SOURCE: Euroseas

August 14, 2008 08:30 ET

Euroseas Ltd. Reports Results for the Second Quarter and Six Month Period Ended June 30, 2008

MAROUSSI, ATHENS, GREECE--(Marketwire - August 14, 2008) - Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the second quarter of 2008 and six month period ended June 30, 2008.

Second Quarter 2008 Highlights:

--  Net income of $15.7 million or $0.52 per share basic and $0.51 per
    share diluted calculated on 30,428,810 basic and 30,554,537 diluted
    weighted number of shares outstanding, respectively, on total net revenues
    of $34.5 million. Excluding the effect on the earnings for the quarter from
    the amortization of the fair value of time charter contracts acquired the
    earnings per share for the quarter ended June 30, 2008 would have been
    $0.44 per share basic and diluted.
    
--  Adjusted EBITDA was $21.7 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average 15.44 vessels were operated during the second quarter 2008
    earning an average time charter equivalent rate of $25,918 per day.
    
--  Declared a quarterly dividend of $0.32 per share for the second
    quarter 2008 payable on September 17, 2008 to shareholders of record on
    September 5, 2008.
    

Six Months 2008 Highlights:

--  Net income of $30.9 million or $1.02 per share basic and $1.01 per
    share diluted calculated on 30,375,182 basic and 30,501,654 diluted
    weighted number of shares outstanding, respectively, on total net revenues
    of $67.3 million. Excluding the effect on the earnings for the quarter from
    the amortization of the fair value of time charter contracts acquired the
    earnings per share for the six months ended June 30, 2008 would have been
    $0.87 per share basic and $0.86 per share diluted, respectively.
    
--  Adjusted EBITDA was $42.7 million. Please refer to a subsequent
    section of the Press Release for a reconciliation of adjusted EBITDA to net
    income.
    
--  An average 15.22 vessels were operated during the first six months of
    2008 earning an average time charter equivalent rate of $25,824 per day
    
--  Declared quarterly dividends for the first and second quarters of
    2008, aggregating $0.63 per share.
    

Fleet Developments:

--  In May 2008, took delivery of the M/V Maersk Noumea, an intermediate
    container vessel acquired for $43.5 million in May 2008. The vessel has a
    capacity of 34,677 dwt and 2,556 teu built in 2001, in South Korea. The
    vessel is employed under a term charter until August 2011, at a rate of
    about $16,800 per day followed by three one-year optional extensions for
    the charterer.
    
--  Following the acquisition of M/V Maersk Noumea, approximately 80% of
    Euroseas total fleet days in the remaining of 2008 and approximately 34% in
    2009 are fixed under period charters, already concluded spot charters, or,
    otherwise protected from market fluctuations.
    

Aristides Pittas, Chairman and CEO of Euroseas commented: "During the second quarter of 2008, we continued to solidify our operations and at the same time expanded our fleet by one vessel, acquiring our youngest containership. We plan to continue expanding our fleet when opportunities arise by selecting vessels from the whole spectrum of the drybulk and containership markets which we believe maximize our return on equity at any given point of the market cycles. The growth of our dividend from $0.49 per share for the first six months of 2007 to $0.63 per share for the first six months of 2008, a 29% increase, is the best evidence of the effectiveness of our investment and employment strategy, especially since it represents only about 60% of our net income and less than 50% of our cash flow. Our aim is to continue providing consistent and significant dividends throughout the market cycles."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the first six months of 2008 reflect significantly higher revenues compared to the first six months 2007 due to the higher average time charter equivalent rate our vessels have achieved and the higher number of vessels in our fleet. Specifically during the first six months of 2008, our fleet earned on average $25,824 per vessel per day compared to $18,567 per vessel per day during the same period in 2007. Daily vessel operating expenses, including management fees, during the first six months of 2008 reflect an increase of about 29% on a per vessel per day basis compared to the same period in 2007. This increase is mainly due to the increase in euro/dollar exchange rate, cost of lubricants, higher maintenance costs and higher crew costs because of the increased competition in securing quality personnel.

"As of today, about 80% of our ship capacity days in the remaining of 2008 have been fixed (including the spot voyages already concluded for which the revenue is already known). In 2009, 34% of our capacity is under time charter contracts or protected from market fluctuations. We believe that our contract coverage gives us a solid revenue base for 2008 and 2009, more predictable cash flows and sufficient downside protection, while still allowing us to participate in the potential upside of the market."

