SOURCE: Euroseas

Euroseas

February 23, 2009 16:15 ET

Euroseas Ltd. Reports Results for the Fourth Quarter and Year Ended December 31, 2008

MAROUSSI, ATHENS, GREECE--(Marketwire - February 23, 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 fourth quarter of 2008 and year ended December 31, 2008.

Fourth Quarter 2008 Highlights:

--  Net loss of $22.6 million or $0.74 per share basic and diluted on
    total net revenues of $24.3 million. The results include a $25.1 million
    impairment loss on fixed assets. Excluding the effect on the earnings for
    the quarter of the impairment loss as well as the effect from the loss on
    derivatives and investments and the amortization of the fair value of time
    charter contracts acquired, the earnings per share for the quarter ended
    December 31, 2008 would have been $7.0 million or $0.23 per share basic and
    diluted.
    
--  Adjusted EBITDA was $13.1 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average of 16 vessels were operated during the fourth quarter of
    2008 earning an average time charter equivalent rate of $17,971 per day.
    
--  Declared a quarterly dividend of $0.10 per share for the fourth
    quarter of 2008 payable on March 20, 2009 to shareholders of record on
    March 12, 2009. This is the fourteenth consecutive quarterly dividend
    declared.
    

Full Year 2008 Highlights:

--  Net income of $23.6 million or $0.78 per share basic and $0.77 per
    share diluted on total net revenues of $127.1 million. The results include
    a $25.1 million impairment loss on fixed assets. Excluding the effect on
    the earnings for the year of the impairment loss as well as the effect from
    the loss on derivatives and investments and amortization of the fair value
    of time charter contracts acquired the earnings per share for the year
    ended December 31, 2008 would have been $48.1 million or $1.58 per share
    basic and diluted.
    
--  Adjusted EBITDA was $78.9 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average of 15.62 vessels were operated during 2008 earning an
    average time charter equivalent rate of $23,837 per day.
    
--  Declared quarterly dividends for the first, second, third and fourth
    quarters of 2008, aggregating $0.93 per share.
    

Aristides Pittas, Chairman and CEO of Euroseas, commented: "The fourth quarter of 2008 was a very challenging one for most shipping companies. Over the past year, we have been preparing for a possible market downturn by maintaining a strong balance sheet with a very low level of debt and plenty of cash. In 2008, we avoided investing in new acquisitions, except for one which was protected through a 3-year time charter.

Our results for the fourth quarter 2008 were greatly impacted by about $25 million impairment charge we took mainly on m/v Ioanna P. This vessel was our latest drybulk acquisition and was sold during the first quarter of 2009. Until its sale, this vessel contributed $14.7 million in operating earnings; had the good markets lasted until mid 2009, as we had expected at the time of its purchase, it would have earned us enough to prove a successful investment.

Looking forward into 2009 and 2010, we expect to witness a difficult market which will however present significant expansion opportunities. We have currently covered about 75% of our drybulk and 54% of our container available days for 2009, and, about 75% of our drybulk and 26% of our container available days for 2010 with time charter or FFA contracts. Revenues of the vessels that will come out of existing charters in 2009 are expected to be low and especially in the container market it may prove more economical to temporarily lay-up some vessels (we have already laid up M/V ARTEMIS).

We have already started implementing a fleet renewal program by purchasing two drybulk vessels of around 11-12 years old and selling two of our 25-year old drybulk vessels. The incremental capital expenditure was about $32 million out of which $10 million is financed with debt and we expect to use $10 million more to finance the ship that we are taking delivery of in early March; if we did the same two replacements in our fleet, five months ago we would have a net capital outlay in excess of $100 million. We will continue with our modernization and fleet expansion program at opportune times.

Our Board confirmed its intention to continue paying healthy dividends to our shareholders throughout the market cycles in parallel with our expansion program, as far as practically possible. In that respect we are happy to have declared a quarterly dividend of $0.10 per share which represents a yield of about 9.5% on the basis of our stock price on February 20, 2009."

