SOURCE: Euroseas

Euroseas

March 01, 2010 16:23 ET

Euroseas Ltd. Reports Results for the Fourth Quarter and Year Ended December 31, 2009

MAROUSSI, ATHENS, GREECE--(Marketwire - March 1, 2010) - 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 2009 and year ended December 31, 2009.

Fourth Quarter 2009 Highlights:


--  Net loss of $16.3 million or $0.53 loss per share basic and diluted on
    total net revenues of $16.5 million. The results include a $9.0 million
    loss from the sale of two vessels. Excluding the effect on the losses
    for the quarter of the loss from the sale of the vessels as well as the
    effect from the unrealized losses on derivatives and trading securities
    and the amortization of the fair value of time charter contracts
    acquired, the loss for the quarter ended December 31, 2009 would have
    been $4.8 million or $0.15 loss per share basic and diluted.

--  Adjusted EBITDA was $0.4 million. Please refer to a subsequent section
    of the Press Release for a reconciliation of adjusted EBITDA to net
    loss.

--  An average of 16.7 vessels were operated during the fourth quarter of
    2009 earning an average time charter equivalent rate of $13,892 per
    day.

--  Declared a quarterly dividend of $0.05 per share for the fourth quarter
    of 2009 payable on March 26, 2010 to shareholders of record on
    March 17, 2010. This is the eighteenth consecutive quarterly dividend
    declared.

Full Year 2009 Highlights:

--  Net loss of $15.6 million or $0.51 loss per share basic and diluted on
    total net revenues of $63.8 million. The results include a $9.0 million
    loss from the sale of two vessels. Excluding the effect on the losses
    for the year of the loss from the sale of the two vessels as well as
    the effect from the unrealized losses on derivatives and trading
    securities and amortization of the fair value of time charter contracts
    acquired the loss for the year ended December 31, 2009 would have been
    $2.6 million or $0.09 loss per share basic and diluted.

--  Adjusted EBITDA was $17.4 million. Please refer to a subsequent section
    of the Press Release for a reconciliation of adjusted EBITDA to net
    loss.

--  An average of 16.3 vessels were operated during 2009 earning an average
    time charter equivalent rate of $13,698 per day

--  Declared quarterly dividends for the first, second, third and fourth
    quarters of 2009, aggregating $0.30 per share.

Aristides Pittas, Chairman and CEO of Euroseas commented: "2009 was a difficult year for Euroseas, as for most shipping companies, as rates declined dramatically compared to the summer and fall of 2008. And, while drybulk rates rebounded by early spring of 2009, containership rates have stayed at historically low levels since. In this challenging environment, we have been fortunate to reap the benefits of our risk management program which in 2008 enabled us to avoid investing in vessels at the peak of the markets. As a result, the huge decline of the markets in 2009 found us with a very strong balance sheet -- lots of cash and low leverage -- which enabled us to not only withstand the low rate environment but use the depressed markets as an opportunity to renew our fleet at a fraction of the cost compared to 2008. In total, we bought 3 drybulk vessels of an average age of about 11 years while we sold our 4 oldest vessels with an average age of about 25 years (3 bulkers and 1 containership).

However, despite our successful fleet renewal, our results for the fourth quarter 2009 and 2009 as a whole were affected by the state of the containership market and by our decision early in 2009 to hedge our drybulk exposure in the FFA markets.

Looking forward into 2010, we expect on the one hand the containership market to remain at very low levels and on the other hand the drybulk market to be quite volatile affected by an emerging markets -- primarily Chinese-led -- recovery and quite a number of scheduled vessel deliveries. As a result, we have currently covered 100% of our drybulk capacity for 2010 at profitable levels, including half of it hedged with FFA contracts, and about 45% of our container available days although the latter at rates that are just covering -- on average -- operating costs. At the same time, we continue to look at the containership markets as a great opportunity to invest in more modern vessels at historically low prices, and to that effect we have been building our strategy over the last 6 months. The closing of our agreement to form a new vehicle together with Eton Park and Rhone Capital, two private investment firms, to exploit the opportunities we currently see arising on a bigger scale has been somewhat delayed but we remain confident that this deal will close within the first quarter of 2010.

