SOURCE: Euroseas

February 28, 2008 16:05 ET

Euroseas Ltd. Reports Results for the Fourth Quarter and Year Ended December 31, 2007

MAROUSSI, ATHENS, GREECE--(Marketwire - February 28, 2008) - 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 fourth quarter and year ended December 31, 2007.

Fourth quarter 2007 Highlights:

--  Net income of $15.3 million or $0.55 basic and diluted earnings per
    share calculated on 27,610,993 basic weighted average number of shares
    outstanding and 27,748,850 diluted weighted average number of shares
    outstanding on total net revenues of $31.5 million. Ignoring the effect on
    the earnings for the quarter from the amortization of the fair value of
    time charter contracts acquired the earnings per share for the quarter
    ended December 31, 2007 would have been be $0.51 per share basic and
    diluted.
    
--  Adjusted EBITDA was $21.5 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income and cash flows provided by operating activities.
    
--  An average 14.63 vessels were operated during the fourth quarter 2007
    earning an average time charter equivalent rate of $26,479 per day.
    
--  Declared a quarterly dividend of $0.30 per share for the fourth
    quarter 2007 payable on March 14, 2008 to shareholders of record as of
    March 5, 2008.
    

2007 Highlights:

--  Net income of $40.7 million or $1.89 basic and $1.88 diluted earnings
    per share calculated on 21,566,619 basic weighted average number of shares
    outstanding and 21,644,920 diluted weighted average number of shares
    outstanding on total net revenues of $82.1 million. Ignoring the effect on
    the earnings for the year from the amortization of the fair value of time
    charter contracts acquired the earnings per share for the year ended
    December 31, 2007 would have been $1.91 per share basic and $1.90 per share
    diluted.
    
--  Adjusted EBITDA was $61.7 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income and cash flows provided by operating activities.
    
--  An average 11.48 vessels were operated during 2007 earning an average
    time charter equivalent rate of $21,468 per day.
    
--  Declared quarterly dividends for the results of 2007, aggregating
    $1.08 per share.
    

Aristides Pittas, Chairman and CEO of Euroseas, commented: "We are very pleased with the performance of our company in the fourth quarter of 2007 during which we reaped the benefits of our fleet growth and employment strategy. With a fleet of 15 vessels we have reached a critical size that allows us to balance our employment strategy and take advantage of market developments as we did during the fourth quarter of 2007. The growth of our dividend from $0.79 per share in 2006 to $1.08 per share in 2007, a 37% increase, is the best evidence of the effectiveness of our investment and employment strategy, especially since it represents only a fraction of our net income and cash flow. We have a strong balance sheet and we are well positioned to take advantage of additional investment opportunities to deploy the funds we raised in November 2007. We will continue executing our plan to grow our fleet by focusing on age and size segments of the drybulk and containership sectors which we believe maximize our risk-adjusted shareholder returns, a strategy that we believe will enable us to continue providing consistent and significant dividends and overall returns to our shareholders."

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The results of 2007 reflect significantly higher revenues compared to 2006 due to the higher number of vessels in our fleet and the higher average time charter equivalent rate our vessels have achieved. Specifically during 2007, our fleet averaged 11.48 vessels vs. 8.09 in 2006 and earned on average $21,468 per vessel per day compared to $14,313 per vessel per day during 2006.

"As of today, 65% of our ship capacity days in 2008 have been fixed under time charter contracts or protected from market fluctuations. We believe that our contract coverage gives us a solid revenue base for 2008 and beyond, more predictable cash flows and sufficient downside protection, while still allowing us to participate in the potential upside of the spot market."

Fourth quarter 2007 Results:

For the fourth quarter of 2007, the Company reported total net revenues of $31.5 million and net income of $15.3 million representing a 165.1% and 222.7% increase, respectively, over total net revenues of $11.9 million and net income of $4.8 million during the fourth quarter of 2006. On average, 14.63 vessels were operated during the fourth quarter 2007 earning an average time charter equivalent rate of $26,479 per day compared to 8.51 vessels in the same period 2006 earning on average $15,774 per day.

Adjusted EBITDA for the fourth quarter of 2007 was $21.5 million, a 166.7% increase of $8.1 million during the fourth quarter of 2006. 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 fourth quarter of 2007 were $0.55, calculated on 27,610,993 basic weighted average number of shares outstanding and 27,748,850 diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.38 for the fourth quarter of 2006, calculated on 12,620,148 basic and diluted weighted average number of shares outstanding. The Company has recently declared a quarterly dividend of $0.30 per share, which represents its tenth consecutive quarterly dividend and a 37% increase over last year's fourth quarter dividend.

