-- Non-cash revenue of $4.7 million and depreciation expense of $0.7 million associated with below market time charters attached to vessels acquired, which increases net revenue (amortized over the remaining period of the time charter) and increases depreciation expense (amortized over the remaining useful life of the vessel). These non- cash items contributed an aggregate of $4.0 million to net income, or $0.09 to basic and diluted earnings per share, for the three months ended December 31, 2009. -- Write-off of $0.5 million, relating to the below market time charters attached to vessels acquired and associated with the early termination of the related time charter agreement, which increases net income, or $0.01 per basic and diluted share. -- Vessel fair value gain on the MV Blue Seas of $0.7 million, or $0.01 per basic and diluted share. -- An unrealized gain from interest rate swaps of $1.4 million, or $0.03 per basic and diluted share for the three months ended December 31, 2009. -- Non-cash expenses of $2.4 million, or $0.05 per basic and diluted share, relating to the amortization for the three months ended December 31, 2009, of the compensation cost recognized for non-vested shares awards issued to executive officers, directors and employees and related to share based compensation to the management company.In the aggregate, these non-cash items increased net income by $4.2 million, or $0.09 to earnings per basic and diluted share, for the three months ended December 31, 2009. Dividend Declared The Company's Board of Directors declared a quarterly dividend of $0.05 per share with respect to the fourth quarter of 2009, payable on or about March 12, 2010 to shareholders of record as of the close of business on March 1, 2010. Time Charter Coverage Update Pursuant to its time chartering strategy, Paragon Shipping Inc. mainly employs vessels under fixed rate charters for periods ranging from one to five years. Assuming all options are exercised, the Company has secured under such contracts 100%, 90% and 45% of its fleet capacity in the remainder of 2010, in 2011 and in 2012, respectively. Cash Flows For the year ended December 31, 2009, the Company generated net cash from operating activities of $80.4 million, compared to $83.5 million for the year ended December 31, 2008. For the year ended December 31, 2009, net cash used in investing activities was $41.0 million and net cash from financing activities was $25.6 million. For the year ended December 31, 2008, net cash used in investing activities was $78.1 million and cash from financing activities was $31.7 million. Year ended December 30, 2009 Financial Results: Time charter revenue for the year ended December 31, 2009 was $161.1 million, compared to $169.3 million for the year ended December 31, 2008. The Company reported net income of $65.7 million, or $1.69 per basic and diluted share for the year ended December 31, 2009, calculated on 38,026,523 weighted average number of basic and diluted shares outstanding for the period and reflecting the impact of the non-cash items discussed below. For the year ended December 31, 2008, the Company reported net income of $69.2 million, or $2.58 and $2.56 per basic and diluted share, respectively, calculated on 26,819,923 weighted average number of basic shares and on 27,010,013 weighted average number of diluted shares. Excluding all non-cash items described below, adjusted net income for the year ended December 31, 2009 was $55.0 million, or $1.42 per basic and diluted share. This compares to adjusted net income of $56.2 million, or $2.10 and $2.08 per basic and diluted share, respectively, for the year ended December 31, 2008. Please refer to the table at the back of this press release for reconciliations of GAAP net income to non-GAAP adjusted net income and GAAP earnings per share to non-GAAP adjusted earnings per share. EBITDA was $109.8 million for the year ended December 31, 2009, compared to $116.1 million for the year ended December 31, 2008. This was calculated by adding to net income of $65.7 million for the year ended December 31, 2009, net interest expense and depreciation that in the aggregate amounted to $44.1 million for the year ended December 31, 2009. Adjusted EBITDA, excluding all non-cash items described below, was $96.4 million for the year ended December 31, 2009, compared to $100.3 million for the year ended December 31, 2008. Please see the table at the back of this release for a reconciliation of EBITDA and Adjusted EBITDA to net income. The Company operated 12 vessels during the year ended