Our Board confirmed its intention to continue paying 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 $0.05 per share which represents an annualized yield of about 5% on the basis of our stock price on February 26, 2010."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the full year of 2009 reflect significantly lower revenues compared to 2008 due to the lower average time charter equivalent rate our vessels have achieved during the year. Our results for the fourth quarter 2009 were also lower compared to the same period for 2008. Our results were also negatively affected by the loss on the sale of two vessels in December 2009, m/v Artemis and m/v Gregos, settlement of certain interest rate swaps and FFA contracts in 2009 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 2009 reflect a decrease of about 16% on a per vessel per day basis compared to 2008. A little more than half of this decrease is due to the fact that three of our vessels were laid-up during most of 2009. Even after adjusting for this factor, we maintain one of the lowest operating cost structures amongst the public shipping companies which, we believe, is one of our competitive advantages and a significant part of our overall strategy. We will continue to focus on controlling and reducing our costs while ensuring safe operations.

We have been and are currently satisfying all our debt covenants. At the end of 2009, our outstanding debt was about $71.5 million versus unrestricted cash and cash in retention accounts of more than $48 million. Our scheduled debt repayments in 2010 are about $14 million, a number low enough to provide us with operational cash flow comfort. We estimate that our cash flow breakeven for 2010 including debt repayments but excluding dividend payments is around $10,000 per vessel per day."

Fourth Quarter 2009 Results:

For the fourth quarter of 2009, the Company reported total net revenues of $16.5 million representing a 30.2% decrease over total net revenues of $23.6 million during the fourth quarter of 2008. The Company reported a net loss for the period of $16.3 million as compared to net loss of $22.2 million for the fourth quarter of 2008. The results for the fourth quarter of 2009 include a $9.0 loss from the sale of two vessels and a $9.9 million loss on derivatives and trading securities as compared to $4.8 million loss on derivatives and trading securities for the same period of 2008. On average, 16.7 vessels were operated during the fourth quarter 2009 earning an average time charter equivalent rate of $13,892 per day compared to 16.0 vessels in the same period 2008 earning on average $17,420 per day.

Adjusted EBITDA for the fourth quarter of 2009 was $0.4 million, a 96.3% decrease from $11.4 million achieved during the fourth quarter of 2008. 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 2009 was $0.53, calculated on 30,813,960 weighted average number of shares outstanding compared to basic and diluted loss per share of $0.73 for the fourth quarter of 2008, calculated on 30,520,584 weighted average number of shares outstanding.

Excluding the effect on the loss for the quarter of the loss on sale of vessels, unrealized loss on trading securities and derivatives, and amortization of the fair value of time charter contracts acquired the loss per share for the quarter ended December 31, 2009 would have been $0.15 per share basic and diluted compared to earnings of $0.24 per share basic and diluted for the quarter ended December 31, 2008. 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 $0.05 per share, which represents its eighteenth consecutive quarterly dividend and a 50% decrease over last year's fourth quarter dividend, reflecting the much worse market conditions for the Company's containerships. The dividend is payable on March 26, 2010 to shareholders of record as of March 17, 2010.

Year Ended December 31, 2009 Results:

For the year ended December 31, 2009, the Company reported total net revenues of $63.8 million representing a 49.5% decrease compared to 2008. Net loss for the year amounted to $15.6 million compared to a net income for 2008 of $21.5 million. The results for the year also include a $9.0 million loss from the sale of two vessels and a $15.4 million loss on derivatives and trading securities as compared to $5.5 million loss on derivatives and trading securities inclusive of dividend income for the same period of 2008.

Adjusted EBITDA for the year was $17.4 million, a 75.8% decrease over 2008 (please see below for Adjusted EBITDA reconciliation to net income / loss and cash flow from operating activities). In the year ended December 31, 2008, net revenues were $126.3 million, net income was $21.5 million and Adjusted EBITDA was $72.0 million. On average,16.3 vessels were operated during the year 2009 earning an average time charter equivalent rate of $13,698 per day compared to 15.6 vessels in the same period 2008 earning a time charter equivalent rate of $23,695.

Basic and diluted losses per share for the year ended December 31, 2009 were $0.51 calculated on 30,648,991 weighted average number of shares outstanding, compared to basic earnings per share of $0.71 and diluted earnings per share of $0.70 for 2008 calculated on 30,437,107 and 30,505,476 weighted average number of shares outstanding, respectively.

