SOURCE: Euroseas

Euroseas

August 11, 2009 16:11 ET

Euroseas Ltd. Reports Results for the Quarter Ended June 30, 2009

MAROUSSI, ATHENS, GREECE--(Marketwire - August 11, 2009) - Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the three and six month periods ended June 30, 2009.

Second Quarter 2009 Highlights:

--  Net loss of $5.4 million or $0.18 loss per share basic and diluted on
    total net revenues of $14.8 million.  Excluding the effect of unrealized
    loss on derivatives, unrealized gain on trading securities and amortization
    of the fair value of charters acquired, the net income for the period would
    have been $0.5 million, or $0.02 per share basic and diluted.
    
--  Adjusted EBITDA was $5.8 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 owned and operated during the second
    quarter of 2009 earning an average time charter equivalent rate of $13,062
    per day.
    
--  Declared a quarterly dividend of $0.10 per share for the second
    quarter of 2009 payable on September 4, 2009 to shareholders of record on
    August 27, 2009. This is the sixteenth consecutive quarterly dividend
    declared.
    

First Half 2009 Highlights:

--  Net loss of $1.5 million or $0.05 loss per share basic and diluted on
    total net revenues of $30.2 million.  Excluding the effect of unrealized
    loss on derivatives, unrealized gain on trading securities and amortization
    of the fair value of charters acquired, the net income for the period would
    have been $2.4 million, or $0.08 per share basic and diluted.
    
--  Adjusted EBITDA was $12.0 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average of 15.85 vessels were owned and operated during the first
    half of 2009, earning an average time charter equivalent rate of $12,875
    per day.
    
--  Declared two quarterly dividends for a total of $0.20 per share during
    the first half of 2009.
    

Aristides Pittas, Chairman and CEO of Euroseas, commented: "The first half of 2009 presented us with a mix of opportunities and challenges: it has proven to be a very difficult chartering environment for our container fleet, but, at the same time, it gave us the opportunity to expand and renew our bulker fleet by purchasing three younger panamax bulkers at attractive prices. We continue evaluating further investment opportunities in drybulk vessels and containerships as we see unique opportunities potentially emerging in both subsectors.

"As we have stated before, we expect to face a difficult and volatile market environment well into 2010. Thus, we have covered 100% of our drybulk fleet for 2009 and 75% for 2010 via either time charter contracts or Freight Forward Agreement ("FFA") contracts. Our containership coverage is currently 57% for the remaining of 2009 and 22% for 2010. We have started seeing some signs that the container market as well may have passed its trough, especially, in the case of containerships below 2,000 teu, like ours. The number of smaller containerships being laid up has decreased and there is more enquiry for such ships than for larger vessels, most likely due to a better balance between supply and demand: the fleet supply side reflects a significantly lower orderbook and more scrapping due to the older age profile, and, the demand side reflects a relative increased activity as shipment sizes tend to reduce in periods of austerity, thus favoring smaller vessels, and intra-regional trade is faring better compared to trade across the oceans.

"Our Board reconfirmed its intention to continue paying healthy dividends to our shareholders throughout the market cycle without compromising our expansion program. In that respect, we have maintained our quarterly dividend at $0.10 per share which represents a yield of about 7.6% on the basis of our stock price on July 31, 2009."

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

"Total daily vessel operating expenses, including management fees and general and administrative expenses, during the second quarter of 2009 reflect a decreased by about 19% on a per vessel per day basis compared to the second quarter of 2008. Part of this decrease (about 8%) is due to the fact that three of our vessels were laid-up during the second quarter of 2009 and, thus, incurred significantly lower daily costs, but, a significant part (about 11%) is associated with the success of our manager's cost reduction and optimization plan launched in mid-2008. Cost control remains a key component of our strategy.

"As of June 30, 2009, our net debt position was close to zero with our outstanding debt at $69.5 million versus restricted and unrestricted cash of about $68.4 million. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $12.3 million a number low enough to provide us with significant operational cash flow comfort. I would like to repeat that we continue to enjoy our bankers' support and have been able to finance all three of our vessel purchases this year with about 50% debt as further evidenced by the $13 million loan we about to conclude to partly finance M/V 'Pantelis,' a vessel that we purchased last month."