December 31, 2009, earning an average TCE rate of $35,250 per day, compared to an average of 11.4 vessels during the year ended December 31, 2008, earning an average TCE rate of $39,439 per day. Please see the table at the back of this release for a reconciliation of TCE rates to time charter revenue. Total adjusted operating expenses for the year ended December 31, 2009 were $31.0 million, or approximately $7,069 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $3.1 million of share-based compensation for the period. For the year ended December 31, 2008, total adjusted operating expenses were $32.6 million, or approximately $7,809 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $0.5 million of share-based compensation. Year ended December 31, 2009 Non-cash Items The Company's results for the year ended December 31, 2009 included the following non-cash items:
-- Non-cash revenue of $18.6 million and depreciation expense of $2.8 million associated with below market time charters attached to vessels acquired, which increases net revenue (amortized over the remaining period of the time charter) and increases depreciation expense (amortized over the remaining useful life of the vessel). These non- cash items contributed an aggregate of $15.8 million to net income, or $0.42 to basic and diluted earnings per share, for the year ended December 31, 2009. -- Write-off of $0.5 million, relating to the below market time charters attached to vessels acquired and associated with the early termination of the related time charter agreement, which increases net income, or $0.01 per basic and diluted share. -- Impairment loss on the MV Blue Seas of $6.0 million, or $0.16 per basic and diluted share. -- An unrealized gain from interest rate swaps of $3.4 million, or $0.09 per basic and diluted share for the year ended December 31, 2009. -- Non-cash expenses of $3.1 million, or $0.08 per basic and diluted share, relating to the amortization for the year ended December 31, 2009, of the compensation cost recognized for non-vested shares awards issued to executive officers, directors and employees and related to share based compensation to the management company.In the aggregate, these non-cash items contributed $10.7 million to net income, or $0.27 to earnings per basic and diluted share, for the year ended December 31, 2009. Conference Call and Webcast: The Company's management will host a conference call to discuss its fourth quarter and year ended December 31, 2009 results on February 23, 2010 at 9:00 a.m. Eastern Time. 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), 0(800) 953-0329 (from the UK) or +44 (0) 1452 542 301 (from outside the US). Please quote "Paragon." A replay of the conference call will be available until March 2, 2010. The United States 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: 55939564#. Slides and audio webcast: There will also be a simultaneous live webcast over the Internet, through the Paragon Shipping website (www.paragonship.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. About Paragon Shipping Inc. Paragon Shipping Inc. is an Athens, Greece-based international shipping company specializing in the transportation of drybulk cargoes. The Company's current fleet consists of eleven vessels with a total carrying capacity of 719,483 dwt. Cautionary Statement Regarding Forward-Looking Statement Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for drybulk shipping capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. - Tables Follow -
Updated Fleet List The following table represents our fleet as of February 22, 2010. Name Type Dwt Year Built ---------- ---------- ---------- Panamax ---------- ---------- ---------- Deep Seas Panamax 72,891 1999 ---------- ---------- ---------- Calm Seas Panamax 74,047 1999 ---------- ---------- ---------- Kind Seas Panamax 72,493 1999 ---------- ---------- ---------- Pearl Seas Panamax 74,483 2006 ---------- ---------- ---------- Diamond Seas Panamax 74,274 2001 ---------- ---------- ---------- Coral Seas Panamax 74,477 2006 ---------- ---------- ---------- Golden Seas Panamax 74,475 2006 ---------- ---------- ---------- Total Panamax 7 517,140 ---------- ---------- ---------- Handymax ---------- ---------- ---------- Clean Seas Handymax 46,640 1995 ---------- ---------- ---------- Crystal Seas Handymax 43,222 1995 ---------- ---------- ---------- Total Handymax 2 89,862 ---------- ---------- ---------- Supramax ---------- ---------- ---------- Sapphire Seas Supramax 53,702 2005 ---------- ---------- ---------- Friendly Seas Supramax 58,779 