Excluding the effect on the loss for the year of the loss on sale of vessels, unrealized loss on trading securities and derivatives, and the amortization of the fair value of time charter contracts acquired the loss per share for the year ended December 31, 2009 would have been $0.09 per share basic and diluted, while for the year ended December 31, 2008 the earnings per share would have been $1.51 per share basic and $1.50 per share diluted. Usually, security analysts do not include the above 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 dry-dockings, 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 year ended December 31, 2008 decreased by $2.2 and net loss for the quarter ended December 31, 2008 decreased by $0.3 million, or $0.07 and $0.01 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 decreased net loss for the three month period and year ended December 31, 2009 by $1.6 and $6.4 million, respectively, or $0.05 and $0.21 per share, respectively, basic and diluted.

Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:

                                       Year                        TCE Rate
Name             Type      Dwt    TEU  Built      Employment        ($/day)
----             ----      ---    ---  -----      ----------       --------
Drybulk Vessels
                 ----      ---    ---  -----      ----------       --------
PANTELIS        Panamax   74,020       2000     TC 'til Mar-10      $22,500
                                               Then until Feb-12    $17,500
                 ----      ---    ---  -----      ----------       --------
ELENI P         Panamax   72,119       1997     TC 'til May-10      $15,350
                 ----      ---    ---  -----      ----------       --------
IRINI (*)       Panamax   69,734       1988     Baumarine Pool
                 ----      ---    ---  -----      ----------       --------
ARISTIDES N.P.  Panamax   69,268       1993     TC 'til Mar-10      $12,350
                                               Then until Mar-12    $18,900
                 ----      ---    ---  -----      ----------       --------
MONICA P (**)   Handymax  46,667       1998    Bulkhandling Pool
                 ----      ---    ---  -----      ----------       --------
Total Drybulk
 Vessels           5     331,808
                 ----      ---    ---  -----      ----------       --------
Multipurpose Dry
 Cargo Vessels
                 ----      ---    ---  -----      ----------       --------
TASMAN TRADER      1      22,568  950  1990     TC 'til Mar-12  $9,500 'til
                                                                 Dec-10,
                                                                $9,000 'til
                                                                 Mar-12
                 ----      ---    ---  -----      ----------       --------
Container
 Carriers
                 ----      ---    ---  -----      ----------       --------

MAERSK NOUMEA   Inter-    34,677 2,556  2001   TC 'til Aug-11  $16,800 'til
                 mediate                     (3 annual options  Aug-11
                                                'til Aug-14)   $18,735 'til
                                                                 Aug-12
                                                               $19,240 'til
                                                                Aug-13
                                                               $19,750 'til
                                                                Aug-14
                 ----      ---    ---  -----      ----------       --------
TIGER BRIDGE    Inter-    31,627 2,228  1990   TC 'til Jun-10        $4,000
                 mediate                     (option 'til Mar-11)    $4,000
                                             (option 'til Mar-12)    $7,500
                 ----      ---    ---  -----      ----------       --------
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
                 ----      ---    ---  -----      ----------       --------
CAPTAIN COSTAS
(ex-OEL
 TRANSWORLD)   Handy size 30,007 1,742  1992    TC til Mar-10        $4,000
                                              then TC 'til Jun-10    $4,250
                 ----      ---    ---  -----      ----------       --------
YM PORT KELANG
(ex-MASTRO NICOS,
 ex-YM
 XINGANG I)    Handy size 23,596 1,599  1993    TC 'til Nov-10       $3,750
                                              (option 'til Nov-11)   $5,900
                 ----      ---    ---  -----      ----------       --------
MANOLIS P      Handy size 20,346 1,452  1995    TC 'til Apr-10       $3,850
                                              (option 'til Oct-10)   $4,000
                                              (option 'til Oct-11)   CONTEX
                                                                      (***)
                                                                   less 10%
                 ----      ---    ---  -----      ----------       --------
NINOS (ex-YM
 QINGDAO I)     Feeder    18,253 1,169  1990    TC 'til Apr-10       $3,900
                                              (option 'til Jun-10)   $4,200
                 ----      ---    ---  -----      ----------       --------

KUO HSIUNG      Feeder    18,154 1,169  1993    TC 'til Mar-10
                                              (option 'til Dec-10)   $3,850
                                                                       'til
                                                                     Dec-10
                                              (option 'til Jun-11)   $5,300
                                                                       'til
                                                                     Jun-11
                 ----      ---    ---  -----      ----------       --------
Total Container
 Carriers          9    243,994  15,779
                 ----      ---    ---  -----      ----------       --------

Fleet Grand
 Total            15    598,370  16,729
                 ----      ---    ---  -----      ----------       --------


Note: TC denotes time charter. All dates listed are the earliest redelivery dates under each TC. All extension option are at the option 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.