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The results of the full year of 2008 reflect significantly higher revenues compared to 2007 due to the higher average time charter equivalent rate our vessels have achieved during the year and the higher number of vessels in our fleet. Our results for the fourth quarter 2008 were lower compared to the same period for 2007. Our results were also negatively affected by impairment and other non-cash losses on interest rate derivatives, FFAs and declines in value of a small amount of securities held.

Daily vessel operating expenses, including management fees, during 2008 reflect an increase of about 15.4% on a per vessel per day basis compared to 2007. Despite this increase, we maintain one of the lowest operating cost structures amongst the public shipping companies which, we believe, is one of our competitive advantages. It is worth noting that in the second half of 2008 most of the cost increases that occurred in the second quarter were reversed. We will continue to focus on controlling and reducing our costs while ensuring safe operations.

I would like to note that we are in full compliance with all our debt covenants as of December 31, 2008. As of December 31, 2008, our outstanding debt is about $56 million versus restricted and unrestricted cash of more than $80 million. Even after accounting for the capital expenditures for our two acquisitions in 2009, we are left with about $70 million of restricted and unrestricted cash. Our scheduled debt repayments in 2009 are about $13.2 million, a number low enough to provide us with operational cash flow comfort. We estimate that our cash flow breakeven for 2009 excluding dividend payments is around $9,500 per vessel per day."

Fourth Quarter 2008 Results:

For the fourth quarter of 2008, the Company reported total net revenues of $24.3 million representing a 22.8% decrease over total net revenues of $31.5 million during the fourth quarter of 2007. The Company reported a net loss for the period of $22.6 million as compared to net income of $15.3 million for the fourth quarter of 2007. The results for the fourth quarter of 2008 include a $25.1 million impairment loss on the book value of the vessels and a $4.7 million loss on derivatives and investments as compared to $0.1 million gain on investments for the same period of 2007. On average, 16 vessels were operated during the fourth quarter 2008 earning an average time charter equivalent rate of $17,971 per day compared to 14.63 vessels in the same period 2007 earning on average $26,479 per day.

Adjusted EBITDA for the fourth quarter of 2008 was $13.1 million, a 39.0% decrease from $21.5 million achieved during the fourth quarter of 2007. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.

Basic and diluted loss per share for the fourth quarter of 2008 was $0.74, calculated on 30,520,584 and 30,534,713 weighted average number of shares outstanding, respectively, compared to basic and diluted earnings per share of $0.55 for the fourth quarter of 2007, calculated on 27,610,993 and 27,748,850 weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings for the quarter of the impairment loss, loss on investments and derivatives and amortization of the fair value of time charter contracts acquired the earnings per share for the quarter ended December 31, 2008 would have been $0.23 per share basic and diluted and, for the quarter ended December 31, 2007 would have been $0.50 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.

The Company has declared a quarterly dividend of $0.10 per share, which represents its fourteenth consecutive quarterly dividend and a 67% decrease over last year's fourth quarter dividend, reflecting the recent dramatic change of market conditions and the Company's continuing investment strategy. The dividend is payable on March 20, 2009 to shareholders of record as of March 12, 2009.

Year Ended December 31, 2008 Results:

For the year ended December 31, 2008, the Company reported total net revenues of $127.1 million and net income of $23.6 million, representing a 54.8% increase and 41.9% decrease, respectively over 2007. The results for the year also include a $25.1 million impairment loss on the book value of the vessels and a $5.4 million loss on derivatives and investments as compared to $0.1 million gain on investments for the same period of 2007. Results for the year ended December 31, 2007 included a capital gain of $3.4 million from the sale of M/V "Ariel."

Adjusted EBITDA for the period was $78.9 million, a 27.9% increase over 2007 (please see below for Adjusted EBITDA reconciliation to net income and cash flow from operating activities). In the year ended December 31, 2007, net revenues were $82.1 million, net income was $40.7 million and Adjusted EBITDA was $61.7 million. On average, 15.62 vessels were operated during the year 2008 earning an average time charter equivalent rate of $23,837 per day compared to 11.46 vessels in the same period 2007 earning a time charter equivalent rate of $21,468.