Second Quarter 2009 Results:

For the second quarter of 2009, the Company reported total net revenues of $14.8 million representing a 56.9% decrease over total net revenues of $34.5 million during the second quarter of 2008. The Company reported a net loss for the period of $5.4 million as compared to net income of $15.6 million for the second quarter of 2008. The results for the second quarter of 2009 include a $6.3 million net unrealized loss on derivatives and trading securities as compared to $0.2 million unrealized gain on trading securities for the same period of 2008. Depreciation expenses for the second quarter of 2009 were $4.8 million compared to $7.5 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $2.0 million to the depreciation expenses in the second quarter of 2008, partly balanced by the depreciation of two vessels purchased in 2009. On average, 16 vessels were owned and operated during the second quarter of 2009 earning an average time charter equivalent rate of $13,062 per day compared to 15.44 vessels in the same period of 2008 earning on average $25,918 per day. Three of the Company's containerships were laid-up throughout the second quarter of 2009.

Adjusted EBITDA for the second quarter of 2009 was $5.8 million, a 71.9% decrease from $20.7 million achieved during the second 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 second quarter of 2009 was $0.18, calculated on 30,575,611 weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.51 for the second quarter of 2008, calculated on 30,428,810 and 30,554,537 weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings for the quarter of the unrealized loss on derivatives, unrealized gain on trading securities and amortization of the fair value of time charter contracts acquired, the earnings per share for the quarter ended June 30, 2009 would have been $0.02 per share basic and diluted, and, for the quarter ended June 30, 2008 would have been $0.43 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Half 2009 Results:

For the first half of 2009, the Company reported total net revenues of $30.2 million representing a 55.2% decrease over total net revenues of $67.3 million during the first half of 2008. The Company reported a net loss for the period of $1.5 million as compared to net income of $29.3 million for the first half of 2008. The results for the first half of 2009 include a $4.5 million net unrealized loss on derivatives and trading securities as compared to $0.2 million unrealized gain on trading securities for the same period of 2008. Depreciation expenses for the first half of 2009 were $9.3 million compared to $14.8 million during the same period of 2008. The decline was due to a change in estimates (see below) and the sale of M/V Nikolaos P and M/V Ioanna P, which contributed $4.0 million to the depreciation expenses in the first half of 2008, partly balanced by the depreciation of two of the vessels purchased in 2009 that contributed to the depreciation expense for the first half. On average, 15.85 vessels were owned and operated during the first half of 2009 earning an average time charter equivalent rate of $12,875 per day compared to 15.22 vessels in the same period of 2008 earning on average $25,824 per day. One of the Company's vessels was laid up during the entire first half of 2009 and two more vessels for the second quarter of 2009.

Adjusted EBITDA for the first half of 2009 was $12.0 million, a 69.6% decrease from $39.4 million achieved during the first half 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 first half of 2009 was $0.05, calculated on 30,575,611 weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.96 basic and diluted per share for the first half of 2008, calculated on 30,375,182 and 30,501,654 weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings for the first half of 2009 of the unrealized loss on derivatives, unrealized gain on trading securities and amortization of the fair value of time charter contracts acquired, the earnings per share for the six-month period ended June 30, 2009 would have been $0.08 per share basic and diluted, and, for the same period in 2008 would have been $0.81 per share basic and diluted. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Change in accounting principle and change in estimates:

Beginning with the first quarter of 2009, the Company changed its accounting policy of drydocking costs from the deferral method, under which the Company amortized drydocking costs over the estimated period of benefit between drydockings, to the direct expense method, under which the Company expenses all drydocking costs as incurred. The Company believes that the direct expense method is preferable as it eliminates the significant amount of time and subjectivity involved in determining which costs and activities related to drydocking qualify for the deferral method. When the accounting principle was retrospectively applied, net income for the three-month and for the six-month periods ended June 30, 2008 decreased by $0.1 and $1.6 million, respectively.