(***) CONTEX is a charter market index for 1700 teu containership vessels


Summary Fleet Data:


                             3 months,   3 months,     Year        Year
                               ended       ended       ended       ended
                             December    December    December    December
                             31, 2008    31, 2009    31, 2008    31, 2009
                            ----------  ----------  ----------  ----------
FLEET DATA
Average number of vessels
 (1)                             16.00       16.68       15.61       16.30
Calendar days for fleet
 (2)                           1,472.0     1,535.0     5,714.0     5,949.0
Scheduled off-hire days
 incl. laid-up (3)                11.9       262.0       150.8       966.5
Available days for fleet
 (4) = (2) - (3)               1,460.1     1,273.0     5,563.2     4,982.5
Commercial off-hire days
 (5)                              40.1        67.6        47.8       223.7
Operational off-hire days
 (6)                              18.3        11.8        64.9        35.0
Voyage days for fleet
 (7) = (4) - (5) - (6)         1,401.7     1,193.6     5,450.5     4,723.8
Fleet utilization
 (8) = (7) / (4)                  96.0%       93.8%       98.0%       94.8%
Fleet utilization,
 commercial
 (9) = ((4) - (5)) / (4)          97.3%       94.7%       99.1%       95.5%
Fleet utilization,
 operational
 (10) = ((4) - (6)) / (4)         98.7%       99.1%       98.9%       99.3%

AVERAGE DAILY RESULTS
Time charter equivalent
 rate (11)                      17,420      13,892      23,695      13,698
Vessel operating expenses
 excl. drydocking expenses
 (12)                            5,730       4,955       5,759       4,832
General and administrative
 expenses (13)                     525         516         710         612
Total vessel operating
 expenses excl. dd expenses
 (14)                            6,255       5,471       6,469       5,444
Drydocking expenses (15)           623           -       1,073         321
                            ----------  ----------  ----------  ----------

(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 voyage 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. 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 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:

Tomorrow, March 2, 2010 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."

A recording of the conference call will be available until March 9, 2010 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, 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 Statement of Operations
            (All amounts expressed in U.S. Dollars - except share amounts)


                                  Year Ended    Year Ended    Year Ended
                                  December 31,  December 31,  December 31,
                                     2008          2008          2009
                                     (as           (as
                                   originally    adjusted
                                    reported     under the
                                    under the     direct
                                    deferral      expense
                                    method)       method)
                                  ------------  ------------  ------------
                                   (unaudited)   (unaudited)   (unaudited)
Revenues
  Voyage revenue                   132,243,918   132,243,918    66,215,669
  Commissions                       (5,940,460)   (5,940,460)   (2,433,776)
Net revenues                       126,303,458   126,303,458    63,781,893

Operating expenses
  Voyage expenses                    3,092,323     3,092,323     1,510,551
  Vessel operating expenses         27,521,194    27,521,194    23,673,480
  Drydocking expenses                        -     6,129,257     1,912,474
  Amortization and depreciation     32,230,901    28,284,752    19,092,384
  Impairment loss / net loss on
   sale of vessels                  25,113,364    25,113,364     8,959,321
  Management fees                    5,387,415     5,387,415     5,074,297
  Other general and administrative
   expenses                          4,057,736     4,057,736     3,640,534
  Charter termination fees                   -             -      (103,577)
Total operating expenses            97,402,933    99,586,041    63,759,464

Operating income                    28,900,525    26,717,417        22,429

Other income/(expenses)
  Interest and finance cost         (2,930,737)   (2,930,737)   (1,437,637)
  Change in fair value of
   derivatives                      (3,474,635)   (3,474,635)  (15,778,209)
  Realized & unrealized gain /
   (loss) on trading securities     (2,312,790)   (2,312,790)      406,119
  Foreign exchange gain                  7,888         7,888        36,477
  Interest income                    3,168,501     3,168,501     1,123,317
  Dividend income                      315,266       315,266             -
  Other expenses, net               (5,226,507)   (5,226,507)  (15,649,933)

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

Net income / (loss)                 23,674,018    21,490,910   (15,627,504)
                                  ------------  ------------  ------------

Earnings / (loss) per share,
 basic                                    0.78          0.71         (0.51)
Weighted average number of
 shares, basic                      30,437,107    30,437,107    30,648,991
                                  ------------  ------------  ------------