Ignoring the effect on the earnings for the quarter from the amortization of the fair value of time charter contracts acquired the earnings per share for the quarter ended December 31, 2007 would have been $0.51 per share basic and diluted, and, for the quarter ended December 31, 2006 would have been $0.38 per share basic and diluted. Usually, security analysts do not include amortization of the fair value of period charter contracts in their published estimates of earnings per share.

Year Ended December 31, 2007 Results:

For the year ended December 31, 2007, the company reported total net revenues of $82.1 million and net income of $40.7 million, representing a 103.6% and 102.6% increase, respectively over 2006. Adjusted EBITDA for the year was $61.7 million, a 108.8% increase of $32.1 million over 2006 (please see below for Adjusted EBITDA reconciliation to net income and cash flow from operating activities). In the year ended December 31, 2006, net revenues were $40.3 million, net income was $20.1 million and EBITDA was $29.5 million. On average, 11.48 vessels were operated during 2007 earning an average time charter equivalent rate of $21,468 per day compared to 8.09 vessels in 2006 earning a time charter equivalent rate of $14,313. Results for the year ended December 31, 2007 included a capital gain of $3.4 million from the sale of M/V "Ariel," while results for the year ended December 31, 2006 included a capital gain of $4.4 million from the sale of M/V "Pantelis P" and M/V "John P," the three eldest of the Company's vessels.

Basic and diluted earnings per share for the year ended December 31, 2007 were $1.89 and $1.88, respectively, calculated on 21,566,619 basic weighted average number of shares outstanding and 21,644,920 diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $1.60 for 2006 calculated on 12,535,365 basic and diluted weighted average number of shares outstanding.

Ignoring the effect on the earnings for the year from the amortization of the fair value of time charter contracts acquired the earnings per share would have been $1.91 basic and $1.90 diluted earnings per share for the year ended December 31, 2007 and $1.57 per share basic and diluted for the year ended December 31, 2006. Usually, security analysts do not include amortization of the fair value of period charter contracts in their published estimates of earnings per share.

Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:


                                         Year                   TCERate
Name           Type        Dwt    TEU    Built   Employment     ($/day)
           ------------- ------- ------ ------- ------------- -------------
Dry Bulk Vessels
                                                   Baumarine
                                                 Spot Pool -  Spot / Partly
IRINI (*)        Panamax  69,734           1988 ‘til end 2008  fixed
           ------------- ------- ------ ------- ------------- -------------
ARISTIDES                                            TC ‘til
 N.P.            Panamax  69,268           1993       Feb-09  $      52,000
           ------------- ------- ------ ------- ------------- -------------
                                                     TC ‘til
IOANNA P.       Panamax  64,873            1984       Aug-08  $      35,500
           ------------- ------- ------ ------- ------------- -------------
NIKOLAOS P.    Handysize  34,750           1984          Spot $      34,000
           ------------- ------- ------ ------- ------------- -------------
GREGOS         Handysize  38,691           1984          Spot $      45,000
           ------------- ------- ------ ------- ------------- -------------
Total Dry
 Bulk Vessels      5     277,316
           ------------- ------- ------ ------- ------------- -------------

Multipurpose Dry
 Cargo Vessels
                                                              $ 8,850 ‘til
                                                                 Dec-08,
                                                              $ 9,500 ‘til
                                                                 Dec-10,
TASMAN                                             TC ‘til    $ 9,000 ‘til
 TRADER           1       22,568    950    1990     Mar-12       Mar-12
           ------------- ------- ------ ------- ------------- -------------

