EXHIBIT 99.1
FreeSeas Inc. Reports Third Quarter and Nine-Month Results for the Period Ending September 30, 2007
Third Quarter Operating Revenue Increased 47 Percent
PIRAEUS, Greece, Dec. 10, 2007 (PRIME NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or "the Company"), a provider of seaborne transportation for drybulk cargoes, announced today unaudited operating results for the quarter and nine-months ended September 30, 2007.
Financial Highlights
* Revenue grew by 47.0% compared to the same quarter of 2006, to $4.88 million from $3.32 million, and by 47.5% for the year-to-date period of 2007 over the comparable 2006 period, to $12.71 million from $8.61 million. * Income from operations reached $1.07 million, compared to a loss of $0.02 million for the same period of 2006; income from operations for the year-to-date period of 2007 reached $4.18 million, compared with a loss of $1.61 million for the comparable year-to-date period of 2006. * Net loss of $0.50 million for the third quarter of 2007, or loss of $0.08 per share based on 6,674,627 basic shares outstanding, compared with a loss of $0.11 million, or loss of $0.02 per share based on 6,290,100 basic shares outstanding for the same quarter of 2006. * Net income for the quarter ended September 30, 2007 was affected by the following factors: o The MV Free Destiny was in drydock for 30 days during the third quarter 2007, passing her scheduled special survey. o An unrealized expense related to interest rate swaps (change in derivative fair value) of $0.4 million. o Higher interest expense attributable to the higher interest-bearing bridge loan facilities utilized in financing the MV Free Hero, Free Jupiter and Free Goddess. These bridge loan facilities have subsequently been repaid in the fourth quarter from the proceeds of the Company's recent equity offering. * Net income from operations for the nine-months ended September 30, 2007 was $2.13 million, or $0.33 per share, compared with a loss of $2.37 million, or loss of $0.38 per share, for the same period in 2006. * Adjusted EBITDA for the nine-month period ended September 30, 2007 increased by 353.5% as compared to same period in 2006, to $7.38 million from $2.08 million.
Fleet developments
* The Company took delivery of the Handysize M/V Free Hero in July 2007. The Free Hero is currently subject to a $14,500 per day time charter expiring in December 2008 with a charterer's option for extension until February 2009. * The Company took delivery of the Handymax M/V Free Jupiter in September 2007, currently in drydock for unscheduled repairs following a grounding incident, after which the vessel will be time-chartered for three years at annually adjusting rates of US$32,000/$28,000/$24,000 per day, respectively. * The Company agreed to purchase for approximately $25.20 million, and took delivery in October 2007, of the 1995-built, 22,051 dwt Handysize M/V Free Goddess, which immediately began a time charter at $13,000 per day; upon completion of the charter, the vessel was delivered to its subsequent charterer for a previously announced two-year time charter at a rate of $19,250 per day.
Corporate Initiatives
* Closed the sale of 12,650,000 shares of common stock in a public offering at $8.25 per share, which included the underwriter's over-allotment option of 1,650,000 shares, resulting in total net proceeds from the stock offering after deducting underwriting discounts and commissions, but before expenses, of approximately $97.1 million. * Additional common stock was issued upon the exercise of 480,107 Class W, 101,444 Class Z and 700,000 Class B warrants. 20,743,456 common shares are presently outstanding.
Mr. Ion Varouxakis, Chairman of the Board, President and Chief Executive Officer, commented, "Our quarterly and year-to-date results clearly demonstrate that our fleet modernization and optimization program remains on track and will continue to provide us with near-term and long-term growth opportunities. We reported another strong quarter of revenue growth and took delivery of one Handymax and one Handysize vessel in the third quarter and one additional Handysize in the fourth quarter. This has significantly lowered the average age of our fleet to 15.9 years and increased our dwt to 145,704 as of November 30, 2007."
Varouxakis continued, "As we look ahead, in addition to our own initiatives aimed at driving growth and building long-term value for our shareholders, we expect to benefit by what we believe will remain a strong dry-bulk market, ideally positioning FreeSeas to take advantage of the opportunities presented in such an environment. We also expect that our recently closed follow-on offering will provide us with added financial flexibility, liquidity and access to the capital markets to support our growth."
Varouxakis concluded, "With the added balance sheet strength that our recent offering has provided, we are actively pursuing opportunities to expand the carrying capacity of our fleet. While vessel prices for new tonnage remain high, we are encouraged by opportunities that we have identified in the second-hand market for newer-built tonnage, and look forward to leveraging our strong cash position for the benefit of our shareholders."