Earnings / (loss) per share,
 diluted                                  0.78          0.70         (0.51)
                                  ------------  ------------  ------------
Weighted average number of
 shares, diluted                    30,505,476    30,505,476    30,648,991
                                  ------------  ------------  ------------


                                 Three Months  Three Months  Three Months
                                  December 31,  December 31,  December 31,
                                     2008          2008          2009
                                     (as           (as
                                   originally    adjusted
                                    reported     under the
                                    under the     direct
                                    deferral      expense
                                    method)       method)
                                  ------------  ------------  ------------
                                   (unaudited)   (unaudited)   (unaudited)
Revenues
  Voyage revenue                    24,679,143    24,679,143    17,117,138
  Commissions                       (1,112,667)   (1,112,667)     (658,815)
Net revenues                        23,566,476    23,566,476    16,458,323

Operating expenses
  Voyage expenses                      262,461       262,461       535,513
  Vessel operating expenses          7,168,597     7,168,597     6,237,576
  Drydocking expenses                        -       917,200             -
  Amortization and depreciation      6,886,703     5,680,610     4,701,556
  Impairment loss / net loss on
   sale of vessels                  25,113,364    25,113,364     8,959,321
  Management fees                    1,265,760     1,265,760     1,366,947
  Other general and administrative
   expenses                            772,561       772,561       792,067
Total operating expenses            41,469,446    41,180,553    22,592,980

Operating loss                     (17,902,970)  (17,614,077)   (6,134,657)

Other income/(expenses)
  Interest and finance cost           (619,077)     (619,077)     (409,420)
  Change in fair value of
   derivatives                      (3,364,429)   (3,364,429)   (9,827,627)
  Realized and unrealized loss on
   trading securities               (1,478,023)   (1,478,023)     (115,751)
  Foreign exchange loss                 24,164        24,164        12,575
  Interest income                      783,159       783,159       170,805
  Dividend income                       41,510        41,510             -
  Other expenses, net               (4,612,696)   (4,612,696)  (10,169,418)

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

 Net loss                          (22,515,666)  (22,226,773)  (16,304,075)
                                  ------------  ------------  ------------

Loss per share, basic                    (0.74)        (0.73)        (0.53)
Weighted average number of
 shares, basic                      30,520,584    30,520,584    30,813,960
                                  ------------  ------------  ------------

Loss per share, diluted                  (0.74)        (0.73)        (0.53)
                                  ------------  ------------  ------------
Weighted average number of
 shares, diluted                    30,520,584    30,520,584    30,813,960
                                  ------------  ------------  ------------



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


                                  December 31,  December 31,  December 31,
                                     2008          2008          2009
                                     (as           (as
                                   originally    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  40,984,549
    Trade accounts receivable           1,233,895    1,233,895   1,650,713
    Other receivables, net              1,439,628    1,439,628     239,656
    Due from related company            4,678,750    4,678,750           -
    Inventories                         2,011,973    2,011,973   1,869,238
    Restricted cash                     2,181,264    2,181,264   1,191,230
    Other deposits                              -            -  12,376,119
    Vessels held for sale               6,067,020    6,067,020           -
    Trading securities                    771,727      771,727     436,598
    Derivatives                            61,670       61,670           -
    Prepaid expenses                      241,102      241,102     185,137
Total current assets                   92,538,220   92,538,220  58,933,240

Fixed assets:
    Vessels, net                      231,963,606  231,963,606 257,270,824
    Advances for vessel acquisition     1,821,798    1,821,798           -
Long-term assets:
    Restricted cash                     4,800,000    4,800,000   6,500,000
    Deferred charges, net               7,771,342      373,702     327,694
    Derivatives                            68,038       68,038     386,536
    Fair value of above market time
     charter acquired                   1,653,422    1,653,422           -
Total long-term assets                248,078,206  240,680,566 264,485,054
                                     ------------ ------------ -----------
Total assets                          340,616,426  333,218,786 323,418,294
                                     ------------ ------------ -----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Long term debt, current portion    12,450,000   12,450,000  14,030,000
    Trade accounts payable              2,283,488    2,283,488   1,843,182
    Accrued expenses                    1,206,466    1,206,466   1,060,326
    Accrued dividends                     116,750      116,750      46,750
    Deferred revenue                    4,533,601    4,533,601   1,247,782
    Derivatives                           827,210      827,210  10,799,132
    Due to related company                      -            -   1,416,380
Total current liabilities              21,417,515   21,417,515  30,443,552