Second Quarter 2008 Results:

For the second quarter of 2008, the Company reported total net revenues of $34.5 million and net income of $15.7 million representing a 121.5% and 145.3% increase, respectively, over total net revenues of $15.6 million and net income of $6.4 million during the second quarter of 2007 On average, 15.44 vessels were operated during the second quarter 2008 earning an average time charter equivalent rate of $25,918 per day compared to 10.08 vessels in the same period 2007 earning on average $18,776 per day.

Adjusted EBITDA for the second quarter of 2008 was $21.7 million, a 91.4% increase over $11.4 million achieved during the second quarter of 2007. Please see below for Adjusted EBITDA reconciliation to net income and cash flow provided by operating activities.

Basic earnings per share for the second quarter of 2008 were $0.52, calculated on 30,428,810 weighted average number of shares outstanding, compared to earnings per share of $0.35 for the second quarter of 2007, calculated on 18,370,861 weighted average number of shares outstanding. Diluted earnings per share were $0.51 and $0.35, respectively, inclusive of capital gains of $0.20 for the second quarter of 2007. The Company has recently declared a quarterly dividend of $0.32 per share, which represents its twelfth consecutive quarterly dividend and a 28% increase over last year's second quarter dividend.

Excluding the effect on the earnings for the quarter from the amortization of the fair value of time charter contracts acquired the earnings per share for the quarter ended June 30, 2008 would have been $0.44 per share basic and diluted and, for the quarter ended June 30, 2007 would have been $0.38 per share basic and diluted. Usually, security analysts do not include amortization of the fair value of period charter contracts in their published estimates of earnings per share.

Six Months Ended June 30, 2008 Results:

For the six months ended June 30, 2008, the company reported total net revenues of $67.3 million and net income of $30.9 million, representing a 131.2% and 94.5% increase, respectively over the same period of 2007. Adjusted EBITDA for the period was $42.7 million, a 71.1% increase over 2007 (please see below for Adjusted EBITDA reconciliation to net income and cash flow from operating activities). In the first six months ended June 30, 2007, net revenues were $29.1 million, net income was $15.9 million and EBITDA was $24.9 million. On average, 15.22 vessels were operated during the six month period 2008 earning an average time charter equivalent rate of $25,824 per day compared to 9.55 vessels in the same period 2007 earning a time charter equivalent rate of $18,567. Results for the six month period ended June 30, 2007 included a capital gain of $3.4 million from the sale of M/V "Ariel." Excluding the capital gains from the 2007 results, net income and Adjusted EBITDA for the six month period ended June 30, 2008 increased 147.7% and 98.2%, respectively, over the same period of 2007.

Basic earnings per share for the six months ended June 30, 2008, were $1.02, calculated on 30,375,182 weighted average number of shares outstanding, compared to earnings per share of $0.92 for the same period of 2007 calculated on 17,258,629 weighted average number of shares outstanding. Diluted earnings per share were $1.01 and $0.92 per share calculated on 30,501,654 and 17,258,629 weighted average number of shares outstanding for the first six months of 2008and 2007, respectively.

Excluding the effect on the earnings for the quarter from the amortization of the fair value of time charter contracts acquired the earnings per share for the six month period ended June 30, 2008 would have been $0.87 per share basic and $0.86 per shares diluted, and, for the six month period ended June 30, 2007 would have been $0.79 per share basic and diluted exclusive of a $0.20 per share capital gain from the sale of M/V Ariel in February 2007. Usually, security analysts do not include amortization of the fair value of period charter contracts or contribution from capital gains in their published estimates of earnings per share.

