SOURCE: Euroseas

Euroseas

November 15, 2010 16:05 ET

Euroseas Ltd. Reports Results for the Nine-Month Period and Quarter Ended September 30, 2010

MAROUSSI, ATHENS, GREECE--(Marketwire - November 15, 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 three and nine month periods ended September 30, 2010.

Third Quarter 2010 Highlights:

--  Net loss of $3.2 million or $0.10 loss per share basic and diluted on
    total net revenues of $12.2 million.  Excluding the effect of
    unrealized gain and realized loss on derivatives and unrealized loss on
    trading securities and amortization of the fair value of charters
    acquired, the net loss for the period would have been $1.4 million, or
    $0.04 loss per share basic and diluted.

--  Adjusted EBITDA was $3.5 million. Please refer to a subsequent section
    of the Press Release for a reconciliation of adjusted EBITDA to net
    income.

--  An average of 16.00 vessels were owned and operated during the third
    quarter of 2010 earning an average time charter equivalent rate of
    $10,623 per day.

--  Declared a quarterly dividend of $0.06 per share for the third quarter
    of 2010 payable on December 7, 2010 to shareholders of record on
    November 26, 2010. This is the 21st consecutive quarterly dividend
    declared.

First Nine Month 2010 Highlights:

--  Net loss of $5.7 million or $0.18 loss per share basic and diluted on
    total net revenues of $39.7 million.  Excluding the effect of
    unrealized gain and realized loss on derivatives and unrealized loss on
    trading securities and amortization of the fair value of charters
    acquired, the net loss for the period would have been $0.5 million, or
    $0.02 loss per share basic and diluted.

--  Adjusted EBITDA was $13.4 million. Please refer to a subsequent section
    of the Press Release for a reconciliation of adjusted EBITDA to net
    income.

--  An average of 15.37 vessels were owned and operated during the first
    nine months of 2010 earning an average time charter equivalent rate of
    $11,645 per day.

--  Declared three quarterly dividends for a total of $0.17 per share
    during the first nine months of 2010.

Euromar Joint Venture

--  Purchased 6 vessels since June 2010 investing almost half of its
    committed capital of $175 million. Euroseas has committed $25 million
    to the venture.

Aristides Pittas, Chairman and CEO of Euroseas commented: "During the third quarter, October and first half of November 2010, we have continued to capitalize on the strengthening of the containership market by re-activating and chartering our two laid-up containerships at rates positively contributing to our cash flow. All our containership vessels are now operating. The reactivation of the above vessels and an increased number of vessels going through drydock affected the results of the third quarter. As our containership charters are rolled over from the existing lower levels to rates reflecting the current market rates over the next 2 quarters, we expect to see a significant contribution to our earnings in 2011 and beyond. Our drybulk fleet continues to be fully covered for the remainder of 2010 either via physical charters or via FFA contracts and we expect to see little influence on our earnings from the developments in the dry bulk market. For 2011, we have 60% secured cover at profitable rates through a combination of physical charters and FFA contracts.

"Our Euromar joint venture has invested decisively in the containership sector in line with our original investment thesis by purchasing or agreeing to purchase -- and take delivery within 2010 -- a total of 6 containerships, four in the 2,500-2,800 teu range and 2 in the 1,700- 1,800 teu range. All 6 vessels are geared and built post 2000 with an average age of approximately 7 years.

"We plan to exploit other attractive investment opportunities either through our Euromar joint venture, as described above, or, by investing our own funds as we did with the purchase of M/V Aggeliki P in June 2010.

"Our Board decided to maintain our quarterly dividend of $0.06 per share which represents an annual yield of about 6% on the basis of our stock price on November 12, 2010."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the third quarter of 2010 reflect the strengthening of the containership market compared to the first quarter of 2010 but also the lower level of the charter rates our fleet has earned compared to the same period a year ago. Our results were negatively influenced by realized losses in FFAs and interest rate swap contracts and positively affected by net unrealized gains on our overall derivative positions.

"Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, reflect a decrease of about 2.0% during the third quarter of 2010 compared to the same quarter of last year; and, a decrease of about 8.3% for the nine month periods ended September 30, 2010 over the same period of 2009. As always, we want to emphasize that cost control remains a key component of our strategy.

"As of September 30, 2010, our outstanding debt was $62.5 million versus restricted and unrestricted cash of about $23.2 million not including $3.7 million held as margin for our FFA contracts. As of the same date, our scheduled debt repayments over the next 12 months amounted to about $12.6 million, a number low enough to provide us with significant operational cash flow comfort. All our debt covenants were satisfied as of September 30, 2010."

Third Quarter 2010 Results:

For the third quarter of 2010, the Company reported total net revenues of $12.2 million representing a 28.5% decrease over total net revenues of $17.2 million during the third quarter of 2009. The Company reported net loss for the period of $3.2 million as compared to a net income of $2.2 million for the third quarter of 2009. The results for the third quarter of 2010 include a $0.07 million net unrealized gain on derivatives and trading securities and a $2.4 million net realized loss on derivatives as compared to $2.0 million net unrealized gain on derivatives and trading securities and $2.3 million realized loss on derivatives for the same period of 2009.

Depreciation expenses for the third quarter of 2010 were $4.6 million compared to $5.1 million during the same period of 2009. On average, 16.00 vessels were owned and operated during the third quarter of 2010 earning an average time charter equivalent rate of $10,623 per day compared to 16.79 vessels in the same period of 2009 earning on average $15,101 per day. M/V Despina P, one of the Company's containerships, that was laid up since March 2009 was reactivated in July 2010 and has entered in a time charter contract that commenced in the first half of July 2010. A second containership of the Company, M/V Jonathan P was reactivated from lay up and entered into dry-dock during the third quarter of 2010.

Adjusted EBITDA for the third quarter of 2010 was $3.5 million, a 51.8% decrease from $7.2 million achieved during the third quarter of 2009. Please see below for Adjusted EBITDA reconciliation to net income / loss and cash flow provided by operating activities.

Basic and diluted losses per share for the third quarter of 2010 were $0.10, calculated on 30,932,211 basic and diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.07 for the third quarter of 2009, calculated on 30,628,410 and 30,700,820, weighted average number of shares outstanding, respectively.

Excluding the effect on the losses for the quarter of the unrealized gain on derivatives and the realized loss on derivatives, unrealized loss on trading securities and amortization of the fair value of time charter contracts acquired, the loss per share for the quarter ended September 30, 2010 would have been $0.04 per share, basic and diluted, compared to earnings of $0.07 per share for the quarter ended September 30, 2009. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First nine months 2010 Results:

For the first nine months of 2010, the Company reported total net revenues of $39.7 million representing a 16.1% decrease over total net revenues of $47.3 million during the first nine months of 2009. The Company reported a net loss for the period of $5.7 million as compared to net income of $0.7 million for the first nine months of 2009. The results for the first nine months of 2010 include a $4.0 million net unrealized gain on derivatives and trading securities and a $10.8 million net realized loss on derivatives as compared to $2.5 million net unrealized loss on derivatives and trading securities and $3.3 million net realized loss on derivatives for the same period of 2009.

Depreciation expenses for the first nine months of 2010 were $13.4 million compared to $14.4 million during the same period of 2009. On average, 15.37 vessels were owned and operated during the first nine months of 2010 earning an average time charter equivalent rate of $11,645 per day compared to 16.17 vessels in the same period of 2009 earning on average $13,632 per day. Two of the Company's vessels that were laid up during the entire first half of 2010, were reactivated during the third quarter of the year.

Adjusted EBITDA for the first nine months of 2010 was $13.4 million, a 32.9% decrease from $20.0 million achieved during the first nine months of 2009. Please see below for Adjusted EBITDA reconciliation to net income/loss and cash flow provided by operating activities.

Basic and diluted loss per share for the first nine months of 2010 was $0.18, calculated on 30,877,513 weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.02 basic and diluted per share for the first nine months of 2009, calculated on 30,593,401 basic and 30,642,954 diluted weighted average number of shares outstanding, respectively.

