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Euroseas Ltd. Reports Results for the Year and Quarter Ended December 31, 2010


February 22, 2011 - Maroussi, Athens, Greece

Euroseas Ltd. (NASDAQ: ESEA), anowner and operator of drybulk and container carrier vessels and provider ofseaborne transportation for drybulk and containerized cargoes, announcedtoday its results for the quarter and year ended December 31, 2010.

Fourth Quarter 2010 Highlights:


-- Net loss of $0.9 million or $0.03 loss per share basic and diluted on
total net revenues of $12.8 million. Excluding the effect of unrealized
gain and realized loss on derivatives and unrealized loss on trading
securities and amortization of the fair value of charters acquired, the
net loss for the period would have been $3.9 million, or $0.12 loss per
share basic and diluted.

-- Adjusted EBITDA was $1.0 million. Please refer to a subsequent section
of the Press Release for a reconciliation of adjusted EBITDA to net
income.

-- An average of 16.00 vessels were owned and operated during the fourth
quarter of 2010 earning an average time charter equivalent rate of
$10,091 per day. M/V Eleni P was released in December 2010 after seven
months of captivity after being hijacked in May of 2010.

-- Declared a quarterly dividend of $0.06 per share for the fourth quarter
of 2010 payable on March 11, 2011 to shareholders of record on March 1,
2011. This is the 22nd consecutive quarterly dividend declared.

Full Year 2010 Highlights:

-- Net loss of $6.6 million or $0.21 loss per share basic and diluted on total net revenues of $52.5 million. Excluding the effect of unrealized gain and realized loss on derivatives and unrealized loss on trading securities and amortization of the fair value of charters acquired, the net loss for the period would have been $4.3 million, or $0.14 loss per share basic and diluted. -- Adjusted EBITDA was $14.4 million. Please refer to a subsequent section of the Press Release for a reconciliation of adjusted EBITDA to net income. -- An average of 15.5 vessels were owned and operated during 2010 earning an average time charter equivalent rate of $11,201 per day. -- Declared four quarterly dividends for a total of $0.23 per share during 2010. -- Completed a joint venture with private equity firms under which we purchased 6 vessels in 2010 investing almost half of the committed capital of $175 million. Euroseas has committed $25 million to the venture.

Aristides Pittas, Chairman and CEO of Euroseas commented: "2010 was asignificant year for Euroseas in many respects. It was a difficult year asour containership fleet had to go through a period of low earnings as aresult of charters we had to enter into during the bottom of the market in2009 and the first half of 2010. Two of our containerships that had beenlaid up in 2009 were only reactivated during the second half of the yearwhen the container market started to recover. On the other hand, it was apivotal year as we took advantage of the low containership prices andacquired one vessel directly, and 6 more vessels via Euromar, our jointventure with two private firms which we concluded in the first quarter of2010. On our own and via Euromar, we have more than $100m of cash which weplan to invest as attractive opportunities and accretive projects areidentified.

Looking into 2011 and beyond, we expect significant contribution to ourearnings from our containership fleet and investment in Euromar as ourcontainership charters are being rolled over from the existing lower levelsto rates reflecting the currently rising market rates. At the same time,our drybulk fleet is fully covered for 2011 and a good part of 2012,insulating us from the widely anticipated weakness in that sector. Thus, Iwould like to suggest that investors look at us as a company with a baserevenue secured from our drybulk fleet and with significant exposure to therecovering containership sector, especially, the geared segment below3000teu. We believe that in addition to the overall containership marketrecovery, the below 3000teu segment will benefit from the rapidlydeveloping trades involving the entire developing world.

Reaffirming our positive prospects, our Board decided to maintain ourquarterly dividend of $0.06 per share which represents an annual yield ofabout 6.25% on the basis of our stock price on February 15, 2011."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The resultsof the fourth quarter of 2010 reflect primarily the high number of ourvessels that were drydocked during the quarter. In several cases, we choseto accelerate the drydocking, especially of containerships, in order toincrease our flexibility of chartering our fleet in a market that it isanticipated to continue improving after the year-end seasonal slowdown. Asin previous periods of 2010, our financial results for the quarter werenegatively influenced by realized losses in FFAs and interest rate swapcontracts and positively affected by net unrealized gains on our overallderivative positions. We have now settled all our FFA contracts that wereinitiated in the first half of 2009 to provide us protection against thepossibility of a drybulk market collapse. For 2011, we only have a pair ofcontracts for a panamax vessel equivalent that protects us if rates fallbelow $16,500/day and caps our upside at $23,500/day; with spot rates forthe index vessel around $13,500/day, this contract is currently providingus with the desired coverage.

