method)       method)
                                     -----------  -----------  -----------
Net cash flow provided by operating
 activities                           60,593,525   60,593,525   11,495,522
                                     -----------  -----------  -----------

Changes in operating assets /
 liabilities                           7,476,078    2,264,021    6,120,457
                                     -----------  -----------  -----------

Loss on interest rate derivatives
 (realized)                                    -            -      305,058
                                     -----------  -----------  -----------

Gain/ (loss) on trading securities,
 net                                    (834,768)    (834,768)     521,870
                                     -----------  -----------  -----------

Investment in trading securities,
 net                                      62,045       62,045     (741,248)
                                     -----------  -----------  -----------

Share-based compensation              (1,392,823)  (1,392,823)    (709,714)
                                     -----------  -----------  -----------

Interest, net                           (138,163)    (138,163)       3,288
                                     -----------  -----------  -----------

Adjusted EBITDA                       65,765,894   60,553,837   16,995,233
                                     ===========  ===========  ===========


EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings before interest, income taxes, depreciation, amortization, (gain)/loss in derivatives and amortization of deferred revenues from above or below market time charters acquired. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. The Company's definition of Adjusted EBITDA may not be the same as that used by other companies in the shipping or other industries.


                              Euroseas Ltd.
 Reconciliation of Net Income Excluding the Effect from Unrealized Loss /
  (Gain) on derivatives, Unrealized Loss / (Gain) on trading securities,
                            Amortization of the
              Fair Value of Charters Acquired to Net Income
 (All amounts expressed in U.S. Dollars - except share data and per share
                                 amounts)

                                Three Months   Three Months  Three Months
                                    Ended         Ended         Ended
                                September 30,  September 30, September 30,
                                    2008           2008         2009
                               (as originally (as adjusted
                                  reported      under the
                                  under the      direct
                                  deferral       expense
                                  method)        method)
                               -------------  -------------  -------------

Net income                        15,319,652     14,453,733      2,177,887
                               -------------  -------------  -------------

Unrealized loss (gain) on
 derivatives, net                    110,206        110,206     (2,146,453)
                               -------------  -------------  -------------

Unrealized loss on trading
 securities                          992,706        992,706        138,835
                               -------------  -------------  -------------

Amortization of deferred
 revenue of below market time
 charter acquired                 (2,025,673)    (2,025,673)      (669,136)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of above market time
 charter acquired                    737,773        737,773        177,876
                               -------------  -------------  -------------

Net Income / (loss) excluding
 unrealized loss / (gain) on
 derivatives, unrealized loss
 on trading securities,
 amortization of the fair
 value of charters acquired       15,134,664     14,268,745       (320,991)
                               -------------  -------------  -------------

Net Income (loss) per share
 excluding  unrealized loss /
 (gain) on derivatives,
 unrealized loss on trading
 securities, amortization of
 the fair value of charters
 acquired basic                         0.50           0.47          (0.01)
                               -------------  -------------  -------------

Weighted average number of
 shares, basic                    30,476,135     30,476,135     30,628,410
                               -------------  -------------  -------------

Net Income (loss) per share
 excluding  unrealized loss /
 (gain) on derivatives,
 unrealized loss on trading
 securities, amortization of
 the fair value of charters
 acquired, diluted                      0.50           0.47          (0.01)
                               -------------  -------------  -------------

Weighted average number of
 shares, diluted                  30,551,315     30,551,315     30,628,410
                               =============  =============  =============


                                 Nine Months   Nine Months   Nine Months
                                    Ended         Ended         Ended
                                September 30,  September 30, September 30,
                                    2008           2008         2009
                               (as originally (as adjusted
                                  reported      under the
                                  under the      direct
                                  deferral       expense
                                  method)        method)
                               -------------  -------------  ------------

Net income                        46,189,684     43,717,683        676,571
                               -------------  -------------  -------------

Unrealized loss on derivatives       110,206        110,206      2,640,022
                               -------------  -------------  -------------

Unrealized loss (gain) on
 trading securities                  561,011        561,011       (110,426)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of below market time
 charter acquired                 (8,017,831)    (8,017,831)    (2,746,373)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of above market time
 charter acquired                  2,213,319      2,213,319      1,653,422
                               -------------  -------------  -------------

Net Income excluding unrealized
 loss on derivatives, unrealized
 loss/(gain) on trading
 securities, amortization of
 the fair value of charters
 acquired                         41,056,389     38,584,388      2,113,216
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized loss / (gain) on
 trading securities, amortization
 of the fair value of charters
 acquired, basic                        1.35           1.27           0.07
                               -------------  -------------  -------------

Weighted average number of
 shares, basic                    30,409,078     30,409,078     30,593,401
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized loss / (gain) on
 trading securities, amortization
 of the fair value of charters
 acquired, diluted                      1.34           1.26           0.07
                               -------------  -------------  -------------

Weighted average number of
 shares, diluted                  30,555,095     30,555,095     30,642,954
                               =============  =============  =============


About Euroseas Ltd.

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. Euroseas trades on the NASDAQ Global Select Market under the ticker ESEA.

Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2000 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

The Company has a fleet of 17 vessels, including 4 Panamax drybulk carriers, 1 Handymax and 1 Handysize drybulk carriers, 3 Intermediate container ships, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas 6 drybulk carriers have a total cargo capacity of 370,499 dwt, its 10 container ships have a cargo capacity of 17,877 teu and its 1 multipurpose vessel has a cargo capacity of 22,568 dwt or 950 teu.

Forward Looking Statement

This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for dry bulk vessels and container ships, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Visit our website www.euroseas.gr

Contact Information

  • Company Contact
    Tasos Aslidis
    Chief Financial Officer
    Euroseas Ltd.
    11 Canterbury Lane,
    Watchung, NJ 07069
    Tel. (908) 301-9091
    E-mail: aha@euroseas.gr

    Investor Relations / Financial Media
    Nicolas Bornozis
    President
    Capital Link, Inc.
    230 Park Avenue, Suite 1536
    New York, NY 10169
    Tel. (212) 661-7566
    E-mail: nbornozis@capitallink.com