Excluding the effect on the earnings of the unrealized gain on derivatives, realized loss on derivatives, unrealized loss on trading securities and amortization of the fair value of time charter contracts acquired, the loss per share for the nine-month period ended September 30, 2010 would have been $0.02 per share compared to earnings of $0.18 per share, basic and diluted, for the same period in 2009. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:

                                      Year
Name          Type       Dwt    TEU   Built  Employment    TCE Rate ($/day)
           ----------- ------- ------ ---- ---------------  ---------------

Dry Bulk
 Vessels
           ----------- ------- ------ ---- ---------------  ---------------
PANTELIS       Panamax  74,020        2000  TC 'til Feb-12     $ 17,500
           ----------- ------- ------ ---- ---------------  ---------------
                                            (currently
                                            detained off
                                            the coast of
                                            Somalia after
ELENI P        Panamax  72,119        1997 being hijacked)
           ----------- ------- ------ ---- ---------------  ---------------
IRINI (*)      Panamax  69,734        1988  Baumarine Pool
           ----------- ------- ------ ---- ---------------  ---------------
ARISTIDES
 N.P.          Panamax  69,268        1993  TC 'til Mar-12     $ 18,900
           ----------- ------- ------ ---- ---------------  ---------------
MONICA P                                     Bulkhandling
 (**)         Handymax  46,667        1998       Pool
           ----------- ------- ------ ---- ---------------  ---------------
Total Dry
 Bulk
 Vessels             5 331,808
           ----------- ------- ------ ---- ---------------  ---------------
Multipurpose
 Dry Cargo
 Vessels
           ----------- ------- ------ ---- ---------------  ---------------
                                                             $ 9,500 'til
                                                                Dec-10,
TASMAN                                                       $ 9,000 'til
 TRADER              1  22,568    950 1990  TC 'til Mar-12      Mar-12
           ----------- ------- ------ ---- ---------------  ---------------
Container
 Carriers
           ----------- ------- ------ ---- ---------------  ---------------
                                                             $ 16,800 'til
                                                                Aug-11
                                                             $ 18,735 'til
                                                                Aug-12
                                           TC 'til Aug-11    $ 19,240 'til
                                             (3 Annual          Aug-13
MAERSK                                      options 'til     $ 19,750 'til
 NOUMEA    Intermediate 34,677  2,556 2001     Aug-14)          Aug-14
           ----------- ------- ------ ---- ---------------  ---------------
                                            TC 'til Mar-11      $ 4,000
TIGER                                       (options 'til
 BRIDGE    Intermediate 31,627  2,228 1990     Mar-12)          $ 7,500
           ----------- ------- ------ ---- ---------------  ---------------
AGGELIKI P Intermediate 30,360  2,008 1998  TC 'til May-11      $ 7,000
           ----------- ------- ------ ---- ---------------  ---------------
DESPINA P   Handy size  33,667  1,932 1990  TC 'til Nov-10      $ 7,500
           ----------- ------- ------ ---- ---------------  ---------------
JONATHAN P                                                   $ 7,500 'til
 (ex-OEL                                    TC 'til Dec-10      Dec-10
 INTEGRITY) Handy size  33,667  1,932 1990  TC 'til Apr-11      $ 9,000
           ----------- ------- ------ ---- ---------------  ---------------
CAPTAIN
 COSTAS
 (ex-OEL
 TRANS-                                    Monthly options
 WORLD)     Handy size  30,007  1,742 1992  TC 'til Mar-11      $ 4,250
           ----------- ------- ------ ---- ---------------  ---------------
YM PORT
 KELANG
 (ex-MASTRO
 NICOS, ex-
 YM XINGANG                                 TC 'til Nov-10      $ 3,750
 I)         Handy size  23,596  1,599 1993  TC 'til Nov-11      $ 5,900
           ----------- ------- ------ ---- ---------------  ---------------
MANOLIS P   Handy size  20,346  1,452 1995  TC 'til May-11      $ 7,699
           ----------- ------- ------ ---- ---------------  ---------------
NINOS
 (ex-YM                                       TC 'til
 QINGDAO I)     Feeder  18,253  1,169 1990    March-11          $ 6,800
           ----------- ------- ------ ---- ---------------  ---------------
                                           Monthly options
                                            TC 'til Dec-10      $ 3,850
                                             Then TC 'til
KUO HSIUNG      Feeder  18,154  1,169 1993     Jun-11)          $ 5,300
           ----------- ------- ------ ---- ---------------  ---------------
Total
 Container
 Carriers           10 274,354 17,787
           ----------- ------- ------ ---- ---------------  ---------------
Fleet Grand
 Total              16 628,730 18,737
           ----------- ------- ------ ---- ---------------  ---------------