The Company reflected this change as a change in accounting principle from an accepted accounting principle to a preferable accounting principle in accordance with Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. The new accounting principle will be applied retrospectively to all periods presented in earnings releases and filings.

During the fourth quarter of 2008, the Company also changed its estimates of the scrap price and useful life of its containerships to better reflect the present market environment, industry practice and intended use. The effect of these changes increased net income for the three and six-month periods ended June 30, 2009 by $1.6 and $3.3 million, respectively.

Fleet Profile:
The Euroseas Ltd. fleet profile is as follows:
                                         Year
Name             Type       Dwt    TEU   Built Employment   TCERate ($/day)
             ------------ ------- ------ ----- ---------  -----------------
Dry Bulk
 Vessels
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
PANTELIS          Panamax  74,020         2000  Dec-09    $25,200
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
ELENI P           Panamax  72,119         1997  May-10    $15,350
             ------------ ------- ------ ----- ---------  -----------------
                                               Baumarine
IRINI (*)         Panamax  69,734         1988   Pool
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
ARISTIDES N.P.    Panamax  69,268         1993  Jan-10    $12,350
             ------------ ------- ------ ----- ---------  -----------------
                                               Bulk-
MONICA P (**)                                  handling
                 Handymax  46,667         1998  Pool
             ------------ ------- ------ ----- ---------  -----------------
GREGOS          Handysize  38,691         1984 Spot
             ------------ ------- ------ ----- ---------  -----------------
Total Dry
 Bulk Vessels           6 370,499
             ------------ ------- ------ ----- ---------  -----------------
Multipurpose
 Dry Cargo
 Vessels
             ------------ ------- ------ ----- ---------  -----------------
                                                          $9,500
                                               TC 'til     'til Dec-10,
TASMAN TRADER           1  22,568    950  1990  Mar-12    $9,000
                                                           'til Mar-12
             ------------ ------- ------ ----- ---------  -----------------
Container
 Carriers
             ------------ ------- ------ ----- ---------  -----------------
                                                          $16,800
                                                TC 'til    'til Aug-11
                                                Aug-11    $18,735
                                               (3 annual   'til Aug-12
MAERSK       Intermediate  34,677  2,556  2001  options   $19,240
 NOUMEA                                         'til       'til Aug-13
                                                Aug-14)   $19,750
                                                           'til Aug-14
             ------------ ------- ------ ----- ---------  -----------------
TIGER                                          TC 'til
 BRIDGE      Intermediate  31,627  2,228  1990  Mar-10    $7,500
             ------------ ------- ------ ----- ---------  -----------------
ARTEMIS      Intermediate  29,693  2,098  1987 Laid-up
             ------------ ------- ------ ----- ---------  -----------------
DESPINA P      Handy size  33,667  1,932  1990 Laid-up
             ------------ ------- ------ ----- ---------  -----------------
JONATHAN P
 (ex-OEL
 INTEGRITY)    Handy size  33,667  1,932  1990 Laid-up
             ------------ ------- ------ ----- ---------  -----------------
OEL TRANSWORLD
 (ex-CLAN                                      TC 'til
 GLADIATOR)    Handy size  30,007  1,742  1992  Sep-09    $18,000
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
                                                Sep-09
                                               (option
                                                'til
YM XINGANG I   Handy size  23,596  1,599  1993  Dec-09)   $3,850
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
MANOLIS P      Handy size  20,346  1,452  1995  Oct-09    $15,800
             ------------ ------- ------ ----- ---------  -----------------

 NINOS
 (ex-YM                                        TC 'til
 QINGDAO I)        Feeder  18,253  1,169  1990  Apr-10    $8,060
             ------------ ------- ------ ----- ---------  -----------------
                                               TC 'til
                                                Dec-09
                                               (option
                                                'til
KUO HSIUNG         Feeder  18,154  1,169  1993  Jun-10)   $3,850
             ------------ ------- ------ ----- ---------  -----------------
Total
 Container
 Carriers              10 273,687 17,877
             ------------ ------- ------ ----- ---------  -----------------
Fleet Grand
 Total                 17 666,754 18,827
             ------------ ------- ------ ----- ---------  -----------------

 (*) "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 also
     managed by Klaveness.



