SOURCE: Paragon Shipping Inc.

Paragon Shipping Inc.

November 15, 2010 16:05 ET

Paragon Shipping Inc. Reports Third Quarter and Nine Months Ended September 30, 2010 Results

ATHENS, GREECE--(Marketwire - November 15, 2010) - 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 third quarter and nine months ended September 30, 2010.

Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "We are pleased to announce our 13th consecutive profitable quarter. Our adjusted EPS of $0.17 represents a $0.04 increase compared to our previous quarter and was a result of our chartering, cost control and risk management strategies. Excluding our scheduled drydockings, we managed to increase the third quarter's utilization rate to 99.8%. Regarding our latest fleet developments, the third quarter of 2010 had been very active. We took delivery of three vessels, the M/V Dream Seas and the two 2010-built containerships. Our latest acquisitions enabled us to diversify our operations into a new sector of the shipping industry with strong upside potential. Furthermore, being consistent with our fleet renewal policy, we managed to improve the average age of our fleet from 8.4 years as of January 1, 2010, to 6.3 years as of today."

Mr. Bodouroglou concluded, "We have secured significant protection against charter market fluctuations by having contractually fixed 98% of our revenue days in 2011. We also expect to be able to maintain our continued fleet growth as a result of our newbuilding program, comprising seven drybulk carriers that are currently under construction. Consistent with our divined policy, we continue to pay a quarterly dividend of $0.05 per share. Summarizing, Paragon evolves through the path of sustainability and growth."

Third Quarter 2010 Financial Results:

Time charter revenue for the third quarter of 2010 was $28.7 million, compared to $40.1 million for the third quarter of 2009. The Company reported net income of $4.1 million, or $0.08 per basic and diluted share for the third quarter of 2010, calculated on 49,482,858 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 third quarter of 2009, the Company reported net income of $18.0 million, or $0.40 per basic and diluted share, calculated on 44,653,942 weighted average number of basic and diluted shares.

Excluding all non-cash items described below, adjusted net income for the third quarter of 2010 was $8.8 million, or $0.17 per basic and diluted share. This compares to adjusted net income of $15.1 million, or $0.33 per basic and diluted share for the third quarter of 2009. Please refer to the table at the back of this press release for reconciliations of GAAP net income to non-GAAP adjusted net income and GAAP earnings per share to non-GAAP adjusted earnings per share.

EBITDA was $15.5 million for the third quarter of 2010, compared to $28.4 million for the third quarter of 2009. This was calculated by adding to net income of $4.1 million for the third quarter of 2010, net interest expense and depreciation that in the aggregate amounted to $11.4 million for the third quarter of 2010. Adjusted EBITDA, excluding all non-cash items described below, was $19.6 million for the third quarter of 2010, compared to $24.9 million for the third 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 third quarter of 2010, earning an average time charter equivalent rate, or TCE rate, of $22,864 per day, compared to an average of 12.0 vessels during the third quarter of 2009, earning an average TCE rate of $34,687 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 third quarter of 2010 were $8.6 million, or approximately $7,150 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $2.4 million of share-based compensation for the period. For the third quarter of 2009, total adjusted operating expenses were $6.6 million, or approximately $5,983 per day, including vessel operating expenses, management fees, general and administrative expenses and drydocking costs, but excluding $0.4 million of share-based compensation.

Third Quarter 2010 Non-cash Items

The Company's results for the three months ended September 30, 2010 included the following non-cash items:

--  Non-cash 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) for the three months ended
    September 30, 2010.
--  An unrealized loss from interest rate swaps of $1.6 million, or $0.03
    per basic and diluted share, for the three months ended September 30,
    2010.
--  Non-cash expenses of $2.4 million, or $0.05 per basic and diluted
    share, relating to the amortization for the three months ended
    September 30, 2010, of the compensation cost recognized for non-vested
    share awards issued to executive officers, directors and employees.

In the aggregate, these non-cash items decreased net income by $4.7 million, or $0.09 to earnings per basic and diluted share, for the three months ended September 30, 2010.

Dividend Declared

The Company's Board of Directors declared a quarterly dividend of $0.05 per share with respect to the third quarter of 2010, payable on or about December 6, 2010 to shareholders of record as of the close of business on November 26, 2010.