Summary Fleet Data:

                                3 months,  3 months,  9 months,  9 months,
                                  ended      ended      ended      ended
                                September  September  September  September
                                30, 2009   30, 2010   30, 2009   30, 2010
                                ---------  ---------  ---------  ---------
FLEET DATA
Average number of vessels (1)       16.79      16.00      16.17      15.37
Calendar days for fleet (2)       1,545.0    1,472.0    4,414.0    4,197.0
Scheduled off-hire days incl.
 laid-up (3)                        331.5      171.7      704.5      595.3
Available days for fleet (4) =
 (2) - (3)                        1,213.5    1,300.3    3,709.5    3,601.7
Commercial off-hire days (5)         43.7          -      156.1          -
Operational off-hire days (6)         1.9       12.7       23.2       22.2
Voyage days for fleet (7) = (4)
 - (5) - (6)                      1,167.9    1,287.6    3,530.2    3,579.5
Fleet utilization (8) = (7) /
 (4)                                 96.2%      99.0%      95.2%      99.4%
Fleet utilization, commercial
 (9) = ((4) - (5)) / (4)             96.4%     100.0%      95.8%     100.0%
Fleet utilization, operational
 (10) = ((4) - (6)) / (4)            99.8%      99.0%      99.4%      99.4%

AVERAGE DAILY RESULTS
Time charter equivalent rate
 (11)                              15,101     10,623     13,632     11,645
Vessel operating expenses excl.
 drydocking expenses (12)           4,251      4,431      4,790      4,421
General and administrative
 expenses (13)                        504        228        645        565
Total vessel operating expenses
 (14)                               4,755      4,659      5,435      4,986
                                ---------  ---------  ---------  ---------
Drydocking expenses (15)            1,238      1,161        433        848
                                ---------  ---------  ---------  ---------

(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. 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. TVOE is the sum of vessel operating expenses excluding drydocking 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, Tuesday, November 16, 2010 at 8:30 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 replay of the conference call will be available until November 23, 2010. The standard international replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 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 Third Quarter and First Nine months 2010 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)


                           Three        Three
                          Months       Months     Nine Months  Nine Months
                           Ended        Ended        Ended        Ended
                         September    September    September    September
                         30, 2009     30, 2010     30, 2009     30, 2010
                        -----------  -----------  -----------  -----------
                        (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues
        Voyage revenue   17,753,656   12,692,529   49,098,531   41,136,042
           Commissions     (586,301)    (476,534)  (1,774,961)  (1,444,206)
Net revenues             17,167,355   12,215,995   47,323,570   39,691,836

Operating expenses
       Voyage expenses      117,462      341,908      975,038      949,162
      Vessel operating
              expenses    5,235,285    5,256,057   17,435,904   15,013,547
   Drydocking expenses    1,912,474    1,709,385    1,912,474    3,560,148
          Depreciation    5,106,899    4,587,321   14,390,828   13,392,813

       Management fees    1,332,991    1,265,533    3,707,350    3,541,078

     Other general and
        administrative
              expenses      777,609      335,947    2,848,467    2,371,534

   Charter termination
 fees and other income            -   (1,327,808)    (103,577)  (1,481,308)

Total operating
 expenses                14,482,720   12,168,343   41,166,484   37,346,974