FreeSeas' fleet of owned vessels is as follows:
Current Fleet: --------------------------------------------------------------------- Vessel Dwt Vessel Built Employment Name Type --------------------------------------------------------------------- Free Destiny 25,240 Handysize 1982 Currently on a short period time charter at $28,000 p/d --------------------------------------------------------------------- Free Envoy 26,318 Handysize 1984 TC through Apr 2008 at $17,000 p/d --------------------------------------------------------------------- Free Goddess 22,051 Handysize 1995 TC at $19,250 p/d until September 2009 to November 2009 --------------------------------------------------------------------- Free Hero 24,318 Handysize 1995 TC through Dec 2008/Feb 2009 at $14,500 p/d --------------------------------------------------------------------- Free Jupiter 47,777 Handymax 2002 Currently in drydock to be followed by three-year TC at $32,000/28,000/24,000 p/d --------------------------------------------------------------------- FREESEAS INC.CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (All amounts in tables in thousands of United States dollars, except for share data) Sept. 30, 2007 Dec. 31, 2006 (Unaudited) ---------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,881 $ 372 Trade receivables, net 337 278 Insurance claims 13 485 Due from related party 40 Inventories 390 242 Prepayments and other 1,411 ---------------------------- Total current assets $ 5,032 $ 1,417 Advances for acquisition of vessels 2,536 Fixed Assets, net 84,158 19,369 Deferred charges, net 2,741 2,300 Restricted cash 700 ---------------------------- Total non-current assets $ 90,135 $ 21,669 ---------------------------- Total Assets $ 95,167 $ 23,086 ============================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Account payable $ 3,088 $ 2,003 Accrued liabilities 1,788 1,515 Unearned revenue 213 179 Due to related parties 148 Shareholders loans, current portion 1,864 1,218 Bank overdraft 2,000 Deferred revenue-current portion 1,873 Bank loans - Current portion debt 8,030 3,345 ---------------------------- Total current liabilities $ 17,004 $ 10,260 Derivatives at fair value 362 Shareholders loans, net of current portion $ 12,422 1,334 Deferred revenue, net of current portion 277 Bank loans - net of current portion 51,570 4,485 Total long term liabilities $ 64,631 $ 5,819 SHAREHOLDERS' EQUITY: Common stock 6 6 Additional paid-in capital 14,104 9,703 Retained (deficit) (578) (2,702) ---------------------------- Total shareholders' equity $ 13,532 $ 7,007 ---------------------------- Total Liabilities and Shareholders' Equity $ 95,167 $ 23,086 ============================ FREESEAS INC. CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in tables in thousands of United States dollars, except for share data) For three months ended For nine months ended 30-Sep-07 30-Sep-06 30-Sep-07 30-Sep-06 (Unaudited) (Unaudited) ------------------------------------------------- OPERATING REVENUES $ 4,879 $ 3,320 $ 12,709 $ 8,614 OPERATING EXPENSES: Vessel operating expenses (1,319) (1,107) (3,632) (3,172) Voyage expenses (289) 0 (328) (550) Depreciation expense (1,148) (1,129) (2,615) (3,350) Amortization of deferred charges (206) (166) (603) (388) Management fees to a related party (225) (135) (585) (405) Commissions (265) (255) (747) (604) Stock-based compensation expense (25) (270) (75) (649) General and administrative expenses (330) (279) (1,314) (1,102) Gain on sale of vessel 1,369 ----------------------------------------------- Income (loss) from operations $ 1,072 $ (21) $ 4,179 $(1,606) OTHER INCOME (EXPENSE): Interest and finance costs $(1,310) $ (222) (1,863) (733) Change in derivatives fair value (362) (362) Interest income 157 3 196 16 Other (55) 129 (25) (47) ----------------------------------------------- Other (expense) $(1,570) $ (90) $ (2,054) $ (764) ----------------------------------------------- ------- ---------------------------------- Net income (loss) $ (498) $ (111) $ 2,125 $(2,370) ======= ================================== Basic earnings (loss) per share $ (0.08) $ (0.02) $ 0.33 $ (0.38) Diluted earnings (loss) per share $ (0.08) $ (0.02) $ 0.30 $ (0.38) Basic weighted average number of shares 6,674,627 6,290,100 6,347,850 6,290,100 Diluted weighted average number of shares 6,674,627 6,290,100 6,996,198 6,290,100 FREESEAS INC. CONDENSED UNAUDITED PERFORMANCE INDICATORS (All amounts in tables in thousands of United States dollars, except for fleet data) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 -------- ------- -------- ------- PERFORMANCE INDICATORS Adjusted EBITDA(1) $ 2,371 $ 1,403 $ 7,372 $ 2,085 Fleet Data: Average number of vessels(2) 3.24 3.00 2.85 3.00 Ownership days(3) 298 276 776 819 Available days(4) 269 276 747 819 Operating days(5) 254 240 715 740 Fleet utilization(6) 85.2% 87.0% 92.1% 90.4% Average Daily Results: Average TCE rate $17.028 $12.771 $ 16.271 $10.081 Vessel operating expenses (8) 4.426 4.011 4.680 3.873 Management fees(9) 0.755 0.489 0.754 0.495 General and administrative expenses(10) 1.299 1.163 1.838 1.489 Total vessel operating expenses(11) $ 5.181 $ 4.500 $ 5.434 $ 4.368 (1) Adjusted EBITDA represents net earnings before interest, taxes, depreciation, amortization and change in the fair value of derivatives. Under the laws of the Marshall Islands, we are not subject to tax on international shipping income. However, we are subject to registration and tonnage taxes, which have been included in vessel operating expenses. Accordingly, no adjustment for taxes has been made for purposes of calculating adjusted EBITDA. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is an alternative measure of our liquidity, performance and indebtedness. The following is a reconciliation of adjusted EBITDA to net income: Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2007 2006 2007 2006 -------- ------- -------- ------- Net income (loss) $ (498) $ (111) $ 2,125 $(2,370) Depreciation and amortization of deferred charges 1,354 1,295 3,218 3,738 Change in derivatives fair value 362 362 Interest and finance cost, net 1,153 219 1,667 717 Adjusted EBITDA $ 2,371 $ 1,403 $ 7,372 $ 2,085 (2) 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 days each vessel was a part of our fleet during the period divided by the number of calendar days in the period. (3) Ownership days are the total number of days in a period during which the vessels in our fleet have been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period. (4) Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry-dockings or special or intermediate surveys. The shipping industry uses available days to measure the number of ownership days in a period during which vessels should be capable of generating revenues. (5) Operating days are the number of available days less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues. (6) We calculate fleet utilization by dividing the number of our fleet's operating days during a period by the number of ownership days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, or dry-dockings or other surveys. (7) 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 operating revenues (net of voyage expenses) by operating days for the relevant time period. TCE is a 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 charters, time charters and bareboat charters) under which the vessels may be employed between the periods: Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2007 2006 2007 2006 -------- ------- -------- ------- Operating revenues $ 4,879 $ 3,320 $12,709 $(8,614) Voyage expenses and commissions (554) (255) (1,075) (1,154) ------- ------- ------- ------- Net operating revenues 4,325 3,065 11,634 7,640 Operating days 254 240 715 740 Time charter equivalent daily rate $17.028 $12.771 $16.271 $10.081 (8) Average daily operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, are calculated by dividing vessel operating expenses by ownership days for the relevant period: Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2007 2006 2007 2006 -------- ------- -------- ------- Vessel operating expenses $ 1,319 $ 1,107 $ 3,632 $ 3,172 Ownership days 298 276 776 819 ------- ------- ------- ------- Daily vessel operating expense $ 4.426 $ 4.011 $ 4.680 $ 3.873 (9) Daily management fees are calculated by dividing total management fees paid on ships owned by ownership days for the relevant time period. (10) Average daily general and administrative expenses are calculated by dividing general and administrative expenses by operating days for the relevant period. (11) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of daily vessel operating expense and daily management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the relevant time period.
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. Currently, it has a fleet of four Handysize vessels and one Handymax vessel. FreeSeas' common stock and warrants trade on the NASDAQ Global Market under the symbols FREE, FREEW and FREEZ, respectively. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the US Securities and Exchange Commission, which can be obtained free of charge on the SEC's website at www.sec.gov. For more information about FreeSeas Inc. please go to our corporate website, www.freeseas.gr.
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or impli ed by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
CONTACT: FreeSeas Inc. Company Contact: Ion Varouxakis, Chief Executive Officer 011-30-210-45-28-770 Fax: 011-30-210-429-10-10 info@freeseas.gr www.freeseas.gr 89 Akti Miaouli Street 185 38 Piraeus, Greece Cubitt Jacobs & Prosek Communications Investor Relations / Financial Media: Thomas J. Rozycki, Jr., Sr. Vice President +1.212.279.3115 x208 Fax: +1.212.279-3117 trozycki@cjpcom.com 350 Fifth Avenue, Suite 3901 New York, NY 10118, USA www.cjpcom.com