Fleet Profile:
The Euroseas Ltd. fleet profile is as follows:

                                             Year                TCE Rate
Name               Type        Dwt     TEU   Built Employment     ($/day)
               ------------- -------- ------ ----- -----------  -----------
Dry Bulk Vessels
               ------------- -------- ------ ----- -----------  -----------
                                                   Baumarine
                                                   Pool - 'til  Spot/Partly
IRINI (*)            Panamax   69,734         1988  end 2008       fixed
               ------------- -------- ------ ----- -----------  -----------
ARISTIDES N.P.                                     TC 'til
                     Panamax   69,268         1993  Jan-09      $    52,000
               ------------- -------- ------ ----- -----------  -----------
IOANNA P.            Panamax   64,873         1984        Spot  $      Spot
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
NIKOLAOS P.        Handysize   34,750         1984  Sep-08      $    36,000
               ------------- -------- ------ ----- -----------  -----------
GREGOS             Handysize   38,691         1984        Spot  $      Spot
               ------------- -------- ------ ----- -----------  -----------
Total Dry Bulk
 Vessels                  5   277,316
               ------------- -------- ------ ----- -----------  -----------

               ------------- -------- ------ ----- -----------  -----------
Multipurpose Dry
 Cargo Vessels
               ------------- -------- ------ ----- -----------  -----------
                                                                $8,850 'til
                                                                 Dec-08,
TASMAN TRADER             1    22,568    950 1990  TC 'til      $9,500 'til
                                                    Mar-12       Dec-10,
                                                                $9,000 'til
                                                                 Mar-12
               ------------- -------- ------ ----- -----------  -----------
Container Carriers
               ------------- -------- ------ ----- -----------  -----------
                                                                $16,800'til
                                                                 Aug 11
                                                                $18,735'til
                                                   TC 'til       Aug 12
MAERSK NOUMEA   Intermediate   34,677  2,556  2001  Aug-11      $19,240'til
                                                   (3 annual     Aug 13
                                                    options     $19,750'til
                                                   'til Aug-14)  Aug 14
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
TIGER BRIDGE    Intermediate   31,627  2,228  1990  Jul-09      $    16,500
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
ARTEMIS         Intermediate   29,693  2,098  1987  Dec-08      $    19,000
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
DESPINA P         Handy size   33,667  1,932  1990  Feb-09      $    15,250
               ------------- -------- ------ ----- -----------  -----------
OEL INTEGRITY                                      TC 'til
(ex-JONATHAN P)   Handy size   33,667  1,932  1990  May-09      $    16,500
               ------------- -------- ------ ----- -----------  -----------
OEL TRANSWORLD
(ex-CLAN                                           TC 'til
 GLADIATOR)       Handy size   30,007  1,742  1992  Sep/Nov 09  $    18,500
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
YM XINGANG I      Handy size   23,596  1,599  1993  Jul-09      $    26,650
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
MANOLIS P         Handy size   20,346  1,452  1995  Nov-09      $    15,800
               ------------- -------- ------ ----- -----------  -----------
                                                                $12,800'til
NINOS (ex-YM                                                     Apr-08
 QINGDAO I)                                        TC 'til      $13,175'til
                      Feeder   18,253  1,169  1990  Apr-09       Apr-09
               ------------- -------- ------ ----- -----------  -----------
                                                   TC 'til
KUO HSIUNG            Feeder   18,154  1,169  1993  Feb-09      $    15,800
               ------------- -------- ------ ----- -----------  -----------
Total Container
 Carriers                 10  273,687 17,877
               ------------- -------- ------ ----- -----------  -----------
Fleet Grand
 Total                    16  573,571 18,827
               ------------- -------- ------ ----- -----------  -----------

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


Summary Fleet Data:


                                   3 months, 3 months, 6 months, 6 months,
                                     ended     ended     ended    ended
                                     June      June      June     June
                                    30, 2007 30, 2008  30, 2007 30, 2008
                                     -------  -------  -------  -------
FLEET DATA
Average number of vessels (1)          10.08    15.44     9.55    15.22
Calendar days for fleet (2)            917.0  1,405.0  1,728.0  2,770.0
Available days for fleet (3)           862.0  1,369.3  1,629.0  2,671.2
Voyage days for fleet (4)              860.6  1,353.5  1,626.3  2,646.2
Fleet utilization (5)                   99.8%    98.8%    99.8%    99.1%

AVERAGE DAILY RESULTS
Time charter equivalent rate (6)      18,776   25,918   18,567   25,824
Vessel operating expenses (7)          4,587    6,050    4,515    5,820
General and administrative expenses (8)  474      894      396      829
Total vessel operating expenses (9)    5,061    6,944    4,911    6,649
                                     -------  -------  -------  -------

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

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

(3) Available days. We define available days as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with scheduled repairs, drydockings or special or intermediate surveys. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.

