SOURCE: Paragon Shipping Inc.

Paragon Shipping Inc.

March 01, 2011 16:05 ET

Paragon Shipping Inc. Reports Fourth Quarter and Year Ended December 31, 2010 Results

ATHENS, GREECE--(Marketwire - March 1, 2011) - Paragon Shipping Inc. (NYSE: PRGN), or the Company, a global shipping transportation company specializing in drybulk cargoes and containers, announced today its results for the fourth quarter and year ended December 31, 2010.

Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "We are pleased to announce yet another set of profitable quarterly and annual results. Our 4th consecutive profitable year of operations underlines our commitment to management strategies that provide consistency in corporate stability and growth. Despite the weakening chartering market and the depressed worldwide economic environment that we have had to face and are still facing, our Company maintains its strong position. Our Company's Board of Directors decided to declare a quarterly dividend of $0.05 per share, payable on or about March 24, 2011 to shareholders of record as of the close of business on March 14, 2011. Including our latest declaration, Paragon will have distributed $0.20 per share in dividends since the beginning of 2010, which, based on our current stock price, represents an annual dividend yield of 6.5%."

Mr. Bodouroglou concluded, "Paragon steps with the right foot into 2011, a year that has already been titled by various sources as one of the most challenging ones in recent shipping history. In 2010, we set the basis for a stable financial position. As a result of our chartering strategy, we have managed to provide our shareholders with visible cash flows. Due to our fleet renewal policy we improved the average age of our fleet from 8.4 years at the end of 2009, to 6.6 years as of today. Taking advantage of favorable conditions in the asset market, we entered into 7 newbuilding agreements at competitive prices and have secured favorable financing for these vessels. Furthermore, we diversified our operations into the containership sector with our two accretive acquisitions, the Box Voyager and the Box Trader. Paragon remains committed to excellence and sustainable growth."

Fourth Quarter 2010 Financial Results:

Time charter revenue for the fourth quarter of 2010 was $28.7 million, compared to $37.1 million for the fourth quarter of 2009. The Company reported net income of $2.3 million, or $0.04 per basic and diluted share for the fourth quarter of 2010, calculated on 50,796,008 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 2009, the Company reported net income of $12.7 million, or $0.26 per basic and diluted share, calculated on 47,547,627 weighted average number of basic and diluted shares.

Excluding all non-cash items described below, adjusted net income for the fourth quarter of 2010 was $4.1 million, or $0.08 per basic and diluted share. This compares to adjusted net income of $8.6 million, or $0.17 per basic and diluted share for the fourth quarter of 2009. Please refer to the table at the back of this 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 $13.9 million for the fourth quarter of 2010, compared to $22.4 million for the fourth quarter of 2009. This was calculated by adding to net income of $2.3 million for the fourth quarter of 2010, net interest expense and depreciation that in the aggregate amounted to $11.6 million for the fourth quarter of 2010. Adjusted EBITDA, excluding all non-cash items described below, was $15.0 million for the fourth quarter of 2010, compared to $17.6 million for the fourth quarter of 2009. Please see the table at the back of this release for a reconciliation of EBITDA and Adjusted EBITDA to net income.

The Company operated an average of 13.1 vessels during the fourth quarter of 2010, earning an average time charter equivalent rate, or TCE rate, of $23,053 per day, compared to an average of 12.0 vessels during the fourth quarter of 2009, earning an average TCE rate of $32,350 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 2010 were $10.8 million, or approximately $8,921 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $3.4 million of share-based compensation for the period. For the fourth quarter of 2009, total adjusted operating expenses 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.

Fourth Quarter 2010 Non-cash Items

The Company's results for the three months ended December 31, 2010 included the following non-cash items:

--  Depreciation expense of $0.7 million, or $0.01 per basic and diluted
    share, associated with below market time charters attached to vessels
    acquired, which increases depreciation expense (amortized over the
    remaining useful life of the vessel).
--  Gain on sale of MV Clean Seas of $0.2 million, or $0.01 per basic and
    diluted share.
--  An unrealized gain from interest rate swaps of $2.1 million, or $0.04
    per basic and diluted share.
--  Non-cash expenses of $3.4 million, or $0.07 per basic and diluted
    share, relating to the amortization of the compensation cost recognized
    for non-vested share 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 decreased net income by $1.8 million, which represents a $0.04 decrease in earnings per basic and diluted share, for the three months ended December 31, 2010.