Recent Fleet Developments

On July 5, 2010, the Company had entered into a Memorandum of Agreement for the sale of the M/V Clean Seas, a 1995 built Handymax drybulk carrier, to an unrelated third party for $23.5 million less 3.5% commission. On October 12, 2010, M/V Clean Seas was delivered to its new owners. The net profit from the sale of the vessel was $0.2 million.

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 the remainder of 2011, in 2012 and in 2013, respectively.

Cash Flows

For the nine months ended September 30, 2010, the Company generated net cash from operating activities of $48.6 million, compared to $62.2 million for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, net cash used in investing activities was $184.2 million and net cash from financing activities was $6.3 million. For the nine months ended September 30, 2009, net cash used in investing activities was $32.8 million and net cash from financing activities was $38.1 million.

Nine months ended September 30, 2010 Financial Results:

Time charter revenue for the nine months ended September 30, 2010 was $89.6 million, compared to $124.0 million for the nine months ended September 30, 2009. The Company reported net income of $20.6 million, or $0.40 per basic and diluted share for the nine months ended September 30, 2010, calculated on 49,481,979 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 nine months ended September 30, 2009, the Company reported net income of $53.0 million, or $1.50 per basic and diluted share, calculated on 34,951,005 weighted average number of basic and diluted shares.

Excluding all non-cash items described below, adjusted net income for the nine months ended September 30, 2010 was $23.6 million, or $0.46 per basic and diluted share. This compares to adjusted net income of $46.4 million, or $1.32 per basic and diluted share for the nine months ended September 30, 2009. Please refer to the table at the back of this press release for reconciliations of GAAP net income to non-GAAP adjusted net income and GAAP earnings per share to non-GAAP adjusted earnings per share.

EBITDA was $52.6 million for the nine months ended September 30, 2010, compared to $87.4 million for the nine months ended September 30, 2009. This was calculated by adding to net income of $20.6 million for the nine months ended September 30, 2010, net interest expense and depreciation that in the aggregate amounted to $32.0 million for the nine months ended September 30, 2010. Adjusted EBITDA, excluding all non-cash items described below, was $53.6 million for the nine months ended September 30, 2010, compared to $78.8 million for the nine months ended September 30, 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 11.8 vessels during the nine months ended September 30, 2010, earning an average time charter equivalent rate, or TCE rate, of $26,980 per day, compared to an average of 12.0 vessels during the nine months ended September 30, 2009, earning an average time charter equivalent rate of $36,219 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 nine months ended September 30, 2010 were $23.2 million, or approximately $7,213 per day, including vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, but excluding $7.3 million of share-based compensation for the period. For the nine months ended September 30, 2009, total adjusted operating expenses were $20.3 million, or approximately $6,183 per day, including vessel operating expenses, management fees and general and administrative expenses and drydocking costs, but excluding $0.7 million of share-based compensation.

Nine months ended September 30, 2010 Non-cash Items

The Company's results for the nine months ended September 30, 2010 included the following non-cash items:

--  Non-cash revenue of $5.3 million and depreciation expense of $2.1
    million associated with below market time charters attached to vessels
    acquired, which increases net revenue (amortized over the remaining
    period of the time charter) and increases depreciation expense
    (amortized over the remaining useful life of the vessel). These
    non-cash items contributed an aggregate of $3.2 million to net income,
    or $0.06 to basic and diluted earnings per share, for the nine months
    ended September 30, 2010.
--  Profit on sale of MV Blue Seas of $0.3 million, or $0.01 per basic and
    diluted share.
--  An unrealized gain from interest rate swaps of $0.8 million, or $0.02
    per basic and diluted share, respectively, for the nine months ended
    September 30, 2010.
--  Non-cash expenses of $7.3 million, or $0.15 per basic and diluted
    share, relating to the amortization for the nine months ended September
    30, 2010, of the compensation cost recognized for restricted common
    shares issued to executive officers, directors and employees.

In the aggregate, these non-cash items decreased net income by $3.0 million, or $0.06 to earnings per basic and diluted share, for the nine months ended September 30, 2010.

Conference Call and Webcast:

The Company's management will host a conference call to discuss its third quarter and nine months ended September 30, 2010 results on November 16, 2010 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 November 23, 2010. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is +44 (0) 1452 550 000 and the access code required for the replay is: 55939564#.