(4) Voyage days. We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of off-hire days associated with scheduled and unscheduled repairs, drydockings or special or intermediate surveys or days waiting to find employment or other offhire. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues.

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

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

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

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

(9) Total vessel operating expenses, or TVOE, is a measure of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses, management fees and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

Conference Call and Webcast:

Later today, August 14, 2008 at 10:30 a.m. EDT, the company's management will host a conference call to discuss the results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (from the US), 0800 953 0329 (from the UK) or +44 (0)1452 542 301 (international standard dial in). Please quote "Euroseas."

In case of any problems with the above numbers, please dial 1 866 223 0615 (from the US), 0800 694 1503 (from the UK) or +44 (0)1452 586 513 (international standard dial in). Quote "Euroseas."

A recording of the conference call will be available until August 21, 2008 by dialing 1 866 247 4222 (from the US), 0800 953 1533 (from the UK) or +44 (0)1452 550 000 (international standard dial in). Access Code: 6973591#

Audio webcast - Slides Presentation:

There will be a live and then archived audio webcast of the conference call, via the internet through the Euroseas website (www.euroseas.gr). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

A slides presentation on the second quarter and six month period ended June 30, 2008 results in PDF format will also be available 30 minutes prior to the conference call and webcast accessible on the company's website (www.euroseas.gr) on the webcast page. Participants to the webcast can download the PDF presentation.

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

                           Three        Three
                          Months       Months     Six Months   Six Months
                           Ended        Ended       Ended        Ended
                         June 30,     June 30,     June 30,     June 30,
                           2007         2008         2007         2008
                        -----------  -----------  -----------  -----------
                        (unaudited)  (unaudited)  (unaudited)  (unaudited)
Revenues
  Voyage revenue         16,341,028   35,982,504   30,524,348   70,453,207
  Commissions              (784,430)  (1,518,387)  (1,421,101)  (3,167,155)
Net revenues             15,556,598   34,464,117   29,103,247   67,286,052

Operating expenses
  Voyage expenses           182,008      902,168      328,623    2,117,459
  Vessel operating
   expenses               3,423,148    7,097,071    6,350,159   13,407,911
  Amortization and
   depreciation           3,472,104    8,486,784    6,163,131   16,456,481
  Management fees           783,171    1,403,355    1,451,378    2,714,535
  Other general and
   administrative
   expenses                 434,280    1,256,180      683,916    2,297,429
Total operating
 expenses                 8,294,711   19,145,558   14,977,207   36,993,815

Net gain from sale of
 vessel                           -            -    3,411,397            -
Operating income          7,261,887   15,318,559   17,537,437   30,292,237
Other income/(expenses)
  Interest and finance
   cost                  (1,165,008)    (677,742)  (2,358,105)  (1,700,736)
  Interest income           303,725      723,422      695,981    1,860,219
  Income from investments         -      324,502            -      431,695
  Foreign exchange
   (loss)/gain                 (538)       8,444           60      (13,382)
  Other expenses, net      (861,821)     378,626   (1,662,064)     577,796

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

Net income                6,400,066   15,697,185   15,875,373   30,870,033
                        -----------  -----------  -----------  -----------
Earnings, per share,
 basic                         0.35         0.52         0.92         1.02
Weighted average number
 of shares, basic        18,370,861   30,428,810   17,258,629   30,375,182
                        -----------  -----------  -----------  -----------
Earnings, per share,
 diluted                       0.35         0.51         0.92         1.01
                        -----------  -----------  -----------  -----------
Weighted average number
 of shares, diluted      18,447,922   30,554,537   17,258,629   30,501,654
                        -----------  -----------  -----------  -----------



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

                                                 December 31,   June 30,
                                                    2007          2008
                                                ------------- -------------
                                                 (unaudited)   (unaudited)
ASSETS
Current Assets:
    Cash and cash equivalents                     104,135,320    68,700,764
    Trade accounts receivable                       1,174,045     1,533,923
    Other receivables, net                            741,081       668,113
    Due from related company                        5,291,197     3,852,494
    Inventories                                     1,903,678     1,598,393
    Restricted cash                                 1,739,879     1,895,523
    Trading securities                              2,891,658     2,865,707
    Prepaid expenses                                  430,605       365,137
Total current assets                              118,307,463    81,480,054