2008 ---------- ---------- ---------- Total Supramax 2 112,481 ---------- ---------- ---------- Grand Total 11 719,483 ---------- ---------- ---------- Summary Fleet Data Quarter Ended Quarter Ended December 31, 2008 December 31, 2009 ----------------- ----------------- FLEET DATA ----------------- ----------------- Average number of vessels (1) 12 12 ----------------- ----------------- Available days for fleet (2) 1,075 1,083 ----------------- ----------------- Calendar days for fleet (3) 1,104 1,104 ----------------- ----------------- Fleet utilization (4) 97% 98% ----------------- ----------------- AVERAGE DAILY RESULTS ----------------- ----------------- Time charter equivalent (5) 39,077 32,350 ----------------- ----------------- Time charter equivalent adjusted (5) 34,140 28,007 ----------------- ----------------- Vessel operating expenses (6) 4,604 4,720 ----------------- ----------------- Drydocking expenses (7) 782 568 ----------------- ----------------- Management fees adjusted (8) 819 848 ----------------- ----------------- General and administrative expenses adjusted (9) 3,190 3,561 ----------------- ----------------- Total vessel operating expenses adjusted (10) 9,395 9,697 ----------------- ----------------- Year Ended Year Ended December 31, 2008 December 31, 2009 ----------------- ----------------- FLEET DATA ----------------- ----------------- Average number of vessels (1) 11.4 12 ----------------- ----------------- Available days for fleet (2) 4,074 4,322 ----------------- ----------------- Calendar days for fleet (3) 4,174 4,380 ----------------- ----------------- Fleet utilization (4) 98% 99% ----------------- ----------------- AVERAGE DAILY RESULTS ----------------- ----------------- Time charter equivalent (5) 39,439 35,250 ----------------- ----------------- Time charter equivalent adjusted (5) 32,920 30,942 ----------------- ----------------- Vessel operating expenses (6) 4,556 4,574 ----------------- ----------------- Drydocking expenses (7) 669 163 ----------------- ----------------- Management fees adjusted (8) 847 822 ----------------- ----------------- General and administrative expenses adjusted (9) 1,737 1,510 ----------------- ----------------- Total vessel operating expenses adjusted (10) 7,809 7,069 ----------------- -----------------(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 the period. (2) Available days for the fleet are the total calendar days the vessels were in our possession for the relevant period after subtracting for off-hire days with major repairs, drydocks or special or intermediate surveys. (3) Calendar days are the total days we possessed the vessels in our fleet for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys. (4) Fleet utilization is the percentage of time that our vessels were available for revenue generating available days and is determined by dividing available days by fleet calendar days for the relevant period. (5) 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 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. TCE is a non-GAAP 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. For the time charter equivalent adjusted, other non-cash items relating to the below market time charters attached to vessels acquired, which are amortized over the remaining period of the time charter as an increase to net revenue, have been excluded. The Company excluded amortization of below market acquired time charters because the Company believes that these non-cash items do not reflect fairly the fleet operational results. (6) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. (7) Daily drydocking expenses are calculated by dividing drydocking expenses by fleet calendar days for the relevant time period. (8) Daily management fees are calculated by dividing management fees payable in cash by fleet calendar days for the relevant time period and exclude share based compensation to the management company. (9) Daily general and administrative expenses are calculated by dividing general and administrative expense by fleet calendar days for the relevant time period. Non-cash expenses relating to the amortization of the share based compensation cost for non-vested shares awards have been excluded. (10) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses, drydocking expenses, management fees and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period. Non-cash expenses relating to the amortization of the share based compensation cost for non-vested shares awards and to share based compensation to the management company have been excluded.