Slides and audio webcast:

There will also be a simultaneous live webcast over the Internet, through the Paragon Shipping website (www.paragonship.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Paragon Shipping Inc.

Paragon Shipping Inc. is an Athens, Greece-based international shipping company specializing in the transportation of drybulk cargoes and containers. The Company's current fleet consists of eleven drybulk vessels with a total carrying capacity of 747,994 dwt and two containership 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 November 15, 2010.

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
                                         ----------  ----------  ----------
Handymax
--------
Crystal Seas                               Handymax      43,222        1995
                                         ----------  ----------  ----------
Total Handymax                                    1      43,222
                                         ----------  ----------  ----------
Supramax
--------
Friendly Seas                              Supramax      58,779        2008
                                         ----------  ----------  ----------
Sapphire Seas                              Supramax      53,702        2005
                                         ----------  ----------  ----------
Total Supramax                                    2     112,481
                                         ----------  ----------  ----------
Grand Total                                      11     747,994
                                         ----------  ----------  ----------

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

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





Summary Fleet Data

                                      Quarter Ended       Quarter Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
FLEET DATA
----------
Average number of vessels (1)                     12.0                13.1
                                    ------------------  ------------------
Available days for fleet (2)                     1,097               1,180
                                    ------------------  ------------------
Calendar days for fleet (3)                      1,104               1,206
                                    ------------------  ------------------
Fleet utilization (4)                               99%                 98%
                                    ------------------  ------------------

AVERAGE DAILY RESULTS
---------------------
Time charter equivalent (5)                     34,687              22,864
                                    ------------------  ------------------
Time charter equivalent adjusted
 (5)                                            30,399              22,864
                                    ------------------  ------------------
Vessel operating expenses (6)                    4,278               4,522
                                    ------------------  ------------------
Drydocking expenses (7)                             22                 659
                                    ------------------  ------------------
Management fees (8)                                818                 931
                                    ------------------  ------------------
General and administrative expenses
 adjusted (9)                                      865               1,038
                                    ------------------  ------------------
Total vessel operating expenses
 adjusted (10)                                   5,983               7,150
                                    ------------------  ------------------


                                     Nine Months Ended   Nine Months Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
FLEET DATA
----------
Average number of vessels (1)                     12.0                11.8
                                    ------------------  ------------------
Available days for fleet (2)                     3,239               3,126
                                    ------------------  ------------------
Calendar days for fleet (3)                      3,276               3,211
                                    ------------------  ------------------
Fleet utilization (4)                               99%                 97%
                                    ------------------  ------------------

AVERAGE DAILY RESULTS
---------------------
Time charter equivalent (5)                     36,219              26,980
                                    ------------------  ------------------
Time charter equivalent adjusted
 (5)                                            31,923              25,293
                                    ------------------  ------------------
Vessel operating expenses (6)                    4,525               4,496
                                    ------------------  ------------------
Drydocking expenses (7)                             27                 637
                                    ------------------  ------------------
Management fees (8)                                813                 894
                                    ------------------  ------------------
General and administrative expenses
 adjusted (9)                                      818               1,186
                                    ------------------  ------------------
Total vessel operating expenses
 adjusted (10)                                   6,183               7,213
                                    ------------------  ------------------

(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 non-cash items do not reflect fairly the fleet
    operational results.
(6) Daily vessel operating expenses, which includes crew costs, provisions,
    deck and engine stores, lubricating oil, insurance, maintenance and
    repairs, is calculated by dividing vessel operating expenses by fleet
    calendar days for the relevant time period.
(7) Daily drydocking expenses are calculated by dividing drydocking
    expenses by fleet calendar days for the relevant time period.
(8) Daily management fees are calculated by dividing management fees
    payable in cash by fleet calendar days for the relevant time period.
(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 have been excluded.