Long-term liabilities:
    Long term debt, net of current
     portion                           43,565,000   43,565,000  57,485,000
    Derivatives                         2,700,028    2,700,028     611,852
    Fair value of below market time
     charter acquired                   8,704,811    8,704,811   3,424,627
Total long-term liabilities            54,969,839   54,969,839  61,521,479
Total liabilities                      76,387,354   76,387,354  91,965,031

Shareholders' equity:
    Common stock (par value $0.03,
     100,000,000 shares authorized,
     30,575,611 and 30,849,711
     issued and outstanding)              917,269      917,269     925,492
    Preferred shares (par value $0.01,
      20,000,000 shares authorized,
      no shares issued and outstanding)
    Additional paid-in capital        234,567,670  234,567,670 235,588,391
    Retained earnings / (deficit)      28,744,133   21,346,493  (5,060,620)
 Total shareholders' equity           264,229,072  256,831,432 231,453,263
                                     ------------ ------------ -----------
 Total liabilities and shareholders'
  equity                              340,616,426  333,218,786 323,418,294
                                     ------------ ------------ -----------



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


                                   December 31,  December 31,  December 31,
                                      2008          2008          2009
                                      (as           (as
                                    originally     adjusted
                                     reported      under the
                                      under the     direct
                                      deferral      expense
                                      method)       method)
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
                                     -----------  -----------  -----------
Cash flows from operating
 activities:
Net income / (loss)                   23,674,018   21,490,910  (15,627,504)
Adjustments to reconcile net income/
 (loss) to net cash provided by
 operating activities:
Depreciation of vessels               28,284,752   28,284,752   19,092,384
Impairment loss / loss on sale of
 vessels                              25,113,364   25,113,364    8,959,321
Amortization of deferred charges       4,031,290       85,141      110,504
Amortization of fair value of time
 charters                             (6,144,507)  (6,144,507)  (3,626,762)
Share-based compensation               1,618,484    1,618,484      820,189
Investment in trading securities,
 net                                    (192,859)    (192,859)     741,248
Loss / (gain) on trading securities    2,312,790    2,312,790     (406,118)
Loss on derivatives                    3,397,530    3,397,530    7,626,918
Changes in operating assets and
 liabilities                          (7,811,121)  (1,681,864)  (9,852,520)
                                     -----------  -----------  -----------
Net cash provided by operating
 activities                           74,283,741   74,283,741    7,837,660
                                     -----------  -----------  -----------

Cash flows from investing
 activities:
Purchase of vessels                  (43,582,320) (43,582,320) (62,224,639)
Advances for vessel acquisition       (1,821,798)  (1,821,798)           -
Insurance proceeds                             -            -      667,839
Change in restricted cash               (741,385)    (741,385)    (709,966)
Proceeds from sale of vessels                  -            -   16,668,001
                                     -----------  -----------  -----------
Net cash (used in) investing
 activities                          (46,145,503) (46,145,503) (45,598,765)
                                     -----------  -----------  -----------

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                       (34,547,949) (34,547,949) (10,849,609)
Loan arrangement fees paid                     -            -     (208,000)
Offering expenses paid                  (110,340)    (110,340)    (197,193)
Proceeds from long-term debt                   -            -   33,000,000
Repayment of long-term debt          (25,575,000) (25,575,000) (17,500,000)
                                     -----------  -----------  -----------
Net cash provided by/(used in)
 financing activities                (58,422,367) (58,422,367)   4,894,463
                                     -----------  -----------  -----------

Net decrease in cash and cash
 equivalents                         (30,284,129) (30,284,129) (32,866,642)
Cash and cash equivalents at
 beginning of year                   104,135,320  104,135,320   73,851,191
                                     -----------  -----------  -----------
Cash and cash equivalents at end of
 year                                 73,851,191   73,851,191   40,984,549
                                     -----------  -----------  -----------



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


                                  Three Months  Three Months
                                      Ended         Ended
                                  December 31,  December 31,
                                      2008          2008
                                 (as originally (as adjusted
                                    reported      under the   Three Months
                                    under the      direct         Ended
                                    deferral       expense    December 31,
                                    method)        method)        2009
                                  ------------  ------------  ------------