Basic earnings per share for the year ended December 31, 2008 were $0.78 calculated on 30,437,107 weighted average number of shares outstanding, compared to basic earnings per share of $1.89 for 2007 calculated on 21,566,619 weighted average number of shares outstanding. Diluted earnings per share for the year ended December 31, 2008 were $0.77 calculated on 30,505,476 weighted average number of shares outstanding, compared to basic earnings per share of $1.88 for 2007 calculated on 21,644,920 weighted average number of shares outstanding.

Excluding the effect on the earnings for the year of the impairment loss, loss on investments and derivatives and from the amortization of the fair value of time charter contracts acquired the earnings per share for the year ended December 31, 2008 would have been $1.58 per share basic and diluted, and, for the year ended December 31, 2007 would have been $1.75 per share basic and $1.74 per share diluted exclusive of a $0.17 per share capital gain from the sale of M/V Ariel in February 2007. Usually, security analysts do not include the above in their published estimates of earnings per share.

Fleet Profile:

The Euroseas Ltd. fleet profile after delivering the vessels Ioanna P and Nikolas P to their new owners in January and February 2009, respectively, taking delivery of MONICA P in January 2009 and after taking delivery in early March 2009 of the recently acquired GLORIOUS WIND (to be renamed ELENI P) will be as follows:


                                             Year                 TCERate
Name                Type       Dwt     TEU   Built  Employment    ($/day)
                ------------ -------- ------ ----- ------------  ----------
Dry Bulk Vessels
                ------------ -------- ------ ----- ------------  ----------
GLORIOUS WIND
 (to be renamed
 ELENI P)            Panamax   72,119         1997         Spot
                ------------ -------- ------ ----- ------------  ----------
                                                      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              5       296,479
                ------------ -------- ------ ----- ------------  ----------

                ------------ -------- ------ ----- ------------  ----------
Multipurpose
 Dry Cargo
 Vessels
                ------------ -------- ------ ----- ------------  ----------
TASMAN TRADER         1        22,568    950  1990      TC 'til  $    9,500
                                                         Mar-12        'til
                                                                     Dec-10

                                                                 $    9,000
                                                                       'til
                                                                     Mar-12
                ------------ -------- ------ ----- ------------  ----------

Container
 Carriers
                ------------ -------- ------ ----- ------------  ----------
MAERSK NOUMEA   Intermediate   34,677  2,556  2001      TC 'til  $   16,800
                                                         Aug-11    'til Aug
                                                      (3 annual          11
                                                   options 'til
                                                        Aug-14)  $   18,735
                                                                   'til Aug
                                                                         12

                                                                 $   19,240
                                                                   'til Aug
                                                                         13

                                                                 $   19,750
                                                                   'til Aug
                                                                         14
                ------------ -------- ------ ----- ------------  ----------
TIGER BRIDGE    Intermediate   31,627  2,228  1990      TC 'til  $   16,500
                                                         Jul-09
                ------------ -------- ------ ----- ------------  ----------
ARTEMIS         Intermediate   29,693  2,098  1987      Laid-up
                ------------ -------- ------ ----- ------------  ----------
DESPINA P         Handy size   33,667  1,932  1990         Open
                ------------ -------- ------ ----- ------------  ----------

OEL INTEGRITY     Handy size   33,667  1,932  1990      TC 'til  $   16,500
(ex-JONATHAN P)                                          Mar-09
                ------------ -------- ------ ----- ------------  ----------
OEL TRANSWORLD    Handy size   30,007  1,742  1992      TC 'til  $   12,000
(ex-CLAN                                            Oct-09 'til  $   10,000
 GLADIATOR)                                              Oct-10    (owner's
                                                      (owner's      option)
                                                        option)
                ------------ -------- ------ ----- ------------  ----------
YM XINGANG I      Handy size   23,596  1,599  1993      TC 'til  $   26,650
                                                         Jul-09
                ------------ -------- ------ ----- ------------  ----------
MANOLIS P         Handy size   20,346  1,452  1995      TC 'til  $   15,800
                                                         Oct-09
                ------------ -------- ------ ----- ------------  ----------