Total daily vessel operating expenses, including management fees, generaland administrative expenses but excluding drydocking costs, reflect anincrease of about 5.5% during the fourth quarter of 2010 compared to thesame quarter of last year which is primarily due to the fact that all ofour vessels are now operating as compared to having 3 vessels laid-upduring the fourth quarter of 2009; and, a decrease of about 4.6% for thefull year ended December 31, 2010 over 2009. As always, we want toemphasize that cost control remains a key component of our strategy and webelieve that our 2010 total daily average cost per vessel of $5,191 clearlyreflects our success in this respect.

During the fourth quarter of 2010, we drew loans totaling $28.5 millionagainst two of our unencumbered vessels in order to enhance our liquidityand continue our fleet renewal and expansion program. As of December 31,2010, our outstanding debt was $88.39 million versus restricted andunrestricted cash of about $40.1 million. Even after the new loans, weestimate that our debt-to-market value of fleet ratio is around 40%, stilla quite conservative level. As of the same date, our scheduled debtrepayments over the next 12 months amounted to about $13.5 million, anumber low enough to provide us with significant operational cash flowcomfort. All our debt covenants were satisfied as of December 31, 2010."

Fourth Quarter 2010 Results:

For the fourth quarter of 2010, the Company reported total net revenues of$12.8 million representing a 22.3% decrease over total net revenues of$16.5 million during the fourth quarter of 2009. The Company reported netloss for the period of $0.9 million as compared to a net loss of $16.3million for the fourth quarter of 2009. The results for the fourth quarterof 2010 include a $4.0 million net unrealized gain on derivatives andtrading securities and a $1.6 million net realized loss on derivatives ascompared to $5.1 million net unrealized loss on derivatives and tradingsecurities and $4.8 million realized loss on derivatives for the sameperiod of 2009.

Depreciation expenses for the fourth quarter of 2010 were $4.6 millioncompared to $4.7 million during the same period of 2009. On average, 16.00vessels were owned and operated during the fourth quarter of 2010 earningan average time charter equivalent rate of $10,091 per day compared to16.68 vessels in the same period of 2009 earning on average $13,892 perday.

Adjusted EBITDA for the fourth quarter of 2010 was $1.0 million, a 79.5%decrease from $4.9 million achieved during the fourth quarter of 2009.Please see below for Adjusted EBITDA reconciliation to net income / lossand cash flow provided by operating activities.

Basic and diluted losses per share for the fourth quarter of 2010 were$0.03, calculated on 30,968,108 basic and diluted weighted average numberof shares outstanding, compared to basic and diluted losses per share of$0.53 for the fourth quarter of 2009, calculated on 30,813,960 weightedaverage number of shares outstanding, basic and diluted.

Excluding the effect on the losses for the quarter of the unrealized gainon derivatives and the realized loss on derivatives, unrealized loss ontrading securities and amortization of the fair value of time chartercontracts acquired, the loss per share for the quarter ended December 31,2010 would have been $0.12 per share, basic and diluted, compared toearnings per share of $0.00 for the quarter ended December 31, 2009.Usually, security analysts do not include the above items in theirpublished estimates of earnings per share.

Full Year 2010 Results:

For the full year of 2010, the Company reported total net revenues of $52.5million representing a 17.7% decrease over total net revenues of $63.8million during the full year of 2009. The Company reported a net loss forthe period of $6.6 million as compared to net loss of $15.6 million for thefull year of 2009. The results for 2010 include a $8.1 million netunrealized gain on derivatives and trading securities and a $12.4 millionnet realized loss on derivatives as compared to $7.6 million net unrealizedloss on derivatives and trading securities and $8.2 million net realizedloss on derivatives for the same period of 2009.

Depreciation expenses for year 2010 were $18.0 million compared to $19.1million during the same period of 2009. On average, 15.5 vessels wereowned and operated during 2010 earning an average time charter equivalentrate of $11,201 per day compared to 16.3 vessels in the same period of 2009earning on average $13,698 per day. Two of the Company's vessels that werelaid up during the entire first half of 2010 were reactivated during thefourth quarter of the year.

Adjusted EBITDA for year 2010 was $14.4 million, a 41.9% decrease from$24.9 million achieved during 2009. Please see below for Adjusted EBITDAreconciliation to net income/loss and cash flow provided by operatingactivities.