Time Charter Equivalents Reconciliation (Expressed in United States Dollars) Quarter Ended Quarter Ended December 31, 2008 December 31, 2009 ----------------- ----------------- Time Charter Revenues 44,346,386 37,120,851 ----------------- ----------------- Less Voyage Expenses 12,563 (185,515) ----------------- ----------------- Less Commission (2,350,660) (1,899,856) ----------------- ----------------- Total Revenue, net of voyage expenses 42,008,289 35,035,480 ----------------- ----------------- Total available days 1,075 1,083 ----------------- ----------------- Time Charter Equivalent 39,077 32,350 ----------------- ----------------- Time Charter Equivalent Adjusted Reconciliation ----------------- ----------------- Time Charter Revenues 44,346,386 37,120,851 ----------------- ----------------- Less Voyage Expenses 12,563 (185,515) ----------------- ----------------- Less Commission (2,350,660) (1,899,856) ----------------- ----------------- Total Revenue, net of voyage expenses 42,008,289 35,035,480 ----------------- ----------------- Less Amortization of Below Market Acquired Time Charters (5,308,086) (4,703,848) ----------------- ----------------- Total Revenue, net of voyage expenses Adjusted 36,700,203 30,331,632 ----------------- ----------------- Total available days 1,075 1,083 ----------------- ----------------- Time Charter Equivalent Adjusted 34,140 28,007 ----------------- ----------------- Year Ended Year Ended December 31, 2008 December 31, 2009 ----------------- ----------------- Time Charter Revenues 169,301,675 161,111,782 ----------------- ----------------- Less Voyage Expenses (461,265) (397,657) ----------------- ----------------- Less Commission (8,164,029) (8,364,661) ----------------- ----------------- Total Revenue, net of voyage expenses 160,676,381 152,349,464 ----------------- ----------------- Total available days 4,074 4,322 ----------------- ----------------- Time Charter Equivalent 39,439 35,250 ----------------- ----------------- Time Charter Equivalent Adjusted Reconciliation ----------------- ----------------- Time Charter Revenues 169,301,675 161,111,782 ----------------- ----------------- Less Voyage Expenses (461,265) (397,657) ----------------- ----------------- Less Commission (8,164,029) (8,364,661) ----------------- ----------------- Total Revenue, net of voyage expenses 160,676,381 152,349,464 ----------------- ----------------- Less Amortization of Below Market Acquired Time Charters (26,559,089) (18,618,699) ----------------- ----------------- Total Revenue, net of voyage expenses Adjusted 134,117,292 133,730,765 ----------------- ----------------- Total available days 4,074 4,322 ----------------- ----------------- Time Charter Equivalent Adjusted 32,920 30,942 ----------------- ----------------- PARAGON SHIPPING INC. Condensed Cash Flow Information (Expressed in United States Dollars) Year Ended Year Ended December 31, 2008 December 31, 2009 Cash and Cash Equivalents, beginning of year 31,328,637 68,441,752 Cash Provided by / (used in): Operating Activities 83,474,314 80,406,754 Investing Activities (78,072,478) (40,500,000) Financing Activities 31,711,279 25,611,672 Net increase in Cash and Cash Equivalents 37,113,115 65,518,426 Cash and Cash Equivalents, end of period 68,441,752 133,960,178 EBITDA Reconciliation (1) (Expressed in United States Dollars) Quarter Ended Quarter Ended December 31, 2008 December 31, 2009 ----------------- ----------------- Net Income 9,955,122 12,700,593 ----------------- ----------------- Plus Net Interest expense 3,970,224 1,482,756 ----------------- ----------------- Plus Depreciation 8,742,360 8,210,208 ----------------- ----------------- EBITDA 22,667,706 22,393,557 ----------------- ----------------- Adjusted EBITDA Reconciliation ----------------- ----------------- Net Income 9,955,122 12,700,593 ----------------- ----------------- Non-cash revenue, depreciation and write off due to below market acquired time charters (4,613,062) (4,557,042) ----------------- ----------------- Vessel fair value gain - (654,570) ----------------- ----------------- Unrealized loss/(gain) from interest rate swaps 8,535,229 (1,373,140) ----------------- ----------------- Non-cash expenses from the amortization of share based compensation cost recognized and share based compensation to the management company 134,241 2,443,486 ----------------- ----------------- Adjusted Net Income 14,011,530 8,559,327 ----------------- ----------------- Plus Net Interest expense 3,970,224 1,482,756 ----------------- ----------------- Plus Depreciation (2) 8,047,336 7,514,383 ----------------- ----------------- Adjusted