NINOS                 Feeder   18,253  1,169  1990      TC 'til  $    8,060
(ex-YM QINGDAO                                           Apr-10
 I)
                ------------ -------- ------ ----- ------------  ----------

KUO HSIUNG            Feeder   18,154  1,169  1993         Open
                ------------ -------- ------ ----- ------------  ----------

Total
 Container
 Carriers                 10  273,687 17,877
                ------------ -------- ------ ----- ------------  ----------
Fleet Grand
 Total                    16  592,734 18,827
                ------------ -------- ------ ----- ------------  ----------

 (*) "IRINI" is employed in the Baumarine spot pool that is managed by
     Klaveness, a major global charterer in the dry bulk area.
(**) "Monica P" is employed in the Bulkhandling spot pool that is managed
     by Klaveness, a major global charterer in the dry bulk area.



Summary Fleet Data:

                                3 months,  3 months,       Year       Year
                                    ended      ended      ended      ended
                                 December   December   December   December
                                 31, 2007   31, 2008   31, 2007   31, 2008
                                ---------  ---------  ---------  ---------
FLEET DATA
Average number of vessels (1)       14.63      16.00      11.46      15.62
Calendar days for fleet (2)       1,346.0    1,472.0    4,190.0    5,714.0
Available days for fleet (3)      1,253.0    1,460.1    3,980.0    5,563.2
Voyage days for fleet (4)         1,245.5    1,401.7    3,968.9    5,450.5
Fleet utilization (5)                99.4%      96.0%      99.7%      98.0%

AVERAGE DAILY
 RESULTS
(USD/day/vessel)
Time charter equivalent rate
 (6)                               26,479     17,971     21,468     23,837
Vessel operating expenses (7)       5,399      5,730      4,991      5,759
General and administrative
 expenses (8)                       1,105        525        634        710
Total vessel operating expenses
 (9)                                6,504      6,255      5,625      6,469
                                ---------  ---------  ---------  ---------

(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, repairs
and management fees are calculated by dividing vessel operating expenses
plus management fees 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, management fees 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, February 24, 2009 at 10:30 a.m. EDT, 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 3, 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 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, 2008 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 Statement of Income
      (All amounts expressed in U.S. Dollars - except share amounts)

                    Three Months  Three Months     Year          Year
                       Ended         Ended         Ended         Ended
                    December 31,  December 31,  December 31,  December 31,
                        2007          2008          2007          2008
                    ------------  ------------  ------------  ------------
                     (unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenues
     Voyage revenue   33,041,513    25,451,506    86,104,365   133,016,281
        Commissions   (1,516,764)   (1,112,667)   (4,024,032)   (5,940,460)
Net revenues          31,524,749    24,338,839    82,080,333   127,075,821

Operating expenses
  Voyage expenses         62,177       262,461       897,463     3,092,323
  Vessel operating
   expenses            6,022,711     7,168,597    17,240,132    27,521,194
  Amortization and
   depreciation        7,132,304     7,722,923    17,963,072    33,067,121
  Impairment loss              -    25,113,364             -    25,113,364
  Management fees      1,244,343     1,265,760     3,669,137     5,387,415
  Other general and
   administrative
   expenses            1,487,958       772,561     2,656,176     4,057,736
Total operating
 expenses             15,949,493    42,305,666    42,425,980    98,239,153

Net gain from sale
 of vessel                     -             -     3,411,397             -