Summary Fleet Data:

                                           3        3        6         6
                                        months,  months,  months,   months,
                                         ended    ended    ended    ended
                                       June 30, June 30,  June 30, June 30,
                                         2008     2009     2008     2009
                                        -------  -------  -------  -------
FLEET DATA
Average number of vessels (1)             15.44    16.00    15.22    15.85
Calendar days for fleet (2)             1,405.0  1,456.0  2,770.0  2,869.0
Scheduled off-hire days incl. laid-up
 (3)                                       35.7    293.0     98.8    373.0
Available days for fleet (4) = (2) -
 (3)                                    1,369.3  1,163.0  2,671.2  2,496.0
Commercial off-hire days (5)                0.0     28.2      7.7    112.4
Operational off-hire days (6)              15.8      8.3     17.3     21.3
Voyage days for fleet (7) = (4) - (5)
 - (6)                                  1,353.5  1,126.5  2,646.2  2,362.3
Fleet utilization (8) = (7) / (4)          98.8%    96.9%    99.1%    94.6%
Fleet utilization, commercial
 (9) = ((4) - (5)) / (4)                  100.0%    97.6%    99.7%    95.5%
Fleet utilization, operational
 (10) = ((4) - (6)) / (4)                  98.8%    99.3%    99.4%    99.1%

AVERAGE DAILY RESULTS
Time charter equivalent rate (11)        25,918   13,062   25,824   12,875
Vessel operating expenses (12)            6,050    4,906    5,820    5,081
General and administrative
 expenses (13)                              894      672      829      722
Total vessel operating expenses (14)      6,944    5,578    6,649    5,803
                                        -------  -------  -------  -------

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

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

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

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

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

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

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

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

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

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

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

(12) Daily vessel operating expenses, which includes 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.

(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. TVOE is the sum of vessel operating expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

Conference Call and Webcast:

Tomorrow, Wednesday, August 12, 2009 at 10:00 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."

A recording of the conference call will be available until August 19, 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 slide presentation on the Second Quarter and First Half 2009 results in PDF format will also be available 30 minutes prior to the conference call and webcast accessible on the company's website (www.euroseas.gr) on the webcast page. Participants to the webcast can download the PDF presentation.

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

                                     Six Months   Six Months
                                        Ended        Ended
                                       June 30,     June 30,
                                        2008          2008
                                   (as originally (as adjusted
                                       reported     under the  Six Months
                                      under the      direct       Ended
                                       deferral      expense     June 30,
                                       method)       method)       2009
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
Revenues
                      Voyage revenue  70,453,207   70,453,207   31,344,875
                         Commissions  (3,167,155)  (3,167,155)  (1,188,660)
Net revenues                          67,286,052   67,286,052   30,156,215

Operating expenses
                     Voyage expenses   2,117,459    2,117,459      857,576
           Vessel operating expenses  13,407,911   13,407,911   12,200,619
                 Drydocking expenses           -    3,274,716            -
       Amortization and depreciation  16,456,481   14,787,848    9,283,929
                     Management fees   2,714,535    2,714,535    2,374,359
    Other general and administrative
                            expenses   2,297,429    2,297,429    2,070,858
            Charter termination fees           -            -     (103,577)
Total operating expenses              36,993,815   38,599,898   26,683,764

Operating income                      30,292,237   28,686,154    3,472,451

Other income/(expenses)
           Interest and finance cost  (1,700,736)  (1,700,736)    (688,453)
 Change in fair value of derivatives           -            -   (5,778,948)
       Realized & unrealized gain on
                  trading securities     256,695      256,695      660,705
        Foreign exchange (loss) gain     (13,382)     (13,382)      24,847
                     Interest income   1,860,219    1,860,219      808,082
                     Dividend income     175,000      175,000            -
        Other income/(expenses), net     577,796      577,796   (4,973,767)