Basic and diluted loss per share for year 2010 was $0.21, calculated on30,900,122 weighted average number of shares outstanding, compared to basicand diluted loss per share of $0.51 basic and diluted per share for theyear 2009, calculated on 30,648,991 basic and diluted weighted averagenumber of shares outstanding.

Excluding the effect on the earnings of the unrealized gain on derivatives,realized loss on derivatives, unrealized loss on trading securities andamortization of the fair value of time charter contracts acquired, the netloss per share for the year ended December 31, 2010 would have been $0.14per share compared to earnings of $0.18 per share, basic and diluted, forthe same period in 2009. Usually, security analysts do not include theabove items in their published estimates of earnings per share.

Fleet Profile:

The Euroseas Ltd. fleet profile is as follows:

 Year TCE RateName Type Dwt TEU Built Employment ($/day)---------------- ------------- ------- ------ ----- ------------- ---------Dry Bulk Vessels---------------- ------------- ------- ------ ----- ------------- ---------PANTELIS TC 'til Panamax 74,020 2000 Mar-12 $17,500---------------- ------------- ------- ------ ----- ------------- ---------ELENI P TC 'til Panamax 72,119 1997 Jan-13 $16,500---------------- ------------- ------- ------ ----- ------------- ---------IRINI (*) TC 'til Panamax 69,734 1988 Apr-13 $14,000---------------- ------------- ------- ------ ----- ------------- ---------ARISTIDES N.P. TC 'til Panamax 69,268 1993 May-12 $14,950---------------- ------------- ------- ------ ----- ------------- ---------MONICA P (*) Bulkhandling (**) Handymax 46,667 1998 Pool---------------- ------------- ------- ------ ----- ------------- ---------Total Dry Bulk Vessels 5 331,808---------------- ------------- ------- ------ ----- ------------- ---------Multipurpose Dry Cargo Vessels---------------- ------------- ------- ------ ----- ------------- ---------TASMAN TRADER TC 'til 1 22,568 950 1990 Mar-12 $9,000---------------- ------------- ------- ------ ----- ------------- ---------Container Carriers---------------- ------------- ------- ------ ----- ------------- ---------MAERSK NOUMEA $16,800 'til Aug-11 $18,735 'til Aug-12 $19,240 TC 'til 'til Jun-11 Aug-13 (3 annual $19,750 options 'til 'til Intermediate 34,677 2,556 2001 Jul-14) Jul-14---------------- ------------- ------- ------ ----- ------------- ---------TIGER BRIDGE TC 'til Mar-11 (option 'til $4,000 Intermediate 31,627 2,228 1990 Mar-12) $7,500---------------- ------------- ------- ------ ----- ------------- ---------AGGELIKI P TC 'til Intermediate 30,360 2,008 1998 May-11 $7,000---------------- ------------- ------- ------ ----- ------------- ---------DESPINA P TC 'til Handy size 33,667 1,932 1990 Jan-12 $8,500---------------- ------------- ------- ------ ----- ------------- ---------JONATHAN P(ex-OEL TC 'til INTEGRITY) Handy size 33,667 1,932 1990 Apr-11 $9,000---------------- ------------- ------- ------ ----- ------------- ---------CAPTAIN COSTAS $4,250(ex-OEL 'til TRANSWORLD) Mar-11 TC 'til then Handy size 30,007 1,742 1992 Aug-11 $10,250---------------- ------------- ------- ------ ----- ------------- ---------YM PORT KELANG (ex-MASTRO NICOS, ex- YM TC 'til XINGANG I) Handy size 23,596 1,599 1993 Oct-11 $5,900---------------- ------------- ------- ------ ----- ------------- ---------MANOLIS P TC 'til Handy size 20,346 1,452 1995 May-11 $7,699---------------- ------------- ------- ------ ----- ------------- ---------NINOS(ex-YM QINGDAO TC 'til I) Feeder 18,253 1,169 1990 May-11 $6,800---------------- ------------- ------- ------ ----- ------------- ---------KUO HSIUNG TC 'til Feeder 18,154 1,169 1993 Jun-11 $5,300---------------- ------------- ------- ------ ----- ------------- ---------Total Container Carriers 10 274,354 17,787---------------- ------------- ------- ------ ----- ------------- ---------Fleet Grand Total 16 628,730 18,737---------------- ------------- ------- ------ ----- ------------- --------- (*) "Monica P" is employed in the Bulkhandling spot pool that is also managed by Klaveness.(**) The company has concluded a Forward Freight Agreement(FFA) option contract on the panamax index for calendar 2011 for a modern panamax. Such a contract serves as an approximate hedge to one of our panamax vessels for 2011 effectively locking in a rate between $16,500 and $23,500.(***) Charter duration are meant to be the earliest redelivery dates. Generally, charterers have a range of 15 days to 3 of months to redeliver the vessels depending on the length of the charter.