Fixed assets:
    Vessels, net                                  238,248,984   276,640,894
Long-term assets:
    Restricted cash                                 4,500,000     4,800,000
    Deferred charges, net                           5,529,870     7,092,133
    Deferred offering expenses                              -       122,925
    Fair value of above market time charter
     acquired                                       4,604,514     3,128,968
Total long-term assets                            252,883,368   291,784,920
Total assets                                      371,190,831   373,264,974

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Long term debt, current portion                25,575,000    17,310,000
    Trade accounts payable                          3,789,764     2,571,440
    Accrued expenses                                2,043,585     2,043,734
    Accrued dividends                                       -       132,675
    Deferred revenue                                3,774,162     2,954,554
Total current liabilities                          35,182,511    25,012,403

Long-term liabilities:
    Long term debt, net of current portion         56,015,000    49,790,000
    Fair value of below market time charter
     acquired                                       8,202,972    11,808,252
Total long-term liabilities                        64,217,972    61,598,252
Total liabilities                                  99,400,483    86,610,655

Shareholders' equity:
    Common stock (par value $0.03, 100,000,000
     shares authorized, 30,261,113 and
     30,430,236 issued and outstanding)               907,834       912,908
    Preferred shares (par value $0.01,
     20,000,000 shares authorized, no shares
     issued and outstanding)
    Additional paid-in capital                    231,147,700   233,830,946
    Retained earnings                              39,734,814    51,910,465
    Total shareholders' equity                    271,790,348   286,654,319
    Total liabilities and shareholders' equity    371,190,831   373,264,974
                                                ------------- -------------




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

                                                  Six Months   Six Months
                                                     Ended       Ended
                                                   June 30,     June 30,
                                                     2007         2008
                                                  (unaudited)  (unaudited)
                                                  -----------  -----------
Cash flows from operating activities:
Net income                                         15,875,373   30,870,033
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation of vessels                             5,613,098   14,787,848
Amortization of deferred charges                      587,883    1,712,454
Amortization of fair value of time charters         1,231,626   (4,516,612)
Gain on sale of vessels                            (3,411,397)           -
Share-based compensation                                    -      877,398
Proceeds from sale of trading securities, net               -      282,646
Gain on trading securities                                  -     (256,695)
Changes in operating assets and liabilities         1,426,504   (3,802,539)
                                                  -----------  -----------
Net cash provided by operating activities          21,323,087   39,954,533
                                                  -----------  -----------

Cash flows from investing activities:
Purchase of vessels including improvements        (58,128,739) (43,582,320)
Change in restricted cash                            (733,359)    (455,644)
Proceeds from sale of vessels                       5,223,523            -
                                                  -----------  -----------
Net cash (used in) investing activities           (53,638,575) (44,037,964)
                                                  -----------  -----------

Cash flows from financing activities:
Issuance of share capital                             172,560        5,030
Net proceeds from shares issued                    44,213,244    1,805,892
Dividends paid                                     (7,185,754) (18,561,707)
Loan arrangement fees paid                            (40,000)           -
Offering expenses paid                             (1,038,394)    (110,340)
Proceeds from long-term debt                       10,000,000            -
Repayment of long-term debts                       (9,370,000) (14,490,000)
                                                  -----------  -----------
Net cash provided by / (used in) financing
 activities                                        36,751,656  (31,351,125)
                                                  -----------  -----------

Net increase / (decrease) in cash and cash
 equivalents                                        4,436,168  (35,434,556)
Cash and cash equivalents at beginning of period    2,791,107  104,135,320
                                                  -----------  -----------
Cash and cash equivalents at end of period          7,227,275   68,700,764
                                                  -----------  -----------