Operating income          2,684,635       47,652    6,157,086    2,344,862

Other income/(expenses)
          Interest and
          finance cost     (339,764)    (366,886)  (1,028,217)  (1,091,862)

  Loss on derivatives,
                   net     (171,634)  (2,338,324)  (5,950,582)  (6,686,258)
 Realized & unrealized
       gain/ (loss) on
    trading securities     (138,835)     (24,293)     521,870     (104,802)

      Foreign exchange
          (loss)/ gain         (945)      (9,373)      23,902       (2,225)

       Interest income      144,430       99,329      952,512      485,288

   Other expenses, net     (506,748)  (2,639,547)  (5,480,515)  (7,399,859)

 Equity Earnings (loss)
      in joint venture            -     (622,219)           -     (622,219)
                        -----------  -----------  -----------  -----------

Net income / (loss)       2,177,887   (3,214,114)     676,571   (5,677,216)
                        -----------  -----------  -----------  -----------
Earnings (loss), per
 share, basic                  0.07        (0.10)        0.02        (0.18)
Weighted average number
 of shares, basic        30,628,410   30,932,211   30,593,401   30,877,513
                        -----------  -----------  -----------  -----------
Earnings (loss), per
 share, diluted                0.07        (0.10)        0.02        (0.18)
                        -----------  -----------  -----------  -----------
Weighted average number
 of shares, diluted      30,700,820   30,932,211   30,642,954   30,877,513
                        -----------  -----------  -----------  -----------





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


                                                December 31,  September 30,
                                                    2009          2010
                                                ------------  ------------
                                                 (unaudited)   (unaudited)
ASSETS
Current Assets:
  Cash and cash equivalents                       40,984,549    17,314,699
  Due from Related company                                 -       123,440
  Trade accounts receivable                        1,650,713     1,436,105
  Other receivables, net                             239,656     2,494,972
  Inventories                                      1,869,238     1,608,471
  Restricted cash                                  1,191,230     1,050,556
  Other deposits                                  12,376,119     3,708,543
  Trading securities                                 436,598       331,796
  Prepaid expenses                                   185,137       381,066
Total current assets                              58,933,240    28,449,648

Fixed assets:
  Vessels, net                                   257,270,824   260,008,185
Long-term assets:
  Restricted cash                                  6,500,000     4,800,000
  Deferred charges, net                              327,694       250,933
  Derivatives                                        386,536             -
  Investment in joint venture                              -     5,627,781
Total long-term assets                           264,485,054   270,686,899
                                                ------------  ------------
Total assets                                     323,418,294   299,136,547
                                                ------------  ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Long term debt, current portion                 14,030,000    12,570,000
  Trade accounts payable                           1,843,182     4,084,548
  Accrued expenses                                 1,060,326     1,313,327
  Accrued dividends                                   46,750        67,025
  Deferred revenue                                 1,247,782     1,160,688
  Derivatives                                     10,799,132     4,483,190
  Due to related company                           1,416,380             -
Total current liabilities                         30,443,552    23,678,778

Long-term liabilities:
  Long term debt, net of current portion          57,485,000    49,920,000
  Derivatives                                        611,852     2,389,589
  Fair value of below market time charter
   acquired                                        3,424,627     1,844,815
Total long-term liabilities                       61,521,479    54,154,404
Total liabilities                                 91,965,031    77,833,182

Shareholders' equity:
  Common stock (par value $0.03, 200,000,000
   shares authorized, 30,849,711 and
   30,932,211 issued and outstanding,
   respectively)                                     925,492       927,967
  Preferred shares (par value $0.01,
   20,000,000 shares authorized, no shares
   issued and outstanding)                                 -             -
  Additional paid-in capital                     235,588,391   236,086,788
  Accumulated deficit                             (5,060,620)  (15,711,390)
Total shareholders' equity                       231,453,263   221,303,365
                                                ------------  ------------
Total liabilities and shareholders' equity       323,418,294   299,136,547
                                                ------------  ------------