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

Net income \ (loss)                   30,870,033   29,263,950   (1,501,316)
                                     -----------  -----------  -----------

Earnings (loss), per share, basic           1.02         0.96        (0.05)
Weighted average number of shares,
 basic                                30,375,182   30,375,182   30,575,611
                                     -----------  -----------  -----------

Earnings (loss), per share, diluted         1.01         0.96        (0.05)
                                     -----------  -----------  -----------
Weighted average number of shares,
 diluted                              30,501,654   30,501,654   30,575,611
                                     -----------  -----------  -----------



                                     Three Months Three Months
                                        Ended        Ended
                                       June 30,     June 30,
                                        2008          2008
                                   (as originally (as adjusted
                                       reported     under the  Three Months
                                      under the      direct       Ended
                                       deferral      expense     June 30,
                                       method)       method)       2009
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
Revenues
                      Voyage revenue  35,982,504   35,982,504   15,423,831
                         Commissions  (1,518,387)  (1,518,387)    (576,782)
Net revenues                          34,464,117   34,464,117   14,847,049

Operating expenses
                     Voyage expenses     902,168      902,168      280,235
           Vessel operating expenses   7,097,071    7,097,071    5,952,620
                 Drydocking expenses           -    1,056,908            -
       Amortization and depreciation   8,486,784    7,512,484    4,782,779
                     Management fees   1,403,355    1,403,355    1,191,603
    Other general and administrative
                            expenses   1,256,180    1,256,180      978,725
            Charter termination fees           -            -            -
Total operating expenses              19,145,558   19,228,166   13,185,962

Operating income                      15,318,559   15,235,951    1,661,087

Other income/(expenses)
           Interest and finance cost    (677,742)    (677,742)    (364,730)
 Change in fair value of derivatives           -            -   (7,842,832)
     Realized and unrealized gain on
                  trading securities     239,653      239,653      765,280
        Foreign exchange (loss) gain       8,444        8,444       (4,746)
                     Interest income     723,422      723,422      339,352
                     Dividend income      84,849       84,849            -
        Other income/(expenses), net     378,626      378,626   (7,107,676)

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

Net income \ (loss)                   15,697,185   15,614,577   (5,446,589)
                                     -----------  -----------  -----------

Earnings \ (loss), per share, basic         0.52         0.51        (0.18)
Weighted average number of shares,
 basic                                30,428,810   30,428,810   30,575,611
                                     -----------  -----------  -----------

Earnings \ (loss), per share, diluted       0.51         0.51        (0.18)
                                     -----------  -----------  -----------
Weighted average number of shares,
 diluted                              30,554,537   30,554,537   30,575,611
                                     -----------  -----------  -----------





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



                                       December 31, December 31,
                                        2008 (as     2008 (as
                                        originally   adjusted
                                         reported    under the
                                         under the    direct
                                         deferral     expense    June 30,
                                          method)     method)      2009
                                        ----------- ----------- -----------
                                        (unaudited) (unaudited) (unaudited)
ASSETS
Current Assets:
 Cash and cash equivalents               73,851,191  73,851,191  56,249,817
 Trade accounts receivable                1,233,895   1,233,895   1,310,760
 Other receivables, net                   1,439,628   1,439,628     860,571
 Due from related company                 4,678,750   4,678,750   4,676,284
 Inventories                              2,011,973   2,011,973   2,069,190
 Restricted cash                          2,181,264   2,181,264   5,427,316
 Vessels held for sale                    6,067,020   6,067,020           -
 Trading securities                         771,727     771,727     691,184
 Derivatives                                 61,670      61,670           -
 Prepaid expenses                           241,102     241,102     291,003
Total current assets                     92,538,220  92,538,220  71,576,125