Summary Fleet Data:

 3 months, 3 months, ended ended Year ended Year ended December December December December 31, 2009 31, 2010 31, 2009 31, 2010 ----------- ----------- ----------- -----------FLEET DATAAverage number of vessels 16.68 16.00 16.30 15.53 (1)Calendar days for fleet (2) 1,535.0 1,472.0 5,949.0 5,669.0Scheduled off-hire days incl. laid-up (3) 262.0 120.7 966.5 715.9Available days for fleet (4) = (2) - (3) 1,273.0 1,351.3 4,982.5 4,953.1Commercial off-hire days (5) 67.6 3.8 223.7 3.8Operational off-hire days (6) (*) 11.8 13.4 35.0 35.6Voyage days for fleet (7) = (4) - (5) - (6) 1,193.6 1,334.1 4,723.8 4,913.7Fleet utilization (8) = (7) / (4) 93.8% 98.7% 94.8% 99.2%Fleet utilization, commercial (9) = ((4) - (5)) / (4) 94.7% 99.7% 95.5% 99.9%Fleet utilization, operational (10) = ((4) - (6)) / (4) 99.1% 99.0% 99.3% 99.3% AVERAGE DAILY RESULTSTime charter equivalent rate (11) 13,892 10,091 13,698 11,201Vessel operating expenses excl. drydocking expenses (12) 4,955 5,329 4,832 4,657General and administrative expenses (13) 516 445 612 534Total vessel operating expenses (14) 5,471 5,774 5,444 5,191 ----------- ----------- ----------- -----------Drydocking expenses (15) - 2,023 321 1,153 ----------- ----------- ----------- -----------

(1) Average number of vessels is the number of vessels that constituted ourfleet for the relevant period, as measured by the sum of the number ofcalendar days each vessel was a part of our fleet during the period dividedby the number of calendar days in that period.

(2) Calendar days. We define calendar days as the total number of days in aperiod during which each vessel in our fleet was in our possessionincluding off-hire days associated with major repairs, drydockings orspecial or intermediate surveys or days of vessels in lay-up. Calendar daysare an indicator of the size of our fleet over a period and affect both theamount of revenues and the amount of expenses that we record during thatperiod.

(3) The scheduled off-hire days including vessels laid-up are daysassociated with scheduled repairs, drydockings or special or intermediatesurveys or days of vessels in lay-up. The shipping industry uses availabledays to measure the number of days in a period during which vessels wereavailable to generate revenues.

(4) Available days. We define available days as the total number of days ina period during which each vessel in our fleet was in our possession net ofscheduled off-hire days including days of vessels laid-up.

(5) Commercial off-hire days. We define commercial off-hire days as dayswaiting to find employment.

(6) Operational off-hire days. We define operational off-hire days as daysassociated with unscheduled repairs or other off-hire time related to theoperation of the vessels.

(7) Voyage days. We define voyage days as the total number of days in aperiod during which each vessel in our fleet was in our possession net ofcommercial and operational off-hire days. The shipping industry uses voyagedays to measure the number of days in a period during which vesselsactually generate revenues. In 2010, we treated as operational the days ofone of our vessels while she was hijacked as during that period the vesseloriginal charter was insured and, in addition, the vessel did receive hirefrom insurance for the entire period of hijacking.

(8) Fleet utilization. We calculate fleet utilization by dividing thenumber of our voyage days during a period by the number of our availabledays during that period. The shipping industry uses fleet utilization tomeasure a company's efficiency in finding suitable employment for itsvessels and minimizing the amount of days that its vessels are off-hire forreasons such as unscheduled repairs or days waiting to find employment.

(9) Fleet utilization, commercial. We calculate commercial fleetutilization by dividing our available days net of commercial off-hire daysduring a period by our available days during that period.

(10) Fleet utilization, operational. We calculate operational fleetutilization by dividing our available net of operational off-hire daysduring a period by our available days during that period.