Dividend Declared

The Company's Board of Directors declared a quarterly dividend of $0.05 per share with respect to the fourth quarter of 2010, payable on or about March 24, 2011 to shareholders of record as of the close of business on March 14, 2011.

Time Charter Coverage Update

Pursuant to its time chartering strategy, Paragon Shipping Inc. mainly employs vessels under fixed rate time charters for periods ranging from one to five years. Assuming all charter options are exercised but excluding the newbuilding vessels which are under construction, the Company has secured under such contracts 98%, 55% and 25% of its fleet capacity in 2011, 2012 and 2013, respectively (which includes 8%, 8% and 7% in 2011, 2012 and 2013, respectively, relating to our charter contract with Korea Line Corporation).

Cash Flows

For the year ended December 31, 2010, the Company generated net cash from operating activities of $60.6 million, compared to $80.4 million for the year ended December 31, 2009. For the year ended December 31, 2010, net cash used in investing activities was $142.2 million and net cash used in financing activities was $17.6 million. 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.

Financing Update

On February 25, 2011, we entered into commitment for a new $135.0 million senior secured amortizing credit facility with a syndicate of major European banks to fully-finance our current outstanding newbuilding program commitments. Under the terms of the commitment, amounts borrowed under the new facility will bear interest at LIBOR, plus a margin of 2.75%. The six-year facility is still subject to the execution of definitive documentation.

Year ended December 31, 2010 Financial Results:

Time charter revenue for the year ended December 31, 2010, was $118.4 million, compared to $161.1 million for the year ended December 31, 2009. The Company reported net income of $22.9 million, or $0.44 per basic and diluted share for the year ended December 31, 2010, calculated on 49,812,716 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, 2009, the Company reported net income of $65.7 million, or $1.69 per basic and diluted share, calculated on 38,026,523 weighted average number of basic and diluted shares.

Excluding all non-cash items described below, adjusted net income for the year ended December 31, 2010, was $27.7 million, or $0.54 per basic and diluted share. This compares to adjusted net income of $55.0 million, or $1.42 per basic and diluted share for the year ended December 31, 2009. Please refer to the table at the back of this 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 $66.5 million for the year ended December 31, 2010, compared to $109.8 million for the year ended December 31, 2009. This was calculated by adding to net income of $22.9 million for the year ended December 31, 2010, net interest expense and depreciation that in the aggregate amounted to $43.6 million for the year ended December 31, 2010. Adjusted EBITDA, excluding all non-cash items described below, was $68.6 million for the year ended December 31, 2010, compared to $96.4 million for the year ended December 31, 2009. Please see the table at the back of this release for a reconciliation of EBITDA and Adjusted EBITDA to net income.

The Company operated 12.1 vessels during the year ended December 31, 2010, earning an average TCE rate of $25,911 per day, compared to an average of 12.0 vessels during the year ended December 31, 2009, earning an average TCE rate of $35,250 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, 2010, were $33.9 million, or approximately $7,680 per day, including vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, but excluding $10.7 million of share-based compensation for the period. For the year ended December 31, 2009, total adjusted operating expenses were $31.0 million, or approximately $7,069 per day, including vessel operating expenses, management fees and general and administrative expenses and drydocking costs, but excluding $3.1 million of share-based compensation.

Year ended December 31, 2010 Non-cash Items

The Company's results for the year ended December 31, 2010, included the following non-cash items:

--  Non-cash revenue of $5.3 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),
    respectively. These non-cash items contributed an aggregate of
    $2.5 million to net income, or $0.05 to basic and diluted earnings per
    share.
--  Gain on sale of MV Blue Seas and MV Clean Seas of $0.5 million in the
    aggregate, or $0.01 per basic and diluted share.
--  An unrealized gain from interest rate swaps of $2.9 million, or $0.06
    per basic and diluted share, respectively.
--  Non-cash expenses of $10.7 million, or $0.21 per basic and diluted
    share, relating to the amortization of the compensation cost recognized
    for restricted common shares issued to executive officers, directors
    and employees and related to share based compensation to the management
    company.

In the aggregate, these non-cash items decreased net income by $4.8 million, which represents a $0.10 decrease in earnings per basic and diluted share, for the year ended December 31, 2010.

Conference Call and Webcast:

The Company's management will host a conference call to discuss its fourth quarter and year ended December 31, 2010 results on March 2, 2011 at 10:00 am 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 9, 2011. 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 in 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 and containers. The Company's current fleet consists of eleven drybulk vessels with a total carrying capacity of 747,994 dwt and two containerships with a total carrying capacity of 6,852 TEU.