Time Charter Equivalents Reconciliation
(Expressed in United States Dollars)

                                      Quarter Ended       Quarter Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Time Charter Revenues                       40,100,204          28,736,569
                                    ------------------  ------------------
Less Voyage Expenses                           (26,846)            (60,333)
                                    ------------------  ------------------
Less Commission                             (2,022,143)         (1,696,816)
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses                                   38,051,215          26,979,420
                                    ------------------  ------------------
Total available days                             1,097               1,180
                                    ------------------  ------------------
Time Charter Equivalent                         34,687              22,864
                                    ------------------  ------------------

Time Charter Equivalent Adjusted
 Reconciliation
--------------------------------
Time Charter Revenues                       40,100,204          28,736,569
                                    ------------------  ------------------
Less Voyage Expenses                           (26,846)            (60,333)
                                    ------------------  ------------------
Less Commission                             (2,022,143)         (1,696,816)
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses                                   38,051,215          26,979,420
                                    ------------------  ------------------
Less Amortization of Below Market
 Acquired Time Charters                     (4,703,848)                  -
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses Adjusted                          33,347,367          26,979,420
                                    ------------------  ------------------
Total available days                             1,097               1,180
                                    ------------------  ------------------
Time Charter Equivalent Adjusted                30,399              22,864
                                    ------------------  ------------------


                                     Nine Months Ended   Nine Months Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Time Charter Revenues                      123,990,931          89,637,904
                                    ------------------  ------------------
Less Voyage Expenses                          (212,142)           (245,977)
                                    ------------------  ------------------
Less Commission                             (6,464,805)         (5,053,971)
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses                                  117,313,984          84,337,956
                                    ------------------  ------------------
Total available days                             3,239               3,126
                                    ------------------  ------------------
Time Charter Equivalent                         36,219              26,980
                                    ------------------  ------------------

Time Charter Equivalent Adjusted
 Reconciliation
--------------------------------
Time Charter Revenues                      123,990,931          89,637,904
                                    ------------------  ------------------
Less Voyage Expenses                          (212,142)           (245,977)
                                    ------------------  ------------------
Less Commission                             (6,464,805)         (5,053,971)
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses                                  117,313,984          84,337,956
                                    ------------------  ------------------
Less Amortization of Below Market
 Acquired Time Charters                    (13,914,851)         (5,272,803)
                                    ------------------  ------------------
Total Revenue, net of voyage
 expenses Adjusted                         103,399,133          79,065,153
                                    ------------------  ------------------
Total available days                             3,239               3,126
                                    ------------------  ------------------
Time Charter Equivalent Adjusted                31,923              25,293
                                    ------------------  ------------------





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

                                     Nine Months Ended   Nine Months Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Cash and Cash Equivalents,
beginning of period                         68,441,752         133,960,178
                                    ------------------  ------------------

Operating Activities                        62,219,000          48,632,762
                                    ------------------  ------------------
Investing Activities                       (32,800,000)       (184,244,729)
                                    ------------------  ------------------
Financing Activities                        38,127,575           6,263,228
                                    ------------------  ------------------
Net increase / (decrease) in Cash
 and Cash Equivalents                       67,546,575        (129,348,739)
                                    ------------------  ------------------
Cash and Cash Equivalents,
 end of period                             135,988,327           4,611,439
                                    ------------------  ------------------





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

                                      Quarter Ended       Quarter Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Net Income                                  17,976,781           4,132,175
                                    ------------------  ------------------
Plus Net Interest expense                    2,004,378           2,797,052
                                    ------------------  ------------------
Plus Depreciation                            8,405,012           8,609,539
                                    ------------------  ------------------
EBITDA                                      28,386,171          15,538,766
                                    ------------------  ------------------

Adjusted EBITDA Reconciliation
------------------------------
Net Income                                  17,976,781           4,132,175
                                    ------------------  ------------------
Non-cash revenue and depreciation
 due to below market acquired time
 charters                                   (4,008,067)            695,825
                                    ------------------  ------------------
Impairment loss                                654,570                   -
                                    ------------------  ------------------
Unrealized loss from interest rate
 swaps                                         160,208           1,571,978
                                    ------------------  ------------------
Non-cash expenses from the
 amortization of share based
 compensation cost recognized                  355,546           2,449,193
                                    ------------------  ------------------
Adjusted Net Income                         15,139,038           8,849,171
                                    ------------------  ------------------
Plus Net Interest expense                    2,004,378           2,797,052
                                    ------------------  ------------------
Plus Depreciation (2)                        7,709,231           7,913,714
                                    ------------------  ------------------
Adjusted EBITDA                             24,852,647          19,559,937
                                    ------------------  ------------------