(11) Time charter equivalent, or TCE, is a measure of the average dailyrevenue performance of a vessel on a per voyage basis. Our method ofcalculating TCE is consistent with industry standards and is determined bydividing revenue generated from voyage charters (including for that matterany insurance proceeds from loss of hire insurance) net of voyage expensesby voyage days for the relevant time period. Voyage expenses primarilyconsist of port, canal and fuel costs that are unique to a particularvoyage, which would otherwise be paid by the charterer under a time chartercontract, as well as commissions. TCE is a standard shipping industryperformance measure used primarily to compare period-to-period changes in ashipping company's performance despite changes in the mix of charter types(i.e., spot voyage charters, time charters and bareboat charters) underwhich the vessels may be employed between the periods.

(12) Daily vessel operating expenses, which includes crew costs,provisions, deck and engine stores, lubricating oil, insurance, maintenanceand repairs and management fees are calculated by dividing vessel operatingexpenses by fleet calendar days for the relevant time period. Drydockingexpenses are reported separately.

(13) Daily general and administrative expense is calculated by dividinggeneral and administrative expense by fleet calendar days for the relevanttime period.

(14) Total vessel operating expenses, or TVOE, is a measure of our totalexpenses associated with operating our vessels. TVOE is the sum of vesseloperating expenses excluding drydocking expenses and general andadministrative expenses. Daily TVOE is calculated by dividing TVOE by fleetcalendar days for the relevant time period.

(15) Drydocking expenses, which include expenses during drydockings thatwould been capitalized and amortized under the deferral method divided bythe fleet calendar days for the relevant period. Drydocking expenses couldvary substantially from period to period depending on how many vesselsunderwent drydocking during the period.

Conference Call and Webcast:

Later today, Tuesday, February 22, 2011 at 8:00 a.m. EST, the company'smanagement will host a conference call to discuss the results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled timeusing the following numbers: 1 866 819 7111 (from the US), 0800 953 0329(from the UK) or +44 (0)1452 542 301 (international standard dial in).Please quote "Euroseas."

A recording of the conference call will be available until March 1, 2011 bydialing 1 866 247 4222 (from the US), 0800 953 1533 (from the UK) or +44(0)1452 550 000 (international standard dial in). Access Code: 6973591#

Audio webcast -- Slides Presentation:

There will be a live and then archived audio webcast of the conferencecall, via the internet through the Euroseas website (www.euroseas.gr).Participants to the live webcast should register on the websiteapproximately 10 minutes prior to the start of the webcast. A slidepresentation on the fourth quarter and full year 2010 results in PDF formatwill also be available 30 minutes prior to the conference call and webcastaccessible on the company's website (www.euroseas.gr) on the webcast page.Participants to the webcast can download the PDF presentation.