Container Carriers
TIGER                                              TC ‘til
 BRIDGE     Intermediate  31,627  2,228    1990     Jul-09    $      16,500
           ------------- ------- ------ ------- ------------- -------------
                                                   TC ‘til
ARTEMIS     Intermediate  29,693  2,098    1987     Dec-08    $      19,000
           ------------- ------- ------ ------- ------------- -------------
                                                              $ 14,750 ‘til
                                                                  Feb-08
                                                   TC ‘til    $ 15,250 ‘til
DESPINA P      Handysize  33,667  1,932    1990     Feb-09       Feb-09
           ------------- ------- ------ ------- ------------- -------------
JONATHAN P     Handysize  33,667  1,932    1990          Spot          Spot
           ------------- ------- ------ ------- ------------- -------------
CLAN                                               TC ‘til
 GLADIATOR     Handysize  30,007  1,742    1992     Apr-08    $      19,000
           ------------- ------- ------ ------- ------------- -------------
YM                                                 TC ‘til
 XINGANG I     Handysize  23,596  1,599    1993     Jul-09    $      26,650
           ------------- ------- ------ ------- ------------- -------------
                                                   TC ‘til
MANOLIS P      Handysize  20,346  1,452    1995     Mar-08    $      13,450
           ------------- ------- ------ ------- ------------- -------------
NINOS                                                         $ 12,800 ‘til
 (ex-YM                                                          Apr-08
  QINGDAO                                          TC ‘til    $ 13,175 ‘til
  I)              Feeder 18,253  1,169     1990     Apr-09       Apr-09
           ------------- ------- ------ ------- ------------- -------------
KUO                                                TC ‘til
 HSIUNG           Feeder  18,154  1,169    1993     Feb-09    $      15,800
           ------------- ------- ------ ------- ------------- -------------
Total Container
 Carriers          9     239,010 15,321
           ------------- ------- ------ ------- ------------- -------------
Fleet Grand
 Total            15     538,894 16,271
           ------------- ------- ------ ------- ------------- -------------

(*) "IRINI" is employed in the Baumarine spot pool that is managed by Klaveness, a major global charterer in the dry bulk area, and also participates in "short" funds (contracts to carry cargo at agreed rates), reducing its exposure to the spot market.

Summary Fleet Data:

                                3 months   3 months       Year       Year
                                   ended      ended      ended      ended
                                December   December   December   December
                                31, 2006   31, 2007   31, 2006   31, 2007
                                ---------  ---------  ---------  ---------
FLEET DATA
Average number of vessels (1)        8.51      14.63       8.09      11.48
Calendar days for fleet (2)         783.0    1,346.0    2,942.0    4,190.0
Available days for fleet (3)        783.0    1,253.0    2,894.9    3,980.0
Voyage days for fleet (4)           779.8    1,245.5    2,863.8    3,968.9
Fleet utilization (5)                99.6%      99.4%      98.9%      99.7%

AVERAGE DAILY RESULTS
Time charter equivalent rate (6)   15,774     26,479     14,313     21,468
Vessel operating expenses (7)       4,332      5,399      4,294      4,991
General and administrative
 expenses (8)                         407      1,105        366        634
Total vessel operating
 expenses (9)                       4,739      6,504      4,660      5,624
                                ---------  ---------  ---------  ---------

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

(4) 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 off-hire days associated with scheduled and unscheduled repairs, drydockings or special or intermediate surveys or days waiting to find employment or other offhire. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues.

(5) 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.

(6) 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.

(7) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.

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

(9) Total vessel operating expenses, or TVOE, is a measure of our total expenses associated with operating our vessels. 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.

Conference Call and Webcast:

Tomorrow, Friday, February 29, 2008 at 9:30 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 March 07, 2008 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 webcast - 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 slides presentation on the fourth quarter and year ended December 31, 2007 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)


                        Three Months Three Months
                           Ended       Ended,     Year Ended,  Year Ended
                        December 31, December 31, December 31, December 31,
                           2006         2007         2006         2007
                        -----------  -----------  -----------  -----------
                        (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues
  Voyage revenue         12,441,416   33,041,513   42,143,361   86,104,365
  Commissions              (549,129)  (1,516,764)  (1,829,534)  (4,024,032)
Net revenues             11,892,287   31,524,749   40,313,827   82,080,333

Operating expenses
  Voyage expenses           140,355       62,177    1,154,738      897,463
  Vessel operating
   expenses               2,768,869    6,022,711   10,368,817   17,240,132
  Amortization and
   depreciation           2,303,081    7,132,304    7,292,838   17,963,072
  Management fees           623,447    1,244,343    2,266,589    3,669,137
  Other general and
   administrative
   expenses                 318,603    1,487,958    1,076,884    2,656,176
  Net gain from sale of
   vessels                        -            -   (4,445,856)  (3,411,397)
Total operating
 expenses                 6,154,355   15,949,493   17,714,010   39,014,583

Operating income          5,737,932   15,575,256   22,599,817   43,065,750
Other income/(expenses)
  Interest and finance
   cost                  (1,139,908)  (1,259,048)  (3,398,858)  (4,850,239)
  Interest income           149,495      909,686      870,046    2,357,633
  Unrealized gain on
   trading securities             -       98,744            -       98,744
  Foreign exchange loss        (534)      (6,060)      (1,598)      (7,824)
Other expenses, net        (990,947)    (256,678)  (2,530,410)  (2,401,686)