Fixed assets:
 Vessels, net                           231,963,606 231,963,606 259,168,663
 Advances for vessel acquisition          1,821,798   1,821,798   2,751,326
Long-term assets:
 Restricted cash                          4,800,000   4,800,000   6,733,260
 Deferred charges, net                    7,771,342     373,702     613,636
 Derivatives                                 68,038      68,038           -
 Fair value of above market time
  charter acquired                        1,653,422   1,653,422     177,876
Total long-term assets                  248,078,206 240,680,566 269,444,761
                                        ----------- ----------- -----------
Total assets                            340,616,426 333,218,786 341,020,886
                                        ----------- ----------- -----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Long term debt, current portion         12,450,000  12,450,000  12,250,000
 Trade accounts payable                   2,283,488   2,283,488   2,770,656
 Accrued expenses                         1,206,466   1,206,466   1,516,129
 Accrued dividends                          116,750     116,750     163,750
 Deferred revenue                         4,533,601   4,533,601   2,498,777
 Derivatives                                827,210     827,210   6,394,003
Total current liabilities                21,417,515  21,417,515  25,593,315

Long-term liabilities:
 Long term debt, net of current portion  43,565,000  43,565,000  57,290,000
 Derivatives                              2,700,028   2,700,028   1,790,002
 Fair value of below market time
  charter acquired                        8,704,811   8,704,811   6,627,574
Total long-term liabilities              54,969,839  54,969,839  65,707,576
Total liabilities                        76,387,354  76,387,354  91,300,891

Shareholders' equity:
 Common stock (par value $0.03,
  100,000,000 shares authorized,
  30,575,611 and 30,575,611 issued
  and outstanding)                          917,269     917,269     917,269
 Preferred shares (par value $0.01,
  20,000,000 shares authorized, no
  shares issued and outstanding)
 Additional paid-in capital             234,567,670 234,567,670 235,119,672
 Retained earnings                       28,744,133  21,346,493  13,683,054
Total shareholders' equity              264,229,072 256,831,432 249,719,995
                                        ----------- ----------- -----------
Total liabilities and shareholders'
 equity                                 340,616,426 333,218,786 341,020,886
                                        ----------- ----------- -----------




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

                                     Six Months   Six Months
                                     Ended June   Ended June
                                      30, 2008     30, 2008
                                   (as originally (as adjusted
                                       reported    under the
                                      under the     direct     Six Months
                                       deferral     expense     Ended June
                                       method)      method)      30, 2009
                                     -----------  -----------  -----------
                                     (unaudited)  (unaudited)  (unaudited)
                                     -----------  -----------  -----------
Cash flows from operating
 activities:
Net income \ (loss)                   30,870,033   29,263,950   (1,501,316)
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
Depreciation of vessels               14,787,848   14,787,848    9,283,929
Amortization of deferred charges       1,712,454       43,821       46,611
Amortization of fair value of time
 charters                             (4,516,612)  (4,516,612)    (601,691)
Share-based compensation                 877,398      877,398      552,001
Unrealized loss on derivatives, net            -            -    4,786,475
Purchase of trading securities          (503,602)    (503,602)           -
Sale of trading securities               786,248      786,248      741,248
Realized gain on trading securities      (93,737)     (93,737)    (411,444)
Unrealized gain on trading
 securities                             (162,958)    (162,958)    (249,261)
Changes in operating assets and
 liabilities                          (3,802,539)    (527,823)  (5,673,515)
                                     -----------  -----------  -----------
Net cash provided by operating
 activities                           39,954,533   39,954,533    6,973,037
                                     -----------  -----------  -----------

Cash flows from investing
 activities:
Purchase of vessels including
 improvements                        (43,582,320) (43,582,320) (34,667,188)
Advances for vessels acquisition               -            -   (2,751,326)
Change in restricted cash               (455,644)    (455,644)    (411,262)
Proceeds from sale of vessels                  -            -    5,980,487
                                     -----------  -----------  -----------
Net cash (used in) investing
 activities                          (44,037,964) (44,037,964) (31,849,289)
                                     -----------  -----------  -----------