Operating income      15,575,256   (17,966,827)   43,065,750    28,836,668

Other income/
 (expenses)
  Interest and
   finance cost       (1,259,048)     (619,077)   (4,850,239)   (2,930,737)
  Interest income        909,686       783,159     2,357,633     3,168,501
  Gain (loss) from
   investments            98,744    (1,436,513)       98,744    (1,997,524)
  Loss on
   derivatives                 -    (3,364,429)            -    (3,474,635)
  Foreign exchange
   (loss) gain            (6,060)       24,164        (7,824)        7,888
  Other expenses,
   net                  (256,678)   (4,612,696)   (2,401,686)   (5,226,507)
                    ------------  ------------  ------------  ------------

Net income (loss)     15,318,578   (22,579,523)   40,664,064    23,610,161
                    ------------  ------------  ------------  ------------

Earnings (loss),
 per share, basic           0.55         (0.74)         1.89          0.78
Weighted average
 number of shares,
 basic                27,610,993    30,520,584    21,566,619    30,437,107
Earnings (loss),
 per share, diluted         0.55         (0.74)         1.88          0.77
Weighted average
 number of shares,
 diluted              27,748,850    30,534,713    21,644,920    30,505,476








                              Euroseas Ltd.
                   Consolidated Condensed Balance Sheet
                 (All amounts expressed in U.S. Dollars)

                                                December 31,  December 31,
                                                    2007          2008
                                                ------------- -------------
                                                 (unaudited)   (unaudited)
ASSETS
Current Assets:
  Cash and cash equivalents                       104,135,320    73,851,191
  Trade accounts receivable                         1,174,045     1,237,592
  Other receivables, net                              741,081     1,439,628
  Due from related company                          5,291,197     4,678,750
  Inventories                                       1,903,678     2,011,973
  Restricted cash                                   1,739,879     2,181,264
  Vessels held for sale                                     -     6,067,020
  Trading securities                                2,891,658       771,727
  Derivatives                                               -        61,670
  Prepaid expenses                                    430,605       241,102
Total current assets                              118,307,463    92,541,917

Fixed assets:
  Vessels, net                                    238,248,984   231,127,386
  Advances for vessel acquisition                           -     1,821,798
Long-term assets:
  Restricted cash                                   4,500,000     4,800,000
  Deferred charges, net                             5,529,870     7,771,342
  Derivatives                                               -        68,038
  Fair value of above market time charter
   acquired                                         4,604,514     1,653,422
Total long-term assets                            252,883,368   247,241,986
                                                ------------- -------------
Total assets                                      371,190,831   339,783,903
                                                ------------- -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Long term debt, current portion                  25,575,000    12,450,000
  Trade accounts payable                            3,789,764     2,283,488
  Accrued expenses                                  2,043,585     1,206,466
  Accrued dividends                                         -       116,750
  Deferred revenue                                  3,774,162     3,764,935
  Derivatives                                               -       827,210
Total current liabilities                          35,182,511    20,648,849

Long-term liabilities:
  Long term debt, net of current portion           56,015,000    43,565,000
  Derivatives                                               -     2,700,028
  Fair value of below market time charter
   acquired                                         8,202,972     8,704,811
Total long-term liabilities                        64,217,972    54,969,839
Total liabilities                                  99,400,483    75,618,688

Shareholders' equity:
  Common stock (par value $0.03, 100,000,000
   shares authorized, 30,261,113 and 30,575,611
   issued and outstanding)
  Preferred shares (par value $0.01, 20,000,000
   shares authorized, no shares issued and
   outstanding)                                       907,834       917,269
  Additional paid-in capital                      231,147,700   234,567,670
  Retained earnings                                39,734,814    28,680,276
Total shareholders' equity                        271,790,348   264,165,215
                                                ------------- -------------
Total liabilities and shareholders' equity        371,190,831   339,783,903
                                                ------------- -------------