EBITDA 26,029,090 17,556,466 ----------------- ----------------- Year Ended Year Ended December 31, 2008 December 31, 2009 ----------------- ----------------- Net Income 69,229,461 65,678,614 ----------------- ----------------- Plus Net Interest expense 13,969,098 10,329,279 ----------------- ----------------- Plus Depreciation 32,874,632 33,814,863 ----------------- ----------------- EBITDA 116,073,191 109,822,756 ----------------- ----------------- Adjusted EBITDA Reconciliation ----------------- ----------------- Net Income 69,229,461 65,678,614 ----------------- ----------------- Non-cash revenue, depreciation and write off due to below market acquired time charters (23,792,213) (16,408,730) ----------------- ----------------- Impairment loss - 6,005,000 ----------------- ----------------- Unrealized loss/(gain) from interest rate swaps 10,284,441 (3,367,354) ----------------- ----------------- Non-cash expenses from the amortization of share based compensation cost recognized and share based compensation to the management company 522,662 3,101,691 ----------------- ----------------- Adjusted Net Income 56,244,351 55,009,221 ----------------- ----------------- Plus Net Interest expense 13,969,098 10,329,279 ----------------- ----------------- Plus Depreciation (2) 30,107,757 31,055,875 ----------------- ----------------- Adjusted EBITDA 100,321,206 96,394,375 ----------------- -----------------(1) Paragon Shipping Inc. considers EBITDA to represent net income plus net interest expense and depreciation and amortization. The Company's management uses EBITDA as a performance measure. The Company believes that EBITDA is useful to investors because the shipping industry is capital intensive and may involve significant financing costs. EBITDA is not an item recognized by GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a Company's operating performance required by GAAP. The Company's definition of EBITDA may not be the same as that used by other companies in the shipping or other industries. The Company excluded non-cash items to derive the adjusted net income and the adjusted EBITDA because the Company believes that the non-cash items do not reflect fairly the fleet operational results. (2) Excludes a portion of depreciation charged on purchase price adjustment allocated to vessel cost for vessels acquired with below market charters.
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information (Expressed in United States Dollars) Quarter Ended Quarter Ended GAAP Financial Information December 31, 2008 December 31, 2009 ----------------- ----------------- Net Income 9,955,122 12,700,593 ----------------- ----------------- Weighted average number of Class A common shares basic 27,038,015 47,547,627 ----------------- ----------------- Weighted average number of Class A common shares diluted 27,038,015 47,547,627 ----------------- ----------------- Earnings per Class A common shares basic 0.37 0.26 ----------------- ----------------- Earnings per Class A common shares diluted 0.37 0.26 ----------------- ----------------- Reconciliation of Net Income to Adjusted Net Income ----------------- ----------------- Net Income 9,955,122 12,700,593 ----------------- ----------------- Non-cash revenue, depreciation and write off due to below market acquired time charters (4,613,062) (4,557,042) ----------------- ----------------- Vessel fair value gain - (654,570) ----------------- ----------------- Unrealized loss/(gain) from interest rate swaps 8,535,229 (1,373,140) ----------------- ----------------- Non-cash expenses from the amortization of compensation cost recognized and share based compensation to the management company 134,241 2,443,486 ----------------- ----------------- Adjusted Net Income 14,011,530 8,559,327 ----------------- ----------------- Weighted average number of common shares basic 27,038,015 47,547,627 ----------------- ----------------- Weighted average number of common shares diluted 27,038,015 47,547,627 ----------------- ----------------- Adjusted earnings per share basic (1) 0.52 0.17 ----------------- ----------------- Adjusted earnings per share diluted (1) 0.52 0.17 ----------------- -----------------(1) Adjusted earnings per share is not an item recognized by GAAP and should not be considered as an alternative to Earnings per share or any other indicator of a Company's operating performance required by GAAP. The Company excluded non-cash items to derive at the adjusted net income and the adjusted earnings per share basic and diluted because the Company believes that these non-cash items do not reflect fairly the fleet operational results.