                              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   Six Months    Six Months
                      Ended          Ended         Ended         Ended
                  June 30, 2007 June 30, 2008  June 30, 2007 June 30, 2008
                   -----------  -------------  ------------  -------------
Net income           6,400,066     15,697,185    15,875,373     30,870,033
                   -----------  -------------  ------------  -------------
Interest and finance
 costs, net (includes
 interest income)      861,283        (45,680)    1,662,124       (159,483)
                   -----------  -------------  ------------  -------------
Depreciation and
 amortization        3,472,104      8,486,784     6,163,131     16,456,481
                   -----------  -------------  ------------  -------------
Amortization of
 deferred revenue
 of below market
 time charter
 acquired             (116,536)    (3,142,739)     (231,791)    (5,992,158)
                   -----------  -------------  ------------  -------------
Amortization of
 deferred revenue
 of above market
 time charter
 acquired              735,751        737,773     1,463,417      1,475,546
                   -----------  -------------  ------------  -------------
Adjusted EBITDA     11,352,668     21,733,323    24,932,254     42,650,419
                   ===========  =============  ============  =============


                   Three Months  Three Months    Six Months    Six Months
                       Ended         Ended          Ended        Ended
                   June 30, 2007 June 30, 2008 June 30, 2007 June 30, 2008
                    ------------  ------------  ------------  ------------
Net cash flow provided
 by operating
 activities           12,478,230    17,199,980    21,323,087    39,954,533
                    ------------  ------------  ------------  ------------
Changes in operating
 assets / liabilities (1,971,114)    5,418,142    (1,426,504)    3,802,539
                    ------------  ------------  ------------  ------------
Gain from vessel sale          -             -     3,411,397             -
                    ------------  ------------  ------------  ------------
Gain on trading
 securities, net               -       239,653             -       256,695
                    ------------  ------------  ------------  ------------
Investment on trading
 securities, net               -      (547,828)            -      (282,646)
                    ------------  ------------  ------------  ------------
Share based
 compensation                  -      (509,658)            -      (877,398)
                    ------------  ------------  ------------  ------------
Interest, net            845,552       (66,966)    1,624,274      (203,304)
                    ------------  ------------  ------------  ------------
Adjusted EBITDA       11,352,668    21,733,323    24,932,254    42,650,419
                    ============  ============  ============  ============

EBITDA Reconciliation:

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

                              Euroseas Ltd.
  Reconciliation of Net Income Excluding the Effect from the Amortization
 of the Fair Value of Charters Acquired and Gains from Vessel Sales to Net
   Income (All amounts expressed in U.S. Dollars - except share data and
                            per share amounts)

                 Three Months   Three Months   Six Months     Six Months
                    Ended          Ended          Ended         Ended
                June 30, 2007  June 30, 2008  June 30, 2007  June 30, 2008
                 ------------  -------------  -------------  -------------
Net income          6,400,066     15,697,185     15,875,373     30,870,033
                 ------------  -------------  -------------  -------------
Amortization of
 deferred revenue
 of below market
 time charter
 acquired            (116,536)    (3,142,739)      (231,791)    (5,992,158)
                 ------------  -------------  -------------  -------------
Amortization of
 deferred revenue
 of above market
 time charter
 acquired             735,751        737,773      1,463,417      1,475,546
                 ------------  -------------  -------------  -------------
Gain on vessel sale         -              -     (3,411,397)             -
                 ------------  -------------  -------------  -------------
Net Income excluding
 amortization of
 the fair value
 of charters
 acquired and
 gains on vessel
 sales              7,019,281     13,292,219     13,695,602     26,353,421
                 ------------  -------------  -------------  -------------
Net Income per
 share excluding
 amortization of
 the fair value
 of charters
 acquired, basic         0.38           0.44           0.79           0.87
                 ------------  -------------  -------------  -------------
Weighted average
 number of shares,
 basic             18,370,861     30,428,810     17,258,629     30,375,182
                 ------------  -------------  -------------  -------------
Net Income per
 share excluding
 amortization of
 the fair value
 of charters
 acquired,
 diluted                 0.38           0.44           0.79           0.86
                 ------------  -------------  -------------  -------------
Weighted average
 number of shares,
 diluted           18,447,922     30,554,537     17,258,629     30,501,654
                 ============  =============  =============  =============

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 16 vessels, including 3 Panamax drybulk carriers, 2 Handysize drybulk carriers, 3 Intermediate container ship, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas` 5 drybulk carriers have a total cargo capacity of 277,316 dwt, its 10 container ships have a cargo capacity of 17,877 teu and its 1 multipurpose vessel has a cargo capacity of 22,568 dwt or 950 teu.

Forward-Looking Statement

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

Contact Information

  • Contact:
    Visit our website www.euroseas.gr

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

    Investor Relations / Financial Media

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