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 tables represent our drybulk fleet and the newbuilding vessels that we have agreed to acquire, as well as our containership fleet as of March 1, 2011.

Drybulk Fleet

Name               Type        Dwt     Year Built
----------       ---------- ---------- ----------
Panamax
Dream Seas          Panamax     75,151       2009
                 ---------- ---------- ----------
Coral Seas          Panamax     74,477       2006
                 ---------- ---------- ----------
Golden Seas         Panamax     74,475       2006
                 ---------- ---------- ----------
Pearl Seas          Panamax     74,483       2006
                 ---------- ---------- ----------
Diamond Seas        Panamax     74,274       2001
                 ---------- ---------- ----------
Deep Seas           Panamax     72,891       1999
                 ---------- ---------- ----------
Calm Seas           Panamax     74,047       1999
                 ---------- ---------- ----------
Kind Seas           Panamax     72,493       1999
                 ---------- ---------- ----------
Total Panamax             8    592,291
                 ---------- ---------- ----------
Supramax
Friendly Seas      Supramax     58,779       2008
                 ---------- ---------- ----------
Sapphire Seas      Supramax     53,702       2005
                 ---------- ---------- ----------
Total Supramax            2    112,481
                 ---------- ---------- ----------
Handymax
                 ---------- ---------- ----------
Crystal Seas       Handymax     43,222       1995
                 ---------- ---------- ----------
Total Handymax            1     43,222
                 ---------- ---------- ----------
Grand Total              11    747,994
                 ---------- ---------- ----------

Containership Fleet
Name                TEU        Dwt     Year Built
------------     ---------- ---------- ----------
Box Voyager           3,426     42,650       2010
                 ---------- ---------- ----------
Box Trader            3,426     42,650       2010
                 ---------- ---------- ----------
Total                 6,852     85,300
                 ---------- ---------- ----------


Newbuildings that we have agreed to acquire
                                       Expected
Name               Type        Dwt     Delivery
------------     ---------- ---------- ----------
Kamsarmax
Hull no. 619      Kamsarmax     82,000       2012
                 ---------- ---------- ----------
Hull no. 622      Kamsarmax     82,000       2012
                 ---------- ---------- ----------
Hull no. 624      Kamsarmax     82,000       2012
                 ---------- ---------- ----------
Total Panamax             3    246,000
                 ---------- ---------- ----------
Handysize
Hull no. 604      Handysize     37,200       2011
                 ---------- ---------- ----------
Hull no. 605      Handysize     37,200       2011
                 ---------- ---------- ----------
Hull no. 612      Handysize     37,200       2012
                 ---------- ---------- ----------
Hull no. 625      Handysize     37,200       2012
                 ---------- ---------- ----------
Total Handymax            4    148,800
                 ---------- ---------- ----------
Grand Total               7    394,800
                 ---------- ---------- ----------




Summary Fleet Data

                                                  Quarter       Quarter
                                                    Ended         Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
FLEET DATA
Average number of vessels (1)                           12.0          13.1
                                                ------------  ------------
Available days for fleet (2)                           1,083         1,169
                                                ------------  ------------
Calendar days for fleet (3)                            1,104         1,208
                                                ------------  ------------
Fleet utilization (4)                                     98%           97%
                                                ------------  ------------

AVERAGE DAILY RESULTS
Time charter equivalent (5)                           32,350        23,053
                                                ------------  ------------
Time charter equivalent
 adjusted (5)                                         28,007        23,053
                                                ------------  ------------
Vessel operating expenses (6)                          4,720         4,585
                                                ------------  ------------
Drydocking expenses (7)                                  568           486
                                                ------------  ------------
Management fees adjusted (8)                             848           989
                                                ------------  ------------
General and administrative expenses
 adjusted (9)                                          3,561         2,861
                                                ------------  ------------
Total vessel operating expenses adjusted (10)          9,697         8,921
                                                ------------  ------------


                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
FLEET DATA
Average number of vessels (1)                           12.0          12.1
                                                ------------  ------------
Available days for fleet (2)                           4,322         4,295
                                                ------------  ------------
Calendar days for fleet (3)                            4,380         4,419
                                                ------------  ------------
Fleet utilization (4)                                     99%           97%
                                                ------------  ------------

AVERAGE DAILY RESULTS
Time charter equivalent (5)                           35,250        25,911
                                                ------------  ------------
Time charter equivalent
 adjusted (5)                                         30,942        24,683
                                                ------------  ------------
Vessel operating expenses (6)                          4,574         4,520
                                                ------------  ------------
Drydocking expenses (7)                                  163           596
                                                ------------  ------------
Management fees adjusted (8)                             822           920
                                                ------------  ------------
General and administrative expenses
 adjusted (9)                                          1,510         1,644
                                                ------------  ------------
Total vessel operating expenses adjusted (10)          7,069         7,680
                                                ------------  ------------



(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
     off-hire days for 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 adjustments provide additional
     information on 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 share 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 share awards and share based
     compensation to the management company have been excluded.