Net loss                           (22,515,666)  (22,226,773)  (16,304,075)
                                  ------------  ------------  ------------
Interest and finance costs, net
 (incl. interest income)              (164,082)     (164,082)      238,615
                                  ------------  ------------  ------------
Depreciation, amortization of
 deferred charges and impairment
 loss                               32,000,067    30,793,974     4,701,556
                                  ------------  ------------  ------------

Loss from vessel sales                       -             -     8,959,321
                                  ------------  ------------  ------------

Loss on derivatives, net             3,364,429     3,364,429     5,358,850
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (1,077,768)   (1,077,768)   (2,533,811)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                              737,773       737,773             -
                                  ------------  ------------  ------------

Adjusted EBITDA                     12,344,753    11,427,553       420,456
                                  ============  ============  ============





                                  Three Months  Three Months
                                      Ended         Ended
                                  December 31,  December 31,
                                      2008          2008   
                                 (as originally (as adjusted
                                    reported      under the   Three Months
                                    under the      direct         Ended
                                    deferral       expense    December 31,
                                    method)        method)        2009
                                  ------------  ------------  ------------
Net cash flow provided by / (used
 in) operating activities           13,690,216    13,690,216    (3,657,862)
                                  ------------  ------------  ------------
Changes in operating assets /
 liabilities                           335,043      (582,157)    3,732,063
                                  ------------  ------------  ------------
Loss on interest rate derivatives
 (realized)                             77,105        77,105       371,953
                                  ------------  ------------  ------------

Loss on trading securities, net     (1,478,022)   (1,478,022)     (115,752)
                                  ------------  ------------  ------------
Investment in trading securities,
 net                                   130,814       130,814             -
                                  ------------  ------------  ------------

Share-based compensation              (225,661)     (225,661)     (110,475)
                                  ------------  ------------  ------------

Interest, net                         (184,742)     (184,742)      200,529
                                  ------------  ------------  ------------

Adjusted EBITDA                     12,344,753    11,427,553       420,456
                                  ============  ============  ============


                                  Year Ended    Year Ended
                                  December 31,  December 31,
                                      2008          2008
                                (as originally  (as adjusted
                                 reported under   under the    Year Ended
                                  the deferral direct expense  December 31,
                                     method)       method)         2009
                                  ------------  ------------  ------------

Net income / (loss)                 23,674,018    21,490,910   (15,627,504)
                                  ------------  ------------  ------------
Interest and finance costs,
 net (incl. interest income)          (237,764)     (237,764)      314,320
                                  ------------  ------------  ------------
Depreciation, amortization of
 deferred charges and
 impairment loss                    57,344,265    53,398,116    19,092,384
                                  ------------  ------------  ------------

Loss from vessel sales                       -             -     8,959,321
                                  ------------  ------------  ------------

Loss on derivatives, net             3,474,635     3,474,635     8,303,930
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (9,095,599)   (9,095,599)   (5,280,184)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                            2,951,092     2,951,092     1,653,422
                                  ------------  ------------  ------------

Adjusted EBITDA                     78,110,647    71,981,390    17,415,689
                                  ============  ============  ============



                                   Year Ended    Year Ended
                                  December 31,  December 31,
                                      2008          2008
                                (as originally  (as adjusted
                                 reported under   under the    Year Ended
                                  the deferral direct expense  December 31,
                                     method)       method)         2009
                                  ------------  ------------  ------------
Net cash flow provided by
 operating activities               74,283,741    74,283,741     7,837,660
                                  ------------  ------------  ------------
Changes in operating assets /
 liabilities                         7,811,121     1,681,864     9,852,520
                                  ------------  ------------  ------------
Loss on interest rate
 derivatives (realized)                 77,105        77,105       677,011
                                  ------------  ------------  ------------
(Loss) / gain on trading
 securities, net                    (2,312,790)   (2,312,790)      406,118
                                  ------------  ------------  ------------
Investment in trading securities,
 net                                   192,859       192,859      (741,248)
                                  ------------  ------------  ------------

Share-based compensation            (1,618,484)   (1,618,484)     (820,189)
                                  ------------  ------------  ------------

Interest, net                         (322,905)     (322,905)      203,817
                                  ------------  ------------  ------------

Adjusted EBITDA                     78,110,647    71,981,390    17,415,689
                                  ============  ============  ============


EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings / loss before interest, taxes, depreciation, impairment loss, loss from sale of vessels, 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 / loss 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 to Net Income / (Loss) Excluding the Effect from Unrealized
Loss on Derivatives, Unrealized Loss on Trading Securities, Impairment
Loss, Loss on Sale of Vessels, Amortization of the  Fair Value of Charters
Acquired to Net Income / (Loss) (All amounts expressed in U.S. Dollars -
except share data and per share amounts)


                               Three Months   Three Months
                                  Ended          Ended
                                December 31,  December 31,
                                   2008          2008
                             (as originally   (as adjusted
                                 reported       under the    Three Months
                                 under the        direct        Ended
                                 deferral        expense     December 31,
                                  method)        method)         2009
                               -------------  -------------  -------------

Net loss                         (22,515,666)   (22,226,773)   (16,304,075)
                               -------------  -------------  -------------

Unrealized loss on
 derivatives, net                  3,287,324      3,287,324      4,986,897
                               -------------  -------------  -------------
Unrealized loss on trading
 securities                        1,436,513      1,436,513        115,751
                               -------------  -------------  -------------

Impairment loss                   25,113,364     25,113,364              -
                               -------------  -------------  -------------

Loss from vessel sales                     -              -      8,959,321
                               -------------  -------------  -------------
Amortization of deferred
 revenue of below market time
 charter acquired                 (1,077,768)    (1,077,768)    (2,533,811)
                               -------------  -------------  -------------
Amortization of deferred
 revenue of above market time
 charter acquired                    737,773        737,773              -
                               -------------  -------------  -------------
Net income / (loss) excluding
 unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired                         6,981,540       7,270,433     (4,775,917)
                               -------------  -------------  ------------- 
Net income / (loss) per share
 excluding  unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired, basic                        0.23           0.24          (0.15)
                               -------------  -------------  -------------
Weighted average number of
 shares, basic                    30,520,584     30,520,584     30,813,960
                               -------------  -------------  -------------
Net income / (loss) per share
 excluding  unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired, diluted                      0.23           0.24          (0.15)
                               -------------  -------------  -------------
Weighted average number of
 shares, diluted                  30,534,713     30,534,713     30,813,960
                               -------------  -------------  -------------




                                 Year Ended    Year Ended
                                December 31,  December 31,
                                   2008          2008
                             (as originally   (as adjusted
                                 reported       under the
                                 under the        direct      Year Ended
                                 deferral        expense     December 31,
                                  method)        method)         2009
                               -------------  -------------  -------------

Net income / (loss)               23,674,018     21,490,910    (15,627,504)
                               -------------  -------------  -------------

Unrealized loss on
 derivatives                       3,397,530      3,397,530      7,626,919
                               -------------  -------------  -------------

Unrealized loss on trading
 securities                        1,997,524      1,997,524          5,325
                               -------------  -------------  -------------

Impairment loss                   25,113,364     25,113,364              -
                               -------------  -------------  -------------

Loss from vessel sales                     -              -      8,959,321
                               -------------  -------------  -------------

Amortization of deferred
 revenue of below market time
 charter acquired                 (9,095,599)    (9,095,599)    (5,280,184)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of above market time
 charter acquired                  2,951,092      2,951,092      1,653,422
                               -------------  -------------  -------------

Net income / (loss) excluding
 unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired                         48,037,929     45,854,821     (2,662,701)
                               -------------  -------------  -------------

Net income / (loss) per share
 excluding  unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired, basic                        1.58           1.51          (0.09)
                               -------------  -------------  -------------

Weighted average number of
 shares, basic                    30,437,107     30,437,107     30,648,991
                               -------------  -------------  -------------

Net income / (loss) per share
 excluding  unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired, diluted                      1.57           1.50          (0.09)
                               -------------  -------------  -------------

Net income / (loss) excluding
 unrealized loss on
 derivatives, unrealized loss
 on trading securities,
 impairment loss, loss from
 vessel sales, amortization of
 the fair value of charters
 acquired                         30,505,476     30,505,476     30,648,991
                               -------------  -------------  -------------


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 15 vessels, including 4 Panamax drybulk carriers and 1 Handymax drybulk carrier, 2 Intermediate containership, 5 Handysize containerships, 2 Feeder containerships and a multipurpose dry cargo vessel. Euroseas` 5 drybulk carriers have a total cargo capacity of 331,808 dwt, its 9 containerships have a cargo capacity of 15,779 teu and its 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 our expected joint venture and vessel acquisitions and 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 drybulk vessels and containerships, 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