 Euroseas Ltd. Consolidated Condensed Statements of Operations (All amounts expressed in U.S. Dollars - except share amounts) Three Months Three Months Ended Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2009 2010 2009 2010 ------------ ------------ ------------ ------------ (unaudited) (unaudited) (unaudited) (unaudited)Revenues Voyage revenue 17,117,138 13,286,447 66,215,669 54,422,489 Commissions (658,815) (500,267) (2,433,776) (1,944,473) Net revenues 16,458,323 12,786,180 63,781,893 52,478,016 Operating expenses Voyage expenses 535,513 647,407 1,510,551 1,596,569 Vessel operating expenses 6,237,576 6,493,645 23,673,480 21,507,192 Drydocking expenses - 2,977,585 1,912,474 6,537,733 Depreciation 4,701,556 4,586,937 19,092,384 17,979,750 Impairment loss / net loss on sale of vessels 8,959,321 - 8,959,321 - Management fees 1,366,947 1,350,928 5,074,297 4,892,006 Other general and administrative expenses 792,067 655,407 3,640,534 3,026,941 Charter termination fees and other income - (871,638) (103,577) (2,352,946) Total operating expenses 22,592,980 15,840,271 63,759,464 53,187,245 Operating income / (loss) (6,134,657) (3,054,091) 22,429 (709,229) Other income/(expenses) Interest and finance cost (409,420) (406,354) (1,437,637) (1,498,216) Gain / (Loss) on derivatives, net (9,827,627) 2,464,441 (15,778,209) (4,221,817) Realized & unrealized gain/ (loss) on trading securities (115,751) (68,573) 406,119 (173,375) Foreign exchange (loss)/ gain 12,575 (975) 36,477 (3,200) Interest income 170,805 53,532 1,123,317 538,820 Other income / (expenses), net (10,169,418) 2,042,071 (15,649,933) (5,357,788) Equity Earnings (loss) in joint venture - 83,386 - (538,833) ------------ ------------ ------------ ------------Net loss (16,304,075) (928,634) (15,627,504) (6,605,850) ------------ ------------ ------------ ------------Loss per share, basic (0.53) (0.03) (0.51) (0.21)Weighted average number of shares, basic 30,813,960 30,968,108 30,648,991 30,900,122 ------------ ------------ ------------ ------------Loss per share, diluted (0.53) (0.03) (0.51) (0.21) ------------ ------------ ------------ ------------Weighted average number of shares, diluted 30,813,960 30,968,108 30,648,991 30,900,122 ------------ ------------ ------------ ------------ Euroseas Ltd. Consolidated Condensed Balance Sheets (All amounts expressed in U.S. Dollars - except share amounts) December 31, December 31, 2009 2010 (unaudited) (unaudited)ASSETSCurrent Assets: Cash and cash equivalents 40,984,549 34,273,518 Trade accounts receivable 1,650,713 1,563,761 Other receivables, net 239,656 6,693,985 Inventories 1,869,238 1,788,256 Restricted cash 1,191,230 976,714 Other deposits 12,376,119 - Derivatives - 574,336 Trading securities 436,598 263,223 Prepaid expenses 185,137 271,033Total current assets 58,933,240 46,404,826 Fixed assets: Vessels, net 257,270,824 255,412,434Long-term assets: Restricted cash 6,500,000 4,800,000 Deferred charges, net 327,694 599,374 Derivatives 386,536 - Investment in joint venture - 14,461,167Total long-term assets 264,485,054 275,272,975 ------------- -------------Total assets 323,418,294 321,677,801 ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities: Long term debt, current portion 14,030,000 13,472,000 Trade accounts payable 1,843,182 3,950,934 Accrued expenses 1,060,326 2,212,401 Accrued dividends 46,750 32,175 Deferred revenue 1,247,782 2,114,335 Derivatives 10,799,132 1,837,924 Due to related company 1,416,380 1,594,773Total current liabilities 30,443,552 25,214,542 Long-term liabilities: Long term debt, net of current portion 57,485,000 74,913,000 Derivatives 611,852 1,537,056 Fair value of below market time charter acquired 3,424,627 1,318,211Total long-term liabilities 61,521,479 77,768,267Total liabilities 91,965,031 102,982,809 Shareholders' equity: Common stock (par value $0.03, 200,000,000 shares authorized, 30,849,711 and 31,002,211 issued and outstanding, respectively) 925,492 930,067 Preferred shares (par value $0.01, 20,000,000 shares authorized, no shares issued and outstanding) - - Additional paid-in capital 235,588,391 236,279,931 Accumulated deficit (5,060,620) (18,515,006)Total shareholders' equity 231,453,263 218,694,992 ------------- -------------Total liabilities and shareholders' equity 323,418,294 321,677,801 ------------- ------------- Euroseas Ltd. Consolidated Condensed Statements of Cash Flows (All amounts expressed in