Time Charter Equivalents Reconciliation
(Expressed in United States Dollars)


                                                  Quarter       Quarter
                                                    Ended         Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
Time Charter Revenues                             37,120,851    28,744,697
                                                ------------  ------------
Less Voyage Expenses                                (185,515)     (166,872)
                                                ------------  ------------
Less Commission                                   (1,899,856)   (1,628,521)
                                                ------------  ------------
Total Revenue, net of voyage expenses             35,035,480    26,949,304
                                                ------------  ------------
Total available days                                   1,083         1,169
                                                ------------  ------------
Time Charter Equivalent                               32,350        23,053
                                                ------------  ------------



Time Charter Equivalent Adjusted Reconciliation
Time Charter Revenues                             37,120,851    28,744,697
                                                ------------  ------------
Less Voyage Expenses                                (185,515)     (166,872)
                                                ------------  ------------
Less Commission                                   (1,899,856)   (1,628,521)
                                                ------------  ------------
Total Revenue, net of voyage expenses             35,035,480    26,949,304
                                                ------------  ------------
Less Amortization of Below Market Acquired Time
 Charters                                         (4,703,848)            -
                                                ------------  ------------
Total Revenue, net of voyage expenses Adjusted    30,331,632    26,949,304
                                                ------------  ------------
Total available days                                   1,083         1,169
                                                ------------  ------------
Time Charter Equivalent Adjusted                      28,007        23,053
                                                ------------  ------------


                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
Time Charter Revenues                            161,111,782   118,382,601
                                                ------------  ------------
Less Voyage Expenses                                (397,657)     (412,849)
                                                ------------  ------------
Less Commission                                   (8,364,661)   (6,682,492)
                                                ------------  ------------
Total Revenue, net of voyage expenses            152,349,464   111,287,260
                                                ------------  ------------
Total available days                                   4,322         4,295
                                                ------------  ------------
Time Charter Equivalent                               35,250        25,911
                                                ------------  ------------ 

Time Charter Equivalent Adjusted Reconciliation
Time Charter Revenues                            161,111,782   118,382,601
                                                ------------  ------------
Less Voyage Expenses                                (397,657)     (412,849)
                                                ------------  ------------
Less Commission                                   (8,364,661)   (6,682,492)
                                                ------------  ------------
Total Revenue, net of voyage expenses            152,349,464   111,287,260
                                                ------------  ------------
Less Amortization of Below Market Acquired Time
 Charters                                        (18,618,699)   (5,272,801)
                                                ------------  ------------
Total Revenue, net of voyage expenses Adjusted   133,730,765   106,014,459
                                                ------------  ------------
Total available days                                   4,322         4,295
                                                ------------  ------------
Time Charter Equivalent Adjusted                      30,942        24,683
                                                ------------  ------------




PARAGON SHIPPING INC.
Condensed Cash Flow Information
(Expressed in United States Dollars)

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
Cash and Cash Equivalents,
 beginning of period                              68,441,752   133,960,178
                                                ------------  ------------


Cash provided by / (used in):
Operating Activities                              80,406,754    60,613,801
                                                ------------  ------------
Investing Activities                             (40,500,000) (142,151,113)
                                                ------------  ------------
Financing Activities                              25,611,672   (17,634,931)
                                                ------------  ------------
Net increase / (decrease) in Cash and Cash
 Equivalents                                      65,518,426   (99,172,243)
                                                ------------  ------------
Cash and Cash Equivalents,
 end of period                                   133,960,178    34,787,935
                                                ------------  ------------





EBITDA Reconciliation (1)
(Expressed in United States Dollars)


                                                  Quarter       Quarter
                                                    Ended         Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
Net Income                                        12,700,593     2,297,481
                                                ------------  ------------
Plus Net Interest expense                          1,482,756     2,635,111
                                                ------------  ------------
Plus Depreciation                                  8,210,208     8,949,138
                                                ------------  ------------
EBITDA                                            22,393,557    13,881,730
                                                ------------  ------------



