-- 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