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information (Expressed in United States Dollars) Year Ended Year Ended GAAP Financial Information December 31, 2008 December 31, 2009 ----------------- ----------------- Net Income 69,229,461 65,678,614 ----------------- ----------------- Weighted average number of Class A common shares basic 26,819,923 38,026,523 ----------------- ----------------- Weighted average number of Class A common shares diluted 27,010,013 38,026,523 ----------------- ----------------- Earnings per Class A common shares basic 2.58 1.69 ----------------- ----------------- Earnings per Class A common shares diluted 2.56 1.69 ----------------- ----------------- Reconciliation of Net Income to Adjusted Net Income ----------------- ----------------- Net Income 69,229,461 65,678,614 ----------------- ----------------- Non-cash revenue, depreciation and write off due to below market acquired time charters (23,792,213) (16,408,730) ----------------- ----------------- Impairment loss - 6,005,000 ----------------- ----------------- Unrealized loss/(gain) from interest rate swaps 10,284,441 (3,367,354) ----------------- ----------------- Non-cash expenses from the amortization of compensation cost recognized and share based compensation to the management company 522,662 3,101,691 ----------------- ----------------- Adjusted Net Income 56,244,351 55,009,221 ----------------- ----------------- Weighted average number of common shares basic 26,819,923 38,026,523 ----------------- ----------------- Weighted average number of common shares diluted 27,010,013 38,026,523 ----------------- ----------------- Adjusted earnings per share basic (1) 2.10 1.42 ----------------- ----------------- Adjusted earnings per share diluted (1) 2.08 1.42 ----------------- -----------------(1) Adjusted earnings per share is not an item recognized by GAAP and should not be considered as an alternative to Earnings per share or any other indicator of a Company's operating performance required by GAAP. The Company excluded non-cash items to derive at the adjusted net income and the adjusted earnings per share basic and diluted because the Company believes that these non-cash items do not reflect fairly the fleet operational results.
Paragon Shipping Inc. Unaudited Condensed Consolidated Balance Sheets As of December 31, 2008 and December 31, 2009 (Expressed in United States Dollars) December 31, December 31, 2008 2009 Assets Current assets Cash and cash equivalents 68,441,752 133,960,178 Restricted cash - 31,000,000 Assets held for sale - 18,050,402 Trade receivables 372,965 2,187,039 Other receivables 1,209,230 2,233,809 Prepaid expenses 379,140 464,804 Due from management company 985,960 1,231,879 Inventories 885,665 921,325 ------------ ------------ Total current assets 72,274,712 190,049,436 ------------ ------------ Fixed assets Vessels at cost 713,373,186 683,721,898 Less: accumulated depreciation (51,142,696) (78,989,341) Other fixed assets - 51,718 ------------ ------------ Total fixed assets 662,230,490 604,784,275 ------------ ------------ Other assets 1,787,988 1,380,577 Restricted cash 6,010,000 15,510,000 Above market acquired time charters 43,304 - Other long-term receivables 74,760 968,560 ------------ ------------ Total Assets 742,421,254 812,692,848 ------------ ------------ Liabilities and Shareholders' Equity Current liabilities Trade accounts payable (including balance due to a related party of $500 and $17,300 as of December 31, 2008 and December 31, 2009 respectively) 2,538,796 1,951,695 Accrued expenses and dividends payable 4,098,929 2,416,524 Interest rate swaps 6,407,751 6,820,289 Deferred income 3,024,423 3,701,832 Current portion of long-term debt 53,150,000 39,200,000 Liability associated with vessel held for sale - 24,900,000 ------------ ------------ Total current liabilities 69,219,899 78,990,340 ------------ ------------ Long-Term Liabilities Long-term debt 334,335,000 270,235,000 Deferred income 703,863 461,390 Interest rate swaps 5,247,391 1,467,499 Below market acquired time charters 24,483,822 5,272,801 ------------ ------------ Total long-term liabilities 364,770,076 277,436,690 ------------ ------------ Total Liabilities 433,989,975 356,427,030 ------------ ------------ Commitments and Contingencies Shareholders' equity Preferred shares, $0.001 par value; 