Cash flows from financing
 activities:
Issuance of share capital                  5,030        5,030            -
Net proceeds from shares issued        1,805,892    1,805,892            -
Dividends paid                       (18,561,707) (18,561,707)  (6,115,122)
Offering expenses paid                  (110,340)    (110,340)           -
Loan arrangements fees paid                    -            -     (135,000)
Proceeds from long-term debt                   -            -   20,000,000
Repayment of long-term debt          (14,490,000) (14,490,000)  (6,475,000)
                                     -----------  -----------  -----------
Net cash provided by (used in)
 financing activities                (31,351,125) (31,351,125)   7,274,878
                                     -----------  -----------  -----------

Net decrease in cash and cash
 equivalents                         (35,434,556) (35,434,556) (17,601,374)
Cash and cash equivalents at
 beginning of period                 104,135,320  104,135,320   73,851,191
                                     -----------  -----------  -----------
Cash and cash equivalents at end of
 period                               68,700,764   68,700,764   56,249,817
                                     -----------  -----------  -----------



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

                                 Three Months   Three Months
                                  Ended June     Ended June
                                   30, 2008       30, 2008
                                (as originally  (as adjusted
                                    reported      under the
                                   under the       direct     Three Months
                                    deferral       expense     Ended June
                                     method)       method)      30, 2009
                                  ------------  ------------  ------------
Net income \ (loss)                 15,697,185    15,614,577    (5,446,589)
                                  ------------  ------------  ------------
Interest and finance costs, net
 (incl. interest income)               (45,680)      (45,680)       25,378
                                  ------------  ------------  ------------
Depreciation and amortization        8,486,784     7,512,484     4,782,779
                                  ------------  ------------  ------------

 Loss on derivatives, net                    -             -     6,813,206
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (3,142,739)   (3,142,739)   (1,101,598)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                              737,773       737,773       737,773
                                  ------------  ------------  ------------

Adjusted EBITDA                     21,733,323    20,676,415     5,810,949
                                  ============  ============  ============



                                    Three Months  Three Months
                                     Ended June   Ended June
                                      30, 2008     30, 2008
                                  (as originally (as adjusted
                                      reported     under the
                                      under the     direct    Three Months
                                      deferral      expense    Ended June
                                       method)      method)     30, 2009
                                     -----------  -----------  -----------
Net cash flow provided by operating
 activities                           17,199,980   17,199,980      540,672
                                     -----------  -----------  -----------

Changes in operating assets /
 liabilities                           5,418,141    4,361,233    5,351,160
                                     -----------  -----------  -----------

Loss on interest rate derivatives
 (realized)                                    -            -      177,187
                                     -----------  -----------  -----------

Gain on trading securities, net          239,653      239,653      765,280
                                     -----------  -----------  -----------

Investment in trading securities,
 net                                    (547,828)    (547,828)    (741,248)
                                     -----------  -----------  -----------

Share-based compensation                (509,658)    (509,658)    (282,925)
                                     -----------  -----------  -----------

Interest, net                            (66,965)     (66,965)         823
                                     -----------  -----------  -----------

 Adjusted EBITDA                      21,733,323   20,676,415    5,810,949
                                     ===========  ===========  ===========



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

Net income \ (loss)                 30,870,033    29,263,950    (1,501,316)
                                  ------------  ------------  ------------
Interest and finance costs, net
 (incl. interest income)              (159,483)     (159,483)     (119,629)
                                  ------------  ------------  ------------
Depreciation and amortization       16,456,481    14,787,848     9,283,929
                                  ------------  ------------  ------------

Loss on derivatives, net                     -             -     4,911,034
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of below market time charter
 acquired                           (5,992,158)   (5,992,158)   (2,077,237)
                                  ------------  ------------  ------------
Amortization of deferred revenue
 of above market time charter
 acquired                            1,475,546     1,475,546     1,475,546
                                  ------------  ------------  ------------