U.S. Dollars) Year Ended Year Ended December 31, December 31, 2009 2010 (unaudited) (unaudited) ------------ ------------Cash flows from operating activities:Net loss (15,627,504) (6,605,850)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation of vessels 19,092,384 17,979,750Impairment loss / loss on sale of vessels 8,959,321 -Amortization of deferred charges 110,504 108,569Amortization of fair value of time charters (3,626,762) (2,106,416)Share-based compensation 820,189 696,117Unrealized loss / (gain) on derivatives, net 7,626,918 (8,223,804)Loss in investment in joint venture - 538,833Sale of trading securities 741,248 -Unrealized (gain) / loss on trading securities (406,118) 173,375Changes in operating assets and liabilities (9,852,520) 10,188,415 ------------ ------------Net cash provided by operating activities 7,837,660 12,748,989 ------------ ------------ Cash flows from investing activities:Purchase of vessels including improvements (62,224,639) (16,121,360)Investment in joint venture - (15,000,000)Insurance proceeds 667,839 -Change in restricted cash (709,966) 1,914,516Proceeds from sale of vessels 16,668,001 - ------------ ------------Net cash (used in) investing activities (45,598,765) (29,206,844) ------------ ------------ Cash flows from financing activities:Issuance of share capital 4,023 -Net proceeds from shares issued 645,242 -Dividends paid (10,849,609) (6,863,112)Offering expenses paid (197,193) (99,814)Loan arrangements fees paid (208,000) (160,250)Proceeds from long-term debt 33,000,000 28,500,000Repayment of long-term debt (17,500,000) (11,630,000) ------------ ------------Net cash provided by financing activities 4,894,463 9,746,824 ------------ ------------ Net decrease in cash and cash equivalents (32,866,642) (6,711,031)Cash and cash equivalents at beginning of period 73,851,191 40,984,549 ------------ ------------Cash and cash equivalents at end of period 40,984,549 34,273,518 ------------ ------------ Euroseas Ltd. Reconciliation of Adjusted EBITDA to Net Loss and Cash Flow Provided By Operating Activities (All amounts expressed in U.S. Dollars) Three Three Months Ended Months Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2009 2010 2009 2010 ------------ ------------ ------------ ------------ Net loss (16,304,075) (928,634) (15,627,504) (6,605,850) ------------ ------------ ------------ ------------Interest and finance costs, net (incl. interest income) 238,615 352,822 314,320 959,396 ------------ ------------ ------------ ------------ Depreciation 4,701,556 4,586,937 19,092,384 17,979,750 ------------ ------------ ------------ ------------Impairment / net loss from vessel sales 8,959,321 - 8,959,321 - ------------ ------------ ------------ ------------Loss / (gain) on derivatives, net 9,827,627 (2,464,441) 15,778,209 4,221,817 ------------ ------------ ------------ ------------Amortization of deferred revenue of below market time charter acquired (2,533,811) (526,604) (5,280,184) (2,106,416) ------------ ------------ ------------ ------------Amortization of deferred revenue of above market time charter acquired - - 1,653,422 0 ------------ ------------ ------------ ------------ Adjusted EBITDA 4,889,233 1,020,080 24,889,968 14,448,697 ------------ ------------ ------------ ------------ Three Three Months Ended Months Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2009 2010 2009 2010 ----------- ----------- ----------- -----------Net cash flow provided by /(used in) operating activities (3,657,862) 1,856,609 7,837,660 12,748,989 ----------- ----------- ----------- ----------- Changes in operating assets / liabilities 3,732,063 (2,584,805) 9,852,520 (10,188,415) ----------- ----------- ----------- ----------- Loss on interest rate and FFA derivatives (realized) 4,840,730 1,607,694 8,151,290 12,445,622 ----------- ----------- ----------- ----------- Gain / (loss) on trading securities & investment in joint venture, net (115,752) 14,813 406,118 (712,208) ----------- ----------- ----------- -----------Sale of trading securities, net - - (741,248) - ----------- ----------- ----------- -----------Share-based compensation (110,475) (195,244) (820,189) (696,117) ----------- ----------- ----------- ----------- Interest, net 200,529 321,013 203,817 850,826 ----------- ----------- ----------- ----------- Adjusted EBITDA 4,889,233 1,020,080 24,889,968 14,448,697 ----------- ----------- ----------- -----------