25,000,000 authorized, none issued, none outstanding at December 31, 2008 and December 31, 2009 - - Class A common shares, $0.001 par value; 120,000,000 authorized 27,138,515 issued and outstanding at December 31, 2008 and 51,189,033 issued and outstanding at December 31, 2009 27,139 51,189 Class B common shares, $0.001 par value; 5,000,000 authorized, none issued and outstanding at December 31, 2008 and December 31, 2009 - - Additional paid-in capital 318,515,490 408,619,010 Accumulated (deficit)/earnings (10,111,350) 47,595,619 ------------ ------------ Total shareholders' equity 308,431,279 456,265,818 ------------ ------------ Total Liabilities and Shareholders' Equity 742,421,254 812,692,848 ------------ ------------ Paragon Shipping Inc. Unaudited Condensed Consolidated Statement of Income For the three months ended December 30, 2008 and 2009 (Expressed in United States Dollars) Three Months Three Months Ended Ended December 31, December 31, 2008 2009 Revenue Time charter revenue (including amortization of below and above market acquired time charters of $5,308,086 and $4,703,848 for the three months ended December 31, 2008 and 2009, respectively) 44,346,386 37,120,851 Less: commissions 2,350,660 1,899,856 ------------ ------------ Net Revenue 41,995,726 35,220,995 ------------ ------------ Expenses/(Income) Voyage expenses (12,563) 185,515 Vessels operating expenses (including expenses charged by a related party of $30,900 and $49,800 for the three months ended December 31, 2008 and 2009, respectively) 5,082,367 5,210,933 Dry-docking expenses 863,369 627,230 Management fees charged by a related party (including share based compensation of $0 and $762,732 for the three months ended December 31, 2008 and 2009, respectively) 904,513 1,699,244 Depreciation 8,742,360 8,210,208 General and administrative expenses (including share based compensation of $134,241 and $1,680,754 for the three months ended December 31, 2008 and 2009, respectively) 3,655,761 5,611,591 Vessel fair value gain - (654,570) Gain from vessel early redelivery - (549,019) ------------ ------------ Operating Income 22,759,919 14,879,863 ------------ ------------ Other Income/(Expenses) Interest and finance costs (4,495,786) (1,971,147) Loss on interest rate swaps (8,770,233) (690,507) Interest income 525,562 488,391 Foreign currency loss (64,340) (6,007) ------------ ------------ Total Other Expenses, net (12,804,797) (2,179,270) ------------ ------------ Net Income 9,955,122 12,700,593 Earnings per Class A common share, basic $ 0.37 $ 0.26 Earnings per Class A common share, diluted $ 0.37 $ 0.26 Weighted average number of Class A common shares, basic 27,038,015 47,547,627 Weighted average number of Class A common shares, diluted 27,038,015 47,547,627 Paragon Shipping Inc. Unaudited Condensed Consolidated Statement of Income For the year ended December 31, 2008 and 2009 (Expressed in United States Dollars) Year Ended Year Ended December 31, December 31, 2008 2009 Revenue Time charter revenue (including amortization of below and above market acquired time charters of $26,559,089 and $18,618,699 for the year ended December 31, 2008 and 2009, respectively) 169,301,675 161,111,782 Less: commissions 8,164,029 8,364,661 ------------ ------------ Net Revenue 161,137,646 152,747,121 ------------ ------------ Expenses/(Income) Voyage expenses 461,265 397,657 Vessels operating expenses (including expenses charged by a related party of $122,143 and $194,900 for the year ended December 31, 2008 and 2009, respectively) 19,016,375 20,034,664 Dry-docking expenses 2,792,710 715,308 Management fees charged by a related party (including share based compensation of $0 and $762,732 for the year ended December 31, 2008 and 2009, respectively) 3,536,240 4,362,908 Depreciation 32,874,632 33,814,863 General and administrative expenses (including share based compensation of $522,662 and $2,338,959 for the year ended December 31, 2008 and 2009, respectively) 7,773,828 8,949,096 Impairment loss - 6,005,000 Gain from vessels early redelivery - (800,874) ------------ ------------ Operating Income 94,682,596 79,268,499 ------------ ------------ Other Income/(Expenses) Interest and finance costs (15,840,197) (11,379,241) Loss on interest rate swaps (11,378,999) (3,239,236) Interest income 1,871,099 1,049,962 Foreign currency loss (105,038) (21,370) ------------ ------------ Total Other Expenses, net (25,453,135) (13,589,885) ------------ ------------ Net Income 69,229,461 65,678,614 Earnings per Class A common share, basic $ 2.58 $ 1.69 Earnings per Class A common share, diluted $ 2.56 $ 1.69 Weighted average number of Class A common shares, basic 26,819,923 38,026,523 Weighted average number of Class A common shares, diluted 27,010,013 38,026,523 Paragon Shipping Inc. Unaudited Condensed Consolidated Statement of Shareholders' Equity For the year ended December 31, 2009 (Expressed in United States Dollars, except for number of shares) Class A Shares ------------------- Additional Accumulated Number of Par Paid-in (Deficit)/ Shares Value Capital Earnings Total ------------ ------ ----------- ----------- ----------- Balance January 1, 2009 27,138,515 27,139 318,515,490 (10,111,350) 308,431,279 ------------ ------ ----------- ----------- ----------- Issuance of Class A common shares, non-vested shares awards and share based compensation 24,050,518 24,050 90,103,520 90,127,570 Dividends paid on Class A common shares (0.20 per share) (7,971,645) (7,971,645) Net Income 65,678,614 65,678,614 ------------ ------ ----------- ----------- ----------- Balance December 31, 2009 51,189,033 51,189 408,619,010 47,595,619 456,265,818 ------------ ------ ----------- ----------- ----------- Paragon Shipping Inc. Unaudited Condensed Consolidated Statement of Cash Flows For the year ended December 31, 2008 and 2009 (Expressed in United States Dollars) Year Ended Year Ended December 31, December 31, 2008 2009 Cash flows from operating activities Net Income 69,229,461 65,678,614 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 32,874,632 33,814,863 Impairment loss - 6,005,000 Amortization of below and above market acquired time charters (26,559,089) (18,618,699) Amortization of financing costs 613,629 970,327 Gain on time charter agreement termination - (549,019) Share based compensation 522,662 3,101,691 Unrealized loss/(gain) on interest rate swaps 10,284,441 (3,367,354) Changes in assets and liabilities Increase in trade receivables (18,811) (1,814,074) Increase in other receivables (921,684) (1,024,579) Decrease / (Increase) in prepaid expenses 275,436 (85,664) Increase in inventories (84,292) (407,992) Increase in due from management company (985,960) (245,919) Decrease / (Increase) in other long term receivables 1,265,842 (893,800) Increase / (Decrease) in trade accounts payable 51,505 (638,819) Decrease in accrued expenses (1,395,502) (1,952,758) Decrease in due to management company (1,642,805) - (Decrease) / Increase in deferred income (35,151) 434,936 ------------ ------------ Net cash from operating activities 83,474,314 80,406,754 ------------ ------------ Cash flow from Investing Activities Acquisition of vessels and attached charter party and capital expenditures (80,072,478) - Repayment of restricted cash 3,000,000 - Increase in restricted cash (1,000,000) (40,500,000) ------------ ------------ Net cash used in investing activities (78,072,478) (40,500,000) ------------ ------------ Cash flows from financing activities Proceeds from long-term debt 111,500,000 30,000,000 Repayment of long-term debt (42,015,000) (83,150,000) Payment of financing costs (816,667) (292,563) Proceeds from the issuance of Class A common shares - 90,088,172 Proceeds from the issuance of Class A common shares from the exercise of warrants and options 13,585,250 - Class A common share offering costs - (3,062,292) Dividends paid (50,542,304) (7,971,645) ------------ ------------ Net cash from financing activities 31,711,279 25,611,672 ------------ ------------ Net increase in cash and cash equivalents 37,113,115 65,518,426 Cash and cash equivalents at the beginning of the period 31,328,637 68,441,752 ------------ ------------ Cash and cash equivalents at the end of the period 68,441,752 133,960,178 ------------ ------------ Supplemental disclosure of cash flow information Cash paid during the period for interest 13,606,475 11,961,768
Contact Information: Contacts: Christopher Thomas Chief Financial Officer Paragon Shipping Inc. 15 Karamanli Ave. GR 166 73 Voula, Greece Tel: +30 (210) 8914 600 Investor Relations / Media Capital Link, Inc. Paul Lampoutis 230 Park Avenue Suite 1536 New York, NY 10169 Tel. (212) 661-7566 E-mail: paragon@capitallink.com