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

Net income                4,746,985   15,318,578   20,069,407   40,664,064
                        -----------  -----------  -----------  -----------

Earnings, per share,
 basic                         0.38         0.55         1.60         1.89
Weighted average number
 of shares, basic        12,620,148   27,610,993   12,535,365   21,566,619
                        -----------  -----------  -----------  -----------

Earnings, per share,
 diluted                       0.38         0.55         1.60         1.88
                        -----------  -----------  -----------  -----------
Weighted average number
 of shares, diluted      12,620,148   27,748,850   12,535,365   21,644,920
                        -----------  -----------  -----------  -----------



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


                                               December 31,   December 31,
                                                   2006           2007
                                              -------------- --------------
                                               (unaudited)    (unaudited)
ASSETS
Current Assets:
   Cash and cash equivalents                       2,791,107    104,135,320
   Trade accounts receivable                         378,216      1,174,045
   Other receivables                                 268,864        741,081
   Due from related company                        2,649,259      5,291,197
   Inventories                                       716,131      1,903,678
   Restricted cash                                 1,146,621      1,739,879
   Vessel held for sale                            1,782,840              -
   Trading securities                                      -      2,891,658
   Prepaid expenses                                  242,558        430,605
Total current assets                               9,975,596    118,307,463

Fixed assets:
   Vessels, net                                   95,494,342    238,248,984
Long-term assets:
   Restricted cash                                 2,700,000      4,500,000
   Deferred charges, net                           1,291,844      5,529,870
   Deferred offering expenses                        500,000              -
   Fair value of above market time charter
    acquired                                       7,543,477      4,604,514
Total long-term assets                           107,529,663    252,883,368
Total assets                                     117,505,259    371,190,831

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Long term debt, current portion                18,040,000     25,575,000
   Trade accounts payable                          1,034,713      3,789,764
   Accrued expenses                                1,233,185      2,043,585
   Deferred revenue                                1,357,501      3,774,162
Total current liabilities                         21,665,399     35,182,511

Long-term liabilities:
   Long term debt, net of current portion         56,910,000     56,015,000
   Fair value of below market time charter
    acquired                                         918,200      8,202,972
Total long-term liabilities                       57,828,200     64,217,972
Total liabilities                                 79,493,599     99,400,483

Shareholders' equity:
   Common stock (par value $0.03, 100,000,000
    shares authorized, 12,620,150 and
    30,261,113 issued and outstanding)
    Preferred shares (par value $0.01,
    20,000,000 shares authorized, no shares
    issued and outstanding)                          378,605        907,834
   Additional paid-in capital                     18,283,767    231,147,700
   Retained earnings                              19,349,288     39,734,814
   Total shareholders' equity                     38,011,660    271,790,348
   Total liabilities and shareholders' equity    117,505,259    371,190,831
                                              -------------- --------------



                              Euroseas Ltd.
              Consolidated Condensed Statements of Cash Flows
                  Years ended December 31, 2006 and 2007
                  (All amounts expressed in U.S. Dollars)


                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2006          2007
                                                ------------  ------------
                                                (unaudited)   (unaudited)
                                                ------------  ------------
Cash flows from operating activities:
Net income                                        20,069,407    40,664,064
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation of vessels                            6,277,328    16,423,092
Amortization of deferred charges                   1,090,111     1,612,695
Amortization of fair value of time charters         (351,369)      548,254
Gain on sale of vessels                           (4,445,856)   (3,411,397)
Share-based compensation                                   -       822,782
Purchase of trading securities                             -    (2,792,914)
Unrealized gain on trading securities                      -       (98,744)
Changes in operating assets and liabilities       (1,670,797)   (4,809,062)
                                                ------------  ------------
Net cash provided by operating activities         20,968,824    48,958,770
                                                ------------  ------------

Cash flows from investing activities:
Purchase of vessels including improvements       (53,830,357) (149,502,254)
Cash paid for above-market charter acquired       (7,923,480)            -
Change in restricted cash                         (2,765,672)   (2,393,258)
Proceeds from sale of vessels                      9,152,494     5,223,521
                                                ------------  ------------
Net cash  (used in) investing activities         (55,367,015) (146,671,991)
                                                ------------  ------------

Cash flows from financing activities:
Issuance of share capital                             10,000       527,204
Net proceeds from shares issued                            -   213,692,070
Dividends paid                                    (9,465,082)  (20,278,535)
Loan arrangement fees paid                          (151,250)     (110,000)
Deferred offering expenses paid                      (41,671)   (1,413,305)
Proceeds from long-term debts                     43,750,000    25,000,000
Repayment of long-term debts                     (17,360,000)  (18,360,000)
                                                ------------  ------------
Net cash provided by financing activities         16,741,997   199,057,434
                                                ------------  ------------