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


                                               Nine Months    Nine Months
                                                  Ended          Ended
                                              September 30,  September 30,
                                                  2009           2010
                                              -------------  -------------
                                                (unaudited)    (unaudited)
                                              -------------  -------------
Cash flows from operating activities:
Net income (loss)                                   676,571     (5,677,216)
Adjustments to reconcile net income / loss to
 net cash provided by operating activities:
Depreciation of vessels                          14,390,828     13,392,813
Amortization of deferred charges                     72,417         76,760
Amortization of fair value of time charters      (1,092,951)    (1,579,812)
Share-based compensation                            709,714        500,873
Unrealized loss / (gain) on derivatives, net      2,640,022     (4,151,669)
Loss / (gain) in investment in joint venture              -        622,219
Sale of trading securities                          741,248              -
Realized gain on trading securities                (411,444)             -
Unrealized (gain) / loss on trading
 securities                                        (110,426)       104,802
Changes in operating assets and liabilities      (6,120,457)     7,603,610
                                              -------------  -------------
Net cash provided by operating activities        11,495,522     10,892,380
                                              -------------  -------------

Cash flows from investing activities:
Purchase of vessels including improvements      (62,224,639)   (16,130,174)
Investment in joint venture                               -     (6,250,000)
Change in restricted cash                          (613,129)     1,840,674
Proceeds from sale of vessels                     5,980,487              -
                                              -------------  -------------
Net cash (used in) investing activities         (56,857,281)   (20,539,500)
                                              -------------  -------------

Cash flows from financing activities:
Issuance of share capital                             4,023              -
Net proceeds from shares issued                     645,242              -
Dividends paid                                   (9,279,783)    (4,953,279)
Offering expenses paid                                    -        (44,451)
Loan arrangements fees paid                        (208,000)             -
Proceeds from long-term debt                     33,000,000              -
Repayment of long-term debt                      (9,925,000)    (9,025,000)
                                              -------------  -------------
Net cash provided by (used in) financing
 activities                                      14,236,482    (14,022,730)
                                              -------------  -------------

Net decrease in cash and cash equivalents       (31,125,277)   (23,669,850)
Cash and cash equivalents at beginning of
 period                                          73,851,191     40,984,549
                                              -------------  -------------
Cash and cash equivalents at end of period       42,725,914     17,314,699
                                              -------------  -------------





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


                    Three Months  Three Months  Nine Months   Nine Months
                        Ended         Ended         Ended         Ended
                      September     September     September     September
                      30, 2009      30, 2010      30, 2009      30, 2010
                    ------------  ------------  ------------  ------------
Net income / (loss)    2,177,887    (3,214,114)      676,571    (5,677,216)
                    ------------  ------------  ------------  ------------
Interest and
 finance costs, net
 (incl. interest
 income)                 195,334       267,557        75,705       606,574
                    ------------  ------------  ------------  ------------
Depreciation           5,106,899     4,587,321    14,390,828    13,392,813
                    ------------  ------------  ------------  ------------
Loss on
 derivatives, net        171,634     2,338,324     5,950,582     6,686,258
                    ------------  ------------  ------------  ------------
Amortization of
 deferred revenue
 of below market
 time charter
 acquired               (669,136)     (526,604)   (2,746,373)   (1,579,812)
                    ------------  ------------  ------------  ------------
Amortization of
 deferred revenue
 of above market
 time charter
 acquired                177,876             0     1,653,422             0
                    ------------  ------------  ------------  ------------
Adjusted EBITDA        7,160,494     3,452,484    20,000,735    13,428,617
                    ------------  ------------  ------------  ------------


