SOURCE: Paragon Shipping Inc.

Paragon Shipping Inc.

February 22, 2010 16:05 ET

Paragon Shipping Inc. Reports Fourth Quarter and Year Ended December 31, 2009 Results

ATHENS, GREECE--(Marketwire - February 22, 2010) - Paragon Shipping Inc. (NASDAQ: PRGN), or the Company, a global shipping transportation company specializing in drybulk cargoes, announced today its results for the fourth quarter and year ended December 31, 2009.

Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "I am pleased to announce yet another strong set of quarterly results coupled with an even stronger set of annual results for 2009. Paragon has once again demonstrated that its adherence to period charter cover and cost control measures produces consistency of financial performance. After adjusting for non-cash items, net income for 2009 was $55.0 million compared to $56.2 million in 2008, which represents a $1.2 million or 2.2% decline based on the same fleet composition. This solid performance was produced against a backdrop of weaker charter rates and global economic turmoil during 2009."

Mr. Bodouroglou concluded, "Paragon faces 2010 in what we believe to be a very strong financial position. The current fleet of eleven vessels has significant protection against volatility in the charter market as we have 100% of our revenue days fixed at levels that will generate free cash flow over and above our capital obligations. The indications for 2010 are that of another volatile market with a record number of newbuildings scheduled to be delivered. We have positioned Paragon to take advantage of what we believe will be opportunities to acquire vessels at attractive price levels during the coming two years. We have significant liquidity reserves to substantially increase our fleet size and composition. Provided that no unforeseen events occur, we believe 2010 could be another profitable year for Paragon and one that could see the Company deliver on its strategic goal of growth."

Fourth Quarter 2009 Financial Results:

Time charter revenue for the fourth quarter of 2009 was $37.1 million, compared to $44.3 million for the fourth quarter of 2008. The Company reported net income of $12.7 million, or $0.26 per basic and diluted share for the fourth quarter of 2009, calculated on 47,547,627 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 fourth quarter of 2008, the Company reported net income of $10.0 million, or $0.37 per basic and diluted share, calculated on 27,038,015 weighted average number of basic and diluted shares.

Excluding all non-cash items described below, adjusted net income for the fourth quarter of 2009 was $8.6 million, or $0.17 per basic and diluted share. This compares to adjusted net income of $14.0 million, or $0.52 per basic and diluted share for the fourth quarter of 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 $22.4 million for the fourth quarter of 2009, compared to $22.7 million for the fourth quarter of 2008. This was calculated by adding to net income of $12.7 million for the fourth quarter of 2009, net interest expense and depreciation that in the aggregate amounted to $9.7 million for the fourth quarter of 2009. Adjusted EBITDA, excluding all non-cash items described below, was $17.6 million for the fourth quarter of 2009, compared to $26.0 million for the fourth quarter of 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 fourth quarter of 2009, earning an average time charter equivalent rate, or TCE rate, of $32,350 per day, compared to an average of 12 vessels during the fourth quarter of 2008, earning an average TCE rate of $39,077 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 fourth quarter of 2009 were $10.7 million, or approximately $9,697 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $2.4 million of share-based compensation for the period. For the fourth quarter of 2008, total adjusted operating expenses were $10.4 million, or approximately $9,395 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $0.1 million of share-based compensation.

Fourth Quarter 2009 Non-cash Items

The Company's results for the three months ended December 31, 2009 included the following non-cash items:

--  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