                                     Nine Months Ended   Nine Months Ended
                                    September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Net Income                                  52,978,021          20,597,799
                                    ------------------  ------------------
Plus Net Interest expense                    8,846,523           7,278,697
                                    ------------------  ------------------
Plus Depreciation                           25,604,655          24,770,574
                                    ------------------  ------------------
EBITDA                                      87,429,199          52,647,070
                                    ------------------  ------------------

Adjusted EBITDA Reconciliation
------------------------------
Net Income                                  52,978,021          20,597,799
                                    ------------------  ------------------
Non-cash revenue and depreciation
 due to below market acquired time
 charters                                  (11,851,688)         (3,208,119)
                                    ------------------  ------------------
Impairment loss                              6,659,570                   -
                                    ------------------  ------------------
Profit on sale of vessel                             -            (262,490)
                                    ------------------  ------------------
Unrealized gain from interest rate
 swaps                                      (1,994,214)           (809,342)
                                    ------------------  ------------------
Non-cash expenses from the
 amortization of share based
 compensation cost recognized                  658,205           7,296,067
                                    ------------------  ------------------
Adjusted Net Income                         46,449,894          23,613,915
                                    ------------------  ------------------
Plus Net Interest expense                    8,846,523           7,278,697
                                    ------------------  ------------------
Plus Depreciation (2)                       23,541,492          22,705,890
                                    ------------------  ------------------
Adjusted EBITDA                             78,837,909          53,598,502
                                    ------------------  ------------------

(1) Paragon Shipping Inc. considers EBITDA to represent net income plus net
    interest expense and depreciation and amortization. The Company's
    management uses EBITDA as a performance measure. The Company believes
    that EBITDA is useful to investors because the shipping industry is
    capital intensive and may involve significant financing costs. EBITDA
    is not an item recognized by GAAP and should not be considered as an
    alternative to net income, operating income or any other indicator of a
    Company's operating performance required by GAAP. The Company's
    definition of EBITDA may not be the same as that used by other
    companies in the shipping or other industries. The Company excluded
    non-cash items to derive the adjusted net income and the adjusted
    EBITDA because the Company believes that the non-cash items do not
    reflect fairly the fleet operational results.
(2) Excludes a portion of depreciation charged on purchase price adjustment
    allocated to vessel cost for vessels acquired with below market
    charters.





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

                                      Quarter Ended       Quarter Ended
GAAP Financial Information          September 30, 2009  September 30, 2010
                                    ------------------  ------------------ 
Net Income                                  17,976,781           4,132,175
                                    ------------------  ------------------
Weighted average number of Class A
 common shares basic and diluted            44,653,942          49,482,858
                                    ------------------  ------------------
Earnings per Class A common shares
 basic and diluted                                0.40                0.08
                                    ------------------  ------------------

Reconciliation of Net Income to
 Adjusted Net Income
-------------------------------
Net Income                                  17,976,781           4,132,175
                                    ------------------  ------------------
Non-cash revenue and depreciation
 due to below market acquired time
 charters                                   (4,008,067)            695,825
                                    ------------------  ------------------
Impairment loss                                654,570                   -
                                    ------------------  ------------------
Unrealized loss from interest rate
 swaps                                         160,208           1,571,978
                                    ------------------  ------------------
Non-cash expenses from the
 amortization of compensation cost
 recognized                                    355,546           2,449,193
                                    ------------------  ------------------
Adjusted Net Income                         15,139,038           8,849,171
                                    ------------------  ------------------
Weighted average number of common
 shares basic and diluted                   44,653,942          49,482,858
                                    ------------------  ------------------
Adjusted earnings per share basic
 and diluted(1)                                   0.33                0.17
                                    ------------------  ------------------

(1) Adjusted earnings per share is not an item recognized by GAAP and
    should not be considered as an alternative to Earnings per share or any
    other indicator of a Company's operating performance required by GAAP.
    The Company excluded non-cash items to derive at the adjusted net
    income and the adjusted earnings per share basic and diluted because
    the Company believes that these non-cash items do not reflect fairly
    the fleet operational results.