                    Three Months  Three Months  Nine Months   Nine Months
                        Ended         Ended         Ended         Ended
                      September     September     September     September
                      30, 2009      30, 2010      30, 2009      30, 2010
                    ------------  ------------  ------------  ------------
Net cash flow
 provided by
 operating
 activities            4,522,485     1,518,406    11,495,522    10,892,380
                    ------------  ------------  ------------  ------------
Changes in
 operating assets /
 liabilities             446,942        72,526     6,120,457    (7,603,610)
                    ------------  ------------  ------------  ------------
Loss on interest
 rate and FFA
 derivatives
 (realized)            2,318,087     2,431,198     3,310,560    10,837,928
                    ------------  ------------  ------------  ------------
Gain / (loss) on
 trading securities
 & investment in
 joint venture, net     (138,835)     (646,512)      521,870      (727,021)
                    ------------  ------------  ------------  ------------
Sale of trading
 securities, net               -             -      (741,248)            -
                    ------------  ------------  ------------  ------------
Share-based
 compensation           (157,713)     (165,104)     (709,714)     (500,873)
                    ------------  ------------  ------------  ------------
Interest, net            169,528       241,970         3,288       529,813
                    ------------  ------------  ------------  ------------
Adjusted EBITDA        7,160,494     3,452,484    20,000,735    13,428,617
                    ------------  ------------  ------------  ------------


EBITDA Reconciliation:

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

                              Euroseas Ltd.
 Reconciliation of Net Income / (loss) Excluding the Effect from Unrealized
 Loss / (Gain) and Realized Loss  on derivatives, Unrealized (Gain) / Loss
   on trading securities and  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  Nine Months   Nine Months
                        Ended         Ended         Ended         Ended
                      September     September     September     September
                      30, 2009      30, 2010      30, 2009      30, 2010
                    ------------  ------------  ------------  ------------

Net income /
 (loss)                2,177,887    (3,214,114)      676,571    (5,677,216)
                    ------------  ------------  ------------  ------------

Unrealized loss /
 (gain)  on
 derivatives, net     (2,146,453)      (92,874)    2,640,022    (4,151,669)
                    ------------  ------------  ------------  ------------

Unrealized (gain) /
 loss on trading
 securities              138,835        24,293      (110,426)      104,802
                    ------------  ------------  ------------  ------------

Realized loss on
 derivatives           2,318,087     2,431,198     3,310,560    10,837,928
                    ------------  ------------  ------------  ------------

Amortization of
 deferred revenue
 of below market
 time charter
 acquired               (669,136)     (526,604)   (2,746,373)   (1,579,812)
                    ------------  ------------  ------------  ------------

Amortization of
 deferred revenue
 of above market
 time charter
 acquired                177,876             -     1,653,422             -
                    ------------  ------------  ------------  ------------

Net income/(loss)
 excluding
 unrealized loss /
 (gain) on
 derivatives,
 unrealized (gain) /
 loss on trading
 securities,
 realized loss on
 derivatives,
 amortization of
 the fair value of
 charters acquired     1,997,096    (1,378,101)    5,423,776      (465,967)
                    ------------  ------------  ------------  ------------

Net income/(loss)
 per share
 excluding
 unrealized loss /
 (gain) on
 derivatives,
 unrealized (gain) /
 loss on trading
 securities,
 realized loss on
 derivatives,
 amortization of
 the fair value of
 charters acquired,
 basic                      0.07         (0.04)         0.18         (0.02)
                    ------------  ------------  ------------  ------------

Weighted average
 number of shares,
 basic                30,628,410    30,932,211    30,593,401    30,877,513
                    ------------  ------------  ------------  ------------

Net income/(loss)
 per share
 excluding
 unrealized loss /
 (gain) on
 derivatives,
 unrealized (gain) /
 loss on trading
 securities,
 realized loss on
 derivatives,
 amortization of
 the fair value of
 charters acquired,
 diluted                    0.07         (0.04)         0.18         (0.02)
                    ------------  ------------  ------------  ------------

Weighted average
 number of shares,
 diluted              30,700,820    30,932,211    30,642,954    30,877,513
                    ------------  ------------  ------------  ------------


About Euroseas Ltd.

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. Euroseas trades on the NASDAQ Global Market under the ticker ESEA since January 31, 2007.

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

The Company has a fleet of 16 vessels, including 4 Panamax drybulk carriers and 1 Handymax drybulk carrier, 3 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 10 containerships have a cargo capacity of 17,787 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 expected vessel acquisitions and entering into further time charters. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for dry bulk vessels and container ships, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.


Visit our website www.euroseas.gr

Contact Information

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

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