Adjusted EBITDA Reconciliation
Net Income                                        12,700,593     2,297,481
                                                ------------  ------------
Non-cash revenue, depreciation and write off
 due to below market acquired time charters       (4,557,042)      695,825
                                                ------------  ------------
Vessel fair value gain                              (654,570)            -
                                                ------------  ------------
Profit on sale of vessel                                   -      (212,993)
                                                ------------  ------------
Unrealized gain from interest rate swaps          (1,373,140)   (2,062,995)
                                                ------------  ------------
Non-cash expenses from the amortization of
 share based compensation cost recognized and
 share based compensation to the management
 company                                           2,443,486     3,391,596
                                                ------------  ------------
Adjusted Net Income                                8,559,327     4,108,914
                                                ------------  ------------
Plus Net Interest expense                          1,482,756     2,635,111
                                                ------------  ------------
Plus Depreciation (2)                              7,514,383     8,253,313
                                                ------------  ------------
Adjusted EBITDA                                   17,556,466    14,997,338
                                                ------------  ------------





                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010
                                                ------------  ------------
Net Income                                        65,678,614    22,895,280
                                                ------------  ------------
Plus Net Interest expense                         10,329,279     9,913,808
                                                ------------  ------------
Plus Depreciation                                 33,814,863    33,719,712
                                                ------------  ------------
EBITDA                                           109,822,756    66,528,800
                                                ------------  ------------


Adjusted EBITDA Reconciliation
Net Income                                        65,678,614    22,895,280
                                                ------------  ------------
Non-cash revenue, depreciation and write off
 due to below market acquired time charters      (16,408,730)   (2,512,292)
                                                ------------  ------------
Impairment loss                                    6,005,000             -
                                                ------------  ------------
Profit on sale of vessel                                   -      (475,483)
                                                ------------  ------------
Unrealized gain from interest rate swaps          (3,367,354)   (2,872,337)
                                                ------------  ------------
Non-cash expenses from the amortization of
 share based compensation cost recognized and
 share based compensation to the management
 company                                           3,101,691    10,687,663
                                                ------------  ------------
Adjusted Net Income                               55,009,221    27,722,831
                                                ------------  ------------
Plus Net Interest expense                         10,329,279     9,913,808
                                                ------------  ------------
Plus Depreciation (2)                             31,055,875    30,959,203
                                                ------------  ------------
Adjusted EBITDA                                   96,394,375    68,595,842
                                                ------------  ------------




(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 these adjustments provide
    additional information on 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       Quarter
                                                    Ended         Ended
                                                December 31,  December 31,
GAAP Financial Information                          2009          2010
                                                ------------  ------------
Net Income                                        12,700,593     2,297,481
                                                ------------  ------------
Income attributable to non-vested share awards      (571,819)     (104,912)
                                                ------------  ------------
Net Income available to common shareholders       12,128,774     2,192,569
                                                ------------  ------------
Weighted average number of Class A common
 shares basic and diluted                         47,547,627    50,796,008
                                                ------------  ------------
Earnings per Class A common shares basic and
 diluted                                                0.26          0.04
                                                ------------  ------------ 
Reconciliation of Net Income to Adjusted Net
 Income
                                                ------------  ------------
Net Income                                        12,700,593     2,297,481
                                                ------------  ------------
Non-cash revenue, depreciation and write off
 due to below market acquired time charters       (4,557,042)      695,825
                                                ------------  ------------
Vessel fair value gain                              (654,570)            -
                                                ------------  ------------
Profit on sale of vessel                                   -      (212,993)
                                                ------------  ------------
Unrealized gain from interest rate swaps          (1,373,140)   (2,062,995)
                                                ------------  ------------
Non-cash expenses from the amortization of
 compensation cost recognized and share based
 compensation to the management company            2,443,486     3,391,596
                                                ------------  ------------
Adjusted Net Income                                8,559,327     4,108,914
                                                ------------  ------------
Income attributable to non-vested share awards      (385,367)     (187,629)
                                                ------------  ------------
Adjusted Net Income available to common
 shareholders                                      8,173,960     3,921,285
                                                ------------  ------------
Weighted average number of common shares basic
 and diluted                                      47,547,627    50,796,008
                                                ------------  ------------
Adjusted earnings per share basic and
 diluted(1)                                             0.17          0.08
                                                ------------  ------------


(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 adjustments provide additional
    information on the fleet operational results.






Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information
(Expressed in United States Dollars)

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
GAAP Financial Information                          2009          2010
                                                ------------  ------------
Net Income                                        65,678,614    22,895,280
                                                ------------  ------------
Income attributable to non-vested share awards    (1,278,992)     (849,650)
                                                ------------  ------------
Net Income available to common shareholders       64,399,622    22,045,630
                                                ------------  ------------
Weighted average number of Class A common
 shares basic and diluted                         38,026,523    49,812,716
                                                ------------  ------------
Earnings per Class A common shares basic and
 diluted                                                1.69          0.44
                                                ------------  ------------
Reconciliation of Net Income to Adjusted Net
 Income
                                                ------------  ------------
Net Income                                        65,678,614    22,895,280
                                                ------------  ------------
Non-cash revenue, depreciation and write off
 due to below market acquired time charters      (16,408,730)   (2,512,294)
                                                ------------  ------------
Impairment loss                                    6,005,000             -
                                                ------------  ------------
Profit on sale of vessel                                   -      (475,483)
                                                ------------  ------------
Unrealized gain from interest rate swaps          (3,367,354)   (2,872,337)
                                                ------------  ------------
Non-cash expenses from the amortization of
 compensation cost recognized and share based
 compensation to the management company            3,101,691    10,687,663
                                                ------------  ------------
Adjusted Net Income                               55,009,221    27,722,829
                                                ------------  ------------
Income attributable to non-vested share awards    (1,071,222)   (1,028,802)
                                                ------------  ------------
Adjusted Net Income available to common
 shareholders                                     53,937,999    26,694,027
                                                ------------  ------------
Weighted average number of common shares basic
 and diluted                                      38,026,523    49,812,716
                                                ------------  ------------
Adjusted earnings per share basic and
 diluted(1)                                             1.42          0.54
                                                ------------  ------------

(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 adjustments provide additional
    information on the fleet operational results.





Paragon Shipping Inc.
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2009 and December 31, 2010
(Expressed in United States Dollars)
                                                December 31,  December 31,
                                                    2009          2010
Assets
Current assets
Cash and cash equivalents                         133,960,178    34,787,935
Restricted cash                                    31,000,000    14,990,000
Assets held for sale                               18,050,402             -
Trade receivables (net)                             2,187,039     1,087,304
Other receivables                                   2,233,809     1,464,051
Prepaid expenses                                      464,804       528,475
Due from management company                         1,231,879     1,579,192
Inventories                                           921,325     1,066,321
                                                ------------- -------------
Total current assets                              190,049,436    55,503,278
                                                ------------- -------------
Fixed assets
Vessels, net                                      604,732,557   695,148,227
Advances for vessels under construction                     -    58,460,129
Other fixed assets, net                                51,718       231,745
                                                ------------- -------------
Total fixed assets, net                           604,784,275   753,840,101
                                                ------------- -------------
Other assets                                        1,380,577     1,922,631
Restricted cash                                    15,510,000    10,010,000
Other long-term receivables                           968,560             -
                                                ------------- -------------
Total Assets                                      812,692,848   821,276,010
                                                ------------- -------------
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable (including balance due
 to a related party of $17,300 and $44,625 as
 of December 31, 2009 and 2010 respectively)        1,951,695     1,939,685
Accrued expenses                                    2,416,524     2,230,475
Interest rate swaps                                 6,820,289     3,881,173
Deferred income                                     3,701,832     2,083,034
Current portion of long-term debt                  39,200,000    35,077,988
Liability associated with vessel held for sale     24,900,000             -
                                                ------------- -------------
Total current liabilities                          78,990,340    45,212,355
                                                ------------- -------------
Long-Term Liabilities
Long-term debt                                    270,235,000   282,757,012
Deferred income                                       461,390     1,300,699
Interest rate swaps                                 1,467,499     1,534,277
Below market acquired time charters                 5,272,801             -
                                                ------------- -------------
Total long-term liabilities                       277,436,690   285,591,988
                                                ------------- -------------
Total Liabilities                                 356,427,030   330,804,343
                                                ------------- -------------
Commitments and Contingencies
Shareholders' equity
Preferred shares, $0.001 par value; 25,000,000
 authorized, none issued, none outstanding at
 December 31, 2009 and 2010, respectively                   -             -
Class A common shares, $0.001 par value;
 120,000,000 and 750,000,000 authorized at
 December 31, 2009 and 2010 respectively;
 51,189,033 and 55,870,299 issued and outstanding
 at December 31, 2009 and 2010, respectively           51,189        55,870
Class B common shares, $0.001 par value;
 5,000,000 authorized none issued and outstanding
 at December 31, 2009 and 2010, respectively                -             -
Additional paid-in capital                        408,619,010   430,339,354
Retained earnings                                  47,595,619    60,076,443
                                                ------------- -------------
Total shareholders' equity                        456,265,818   490,471,667
                                                ------------- -------------
Total Liabilities and Shareholders' Equity        812,692,848   821,276,010
                                                ------------- -------------






Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Income
For the three months ended December 31, 2009 and 2010
(Expressed in United States Dollars)

                                                Three Months  Three Months
                                                    Ended         Ended
                                                December 31,  December 31,
                                                    2009          2010
Revenue
Time charter revenue (including amortization of
 below and above market acquired time charters of
 $4,703,848 and $0 for the three months ended
 December 31, 2009 and 2010, respectively)        37,120,851    28,744,697
Less: commissions (including related party
 commissions of $433,030 and $366,494 for the
 three months ended December 31, 2009 and 2010,
 respectively)                                     1,899,856     1,628,521
                                                ------------  ------------
Net Revenue                                       35,220,995    27,116,176
                                                ------------  ------------
Expenses / (Income)
Voyage expenses                                      185,515       166,872
Vessels operating expenses (including expenses
 charged by a related party of $49,800 and
 $82,733 for the three months ended
 December 31, 2009 and 2010, respectively)         5,210,933     5,539,101
Dry-docking expenses                                 627,230       586,802
Management fees charged by a related party
 (including share based compensation of $762,732
 and $226,459 for the three months ended
 December 31, 2009 and 2010, respectively)         1,699,244     1,420,535
Depreciation                                       8,210,208     8,949,138
General and administrative expenses (including
 share based compensation of $1,680,754 and
 $3,165,137 for the three months ended
 December 31, 2009 and 2010, respectively)         5,611,591     6,621,259
Vessel fair value gain                              (654,570)            -
Gain on sale of assets                                     -      (212,993)
Gain from vessel early redelivery                   (549,019)            -
                                                ------------  ------------
Operating Income                                  14,879,863     4,045,462
                                                ------------  ------------

Other Income / (Expenses)
Interest and finance costs                        (1,971,147)   (2,667,205)
(Loss)/gain on derivatives                          (690,507)      913,457
Interest income                                      488,391        32,094
Foreign currency loss                                 (6,007)      (26,327)
                                                ------------  ------------
Total Other Expenses, net                         (2,179,270)   (1,747,981)
                                                ------------  ------------
Net Income                                        12,700,593     2,297,481

Earnings per Class A common share, basic and
 diluted                                        $       0.26  $       0.04

Weighted average number of Class A common
 shares, basic and diluted                        47,547,627    50,796,008





Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Income
For the year ended December 31, 2009 and 2010
(Expressed in United States Dollars)

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010
Revenue
Time charter revenue (including amortization of
 below and above market acquired time charters of
 $18,618,699 and $5,272,801 for the year ended
 December 31, 2009 and 2010, respectively)       161,111,782   118,382,601
Less: commissions (including related party
 commissions of $1,776,959 and $1,427,823 for
 the year ended December 31, 2009 and 2010,
 respectively)                                     8,364,661     6,682,492
                                                ------------  ------------
Net Revenue                                      152,747,121   111,700,109
                                                ------------  ------------
Expenses / (Income)
Voyage expenses                                      397,657       412,849
Vessels operating expenses (including expenses
 charged by a related party of $194,900 and
 $324,061 for the year ended December 31, 2009
 and 2010, respectively)                          20,034,664    19,974,806
Dry-docking expenses                                 715,308     2,632,479
Management fees charged by a related party
 (including share based compensation of $762,732
 and $226,459 for the year ended December 31,
 2009 and 2010, respectively)                      4,362,908     4,292,291
Depreciation                                      33,814,863    33,719,712
General and administrative expenses (including
 share based compensation of $2,338,959 and
 $10,461,204 for the year ended
 December 31, 2009 and 2010, respectively)         8,949,096    17,723,987
Impairment loss                                    6,005,000             -
Gain on sale of assets / vessel acquisition
 option                                                    -    (1,064,023)
Gain on vessel early redelivery                     (800,874)     (113,338)
                                                ------------  ------------
Operating Income                                  79,268,499    34,121,346
                                                ------------  ------------
Other Income / (Expenses)
Interest and finance costs                       (11,379,241)  (10,234,928)
Loss on derivatives                               (3,239,236)   (2,611,920)
Interest income                                    1,049,962       321,120
Foreign currency (loss)/gain                         (21,370)    1,299,662
                                                ------------  ------------
Total Other Expenses, net                        (13,589,885)  (11,226,066)
                                                ------------  ------------
Net Income                                        65,678,614    22,895,280