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

                                     Nine Months Ended   Nine Months Ended
GAAP Financial Information          September 30, 2009  September 30, 2010
                                    ------------------  ------------------
Net Income                                  52,978,021          20,597,799
                                    ------------------  ------------------
Weighted average number of Class A
 common shares basic and diluted            34,951,005          49,481,979
                                    ------------------  ------------------
Earnings per Class A common shares
 basic and diluted                                1.50                0.40
                                    ------------------  ------------------

Reconciliation of Net Income to
 Adjusted Net Income
-------------------------------
Net Income                                  52,978,021          20,597,799
                                    ------------------  ------------------
Non-cash revenue and depreciation
 due to below market acquired time
 charters                                  (11,851,688)         (3,208,119)
                                    ------------------  ------------------
Impairment loss                              6,659,570                   -
                                    ------------------  ------------------
Profit on sale of vessel                             -            (262,490)
                                    ------------------  ------------------
Unrealized gain from interest rate
 swaps                                      (1,994,214)           (809,342)
                                    ------------------  ------------------
Non-cash expenses from the
 amortization of compensation cost
 recognized                                    658,205           7,296,067
                                    ------------------  ------------------
Adjusted Net Income                         46,449,894          23,613,915
                                    ------------------  ------------------
Weighted average number of common
 shares basic and diluted                   34,951,005          49,481,979
                                    ------------------  ------------------
Adjusted earnings per share basic
 and diluted(1)                                   1.32                0.46
                                    ------------------  ------------------

(1) Adjusted earnings per share is not an item recognized by GAAP and
    should not be considered as an alternative to Earnings per share or any
    other indicator of a Company's operating performance required by GAAP.
    The Company excluded non-cash items to derive at the adjusted net
    income and the adjusted earnings per share basic and diluted because
    the Company believes that these non-cash items do not reflect fairly
    the fleet operational results.




Paragon Shipping Inc
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2009 and September 30, 2010
(Expressed in United States Dollars)
                                                December 31,  September 30,
                                                    2009          2010
Assets
Current assets
Cash and cash equivalents                        133,960,178     4,611,439
Restricted cash                                   31,000,000    28,144,000
Assets held for sale                              18,050,402    22,442,509
Trade receivables                                  2,187,039       953,636
Other receivables                                  2,233,809     1,241,480
Prepaid expenses                                     464,804       318,465
Due from management company                        1,231,879     2,613,829
Inventories                                          921,325     1,270,368
                                                ------------  ------------
Total current assets                             190,049,436    61,595,726
                                                ------------  ------------
Fixed assets
Vessels at cost                                  683,721,898   800,368,623
Less: accumulated depreciation                   (78,989,341)  (96,282,026)
Advances for vessels under construction                    -    58,290,464
Other fixed assets                                    51,718       196,292
                                                ------------  ------------
Total fixed assets                               604,784,275   762,573,353
                                                ------------  ------------
Other assets                                       1,380,577     1,927,374
Restricted cash                                   15,510,000    16,510,000
Other long-term receivables                          968,560             -
                                                ------------  ------------
Total Assets                                     812,692,848   842,606,453
                                                ------------  ------------
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable (including balance due
 to a related party of $17,300 and $32,421 as
 of December 31, 2009 and September 30, 2010
 respectively)                                     1,951,695     3,068,452
Accrued expenses                                   2,416,524     2,333,152
Interest rate swaps                                6,820,289     4,259,003
Deferred income                                    3,701,832     2,502,281
Current portion of long-term debt                 39,200,000    36,933,491
Liability associated with vessel held for sale    24,900,000    12,700,000
                                                ------------  ------------
Total current liabilities                         78,990,340    61,796,379
                                                ------------  ------------
Long-Term Liabilities
Long-term debt                                   270,235,000   300,026,509
Deferred income                                      461,390     1,088,578
Interest rate swaps                                1,467,499     3,219,443
Below market acquired time charters                5,272,801             -
                                                ------------  ------------
Total long-term liabilities                      277,436,690   304,334,530
                                                ------------  ------------
Total Liabilities                                356,427,030   366,130,909
                                                ------------  ------------
Commitments and Contingencies
Shareholders' equity
Preferred shares, $0.001 par value; 25,000,000
 authorized, none issued, none outstanding at
 December 31, 2009 and September 30, 2010                  -             -
Class A common shares, $0.001 par value;
 120,000,000 and 750,000,000 authorized;
 51,189,033 and 51,224,599 issued
 and outstanding at December 31, 2009 and
 September 30, 2010, respectively                     51,189        51,225
Class B common shares, $0.001 par value;
 5,000,000 authorized none issued and
 outstanding at December 31, 2008 and
 September 30, 2010                                        -             -
Additional paid-in capital                       408,619,010   415,915,042
Retained earnings                                 47,595,619    60,509,277
                                                ------------  ------------
Total shareholders' equity                       456,265,818   476,475,544
                                                ------------  ------------
Total Liabilities and Shareholders' Equity       812,692,848   842,606,453
                                                ------------  ------------




Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Income
For the three months ended September 30, 2009 and 2010
(Expressed in United States Dollars)

                                                Three Months  Three Months
                                                    Ended         Ended
                                                September 30, September 30,
                                                     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
 September 30, 2009 and 2010, respectively)       40,100,204    28,736,569
Less: commissions (including related party
 commissions of $425,525 and $376,069 for the
 three months ended September 30, 2009 and
 2010, respectively)                               2,022,143     1,696,816
                                                ------------  ------------
Net Revenue                                       38,078,061    27,039,753
                                                ------------  ------------
Expenses/(Income)
Voyage expenses                                       26,846        60,333
Vessels operating expenses (including expenses
 charged by a related party of $44,900 and
 $94,367 for the three months ended September
 30, 2009 and 2010, respectively)                  4,722,549     5,453,655
Dry-docking expenses                                  23,821       795,037
Management fees charged by a related party           903,392     1,122,363
Depreciation                                       8,405,012     8,609,539
General and administrative expenses (including
 share based compensation of $355,546 and
 $2,449,193 for the three months ended
 September 30, 2009 and 2010, respectively)        1,311,253     3,701,284
Impairment loss                                      654,570             -
                                                ------------  ------------
Operating Income                                  22,030,618     7,297,542
                                                ------------  ------------

Other Income/(Expenses)
Interest and finance costs                        (2,201,783)   (2,838,063)
Loss on derivatives                               (2,014,358)   (1,734,993)
Interest income                                      197,405        41,011
Foreign currency (loss)/gain                         (35,101)    1,366,678
                                                ------------  ------------
Total Other Expenses, net                         (4,053,837)   (3,165,367)
                                                ------------  ------------
Net Income                                        17,976,781     4,132,175

Earnings per Class A common share, basic and
 diluted                                        $       0.40  $       0.08

Weighted average number of Class A common
 shares, basic and diluted                        44,653,942    49,482,858




Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Income
For the nine months ended September 30, 2009 and 2010
(Expressed in United States Dollars)

                                                Nine Months    Nine Months
                                                   Ended          Ended
                                                September 30, September 30,
                                                    2009          2010
Revenue
Time charter revenue (including amortization of
 below and above market acquired time charters
 of $13,914,851 and $5,272,803 for the nine
 months ended September 30, 2009 and 2010,
 respectively)                                   123,990,931    89,637,904
Less: commissions (including related party
 commissions of $1,343,929 and $1,061,329 for
 the nine months ended September 30, 2009
 and 2010, respectively)                           6,464,805     5,053,971
                                                ------------  ------------
Net Revenue                                      117,526,126    84,583,933
                                                ------------  ------------
Expenses/(Income)
Voyage expenses                                      212,142       245,977
Vessels operating expenses (including expenses
 charged by a related party of $145,100 and
 $241,328 for the nine months ended
 September 30, 2009 and 2010, respectively)       14,823,731    14,435,705
Dry-docking expenses                                  88,078     2,045,677
Management fees charged by a related party         2,663,664     2,871,756
Depreciation                                      25,604,655    24,770,574
General and administrative expenses (including
 share based compensation of $658,205 and
 $7,296,067 for the nine months ended
 September 30, 2009 and 2010, respectively)        3,337,505    11,102,728
Impairment loss                                    6,659,570             -
Profit on sale of assets / vessel acquisition
 option                                                    -      (851,030)
Gain from vessel early redelivery                   (251,855)     (113,338)
                                                ------------  ------------
Operating Income                                  64,388,636    30,075,884
                                                ------------  ------------