Adjusted EBITDA                     42,650,419    39,375,703    11,972,327
                                  ============  ============  ============




                                     Six Months   Six Months
                                     Ended June   Ended June
                                      30, 2008     30, 2008
                                  (as originally (as adjusted
                                      reported     under the
                                      under the     direct     Six Months
                                      deferral      expense    Ended June
                                       method)      method)     30, 2009
                                     -----------  -----------  -----------
Net cash flow provided by operating
 activities                           39,954,533   39,954,533    6,973,037
                                     -----------  -----------  -----------

Changes in operating assets /
 liabilities                           3,802,539      527,823    5,673,515
                                     -----------  -----------  -----------

Loss on interest rate derivatives
(realized)                                     -            -      124,559
                                     -----------  -----------  -----------

Gain on trading securities, net          256,695      256,695      660,705
                                     -----------  -----------  -----------

Investment in trading securities,
 net                                    (282,646)    (282,646)    (741,248)
                                     -----------  -----------  -----------

Share-based compensation                (877,398)    (877,398)    (552,001)
                                     -----------  -----------  -----------

Interest, net                           (203,304)    (203,304)    (166,240)
                                     -----------  -----------  -----------

Adjusted EBITDA                       42,650,419   39,375,703   11,972,327
                                     ===========  ===========  ===========

EBITDA Reconciliation:

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

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

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

Net income \ (loss)               15,697,185     15,614,577     (5,446,589)
                               -------------  -------------  -------------

Unrealized loss on
 derivatives, net                          -              -      6,636,019
                               -------------  -------------  -------------

Unrealized gain on trading
 securities                         (145,916)      (145,916)      (353,836)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of below market time
 charter acquired                 (3,142,739)    (3,142,739)    (1,101,598)
                               -------------  -------------  -------------

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

Net Income excluding
 unrealized loss on
 derivatives, unrealized gain
 on trading securities,
 amortization of the fair
 value of charters acquired       13,146,303     13,063,695        471,769
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized gain on trading
 securities, amortization of
 the fair value of charters
 acquired basic                         0.43           0.43           0.02
                               -------------  -------------  -------------

Weighted average number of
 shares, basic                    30,428,810     30,428,810     30,575,611
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized gain on trading
 securities, amortization of
 the fair value of charters
 acquired, diluted                      0.43           0.43           0.02
                               -------------  -------------  -------------
Weighted average number of
 shares, diluted                  30,554,537     30,554,537     30,680,038
                               -------------  -------------  -------------


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

Net income \ (loss)               30,870,833     29,263,950     (1,501,316)
                               -------------  -------------  -------------

Unrealized loss on
 derivatives, net                          -              -      4,786,475
                               -------------  -------------  -------------

Unrealized gain on trading
 securities                         (162,958)      (162,958)      (249,261)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of below market time
 charter acquired                 (5,992,158)    (5,992,158)    (2,077,237)
                               -------------  -------------  -------------

Amortization of deferred
 revenue of above market time
 charter acquired                  1,475,546      1,475,546      1,475,546
                               -------------  -------------  -------------

Net Income excluding unrealized
 loss on derivatives, unrealized
 gain on trading securities,
 amortization of the fair
 value of charters acquired       26,191,263     24,584,380      2,434,207
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized gain on trading
 securities, amortization of
 the fair value of charters
 acquired, basic                        0.86           0.81           0.08
                               -------------  -------------  -------------

Weighted average number of
 shares, basic                    30,375,182     30,375,182     30,575,611
                               -------------  -------------  -------------

Net Income per share excluding
 unrealized loss on derivatives,
 unrealized gain on trading
 securities, amortization of
 the fair value of charters
 acquired, diluted                      0.86           0.81           0.08
                               -------------  -------------  -------------

Weighted average number of
 shares, diluted                  30,501,654     30,501,654     30,641,379
                               =============  =============  =============

About Euroseas Ltd.

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

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

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

Forward-Looking Statement

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

Visit our website www.euroseas.gr

Contact Information

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

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