Earnings per Class A common share, basic and
 diluted                                        $       1.69  $       0.44

Weighted average number of Class A common
 shares, basic and diluted                        38,026,523    49,812,716



Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Shareholders' Equity
For the year ended December 31, 2009 and 2010
(Expressed in United States Dollars, except for number of shares)

                    Class A Shares
                  ------------------
                                                  (Accumulated
                                      Additional   Deficit) /
                  Number of     Par     Paid-in     Retained
                    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
 and share based
 compensation     24,051,518  24,051   90,103,519               90,127,570
Cancellation of
 restricted Class
 A common shares      (1,000)     (1)           1
Dividends
 declared (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
                  ----------  ------  ----------- -----------  -----------
Issuance of Class
 A common shares,
 and share based
 compensation      4,689,700   4,689   21,720,336               21,725,025
Cancellation of
 restricted Class
 A common shares      (8,434)     (8)           8
Dividends
 declared (0.20
 per share)                                       (10,414,456) (10,414,456)
Net Income                                         22,895,280   22,895,280
                  ----------  ------  ----------- -----------  -----------
Balance December
 31, 2010         55,870,299  55,870  430,339,354  60,076,443  490,471,667
                  ----------  ------  ----------- -----------  -----------



Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
For the year ended December 31, 2009 and 2010
(Expressed in United States Dollars)

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2010

Cash flows from operating activities
Net Income                                        65,678,614    22,895,280
Adjustments to reconcile net income to net cash
 provided by operating activities
Depreciation                                      33,814,863    33,719,712
Impairment loss                                    6,005,000             -
Profit on sale of assets / vessel acquisition
 option                                                    -    (1,064,023)
Amortization of below and above market acquired
 time charters                                   (18,618,699)   (5,272,801)
Amortization of financing costs                      970,327       907,310
Gain on vessel early redelivery                     (549,019)            -
Share based compensation                           3,101,690    10,687,663
Unrealized gain on interest rate swaps            (3,367,354)   (2,872,337)
Changes in assets and liabilities
Trade receivables (net)                           (1,814,074)    1,099,735
Other receivables                                 (1,024,579)      769,758
Prepaid expenses                                     (85,664)      (63,671)
Inventories                                         (407,992)     (144,996)
Due from management company                         (245,919)     (347,313)
Other long term receivables                         (893,800)      968,560
Trade accounts payable                              (638,818)      (12,010)
Accrued expenses                                  (1,952,758)      122,423
Deferred income                                      434,936      (779,489)
                                                ------------  ------------
Net cash from operating activities                80,406,754    60,613,801
                                                ------------  ------------
Cash flow from Investing Activities
Net proceeds from sale of assets / vessel
 acquisition option                                        -    41,556,934
Acquisition of vessels and capital expenditures            -  (146,551,672)
Payments for vessels under construction                    -   (58,460,129)
Other fixed assets                                         -      (206,246)
Release of restricted cash                                 -    23,010,000
Increase in restricted cash                      (40,500,000)   (1,500,000)
                                                ------------  ------------
Net cash used in investing activities            (40,500,000) (142,151,113)
                                                ------------  ------------
Cash flows from financing activities
Proceeds from long-term debt                      30,000,000    70,000,000
Repayment of long-term debt                      (83,150,000)  (86,500,000)
Payment of financing costs                          (292,563)   (1,648,201)
Proceeds from the issuance of Class A common
 shares (net)                                     87,025,880    10,927,726
Dividends paid                                    (7,971,645)  (10,414,456)
                                                ------------  ------------
Net cash from / (used in) financing activities    25,611,672   (17,634,931)
                                                ------------  ------------ 
Net increase / (decrease) in cash and cash
 equivalents                                      65,518,426   (99,172,243)
Cash and cash equivalents at the beginning of
 the period                                       68,441,752   133,960,178
                                                ------------  ------------
Cash and cash equivalents at the end of the
 period                                          133,960,178    34,787,935
                                                ------------  ------------
Supplemental disclosure of cash flow
 information
Cash paid during the period for interest          11,961,768     8,745,571
Non cash financing activities                        270,353       167,737


Contact Information

  • Contacts:

    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