Other Income/(Expenses)
Interest and finance costs                        (9,408,094)   (7,567,723)
Loss on derivatives                               (2,548,729)   (3,525,377)
Interest income                                      561,571       289,026
Foreign currency (loss)/gain                         (15,363)    1,325,989
                                                ------------  ------------ 
Total Other Expenses, net                        (11,410,615)   (9,478,085)
                                                ------------  ------------
Net Income                                        52,978,021    20,597,799

Earnings per Class A common share, basic and
 diluted                                        $       1.50  $       0.40

Weighted average number of Class A common
 shares, basic and diluted                        34,951,005    49,481,979




Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Shareholders' Equity
For the nine months September 30, 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      20,900,600  20,900  83,369,830               83,390,730
Dividends
 declared (0.15
 per share)                                        (5,412,292)  (5,412,292)
Net Income                                         52,978,021   52,978,021
                  ----------- ------- ----------- -----------  -----------
Balance September
 30, 2009          48,039,115  48,039 401,885,320  37,454,379  439,387,738
                  ----------- ------- ----------- -----------  -----------

Balance January 1,
 2010             51,189,033  51,189  408,619,010 47,595,619   456,265,818
                  ----------  ------  ----------- -----------  -----------
Issuance of Class A
 common shares,
 and share based
 compensation         44,000      44    7,296,024                7,296,068
Cancellation of
 restricted Class A
 common shares        (8,434)     (8)           8
Dividends
 declared (0.15
 per share)                                        (7,684,141)  (7,684,141)
Net Income                                         20,597,799   20,597,799
                  ----------  ------  ----------- -----------  -----------
Balance September
 30, 2010         51,224,599  51,225  415,915,042  60,509,277  476,475,544
                  ----------  ------  ----------- -----------  -----------




Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2009 and 2010
(Expressed in United States Dollars)


                                                Nine Months    Nine Months
                                                   Ended          Ended
                                                 September      September
                                                 30, 2009       30, 2010

Cash flows from operating activities
Net Income                                       52,978,021     20,597,799
Adjustments to reconcile net income to net
 cash provided by operating activities
Depreciation                                     25,604,655     24,770,574
Impairment loss                                   6,659,570              -
Profit on sale of assets / vessel acquisition
 option                                                   -       (851,030)
Amortization of below and above market
 acquired time charters                         (13,914,851)    (5,272,803)
Amortization of financing costs                     901,185        697,606
Share based compensation                            658,205      7,296,067
Unrealized gain on interest rate swaps           (1,994,214)      (809,342)
Changes in assets and liabilities
Trade receivables                                  (631,832)     1,233,403
Other receivables                                   290,580        992,329
Prepaid expenses                                   (478,982)       146,339
Inventories                                         147,982       (349,043)
Due from management company                      (2,548,537)    (1,381,950)
Other long term receivables                      (1,553,196)       968,560
Trade accounts payable                             (754,102)     1,116,757
Accrued expenses                                 (2,339,340)        49,859
Deferred income                                    (806,144)      (572,363)
                                               ------------   ------------
Net cash from operating activities               62,219,000     48,632,762
                                               ------------   ------------
Cash flow from Investing Activities
Net proceeds from sale of assets / vessel
 acquisition option                                       -     18,901,432
Acquisition of vessels and capital
 expenditures                                             -   (146,551,672)
Payments for vessels under construction                   -    (58,290,464)
Other fixed assets                                        -       (160,025)
Restricted cash (net)                           (32,800,000)     1,856,000
                                               ------------   ------------
Net cash used in investing activities           (32,800,000)  (184,244,729)
                                               ------------   ------------
Cash flows from financing activities
Proceeds from long-term debt                     30,000,000     70,000,000
Repayment of long-term debt                     (68,625,000)   (54,675,000)
Payment of financing costs                         (250,549)    (1,377,631)
Proceeds from the issuance of Class A common
 shares (net)                                    82,415,416              -
Dividends paid                                   (5,412,292)    (7,684,141)
                                               ------------   ------------
Net cash from financing activities               38,127,575      6,263,228
                                               ------------   ------------
Net increase / (decrease) in cash and cash
 equivalents                                     67,546,575   (129,348,739)
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                                         135,988,327      4,611,439
                                               ------------   ------------
Supplemental disclosure of cash flow
 information
Cash paid during the period for interest         10,078,148      6,066,753

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