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

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                ------------  ------------
                                                        2007          2008
                                                ------------  ------------
                                                (unaudited)   (unaudited)
                                                ------------  ------------
Cash flows from operating activities:
Net income                                        40,664,064    23,610,161
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation of vessels                           16,423,092    29,120,972
Impairment of vessels                                      -    25,113,364
Amortization of deferred charges                   1,612,695     4,031,290
Amortization of fair value of time charters          548,254    (6,144,507)
Gain on sale of vessels                           (3,411,397)            -
Share-based compensation                             822,782     1,618,484
Investment in trading securities, net             (2,792,914)     (192,859)
Loss on trading securities                           (98,744)    2,312,790
Loss on derivatives                                        -     3,397,530
Changes in operating assets and liabilities       (4,809,062)   (8,583,484)
                                                ------------  ------------
Net cash provided by operating activities         48,958,770    74,283,741
                                                ------------  ------------

Cash flows from investing activities:
Purchase of vessels including improvements      (149,502,254)  (43,582,320)
Advances for vessel acquisition                            -    (1,821,798)
Change in restricted cash                         (2,393,258)     (741,385)
Proceeds from sale of vessels                      5,223,521             -
                                                ------------  ------------
Net cash (used in) investing activities         (146,671,991)  (46,145,503)
                                                ------------  ------------

Cash flows from financing activities:
Issuance of share capital                            527,204         5,030
Net proceeds from shares issued                  213,692,070     1,805,892
Dividends paid                                   (20,278,535)  (34,547,949)
Loan arrangement fees paid                          (110,000)            -
Offering expenses paid                            (1,413,305)     (110,340)
Proceeds from long term debt                      25,000,000             -
Repayment of long-term debt                      (18,360,000)  (25,575,000)
                                                ------------  ------------
Net cash provided by / (used in) financing
 activities                                      199,057,434   (58,422,367)
                                                ------------  ------------

Net increase / (decrease) in cash and cash
 equivalents                                     101,344,213   (30,284,129)
Cash and cash equivalents at beginning of
 period                                            2,791,107   104,135,320
                                                ------------  ------------
Cash and cash equivalents at end of period       104,135,320    73,851,191
                                                ------------  ------------







                              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      Year          Year
                        Ended         Ended         Ended         Ended
                    December 31,  December 31,  December 31,  December 31,
                         2007          2008          2007          2008
                    ------------  ------------  ------------  ------------
Net income/(loss)     15,318,578   (22,579,523)   40,664,064    23,610,161
                    ------------  ------------  ------------  ------------
Interest and
 finance costs,
 net (includes
 interest income)        349,362      (164,082)    2,492,606      (237,764)
                    ------------  ------------  ------------  ------------
Depreciation,
 amortization of
 deferred charges
 and impairment
 loss                  7,132,304    32,836,287    17,963,072    58,180,485
                    ------------  ------------  ------------  ------------
Loss on
 derivatives                   -     3,364,429             -     3,474,635
                    ------------  ------------  ------------  ------------
Amortization of
 fair value of
 below market time
 charter acquired     (2,042,062)   (1,077,768)   (2,390,709)   (9,095,599)
                    ------------  ------------  ------------  ------------
Amortization of
 fair value of
 above market time
 charter acquired        737,773       737,773     2,938,963     2,951,092
                    ------------  ------------  ------------  ------------
Adjusted EBITDA       21,495,955    13,117,116    61,667,996    78,883,010
                    ============  ============  ============  ============


                    Three Months  Three Months      Year          Year
                        Ended         Ended         Ended         Ended
                    December 31,  December 31,  December 31,  December 31,
                         2007          2008          2007          2008
                    ------------  ------------  ------------  ------------
Net cash flow
 provided by
 operating
 activities           15,645,916    13,690,216    48,958,770    74,283,741
                    ------------  ------------  ------------  ------------
Changes in
 operating assets /
 liabilities           3,449,963     1,107,406     4,809,062     8,583,484
                    ------------  ------------  ------------  ------------
Gain from vessel
 sale                          -             -     3,411,397             -
                    ------------  ------------  ------------  ------------
Loss on trading
 securities, net          98,744    (1,478,022)       98,744    (2,312,790)
                    ------------  ------------  ------------  ------------
Investment in
 trading
 securities, net       2,792,914       130,814     2,792,914       192,859
                    ------------  ------------  ------------  ------------
Loss on
 derivatives
 (realized)                    -        77,105             -        77,105
                    ------------  ------------  ------------  ------------
Share based
 compensation           (822,782)     (225,661)     (822,782)   (1,618,484)
                    ------------  ------------  ------------  ------------
Interest, net            331,200      (184,742)    2,419,891      (322,905)
                    ------------  ------------  ------------  ------------