EBITDA Reconciliation:

Euroseas Ltd. considers Adjusted EBITDA to represent net earnings beforeinterest, income taxes, depreciation, gain / loss in derivatives andamortization of deferred revenues from above or below market time chartersacquired. Adjusted EBITDA does not represent and should not be consideredas an alternative to net income or cash flow from operations, as determinedby United States generally accepted accounting principles, or U.S. GAAP,and our calculation of Adjusted EBITDA may not be comparable to thatreported by other companies. Adjusted EBITDA is included herein because itis a basis upon which we assess our financial performance and liquidityposition and because we believe that it presents useful information toinvestors regarding a company's ability to service and/or incurindebtedness. The Company's definition of Adjusted EBITDA may not be thesame as that used by other companies in the shipping or other industries.

 Euroseas Ltd. Reconciliation of Net Income / (loss) Excluding the Effect from Unrealized Loss / (Gain) and Realized Loss on derivatives, Unrealized (Loss on trading securities and Amortization of the Fair Value of Charters Acquired to Net Loss) (All amounts expressed in U.S. Dollars - except share data and per share amounts) Three Three Months Ended Months Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2009 2010 2009 2010 ------------- ------------- ------------- ------------- Net loss (16,304,075) (928,634) (15,627,504) (6,605,850) ------------- ------------- ------------- ------------- Unrealized loss / (gain) on derivatives, net 4,986,897 (4,072,135) 7,626,919 (8,223,805) ------------- ------------- ------------- ------------- Unrealized loss on trading securities 115,751 68,573 5,325 173,375 ------------- ------------- ------------- ------------- Impairment loss / loss on sale 8,959,321 - 8,959,321 - ------------- ------------- ------------- ------------- Realized loss on derivatives 4,840,730 1,607,694 8,151,290 12,445,622 ------------- ------------- ------------- ------------- Amortization of deferred revenue of below market time charter acquired (2,533,811) (526,604) (5,280,184) (2,106,416) ------------- ------------- ------------- ------------- Amortization of deferred revenue of above market time charter acquired - - 1,653,422 - ------------- ------------- ------------- -------------Net income/(loss) excluding unrealized loss / (gain) on derivatives, unrealized (gain) / loss on trading securities, realized loss on derivatives, amortization of the fair value of charters acquired 64,813 (3,851,106) 5,488,589 (4,317,074) ------------- ------------- ------------- -------------Net income/(loss) per share excluding unrealized loss / (gain) on derivatives, unrealized (gain) / loss on trading securities, realized loss on derivatives, amortization of the fair value of charters acquired, basic 0.00 (0.12) 0.18 (0.14) ------------- ------------- ------------- -------------Weighted average number of shares, basic 30,813,960 30,968,108 30,648,991 30,900,122 ------------- ------------- ------------- -------------Net income/(loss) per share excluding unrealized loss / (gain) on derivatives, unrealized (gain) / loss on trading securities, realized loss on derivatives, amortization of the fair value of charters acquired, diluted 0.00 (0.12) 0.18 (0.14) ------------- ------------- ------------- -------------Weighted average number of shares, diluted 30,813,960 30,968,108 30,648,991 30,900,122 ------------- ------------- ------------- -------------

About Euroseas Ltd.

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic ofthe Marshall Islands to consolidate the ship owning interests of the Pittasfamily of Athens, Greece, which has been in the shipping business over thepast 136 years. Euroseas trades on the NASDAQ Global Market under theticker ESEA since January 31, 2007.

Euroseas operates in the dry cargo, drybulk and container shipping markets.Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2000certified affiliated ship management company, which is responsible for theday-to-day commercial and technical management and operations of thevessels. Euroseas employs its vessels on spot and period charters andthrough pool arrangements.

The Company has a fleet of 16 vessels, including 4 Panamax drybulk carriersand 1 Handymax drybulk carrier, 3 Intermediate containership, 5 Handysizecontainerships, 2 Feeder containerships and a multipurpose dry cargovessel. Euroseas` 5 drybulk carriers have a total cargo capacity of 331,808dwt, its 10 containerships have a cargo capacity of 17,787 teu and itsmultipurpose vessel has a cargo capacity of 22,568 dwt or 950 teu.

Forward-Looking Statement

This press release contains forward-looking statements (as defined inSection 27A of the Securities Act of 1933, as amended, and Section 21E ofthe Securities Exchange Act of 1934, as amended) concerning future eventsand the Company's growth strategy and measures to implement such strategy;including expected vessel acquisitions and entering into further timecharters. Words such as "expects," "intends," "plans," "believes,""anticipates," "hopes," "estimates," and variations of such words andsimilar expressions are intended to identify forward-looking statements.Although the Company believes that the expectations reflected in suchforward-looking statements are reasonable, no assurance can be given thatsuch expectations will prove to have been correct. These statements involveknown and unknown risks and are based upon a number of assumptions andestimates that are inherently subject to significant uncertainties andcontingencies, many of which are beyond the control of the Company. Actualresults may differ materially from those expressed or implied by suchforward-looking statements. Factors that could cause actual results todiffer materially include, but are not limited to changes in the demand fordry bulk vessels and container ships, competitive factors in the market inwhich the Company operates; risks associated with operations outside theUnited States; and other factors listed from time to time in the Company'sfilings with the Securities and Exchange Commission. The Company expresslydisclaims any obligations or undertaking to release publicly any updates orrevisions to any forward-looking statements contained herein to reflect anychange in the Company's expectations with respect thereto or any change inevents, conditions or circumstances on which any statement is based.

Visit our website www.euroseas.gr

Company Contact
Tasos Aslidis
Chief Financial Officer
Euroseas Ltd.
11 Canterbury Lane,
Watchung, NJ 07069
Tel. (908) 301-9091
E-mail: aha@euroseas.gr

Investor Relations / Financial Media
Nicolas Bornozis
President
Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, NY 10169
Tel. (212) 661-7566
E-mail: nbornozis@capitallink.com

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