Net (decrease) increase in cash and cash
 equivalents                                     (17,656,194)  101,344,213
Cash and cash equivalents at beginning of year    20,447,301     2,791,107
                                                ------------  ------------
Cash and cash equivalents at end of year           2,791,107   104,135,320
                                                ------------  ------------



                              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
                   Ended          Ended        Year Ended     Year Ended
                December 31,   December 31,    December 31,   December 31,
                   2006           2007            2006           2007
                -------------  -------------  -------------  -------------
Net income          4,746,985     15,318,578     20,069,407     40,664,064
                -------------  -------------  -------------  -------------
Interest and
 finance costs,
 net (incl.
 interest
 income)              990,413        349,362      2,528,812      2,492,606
                -------------  -------------  -------------  -------------
Depreciation
 and
 amortization       2,303,081      7,132,304      7,292,838     17,963,072
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 below market
 time charter
 acquired            (361,566)    (2,042,062)      (731,372)    (2,390,709)
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 above market
 time charter
 acquired             380,003        737,773        380,003      2,938,963
                -------------  -------------  -------------  -------------
Adjusted EBITDA     8,058,916     21,495,955     29,539,688     61,667,996
                =============  =============  =============  =============



                Three Months   Three Months
                   Ended          Ended        Year Ended     Year Ended
                December 31,   December 31,    December 31,   December 31,
                   2006           2007            2006           2007
                -------------- -------------  -------------- -------------
Net cash flow
 provided by
 operating
 activities          5,253,526    15,645,916      20,968,824    48,958,770
                -------------- -------------  -------------- -------------
Changes in
 operating
 assets /
 liabilities         1,830,796     3,449,963       1,670,796     4,809,063
                -------------- -------------  -------------- -------------
Gain from sale
 of vessels                  -             -       4,445,856     3,411,397
                -------------- -------------  -------------- -------------
Purchase of
 trading
 securities                  -     2,792,914               -     2,792,914
                -------------- -------------  -------------- -------------
Unrealized gain
 on trading
 securities                  -        98,744               -        98,744
                -------------- -------------  -------------- -------------
Share-based
 compensation                -      (822,782)              -      (822,782)
                -------------- -------------  -------------- -------------
Interest, net          974,594       331,200       2,454,212     2,419,890
                -------------- -------------  -------------- -------------
Adjusted EBITDA      8,058,916    21,495,955      29,539,688    61,667,996
                ============== =============  ============== =============

EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings before interest, income taxes, depreciation, amortization 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 the 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
                   Ended          Ended        Year Ended     Year Ended
                December 31,   December 31,    December 31,   December 31,
                   2006           2007            2006           2007
                -------------  -------------  -------------  -------------
Net income          4,746,985     15,318,578     20,069,407     40,664,064
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 below market
 time charter
 acquired            (361,566)    (2,042,062)      (731,372)    (2,390,709)
                -------------  -------------  -------------  -------------
Amortization of
 deferred
 revenue of
 above market
 time charter
 acquired             380,003        737,773        380,003      2,938,963
                -------------  -------------  -------------  -------------
Net Income
 excluding
 amortization
 of the fair
 value of
 charters
 acquired           4,765,422     14,014,289     19,718,038     41,212,318
                -------------  -------------  -------------  -------------
Net Income per
 share
 excluding
 amortization
 of the fair
 value of
 charters
 acquired,
 basic                   0.38           0.51           1.57           1.91
                -------------  -------------  -------------  -------------
Weighted
 average number
 of shares,
 basic             12,620,148     27,610,993     12,535,365     21,566,619
                -------------  -------------  -------------  -------------
Net Income per
 share
 excluding
 amortization
 of the fair
 value of
 charters
 acquired,
 diluted                 0.38           0.51           1.57           1.90
                -------------  -------------  -------------  -------------
Weighted
 average number
 of shares,
 diluted           12,620,148     27,748,850     12,535,365     21,644,920
                =============  =============  =============  =============

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 Market under the ticker ESEA since January 31, 2007.

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 15 vessels, including 3 Panamax drybulk carriers, 2 Handysize drybulk carriers, 2 Intermediate container ships, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas' 5 drybulk carriers have a total cargo capacity of 277,316 dwt, its 9 container ships will have a cargo capacity of 239,010 dwt or 15,321 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