Adjusted EBITDA       21,495,955    13,117,116    61,667,996    78,883,010
                    ============  ============  ============  ============

EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings before interest, taxes, depreciation, impairment loss, amortization of deferred charges, amortization of fair value from above or below market time charters acquired and gain or loss on derivatives. 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 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 Impairment Loss,
  Loss on derivatives, Loss on trading securities, Amortization of the
 Fair Value of Charters Acquired and Gain from Vessel Sale to Net Income
     (All amounts expressed in U.S. Dollars - except share data and
                            per share amounts)


                    Three Months  Three Months      Year          Year
                        Ended         Ended         Ended         Ended
                    December 31,  December 31,  December 31,  December 31,
                         2007          2008          2007          2008
                    ------------  ------------  ------------  ------------
Net income/(loss)     15,318,578   (22,579,523)   40,664,064    23,610,161
                    ------------  ------------  ------------  ------------
Impairment loss                -    25,113,364             -    25,113,364
                    ------------  ------------  ------------  ------------
Loss on derivatives            -     3,364,429             -     3,474,635
                    ------------  ------------  ------------  ------------
Loss on investments      (98,744)    1,436,513       (98,744)    1,997,524
                    ------------  ------------  ------------  ------------
Amortization of
 deferred revenue
 of below market
 time charter
 acquired             (2,042,062)   (1,077,768)   (2,390,709)   (9,095,599)
                    ------------  ------------  ------------  ------------
Amortization of
 deferred revenue
 of above market
 time charter
 acquired                737,773       737,773     2,938,963     2,951,092
                    ------------  ------------  ------------  ------------
Gain on vessel
 sale                          -             -    (3,411,397)            -
                    ------------  ------------  ------------  ------------
Net Income
 excluding
 impairment loss,
 loss on
 derivatives, loss
 on trading
 securities,
 amortization of
 the fair value of
 charters acquired
 and gain on vessel
 sale                 13,915,545     6,994,788    37,702,177    48,051,177
                    ------------  ------------  ------------  ------------
Net Income
 excluding
 impairment loss,
 loss on
 derivatives, loss
 on trading
 securities,
 amortization of
 the fair value of
 charters acquired
 and gains on
 vessel sales,
 basic                      0.50          0.23          1.75          1.58
                    ------------  ------------  ------------  ------------
Weighted average
 number of shares,
 basic                27,610,993    30,520,584    21,566,619    30,437,107
                    ------------  ------------  ------------  ------------
Net Income
 excluding
 impairment loss,
 loss on
 derivatives, loss
 on trading
 securities,
 amortization of
 the fair value of
 charters acquired
 and gains on
 vessel sales,
 diluted                    0.50          0.23          1.74          1.58
                    ------------  ------------  ------------  ------------
Weighted average
 number of shares,
 diluted              27,748,850    30,534,713    21,644,920    30,505,476
                    ============  ============  ============  ============

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.

After the delivery of M/V GLORIOUS WIND in March 2009, the Company will have a fleet of 16 vessels, including 3 Panamax drybulk carriers, 1 Handymax drybulk carrier, 1 Handysize drybulk carrier, 3 Intermediate container ship, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas` 5 drybulk carriers have a total cargo capacity of 296,479 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.

Contact Information

  • Contact:
    Visit our website www.euroseas.gr

    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